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2009_0209_Packet
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Department Approval <br />� �.�,c� <br />�. <br />Item Description: <br />BACKGROUND <br />l�'�, <br />Jy <br />REQUEST FOR COUNCIL ACTION <br />Centennial Gardens Apartments Update <br />Date: 02/09/2009 <br />Item No.: 13.a <br />City Manager Approval <br />� / <br />In June of 2007, the Roseville City Council authorized the issuance of t�-exempt bonds for Centennial <br />Gardens Apartments in the amount of $12M to finance the acquisition and renovation of the buildings. <br />The tax-exempt bonds are be considered "conduit financing" and have no fiscal impact on the part of <br />the City. All of the costs for debt issuance were paid by the applicant. <br />In August 2008, the City Council discussed concerns regarding rent increases and tenant not having <br />their leases renewed that occurred as part of the rehab of the apartments. In the fall of 2008, there were <br />several letters from Jack Cann of the Housing Preservation Project regarding the project's violation of <br />state statutes governing the use of the t�-exempt bonds. Specifically, Mr. Cann alleged that the project <br />did not meet the minimum threshold for providing affordable rents for at least 20% of the units since <br />the developer failed to include utilities in their calculation of rents when determining the fair market <br />rent. <br />Upon review of Mr. Cann's assertions, the developer's attorney recognized a mistake was made in the <br />calculations. Subsequently, the developer reduced the rents to get into compliance with state statutes <br />and reimbursed the tenants that were overcharged. <br />Councilmember Ihlan requested that staff bring forward an update on this matter to the February 9, <br />2009 City Council meeting. Staff has prepared this report to give the City Council an update and plan <br />on discussing this matter more thoroughly at the March 9th City Council meeting. <br />DISCUSSION <br />Minnesota State Statutes 474A.047 describe the requirements that projects must adhere to if they are <br />using Residential Rental Sonds. One of the requirements is that at least 20% of the units do not exceed <br />the area fair market rent. Section 474A.047(3) discusses penalties: <br />474A. 047 Subd. 3.Penalty. <br />The issuer shall monitor project compliance with the rental rate and income level <br />requirements under subdi vision 1. The issuer may issue an order of noncompliance if a project <br />is found by the issuer to be out of compliance with the rental rate or income level requirements <br />under subdivision 1. The owner or owners of the project shall pay a penalty to the issuer equal <br />to one-half of one percent of the total amount of bonds issued for the project under this chapter <br />Page 1 of 2 <br />
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