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Mayor Craig Klausing February 26, 2009 Page 2 This result is consistent with the policy underlying the rent limitation in Minnesota Statutes, which is affordability to residents. The definition of "rent" focuses on what the resident has to pay out of his or her own pocket. If the opposite were true, and the statute were to also include as "rent" payments by others who are not residents, that {i) would do nothing to help affordability to residents, and (ii} would hinder what the various state or federal renta� assistance prsgrams are designed to do. In that case, would the owner, for example, have to refuse to rent FMR units to Section 8 voucher holders? Or would the owner first have to negotiate a lower voucher amount with HL7�? One can quickly see how such a statute would create conflict between the FMR requirements in Minnesota statutes versus the federal or state rental assistance provider. We have also been asked to interpret an additional sentence appearing in Minnesota Statute Section 474A.047, Subd. 1(a)(2}, as follows: "The rental rates of units in a residential rental project for which project-based federal assistance payments are made are deemed to be within the rent limitations of this clause." Our interpretation of this sentence is threefold. First, this sentence by its terms has no direct application to this project because no project-based federal assistance payments are being made to the project. Second, as a policy statement, it appears to be entirely consistent with the policy we describe above, which is noninterference with other governmental programs designed to assist tenants to pay for housing. Third, it seems to indicate deference to HUD. As if to say, "If HUD says the rent is affordable, we won't impose a harsher standard." We don't think it's appropriate to interpret this sentence as saying "federal assistance payments that are not project based are deemed not to be within the rent limitations." This would be inconsistant with the plain words in the definition of "rent" in the statute and would make nonsense of the policy described above. As a separate matter, the owner's consultant has made the owner aware that, most likely due to a computer error, rent rolls on which we based our conclusions as to June 2008 in some cases stated increased rent levels which were not actually paid by tenants unti130 or 60 days later. The data which we have now been provided and upon which we rely for purposes of this letter has been verified with actual tenant ledgers for the relevant periods. In our October 31, 2008 letter, we had concluded that the project was in compliance with the Minnesota FMR requirement through May 2008. Be1ow is a chart which summarizes our conclusions from June 2008 (revised) through the remainder of the year. We found the following numbers of units that were rented at or below the FMRs (out of 194 total units), as described above using only amounts paid by the tenants: _