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HomeMy WebLinkAboutOrdinance - 12-2021 - Enacting a New City Code Chapter 13 Relating to Inclusionary Housing - 09/16/2021CITY OF EDEN PRAIRIE HENNEPIN COUNTY, MINNESOTA ORDINANCE NO. 12-2021 AN ORDINANCE OF THE CITY OF EDEN PRAIRIE, MINNESOTA, ENACTING NEW CITY CODE CHAPTER 13 RELATING TO INCLUSIONARY HOUSING THE CITY COUNCIL OF THE CITY OF EDEN PRAIRIE, MINNESOTA ORDAINS: Section 1. That the City Code is hereby amended by adding a new Chapter 13 to read as follows: CHAPTER 13 -INCLUSIONARY HOUSING SECTION 13.01 -FINDINGS, PURPOSE, AND AUTHORITY. Subd. 1. Findings. The City Council finds and declares the following: A. Appropriate housing that meets its citizens' needs is an integral part of Eden Prairie's existing and future prosperity and its citizens' health and well-being. B. A notable housing shortage exists in Eden Prairie for lower-income rental properties and owner-occupied housing. C. There is a pronounced need to encourage and assist in the development of affordable housing in Eden Prairie. D. A goal of the City's Comprehensive Plan, Aspire Eden Prairie 2040, is to incentivize attainable and affordable housing options for lower-income households so they can move to and remain in Eden Prairie. E. Aspire Eden Prairie 2040 establishes the portion of Eden Prairie's regional share of affordable housing at 1,408 new affordable units by 2030. F. The health, safety, and economic welfare of the present and future residents of Eden Prairie depends on the availability of a range of housing choices affordable to persons and families who live and work in the City. G. Developing and maintaining a healthy mix of affordable housing options can foster a diverse, resilient local economy by bringing workers and residents closer to their jobs, schools, and necessary services. Subd. 2. Purpose. The purpose of this Chapter is to implement the City's Inclusionary Housing Policy to further City's goal of promoting diversity in its housing stock such that households of various income levels, ages, and sizes have choice in the place they call home. Subd. 3. Authority. This Chapter is adopted pursuant to the following authority: A. Minn. Stat.§ 462.358, subd. la, which provides that a municipality may by ordinance adopt and maintain in effect subdivision regulations "to promote the availability of housing affordable to persons and families of all income levels"; B. Minn. Stat. § 462.358, subd. 11, which provides that, in connection with approving a development application, a municipality may enter into an agreement with an applicant that provides for a portion of housing units be affordable with established pricing and long- term affordability; and C. Minn. Stat. § 473.859, which requires municipal comprehensive plans to include "a housing implementation program, including official controls to implement the housing element of the land use plan, which will provide sufficient existing and new housing to meet the local unit's share of the metropolitan area need for low and moderate income housing." D. Chapter 4 of the City's Comprehensive Plan, Aspire Eden Prairie 2040, which emphasizes the need for increasing the City's affordable housing stock and providing diverse, safe, high-quality affordable housing options to residents of all income levels. SECTION 13.02. -DEFINITIONS. For the purposes of this Chapter, the following terms, phrases, words, and their derivations have the meanings given in this Section. Affordable Residential Project means a development that has received funding directly from an entity other than the City in exchange for the provision of affordable dwelling units. Area Median Income or AMI means the median household income as most recently determined by the United States Department of Housing and Urban Development for the Minneapolis-St. Paul- Bloomington, Minnesota -Wisconsin Metropolitan Statistical Area, as adjusted for household size and number of bedrooms. Developer means any person who applies to the City for a comprehensive plan amendment, zoning amendment, planned unit development, or site plan review for a residential project subject to the requirements of this Chapter. Dwelling Unit means residential accommodation including kitchen facilities, permanently installed, which are arranged, designed, used, or intended for use as living quarters for one (1) family and not more than an aggregate of two (2) roomers or boarders. Financial Assistance means the provision of TIF, pooled TIF, housing revenue bonds, grants secured by the City on behalf of the owner, funds levied to support affordable housing, reduced or waived City fees, and any other grants or loans provided by or through the City to the developer or owner that benefit a residential project. Household means one person residing alone or two or more related or unrelated persons sharing residency in a dwelling unit. 2 Inclusionary Dwelling Unit means a dwelling unit within a residential project subject to this Chapter that meets the affordability standards in Section 13.03, subdivision 1. Income-Eligible Household means a household that meets the income requirements to qualify for ownership or occupancy of an inclusionary dwelling unit. Market Rate Residential Project means a residential project in which the dwelling units are or will be marketed for sale or lease at a price affordable to households earning 120% or more of AMI. Owner means the individual or entity that holds title to a property as determined from the Hennepin County property records. Residential Ownership Project means any residential project in which dwelling units are or will be sold to owners who will occupy the units. Residential Project means any residential or mixed-use development that includes any duplex, townhouse, apaiiment, condominium, or other multi-family residential dwelling units. A residential project subject to the requirements of this Chapter does not include a development containing only single-family homes. Residential Rental Project means any residential project in which dwelling units are or will be leased to tenants. TIF means tax increment financing provided pursuant to the authority granted by Minnesota Statutes Sections 469 .17 4-469 .1794. SECTION 13.03. -INCLUSIONARY HOUSING REQUIREMENT. Subd. 1. Applicability. This Chapter applies to any new or existing residential project that meets one or more of the following criteria: A. A market rate residential project that adds or creates fifteen (15) or more dwelling units and: 1. Requires approval from the City for a comprehensive plan amendment, zoning amendment, planned unit development, or site plan review; or 2. Receives financial assistance from the City. B. Any residential project that adds or creates fifteen (15) or more dwelling units and receives or will receive TIF from the City. C. A partially or fully affordable residential project that adds or creates fifteen (15) or more dwelling units that already meets or will meet the affordability requirement specified in subdivision 2. D. Any other residential project for which the developer or owner voluntarily chooses to provide inclusionary dwelling units under this Chapter. 3 Subd. 2. Affordability Requirement. A. For .residential rental projects, the developer must provide inclusionary dwelling units as follows: 1. 5% of the total dwelling units affordable to households at or below 30% of AMI; 2. 10% of the total dwelling units affordable to households at or below 50% of AMI; or 3. 15% of the total dwelling units affordable to households at or below 60% of AMI. B. For r~sidential ownership projects, the developer must provide inclusionary dwelling units as follows: 1. 10% of dwelling units affordable to households at or below 115% of AMI; or 2. Payment to the City in lieu of providing inclusionary dwelling units in an amount established by the Council by resolution or ordinance which will be used by the City to promote and provide affordable housing in other areas of the City. Such payment must be received by the City prior to the issuance of any building permit for the development or as otherwise established in the development agreement. C. For residential projects receiving TIF from the City, the inclusionary dwelling units required are 5% of dwelling units affordable to households at or below 80% of AMI. This inclusionary dwelling unit requirement is in addition to the statutory affordability requirements imposed as a condition of receiving TIF. D. For a partially or fully affordable residential project, the inclusionary dwelling units required are 10% of dwelling units affordable to households at or below 80% of AMI. This inclusionary dwelling unit requirement is in addition to any affordability requirements imposed by the entity providing funding or assistance for the affordable residential project. E. The number of inclusionary dwelling units required will be based on the total number of dwelling units approved by the City. If the final calculation includes a fraction of a unit, the fraction will be rounded up to the nearest whole number. F. For an existing residential project that is expanded by at least 15 dwelling units, the number of required inclusionary dwelling units will be based on the total number of units following completion of the expansion. G. The developer must include, along with its application to the City for a comprehensive plan amendment, zoning amendment, planned unit development, or site plan review, information detailing how the requirements of this Section will be met. 4 Subd. 3. Period of Affordability. A. Rental Projects. A residential rental project subject to this Chapter must maintain the inclusionary dwelling units in perpetuity. B. Ownership Projects. Inclusionary dwelling units in residential ownership projects must remain affordable for a minimum period of ten (10) years. Prior to the issuance of a building permit that allows the construction of any dwelling unit in the project, the developer or owner must record a restrictive covenant in a fo1m approved by the City against each inclusionary dwelling unit property prohibiting the sale of the property at a price higher than that affordable to a household earning 115% or less of AMI during the ten-year period. Subd. 4. Eligibility and Rent Limitation. A. Rental Projects. The following apply to residential rental projects subject to this Chapter: 1. Inclusionary dwelling units may only be leased to income-eligible households. 2. The monthly rent of the inclusionary dwelling unit must be based on the AMI as determined by the U.S. Department of Housing and Urban Development and published by the Minnesota Housing Finance Agency, adjusted for number of bedrooms. 3. A household that is income-eligible at the commencement of a lease may remain in the inclusionary dwelling unit for the entire lease term even if the household's income exceeds 120% of the applicable AMI before the end of the lease term. 4. An income-eligible household may remain in the inclusionary dwelling unit for additional lease periods so long as the income of the household does not exceed 120% of the applicable AMI for the inclusionary dwelling unit. 5. The owner or its agent may not decline to lease to, or otherwise discriminate against, income-eligible households that would pay their rent with federal, state, or local public assistance, or tenant-based federal, state, or local subsidies, including but not limited to rental assistance, rent supplements, and housing choice vouchers. B. Ownership Projects. Inclusionary dwelling units in residential ownership projects may be sold only to income-eligible households at the time of initial sale and during the period of affordability. Subd. 5. Standards for lnclusionary Dwelling Units. A. Location. Inclusionary dwelling units for an approved residential project must be located within that project. Unless otherwise approved by the Council, inclusionary dwelling units must be mixed with and incorporated into the overall development and must not be separated from market-rate units. Residents of inclusionary dwelling units must have equal 5 access to all entries, lobbies, elevators, parking, and amenities as residents of market-rate units. B. Unit Mix. Inclusionary dwelling units in residential rental projects may be fixed or may "float" within the development provided that the minimum number of required inclusionary dwelling units per bedroom size is maintained and the units are reasonably spread throughout the development. C. Timing. The construction or provision of inclusionary dwelling units must be concurrent with construction of new market-rate dwelling units. D. Primary Residence. An inclusionary dwelling unit may not be sold or leased to a household unless the household is income-eligible and the household will occupy the inclusionary dwelling unit as its primary residence. E. Size and Design. The size, design, and amenities of inclusionary dwelling units must at all times be functionally equivalent to the market-rate units in the project. F. Quality. The exterior materials, interior finish including appliances and mechanical equipment, and quality of construction of inclusionary dwelling units must be indistinguishable in style and quality from comparably priced or valued market-rate units in the project. G. Compliance with Laws and Codes. Inclusionary dwelling units must be maintained in compliance with all applicable state and local building codes and all other federal, state, and local rules and regulations. Subd. 6. Monitoring and Compliance. The owner or developer must submit documentation as and when required by the Community Development Director to establish continuing compliance with the requirements of this Chapter. The Community Development Director is directed and authorized to establish a program or procedure to monitor compliance. Subd. 7. Agreement with City. The requirements of this Chapter as applicable to an individual residential project will be incorporated into a development agreement or other agreement between the City and the owner or developer. The agreement must be recorded with the Hennepin County Recorder or Registrar of Titles, as appropriate, prior to issuance of a building permit or prior to the sale of any unit in the project, unless otherwise authorized by the City Manager in his or her sole discretion. Subd. 8. Exemptions. The City Council may, in its sole discretion, partially or fully exempt a residential project from the requirements of this Chapter or otherwise alter the requirements at any time if the Council finds that compliance with this Section would cause an undue burden. Factors that will be considered by the Council in determining whether a partial or full exemption should be granted include, but are not limited to: A. Whether the owner or developer has applied for or otherwise sought available resources to close any financial gap including, but not limited to, regional, state, or federal grants or loans. 6 B. Whether the residential project aligns with and will advance other goals of the City's Comprehensive Plan. C. Whether the residential project will serve special populations, including but not limited to veterans, households experiencing or at risk of experiencing long-term homelessness, and senior facilities providing assisted living, memory care, skilled nursing care, or end-of-life care. SECTIONS 13.04-13.98. -RESERVED SECTION 13.99. -VIOLATION A MISDEMEANOR. Every person violates a section, subdivision, paragraph, or provision of this chapter when he or she performs an act thereby prohibited or declared unlawful, or fails to act when such failure is prohibited or declared unlawful, and upon conviction thereof, shall be punished as for a misdemeanor except as otherwise stated in specific provisions hereof. Section 2. City Code Chapter 1 entitled "General Provisions and Definitions Applicable to the Entire City Code Including Penalty for Violation" is hereby adopted in its entirety, as though repeated verbatim herein. Section 3. This ordinance shall become effective from and after the date of its passage and publication. FIRST READ at a regular meeting of the City Council of the City of Eden Prairie on the 17th day of August, 2021, and finally read and adopted and ordered published at a regular meeting of the City Council of said City on the 7th day of September, 2021. ATTEST: Ronald A. Case, Mayor PUBLISHED in the Sun Sailor on the 16th day of September, 2021. 7