HomeMy WebLinkAbout2023-09-14 HRA Special Work Session PacketAg enda
H ousing and R edevelopment Authority Work Session Meeting
City of E dina, Minnesota
City Hall, Community Room
Thursday, Septem ber 14, 2023
7:30 AM
I.Call to Ord er
II.Roll Call
III.Su stain able Fina n cin g for Aorda b le Hou sin g
IV.Ad jou rn m ent
Th e E d ina Housing a n d Redevelop m ent Au thority wa n ts all pa rticip ants to be
com fortable b ein g pa rt of th e p u b lic p rocess. If y ou n ee d a ssista n ce in the w a y of
h ea ring am pli%ca tion, a n in terp reter, large-p rint docum en ts or som ethin g else,
p lease ca ll 952-927-8861 72 hou rs in advance of the m eeting.
Date: S eptember 14, 2023 Agenda Item #: I I I.
To:C hair & C ommis s ioners of the Edina HR A Item Type:
Advisory C ommunic ation
F rom:S tephanie Hawkinson, Affordable Housing
Development Manager Item Activity:
Subject:S ustainable F inancing for Affordable Hous ing Disc ussion
Edina Housing and Redevelopment
Authority
Established 1974
C ITY O F E D IN A
HO US I NG & R EDEVELO P MENT
AUT HO R I T Y
4801 West 50th Street
Edina, MN 55424
www.edinamn.gov
A C TI O N R EQ U ES TED:
Discussion only.
I N TR O D U C TI O N:
I n D ecember 2022 T he City Council approved a portion of the AR PA financing plan to be allocated to hiring an
consultant to help the C ity determine the feasibility and process for creating affordable housing financing sources
and tools. T he goal was to make the H R A less dependent on Buy-in funds, which are contributed infrequently,
and T I F pooled funds which can take years to accrue a usable balance.
I n J anuary 2023 entered into a Master Services Agreement with T he Financial Services Consulting G roup,
L L C . S taff has been meeting regularly with the C onsultants, and a Steering Committee was formed to provide
additional input. T he S teering C ommittee members are City Manager S cott N eal, Commissioner James P ierce,
former C ommissioner and Edina resident Ron Anderson, Attorney and E dina resident J ay L indgren, Director of
F inance Alisha McAndrews, and Affordable Housing D evelopment Manager S tephanie Hawkinson. O thers,
including the C ity's financial advisor and C ity Assessor, have contributed their expertise.
At the work session the Commissioners will be informed of the work completed to date, the financial goal, and
the various possible sources. T he S teering C ommittee is seeking feedback and possible future direction.
AT TAC HME N T S:
Description
Pres entation
Affordable and Attainable Housing Strategies
Working Session / HRA Commissioners
Review and Engagement
September 14, 2023
•This effort is focused on developing funding models that would allow us to accelerate the
achievement of our affordable and attainable housing goals.
•Includes building on a number successful programs we have been operating within the City, and exploring
effective programs / other “best practices” in use with other municipalities (locally and across the country).
•We have engaged a team of advisors who have been working with us on this effort, and who have worked
closely with City staff and resident representatives in the steering committee.
•Efforts have included exploring these programs further, framing what considerations and outcomes are
important for the City, and a developing a range of alternatives for further consideration and evaluation.
•From this we have developed a set of programmatic funding sources for upcoming recommendation to the
HRA Commissioners, with a preliminary implementation roadmap.
•In today’s working session, we are seeking feedback from the HRA Commissioners on the
strategies from the steering committee, in advance of formal recommendations.
•Thank you for your continued support of affordable and attainable housing efforts within our community, and we
look forward to your active participation and engagement in this important effort.
EdinaMN.gov 2
HRA Working Session
Background and HRA Commissioner Engagement
City of Edina Team (Staff and Residents)
•James Pierce (City Council, Resident)
•Stephanie Hawkinson (Staff)
•Alisha McAndrews (Finance Director)
•Scott Neal (City Manager)
•Jay Lindgren (Special Counsel, Resident)
•Ron Anderson (Resident)
Supported by THE FINANCIAL SERVICES CONSULTING GROUP
•Donovan Walsh (TFSCG Project Team, Former Resident)
EdinaMN.gov 3
Steering Committee
Affordable and Attainable Housing Strategies
Progress and the Work Ahead
Towards the City’s Comprehensive Plan Goals
EdinaMN.gov 4
$100mm
AFFORDABLE
& ATTAINABLE
HOUSING
TARGET
Solid Progress
(Work To Date)
$36mm
COMMITTED
ADDING 340+
HOUSEHOLDS
OVER 1,100
ADDITIONAL
HOUSEHOLDS
NEEDED
Work Ahead
(To Be Done)
Resource “Gap”
(Funding Needed)
Sources: City HRA updates and staff reports, pro forma planning assumptions to exceed goal minimums, see appendix for detail
•COMPREHENSIVE PLAN GOALS
EdinaMN.gov 5
Forecasted
Need Approved
% of
Need Completed
% of
Need Remaining
Goal
Minimum
% of
Goal*
Total Units 1804 343 19.0%109 6.0%1461 992 34.6%
<30% AMI 751 22 2.9%16 2.1%729 412 5.3%
31-50% AMI 480 178 37.1%70 14.6%302 266 66.9%
51-80% AMI 573 143 25.0%67 11.7%430 314 45.5%
* Percentage based on what has been approved assuming the units will be delivered by 2030AMI: Area Median Income
Baseline Current Strategies
Affordable and Attainable Housing Strategies
•PRIORITY GOALS
•HOUSING GOALS*
EdinaMN.gov 6
Goals Approved % of Goal Completed % of Goal
Affordable General Occupancy 794 229 29%132 17%
Affordable Active Seniors 198 127 64%-0%
Market Rate General Occupancy 900 1,607 179%227 25%
Senior Independent Living 360 204 57%-0%
Owned Multi-Family Units 250 86 34%-0%
Senior Assisted Living Units 200 -0%-0%
Promote
Lifecycle
Housing
Enable
Diverse
Housing
Stock
Reduce
Housing
Development
Costs
Encourage
Sustainable
Design &
Technology
Source: Per HRA Staff Report / Housing Task Force Update (November 2022)
Baseline Current Strategies
Affordable and Attainable Housing Strategies
EdinaMN.gov 7
Affordable Housing
Program / Funding Funds Committed Units % of
Total
TIF
Pooled
Affordable
Housing Trust
Fund (AHTF)
New TIF
Increment
Multi-Family Rental*27,424,901 330 77%17,437,901 9,987,000
NOAH Preservation**210,000 29 7%210,000
Single Family Rental 2,000,000 4 1%2,000,000
Single Family Rehab 1,500,000 49 12%1,500,000
Single Family Ownership 5,402,717 14 3%5,402,717
Totals .36,537,618 19,437,901 7,112,717 9,987,000
Source: HRA Staff Update – April 2023
Current Funding Sources
Affordable and Attainable Housing Strategies
Illustrative Planning Assumptions
Total Program (5-year deployment, 25-year program life)
EdinaMN.gov 8
Assumes 5-year deployment to progress against affordable housing outcome targets, and 25-year program life
$80mm IMPACT ASSETS
(program recycles)
$20mm GRANT SUPPORT
(self-funding)
$100mm
AFFORDABLE
& ATTAINABLE
HOUSING
TARGET
Sources: pro forma planning assumptions, historic city household support estimates, see Appendix II for detail
EdinaMN.gov 9
❖Additional State Funding / $3.6mm (5Y Total)
From 2023 legislature, including annual metro-wide sales tax and one-time match
A.Teardown Fee / $26.1mm (5Y Total)
This type of user fee is in active use by other communities throughout the
country, with planning assumptions prepared for single-family, multifamily, and
commercial / industrial (based on historic levels).
B.HRA Levy / $13.0mm (5Y Total)
Analysis of an additional HRA Levy as has been undertaken, with planning
assumptions outlined (target within municipal peer group levels).
C.Pooled TIF / $9.6mm (5Y Total)
Analysis of Pooled TIF capacity (20%), with planning assumptions prepared based
on historic levels.
D.Single-family Transfer Tax / $12.7mm (5Y Total)
This type of user tax is in active use by other communities throughout the
country, with planning assumptions prepared (based on historic levels).
E.City Program Related Investment (PRI) Income / $2.0mm (5Y Total)
This includes planning assumptions for reinvesting PRI interest from capital
deployed to support affordable Multifamily Rental (Inclusionary).
Illustrative Potential Sources
Prioritized recommendations from analysis undertaken
Directional planning assumptions to validate order
of magnitude capacity by source / funding program
type, will require further validation / refinement.
67.0mm
33.3mm
Illustrative Sources
(Y1-Y5)
Illustrative Sources
(Y6+ / Other)
Sources: pro forma planning assumptions, see detail for each area
EdinaMN.gov 10
Implementation Assumptions
Prioritized recommendations from analysis undertaken
•The overall affordable and attainable housing goals are defined by the Comprehensive Plan
•How we deploy the funding is through programs defined by the Comprehensive Plan
(we will come back later on this, as there are additional opportunities being evaluated)
•Set of programmatic funding sources for upcoming recommendation to the
HRA Commissioners, with a preliminary implementation roadmap
•Use of planning assumptions – Simple. Directional. Illustrative.
•All will require additional detailed work around implementation
•Some will require City Council action
•Some will require legislative action (will need to include as priority)
EdinaMN.gov 11
❖Additional State Funding / $3.6mm (5Y Total)
From 2023 legislature, including annual metro-wide sales tax and one-time match
A.Teardown Fee / $26.1mm (5Y Total)
This type of user fee is in active use by other communities throughout the
country, with planning assumptions prepared for single-family, multifamily, and
commercial / industrial (based on historic levels).
B.HRA Levy / $13.0mm (5Y Total)
Analysis of an additional HRA Levy as has been undertaken, with planning
assumptions outlined (target within municipal peer group levels).
C.Pooled TIF / $9.6mm (5Y Total)
Analysis of Pooled TIF capacity (20%), with planning assumptions prepared based
on historic levels.
D.Single-family Transfer Tax / $12.7mm (5Y Total)
This type of user tax is in active use by other communities throughout the
country, with planning assumptions prepared (based on historic levels).
E.City Program Related Investment (PRI) Income / $2.0mm (5Y Total)
This includes planning assumptions for reinvesting PRI interest on capital
deployed to support affordable Multifamily Rental (Inclusionary).
Implementation Assumptions
Prioritized recommendations from analysis undertaken
HRA direction for staff to pursue, will require
program design and review (including legal, tbd
legislative), target Q2 2024 implementation.
HRA direction for staff to prepare formal City
Council recommendation (in September) for
2024 implementation.
HRA direction for staff to prepare policy
amendment for 2024 (for formal HRA / City
Council recommendation).
HRA direction for staff to pursue, will require
program design / review, and legislative approval
(target 2024, with 2025 implementation)
HRA direction for staff to pursue, will require
program design and policy revision (outcome of
planned “uses”), target 2024 implementation
(No additional HRA action needed)
Sources: pro forma planning assumptions, see detail for each area
Illustrative Sources (Across 5Y)(Tail Y6-Y25)
Total
(Across 25Y)
Annual
(5Y Avg.)Y1 Y2 Y3 Y4 Y5
Additional Funding Sources 3.6mm 13.3mm 16.9mm 0.7mm 6%962,808 662,808 662,808 662,808 662,808
A1. Teardown Fee (SF) 13.4mm 78.6mm 92.0mm 2.7mm 21%2,522,059 2,597,720 2,675,652 2,755,922 2,838,599
A2. Teardown Fee (MF) 10.0mm 58.6mm 68.5mm 2.0mm 16%1,880,001 1,936,401 1,994,493 2,054,328 2,115,958
A3. Teardown Fee (Comm/Ind) 2.7mm 15.8mm 18.5mm 0.5mm 4%507,415 522,638 538,317 554,466 571,100
Teardown Fee Subtotals 26.1mm 152.9mm 179.0mm 5.2mm 41%4,909,475 5,056,759 5,208,462 5,364,716 5,525,657
B. HRA Levy 13.0mm 86.6mm 99.6mm 2.6mm 20%1,007,268 2,864,458 2,950,392 3,038,903 3,130,071
C. Pooled TIF 9.6mm 75.1mm 84.7mm 1.9mm 15%593,898 1,223,430 1,890,199 2,595,873 3,342,187
D. Single-family Transfer Tax 12.7mm 74.3mm 86.9mm 2.5mm 20%2,383,925 2,455,442 2,529,106 2,604,979 2,683,128
E. City MF PRI Income 2.0mm 18.2mm 20.3mm 0.4mm 3%- 202,500 405,000 607,500 810,000
All Program Subtotals (Sources) 67.0mm 420.4mm 487.4mm 12.7mm Inflows 9,857,374 12,465,398 13,645,967 14,874,780 16,153,851
Cumulative 9,857,374 22,322,771 35,968,738 50,843,517 66,997,368
EdinaMN.gov 12
Illustrative Potential Sources
Preliminary planning assumptions / feasibility
Sources: pro forma planning assumptions, see detail for each area
Illustrative Sources (Across 5Y)(Tail Y6-Y25)
Total
(Across 25Y)
Annual
(5Y Avg.)
A1. Teardown Fee (SF) 13.4mm 78.6mm 92.0mm 2.7mm 21%
A2. Teardown Fee (MF) 10.0mm 58.6mm 68.5mm 2.0mm 16%
A3. Teardown Fee (Comm/Ind) 2.7mm 15.8mm 18.5mm 0.5mm 4%
Teardown Fee Subtotals 26.1mm 152.9mm 179.0mm 5.2mm 41%
EdinaMN.gov 13
A.Teardown Fees / $26.1mm (5Y Total)
This type of user fee is in active use by other communities throughout the country, with planning assumptions prepared for
single-family, multifamily, and commercial / industrial (based on historic levels).
•Assumes 2.000% user fee as placeholder ($1mm property value > $20,000 teardown fee)
•Uses average over past three years, and assumes annual 3% inflationary increase
•Note actual method of fee calculation to be determined, based on impact (e.g. sq. ft. lost, etc.)
Illustrative Potential Sources
Preliminary planning assumptions / feasibility
Sources: planning assumptions from other communities, pro forma planning assumptions, note teardown fee also intended to be applied to public properties, see Appendix II for detail
EdinaMN.gov 14
B.HRA Levy / $13.0mm (5Y Total)
Analysis of an additional HRA Levy as has been
undertaken, with planning assumptions outlined
•Analysis at increment from current to increased
(from existing 0.138% to 0.688% to 1.588%)
•Estimated annual net from leavy increase $2,864,458
•Phase-in approach (2024 sources additional $1mm,
with 2025 and thereafter at target amounts)
•HRA Levy Impact (Median Home Value $659,900)
2023 $9.66 / 2024 $49.83 / 2025 $119.10*
…additional 0.2715% of est. increase in home value
Illustrative Potential Sources
Preliminary planning assumptions / feasibility
Sources: planning assumptions from Ehlers and City finance staff, pro forma planning assumptions, assumes 4% annual property value increase through 2025 (10-year average), and 3% increase thereafter, see Appendix II for detail
Illustrative Sources (Across 5Y)(Tail Y6-Y25)
Total
(Across 25Y)
Annual
(5Y Avg.)
B. HRA Levy 13.0mm 86.6mm 99.6mm 2.6mm 20%
Target within municipal peer group levels
EdinaMN.gov 15
Illustrative Potential Sources
Preliminary planning assumptions / feasibility
Source: City Council September 5, 2023 Work Session on the 2024-2025 Levy & Budget
Proposed Levy with Funding for Affordable and Attainable Housing
Strategies
ProposedBudget
202520242023
$ 48,241,973 43,850,665 39,820,200 General Operating
10.01%10.12%8.48%
5,785,900 3,471,700 3,230,000 Debt Service
66.66%7.48%-0.06%
7,172,000 6,951,000 6,560,400 Construction
3.18%5.95%26.40%
3,110,016 1,251,700 244,400 HRA
148.46%397.30%2.99%
64,309,889 55,645,065 49,855,000 Total Tax Levy
15.57%11.61%9.89%% increase
Source: City Council September 5, 2023 Work Session on the 2024-2025 Levy & Budget 16
2024 Estimated Levy Impact
•For current tax year, the median value home (MVH) is $659,900 pays about $164 per
month in property taxes to fund all City provided services
•The MVH is $696,600 for taxes payable in 2024.
•With a 9.37% city property tax increase, the effect on the MVH in 2024 is estimated:
•7.75% increase in City property taxes
•$152. 97 increase per year, or $12.75/month
•With a 11.61% city property tax increase, the effect on the MVH in 2024 is estimated:
•9.78% increase in City property taxes
•$193 increase per year, or $16.08/month
Source: City Council September 5, 2023 Work Session on the 2024-2025 Levy & Budget 17
EdinaMN.gov 16
C.Pooled TIF / $9.6mm (5Y Total)
Analysis of Pooled TIF / tax increment financing capacity (20%), with planning assumptions prepared based on historic levels.
•Uses average over past three years (2021-2023 est.)
•Adjusts with conservative factor of 2/3 to allow for waivers (of 1/3)
•Assumes 20% portion for Affordable Housing
•Assumes no annual property value increase over deployment period or capture period (20y)
Illustrative Potential Sources
Preliminary planning assumptions / feasibility
Sources: planning assumptions from Ehlers, pro forma planning assumptions, see Appendix II for detail
Illustrative Sources (Across 5Y)(Tail Y6-Y25)
Total
(Across 25Y)
Annual
(5Y Avg.)
C. Pooled TIF 9.6mm 75.1mm 84.7mm 1.9mm 15%
EdinaMN.gov 17
D.Single-family Transfer Tax / $12.7mm (5Y Total)
This type of user tax is in active use by other communities throughout the country, with planning assumptions prepared
(based on historic levels).
•Uses prior year sales (2022) with analysis by value bands (count and amount)
•Assumes 0.50% transfer tax on single-family property sales (over $500,000 to preserve affordability)
•Use tax provides $2,314,490 (first year)
•Assumes 3% annual property value increase
•Implementation will require legislative authority
•Can also include documentation fees
Illustrative Potential Sources
Preliminary planning assumptions / feasibility
Sources: planning assumptions from other communities, pro forma planning assumptions, city historic property sales (2022), see Appendix II for detail
Illustrative Sources (Across 5Y)(Tail Y6-Y25)
Total
(Across 25Y)
Annual
(5Y Avg.)
D. Single-family Transfer Tax 12.7mm 74.3mm 86.9mm 2.5mm 20%
EdinaMN.gov 18
Illustrative Potential Sources / Uses
Example sources, funding programs, and uses
Sources: planning assumptions, pro forma planning assumptions * see interest rate assumptions by program type
Example Gap Lending / Affordability Support
(Fund / Programmatic)
Multifamily
First Lien Mortgage
(~70-80%)
City-funded Gap /
Affordability (~20%)
Developer Equity
(~10%)
Patient capital /
program related
investment (PRI)
Return of capital
(plus interest*).Recycle
Sources
Existing
Sources
New
Sources
Affordable &
Attainable
Housing Fund
for Multifamily
Inclusionary
Example City Funds
(For Housing Programs)
…for NOAH
Preservation
…for Single-Family
Grants
Example Funding Sources
(For Housing Programs)
Illustrative Uses (Across 5Y)(Tail Y6-Y25)
Total
(Across 25Y)
Annual
(5Y Avg.)Notes
E1. PRI Multi-Family Rental Affordable (25.0mm)25.0mm - 0.000% (5.0mm)500 units
E2. PRI Multi-Family Rental Inclusionary (45.0mm)45.0mm - 2.250% (9.0mm)300 units
E3. PRI Multi-Family NOAH Preservation (10.0mm)10.0mm - 0.000% (2.0mm)250 units
E4. Grants SF (Ownership & Rental) (20.0mm)- (20.0mm) (grant) (4.0mm)60 units
Program Subtotals (PRIs / Grants) (100.0mm)80.0mm (20.0mm) (7.3mm)Outflows
Illustrative Sources (Across 5Y)(Tail Y6-Y25)
Total
(Across 25Y)
Annual
(5Y Avg.)
E. City MF PRI Income 2.0mm 18.2mm 20.3mm 0.4mm
EdinaMN.gov 19
Illustrative Potential Uses
Preliminary planning assumptions / feasibility
Sources: planning assumptions, pro forma planning assumptions, historic city household support estimates, see Appendix II for detail
E.City Program Related Investments and Grants
Planning assumptions for PRI to support affordable
Multifamily Rental (Inclusionary & Affordable) and NOAH
Preservation, and grants for Single Family.
•Via targeted fund / intermediary or direct program
•Assumes $45mm patient (20Y), “equity equivalent”
capital (2.250%) for Multifamily Rental Inclusionary
•Assumes $35mm patient (10Y / 20Y) no-cost,
“equity equivalent” capital supporting Multifamily
Rental Affordable and NOAH Preservation
•Assumes grants of $20mm for single-family
ownership and rental support
•Total funding need of $100mm (5Y)
(PRI $80mm and grants $20mm)
The “uses” of PRIs provide basis for return of $80mm of
capital plus $20.3mm of income (offsetting grant expense)
$80mm IMPACT ASSETS
(program recycles)
$20mm GRANT SUPPORT
(self-funding)
EdinaMN.gov 20
F.City GSE Investment (Additional Capacity)
Example with Freddie Mac supporting NOAH property
financing, closed-loop investments allowing City funding
with GSE guaranty, applied to NOAH or Inclusionary.
•Assumes up to $10mm available for investment
($2mm per year x 5 years based on ~5% maturing)
•Assumes 2.000% rate reduction property mortgage
(reduces City bond income, fully guaranteed)
•Uses preliminary planning assumptions (adapted from
illustrative development project)
•Benefits from leverage / rate arbitrage (less high-cost
equity capital needed and lower-cost debt)
•Provides support for approximately 50 units (at total
cost to City of ~$2,515 per unit in reduced income)
•Will explore as scalable alternative to PRI approach
Illustrative Potential Uses
Preliminary planning assumptions / feasibility
Sources: planning assumptions from other communities, pro forma planning assumptions, see Appendix II for detail, GSE government-sponsored enterprise (Fannie Mae, Freddie Mac, etc.)
Example Gap Lending / Affordability Support
(GSE “Closed Loop” Program)
Multifamily
First Lien Mortgage
(~70-80%)
Interest Savings to
Support Affordability
(~tbd%)
Developer Equity
(~20-30%)
City Purchase
“Closed Loop”
Bond at Discount
GSE
Guaranty
Illustrative Uses (Across 5Y)(Tail Y6-Y25)
Total
(Across 25Y)
Annual
(5Y Avg.)Notes Y1 Y2 Y3 Y4 Y5
E1. PRI Multi-Family Rental Affordable (25.0mm)25.0mm - 0.000% (5.0mm)500 units (5,000,000) (5,000,000) (5,000,000) (5,000,000) (5,000,000)
E2. PRI Multi-Family Rental Inclusionary (45.0mm)45.0mm - 2.250% (9.0mm)300 units (9,000,000) (9,000,000) (9,000,000) (9,000,000) (9,000,000)
E3. PRI Multi-Family NOAH Preservation (10.0mm)10.0mm - 0.000% (2.0mm)250 units (2,000,000) (2,000,000) (2,000,000) (2,000,000) (2,000,000)
E4. Grants SF (Ownership & Rental) (20.0mm)- (20.0mm) (grant) (4.0mm)60 units (4,000,000) (4,000,000) (4,000,000) (4,000,000) (4,000,000)
Program Subtotals (PRIs / Grants) (100.0mm)80.0mm (20.0mm) (7.3mm)Outflows (20,000,000) (20,000,000) (20,000,000) (20,000,000) (20,000,000)
Cumulative (20,000,000) (40,000,000) (60,000,000) (80,000,000) (100,000,000)
F. City GSE Investment (Gap Reduction) (0.3mm)(1.0mm) (1.3mm) (other) (0.1mm)50 units - (25,154) (50,308) (75,462) (100,616)
All Program Subtotals (All Uses) (100.3mm)79.0mm (21.3mm) (27.4mm)Outflows (20,000,000) (20,025,154) (20,050,308) (20,075,462) (20,100,616)
Cumulative (20,000,000) (40,025,154) (60,075,462) (80,150,924) (100,251,540)
EdinaMN.gov 21
Illustrative Potential Uses
Preliminary planning assumptions / feasibility
Sources: pro forma planning assumptions, see detail for each area
67.0mm
33.3mm
Illustrative Sources
(Y1-Y5)
Illustrative Sources
(Y6+ / Other)
EdinaMN.gov 22
G.City Program Liquidity ($33.3mm)
Assume ability to borrow / bond against future expected
program income.
•Advances needed ($33.3mm) over the first five years
of the program to achieve $100mm funding target
•Assumes maximum of 50% of future available as
source to borrow / bond against, 6.000% cost
•Full repayment over the next three years
(for an eight-year total, beginning year one)
•Assumed 6.000% funding cost and shorter-term /
rolling advances (vs. longer-dated borrowings)
Sources: pro forma planning assumptions, see Appendix II for detail
Illustrative “Timing Gap”
Preliminary planning assumptions / feasibility
Timing gap of $33.3mm
(~$100.3mm of uses against ~$67mm of sources over first five years)
EdinaMN.gov 23Sources: pro forma planning assumptions, other community programs, see Appendix II for detail
Summary of Sources and Uses
Preliminary planning assumptions / feasibility
Illustrative Sources (Across 5Y)
Additional Funding Sources 3.6mm
A1. Teardown Fee (SF) 13.4mm
A2. Teardown Fee (MF) 10.0mm
A3. Teardown Fee (Comm/Ind) 2.7mm
Teardown Fee Subtotals 26.1mm
B. HRA Levy 13.0mm
C. Pooled TIF 9.6mm
D. Single-family Transfer Tax 12.7mm
E. City MF PRI Income 2.0mm
All Program Subtotals (Sources) 67.0mm
Illustrative Uses (Across 5Y)
E1. PRI Multi-Family Rental Affordable (25.0mm)
E2. PRI Multi-Family Rental Inclusionary (45.0mm)
E3. PRI Multi-Family NOAH Preservation (10.0mm)
E4. Grants SF (Ownership & Rental) (20.0mm)
Program Subtotals (PRIs / Grants) (100.0mm)
F. City GSE Investment (Gap Reduction) (0.3mm)
All Program Subtotals (All Uses) (100.3mm)
G. City Advances / "Gap Bridging" 33.3mm
Program Subtotals -
Illustrative Uses (Across 5Y)
E1. PRI Multi-Family Rental Affordable (25.0mm)
E2. PRI Multi-Family Rental Inclusionary (45.0mm)
E3. PRI Multi-Family NOAH Preservation (10.0mm)
E4. Grants SF (Ownership & Rental) (20.0mm)
Program Subtotals (PRIs / Grants) (100.0mm)
F. City GSE Investment (Gap Reduction) (0.3mm)
All Program Subtotals (All Uses) (100.3mm)
EdinaMN.gov 24
H.Philanthropic / Impact Capital
Source and leverage companion philanthropic support
and/or impact capital, either included in or excess to
targeted impact funds City may also participate in.
•Leverages City funding commitments (need sources)
•Conservatively assumed at $18mm 5Y target
(to allow for ramp-up / reduce external dependency)
•Can be paired / matched as grant funds, low-cost /
patient capital / program related investments, or be
capital provided at reduced cost leveraging funds
•Capital can reduce City liquidity needs, reduce City
portions, or additional funding to increase outcomes
Sources: pro forma planning assumptions, other community programs, see Appendix II for detail
Illustrative “Gap Reduction”
Preliminary planning assumptions / feasibility
Example: City of Columbus, OH
$100 million Housing Action Fund for the Affordable Housing Trust from
the City of Columbus, Franklin County, corporate partners and The
Columbus Foundation (low-cost loans to preserve / increase affordability).
Example: UnitedHealth Group $100mm health and housing fund
Example: Benefit Chicago with Calvert impact bonds
Example: Greater Minnesota Housing Fund / NOAH fund
Example: Sunrise Banks & Aeon / NOAH program
Example: LISC & Aeon / Metro affordable housing program
Example: Twin Cities Habitat & Bremer ownership program
Example Gap Lending / Affordability Support
(Fund / Programmatic)
EdinaMN.gov 25
Illustrative Implementation
Programmatic Alternatives (Administration / Funds)
Multifamily
First Lien Mortgage
(~70%)
City-funded Gap /
Affordability
(~20%)
Developer Equity
(~10%)
Multifamily
First Lien Mortgage
(~70%)
Developer Equity
(~10%)
Multifamily
First Lien Mortgages
(~70%)
City-funded Gap /
Affordability
(~20%)
Developer Equity
(~10%)
Leveraged Funds
Supportive Funds
Credit Enhancement
Indirect / Funded
Supportive Funds
Direct / Funded
Supportive Funds
Need to Determine Implementation Program Partners
(Direct / Outsource / Delegated / Fund / Hybrid)
Program
Criteria
Program
Administration
Project
Underwriting
Project
Funding
Asset
Management
Funding
Recapture
Direct / Funded. City staff manages program
and implements, solely includes City funds.
Hybrid (combination of the above). May
vary by program, functional role, or funding.
Outsourced or Delegated / Funded. City
oversight of third-party processor (outsourced) or
designee (delegated), solely includes City funds.
Fund / Leveraged. City participation and
oversight of third-party fund (solely city or multi-
jurisdictional), includes City funding as credit
enhancement and/or supportive funds, and third-
party funding partners for additional leverage.
EdinaMN.gov 26
Discussion / Next Steps
Prioritized recommendations from analysis undertaken
•In today’s working session, we are seeking feedback from the HRA Commissioners on the
strategies from the steering committee, in advance of formal recommendations.
•With a focus on the “sources” needed to support the affordable and attainable housing goals.
•Note future working sessions will be held regarding the envisioned “uses” under the various affordable and
attainable housing programs, as well as operational matters (funding / capitalization and program administration).
• ― HRA direction for staff to pursue strategies
• ― HRA Levy will be on the docket for the September City Council meeting
• ― City Staff will progress the other strategies, “uses”, and fund management this fall, and review with the HRA
•Thank you for your continued support of affordable and attainable housing efforts within our community, and we
look forward to your active participation and engagement in this important effort.
Appendix I / Context
•Larger Lot Sizes / Land Value. Disproportionately impacts single-family affordable
housing total development costs (e.g. compared to Minneapolis).
•Existing Residential Land Use is Predominantly Single-family. With ~93% land use
is single-family housing. City-wide only 1.7% of land use is guided high-density residential, and
only 2.2% guided for medium-density / “missing middle” use.
•Fully Built City. Fewer opportunities for new development of affordable housing, with
higher costs in using re-purposing existing.
•Local and Overall Market Conditions. Including increasing home prices / valuations,
current increased interest rate environment, etc.
•Limited Resources. Current funding sources available to the City are limited, and
insufficient to allow the City to achieve its objectives.
EdinaMN.gov 28
Current Challenges
Facing our City’s Affordable and Attainable Housing Goals
EdinaMN.gov 29
Single-family
Programs
Come Home 2 Edina
(2nd Mortgage)
Home Improvement
(Deferred Loan w/ CEE)
Housing Preservation Program
(CLT / HWR / TCHFH)
Supporting Density
(Evaluating ADUs, lot splits, etc.)
“Gap Financing”
Multifamily
Programs
Low Income Rental Classification
(LIRC / Tax 4d)
Naturally Occurring
Affordable Housing
(NOAH / Funding Support)
Housing Improvement /
Common Area
(Financing)
Targeted Site Acquisition
(99-year Ground Leases, etc.)
“Gap Financing”
Funding, Policies
and Practices
Redevelopment Opportunities /
Owner & Developer Engagement
Small Area Plans
for Key Locations
Sustainable Buildings &
Incentive Programs
Homeowner Engagement
(e.g. preservation of affordable SFH)
“Gap Financing” Sourcing
(Affordable Housing Trust Fund, TIF, etc.)
CEE: Center for Energy and Environment / CLT: Community Land Trust / HWR: Homes Within Reach / TCHFH: Twin Cities Habitat for Humanity / ADU: Accessory Dwelling Units / LIRC: Low Income Rental Classification /
Tax 4d: Minnesota Department of Revenue tax classification for low-income rental housing / NOAH: Naturally Occurring Affordable Housing / SFH: Single-family housing / TIF: Tax Increment Financing
Baseline Current Strategies
Affordable and Attainable Housing Strategies
EdinaMN.gov 30
Multifamily Rental
•Mostly smaller NOAH (~25+ units)
•Some midsize NOAH (~100+ units)
•Inclusionary units in market rate
•Senior affordable, youth affordable
•Full / 100% affordable properties
Single-family
•Approximately 25 CLT properties
NOAH: Naturally Occurring Affordable Housing / CLT: Community Land Trust
Baseline Current Strategies
Affordable and Attainable Housing Strategies
EdinaMN.gov 31
In Edina,approximately 6,320 households are estimated to be cost-burdened
Source: League of Minnesota Cities / State of Minnesota Legislature, House Research Department and U.S. Census
6,320
Cost Burdened
Not Cost-Burdened
Supporting the Cost-Burdened
Affordable and Attainable Housing Strategies
Preserving Single-family
Home Ownership
Preserving Naturally
Occurring Affordable
Housing Rentals
Creating New Affordable
and Attainable Housing
for Ownership
Creating New Affordable
and Attainable Housing
Rentals
In Edina,70.4%of households own their homes
and 29.6%rent. The homeownership rate in Edina
is less than that of the state and greater than
the Twin Cities metro area and national average.
EdinaMN.gov 32Sources: League of Minnesota Cities / State of Minnesota Legislature, House Research Department and U.S. Census, and Minnesota Housing Partnership: State of the State’s Housing 2021
29.6%
70.4%
Rental
Ownership
Land Use Considerations
Affordable and Attainable Housing Strategies
93.0%
7.0%
Residential SF
Residential MF
In Edina,only 7% of current residential
land use is for multifamily rental housing,
leading to increased concentrations.
EdinaMN.gov 33
In Edina,the homeownership rates across race / ethnicity show gaps when compared
to the percentage of non-Hispanic white households that own their homes.
~14,300
~100
~680
~20
--
~200
~220
Including # of homeowners
Source: Homewise - homewisdom.org / PolicyMap and ACS
Supporting Racial Equity
Affordable and Attainable Housing Strategies
•Completed over 20 meetings on best practices across a variety of stakeholders locally and
nationally (affordable housing preservation programs, leading organizations locally and in
other regions nationally, national intermediaries, and mission-aligned private developers)
•The City’s affordable housing efforts, programs and staff are very well regarded in the Twin
Cities metropolitan area – often cited as one of the leading examples
•Includes callouts to dedicated staff, ability to work with developers to find solutions, good
coordination across each of the City areas (gap funding, planning / zoning, permitting, etc.),
creative solutions and support (e.g. City undertaking demolition prior to redevelopment, etc.)
•Also included callouts to effective programs, and active programs vs. passive
(e.g. reaching out to homeowners for preservation, etc.)
•Reiterated expected challenges (e.g. cost of land, new development vs. redevelopment, etc.)
EdinaMN.gov 34
Best Practices & Engagement
Affordable and Attainable Housing Strategies
Appendix II / Supporting Detail
•Using simple planning assumptions to develop a directional / illustrative sizing of each of the
affordable and attainable housing programs.
•Per Household Gap. Developed planning assumptions as an estimated adjusted average
“gap” per household by program, reviewing history & current / expected market conditions.
•Gap Applied to Programs. Developed planning assumptions (households / year) to
progress each program over five years, including patient capital and grant / forgivable capital.
•Sources to Fund Programs. Developed planning assumptions for the various potential
sources identified from our working sessions and offline research and analysis.
•Illustrative Pro Forma. Developed planning assumptions (cashflows, recycling funds, etc.)
for 5-year deployment to progress against housing outcome targets (25 -year program life)
•Simple. Directional. Illustrative.
EdinaMN.gov 36
Illustrative Planning Assumptions
Determining “Gap” Assumptions for the Total Program
Affordable Housing Program / Funding $PER
HH
$TOT
PRI
$TOT
GRANT # HH TOT Y1 Y2 Y3 Y4 Y5
Multi-Family Rental* 50,000 25,000,000 500 100 100 100 100 100
Multi-Family Rental* Inclusionary 150,000 45,000,000 300 60 60 60 60 60
NOAH Preservation** (Acq/Rehab) 40,000 10,000,000 250 50 50 50 50 50
Single Family Rental 500,000 5,000,000 10 2 2 2 2 2
Single Family Rehab 30,000 1,500,000 50 10 10 10 10 10
Single Family Ownership 300,000 15,000,000 50 10 10 10 10 10
Totals 81,500,000 20,000,000 1,160 232 232 232 232 232
Illustrative Planning Assumptions
“Gap” Assumptions by Year by Program (5-year deployment)
EdinaMN.gov 37
Assumes 5-year deployment to progress against affordable housing outcome targets. (1) Noting separate allocation for single -family rehab program ($1.5mm)
Adjusted Totals 80,000,0001 20,000,000
HH: Household / PRI: Program-related investment / NOAH: Naturally Occurring Affordable Housing
EdinaMN.gov 38
A.Teardown Fees / $26.1mm (5Y Total)
This type of user fee is in active use by other
communities throughout the country, with planning
assumptions prepared for single-family, multifamily, and
commercial / industrial (based on historic levels).
•Assumes 2.000% user fee as placeholder
($1mm property value > $20,000 teardown fee)
•Uses average over past three years, and assumes
annual 3% inflationary increase
•Note actual method of fee calculation to be
determined, based on impact (e.g. sq. ft. lost, etc.)
Illustrative Potential Sources
Preliminary planning assumptions / feasibility
Sources: planning assumptions from other communities, pro forma planning assumptions, note teardown fee also intended to be applied to public properties
Year Residential Apartment Comm/Ind Improvement Amount
2013 87,411,800$ 1,573,700$ 16,148,300$ 105,133,800$
2014 96,370,700$ 14,714,700$ 6,381,100$ 117,466,500$
2015 114,410,500$ 31,467,000$ 9,768,100$ 155,645,600$
2016 122,275,400$ 77,464,100$ 27,265,700$ 227,005,200$
2017 123,120,400$ 76,995,000$ 28,843,100$ 228,958,500$
2018 120,910,200$ 34,681,600$ 31,388,800$ 186,980,600$
2019 113,947,900$ 48,590,700$ 32,198,300$ 194,736,900$
2020 108,678,100$ 115,516,000$ 65,170,300$ 289,364,400$
2021 113,699,900$ 69,540,100$ 28,392,300$ 211,632,300$
2022 105,348,000$ 99,929,200$ 10,566,200$ 215,843,400$
2023 148,242,200$ 104,317,300$ 34,936,900$ 287,496,400$
Total 1,254,415,100$ 674,789,400$ 291,059,100$ 2,220,263,600$
Average 114,037,736$ 61,344,491$ 26,459,918$ 201,842,145$
Average (3Y)122,430,033$ 91,262,200$ 24,631,800$ 238,324,033$
(A1)Y1 Teardown Assumption (3Y Average, Residential)122,430,033
Teardown Fee Assumption 2.000%
Estimated Annual Teardown Fee (Residential)2,448,601
(A2)Y1 Teardown Assumption (3Y Average, Apartment)91,262,200
Teardown Fee Assumption 2.000%
Estimated Annual Teardown Fee (Apartment)1,825,244
(A3)Y1 Teardown Assumption (3Y Average, Commercial / Industrial)24,631,800
Teardown Fee Assumption 2.000%
Estimated Annual Teardown Fee (Comm/Ind)492,636
Illustrative Sources (Across 5Y)(Tail Y6-Y25)
Total
(Across 25Y)
Annual
(5Y Avg.)
B. HRA Levy 13.0mm 86.6mm 99.6mm 2.6mm
EdinaMN.gov 39
B.HRA Levy / $13.0mm (5Y Total)
Analysis of an additional HRA Levy as has been
undertaken, with planning assumptions outlined
(target within municipal peer group levels).
•Analysis at increment from current to increased
(from existing 0.138% to 0.688% to 1.588%)
•Estimated annual net from leavy increase $2,864,458
•Phase-in approach (2024 sources additional $1mm,
with 2025 and thereafter at target amounts)
•HRA Levy Impact (Median Home Value $659,900)
2023 $9.66 / 2024 $49.83 / 2025 $119.10*
…additional 0.2715% of est. increase in home value
•Assumes 4% annual property value increase through
2025 (10-year average), and 3% increase thereafter
Illustrative Potential Sources
Preliminary planning assumptions / feasibility
Sources: planning assumptions from Ehlers and City finance staff, pro forma planning assumptions
Payable Years 2023 2024 2025
Assessed valuation/tax capacity 190,473,325 206,240,895 214,490,531
Tax capacity used for local rate 172,188,460$ 186,317,282$ 195,345,625$
Levy used for property tax 46,612,572$ 52,875,808$ 58,214,073$
Tax Capacity Rate
General Fund 28.056%28.379%29.801%
HRA Operating Levy 244,400 1,251,700 3,110,016
Less FD distribution (6,842) (6,874) (8,000)
HRA Tax Rate 0.1380%0.668%1.588%
Housing Amount 237,558 1,244,826 3,102,016
Increase from 2023 (Illustrative)1,007,268 2,864,458
Illustrative Sources (Across 5Y)(Tail Y6-Y25)
Total
(Across 25Y)
Annual
(5Y Avg.)
C. Pooled TIF 9.6mm 75.1mm 84.7mm 1.9mm
EdinaMN.gov 40
C.Pooled TIF / $9.6mm (5Y Total)
Analysis of Pooled TIF capacity (20%), with planning
assumptions prepared based on historic levels.
•Uses average over past three years (2021-2023 est.)
•Adjusts with conservative factor of 2/3 to allow for
waivers (of 1/3)
•Assumes 20% portion for Affordable Housing
•Assumes no annual property value increase over
deployment period or capture period (20y)
Illustrative Potential Sources
Preliminary planning assumptions / feasibility
Estimated DOR Annual Tax Incr.2,883,000 (2/3 of average of last three years, to allow for waivers of 1/3)
Affordable Housing Pooling %20%(portion for Affordable Housing)
Estimated Annual TIF Pooling 576,600 (Amount each year, adjusted for appreciation assumption of 103%, for first five years in pool)
Appreciation Assumption 103%
NPV Total Y1 Y2 Y3 Y4 Y5
Discount Rate 6.000%8,648,064$ 15,958,259$ Y1 593,898$ 611,715$ 630,066$ 648,968$ 668,437$
8,907,506$ 16,437,007$ Y2 611,715$ 630,066$ 648,968$ 668,437$
9,174,731$ 16,930,117$ Y3 630,066$ 648,968$ 668,437$
9,449,973$ 17,438,021$ Y4 648,968$ 668,437$
9,733,472$ 17,961,161$ Y5 668,437$
45,913,745$ 84,724,565$ Total 593,898$ 1,223,430$ 1,890,199$ 2,595,873$ 3,342,187$
Cumulative 593,898$ 1,817,328$ 3,707,526$ 6,303,400$ 9,645,586$
Total (25Y)84,724,565$
First Five Years 9,645,586$
Tail (Y6-Y25)75,078,979$
Sources: planning assumptions from Ehlers, pro forma planning assumptions
Illustrative Sources (Across 5Y)(Tail Y6-Y25)
Total
(Across 25Y)
Annual
(5Y Avg.)
D. Single-family Transfer Tax 12.7mm 74.3mm 86.9mm 2.5mm
EdinaMN.gov 41
D.Single-family Transfer Tax / $12.7mm (5Y Total)
This type of user tax is in active use by other
communities throughout the country, with planning
assumptions prepared (based on historic levels).
•Uses prior year sales (2022) with analysis by value
bands (count and amount)
•Assumes 0.50% transfer tax on single-family property
sales (over $500,000 to preserve affordability)
•Use tax provides $2,314,490 (first year)
•Assumes 3% annual property value increase
•Implementation will require legislative authority
•Can also include documentation fees
Illustrative Potential Sources
Preliminary planning assumptions / feasibility
Sales Price Band Count Count (%)Value ($)Value (%)
Up to $500,000 92 17.4%38,112,300$ 7.6%
$500,001 to $750,000 181 34.3%112,382,390$ 22.4%
$750,001 to $1,000,000 86 16.3%74,923,525$ 15.0%
$1,000,001 and over 169 32.0%275,592,095$ 55.0%
Total 528 100.0%501,010,310$ 100.0%
Key Takeaways
Over 55% of the value is in properties selling for over $1mm (and ~32% by count)
Only ~8% of the value is in properties selling up to $500,000 (and ~17% by count)
Approximately 22% of the value is between $500,000 and $750,000 (~34% by count)
Approximately 15% of the value is between $750,000 and $1mm (~16% by count)
A 1% real estate transfer tax on properties over $1mm would provide nearly $2.8mm
…over 5 years this would be nearly $13.8mm (or $15.1mm assuming 3% appreciation)103%
…over 25 years this would be nearly $69.9mm (or $103.5mm assuming 3% appreciation)
Applying 1% to all properties would provide just over $5mm per year
…over 5 years this would be $25mm (or $27.4mm assuming 3% appreciation)103%
…over 25 years this would be nearly $69.9mm (or $188.1mm assuming 3% appreciation)
Applying 0.45% to all properties would provide just under $2.3mm per year
…over 5 years this would be nearly $11.3mm (or $12.3mm assuming 3% appreciation)103%
…over 25 years this would be nearly $56.4mm (or $84.7mm assuming 3% appreciation)
Applying 0.50% to properties over $0.5mm would provide just over $2.3mm per year
…over 5 years this would be nearly $11.6mm (or $12.7mm assuming 3% appreciation)103%
…over 25 years this would be nearly $57.9mm (or $86.9mm assuming 3% appreciation)
Sources: planning assumptions from other communities, pro forma planning assumptions, city historic property sales (2022)
Illustrative Uses (Across 5Y)(Tail Y6-Y25)
Total
(Across 25Y)
Annual
(5Y Avg.)Notes Y1 Y2 Y3 Y4 Y5
E1. PRI Multi-Family Rental Affordable (25.0mm)25.0mm - 0.000% (5.0mm)500 units (5,000,000) (5,000,000) (5,000,000) (5,000,000) (5,000,000)
E2. PRI Multi-Family Rental Inclusionary (45.0mm)45.0mm - 2.250% (9.0mm)300 units (9,000,000) (9,000,000) (9,000,000) (9,000,000) (9,000,000)
E3. PRI Multi-Family NOAH Preservation (10.0mm)10.0mm - 0.000% (2.0mm)250 units (2,000,000) (2,000,000) (2,000,000) (2,000,000) (2,000,000)
E4. Grants SF (Ownership & Rental) (20.0mm)- (20.0mm) (grant) (4.0mm)60 units (4,000,000) (4,000,000) (4,000,000) (4,000,000) (4,000,000)
*F. City GSE Investment (Gap Reduction) (0.3mm)(1.0mm) (1.3mm) (other) (0.1mm)50 units - (25,154) (50,308) (75,462) (100,616)
Program Subtotals (100.3mm)79.0mm (21.3mm) (20.1mm)Outflows (20,000,000) (20,025,154) (20,050,308) (20,075,462) (20,100,616)
Cumulative (20,000,000) (40,025,154) (60,075,462) (80,150,924) (100,251,540)
EdinaMN.gov 42
Illustrative Potential Uses
Preliminary planning assumptions / feasibility
The “uses” of Program Related Investments provide basis for the return of $80mm of capital plus $20.3mm of income (offsetting grant expense)
Illustrative Sources (Across 5Y)(Tail Y6-Y25)
Total
(Across 25Y)
Annual
(5Y Avg.)
E. City MF PRI Income 2.0mm 18.2mm 20.3mm 0.4mm - 202,500 405,000 607,500 810,000
Sources: pro forma planning assumptions, see detail for each area
Illustrative Potential Uses
Illustrative program cashflows (full program / cohort life)
EdinaMN.gov 43
Illustrative Programmatic Cashflows
Illustrative Funding Program Return Term Total #HH Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10 Y11 Y12 Y13 Y14 Y15 Y16 Y17 Y18 Y19 Y20 Y21 Y22 Y23 Y24 Y25 TOT
Grants - Single Family (Ownership & Rental)(grant)(grant)20,000,000 60 (4,000,000) (4,000,000) (4,000,000) (4,000,000) (4,000,000) (20,000,000)
PRI - Multi-Family Rental Affordable 0.000%20y 25,000,000 500 (5,000,000) (5,000,000) (5,000,000) (5,000,000) (5,000,000) 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 -
PRI - Multi-Family Rental Inclusionary 2.250%20y 45,000,000 300 (9,000,000) (9,000,000) (9,000,000) (9,000,000) (9,000,000) 9,000,000 9,000,000 9,000,000 9,000,000 9,000,000 -
PRI - NOAH Preservation 0.000%10y 10,000,000 250 (2,000,000) (2,000,000) (2,000,000) (2,000,000) (2,000,000) 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 -
(100,000,000) Outflows (20,000,000) (20,000,000) (20,000,000) (20,000,000) (20,000,000) - - - - - - - - - - - - - - - - - - - - (100,000,000)
100,250,000 Inflows - 202,500 405,000 607,500 810,000 1,012,500 1,012,500 1,012,500 1,012,500 1,012,500 3,012,500 3,012,500 3,012,500 3,012,500 3,012,500 1,012,500 1,012,500 1,012,500 1,012,500 1,012,500 15,012,500 14,810,000 14,607,500 14,405,000 14,202,500 100,250,000
250,000 Net (20,000,000) (19,797,500) (19,595,000) (19,392,500) (19,190,000) 1,012,500 1,012,500 1,012,500 1,012,500 1,012,500 3,012,500 3,012,500 3,012,500 3,012,500 3,012,500 1,012,500 1,012,500 1,012,500 1,012,500 1,012,500 15,012,500 14,810,000 14,607,500 14,405,000 14,202,500 250,000
(20,000,000)
(15,000,000)
(10,000,000)
(5,000,000)
-
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
NOAH Recycles
(Y10: Y11-15)
Other Multi-Family Recycles
(Y20: Y21-25)
Grants – Single Family
PRI – Multi-Family Rental Affordable (0% / 20y)
PRI – Multi-Family Rental Inclusionary (2.250% / 20y)
PRI – NOAH Preservation (0% / 10y)
Grant Support offset through
Cumulative PRI Income
Sources: pro forma planning assumptions, see detail for each area
EdinaMN.gov 44
F.City GSE Investment (Additional Capacity)
Example with Freddie Mac supporting NOAH property
financing, closed-loop investments allowing City funding
with GSE guaranty, applied to NOAH or Inclusionary.
•Assumes up to $10mm available for investment
($2mm per year x 5 years based on ~5% maturing)
•Assumes 2.000% rate reduction property mortgage
(reduces City bond income, fully guaranteed)
•Uses preliminary planning assumptions (adapted from
illustrative development project)
•Benefits from leverage / rate arbitrage (less high-cost
equity capital needed and lower-cost debt)
•Provides support for approximately 50 units (at total
cost to City of ~$2,515 per unit in reduced income)
•Will explore as scalable alternative to PRI approach
Illustrative Potential Uses
Preliminary planning assumptions / feasibility
Sources: planning assumptions from other communities, pro forma planning assumptions, see Appendix II for detail, GSE government-sponsored enterprise (Fannie Mae, Freddie Mac, etc.)
Example Gap Lending / Affordability Support
(GSE “Closed Loop” Program)
Multifamily
First Lien Mortgage
(~70-80%)
Interest Savings to
Support Affordability
(~tbd%)
Developer Equity
(~20-30%)
City Purchase
“Closed Loop”
Bond at Discount
GSE
Guaranty
Illustrative Uses (Across 5Y)(Tail Y6-Y25)
Total
(Across 25Y)
Annual
(5Y Avg.)Notes Y1 Y2 Y3 Y4 Y5
F. City GSE Investment (Gap Reduction) (0.3mm)(1.0mm) (1.3mm) (other) (0.1mm)50 units - (25,154) (50,308) (75,462) (100,616)
67.0mm
33.3mm
Illustrative Sources
(Y1-Y5)
Illustrative Sources
(Y6+ / Other)
EdinaMN.gov 45
G.City Program Liquidity ($33.3mm)
Assume ability to borrow / bond against future expected
program income.
•Advances needed over the first five years of the
program to achieve $100mm funding target
•Full repayment over the next three years
•Assumes maximum of 50% of future available as
source to borrow / bond against, 6.000% cost
•Assumed 6.000% funding cost and shorter-term /
rolling advances (vs. longer-dated borrowings)
Sources: pro forma planning assumptions
Illustrative “Timing Gap”
Preliminary planning assumptions / feasibility
Illustrative "Bridging the Timing Gap"(Across 5Y)(Tail Y6-Y25)
Total
(Across 25Y)
Annual
(5Y Avg.)Notes Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8
Total Program Sources 67.0mm 420.4mm 487.4mm 12.7mm Inflows 9,857,374 12,465,398 13,645,967 14,874,780 16,153,851 16,796,782 17,250,427 17,717,680
Total Program Uses (100.3mm)79.0mm (21.3mm) (20.1mm)Outflows (20,000,000) (20,025,154) (20,050,308) (20,075,462) (20,100,616) (125,770) (125,770) (125,770)
Gap / Program Sources less Progam Uses (33.3mm)499.4mm 466.1mm (20.1mm)Subtotal (10,142,626) (7,559,756) (6,404,341) (5,200,682) (3,946,765) 16,671,012 17,124,657 17,591,910
Cumulative (10,142,626) (17,702,383) (24,106,724) (29,307,407) (33,254,172) (16,583,159) 541,497 18,133,407
G. City Advances / "Gap Bridging" 33.3mm (42.7mm) (9.4mm) 6.7mm 10,142,626 7,559,756 6,404,341 5,200,682 3,946,765 (16,796,782) (17,250,427) (8,652,958)
Program Subtotals - 456.7mm 456.7mm (20.8mm)Total - - - - - (125,770) (125,770) 8,938,952
Advances over first five years
of program ($33.3mm cumulative)
Timing gap (~$100mm of
uses against ~$67mm of
sources over first five years)
EdinaMN.gov 46
H.Philanthropic / Impact Capital
Source and leverage companion philanthropic support
and/or impact capital, either included in or excess to
targeted impact funds City may also participate in.
•Leverages City funding commitments (need sources)
•Conservatively assumed at $18mm 5Y target
(to allow for ramp-up / reduce external dependency)
•Can be paired / matched as grant funds, low-cost /
patient capital / program related investments, or be
capital provided at reduced cost leveraging funds
•Capital can reduce City liquidity needs, reduce City
portions, or additional funding to increase outcomes
Sources: pro forma planning assumptions, other community programs
Illustrative “Gap Reduction”
Preliminary planning assumptions / feasibility
Example: City of Columbus, OH
$100 million Housing Action Fund for the Affordable Housing Trust from
the City of Columbus, Franklin County, corporate partners and The
Columbus Foundation (low-cost loans to preserve / increase affordability).
Example: UnitedHealth Group $100mm health and housing fund
Example: Benefit Chicago with Calvert impact bonds
Example: Greater Minnesota Housing Fund / NOAH fund
Example: Sunrise Banks & Aeon / NOAH program
Example: LISC & Aeon / Metro affordable housing program
Example: Twin Cities Habitat & Bremer ownership program
Illustrative External / Gap Reduction (Across 5Y)(Tail Y6-Y25)
Total
(Across 25Y)
Annual
(5Y Avg.)Y1 Y2 Y3 Y4 Y5
*H. Supplement w/ Philanthropic/Impact Capital 18.0mm - 18.0mm 3.6mm 1,000,000 2,000,000 5,000,000 5,000,000 5,000,000
Program Subtotals 18.0mm - 18.0mm (10.5mm)Offsets 1,000,000 2,000,000 5,000,000 5,000,000 5,000,000
Cumulative 1,000,000 3,000,000 8,000,000 13,000,000 18,000,000