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30 <br /> MEMORANDUM <br /> DATE: January 22, 1996 <br /> TO: Mayor and Councilmembers <br /> FROM: Michael Mornson, City Manager <br /> ITEM: SLIM ARY OF MEETING AT CHANDLER PLACE <br /> On Monday, January 22nd, Jerry Gilligan, Roger Larson, and I met with representatives of <br /> Chandler Place. They are asking the City for an inducement resolution to refund bonds that <br /> were previously issued by Chandler Place in 1985. As part of the 1985 issue, the City set up <br /> a tax increment district and borrowed Chandler Place $700,000 at 3% interest. The first <br /> interest payment starts in December, 1996, and lasts until the principal is paid, currently 2005. <br /> They intend to ask for the following from the City: <br /> 1) An inducement resolution to refund the bonds. They have a window of opportunity to <br /> • refund the bonds between March 1 and May 1. A hearing will have to be held on this. <br /> The Council, if they elected to do this, could call for the hearing at their February <br /> meeting and conduct the hearing on March 12. <br /> 2) Chandler Place would like to use the $700,000 in the form of a loan or grant in the <br /> refunding issuance. They will submit a proposal by January 30th so the City can <br /> review it at the February 6th Work Session. Mike Miller has requested to be in <br /> attendance at that meeting. I told him I would ask the Council if it would be beneficial <br /> to have him in attendance. (Any thoughts?) <br /> 3) Chandler Place intends to refund the bonds through FHA insurance. The important <br /> thing to remember about that is the property is eligible for treatment as Class 4C <br /> property vs. 4A property, as it is currently considered. 4A property is taxed at a rate <br /> of 3.4% and the tax increment is about $240,000 per year. 4C property is taxed at <br /> 2.3% and it would bring in about $160,000 per year. This could only last for 15 <br /> years. You should be advised that they can do this even if the City does not agree to <br /> offer an inducement resolution. They are planning on adding about 44 units at a cost <br /> of$3 million. Chandler Place intends to contend that this expansion will more than <br /> make up for the difference in tax rate. Chandler Place is currently valued at $4.2 <br /> million with 120 units. They would like to give rent reductions to the tenants with the <br /> reduced tax rate. <br />