07-28-1997 EDA - Laserfiche WebLink

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dollars per year. It is estimated that the current tenants in the Red Oak Apartments Would qualify under these income limits,therefore the existing apartments can currently be considered affordable. The rent proposed for the development range from$509-$650 per month with the exception of 10 • units (5 existing and 5 new) that would be set aside for families that are on public assistance. These 10 units are referred to as Hollman Units under the Hollman Consent.Decree which was the result of a class action lawsuit filed by tenants of Minneapolis Public Housing claiming discrimination by HUD, Minneapolis PubJ c Housing Authority and City of.Minneapolis. The Hollman Consent Decree states that 770 units of public housing in the North Side of Minneapolis will be demolished and replaced with new and rehabd public housing units in other locations throughout the metro. Currently, there are approxi l .8 units under constrt( n in Chaska,Minnetonka; Savage,Washington County,Minneapoliraitd Carver County and 172 units planned in,other suburban locations. The tenants for the Hallman Units go through both screening by the Minneapolis Public Housing Agency and the SLC property management. Based on unfavorable tenant profile,SLC can refuse to accept tenants. (Attachment B: I-lollman Consent Decree Information.Flyer) • In reviewing this proposal,several issues have come forward from Council,staff and residents. MSP Real tate has addressed many of these concerns in the attached letter and supporting documentation dated July 24, 1997. (Attachment C) In addition,there was a concern that the increase in the number of children created from the new development will put a strain on the Mounds View School District. MSP Real Estate met with the Superintendent of Mounds View School District,Jan Witthun. The Director of Technology, Information and Planning is confident that there is adequate space available at one of the elementary schools that serve Mounds View. Conclusions and Options: The attached resolution would make a conditional approval to sellthe land to MSP Real Estate for the development of Silver Lake Commons Project. If the project does not move forward,the land is still under the ownership and control of the EDA. In addition,the sale would legally be tied to a development agreement which would be an additional assurance that the land is tied to the proposed development. The EDA may act on the resolution upon closure of the public hearing or they may defer decision to another meeting when the tax increment request is presented. But,if approved,there are still several controls that would give the EDA the legal right not to sell the property as noted above. If approved,the proceeds from the sale of the land is not subject.to the same requirements under State law for use of Tax Increment Funds. Even though the land was purchased with TIF,the proceeds would not be considered TIF and not subject to the TIF restrictions. Therefore,the$47,000,or what ever price is ultimately negotiated,can be used for other City projects that are non TIF eligible: As an example, two years ago the City discussed setting up first time home buyer program that would buy down interest rates or provide funds for closing costs. These type of programs can not be funded with the use of TIF because they are not clearly redevelopment but the land proceeds could be used. Staff if not prepared to present the final Tax Increment Financing Loan agreement at this time. The request if for a$230,000, 1%interest deferred 30-year loan due upon sale. This request represents 5%of the total project cost. The EDC recommended a conditional commitment to approve the loan with assurances that if there were additional funds from the relocation budget after 24 months,the EDA would receive those funds as partial payment of the loan. Staff is prepared to have a development • agreement drafted to bring to the EDA in August. Staff/Commission_Itecoprnmendat on: ® Staff is recommending the approval of Resolution No. 97-EDA72 for several reasons. The resolution is a conditional approval for the sale to MSP Real Estate and states that the sale would be in furtherance of the TIF Plan and for the public purposes noted in the TIF Plan to eliminate the blighting influences