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HomeMy WebLinkAbout[05] Rental Housing Work GroupJA.-19� CrrY of XT. J( )s1trH Council Agenda Item r MEETING DATE: May 5, 2011 AGENDA ITEM: Rental Housing Work Group SUBMITTED BY: EDA Director BOARD /COMMISSION /COMMITTEE RECOMMENDATION: In 2009, upon confirming that both CSB and SJU would be implementing a residency requirement for students, the EDA hosted a meeting with landlords to discuss a transition strategy for rental properties. EDA staff contacted landlords to solicit participation in a working group to address housing transition as it relates to the CSB /SJU housing polity change. PREVIOUS COUNCIL ACTION: In 2010 the City Council, upon a recommendation from the EDA, authorized the formation of a Rental Housing Work group whose task would be to determine if the City should be involved in the transition of rental units, and if so to what extent. The Council in March requested an update on the activities of the Rental Housing Work Group and it was agreed that a report would not be forwarded until after the working group conducted a meeting at which all rental property owners were invited. Members of the working group include: Cynthia Smith Strack, Dale Wick, Judy Weyrens, Barb Schloemer, Sue Palmer, Kurt Schneider, Cory Ehlert, MB Thompson. BACKGROUND INFORMATION: See attached memo BUDGET /FISCAL IMPACT: ATTACHMENTS: Request for Council Action .......... ............................... 5:1 -2 MDGMemo ................................... ............................... 5:3 -20 REQUESTED COUNCIL ACTION: 5:1 THIS PAGE INTENTIONALLY LEFT BLANK 5:2 CITY OF ST. JOSEPH WWW.cityofstjoseph.com Date: April 29, 2011 Since its formation the WG has met nine times (meetings limited to one hour in length so as to encourage efficiency and accommodate schedules) for a total of nine hours of discussion. Update on WG Activities: The initial meeting in August, 2010 began with introductions, an overview of the WG task, and the sharing of initial information related to a study completed by SCSU. Those in attendance were then asked to share their perspectives of the issue and expectations for the WG. The meeting ended with consensus that the issue was potentially too impactful to not study further. Over the next several meetings brainstorming, prioritization of brainstorming ideas, and review/next step activities occurred. After reviewing brainstorming ideas, the WG decided additional information and a meeting to which all rental property owners were invited were needed. 5:3 Memo To: Honorable Mayor Schultz Members of the City Council City Administrator Weyrens Administrator Memo From: Cynthia Smith - Strack, MDG, Inc. Judy Weyrens RE: Rental Housing Working Group Mayor Richard Schultz Backaround: Councilors In October of 2009 the EDA hosted a meeting with student rental property owners. One Steve Frank outcome of the meeting was a desire by some of those present to volunteer to serve on a Bob Loso group formed to investigate potential strategies to transition rental properties to other uses. Renee Symanietz Dale Wick In the Spring of 2010, the EDA Board requested staff contact those persons potentially interested in serving on a working group related to identification of options pursuant to the EDA SCSU Economic Impact Study. Staff has contacted the group of rental property owners Carolyn Yaggie- who had indicated a willingness to work on defining a transition strategy related to rental Heinen housing changes. A few persons have responded with a desire to serve on such a group. Chad Davey Al Rassier In June of 2010 the EDA approved a recommendation to the City Council to form a Student Tom Skahen Rental Working Group. In July, 2010 the City Council authorized the formation of a working Dale Wick group (WG). The WG was open to stakeholders with professional and technical expertise who were willing to work with City representatives to examine transition strategies related to rental housing changes. While the WG parameters were not specifically defined the stated overall goal was to determine, examine, and report potential strategies to transition student rental properties from previous occupancy levels to those experienced post - change in CSB /SJU on campus residency requirements. The basic underlying question to be examined is whether or not the public sector should get involved in transitioning rental uses, and, if so to what extent. Since its formation the WG has met nine times (meetings limited to one hour in length so as to encourage efficiency and accommodate schedules) for a total of nine hours of discussion. Update on WG Activities: The initial meeting in August, 2010 began with introductions, an overview of the WG task, and the sharing of initial information related to a study completed by SCSU. Those in attendance were then asked to share their perspectives of the issue and expectations for the WG. The meeting ended with consensus that the issue was potentially too impactful to not study further. Over the next several meetings brainstorming, prioritization of brainstorming ideas, and review/next step activities occurred. After reviewing brainstorming ideas, the WG decided additional information and a meeting to which all rental property owners were invited were needed. 5:3 Tangible Items Produced to Date by WG Activities: The following materials have been produced by the WG to date. They are attached to this memo in the same order: 1. A list of brainstorming ideas (this is not a prioritized list) 2. A sub -area map of rental property, by type (IUP, SF student rental, MF 4+ unit) with zoning classifications as base map. 3. A list of ideas generated by the WG as a result of reviewing the sub -area map. 4. A fisting of estimated market values of rental properties, by type ($22M in value) created from sub -area map. 5. A list of potential grant/loan opportunities that could support efforts to transition student rentals to other uses. 6. Materials from meeting with rental property owners on April 201h including meeting notes and a survey distributed to those present. Purpose of the meeting was to gauge potential interest in working to transition uses. Presentation at Meeting Two members of the WG will present information to the Council on May 5th. Other representatives from the WG will be in the audience. The presentation will be given by Cory Ehlert and Kurt Schneider. The WG plans to continue to meet to discuss potential grant opportunities unless otherwise directed by the Council. Action: This item was requested by the City Council and is provided for information and comment. 5:4 Rental Housing Working Group Brainstorming Session September 22, 2010 BRAINSTORMING IDEAS RENTAL HOUSING TRANSITION STRATEGIES NOTE: UNEDITED OR FILTERED, ALTHOUGH GROUP DIDCONDUCT A SEPARATE EXERCISE TO PRIORITIZE (prioritization questions are contained at the close of this document). SUBJECT AREA: Ideas for CSB /SJU • Certified Housing Program (CHP) • Work w /College to utilize the Campus Villas as a dorm rather than build • Purchase larger units and certify for select students • Rent buildings instead of building — don't have empty buildings being vandalized • Purchase housing • Contribute to transition program — proceeds used for down payment assistance on single family units • Rework off - campus lottery so those who want to room together are eligible as a group • Use existing structures as faculty /staff friendly (desirable) apartments / housing • CSB /SJU use incentives for staff to move into vacated residential units SUBJECT AREA: Planning • Create Study Areas within city • Concentrate on larger, primarily student housing apartment complexes due to property tax implications • Determine priority for time and resources Campus Villas most important or start with single family homes • Prioritize what is first, what is next, and then what • identify "players" and resources • Find other markets who have worked thru this • Timeline and plan • Who will need this space? — Find out • What similar groups of residents need this space ? — Market • Tour larger apartment complex to learn more • Identify property where land is significantly more valuable than home itself — large home receive top priority • Explore if mortgage holders (banks) want to become actively involved finding solutions • Interview rental property investors from twin cities — ask for advice • Better identify proposed impact and timeline for movement • Find out what apartment house owners belong to rental associations • Develop "University District" group student housing within that district • Find out what other cities did in similar situations — meet with them 5:5 Rental Housing Working Group Brainstorming Session September 22, 2010 SUBJECT AREA: Industry / EDA • Get more industry to have more jobs available to have people to fill units • Public transportation to surrounding communities to attract more residents • Who says people won't drive to St. Joseph to rent? — Market • Connect employers with landlords to promote rental/ownership within the city • Family housing — work with MTC to do route into St. Cloud / Waite Park like County Road 75 route • Any further rental base considering area? Attract downtown rather than near Coborns, etc... SUBJECT AREA: Money/Resources/Financing • Housing Grant Application • Seek Redevelopment Grants • Comprehensive Grant Application • Initiative Foundation work with city similar to St. Cloud with core neighborhoods • Grants / Low Interest Loans for property upgrades • Grant Programs — HUD, MHFA • Who will pay? • Identify fund available from government — how can city retain funds for recirculation? • Fund transition program thru city CIP — Use for down payment or repair assistance • Ask for assistance thru state bonding bill to transition rentals • Use SCDP to change selected single family rentals to owner occupied • Cost of razing blighted property? SUBJECT AREA: Ideas for Campus Villas • Assisted living for seniors — none in area? • Hire an architect to see if the building can be remodeled for another use • Senior housing add elevators, etc. in larger units • Farmers Market — Crafters — Community Ed Center • Have larger units serve as Conference Center • Attract satellite campus from? — Convert to classroom and offices? • Hotel with conferencing options • Business Center (Offices, conference rooms) Charter School — Boarding for SJ Prep • Combined retail — gym/fitness as components • Convert to a large recreation center — 3 story climbing wall (Monticello) • Hotel / Suites hostel — style rentals • Large Montessori School — Villas • "Grandstay" like hotel / extended stay options 5 :6 Rental Housing Working Group Brainstorming Session September 22, 2010 SUBJECT AREA: Transitioning of Single Family Student Rentals • Partner with Habitat for Humanity for possible conversion to single family dwellings • Work with Habitat for Humanity to convert • Community rehab project? Habitat for Humanity buy in — resources • Houses to single family first time home buyers • What groupings are there for parking lots / business centers — in town • Purchase a group of rental homes in the downtown and raze them — put in senior housing • Work with Stearns HRA to turn single family units from rental to owner occupied • Identify single family homes and apartments that could be converted to business SUBJECT AREA: Issues / Concerns • Students not knowing what to look for in a lease or paying monthly bills • Do nothing — let market do its thing • Students not having rental reference for after graduation • Ask what if— example — Campus Villas is vacant, can't be sold and falls into disrepair • Wait 2 years and see if there is a need to help transition units • Ask public what if anything should be done • Get owners of rental properties more involved • Slow down transition to four year residency — phase in slowly • Work with CSB on timing of adding the additional 150 units • Ask rental property owners to either opt in or opt out of the transition planning — work only with those opting in • Ask property owners what, if any, strategy they have in place for dealing with the residency change • Determine level of commitment from various stakeholders — City — Property Owners — CSB /SJU • Ask SJU to be present at the working group meetings • Ask / invite single family housing owners to working group meetings 5:7 Rental Housing Working Group Brainstorming Session September 22, 2010 Prioritization/Ranking Categories: 1. To what degree is the idea is based on reason, clear, and sensible thinking rather than emotion or prejudice? 2. To what degree is this idea capable of being put into effect? 3. How quickly can this idea be implemented? 4. How great are the potential benefits of this idea? 5. To what extent will this idea help transition student rental properties to other uses? 5:8 ° In O h o�g -j Ec E4 vi T m C N C .ION- 1--a. N co >. 'E m E c u m S win SAEu V C Q E ?_` m N'C O co j j C �i E LL m= CO tL m 4 m m O m V LL CL E95 Es .� c c °c =c 3� O c o, w .� RByx = =o p a a� m �� �� r �a x m c' 0 LL rn w w $gQem$ 2 O a ^u v E c a ¢' �Z mw ..� E98,pym HL Hie I �� -- i '16,1101 SOON AJ Hill awi V Y f J hry � �rox i = fIf a � c Fl 0 a0 U) J LL Q Z Z Z W od a W Z cn 2 O N S U) CL W O V) 5:9 Rental housing working group ideas - (sub areas) Sub -Area #1: • Convert those on fringe to SF. • Leave St. Joseph Apartments as is. • Parcels owned by CSB south of Minnesota and west of 3rd may not continue as rental units, CSB Master Plan may change. • Remember 3`d Ave in only entrance to CSB from Mn. Street • Master plan % block between Minnesota, 3'd, Ash, and 2 "d. Be mindful of needed connection to CSB, Monastery — visual connection across Minnesota street. • Rezone the % block are mentioned above to CBD. • "The projects" townhomes, tried to convert to G.O. previously — didn't work. • 4+ unit rentals — property owner plans to convert to G.O. or even Section 8 Sub -Area #2: • Area by old clinic target for redevelopment. • Leave area by College /Ash as is to transition on its own. • Consider areas for a downtown park and public parking (facilities planning). • Maybe public parking by old P.D. bldg — water treatment plant /well. Sub -Area #3: • Bldgs west of college between Date /Elm — guide toward trail retail /mixed use. • Campus Villas — CSB to tour. This is an absolute priority. • Streetscape and addl trail parking by water tower. Su b- Area #4: • Properties with the exception of those abutting CSAH 75 /Birch St. could possibly be converted to owner occupied housing units from rental housing units. • There is consensus the transition from rental house to owner occupied house could require assistance. Sub -Area #5: • General feeling is that most of these units will be suitable for general occupancy vs. student rental as many already are general occupancy. Feeling is this area will transition naturally although we feel there may be a need or desire to support rehabilitation /redevelopment of the Hoffman rental complex at some point in the future. 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Funds are granted to local units of government, which, in turn, lend funds for the purpose of rehabilitating local housing stock. Loans may be used for owner - occupied, rental, single - family or multiple - family housing rehabilitation. Loan agreements may allow for deferred payments or immediate monthly payments. Interest rates may vary, and loan repayments are retained by grantees for the purpose of making additional rehabilitation loans. SCDP funds may also be used to assist new housing construction projects. Funds may also be used for land acquisition, site improvements and infrastructure and housing construction. In all cases, housing funds must benefit low- and moderate - income persons. This loan program could include a portion that is 'forgivable' should beneficiary hold on the property for a number of years. Demolition Grant Program through Minnesota Department of Employment and Economic Development (DEED). DEED is proposing an amendment to the Redevelopment Grant Program that would provide funds for demolition activities on sites even when there is no imminent redevelopment opportunity or plan. The program could assist development authorities with the costs of demolishing blighted buildings on sites that have future development potential but where there are no current development plans. "Demolition costs" means the costs of demolition, destruction, removal and clearance of all structures and other improvements on the project site, including interior remedial activities, and proper disposal thereof. DEED Redevelopment Grant Program. DEED's Redevelopment Grant Program helps communities with the costs of redeveloping blighted industrial, residential, or commercial sites and putting land back into productive use. Grants pay up to half of redevelopment costs for a qualifying site, with a 50- percent local match. Grants can pay for land acquisition, demolition, infrastructure improvements, soil stabilization when infill is required, ponding or other environmental infrastructure and adaptive reuse of buildings, including remedial activities at sites where a subsequent redevelopment will occur. Redevelopment Tax Increment Financing. Tax increment financing is a tool which allows the City /EDA to reimburse the company or land owner a portion of the new property taxes which are generated as a result of an project. The amount of financial assistance available (TIF) is dependent upon a number of factors including but not limited to the assessed market value of the building and the financial need of the company. Several types of TIF districts are authorized by state law including a redevelopment district. Redevelopment districts may be comprised of mixed use properties. Minnesota City Participation Program. Minnesota Housing Finance Agency (MHFA) sells mortgage revenue bonds on behalf of cities to meet locally identified housing needs. The proceeds of these bonds provide below- market interest rate home mortgage loans for low -and moderate - income first -time homebuyers. The Minnesota City Participation Program provides cities throughout the state with a unique opportunity to easily access housing resources to meet the needs of their citizens. MHFA Single Family Rehabilitation Loan Program The Rehabilitation Loan Program (RLP) provides deferred loan financing to low income homeowners needing to rehabilitate their existing residential housing for the purpose of improving its safety, livability or energy efficiency. The RLP is a compliment to loan programs available in the private sector and fills the financing gap that exists between homeowners who are able to secure home improvement financing in the private sector and those homeowners who are unable to do so. Potential grant, loan, and assistance available to property owners - 5:17 Neighborhood Stabilization Program (NSP1 and NSP3) (MFHA, if additional allocation identified) In response to the drastic increase in foreclosures and the impact of the subprime lending environment on housing. Congress authorized the Neighborhood Stabilization Program (NSP1) under Title III of Division B of the Housing and Economic Recovery Act (HERA) signed by the President July 30th, 2008. NSP provides emergency assistance for the redevelopment of abandoned and foreclosed homes. NSP Funding Applications closed in January 2009. In a third round of funding, Congress authorized NSP3 under the Dodd -Frank Wall Street Reform and Consumer Protection Act of 2010, which provided additional funding for the Neighborhood Stabilization Program (NSP). NSP3 funding assignments were approved in February 2011. Minnesota Multifamily Rental Housing Common Application. MHFA its funding and collaborating partners, in an effort to eliminate duplication and simplify the financial packaging process, provide a common application to be used for multifamily rental housing projects seeking more than one funding source. Housing Tax Credits The Federal Tax Reform Act of 1986 created the Housing Tax Credit (HTC) Program for qualified residential rental properties. The HTC offers a ten year reduction in tax liability to owners and investors in eligible affordable rental housing units produced as a result of new construction, rehabilitation, or acquisition with rehabilitation. Minnesota Housing was designated by the Minnesota Legislature as the primary allocating Agency of Housing Tax Credits (HTC) in Minnesota. Qualified local cities and counties have also been designated by the Legislature as suballocators of the HTC. Multifamily Rental Assistance The Minnesota Legislature established the Housing Trust Fund in 1988 to support the development of affordable housing for low- income persons and families. Historically, the program was used for capital funding only. Now eligible activities are expanded to include rental assistance and housing operating support. MHFA Rental Rehabilitation Loans (RRL) The purpose of the Rental Rehabilitation Loan Program is to assist owners of smaller rental properties finance improvements to their investment properties, occupied by persons or families that have an income less than 80% of the statewide median income. The loan is a 6% annual percentage rate, with a term of up to 15 years. The loan is non - assumable, and due on sale. You may receive up to $25,000 for a one or two unit property, or $10,000 per unit for larger properties, with a maximum amount of $100,000. MHFA Rental Rehabilitation Deferred Loan (RRDL) Information coming soon and will be posted in this location as soon as it becomes available, expected to be similar to that above (i.e. RRL) only allow for deferral of loan. Stearns County HRA Revolving Loan Fund. Stearns County HRA provides a loan program for gap financing for projects related to economic development. The loan program interest rate may be lower than market rate but is dependent on qualifications. City of St. Joseph BFA Grant. The St. Joseph EDA has established a matching grant program in the amount of up to $1,000 to assist with commercial use architectural services, facade changes /enhancements, signage, landscaping and the like for commercial properties. In general improvements visible from a public right of way are eligible projects. If a student rental is contemplated for use as a commercial establishment this program could be employed. Potential grant, loan, and assistance available to property owners 5:18 Rental Property Owner Meeting Sal's 6:30 p.m. April 20, 2011 Introduction. Thank you for attending this meeting. We are representing a rental housing working group which was formed as a result of a meeting with rental property owners in 2009. You are all invited to participate in the working group. We meet monthly and our purpose is to determine if the City should be involved in transitioning student rental properties to other uses, and, if the answer is 'yes' to suggest potential transition strategies to the Council. So far we've done some brainstorming and researching. We've also tried to break down the issue by creating sub -areas and examining the kinds of student rentals and the number of student rentals within each. Now we'd like to hear from you. We think this will help us to make appropriate recommendations to the City Council. We are set to present information to the Council on May Stn We are not here to talk about whether or not CSB /SJU residency requirements will be changed because we know that is a given, rather we are here to hear from you. Purpose of meeting: • This is your opportunity to be heard and be part of a vision for the future of your student rental property. • It's also an opportunity to indicate whether or not you would like to actively participate in transitioning your student rental property to an alternate use based on its location, size, age, etc. • We'll also share some information with you on potential grant programs that could assist in transitioning student rental property to other uses. Most of them require application by /through the City to access. Meeting logistics: • We hope to be done with'this meeting in an hour or so. • Barb, Kurt, Cory, and I are here to help facilitate a discussion. • We'd like you to sign the sheet that's being distributed. • The wall maps are for your reference and our information as we hear from you. • We have a survey we'd like you to complete before you leave. 5:19 Student Rental Property Owner Survey Name: Rental Property Address(s): 1. Are you planning a change to your student rental property? If so, in general what are your plans? 2. Are you interested in applying for grants that could potentially assist in making a change to your student rental property? If so, what would you use assistance for? Do you think your student rental property(ies) have an alternative use(s) based on its (there) age, location, size, etc? What would or could that use(s) be (for example: single family owner occupied home, continued general market rental, senior rental complex, community center, parking lot, park land or open space, downtown pedestrian friendly business use, commercial use dependent on vehicular traffic, etc)? 4. Are you interested in being involved with student rental transition planning? If so, in what way? 5. Should the City be involved in helping property owners transition their student rentals to alternative uses or should the City allow the market to make adjustments? Please explain. 5:20 ® Background: 0 The College of St. Benedict and St. John's University have changed student on- campus residency requirements. The 9ACKSnourvo goal is now to house 90% of students on- campus for all four years of their college experience. 0 This change is projected to result in an annual $1.3M decrease in local business volume according to an SCSU Study. o The value of student rental properties within the community is estimated to be over $22M (based on most recent estimated market values available). GROUP UPDATE TO COUNCIL a Timeline: 0 September 2009 impact study completed by SCSU. o October 2009 EDA hosts meeting with student rental property owners some of who indicate desire to help T—u., EDA identify strategies to transition rental properties to other uses. 0 2010 EDA Goals continue to address rental unit conversion issues resulting from residency requirement changes at the College and University. Accepted by City Council on March 18, 2010. aUpdate to the City �i 5/10/2011 RENTAL HOUSING WORK GROUP UPDATE TO 'COUNCIL 0 Timeline: 0 2008 EDA Goals include formation of a focus group to examine CSB /SJU four -year residency initiative. Group expected to encourage dialogue regarding the residency initiative, provide factual information to decision makers and the public and to establish a work plan to provide for TiMEOnE the transition. Council accepted at January 29, 2008 retreat. u�nat� o December 2008 Economic Impact Study commissioned by ": rdaan EDA. 0 2009 EDA Goals include continuation of investigation of potential impact of residency change. Council indicated EDA should continue to work on this item at a meeting retreat on February 10, 2009. 1 RENTAL HOUSING :WORK „ GROUP UPDATE TO COUNCIL a Timeline: O Spring 2010 EDA recommends Council form Rental Housing Working Group following consultation with SCSU study agents and owners of rental housing aura ;a properties. T—ueE o July 2010 City Council Authorizes Working Group to: O Make a recommendation to Council regarding whether or not the public sector should get Involved in transitioning rental uses. p cdr<ts O Examine and report potential strategies to Council regarding transitioning student rental properties from previous occupancy to post on- campus housing change. o August, 2010 Working Group has first meeting. 1 0 Update: O Work group has met nine times (one hour each month). c O First meeting - determined economic impact warranted additional meetings, study. -`• O Subsequent meetings involved a brainstorming exercise, evaluation of ideas developed during uvonrr brainstorming, further scrutiny of existing student rental units, and an effort to reach out to rental s property owners. O Most recently the Working Group hosted a meeting with rental property owners to allow for insight into transitioning strategies and to gauge interest in participating in transition effort. GROUP UPDATE TO COUNC 0 Products of Work Group: O Sub -area map of rental property by type of rental (Interim use, student rental house, apartments) superimposed on existing zoning. Nor— ¢s; O List of ideas generated by Working Group from examination of sub -area map. RENTAL HOUSING WORKING' GROUP UPDATE TO COUNCIL' @Next Step: @Work Group plans to continue to meet to discuss potential grant opportunities unless otherwise directed by the Council. 5/10/2011 RENTAL HOUSING WORK GROUP UPDATE TO COUNCIL 0 Products of Work Group: O Brainstorming ideas: unfiltered strategies; comments on a variety of subjects including (a complete list included in packet): Duna <, o What /how CSB /SJU could contribute to transitioning O Planning /prioritization of transition efforts /concerns O Role of EDA in transitioning units o Potential financial resources available to assist with cm transitioning O Potential re -uses for Campus Villas O Potential re -uses for existing student rental houses O overall issues /concerns 0 Products of Work Group: • List of potential grant /loan opportunities that could support efforts to transition student rentals to other uses. 0 Market value information on properties with interim use permits to allow renter(s), free - standing single c,:�aae family homes used for student rental purposes, and apartment buildings used for student rentals. P—_ • Information including a survey presented to rental property owners late last month. 2