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Mark Ruff, from Ehlers and Associates stated that he has been involved with this project since the beginning and stated that the County is looking to refinance which will save the County . about $10,000 to $15,000 a year. He stated that the County is recommending that the $320,000 be used for the principal amount of debt, which would make the facility break even. He stated that this housing has been set up as affordable, self-sustainable, housing. He stated that the cash can be used to reduce the debt so there doesn't need to be an above average increase in rents. He stated that the City would have access to another $400,000 to use for other projects. He stated that the County is trying to move this along quickly to take advantage of the low interest rates, so they will be asking for Council approval of a new Joint Powers Agreement in April with the bond sale to be held in June. He stated that the County is also working on a similar refinancing project in Ham Lake. Karen Skepper, Anoka County HRA, stated that they took a strong look to make sure the projects were able to have adequate cash flow and noted that if the equity contribution is not made, rents could be increased as a way to make up the difference. She stated that they may also have to pull on the levy funds to offset the rent costs. Finance Officer Lund asked Ms. Skepper to explain the 5-year operating deficit in relation to the priority lists. Ms. Skepper stated that in exchange for the County assuming the debt, they are asking for a 5- year operating deficit agreement from the City. She stated this means, that if there is a shortfall in operating funds, the City will be required to cover the shortfall. She stated that in exchange for this, the County would agree to continue to give Ramsey residents priority for the same 5- year time period. She stated that because this is a healthy project, she does not anticipate any budget shortfalls. Councilmember Look asked if they anticipated any competition from the new project going in across the street. Ms. Skepper stated that, at this point, Savannah Oaks is full with a waiting list. She stated that traditionally, their rents have been slightly below market, so while there may be a few people that choose the new building, she does not think it will cause vacancies. She stated that Ramsey has a large fund balance accumulated from the HRA levy which is why the County thinks this would be a good use of funds to buy down the debt. Councilmember Look asked if the County would be renewing the bonds. Mr. Ruff stated that they are refinancing the existing bonds, but not extending the terms. Councilmember Elvig stated that he appreciates the County trying to keep rent costs down, but feels something isn't adding up. He stated that the City also levies HRA funds and the County has an HRA levy. He stated that "cash is king" and if the City doesn't have cash, it will not be able to bond for other projects. He stated that the RTC project is struggling and the City is trying Finance Committee lMarch 25, 2008 Page 20f 5