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<br /> '-'..J.. =- "_'~'--' '-'~"_'''-- ,_", '"_'~"'--' -'.___ . , ,.-,,--,--, .. " .. - -. . . --- <br /> 4. Tax Increment Financing, The Project would qualify as <br /> . a housing district under the Tax Increment Act and the <br /> Developer is requesting 90% of the tax increment <br /> generated over 15 years (13 tax increment years). The <br /> tax increment would most likely be assigned to the <br /> trustee of the bonds. As in 3 above, utilizing the tax <br /> increment enhances the cash flow which allows for a <br /> larger mortgage and a better debt service coverage. <br /> MUNICIPAL CONCERNS <br /> Several municipal concerns which must be addressed include the <br /> following: <br /> 1. Seniors Only Project. The City is providing the <br /> assistance and forgoing the receipt of property taxes for <br /> 13 years and reduced taxes thereafter in order to provide <br /> affordable housing to lower income seniors. The City <br /> must have assurances that the Project will be maintained <br /> for that purpose. One of the earlier Cottage Lifestyle <br /> projects in stillwater apparently did not have that <br /> restriction and reportedly some younger families are <br /> renting in that project. we can probably require various <br /> . restrictions or covenants in the deed and in the <br /> authorization for the issuance of bonds. The pledge of <br /> tax increment and the redevelopment contract can all be <br /> approved with various conditions and restrictions, Some <br /> further discussion on this point is necessary. <br /> 2. Quality Control. The construction cost per unit is <br /> $35,000, while the overall project cost per unit is <br /> .$48,889. These are modest per unit costs and the City <br /> must assure itself that it will be authorizing a well <br /> constructed unit. The project that would be the most <br /> similar to the one proposed for Arden Hills is in North <br /> St. Paul, which we understand is the most recently <br /> completed Cottages project. The City of North st. Paul <br /> was positive about the Developer and only a few changes <br /> were required in the construction plans, <br /> 3. Tax Increment penalties. with the 1990 amendments to <br /> the Tax Increment 'Act, cities are penalized when they <br /> create tax increment districts by having their Local <br /> Government Aid and Homestead Credit Aid reduced by the <br /> state. It is our understanding that Arden Hills does <br /> not receive either one of these aids and as a result <br /> there would be no deduction, However, we must continue <br /> . to be aware of the potential problem and design our <br /> documents accordingly. <br /> 3 <br />