Agenda Packets - 1997/04/28 - Laserfiche WebLink

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City of Mounds View Staff Report April 24, 1997 Page 2 The second resolution deals with the City's support for Holman Units as part of the SLC. The Holman Decree provides an equity investment per unit into the project in return for setting aside units for Minneapolis Public Housing recipients. Three of the 10 units proposed would be set aside for existing Mounds View residents that receive rent subsidies. Residents of the remaining 7 units would come from Minneapolis Public Housing waiting list. Apparently, the applicants for this project undergo a thorough screening process to ensure no criminal record and a positive rent payment history. This is a fairly new program in the Metro Area. Minnetonka and Shakopee are a couple of Cities that have signed agreements for this funding source as part of new developments. It is a significant factor of MSP's budget and without these units the project's economic viability reduces. I have put in some contingencies into the resolution which would allow the City to support this funding only if the SLC project is approved for rezoning, development review and TIF financing. I have discussed with MSP the possibility of mixing up the new construction with more market rate rental units or even for sale units. MSP is willing to look at these options but is afraid that since the rehab is such a financial drain on the entire budget that without the additional assistance for new affordable units the project is not economically feasible. One option for the City to consider would be to provide • additional subsidy to the project to meet the desired goals of ownership and/or market rate units. MSP has provided me with some estimations regarding the additional assistance they may need to accommodate the City's goals for ownership and/or market rate units on the new portion of the project. (See attached letter from MSP). Clearly with this project there is a significant price to pay if the assistance associated with the Holman Units and Tax Credit Funds is lost. We may be able to review reducing the construction costs but this would take away from the quality of the rehab and new development. I have contacted both a commercial and a residental developer to ask their professional opinion regarding this site. I will present their responses regarding commercial use and for-sale townhomes for this location at the Council meeting. The Economic Development Commission reviewed the concept for this project and passed a resolution on a 6-0 vote as follows: General support for MSP Real Estate's concept proposal as it pertains to the rehabilitation of Red Oak Apartments and construction of 26 new townhomes. This support is limited to the concepts and land use but there needs to be • further evaluation with regards to the management company and financial