Forwarded on behalf of Steve Minn... "Bill Cullen's thoughtful policy question rises from a flawed factual premise.
Stone Arch was PRIVATELY financed using public conduit bonds, some tax increment and some environmental clean-up funds. This means the developer is fully "recourse" for the borrowings, and had to give value for the other public contributions. The $20,120,000 of bonds is the face value of the mortgage, not tax credits. We borrowed money from investors, not the public. No government guarantees exist for these funds. We pay interest and principal on it every month. Just like Mr. Cullen does on his mortgages. The $3,600,000 of Tax Increment is a junior mortgage, essentially serviced by a part of taxes we created when the building was built. It amounts to about $300K a year of subsidy, in exchange for almost double that amount of rent subsidy every year that we do not collect. The $750,000 of environmental grants was about half of the total clean-up cost we incurred. The tax credits that we sold for equity, gave us an outside investor partner, (not government funds) who shares in a portion of the project profits. We received less than nine percent (9%) of the total project cost in credit proceeds, for which we surrendered economic control of 40% of the project to affordable rates for thirty (30) years. On a unit basis, the "subsidy package" to build Stone Arch will be less than $80,000 per affordable unit, at the end of 30 years. There are 92 affordable units. The rent subsidy is worth on a current year basis just over $6500/year per affordable unit. Over 30 years, this equals just under $18 million dollars. Discounted in today's dollars, at five percent (5%) that is worth $4.029 Million. The city's upfront investment, similarly discounted was worth $1.647 million. That's a 260% "bang for the buck." By offering us a one time environmental grant, about $300,000 a year in deferred taxes, and the chance to solicit investors with some tax credits, the city created a "package" that was worth $18 million in rent savings over the next 30 years, cleaned up a polluted brownfield,and opened the east bank industrial riverfront to residential redevelopment. I think The City made a good investment, and certainly received a lot of value. If properly structured, affordable housing is low or no risk to the public, with very real public benefit. I hope this is helpful. Steve Minn Principal Lupe Development Partners,LLC REMINDERS: 1. Be civil! Please read the NEW RULES at http://www.e-democracy.org/rules. If you think a member is in violation, contact the list manager at [EMAIL PROTECTED] before continuing it on the list. 2. Don't feed the troll! Ignore obvious flame-bait. For state and national discussions see: http://e-democracy.org/discuss.html For external forums, see: http://e-democracy.org/mninteract ________________________________ Minneapolis Issues Forum - A Civil City-focused Civic Discussion - Mn E-Democracy Post messages to: mailto:[email protected] Subscribe, Un-subscribe, etc. at: http://e-democracy.org/mpls
