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Housing & Redevelopment Authority May 2, 2005 Page 3 than 50% of the Sherburne County Median Income, which is currently $77,000 per year. ^ The loan is secured by a subordinate mortgage. The loan is dispersed on a drawdown basis during the construction of the project which must be approved by DEED prior to the disbursement. ^ Management and operation requirements, i.e. that MetroPlains must provide a property manager and that the property will be sufficiently maintained. ^ The agreement includes Federal requirements, in addition to state requirements, to be monitored by Short, Elliot, Hendrickson (SEH) per the Grant Administration Contract the city has with SEH. Commissioner Toth questioned if this property will be subsidized. Ms. Steinmetz stated that the requirement of the grant is that the units must be affordable to households earning no more than 50% of the Sherburne County Median Income and that any details of subsidies would have to be confirmed with MetroPlains. Commissioner Lieser questioned why page 1 of the agreement states that the units must be affordable to renters earning no more than 50% of the Sherburne County Median Income and on page 7 it states that the borrower shall obtain a certification that the tenant's household income does not exceed 60% of the County Median Income. Ms. Steinmetz stated that page 1 relates to the fact that rental rates cannot exceed what is affordable to 50% of the Sherburne County Median Income and page 7 indicates that the tenants can make up to 60% of the Sherburne County Median Income. Conuiussioner Motin indicated that the units have always been referred to as "affordable", not "low income" and that the requirement that the rent does not exceed 50% of the Sherburne County Median Income makes the units affordable but the provision stating that the renters cannot make more than 60% of the Sherburne County Median Income makes the units low income. Ms. Steinmetz indicated that both requirements were part of the original grant application and must remain as part of the loan agreement. Commissioner Toth indicated that he was not aware that these requirements were part of the grant application. He stated that he is fine with the units being affordable but does not want to see them subsidized as the city has had problems with subsidized units in the past. Ms. Steinmetz indicated that it is appropriate for MetroPlains to address the HRA on these issues. It was the consensus of the HRA that they would like to meet with MetroPlains prior to approving the loan agreement. Director of Economic Development Catherine Mehelich indicated that staff will see if MetroPlains is available to meet with the HRA prior to the HRA's joint meeting with the City Council on May 9 and if they are not, they will schedule MetroPlains to come to the June HRA meeting. Chair Wilson questioned if the loan would be paid off when the property is sold prior to the mortgage maturity. Ms. Mehelich stated that it is not the city's intention for the property to be sold but if it is, there is a condition in the development agreement that requires the city to be notified and approve any sale at which time they could require the loan be paid in full.