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HomeMy WebLinkAboutCity Council - 06/15/2021 - Workshop APPROVED MINUTES CITY COUNCIL WORKSHOP & OPEN PODIUM TUESDAY, JUNE 15, 2021 CITY CENTER 5:00 – 6:25 PM, HERITAGE ROOMS 6:30 – 7:00 PM, COUNCIL CHAMBER CITY COUNCIL: Mayor Ron Case, Council Members Kathy Nelson, Mark Freiberg, PG Narayanan, and Lisa Toomey CITY STAFF: City Manager Rick Getschow, Police Chief Greg Weber, Fire Chief Scott Gerber, Public Works Director Robert Ellis, Community Development Director Janet Jeremiah, Parks and Recreation Director Jay Lotthammer, Administrative Services/HR Director Alecia Rose, Communications Manager Joyce Lorenz, City Attorney Maggie Neuville, and Recorder Katie O’Connor Workshop - Heritage Rooms I and II (5:30) I. DAN BLAKE HEULER PROPERTY (5:30-5:40) Mayor Case introduced Dan Blake who represents the Heulers. He informed the Council Blake is seeking some input from the Council about whether or not this proposal would be worth investing time and money into. Blake stated he is here today because the City does not have a concept plan approval. The proposal would include a guide plan, rezoning, and subdivision to build one house. Blake displayed a photo of the property and showed the 16 acres. The Heulers old house was sold and subdivided into three lots. Two of the lots were purchased, and the Heulers still own the remaining lot. Beyond the lot is 16 acres. The old Riverview Road used to run through this property. The Heulers would like to build one house on the 16 acres. The proposal is 4 acres would be designated for the property, and the remaining land would be dedicated to the City. The property is guided park and open space currently. Physically there is access to the property, and if a house was built it would need to be rezoned. There is some erosion, but a trail could possibly be placed in the dedicated property. He is seeking input from the Council on the proposed application and the dedication of land. If the Council is not interested, it may not necessarily stop an application, but they would rather work cooperatively. Case stated he would like to hear the history of the property from Staff. Julie Klima, City Planner, stated in 1978 the property was guided as park and open space. There was development to the north of the property approved in the late seventies. Originally when the plan came in, the 12-16 acres was included in the project. After review through the environmental process, the plan was revised to remove the property from the development plan, but the density was transferred off of the land in order to allow for a higher density for the property to the north. There was discussion in several of the memos to the City Council of the property being deeded to the City. The property owner at the time preferred to provide it through a warranty deed rather than the planning process for tax purposes. Staff has fielded City Council Workshop Minutes June 15, 2021 Page 2 many calls about the property over time and have consistently stated the density has been transferred off the site and there are no development opportunities on the property. Nelson inquired what development was done in the seventies. Klima stated there was a much bigger master plan done in 1978-1979, Bluffs West. As a part of the bigger masterplan the density was transferred. Case inquired if there is a clear legal trail to pursuing the land that was supposed to be deeded to the City. Neuville stated in general an agreement to convey land has to be in writing to be enforceable. Although the property is open space, the City hasn’t done anything such as constructed trails. Case inquired if the City has the right of way for a trail. Lotthammer stated he would have to do more research. Case also inquired if the City would like to place a trail in this location. Lotthammer replied it is unlikely as the property is fairly sandy and unstable. The property owners would need to be cooperative as well. The City does own a decent amount of land guided as open space without any park amenities. The City would not utilize this property for park usage. Case inquired about liability on the property if there are sewer system failures. Ellis stated the failed sewer system in 1997 was about a quarter of a mile east of the property. He is unaware of any liability for the erosion on the property. The Lower Minnesota River Watershed District is pursuing a sizable project to stabilize the slope. Any grading done on the land would add to an existing problem. Many organizations and entities are aware there is significant erosion problem in this area, and it is probably one of the worst in Eden Prairie’s boundaries. Building a house on the slope would send a terrible message and it would only increase erosion. Case asked if this would change if the developable property was a half an acre. Ellis stated he could not support any development on the entire property because it would eventually become problematic for all the houses to the north. Toomey asked if the property being originally removed from the initial development plans was based on erosion. Klima responded, based on the research, yes. There was a comment made by the soil and water conservation board. There was an environment assessment worksheet (EAW) done for the master plan and it specifically talks about no development south of a specific contour line due to the erosion. Freiberg stated the question is about the four and a half acres they would like to develop on. Ellis replied he believes building one house on the land is one too many, even on the four and a half acres. Nelson recalled the houses to the north being built when on the Planning Commission. She is fairly aware of how steep and unstable the land is, and she does not envision a property being built on this land. Case noted the Council is in agreement no property should be built on this land. II. INCLUSIONARY HOUSING (5:40-6:30) Stanley stated inclusionary housing is a policy requiring a certain percentage of units be affordable at a given income level. It is an increasingly used tool around the metro with hundreds of programs nationwide. The City has been utilizing the policy on a deal-by-deal City Council Workshop Minutes June 15, 2021 Page 3 negotiated basis. Inclusionary housing was the Housing Task Force (HTF) number one recommendation to the Council for adoption. The affordable housing need is over 1,400 units by 2030 in Eden Prairie per the recommendation of the Metropolitan Council. The bulk of the need is at the extremely low-income level at or below 30 percent average median income (AMI). At the 50 percent level the City does fairly well because it can use tax increment financing (TIF). Stanley stated the deal-by-deal approaches rather than generally applicable ones may invite legal challenges. A formal ordinance and policy sends a consistent signal to developers. The ordinance and policy can still allow for elements of flexibility. Some of the recommended elements for multifamily is to apply to all developments of 15 or more units. It would provide developer choice, but skew slightly towards deeper income affordability. The developer chooses to provide five percent at or below 30 percent AMI, 10 percent at 50 percent, or 15 percent at 60 percent. If receiving TIF, they must provide an additional five percent at or below 80 percent AMI in addition to those required by state statute. The affordable units must be similar or identical to market rate units. The City has been somewhat of a leader in the area with requiring affordable units to be in perpetuity. HTF recommended they seek long term affordability. They are seeking affordable units long-term with a buy-out option at year 30. Narayanan inquired if those buy-out funds would be utilized in the future. Stanley replied yes. Ideally those funds would be dedicated to an affordable housing trust fund. Case inquired what the developer’s reactions have been. Stanley replied after running the numbers they have not experienced developers saying that would not move forward with their project. Stanley stated for single family and owner-occupied homes it is recommended inclusionary housing be applied to development of 15 or more units. It requires 10 percent of units to be affordable to households earning 115 percent or less of AMI or a payment-in-lieu. Case inquired if the units will look identical to non-affordable units. Stanley responded ideally they want to see continuity so affordable units are not easily identified on the exterior. Nelson stated in the 1980s there was more variety of builds, and it was more appealing. Case inquired how the unit becomes affordable and remains affordable. Stanley stated there isn’t a strong single family or owner-occupied finance tool. TIF is impractical for these. Case clarified the developer would need to build a less expensive home in an expensive neighborhood. Stanley noted this is the primary reason to offer a choice of payment-in-lieu. Case inquired if the City would consider retaining ownership of the land and the house would be sold without the land. Stanley replied they are not recommending it. Jeremiah stated the developer could approach this with a land trust, but is it unlikely. It is a tool the City could consider. Freiberg mentioned the Cheyenne Land Trust. The house is leased out for a sequence of 99 years to homeowners. It is really common in Hawaii, but there is some liability. The payment on the lease is much less than potentially financing a home. Stanley added this is the land trust approach to not factoring in the cost of land with the home. City Council Workshop Minutes June 15, 2021 Page 4 Narayanan stated another approach he has heard of is help with the down payment of a home. Stanley stated the City does have a first time homebuyer program. Narayanan added the buyer would eventually pay the down payment sum back. Case clarified these alternatives are not what is being recommended. It is likely a developer would chose the payment in-lieu option for single family or owner-occupied homes. Stanley agreed. The payment in-lieu fee would need to be very high in order for many developers to consider the other option. Narayanan asked why this policy would need to be applied to single family housing. Stanley replied the idea is there would be funds designated to the City in exchange for affordable units. Stanley reviewed comparable policies in nearby cities such as Bloomington, Edina, Richfield, and St. Louis Park. Getschow noted Eden Prairie is on equal footing when creating a policy for rental units. In regards to single family or owner-occupied there aren’t 15 unit developments happening in many of the other cities. Case inquired how many potential projects there could be with 15 or more units and what the potential additional cost is to the other homes. Getschow noted there is an owner-occupied townhome proposal this evening with an affordable aspect. Case stated there might be better options such as increasing the Housing and Redevelopment Authority (HRA) levy. Narayanan inquired if the policy allows for flexibility. Neuville replied in the draft ordinance there is an exemption section that allows the Council some flexibility to alter or modify the requirements. It is good to have flexibility for developers, but she would still recommend including the criteria to move away from the deal-by-deal. Stanley stated the sizing of the in-lieu fee is critical. Jeremiah stated the City does have one owner-occupied project at Applewood Point. Single family housing could be excluded. Nelson stated Hennepin village does have a variety of houses, and she would like to continue allowing for a similar concept. She prefers to keep the owner-occupied portion of the ordinance. Stanley replied they can strive for affordability in any circumstances. Freiberg stated with the development of light rail transit (LRT) there is opportunity for housing development. The City may have an opportunity for additional affordability. Nelson noted it is unlikely to be single family detached. Narayanan inquired about the AMI amount. Stanley replied it is a regional figure. Toomey added it is unfortunate they calculate AMI based off gross income. Stanley stated there are cost offsets in use by other local cities. Density bonus is very popular. Fast tracked processes have been discussed. For smaller amounts there have been uses of fee reduction, deferments, and waivers. It is important the City recognizes these methods and attempts to offset the cost. Case inquired if the City has plans for a density bonus. Klima stated the Comprehensive Plan sets the density ranges for different land use categories. The zoning district has a much lower density cap in the multifamily zoning districts, so through a planned unit development (PUD) process the City is reviewing each and allowing increases in the density up to the maximum in the range. The density bonus doesn’t necessarily align with the City’s philosophy. City Council Workshop Minutes June 15, 2021 Page 5 Stanley stated there a three specific questions Staff would like feedback on. Should affordable housing units be required for all projects? Should builders of owner-occupied units be allowed to pay a fee in lieu of providing affordable units on-site? How long should regulated units remain affordable? Nelson noted in perpetuity is important, especially in the instances they have recently seen when affordable units have expired. Case inquired about the legality of in perpetuity. Neuville stated state law does not provide a lot of guidance for what can or cannot be done. There hasn’t been any litigation she is aware of including these other inclusionary housing policies. The waters are rather untested right now. Getschow added most cities are in the 20 to 25 year range. With 30 years affordability the City would be the strictest. Narayanan inquired about the payment in-lieu amount. Neuville stated there should be some considerations of what the payment in-lieu looks like so they are not inconsistent. The number does not have to be set in advance. Narayanan inquired if the number would increase based on market rate in 30 years. Neuville noted circumstances could change dramatically in 30 years. Jeremiah noted this was addressed with the Paravel development and in perpetuity units. Ultimately the PUD can be amended so the development is successful. Case asked for feedback from Council on Staff questions. Freiberg stated he does not want to pursue owner-occupied single. Council unanimously agreed to pursue owner-occupied multifamily not single family. Case inquired if affordable housing units should be required for all projects. Council unanimously agreed they should be required. Case asked for how long units should be affordable. Toomey replied she would prefer 30 years. Freiberg noted the other cities mentioned are less than a 30 year requirement. Case stated he agrees with 30 years if it is legal and manageable. Narayanan stated 30 years seems like the standard the City has already been using if not in perpetuity. Nelson added it would be nice if something could be done to incentivize a developer to make affordable units in perpetuity. Open Podium - Council Chamber (6:30) III. OPEN PODIUM IV. ADJOURNMENT