I think some clarifications are in order after Vicky's post on "what affordable housing means in Minneapolis." She makes some good points, but much of it is also misleading.
1. The income and rent limits she listed are correct for units restricted at 60% AMI. However, the state's Qualified Allocation Plan (which is used to score potential low income housing tax credit and bond projects) gives preference to projects with rents at 50% AMI and 30% AMI. It also gives preference to SRO projects, projects with 3+ bedroom units, and projects serving special needs. A generic project with rents at 60% AMI would probably not get funded under the competitive tax credit process. 2. The allowable rents (e.g., $805 for a studio at 60% AMI or $862 for a 2BR unit at 50% AMI) are not guaranteed, but rather the MAXIMUM ALLOWABLE GROSS rent that could be charged if the market would support it. The actual rents charged depend on the market and are typically underwritten at rents at least 10% below comparable market rents. So, if the going rent for a COMPARABLE apartment in the neighborhood is $500, the tax credit project will have to work financially and open with rents no higher than $450 -- even if the maximum allowable rent is $805. 3. Bonds used to finance affordable housing are not a grant, but a way to loan money to the developer at below market interest rates in exchange for keeping units "affordable." So the $26.9M in bonds for Mann's project functions like a mortgage, with the owner responsible for paying the principle and interest on the bonds. 4. The $3M in tax credits sold to "rich guys" represent the federal Low Income Housing Tax Credits the project received for making units affordable. The credits are paid out over 10 years, and the developer typically sells these credits at a discount (to institutional investors not rich guys). The cash from the sale of the credits goes to cover some of the project costs. John Rocker JCR Realty Advisors 3211 Fremont Avenue South Minneapolis MN 55408 (612) 825-4110 (612) 825-1082 fax -----Original Message----- From: [EMAIL PROTECTED] [mailto:mpls-admin@;mnforum.org] On Behalf Of Victoria Heller Sent: Friday, October 18, 2002 11:41 AM To: Mpls Forum Subject: [Mpls] Zoning Changes/Affordable Housing Everyone should know what "affordable housing" means in Minneapolis. A single person, making $32,220 qualifies for "affordable housing." A developer may charge that person $805 rent for a studio apartment, including utilities. A five person family making $49,680 qualifies for "affordable housing." A developer may charge that family $1,035 rent for a 2 BR apartment, including utilities. All of the "affordable housing" calculations are based on AMI (Area Median Income.) The AMIs used in Minneapolis are as follows: 1 person $53,700 2 persons $61,400 3 persons $69,000 4 persons $76,700 5 persons $82,800 If persons make 60% of these figures (60% of AMI) they qualify. Here are the "affordable rents" that developers may charge persons at 60% AMI, including utilities: Studio $805 1 BR $863 2 BR $1,035 3 BR $1,196 4 BR $1,335 5 BR $1,472 Now you know what's "affordable." A development like The Village at St. Anthony ($95 million) needed only 30 "affordable units" to qualify for taxpayer guaranteed financing. Steve Minn's development is receiving $23.7 million in housing revenue bonds from the City and County, plus $3.2 million in tax increment financing - for 221 units. I couldn't tell from Neal St. Anthony's article how many units are "affordable." In addition to the $26.9 million, Minn will receive another $3 million by selling "tax credits" to rich guys. Now were up to $29.9 million for 221 units - $135,294 per unit. An MCDA official (Hemmerlin) in charge of this deal said "they also brought nearly $2 million in cash into the project." Could we see copies of the cancelled checks Mr. Hemmerlin? Assuming this is true (which I doubt), the project cost goes up to $31.9 million for 221 units - $144,344 per unit. Does anyone really think this is affordable housing? Steve Minn ends up with a $30 million asset. How does that help people who cannot pay $500 per month for apartments that are available now? Vicky Heller North Oaks and Cedar-Riverside _______________________________________ Minneapolis Issues Forum - A City-focused Civic Discussion - Mn E-Democracy Post messages to: mailto:mpls@;mnforum.org Subscribe, Unsubscribe, Digest, and more: http://e-democracy.org/mpls _______________________________________ Minneapolis Issues Forum - A City-focused Civic Discussion - Mn E-Democracy Post messages to: mailto:mpls@;mnforum.org Subscribe, Unsubscribe, Digest, and more: http://e-democracy.org/mpls
