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2009_0817_Packet
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Attachment E <br />April 22, 2009 <br />Mr. Thomas Paschke <br />City Planner <br />Planning and Zoning <br />City of Roseville <br />2660 Civic Center Drive <br />Roseville, MN 55113 <br />RE: Applewood Pointe of Roseville at Langton Lake <br />Dear Thomas: <br />Following up on our recent conversation regarding dividing the Cooperative into two <br />phases, I have attached floor plans reflecting this approach. I should also have a <br />revised colored site plan and rendering of the building(s) next week. I will forward these <br />to you as they are completed. <br />We have been struggling with two major issues with respect to not only this project, but <br />also other Applewood Pointe communities that we are pursuing. First, the economic <br />climate and corresponding poor housing market has resulted in a reduction of solid <br />buyers willing to market their homes and commit to Applewood Pointe. The interest <br />remains very high, but there is a concern that homes will remain on the market for a <br />prolonged period of time and/or bring in much lower than expected proceeds. This has <br />resulted in a significant number of reservation holders which remain interested, but are <br />not yet willing to commit to purchasing a home at this time. <br />The second major issue is financing. As you are aware, we have used 40-year Master <br />Mortgages guaranteed by HUD. In the past, HUD required a 50% pre-sale level prior to <br />approving and funding the project. As of late last year, they have increased this <br />requirement to 70%. At 95 units, this changes the pre-sale target from 48 units to 67 <br />units. This is a tall order in a strong economic and housing environment, but almost an <br />impossible task in the current climate. <br />We don't see either of these conditions changing significantly this year to the point <br />where we would be able to meet this threshold. This would mean that the project could <br />not get started until 2010 at the earliest, and there is certainly no guarantee unless <br />things improve that we would meet the requirements in 2010. The two other options we <br />looked at included reducing the size of the building and the current phased approach <br />which we are now pursuing. Given the cost of the land and other fixed expenses, <br />reducing the size of the building cuts too deeply into the potential profit making the <br />project very questionable from a feasibility standpoint. Phasing the project maintains the <br />profitability and results in a target pre-sale level for each phase that we feel is <br />obtainable. <br />Page 1 of 3 <br />
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