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Home My WebLink AboutMay 31, 1994 Work SessionCITY OF COLUMBIA HEIGHTS 590 40th Avenue N. E. Columbia Heights, MN 55421-3878 (612) 782-2800 Mayor Joseph Sturdevant Councilmembers Donald G. Jolly Bruce G. Nawrocki Gary' L. Peterson Robert W. Ruettimann City Manager Patrick Hentges NOTICE OF OFFICIAL MF~F~TING Notice ~ hereby ~ven ~t ~ offi~ m~g ~ m ~ held ~ ~e Ci~ of ~1~ Hci~ ~ foHow~ Meeting of: Date of Meeting: Time of Meeting: Location of Meeting: Purpose of Meeting: MAYOR, CITY COUNCIL, AND CITY MANAGER TUESDAY, MAY 31, 1994 7P.M. CITY HALL CONFERENCE ROOM WORK SESSION AGENDA 1. ACCAP Leasehold Cooperative Request 2. City Attorney Contract 3. 1995 Budget Resolution 4. Report back on Fire Pumper Specifications 5. Discuss HRA Staff Consolidation 6. Adjournment The City of Columbia Heights does not discriminate on the basis of disability in the admission or access to, or treatment or employment in, its services, programs, or activities. Upon request, accommodation will be provided to allow individuals with disabilities to participate in all City of Columbia Heights' services, programs, and activities. Auxiliary aids for handicapped persons are available upon request when the request is made at least 96 hours in advance. Please call the City Council Secretary at 782-2800, Extension 209, to make arrangements. (TDD/782-2806 for deaf only) "SERVICE IS OUR BUSINESS" EQUAL OPPORTUNITY EMPLOYER THE CITY OF COLUMBIA HEIGHTS DOES NOT DISCRIMINATE ON THE BASIS OF DISABILITY IN EMPLOYMENT OR THE PROVISION OF SERVICES CITY COUNCIL LETTER Heeting of: Nay 23, 1994 ~GENDA SECTION = ORDINANCES & KESOLUTIONS ORIGINATING DEPARTW~.NT: CITY HANAGER' S APPROVAL JIF. H, ACCAP LEASEHOLD COOP. TAX STATUS BY: P. HENTGES BY: iO: 6. C. DATE: 5-19-94 DATEs ~)uncilmember Jolly arranged a ~g consideration of the Leasehold Cooperative Desisnation of 3932 Central Avenue (Theatre HeiShts ~?artments). As the Council recalls, no effective action was taken on this item at the last B,~eting as a number of motions were not sustained as a result of a 2-2 deadlock vote. At the meeting, ACCAP presented a further clarification on the use of funding obtained from a homestead tax desiKnation for the project. ACCAP emphasizes that many of the hnprovements t.~ be undertaken are items that will be in need of eventual replacement under the City'f- H.~using Naintenance Code. Further, ACCAPexplainedthe financing structure fort he building. Up to this point, the actual sources of funding for the project were not entirely clear to City officials. The basic issue under consideration by the City Council is a finding of fact that the proposed project is consistent with all of the following findings within state law= 1) That the granting of the homestead treatment of the 22-unit apartment building will facilitate safe, clean, affordable housing for the cooperative members that would otherwise not be available absent the homestead desisnation for this property; 2) That ACCAPhas presented information satisfactory to the Columbia Heights City Council shoving that the saving8 8aruered from the homestead desiKnation of the units rill be used to reduce the tenant's rents or provide a level of furnishings or maintenance not possible absent the desisnation; and 3) That the requirements of paragraphs (b), (d), and (i) of H!nnesota statutes Section 273.124, Subd. 6 have been met by ACCAP (see attached copy of State Law); and 4) That the Nayor and City Hanager are directed to enter into a development contract (as attached Exhibit A) regarding the operation of the leasehold cooperative located at 3932 Central Avenue. Iff the Council is uncomfortable with the information or does not understand the hnpact of the project, an'alternative is to refer this matter to work session or essentially take no action on the item until the information is properly presented by ACCAP. Of course, there is some obligation on the part of the City to advise ACCAP as to what information needs to be (:larified. RECOHHENDED HOTION: Hove to waive the reading oft he resolution, there being ample copies available to the public. ALTERNATIVE HOTION= Hove approval of Resolution 94- , Resolution of the City Council of the City of Columbia Neisht8 Granting Homestead Classification to the Property Located at :~932 Central Avenue and Authorization to Enter into Development Contract Regarding the Same. ALTERNATIVE HOTION: Hove to deny homestead classification to the property located at 3932 Central Avenue, as information is ~nadequate. ALTERNATIVE HOTION: Hove to table Resolution 94- , Resolution of the City Council of the City of Columbia Heights Granting Homestead Classification to the Property Located at 3932 Central Avenue and Authorization to Enter into Development Contract Regarding the Same, and refer discussion to work session of Tuesday, Hay 31, at 7 P..H. ALTERNATIVE HOTION: Take no action on the resolution; however, specify to ACCAP what information needs to be further clarified. COUNCIL ACTION: RESOLUTION 94- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF COLUMBIA HEIGHTS GRANTING HOMESTEAD CLASSIFICATION TO THE PROPERTY LOCATED AT 3932 CENTRAL AVENUE AND AUTHORIZATION TO ENTER INTO DE~IOP~NT CONTRACT RF. GARDING THE SAMF_ WHEREAS, Anoka County Community Action Program, Inc. (ACCAP), an experienced nonprofit corporation and real property manager, has purchased a 22-unit apartment building in the City of columbia Heights at 3932 Central Avenue. WHEREAS, pursuant to paragraph (j) of Minnesota Statutes Section 2'/3.124, subd. 6, ACCAP has applied to the City C.0uncil of the City of Columbia Heights to make certain findings with respect to that property now owned by ACCAP. NOW, THEREFORE, BE IT RESOLVED, by thc City Council of the City of Columbia Heights, Anoka County, Minnesota, as follows: That the City Council for thc City of Columbia Heights, after holding a public hearing to determine whether ACCAP, the owner of an apartment building located at 3932 Central Avenue, Columbia Heights, Minnesota, has submitted sufficient evidence regarding whether this property should receive homestead classification under Minnesota Statutes Section 273.124, subd. 6 (j), hereby make the following findings: (1) That the granting of the homestead treatment of the 22-unlt apartment building will facilitate safe, clean, affordable housing for the cooperative members that would otherwise not be available absent the homestead designation for this property; (2) That ACCAP has presented information satisfactory to the Columbia Heights City Council showing that the savings garnered from the homestead designation of the units will be used to reduce the tenant's rents or provide a level of furnishing or maintenance not possible absent the designation; and (3) That the requirements of paragraphs (b), (d), and (i) of Minnesota Statutes Section 273.124, subd. 6 have been met by ACCAP. (4) That the Mayor and City Manager are directed to enter into a development contract (as attached Exhibit A) regarding the operation of the leasehold cooperative of the property located at 3932 Central Avenue. Passed the day of ,1994. Offered by: Seconded by: Roll Call: Joseph Sturdevan~Mayor Jo-Anne Student, Secretary to the Council Mr. Pat Hentges City Manager City of Columbia Heights 590 40th Avenue N.E. Columbia Heights, Minnesota 55421 Leasehold Cooperative Status Theater Heights Apartments 3932 Central Avenue N.E. Dear Mr. Hentges: ! am writing tO request that the City Council re-examine our request fbr the necessary findings to facilitate leasehold cooperative.tax status on the above referenced property. I understand from our conversation that this action could be scheduled for your May. 23, I994 meeting. ACCAP staff will be in attendance to answer any questions at that time. Pat, you raised two (2) questions during our telephone conversation and I. thought a written response might be helpful for you and the Council members. I. Are the proposed improvements ail really necessary at this time? The proposed improvements are designed with a look toward the long term maintenance and condition of this property. We do not want to restrict the worl( to only the immediate pressing problems as this does nothing but bring the building up to minimum livability standards. Our proposal is designed to bring the building to a standard that would reflect positively on the City of Columbia Heights, ACCAP and our tenants. This standard is not possible without the leasehold cooperative status. 2. What will be the disposition of any "profit" from the operation of this building? Any excess operating income will be used to, insure that we can maintain affordable rents,, complete necessary 'and desirable improvements and to egtablish a reserve for replacement fund. As you are aware, the net impact of the leasehold cooperative tax status is that without your AN EQUAL OPPORTUNITY EMPLOYER approval, we will need to reduce our proposed renovation plans by $50,000. The cheapening of this project will be visible at this project on a long term basis. Our contractor is currently on the job and we are proceeding on the net impact of denial from the City of Columbia Heights. If the City Council is open to revisit our request, it would be most helpful and appreciated, but it is important to recogniTe that we have a small window of opportunity to act while we can still effectively modify our construction activities. We are attempting to set up a meeting with the Mayor prior to this Council meetinE. Thank you for your cooperation and your efforts to work together in addressing the needs of our residents. Executive Director PM/ch ANOKA COUNTY COMMUNITY ACTION PROGRAM, INC. I as ifit were homestead I;idence; [.he ad valorem property [t a land lease; and anding the fact that the intervals. [one or more dwellings, I,its, are owned by a cot- [ eh person who owns a occupy a dwelling, or may claim homestead · lng ..~.ntaining several ~ building occupied by 2escription or number, ment under this subdi. ted, nor more than 80 ngs containing several respective units com. subdivision, the cor- '~g a right to occupy a a. ^ charitable corpo- ;e exempt thereunder :h respect to member idential participation ufactured home park 308A, and each per- is entitled to occupy iome.stead treatment t by legal description 'land for each home- I as if it were home- nee; id valorem property .'lure either directly, 8A is wholly owned )n or association. :a with no outstand- O I (eX3) tax-exempt idents ofthe manu- entitling them to g several dwelling ~ting as a nonprofit ~ under which they classification must sessed in the ~rations. g several dwelling fchapter 80D and enis with persons vim occupy a unit in the building and the residency agreement entitles the resident to occupancy in the building after personal assets are exhausted and regardless of ability W pay the monthly m~intenance fee, homestead classification~halI be given lo each unit so occupied and the entire building shall be assessed in the m_~ner provided in subdivi- sion 3 for cooperatives and charitable corporations. Subd. 6. l.easehold cooperatives. When one or more dwellings or one or more buildings which each contain several dwelling units is owned by a nonprofit corporation subject to the provisions of chapter 317A and qualifying under section 501(cX3) or 50I(cX4) of the Internal Revenue Code of 1986, ~ amended through December 31, 1990, or a limited partnership which corporation or partnership operates the property in conjunction with a cooperative association, and has received public financing, home- stead treatment may be claimed by the cooperative association on behalf of the mem- bers of the cooperativ~ for each dwelling unit occupied by a member of the cooperative. The cooperative association must provide the assessor with the social security numbers of those members. To qualify for the treatment provided by this subdivision, the fol- lowing conditions must be met: (a) the cooperative association must be organized under chapter 308A and all vot- ing members of the board of directors must be resident tenants of the cooperative and must..be elected by the resident tenants of the cooperative; /. co) .at!o? must.hav_ a leas rot o pancy or the roperty for B zu the cooperat,ve as=lation, while not in ~.~c~tuj on me l .e.e.e.e~, to pamc~pate materially in the management of the propert , {al ~l~:lUalng material pal'lJci tion ines ' · · Y d supervising a man:~, pa a~ .tablishmg budgets, setting rent levels, and hiring __ .ement -oent, t----(c) to the extent pernutted under state or federal law, the cooperative assodation must have a right under a written a/reement w/th the owner to purchase the property if the owner proposes to sell it; if the cooperative association does not purchase the property it is ofl'ered for sale, the owner may not subsequently sell the property to another purchaser at a price lower than the price at which it was offered for sale to the . coope..rative assodation unless the cooperative as.sochtion approves the sale; (d) a minimum of 40 percent ofthe cooperative association's members incomes at or Iess than 60 '"'me", ~r ........ . must have United ~ ,,,_.,?. ,,, ~ mealan sross_mcome as aetermined by the States Secretary of Housing and Urban Develo ment u · 142id× × ) ofthe nternal Revenue Code of 19S ......... . !der sFt,.o.n 19 . ,, , ,.-- mzwuuco Iarougtl December .9!.. For p.url~.ses o_f this clause, member income" means the incom~_ ,~r {~s~mg at the tune the member acquires cooperative membership; ....... " ..... (e) ifa limited partnership owns the property, it must include as the managing gen- eral partner a nonprofit organization operating under the provisions of chapter 317A and qualifying under section 501(cX3) or $01(c×4) of the Internal Revenue Code of 1986, as amended through December 3 I, 1990, and the limited partnership agreement must provide that the m~n~ ~, eneral · ?~ug g partner have sufficient powers so that it materi- ally participates in the m*,~_gcment and control of the limited partnership; (f) prior to becoming a member ora leasehold cooperative described in this subdi- vision, ~ person must have received notice that (I) describes leasehold cooperative property in plain language, including but not limited to the effects of classification under this subdivision on rents, property taxes and lax credits or refunds, and operating expenses, and (2) states that copies of the articles of incorporation and bylaws of the cooperative association, the lease between the owner and the cooperative association, ~ sample sublease between the cooperative ar, sociation and a tenant, and, if the owner is t partnership, a copy of the limited partnership agreement, can be obtained upon written request at no charlte from the owner, and the owner must send or deliver the materials within seven days after receiving any request; (g) ifa dwelling unit ora building was occupied on the 60th day prior to the date on which the unit became leasehold cooperative property described in this subdivision, the notice described in paragraph (f) must have been sent by first class mail to the occu- pant ofthe unit at least 60 days prior to the date on which the unit became leasehold 273.124 TAXES; LISTING, ASSESSMENT 1096 cooperative property. For purposes of the notice under this parap~ph, the copies of the documents referred to in paragraph (0 may be in proposed version, provided that any subsequent material alteration of those documents made after the occupant las requested · copy shall be disclosed to any occupant who has requested · copy of the document. Copies of the articles of incorporation and certificate of fim~ted partne~xip dudl be filed with the secretary of state after the expiration of the 60-day period unless the chanse to leasehold cooperative status does not proceed; CO) the county attorney of·he county in which the property is located must certify to the assessor that the property meets the requirements of this subdivision; ~) the public financins received must be from at least one of the followin8 sources: (1) tax increment fLuancins proceeds used for the m:quisition or rehbilitation of the buiMinS or interest rate write-dom rehtins to the acquisition of the buildin8; (2) Sovermnent issued bonds exempt From taxes under section 103 of the Internal Revenue Code of 1986, as mended throush December 31, 1991, thc proceeds of which are used for the acquisition or rehabilitation of the buildin~ (3) pros~ms under section 22 l(dX3~ 202, or 236, of Title II of·he National Hous- (4) rental housing propum Funds under Section 8 of the United States Honsin~ Act of 1937 or the market rate family plduated payment mortsaSe proj3mn funds · dministered b), thc Minnesota hous~ fll~nce ~ tho! Lre used for the ·cqu~si~ion or rehabilitation of the buildi~ (5) iow-income housins credit under section 42 of the Internal Revenue Code of 1986, as amended throush December 31, 1991; (6) public financing provided by a local government used for the acquisition or rehabilitation of the buUdinL including sr~lts OF loans From (i) federal community development block pants; (ii) HOME block punts; or (iii) residential rental bonds issued under chapter 474A; or (7) other rental housing pm82~m funds provided by the Minnesota housin8 finance qency for thc acquisition or rehabilitation of thc building; '" (j) at the time of the initial request for homestead classification or of any transfer of ownership of the property, the governi~ body of thc municipality in which the prop- erty is located must hold · public he·FinS and make the followins fmdinss: (1) that thc pa·tin8 of the homestead trutment of the apartment's units will facil- itate safe, clean, affordable housi~ for the cooperative members that would otherwise not be available absent thc homestead desipmtion; (2) that the owner has presented information satisfactory to the Sovernin.~ body showins that thc sari·ss sarnered From the homestead desipmtion of the units will be used to reduce tenant's rents or provide · level of fumishi~ or maintemmce not possi- ble absent the desisnation; and (3) that the requirements of pa~tSraph (b), (d), and (i) have been met. Homestead treatment must be afforded to units occupied by members of the coop- er·tire association and the units must be assessed as provided in subdivision 3, pro- v~ded that any unit not so occupied sludl be classified and assessed pursuant to the appropriate class. No more than three acres of land may, for assessment purposes, be included with each dwelling unit that qualifies for homestead tremment under this sub- division. .- Sub(L 7. Leased haiidinp er hid. For purposes of class I dc~..~insfions, home- steads include: (a) buiidi~s and appurtenances owned and used by the occupant as · lxTmanent residence which arc located upon land the title to which is vested in · pe~on or entity other than the occupam; .. .. CO) all buildings and appuflenanc~ local! upon land owned I~y the oCCUpant ~nd used for the proposes of · homestead together' with the land upon which they ~re located, if all of the following'criteria are me~ '. !(~7 (I) the occupant is (2) the occupant is apl·st the property, (3) the occupant h: and appurtenances; ' (4) the term of the (5) the occupant erty was purchased by: county assessor, o; the. section 273.063, in occupyins thc building Subd. 8. Homestes il~ farm corporation lb under section 273.1. homestead occupied by actively ensaged in Homestead treatment potation or paflnershi~ the number of allowai exceed 12. Co) In addition to~ by corporations or pa~.~ tural land and occuple ensqed in farming on as class 2a property or ~raph Co), but the prol~ land surrounding the h( the use of the dwellin8 be located on it. Subd.' 9. Homestm used for the purpose o the purpose of a home. Any taxpayer mere asSesSOF, Of the asSe~ 273.063, in writing, this subdivision. The that is partially homest stend by June 1 ofay~ their assessment and ta vided in this subdivisi, If homestead class: will chssify the prope~ payable in the followin! this subdivision, which entitled to receive horn 375.192. county no later than ment to file an applica Subd. 10. Real es chased for occupancy a chaser is prevented fro~ by reason of federal m by an~ between the 0£t¥ o~ Co~ Ho~gh~ ('C~C~)~' -a~ Counc~ Commun£~¥ ncc£on P~ogxam~ Znc,, ~ Hinmoo~a non~o~t ~ITNE~SETHt ~, the Developer £~ the owner o= ]2-unit apartment building located at 3932 Cent=al Avonu, in Columbia Height., MAnn, uo= . which ~ . legal description o~ Lots 12, 13 m~d 1.%, Block 62, .Columbia Heights A~nox to Minn~apolil, Anok~ County, M~r.~ooOC~", A~tok~ CotMat~, Ml~oSotu. ~REAS, the Developer purpose o~ providing peroo~ in Anok= County, Minn~o~a. tncom~u ~ha~ need good ~ffo=dabl, housing. WHEREAS, Minnt0ot. ~Cntut~ ~oecton ~3.12~(6) provides that M£nne~ota nonprof~ corporation can receive homestead ~ax =r~atmen~ for a property thnt h~ ~c~oehold coopera~iv= ostablishe~. Th= Developer i ~o~fng to ~htain homestead tax ~eatmen~ under thi, Minn~ot~ otatut~. m.~, Minnesot~ ~atut¢ Sec=ion ~.12~(6) C~) providss th. ~ovarnin~ bo~y of the municipality in which the property i. located must hole public hearing and w~ke ~o=~ain zindingu. ~%?J~, ~hu City has agr~ed thn= it will m ak. t~o~m finding~ ~uruuant to th~ stntut~ if =h~ Developer agree~ =o the ~ullo~ing~ Thac ~e Developer ~ill limit thc housing within ~hi Thac ~heDeveloper wil~ ~iv. ~igh~ oz =i=n~ =~£u, al to Chk ooopora~ivem~mbe~ to puruh~ ~h¢ bu£1~£~ ~ et p=ic. on~O~venient terms. Th=t th~Duvulopar will m ak._ lmprovamanc~ ur r~ducurent~ with th, monit tha~ it ie -~v~ng by ~oooivin~ the NOW, ~~J~, in consideration OE the mutual covenants expr= ed huroin, it i, hereby mgraad ~. follc~.~t i Thm~ tho IMveloper end t~e .C~.t¥ mgree that the eu~fent bec~ ~rn of the o~ t~ ~~at~ve m~ld ~ llmite~ to a ~oup co~et~ng o~ a~ ~rlo~ ~r ~hm age of 50 ~/o~ any ~~ with a ph~iaal That the Developer shall, u parc ~£ tho Mentor ldaoe with ~he e~rat/~ ao~oc&~on ~~ ~u~ tho ~haoo o~ ~ho p~Y ~ ~he ~ro~ ~ur proper~y, Vlus ~he ~st o~ l~r~ts to t~e pro~r~y, pl~ o~er euh deflei~o ~ed by ~e ~veA~r, loom oaoh vteh~a~ ~ the ~el~er. That the Developer agrees that the the rece~p~ o£ houeetead tax treatment reduce rents, and to kemp the property m.s. ln. ta~n. ea 2.n. a high standard. ~pon the written request o~ ~ne City, tile Developer will apply ~ho ~ex percent (50%) to providing add4~Lonal fun_do for renovation and f~£ty percon, t (SOt) to reducing the rent oZ qua~i~ied oen~oro and d~eaBled Thin Agreeumn2 oh~ll be binding on the eucoeeeoro and Besiege of the par~Le0. S~gnod and executed b~ ~he parties here~o on th~e __, ~9~4, CITY: O~[t~Y OF COL~4BIA KEZGH~8 ~tty Cleg~ xt., ACTIOn. PRDGRAM, .: i u ~t~h;'2B01 ~t'AT~ OF ~INN~S0TA ) ) COUNTY OF ) ~TATE OF MINNBBOTA ) COUNTY 0~ THIS INSTRUMENT ~AS DRM~gD BYt ~mJa~, o~z¥ & STE~, LTD. &O0 N~rthtow~ ~nnneial Pl~tz~ 200 Coon Rapi~ S~10var~ Mt~ea~lis, ~ 5543~ THEATER HEXGHTS 1994 Assessed Value of build~ng MaxiJium increase ~n budget pOll~ble Mew r~ova~ bu~e~ v~th Mntud t~on U--hlan~tiOn of ~J~ aerate. X994 mm~&lma~ed ~&xet payable hommmtemd Less additAonaX pa~t to city Hot reduction ~n taxes Avi~l~le for JLddit~onal debt possible with reduced taxes Additional debt possible end Additional reduced rent for meniorm and dimeblmd $328,200.00 $150,000.00 S S0,000.00 $200,000.00 11,421.67 4.278.00 7,143.67 1.410.21 5,733.45 4,985,00 $ 49,850.00 $ 27,940.00 $ 2,520.00 ~ ,,~ ,RNOKA COUNT',' COMn/iUNITY ACTION PROGRAM, INC. I 1201 89th Avenue NE · Suite 345 · Blaine, MN 55434 · Phone 783-4747 · FAX 783-4700 · TTY 783.4724 ~c~ Theater Heights 3932 Central Avenue NE Columbia Heights, MN Proposed Funding Plan May 9, 1994 Expense~ Acquisition Basic/Minimum Rehabilitation Recommended Additions Contingency MAY I ~ 199,~. CITY OF COL.;.,/ ....... ""~:TS $337,000 150,000 45,000 5,000 $537,000 Revenue HUD Rental Rehabilitation Grant Loan MFHA Housing Trust Fund Loan Federal Home Loan Bank Board Loan Anoka County CDBG Loan ACCAP Investment MHFA End Loan TOTAL $ 75,000 50,000 75,000 185,000 22,000 130,000 $537,000 This report is based on our investment of all leasehold cooperative tax savings into proposed building improvements. AN EQUAL OPPORTUNITY EMPLOYER 1201 89th Avenue NE · Suite 345 · Blaine, MN 55434 · Phone 783-4747 · FAX 783-4700 · 'CI-Y 783-4724 May 5, 1994 Mr. Pat Hcntges City Manager City of Columbia Heights 590 40th Avenue N.E. Columbia Heights, Minnesota 55421 Leasehold Cooperative Status Theater Heights Apartments 3932 Central Avenue N.E. Dear Mr. Hentges: I am writing to request that the City Council re-examine our request for the necessary findings to facilitate leasehold cooperative tax status on the above referenced property. I understand from our conversation that this action could be scheduled for your May 23, 1994 meeting. ACCAP staff will be in attendance to answer any questions at that time. Pat, you raised two (2) questions during our telephone conversation and I. thought a written response might be helpful for you and the Council members. 1. Are the proposed improvements all really necessary at this time? The proposed improvements are designed with a look toward the long term maintenance and condition of this property. We do not want to restrict the work to only the immediate pressing problems as this does nothing but bring the building up to minimum livability standards. Our proposal is designed to bring the building to a standard that would reflect positively on thc City of Columbia Heights, ACCAP and our tenants. This standard is not possible without thc leasehold cooperative status. 2. What will be the disposition of any "profit" from the operation of this building? Any excess operating income will be used to insure that we can maintain affordable rents, complete necessary and desirable improvements and to establish a reserve for replacement fund. As you are aware, the net impact of the leasehold cooperative tax status is that without your approval, we will need to reduce our proposed renovation plans by $50,000. The cheapening of this project will be visible at this project on a long term basis. Our contractor is currently on the job and we are proceeding on the net impact of denial from the City of Columbia Heights. If the City Council is open to revisit our request, it would be most helpful and appreciated, but it is important to recognize that we have a small window of opportunity to act. while we can still effectively modify our construction activities. We are attempting to set up a meeting with the Mayor prior to this Council meeting. Thank you for your cooperation and your efforts to work together in addressing the needs of our residents. Sincerely, Executive Director PM/ch ANOKA COUNTY COMMUNITY ACTION PROGRAM, INC. 1201 89th Avenue NE · Suite 345 · Blaine, MN 55434 · Phone 783-4747 · FAX 783-4700 · TTY 783-472 STRUCTURE Theater Heights 3932 Central Avenue NE Columbia Heights, MN May 9, 1994 RENTS WITH NO RENT ORIGINAL REDUCTION RF2qT WITH RENTS AS FROM $2520.00 RENT BUILDING LEASEHOLD REDUCTION PROPOSED WAS COOPERATIVE FROM TAX RENTS PURCHASED TAX SAVINGS SAVINGS 1 BR Unit 375 280 280 Efficiency 300 255 255 1 BR unit, low 375 280 260 income elderly/disabled Efficiency, low 300 255 235 iacome elderly/disabled AlU I=t'~l IAI I'~PPt~JPiTI IIUIT~ I::MPl TO 97822801 Po~ CITY O_F COLUMBIA HEIG_HT$ ~ ...... *'," "~ ' ~~~"'"" AV~::'~i~ '" "'"~"'""~:""'""~ ....... ' ' ' ..o :,:,~1~,~,~.~"~'"-""" .......... '" ......... ~" ' ' r,..:.?, ''.t': ....... '" .... ..:..--"'...*': "1 :'"~;:":..';' 4"~'''*~''' ........... ;'' "SERVICE IS OUR BUSINESS" )932 Central Av~, 35 30 2~ ~1 0073 Ta,.es Payab_le 2,601o~G COUNTY 1,992.h3 CITY li.138.~9 TOTAL The obove estimated taxes payable T.x= Payable In 1993 ~nd 1994 ~re Title 11 E~stlmated_ _ Payablu 199~ ~9~ $ 6,070,95 2,624.53 2,25q.72 11,~21.67 In 199q are based on a value of $328,200 of which $292,G00 1'. at Title II rate and~5,600 I, at apartment rats. If the value of $328,200 w. 199q would be: SCHOOL COUNTY CITY TOTAL t~xed at the apartment rat=, the £STIHAT£D ta;. payabl~ tn $ 7,263.29 3,Iq9.oo 2,697.5q 13,66q.89 ESTII~TED If th~ w lu¢ of $328,200 was t, :od at the home..tuadad v~lut baeauj~ of each of the unltt met the qualification of cooperative membership ~nd lncome~ the ESTIHATED payable ~ould be $~,278. Other Tit1, 11 propertle: in thls City ar~: The Boulevard, Royc, Place, Heights I~nnor, and Peters P1ac~ . THIATER HEX~HTS CENTRAL AIR Date Built, ~ross building: Ou~ita parking, 2959 (35 years old) 22, ll e£fieAencies and XX one bedrooms 16,600 BY 12 uncovered off street back. Renovation Scope, Replace roof Clean and tuckpoint brick, repair stucco Replace acne,eta stair entry Overlay parking lot with 2' of asphalt Add landscaping Suild trash duupster enclosure Provide mini blinds throughout Replace appliances as necessary Replace floor severings as necessary Repaint and decorate a11 units and hallways Repair bathroom tile and tub enclosures Update plvs~b~ng, electrical, and heating Xnstall ~Bw fire rated unit anf~y 4sero Additions, Xnst&lX longer life roof Replace retaining walls, not repair Construct concrete block dumpatar enclosure Modify lower level ko bo wheel and add an office/meeting Replace all appliances and floor coverings Replace all countertop, and ~l~chen ,inks Install bathroom exhaust fans to vent notsture TO 97822801 THEATER HEIGHTS ~932 C~ ~V~ ~ECT O~ TJu CLASSIFICATION OT~ER ~tLCULATIONS AND Ag.qUMPTION-q ~u~u=tion in rent 1, ~ =&rotakor of $120 Net ~ncruo ~n NOI A~d£tional ~ob~ po~,~£bl, .~.520.00. 3,2~3.3~ 2?,040.00 Rent roduction ot $10 Dot unit x 12 month~ x ~1 - no rent ~eduction ~or r, aid~nt manager'~ unit 2,520.00 Dc~t intur~ ~t rat~ amort£=ation 20 ¥ ar~ ~ebt =overage 1.1S oT 9~ o~: 2 5 ¥ NE3.4~ ~ot~rz~o~J~qOzc& ) Pa~r~ck I~ar~and, being duA¥ sworn, on oith abates as Co~uub~i He~g~o, Minnesota. 4. 7ha~ ACCAP hal applied Co bocA the County of Aha]ca and 2'73.2~&. lubd. G ~o~hO~lltlld tt&IClltent ~OF~tO pro~osedleaseho2d fuJxI. Ga(a), &C~AI) e~i~is ~ :re~resunt~ to _tho Anoka Ch:Muty A~torney and to the C~ty Counc~! ~o~ ~hl c~t¥o£ Co~tln~& Heights t~lC ACCAP w121 compXy w~th &l~ requ~omon~f of XAnnooocn 8ta~u~ef ~ctLon 273.124, luixI. 6, 6. That ACCA9 v~l~ eoupXy wXch ~he requtreuentm aZ tills Statute by talcLng the £ollowXng an~onoz vhichhasboen prepared by_ACCA~'S oounse2 and app_rovgd aa to form by bach the Anoka C:c~nty AttoFney and ~he Attorney for ~he C~Cy o£ ~olumbXa Heights. That 40 porcont of tho Cooperative Asooc4atLon w~ll ~e~t o~ ~ ~la wd~ ~vel~Mn~ ~or ~~ ~42(d) ~9~. For ~soo o~ c~im Xn the r~habXlitatLon of che propez~cy, ACCZA~vXllroceLve houlLngprograu fundl provXded by th~ lGnnelOt& Housing F~nance Agency for ~he rehabillCa~Lon o£ thLa ~2-unit bu~ld~ng. ~0 9782280~ YOUR AFFIANT ~AYET~ NOT. thit __ day of ., 1994. Tnl~-qTERI[EIGHTS 3932 ZF~ECT OF TAX CLASSIFICATION OTI:r~CALCULATIONSANDASSUMPTIONS Increased renovation and rent reduction; Net reduction in taxes Reduction in rent less caretaker o£ $220 Net increase in Additional debt possible 5,733.45 2,520.00 3,213.35 27,940.00 Rent reduction o£ $10 per unit x 12 months x 21 units $ 2,520.00 - no rent reduction for resident manager's unit Debt assumptions: interest rate Amortization debt coverage 8% or 9% 20 ye&rs or 25 years 1.15 . THEATER HEIGHTS 3932 CENTRAL AVE EFFECT OF TAX CLASSIFICATION 1994 Assesse~ Value of building Budget for pl-n-ed renovation Maximum increase in budget possible New renovation budget with homestead t~ation Explanation of tax 1994 estimated taxes payabl.e 1994 estimated taxes payable homestead Tax savings realized 'Less additional payment to City Net reduction in taxes Available ~or debt service (debt coverage 1.15) Additional debt possibl~ with reduced taxes or Additional debt possible and Additional reduced rent for seniors and disabled $328,200.00 $150,000.00 $ 50,.000.00 $200,000.00 11,421.67 4,278.00 7,143.67 1,410.21 5,733.45 4,985.00 $ 49,850.00 $ 27,940.00 $ 2,520.00 Tm:~-4.TER HEIGHTS 3932 CEHTRAL ,AVE Buildina's Charact~.ri~tiC~: Date Built: N'Lu~er of Units: Gross building: 0nsite parking: Description: 1959 (35 years old) 22, 11 efficiencies ~d [1 one bedrooms 16,600 SF 12 uncovered off street 2 1/2 story walkup, brick face, stucco sides and back. Renovation Scope: .Replace roof Clean and tuckpoint brick, repair stucco Replace concrete stair entry Overlay parking lot with 2' of asphalt Repair retaining walls Add landscaping Build trash dumpster enclosure Provide m/hi blinds throughout Re~lace appliances as necessary ~lace floor coverings as necessary P~paint m-d decorate a11units ~dhallways Repair bathroom t£1e ~dtub enclosures Update plumbing, electrical, and heating Install new fire rated unit entry doors Additions: Install longer life roof Replace retaining walls, not repair Construct concrete block d,,~ster anclosure Modify lower level to be wheel chair accessible and add ~-'office/meeting room Replace all appliances and floor coverings Replace all countertops and kitchen sinks Refinish cabinets Install bathroom exhaust fans to vent moisture CITY OF COLUMBIA HEIGHTS 'SErViCE IS ~UR B~INESS' 2-7-.q4 3932 Central Ave. 35 30 2h 41 0073 Taxes Payable 1993 5,902.46 SCHOOL 2,601.46 COUNTY 1,99Z. 43 CITY 11,138.49 TOTAL The above estimated taxes'payable Taxes Payable In 1993 and 1994 are Title II 'E~tlmated Payable 1994 Tax $ 6,070.95 2,624.53 2,254.72 11,421.67 in 1994 ere based on e value of $328,200 of which $282,600 is at Title 11 rate and~45,600 is at apartment rate. If the value of $328,200 was taxed at the apartment rate, the ESTIMATED tax payable in 1994 would be: SCHOOL $ 7,263.29 COUNTY 3,149.OO CITY 2,697.54 TOTAL 13,664.89 ESTIMATED If the value of $328,200 was taxed at the homesteaded value because of each of the _pnits.met the qualiflcation of cooperative membership and income, the ESTIMATED tax payable would be $4,278. Other Title il propertie= in this City are: The Boulevard, Royce Place, Heights Marmot, and Peters Plac~ . ANOKA COUNTY COMMUNITY ACTION PROGRAM, INC. 1201 89th Avenue NE · Suite 345 · Blaine. MN 65434 · Phone 783-4747 · FAX 783-4700 · TTY 783-472~q~1 February 17, 1994 PatrickHentges City of Columbia Heights 590 40th Ave Columbia Heights, Mn 55421-3978 1994 MANAGER CITY OF COLUMSiA HEIGHTS re: 3932 Central Ave (Theater Heights) Dear Mr. Hentges ~nclosed are financial projections that reflect the alternatives ! presented to the Council. I used your real estate tax figures which I agree with even though your tax figures reflect less of savings than ! roughly estimated. The savings generated from the leasehold cooperative ~)after paying the City $442.82 in lost revenue peru=ts ACCAP to reduce "rents on average by $10 per unit and increase the scope of the renovation $30,000. Or as certain members of ~he Council seemed to want the renovation could be i~creased $50f000 if no further rent-reduction is passed on. ~ If the Council makes a positive factual finding we would agree to fund a $174,000 to $194,000 (depending on the rent level alternative used) renovation verses the $150,000 we had otherwise planned. A lot can be done with $30,000. Especially when all the basics will be taken care of with the funds already coa~nitted. There is never enough money in a construction project. Additionally ACCAP would agree to sell the building to the cooperative Jar our cost plus any additional capital invested to fund negative cash flow or additional improvements less any cash withdrawn. In other words, no escalator for inflation or appreciation. This language will be put in the Master Lease as the Cooperative's buyout price. As I discussed at the meeting this project goes through regardless of t~e Council's willingnes~ to contribute by making a positive factual fznding t.hat the tax savzngs will be used to reduce rents or provide for addit=onal renovation. -- Please give'me call if you think of anything else ! can provzde. ~Hou~Develope~nt~pecialist agree that language should be added to the Master Lease requiring ~~ne- residents to be seniors or disabled. o~o i