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HomeMy WebLinkAbout[06] Affordable Housing Council Agenda Item 6 MEETING DATE: May 6, 2019 AGENDA ITEM: Affordable Housing SUBMITTED BY: Administration BOARD/COMMISSION/COMMITTEE RECOMMENDATION: The EDA met on April 16, 2019 and recommended the City Council approve the utilization of Tax Increment Financing for the proposed affordable housing project presented by Sand Companies. In addition, they recommended the Council adopt the TIF district for the entire statutory limit of 25 years, using excess TIF to support other affordable housing projects such as rehabbing existing structures. The proposed site for the project is the Outlot in Liberty Point that has been on the forfeiture list for the past number of years. The EDA has agreed to purchase the property from Stearns County at a price of $ 25,000 contingent upon Sand receiving funding. The purchase will be refunded to the EDA by Sand Properties. PREVIOUS COUNCIL ACTION: The City Council met in joint session with the EDA on March 19 to hear a presentation from Sand Properties on a proposed affordable housing project and supported to continue investigating the financing options. BACKGROUND INFORMATION: Sand Properties is proposing to utilize the forfeiture property in Liberty Point to construct an affordable housing project. The matter before the Council is not the site plan for the project; rather if the City will utilize TIF or Tax Abatement to support the project. There has th been considerable discussion about the access to the property and the potential construction of 20 Avenue and Dale Street. Randy Sabart will be at the meeting to discuss the access and associated costs. thth With regard to 20 Avenue we do not have proposed costs for the road; rather high level estimates. 20 Avenue is proposed to be constructed with the design that was recently completed for Field Street. Utilities will have to be put under the road and at this time we do not know what type of development will be utilizing the pipes and since the property is not developed at this time, the City would be holding the costs for a number of years. The EDA had considerable discussion on the roads and the same information will be provided at the meeting. BUDGET/FISCAL IMPACT: ATTACHMENTS: Request for Action Letter of Support Northland Security Financial Impact April 16, 2019 EDA Minutes April 16, 2019 EDA Packet Material Liberty Pointe Plat REQUESTED COUNCIL ACTION: Determine if Tax Increment Financing or Tax Abatement is approved for this project. If so, approval of the letter of support. May 6, 2019 Minnesota Housing Finance Authority 400 Wabasha Street, Suite 400 Saint Paul, Minnesota 55102 RE: Housing Tax Credit Program Saint Joseph Dear MN Housing Multifamily Underwriter: The City of Saint Joseph is a growing community in Greater Minnesota with the primary purpose to serve as a place for residence for its citizens. Assuming this charge, offering a mix of life-cycle housing opportunities becomes a challenge for local governments, especially in greater Minnesota markets. The cost of housing, specifically rental rates, is an increasing concern throughout the St. Joseph/St. Cloud region. Concern over the rising costs of housing affects businesses. Business leaders indicate that affordable housing is a benefit to the City as most workers desire to live in the same community where they work or in a nearby community. With the substantial increase in employment anticipated for St. Joseph and surrounding area in the next 20 years, affordable housing for workers is a critical issue. The City proposes significant local financial assistance for Apartments located in Saint Joseph as part of its participation and endorsement. If the project is selected for funding, the City Council will:  Donate the land for the site in the amount of $186,600 (land is valued at $211,600, purchase price is $25,000); and  Waived Fees  Tax Increment Financing  Tax Abatement The City of Saint Joseph confirms that all infrastructure, including sewer and water, are located near the site and that proper zoning is in place and that only the final plat and site plan review remain to be complete for the site. At its meeting on May 6, 2019, the Saint Joseph City Council reviewed and endorsed the apartment housing development proposal in Saint Joseph that proposes 48 units new construction. This endorsement is based upon the findings that the project will meet locally identified housing needs and that the proposed housing is in short supply in the local housing market. This need is evidenced by the high demand at other affordable properties in our community. 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Members Present: Board Members Rick Schultz, Doug Danielson, Troy Goracke, Larry Hosch, Dale Wick, EDA Director/Administrator Judy Weyrens City Representatives Present: Community Development Director Therese Haffner, City Engineer Randy Sabart Others Present: Mary Bruno. Megan Carr Public Comments: No one present wished to speak. Agenda Approval: Wick made a motion to approve the agenda, seconded by Goracke and passed unanimously. Consent Agenda: Danielson made a motion to approve the consent agenda as follows; seconded by Wick and passed unanimously. a. Minutes - Approved the minutes of February 19, 2019. b. March Financial Report - Accepted the March 2019 Financial Report as presented. St. Joseph CVB – update on activities: Mary Bruno approached the Board on behalf of the St. Joseph Visitor Bureau. She stated that she along with several other business owners in the City have come together to try and find ways to bring people to the City, trying to make the City a destination. Bruno then presented the board with a logo with the slogan, “JoeTown, small town warmth, big city cool.” Schultz stated the group has been meeting for the past 6 months and are asking for funding to continue to work on the marketing and outreach efforts. Bruno added she is looking for feedback and direction on the logo and whether the board would like the CVB to continue in this direction. Danielson questioned whether Joetown had already been trademarked by the Church of St. Joseph. Weyrens stated the Church does have Joetown Rocks trademarked, but not just Joetown. There will be a fee associated with getting the logo trademarked, but it is not known at this time. Schultz stated the request is for up to $2,000 to have the logo trademarked and to expand the marketing and outreach in the area. Wick questioned whether the logo was presented to other people in the city for feedback. Wick was unsure if the logo would make people think of St. Joseph, Minnesota. He question truncating Joseph to Joe as he does not see a City such as Hutchinson create material with “Hutch”. Wick recommended the committee discuss the branding with others to solicit feedback. Hosch stated the CVB is working on a brand for the City and he likes the logo and its design. Hosch added he likes the CVB and their mission in making St. Joseph visible. Schultz moved to approve spending up to $2,000 to trademark the logo and continue marketing efforts. The motion was seconded by Wick and passed unanimously. Proposed Affordable Housing Project – Utilization of Tax Incentives: The EDA met jointly with the City Council on March 18, 2019 to discuss a potential affordable housing project proposed by Sand Properties. The project would require assistance from the City in order to be competitive in the selection process. Sand Properties has indicated the contribution would need to be approximately $500,000 which could be in the form of reduced property price, tax increment financing, tax abetment or reduced fees. April 16, 2019 Page 2 of 3 The proposed property is located in the Liberty Point subdivision and has been on the forfeiture list for a number of years. While the value of the property is listed over $ 200,000, Stearns County has agreed to sell the property to the EDA for $ 25,000. The City could use the difference between the value of the property and the purchase price as a contribution. The City would have a contribution of $200,000, leaving a gap of $300,000. The Assessor’s Office has provided projected numbers on what the taxes might be based on what was provided by Sand Properties. The City is not approving a site plan, rather deciding if TIF and/or Tax Abatement would be an option for this project. Weyrens stated Northland Securities put together scenarios if TIF and/or Tax Abatement were approved for the project and how long it would take to payoff. Weyrens added that with TIF, the City, County, and School District need to participate. With Tax Abatement, City and County participation is voluntary. Weyrens stated that the proposed site will require the construction of two roads: extension of Dale Street th and 20 Ave. The property could be developed with the construction of a portion of Dale Street to serve th the property and then when 20 Avenue is extended Dale could also. City Engineer Randy Sabart provided the EDA with an overview of the roads and utilities. The extension th of 20 Avenue would be costly and utilities would have to be extended at the same time. If it were done at this time, the City would be building utilities for an unknown need and they would not be utilized. Additionally, the City would have a large holding cost. Wick questioned whether the road could be constructed without putting utilities in. Sabart responded that th it depends on what type of road the City is intending 20 Avenue to be. Looking at the Transportation th Plan, 20 Avenue is slated for a minor arterial road with the utilities going under the road as opposed to the ditch. Wick expressed concern that residents of the new development would use Jefferson LN, a private street, th as their main way in and out of the development if the connection is not made to 20 Avenue. th Weyrens stated there would be a large cost to the City if 20 Avenue were to be constructed because it is undeveloped. A large sum would be a deferred assessment, the road construction costs would be bared by the City, and putting in utilities would be an additional expense when the City is unsure of how those utilities will be utilized in the future. Hosch stated he read the minutes regarding the need for this type of housing in Stearns County, and questioned if they would support tax abatement. Megan Carr of Sand Properties stated that the Stearns County HRA Director has previously indicated that that they would provide five vouchers for this project; however since that time it has been determined that the project in St. Joseph would not qualify for that program as the poverty level is above 20%. Therefore Stearns County cannot provide the vouchers for this project. Sand Stated they are still interested in moving the project forward. Hosch stated the poverty level is greatly affected by the number of students declaring St. Joseph as their place of residence as they attend college. Weyrens presented the Board with a summary of TIF and Tax Abatement as prepared by Northland Securities. If the City were to authorize the utilization of TIF, the district would need to extend approximately 12 – 15 years before the desired amount would be captured. If Tax Abatement is utilized it would take 20 years and the ultimate funding request would not be met. Carr questioned if the entire amount of TIF were not used on the building, could it be used on the construction of the road. Weyrens stated that she would look into that as the expenses would need to go to serve the low to moderate income. For this project, the City or County would need to purchase the property. The County has agreed to sell it for $25,000 and the City would need to enter into a purchase agreement dependent upon the grant being awarded. April 16, 2019 Page 3 of 3 th Wick questioned whether the recommendation of constructing 20 Avenue would be any different if the apartments were market rate versus low to moderate income housing. Sabart responded that the type of housing does not warrant whether a road is to be constructed or not. Sabart added that there is flexibility on the layout of roads being constructed and staff and the Council will need to look at what makes the most sense both now and for the future. Wick questioned Weyrens as to what staff is recommending. Weyrens stated that if the EDA feels that affordable housing is a City initiative and you want to support, tax abatement would be the tool to use. If it is believed that it is the responsibility of all units of government and school and you want to support tax increment financing would be the appropriate tool as they would be required to participate. In tax abatement it is optional for participation of the School and County. If the EDA does not support the concept that the action would be to not financially support the project. Hosch stated he is in favor of TIF versus Tax Abatement. Hosch added it is a regional benefit and a regional responsibility. TIF is the best way to assure that the City, County, and School all participate. Hosch made a motion recommending the City Council approve a twenty-six year Tax Increment Financing District allowing for the expansion of the district to allow for additional utilization for affordable housing projects. The motion was seconded by Goracke and passed unanimously. Wick made a motion recommending the City Council move forward with the project while focusing th on the transportation issues and the extension of 20 Avenue. The motion was seconded by Goracke and passed unanimously. Wick made a motion authorizing the execution of a purchase agreement with Stearns County in the amount of $ 25,000, recognizing the present land value be acknowledged as an in-kind contribution and that the land purchase is contingent upon grant and project approval. The motion was seconded by Schultz and passed unanimously. EDA Director Reports Industrial Park: Weyrens stated the Industrial Park Improvement project is still moving forward and staff is close to securing right-of-way. Development Updates: Community Development Director Therese Haffner reported the City Council had approved a rezoning of the property just north of Central MN Credit Union to B2 which is consistent with the Land Use Plan. Plans are yet to be submitted. thnd The building permit has been issued for the Oaks on 20’s 2 apartment complex. Haffner added the Council also approved a Conditional Use Permit for Stack Companies to construct outdoor storage. Strack is constructing an office building on the same lot, but the outdoor storage is what required the CUP approval. Board Member Announcements: None Adjourn: Wick made a motion to adjourn at 7:09 PM; seconded by Schultz and passed unanimously. Therese Haffner Community Development Director 0 EDA Agenda Item [06] CITY OF ST.JOSEPH MEETING DATE: April 16, 2019 AGENDA ITEM: Affordable Housing Project SUBMITTED BY: EDA Director BACKGROUND INFORMATION: The EDA met jointly with the City Council on March 18,2019 to discuss a potential Affordable Housing project proposed by Sand Properties. The project would require assistance from the City in order to be competitive in the selection process. The assistance can be in the form of land,fees,tax increment financing, or tax abatement. Sand Properties has indicated that the contribution would need to be approximately$ 500,000. For a portion of the contribution the City could use the cost of the property. The proposed property is in the forfeiture list and could be purchased for$ 25,000; however the land is valued much higher,most likely in the$200,000+range. The City could use the difference between the value of the property and the selling price as a contribution. Using the numbers above the City would have a contribution of$200,000, leaving a gap of$300,000. In order to get a sense as to what the taxes might be,the Stearns County Assessor's Office has provided projected numbers based on the presentation provided by Sand Properties. See attached email. At this time the City is not approving a site plan,only if TIF and/or Tax Abatement would be an opportunity. The EDA would submit a recommendation to the City Council. BUDGET/FISCAL IMPACT: ATTACHMENTS: Request for Action Minutes—Joint City/EDA Meeting Email Correspondence—Stearns County Assessor Sand presentation from March REQUESTED BOARD ACTION: Forward recommendation to City Council Thispageintentionally leftblank March 19, 2019 Page 1 of 2 Pursuant to due call and notice thereof, the City Council for the City of St. Joseph met in joint session with the St. Joseph Economic Development Authority on Tuesday, March 19, 2019 at 6:00 PM at the St. Joseph Government Center. City Council Members Present: Mayor Rick Schultz. Councilors Anne Buckvold, Troy Goracke, Bob Loso, Brian Theisen, EDA Director/Administrator Judy Weyrens. EDA Members Present: Chair Rick Schultz. Board Members Doug Danielson, Troy Goracke, Dale Wick EDA Members Absent: Larry Hosch City Representatives Present: Community Development Director Therese Haffner Others Present: Megan Sand Carr, Nicole Sand, Neil Fortier, Stephanie Dickrell Affordable Housing Project, Sand Companies: Weyrens stated that city staff met with Sand Companies regarding their proposal for an affordable housing project located on Outlot C in the Liberty Pointe subdivision. The property is in tax forfeiture. Weyrens stated the property was zoned R-3 with the understanding that the property would be developed with an apartment complex. The Comprehensive Plan also guides this property for multiple family. Weyrens introduced Megan Sand Carr with Sand Companies. Carr introduced herself and provided background on Sand Companies and shared the project in St. Joseph would be a 48 unit apartment building with a mix of one, two, and three bedroom units. Carr highlighted the various amenities on-site. Carr explained the project was dependent on receiving a grant which requires a municipal contribution. Loso questioned height of building. Carr said it would be a three story building. Loso questioned if all of the units would be ADA compliant. Carr said all of the units would be Universal Design and some would be designated ADA units. Universal Design allows people to age in place and incorporates similar components of ADA design. Goracke questioned if the units would be for 55 years of age and older. Carr said there would be no age restrictions. Loso commented on people on fixed income and questioned how social security, IRA’s and so forth are calculated when reviewing eligibility. Carr said it is complicated and applications are reviewed on a case by case basis. Theisen questioned whether criminal background checks were completed on prospective tentants. Carr stated they are screened by a third party. Theisen questioned if one with a criminal background would be allowed to live at the apartment. Carr stated it depended on the criminal background findings. For example, it would need to be a conviction, crime against person and/or property. Carr commented that it is scrutinized heavily. Carr stated that Sand Companies would need to submit the grant application by June 3rd of this year provided the City would support the project through reduction if fees, tax increment financing (TIF), or tax abatement for the purpose of affordable housing where residents would need to income qualify. The grant is competitive and would require assistance from the City. Carr discussed Stearns County participating as well by selling the property to the City at a reduced rate. Neil Fortier, Executive Director for Stearns County Housing and Redevelopment Authority (HRA) spoke for the need for affordable housing in the area. Stearns County HRA could commit to up to five vouchers. Weyrens presented the options of TIF or Tax Abatement. Wick questioned if the City EDA would purchase the property. Weyrens said that would be an option. Wick questioned if there would be an on-site manager. Carr said that was not determined yet but it may be a part-time manager and they usually hire a part-time caretaker who lives on-site. th Schultz questioned the timing of constructing 20 Avenue SE. Weyrens discussed the extension of Dale thth Street East and 20 Avenue SE. There was further discussion on access and consensus was that 20 March 19, 2019 Page 2 of 2 Avenue SE should be extended with the project. Consensus was for Weyrens to get an estimate on the th cost of doing 20 Avenue SE now. Loso suggested putting together a spreadsheet with TIF and Tax Abatement showing how the project could work. Weyrens said she could put that together within the next day or two. Consensus was for staff to continue to work with Sand Companies and bring back options. Fortier commented that the need for affordable housing was substantial and said this was a great site for the project. Buckvold commented on the need in the community. Wick questioned whether college students would be able to live here. Carr said full-time college students do not qualify. Carr shared that public transit was a factor in the rating of the grant application. There was further discussion on public transit. Adjourn: Mayor Schultz adjourned the meeting at 7:04 PM Therese Haffner Community Development Director Judy Weyrens From: Rausch, Connor <Connor.Rausch@co.stearns.mn.us> Sent: Tuesday, April 9, 2019 3:42 PM To: Judy Weyrens Cc: Pidde,Jake;Johnson,Jeff Subject: St.Joseph TIF Work-Up .Judy, I have completed your request for an estimated market value and payable taxes for a new 48 unit low income apartment complex in St.Joseph City.This request is based on the following information sent to me. 48 low income units to be constructed. It will include a play area and fitness room. 1 bedrooms are 720 sf estimated rents are$602 to$735 2 bedrooms 1,100 sf estimated rents are$717 to$876 3 bedrooms 1,420 sf estimated rents are$822 to$905 There are garages but the number of units were not available and it was unknown whether or not the projected rents included a garage. The income approach was used to derive our values.The sales comparison approach was considered but there were a small number of qualified sales to base a value on.As for the cost approach,the limited amount of physical information available prohibits us from using this method of valuation at this time. Based upon mass appraisal techniques and applications,the total value range is$2,977,000 ($62,021/unit)to $3,500,900($72,935/unit).The tax estimate for payable 2019 based on the current class rate for 4d property at .75% ranges from$33,788 to$39,733.The Legislature is proposing a tax rate of.25%.At that rate the tax estimate is$12,753 to$15,016.Taxes as land only based on 48 units buildable at$8,900 per unit would be approximately$7,975. This analysis is prepared for TIF or tax abatement planning purposes only.The final valuation may differ due to changes or differences attributable to the interpretation of the details provided by the owner.The final taxes may differ due to differences in levies,tax rates, and classification rates that will come into play for taxes payable in the upcoming year. Thanks, Connor Rausch Senior Appraiser Stearns County Assessor's Office Phone-320-656-3685 Total Control Panel Login To: iwcyrens(Gd;cityok'stjoseph.com Message Score: 1 High(60): Pass From:connor.rausch@co.stearns.mn.us My Spam Blocking Level:Medium Medium(75):Pass Low(90): Pass Block this sender/Block this sender enterprise-wide Block co.stearns.mn.us/Block co.stearns.mn.us enterprise-wide This message was delivered because the content filter score did not exceed your filter level. 1 www.SandCompanies.com 46 East Fourth Street, Suite 200 366 South Tenth Avenue, PO Box 727 Saint Paul, Minnesota 55101-1137 Waite Park, Minnesota 56387-0727 651.289.0100 48 units -mix of 1, 2 and 3 bedroom units Amenities: Outdoor Playground Area Community Room Fitness Room Controlled Access On-site Management Elevator Storage Units Amenities: Decks In-unit washer/dryer Individually controlled heating and cooling systems Walk-in closets Kitchen islands (two and three bedroom units) Unit Mix 11 –1 Bedroom –720 approx. sf 21 –2 Bedroom –1,100 approx. sf 15 –3 Bedroom –1,420 approx. sf Income Restrictions 5units at 30% AMI 43 units at 60% AMI Contract Rent Range 1 Bedroom –$602 to $735 2 Bedroom –$717 to $876 3 Bedroom –$822 to $905 Development Architecture Construction Property Management Procurement & Design Building Maintenance 3,000+ developed units Community Sizes: 12 to 322 units 50+ properties Multifamily Market Rate Tax Credit/Affordable HUD Historic Senior Market Rate Tax Credit/Affordable HUD Cooperative Hotel Commercial Office Mixed Use Renovation/Rehabilitation Edison Roseville, MN 59 Units NEX Iowa City, IA 36 Units Cornerstone Village I & II Saint Michael, MN 91 Units Hoffman Place White Bear Lake, MN 60 Units Maple Village I & II Maple Grove, MN 102 Units West View Estates Plymouth, MN 67 Units Gateway Place Chanhassen, MN 48 Units