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. Council Meeting Minutes December 19, 1985 I, Harcus stated historically financing to provide tax increment financing has been limited to clear land or to redevelop areas with poor soil conditions, not for clean land; feels assistance for senior citizen housing should be done very cautiously. Smith responded that a 1985 independent survey indicated a need for 293 units in the area; Harcus felt the waiting list at Palmer Drive is due to the fact that that ~roject is subsidized. Blomquist felt if council makes the determination to postpone the proposed project and have it reviewed, it is essentially killing this project, Smith stated the developer overhead is high for a rental project as is the sales and marketing expense because it is for seniors and explained the meetings with the seniors and neighbors is costly, and that the developing of programs is extremely high; Smith stated these ideas are not required in a general housing project. Smith further stated that a five percent project contingency is standard. Benke asked for clarification that the subsidy would offset rents as opposed to reducing the amount of subsidy. Smith responded affirmatively because of the high projection of vacancy in the first year; stating the rent has been established at $730 per month and that Housing Alliance would like to get it I back down, to increase occupancy, to $700 per month as requested by the marketing people and any overages would be applied toward reducing the rent. Blomquist inquired about the nature of the subsidy being provided by the City; Smith stated the rent would be about $769 without the subsidy. Blomquist asked how many increment years were involved; ~Jinkels responded it would take five years to payoff. Harcus inquired about equity in the project; Smith indicated the total equity required is $700t861. Blomquist stated that, due to the lack of any subsidies available now for any type of senior housingt he believes this city and other cities have a responsibility to provide housing ~or all types of people; views this subsidy as a social cost~ and would support the project. Benke stated if we return to the original motivation for incre- ment financing to do projects where they would otherwise be un- able to proceedt we were very clearly told without this type of assistance this project will not proceed. Regarding the wait- ing list at Palmer Drive, 8enke feels that project will always I be one of the best projects. There is no ~uestion that the need is there. Feels if the project becomes a reality, the benefits this community receives will be there for a long time beyond the time it would take us to return the subsidy. Feels it is a gain to the community and is comfortable in providing a minor assist to make it possible. Page Six I .