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Minutes of Regular Council Meeting Monday, November 28, 1983 Page Three in te res t rate. The 30 years proposed is most eusto~ary. Weir said that in some ins tances, after a 10-year pe riod, the credit enhancing device is reviewed, and perhaps renegotiat~d with the borrow,ing party, and causes the project to be reevaluated and refinanced in some fashion. Hicks noted that, in the August summary of IRBs issued by the State . Department of Energy, only about 1/3 were for 30 years - many we re for 15 years. . Weir said in some large corporations, building manufacturing plan ts , the term is as 11 t t Ie as 7 years; the circumstances are di ff e ren t f rom ours in terms of the financial consequence to the tenant. as opposed to ourselves as owner of the prope rty. Hicks asked Mr. Buegler if his analysis of the financial package indicates the project is "reaso,nable" only with IRB's or is it reasonable with conventional financing? Buegler said that at the present time, new office projects coming on strea~ are those co~peting with pro,1ects built in years past, in a different' construction environment; today the viable projects he sees are those that have subsidy in the form of LR.B. financing. In order to build something today to give a developer an incen ti ve to build, you almost have to have tax-exempt financing. That is quite c us t OJlla ry at the moment; estimated about 50% of office projects today have this type of financin g. A letter from Northland Mortgage Company was distributed to Council which was written at the request of Woodbridge Properties, Inc. informing Council of its efforts in pursuing ~ong term, permanent financing for the three office building ~rojects in Arden H~lls; noting they have been unable to secure permanent financing on te rms that would make the proje~t feasible (13%~13~% interest) . The letter noted that the public sale of revenue bonds may result in an effective interest ra te which will permit the owner to charge lower rent to tenan ts . It stated that, as, mortgage bankers, they are most concerned about the overall project feasibility; they see no way that long term, permanent financing is available to t'his proj e ct today on an affordable basis without IRBs. Hicks asked Mr. Buegler if projects today need IRBs to m.ake them feasible; will we be facing a similar problem in five years or so? What will make those developments economically comparable and competitive with projects financed: with IRBs today? Buegler explained that changing conditions are bound to occur. I t depends on the business cycle, vacancy rates of off i ce buildings; said many things come into play; noted tha t today in St. Paul the . audit enhancer is tax increment financing, as oppose'd to IRBs. Various types of proj e c ts today need something to get them going. Buegler said, as we get the urban sprawl, Arden Hills ma.y have to look at tax increment financing. Mulcahy asked Buegler to expand on the credit worthiness of Woodbridge . Properties, Inc. I note d the Counci I wan ts a project that will survive; asked if the project is as good as we are goin.g to find in the fo reseab Ie future? Buegler said he would not be here in support of the applicant if he had any doubt that he eould do what he proposes to do. Buegler aaid it has been several months since he reviewed the Woodbridge financial statement; things do change; stated that, ~n his mind, the project is doable.