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City Council - 05/19/2020 - Workshop APPROVED MINUTES CITY COUNCIL WORKSHOP TUESDAY, MAY 19, 2020 5:30 – 6:30 PM, VIRTUAL MEETING CITY COUNCIL: Mayor Ron Case, Council Members Brad Aho, Kathy Nelson, Mark Freiberg, and PG Narayanan 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 – Virtual Meeting (5:30) I. HOUSING TASK FORCE UPDATE Case stated housing has been an important topic, and the Council is appreciative of the members of the Housing Task Force (HTF) who have been working diligently on creating recommendations. Getschow noted this will be the third time the HTF has met to discuss their progress on recommendations with the Council. Howe-Pullis, HTF chair, stated their mandate is guided by Aspire 2040. Housing is the foundation of the community. It helps to determine the health and vibrancy of a community. The most notable shortage of housing is for lower and upper income level rental properties, including single and multi-family rental units. There is a significant unmet need for affordable housing and senior-friendly living. The goal is to meet the number of units needed by 2040 while keeping the values of the City in mind. HTF has focused on the building and rehabilitation of rental units as this would create the biggest impact. Howe-Pullis stated providing developers with economic assistance, variances, reduced or waived fees, and a streamlined entitlement process provides the City with an opening to utilize a set of tools with developers to implement various strategies. Another need in regards to housing is renter protection strategies to ensure the wellbeing of Eden Prairie renters. Howe-Pullis presented a varied tool box of recommendations. One goal of the Inclusionary Housing Policy is to incentivize attainable and affordable housing options for lower-income households so they can move to and remain in City. HTF is recommending different standards for multifamily and single family housing. The inclusionary housing policy can be triggered by a request from the developer. There are guidelines surrounding the size of the development and the inclusionary unit requirement options. For multifamily the developer options include five percent of units at 30 percent average median income (AMI), 10 percent at 50 percent AMI, or 15 percent at 60 percent AMI. Single family options include 10 percent of units at 120 percent of AMI or pay a to-be-determined in lieu fee into a housing trust fund. HTF is strongly recommending the multifamily term be in perpetuity with a buy-out option for the developer a later set date. Single family can apply to the initial sale only or be secured by deed restriction. City Council Workshop Minutes May 19, 2020 Page 2 Case inquired which term differs from neighboring cities. Howe-Pullis responded in perpetuity. Howe-Pullis stated tools that might be utilized to make the inclusionary housing policy more attractive to developers are density variances, parking variances, fee adjustments and waivers, tax increment financing, expedited or streamlined entitlement process, and common space variances. The recommendations related to the triggers, project types, and number of inclusionary units are comparable to neighboring communities. Recommendations related to term and development size differ from neighboring communities with the intent to meet the goals of the community. Stanley stated affordable housing trust fund relates to the Aspire 2040 goal to work in partnership with private and public sectors to help envision and finance innovative housing demonstration projects and housing development. The purpose of the tool is to provide financial gap assistance for affordable and mixed-income housing projects and to provide assistance to low income renters and homebuyers. A formal trust fund would allow Eden Prairie to source, maintain and utilize monies in a structured manner. A variety of sources can be used to fund the Trust. The Trust funds can be used in a number of ways for needs and opportunities as they arise. Stanley provided examples of potential funding sources for the Affordable Housing Trust Fund including in lieu payments, pooled housing tax increment financing (TIF) payments, sale of City property, donations, State matching funds, and City transferred funds. Some examples of uses for funds are purchases of naturally occurring affordable housing (NOAH) properties, rehabilitation or renovation of NOAH properties, grants for rental assistance, loans or grants to developers as incentive for more affordable units, loans or grants for down payment assistance, or seminars for homebuyers or senior counseling services. HTF strongly recommends the creation of an Affordable Housing Trust Fund similar to St. Louis Park. There would be a document with clear guidelines on how the Trust can be used, administered, funds allocated, and the tracking and reporting. These trust funds are utilized in some Minnesota cities and are common in other states. Narayanan inquired if a private donation would be tax deductible. Stanley responded he is uncertain of the answer. Nelson stated if the trust fund donation is not tax deductible, the City could consider sourcing funds through the Eden Prairie Foundation as an alternative. Howe- Pullis stated this would need additional follow up. Howe-Pullis stated the third Aspire 2040 goal is to promote senior housing opportunities and increase housing choices. HTF will also provide recommendations in regards to connecting seniors to resources for knowing and understanding how to age in place. Narayanan inquired if there is priority to place current residents into affordable senior housing. Stanley replied it is a sensitive topic because of fair housing considerations. Jeremiah stated it depends on the financing. Housing and Urban Development (HUD) financing cannot include language in their agreement providing priority to current residents due to fair housing and equal opportunity. Stanley addressed the fourth Aspire 2040 goal referring to NOAH properties. NOAH properties are a critical source of existing affordable housing. Investors often quickly purchase NOAH properties and displace lower or moderate- income tenants. City Council Workshop Minutes May 19, 2020 Page 3 Recommendations include formalizing a definition of NOAH properties, obtaining rent information on these properties, putting an effective process in place for quick intervention when a NOAH property comes on the market, and proving expedited financing for NOAH preservation. A recommended formal definition of NOAH properties would be a class B or C property with at least four units where at least 20 percent of rents are affordable to households at or below 80 percent of AMI. Aho inquired how to maintain affordability after making needed repairs on NOAH properties. Stanley replied non-profit entities preserving NOAH properties do modest repairs. There is potential for the City to help assist with purchasing and repairing properties that cannot be purchased by one of the mission-oriented non-profits. Freiberg inquired how the City would have an effective process for quick intervention. Stanley replied establishing a means to identify properties preparing for sale before they are listed. Also, establishing a working relationship with mission-oriented buyers, such as Greater Minnesota Housing Fund (GMHF) and Aeon, and potentially providing them a list of properties the City considers NOAH properties. Nelson added this has also been an issue with multifamily housing. New owners make minimal repairs and increase rent. Stanley stated it is also important to reach out to owners of smaller properties that do not fit GMHF or Aeon’s purchase parameters to gain a sense of owner intentions and discuss the prospect of rehabilitation to gain long-term affordability. It would be critical to have funds available when these opportunities arise. Aho clarified the City is not looking to own these properties. Stanley replied there will be no ownership. Howe-Pullis spoke to the fifth goal addressed from Aspire 2040, prioritizing housing around public transit with convenient access to basic services. Southwest Light Rail development offers a unique opportunity to encourage developers specializing in affordable housing to participate. In these cases, providing important gap financing. These developers would not hand off the project, but would see it through. Stanley stated people are displaced when a NOAH property is sold. HTF identified a need to protect tenants and for tenants to understand their rights. Regionally, many communities are considering Tenant Protection Ordinances. The Ordinance would apply to any sold NOAH property for 90 days. The policy would require notification to tenants within 30 days of sale provided in writing in multiple languages. Payment would be required to affected low- income tenants of three months’ rent if tenant terminates the lease or owner terminates. The City cannot enact anything construed as rent control. Without rent increase protection, securing compliance with other restrictions is still worth the effort. HTF strongly recommends a written notice of tenant rights in multiple languages at the time a lease or extension to a lease is signed. This form would be created by the City. Howe-Pullis presented out-of-the-box strategies. Accessory dwelling units (ADU) in some form are allowed in 18 metro cities. ADU benefit the community in many ways and can provide a gentle form of density as form of small-scale infill housing. ADUs are only allowed in certain zoning districts and are limited to units built into the existing home. HTF City Council Workshop Minutes May 19, 2020 Page 4 recommends exploring ADU as separate structures. Additional out-of-the-box strategies being considered are micro units, land trusts, and linked apartments for larger families. Freiberg recommended researching land trust further as it is very common across the nation. Case agreed with this notion and stated this could allow properties to be in perpetuity and to assist seniors to age in place. Aho appreciated the presentation and encouraged the HTF to continue considering any potential unintended consequences through the implementation of these recommendations. Narayanan added he also appreciates the work of the HTF. Moquist stated the option of payment in lieu of could be appealing to developers, but what amount would be realistic. Howe-Pullis stated in perpetuity is existing right now, and it is not necessarily something that will scare developers away. Moquist added there needs to be a consistent, clearly communicated policy. Case agrees with both statements. One size likely does not fit all, but realistically some developers will be scared away in the process. Additionally, he would like to pursue the idea of the mother-in-law suites to help decrease cost of living. Nelson stated she would be in favor of pursuing mother-in-law suites and linked apartments. II. ADJOURNMENT