COTTONWOOD -- The City of Cottonwood has agreed to provide a $120,000 loan to help get the dormant Highland Square Senior Apartment project off the ground.
Proposed to be constructed at Candy Lane and Mingus Avenue, the project hopes to use low-income housing tax credits from the Arizona Department of Housing for the project. The project was shelved five years ago due to the floundering economy. The council unanimously agreed to the loan.
Steve Hastings, director of Real Estate Services for the Foundation for Senior Living, and Terry Campbell of Campbell-Hogue & Associates recently met with Mayor Diane Joens and Administrative Services General Manager Rudy Rodriguez to discuss the possibility of a local government contribution from the City toward the project that would entitle the developer to additional points on its application for tax credits.
The funding mechanism is highly competitive.
Under the scoring matrix for this program, such local government contributions can take the form of a cash contribution; HOME contribution; CDBG contribution; deferred or cash flow loan; donation of land; or waiver of fees.
The city and the partners discussed the option of an "in-kind" donation using roadway rights but that option did not quality.
The dollar figure is an amount equal to about 2 percent of the construction cost.
In exchange for this sum, the developers would execute a promissory note that would provide for monthly payments back to the City from the project's cash flow over a five-year period at a rate of interest that approximates what the City would receive if the funds were maintained in a safe, conservative deposit or investment. The note would be secured by a "letter of credit," a guarantee from a bank or other financial institution that the payments will be made as promised and required.