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Attachment A <br />in effect become an investment of the City funds. From an investment <br />standpoint, the council should consider: <br />All of the City's existing investments are federally guaranteed or <br />insured against the loss of principle. A cash loan to a town home <br />association would not carry this type of protection. <br />However, the assessment would become a lien against the property; <br />and would be collected just like ad valoram taxes which are not <br />subordinate debt. <br />In addition, the Council could apply a higher interest rate than they <br />are currently collecting on their typical public investments to receive a <br />higher return for the small risk incurred as part of the project. <br />c. Private Bank Financing — HRA staff is currenny exploring the option to <br />assist Westwood Village I with a more favorable bank financing. <br />Typically, banks are reluctant to loan funds to an association as the <br />collateral (real estate) is not owned by the association but rather the <br />individual homeowners. However, with the aging of townhomes and <br />condominiums, banks are beginning to reexamine their position. <br />However, this may not be apparent yet in Minnesota. <br />Option —Meet with area banks to determine their openness to <br />provide favorable financing using other national models. The private <br />lending risk could be reduced with a type of government guarantee. <br />This option should be explore over the next several months. <br />4.1 Are the Improvements Needed? —City building staff have conducted an external <br />inspection of the property and have the following recommendations: (full report attached) <br />a. The lifecycle of cedar and ma unite siding can be extended through maintenance <br />such as patching, caulking and repainting, however, many of the siding and fascia <br />materials on this project appear to now require excessive repair efforts. These <br />types of repairs have short life-spans as they often do not keep storm water out. <br />This then accelerates deterioration by allowing storm water penetration which can <br />cause more extensive and expensive repairs in the future. Also, allowing areas of <br />rot to remain can attract pests, such as carpenter ants, which can cause additional <br />damage. It is the opinion of staff that the cedar siding and fascia on this <br />project have reached the end of their useful life-cycle and should be replaced. <br />b. Roofing materials on these roofs appear to be of the 15-25 year shingles. Many <br />have reached the end of their life-cycle and should be replaced. Any roofing over <br />5 years old should be replaced at the same time any siding is replaced (no re- <br />roofing permits were found in a search of City permit records). A more durable <br />30-35 year shingle is recommended. <br />BHA Public Hearing (12-18-06) -Page 4 of 8 <br />