Agenda - Council - 02/24/1998 - Laserfiche WebLink

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Ramsey Senior Housing Market Study January 1998 This absorption rate assumes an aggressive, professional marketing campaign will be conducted. The project should open in the spring to take advantage of peak leasing season, otherwise, the absorption ma5' be extended. Attractive brochures with floor plans, building layout and a list of amenities and features as well as the location of local attractions is required as part of the campaign. A housing professional experienced in the senior housing field should be available during the initial lease-up of the building to make presentations to senior clubs, community organizations, and local churches, and to make contacts with key referral sources during the construction phase of the lease period. Low Income Seniors It is estimated that there are approximately 24 low income senior households with short term interest (three year) and eight low income senior households with immediate interest (one year) in the Market Study Area that cannot afford to live in the senior housing units that are proposed. Unfortunately, at this time, it is not feasible to construct rental units that can be leased at lower rates because of the elimination of state and federal programs. However, it is important to monitor various funding sources and to utilize any current funding sources for rental assistance such as the Section 8 and Voucher Programs to assist low income seniors. Essential Function Bonds The Anoka County Housing and Redevelopment Authority is assisting municipalities with the development of senior housing with essential function bond financing. A summary of essential function bond financing follows. The changes made by the Tax Reform Act of 1986 significantly reduced the incentives of the private sector to develop multi-family rental housing. The Tax Act, coupled with the prohibitive multi-family real estate tax costs in thc State of Minnesota, make it financially infeasible for the private sector to develop affordable housing, despite a need for housing to maintain and expand economic development. In response to this dilemma, many communities have taken a pro-active approach to providing the housing, which the private sector in more economically favorable times, traditionally developed. Housing Authorities throughout Minnesota have utilized Essential Function Bonds to finance the development and construction of affordable housing within their communities. Essential Function Bonds are available to certain public agencies such as an Economic Development Authority or Housing and Redevelopment Authority as tax-exempt financing to acquire or develop affordable housing. The primary advantages of Essential Function Bonds are: Because the bonds will be tax-exempt for federal and state income tax purposes, lower interest rates will be obtained on the financing. Because the bonds are Essential Function Bonds, the interest paid is not a tax preference item included in the calculation of the bond holder's alternative minimum tax, again permitting a lower interest rate on the financing. 3. Essential purpose bonds are not subject to private activity bond volume limitations. 4. Because the Authority is the owner of the development, it will make payment in lieu of real estate Community Partners Research, Inc. 41