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in this determination, however if they wouldn't so declare this project as such <br /> it would reduce the amount of tax credit equity that could be raised by some <br /> 30% and that would put a significant "hole" in the financial feasibility of it. <br /> 6. Other underwriting and financial forecast items that need some attention and <br /> which I would be glad to work with you and CommonBond on further if you'd <br /> like: <br /> a. CommonBond's Operating Expense Amount per room is a bit light <br /> from what is required by Minnesota Housing. Minnesota Housing <br /> requires a minimum amount per room of$982 for Metro Area <br /> Townhouses and CommonBond's Application reflects only $959 per <br /> room. Once this is raised it will diminish the amount of the estimated <br /> mortgage by roughly$100,000 and thus increase the other subsidies <br /> needed a bit. (See attached MHFA Guidelines page.) <br /> b. The construction interest amount seems quite high for normal <br /> purposes and it might be at that level to anticipate funding other <br /> interest, also, for a "bridge loan" for one or more of the subsidies, <br /> including the tax credit equity, however that isn't clear from the <br /> proforma. <br /> c. I have some issues with the "basis" estimates CommonBond has used <br /> for some of the development cost categories for tax credits. Some are a <br /> bit high, but however one that might be a bit low is the City Fees one, <br /> i.e. SAC,WAC, Park, of$580,000; there CommonBond only took <br /> $500,000 into basis and IRS Regulations now provide that city <br /> construction and impact fees are includable in eligible basis. It would <br /> be helpful to know what the $80,000 represents that CommonBond left <br /> out to see if that $80,000 might not now be includable in eligible basis. <br /> Those are the major and some minor points, in summary, about my financial review <br /> of this project. I would lastly point out that CommonBond, in my opinion, is likely <br /> one of the top five affordable housing developers in Minnesota and the Upper <br /> Midwest, so the City of Orono is fortunate to be entertaining a development request <br /> in that respect, I think. <br /> If you have any further questions, please e-mail or call me and I'd be glad to come to <br /> any future meetings you think necessary to discuss this proposal with you, the City <br /> Council and/or its Committees. <br /> Sincerely, <br /> /s/ <br /> James F. Gabler <br /> President <br /> 3 <br />