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�� �. Memo Date: 11/201Q6 Item: 3. WestwQOd Village I To: Mayor and City Council '� � i �� From: Chris Miller, Interim City Manager ��.� Cathy Ben��ett, HR�. Executive Director Date: November 20,2006 Re: Public Policy and Financial Issues Relating to the Petition Filed by Westwoac� Village I Introduction At the October 9, 2006 City Council meeting, the Council received a petition from the properly owners of Westwood Village I, a 47-unit town home association located at County Road C and Mackubin. The Petition was part of a request for the City to create a Housing Improvement Area for the association for the purposes of facilitating City-financed improvements to the housing units. A public hearing regarding the issue have been schedule for December 1$`�'. Cathy Bennett, Executive Director of the ��°�. has provided a summary of the public policy issues regarding providing assistance for housing improvements and will be in attendance to address these public policy issues as well as answer questions regarding a municipality's ability to establish a Housing Improvement Area per statutory authority. (Refer to attached Information on Housing Improvement Areas). In addition, the memo addresses the financial issues of providing City funding for the project and other public financing policy issues. Financing Plan Summary The proposed financing plan calls for the City to provide a capital contribution to the town home association via the HRlA. The City would then place an assessment on each of the 47 units that would be equivalent to the amount of the contribution plus interest. This is si�nilar to the mechanism used to assess property owners for street improvements. With traditional street assessments, the City would borrow money (issue bonds), make the capital improvements, and assess property owners in a manner that is sufficient to pay off the bonds. With this financial arrangement, the City's existing cash reserves remain untouched. Financing Strategy — Housing Bonds The City could take an approach similar to street improvements with a housing improvement area. This would entail issuing housing revenue bonds, making the capital contribution, and then assessing the property owners. However, the proposed project will require approximately $1 million, which is relatively small for new bond issues. Generally speaking, the issuance costs for a bond of this size is relatively high compared to a much larger issue. As a result, the City typically does not issue bonds of this size. If, however, the Westwood Village project was incorporated into a much larger housing bond issue — say $3 million or more, then the issuance costs become less of a factor, and the financing package becomes more favorable.