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7-25-1997 0:O6AM FROM MSP REAL ESTATE. INC. 612 336 4566 P_ 7 <br /> MARDE 4L • <br /> AMUNDSON `. <br /> JOHNSON & <br /> EIRNESS,, INC. <br /> .1( luat.ion & Consultation ' <br /> My 24, 1997 <br /> Mr.Jeffrey.R.:Huggett : <br /> Vice President <br /> MSP.Real Estate Services,Inc. <br /> 311 Fifth Avenue North <br /> • Minneapolis, MN-55401 <br /> Rit IMPACT OF LOW-INCOME HOUSING ON PROPERTY VALUES <br /> .,. <br /> Dear Mr. Huggett: <br /> In conjunctionwith your current proposal to acquire and develop/redevelop the Red Oaks <br /> Apartments property and adjacent vacant land located along U.S.Highway 10 in Mounds. <br /> View,Minnesota,you have asked me to comment on the potential impact of the'project on • <br /> property values in the area. . <br /> . Generally,I have observed that property values'in a nei hborh 'te . <br /> p perty g ood nd to rise or fall with the . <br /> level of maintenance and attention to management of properties that are not occupied by the <br /> owner. In other words, when a project such as Red Oaks Aparuuents(formerly Pleasant <br /> Wood)begins to suffer deferred maintenance or inattentive management,property values in. <br /> the area are threatened. This tends to be true regardless of the type Ofoccupancy of the • <br /> buildings. The single most,important factor on property values in the surrounding area is to <br /> • cure the deferred maintenance and inattentive management of Red'Oak Apartments. ' <br /> In my experience working with Section 42 properties throughout the Midwest,I have not • <br /> observed.an adverse impact on nearby property values due to the construction and operation <br /> of an income-restricted development. Section.42 properties are privately owned and • <br /> fmanced, with indirect government involvement through the availability of income tax credits <br /> to sell to investors. The property must be managed very professionally and must maintain <br /> good curb appeal to continue to compete for tenants in the marketplace;or the property.runs. <br /> the risk of non-compliance and/or foreclosure. As a result,Section 42 properties tend to be <br /> indistinguishable from market-rate apartment <br /> properties. Based on rztyreview of your <br /> development proposal,the design appears to meet or exceed.market-rate apartment standards, <br /> and is appropriately buffered from.surrounding single family'neighborhoods. These are two <br /> key ingredients'(along with property management)that bode well for.long term property <br /> value appreciation. • <br /> • . '10 <br /> • <br /> AAAAD _ _.7 Tom.. rein♦e .. - .. <br />