2006-11-21_Agenda - Laserfiche WebLink

Home

1 Memo To: Mayor and City Council From: Chris Miller, Interim City Manager Cathy Bennett, HRA Executive Director Date: November 20, 2006 Re: Public Policy and Financial Issues Relating to the Petiti on Filed by Westwood Village I Introduction At the October 9, 2006 City Council meeting, th e Council received a petition from the property 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 facilita ting City-financed improvements to the housing units. A public hearing re garding the issue have been schedule for December 18 th . Cathy Bennett, Executive Director of the HRA ha s provided a summary of the public policy issues regarding providing assistance for housi ng improvements and will be in attendance to address these public policy issues as well as answer questions rega rding 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 issu es of providing City fu nding for the project and other public financing policy issues. Financing Plan Summary The proposed financing plan calls for the City to provide a capital contri bution to the town home association via the HRA. The City would then place an assessment on each of the 47 units that would be equivalent to the amount of the contri bution plus interest. This is similar to the mechanism used to assess property owners for st reet improvements. With traditional street assessments, the City would borrow money (iss ue bonds), make the capital improvements, and assess property owners in a manner that is suffici ent to pay off the bonds. With this financial arrangement, the City’s existi ng cash reserves remain untouched. Financing Strategy – Housing Bonds The City could take an appro ach similar to street improvements with a housing improvement area. This would entail issuing housing reve nue bonds, making the capital contribution, and then assessing the property owners. However, the proposed project will re quire 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 issu e bonds of this size. If, however, the Westwood Village project was in corporated 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.