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c <br />( <br />£ <br />GITYofORONO <br />Munkipal Offices <br />Street Address: <br />27S0 Kelley Perliway <br />Orono, MN 55356 <br />Msillni Address: <br />P 0 Bn 66 <br />ciystst Bay, MN 55323^66 <br />October 18,2002 <br />Teny Dahlstrom <br />Dahlstrom Development, LLC <br />7745 Polaris Lane <br />Maple Grove, MN 55311 <br />Dear Mr. Dahlstrom: <br />I have reviewed with the City Council the affordable housing proposal detailed in your letter of <br />September 18,2002. The reaction of the Council to the proposal was that reducing the cost of <br />three to four units is only a token effort. A worthwhile effort should involve setting the price <br />point of a much larger number of units at $199,000. The Council also indicated the City will not <br />provide a financial subsidy to the development. The City does not have any financial <br />information regarding the project to enable a determination regarding the developer’s ability to <br />reduce the price of a substantial number of units to the $199,000 price point. The Council has <br />requested that you provide the City with fiiuincial information regarding the project to enable an <br />evaluation of the feasibility of accomplishing a worthwhile affordability effort. <br />One element to be included in the feasibility evaluation of the affordability effort is the project <br />cost related to sewer and water fees. In 2001, the sewer and water connection fees for the <br />Highway 12 area were converted from per-unit fees to per-acre fees. A major reason for this fee <br />restructuring was to reduce the fees to a level that would enable the higher density housing <br />planned for this area to be more affordable. <br />If this fee structure had not changed, the sewer and water connection fees.would have been <br />approximately $10,500 per unit vs. the $3,500 per unit being charged to the Stonebay <br />development based on the six unit per acre density. This is a reduction of $7,000 per unit for <br />yvery unit in the development. This fee restructuring has reduced the total cost for sewer and <br />water by $1,169,000. This is a major cost reduction that is, in itself, sufficient to enable a large <br />number of units to be developed at an affordable price. It is important that you provide the City <br />Tdepbooe (952) 249^4400 • Fax (952) 249-4616 <br />wwwxLorono.Bm.as