12-19-1991 HR MIN - Laserfiche WebLink

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Housing and Redevelopment Authority Minutes Page 2 December 19, 1991 • 1. Acquiring the blighted site which would be held in inventory until the developer received Farmers Home funding in FY93, or; 2. Submitting an application as a "non-profit" entity wherein the HRA would construct and own the facility as a co-general partner with Metcalf and Larson. At this time, Chairman Hinkle recognized Bradley Larson, an attorney with the law firm of Metcalf and Larson, Monticello, Minnesota. He reviewed with HRA Commissioners an earlier project that was proposed with Guardian Angels on the Guardian campus. Because of a State mandate that limited the project size to 24 units or less, both Metcalf and Larson and Guardian Angels decided against developing on the campus. Metcalf and Larson then began reviewing other potential sites with City staff and ultimately determined that the site at Holt and 4th Street was a good location because of its proximity to the medical clinic, post office, nutrition center and downtown Elk River. Mr. Larson also clarified the difference between his proposed independent living project and a "congregate care" project that Guardian Angels is currently proposing with the Department of Housing and Urban Development (HUD) . At this time Mr. Larson handed out a site plan of the proposed 23 unit apartment project on the redevelopment site. He indicated that with • the two older homes on the site, the applicant needed tax increment financing to create "a level playing field". The facility is designed for low to moderate income seniors. That definition includes persons over 62, persons that are disabled, or persons that are handicapped. Rents on the project range from $285 to $305 per month. The rent includes heat, sewer, water and garbage service. A tenant would pay for electricity. The units are one bedroom units with an approximate size of 585 square feet to 600 square feet per unit. The project would contain an elevator and a coin operated laundry room. In addition, Farmers Home requires a common area that is open for small groups and tenant gatherings. Mr. Larson indicated the average age of the person entering a project of this type would be 72 to 73 years of age. The Farmers Home mortgage would be a market rate interest of about 9%. However, if the project were rented to income qualified tenants there would be a "interest credit agreement" that allows a reduction in interest to reduce the rent on those units that qualify. By renting to income qualified tenants, the interest rate then goes from 8-1/2 or 9% to 1%. This lower interest rate then reduces the interest rate on the project to allow for the units to be rented at approximately $285 to $305 per month. Mr. Larson then explained that it is not likely that the Elk River project would be funded during fiscal year 1992. As a result of changes in the ranking criteria, it is unlikely that a project of this type and kind would be eligible in the future. Mr. Larson indicated 4111 however, that the Elk River project would likely be the first project funded during 1993. Another funding option is to wait until mid August when a pooling of funds occur, wherein other states return unused funds to Washington for disbursement to other states. Mr. Larson explained