5.1. SR 02-05-2007 - Laserfiche WebLink

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City of Elk River REQUEST FOR COUNCIL ACTION Agenda Section Meeting Date Community Development February 5, 2007 Item Number 5.1. Prepared by Scott Clark, Community Development Director Reviewed by Item Description Dominium Corporation Request for Housing Revenue Bond for Birchwood Court A artments 1227 School Street Introduction The Dominium Corporation, under the ownership of Elk River Leased Housing Associates II, LP (Elk River Housing), is seeking authorization for the City of Elk River to issue a 30-year tax exempt housing revenue bond in an amount up to $2.5 million. These funds will be used as proceeds for the purchase of the 51-unit Birchwood Court Apartments (formerly Park Pointe) located at the southwest corner of School Street and Proctor Avenue. The City's issuance of these housing revenue bond will also enable the new owner to receive housing tax credits which will be converted to project equity. The bond and credits place a cap on income and rent for the project which is illustrated on page 2 of the attached Dominium letter dated January 16, 2007. It should be noted that this apartment complex was originally financed with tax credits, and as such, had similar limitations. The applicant is requesting that the Council consider an inducement resolution which indicates a preliminary intention to start the process (and allows the applicant to start the tax credit process). In addition, the resolution establishes March 5, 2007 as the date for a statutorily required public hearing. Also included for Council consideration is a "Program for Financing a Multifamily Rental Housing Development", which essentially is a summary of how proceeds will be used, rent standards, and where authorization of the bonds are derived from. Discussion Staff is recommending this issuance base on the following: Elk River Housing will infuse a minimum of $671,000 into rehabilitation efforts including boilers, interior and common area improvements. This is in addition to approximately $300,000 of recent improvements for steel siding, roof and new decks. The combined total of $971,000 equates to almost $16,000 per unit of rehabilitation, which is substantial for a complex of this age (built in approximately 1990). Rent "restrictions" on this property is not a concern as the maximum allowable rent is substantially higher than Elk River's normal rental market value. Page 2 of the previously cited letter illustrates that current rents will be increased, depending on the type of unit, and more important to the point of rental rates, proposed rents will be $250 to $300 under the maximum allowed by the restrictions placed on the property because of the bond sale. S:\Community Development \Scott Clark \Dominium Project \Request Council Action dominium.doc