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~ ( II p I~'J~ September 3, 2008 Mayor Craig Klausing City of Roseville 2660 Civic Center Drive Roseville, MN 55113 Re: Centennial Commons Deaz Mayor Klausing: ~3PP Housing Preservation Project A Public Interest Law Firm We represent residents of Centennial Commons Apartments in Roseville. We are responding to your invitation to contact you about steps which the City might take to address issues related to the issuance of tax exempt debt by the City for this project. As discussed below, there aze two vehicles which provide the City with the authority, and the responsibility, to address the issues discussed at the August 11 City Council meeting: the regulatory agreement and the statutory requirement that the City find the amount of low income housing tax credits requested to be necessary for the financial feasibility of the project. On behalf of the residents of Centennial Commons, we ask that you take the steps outlined below to investigate and. address the rent increases, imminent lease terminations, and interference with resident access to community facilities imposed by the owners as a direct result of the City's issuance of bonds for the project, and to set up a meeting with residents to discuss these issues. Since receiving tax exempt fmancing for purchase of the project from the City of Roseville and applying to the MHFA for low income housing tax credits, the owner has: raised rents in the range of $75 to $150 per month, including on units for which no rehabilitation work has been done; terminated the tenancies of large numbers of residents, many of them long term residents, without cause; and refused to permit a community facility to be used for a meeting between residents and public officials to discuss these issues. It is difficult to see how the public interest has been served in any way by the use of scarce public resources for this project. The long-term limitation of the project to rents at 60% of area median income, which the owner offers as justification for the project, is meaningless as those rents greatly exceed market rents in the azea. The owner's tax credit proposal indicates 2-bedroom rents of $825; the 2-bedroom rents permitted at 60% of area median income are currently $1,092. It is not difficult, however, to see how the owner is benefited: the tax credit application to MHFA indicates a net (non-deferred) developer fee of $1,217,500. Had the owners simply purchased this property, they would have had to put up equity and tried to recover it from rents and appreciation. Instead, they utilize scarce public resources to no public purpose and receive a $1.2 million payment from investors buying an interest in the tax credits. Although the rents are well under the federal rent limit for projects financed with tax exempt debt, it is not clear that the rent increases leave the project in compliance with 570 Asbury Street, Suite 105 • St. Paul, MN 55104 • tel: 651.642.0102 • fax: 651.642.0051 Dedicated to expanding and preserving the supply o,~afjorda6le housing in Minnesota and nationwide