Efforts by the owners of a 47-unit senior housing community in Coon Rapids to get state agency assistance to refinance and renovate the development failed for a second time in January.
Cottages of Coon Creek, located at 110th Lane and Coon Rapids Boulevard, has 47 one-level rental housing units in four buildings for seniors age 55 and over with restricted incomes plus a community activity center.
It was built in 1998 with the help of city tax increment financing, or TIF, and tax credits issued by the Minnesota Housing Finance Agency.
Those tax credit have expired, and in 2015, at the request of the ownership group, the Coon Rapids City Council gave preliminary approval to housing revenue bonds for a proposed refinancing and rehabilitation project, but the owners could not secure new tax credits, and without that, the bonds could not be sold.
Roger Derrick and Mike Saxton, partners in the ownership group, met with the council in a work session in September 2016 to propose a change in tenant eligibility from 100 percent seniors to 80 percent targeted at seniors but with the income restrictions still in place that they felt would give them a better chance of obtaining the tax credits and bonding.
With new tax credits and bonding, the ownership group planned to sell the development to another real estate investor within the partnership, keep rents affordable and rehabilitate the property, according to Grant Fernelius, city community development director.
Proposed renovation work, estimated at over $700,000, included new roofs on all four buildings; heating, ventilation and air conditioning units; water heaters; and household appliances; as well as improvements to the community activity center and repaving the private streets, sidewalks and driveways within the development.
The acquisition and remodeling costs are estimated at $5 million, Fernelius said.
The council Oct. 18, 2016, gave preliminary approval to tax-exempt conduit housing revenue bond financing totaling about $5 million, while the Coon Rapids Economic Development Authority authorized an amendment to allow the 20 percent non-senior eligibility.
Derrick and Saxton were back before the council at a work session Feb. 21 with the bad news that the application had been turned down for a second time by the Minnesota Housing Finance Agency.
“MHFA was willing to approve the tax credits, but not authorize the bonding because, under state law for bonding, seniors are not a priority,” Derrick said. “That put us at a competitive disadvantage.”
According to Derrick and Saxton, the only way for the development to get the tax credits and bonding authority from MHFA is to have no restrictions on tenant eligibility.
The ownership group hired Coon Rapids-based Mary T. Inc. last year to manage the property and preserve it as a senior community, and Mary T. has the resources to steer any families that might seek housing at Cottages of Coon Creek to family housing in its projects that better meet their needs, Derrick said.
In addition, with the one- and two-bedroom apartments 800 square feet or less in size, it is not really suitable for families, nor is there a play area for children, he told the council.
There is a new round of applications to the MHFA this spring for tax credits and bonding authority, and Derrick and Saxton asked the council to consider lifting the seniors tenant-eligible restriction completely.
“It will remain a senior project, not a family development,” Derrick said.
But while sympathetic to the ownership group’s predicament, there was no consensus on the council to lifting the tenant eligibility restrictions beyond the 80-20 approved in October 2016.
According to Council Member Brad Johnson, his concern was the lack of restrictions would make the housing attractive to college students and young families.
“A lot of people, not just seniors, might well like the development because it is affordable and in a quiet neighborhood,” said Council Member Wade Demmer.
In an interview following the work session, Fernelius said staff would look at some other options with the ownership group, including a couple of suggestions that were made at the meeting: financial assistance from the city HRA and whether it is legal for the 100 percent senior tenant eligibility restriction to be reimposed once the bonds are paid off.