8A, Arden Village Workforce Housing

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Letter of Suuport Review In preparation for a new housing tax credit application to MHFA, SCI submitted an updated letter of support in May. FPAC reviewed the revised letter at their May 6, 2010, meeting. FPAC did not recommend a particular course of action but stated that the request for up to $575,000 was an appropriate number for the gap �nancing request. The $575,000 request was an increase from the $400,000 request made in September 2009, which is related to SCI's proposal to sell the communications tower to the City. While SCI would technically donate the tower to the City for $1 and write-off the tower as a donation, the loss of revenue from the tower increased the funding need for the project. However, the increased support from the City adds points to SCI's housing tax credit application and increases their likelihood of being selected. If the City accepted SCI's tower sale proposal, the City could fund the complete $575,000 request through a combination of TIF, fee waivers, or direct payment. Under this scenario, the City would also take ownership of the tower. When the new letter of support was reviewed by FPAC and the City Council, the preliminary TIF calculations indicated that the project would generate approximately $184,000 over 15 years. It is important to remember that the TIF calculation was an estimate because a complete analysis will not be completed until 2011 prior to the start of construction. Based on SCI's $575,000 request, the remaining gap after TIF would be $391,000. The remaining $391,000 could be funded by a combination of fee waivers or payment from the City. On May 10, 2010, the City Council reviewed the revised letter of support from SCI for their housing tax credit application to MHFA. At that time, the Council expressed concern regarding the increased funding request from $400,000 to $575,000; the discrepancy between the funding request and estimated TIF generation; and the potential impact of a HOME grant from Ramsey County. Furthermore, the request for support had become intertwined with the sale of the tower, which made it dif�cult to fully analyze the request. Due these reasons and since the tower appraisal was expected by the end of May, the letter of support was tabled. The tower has since been valued at $500,000. Updated Preliminary TIF Review The City's financial consultant has revised the preliminary TIF analysis since the May meeting. The revised calculation indicates that the project would generate $201,000 over 15 years. Again, this is a preliminary calculation and the �nal number will not be determined unti12011. The TIF number currently does not include any adjustments for inflation over the life of the TIF district. Additionally, SCI is considering opting out of the 4d tax classification, which is a reduced tax level for workforce housing. Either of these adjustments could increase the amount of TIF generated by the proj ect. These decisions would be made during the complete TIF review in 2011. City of Arden Hills City Council Meeting for June 14, 2010 IlMetro-inet.uslardenhillslPlanninglCommunity DevelopmentlHousinglAffordable HousinglArden Village - Sand Companies106141 D- CC Memo - Arden Village - Sand Companies.doc Page 2 of 4