WORKSHOP ITEM Joe Huss, Finance Director
Title
ACCAP REQUEST FOR CONDUIT DEBT
Background
ACCAP has been working with the City and Anoka County on a residential redevelopment concept that would include the removal ACCAP’s four homes, the two homes not purchased by the Anoka County Highway Department, and six of the now vacant lots that were purchased by the ACHD. ACCAP has reached an agreement to purchase the two homes currently still privately held. The proposed redevelopment project would include 30 townhomes within five separate buildings on this property. ACCAP would own all units and would rent the units to residents at 80% of the area median income ($65,800-family of four). Rents would range from $1,300 to $1,500 based on the number of bedrooms. Previously, the City’s economic development arm (Blaine EDA) agreed to assist ACCAP in the redevelopment by providing funds for site assembly and redevelopment. A total of $900,000 has been pledged to ACCAP with $450,000 pledged April 3, 2014 and another $450,000 pledged April 16, 2015. A comprehensive land use amendment, rezoning, preliminary plat and conditional use permit was approved by the City of Blaine on June 19, 2014.
ACCAP is now requesting the use of the Blaine EDA’s bonding authority to issue conduit housing bonds to provide funding for the project. Issuing through the EDA would allow the bonds to be issued as bank qualified debt which would provide a lower interest rate on the bonds and allow for lower issuance costs. The estimated total cost of the project is $6.7 million and ACCAP is seeking approval of the EDA to issue no more than $5 million in conduit debt for the project.
Per Minnesota Statute 462C.02, before the EDA can issue housing bonds, the City must adopt an ordinance that provides that authority to the EDA. An ordinance to that effect will be introduced for first reading at this evening’s Council Meeting.
Issuance of the conduit bonds is expected to take place at the September 15 Council Meeting. The bonds would not constitute a charge, lien, or encumbrance upon any property of the City and would be repaid only with the revenues derived from the project itself. As such, the bonds are not considered an obligation of the City and would not be a charge against the City’s general credit or taxing powers.