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City Council - 02/19/2019 - Workshop APPROVED MINUTES CITY COUNCIL WORKSHOP & OPEN PODIUM TUESDAY, FEBRUARY 19, 2019 CITY CENTER 5:00—6:25 PM, HERITAGE ROOMS 6:30—7:00 PM, COUNCIL CHAMBER 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, Interim Fire Chief Kevin Schmieg, 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 Ric Rosow, and Recorder Katie O'Connor GUEST: Planning Commission Workshop - Heritage Rooms I and H(5:30) I. HOUSING Mayor Case introduced the topic. City Manager Getschow stated there have been workshops devoted to housing with Aspire and the Strategic Plan for Housing and Economic Development. The last housing related workshop discussed inclusionary housing. Housing and Community Services Manager Stanley provided on overview of the topics that will be covered including current housing policy documents, an overview of current housing policies and programs along with Eden Prairie successes, inclusionary housing recommendations, fair housing policy, and tenant protection ordinances. Current housing policy documents include the Strategic Plan for Housing and Economic Development 2017- 2020, which serves as the City's short-term action plan for prioritizing projects and identifying needs, potential financing sources, and setting goals for implementation. The Aspire 2040 Comprehensive Plan is a long-term document with a recently completed housing chapter that includes the framework for inclusionary housing; the Land Use Chapter that identifies new densities, districts and infill opportunities; and the Implementation Chapter which includes a matrix of housing tools used by the City. Council Member Aho inquired how inclusionary housing differs from fair housing policy. Stanley replied inclusionary housing requires new developments to include a set percentage of affordable units, and fair housing policy is a guide to how the City will look at and approach fair housing issues. Stanley provided on overview of current affordable housing policies, programs and practices including City successes. The City administers affordable homeownership through the First Time Homebuyers Program and Homes Within Reach Program with West Hennepin Affordable Housing Land Trust. Maintenance of owner-occupied houses, townhomes and rental units are done through the Rehab Program, Housing Improvement Areas, and License City Council Workshop Minutes February 19, 2019 Page 2 and Inspection Program. The Property Manager's Group will be reactivated for education and collaboration opportunities. To preserve affordable rental housing, the City is utilizing tax increment financing (TIF) District Extensions, Pooled TIF for naturally occurring affordable housing, and required acceptance of Section 8 Housing Choice Vouchers. Case inquired if naturally occurring affordable housing is mostly rental. Stanley replied yes. Aho inquired how the City is requiring the acceptance of Section 8 Housing Choice Vouchers. Stanley replied Staff has negotiated the acceptance into development agreements. Aho inquired if these are for new properties. Stanley replied the requirements are part of the negotiations for financing of the developments and not for new properties. Nelson recalled Prairie Meadows always being section 8 housing. Community Development Director Jeremiah stated it was and they were looking for housing revenue bonds when close to term. The City developed a policy in 2017 requiring any conduit financing to accept section 8 housing choice vouchers. The rent difference was made up by the vouchers. Council Member Freiberg inquired what the major pushback is with accepting section 8 housing. Stanley stated one of the primary perceptions is damage to units. A loss in overall revenue can also be perceived. If they are charging rents higher than the set rental threshold, then it wouldn't be in their best interest. Council Member Narayanan inquired how the City's policies compare to neighboring cities policies. Stanley stated the City's use of pooled TIF tends to be ahead of the curve. Jeremiah stated metro cities are sharing their successes with one another. There are limitations in making comparisons to charter cities. The City has been a leader in making inclusionary housing in perpetuity. The City has also had successes with extending TIF districts. The City has been a leader in some areas and at least equal in other areas. 37 percent of the existing housing is affordable in the City. Aho inquired if the Land Trust continues to own the property for the Homes Within Reach program. Stanley stated the land trust continues to own the land and the house is sold. The land trust will scout and find eligible buyers. The nonprofit West Hennepin Affordable Housing Land Trust is the owner. Jeremiah stated the Land Trust maintains their portion of the equity and any growth in the market value of the building. Case inquired how many homes are in the Homes Within Reach Program. Stanley replied he does not have those specific numbers, but the Twin Cities has a disproportionate number of these Land Trust homes in comparison to other cities. Jeremiah added the City has been creating about one per year for the last 15 years. Narayanan stated he would like to see some numbers comparing the City with other neighboring cities. Stanley stated he can make those numbers available. Stanley stated the City also had recent affordable rental housing developments utilize financing through new TIF Districts, Pooled TIF for Transit-Oriented Development (TOD), Livable Communities grants, and Resolutions of support for other financing. Additionally, affordable inclusionary housing has been secured with no subsidy. The inclusionary housing policy requires a given share of new construction be affordable by people with low to City Council Workshop Minutes February 19, 2019 Page 3 moderate incomes. Inclusionary housing policies vary amongst cities. Edina is the only local city that allows a payment in lieu of$100,000 per unit for rental or for-sale housing. Aho inquired if the financial differences are made up once the TIF program ends. Stanley stated there is no financial gain at the end. Jeremiah stated a subsidized project via TIF has received tax benefits for many years. Case reiterated it would be beneficial to have the numbers as comparisons from other cities. Stanley stated the Planning Commission provided the feedback to stay flexible for developers, limit projects to a certain size requirement to not hamper smaller developments, treat rental and for-sale differently, keep units integrated into developments, revisit the policy periodically, and to not allow payment in lieu for rental development. Nelson inquired if affordable units are checked to make sure they are kept to the same standards over time as other units in the development. Interim Fire Chief Schmieg stated inspectors check units for safety issues and make certain all units are being maintained. Getschow noted feedback has been sought from residents during the Aspire 2040 plan and the various methods of outreach. Jeremiah stated from that feedback the City has developed goals for affordability after identifying needs. Stanley stated over 35 percent of programs nationally are doing in perpetuity on rental and over 30 percent on for-sale. A formal policy sends a consistent signal to developers. Brooklyn Park offers a range of affordability thresholds for developers. The units need to be of comparable quality, and the City would require them to be integrated throughout the building. Planning Commissioner Mette inquired if 10 percent at 80 percent AMI for ownership units is for single family developments. Stanley stated this would be for owner occupied, single family developments of 10 units or more. Jeremiah added the City has attempted this process with homeowner units at Applewood Pointe. This model would be utilized on multi-family. Aho inquired what percentage of income is considered affordable. Stanley replied generally housing should account for 30 percent of income. Planning Commissioner Farr inquired if this is a blend of unit types, one to three bedroom. Stanley stated the City does recommend a blend of units. Stanley presented, without subsidies, for rental units it is recommended for developers to choose a level of affordability, changing from 5 percent at 50 percent AMI and 5 percent at 80 percent AMI to 5 percent at 30 percent AMI, 10 percent at 50 percent AMI, or 15 percent at 60 percent AML This would allow for a slightly greater profit for developers. Jeremiah stated to be eligible for subsidies, the minimum requirement is 20 percent at 50 percent AMI or 40 percent at 60 percent AMI. Case inquired if the restrictions are hampering development in the City. Jeremiah responded there has been good response to a soft policy especially with two new senior developments. City Council Workshop Minutes February 19, 2019 Page 4 Aho added the City only has about 60 acres available to develop. Jeremiah stated the City is still working on infill properties and the redevelopment around the light rail. Nelson inquired if we have looked into the density of projects to get more units. Jeremiah replied many are not utilizing the density bonuses, specifically with parking requirements. Stanley stated the recommendation for owner-occupied housing is to require 10 percent at or below 80 percent AMI or the potential of payment in lieu of affordable units to be used toward affordable owner-occupied or rental housing elsewhere. Aho inquired where the money would go if the City did payment in lieu. Jeremiah recommended it go to the Land Trust Fund as the model has been successful in the City. Stanley stated the fair housing policy is a requirement for Met Council Livable Communities Act Program. The City will need to have this in place for the Trail Pointe Ridge/Smith Village development. The policy defines the purpose and vision, designates a fair housing officer, discusses means for meaningful access for citizens, and puts in place internal practices that support fair housing. Stanley stated tenant protection ordinances are currently being adopted in metro cities for specific subsets of properties. Tenant protection ordinances provide advanced notice or notice of sale to tenants and the City, tenant protection periods of 90 days, eviction only for cause, no eviction for rescreening, and no eviction for substantial rent increases. There would be relocation assistance and penalties for violation of tenant protection policy. City Attorney Rosow stated a number of cities that have passed these policies are charter cities. A statutory city does not have an all powers clause, so there is doubt of whether statutory cities can sustain some of the features such as penalties. Aho inquired which properties the tenant protection ordinance would encompass. Stanley stated for most policies it only applies to the affordable units within the properties. Jeremiah stated staff could distribute draft policies for additional feedback. Getschow added there is another housing workshop planned for the spring. Open Podium - Council Chamber(6.30) II. OPEN PODIUM III. ADJOURNMENT