street e town homes concept

7/27/2019 Street E Town Homes Concept

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Street E Town Homes, Jackson, MN Current Project Summary (2014)

Market: Workforce/General Occupancy/Family

Project Characteristics:

New Construction Townhomes with attached garage (1 car) 48 units Total Development Cost - $7,242,090 (includes full land cost)

Mixed Income Section 42 (tax credit) & Market Rateo 16 units market rate unitso 8 two-bedroom units - $775 rental rateo 8 three-bedroom units - $905 rental rate

32 units Section 42 income restricted unitso 2 one-bedroom units (very low income) - $60 rental rateo 2 two bedroom units (very low income) - $105 rental rateo 13 two bedroom units (low income) - $636 rental rateo 15 three bedroom units (low income) - $744 rental rate

Market Rate income restriction (Challenge Fund): $59,200 Section 42 (Tax Credit):

o Family Size 1 - $26,460o Family Size 2 - $30,240o Family Size 3 - $34,020o Family Size 4 - $37,800

Section 42 (ta credit) income restrictions appl at initial occ panc can rise indefinitel itho t loss


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Section 42 (tax credit) income restrictions apply at initial occupancy can rise indefinitely without loss

Challenge Fund - $987,214 (0% deferred)Funding/Financing Request to MN Housing Finance Agency:

Allocation of 2014 Tax Credits: $4,477,560 ($447,756 X 10 years)

Challenge Fund: $987,214

Tax Credit Equity Assumptions: Are sold to investor(s)

Applicable Fraction (% tax credit units): 67.94% Qualified Basis: $6,823,138 Annual Tax Credits: $447,756 Gross Tax Credits: $4,477,560 Pricing (.90/$1.00): $4,029,805

Challenge Grant:

Eligibility is based on local contributions including employer(s), philanthropic and the local community.

The current committed local commitment consists of the following:

Employer - AGCO: $90,000 (0% deferred loan)

City of Jackson: $152,090 (0% deferred loan)

$781,523 (Tax increment financing)

Philanthropic (SW MN Housing): $87,000 (0% deferred loan)


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Tax credits are allocated based on eligible expenditures that drive an annual allocation. That allocation

extends for a 10 year time frame. In the case of the current project, we have requested an allocation of

$447,756 over ten years. The investor will acquire the credits and pay a discounted price, in this case

.90 for each $1.00 of tax credits. The tax credits are used to reduce the investors federal tax obligation

by $1.00 for each of the 10 years.

Tax credit allocations within the State of Minnesota are extremely competitive. Each State must adopt

a plan that they utilize to award allocation of tax credits. The plan is termed the Qualified Allocation

Plan and awards points based on how closely it meets the States policy objectives. We felt that in

order to be competitive for 2014 credits we needed to achieve around 78 points but were only able to

gain 75 points. A major objective in Minnesotas plan is to maximize local contributions. Local

contributions were an area where we could gain significant points and where employer contributions

would have a large impact. Are target was to raise $220,000 of employer contributions which we did

not meet.

However, MHFA staff has opened dialogue concerning additional employer contributions. We believethat they are trying to fund this project and need additional contributions to make that happen. This

has never happened in our previous experience.

Employer Assisted Housing Pools (Future Projects)

The Governor and State Legislature have begun to respond to issues related to attracting and retaining

work force. Part of the issue in many parts of greater Minnesota is related to housing shortages. The

State Legislature and Minnesota Housing Finance Agency have directed significant resources into the

Challenge Fund. Another substantial funder of housing, the Greater Minnesota Housing Fund (GMHF)


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Concept Drawing of Proposed Multi-Family Housing Project in Jackson, MN Street E Townhomes

street e town homes concept

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