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� <br /> GABLER HOUSING SOLUTIONS CORPORATION <br /> "Creating Better Housing Solutions for Better Communities Since 1995" <br /> 1904 SELBY AVENUE <br /> SAINT PAUL,Mi1vlvEso'rA 55104-5944 <br /> TELEPHONE: 651/917-2200 EMA�L:jim@gablerhousing.com <br /> Apri121, 2009 <br /> Ms.Jessica Loftus <br /> Ciry Administrator <br /> City Of Orono <br /> 2750 Kelley Parkway <br /> Orono, Minnesota 55356 <br /> Re: CommonBond's "Willow Commons" Affordable Housing; Financial Review of <br /> Dear Ms. Loftus: <br /> I have reviewed the materials you sent on "Willow Commons" and, along with Mr. <br /> Steve Stanley, a CPA at Mahoney, Ulbrich, Christiansen, Russ, find it overall a very <br /> feasible and reasonably portrayed affordable housing project. It is further one which <br /> should compete very well with other projects for funds when submitted to the various <br /> funding agencies such as Minnesota Housing (MHFA), Hennepin County and <br /> others. However, before I detail my suggestions, some other comments are in order. <br /> The primary subsidy mechanism for this project is intended to be the Federal Low- <br /> Income Housing Tax Credits (FLIHTC's). Nationally, FLIHTC's are usually the <br /> central method to get private capital into the production of affordable housing. <br /> Clearly, housing efforts that are intended to have limited rents (and thus cash flows, <br /> too) need some other way for for-profit investors to make money and thus Congress <br /> came up with this tax credit as a way to do it. The credits are basically allocated <br /> nationally on a population basis through the State Housing Finance Agencies. <br /> Since you need a for-profit entity to sell the credits usually a Limited Partnership is <br /> ultimately formed and, as is normally the case, I believe CommonBond or some <br /> entity controlled by them will be the Managing General Partner (GP) and the tax <br /> credit investor will be the Limited Partner (LP). Because of the tax credits and other <br /> tax benefits, i.e. depreciation, that a project like this will throw off that the GP can't <br /> normally use, a GP will usually only own .001 percent of the Limited Partnership and <br /> the LP will own the rest. However, the GP will stay in control of the project <br /> operations and is the entity that everyone will look to for IRS compliance and <br /> financial guarantees, etc. —no small items —for the life of the Limited Partnership. <br /> 1 <br />