A public hearing has been scheduled by the Coon Rapids City Council for its May 6 meeting to consider a request for the city to issue housing revenue bonds to help finance the acquisition and renovation of an existing senior townhouse development in the city.
The council in setting the hearing gave preliminary approval April 15 to the request by Coon Creek Senior Community Limited Partnership.
According to Finance Director Sharon Legg, the housing revenue bonds totaling $2.67 million involve the Cottages of Coon Creek, a 47-unit rental townhouse development for seniors at 2628 110th Lane NW.
The proposal will transfer ownership from Cottage Homesteads of America to Coon Creek Senior Community Limited Partnership, Legg wrote in a report to the council.
“Although the bonds will be in the city’s name, the city has no obligation to repay them,” she wrote.
“The bonds are tax exempt to the buyers and it is the intent to issue these bonds, which will be very short term, to allow them to seek tax credits for additional financing.”
The city, by issuing the tax-exempt bonds, provides lower cost financing to the limited partnership that is acquiring the property and it does not affect the city’s bond rating, said Marc Nevinski, city community development director.
In the past, this bonding mechanism has been used to finance improvements to other housing projects in Coon Rapids.
The townhomes are located just north of Coon Rapids Boulevard behind the Dependable Heating building, Nevinski said.
According to Roger Derrick, a partner in the project, the development, which was built in 1997, has four 12-unit buildings with 47 one-level townhouses for seniors, plus a community room. There are both one- and two-bedroom units.
Each unit has its own front door, a garage and no stairs to climb, Derrick said.
They are ideal for seniors who don’t want to leave their home, but have to, and don’t want to move into an apartment, he said. “People love it there,” Derrick said.
Normally the units are full because residents don’t want to leave unless they have to, he said. “But there is one vacancy right now,” Derrick said.
The townhouses were built through the federal tax credit program to serve senior citizens with low and moderate incomes, according to Derrick.
Tax credit investors provided the equity, and the city approved tax increment financing to help make the rents affordable and qualify under U.S. Department of Housing and Urban Development guidelines, Derrick said.
Under the federal tax credit program, the project has to be sold and refinanced after 15 years to repay the initial tax credit investors and lenders, he told the council. “We are at that stage now,” Derrick said.
The total cost of the acquisition and renovation project is some $5 million, he said. HUD is putting money into the project, Derrick said.
But a new round of tax credits is necessary to fund the equity and the rehab work, according to Derrick. The tax credit investors are generally large corporations, Derrick said.
Renovation work outlined by Derrick includes removing and replacing shingles and roofing materials; repairing and replacing, as needed, damaged siding, sidewalks, private street paving and asphalt driveways; repairing and repainting all front entries; creating a handicap accessible garage by combining two existing garages; and replacing heating and air conditioning systems, water heaters and all kitchen appliances that are more than five years old.
“The total cost of the improvements will be more than $500,000,” Derrick said.