8.1. SR 10-21-2013 - Laserfiche WebLink

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Section 42 low and moderate income housing projects utilize Government financing programs that provide equity and mortgage financing. The equity,consisting of 25%of the project cost, is provided by Syndicators who market the low and moderate income housing tax credits generated by the project to Corporate Investors. The mortgage is obtained through a community bank or through a HUD FHA low interest loan. Section 42 projects have building cost constraints,tenant income limitations and rent ceilings that are imposed and monitored by HUD and Minnesota Housing inance g Agency(MHFA). The 4%tax credit program that we will be utilizing does not require winning a MHFA competition like the 9% program does, but still must adhere to MHFA scoring requirements. Although Section 42 4%tax credit Senior housing projects have not usually been financially feasible in the past,the economic problems facing the housing industry can actually help in this instance because costs can be significantly reduced. The developer that originally sold us the lots is willing to discount them by more than 50%. The subcontractors are able to give us exceptionally good prices because they need the work and the mortgage interest rates are less than 4%,an all-time low. The project also requires TIP assistance to achieve the targeted rents and is actually required by MHFA in order to meet scoring requirements for the 4%tax credits. We have developed 17 one-level Senior projects during the past 20 years including Elk Run Village in Elk River. Six projects have been Section 42 tax credit projects similar to the one we are now proposing. In summary,we are requesting from the City, approval of our proposed Blackhawk Woods Senior Planned Unit Development. We are familiar with the City's standards for building design and products and will meet those standards. The property has already been developed with streets and utilities. Our engineers have designed a development that consists of 84-one-level townhome apartments, plus a clubhouse activity center. We will need tax increment financing approval from the City,which will provide the project with necessary resources to achieve the reduced rents and meet the requirements of MHFA. This would be a pay as you go TIF program so would not require a financial commitment from the City. The existing lot taxes would continue to be paid and in addition,the City would collect 10%annually of the increment amount. A 15 year use agreement with corresponding pay as you go TIF,will insure that Blackhawk Woods remains a Senior Citizen community serving residents with low and moderate incomes. Because there will be no children living in the development,there will be no negative impact on schools or parks. Thank you for considering our proposal. Q p fully, r Roge err! Senior 30, LLC Chief Manager