Agenda - Council Work Session - 05/30/2006 - Ramsey Town Center

Home

Ramsey Town Center Apartments Proposed by Anoka County Community Action Program, Inc. and J Johnson Inc. Financial Participation Request April 27, 2006 Early in the process of developing an affordable project a developer estimates the Total Development Cost of the project and the likely sources of funds. I have provided a Projected Statement of Sources and Uses. As it is early in the development process for this project none of the funds are committed. At the same time funds are seldom made available until sufficient funds are committed and available to develop the project. So when the City and County commit the HRA Levy funds, the actual expenditure or delivery of the funds to the project isn't made until the other funds are also available and expended at a closing typically associated with the start of construction. The process of developing affordable housing involves applying for numerous grants, loans and financial participation from both the private and public sector. Minnesota Housing Finance Agency (MHFA) is the primary source of the public participation. An allocation of federal Iow income housing tax credits being the key source of funding. A for profit equity partner that invests in the project in order to take advantage of the income tax benefits is the primary private sector participant, Banks and insurance companies are typical investors. Twice a year MHFA conducts a Request for Proposals (RFP) that involves MHFA funds and the funds of numerous other organizations: Metropolitan Council, The Family Housing Fund, the federal government, etc. Competition is keen for these funds with more than three times as many requests made than funds are available. As a result, MHFA has created a point system to analyze requests that awards points to a project if it has financial support from sources outside the RFP, if it meets various affordable housing goals, and based on a project's feasibility. If the City participates in the areas the developers are requesting, points will be received in the MHFA RFP process making it more feasible that the developer's proposal will be awarded financing by MHFA and other participants in the MHFA RFP. The following are areas of financial participation being requested by the Developers of the City. 1. Anoka County dedicated City HRA levy in the amount of $400,000 by a 0% interest loan. 2. Pay as you tax increment financing for the affordable rental units in the amount of 50% of the housing/residential real estate tax liability for a period of 25 years. 3.25% waver of impact fees: building permit, SAC and WAC, and park dedication for the affordable rental units. 4. Agree to act as intermediary for a Metropolitan Council Liyable Community housing grant. 5. Develop a shallow rental subsidy for 10 years from a port.ion of the HRA levy funds. 6. Use the proceeds of the Metropolitan Councils Livable C°mmunity grant or a portion of the HRA Levy to acquire the project land and give it to the project.