2009_0209_Packet - Laserfiche WebLink

Home

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