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Regular City Council Meeting Monday, March 09, 2009 Page 9 tennial Gardens was in non-compliance with the affordability regulations for the months of July through November of 2008, but that the violations were deemed "insubstantial" and that no penalty would be levied at this time. Staff further rec- ommended that the letter state that violations were a result of misinterpretation of regulations and poor communication; and that if this or similar violations occur again, upon the City's monitoring and annual review, the City would levy a pen- alty. Mary Ippel, representing the City's Bond Counsel, Briggs & Morgan, was present and addressed the City Council, noting that staff and bond counsel were not rely- ing on interpretation by the developer's attorney via referenced letter; and advised that the issue at hand was not that of compliance, since the developer had admit- ted to that non-compliance; but that the recommendation was based on language of State Statute, and lack of evidence of any deliberate attempt for non- compliance by the developer, and their remedies following being made aware of concerns. Staff recommended that, while not recommending a penalty, the letter be held un- til reimbursement by the developer of the City's legal fees related to this issue. City Attorney Scott Anderson, reiterated the language of State Statute 474A.047, Subd. 3 related to the penalty provisions; and the proposed condition for the letter versus order, is that they reimburse the City's attorney fees. Ms. Ippel, as Bond Counsel, concurred with the City Attorney's interpretation. Discussion included upfront administration fees in the amount of $120,000 paid to the City by the developer for the original tax credit bond filing; and the conserva- tive nature of the total of $1,684 overcharge. by the developer to tenants, and their compensation to those tenants who could be found, based on the developer's mis- interpretation of law. Councilmember Ihlan sought what perspective was taken in concluding that this was an insubstantial violation. Staff provided their rationale for this recommendation, as detailed in the staff re- port, and staff's thorough review of rents paid monthly by each rental unit, the scope of the occurrence and dollar amount. Councilmember Pust noted that the developer was required to provide 38 of the total 190 units in meeting affordability guidelines, with errors made, due to inter- pretation of utility costs, on 31 of those 38 units; opining that this seemed sub- stantial., and the City's need to protect those 38 affordable housing units, and im- pacts felt by those 31 families.