On Jan. 24, the EDA and One Roof Housing presented the proposal for the Lutsen Affordable Housing Project to the Cook County Board of Commissioners. Prior to the proposal, during the public comment period, I asked for clarification on a “tenant utility” line item. The proposal estimated $8,000 for electric, electric off-peak heat and garbage for the 16 apartments or $42 per month. One of the advisors, Bruce Kimmel, stated that line item was not up-to-date.
On Feb. 7, One Roof Housing gave me the up-to-date estimate on tenant utilities which is $25,000. The proposal was given to the commissioners for the project estimated that after all expenses and debt service payments there would be $15,844 in extra revenue each year. When this additional tenant utility increase of $17,000 is applied against that extra revenue, the project proposal will estimate a negative cash flow of $1,116 per year. To be transparent, this shortfall of $1,116 can easily be made up by raising the rents from the present rates of $850/1 bedroom and $1050/2 bedroom.
Additionally, $475,000 (19 percent) of the construction funding that totals $2,540,000 is not yet secure. Per One Roof Housing, a Greater MN Housing Fund Loan of $175,000 has not been finalized but is expected to be in March. An IRRRB grant of $300,000 will be considered by the IRRRB at their next meeting that will be held either in February or March, per the EDA.
One Roof Housing has stated they will not receive more than a $1,400,000 abatement bond amount from the county, but the resolution for the bond amount is “up to” $1,600,000 at the request of the bond advisor, to cover any financing changes that could occur. Any increase in the bond amount from $1.4 million will increase the yearly debt service and therefore increase the above-estimated shortfall.
The point of all the above information is not to discredit the project. I still believe the best solution to protect taxpayers is to place the businesses who are benefiting most and that have agreed to guarantee occupancy of the 16 units for the first year, in a position (along with One Roof Housing) in a legal agreement to pay any yearly debt service not covered by rent revenue.
The point is, why is there a public hearing scheduled for Feb. 28 at 5 p.m. at the courthouse to consider issuing this “up to” $1,600,000 abatement bond, when so many of the numbers are still unknown or moving?
I have asked if the vote for these bonds to be issued will occur immediately after the public comments at the Feb. 28 meeting and was told “maybe” by a county official.
I would argue that the public hearing should be canceled and rescheduled after the numbers for this project are more transparent and the taxpayers are more informed about what they will ultimately be responsible for. I would also suggest there be a period between the public hearing and the vote to issue the bonds so taxpayers’ questions could be answered and commissioners could absorb and be responsive to those constituents’ comments at that public hearing.
Contact your county commissioner and ask them to reschedule so that there can be a more informed, transparent and accountable hearing held for this project.
Greg Gentz
Maple Hill
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