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HomeMy WebLinkAbout1988-06-23 Applicant Ltr to Mayor & Council • • 'RECEIVES 1 2 4 lggg Dunbar- Herman Development Services, Inc. June 23, 1988 cT�' Mayor and Members of the City Council City of Oak Park heights / ``c 14168 57th Street North Oak Park Heights, MN 55082 -2007 RE: Proposed Washington County JIRA Project Dear Mayor and Members of the City Council: In anticipation of the public hearing on the proposed Washington County (lousing & Redevelopment Authority project, I wanted to provide you with a better description of the project and the nature of the Housing units we are proposing to construct. As you know, the 1986 Tax Reform Act eliminated many of the benefits which generated multifamily apartment construction in previous years. Indeed, in Washington County, there has been almost no new multifamily housing constructed in the last two years. The exceptions to this have been a few projects which continue to have 1985 Tax Exempt Housing Revenue Bonds. Oak Park Heights has one of such projects, although, to date, the Swager brothers have not yet been able to go forward even with the benefits of these bonds. We understand they may be close to proceeding, however, this project illustrates • the difficulty of constructing apartments in the post 1986 Tax Reform Act period. As a result of these tax law changes, only one Multifamily Tax Exempt Revenue Bond opportunity continued to exist. This is a program termed "essential function bonds" under which a public body, such as the Washington County HRA, can issue bonds for its own ownership of a project to provide needed housing. In recognition of the current difficulty of developing moderate income Housing, the Washington County LIRA has determined to go forward with a program of essential functioned bond housing. They will be building between six and eight new projects and rehabilitating approximately the same number of projects through an issue which is sized at approximately $115,000,000. It is not expected that there will be further essential function bond projects undertaken beyond those in this bond issue in the future. The goal of the program is to construct moderate income multifamily housing in a variety of submarkets within the county. The (IRA will only do this one group of projects so it w:i.11 not be a major market force', and no City would be expected to have more than one of this type of project (with the possible exception of Oakdale, where one may be located at the far southern portion of that city and another at the northern end). The HRA identified a number of sites as appropriate for this housing and with the necessary market demand. Each site was one which was properly zoned by the City for multifamily housing and where the City had expressed an interest in having such housing in the past. In most of the cases, other developments on the site had not been able to go forward because of the tax law changes or the inability to deliver housing to the market place at an acceptable cost. 5353 Gamble Drive • Suite 311 • Minneapolis, Minnesota 55416 612/593 -5014 • June 23, 1988 Page Two The site in Oak Park Heights is one which war, prcviously approved for 144 units. The LIRA development will also be 144 units. The units would be divided amongst one-bedroom, two-bedroom and a limited number of three- bedroom units, in accordance with the recommendations of the market study. Rents on the units would be at moderate income levels which ore not stainable by projects without the county program, but not at .low income levels;. The county believes there is a significant demand for housing for persons with such incomes, above levels which qualify there for direct housing assistance, such as Section 8, but below levels at which they can afford, newer construction such as that in the Maplewood, Woodbury and White Lear areas, where virtually all new grousing construction in the county is currently ocurring. The project we propose is depicted in the enclosed site plans and typical elevation. Units would range from 725 square feet for a one - bedroom, 950 and 1,050 square feet for a two- bedroorn and 1,250 square feet for a three- bedroom. Rents would be between $535 and $740. Each unit would have one heated underground parking space and one surface space. Each unit would also have a washer and dryer in the unit. The exteriors of the buildings would have a gabled roofline, use of brick facing and would otherwise generally be of a character and quality typical of high quality new construction moderate income housing. We believe the projects fill a substantial unmet housing need in Washington County. In addition, they can be constructed immediately, even under current difficult tax laws. The City would he an active and involved partner with the IIRA and the project, under the agreement related to payment in lieu of taxes. 'Thus, if the project operated more favorably than the projections, City tax revenues would increase over those projected and the project would be returned to the private sector more quickly. The LIRA views this as a program which is needed to develop housing immediately, hut which is not going to result in long term HRA ownership of the properties. We enclose a projection of taxes projected under a payment in lieu agreement parallel that being reviewed in Cottage Grove. We also compare these revenues to a 15 year tax increment alternative. In the HRA program, at sale, 100% of taxes foregone earlier will be repaid from any profits at sale. As you can see, the annual payments are substantial and the benefit compared to a project assisted by Tax Increment is very substantial. With respect to site plan specifics, we have attempted to minimize the impact on the topography of the site by avoiding encroachment on the large valley that characterizes the property. Units are aligned so that many have views into this preserved area. Access is divided between Osgood and the Highway 36 access road. In general, i i June 23, 1988 Page Three we believe the site plan is one of high quality and will be a significant benefit to the community. The property is being acquired from the Swager brothers, who have indicated that they do not feel any kind of market rate project, without significant governmental assistance, would be possible on the property. I look forward to meeting with the Council on the 27th and will be pleased to answer questions at that time. In a separate letter, from the Leonard Street & Deinard law firm, you will find a description of the currently proposed payment in lieu of taxes agreement. We believe you will find the currently proposed agreement, which has resulted from lengthy negotiations between the HRA and other cities, to be substantially different from that previously described to the Council. We apologize for the earlier misinformation, which resulted because the HRA had not itself completed its program for payment in lieu of taxes. Thank you for your attention to these matters. Sincerely, 'c John H. Herman Dunbar - Herman Development Services, Inc. .11111 / n k s Enclosure File CC: Sam Griffith Robert Voto Lyle Eckberg LaVonne Wilson David Licht • • • 11 II Var .4 It 11 11 II ° _ II II 03 11 Os II ol ° ors CO mm 01 sr 01. 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