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Home My WebLink About2020-12-10 HRA Regular Meeting PacketAgenda Edina Housing and Redevelopment Authority City of Edina, Minnesota VIRTUAL MEETING Thursday, December 10, 2020 7:30 AM Watch the meeting on cable TV or at EdinaMN.gov/LiveMeetings or Facebook.com/EdinaMN. To participate in Community Comment: Call 800-374-0221. Enter Conference ID 7409406. Give the operator your name, street address and telephone number. Press *1 on your telephone keypad when you would like to get in the queue to speak. A City sta9 member will introduce you when it is your turn. I.Call to Order II.Roll Call III.Pledge of Allegiance IV.Approval of Meeting Agenda V.Community Comment During "Community Comment," the Edina Housing and Redevelopment Authority (HRA) will invite residents to share new issues or concerns that haven't been considered in the past 30 days by the HRA or which aren't slated for future consideration. Individuals must limit their comments to three minutes. The Chair may limit the number of speakers on the same issue in the interest of time and topic. Generally speaking, items that are elsewhere on today's agenda may not be addressed during Community Comment. Individuals should not expect the Chair or Commissioners to respond to their comments today. Instead the Commissioners might refer the matter to sta. for consideration at a future meeting. VI.Adoption of Consent Agenda All agenda items listed on the consent agenda are considered routine and will be enacted by one motion. There will be no separate discussion of such items unless requested to be removed from the Consent Agenda by a Commissioner of the HRA. In such cases the item will be removed from the Consent Agenda and considered immediately following the adoption of the Consent Agenda. (Favorable rollcall vote of majority of Commissioners present to approve.) A.Draft Minutes of Regular Meeting November 12, 2020 B.Approve 2021 Calendar of Meeting Dates C.Approval and Authorization of Closing Documents for The Sound on 76th D.Update to New Multi-Family A.ordable Housing Policy E.Payment of Claims VII.Reports/Recommendations: (Favorable vote of majority of Commissioners present to approve except where noted) A.The Housing Strategy Task Force Report B.A.ordable Housing Policy Compliance Report VIII.Correspondence A.Correspondence IX.HRA Commissioners' Comments X.Executive Director's Comments XI.Adjournment The Edina Housing and Redevelopment Authority wants all participants to be comfortable being part of the public process. If you need assistance in the way of hearing ampli?cation, an interpreter, large-print documents or something else, please call 952-927-8861 72 hours in advance of the meeting. Date: December 10, 2020 Agenda Item #: VI.A. To:Chair & Commissioners of the Edina HRA Item Type: Minutes From:Liz Olson, Administrative Support Specialist Item Activity: Subject:Draft Minutes of Regular Meeting November 12, 2020 Information Edina Housing and Redevelopment Authority Established 1974 CITY OF EDINA HOUSING & REDEVELOPMENT AUTHORITY 4801 West 50th Street Edina, MN 55424 www.edinamn.gov ACTION REQUESTED: Approve the regular minutes of November 12, 2020. INTRODUCTION: See attached meeting minutes of November 12, 2020. ATTACHMENTS: Description Draft Minutes of Regular Meeting November 12, 2020 Page 1 MINUTES OF THE REGULAR MEETING OF THE EDINA HOUSING AND REDEVELOPMENT AUTHORITY NOVEMBER 12, 2020 7:30 A.M. I. CALL TO ORDER Chair Hovland called the meeting to order at 7:30 a.m. and noted the meeting was being held virtually to comply with the Governor’s Stay at Home Order due to the COVID-19 pandemic then explained the processes created for public comment. II. ROLLCALL Answering rollcall were Commissioners Anderson, Brindle, Fischer, Staunton, and Chair Hovland. Absent: None. III. PLEDGE OF ALLEGIANCE IV. MEETING AGENDA APPROVED - AS PRESENTED Motion by Commissioner Anderson, seconded by Commissioner Brindle, approving the meeting agenda as presented. Roll call: Ayes: Anderson, Brindle, Fischer, Staunton, and Hovland Motion carried. V. COMMUNITY COMMENT No one appeared. VI. APPROVAL OF CONSENT AGENDA – AS PRESENTED VI.A. Draft Minutes of Regular Meeting September 24, 2020 Motion by Commissioner Fischer, seconded by Commissioner Brindle, approving the consent agenda as presented. Rollcall: Ayes: Anderson, Brindle, Fischer, Staunton, and Hovland Motion carried. VII. REPORTS/RECOMMENDATIONS VII.A. PARTNERSHIP WITH METRO HRA TO EXPAND THE FAMILY AFFORDABLE HOUSING PROGRAM AND AUTHORIZE STAFF TO ENGAGE AN ATTORNEY TO DRAFT LEGAL AGREEMENTS – APPROVED Affordable Housing Manager Hawkinson said staff was seeking $2,000,000 from the Southdale 2 TIF “Regular Housing” pooled funds for the expansion of the Family Affordable Housing Program in Edina. The Metro HRA currently owned and managed eight properties in Edina acquired between 2001 and 2004 following the 1995 landmark Hollman consent decree that called for the deconcentration of affordable housing in Minneapolis. Their housing portfolio in Edina had not increased in 16-years despite the growing need for affordable housing and through continued partnership with the Edina HRA, the number of houses that served households needing larger rental opportunities could double. She shared how the Metro HRA had over 1,000 names on the waiting list and occupancy rates of 99% with little turnover then spoke on how VEAP served 190 Edina households in first quarter, the benefits of stable housing, and how this partnership could help meet a need. Minutes/HRA/November 12, 2020 Page 2 The Commission asked questions regarding the need for the agreement to be amended each time a home was purchased and commented about home pricing challenges and the goals for the number of bedrooms. They asked if staff was satisfied with the deadline and use of funds and would the HRA be conveying money or preserving as identified. Ms. Hawkinson explained while the funds did not have strict deadline they needed to be spent down at some point and how the funds would be earmarked but maintained in the HRA account. Terri Smith, Director of Metropolitan Council’s HRA, shared their focus of identifying three- bedroom homes as it was difficult to find housing for families and outlined challenges going forward. The Commission thanked staff for the creative ways to identify affordable housing opportunities and said they were pleased TIF dollars could be used for this need with partners to assist and asked if funding use was contingent upon Metropolitan Council’s program approval. Ms. Hawkinson responded staff would not proceed until approved by the Met Council but said they already indicated partnership support and would formally consider the item on December 16. Motion by Commissioner Staunton, seconded by Commissioner Brindle, approving the Partnership with Metro HRA to Expand the Family Affordable Housing Program and Authorize Staff to Engage an Attorney to Draft Legal Agreements. Roll call: Ayes: Anderson, Brindle, Fischer, Staunton, and Hovland Motion carried. VII.B. FIRST AMENDMENT TO LOAN DOCUMENTS FOR THE ACQUISITION OF 4040 W. 70TH STREET – APPROVED Ms. Hawkinson stated on February 13, 2020 the HRA approved and authorized the execution of the Loan Agreement, Mortgage and Note. The Edina Housing Foundation had negotiated a Development Agreement and Land Lease with a development partnership comprised of Lupe Development Partners and Ecumen for the development of a 100% affordable age restricted building. The land lease was designed to keep the property affordable for 99-years and as the Edina Housing Foundation would be a partner in the development through the land lease, rather than through a sale to the Developer, they were requesting the Loan Documents be modified to be forgiven once certain conditions were met. She outlined conditions for forgiveness that included the ground lease, reviewed budget implications of $3,650,000, then reviewed next steps with a potential closing in late 2022. Edina Housing Foundation Chair Huggett shared the goal was to create permanent affordability and how they were excited for the opportunity for a top project that would result in 120 units that would remain affordable for 99 years. He explained how the partnership and ground lease concept allowed for the maximum affordability term. Edina Housing Foundation Member Swenson commented about the analysis the Foundation conducted to achieve permanent affordability and the importance of listening to the HRA on how to make sites affordable for as long as possible and felt the partnership would be a good fit for senior housing as the need was great. The Commission thanked everyone for creating this opportunity for seniors who would have access to transportation in a safe neighborhood and remain vibrant members of the community and thanked the Housing Foundation for the concept. Motion by Commissioner Fischer, seconded by Commissioner Brindle, approving the First Amendment to Loan Documents for the Acquisition of 4040 W. 70th Street with the Edina Housing Foundation in the amount of $3,650,000. Minutes/HRA/September 10, 2020 Page 3 Roll call: Ayes: Anderson, Brindle, Fischer, Staunton, and Hovland Motion carried. VII.C. CENTENNIAL LAKES FUND – UPDATED INVESTMENT STRATEGY – APPROVED Economic Development Manager Neuendorf shared the Centennial Lakes TIF Fund retained a balance and these dedicated funds could be used for specific purposes in accordance with applicable portions of MN Statute governing tax increment financing. Historically, the City had used these funds to support public projects that provided community and economic development benefits then presented a summary of upcoming projects and request for guidance on the future use of these remaining funds. He outlined the project area boundaries then reviewed the proposed guidelines for funding that would invest in capital projects rather than planning for them. He explained the guidelines would allow for added long-term value and benefit to the community for public improvements that would add jobs, strengthen tax base, add and retain businesses then outlined project prioritization that would be completed by 2028 and shared examples of projects such as public parking, traffic signal improvements, and pedestrian bridges. The Commission spoke about the TIF boundary map and how improved access to light rail would be outside the boundary map, prioritization of the pedestrian bridge, and projected amounts by 2028. Mr. Neuendorf shared project amounts by 2025 would be $2.3 million which would not be enough to upgrade the bridge. The Commission confirmed the Grandview District would be eligible for this funding and asked for an update on district parking negotiations and how this would be a good project for funding. They spoke about changes that could be made to enhance businesses and residential capacities then expressed concern about using funding for the bridge over Crosstown that could be accomplished through another funding source. They spoke about superblocks and developments over time to move traffic in areas with those internal roadways and Commission asked questions about reasons to consider interfund loans. Mr. Neuendorf outlined the strategy and reasons to support the Southdale II project in 2011 after the recession that allowed the HRA to borrow from ourselves and created the project with full payback. Motion by Commissioner Anderson, seconded by Commissioner Brindle, approving the updated investment strategy proposed for use of Centennial Lakes Fund Balance as proposed. Discussion was held on reasons for approval at this time and suggested including projects that would require Council approval. Executive Director Neal explained staff received questions regarding how these funds could be used and that general guidance from the HRA would be helpful for project parameters. Motion by Commissioner Staunton, seconded by Commissioner Fischer, to require projects be proposed to the HRA or Council for funding approval. Roll call: Ayes: Anderson, Brindle, Fischer, Staunton, and Hovland Amended motion carried. Roll call: Ayes: Anderson, Brindle, Fischer, Staunton, and Hovland Main motion carried. VIII. CORRESPONDENCE – Received VIII.A. Correspondence Minutes/HRA/November 12, 2020 Page 4 IX. HRA COMMISSIONERS’ COMMENTS – Received X. EXECUTIVE DIRECTOR’S COMMENTS – Received X.A. REDEVELOPMENT OF 5146 EDEN AVENUE Mr. Neal said this item pertained to the vacant 3.3-acre parcel owned by the HRA located at 5146 Eden Avenue and that staff recommended a strategy to redevelop and return the site to productive use be completed in 2021. This vacant property had been the subject of several redevelopment discussions in the past 12 years which did not yield a redevelopment strategy. This 3.3-acre site had monetary value and in its current tax-exempt and vacant state, it was not contributing to Edina’s property tax base nor was it delivering any of the community goals identified in the 2012 Grandview Framework Plan. He said after 12 years of considering a variety of different options, staff recommended the Edina HRA consider selling or leasing at least a portion of the site so that it can put to productive use and recommended the redevelopment of this site be actively pursued in 2021. Mr. Neal outlined a recommended redevelopment strategy, shared potential development partners, then spoke about a competitive Request for Proposal (RFP) process to formally select a partner. Mr. Neuendorf shared staff’s proposal for reuse and redevelopment of 5146 Eden Avenue and explained the fire department was studying the site for the possibility of future Station 3 and how Frauenshuh Company was interested in a partnership as well as others then outlined the proposed RFP process and timetable for Commission consideration and the need for a plan. The Commission inquired about including the option to sell the site and use the proceeds to fund a new public works site then shared about realistic expectations with development partners and concerns an open RFP could inhibit other plans and result in a domino effect and the need to be fair to our partners. Mr. Neuendorf responded how a long-term land lease or retaining a portion of the site could be done for a future fire station but said staff had exhausted options for retaining the full site for public use. The Commission discussed history of this site and potential for senior coop with United Properties as a partner that would expand the medical use and the ability to review the concept with Frauenshuh for this site and not waiting until 2022 for a project. They said they already had an idea of what the site could be used for that would provide affordable housing for seniors and said decisions could be made while the current Commission was in place based on their knowledge of history of the site. Discussion was held on the desire for a community center and reasons why it would not work but how this site would be good for public use and should move forward as presented. The Commission discussed the need to explore other ideas and to include incoming Commissioners and their support of a pedestrian crossing by the railroad tracks then shared concerns with Frauenshuh Company and the need to explore ideas from other developers. Consensus was to hold worksession with developers in December. VIII. ADJOURNMENT Motion made by Commissioner Fischer, seconded by Commissioner Brindle, to adjourn the meeting at 9:18 a.m. Roll call: Ayes: Anderson, Brindle, Fischer, Staunton, and Hovland Motion carried. Respectfully submitted, Scott Neal, Executive Director Date: December 10, 2020 Agenda Item #: VI.B. To:Chair & Commissioners of the Edina HRA Item Type: Other From:Liz Olson, Administrative Support Specialist Item Activity: Subject:Approve 2021 Calendar of Meeting Dates Action Edina Housing and Redevelopment Authority Established 1974 CITY OF EDINA HOUSING & REDEVELOPMENT AUTHORITY 4801 West 50th Street Edina, MN 55424 www.edinamn.gov ACTION REQUESTED: Approve the 2021 calendar of meetings for the City Council, Commissions, legal holidays, and days of religious observance. INTRODUCTION: The 2021 calendar was approved by City Council on December 1, 2020. The color key at the top of the calendar indicates the types of meetings including religious observance days when public meetings will not be scheduled. ATTACHMENTS: Description 2021 Calendar of Meeting Dates 2021 CITY OF EDINA COUNCIL AND BOARDS AND COMMISSIONS MEETINGS, HOLIDAYS, DAYS OF RELIGOUS OBSERVANCE AND ELECTION DATE Holidays City Council Nite to Unite Pln Comm Trns Comm Pk & Rec Comm City Council Retreat Indicates a religious holiday's observance Election Day HRA HP Comm Comm Health Human R/R Comm E& E Comm Arts & Culture Comm JANUARY FEBRUARY MARCH S M T W T F S S M T W T F S S M T W T F S 1 2 1 2 3 4 5 6 1 2 3 4 5 6 3 4 5 6 7 8 9 7 8 9 10 11 12 13 7 8 9 10 11 12 13 10 11 12 13 14 15 16 14 15 16 17 18 19 20 14 15 16 17 18 19 20 17 18 19 20 21 22 23 21 22 23 24 25 26 27 21 22 23 24 25 26 27 24 25 26 27 28 29 30 28 28 29 30 31 31 S M T W T F S S M T W T F S S M T W T F S 1 2 3 1 1 2 3 4 5 4 5 6 7 8 9 10 2 3 4 5 6 7 8 6 7 8 9 10 11 12 11 12 13 14 15 16 17 9 10 11 12 13 14 15 13 14 15 16 17 18 19 18 19 20 21 22 23 24 16 17 18 19 20 21 22 20 21 22 23 24 25 26 25 26 27 28 29 30 23 24 25 26 27 28 29 27 28 29 30 30 31 S M T W T F S S M T W T F S S M T W T F S 1 2 3 1 2 3 4 5 6 7 1 2 3 4 4 5 6 7 8 9 10 8 9 10 11 12 13 14 5 6 7 8 9 10 11 11 12 13 14 15 16 17 15 16 17 18 19 20 21 12 13 14 15 16 17 18 18 19 20 21 22 23 24 22 23 24 25 26 27 28 19 20 21 22 23 24 25 25 26 27 28 29 30 31 29 30 31 26 27 28 29 30 S M T W T F S S M T W T F S S M T W T F S 1 2 1 2 3 4 5 6 1 2 3 4 3 4 5 6 7 8 9 7 8 9 10 11 12 13 5 6 7 8 9 10 11 10 11 12 13 14 15 16 14 15 16 17 18 19 20 12 13 14 15 16 17 18 17 18 19 20 21 22 23 21 22 23 24 25 26 27 19 20 21 22 23 24 25 24 25 26 27 28 29 30 28 29 30 26 27 28 29 30 31 31 OCTOBER NOVEMBER APRIL MAY JUNE JULY AUGUST SEPTEMBER DECEMBER Adopted City Council 12/1/20 Adopted HRA Date: December 10, 2020 Agenda Item #: VI.C. To:Chair & Commissioners of the Edina HRA Item Type: Report / Recommendation From:Stephanie Hawkinson, Affordable Housing Development Manager Item Activity: Subject:Approval and Authorization of Closing Documents for The Sound on 76th Action Edina Housing and Redevelopment Authority Established 1974 CITY OF EDINA HOUSING & REDEVELOPMENT AUTHORITY 4801 West 50th Street Edina, MN 55424 www.edinamn.gov ACTION REQUESTED: Approve and authorize execution of Master Subordination Agreement, Master Disbursement Agreement, Subordination of Right of Reverter, and First Amendment to P urchase Agreement. INTRODUCTION: On September 10 the Housing and Redevelopment Authority authorized the sale of 4100 W. 76th St. to The Sound on 76th LP and approved the Redevelopment Agreement. Previously, on February 19, 2020 the City Council authorized approval of two Metropolitan Council grants and the sub-recipient loan agreements. These funding sources are provided to the development Owner as loans, which will be subordinate to the construction and permanent loans provided by US Bank in addition to financing provided by Minnesota Housing. The Master Subordination Agreement defines the lien position of each source of financing and the Master Disbursing Agreement defines when the funds will be disbursed. The Subordination Agreement recognizes that the Right of Reverter and Declaration are subordinate to the US Bank Mortgage. US Bank also required that the Right of Reverter and Restrictive Covenant contained within the Redevelopment Agreement be subordinate to their construction loan, which will be in first position. Finally, the Purchase Agreement needs to be amended to reflect the action taken on September 10, 2020 to sell the site for $2,900,000 and provide a $2,400,000 deferred loan. ATTACHMENTS: Description Subordination of Right of Reverter Master Subordination Agreement Master Disbursement Agreement First Amendment to Purchase Agreement 4840-4192-8908.1 Error! Unknown document property name. RECORDING REQUESTED BY AND AFTER RECORDING RETURN TO: Kutak Rock LLP 8601 N. Scottsdale Road, Suite 300 Scottsdale Road, Arizona 85253 Attn: Heather Aeschleman SUBORDINATION AGREEMENT (RIGHT OF REVERTER AND RESTRICTIVE COVENANT) This Subordination Agreement (Right of Reverter and Restrictive Covenant) (this “Agreement”), dated as of _________________, 2020, is made by HOUSING AND REDEVELOPMENT AUTHORITY OF EDINA, MINNESOTA, a public body corporate and politic organized and existing under the laws of the State of Minnesota (“Authority”), for the benefit of U.S. BANK NATIONAL ASSOCIATION, a national banking association (“Bank”). BACKGROUND Bank is making a loan in the approximate amount of [$_______] (the “Construction Loan”) to The Sound On 76th Limited Partnership, a Minnesota limited partnership (“Borrower”) pursuant to a Construction Loan Agreement of even date herewith by and between Bank and Borrower (as amended from time to time, the “Loan Agreement”). The Construction Loan is secured by, among other things, a first mortgage lien on certain property located in the City of Edina, Minnesota as further described on Exhibit A attached hereto (the “Land”) pursuant to that certain [Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing] of even date herewith from Borrower to Bank (the “Mortgage”). The proceeds of the Construction Loan shall be used by Borrower to construct a 70-unit affordable housing project (the “Project”) on the Land. As a condition to Bank’s making the Construction Loan, Bank requires that Authority subordinate to the Mortgage: (i) the right of reverter benefiting Authority set forth in Section 3.9 of that certain Redevelopment Agreement dated [_________] by and between Authority and Borrower (the “Right of Reverter”), and (ii) that certain Declaration of Covenants and Restrictions made by Borrower dated [___________] (the “Declaration”; and together with the Right of Reverter, the “Subordinated Documents”). AGREEMENT For good and valuable consideration, the receipt and sufficiency of which is acknowledged, Authority agrees as follows for the benefit of Bank: 4840-4192-8908.1 Error! Unknown document property name. 1. Authority subordinates the Subordinated Documents to the lien of the Mortgage and declares that the Subordinated Documents are and shall be subordinate, subject to, and inferior to, the lien of the Mortgage. 2. In the event of any foreclosure sale or deed in lieu thereof of the Mortgage, it is understood and agreed that the Mortgage shall have the validity, effect, and priority of lien as if the same were executed, delivered, and recorded prior to the execution, delivery, and recordation of the Subordinated Documents. 3. If for any reason, by operation of the Right of Reverter, Authority becomes the owner of, and obtains all or any part of the right, title, and interest in and to the real property encumbered by the Mortgage, and the improvements, buildings, and structures thereon, and any fixtures attached thereto, then it shall immediately notify Bank and execute a mortgage and such other documents, instruments, and agreement as requested by Bank, in its sole and absolute discretion, to amend, modify, and/or restate the Mortgage to verify and confirm the lien of the Mortgage for the benefit of Bank. 4. This Agreement (a) is governed by and will be construed under the laws of the State of Minnesota, (b) is binding upon Authority and its successors and assigns and will inure to the benefit of Bank and its successors and assigns, and (c) may not be changed, amended, modified, abridged, cancelled, or discharged other than by a written instrument signed by Authority and Bank. (Signature Page Follows) 4840-4192-8908.1 Error! Unknown document property name. Authority has caused this Subordination Agreement (Right of Reverter and Restrictive Covenant) to be executed by an authorized representative as of the date first set forth above. AUTHORITY HOUSING AND REDEVELOPMENT AUTHORITY OF EDINA, MINNESOTA, a public body corporate and politic organized and existing under the laws of the State of Minnesota By Name: Title: STATE OF MINNESOTA COUNTY OF HENNEPIN The foregoing instrument was acknowledged before me as of ____________, 20____, by _______________, as ____________ of the HOUSING AND REDEVELOPMENT AUTHORITY OF EDINA, MINNESOTA. Witness my hand and official seal. My commission expires: __________ US.130262362.02 The Sound on 76th, Edina MHFA Dev. #8111 Master Subordination Agreement 1 10/27/2020 (Ver. 11/20/2017) FOR USE BY FILING OFFICER ONLY MASTER SUBORDINATION AGREEMENT AND ESTOPPEL CERTIFICATE THIS MASTER SUBORDINATION AGREEMENT AND ESTOPPEL CERTIFICATE (this “Agreement”) is effective as of the ____ day of ____________, 20___, and entered into among THE SOUND ON 76TH LIMITED PARTNERSHIP, a Minnesota limited partnership (“Borrower”), the MINNESOTA HOUSING FINANCE AGENCY, a public body corporate and politic of the State of Minnesota (“MHFA”), CITY OF EDINA, a public body corporate and politic of the State of Minnesota (the “City”), COUNTY OF HENNEPIN, a public body corporate and politic of the State of Minnesota (the “County”), HOUSING AND REDEVELOPMENT AUTHORITY OF EDINA, MINNESOTA, a public body corporate and politic organized and existing under the laws of the State of Minnesota (“HRA”), U.S. BANK NATIONAL ASSOCIATION, a national banking association (“U.S. Bank”), and AEON, a Minnesota non-profit corporation (the “General Partner”). RECITALS A. Borrower has applied to and obtained certain loans from the other parties to this Agreement and will use the proceeds of the loans and additional equity to fund the acquisition, construction and/or rehabilitation of a multifamily housing development identified as MHFA Development No. 8111 (the “Development”), which will be situated on real property located in the City of Edina, County of Hennepin, State of Minnesota, and legally described in Exhibit A attached to this Agreement (the “Property”). B. The following is a listing and description of the loans that Borrower has obtained from the other parties to this Agreement (collectively, the “Loans”), and the repayment of the Loans will be secured by liens on the Property, and a listing of the documents that evidence and secure the repayment of the Loans (collectively, the “Loan Documents”): US.130262362.02 The Sound on 76th, Edina MHFA Dev. #8111 Master Subordination Agreement 2 10/27/2020 (Ver. 11/20/2017) Description of Loan Amount of Loan Loan Documents Evidencing and Securing Repayment A loan from MHFA through its HUD Risk-Sharing Program (“MHFA HRS Loan”) $6,612,000.00 Those documents set forth in Exhibit B attached to this Agreement. A loan from MHFA through its Economic Development and Housing Challenge Program (“MHFA EDHC Loan”) $888,634.00 Those documents set forth in Exhibit C attached to this Agreement. A Construction loan from U.S. Bank (“U.S. Bank Loan”) $14,960,658.00 Those documents set forth in Exhibit D attached to this Agreement. A loan from Hennepin County through the HOME Loan Program (“HOME Loan”) $500,000.00 Those documents set forth in Exhibit E attached to this Agreement. A loan from the City funded by the Metropolitan Council’s Local Housing Incentives Account Program (“LHIA Loan”) $500,000.00 Those documents set forth in Exhibit F attached to this Agreement. A loan from the City funded by the Metropolitan Council’s Livable Communities Demonstration Account Program (“LCDA Loan”) $493,950.00 Those documents set forth in Exhibit G attached to this Agreement A loan from Aeon (“Aeon Loan”) $206,000.00 Those documents set forth in Exhibit H attached to this Agreement A loan from the HRA (“TIF Loan”) $2,400,000.00 Those documents set forth in Exhibit I attached to this Agreement C. The parties intend that the Loans, the corresponding Loan Documents, and other documents referred to in this Agreement and the liens created by the Loan Documents and other documents referred to in this Agreement have a certain order of priority. D. The parties wish to specify how the terms and conditions contained in the Loan Documents will be interpreted in the event of a conflict or inconsistency. US.130262362.02 The Sound on 76th, Edina MHFA Dev. #8111 Master Subordination Agreement 3 10/27/2020 (Ver. 11/20/2017) NOW, THEREFORE, in consideration of good and valuable consideration, and in further consideration of the parties making and entering into the Loans, the parties to this Agreement agree as follows: 1. Definitions. For the purposes of this Agreement, the definitions set forth above are incorporated into this Section 1 by reference. The following terms have the meanings set out respectively after each term, and its meaning is equally applicable to both the singular and plural forms of the term defined: (a) “Aeon Loan” means a loan from the General Partner through Aeon’s Philanthropic Funds Program to Borrower in an original principal amount of $206,000.00. (b) “Aeon Loan Documents” means those documents listed in Exhibit H attached to this Agreement which evidence and secure the repayment of the Philanthropic Loan. (c) “Bankruptcy Proceeding” means any bankruptcy, reorganization, insolvency, composition, restructuring, dissolution, liquidation, receivership, assignment for the benefit of creditors, or custodianship action or proceeding under any federal or state law with respect to Borrower, any guarantor of any of the Loan Documents, any of their respective properties, or any of their respective partners, members, officers, directors, or shareholders. (d) “HOME Loan” means a loan from Hennepin County through its HOME Program to Borrower in an original principal amount of $500,000.00. (e) “HOME Loan Documents” means those documents listed in Exhibit E attached to this Agreement which evidence and secure the repayment of the HOME Loan. (f) “LCDA Loan” means a loan from the General Partner through the Metropolitan Council’s Livable Communities Demonstration Account Program to Borrower in an original principal amount of $493,950.00. (g) “LCDA Loan Documents” means those documents listed in Exhibit G attached to this Agreement which evidence and secure the repayment of the LCDA Loan. (h) “LHIA Loan” means a loan from the City through the Metropolitan Council’s Local Housing Incentives Account Program to Borrower in an original principal amount of $500,000.00. (i) “LHIA Loan Documents” means those documents listed in Exhibit F attached to this Agreement which evidence and secure the repayment of the LHIA Loan. US.130262362.02 The Sound on 76th, Edina MHFA Dev. #8111 Master Subordination Agreement 4 10/27/2020 (Ver. 11/20/2017) (j) “MHFA EDHC Loan” means a loan from MHFA through its Economic Development and Housing Challenge Program to Borrower in an original principal amount of $888,643.00. (k) “MHFA EDHC Loan Documents” means those documents listed in Exhibit C attached to this Agreement which evidence and secure the repayment of the MHFA EDHC Loan. (l) “MHFA HRS Loan” means a loan from MHFA through its HUD Risk- Sharing Program to Borrower in an original principal amount of $6,612,000.00. (m) “MHFA HRS Loan Documents” means those documents listed in Exhibit B attached to this Agreement which evidence and secure the repayment of the MHFA HRS Loan. (n) “Permanent Loan Closing” means the date that the MHFA HRS Loan is closed and the U.S. Bank Loan is paid off in full. (o) “TIF Loan” means a loan from the HRA to Borrower in an original principal amount of $2,400,000.00. (p) “TIF Loan Documents” means those documents listed in Exhibit I attached to this Agreement which evidence and secure the repayment of the City Loan. (q) “U.S. Bank Loan” means a loan from U.S. Bank to Borrower in an original principal amount of $14,960,658.00. (r) “U.S. Bank Loan Documents” means those documents listed in Exhibit D attached to this Agreement which evidence and secure the repayment of the U.S. Bank Loan. 2. Consent to Loans, Liens and Encumbrances. The parties agree and consent to all of the Loans and agree that all of the liens and encumbrances created by the Loan Documents are deemed to be permitted encumbrances under their respective Loan Documents. The parties further agree to execute any and all documents that any party to this Agreement may reasonably request in order to document that the liens and encumbrances are permitted encumbrances under their respective Loan Documents. 3. Use of Loan Documents. The parties agree and consent to the use of the Loan Documents set forth in the attached exhibits in conjunction with the Loan referenced in each exhibit. In addition, each party, as to the Loan Documents that correspond to one of its Loans, does hereby covenant, warrant, consent and agree that (i) the described Loan Documents are all of the documents that the party has entered into regarding the corresponding Loan, (ii) there are no documents relating to its Loan other than the described Loan Documents for its Loan, (iii) it will not enter into any other document for its Loan that would adversely impact any other party or parties to this Agreement without the prior written consent of the party or parties (excluding US.130262362.02 The Sound on 76th, Edina MHFA Dev. #8111 Master Subordination Agreement 5 10/27/2020 (Ver. 11/20/2017) documentation of amounts having been advanced by a party for the protection of its security interest or lien priority pursuant to the Loan Documents), (iv) any existing document or documents that may come into existence in the future to which a party is or becomes a party or from which a party obtains a benefit that is different from the benefits that the other parties have received or will receive, and that is not listed in the Loan Documents set forth in this Agreement for the Loan, will be of no force or effect until approved and consented to in writing by all of the parties to this Agreement upon which the document has, or will have, an adverse effect (excluding documentation of amounts having been advanced by a party for the protection of its security interest or lien priority pursuant to the Loan Documents), and upon written approval, the documents will automatically be considered to be included in the exhibit to this Agreement setting forth the Loan Documents for the Loan. The other parties to this Agreement will execute any document that may reasonably be requested in order to include the document in the exhibit. 4. Subordination of Loans and Loan Documents. (a) Loan Priority. Except as specifically provided below, each party agrees to the following priority of the Loan Documents and any and all the liens and encumbrances created by the Loan Documents and subordinates its respective Loan Documents and the liens and encumbrances created by its respective Loan Documents to those Loan Documents and liens and encumbrances created by the Loan Documents that are listed as having a priority over its Loan Documents and the liens and encumbrances created by its respective Loan Documents: Loan Documents and Liens and Encumbrances Created by the Loan Documents Party to the Loan Documents and Holder of Liens and Encumbrances Created by the Loan Documents Order of Priority U.S. Bank Loan Documents U.S. Bank First MHFA EDHC Loan Documents MHFA Second TIF Loan Documents HRA Third LHIA Loan Documents City Fourth LCDA Loan Documents City Fifth HOME Loan Documents County Sixth Aeon Loan Documents Aeon Seventh After the Permanent Loan Closing, except as specifically provided below, each party agrees to the following priority of the Loan Documents and any and all liens and encumbrances created by the Loan Documents. Each party agrees to subordinate its respective Loan Documents and liens and encumbrances created by its respective Loan Documents to those Loan Documents and liens and encumbrances that are listed as having a priority over its Loan Documents and liens and encumbrances created by its respective Loan Documents: US.130262362.02 The Sound on 76th, Edina MHFA Dev. #8111 Master Subordination Agreement 6 10/27/2020 (Ver. 11/20/2017) Loan Documents and Liens and Encumbrances Created by the Loan Documents Party to the Loan Documents and Holder of Liens and Encumbrances Created by the Loan Documents Order of Priority MHFA HRS Loan Documents MHFA First MHFA EDHC Loan Documents MHFA Second TIF Loan Documents HRA Third LHIA Loan Documents City Fourth LCDA Loan Documents City Fifth HOME Loan Documents County Sixth Aeon Loan Documents Aeon Seventh (b) Tax Credit Declaration. The parties acknowledge that the Development is intended to receive the benefits of Low Income Housing Tax Credits (the “Credits”) pursuant to Section 42 of the Internal Revenue Code (“Section 42”) and that it is a condition of the receipt of the Credits that Borrower file a Declaration of Land Use Restrictive Covenants for Low-Income Housing Credits (the “Tax Credit Declaration”) substantially in the form attached to this Agreement as Exhibit J. The parties consent to the terms of the Tax Credit Declaration as required by Section 2(c) of the Tax Credit Declaration and agree that the Tax Credit Declaration is subordinate to each of their Loans and the related Loan Documents, except to the extent required by Section 9(d) of the Tax Credit Declaration (relating to the three-year vacancy control during the extended use period). 5. Collection of Payments. Intentionally Omitted. 6. Interpretation. The parties are entering into and executing this Agreement in order to establish the subordination and priority of the Loan Documents and any liens and encumbrances created by the Loan Documents, and, accordingly, the parties agree, understand, and acknowledge that the enforceability of this Agreement is not, and will not be, restricted, limited, or impaired by the fact that not all of the parties to this Agreement are signatories to each or any of the Loan Documents. 7. Most Restrictive Requirements. Notwithstanding the order of priority and subordinations granted in this Agreement, the Borrower will comply not only with the Loan Documents having first priority but with all Loan Documents. For example, if a party’s Loan Documents contain rent, income or occupancy requirements that are more restrictive than Loan Documents that are more senior in priority, then the Borrower will comply with the more restrictive Loan Documents for as long as they remain in effect. 8. Absence of Events of Default and Compliance with Closing Requirements. Each party states, represents, and warranties that as to each of its individual Loans, (i) its Loans have been duly closed, (ii) there are no events of default, or events that with the passage of time could constitute an event of default, currently existing with respect to any of its Loans, and (iii) all of its Loans are in good standing. US.130262362.02 The Sound on 76th, Edina MHFA Dev. #8111 Master Subordination Agreement 7 10/27/2020 (Ver. 11/20/2017) 9. Notice of Default and Cure Rights. Each party will deliver to the other parties a default notice within five business days in each case where a party has given a default notice to Borrower (provided that each party will have no liability to any party for failure to timely give notice). Failure of the notifying party to send a default notice to the other parties will not prevent the exercise of the notifying party's rights and remedies under the Loan Documents, subject to the provisions of this Agreement. The other parties will have the opportunity, but not the obligation, to cure any default within 60 days following the date of the notice; provided, however that the notifying party will be entitled, during the 60-day period, to continue to pursue its rights and remedies under the Loan Documents. 10. Use of Insurance and Condemnation Proceeds. Notwithstanding any provisions to the contrary contained in this Agreement or in any of the Loan Documents, the parties agree that any and all insurance and/or condemnation proceeds will be used first to repair or reinstate the Development. If there are any remaining proceeds, or if the amounts are insufficient to repair or reinstate the Development, or if the Development cannot be repaired or reinstated, then the proceeds will be used to pay off the Loans in order of the priority of the Loan Documents specified in this Agreement. 11. Agreement Not to Commence Bankruptcy Proceeding. The parties agree that during the term of this Agreement they will not commence, or join with any other creditor in commencing, any Bankruptcy Proceeding with respect to Borrower, without the other parties’ prior written consents. 12. Consent to MHFA HRS Loan. The parties to this Agreement acknowledge that MHFA and the Borrower have executed and delivered an End Loan Commitment of even date with this Agreement pursuant to which MHFA commits to loan to the Borrower, and the Borrower commits to borrow from MHFA the MHFA HRS Loan following completion of construction of the Development and fulfillment of the conditions set forth in this Agreement. The MHFA HRS Loan will be used for the purpose of paying off the U.S. Bank Loan. MHFA, the General Partner, the City, the County, and U.S. Bank hereby consent to the making and borrowing of the MHFA HRS Loan, and agree that the MHFA HRS Loan will be secured by a mortgage on the Property. The mortgage securing the MHFA HRS Loan will be in first lien position upon payment in full of the Bridge Loan and the release or satisfaction of all documents securing the U.S. Bank Loan. In connection with the closing of the MHFA HRS Loan and payment in full of the U.S. Bank Loan, the parties to this Agreement agree that the MHFA HRS Loan will have first lien priority pursuant to Section 4 (a) without the need to amend this Agreement. 13. Survival of Termination. The terms of this Agreement will continue, and will survive the termination of this Agreement, if any payment under the Loan Documents (whether by or on behalf of Borrower, as proceeds of security or enforcement of any right of set-off or otherwise) is for any reason repaid or returned to Borrower or its insolvent estate, or avoided, set aside or required to be paid to Borrower, a trustee, receiver or other similar party under any bankruptcy, insolvency, receivership or similar law. In the event, any or all of the Loans originally intended to be satisfied will be deemed to be reinstated and outstanding to the extent of any repayment, return, or other action, as if the payment had not been made. US.130262362.02 The Sound on 76th, Edina MHFA Dev. #8111 Master Subordination Agreement 8 10/27/2020 (Ver. 11/20/2017) 14. Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which will be an original but all of which will constitute one instrument. (THE REMAINING PORTION OF THIS PAGE IS INTENTIONALLY LEFT BLANK) US.130262362.02 The Sound on 76th, Edina MHFA Dev. #8111 Master Subordination Agreement 9 10/27/2020 (Ver. 11/20/2017) IN WITNESS WHEREOF, the parties have executed this Master Subordination Agreement and Estoppel Certificate as of the date first written above. BORROWER: THE SOUND ON 76TH LIMITED PARTNERSHIP a Minnesota limited partnership By: 4100 Edina LLC a Minnesota limited liability company General Partner By: Caroline Horton, Vice-President/Treasurer STATE OF MINNESOTA ) ) ss COUNTY OF ) The foregoing instrument was acknowledged before me this ____ day of December, 2020, by Caroline Horton, the Vice-President/Treasurer of 4100 Edina LLC, a Minnesota limited liability company, General Partner of The Sound on 76th, a Minnesota limited partnership, on behalf of the limited liability company and the limited partnership. Notary Public THIS DOCUMENT WAS DRAFTED BY: Minnesota Housing Finance Agency 400 Wabasha Street North, Suite 400 St. Paul, MN 55102-1109 US.130262362.02 The Sound on 76th, Edina MHFA Dev. #8111 Master Subordination Agreement 10 10/27/2020 (Ver. 11/20/2017) MHFA: MINNESOTA HOUSING FINANCE AGENCY By: James Lehnhoff Assistant Commissioner, Multifamily STATE OF MINNESOTA ) ) ss. COUNTY OF RAMSEY ) The foregoing instrument was acknowledged before me this ______ day of ____________, 20 , by James Lehnhoff, Assistant Commissioner, Multifamily of the Minnesota Housing Finance Agency, on behalf of the agency. Notary Public US.130262362.02 The Sound on 76th, Edina MHFA Dev. #8111 Master Subordination Agreement 11 10/27/2020 (Ver. 11/20/2017) CITY: CITY OF EDINA a public body corporate and politic of the State of Minnesota By: Its: STATE OF MINNESOTA ) ) ss. COUNTY OF ) The foregoing instrument was acknowledged before me this ___ day of ____________, 20 , by ____________ the ____________ of the City of Edina, a public body corporate and politic of the State of Minnesota. on behalf of the city. Notary Public US.130262362.02 The Sound on 76th, Edina MHFA Dev. #8111 Master Subordination Agreement 12 10/27/2020 (Ver. 11/20/2017) HRA: HOUSING AND REDEVELOPMENT AUTHORITY OF EDINA, MINNESOTA By: ______________________________________ James B. Hovland, Chair By: ______________________________________ Scott H. Neal, Executive Director STATE OF MINNESOTA ) ) ss. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this ___ day of December, 2020, by James B. Hovland and Scott H. Neal, the Chair and Executive Director of the Housing and Redevelopment Authority of Edina, Minnesota, a public body corporate and politic organized and existing under the laws of the State of Minnesota, on behalf of the authority. Notary Public US.130262362.02 The Sound on 76th, Edina MHFA Dev. #8111 Master Subordination Agreement 13 10/27/2020 (Ver. 11/20/2017) COUNTY: COUNTY OF HENNEPIN, STATE OF MINNESOTA ON BEHALF OF THE APPROVED AS TO FORM HENNEPIN HOUSING CONSORTIUM _____________________________ By: ______________________________________ Assistant County Attorney Chair of its County Board Date: December ___, 2020 Attest: ___________________________________ Deputy/Clerk of the County Board Date: December ____, 2020 RECOMMENDED FOR APPROVAL By: _____________________________ Director, Community Works And: _________________________________ Date: December ___, 2020 County Administrator Date: ___________________ And: ________________________________ Assistant County Administrator, Public Works Date: December _____, 2020 STATE OF MINNESOTA ) ) ss. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this ___ day of December, 2020, by _____________________, the Chair of its County Board of Hennepin County, a public body corporate and politic of the State of Minnesota on behalf of the county. Notary Public US.130262362.02 The Sound on 76th, Edina MHFA Dev. #8111 Master Subordination Agreement 14 10/27/2020 (Ver. 11/20/2017) AEON: AEON a Minnesota non-profit corporation By: Caroline Horton, Chief Financial Officer STATE OF MINNESOTA ) ) ss. COUNTY OF ) The foregoing instrument was acknowledged before me this ___ day of December, 2020, by Caroline Horton, the Chief Financial Officer of Aeon, a Minnesota non-profit corporation, on behalf of the corporation. Notary Public US.130262362.02 The Sound on 76th, Edina MHFA Dev. #8111 Master Subordination Agreement 15 10/27/2020 (Ver. 11/20/2017) U.S. BANK: U.S. BANK NATIONAL ASSOCIATION a national banking association By: Its: STATE OF MINNESOTA ) ) ss. COUNTY OF ) The foregoing instrument was acknowledged before me this ___ day of December, 2020, by ____________ the ____________ of U.S. Bank National Association, a national banking association, on behalf of the banking association. Notary Public US.130262362.02 The Sound on 76th, Edina MHFA Dev. #8111 Master Subordination Agreement 16 10/27/2020 (Ver. 11/20/2017) Exhibit A LEGAL DESCRIPTION Tract J, Registered Land Survey No. 1129, Hennepin County, Minnesota. Being Registered land as is evidenced by Certificate of Title No. 1490730. US.130262362.02 The Sound on 76th, Edina MHFA Dev. #8111 Master Subordination Agreement 17 10/27/2020 (Ver. 11/20/2017) Exhibit B MHFA HRS LOAN DOCUMENTS 1. HUD Risk-Sharing Program Combination Mortgage, Security Agreement, Assignment of Rents and Leases and Fixture Financing Statement executed by Borrower to MHFA, of even date with the document to which this exhibit is attached, securing the repayment of a loan from in an original principal amount of $6,612,000.00, which will be recorded in the Office of the Registrar of Titles for Hennepin County, Minnesota. 2. HUD Risk-Sharing Program Regulatory Agreement, of even date with the document to which this exhibit is attached, between Borrower and MHFA, which will be recorded in the Office of the Registrar of Titles for Hennepin County, Minnesota. 3. HUD Risk-Sharing Program Declaration of Covenants, Conditions and Restrictions, of even date with the document to which this exhibit is attached, executed by Borrower in favor of MHFA, which will be recorded in the Office of the Registrar of Titles for Hennepin County, Minnesota. 4. The following additional HUD Risk-Sharing Program Loan Documents: (a) Allonge Endorsement to TIF Note; (b) Assignment of Architect’s Contract; (c) Assignment of Construction Contract; (d) Assignment of Development Agreement; (e) Assignment of Tax Increment Financing; (f) Certification Regarding Identity of Interest or Family Relationship; (g) Certification Regarding Liens; (h) Certification Regarding Payment of Obligations; Construction Loan Agreement; (j) Disclosure of Lobbying Activities Form; (k) Guaranty; (l) Mortgage Loan Commitment; (m) Mortgage Note in an original principal amount of $6,612,000.00; (n) UCC-1 Financing Statement; (o) Operating Deficit Reserve and Escrow Account Agreement. US.130262362.02 The Sound on 76th, Edina MHFA Dev. #8111 Master Subordination Agreement 18 10/27/2020 (Ver. 11/20/2017) Exhibit C MHFA EDHC LOAN DOCUMENTS 1. Economic Development and Housing Challenge Program Combination Mortgage, Security Agreement, Assignment of Rents and Leases and Fixture Financing Statement executed by Borrower to MHFA, of even date with the document to which this exhibit is attached, securing the repayment of a loan from in an original principal amount of $888,643.00, which will be recorded in the Office of the Registrar of Titles for Hennepin County, Minnesota. 2. Economic Development and Housing Challenge Program Regulatory Agreement, of even date with the document to which this exhibit is attached, between Borrower and MHFA, which will be recorded in the Office of the Registrar of Titles for Hennepin County, Minnesota. 3. Economic Development and Housing Challenge Program Declaration of Covenants, Conditions and Restrictions, of even date with the document to which this exhibit is attached, executed by Borrower in favor of MHFA, which will be recorded in the Office of the Registrar of Titles for Hennepin County, Minnesota. 4. Economic Development and Housing Challenge Program Declaration of Covenants, Conditions and Restrictions (Subsidy), of even date with the document to which this exhibit is attached, executed by Borrower in favor of MHFA, which will be recorded in the Office of the Registrar of Titles for Hennepin County, Minnesota. 5. The following additional Economic Development and Housing Challenge Program Loan Documents: (a) Assignment of Architect’s Contract; (b) Assignment of Construction Contract; (c) Construction Loan Agreement; (d) Disbursement Agreement; (e) Master Disbursement Agreement; (f) Master Subordination Agreement; (g) Mortgage Loan Commitment; (h) Mortgage Note in an original principal amount of $888,643.00; (i) Request for Notice of Foreclosure; and (j) Supplement to General Conditions of the Agreement Between Owner and Contractor. US.130262362.02 The Sound on 76th, Edina MHFA Dev. #8111 Master Subordination Agreement 19 10/27/2020 (Ver. 11/20/2017) Exhibit D U.S. BANK LOAN DOCUMENTS 1. Construction Loan Agreement 2. Construction Loan Note 3. Repayment and Completion Guaranty 4. Environmental and ADA Indemnification Agreement 5. Disbursing Agreement 6. Master Disbursement Agreement 7. Subordination Agreement (Right of Reverter and Restrictive Covenant) 8. Construction Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing 9. Assignment and Subordination of Construction Contract 10. Assignment and Subordination of Architect’s Contract 11. Assignment of Partnership Interests, Capital Contributions, and Credits 12. Assignment of Property Manager Agreement 13. Assignment of Development Services Agreement and Developer Fee Subordination Agreement 14. Collateral Assignment of TIF Development Agreement and TIF Note 15. Architect’s Certificate US.130262362.02 The Sound on 76th, Edina MHFA Dev. #8111 Master Subordination Agreement 20 10/27/2020 (Ver. 11/20/2017) Exhibit E HOME LOAN DOCUMENTS 1. Note 2. Mortgage 3. Loan Agreement 4. Declaration of Covenants and Restrictions US.130262362.02 The Sound on 76th, Edina MHFA Dev. #8111 Master Subordination Agreement 21 10/27/2020 (Ver. 11/20/2017) Exhibit F LHIA LOAN DOCUMENTS 1. Loan Agreement, together with LHIA Grant Agreement 2. Promissory Note 3. LHIA Mortgage US.130262362.02 The Sound on 76th, Edina MHFA Dev. #8111 Master Subordination Agreement 22 10/27/2020 (Ver. 11/20/2017) Exhibit G LCDA LOAN DOCUMENTS 1. Metropolitan Council Livable Communities Demonstration Account Development Grant Program Loan Agreement, together with Metropolitan Council Grant Agreement 2. Promissory Note 3. LCDA Mortgage US.130262362.02 The Sound on 76th, Edina MHFA Dev. #8111 Master Subordination Agreement 23 10/27/2020 (Ver. 11/20/2017) Exhibit H AEON LOAN DOCUMENTS 1. Note 2. Mortgage US.130262362.02 The Sound on 76th, Edina MHFA Dev. #8111 Master Subordination Agreement 24 10/27/2020 (Ver. 11/20/2017) Exhibit I TIF LOAN DOCUMENTS 1. Loan Agreement 2. Promissory Note 3. Mortgage US.130262362.02 The Sound on 76th, Edina MHFA Dev. #8111 Master Subordination Agreement 25 10/27/2020 (Ver. 11/20/2017) EXHIBIT J TAX CREDIT DECLARATION US.130262380.01 The Sound on 76th, Edina MHFA Dev. #8111 Master Disbursement Agreement 1 10/29/2020 (Ver. 11/20/2017) MASTER DISBURSEMENT AGREEMENT THIS MASTER DISBURSEMENT AGREEMENT (this “Agreement”) has an effective date of the ____ day of December, 2020, and is entered into among THE SOUND ON 76TH LIMITED PARTNERSHIP, a Minnesota limited partnership, with its offices located at 901 North Third Street, Suite 150, Minneapolis, MN 55401 (“Borrower”), the MINNESOTA HOUSING FINANCE AGENCY, a public body corporate and politic of the State of Minnesota, with its offices located at 400 Wabasha Street North, Suite 400, St. Paul, MN 55102- 1109 (“MHFA”), CITY OF EDINA, a public body corporate and politic of the State of Minnesota (the “City”), HOUSING AND REDEVELOPMENT AUTHORITY OF EDINA, MINNESOTA, a public body corporate and politic organized and existing under the laws of the State of Minnesota (“HRA”), COUNTY OF HENNEPIN, a public body corporate and politic of the State of Minnesota (the “County”), U.S. BANK NATIONAL ASSOCIATION, a national banking association (“U.S. Bank”), AEON, a Minnesota non-profit corporation (“Aeon”), and GUARANTY COMMERCIAL TITLE, INC., a Minnesota corporation, with its offices located at 465 Nicollet Mall, Suite 230, Minneapolis, MN 55401 (“Title Company”). RECITALS A. Borrower has applied to and obtained loans from certain other parties to this Agreement and will use the proceeds of such loans and additional equity to fund the acquisition, construction and/or rehabilitation of a multifamily housing development identified as MHFA Development No. 8111 (the “Development”), which will be situated on real property located in the City of Edina, County of Hennepin, State of Minnesota, and legally described in Exhibit A attached to this Agreement. B. The following is a listing and description of the loans that Borrower has obtained (collectively, the “Loans”) and the Equity (as defined in this Agreement) that Borrower will use to fund the acquisition, construction and/or rehabilitation of the Development (collectively, the “Project Funds”): Description of Project Funds Amount A loan from MHFA through its Economic Development and Housing Challenge Program, none of which has been disbursed as of the effective date of this Agreement. $888,643.00 A loan from U.S. Bank, none of which has been disbursed as of the effective date of this Agreement. $14,960,658.00 A loan from the Hennepin County through the HOME Loan Program, none of which has been disbursed as of the effective date of this Agreement. $500,000.00 US.130262380.01 The Sound on 76th, Edina MHFA Dev. #8111 Master Disbursement Agreement 2 10/29/2020 (Ver. 11/20/2017) A loan from the City through the Metropolitan Council’s Local Housing Incentives Account Program, none of which has been disbursed as of the effective date of this Agreement. $500,000.00 A loan from the City through the Metropolitan Council’s Livable Communities Demonstration Account Program, none of which has been disbursed as of the effective date of this Agreement. $493,950.00 A loan from Aeon, none of which has been disbursed as of the effective date of this Agreement. $206,000.00 A loan from the HRA funded with tax increment financing funds, none of which has been disbursed as of the effective date of this Agreement. $2,400,000.00 Funds to be supplied by Borrower, as further described in Section 1(d) of this Agreement, none of which has been disbursed as of the effective date of this Agreement. $2,259,277.00 C. MHFA, the City, the County, U.S. Bank, and the General Partner have entered into agreements with Borrower and/or Title Company regarding the disbursement of the Project Funds. D. The parties have agreed that the Project Funds are to be disbursed in a certain order of priority. E. The parties wish to establish how the Project Funds are to be disbursed and the order of priority for the disbursement. NOW, THEREFORE, the parties agree as follows: 1. Definitions. The definitions set forth above are incorporated into this Section 1 by reference. The following terms have the meanings set out respectively after each such term, and such meaning are equally applicable to both the singular and plural forms of the term defined: (a) “TIF Disbursement Agreement” - An agreement, whether verbal or written, between the City, Borrower, and, if applicable, Title Company, which provides for the disbursement of the City Loan. (b) “TIF Loan” – A loan from the City of Edina to Borrower in an original principal amount of $2,400,000.00. US.130262380.01 The Sound on 76th, Edina MHFA Dev. #8111 Master Disbursement Agreement 3 10/29/2020 (Ver. 11/20/2017) (c) “County Disbursement Agreement” – An agreement, whether verbal or written, between the County, Borrower, and, if applicable, Title Company, which provides for the disbursement of the HOME Loan. (d) “Equity” – Cash in an amount of [_$2,259,177.00_] to be supplied to Title Company by Borrower. (e) “HOME Loan” - A loan from Hennepin County through its HOME Program to Borrower in an original principal amount of $500,000.00. (f) “General Partner Disbursement Agreement” – An agreement, whether verbal or written, between the General Partner, Borrower, and, if applicable, Title Company, which provides for the disbursement of the LCDA Loan, LHIA Loan and the Philanthropic Loan. (g) “LCDA Loan” - A loan from the City through the Metropolitan Council’s Livable Communities Demonstration Account Program to Borrower in an original principal amount of $493,950.00. (h) “LHIA Loan” - A loan from the City through the Metropolitan Council’s Local Housing Incentives Account Program to Borrower in an original principal amount of $500,000.00. (i) “MHFA Disbursement Agreement” - The Disbursement Agreement between MHFA and Title Company of even date with this Agreement, which provides for the disbursement of the Equity and the proceeds of the MHFA EDHC Loan. (k) “MHFA EDHC Loan” - A loan from MHFA through its EDHC Program to Borrower in an original principal amount of $888,643.00. (k) “Aeon Loan” – A loan from Aeon to Borrower in an original principal amount of $206,000.00. (l) “U.S. Bank Disbursement Agreement” – An agreement, whether verbal or written, between the U.S. Bank, Borrower, and, if applicable, Title Company, which provides for the disbursement of the U.S. Bank Loan. (m) “U.S. Bank Loan” – A loan from U.S. Bank to Borrower in an original principal amount of $14,960,658.00. 2. Order of Priority for Disbursement of Project Funds. Each party agrees that the Title Company has already been, or will be from time to time, supplied with the Project Funds and must disburse the Project Funds in the following order: Source of Project Funds Order of Disbursement Equity First US.130262380.01 The Sound on 76th, Edina MHFA Dev. #8111 Master Disbursement Agreement 4 10/29/2020 (Ver. 11/20/2017) Aeon Loan Second LCDA Loan Third LHIA Loan Fourth HOME Loan Fifth City Loan Sixth MHFA EDHC Loan Seventh U.S. Bank Loan Eighth The parties agree that the Project Funds must be disbursed in the order indicated and that none of the proceeds of a source of funds will be disbursed until all of the proceeds of funds that are to be disbursed prior to such source have been disbursed. The parties further direct Title Company to disburse the Project Funds in the order indicated, and Title Company agrees to comply with such direction. Notwithstanding the above order of disbursement, the parties agree that if funds from one funding source (the “Original Funding Source”) are unavailable due to (a) the requirements of the documents governing the eligible uses of such funding source and/or (b) certain conditions for disbursement of such funds that have not yet been met, subject to the terms of such funding party’s documents, funds from the next funding source in the order above will be made available for disbursement, but only to the extent the Original Funding Source is unavailable. In particular, the LCDA Loan may only be disbursed as payment or reimbursement for certain eligible costs which must be approved by the City and by the Metropolitan Council before they are disbursed and, to the extent those funds are unavailable, the next source shall be disbursed until eligible costs are incurred and approved so that the funds are available. In addition, the LCDA Loan may be disbursed to reimburse any prior sources that have been used for eligible costs under the LCDA Loan. In addition, MHFA, the City, HRA, US Bank, the County, and Borrower may agree in writing to a different order of disbursement for the funds. 3. Disbursement of Individual Loan Proceeds. When Borrower desires the disbursement of any or all of the Project Funds referred to in Section 2, it will submit a draw request to the appropriate entity that is supplying such funds. If the draw request meets the provisions contained in the applicable document that Borrower has entered into with the entity supplying the requested funds and all other requirements imposed by the applicable document have been satisfied, then the approving entity will approve the draw request and forward it to MHFA for authorization for the disbursement of the draw. MHFA’s authorization will be solely to confirm that the Development is being constructed in conformance with all applicable plans and specifications and will not in any way relate to Borrower’s compliance with any provision imposed by an entity for the disbursement of that entity’s funds. Upon authorization by MHFA, MHFA will forward the draw request to Title Company for disbursement of the applicable funds. Title Company will not disburse any monies without first receiving a draw request approved by both the entity whose monies are to be disbursed and MHFA, and upon receipt of an approved draw request, Title Company will disburse the applicable monies in accordance with the provisions contained in the following documents: US.130262380.01 The Sound on 76th, Edina MHFA Dev. #8111 Master Disbursement Agreement 5 10/29/2020 (Ver. 11/20/2017) Source of Project Funds to be Disbursed Entity Supplying the Source of Project Funds Disbursement Document Equity Borrower MHFA Disbursement Agreement U.S. Bank Loan U.S. Bank U.S. Bank Disbursement Agreement Aeon Loan General Partner General Partner Disbursement Agreement LCDA Loan City General Partner Disbursement Agreement LHIA Loan City General Partner Disbursement Agreement HOME Loan County County Disbursement Agreement TIF Loan HRA City Disbursement Agreement EDHC Loan MHFA MHFA Disbursement Agreement 4. Binding Effect. This Agreement is binding upon and inures to the benefit of the parties to this Agreement and their respective successors and assigns. 5. Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which is an original but all of which will constitute one instrument. (THE REMAINING PORTION OF THIS PAGE IS INTENTIONALLY LEFT BLANK) US.130262380.01 The Sound on 76th, Edina MHFA Dev. #8111 Master Disbursement Agreement 6 10/29/2020 (Ver. 11/20/2017) IN WITNESS WHEREOF, the parties have executed this Master Disbursement Agreement as of the date first written above. BORROWER: THE SOUND ON 76TH LIMITED PARTNERSHIP a Minnesota limited partnership By: 4100 Edina LLC a Minnesota limited liability company General Partner By: Caroline Horton, Vice-President/Treasurer THIS DOCUMENT WAS DRAFTED BY: Minnesota Housing Finance Agency 400 Wabasha Street North, Suite 400 St. Paul, MN 55102-1109 US.130262380.01 The Sound on 76th, Edina MHFA Dev. #8111 Master Disbursement Agreement 7 10/29/2020 (Ver. 11/20/2017) MHFA: MINNESOTA HOUSING FINANCE AGENCY By: _______________________________________ James Lehnhoff Assistant Commissioner, Multifamily US.130262380.01 The Sound on 76th, Edina MHFA Dev. #8111 Master Disbursement Agreement 8 10/29/2020 (Ver. 11/20/2017) CITY: CITY OF EDINA a public body corporate and politic of the State of Minnesota By: Its: US.130262380.01 The Sound on 76th, Edina MHFA Dev. #8111 Master Disbursement Agreement 9 10/29/2020 (Ver. 11/20/2017) HRA: HOUSING AND REDEVELOPMENT AUTHORITY OF EDINA, MINNESOTA By: ______________________________________ James B. Hovland, Chair By: ______________________________________ Scott H. Neal, Executive Director US.130262380.01 The Sound on 76th, Edina MHFA Dev. #8111 Master Disbursement Agreement 10 10/29/2020 (Ver. 11/20/2017) COUNTY: COUNTY OF HENNEPIN, STATE OF MINNESOTA ON BEHALF OF THE APPROVED AS TO FORM HENNEPIN HOUSING CONSORTIUM _____________________________ By: ______________________________________ Assistant County Attorney Chair of its County Board Date: December ___, 2020 Attest: ___________________________________ Deputy/Clerk of the County Board Date: December ____, 2020 RECOMMENDED FOR APPROVAL By: _____________________________ Director, Community Works And: _________________________________ Date: December ___, 2020 County Administrator Date: ___________________ And: ________________________________ Assistant County Administrator, Public Works Date: December _____, 2020 US.130262380.01 The Sound on 76th, Edina MHFA Dev. #8111 Master Disbursement Agreement 11 10/29/2020 (Ver. 11/20/2017) AEON: AEON a Minnesota non-profit corporation By: Caroline Horton, Chief Financial Officer US.130262380.01 The Sound on 76th, Edina MHFA Dev. #8111 Master Disbursement Agreement 12 10/29/2020 (Ver. 11/20/2017) U.S. BANK: U.S. BANK NATIONAL ASSOCIATION a national banking association By: Its: US.130262380.01 The Sound on 76th, Edina MHFA Dev. #8111 Master Disbursement Agreement 13 10/29/2020 (Ver. 11/20/2017) TITLE COMPANY: GUARANTY COMMERCIAL TITLE, INC. a Minnesota corporation By: Its: US.130262380.01 The Sound on 76th, Edina MHFA Dev. #8111 Master Disbursement Agreement 14 10/29/2020 (Ver. 11/20/2017) Exhibit A LEGAL DESCRIPTION Tract J, Registered Land Survey No. 1129, Hennepin County, Minnesota. Being Registered land as is evidenced by Certificate of Title No. 1490730. US.130372031.01 1 FIRST AMENDMENT TO PURCHASE AGREEMENT THIS AMENDMENT is made as of the ____ day of December, 2020 by and between the HOUSING AND REDEVELOPMENT AUTHORITY OF EDINA, MINNESOTA, a public body corporate and politic organized and existing under the laws of the State of Minnesota (the “Seller”), and 4100 EDINA LLC, a Minnesota limited liability company (“Buyer”). WHEREAS, Seller and Buyer entered into a Purchase Agreement dated August 29, 2019 (the “Purchase Agreement”); and WHEREAS, the parties want to amend the Purchase Agreement to delete the inaccurate references to a Land Write-Down. The Seller and Buyer agree to amend the Purchase Agreement as follows: 1. Section 2.1 is amended and restated as follows: 2.1 Purchase Price. The purchase price for the Property shall be $2,900,000 which is the sum of (A) all Seller Acquisition Costs and (B) all Reserve Costs, less the sum of (X) the Net Reserve Cost Deposits, and (Y) the cumulative Reserve Revenue, if any, and Buyer shall pay the Purchase Price as follows: (a) $50,000 earnest money deposited with the Title Company (as defined below) in the time and manner set forth below (the “Earnest Money”); (b) the balance of the Purchase Price (subject to any prorations, reductions, or credits as provided herein) is due and payable by Buyer to Seller by wire transfer of immediately available funds in U.S. Dollars on the Closing Date. Notwithstanding anything to the contrary contained in this Agreement, the sale is conditioned on the Property subject to a restrictive covenant that will be used for the development, construction, and operation of the Project in accordance with the Minimum Affordability Requirements. 2. Section 3.1(f) is amended and restated as follows: (f) “Seller Acquisition Costs” means any and all reasonable, actual out-of- pocket third-party costs, expenses, and expenditures incurred by Seller as disbursements and costs that are attributable in any way to the due diligence and acquisition of the Property under the Initial Purchase Agreement, including, without limitation, attorneys’ fees, title insurance premiums for Seller’s title policy, transfer taxes, recording costs, due diligence costs, real estate taxes, special assessments, and the purchase price paid to Third Party Seller pursuant to the Initial Purchase Agreement. Seller and Buyer acknowledge and agree that the Seller Acquisition Costs are $2,900,000.00. If the Seller Acquisition Costs are not final at the time Seller purchases the Property from Third Party Seller, Buyer and Seller agree to confirm in writing the actual Seller Acquisition Costs promptly after the acquisition of the Property by Seller from Third Party Seller pursuant to the Initial Purchase Agreement. 3. All references to Land Write-Down are hereby deleted. US.130372031.01 2 4. All other provisions of the Purchase Agreement shall remain unchanged by this Amendment. [Remainder of page intentionally left blank; signatures on following page(s)] S-1 IN WITNESS WHEREOF, the parties have executed this Agreement to be effective as of the day and year first above written: SELLER: HOUSING AND REDEVELOPMENT AUTHORITY OF EDINA, MINNESOTA By: __________________________________ James B. Hovland, Chair By: __________________________________ Michael Fischer, Secretary S-2 BUYER: 4100 EDINA LLC, a Minnesota limited liability company By: ___________________________________ Name: ________________________________ Its ____________________________________ S-3 TITLE COMPANY: (For the purpose of acknowledging its agreement with the provisions hereof relating to its duties and obligations as escrow agent hereunder, including without limitation Section 18(t)) GUARANTY COMMERCIAL TITLE, INC. By: Name: Its: The Effective Date is December ____, 2020 Date: December 10, 2020 Agenda Item #: VI.D. To:Chair & Commissioners of the Edina HRA Item Type: Report / Recommendation From:Stephanie Hawkinson, Affordable Housing Development Manager Item Activity: Subject:Update to New Multi-Family Affordable Housing Policy Action Edina Housing and Redevelopment Authority Established 1974 CITY OF EDINA HOUSING & REDEVELOPMENT AUTHORITY 4801 West 50th Street Edina, MN 55424 www.edinamn.gov ACTION REQUESTED: Approve Updated New Multi-Family Affordable Housing Policy. INTRODUCTION: The New Multi-Family Affordable Housing Policy contains old income and rent caps that need to be updated. In addition, The Edina Housing Foundation has increased the maximum qualifying house value to $425,000. Since 2018, the rent and income caps have increased by just over 9%. HUD adjusts the rents and income in April of each year, so staff will amend the Policy and in-line table once the new numbers are published. ATTACHMENTS: Description Updated Affordable Housing Policy ☐City Council Approved: 11/1/2015 ☒City-Wide Revised: 12/10/2020 ☐Department City of Edina Policy NEW MULTI-FAMILY AFFORDABLE HOUSING The City and Housing and Redevelopment Authority recognize the need to provide a range of affordable housing choices for those who live or work in the City. Since the land appropriate for new multi-family residential development is limited, it is essential that a reasonable proportion of such land be developed into affordable housing units. As such, the City of Edina adopts the following New Multi-Family Affordable Housing Policy. FOR THE PURPOSES OF THIS POLICY: 1. “Unit” means either a for-sale dwelling or a rental dwelling in which a lease is signed prior to occupancy. 2. “Financial Assistance” provided the City includes but is not limited to tax increment financing, land write downs, pass-through funding for purposes other than environmental remediation and other forms of direct subsidy. 3. Any specific projects requesting exemptions to the affordable housing requirements of this policy must seek recommendation from the Edina HRA and approval from the Edina City Council based on alternative public purpose. 4. All new multi-family developments of 20 units or more must adhere to this policy and must be zoned PUD Planned Unit Development. 5. Affordable Rental Housing Income and Rents are defined as both gross incomes (adjusted for family size) and gross rental rates (adjusted for bedroom count and include utility allowance and any fees that are a requirement of occupancy as per Section 42 of the Internal Revenue Service Code.) that are updated annually by the Minnesota Housing Finance Agency (MHFA) and published at www.mnhousing.gov. 2020 income and rental limits can be found at the end of this policy. 6. Affordable Ownership Housing Income and Sales Price are affordable to and initially sold to persons whose income is at or below the levels set in the MHFA’s “Startup Program” (first-time homebuyer). This program has a sales price limit of $340,000, adjusted annually. The Edina Housing Foundation has set this limit at $425,000 in consideration of the high prices in Edina. A table showing sales prices that will be used as the acquisition limit in this definition can be found at the end of this policy. THIS POLICY APPLIES TO ALL NEW MULTI-FAMILY DEVELOPMENTS THAT: 1. Include 20 units of more. 2. Require rezoning or a Comprehensive Plan Amendment. 3. Receive financial assistance from the City of Edina and/or the Edina Housing and Redevelopment Authority. Page | 2 4. Are developed on property purchased from the City of Edina even if no financial assistance is being provided by the City unless the waiver is recommended by the Edina HRA and approved by the Edina City Council. THE POLICY 1. New rental multi-family developments subject to this policy shall provide a minimum of 10% residential units at 50% affordable rental rates or 20% residential units at 60% affordable rental rates as defined below. The units shall be occupied by households at or below 60% of the Multi- Family Tax Subsidy Income Limits (MTSP). 2. New for-sale developments shall provide a minimum of 10% of residential units at affordable sales prices as defined below. 3. The affordable unit mix must be approximately proportional to the market rate unit mix. 4. Rental and for-sale/owner occupied affordable units shall provide the following: a. on-site parking (either surface or enclosed) for affordable units and the cost related to parking must be included affordable sales price or affordable rental rate. At least one enclosed parking space shall be included in the purchase price of a for-sale unit in the same manner offered to buyers of market rate units. b. Affordable and market rate residents will have equal access to all entries, lobbies, elevators, parking and amenities. Examples of amenities include storage lockers, balconies, roof decks, outdoor patios, pools, fitness facilities, and similar unit and project features. c. Exterior appearance of affordable units shall be visually comparable with market rate units in the development. 5. New rental housing will remain affordable for a minimum of 20 years and this requirement will be memorialized by a Land Use Restrictive Covenant. 6. New for-sale or owner-occupied developments will remain affordable for a minimum of 30 years and this requirement will be memorialized by a Land Use Restrictive Covenant. The Land Use Restrictive Covenant will contain a provision providing the Housing and Redevelopment Authority or Edina Housing Foundation the right of first refusal to purchase affordable units. 7. The owners of multi-family rental housing projects subject to this Policy by receiving financial assistance shall accept tenant-based rental housing assistance including but not limited to Section 8 Housing Choice Vouchers, HOME tenant-based assistance and Housing Support. Tenants with rental assistance may occupy an affordable dwelling unit with the rent charged not exceeding the maximum allowed by Metro HRA or the assistance provider. Furthermore, the rent charged may not exceed the maximum allowed by the most restrictive funding soured. This requirement will be enforced through a contract between the City of the project owner pursuant to which the owner will be required to adopt business practices that promote fair housing and provide documentation of compliance with these requirements to the City. This requirement will be further enforced through the City’s monitoring policies and procedures. 8. Owners of City-assisted housing projects shall affirmatively market affordable housing opportunities. All multi-family housing providers subject to this policy must submit an Affirmative Fair Housing Marketing Plan (AFHMP) at lease every 5 years and a Survey and Certification regarding AFHMP outcomes annually. Owners must advertise housing opportunities on HousingLink or another medium acceptable to the City concurrent with any other public or private advertising. 9. Recognizing that affordable housing is created through a partnership between the City and developers, the City and/or Housing and Redevelopment Authority will consider the following incentives for developments that provide affordable housing: a. Density bonuses Page | 3 b. Parking requirement reductions c. Tax increment financing for projects that exceed the minimum requirement d. Deferred low interest loans from the Housing and Redevelopment Authority and/or Edina Housing Foundation e. Property Tax Abatement 10. It is the strong preference of the City that each new qualifying development provide its proportionate share of affordable housing on site. However, the City recognizes that it may not be economically feasible or practical in all circumstances to do so. As such, the City reserves the right to waive this policy (only if circumstances so dictate, as determined by the City).In lieu of providing affordable housing in each new qualifying development, the City may consider the following: a. Dedication of existing units in Edina to 110% of what would have been provided in a proposed new development. These units would need to be of an equivalent quality within the determination of the City. b. Financial risk and participation in the construction of affordable dwelling units of an equivalent quality by another developer on a different site within the City. c. An alternative proposed by a developer that directly or indirectly provides or enables provision of an equivalent amount of affordable housing within the city. An alternative could be payment of a Total Buy In (TBI) fee, a cash payment to the City in lieu of providing affordable housing units. The TBI shall be equal to $100,000 per unit rounding up to the next whole unit. The TBI would be due in cash or certified funds in full to the City at the time of issuance of the building permit. A building permit will not be issued unless the TBI is paid in full. The City Council may allow the housing developer to pre- pay the TBI to satisfy a future Affordable Housing Opportunity on a case-by-case basis. TBI will be deposited into the Affordable Housing Trust Fund to be used for the development and preservation of affordable housing. 11. Guidelines for implementing this Affordable Housing Policy can be found in the Inclusionary Housing Policy Program Guide. 2020 INCOME AND RENTAL LIMITS GROSS INCOMES GROSS RENTS 60% 50% 60% 50% 1 Person $43,440 $36,200 Studio $1,086 $905 2 Persons $49,680 $41,400 1 Bedroom $1,164 $970 3 Persons $55,860 $46,550 2 Bedroom $1,396 $1,163 4 Person $62,040 $51,700 3 Bedroom $1,613 $1,344 5 Persons $67,020 $55,850 4 Bedroom $1,800 $1,500 6 Persons $72,000 $60,000 2018 OWNERSHIP HOUSING INCOME AND SALES PRICE Acquisition Limit in this policy definition: $425,000 2020 income limits as published on the MHFA website are as follows: 1-2 person household $103,400 3+ person household $118,900 Income limits and maximum sales prices are updated annually. See www.mnhousing.gov. Page | 4 Originally adopted: November 1, 2015 Income/Rent Limits Adjusted: April 13, 2016 As amended: February 7, 2018 As amended: April 3, 2018 As amended: October 2, 2018 As amended: March 5, 2019 Income/Rent Limits Adjusted: December 10, 2020 Date: December 10, 2020 Agenda Item #: VI.E. To:Chair & Commissioners of the Edina HRA Item Type: Claims From:Don Uram, Finance Director Item Activity: Subject:Payment of Claims Action Edina Housing and Redevelopment Authority Established 1974 CITY OF EDINA HOUSING & REDEVELOPMENT AUTHORITY 4801 West 50th Street Edina, MN 55424 www.edinamn.gov ACTION REQUESTED: Approve Payment of Claims. INTRODUCTION: Claims information for approval is attached. ATTACHMENTS: Description HRA Check Register 09.18.20-12.04.20 Total $187,272.13 12/7/2020CITY OF EDINA 9:53:39R55CKS2LOGIS600V 1Page -Council Check SummaryNote: Payment amount may not reflect the actual amount due to data sequencing and/or data selection. 12/4/20209/18/2020 - Check #AmountDate Supplier / Explanation PO#Doc No Inv No BU Obj Sub Subledger Account Description BU Description Co Dept Div 452596 9/25/2020 100730 DORSEY & WHITNEY LLP 09210 1420661,170.00 92104500 FRANCE - TIF ESCROW LEGAL 533504 3605649 ESCROW DEPOSITS HRA ADMINISTRATION 09238 1461034,882.50 92384100 HISTORIC PRESERVATION 533560 3605648 PROFESSIONAL SERVICES SOUTHDALE 2 TIF DISTRICT 6,052.50 452598 9/25/2020 133662 ECCO MIDWEST INC. 09248 1261037,200.00 92484100 ABATEMENT 533632 20108-001 PROFESSIONAL SERVICES WEST 76TH STREET TIF DIST 7,200.00 452602 9/25/2020 100049 EHLERS & ASSOCIATES INC. 09232 146103375.00 92322019 TIF REPORTING 533360 84540 PROFESSIONAL SERVICES CENTENNIAL TIF DISTRICT 375.00 452673 9/25/2020 141258 PEMBER COMPANIES INC. 09232 14671011,521.88 923250TH FRANCE PAVERS 533548 ENG20-10NB EQUIPMENT REPLACEMENT CENTENNIAL TIF DISTRICT 11,521.88 452714 9/25/2020 123129 TIMESAVER OFF SITE SECRETARIAL INC. 09210 146136148.00 9210HRA MINUTES SEPT. 10 533580 M25878 PROFESSIONAL SVC - OTHER HRA ADMINISTRATION 148.00 452764 10/2/2020 100643 BARR ENGINEERING CO. 09242 1267104,183.50 9242LIFT STATION PRELIM ENGINEERIN 533916 23271827.00-1 EQUIPMENT REPLACEMENT GRANDVIEW 2 TIF DISTRICT 4,183.50 452797 10/2/2020 100730 DORSEY & WHITNEY LLP 09210 14206611,422.50 9210PENT VILL - TIF LEGAL ESCROW 533901 3605647 ESCROW DEPOSITS HRA ADMINISTRATION 11,422.50 452943 10/2/2020 131648 WENCK ASSOCIATES INC. 09248 1261033,725.68 92484100 ABATEMENT 533995 12006006 PROFESSIONAL SERVICES WEST 76TH STREET TIF DIST 3,725.68 453047 10/9/2020 101503 HENNEPIN COUNTY PROPERTY TAX 09248 12610543,883.97 92484100 PROPERTY TAXES 534712 3102824410010 2020 TAXES DUES & SUBSCRIPTIONS WEST 76TH STREET TIF DIST 43,883.97 453066 10/9/2020 124002 KIMLEY-HORN AND ASSOCIATES INC. 09242 1267103,087.25 9242JERRY RAMP IMPROV ENGINEERING 534757 17255608 EQUIPMENT REPLACEMENT GRANDVIEW 2 TIF DISTRICT 3,087.25 453256 10/16/2020 100049 EHLERS & ASSOCIATES INC. 09238 146103240.00 9238TIF QUESTIONS 535502 84750 PROFESSIONAL SERVICES SOUTHDALE 2 TIF DISTRICT 09248 126103490.00 9248TIF QUESTIONS 535503 84757 PROFESSIONAL SERVICES WEST 76TH STREET TIF DIST 09240 1261361,163.75 9240PP TIF MONITORING ADMIN 535504 84762 PROFESSIONAL SVC - OTHER PENTAGON PARK DISTRICT 09238 146136367.50 9238TAX MONITORING 66 WEST 535505 84749 PROFESSIONAL SVC - OTHER SOUTHDALE 2 TIF DISTRICT 2,261.25 12/7/2020CITY OF EDINA 9:53:39R55CKS2LOGIS600V 2Page -Council Check SummaryNote: Payment amount may not reflect the actual amount due to data sequencing and/or data selection. 12/4/20209/18/2020 - Check #AmountDate Supplier / Explanation PO#Doc No Inv No BU Obj Sub Subledger Account Description BU Description Co Dept Div 453404 10/16/2020 123129 TIMESAVER OFF SITE SECRETARIAL INC. 09210 146136148.00 9210SEPT. 24 HRA MINUTES 535058 M25910 PROFESSIONAL SVC - OTHER HRA ADMINISTRATION 148.00 453522 10/23/2020 100049 EHLERS & ASSOCIATES INC. 09210 1420661,592.50 9210TIF ESCROW 4500 FRANCE 535914 84766 ESCROW DEPOSITS HRA ADMINISTRATION 1,592.50 453662 10/23/2020 141258 PEMBER COMPANIES INC. 09232 146710606.41 923250 FRANCE PAVERS 536013 ENG20-10NB-FINAL EQUIPMENT REPLACEMENT CENTENNIAL TIF DISTRICT 606.41 453695 10/23/2020 100995 SEH 09242 12671024,384.86 9242EDEN AVE PRELIM ENGINEERING 536012 393975 EQUIPMENT REPLACEMENT GRANDVIEW 2 TIF DISTRICT 24,384.86 453904 10/30/2020 100730 DORSEY & WHITNEY LLP 09210 1420662,630.00 92104500 FRANCE TIF ESCOW 536587 3612135 ESCROW DEPOSITS HRA ADMINISTRATION 09248 1261036,545.00 92484100: LEGAL WORK 536623 3612134 PROFESSIONAL SERVICES WEST 76TH STREET TIF DIST 09238 14610342.50 9238AMUNDSON LEGAL WORK 536630 3612140 PROFESSIONAL SERVICES SOUTHDALE 2 TIF DISTRICT 9,217.50 454130 10/30/2020 131648 WENCK ASSOCIATES INC. 09248 1261031,088.90 92484100 REMEDIATION WORK 536217 12006953 PROFESSIONAL SERVICES WEST 76TH STREET TIF DIST 1,088.90 454227 11/6/2020 124002 KIMLEY-HORN AND ASSOCIATES INC. 09242 1267105,143.65 9242JERRY'S RAMP 537233 17488556 EQUIPMENT REPLACEMENT GRANDVIEW 2 TIF DISTRICT 5,143.65 454329 11/13/2020 100643 BARR ENGINEERING CO. 09242 1267103,212.00 9242ROADWAY ENGINEERING 537664 23271827.00-2 EQUIPMENT REPLACEMENT GRANDVIEW 2 TIF DISTRICT 3,212.00 454569 11/20/2020 100730 DORSEY & WHITNEY LLP 09210 146131404.00 9210LEGAL REVIEW 538126 3619535 PROFESSIONAL SERV - LEGAL HRA ADMINISTRATION 09248 1261032,125.50-92484100 LEGAL 538145 3619536 PROFESSIONAL SERVICES WEST 76TH STREET TIF DIST 09248 1261032,125.50 92484100 LEGAL 538145 3619536 PROFESSIONAL SERVICES WEST 76TH STREET TIF DIST 09248 1261032,125.50 92484100 LEGAL 538145 3619536 PROFESSIONAL SERVICES WEST 76TH STREET TIF DIST 2,529.50 454640 11/20/2020 100995 SEH 09242 12671024,606.90 9242EDEN AV PRELIM ENGINEER 538134 395397 EQUIPMENT REPLACEMENT GRANDVIEW 2 TIF DISTRICT 24,606.90 454695 11/20/2020 100049 EHLERS & ASSOCIATES INC. 09210 142066673.75 92106600-6800 FINANCIAL ADVISORY 538362 85128 ESCROW DEPOSITS HRA ADMINISTRATION 12/7/2020CITY OF EDINA 9:53:39R55CKS2LOGIS600V 3Page -Council Check SummaryNote: Payment amount may not reflect the actual amount due to data sequencing and/or data selection. 12/4/20209/18/2020 - Check #AmountDate Supplier / Explanation PO#Doc No Inv No BU Obj Sub Subledger Account Description BU Description Co Dept Div 673.75 454910 11/25/2020 124002 KIMLEY-HORN AND ASSOCIATES INC. 09242 12671018,901.88 9242EDEN AVE PRELIM ENGINEERING 538957 17611155 EQUIPMENT REPLACEMENT GRANDVIEW 2 TIF DISTRICT 18,901.88 455090 12/4/2020 120784 SIGN PRO 09210 146710222.00 921050 FRANCE STREET DIRECTORY 539134 15738 EQUIPMENT REPLACEMENT HRA ADMINISTRATION 222.00 20201008 10/8/2020 129962 US BANK - CREDIT CARD 09240 1264067.75 9240MAIL DOCS TO PENT VILL LEGAL 535272 WILLIAM 8/27/2020 134 GENERAL SUPPLIES PENTAGON PARK DISTRICT 7.75 20201109 11/9/2020 129962 US BANK - CREDIT CARD 09248 126103480.00 92484100 DEMO PERMIT 537317 DERIK 10/8/2020 101 PROFESSIONAL SERVICES WEST 76TH STREET TIF DIST 09210 14610420.00 9210SLUC TRAINING 537377 WILLIAM 9/29/2020 180 CONFERENCES & SCHOOLS HRA ADMINISTRATION 09232 146104575.00 9232IEDC TRAINING 537379 WILLIAM 10/12/2020 182 CONFERENCES & SCHOOLS CENTENNIAL TIF DISTRICT 1,075.00 Report Totals 187,272.13 Date: December 10, 2020 Agenda Item #: VII.A. To:Chair & Commissioners of the Edina HRA Item Type: Report / Recommendation From:Stephanie Hawkinson, Affordable Housing Development Manager Item Activity: Subject:The Housing Strategy Task Force Report Action Edina Housing and Redevelopment Authority Established 1974 CITY OF EDINA HOUSING & REDEVELOPMENT AUTHORITY 4801 West 50th Street Edina, MN 55424 www.edinamn.gov ACTION REQUESTED: Staff recommends the HRA direct City Staff to develop an implementation plan. INTRODUCTION: The Housing Strategy Task Force has been meeting for over 18 months to develop Goals and Strategies to address the housing needs in Edina. This report is the culmination of 45 meetings. The final report is a compromise. It includes the preservation of R1 zoning for single-family houses and it recognizes the need for more multi-family housing production to accommodate growth. The report is not prescriptive. Rather it is a document to guide housing priorities in the city, to suggest strategies to achieve specific goals, and to encourage the city on how to proactively enable, support and facilitate quality housing development that meets the evolving needs and desires of current and future residents. ATTACHMENTS: Description Staff Report The Housing Strategy Task Force Report December 10, 2020 Chairs and Commissioners of the Edina Housing and Redevelopment Authority Stephanie Hawkinson, Affordable Housing Development Manager Housing Strategy Task Force Report Information / Background: In April 2019, the City Council approved the creation of a Housing Strategy Task Force to support the City’s development of a comprehensive housing strategy. The charge was to: • Review the current state of housing options in Edina. • Recommend an optimal composition of housing options to the City Council to ensure the long-term fiscal and social health and viability of the community. • Propose a strategy to the City Council that seeks to achieve that optimal composition. The charge in its entirety is included as an appendix. Out of an applicant pool of over 50 individuals, The City Council selected seven members: • Dan Hunt - Co-Chair • Bernadette Hornig – Co-Chair • Joe Burke • Janet Kitui • Tom Koon • Norm Siekman • Feroza Mehta (June 2019 – Nov. 2019) • Steve Brown (Jan. 2020 – Dec. 2020) The Task Force Report (“Report”) is included with this staff report, therefore the purpose of this staff report is to outline some of the challenges faced both internally and externally, the methods used to reach agreement, and present next steps. STAFF REPORT Page 2 Staff Perspective Due to the variety of perspectives and philosophies within the Task Force, there were challenges agreeing on the purpose of the Task Force and later agreeing to the final product. Nonetheless, the Task Force was incredibly committed to the topic and worked hard to form a report considering all perspectives. Timeline & Vision The first timeline had the Task Force providing the Report to Council in December of 2019. The disparate Task Force perspectives was a driving factor to realign the timeline to December of 2020. The Task Force wanted more time to educate themselves on housing issues from technical experts. The Report: Advancing Housing Priorities in Edina As stated in the opening paragraph “The City of Edina is healthy and thriving. It has and continues to be one of the most sought after communities in the Twin Cities for people who want to live near strong schools, lovely neighborhoods, amenities like parks, convenient access to both downtowns and a high quality of life.” One of the downsides of being a sought-after place to live is that people will pay more to be able to live in Edina and thereby drive up the housing costs. As housing prices in Edina continue to rise, fewer people can make a home here; Edina is increasingly out of financial reach for households with low or moderate incomes. This creates tension between preserving the City that residents love and adapting to changing demographics and needs. Fortunately, preserving the City’s high standards does not need to equate with making the City stagnant. A healthy, vibrant City has a diversity of incomes and people, and is adaptable to change. The Task Force was asked to find a balance between keeping Edina as its been in the past and making room for change. Goals and Strategies 1. Goal 1: Promote Lifecycle Housing a. Promote Affordable and Attainable Housing. i. Prepare a housing implementation plan using a mix of tools to achieve the City’s housing goals, including the Comprehensive Plan goal range of 992 to 1,804 affordable units, in the ten-year horizon, with time-bound goals and milestones, to be reviewed on an annual basis. ii. Facilitate the development of “new” housing options such accessory dwelling units to accommodate the diverse needs of people of different ages, household sizes, lifestyle and incomes. iii. Attract new residents and retain existing residents by preserving and expanding housing options for moderate- and low-income households. iv. Promote affordable and workforce housing that includes a range of housing prices and options, based on the principle that those who contribute to the community should have the opportunity to live here. v. Explore directing for a limited period of time, the City’s portion of the increased tax value of tear down properties to support Affordable Housing. b. Promote Missing Middle Housing Production. i. Support opportunities to accommodate Missing Middle housing within the city, defined as range of multi-unit or clustered housing types compatible in scale with single-family homes. c. Promote Special Needs Housing. STAFF REPORT Page 3 i. Support a range of housing options for people with special needs (Developmentally, Physically, or Mentally) 1) Families with a disabled member 2) Affordable housing for working households with a disabled member 3) Assisted living for individuals with disabilities. d. Encourage Preservation and Promotion of Diverse Housing Stock. i. Assist neighborhoods in retaining starter housing stock that can accommodate young families. ii. Encourage the preservation, maintenance and rehabilitation of existing subsidized and naturally occurring affordable rental and ownership housing (NOAH). iii. Maintain some of Edina’s single-family, lower square footage housing stock. iv. Support program(s) for assisting income eligible property owners with rehabilitating their homes to extend their useful life. v. Increase awareness about the range of housing variety that exists in Edina. 2. Goal 2: Amend Land Use Regulations to Enable a More Diverse housing Mix. a. Adjust Zoning Standards for Housing. i. Provide zoning flexibility in the specific areas identified for development in the Comprehensive Plan to streamline the public approval process for minor variances. ii. Continue to allow teardowns/rebuilds but consider design guidelines and regulations that prevent privacy invasion via window placement and infringement on both active and passive solar energy capture. iii. Allow for creative solutions and some flexibility in the provision of off-street parking standards for housing. This might include options like shared parking, reduced minimums near transit and activity nodes, or exceptions to structured parking requirements for affordable housing. b. Consider Zoning District Amendments to Expand Housing Options. i. Consider zoning amendments in limited areas (such as transitional areas and activity nodes) and pursue zoning changes to encourage split lots to allow infill, to allow lot splits for infill, single-family ownership housing, detached or attached (zero lot line), on lots after splitting that are 50’ or wider (or 3,500 sf or larger). ii. Consider amending current R1 zoning to allow attached or detached Accessory Dwelling Units (ADU) such as self-contained "mother-in-law units". Develop Small Area Plans for extending R2 zoning along Vernon Ave from 169 to Interlachen, France Ave north of Hwy 62, and Valley View from 66th to Hwy 100. Evaluate additional areas for R2 zoning. iii. Support the development and preservation of affordable housing throughout Edina where there is access to transit. 3. Goal 3: Reduce Building Costs. a. Streamline the Approval Process for housing Development requiring a Variance or Subsidy. STAFF REPORT Page 4 i. Fully empower the City’s Community Development Department to identify properties for development or redevelopment, analyze projects for both fit with the Comprehensive Plan Design Guidelines and economic feasibility in prevailing market conditions, balancing these two as needed. Communicate development objectives to developers and encourage the preparation of proposals for development. ii. Implement active outreach and recruit developers with a successful track record in providing the housing desired. iii. Empower the City’s Community Development Department to guide developers through the project approval process. iv. Provide better guidelines for development requirements, based on location and economic objectives. v. Simplify the current project approval process. Limit discussion to the variance or Comprehensive Plan amendment issues being raised. vi. Conduct semi-annual project review meetings between Staff, City Council and Planning Commission to discuss lessons learned, gain alignment, and determine policy implications of projects completed in the past six months. vii. Complete Post-mortem reviews of the current development review process, paying particular attention to assessing the level of quality of resulting developments. Identify what developments have been delayed or have been negatively impacted by incurring additional costs in the development process due to multiple levels of approvals or ad hoc design and amenity requests. viii. Ensure that there is a robust system in place to identify the evolving best practices for managing housing developments being used by other communities. For example, Bloomington, St. Louis Park, Brooklyn Center, or others. b. Reduce the Cost of Building, Renovating and Financing Quality Housing. i. Develop a parking policy that reflects the latest thinking for current and future parking needs, parking construction costs, sustainability and evolving economic and marketability needs for successful projects. ii. If underground or covered parking is required, be willing to fund it by Tax Increment Financing (TIF) or other means of subsidy. iii. Expand the HRA levy to generate funds that can be leveraged for land acquisition, bridge loans and renovations. iv. Utilize land trusts and land write-downs to secure land for future development projects. v. Empower the City’s Affordable Housing Development Manager to be responsible for establishing/evaluating the parking, design, and amenity requirements for affordable housing developments to ensure economic viability of these projects. vi. Empower the City’s Affordable Housing Development Manager and the Director of Community Development to be responsible for parking, design, and amenity requirements for housing for seniors, people with disabilities and other housing market segments with specific needs. vii. Authorize the City, through a public hearing process, to have authority to make property purchases that are consistent with a city development STAFF REPORT Page 5 strategy, within a financial limit, to be able to secure control of potential properties for affordable housing development, in an expeditious manner. viii. Fully utilize the other options the city has to lower the cost of development and or financing (i.e. rebate on fees, tax exempt bond financing, upgrading to an Economic Development Agency, selling land below market value, reduced property taxes, etc.). ix. Explore directing City portion of increment of increased tax value of tear down properties to Affordable Housing Trust Fund. 4. Goal 4: Encourage Sustainable Design and Technology in all New and Substantial Rehabilitation Housing. a. Encourage alternative energy sources including solar, wind, waste material, and geothermal. b. Promote active and passive energy efficiency in the design and placement of buildings and trees and educate property owners regarding weatherization and energy efficiency. c. Require shadow studies on new or replacement housing structures to ensure active and passive solar energy use by adjacent properties is not adversely impacted. d. Promote water conservation by homeowners and housing property owners through education about wat er conserving appliances and fixtures, and reusing wastewater. e. Support mitigation of water runoff by encouraging use of rain gardens, rain barrels, cisterns, permeable driveways and walkways, and appropriate building and landscape design. f. Frequently review housing codes and policies to incorporate new technology regarding alternative energy sources, new energy efficient building practices. g. Promote new construction and substantial rehabilitation projects to follow leading industry sustainability standards. The final report is a compilation of the Task Force’s varied opinions and perspectives. It includes the preservation of R1 zoning for single-family houses and it recognizes the need for more multi- family housing production to accommodate growth. It honors the diversity of the neighborhoods and proposes housing for people who want to age in place, as well as affordability levels for lower income workers in Edina who may want the option to live closer to their jobs. It recognizes that Edina is getting older yet needs young families to populate the schools. The report is not prescriptive. It does not guide what should be built where. Rather it is a document to guide housing priorities in the city, to suggest strategies to achieve specific goals, and to encourage the city on how to proactively enable, support and facilitate quality housing development that meets the evolving needs and desires of current and future residents. Methodology Meetings The Task Force met bi-weekly for 1.5 hours. During the spring of 2020, the meetings were regularly held once a week for 2 hours including a six-hour long retreat in July. The Task Force has met approximately 45 times. STAFF REPORT Page 6 Presentations: The first few months were spent hearing from individuals and technical experts identified by members of the Task Force. Presenters included: • Community Development Director, Cary Teague. Director Teague’s presentation focused on zoning. • Race and Equity Coordinator, Heidi Lee. Lee’s presentation focused on the City’s Race and Equity work plan • Staff from the Metropolitan Council • Edina School District • Chamber of Commerce • Center for the American Experiment • Maxfield Research In addition to presentations, the Task Force reviewed multiple article and reports, including a more in-depth review of the 2006 Housing Succession Plan and Chapter Four of the 2040 Comprehensive Plan. The Task Force agreed on a synthesize of the materials into four main issue areas, which became the basis for the Goals and Strategies: Current Housing Stock, Affordable Housing, Community Drivers, and Finance and Economics. Decision Making: Due to the variety of perspectives and philosophies with the Task Force, there needed to be methodology to determine the goals and strategies without requiring consensus. The Task Force agreed to utilize the “Fist to Five” approach for decision making - when reviewing a proposed strategy, each member would rate it with their fist from zero (do not support) to five fingers (full support): 0 = No support, will work to block 1 = No support, but will not actively block 2 = Minimal support, willing to accept with some modifications 3 = Neutral 4 = Solid support, not over the top enthusiastic 5 = Enthusiastically support All proposed strategies given a 0, 1, or 2 by anyone were discussed further: Low scored strategies were not immediately dismissed. Items where there was a consensus (5 to 6 Task Force members having similar ratings) were considered to have the Task Force’s approval, despite the lack of consensus. By the end of July, the Task Force had a list of approved goals and strategies. At the time, the Task Force Members seems to be in agreement on the final outcome. Engagement: The HRRC and Planning Commission held a joint meeting to hear a presentation from the Task Force on November 17. The Edina Housing Foundation reviewed and discussed the proposal at their November 24th Board Meeting. The HRRC and Foundation submitted responses that are included in the Report’s addendum and submitted with this Staff Report. STAFF REPORT Page 7 Challenges Identified by Staff While tackling this topic is best with a variety of perspectives, it presents some challenges. • There was a lack of common agreement about among the Task Force members about whether the Task Force was bound by the parameters of the City’s foundational planning documents, such as the City’s Comprehensive Plan. This led to an inordinate amount of time dedicated by Task Force members speculating about what the Council would want them to do. • The availability of personal time to dedicate to the Task Force varied widely among the members. Members with more available time tended to want to meet more often than members who did not have as much available time. This led, at times, to concerns about equity of participation among the Task Force members and staff. • COVID-19 restrictions contracted the range of meeting options and engagement opportunities in a manner that made both more difficult than expected when the task force was established in 2019. • The killing of George Floyd raised unresolved questions regarding how much historical issues such as restrictive racial covenants play a role in housing disparities experienced today, and whether Edina bears some responsibility to resolve social inequities. • There was disagreement, at times, between the Task Force and staff about the selection and management of consulting partners (Maxfield and Moxie), which led to occasional frustration among those involved. • How and who would compose the Task Force’s final report was not well established at the beginning of the process, which led to authorship and editing struggles at the end of the process when the final report was being composed. Concluding Thoughts The long-term economic, social and health consequences of COVID may affect housing in ways that we cannot yet imagine. For example, the Maxfield study was completed pre-COVID and includes a recommendation for additional age-restricted congregate living. Although demographics may support this, it is unknown whether the pandemic will alter the choices people make when desiring to age in community. Another example is pre-COVID Millennials were leaving suburban environments to move closer to downtown areas as evidenced by the development boom in the North Loop of Minneapolis. However, social unrest, the shift in at home work options, and the decline of retail and commercial activity, has caused some people to rethink their desired living location and some are moving back to the suburbs. The Task Force considered these potential market shifts but felt that the fall-out remains unknown. Report Presentation The Housing Strategy Task Force respectfully submits the Report to the HRA. Staff Recommendation Staff recommends HRA to direct City Staff to bring back an implementation plan. STAFF REPORT Page 8 Addendums • Email from Members of the Human Rights and Relations Commission • Letter from Edina Housing Foundation • Task Force Amended Charge From: Cat Beringer <cat.beringer@gmail.com> Sent: Thursday, December 3, 2020 4:53 PM To: Stephanie Hawkinson <SHawkinson@EdinaMN.gov>; Heidi Lee <HLee@EdinaMN.gov>; Mark Felton <markfeltoncpa@feltonforensics.com> Subject: Housing Task Force Report comments EXTERNAL EMAIL ALERT: This email originated from outside the City of Edina. Do not click links or open attachments unless you recognize the sender and know the content is safe. Hi Heidi and Stephanie, I really appreciated how much depth went into compiling this report, including Edina's history. However, I do have some concerns about a few phrases in the document. 1. I would like to suggest that the word unfounded be added to this sentence: p. 28* Citing unfounded concerns about crime and property value declines from white buyers, some housing developers added clauses to property deeds that included racially restrictive covenants. I think it's important to state that these concerns about crime and property values were unfounded and not based in fact. These "concerns about crime and property values" were unfounded complaints used to conceal the true purpose of these covenants. The segregatory effects of these housing policies were not a fluke, they were the point. To allow this sentence to stand is to be complicit with these housing policies. TPT's Jim Crow of the North. https://www.tpt.org/minnesota-experience/video/jim-crow-of-the-north-stijws/ and this article https://www.npr.org/2017/05/03/526655831/a-forgotten-history-of-how-the-u-s-government- segregated-america https://www.nytimes.com/2017/08/24/upshot/how-redlinings-racist-effects-lasted-for-decades.html 2. p.29* Understanding the history of exclusionary housing policy helps people recognize housing regulations that may reinforce patterns of income exclusion. It is a matter of personal opinion whether active zoning measures should be taken to reduce the income segregation created by past housing policies. The two sentences above seem to be in direct contradiction with each other. The second sentence should maybe be removed or rephrased. Otherwise, it gives the impression that the city is okay with income segregation in housing. The phrase "personal opinion" especially seems to imply a certain level of absence of culpability, as the entire point is that housing policy helped to create the problem, and it cannot be fixed without further housing policy. 3. I would like to reiterate my concerns about affordable housing that can accommodate families. Although, I think it is too late to be added to the discussion about housing for this report, I would like the city to be more aware of the lack of affordable housing beyond studio, one bedroom, or two bedroom apartments. I think the commonly used industry term "multifamily housing" is misleading when you are describing households and not families. And, although a two bedroom apartment could conceivably accommodate a family of four, leasing agreements may not allow a family of that size. Overall, I really appreciate the comprehensive work of the task force and their attempt to cover such a broad range of topics while trying to give voice to many different perspectives. Thanks, Cat Beringer Chair HRRC From: Mark Felton <markfeltoncpa@feltonforensics.com> Sent: Thursday, December 3, 2020 6:55 PM To: Cat Beringer <cat.beringer@gmail.com> Cc: Stephanie Hawkinson <SHawkinson@EdinaMN.gov>; Heidi Lee <HLee@EdinaMN.gov> Subject: Re: Housing Task Force Report comments EXTERNAL EMAIL ALERT: This email originated from outside the City of Edina. Do not click links or open attachments unless you recognize the sender and know the content is safe. Hello Everyone: I support and concur with Chair Beringer’s comments and concerns. I am very comfortable letting her letter represent my concerns as a member of the HRRC and as an Edina resident. Best regards, Mark Felton *Note from Staff: The page numbers have changed between the draft version review by the HRRC and the final version S H E L T E R I N G O U R C O M M U N I T Y 4801 WEST 50TH STREET EDINA, MINNESOTA 55424 952-826-0462 FAX: 952-826-0389 November 30, 2020 Dear Mayor and City Council Members: With this letter, The Edina Housing Foundation wishes to provide its comments on the Affordable Housing Priorities for Edina report. In summary, we believe this is a balanced report, providing lots of good context and information on our community. We support most all of its recommendations and conclusions and believe that by pursuing these goals our community will become stronger. The board members of the Edina Housing Foundation are all long-term Edina residents, some have lived here their entire lives. We resonate with the report in that it describes Edina as a strong, close-knit community that is well run. Edina has made many good decisions and taken bold leadership positions over the years – Southdale, Edinborough, and Centennial Lakes come to mind. Housing affordability is a regional problem, and Edina has the financial and human resources to take a leadership role. For many years we have observed the tension between two groups in Edina: one that embraces growth, and one that wants things to remain as they are. Whereas there are valid concerns that each group holds, the Housing Foundation board tends to favor growth in our community. We note two points highlighted in the report. First, 88% of Edina’s land area is developed as single-family homes and will remain as such. That means that future household growth in Edina will come from the 12% of Edina’s land area that is not already developed as single- family homes. We support this direction as we believe it both preserves the prevailing suburban character of our community, while also offering greater density in targeted areas. We believe this is a wise and balanced approach to planning. We believe that a zero or tentative growth policy is not an option if Edina wishes to maintain and sustain itself as a thriving and desirable community. Targeted growth in certain areas of our community will sustain us as a premiere community where people want to live, play and work. We acknowledge that growth will bring challenges we must address, but we believe it is far preferable to address these issues than those associated with stagnation. The only recommendation the Housing Foundation does not support is, “Promote Missing Middle Housing Production”. The Housing Foundation certainly supports missing middle housing. However, we do not believe it is reasonable or realistic for Edina to pursue this housing – our land values are simply too high to support this type of housing production. If we did pursue this, the public subsidy would likely be very high. And we believe that limited resource has better uses. Lastly, we believe there are two community education directions implied from this report. First, on page 34 the taskforce “recommends that concerns related to ‘poor building/over-building/density of the city’ be investigated …”. We commend this mayor and city council as well as past leaders for decisions that have made our community what it is, and encourage our leaders to continue to educate the community on the benefits that come from growth, redevelopment, and yes, density. Second, we believe the mayor and city council should support broad community education on affordable housing. What is it? What does it look like? What are the needs? And what are the benefits? To that end, the Edina Housing Foundation makes itself available as needed in this education role. We thank the Mayor and City Council for the leadership it has shown over the years on affordable housing in our community. And we thank the Edina Housing Strategy Task Force for its strong report and hard work on this issue. And as always, we offer our service to the Edina community. Although Bernadette Hornig is a board member for the Edina Housing Foundation, she has recused herself from the Housing Foundation’s comment letter, as she is also a member of the Task Force. Sincerely, The Edina Housing Foundation Jeff Huggett Mary Kay McNee Jerry Gilligan Ann Swenson EDINA ADVISORY TASK FORCE I HOUSING STRATEGY I CITY OF EDINA Page 1 CITY COUNCIL TASK FORCE CHARGE PROJECT: EDINA HOUSING STRATEGY PURPOSE Support the City’s development of a comprehensive housing strategy. OBJECTIVE - Gather information, perspectives and provide analysis that assists in the development of a comprehensive housing strategy for the community. - To review the current state of housing options in Edina. - To recommend an optimal composition of housing options to the City Council to ensure the long term fiscal and social health and viability of the community. - To propose a strategy to the City Council that seeks to achieve that optimal composition. STRATEGIES Stage 1: - Obtain public input on experiences with housing in Edina - Study other communities and best practices - Review past City studies/initiatives, including the 2006 Housing Succession Plan Stage 2: - Develop a recommendation for City Council using information from stage 1 The Housing Strategy Task Force will advance its proposed deliverables to the Planning Commission for a Review and Comments action prior to advancing the same deliverables to the City Council. TIMELINE - May 2019 through December 2019 KEY DATES May 7, 2019 Council authorizes the establishment of City Council Task Force June 4, 2019 City Council appoints Task Force members STAGE 1: GATHER INFORMATION/EXPLORATORY Aug. 7, 2019 Task Force presents initial findings report for Council to affirm (work session) STAGE 2: HOUSING STRATEGIES/RECOMMENDATION Dec. 3, 2019 Task Force presents final strategy to Council Dec. 17, 2019 Council adopts final strategy COMMITMENT EDINA ADVISORY TASK FORCE I HOUSING STRATEGY I CITY OF EDINA Page 2 - Appointed members will be asked to fulfill their work until Council adopts the final strategy in December 2019 - Appointed members should expect to meet at least monthly with additional off-line work - Appointed members should consider project timeline prior to appointments MEETINGS - The Task Force will establish their schedule including meeting times and dates as needed to complete the work - Conclusion of work must fall into the indicated timeline - Meetings are public LEVEL OF AUTHORITY CITY COUNCIL The establishment and appointments of a City Council Task Force are conducted by the Council. The Council has the authority to appoint/remove members. CITY MANAGER The City Manager has the authority to: - Designate the Staff Liaison and any additional staff support needed - Authorize financial resources - Enter into a service contract with a subject matter expert/consultant - Make recommendations to Council on adjustments to this Task Force charge TASK FORCE The Task Force has the authority to: - Conduct public engagement and collect input using the City’s public engagement protocols - Make adjustments/refinements to the strategy based on input and research - Recommend the final strategy which will be presented to Council for consideration TASK FORCE LEADERSHIP City Council will designate a member of the Task Force to serve as the Chair and another member as the Vice Chair. The role of the chair will include: - Prepare agenda - Lead meetings and facilitate discussions - Maintain meeting decorum - Encourage participation of all members The Vice Chair will support the Chair as needed and perform the chair duties if the Chair is unavailable. STAFF LIAISON City Manager will designate the staff liaison to the Task Force. Liaison role includes: - Support Task Force chair in preparing agendas and meeting materials - Provide technical expertise and access to City resources EDINA ADVISORY TASK FORCE I HOUSING STRATEGY I CITY OF EDINA Page 3 - Relay information from City Council to Task Force and vice versa - Submit packet materials for City Council review The Task Force does not direct the work of the liaison. RESOURCES AVAILABLE - The Task Force will have access to City resources available for advisory groups i.e. marketing/communications, meeting supplies, etc - Also, see City Manager’s level of authority OUTCOMES - Comprehensive housing strategy with the following priorities: o Types of housing o Sizes o Affordability o Location MEMBERSHIP APPLICATION The City of Edina’s Volunteer Edina program will manage the recruitment, application and onboarding process. CONSIDERATIONS & COMPOSITION City Council will appoint up to seven members with a variety of perspectives and experiences on housing in the community. FINAL DRAFT REPORT from the Edina Housing Strategy Task Force DECEMBER 4, 2020 ADVANCING HOUSING PRIORITIES FOR EDINA Report from the City of Edina Housing Strategy Task Force | i Acknowledgements Task Force Members »Bernadette Hornig, co-chair »Daniel Hunt, co-chair »Janet Kitui »Joe Burke »Norm Siekman »Steve Brown (joined January 2020) »Thomas Koon * »Feroza Mehta (served June - November 2019) City Staff »Stephanie Hawkinson, Affordable Housing Development Manager »MJ Lamon, Community Engagement Coordinator »Scott Neal, City Manager »Cary Teague, Community Development Director Consultant Team »Merritt Clapp-Smith, Moxie Consulting LLC »Janne Flisrand, Flisrand Consulting »Antonio Rosell, Community Design Group * A special thank you to Task Force member Thomas Koon for providing many of the photos in this report. Report from the City of Edina Housing Strategy Task Force | ii Table of Contents Executive Summary ................................................................................ 1 Chapter 1: Introduction ......................................................................... 6 Chapter 2: Housing in Edina – Current and Future ........................ 8 Chapter 3: What Shapes Housing in Edina? ....................................... 28 Chapter 4: Recommended Priorities for Edina Housing ................ 48 Goals and Strategies ............................................................................... 49 Priorities for New Housing in Edina ................................................... 53 Concluding Highlights ............................................................................ 54 Endnotes ................................................................................................... 55 Appendices ............................................................................................... 57 A.I - Getting from Here to There ........................................................ 58 A.II – Housing Definitions ..................................................................... 61 A.III - Housing Affordability and Income Qualifications ................. 66 A.IV - Regional Housing Need and Edina’s Role .............................. 68 A.V - References and Sources .............................................................. 69 A.VI - Responses to the Report .......................................................... 75 Report from the City of Edina Housing Strategy Task Force | 1 Executive Summary The City of Edina is healthy and thriving. It has and continues to be one of the most sought-after communities in the Twin Cities for people seeking strong schools, lovely neighborhoods, amenities like parks, convenient access to both downtowns, and a high quality of life. The neighborhoods have distinctive character, from “urban villages” like “The Lakes” to low rise townhomes and duplexes to compact, small lot neighborhoods with sidewalks, to large lot estates. The diversity of neighborhood options provides people with a place to call home during different phases of their life, based on income, household size and lifestyle. As demographics, economics and people’s lifestyle habits change, housing preferences change as well. Edina has a diverse mix of housing types and changes in this mix have occurred and are likely to continue changing. As an example, in 2010 Edina’s housing was 57% single-family and 43% multi-family. In 2019, it was 53% single-family and 47% multi-family. If the projected growth trajectory is realized, it is likely that by the end of 2040 there will be more multi-family units than single- family units resulting in significant change in Edina. Housing projections in Edina and other Twin Cities communities are guided by a process that starts with the Metropolitan Council. Every 10 years, the Metropolitan Council updates its general growth projections for the Twin Cities region and from these projections, it allocates a growth percentage to each community in the region. Within this allocation is a community’s share of recommended new affordable housing units to help meet the projected regional need. The allocated number of affordable housing units for Edina in this cycle is significant and requires and deserves Edina’s leadership. City staff and volunteer community groups used the housing allocations to guide housing and land use policies in the Comprehensive Plan update. The policies were also informed by consultant reports, market trends and community engagement. In 2020, the Edina City Council approved the 2040 Comprehensive Plan with a Housing Chapter that provides data, goals, and strategies to advance city housing objectives. To get additional community engagement and direction on the housing policies in the 2040 Comprehensive Plan, the City Council commissioned this Housing Strategy Task Force in 2019 to provide further guidance around housing priorities for the City. This seven- person task force, composed of individuals with a variety of views and opinions, came together over an 18-month period to develop the recommendations in this report. Report from the City of Edina Housing Strategy Task Force | 2 The Housing Strategy Task Force has embraced three key Principles to guide housing policy in Edina. These Principles are consistent with key housing themes from the Edina 2040 Comprehensive Plan. »Supply and Growth: Plan to accommodate projected residential growth. »Housing Choice: Support the development of a wide range of housing options to meet the diverse needs and preferences for the existing and future Edina community. »Affordability: Encourage the development and maintenance of diverse housing options affordable to residents at a range of incomes and life stages. Additionally, these factors influenced the recommendations of the Task Force: »Metropolitan Council’s allocation of new housing units, particularly affordable units, to individual cities. »Comprehensive Housing Market Analysis for the City of Edina, April 2020 [henceforth referred to as the “Maxfield Housing Market Study”] »Interviews and reports from developers, planning experts, neighboring cities’ staff, and Edina city staff and council members. »Task Force desire to support housing policy that is consistent with “community drivers” »City and Task Force desire for economic diversity »City and Task Force desire for racial and ethnic diversity The City of Edina commissioned Maxfield Research and Consulting to do a housing market study to examine the city’s housing supply and demand, relative to market needs and trends at the local and regional level. The report was completed in April 2020. The report identified “gaps” in the Edina housing stock, where demand far exceeds supply. Based on the market study, the Comprehensive Plan, and extensive research by the Task Force, this report identifies four priority goals for housing development: 1) Promote Lifecycle Housing 2) Enable Diverse Housing Stock 3) Reduce Housing Development Costs 4) Encourage Sustainable Design and Technology More specifically, this task force recommends five priorities for the provision of new housing in Edina, based on the Edina City Council’s approved housing numbers in the 2040 Comprehensive Plan, and further informed by the Maxfield Housing Market Study. Executive Summary Report from the City of Edina Housing Strategy Task Force | 3 Priorities for New Housing in Edina 1) Add 992* affordable rental housing units »80% affordable rental for general occupancy [see note] »20% affordable rental for active seniors 2) Add 900** market rate rental housing units for general occupancy 3) Add 360** senior independent living, congregate housing units 4) Add 250** owned multi-family housing units 5) Add 200** senior assisted living housing units *Metropolitan Council **Maxfield Housing Report Note: ‘General Occupancy’ is a term for all housing types, available for purchase or rental by people of any age and ability level. The term is used to differentiate from age- restricted housing for 55+ ‘active adults’ and senior housing. Owned, multi-family at Halifax condominiums on 50th near France Ave. Source: Tom Koon. Senior assisted living and memory care at Yorkshire. Source: Tom Koon. Affordable rental at Oak Glen Apartments. Source: https://www.rent.com/minnesota/edina-apartments Market rate rental at The Lorient. Source: Tom Koon. Executive Summary Report from the City of Edina Housing Strategy Task Force | 4 This Task Force recommends the following next steps for the City Council: »Solicit additional input from city residents regarding the recommendations in this report. This should include use of the biennial Quality of Life survey of Edina residents in 2021 to test additional questions on housing and obtain statistically valid feedback from a larger sample of residents. In addition, the city should host focus group discussions about these report recommendations and how to advance them when public health measures allow. »Evaluate the impact of the increased population and housing growth rate, by housing type, on all areas of the city. »Use the five priorities to evaluate new housing proposals when considering additional developments and growth. »Evaluate and streamline the current approval process for housing development. »Recognize that to achieve the affordable housing goal of 992 units in the next decade, after having built only 98 of the 212 units goal for the past ten years, the Council and City Staff must redouble their current laudable effort and provide the needed financial support and political leadership. Details, background, and strategies that follow in this report will allow readers to better understand the context and appropriate use of these recommendations. The overarching goal of this report is to provide housing recommendations that will keep Edina healthy and thriving over the next decade. Working in Special Times The Task Force wants to note two special circumstances that affected the process of its work, as well as its view of housing in light of economic and socio-political events. COVID-19: This report was developed during the COVID-19 pandemic, which limited the Task Force’s ability to obtain community input through focus group meetings and other means of communication. The Task Force recommends that the goals and recommendations of this report be thoroughly reviewed with the residents of Edina when public health conditions allow. This review can include a better understanding of how the COVID-19 pandemic may influence the future design of housing, at-home workspace, and congregate housing such as senior living. SPOTLIGHT ON DISPARITIES: The year 2020 was also marked by the social unrest in Minneapolis and across our nation resulting from the killing of George Floyd at the hands of Minneapolis Police. Based on discussions at the regional and state level, there may be greater priority on policies and resource allocation to address racial disparities across systems such as employment and housing. The pandemic and heightened awareness of racial disparities following the George Floyd killing contributed to the context in which the Task Force discussed and evaluated the future of housing in Edina, and will continue to inform future housing priorities in ways that we cannot currently anticipate. Executive Summary Report from the City of Edina Housing Strategy Task Force | 5 1 Introduction Report from the City of Edina Housing Strategy Task Force | 6 Chapter 1: Introduction This report is the culmination of work by the Edina Housing Strategy Task Force, which began meeting in June 2019. The Edina City Council created the Task Force with the following charge: PURPOSE - Support the City’s development of a comprehensive housing strategy. OBJECTIVE - Gather information, perspectives and provide analysis that assists in the development of a comprehensive housing strategy for the community. The Task Force had seven members, representing different perspectives and housing experiences in Edina. One member needed to resign, but she was soon replaced with another to maintain a Task Force of seven people. City staff organized and supported the Task Force work, and periodic updates were provided to City Council on Task Force progress. About halfway through the Task Force work, a consultant was engaged to prepare a final report reflecting the Task Force’s findings and recommendations. During its work, the Task Force met 45 times, heard presentations from 10 people (from the Edina Chamber of Commerce, the Edina School District, Metropolitan Council, Center for the American Experiment, and Mapping Prejudice, to name a few), and interviewed 19 people (including developers of affordable, market-rate and senior housing, architects, staff from the Edina school district, and housing and development professionals from nearby cities). The Task Force felt it was very important to have first person presentations and interviews with people to hear a variety of viewpoints and ideas. The Task Force also reviewed dozens of articles, reports, data sets, and opinion pieces on housing generally and specific to Edina. They discussed points of interest and debated areas of difference. This report provides a synthesis of the group’s research, discussions, and topics of shared interest, and recommendations supported by the group. Any single point or item in this report may be viewed a bit differently by each Task Force member, which is healthy and to be expected of a group intended to represent a range of people and ideas in the City of Edina. This report is organized into three sections: »Housing in Edina – Current and Future »What Shapes Housing in Edina »Recommended Priorities for Edina Housing Each section builds on the prior section, starting with existing conditions and what is changing, moving to what can influence housing change in Edina, followed by Task Force recommended Goals and Strategies. This report complements and advances the ongoing work by the City of Edina to proactively address its high-quality mix of housing options. Report from the City of Edina Housing Strategy Task Force | 7 2 Housing in Edina: Current and Future Image courtesy of Lander Group. Report from the City of Edina Housing Strategy Task Force | 8 Chapter 2: Housing in Edina – Current and Future Edina has the reputation as a desirable place to live with a variety of housing options. The variety of living options provides the foundation for a vibrant city, serving people of different lifestyles, household sizes and incomes. Housing diversity can be measured in different ways: »Housing Type or Style »Rental or Ownership »Price »Assisted or Supportive Edina housing provides good diversity in a number of these ways and offers more limited options in others. Demographic shifts in Edina, mirroring the United States a whole, have resulted in an aging population and reductions in family and household sizes. As the age and size of households change, so too does the demand for certain types of housing. If Edina wishes to retain residents with changing housing needs, while attracting new residents who reflect the region’s demographic trends, then Edina must consider which policies, programs and regulations will best provide the needed range of housing. Report from the City of Edina Housing Strategy Task Force | 9 Types of Housing Opportunity: Enhance Edina’s housing mix with duplexes, triplexes, quads, and townhomes Edina neighborhoods are primarily composed of single-family homes. 88% of residential land in Edina is used for single-family homes, compared to 12% for multi-family homes.1 However, due to the greater number of homes per acre in multi-family areas, the 12% of residential land that is multi-family hosts 47% of Edina’s current households. This means that as the City looks to accommodate future growth, it can do so using only a small fraction of the City’s land. Edina currently offers a good mix of single-family and multi-family housing types, while having relatively few townhomes and 2 - 4-unit housing units. In 2019, the mix of housing types in Edina was: »53% single-family »39% apartments and condos »6% townhomes »2% duplexes, triplexes, and quads Between 1990 and 2010, the mix of housing types remained fairly consistent, and then began to shift around 2010, with almost all new housing being multi-family. This trend is expected to continue for the foreseeable future. Mix of Housing Types in Edina, 2019Duplexes, triplexes and quads2% Townhomes6% Apartments and condos39% Single-family53% Mix of Housing Types in Edina - 1990 to 2019 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 1990 2000 2010 2019 Single-family detached Duplex, triplex and quadTownhomes (single-family attached)Multifamily (5 units or more) Figure 1: Edina mix of housing in 2019. Source: Metropolitan Council. Figure 2: Edina mix of housing since 1990. Source: Metropolitan Council Housing in Edina – Current and Future Report from the City of Edina Housing Strategy Task Force | 10 Single-family detached housing accounts for 53% of Edina’s residential units and occupy 88% of all residential land in the city. Apartments and condominiums account for 39% of all Edina housing. They are identified as “multi-family” housing, which occupies 12% of Edina’s residential land. Image courtesy of www.joshsprague.com Housing in Edina – Current and Future Report from the City of Edina Housing Strategy Task Force | 11 Townhomes account for 6% of Edina housing and are classified as “multi-family”. Duplexes, triplexes, and quads account for 2% of Edina housing and are classified as “multi-family”. Housing in Edina – Current and Future Report from the City of Edina Housing Strategy Task Force | 12 Maintaining a variety of housing and neighborhood options allows people who love Edina to stay there over their lifetime. Long-term residency can deepen community ties, foster strong connections between residents and city institutions, and improve health outcomes for the residents. “There is strong evidence characterizing housing’s relationship to health. Housing stability, quality, safety, and affordability all affect health outcomes, as do physical and social characteristics of neighborhoods.” ~ Housing and Health: An Overview of the Literature2 “Missing middle” housing encompasses housing between the scale of low and high densities, providing both an option to meet needs, and a built form type that can transition between adjacent districts of different levels of scale and intensity. These may include co-housing, duplexes, triplexes, fourplexes, and other smaller scale multi-family types.” ~ Edina Comprehensive Plan “Missing middle” housing is somewhat larger than a single-family structure and smaller than typical multi-family buildings. This scale makes Missing Middle housing adaptable to many residential areas, be they predominantly single-family or multi-family. Missing Middle homes offer the opportunity to create housing variety within neighborhoods, as well as to transition between high density areas and low-density areas. Figure 3: Continuum of housing types by scale, highlighting “missing middle” types. Source: Opticos Design. Housing in Edina – Current and Future Report from the City of Edina Housing Strategy Task Force | 13 Missing Middle housing is gaining in market popularity, and Edina’s demographic trends show growth in the areas with greatest preference for these housing types. If Edina wishes to match people’s interest in these housing forms and diversify its housing stock, then it will need to proactively foster them with tools such as focused zoning districts, flexible design standards, targeted finance programs for affordable midsize housing, and outreach to specialized builders. “With the overall aging of the population, more households are looking for greater convenience and less space in their housing and are selecting twin homes, detached townhomes, and condominiums. Typically, the target market for owned multi-family housing is empty-nesters and retirees seeking to downsize from their single- family homes. In addition, professionals, particularly singles and couples without children also seek these products if they prefer not to have the maintenance responsibilities of a single-family home. In many housing markets, younger households also find purchasing owned attached housing more affordable than purchasing new single-family homes.” ~ Maxfield Housing Study 2020 “MISSING MIDDLE” HOUSING is a Housing Diversification Opportunity for Edina Housing in Edina – Current and Future Report from the City of Edina Housing Strategy Task Force | 14 Rental and Ownership Opportunity: Increase the proportion of housing that is rental and alternative ownership models. Edina’s mix of rental and ownership housing has remained steady for four decades, at around 73% ownership and 27% rental. This homeownership rate is about 10% higher than Hennepin County and about 5% higher than the Twin Cities region. The proportion of rental housing in Edina has been stable and is similar to the proportion regionally. Therefore, is there any reason for Edina to take an active role in encouraging that mix to change? The answer is ‘yes’ according to the Maxfield Housing Market Study for Edina, completed in April 2020. Lifestyle changes impact housing demand. The increasingly busy lives of adults and children has meant less time to maintain a single-family home and lot. Other reasons that people rent include convenience, seasonal residency, and financial considerations. Nationally, the fastest-growing group of renters are high-income people who choose renting over owning. In addition to rental, market interest in other alternatives to traditional home ownership have grown. More people are exploring options such as cohousing, cooperatives, and land trusts. Cohousing provides unique social amenities such as congregate dining, movie night, or other activities as decided on by the residents. Land trusts and limited equity cooperatives are designed to provide more affordable ownership, with varied ability to benefit from equity if the property appreciates. Each is described briefly below and can apply to different styles of housing. COMMUNITY LAND TRUST – A community land trust (CLT) is a nonprofit, community-based organization that provides perpetually affordable homeownership opportunities. In the truest sense, a CLT acquires land and removes it from the speculative, for-profit, real estate market. CLT’s hold the land they own “in trust” for 99-years for the benefit of the community by ensuring that it will always Edina Housing Units - Ownership and Rental  1940 to 2018 0 5,000 10,000 15,000 20,000 25,000 1940 1950 1960 1970 1980 1990 2000 2010 2018 Owned Rented Figure 4: Mix of ownership and rental homes in Edina since 1940. Source: Metropolitan Council / US Census. Housing in Edina – Current and Future Report from the City of Edina Housing Strategy Task Force | 15 remain affordable for homebuyers.3 The land is leased back to the homeowner through a land lease. A Local Example - Since 2007, the City of Edina has supported the West Hennepin [County] Affordable Housing Land Trust (WHAHLT), also known as Homes Within Reach (HWR), through the allocation of some of Edina’s Community Development Block Grant program funds. Since that time, 14 houses have been placed into a Land Trust to remain affordable for 99-years. HWR establishes affordability by using the Community Land Trust practice to acquire and retain the ownership of real property, rehabilitate, and then sell the improvement (home) to buyers earning less than 80% Area Median Income (AMI). The HWR Community Land Trust program removes the land value from the mortgage equation to create initial affordability. The home costs less than market rate homes because HWR buyers purchase only the house and enter into a Ground Lease with WHAHLT-HWR to secure the long-term rights and use of the land. This land trust practice offers long-term affordability, where each affordable home will offer homeownership to 7-12 families throughout the life of the lease. The homes are made permanently affordable for work-force homeowners through two contractual provisions embedded in the Ground Lease.4 COHOUSING –A multi-family building or cluster of single-family homes with separate living space for households that includes communal areas such as gardens, kitchens, gathering spaces. Cohousing residents consciously commit to living as a community. The neighborhood’s physical design encourages both individual space and social contact. Most cohousing communities use some form of consensus as the basis for group decision-making on community expectations, social events, and property care. COOPERATIVE HOUSING – A legal ownership arrangement where members own a share of the property (rather than an individual unit) which often includes one or more multi-family buildings or even a group of detached houses owned by the cooperative, and where share owners are members and have rights to occupy one housing unit. Some cooperatives are a “limited equity cooperative.” A limited equity cooperative (LEC) is a cooperative model in which residents commit to resell their share at a price determined by formula—an arrangement that maintains affordability at purchase and over the long term. Cooperative share owners enjoy all the tax advantages of home ownership regarding the deduction of interest and property taxes under State and Federal tax law. In Minnesota, many recent cooperatives have been for seniors. The Monterey Cohousing Community in St. Louis Park. Housing in Edina – Current and Future Report from the City of Edina Housing Strategy Task Force | 16 Demand for single-family ownership housing in Edina will remain strong, but opportunities to expand the number of ownership opportunities are extremely limited under current city zoning. The best opportunity to open up single-family options for new households in Edina is through turnover. An increase in rental and alternative ownership housing in Edina will give some existing single- family residents who are ready to downsize the option to move within the community, freeing up their homes for new owners. Without alternatives, people with more limited incomes may remain in their existing single-family home to avoid the cost of new housing and the expense and stress of a move. An increase in housing options enables the city to better meet the rising demand for rental or alternative ownership housing among empty nesters, seniors, young families, and limited income households who wish to live in Edina. RENTAL HOUSING AT ALL PRICE LEVELS and ALTERNATIVE OWNERSHIP HOUSING are Housing Diversification Opportunities for Edina 7500 York is a 337-unit, limited equity senior cooperative. Source: Thomas Koon. Housing in Edina – Current and Future Report from the City of Edina Housing Strategy Task Force | 17 Housing Prices Opportunity: Provide more housing that is affordable to people who make less than average median income. Edina’s desirability has made it one of the most expensive places to live in the region. This map shows the estimated price of single- family homes in Edina. The distribution of single-family housing prices in Edina is: 11% - $1 million or higher 43% - $500,000-$1 million 34% - $350,000-$500,000 12% -<$350,000 Map 1 shows homes in Edina color coded by price level, with red at the high end of homes valued are over $1 million and purple at the low end of homes valued at $350,000 or less. According to the City Assessor, in 2020 the average home value in Edina was $548,500. In Hennepin County it was $289,990.5 The strong demand for Edina living exceeds the available homes, putting upward pressure on home prices. When neighborhoods become more expensive, the number of people who can afford to live there shrinks and some people move out in search of less expensive housing or cannot afford to move in. Seniors on fixed incomes, young families, and local workers in medium to low wage jobs are disproportionately impacted by this phenomenon. Map 1 - Estimated single-family home values in 2018. Source: City of Edina. Housing in Edina – Current and Future Report from the City of Edina Housing Strategy Task Force | 18 Edina homes for sale in December 2020 priced around $350,000, the amount considered affordable to a family of four earning the Average Median Income in the Twin Cities region in 2020. Source: Realtor.com. “In the 2019 Edina Quality of Life survey, 35% of respondents stated the most serious issue facing Edina is housing [including teardowns, overdevelopment and affordability]. Most respondents listed the number of housing options in Edina as fair and the availability of affordable housing as fair to poor.” ~ Maxfield Housing Market Study, 2020 The availability of entry level or affordable homes has been further impacted by the moderate priced homes being acquired, demolished, and replaced with luxury homes. Between 2008 and 2019, 886 permits were issued for teardowns and replacement houses. The peak was in 2014 when 115 permits were issued. According to the Maxfield Housing Market Study, the average price of a home torn down in Edina has been in the mid $400,000s and the average value of the replacement house has been $1.2M. The Task Force recognizes that there is little the City can do to preserve the more moderate priced homes due to private property laws. Nonetheless some programs could be explored to incentivize the preservation of these houses. There are several ways to talk about the price of housing and housing affordability. Affordability can be defined in the traditional sense, relative to Area Median Income, or it can be thought of in relation to what people are able to pay. Here are some common terms used to talk about the price of housing: Figure 5: Comparison of Edina home sale prices to other nearby areas. Source: Maxfield Housing Study, page 66. Housing in Edina – Current and Future Report from the City of Edina Housing Strategy Task Force | 19 MARKET RATE - Housing sold or rented on the open real estate market, with no subsidy, program, or contractual obligation that limits the price. “Market rate” does not define housing value, it may be very expensive or very inexpensive, depending on the size, location, quality, age, and other factors. HOUSING AFFORDABILITY - Housing is defined by HUD, lenders, and other government agencies as ‘affordable’ when it costs 30% or less of the household’s gross income. The Twin Cities Metropolitan Council measures affordability using Area Median Income (AMI). Affordable Housing may or may not be subsidized and it may or may not have contractual limits on the rent or sales price. Low to moderate income affordability is defined at four levels: »Extremely low income (30% or less of AMI, or $31,000 in 2020)) »Very low income (30% to 50% of AMI, or $51,700 in 2020) »Low income (50% to 80% of AMI, or $78,500* in 2020) * The 80% AMI value is capped at the Area Median Income for the United States as a whole. See Appendix III for more detailed information on affordability thresholds. NATURALLY OCCURRING (MARKET RATE) AFFORDABLE HOUSING (NOAH) - Homes that are affordable because the market price or rent falls into a range that can be considered affordable to a low- or moderate-income household. Subsidized Affordable Housing - The Twin Cities Metropolitan Council measures affordability using Area Median Income (AMI). Affordable Housing may or may not be subsidized and it may or may not have contractual limits on the income of the residents and/ or rent or sales price. ATTAINABLE HOUSING - Housing that meets affordability thresholds for moderate income households, between 80% and 120% percent of the Area Median Income. »Moderate income ($78,500 to $118,910 for a family of four in Edina in 2020) WORKFORCE HOUSING - The National Association of Realtors defines workforce housing as being affordable to workers and close to their jobs. It includes ownership, and rental homes that can be reasonably afforded by a moderate to middle income, critical workforce and located in acceptable proximity to workforce centers.6 HOUSING COST BURDEN occurs when a household’s housing costs exceed 30% of the household gross income, regardless of the level of income. Percent of Edina Households Experiencing Cost Burden 0% 10% 20% 30% 40% 50% 1990 2000 2010 2016 39%43%43%43% 26%28% 19%19% 29%31% 26%25% All Households Owner Households Renter Households Figure 6: Rates of cost burdened households in Edina. Source: Metropolitan Council / US Census. Housing in Edina – Current and Future Report from the City of Edina Housing Strategy Task Force | 20 »For renters, housing costs include rent and utilities »For owners, housing costs include mortgage principal and interest, property taxes, property insurance, utilities, and other fees. “Americans may choose to spend substantially on housing to live in neighborhoods that provide access to health-promoting features such as schools and parks. However, a lack of affordable housing options can affect families’ ability to make other essential expenses and can create serious financial strains.” ~ Housing and Health: An Overview of the Literature, Lauren Taylor, June 7, 20187 Figure 6 shows that nearly one third of Edina households were cost burdened in 2016. Renters are more likely to experience cost burden in Edina than homeowners. People at any income level can experience cost burden if they pay more than 30% of their income for housing. For example, if a household’s income is $100,000, then the household would be classified as “cost burdened” if their annual housing expense exceeded $30,000, or said another way, if their home cost more than $370,000 (depending on the interest and term). This map identifies all existing structures in the city that have affordable units, regardless of how they are financed. It includes a mix of rental and ownership. The pink and orange dots show properties that have a market price that makes them affordable without subsidy (NOAH) to households with annual incomes less than 80% and 60% of the Area Median Income (AMI). Yellow, red, and green dots show subsidized affordable developments contractually obligated to be priced at or below 60% of AMI. The blue dots represent homeowners who received second mortgage Map 2: Ownership and rental properties affordable to households in Edina making at or below 60% AMI, as of 2020. Source: City of Edina. Housing in Edina – Current and Future Report from the City of Edina Housing Strategy Task Force | 21 financing through the Come Home 2 Edina program. At the time of acquisition, the homes needed to be valued below a certain threshold that has changed over time. When the homes sell there is no obligation to remain affordable. Here is information about multi-family housing built in Edina between 2010 and 2020 »100% of affordable housing options are rental. »7% of the rental units built are affordable. »0% of affordable housing options are ownership. Affordable homes, both rental and ownership, tend to be older. »100% of affordable ownership housing was built before 1990 and all are multi-family (condominiums). Since the 1970s, the pace of adding subsidized affordable units in Edina slowed. »33% were built in the 1960s »38% were built in the 1970s »10% have been built since the year 2000 Of new housing units built in Edina over the 15-year period from 2003 to 2018, 97% were market rate and only 3% were subsidized to make them affordable to people making less than 60% of Area Median Income. Naturally Occurring Affordable Housing (NOAH) units across the Twin Cities have rising values/rents due to increased demand, including in Edina. Existing homes that were previously affordable at or below the 60% level have increased in price beyond that affordability, decreasing the City’s net stock. It is prudent to look at the net stock of affordable units in Edina each year to understand how affordable units being added may or may not replace those that are lost. The City began an annual count of multi-family NOAH properties in 2019, to track trends in the gain or loss of NOAH inventory. “There is a demand/need for more modest homes across the Twin Cities and in Edina... particularly housing targeted to entry-level buyers (i.e. low to mid- $300,000s).” ~ Maxfield Housing Market Study 2020 New Edina Housing Units by Affordability and Tenure, 2003 to 2018 0 100 200 300 400 500 600 700 2003200420052006200720082009201020112012201320142015201620172018Affordable Rental Affordable OwnershipMarket Rental Market Ownership Figure 7: Market and affordable housing units built since 2003. Source: New housing permits in Edina. Housing in Edina – Current and Future Report from the City of Edina Housing Strategy Task Force | 22 How New Multi-Family Housing Impacts Nearby Home Values The potential impact of new housing construction on the value of existing homes is frequently questioned. The most common questions follow, with research findings on each. 1. At a regional level, does increasing the supply of housing in an area help to bring down the price of existing housing, because the increased housing supply reduces the inflationary price pressure of unmet demand? YES - Economists and policymakers share a consensus that building more homes, and thereby increasing supply, drives down housing prices within a market. New research is emerging on how adding homes affects affordability of homes within a few blocks of new apartments. A 2019 study from the Upjohn Institute8 found that on a macro level, such as a metropolitan region, the effect of adding housing units at any price, reduces upward housing cost pressures, making the region’s housing more affordable than it would have been without the added housing. “New market-rate construction loosens the housing market in such areas and, moreover, could do so in less than five years. This implies that market-based strategies can play an important role in improving housing affordability for middle- and low-income households.” 2. At a local level, does the addition of affordable housing decrease the value/cost of nearby properties? NO - Research9 shows that building an apartment building near single-family homes does not decrease their value. In a 2016 article posted on Trulia (a subsidiary of Zillow) entitled “There Doesn’t Go the Neighborhood: Low-Income Housing Has No Impact on Nearby Home Values,” concluded that in the nation’s 20 least affordable housing markets, low-income housing built during a 10-year span shows no effect on nearby home values. A few years earlier, the locally based Family Housing Foundation concluded the same. “Whether in the Twin Cities or elsewhere in the country, the evidence is overwhelming: providing quality housing that lower-income families can afford poses no threat to area property values.” ~ “Affordable Rental Housing Does Not Reduce Property Values: Evidence from the Twin Cities” Family Housing Fund study, May 2014 3. At a local level, does adding new market-rate housing drive up the cost/value of nearby rental properties? IT DEPENDS - Recent studies10 indicate that adding new apartments has a small, but statistically significant effect on nearby rental properties, lowering their value (rent) slightly immediately after construction. The higher the rent of the nearby units, the more noticeable the short-term price drop will be. The research finds that the impact on very low-rent apartments nearby is mixed, showing both small decreases and small increases in rent following construction of a new apartment nearby. Housing in Edina – Current and Future Report from the City of Edina Housing Strategy Task Force | 23 MODERATE TO LOW-INCOME HOMEOWNERSHIP and RENTAL are Housing Diversification Opportunities for Edina “The City recognizes the need to provide affordable housing in order to create and maintain a diverse population and to provide housing for those who live or work in the City.” ~ Edina Affordable Housing Policy Housing in Edina – Current and Future Report from the City of Edina Housing Strategy Task Force | 24 Assisted and Supportive Housing Opportunity: Expand housing options for residents seeking specialized design, services, or care. Thousands of Edina’s residents need some form of support or assistance to maintain their health and home. This includes some seniors on fixed incomes, people with physical and cognitive disabilities, and people who have other barriers to maintaining stable housing without support. The Maxfield Housing Market Study shows that of an estimated 4,883 people in Edina with physical or cognitive disabilities that may impact their housing options, 271 are children under the age of 18, 1,235 are adults 18 to 64 years of age, and 3,377 are over the age of 65. The proportion of Edina residents with disabilities is slightly less than the greater metro area. Edina currently offers limited housing options for this population, which includes the varied levels of direct support some people with disabilities need to live independently. Assisted Living “Assisted Living” provides a semi-independent living option for people with disabilities or adults who cannot live independently. This type of housing t is an important part of the “Lifecycle Housing” spectrum. There is no universally accepted definition of an Assisted Living housing development. These properties can provide various levels of care and a diversity of services, ranging from basic board and assistance with household chores, to medication management and bathing assistance and limited Registered Nurse support. They usually include common areas for socializing. Living space may consist of independent apartments, hotel-like rooms, or congregate living. Supportive Housing Supportive Housing tends to be more clearly defined. “Supportive housing combines affordable housing with services to help people who face the most complex challenges to live with stability, autonomy and dignity,” as described by the nonprofit Corporation for Supportive Housing. It is an effective housing model for individuals and families moving out of homeless and who also have serious and persistent issues including chronic physical or mental illness, substance use disorders and disabilities. While the cost to construct and operate supportive housing is higher than traditional affordable housing, research indicates that supportive Housing in Edina – Current and Future Report from the City of Edina Housing Strategy Task Force | 25 housing reduces use of homeless shelters, hospitals, emergency rooms, jails, and prisons. Research also shows that supportive housing interrupts cycles of homelessness.11 Furthermore, the data shows that the deep development and operating subsidies required to own and manage supportive housing properties are financially neutral or a net benefit to communities. “Lifecycle housing [offers] a full range of housing options for all stages of life, from starter homes through continuum of care, so people can live their whole lives in Edina as they choose.” ~ Edina Comprehensive Plan Intersection of Assisted, Supportive, and Affordable Housing The need for assisted living, supportive and affordable housing options overlap in providing homes for many people with disabilities. People with disabilities tend to have lower incomes than the general population. According to the American Psychological Association and 2015 United States Census Statistics, the typical disabled person in the United States makes 66% of the average median income. A disproportionate number of disabled persons and their households have incomes at or below the 80% Average Median Income limit and need affordable housing. The American Institute for Research noted that disabled Minnesotans with a bachelor’s degree had a disparity in income of $18,000. A Cornell University analysis of 2018 U.S. Census data found that 25% of disabled persons in Minnesota who live outside an institution, live in poverty. People with disabilities typically have higher medical costs, further straining their household budgets. A higher rate of disabled individuals may not marry or have a significant other, which limits household wealth and income in the era of two income households. Household expenses are strained by the cost of added therapies, support, learning resources, and medical requirements for a disabled child or adult family member. Households with a severely disabled child may be limited in their income because one parent stays home to care and out of the paying workforce, since needs based daycare may be hard to find. The Minnesota Housing Partnership in 2018 cited that 27% of households in Minnesota with extremely low incomes were disabled. In the United States, nearly 40% of those households with a worst-case housing problem and 43% of those in homeless shelters have a self-reported disability. In discussions with special education teachers in the Edina Public Schools and statistics around the country there is a noted increase in children diagnosed on the Autism spectrum, other learning disabilities and Attention Deficit Disorder. While these disorders have a large range, many with these diagnoses will have trouble commanding higher incomes in the workforce because of challenges in obtaining advanced education, going through the job interview process, or advancing in careers. Yet these children and their parents’ want to live as independently as possible and require affordable or supportive housing. Those with milder disabilities will need affordable or workforce housing designed for singles or families with children. Those with significant disabilities need age appropriate congregate or supportive housing units. To meet the needs of current and future Edina residents with significant disabilities more housing is needed. The cost to construct and operate supportive housing is higher than average housing, requiring deep development and operating funds and specialized agencies to own and manage the properties. Housing in Edina – Current and Future Report from the City of Edina Housing Strategy Task Force | 26 Assisted and supportive housing is important to meet the needs of current and future Edina residents. In adding these options, it is important to recognize that many of these residents are also income constrained and a significant proportion of these housing types groups will need to be affordable. “The development of additional senior housing serves a two-fold purpose in meeting the housing needs in Edina: older adult and senior residents can relocate to new age- restricted housing in Edina and existing homes and rental units that were occupied by seniors become available to other households.” ~ Maxfield Housing Market Study 2020 SENIOR AND SUPPORTIVE HOUSING OF ALL TYPES is a Housing Diversification Opportunity for Edina Avidor is a rental community in Edina for people 55 years and older. Source: Tom Koon. Housing in Edina – Current and Future Report from the City of Edina Housing Strategy Task Force | 27 3 What Shapes Housing in Edina? Report from the City of Edina Housing Strategy Task Force | 28 Chapter 3: What Shapes Housing in Edina? The housing that exists in any community is the result of policies and decisions made over time. To influence housing in the future there are a number of options (such as policies, programs, plans, guidelines) that the city can use. Understanding how these options may have been used in the past, how they interact with one another, and how they could be used in the future, will ensure intent and outcome. This task force has identified the following as forces shaping housing in Edina: 1) Policy and Principles 2) Community Drivers 3) Demographics and Housing Trends 4) Regulations 5) Financing 6) Outreach Report from the City of Edina Housing Strategy Task Force | 29 1. Policy & Principles Public feedback about new development proposals can be strong, with people speaking for or against a project based on issues (or perceived issues) such as traffic, environmental impact, and impact on property values. Public officials should consider their constituents’ input carefully and measure the issues raised based on what is technically or legally relevant and within city control. In order to meet the city’s housing needs into the future, there needs to be the political will to make tough decisions and allow for flexibility and creativity in future developments in Edina. Past Attitudes and Housing Policies The history of zoning is based on the premise that some land uses are incompatible with one another, with one use having negative consequences to the health, safety, and welfare of the other use. Zoning provides a legal means to segregate certain uses from one another, such as a heavy industrial use and a residential area. Edina’s Planning Commission frequently reviews zoning requests and studies elements of the zoning code that have unusually high incidents of variance requests. Following adoption of the 2030 Comprehensive Plan around 2010, variance requests for multi-family housing projects became frequent, because the number of limitations in the code made it financially challenging and sometimes impossible to develop projects without variances. These limitations made it particularly difficult to produce affordable housing. The recently adopted 2040 Comprehensive Plan addressed some of the more prohibitive issues by amending the allowed uses within certain districts. It also identified zoning code revisions that could reduce the cost of new or rehabilitated housing. The Edina Planning Commission is already studying potential zoning changes, which it could recommend to the City Council. To help understand where the City should go, it is important to understand where we have been. Separating certain uses from one another makes sense. The question is how much separation is prudent and when does government regulation overstep. When zoning began in the United States,12 it was used sparingly. In 1899 Washington D.C. enacted zoning to limit building height. In 1908, Los Angeles adopted zoning to prevent industrial uses from moving into residential areas. However, zoning codes across the country evolved to separate almost all types of uses. Zoning districts were designated for one type of use – industrial, commercial, or residential. That later evolved into districts for subsets of use, such as heavy industrial and light industrial, large scale commercial from neighborhood commercial, and differentiated residential districts by type and density of housing - and race. “What began as a means of improving the blighted physical environment in which people lived and worked, [became] a mechanism for protecting property values and excluding the undesirables.” ~ Yale Rabin, Urban Planner and Professor In “The Color of Law,” Richard Rothstein documented 1910 zoning codes that included explicit racial zoning. People of certain races were prohibited from living in certain zones. After this was deemed illegal by the United States Supreme Court in 1917, many zoning codes were written to allow only expensive, large homes on large lots. They also prohibited less expensive duplexes and small What Shapes Housing in Edina? Report from the City of Edina Housing Strategy Task Force | 30 apartment homes. Black people and people of color were systematically excluded from economic opportunity, and zoning rules requiring expensive homes took advantage of economic barriers to separate communities by race. Now called “exclusionary zoning,” these requirements have the effect of pricing out households with lower incomes. Citing concerns about crime and property value declines from white buyers, some housing developers added clauses to property deeds that included racially restrictive covenants. In Minneapolis, people began using racial covenants to segregate neighborhoods in 1910. The first documented use in property deeds in Edina is in 1916. The Mapping Prejudice project has documented where racially restrictive covenants were used across Hennepin County. While these covenants are no longer legally enforceable, they have created persistent racial segregation patterns. This map shows lots in Edina that had or still have (unenforceable) racially restrictive covenants. “Planning that regulated urban development through implementation of master plans and capital improvement programs, as well as through a more subtle sort of “racially informed zoning,” helped to create the racially bifurcated social geography of most contemporary American cities.” ~ Christopher Silver, “The Racial Origins of Zoning in American Cities” 199713 In Edina as elsewhere, local zoning and land use rules directly impact the type, location and price of housing allowed in a community. Requirements on lot size, lot coverage, landscaping, building materials used, and minimum building size all drive the cost of housing.14 For developers of affordable housing, strict requirements translate to needing a higher level of subsidy per unit to make them home affordable. Map 3: Parcels in the City of Edina that had or still have racial covenants recorded on the property deed. Source: City of Edina. What Shapes Housing in Edina? Report from the City of Edina Housing Strategy Task Force | 31 Understanding the history of exclusionary housing policy helps people recognize housing regulations that may reinforce patterns of income exclusion. It is a matter of personal opinion whether active zoning measures should be taken to reduce the income segregation created by past housing policies. Edina’s Housing Policy Vision Edina seeks to be a welcoming, diverse, and inclusive community for all who live, work, and spend time in the city. Furthermore, Edina is committed to creating a community where every person can contribute, thrive, and enjoy the benefits of all that our city has to offer. Edina is committed to ensure that there is no systemic racial discrimination that limits any person from living anywhere that they wish in Edina. Moreover, the City has put processes and resources in place to support the continuing growth of economic diversity by welcoming new residents of varied economic strata. The Task Force believes that the Goals and Strategies that are proposed in this report make a positive contribution to continuing this growth in making Edina an open and welcoming community with housing opportunities for all. The City of Edina has taken active steps in recent years to provide and support housing for new residents across the economic strata. Prior to the creation of this Task Force, the City of Edina took steps in recent years to articulate and act on its vision and values for housing. The Task Force believes that all of these actions have been instrumental in continuing to make Edina a welcome home for all families. »In 2015, the City of Edina passed an Affordable Housing Policy for new multi-family housing developments. This applied to housing proposals that require a zoning change or financial support. Prior to this policy, the City was behind its prior Comprehensive Plan goal of 212 new affordable units. The 66 West project had been the only affordable housing development in Edina’s recent history. »In 2016, the City Council of Edina commissioned the Race and Equity Task Force, resulting in the Race and Equity Initiative Final Report and Recommendations, issued on June 26, 2018. »In 2018, the City created a new position in the Planning Department and hired its first housing specialist. This staff person, the Affordable Housing Development Manager, is tasked with pursuing and advancing new affordable housing projects in Edina. In 2019, Edina hired its first Race and Equity Coordinator, another step toward becoming a more racially inclusive and equitable community. »In 2020, the City Council approved an ordinance amendment that requires all new residential developments with over 20 units to designate some of those as affordable, even if a development does not require city financing or approval as a Planned Unit Development. The housing developer may opt out of including the affordable units if they make payment to the city in lieu of incorporating them. The city can then use these funds to subsidize affordable housing units in future projects. What Shapes Housing in Edina? Report from the City of Edina Housing Strategy Task Force | 32 »Since the Affordable Housing Development Manager has been retained, the City has taken these additional steps to support affordable housing: -Passed the Fair Housing Policy -Created the Affordable Housing Trust Fund -Included Non-discrimination of Housing Choice vouchers and the requirement for an Affirmative Fair Housing Marketing Plan in the Affordable Housing Policy and Ordinance -Amended an ordinance to reduce the hookup fees to sewer and water for new developments, if certain conditions are met -Adopted a rental housing licensure program -Adopted a finance program to help preserve NOAH properties -Received grant funds to enhance the tree canopy on affordable housing sites All of these actions demonstrate Edina’s commitment to be a more racially inclusive, equitable and welcoming community. The Edina Comprehensive Plan Communities are complex ecosystems influenced by many interrelated factors. Housing is one element in the ecosystem -- shaping and being shaped by other elements. When housing projects are proposed it can be tricky for City policy makers to make data driven housing decisions since housing preferences are often based on personal opinions and lifestyle choices. It is human nature to resist change in your immediate environment, even if you might support it in principle. The NIMBY (Not In My Back Yard) objections of neighbors to projects can occur in any area. In light of this response to projects, it is important that policy makers have clear guidelines for evaluation and decision making. Housing decisions should be vetted through a consistent set of criteria, which take into account the welfare of the entire city. This is where the Edina Comprehensive Plan comes in. Every 10 years, the State of Minnesota and the Twin Cities Metropolitan Council require each city in the region to update their Comprehensive Plan. The plan sets policies, goals, and strategies in the areas of Land Use, Housing, Transportation, Water, Environment, and other systems. A Comprehensive Plan update requires extensive engagement from the community and is guided by regional growth forecasts from the Metropolitan Council. The City of Edina began its last update process in 2016 and formally approved its new Comprehensive Plan in 2020. What Shapes Housing in Edina? Report from the City of Edina Housing Strategy Task Force | 33 Metropolitan Council Affordable Housing Allocation for Edina The Metropolitan Council forecasts the anticipated regional demand for new affordable housing units based on forecasted regional household growth by income ranges. The Council then apportions a share of the needed new affordable units across all Twin Cities communities. Each city’s portion of meeting the regional need is called its “Allocation”. »Met Council’s forecasted demand for affordable housing across the Twin Cities region from 2021 to 2030 is 37,900 units. »Edina’s Allocation of new affordable housing to help meet regional need from 2021 to 2030 is 1,804 units. The ability to provide affordable housing is based on funding availability from various public sources. The Metropolitan Council recognizes that financial resources for affordable housing from the Federal Government, State, County, Metropolitan Council and City are limited. Based on estimated funding for affordable housing in the region, the Metropolitan Council established a production goal of 992 units for Edina that it thinks is realistic. This results in a Metropolitan Council goal range for Edina to produce between 992 new affordable housing units (based on anticipated financial feasibility) and 1,804 new affordable housing units (based on anticipated regional need and Edina’s share of meeting that need). Goal Range for New Affordable Housing Units in Edina between 2021 and 2030, as adopted in the Edina 2040 Comprehensive Plan Household Income as % of Average Median Income Edina’s Share of New Affordable Housing needed to help meet regional demand* New Affordable Housing that Edina can supply based on funding availability* 30% AMI and below 751 (42%)413 (42%) 31% to 50% AMI 480 (26%)264 (26%) 51% to 80% AMI 573 (32%)315 (32%) TOTAL affordable homes 1,804 992 Figure 8: Number of affordable housing units to be added in Edina, per the Edina 2040 Comprehensive Plan. What Shapes Housing in Edina? Report from the City of Edina Housing Strategy Task Force | 34 2. Community Drivers Community Drivers are those qualities of the Edina community that make it an attractive and inviting place to live - they are those characteristics that drive people to choose Edina as the place to be for them and their families. These are well described by the City’s Vision statement: “Edina holds a well-earned reputation as a city of choice. It is a model of a successful, mature, and progressive urban community, that strives to lead in a modern and evolving world. We maintain our heritage and attractiveness, and afford our residents the highest quality of life, while actively embracing the future.” Thriving communities share a number of things in common -- good schools, stable housing, proximity to jobs, accessible parks, mix of local retail and services, and established neighborhoods. Each of these factors complements the others, in a virtuous cycle. Edina is fortunate to have these elements in place and has benefited economically from rising land values and a strong tax base. We are proud of these traits and intend to make them stronger. It is critical to evaluate the relationship between housing and these key “community drivers.” The Task Force considered the following Community drivers: »Quality of Life »Jobs »Schools »Location and Transportation »Demographics and Market Trends Quality of Life Since 2011, the City of Edina has conducted a statistically valid Quality of Life survey every other year. The Quality of Life surveys15 have, overall, indicated that the residents of Edina believe that Edina is a good to excellent place to live. The top five reasons that residents choose to live in Edina are: »Safe Community »High performing Schools »Desirable Community »Distinct Neighborhoods »Amenities (e.g. parks library, etc.) What Shapes Housing in Edina? Report from the City of Edina Housing Strategy Task Force | 35 The Quality of Life Survey also asked about people’s concerns, such as, “All in all, do you think things in Edina are generally headed in the right direction, or do you feel things are on the wrong track?” Between 2017 and 2019, those who answered the ‘wrong track’ increased from 22% to 29%. Of these residents, 49% said that one of their primary concerns was “Poor development/overbuilding/ density of the city,” which was an increase from 26% in 2017. As the City looks to accommodate additional growth and housing, it is important to better understand this concern and how to address it. Due to public health concerns during the COVID-19 pandemic, the Task Force was not able to do the type of community engagement that is needed to investigate these concerns and to work with people to find solutions. The Task Force recommends that the concerns related to “poor development/overbuilding/density of the city,” be investigated with new questions in the 2021 City of Edina Quality of Life survey and supplemented by focus group discussions when public health safety allows. Jobs Edina is uniquely located with excellent proximity to key job centers in the Twin Cities region – including Minneapolis, Bloomington, and St. Paul. As a result, Edina is a convenient place to live for a large share of the region’s employees. Edina’s central location and employment base also makes it a convenient jobs center for people from around the region. In 2019, Edina was home to 44,899 jobs, across all employment sectors, and 98% of those jobs were filled by non-residents of the community.16 Despite its central location, Edina employers may still find it challenging to fill positions, and therefore seek solutions to make it easier for their employees to get to work. Housing is one of those solutions. “Like employers throughout the MSP region, Edina employers are experiencing talent recruitment challenges and report that prospective employees seek transit access, housing within their household’s budget, quality of life amenities and ongoing training and education to remain relevant in their field of expertise.” ~ Edina Comprehensive Plan, Economic Competitiveness Chapter If Edina wants to provide housing options for people who work in the city, then housing options should align with employees’ salaries and desired housing types. Edina performed well by this measure for decades, relying on the private market to deliver housing that was affordable to many people who worked in and near the city. Today, the private market struggles to fulfill that role, as the cost of housing continues to rise faster than wages. Employee at Braemar golf course. Source: City of Edina. What Shapes Housing in Edina? Report from the City of Edina Housing Strategy Task Force | 36 Figure 9 shows a few prevalent job sectors that do not pay a wage that allows those employees to afford the average mortgage payment in Edina (based on 30% or less of wages for housing being affordable to a household). Today’s young professionals, office workers, construction trades, teachers, firefighters, and health care aides cannot afford the types of homes in Edina that they could a generation ago. “Workforce housing gives working families more choice as to what neighborhood they can live in. It also addresses affordability and offers homeownership opportunities for moderate- and middle-income families. Additionally, there are advantages to having employees live in the same community in which they work. This includes decreased traffic and sprawl and shorter commute times for the workers, leading to an improved quality of life. It also may increase the level of community involvement if workers are able to live in the same communities in which they work.” ~ National Association of Realtors17 Schools The relationship between housing and local schools is complex. In years past, when neighborhood schools were the primary option for communities, the relationship between local housing and the local school was clear. Neighborhood schools reflected the demographics of the community. The quality of the school was not based on the students themselves, but on the resources available to educate the students. Today, the school and housing relationship is somewhat complicated. Students in Edina are not limited to attending their neighborhood schools. They can attend public schools, charter schools or private schools. Under the Open Enrollment program, public school students can apply to attend any school in any school district, regardless of home address. Furthermore, the City of Edina straddles three different school districts within its borders (Edina, Hopkins, and Richfield), further disconnecting the relationship between housing location and schools. Within this system, some limiting factors on school choice remain. Private schools are financially out of reach for many families, as they are for families who are unable to drive the child to and from school. Popular schools may be 30% of Average Wages in Growth Industries vs.  Mortgage Payment on an Average Priced House $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 2000 2005 2010 2015 2019 Education Health ServicesLeisure & Hospitality Public AdministrationAnnual Mortgage Payment (30 yr, 5%) Figure 9: Average wages compared to an average priced home in Edina. Source: City of Edina. What Shapes Housing in Edina? Report from the City of Edina Housing Strategy Task Force | 37 oversubscribed and hard to get into in the open enrollment system if you live outside the school preference area. Despite greater school choice today, proximity to high quality local schools remain one of the most important factors that families consider when seeking new housing. Everyone wants a good educational experience for their children and most people prefer to live close to their school. Thus, finding a home near a desired school is important. Unfortunately, the area near the school may lack the type and range of housing affordability families require. The Edina School District did a ‘yield’ analysis to determine which types of housing generated the most students. It found that averaged across the city, a single-family house generates 0.54 students, with duplexes yielding 0.30 students and apartments yielding 0.23 students. Condominiums yielded a very low 0.03 students.18 The school district concluded that changes in single-family detached housing stock (newly built units from tear downs and the sales of existing units) have a significant positive effect on resident enrollment in the Edina Public Schools. Edina’s per single-family detached unit student yields look more like a developing area than a first ring suburb. As a built-up city, Edina has the most potential to attract new families and grow the student population in these ways: »Allowing subdivision of large lots to build additional single- family homes »Adding duplexes and triplexes »Adding apartments sized for families »Encouraging turnover of single-family homes, which can be assisted with the addition of multi-family housing options in the city. In addition to single-family homes, apartments, duplexes, and triplexes are important for welcoming and maintaining a diversity of students. When the school district looked specifically at where BIPOC students lived, they found that they come from a diverse range of housing.19 Location and Transportation In the recent Edina Quality of Life Survey, people were asked to write in their own words what they liked most about living in Edina. 40% of the comments related to the convenience, accessibility, and walkability of Edina. Transportation options for residents going to work, school and recreation factor heavily into how livable a Figure 10: Average number of students per housing type. Source: 2018 report by Edina School District. What Shapes Housing in Edina? Report from the City of Edina Housing Strategy Task Force | 38 community is. Travel time takes time away from other daily activities such as work, family and friends, exercise, rest, and play. A community with a range of transportation options and proximity to primary destinations, makes it easier for residents of all ages and incomes to pick a transportation mode that works for them and to minimize their time using it. Opportunities to take transit, walk or bicycle between destinations reduces auto dependence and ownership costs. Low-wage workers often have to work two jobs to pay the bills, leaving less time to travel between home and workplaces. “As transportation costs rise, it is becoming increasingly difficult to make the economic case for “driving until you qualify” [for a reasonably priced mortgage] because these increased costs consume much of the home price savings.” ~ National Association of Realtors20 Edina is well served by regional transit, with multiple connections to the north, east and south. Within the city limits, there are transit links to job centers, commercial nodes, and higher density housing areas, but there are few transit connections through and between the low-density single-family neighborhoods. Areas with limited transit access are more car dependent and tend to have higher average daily trips per capita than areas well served by transit. Shifting the proportion of trips by cars to other modes, even modestly, will benefit the city through reduced traffic and vehicle emissions. Fewer vehicle trips also means less demand for street infrastructure and maintenance, which can be a significant portion of a city’s budget. The recently adopted Edina Comprehensive Plan calls for adding a regional or municipal connector or shuttle bus service to move people to major locations around Edina to lessen dependency on cars. Another means to reduce driving within Edina is to locate new housing near activity nodes that are already well-served by transit, walk and bike infrastructure. Directing residential growth to existing transportation hubs is faster and less costly to the city than expanding multi-modal transportation infrastructure to less dense residential areas. Focusing new housing growth near activity nodes is a central policy in Edina’s Comprehensive Plan. Suburban to Urban One of Edina’s strengths is that it has already established a wide variety of housing options and a wide distribution of housing types. Future planning should continue to accommodate the diverse housing in Edina. The Metropolitan Council has designated Edina as an “Urban” community. Urban communities are expected to plan for forecasted population and household growth at average densities of at least 10 units per acre for new development and redevelopment. In addition, Urban communities are expected to target opportunities for more intensive development near regional transit at densities and in a manner articulated in the 2040 Transportation Policy Plan. Communities designated as “Suburban” communities are expected to plan for forecasted population and household growth at average densities of at least 5 units per acre for new development and redevelopment. As a comparison, the cities of Eden Prairie and Source: Tom Koon. What Shapes Housing in Edina? Report from the City of Edina Housing Strategy Task Force | 39 Minnetonka have been designated as Suburban communities by the Metropolitan Council. As shown in Map 4 - Future Land Use of Edina,21 the areas of higher density in Edina are much less than the areas of low density residential, defined as 1-5 housing units per acre. Edina is a unique community in that it has some areas that are urban, in addition to areas that are clearly suburban. The low-density suburban residential areas are essentially fully developed and are not likely targets for redevelopment as compared to high density residential areas. Given the history and current mix of household units in Edina, when planning for development, Edina must account for the needs of a suburban environment, as well as planning in specific areas for an urban environment. For examples, the Metropolitan Council recommends the implementation of travel demand management policies that encourage the use of travel options and decrease reliance on single-occupancy vehicle travel. However, since Edina includes large suburban areas, vehicle travel must be accounted for in planning for parking for mixed use and retail areas for the foreseeable future. Development in areas such as the Southdale area should take into consideration appropriate parking requirements specific to the area and driven by market demands. Residents in the low-density residential areas of Edina will continue to rely on automobile transportation for the foreseeable future and retail parking will need to accommodate the needs of these residents by providing user friendly parking alternatives that meet the needs of single-family residents in a suburban setting.Map 4: Future Land Use Map for Edina. Source: Edina 2040 Comprehensive Plan. What Shapes Housing in Edina? Report from the City of Edina Housing Strategy Task Force | 40 3. Demographics and Market Trends This report identifies strategies to implement the housing goals identified in Edina’s Comprehensive Plan, and to address the expected gap between natural market growth and the growth in housing demand, as identified in the Maxfield Housing Market Study. Edina Comprehensive Plan Figure 11 from the Comprehensive Plan shows growth in Edina’s population and households since 1960, and anticipated growth through 2040. After rapid growth in the 1960s, growth in population and households between 1970 and 2010 was modest. Since 2010, the pace of growth has picked up and is expected to continue through 2040. »From 1980 to 2010 (30 years), Edina’s population grew 4% and the number of households grew 15%. »From 2010 to 2040 (30 years), Edina’s population is projected to grow 32% and the number of households to grow 44%. Since the areas in Edina zoned for single-family homes are virtually built out, there is likely to be very little growth in single-family housing units to accommodate future growth. Rather it will take place in multi-unit buildings (duplex, triplex, quad, townhomes, and multi- family housing with five or more units). With this in mind, Edina can anticipate and plan for a change in its housing mix, as shown in Figure 12. In 2019, housing units in Edina were 53% single-family and 47% multi-family (2+ units). By 2040, based on the projections in the Edina Population and Households 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 1960 1970 1980 1990 2000 2010 2020 2030 2040 Population Households Single Family Units vs. Duplex, Triplex, Quad and Multi-Family Units Through 2040 0 2,500 5,000 7,500 10,000 12,500 15,000 17,500 1990 2000 2010 2020 2030 2040 Single Family (Attached and Detached)Duplex, Triplex, Quad and Multifamily Figure 11: Growth in Edina population and households. Source: Metropolitan Council. Figure 12: Past and projected mix of single-family and multi-family housing in Edina. Source: US Census and Metropolitan Council. What Shapes Housing in Edina? Report from the City of Edina Housing Strategy Task Force | 41 Comprehensive Plan, the balance will flip, with slightly less than 50% single-family and slightly more than 50% multi-family. Maxfield Housing Market Study In 2019, the Edina City Council commissioned a housing market study from Maxfield Research and Consulting to determine the market demand for different types of housing in Edina. The report, titled “Comprehensive Housing Market Analysis for the City of Edina, Minnesota,” was completed in April 2020. The report includes in depth information and analysis of demographic trends, existing housing in Edina, and anticipated demand. The Maxfield analysis found that housing market demand in Edina exceeds the minimum goals for new housing units identified in the Edina Comprehensive Plan (which were based on Metropolitan Council’s allotment of new units needed in Edina to help meet regional housing needs). The Maxfield analysis identified the total demand for new housing in Edina as 5,568 units by 2030.22 This exceeds the forecasted growth of 3,700 new homes for Edina, as identified in the Edina 2040 Comprehensive Plan. Maxfield then analyzed the expected supply of housing in Edina through 2030, compared to the anticipated need for housing in all housing categories. In almost all cases, the level of demand exceeded the expected supply that would be provided under existing market conditions, policies, and regulations in Edina. The difference between supply and demand is considered the market “gap”, where additional efforts are needed by the city to advance specific housing types. The Maxfield report is a must read for anyone who wants to understand more about the expected demand and supply, and the resulting Maxfield recommendations. Maxfield identified housing demand by types of units within the “General Occupancy” categories and the “Senior Housing” categories (Figure 13). Figure 13: Anticipated demand for housing by type in Edina between 2020 and 2030, with “Senior Housing” types described. Source: Maxfield Housing Study. Table 1 GENERAL SENIOR TYPE Demand TYPE Rental - Market 1377 Active Adult - Market; Rental 315 Rental - Affordable 1456 Active Adult - Affordable; Rental 576 Owned Single-family - Market 109 Active Adult - Market; Ownership 220 Owned Multi-family - Market 461 Independent Congregate Living 553 55+ and Other Senior 2165 Assisted Living 298 Memory Care 203 55+ and Other Senior39% Owned Multi-family - Market8% Owned Single-family - Market2% Rental - Affordable26% Rental - Market25% Memory Care9% Assisted Living14% Independent Congregate Living26% Active Adult - Market; Ownership10% Active Adult - Affordable; Rental27% Active Adult - Market; Rental15% 1,456 109 461 2,165 1,377 298 203 315 576 220 553 1 Demand for General Occupancy and 55+ and Senior Housing in Edina 2020 to 2030 What Shapes Housing in Edina? Report from the City of Edina Housing Strategy Task Force | 42 4. Land Use Regulations The strongest tool that a city has to expand or limit housing is land use regulation. Land use rules determine what can be built, where and the process for review and permitting. A city’s zoning code, like the Edina code found here, is the primary way a city impacts housing development and redevelopment. Zoning rules identify what can be built, but do not make things happen. For example, two projects that are part of the Southdale office center redevelopment, 7200 France and The Avenue on France, had zoning approval to proceed, but both projects stalled for other reasons. Common reasons that projects fold, despite being allowed under zoning, are lengthy process review by public entities, lack of community support, financing issues, or changes in market demand. Zoning Rules Impact Housing Costs Many different costs determine the price of a new single-family or multi-family home. The two biggest expenses for new housing are land purchase and materials/construction costs. [Article “Why are new apartments so expensive?” available at Open: Housing] Zoning and land use rules also add significant costs to building homes of all types. These rules might be at the State, regional or city level. At the regional level, the average cost to build a single-family home is affected by the Metropolitan Council’s tight MUSA (Metropolitan Urban Service Area) allocation that decreases affordability throughout the region by raising land cost. Fortunately, there are a number of things that can be done at the city level through flexible zoning and streamlined review and approval procedures. Land Costs When building a new home, the cost of the land can be substantial. If local zoning requires a large lot for a home, then the price of that new home will be higher from the outset than one allowed on a smaller lot. When a lot is allowed to provide more than one home, the price of the land is split among the homes, reducing the base land price for each unit. The land cost goes down with every additional household. Edina could promote the construction of less expensive homes by allowing smaller lots or allowing multiple homes on a lot in specific areas of the city where the density would be compatible with surrounding land uses. What Shapes Housing in Edina? Report from the City of Edina Housing Strategy Task Force | 43 Here is a list of common zoning requirements, which drive up housing costs or disallow less expensive housing options, ordered from most expensive to least: »Requirements for parking – minimum number of spaces; structured parking »Prohibitions on mother-in-law apartments, duplexes, triplexes, townhouses, garden, walk-up, or low-rise buildings »Restrictive height and density limits »Buildings setbacks »Mandatory basements »Minimum unit or bedroom sizes »Exterior finish requirements Reducing more expensive requirements at the local level does not reduce construction quality since the State Building Code sets quality building standards to ensure safe, durable, and healthy homes. Just as zoning and land use controls facilitated segregation, they can be re-envisioned and revised to reopen housing choice for a wider range of households by allowing for wider varieties of well-built, less expensive homes. The City of Edina can use its own zoning and land use regulations to help affect the underlying price of housing in Edina, but State and regional land use rules also have an impact. Review Costs and Fees (Soft Costs) Once it is determined whether zoning allows a certain type of housing in an area, there are multiple processes to secure permission to build. Land use approvals may be required, and building permits are always required. The process of securing land use permits and building permits and the costs of fees imposed on new development add to the cost of building homes. It requires an enormous amount of time for developers and contractors to prepare applications, work with communities and city staff, and attend meetings and hearings. The developer or project sponsor needs to have “control” (ownership) of the land during that process and maintaining that control through holding costs adds more to the expenses the longer the approvals process takes. Developers report lengthy project review, as well as a lack of community support, as obstacles to development. The Edina Housing Strategy Task Force found this to be the case in a number of interviews it did with developers who have done or tried to do housing projects in Edina.23 Extended review times increase risk and holding costs, costs which the developer adds to the project, making it more expensive to develop in Edina. Every city has the ability to structure its development and construction review process to be as efficient as possible, within certain limits. Anything allowed “by right” complies with the zoning code and does not require public notification or review. “By right” reviews are administrative processes at the city level and have some ability to be “fast tracked” if policy and staff capacity allow. Building inspections and permitting are required for all projects and may also be sped up or slowed depending on city policy and staffing. If State inspections and permits are needed, the City has no ability to influence how quickly these are completed. What Shapes Housing in Edina? Report from the City of Edina Housing Strategy Task Force | 44 Proposed projects that require a “variance”, a Conditional Use Permit or a Special Use Permit under City zoning must provide public notice and review to comply with State rules that dictate the minimum and maximum number of days to complete them. Proposed housing projects may also trigger reviews beyond zoning, related to environmental conditions (soil, air, or water), infrastructure improvements, or historic resources, to name a few. These items have State mandated minimum and maximum review days as well, to ensure that the public and interested parties or agencies have adequate time for review. Cities like Edina can streamline some review processes and waive or eliminate fees to lower housing project costs. Common types of discretionary reviews and fees are preliminary design review, permit fees, and impact fees. Edina has reasonable impact and permit fees compared to comparable Minnesota communities, so its focus for should be on determining which development review requirements support the policy goals of the Edina Comprehensive Plan (such as housing affordability), and which requirements undermine them. Funding Sources for a 70-Unit, 100% Affordable Development: $23,435,489 $206,000 $214,418 $316,500 $993,950 $500,000 $798,000 $888,634 $2,400,000 $5,787,000 $11,295,887 Tax Credit Equity First Mortgage Edina Deferred LoanMN Housing Deferred Loan Edina TIF Pay-Go Note Hennepin Cnty HOME LoanMet Council LCDA & LHIA Sales Tax Rebate Deferred Developer FeePhilanthropic Figure 14: Funding sources for a recent affordable housing project. Source: City of Edina. What Shapes Housing in Edina? Report from the City of Edina Housing Strategy Task Force | 45 5. Financing and Programs Financing for rent and/ or income-restricted affordable housing is distinct from market rate housing finance. Market rate projects are financed through banks, developer collateral, and investors who rely on operating revenues to pay the mortgage revenue and/or future sale revenue earns a return on their initial investment. The financing for affordable multi-family development comes from three main sources: »First mortgage debt - bank financing, bonds, FHA/ HUD insured »Equity - Generated by the sale of Low-Income Housing Tax Credits »Public Financing / Soft Debt - payable from surplus cash flow or deferred and payable upon sale or refinance. Due to the restricted rents, the property income is not sufficient to leverage the bank debt needed to fully finance an affordable housing development. Debt secures a mortgage that pays for 30%-70% of the construction costs, depending on the level of affordability. The remaining 30% and 70% of capital funds required to construct the housing needs to come from other sources, primarily Low-Income Housing Tax Credits and public financing. These sources are limited and highly competitive. Each state is allocated a certain amount in Low Income Housing Tax Credits (LIHTC) under Section 42 of the IRS Revenue code based on the state’s population. Minnesota Housing is the primary conduit for distribution of the credits in Minnesota and is the designated allocator of tax credits for developments in Edina. Therefore, to obtain LIHTC a developer applies to Minnesota Housing through a competitive application process. LIHTC are awarded based on a pointing system, so certain criteria must be met as described in their Qualified Allocation Plan. The proposed development with the most points receives the tax credits. Soft debt can come from a variety of sources including Minnesota Housing, Hennepin County, Metropolitan Council, and the City of Edina. Again, these sources are limited and awarded through a competitive application process. The different funding agencies have their own criteria, so a developer must know how to thread the needle to secure funding from multiple sources. Local support is a key criterion for obtaining awards of LIHTC and all public subsidies. The City of Edina should be prepared to assist developers seeking these sources by providing letters of support and facilitating expedited reviews to control project costs when possible. What Shapes Housing in Edina? Report from the City of Edina Housing Strategy Task Force | 46 6. Outreach, Communication and Dialogue Like many cities across the nation and in the Twin Cities region, Edina is growing. Growth can be positive in many ways, but there are downsides as well. In either case, growth is a big change for a community and by and large, people are apprehensive about change and how it will impact them. In this way, Edina is experiencing heightened sensitivity and public engagement from the community regarding the change. In the 2019 Edina Quality of Life Survey, respondents were asked how well, if at all, they felt the City does at managing tensions in the community related to residential redevelopment in Edina. Only about half of residents felt the City manages tensions very or somewhat well, which was a decline from 2017 and 2015.24 In Edina today, recently formed grassroot citizen groups are organizing and communicating around specific agendas in regard to growth and the nature of development. These groups represent different perspectives on growth, some in general support and some in general opposition. The groups are increasingly sophisticated, with websites, strong communication networks, visibility at city meetings and hearings, and even registered as formal nonprofits with the State of Minnesota. The increased skill and activity of engaged residents amplifies areas of disagreement between citizens and challenges city leadership and staff to lead and facilitate constructive and respectful public dialogue. It also challenges citizens with different opinions to hone their skills at talking with one another instead of to one another. What Shapes Housing in Edina? Report from the City of Edina Housing Strategy Task Force | 47 4 Recommendations Image courtesy of Urban Design Associates. Report from the City of Edina Housing Strategy Task Force | 48 Chapter 4: Recommended Priorities for Edina Housing Principles The Edina Housing Strategy Task Force has identified three Principles as foundational to maintaining Edina’s strength as a great residential community. These Principles mirror three of the four goal areas in Edina’s Comprehensive Plan and serve as the basis for the recommendations in this report. SUPPLY AND GROWTH: Plan to accommodate projected residential growth. HOUSING CHOICE: Support the development of a wide range of housing options to meet the diverse needs and preferences for the existing and future Edina community. AFFORDABILITY: Encourage the development and maintenance of diverse housing options affordable to residents at a range of incomes and life stages. Two Key Value Statements of the City of Edina The work of this report is guided by the values of the Edina community. Two key City of Edina values are Equity and Community Engagement: Equity As the Edina City Council, we are dedicated to creating an environment in our community where residents have equitable opportunities to participate in their city government and access the City’s institutions, facilities, and services. Our commitment to diversity, equity and inclusion will be a continuous process of learning and adapting to the multiple needs of all in the community, while consistently applying an equity lens in all decisions and interactions. Our vision of a welcoming Edina includes removing systemic and institutional barriers to create opportunities for all in the community to thrive. Community Engagement As the Edina City Council, we are dedicated to fostering an engaged community built on a foundation of trust. We will do this by intentionally focusing on equity, diversity and inclusion and creating a dialogue of perspectives. We will build trust by demonstrating our engagement principles of Relationships, Equity, Inclusivity, and Accountability. »Relationships: make relationships foundational; strengthen relationships and build new ones; develop a trust between the City and residents »Equity: engage with residents where they are; remove barriers for participation; provide multiple options for participation »Inclusivity: strive to provide meaningful engagement opportunities; invite underrepresented groups to participate; make all feel welcomed and valued »Accountability: plan; do what we say we are going to do; do not change the rules; make a decision; communicate how participation influenced decision Report from the City of Edina Housing Strategy Task Force | 49 Goals and Strategies GOAL 1: PROMOTE LIFECYCLE HOUSING Actively work to create lifecycle housing to support a range of housing options that meet people’s preferences and circumstances in all stages of life, such as renters, first-time homebuyers, empty nesters, and seniors. A) Promote Affordable and Attainable Housing 1) Prepare a housing implementation plan using a mix of tools to achieve the City’s housing goals, including the Comprehensive Plan goal range of 992 to 1,804 affordable units, in the ten-year horizon, with time-bound goals and milestones, to be reviewed on an annual basis. 2) Facilitate the development of “new” housing options such as accessory dwelling units to accommodate the diverse needs of people of different ages, household sizes, lifestyle, and incomes. 3) Attract new residents and retain existing residents by preserving and expanding housing options for moderate- and low-income households. 4) Promote affordable and workforce housing that includes a range of housing prices and options, based on the principle that those who contribute to the community should have the opportunity to live here. 5) Explore directing for a limited period of time, the City’s portion of the increased tax value of tear down properties to support Affordable Housing. B) Promote Missing Middle Housing Production 1) Support opportunities to accommodate Missing Middle housing within the city, defined as range of multi-unit or clustered housing types compatible in scale with single-family homes C) Promote Special Needs Housing 1) Support a range of housing options for people with special needs (Developmentally, Physically, or Mentally) a) Families with a disabled member b) Affordable housing for working households with a disabled member c) Assisted living for individuals with disabilities. D) Encourage Preservation and Promotion of Diverse Housing Stock 1) Assist neighborhoods in retaining starter housing stock that can accommodate young families. 2) Encourage the preservation, maintenance, and rehabilitation of existing subsidized and naturally occurring affordable rental and ownership housing (NOAH) 3) Maintain some of Edina’s single-family, lower square footage housing stock. 4) Support program(s) for assisting income eligible property owners with rehabilitating their homes to extend their useful life. 5) Increase awareness about the range of housing variety that exists in Edina. Recommendations Report from the City of Edina Housing Strategy Task Force | 50 GOAL 2: AMEND LAND USE REGULATIONS TO ENABLE A MORE DIVERSE HOUSING MIX A) Adjust Zoning Standards for Housing 1) Provide zoning flexibility in the specific areas identified for development in the Comprehensive Plan to streamline the public approval process for minor variances. 2) Continue to allow teardowns/rebuilds but consider design guidelines and regulations that prevent privacy invasion via window placement and infringement on both active and passive solar energy capture. 3) Allow for creative solutions and some flexibility in the provision of off-street parking standards for housing. This might include options like shared parking, reduced minimums near transit and activity nodes, or exceptions to structured parking requirements for affordable housing. B) Consider Zoning District Amendments to Expand Housing Options 1) Consider zoning amendments in limited areas (such as transitional areas and activity nodes) and pursue zoning changes to encourage split lots to allow infill, to allow lot splits for infill, single-family ownership housing, detached or attached (zero lot line), on lots after splitting that are 50’ or wider (or 3,500 sf or larger). 2) Consider amending current R1 zoning to allow attached or detached Accessory Dwelling Units (ADU) such as self-contained “mother-in-law units”. Develop Small Area Plans for extending R2 zoning along Vernon Ave from 169 to Interlachen, France Ave north of Hwy 62, and Valley View from 66th to Hwy 100. Evaluate additional areas for R2 zoning. 3) Support the development and preservation of affordable housing throughout Edina where there is access to transit. Recommendations Report from the City of Edina Housing Strategy Task Force | 51 GOAL 3: REDUCE BUILDING COSTS A) Streamline the Approval Process for Housing Developments Requiring a Variance or Subsidy 1) Fully empower the City’s Community Development Department to identify properties for development or redevelopment, analyze projects for both fit with the Comprehensive Plan Design Guidelines and economic feasibility in prevailing market conditions, balancing these two as needed. Communicate development objectives to developers and encourage the preparation of proposals for development. 2) Implement active outreach and recruit developers with a successful track record in providing the housing desired 3) Empower the City’s Community Development Department to guide developers through the project approval process. 4) Provide better guidelines for development requirements, based on location and economic objectives. 5) Simplify the current project approval process. Limit discussion to the variance or Comprehensive Plan amendment issues being raised. 6) Conduct semi-annual project review meetings between Staff, City Council and Planning Commission to discuss lessons learned, gain alignment, and determine policy implications of projects completed in the past six months. 7) Complete Post-mortem reviews of the current development review process, paying particular attention to assessing the level of quality of resulting developments. Identify what developments have been delayed or have been negatively impacted by incurring additional costs in the development process due to multiple levels of approvals or ad hoc design and amenity requests. 8) Ensure that there is a robust system in place to identify the evolving best practices for managing housing developments being used by other communities. For example, Bloomington, St. Louis Park, Brooklyn Center, or others. B) Reduce the Cost of Building, Renovating and Financing Quality Housing 1) Develop a parking policy that reflects the latest thinking for current and future parking needs, parking construction costs, sustainability and evolving economic and marketability needs for successful projects. 2) If underground or covered parking is required, be willing to fund it by Tax Increment Financing (TIF) or other means of subsidy. 3) Expand the HRA levy to generate funds that can be leveraged for land acquisition, bridge loans and renovations. 4) Utilize land trusts and land write-downs to secure land for future development projects. 5) Empower the City’s Affordable Housing Development Manager to be responsible for establishing/evaluating the parking, design, and amenity requirements for affordable housing developments to ensure economic viability of these projects. 6) Empower the City’s Affordable Housing Development Manager and the Director of Community Development to be responsible for parking, design, and amenity requirements for housing Recommendations Report from the City of Edina Housing Strategy Task Force | 52 for seniors, people with disabilities and other housing market segments with specific needs. 7) Authorize the City, through a public hearing process, to have authority to make property purchases that are consistent with a city development strategy, within a financial limit, to be able to secure control of potential properties for affordable housing development, in an expeditious manner. 8) Fully utilize the other options the city has to lower the cost of development and or financing (i.e. rebate on fees, tax exempt bond financing, upgrading to an Economic Development Agency, selling land below market value, reduced property taxes, etc.). 9) Explore directing City portion of increment of increased tax value of tear down properties to Affordable Housing Trust Fund. GOAL 4: ENCOURAGE SUSTAINABLE DESIGN AND TECHNOLOGY IN ALL NEW AND SUBSTANTIAL REHABILITATION HOUSING 1) Encourage alternative energy sources including solar, wind, waste material, and geothermal. 2) Promote active and passive energy efficiency in the design and placement of buildings and trees and educate property owners regarding weatherization and energy efficiency. 3) Require shadow studies on new or replacement housing structures to ensure active and passive solar energy use by adjacent properties is not adversely impacted. 4) Promote water conservation by homeowners and housing property owners through education about wat er conserving appliances and fixtures, and reusing wastewater. 5) Support mitigation of water runoff by encouraging use of rain gardens, rain barrels, cisterns, permeable driveways and walkways, and appropriate building and landscape design. 6) Frequently review housing codes and policies to incorporate new technology regarding alternative energy sources, new energy efficient building practices. 7) Promote new construction and substantial rehabilitation projects to follow leading industry sustainability standards. Solar panels on rooftop of home in the Morningside neighborhood. Photo credit: Tom Koon. Recommendations Report from the City of Edina Housing Strategy Task Force | 53 Priorities for New Housing in Edina The Task Force considered the results of the Maxfield study and the Edina 2040 Comprehensive Plan to identify recommended housing priorities for the City of Edina. This Task Force acknowledges that adopted policy in the Edina 2040 Comprehensive Plan anticipates housing growth and is planning for ways to accommodate it. The City of Edina should craft policies, adjust regulations, and prioritize financing for housing that meets the highest market need, and which the market may not deliver under current city conditions. A zero or tentative growth policy is not an option if Edina wishes to maintain and sustain itself as a thriving and desirable community. After extensive analysis and discussion, the Task Force decided to recommend a minimum of 992 new affordable housing units to Edina, based on the adopted 2040 Comprehensive Plan. In other housing categories, the Task Force based its recommendation for new units on the Maxfield Housing Market study, which identified housing types where demand most exceeds the anticipated supply. The top five Task Force recommended housing priorities are: 1) Add 992* affordable rental housing units -80% affordable rental for general occupancy -20% affordable rental for active seniors. 2) Add 900 market rate rental housing units for general occupancy 3) Add 360 senior ‘independent living,’ congregate housing units 4) Add 250 owned multi-family housing units 5) Add 200 senior ‘assisted living’ housing units *Note: To meet the lower bound goal of 992 affordable housing units, it would require approximately nine projects consisting of 100 apartments each - which is a typical size for affordable housing projects. In addition to 92 additional apartments created through Edina’s inclusionary housing policy, which mandates 10% of all new multi-family units be affordable at 60% of Area Median Income. To get built, all nine of these projects would have to be vetted thoroughly to receive both city approvals and competitive awards of subsidized financing. The Task Force understands that this is a lofty goal and as such will require consistent effort by Edina’s policymakers and city staff. Recommendations Report from the City of Edina Housing Strategy Task Force | 54 Concluding Highlights RELATIONSHIP TO THE 2040 COMPREHENSIVE PLAN - The Task Force acknowledged early on that the 2040 Comprehensive Plan was developed with an impressive amount of community engagement, debate, and input, both in aggregate and in each of the Small Area Plans. Regarding housing, which is our charge, the Comprehensive Plan provides clear guidance on overall quantity needed, and where new development should happen. The Task Force accepted and supports the population, housing unit and affordable housing unit forecasts in the Comprehensive Plan. Our charge was to provide more guidance on the amount of specific types of housing needed for specific target audiences and recommend goals and strategies to help ensure this housing gets built. HOUSING DIVERSITY – The Task Force was focused on ensuring that we addressed the full spectrum of housing needs. We strongly believe that one of Edina’s strengths is that it has a wide variety and distribution of housing types. We believe future housing should continue to accommodate diverse housing in Edina while minimizing the impact on our predominantly single-family neighborhoods. The Task Force recognizes that the wide variety of homes available in single family home neighborhoods has had an important role in attracting families to Edina. We want to ensure that these single- family home neighborhoods continue to be a part of the diversity of housing that is a strength of Edina. Our recommended top priorities for housing cover a wide variety of housing types, including affordable, market rate, senior and multi-family. Our priorities are intended to help guide the City in what types of projects it should support. This report can give the incorrect impression that the Task Force was focused on affordable housing. The report includes a lot of information on affordable housing because while the market will work to satisfy the demand for market rate housing, both new and existing, it will not do that for new affordable housing. New affordable housing is more challenging to produce. It usually requires financial support and political leadership from the City. Our report works to educate the reader on why we need new affordable housing, the benefits of having it, and why it will not happen on its own. COMMUNITY ENGAGEMENT –Covid-19 limited our ability to get robust input from the community about our ideas, through either large in person meetings, robust surveys or focus groups. The issues we grappled with are being debated throughout the city and, like our task force, there are widely disparate positions. We feel strongly that when circumstances change, the City should ensure that it has robust input from the community about the recommendations we have made. This includes the recommendation we made about topics to be included in the 2021 Quality of Life Survey. SPIRITED DEBATE – This report is the culmination of spirited debates among the Task Force members who held widely disparate views on many of the topics we discussed. The task force used a voting system that allowed everyone to state their level of support for an idea, debate further if there was insufficient support for the idea, and ultimately allow for majority rule on accepting or rejecting the final shape of the idea. CITY SUPPORT – The Task Force recognizes the City’s deep commitment to open, informed debate of complex issues. This is evident in the extensive public engagement used to prepare the Comprehensive Plan, the subsequent formation of this public Task Force, the extension of time to complete our work, the investment in the Maxfield Study, and in Staff resources and consulting services to support our work. We hope this report is a useful contribution to what will be an important ongoing debate to ensure Edina continues to be a healthy and thriving community. Recommendations Report from the City of Edina Housing Strategy Task Force | 55 Endnotes 1 https://stats.metc.state.mn.us/profile/detail. aspx?c=02394621#genlanduse 2 Taylor, Lauren. “Housing and Health: An Overview of The Literature” June 7, 2018. https://www.healthaffairs.org/ do/10.1377/hpb20180313.396577/full/ 3 Definition from City of Lakes Community Land Trust. http:// www.clclt.org/ 4 http://homeswithinreach.org/wp/ 5 https://datausa.io/profile/geo/hennepin-county-mn/ 6 “Workforce Housing Overview” National Association of Realtors. https://www.nar.realtor/home_from_work.nsf/files/ PG%20Module%201.pdf/$FILE/PG%20Module%201.pdf 7 Taylor, Lauren. “Housing and Health: An Overview of The Literature” 8 “The Effect of New Market-Rate Housing Construction on the Low-Income Housing Market,” Upjohn Institute working paper 19-307. https://research.upjohn.org/up_ workingpapers/307/ 9 Family Housing Fund report, “Affordable Rental Housing Does Not Reduce Property Values: Evidence from the Twin Cities” 2014 (https://www.fhfund.org/wp-content/ uploads/2019/07/Property-Values-report-2014.pdf ; and https://www.fhfund.org/wp-content/uploads/2019/07/ Summary-AH-Does-Not-Reduce-Property-Values_ Updated-11.24.14.pdf ]; and Young, Cheryl. “There Doesn’t Go the Neighborhood: Low- Income Housing Has No Impact on Nearby Home Values.” November 16, 2016. https://www.trulia.com/research/low- income-housing/ 10 Cecchini, Alex. “No, Large Apartment Buildings Won’t Devalue Your Home” February 7, 2016. https://streets. mn/2016/02/07/no-large-apartment-buildings-wont-devalue- your-home/ ; and Damiano, Tony and Chris Frenier. “Build Baby Build?: Housing Submarkets and the Effects of New Construction on Existing Rents” University of Minnesota, Center for Urban and Regional Affairs. October 16, 2020. https://www. tonydamiano.com/project/new-con/bbb-wp.pdf ; and “New Apartment Buildings in Low-Income Areas Decrease Nearby Rents: Upjohn Institute. https://www.upjohn.org/ research-highlights/new-apartment-buildings-low-income- areas-decrease-nearby-rents 11 “Is Supportive Housing Cost Effective?” Center for Supportive Housing. https://d155kunxf1aozz.cloudfront.net/wp- content/uploads/2018/06/Cost-Effectiveness-FAQ.pdf 12 “Zoning Laws. The First Amendment Encyclopedia. September 2017. https://en.wikipedia.org/wiki/Zoning_in_ the_United_States ; https://oxfordre.com/americanhistory/ Endnotes Report from the City of Edina Housing Strategy Task Force | 56 view/10.1093/acrefore/9780199329175.001.0001/acrefore- 9780199329175-e-209 ; and https://mtsu.edu/first-amendment/article/28/zoning-laws ; and https://www.strongtowns.org/journal/2017/6/28/a-history- of-zoning-in-three-acts-part-i ; and https://www.bloomberg.com/news/articles/2012-06-19/the- birth-of-zoning-codes-a-history ; and https://en.wikipedia.org/wiki/Zoning_in_the_United_States 13 Silver, Christopher. “The Racial Origins of Zoning in American Cities”. Arizona State University. 1997 http://www. asu.edu/courses/aph294/total-readings/silver%20--%20 racialoriginsofzoning.pdf 14 “Exclusionary zoning”. Wikipedia https://en.wikipedia.org/ wiki/Exclusionary_zoning 15 City of Edina Quality of Life Surveys, https://www.edinamn. gov/QuickLinks.aspx?CID=198 16 Maxfield Housing Market analysis for Edina. April 2020, page 231 17 Workforce Housing Overview presentation, National Association of Realtors https://www.nar.realtor/home_from_ work.nsf/files/PG%20Module%201.pdf/$FILE/PG%20 Module%201.pdf 18 2018 data from Edina Public Schools ISD#273, presented by Hazel Reinhardt, March 6, 2018 19 2018 data from Edina Public Schools ISD#273, presented by Hazel Reinhardt, March 6, 2018 20 “Millennials and Silent Generation Drive Desire for Walkable Communities, Say Realtors,” National Association of Realtors. https://www.nar.realtor/sites/default/files/documents/2017- community-preferences-survey-press-release-12-19-2017.pdf 21 Edina Comprehensive Plan Chapter 3, Land Use and Community Design, p. 3-26. 22 Maxfield Housing Market Analysis for Edina. April 2020. 23 Members of the Edina Housing Strategy Task Force interviewed a number or types of developers to learn their perspectives on housing development in Edina, both market rate and affordable. 24 “2019 Quality of Life Survey: Edina, Minnesota.” National Research Center, May 2019. https://www.edinamn.gov/ DocumentCenter/View/6564/2019-Quality-of-Life-Survey- PDF Endnotes Report from the City of Edina Housing Strategy Task Force | 57 Appendices I. Getting from Here to There II. Housing Definitions III. Housing Affordability and Income Qualifications IV. Regional Housing Need and Edina’s Role V. List of Resources Used by the Task Force VI. Responses to the Report From the Human Rights and Relations Commission and the Edina Housing Foundation Report from the City of Edina Housing Strategy Task Force | 58 Appendix I - Getting from Here to There Achieving the goals in this report requires a suite of policy, funding, and program tools. The Edina 2040 Comprehensive Plan had a full matrix of tools to advance housing projects in the city. It is found in Chapter 4 - Housing, page 4-2-, Table 4-7. Below is a list of tools available through the city. Housing Tools The following are housing programs offered through the City of Edina to address housing needs of Edina residents, preserve and improve the existing housing stock, provide for affordable housing, provide for new housing products, provide for the safety and security of residents residing in rental housing and ownership housing and other strategies and initiatives to support ongoing stability and enhancement of the City’s housing stock. GENERAL OBLIGATION BONDS - Bonds have been used to a limited degree by municipalities and counties to support the development of affordable housing. Typically, the government guarantees the bonds issued. This can create affordable housing, usually affordable to households with incomes between 60% and 80% of AMI but is not prevalent in the market. AFFORDABLE HOUSING TRUST FUND - An affordable housing trust fund provides a source of funds to facilitate the housing needs of low- and moderate-income individuals and families in the city. The affordable housing trust fund shall be a permanent endowment and continually renewable source of revenue to provide loans and grants to for-profit and non-profit housing developers for the acquisition, capital and soft costs necessary for the creation of new affordable rental and owner-occupied housing, and for the acquisition, rehabilitation and preservation of existing multi-family residential rental housing including naturally occurring affordable housing (NOAH). This fund is composed primarily of the “Buy-in” fees developers may opt to pay in lieu of including affordable units into their market rate developments. TAX INCREMENT FINANCING - Tax Increment Financing has been utilized in many communities throughout the Metro Area and in Greater Minnesota to support the development of new housing, primarily rental housing to reduce rental rates to bring them in line with levels supportable in the market. The use of TIF to address housing needs for very low-income households has not been used extensively and typically does not provide sufficient gap funding to create this type of housing. RENTAL HOUSING LICENSING AND INSPECTION PROGRAM - Edina only recently implemented a rental housing licensing and inspection program. The rental housing licensing and inspection program consists of inspecting all registered rental dwelling units, including single-family homes, townhouses, condominiums, duplexes, multi-family buildings, housing with services dwellings and accessory dwelling units. The goal is to inspect a minimum of one-third of all licensed rental units each year so that all rented units will be inspected at least once every three years. The focus of the rental inspection program is to maintain the quality and stability of rental units, thereby preserving land and building values in the community. Rental housing conditions that adversely affect the life, safety, and general welfare of renters should be attended to for the well-being Appendix I Report from the City of Edina Housing Strategy Task Force | 59 of all residents and the improvement of housing conditions in the community. COME HOME2 EDINA - The City offers a low interest second home mortgage intended to assist families and individuals looking for affordable homeownership in Edina. The maximum loan amount is 25% of the purchase price and not to exceed $60,000. Borrower must spend at least 25% of their gross income on the first mortgage (PITI, etc.) and the program uses the interest rate of the first mortgage. The purchase price of the property cannot exceed $425,000 and the borrower shall not pay less than $1,000 towards down payment, closing costs and/or prepaid expenses. The program has been in place for 20 years. The program is funded through the Edina Housing Foundation. The only area excluded from consideration is the far southwest corner of Edina. REDEVELOPMENT ACTIVITIES - The City has, in the past, provided some assistance to various housing developments through the use of TIF or other funding to support redevelopment. Redevelopment activity has been focused on the Southdale area, the Grandview area and 50th and France commercial district. Each of these areas has experienced increased density and redevelopment with owned and rental housing properties. HOUSING IMPROVEMENT AREA (HIA) PROGRAM - The HIA program is a financial tool for improvements in condominiums and townhomes. This program was established by State law and can be a tool through the municipality to assist condominium and townhome developments that may have significant improvements to make to common elements that they would otherwise be unable to finance. St. Louis Park, Bloomington, Minneapolis, and Hopkins have all funded various HIA owned multi-family projects through this program. We do not believe that Edina has ever funded this type of loan for any owned multi-family property in the city to date. INCLUSIONARY HOUSING POLICY AND ZONING - The City of Edina requires that multi-family properties seeking rezoning or comprehensive plan amendments incorporate affordable housing units at 10% affordable at 50% AMI or 20% affordable at 60% AMI. Most new developments have opted for 10% affordable at 50% AMI or have opted out of including affordable housing units by paying a per unit fee of $100,000 for the required affordable units. Today’s cost of constructing new housing units is upwards of $200,000 per unit or higher. Therefore, requiring a per unit fee of $100,000 is less than the cost to develop new affordable housing units. A total of 98 new affordable units have been developed or approved in the City between 2015 and 2018. The plan has been expanded to include developments on city owned land and projects seeking city financial assistance. The affordability requirement has also been extended from 15 years to 20 years. This is an effort to increase the number of affordable housing units developed and to provide for more affordable housing over the long-term. Innovative Tools Enable Attainable Ownership Options Land use regulations can create new affordable housing tools with less direct financial subsidies. Many cities are applying different models, tailored to their local needs – some of which may exist in Edina today. These approaches can be examined and if they seem useful, they can be tailored to meet the unique circumstances and needs of Edina. Appendix I Report from the City of Edina Housing Strategy Task Force | 60 »Several cities and counties around the country are using different ADU program models tailored to local goals to add affordable housing. »The nonprofit Hacienda Community Development Corporation is developing a program that would build 537-square-foot cottages in the backyards of low- to middle-income homeowners. They would provide affordable housing for low-income tenants for 10 to 15 years. They are specifically targeting lower-income homeowners to receive the ADUs and building in a modest monthly income for the homeowner—maybe $200 out of a $990 per month rent payment. »The City of Portland, partly in response to teardowns and out-of- scale new buildings, recently passed innovative reforms that discourage teardowns and encourage affordable homes. The Residential Infill Project allows more housing units to be built in residential neighborhoods, but only if they follow new limits on size and scale. An innovative aspect of the proposal simultaneously lowers the maximum size of new homes in low-density areas, allows buildings to contain more homes, and lets a building be a little bit larger if it creates either more homes or very affordable homes. It is a building size sliding scale, which encourages affordable smaller homes that fit into the surrounding neighborhoods. »Austin, Texas has an affordable housing bonus which allows more homes on any lot in the city, but only if half of the homes are deeply affordable. »In Denver, Colorado, Silvernest is a service that helps homeowners with extra bedrooms and people looking for a bedroom to connect, create a home-sharing lease, and collect rent. Appendix I Report from the City of Edina Housing Strategy Task Force | 61 Appendix II – Housing Definitions These definitions came from a variety of sources, including the Maxfield report, the Metropolitan Council, Wikipedia, the Urban Land Use Institute, Opticos, and subject specific websites. Accessory Dwelling Unit or Auxiliary Dwelling Unit (ADU) - Secondary suites or in-law apartments are self-contained apartments, cottages, or small residential units, that are located on a property that has a separate main, single-family home, duplex, or other residential unit. They may be inside the primary residents or a smaller secondary structure on the same lot. Affordable Housing - There is no single definition of “affordable housing.” HUD defines a home as affordable if the household that lives in it pays less than 30% of their income for housing. Affordable housing may or may not be subsidized and it may or may not have contractual limits on the rent or sales price. The Metropolitan Council measures affordability using Area Median Income (AMI). Low income affordability is defined at three levels: »Extremely low income (30% of AMI) »Very low income (50% of AMI) »Low income (80% of AMI) Area Median Income - The Area Median Income (AMI) is the midpoint of a region’s income distribution – half of families in a region earn more than the median and half earn less than the median. For housing policy, income thresholds are set relative to the area median income—such as 50% of the area median income—identify households eligible to live in income-restricted housing units and the affordability of housing units to low- income households. Assisted Living - Assisted Living provides a semi-independent living option for people with disabilities or adults who cannot or choose not to live independently. There is no official definition of an Assisted Living Facility, and they provide a wide range of levels of care and diversity of services. It can range from basic board and assistance with household chores, to medication management and bathing assistance and limited Registered Nurse support. They usually include common areas for socializing. Living space may consist of independent apartments, or hotel-like rooms. Attainable Housing - Non-subsidized, for-sale housing that is affordable to households with incomes between 80 and 120 percent of the area median income. Building Permit - Building permits track housing starts and the number of housing units authorized to be built by the local governing authority. Most jurisdictions require building permits for new construction, major renovations, as well as other building improvements. Building permits ensure that all the work meets applicable building and safety rules and is typically required to be completed by a licensed professional. Once the building is complete and meets the inspector’s satisfaction, the jurisdiction will issue a “CO” or “Certificate of Occupancy.” Building permits are a key barometer for the health of the housing market and are often a leading indicator in the rest of the economy as it has a major impact on consumer spending. Appendix II Report from the City of Edina Housing Strategy Task Force | 62 Community Land Trust - A community land trust (CLT) is a nonprofit, community-based organization that works to provide perpetually affordable homeownership opportunities. CLTs hold the land they own “in trust” permanently for the benefit of the community by ensuring that it will always remain affordable for homebuyers. CLTs enter into a long-term, renewable lease with prospective homeowners instead of a traditional sale. Cooperative Housing - A legal ownership arrangement where members own a share of the property (rather than an individual unit) which often includes one or more multi-family buildings or even a group of detached houses owned by the cooperative, and where share owners are members and have rights to occupy one housing unit. Some cooperatives are a “limited equity cooperative.” A limited equity cooperative (LEC) is a cooperative model in which residents commit to resell their share at a price determined by formula—an arrangement that maintains affordability at purchase and over the long term. Cooperative share owners enjoy all the tax advantages of home ownership regarding the deduction of interest and property taxes under State and Federal tax law. Co-Housing - A multi-family building or cluster of single-family homes with separate living space for households that includes communal areas such as gardens, kitchens, gathering spaces. Demand – The total number of households that would potentially move into a proposed new or renovated housing project or community. Components vary and can include, but are not limited to turnover, people living in substandard conditions, rent over-burdened households, income-qualified households, and age of householder. Demand is project specific. Density – Number of units in a given area. Density is typically measured in dwelling units (DU) per acre – the larger the number of units permitted per acre the higher the density; the fewer units permitted results in lower density. Detached housing – a freestanding dwelling unit, most often single- family homes, situated on its own lot. Exclusionary Zoning - After explicit racial zoning that prohibited people of a designated race from living in particular zones was deemed illegal by the United States Supreme Court in 1917, many zoning codes were written to allow only expensive, large homes on large lots. They prohibited less expensive duplexes and small apartment homes. An explicit goal of many exclusionary zoning policies was racial segregation. Now called “exclusionary zoning,” these requirements ensure lower-income people cannot afford the community. Extremely low-income – person or household with incomes below 30% of Area Median Income, adjusted for respective household size. Fair Market Rent – Estimates established by HUD of the Gross Rents needed to obtain modest rental units in acceptable conditions in a specific geographic area. The amount of rental income a given property would command if it were open for leasing at any given moment and/or the amount derived based on market conditions that is needed to pay gross monthly rent at modest rental housing in a given area. This figure is used as a basis for determining the payment standard amount used to calculate the maximum monthly subsidy for families on financially assisted housing. Appendix II Report from the City of Edina Housing Strategy Task Force | 63 Floor Area Ratio (FAR) – Ratio of the floor area of a building to the area of the lot on which the building is located. General Occupancy housing – All housing types, available for purchase or rental by people of any age and ability level. The term is used to differentiate from age-restricted housing for 55+ ‘active adults’ and senior housing. Holding costs (also known as Carrying Costs) – Costs or expenses associated with owning or maintaining a property that an individual or company incurs during a specified period of time. Typical holding costs are Taxes, Insurance, Utilities, Maintenance, Wear and Tear, Municipal Charges, and Interest on income. Household – All persons who occupy a housing unit, including occupants of a single-family, one person living alone, two or more families living together, or any other group of related or unrelated persons who share living arrangements. Household Trends – Changes in the number of households for any particular area over a measurable period of time, which is a function of hew households’ formations, changes in average household size, and met migration. Housing Stock - The total number of houses and apartments in a geographic area. Housing Unit – House, apartment, mobile home, or group of rooms used as a separate living quarters by a single household. Income limits – Maximum household income by a designed geographic area, adjusted for household size and expressed as a percentage of the Area Median Income, for the purpose of establishing an upper limit for eligibility for a specific housing program. Infill - Development of vacant or under-used parcels, refurbishing or reusing existing buildings in areas that are already largely developed. It includes adding a little bit of density, such as with Accessory Dwelling Units or by subdividing lots to build additional single-family homes or duplexes. Land Use Regulation - Laws or the application of laws that limit or restrict how an owner or lessee can use or develop land. Zoning and related governmental approvals to use or develop land are the most common types of land use regulation. Lifecycle housing - Ensuring there is a full range of housing options for all stages of life, from starter homes through continuum of care, so people can live their whole lives in a given community. Low-Income – Person or household with gross household incomes below 80% of Area Median Income, adjusted for household size. [See Appendix III for income levels that qualify.] Market analysis – The study of real estate market conditions for a specific type of property, geographic area or proposed (re) development. Market rent – The rent that an apartment, without rent or income restrictions or rent subsidies, would command in a given area or “Market Area” considering its location, features and amenities. Market study – A comprehensive study of a specific proposal including a review of the housing market in a defined market or geography. Project specific market studies are often used by developers, property managers or government entities to determine the appropriateness of a proposed development, Appendix II Report from the City of Edina Housing Strategy Task Force | 64 whereas market specific market studies are used to determine what house needs, if any, existing within a specific geography. Market rate rental housing – Housing that does not have any income- restrictions. Some properties will have income guidelines, which are minimum annual incomes required in order to reside at the property. Missing Middle - These housing types provide diverse housing options, such as duplexes, fourplexes, cottage courts, and multiplexes. These house-scale buildings fit seamlessly into existing residential neighborhoods and support walkability, locally serving retail, and public transportation options. They can provide solutions along a spectrum of affordability. Some types of missing middle housing are moderately larger than house- scale and can transition between adjacent districts of different levels of scale and intensity. Moderate Income – Person or household with gross household income between 80% and 120% (or 115% in Edina) of the Area Median Income, adjusted for household size. Mother-in-law unit - See Accessory Dwelling Unit. Multi-family – Properties and structures that contain two or more housing units. Naturally Occurring Affordable Housing (NOAH) – NOAH housing units happen to have affordable rents due to age of structure, condition, location, or size. They were not developed or designated with income guidelines or any governmental or philanthropic subsidy. Because their lower costs occur for reasons unrelated to subsidy, they are considered “naturally- occurring” or “unsubsidized affordable” units. Owned, multi-family housing – Two or more attached dwelling units, each unit owned by its occupant(s), including townhomes, condominiums, or cooperatives. Owned, single-family housing – A single home, not attached to other housing units, that is owned by the occupant(s). Pent-up demand – A market in which there is a scarcity of supply and as such, vacancy rates are very low or non-existent. Population Trends – Changes in population levels for a specific geographic area over a specific period– a function of the level of births, deaths, and in/out migration. Racially Restrictive Covenants - Covenants are clauses in property deeds that restrict how a property may be used or who may occupy the property. Racially Restrictive covenants prohibited a buyer of real property from allowing sale, use or occupancy by members of a given race, ethnic origin, and/or religion as specified in the title deed. Such covenants were employed by many real estate developers to “protect” entire subdivisions, with the primary intent to keep “white” neighborhoods “white.” Ninety percent of the housing projects built in the years following World War II were racially restricted by such covenants. Redevelopment – The redesign, rehabilitation, or expansion of existing properties. Senior Housing – The term “senior housing” refers to any housing development that is restricted to people age 55 or older. Today, senior housing includes an entire spectrum of housing alternatives. Senior housing is often classified into four categories based on the level of support services. The four Appendix II Report from the City of Edina Housing Strategy Task Force | 65 categories are: Active Adult, Independent Living, Assisted Living and Memory Care. Single-family home – A dwelling unit, either attached or detached, designed for use by one household and with direct street access. It does not share heating facilities or other essential electrical, mechanical, or building facilities with another dwelling. Single-family attached home – a side by side duplex, semi-detached unit or two-unit townhouse. May look like one large home, two distinct homes, or a townhome. Subsidized housing – Housing that is income-restricted to households earning at or below a specific % of AMI. Some programs may set a specific rent where households may qualify based on 30% or less of AMI. Subsidy – Public entities provide subsidy to housing developments or individuals to achieve a variety of public goals. The most common subsidy programs include: »Low Income Housing Tax Credits (LIHTC) or Section 42 »Tax Increment Financing (TIF) »Housing Choice Vouchers (Section 8) »Other state or Federal rental assistance programs »HUD Project-based Section 8 »HUD Section 202 »HUD Section 811 »HUD Section 236 Teardown - Demolishing a structure for the purpose of building a new structure. Most common in communities that have limited vacant land. Tenant – One who rents real property from another individual or rental company. Transition zone - The area where land use shifts from one type of use to another, generally between areas with commercial buildings and residential buildings. They are characterized by a gradual shift from larger buildings to smaller buildings, which enable the provision of several housing types in a small geographic area. Workforce housing – Housing that is income-restricted to households earning between 80% and 120% AMI. Also referred to as moderate-income housing. Zoning – Classification and regulation of land use by local governments according to use categories (zones); often also includes density designations and limitations Appendix II Report from the City of Edina Housing Strategy Task Force | 66 Appendix III - Housing Affordability and Income Qualifications In 2020, the area median income (AMI) for a household of four in the Twin Cities 7-County metropolitan area was $103,400. Area Median Income is the basis for calculations of housing affordability. Based on the 2020 AMI, affordability levels for rental and ownership housing have been calculated. [https://metrocouncil.org/Communities/Services/Livable-Communities-Grants/Ownership-and-Rent-Affordability-Limits. aspx#History] Based on an Area Median Income (AMI) of $103,400 »80% AMI = $78,500 »60% AMI = $62,040 »50% AMI = $51,700 »30% AMI = $31,000 Rental Housing Affordability Rents include tenant-paid utilities. Tenant-paid utilities are included in the rent value because all housing costs should be included to determine affordability, rather than just rent alone. 2020 Rental Housing # Bedrooms 30% AMI 50% AMI 60% AMI 80% AMI Efficiency $543 $905 $1,086 $1,448 1 Bedroom $582 $970 $1,164 $1,552 2 Bedrooms $697 $1,163 $1,395 $1,860 3 Bedrooms $806 $1,344 $1,612 $2,150 4 Bedroom $900 $1,500 $1,800 $2,400 Appendix III Report from the City of Edina Housing Strategy Task Force | 67 Ownership Housing Affordability For owner-occupied housing, the income limit includes principal, interest, property taxes and home insurance. Assumptions include: »Fixed-interest, 30-year home loan »Interest rate of 3.625% »A 29% housing debt-to-household income ratio »A 3.5% down payment »A property tax rate of 1.25% of the property sales price »Mortgage insurance at 0.85% of unpaid principal »$100/month for hazard insurance 2020 Home Ownership Household Income Level Affordable Home Price 80% AMI ($78,500) $293,500* 60% AMI ($62,040) $228,500 50% AMI ($51,700) $187,500 30% AMI ($31,000) $106,000 *Applying an interest rate of 3.625% on a 30-year fixed-rate home loan for 2020 and other standard mortgage assumptions listed above to the 80% of AMI amount for a family of four ($78,500), yields an affordable purchase price of $293,500. Appendix III Report from the City of Edina Housing Strategy Task Force | 68 Appendix IV - Regional Housing Need and Edina’s Role The Metropolitan Council determines the allocation of affordable housing need for each community in the Twin Cities region. The explanation below is provided by the Metropolitan Council on its website at https://metrocouncil.org/housing/planning/Affordable- Housing-Measures/Allocation-of-Affordable-Housing-NEED.aspx ALLOCATION OF AFFORDABLE HOUSING NEED Planning for the growing need for affordable housing The Council forecasts future affordable housing needs using a regional economic model, then allocates a share of the overall need to all communities expecting sewer-serviced household growth over the next decade. Cities are not required to create enough units to meet their share of the NEED, but they must plan for the possibility of these units by guiding sufficient land at higher residential densities. The NEED number is calculated every 10 years in preparation of a community’s comprehensive plan update—therefore it only applies to the upcoming decade, not the full 30-year scope of their comprehensive plan. How the Metropolitan Council calculates the NEED The methodology for calculating a community’s share of the regional need is revisited and updated every 10-year cycle. The 2021-2030 NEED is proportional to a city’s »overall forecasted growth; »its existing affordable housing stock; and »the ratio of low-wage jobs to low-wage earning residents. Changes in a community’s forecasted growth may result in changes to their NEED number. Housing information—including NEED numbers—for each city and township is available in Local Planning Handbook’s Community Pages The Region’s Total Need for Affordable Housing for 2021- - 2030 is 37,900 units. Edina’s 2021-2030 Allocation of Need is 1,804 units. ~ Metropolitan Council Community Page for Edina at https://lphonline. metc.state.mn.us/CommPage?ctu=2394621&applicant=Edina Appendix IV Report from the City of Edina Housing Strategy Task Force | 69 Appendix V - References and Sources This appendix identifies references in the report and resources considered by the Task Force in preparing its recommendations. Guest speakers at Housing Task Force meetings »Tara Beard, Livable Communities Manager, Metropolitan Council »Mary Bujold, President, Maxfield Research and Consulting »Kevin Ehrman-Solberg, Co-Founder, Mapping Prejudice »Todd Graham, Principal Forecaster, Metropolitan Council »Heidi Lee, Race and Equity Coordinator, City of Edina »Mary Manderfeld, Director of Equity and Enrollment, Edina Public Schools »John Phelan, Economist, Center for the American Experiment »Matt Schroeder, Senior Researcher, Metropolitan Council »Lori Syverson, President, Edina Chamber of Commerce »Cary Teague, Community Development Director, City of Edina Interviews with subject matter experts Members of the Task Force interviewed 19 subject matter experts to gain a deeper understanding of the housing development process, market opportunities and challenges, and the interaction of housing with other systems, such as the school district. Those interviewed included: »developers of affordable, market-rate and senior housing »architects »staff from the Edina school district »housing and development professionals from nearby cities Appendix V Report from the City of Edina Housing Strategy Task Force | 70 Bibliography – Reports, Article and Studies Reviewed “2014 Analysis of Impediments to Fair Housing Choice: Twin Cities Region.” HousingLink, 13 February 2014. “2015-2023 City of Menlo Park: Housing Element.” 1 April 2014. “2019 Minnesota housing Profile.” National Low-Income Housing Coalition. 28 February 2019. “2019 Quality of Life Survey: Edina, Minnesota.” National Research Center, May 2019. https://www.edinamn.gov/DocumentCenter/ View/6564/2019-Quality-of-Life-Survey-PDF “2040 Comprehensive Plan,” City of Edina. “A Roof of One’s Own.” The Economist, 16 January 2020. pp. 10. “Addendum to the 2014 Regional AI.” Fair Housing Implementation Council, May 2017. “Affordable Rental Housing Does Not Reduce Property Values: Evidence from the Twin Cities,” Family Housing Fund, 2014 https:// www.fhfund.org/wp-content/uploads/2019/07/Property-Values- report-2014.pdf “Affordable Rental Housing Does Not Reduce Property Values: Evidence from the Twin Cities”, report from Family Housing Fund, May 2014; https://www.fhfund.org/report/affordable-rental- housing-does-not-reduce-property-values/ “An Update Analysis of the Relationship Between Affordable Family Rental Housing and Home Values in the Twin Cities.” Maxfield Research Inc Reports prepared for the Family Housing Fund. May 2014. Aurand, Andrew and et al. “The Gap: A Shortage of Affordable Homes.” National Low-Income Housing Coalition, March 2018. Badger, Emily, and Kevin Quealy. “Watch 4 Decades of Inequality Drive American Cities Apart.” nytimes.com/2019/12/12/upshot Becker, Carol. “Editorial Counterpoint: So Let’s Talk About What ‘Density’ Really Is. Startribune.com. 17 September 2019. Bower, Susan. State Demographer Presentation on Growth of Racial and Cultural Diversity in Minnesota. 8 February 2019. Britschgi, Christian. “Audit Finds Cost of Building Supportive housing in L.A. Exceeds Median Price of Market-Rate Condo.” Reason.com/2019/10/08/. Buchta, Jim. “In Maple Grove and Plymouth, a New Kind of Housing is Going Up: Rentals.” Startribune.com, 7 September 2019. Callaghan, Peter. “Why Are the Twin Cities So Segregated? A New Report Blames Housing Policies – and Educational Reforms.” Minnpost.com/politics-policy/2015/03/. Cecchini, Alex. “No, Large Apartment Buildings Won’t Devalue Your Home.” https://streets.mn/, 7 February 2016. Charles, J. Brian. “Will Up-Zoning Make Housing More Affordable?” governing.com/templates/gov_print_article?id511415102, July 2019. “City of Bellevue Affordable Housing Strategy.” 5 June 2017. City of Bellevue Comprehensive Plan, pp. 77-97. Appendix V Report from the City of Edina Housing Strategy Task Force | 71 “City of Manhattan Beach: Housing Element 2013-2021.” February 2014. Community Profile for the City of Edina. Metropolitan Council, 2020 https://stats.metc.state.mn.us/profile/detail. aspx?c=02394621#genlanduse “Comprehensive Housing Market Analysis for the City of Edina, Minnesota,” Maxfield Research and Consulting. April 2020. https://www.edinamn.gov/DocumentCenter/View/8488/Edina- Comprehensive-Housing-Market-Analysis-PDF Corporation for Supportive housing. “FAQ’s about Supportive Housing Research: Is Supportive housing Cost Effective?” https:// d155kunxf1aozz.cloudfront.net/wp-content/uploads/2018/06/ Cost-Effectiveness-FAQ.pdf - June 2018. Damiano, Anthony, and Chris Frenier. “Build Baby Build?: Housing Submarkets and the Effects of New Construction on Existing Rents.” Center for Urban and Regional Affairs Working Paper, https://www.tonydamiano.com/project/new-con/bbb-wp.pdf , 16 October 2020. “Data USA: Hennepin County, MN.” Hennepin County 2020. https://datausa.io/profile/geo/hennepin-county-mn/ Desilver, Drew. “The Biggest US Tax Breaks.” Pew Research Center, 6 April 2016. “Finding a Frame for Affordable Housing.” The FrameWorks Institute in Partnership with Enterprise Community Partners, October 2018. Erickson, Amanda. “The Birth of Zoning Codes, a History: Or, How Americans Learned to Legislate Our NIMBY Impulses.” Bloomberg City Lab, 19 June 2012. “The Effect of New Market-Rate Housing Construction on the Low- Income Housing Market,” Upjohn Institute working paper 19-307, https://research.upjohn.org/up_workingpapers/307/ “Exclusionary Zoning.” https://en.wikipedia.org/wiki/Exclusionary_ zoning “Fact of the Week: Projected Mortgage Interest Deduction (MID) Tax Expenditure vs. HUD Budget (2015-2021).” nlihc.org/ resource/, 30 April 2019. Family Housing Fund. “Housing and Economic Growth in the Twin Cities Region.” May 2019. Fischer, Will, and Barbara Sard. “Chart Book: Federal Housing Spending is Poorly Matched to Need: Tilt Towards Well-Off Homeowners Leaves Struggling Low-Income Renters Without Help.” Center on Budget and Policy Priorities, 8 March 2017. Florida, Richard. “The US Spends Far More on Homeowner Subsidies Than it Does on Affordable Housing.” citylab.com/ equity/2015/04, 17 April 2015. Gardner, Spencer. “A History of Zoning in Three Acts – Part 1.” Strong Towns, 28 June 2017. Gladwell, Malcolm. “Million-Dollar Murray: Why Problems Like Homelessness May Be Easier to Solve Than to Manage.” The New Yorker, 12 February 2006. “Great Southdale District Plan.” 18 December2018. Hennepin County housing and income data and information. https://datausa.io/profile/geo/hennepin-county-mn#housing Appendix V Report from the City of Edina Housing Strategy Task Force | 72 Herriges, Daniel. “When Apartment Dwellers Subsidize Suburban Homeowners.” Strongtowns.org/journal/2020/4/17. Accessed 17 April 2020. “Housing and Economic Growth in the Twin Cities Region.” Family Housing Fund. May 2019. “Housing is at the Root of Many of the Rich World’s Problems” The Economist, 16 January 2020. “Housing: Just Build. The Economy and the People Both Will Benefit.” The Economist, 17 January 2020. “Housing Succession Plan for Edina’s Future.” Edina Housing Task Force, October 2006. “How Housing Became the World’s Biggest Asset Class.” The Economist, 16 January 2020. “Interview: Enrico Moretti.” Econ Focus, First Quarter 2019. Pp. 18-23. Kaul, Greta. “Why It’s So Expensive to Build a House in Minnesota Right Now,” Minn Post, 3 May 2019. https://www.minnpost.com/ economy/2019/05/why-its-so-expensive-to-build-a-house-in- minnesota-right-now/ “Key Trends in Housing.” Minnesota Housing, January 2018. Margolies, Jane. “All-Electric’ Movement Picks Up Speed, Catching Some Off Guard.” https://www.nytimes.com/2020/02/04/ business/all-electric-green-development.html , 9 February 2020. Mast, Evan, and Brian Asquith. “New Apartment Buildings in Low-income Areas Decrease Rents.”75th W.E. Upjohn Institute for Employment Research, https://www.upjohn.org/research- highlights/new-apartment-buildings-low-income-areas-decrease- nearby-rents , 19 December2019. “Millenials and Silent Generation Drive Desire for Walkable Communities, Say Realtors.” National Association of Realtors. December19, 2017. https://www.nar.realtor/sites/default/ files/documents/2017-community-preferences-survey-press- release-12-19-2017.pdf “Market Watch: Hennepin County – Trends in the Unsubsidized Multifamily Rental Market.” Minnesota Housing Partnership, October 2019. Maxfield Housing Market Study – See “Comprehensive Housing Market Analysis for the City of Edina, Minnesota,” Maxfield Research and Consulting, April 2020. Metropolitan Council Allocation of Affordable Housing Need, https://metrocouncil.org/Housing/Planning/Affordable-Housing- Measures/Allocation-of-Affordable-Housing-NEED.aspx “Missing Middle Housing: Responding to the Demand for Walkable Urban Living.” Presentation by Opticos Design, Inc., 2015. “More Places to Call Home: Investing in Minnesota’s Future.” Report of the Governor’s Task Force on Housing, August. 2018. National Association of Realtors. “Workforce Housing Overview,” https://www.nar.realtor/home_from_work.nsf/files/PG%20 Module%201.pdf/$FILE/PG%20Module%201.pdf Norton, Gabriela. “State of the State’s Housing 2019: Biennial Report of the Minnesota Housing Partnership.” Minnesota Housing Partnership, 2019. Appendix V Report from the City of Edina Housing Strategy Task Force | 73 Novogradac, Michael. “Once Again, Homeownership Gets Far More Tax Subsidies Than Rental Housing.” Novogradac Journal of Tax Credits, Volume IX, Issue VII, July 2018. Phaneuf, Taryn. “Homebuilders Want to Tackle Affordability by Cutting Building Permit Fees. City Leaders Say it Won’t Help.” Bizjournals.com/twincities/news/2019/09/13 . “Piecing it Together: A Framing Playbook for Affordable Housing Advocates.” The FrameWorks Institute in Partnership with Enterprise Community Partners, 2018. Prevost, Lisa. “Seven Ways Telecommuting Has Changed Real Estate.” nytimes.com/2019/09/20/realestate/. “Race & Equity Initiative: Final Report & Recommendations Version 2.0.” Edina Race and Equity Task Force, 26 June 2018. “Rebuilding.” The Economist, 16 January 2020. pp. 12. “San Francisco Housing Needs and Trends Report: Executive Summary.” San Francisco Planning, July 2018. Schuetz, Jenny. “Under US Housing Policies, Homeowners Mostly Win, While Renters Mostly Lose.” brookings.edu/research/, 10 July 2018. Schuetz, Jenny. “Who’s to Blame for High Housing Costs? It’s More Complicated Than You Think.” Brookings.edu/research/. 17 January 2020. Silver, Christopher. “The Racial Origins of Zoning in American Cities.” From: Manning Thomas, June and Marsha Ritzdorf eds. Urban Planning and the African American Community: In the Shadows. Thousand Oaks, CA: Sage Publications, 1997. https:// us.sagepub.com/en-us/nam/node/41442/print Silver, Christopher. “Zoning in the 20th-Century American Cities.” Oxford Research Encyclopedias, https://oxfordre.com/ americanhistory/view/10.1093/acrefore/9780199329175.001.0001/ acrefore-9780199329175-e-209 . Taylor, Lauren. “Housing and Health: An Overview of The Literature.” 7 June 2018. https://www.healthaffairs.org/do/ 10.1377/ hpb20180313.396577/full/ “The Effect of New Market-Rate Housing Construction on the Low- Income Housing Market.” Upjohn Institute working paper, https:// research.upjohn.org/up_workingpapers/307/ , 1 July 2019, pp. 19- 307. Thomas, Julie Manning, and Marsha Ritzdorf. Urban Planning and the African American Community: In The Shadows. December 1996 https://us.sagepub.com/en-us/nam/node/41442/print “Tool: By-Right Development: The Housing Affordability Toolkit.” pp. 63-73. National Multifamily Housing Council. Unmacht, David, Patricia Newman, James Hovland. Bradley Peterson, and Mary McComber. “Counterpoint: Developers’ Studies Misrepresent Role of Fees in Housing Costs.” StarTribune, 23 September 2019. “Vision Edina: City of Edina Strategic Vision and Framework.” City of Edina. May 2015. Wallace, Jennifer Breheny. “Students in High-Achieving Schools Are Now Names an ‘At-Risk’ Group, Study Says.” washingtonpost.com/ lifestyle/2019/09/26. Appendix V Report from the City of Edina Housing Strategy Task Force | 74 “Why Are the Twin Cities So Segregated?” Institute on Metropolitan Opportunity, University of Minnesota Law School. February 2015. Wiener, Scott, and Daniel Kammen. “Why Housing Policy Is Climate Policy.” nytimes.com/2019/03/25/opinion. “Working Doesn’t Always Pay for a Home.” Family Housing Fund, October 2018. Young, Cheryl. “There Doesn’t Go the Neighborhood: Low-Income Housing Has No Impact on Nearby Home Values.” Trulia, 16 November 2016. “Zoning in the United States.” Wikipedia, https://en.wikipedia.org/ wiki/Zoning_in_the_United_States . “Zoning Laws.” The First Amendment Encyclopedia. September 2017. https://oxfordre.com/americanhistory/view/10.1093/ acrefore/9780199329175.001.0001/acrefore-9780199329175-e-209 Appendix V Report from the City of Edina Housing Strategy Task Force | 75 Appendix VI - Responses to the Report 1: From the Human Rights and Relations Commission Email message from Cat Beringer, Chair of the Edina Human Rights and Relations Commission From: Cat Beringer <cat.beringer@gmail.com> Sent: Thursday, December 3, 2020 4:53 PM To: Stephanie Hawkinson <SHawkinson@EdinaMN.gov>; Heidi Lee <HLee@EdinaMN.gov>; Mark Felton <markfeltoncpa@ feltonforensics.com> Subject: Housing Task Force Report comments Hi Heidi and Stephanie, I really appreciated how much depth went into compiling this report, including Edina’s history. However, I do have some concerns about a few phrases in the document. 1. I would like to suggest that the word unfounded be added to this sentence: p. 30 Citing unfounded concerns about crime and property value declines from white buyers, some housing developers added clauses to property deeds that included racially restrictive covenants. I think it’s important to state that these concerns about crime and property values were unfounded and not based in fact. These “concerns about crime and property values” were unfounded complaints used to conceal the true purpose of these covenants. The segregatory effects of these housing policies were not a fluke, they were the point. To allow this sentence to stand is to be complicit with these housing policies. TPT’s Jim Crow of the North. https://www.tpt.org/minnesota-experience/video/jim-crow-of-the- north-stijws/ and this article https://www.npr.org/2017/05/03/526655831/a-forgotten-history- of-how-the-u-s-government-segregated-america https://www.nytimes.com/2017/08/24/upshot/how-redlinings- racist-effects-lasted-for-decades.html 2. p.31 Understanding the history of exclusionary housing policy helps people recognize housing regulations that may reinforce patterns of income exclusion. It is a matter of personal opinion whether active zoning measures should be taken to reduce the income segregation created by past housing policies. The two sentences above seem to be in direct contradiction with each other. The second sentence should maybe be removed or rephrased. Otherwise, it gives the impression that the city is okay with income segregation in housing. The phrase “personal opinion” especially Appendix VI Report from the City of Edina Housing Strategy Task Force | 76 seems to imply a certain level of absence of culpability, as the entire point is that housing policy helped to create the problem, and it cannot be fixed without further housing policy. 3. I would like to reiterate my concerns about affordable housing that can accomodate families. Although, I think it is too late to be added to the discussion about housing for this report, I would like the city to be more aware of the lack of affordable housing beyond studio, one bedroom, or two bedroom apartments. I think the commonly used industry term “multifamily housing” is misleading when you are describing households and not families. And, although a two bedroom apartment could conceivably accomodate a family of four, leasing agreements may not allow a family of that size. Overall, I really appreciate the comprehensive work of the task force and their attempt to cover such a broad range of topics while trying to give voice to many different perspectives. Thanks, Cat Beringer Chair HRRC Reply message from Mark Felton From: Mark Felton <markfeltoncpa@feltonforensics.com> Sent: Thursday, December 3, 2020 6:55:23 PM To: Cat Beringer <cat.beringer@gmail.com> Cc: Stephanie Hawkinson <SHawkinson@EdinaMN.gov>; Heidi Lee <HLee@EdinaMN.gov> Subject: Re: Housing Task Force Report comments Hello Everyone: I support and concur with Chair Beringer’s comments and concerns. I am very comfortable letting her letter represent my concerns as a member of the HRRC and as an Edina resident. Best regards, Mark Felton Appendix VI Report from the City of Edina Housing Strategy Task Force | 77 2: From the Edina Housing Foundation Appendix VI Report from the City of Edina Housing Strategy Task Force | 78 Appendix VI For more information about City of Edina housing initiatives, please contact the Planning Department, 952-826-0369. Planning Department Edina City Hall 4801 W. 50th St. Edina, MN 55424 Date: December 10, 2020 Agenda Item #: VII.B. To:Chair & Commissioners of the Edina HRA Item Type: Report / Recommendation From:Stephanie Hawkinson, Affordable Housing Development Manager Item Activity: Subject:Affordable Housing Policy Compliance Report Action Edina Housing and Redevelopment Authority Established 1974 CITY OF EDINA HOUSING & REDEVELOPMENT AUTHORITY 4801 West 50th Street Edina, MN 55424 www.edinamn.gov ACTION REQUESTED: Authorize clarification in the Affordable Housing Policy Guide that the compliance period commences once all committed affordable housing units are delivered to income eligible tenants as confirmed by the compliance consultant. INTRODUCTION: The Affordable Housing Policy for new multifamily residential developments has been in place since 2015. The intent was that affordable units would be included in market rate developments and be rented to income qualified tenants. The affordable units would remain affordable for a predetermined period of time, which for some was 15-years and for new developments is now 20-years. Affordable Housing Connections (AHC) was hired as a compliance consultant to confirm and verify that the affordable units are affordable and being rented to income eligible tenants. AHC met with the management staff at Avidor, Aurora, Aria, and Nolan Mains. Only the Aurora is in compliance as presented in AHC's first compliance report. ATTACHMENTS: Description Staff Report Affordable Housing Connection's Compliance Summary Compliance Letters to Owners Compliance spreadsheet December 12, 2020 Chair and Members of the Edina Housing and Redevelopment Authority Stephanie Hawkinson, Affordable Housing Development Manager Affordable Housing Compliance Report Information / Background: In 2015 the City adopted an Affordable Housing Policy that required new multifamily housing developments asking for a zoning amendment or financial support to either include affordable units in their development or pay a fee in lieu. Four market rate developments that included affordable units have been completed with the affordable units fully leased: Building Owner Management Company Aria Doran Company Doran Management Aurora Aurora Investments Ebenezer Avidor CRP/TCC AA II Edina, LLC Allegro Management Company Nolan Mains Edina Market Street, LLC Saturday Properties In December 2018, the City entered into a service contract with Affordable Housing Connections (AHC) to monitor these four buildings and all new market rate developments that contain affordable units. The compliance monitoring is to confirm and verify the following: 1. The approved number of units have rents that are deemed affordable per the agreement made with the City (with rents at the 50% and/or 60% Area Median Income levels); and 2. The affordable units are being rented to households who are income qualified. STAFF REPORT Page 2 Affordability Requirement Income Limits Rent Limits 50% Area Median Income 1 person – $36,200 2 people - $41,400 3 people - $46,550 Studio – $905 1 Bedroom – $970 2 Bedroom - $1,163 60% Area Median Income 1 person – $43,440 2 people - $49,680 3 people - $55,860 Studio – $1,086 1 Bedroom – $1,164 2 Bedroom - $1,396 Compliance Results Only Aurora is in compliance. Currently three of the four developments comply as affordable places to live and only one complies with serving income qualified tenants. Letters of non-compliance were sent to the four owners in early October. Aurora certified their compliance in Mid-November with confirmation on December3. The reasons for non-compliance stem more from lack of providing the necessary paperwork to verify income than from disregard of the policy. AHC has informed each Property Manager of their status and what needs to occur to become compliant by December 31, 2020. Copies of these letters are included with this report. • Avidor – Rents comply. Proper paperwork demonstrating that tenants meet income qualifications is not sufficient. • Aurora – Incomes and rents comply. • Nolan Mains – Rents comply. Only 3 of the 10 tenant files had sufficient information to determine income compliance. • Aria – Tenants are paying the allowable rents, but then are charged utilities and other fees in addition to rent which makes them non-compliant. The rent cap must include all required fees and a utility allowance otherwise the units are deemed not affordable. Furthermore, tenant files lack sufficient information to determine income eligibility. AHC and Staff believe that with additional guidance these four properties will come into compliance. The Owners/Property Manager have until December 31, 2020 to correct issues of non-compliance. Every three years AHC will review the tenant files. In the interim, AHC will review new tenant files and the Property Managers will self-certify. Compliance Expectations With these early developments there were little written expectations of how the properties would deliver the affordable units and how the City would confirm that the affordable units were serving tenants who needed them. These initial four buildings were approved prior to the development of the Affordable Housing Policy Guide (“Guide”) which defines program requirements and how they are achieved. Each development also has a unique regulatory agreement, making compliance monitoring a challenge. For Aurora, the requirement to provide affordable units was only stated in the Resolution. With each STAFF REPORT Page 3 successive development, the requirements have become increasing defined in the Development Agreements with the Guide included as an attachment. In 2019 and again in the beginning of 2020 AHC staff met with Property Management staff or owners to review expectations and requirements. As renting affordable units to income qualified tenants requires very different paperwork and oversight than leasing Market Rate units, AHC spent significant time educating property management staff. Interactions took place through in person meetings, WebEx meetings, calls, and emails. Options for Corrective Actions • Only one development, Nolan Mains, received financial assistance from the City and HRA so they are required to comply prior to receiving any TIF payment. • The City could consider having the 15 year/20-year compliance period commence once developments are in compliance. • The City could require the building owners to send their property management staff to be trained on affordable housing requirements at their cost. We cannot expect AHC to keep training all the new property managers as they turn-over. Recommendations for Future Developments • Clearly define the affordability requirements in the Development Agreement. • Require Property Managers to seek training from AHC. • Have the compliance period commence once all affordable units are in compliance and reflect this in the Affordable Housing Policy Guide. Affordable Housing Connections, Inc. 400 Selby Avenue, Suite B Saint Paul, MN 55102 Office: 651-222-8319 Fax: 651-222-3755 | www.ahcinc.net December 2, 2020 Program Year 2019 Affordable Housing Program (AHP) Rental Monitoring Summary The City of Edina contracts with Affordable Housing Connections, Inc. (AHC) to provide ongoing compliance monitoring of its AHP funded rental projects. The current contract between the City and AHC runs through December 2022. This rental monitoring report summarizes the of reviews conducted for program year 2019. PY2019 is Edina’s first full contract year that contained program monitoring. Monitoring was completed in calendar year 2020. AHC’s monitoring involved site visits, review of program progress, audits of tenant files and beneficiary data, staff interviews and meetings, and follow up letters describing the results. Most of the programs were operating within the program and contract requirements. AHC provided guidance to several organizations related to program structure, performance measurement, and customer service care surrounding affordable and fair housing. Forty-six tenant files were reviewed against the novel compliance program shaped within the past year. After monitoring and evaluation of the forty-six tenant files, it appears that program requirements were implemented at each development. The overall outcome is not necessarily free of deficiencies; the evaluation process uses the review findings to assess a project’s compliance. The conclusions from the evaluations at each location can be used to learn about the overall impact and/or sustained changes produced by the AHP. During calendar year 2020, AHC drafted a total of eight reports for AHP compliance. The AHP Annual Compliance Report is consolidated housing data of annual information that; collects move in/move out, income and rent information of each household residing in an affordable dwelling unit (ADU) at an AHP assisted property. AHC also utilizes a Tenant File Review (TFR) report for each individual ADU within the portfolio. These 46 TFR reports as well as the eight AHP Annual Reports, outline the collection of both detailed and generalized data to report any “at-risk” projects. While some reports may detail deficiencies found during the review the overall program objective is being met. The goal to create and preserve affordable housing for people who work, stay and move to Edina is evident. Non-Compliance labels within the information being provided, for the most part can be resolved training and technical assistance. Due to Covid-19, many planned site visits have been postponed until it is safe for all parties involved to gather, mainly management and the residents. Willing property participants Affordable Housing Connections, Inc. 400 Selby Avenue, Suite B Saint Paul, MN 55102 Office: 651-222-8319 Fax: 651-222-3755 | www.ahcinc.net received an introductory visit from AHC in early January 2020. AHC conducted many virtual visits which included further education of the AHP; understanding and use of the AHP guide, AHP forms along with detail functions, and desktop tools to encourage individual program growth. The management turnover within the AHP communities posed and continued to pose difficulties with dissemination of program knowledge. Articulation between management staff and property staff to potential tenants may affect maintenance of ongoing compliance. It is encouraged that continuous program development and education at the site level remains a goal. The attached spreadsheet provides more detail for each AHP assisted project in Edina. Affordable Housing Connections, Inc. 400 Selby Avenue, Suite B Saint Paul, MN 55102 Office: 651-222-8319 Fax: 651-222-3755 | www.ahcinc.net 12/1/2020 Kelly Doran 7803 Glenroy Road Suite 200 Bloomington, MN. 55439 RE: PY2019 Compliance Review Aria - Edina Correction Period Deadline: December 31, 2020 Dear Mr. Doran: Affordable Housing Connections (AHC) as the monitoring agent for Edina, recently completed a compliance review for this project. Please read this letter carefully to understand what actions must be taken by the Owner in response to any apparent findings of noncompliance. The date of this letter provides notice of the correction period established for Owner to respond to any potential reportable event(s) of noncompliance. Failure to respond by the due date or to request in writing an extension “for reasonable cause” prior to the response date may result in determination of Not In Good Standing by the City of Edina. AHC’s review was based on a total of 10 current tenant files and 1 past tenant file, for compliance with the Affordable Housing Program. These issues have not yet been reported to the City of Edina. All “Sufficient But Imperfect” (SBI) issues noted during the tenant file review may not be included in this review. The final report to the City of Edina and will include the advisory “SBI” comments, if applicable. During the tenant file review, a creation of your PY2019 AHP Annual Report was created on your behalf. For report understanding and training, the report has been included for your reference. Subsequent Annual Project Reporting will be the responsibility of the owner on an annual basis starting with PY2020. If you disagree with the report or any of the data collected within, please let us know in a written response within 30-days. Tenant File Review: Please see the Tenant File Review Forms (TFR) identifying potential noncompliance. Please respond ONLY to FAIL/Non-Compliance (NC) or UTD items. Although you must address “SBI” items and make corrections to the tenant file or to your processes, do not submit those corrections to AHC. Tenant file information was provided to AHC via electronic upload on October 26, 2020. Use of the Calculation Worksheet is necessary within each resident certification to better demonstrate income eligibility. The Calculation Worksheet is used to recap and display the total Affordable Housing Connections, Inc. 400 Selby Avenue, Suite B Saint Paul, MN 55102 Office: 651-222-8319 Fax: 651-222-3755 | www.ahcinc.net gross income and income from assets, from all household members living within the unit. Management did in fact submit calculation worksheets for each tenant file however the document wasn’t accurate in many instances.  Education surrounding income and asset calculation(s) and source verification is suggested. The attempt to comply with AHP’s rules and regulations was present within the tenant file submission, but further knowledge regarding affordable housing may be suggested. Overall Program Findings:  Eligibility Determination: o Resident files lack enough information to make determination of income eligibility. Several certifications exhibited incomplete or contradicting information entered within the application. This section is extremely vital to determining household eligibility. o After the tenant completes the Household Questionnaire/Application, the owner/agent must have all income verified by obtaining source documentation (award letters, offers of employment, W2’s, check stubs (not paycheck), bank statements, investment records, etc.) or by a third-party (public agency, employer, financial institution). o If total cash value of household assets is less than $50,000, assets can be self-certified using the Under $50,000 Certification at Move In. Assets exceeding $50,000 must be third-party source verified. Confusion and misunderstanding surrounding the use of the form is present in nearly every file. In many tenant certifications, the tenant reported “no assets” however contradicting information such as a direct deposit into a checking account is visible on a paystub, for example, will need addressing.  Application for Residency: o Households applying for housing at Aria appear to be collected using an online software platform. Because of fair housing laws, the application must reflect the actual date and time of submission. It was reported the property uses YARDI software therefore best practice suggestion would be to find an alternative way to document the application information that includes the necessary date and time stamp.  Annual Recertifications: o The owner/agent must verify and certify tenant income eligibility and student status at move in and recertify at least annually thereafter. At initial move in, or when first being determined eligible for an ADU and in every 3rd year of the affordability period (not tenancy), household composition, income and income from assets must be verified via third-party verification or other forms of supporting documentation and kept in the tenant’s file. In other years, tenants must, at a minimum, self-certify to their anticipated income (including income from assets), family size, and composition. o Because AHC is unable to determine initial income eligibility at this time, it is recommended that owner/agent continues to verify all income and income from assets at the household’s anniversary until told otherwise. Historical recreation of income and assets is not easy and can be very frustrating and cumbersome for residents and management teams.  Gross Rent – Use of Utility Allowances: o The AHP requires that an allowance for tenant paid utilities be considered as a housing cost to the tenant and be factored in when determining rent for an ADU. Households at Aria are responsible for paying all utilities as laid out within the Apartment Lease Contract. The HRA approved the use of Metro HRA’s Utility Allowance Schedule (effective 1/1/2019 and Affordable Housing Connections, Inc. 400 Selby Avenue, Suite B Saint Paul, MN 55102 Office: 651-222-8319 Fax: 651-222-3755 | www.ahcinc.net amended annually) as the document to use to determine an ADU’s utility allowance. Utility allowance schedules are usually updated annually. It is the owner’s/agent’s responsibility to obtain an updated utility allowance and retain it in the property records. o Each ADU is subject to maximum allowable rents based on bedroom size for the area in which the property is located. These limits represent the maximum that owners/agents can charge for rent, including an allowance for tenant paid utilities, and other non-optional charges (i.e. parking, required renter’s insurance, etc.). Use of Minnesota Housing published limits, specifically Table L: appears to be in use however oversight of non-optional charges may have taken place. o All households are at the maximum rent limit for the appropriate bedroom size. Once the non-optional charges (Utility $20 and Trash $15) are included and the gross rent is accurate, the rent being charged to each tenant is over the published limits. o No utility allowance schedule was included with tenant files or AHP Compliance Monitoring Form. Owner/Management agent needs to implement use of the applicable allowances.  One-time nonrefundable Fees: o Management and AHC agent discussed the $150 administrative fee being charged to tenants and outlined within the Apartment Lease Contract. The AHP Guide outlines on page 7, fees considered reasonable and customary may be charged, such as application fee, if such fees are customary for rental housing in the neighborhood however an eligible tenant cannot be charged a fee for the owner or manager’s work involved in completing the additional forms or documentation required for the AHP, such as the Resident Income Certification. o Management has since then off set each $150 one-time nonrefundable fee with a credit therefore the individual TFRs do not reflect the file findings. o Review of leasing policies and procedures are suggested. Overall, the tenant files were extremely organized and easy to review. Management has been a pleasure to work with. Further program knowledge is needed but there are no concerns surrounding the site team’s ability to learn. Review of the Affordable Housing Program Guide found on the City of Edina’s website is recommended. Should training specific to AHP become available, notice to owner/management will be sent. Questions can be sent to Amanda Hitzeman at ahitzeman@ahcinc.net. Again, thank you for your cooperation. Sincerely, Amanda Hitzeman Manager of Strategic Initiatives and Training cc: Dawn Kloeckner, Property Manager Aria Jody McGuire, Senior Director of Operations, Doran Management Affordable Housing Connections, Inc. 400 Selby Avenue, Suite B Saint Paul, MN 55102 Office: 651-222-8319 Fax: 651-222-3755 | www.ahcinc.net 10/16/2020 Todd Willett 6500 France Avenue Edina, MN. 55435 RE: PY2019 Compliance Review Aurora on France Correction Period Deadline: 11/16/2020 Dear Mr. Willett: Affordable Housing Connections (AHC) as the monitoring agent for Edina, recently completed a compliance Review for this project. Please read this letter carefully to understand what actions must be taken by the Owner in response to any apparent findings of noncompliance. The date of this letter provides notice of the correction period established for Owner to respond to any potential reportable event(s) of noncompliance. Failure to respond by the due date or to request in writing an extension “for reasonable cause” prior to the response date may result in determination of Not In Good Standing by the City of Edina. AHC’s review was based on a total of 7, of the necessary 10, tenant files for compliance with the Affordable Housing Program. These issues have not yet been reported to the City of Edina. All “Sufficient But Imperfect” (SBI) issues noted during the tenant file review may not be included in this review. The final report to the City of Edina and will include the advisory “SBI” comments, if applicable. During the tenant file review, a creation of your PY2019 Annual Project Report was created on your behalf. For report understanding and training, the report has been included for your reference. Subsequent Annual Project Reporting will be the responsibility of the owner. If you disagree with the report or any of the data collected within, please let us know in a written response within 30-days. Tenant File Review:  Please see the Tenant File Review Forms identifying potential noncompliance. Please respond ONLY to FAIL or UTD items. Although you must address “SBI” items and make corrections to the tenant file or to your processes, do not submit those corrections to AHC.  Tenant file information was provided to AHC via electronic upload on two separate occasions. o Submission 1: September 14, 2020 o Submission 2: October 8, 2020 Overall Program Findings:  Lease Agreement: Affordable Housing Connections, Inc. 400 Selby Avenue, Suite B Saint Paul, MN 55102 Office: 651-222-8319 Fax: 651-222-3755 | www.ahcinc.net o The agreement lacks the lease term. Initial leases for ADUs must be for 12 months unless another term is agreed to mutually by owner/agent and tenant. o Missing language regarding the owner/agent’s right to adjust tenant rents in accordance with the AHP rent limits and fails to outline procedures in the event a tenant’s income increases above the income limits of the AHP. o Absence of provisions that the owner/agent retains the right to recertify the tenant’s income and household composition on an annual basis. The tenant’s failure to cooperate with the annual recertification constitutes a violation of the lease agreement. o Missing Resident Notification Letter, Good Cause Rider or proper verbiage within the lease illustrating the owner/agent inability to evict or terminate resident without good cause. o Initial lease agreements do not have AHP Lease Addendum. o Minnesota statute (504B.177 Late Fees) indicates the landlord of a residential building may not charge a late fee if the rent is paid after the due date, unless the tenant and landlord have agreed in writing that a late fee may be imposed. In no case may the late fee exceed eight percent of the overdue rent payment. o Legal obligation to comply with statutory requirements found in Section 601 of the Violence Against Women Reauthorization Act of 20163 (VAWA). Resident files deficient VAWA Lease Addendum.  Eligibility Determination: o A fully completed Household Questionnaire is critical to accurate determination of eligibility. In many resident files, the income/asset portion of the application was crossed out and if not crossed out, the information was not clear or insufficient in aiding in determining applicant income eligibility. o Resident files lack enough information to make determination of income eligibility. AHC recommended use of the Rental Assistance Eligibility Verification to authenticate income eligibility with one document however management was unable to collect the completed verification.  Management will need to proceed with resident source documentation(s) to confirm compliance of the Affordable Housing Program. The Under $50,000 Asset Form is acceptable at initial certification.  Marketing: o No marketing material submitted. Unable to determine use of fair housing marketing strategies.  Demographic Information: o All heads-of-household that have been approved for occupancy in units associated with Affordable Housing Program must complete the Demographic Information Form. Again, thank you for your cooperation. Sincerely, Amanda Hitzeman Manager of Strategic Initiatives and Training cc: Barbara Mekenye, Ebenezer; Lynn Thoresen,Ebenezer; Garrett Bothun, Ebenezer Affordable Housing Connections, Inc. 400 Selby Avenue, Suite B Saint Paul, MN 55102 Office: 651-222-8319 Fax: 651-222-3755 | www.ahcinc.net 10/20/2020 Jamie Lemon 700 Commerce Drive, Suite 455 Oak Brook, IL. 60523 RE: PY2019 Compliance Review Avidor - Edina Correction Period Deadline: 11/21/2020 Dear Mr. Lemon: Affordable Housing Connections (AHC) as the monitoring agent for Edina, recently completed a compliance Review for this project. Please read this letter carefully to understand what actions must be taken by the Owner in response to any apparent findings of noncompliance. The date of this letter provides notice of the correction period established for Owner to respond to any potential reportable event(s) of noncompliance. Failure to respond by the due date or to request in writing an extension “for reasonable cause” prior to the response date may result in determination of Not In Good Standing by the City of Edina. AHC’s review was based on a total of 18 tenant files for compliance with the Affordable Housing Program. These issues have not yet been reported to the City of Edina. All “Sufficient But Imperfect” (SBI) issues noted during the tenant file review may not be included in this review. The final report to the City of Edina and will include the advisory “SBI” comments, if applicable. During the tenant file review, a creation of your PY2019 Annual Project Report was created on your behalf. For report understanding and training, the report has been included for your reference. Subsequent Annual Project Reporting will be the responsibility of the owner on an annual basis. If you disagree with the report or any of the data collected within, please let us know in a written response within 30-days. Tenant File Review:  Please see the Tenant File Review Forms identifying potential noncompliance. Please respond ONLY to FAIL/Non-Compliance (NC) or UTD items. Although you must address “SBI” items and make corrections to the tenant file or to your processes, do not submit those corrections to AHC.  Tenant file information was provided to AHC via electronic upload on two separate occasions. o Submission 1: August 18, 2020 o Submission 2: October 9, 2020  Use of the Calculation Worksheet is necessary within each resident certification to better demonstrate income eligibility. The Calculation Worksheet is used to recap and display the total Affordable Housing Connections, Inc. 400 Selby Avenue, Suite B Saint Paul, MN 55102 Office: 651-222-8319 Fax: 651-222-3755 | www.ahcinc.net gross income from all household members living within the unit. An email was sent to Pauline Marell-Speranza today, (10/20/20) illustrating use of the calculation worksheet within one of your own resident tenant files. Comments were made within the Example File displaying how and why to use. Overall Program Findings:  Eligibility Determination: o Resident files lack enough information to make determination of income eligibility. Several certifications exhibited incomplete or contradicting information entered within the application. This section is extremely vital to determining household eligibility. o After the tenant completes the Household Questionnaire/Application, the owner/agent must have all income verified by obtaining source documentation (award letters, offers of employment, W2’s, check stubs (not paycheck), bank statements, investment records, etc.) or by a third-party (public agency, employer, financial institution). Remember, If total cash value of household assets is less than $50,000, assets can be self-certified using the Under $50,000 Certification. Assets exceeding $50,000 must be third-party verified.  Application for Residency: o Households applying for the Affordable Housing Program are completing two different/separate applications for occupancy. Best practice suggestion would be use of only one application to capture all necessary information. Use of only one application will save on time for both the applicant and your leasing team.  Annual Recertifications: o The owner/agent must verify and certify tenant income eligibility and student status at move in and recertify at least annually thereafter. At initial move in, or when first being determined eligible for an ADU and in every 3rd year of the affordability period (not tenancy), household composition, income and income from assets must be verified via third-party verification or other forms of supporting documentation and kept in the tenant’s file. In other years, tenants must, at a minimum, self-certify to their anticipated income (including income from assets), family size, and composition. o Because AHC is unable to determine initial income eligibility at this time, it is recommended that owner/agent continues to verify all income and income from assets at the household’s anniversary until told otherwise. Historical recreation of income and assets is not easy and can be very frustrating and cumbersome for residents and management teams. Again, thank you for your cooperation. Sincerely, Amanda Hitzeman Manager of Strategic Initiatives and Training cc: Pauline Marell-Speranza, Allegro Management Company Affordable Housing Connections, Inc. 400 Selby Avenue, Suite B Saint Paul, MN 55102 Office: 651-222-8319 Fax: 651-222-3755 | www.ahcinc.net 12/2/2020 Mark Laverty 5100 Eden Ave., Suite #200 Edina, MN. 55424 RE: PY2019 Compliance Review Nolan Mains - Edina Correction Period Deadline: December 31, 2020 Dear Mr. Laverty: Affordable Housing Connections (AHC) as the monitoring agent for Edina, recently completed a compliance review for this project. Please read this letter carefully to understand what actions must be taken by the Owner in response to any apparent findings of noncompliance. The date of this letter provides notice of the correction period established for Owner to respond to any potential reportable event(s) of noncompliance. Failure to respond by the due date or to request in writing an extension “for reasonable cause” prior to the response date may result in determination of Not In Good Standing by the City of Edina. AHC’s review was based on a total of 10 tenant files, for compliance with the Affordable Housing Program. These issues have not yet been reported to the City of Edina. All “Sufficient But Imperfect” (SBI) issues noted during the tenant file review may not be included in this review. The final report to the City of Edina and will include the advisory “SBI” comments, if applicable. During the tenant file review, a creation of your PY2019 AHP Annual Report was created on your behalf. For report understanding and training, the report has been included for your reference. Subsequent Annual Project Reporting will be the responsibility of the owner on an annual basis starting with PY2020. If you disagree with the report or any of the data collected within, please let us know in a written response within 30-days. Tenant File Review:  Please see the Tenant File Review Forms (TFR) identifying potential noncompliance. Please respond ONLY to FAIL/Non-Compliance (NC) or UTD items. Although you must address “SBI” items and make corrections to the tenant file or to your processes, do not submit those corrections to AHC.  Tenant file information was provided to AHC via electronic upload on October 26, 2020.  Use of the Calculation Worksheet is necessary within each resident certification to better demonstrate income eligibility. The Calculation Worksheet is used to recap and display the total Affordable Housing Connections, Inc. 400 Selby Avenue, Suite B Saint Paul, MN 55102 Office: 651-222-8319 Fax: 651-222-3755 | www.ahcinc.net gross income and income from assets, from all household members living within the unit. Management did in fact submit calculation worksheets for each tenant file however the document wasn’t accurate in many instances.  Education surrounding income and asset calculation(s) and source verification is suggested. The attempt to comply with AHP’s rules and regulations was present within the tenant file submission, but further knowledge regarding affordable housing may be suggested. Overall Program Findings:  Eligibility Determination: o Some resident files lack enough information to make determination of income eligibility. This collection of household income, asset/income from asset, is extremely vital to determining household eligibility. o After the tenant completes the Household Questionnaire/Application, the owner/agent must have all income verified by obtaining source documentation (award letters, offers of employment, W2’s, check stubs (not paycheck), bank statements, investment records, etc.) or by a third-party (public agency, employer, financial institution). o If total cash value of household assets is less than $50,000, assets can be self-certified using the Under $50,000 Certification at Move In. Assets exceeding $50,000 must be third-party source verified.  Application for Residency: o Households applying for housing at Nolan Mains appear to be collected using an online software platform. This application itself is compliant, however determining details such as student status, is not being asked. Possible use of the AHP housing application may allow management to better capture household income, assets/income from assets, and student status. o Two tenant files had documentation within the certification relating to individuals not living at Nolan Mains. When changes, updates to household composition occur, please be sure to review original documents to ensure accuracy.  Annual Recertifications: o The owner/agent must verify and certify tenant income eligibility and student status at move in and recertify at least annually thereafter. At initial move in, or when first being determined eligible for an ADU and in every 3rd year of the affordability period (not tenancy), household composition, income and income from assets must be verified via third-party verification or other forms of supporting documentation and kept in the tenant’s file. In other years, tenants must, at a minimum, self-certify to their anticipated income (including income from assets), family size, and composition. o Because AHC is unable to determine initial income eligibility for all households at this time, it is recommended that owner/agent continues to verify all income and income from assets at the household’s anniversary until told otherwise. Historical recreation of income and assets is not easy and can be very frustrating and cumbersome for residents and management teams.  Gross Rent – Use of Administrative Fee: o As you know, each ADU is subject to maximum allowable rents based on bedroom size for the area in which the property is located. These limits represent the maximum that owners/agents can charge for rent, including an allowance for tenant paid utilities, and other Affordable Housing Connections, Inc. 400 Selby Avenue, Suite B Saint Paul, MN 55102 Office: 651-222-8319 Fax: 651-222-3755 | www.ahcinc.net non-optional charges (i.e. parking, required renter’s insurance, etc.). Use of Minnesota Housing published limits, specifically Table L: appears to be in use however oversight of non- optional charges may have taken place. o Management and AHC agent discussed the $350 administrative fee being charged to tenants and outlined within the Apartment Lease Contract. The AHP Guide outlines on page 7, fees considered reasonable and customary may be charged, such as application fee, if such fees are customary for rental housing in the neighborhood however an eligible tenant cannot be charged a fee for the owner or manager’s work involved in completing the additional forms or documentation required for the AHP, such as the Resident Income Certification. o Because the $350 charge is non-optional, the gross rent will need to include the fee. After adding the fee to the tenant rent and utility allowance, your actual gross rent would be above the maximum limit by unit size. o Review of leasing policies and procedures are suggested. Overall, the tenant files were extremely organized, submitted using a folder for each category within the certification and easy to review. Management has been a pleasure to work with. Further program knowledge is desired but there are no concerns surrounding the site team’s ability to learn. Review of the Affordable Housing Program Guide found on the City of Edina’s website is recommended. Should training specific to AHP become available, notice to owner/management will be sent. Thank you for your hard work and dedication to affordable housing. Questions can be sent to Amanda Hitzeman at ahitzeman@ahcinc.net. Sincerely, Amanda Hitzeman Manager of Strategic Initiatives and Training cc: Kirsten Ruliffson, General Manager Nolan Mains Nico Torrez, General Manager Oscar Villegas, Leasing Professional Nolan Mains Project Name Management Company PY2019 visit in 2020 AHP Review Intervals Total Units Total Affordable Units Fixed or Floating Date of Site Visit Inspector(s)Annual Report Received Timely UA Source Document Report Review Complete ("X")TFR Complete ("X")# of TFRs All Units Income Qualify ("Y/N")# of Units Income Qualfied All Units Rent Qualified ("Y/N")# of Units Rent Qualified Letter of Correction Period Sent to Owner Owner Response Due Owner Response Received Final Report to Owner & CC: PJ Comments The Millenium Pinnacle ---annual 372 19 ------------------------------------------------PY2019 property not yet in service Avidor Allegro Management Company Yes annual 165 18 Fixed 01/30/20 Amanda Hitzeman Lyn Burton YR-1 Contract, AHC Reporting Owner pays Pending Corrections X 18 N 0 Y 18 11/19/20 12/31/20 N N Owner requested extentsion on 11/21/20 - New deadine 12/31/20 Aurora Ebenezer Yes annual 179 10 Fixed 01/30/20 Amanda Hitzeman Lyn Burton YR-1 Contract, AHC Reporting Owner pays X X 10 Y 10 Y 10 10/20/20 12/03/20 Y N Compliance Affidavit executed 11/17/20 Nolan Mains Satruday Properties Yes annual 100 10 Fixed 01/31/20 Amanda Hitzeman Lyn Burton YR-1 Contract, AHC Reporting Tenant Pays - Metro HRA UA Source Matrix Pending Corrections X 10 N 3 Y 10 12/02/20 12/31/20 N N Aria Doran No annual 184 8 Fixed Incomplete ---YR-1 Contract, AHC Reporting Tenant Pays - Metro HRA UA Source Matrix Pending Corrections X 8 N 0 N 0 12/01/20 12/31/20 N N The Lorient Greco Properties No annual 45 3 ------------------------------------------------PY2019 property not yet in service City of Edina, Affordable Housing ProgramPY2019 Management Desk Audit, & TFR Tracking Date: December 10, 2020 Agenda Item #: VIII.A. To:Chair & Commissioners of the Edina HRA Item Type: Other From:Liz Olson, Administrative Support Specialist Item Activity: Subject:Correspondence Information Edina Housing and Redevelopment Authority Established 1974 CITY OF EDINA HOUSING & REDEVELOPMENT AUTHORITY 4801 West 50th Street Edina, MN 55424 www.edinamn.gov ACTION REQUESTED: None. INTRODUCTION: Attached is correspondence received since the last HRA meeting. ATTACHMENTS: Description HRA Correspondence City of Edina Correspondence Submission If you are leaving comments for a public hearing being heard by Council or the Planning Commission, go to https://www.bettertogetheredina.org/public-hearings Correspondence Selection * Data Practices Advisory: Any information submitted through this form will be emailed to the Housing and Redevelopment Authority (HRA) Chair and Commissioners and submitted for inclusion in the next public “HRA packet.” HRA packets are permanent records of materials prepared for HRA meetings. HRA packets are public documents that are available in print, published on the City’s website and maintained in permanent electronic records. You are not required to complete any fields of this form. However, if you do not provide your name and street or email address, your comments will not be included in the HRA packet. Open Meeting Law The HRA Chair and Commissioners receive and consider all feedback sent through this form. Because of the open meeting law, the HRA Chair and Commissioners cannot engage in back-and-forth emails involving a quorum of three or more members. For that reason, you might not receive a response from them. You might also receive a response from a City staff member. Email HRA: If you only want to email the City Council and not send your comments for publishing, contact members at CityCouncil@EdinaMN.gov. Contact Executive Assistant Jennifer Garske, at jgarske@EdinaMN.gov, if you have any questions or require assistance. HRA Packet Deadline Correspondence must be received by noon the Monday prior to a HRA meeting in order to ensure it is published in the packet prior to the Council meeting. Submissions after that time may be included in a future Council packet. Name * Street Address City State Zip Code Phone Number Email Comments * File Upload By submitting this form, I have read and agree to the Data Practices Advisory above. Housing and Redevelopment Authority Steve Brown 5528 Halifax Lane Edina MN 55424 6126705244 no dashes or spaces stevenbrown7891@gmail.com The attached file is a duplicate on an email that I sent earlier via the City Council email link. Attachments allowed: pdf, jpg, png Metro HRA AH ltr of support 2 pdf 201110.pdf 71.87KB Chair and HRA members, I am writing in support of the proposal to expand the existing program for working family affordable housing that is done in collaboration with the Metro HRA’s Family Affordable Housing program. I support this program for the following reasons: - The Maxfield Housing study reported that there is significant demand for affordable housing in Edina and that the market will not produce anywhere near enough affordable housing to meet the identified demand. Programs like this one are needed to fill the gap -Affordable housing for families is in particularly short supply. This program will provide homes that can accommodate families, some of which may be large families that have few other options. -This is an expansion of an existing program that has been proven to work and work well for its intended purpose. The existing program, while effective, has not acquired new properties since 2004 due to lack of funding. This proposal to provide funding from the Southdale 2 TIF pooled funds will address the lack of funding. - This program acts to preserve existing NOAH homes. There is strong community support for the concept of preserving existing NOAH homes but there are very few mechanisms to make this happen. This program provides the return on investment that the current homeowner is properly expecting while enabling the home to kept affordable for a new family. It is a win-win. - This program is designed to maintain the property as affordable housing. This long-term commitment to affordability is both desirable and difficult to obtain. - This program can work to ensure economic diversity throughout the community, something that according to the Quality of Life survey, the community supports. - This program is an excellent way to ensure that the Southdale 2 TIF pooled funds get used before they expire. I have two ideas for you to consider regarding this program. 1) As it is currently constructed, I believe that it is designed for the City to purchase available single-family properties at market rate and lease them to the Metro HRA for $1. As the program seeks homes priced at $400,000 or less, it is likely that this current expansion of the program will result in the purchase perhaps 5-7 additional homes to add to the existing 8 homes. In December 2019, The City of Bloomington, created a $15 million Affordable Housing Trust fund by working with Old National Bank to leverage an existing HRA levy that yields $500,000 annually. I wonder if there is an opportunity to leverage the $2 million in Southdale 2 TIF pooled funds to create a larger pool of money to acquire more homes. Old National Bank is supportive of affordable housing programs and might be a willing partner in exploring creative ways to leverage this funding source. 2) As families will be renting these properties, it is likely that there will potential students for the Edina schools in the families. I believe it would be beneficial to both the Edina School system and to the students if they could attend Edina schools. For this reason, I recommend that priority be given to homes that lie within the Edina School district. Obviously, satisfying the need for affordable housing must be given top priority but if a situation arises where there are several properties available, I ask that you acquire those within the school district first. I urge you to vote in favor of expanding the working families affordable housing program. Best Regards! Steve Steve Brown 5528 Halifax Lane ! " # $ % " " & ' " ( ( % ) " $ !" * " +, -. , /0 " 1 +, -. " % % !"# - 2 $ % & $ ' 34567 , -. 4489: :45:8633;9 + ' ( ' "* 7 < * -= ) < )< , % >8??"???" - % 4?@-*>46";?? , = % 63 &- 7 &, - & - 2 A B2 & * C"1"