07-24-1997 - Laserfiche WebLink

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Public Housing Agency. TIF Consultant Dave Marony explained that because there is a possibility that tenants may be displaced the City should be concerned that adequate amount of dollars are set aside for relocation and that a relocation plan be done by a professional relocation consultant. Director Bennett mentioned that the proposal has gone through development review and was approved by the Planning Commission at the July 16, 1997 meeting. The Council will vote on the development proposal at the July 28th meeting and is holding a public hearing on the sale of the land. Mr. Marony reviewed the sources and uses presented by the applicant per the EDC=s request in May. Mr. Marony explained the financing structure from Minnesota Housing Finance Agency, Ramsey County, Minneapolis Public Housing Agency and the City of Mounds View. He noted that although the amount of the City loan is relatively small compared to the entire project size of $5 million, he suggested that any support should be conditioned upon the applicant securing other sources of financing and providing a relocation plan by a professional relocation consultant. Per State law for use of TIF funds, this is seen as an acceptable of tax increment funds. Per the EDC=s request in May staff gathered additional information regarding the management of the project. Danzeisen Properties has been hired to provide property management for the project. Staff contacted references and received wonderful comments on Danzeisen Properties abilities to effectively manage the property. Ms. Danzeisen gave an overview of how she manages property and answered several questions. The commission members asked the applicant several questions regarding density, children play area, crime, green space and noise abatement. The applicant explained that the project is much less dense than is required, that they have created two play areas, quality management controls crime, that they exceeded the required green space and any noise abatement required by MnDot would be covered by the developer. Commissioner Goff wondered if the retention pond would be screened from Children. The applicant responded that the play area is fenced. Commissioner Sjoberg asked more specifically how the management would reduce the crime. Ms. Danzeisen explained tenant screening and strict policies and she expects that crime will decrease by 90% after the project is fully complete. Commissioner Carlson noted that this is a difficult project because of the level of public funding and the first lenders investment will require quality construction and proper management. The need for a market study was discussed. Commissioner Carlson wondered if requiring that an independent 3rd party study be done is necessary. Mr. Marony suggested that the EDA may want the study for assurances that there will be a payback on the loan. MSP Real Estate said it is a requirement for first mortgage lender. Commissioner Carlson reviewed the goals for improvement in this area - develop EDA owned land, improve safety and improve aesthetics - and this project seems to meet these goals. Carlson asked about the status of the first mortgage. MSP said that they have received a letter of intent from the equity investor and first mortgage lender. Documentation should be final in September with closing in October. The loan is a 9%, 30 year fully amortized loan. Carlson noted that when Western finances this type of project they generally see acquisition costs of approximately $24,000 per unit (or less) on older apartment buildings. This project contemplates a cost of $80,000 per unit (acquisition plus rehab). The cost will exceed value for purposes of determining bank financing and thus the project will require significant subsidy. This level of subsidy for housing seems common place in many urban housing redevelopment projects.