HomeMy WebLinkAbout2023-06-08 HRA Regular Meeting PacketAgenda
Edina Housing and Redevelopment Authority
City of Edina, Minnesota
City Hall Council Chambers
Thursday, June 8, 2023
7:30 AM
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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.
A.Executive Director's Response to Community Comments
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 the Regular Meeting May 18, 2023
B.Resolution 2023-06: Authorizing an Interfund Loan in connection with the
Eden / Willson Tax Increment Financing District
VII.Reports/Recommendations: (Favorable vote of majority of Commissioners
present to approve except where noted)
A.Resolution No. 2023-05 Supporting A.ordable Family Housing at 5780 Lincoln
Drive
VIII.Executive Director's Comments
IX.HRA Commissioners' Comments
X.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 ampliBcation, an interpreter, large-print documents or something else,
please call 952-927-8861 72 hours in advance of the meeting.
Date: June 8, 2023 Agenda Item #: V.A.
To:Chair & Commissioners of the Edina HRA Item Type:
From:
Item Activity:
Subject:Executive Director's Response to Community
Comments
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:
INTRODUCTION:
Executive Director Neal will respond to questions asked at the previous HRA meeting.
Date: June 8, 2023 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 the Regular Meeting May 18, 2023 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 draft minutes of the regular meeting May 18, 2023.
INTRODUCTION:
ATTACHMENTS:
Description
Draft Minutes from May 18, 2023
Page 1
MINUTES
OF THE REGULAR MEETING OF THE
EDINA HOUSING AND REDEVELOPMENT AUTHORITY
MAY 18, 2023
7:30 A.M.
I. CALL TO ORDER
Chair Hovland called the meeting to order at 7:33 a.m. then explained the processes created for
public comment.
II. ROLLCALL
Answering rollcall were Chair Hovland, Commissioners Agnew, Jackson, Pierce, and Risser.
Absent: None.
III. PLEDGE OF ALLEGIANCE
IV. MEETING AGENDA APPROVED - AS PRESENTED
Motion by Commissioner Agnew, seconded by Commissioner Jackson, approving the
meeting agenda as presented.
Roll call:
Ayes: Agnew, Jackson, Pierce, Risser, and Hovland
Motion carried.
V. COMMUNITY COMMENT
No one appeared.
VA. EXECUTIVE DIRECTOR’S RESPONSE TO COMMUNITY COMMENT
Executive Director Neal shared response to community comments received.
VI. CONSENT AGENDA - ADOPTED
Member Jackson made a motion, seconded by Member Agnew, approving the consent
agenda as presented:
V.A. Draft Minutes of the Special Meeting of April 18, 2023
V.B. Request for Purchase; ENG 23-5 Valley View Road Reconstruction, S.M. Hentges
& Sons, Inc., $760,259
V.C. Approve Grant of Permanent Easements at 4100 76th Street
Rollcall:
Ayes: Agnew, Jackson, Pierce, Risser, and Hovland
Motion carried.
VII. REPORTS AND RECOMMENDATIONS
VII.A. HOUSING IMPROVEMENT AREA UPDATE: EDINA WEST - RECEIVED
Affordable Housing Development Manager Hawkinson said on October 18, 2022 the City Council
held a work session to learn about Housing Improvement Areas (HIA). Since that time the Edina
West Condominium Association had submitted an application and petition to establish an HIA. She
said staff would be seeking Council authorization to hold a public hearing on June 6 pertaining to the
HIA application then said as this was a housing activity, staff informed the HRA of the application
and the process. She explained HIAs were a way to finance common area improvements in a
condominium association to lend money which would be paid back as a fee as part of property taxes.
She said the City’s policy was stricter than statute and required 70% property owners to sign the
petition requesting the HIA and would include a public hearing and process for property owners to
object. Ms. Hawkinson stated a maintenance plan was required to ensure funding was for something
necessary and include a third-party evaluator to review costs and plan. She said everyone had to
Minutes/HRA/May 18, 2023
Page 2
benefit from the improvement and the plan had to ensure that all costs were reasonable and all
other funding sources exhausted. She outlined the project in detail for 6075-6115 Lincoln Drive
that included four buildings of 162 units which was over 50 years old and would correct building
code violations from flooding and drainage. She said the improvements included façade repair, siding
replacement, insulation, roof replacement, etc. and had an estimated cost of $3,912,245. She said
the developer had provided letters from three financial institutions declining them for a loan and
said the challenge was the 20-year term. Ms. Hawkinson said the petition included 145 signatures
which was 89.5% of the property owners then reviewed possible funding sources that included
internal funds, revenue bonds, and general obligation bonds which was being recommended.
Nick Anhut, Ehlers & Associates, said once a resolution was adopted the Council had authority to
issue debt to provided funding which would be repaid over time by the property owners. He
outlined advantages of an HIA included a much lower cost of financing and while it would not count
against the City’s overall debt limit it would provide some form of risk to the City should the
repayment not occur and impacted the City’s credit rating. He shared evaluation points of risks that
included property owners vetoing the proposal and noted the association would pay for any
overhead costs related to the process. He said staff would ensure the project was feasible and
provide options for funding to protect the City’s interest and recommended bonding. He spoke
about administrative costs would be covered by an appropriate fee and that the association would
provide a financial guaranty.
Ms. Hawkinson spoke about the importance of preserving these properties as one way to preserve
and maintain affordable housing options for the City and noted this could be the first of other
requests as properties age.
The Board asked questions and provided feedback.
VII.B. SPARC POTENTIAL PROGRAMS TO SUPPORT BUSINESS INVESTMENT -
RECEIVED
Economic Development Manager Neuendorf said in 2021, Edina created the SPARC program in
order to guide the investment of $9.6 million dollars based on provisions in Minnesota Law. He said
this item pertained to potential programs to be implemented to support private investment, job
creation and construction improvements and that direction was requested from the HRA to inform
future programs. He said staff intended to incorporate this direction and return later in the year
with a series of programs to apply these funds before the 2025 spending deadline then outlined
potential programs that supported small businesses as well as larger and unique projects through
providing $25,000 grants, $149,000 forgivable loans, or establishment of a permanent revolving loan
fund that would be flexible to allow for creativity. He outlined benefits of such programs that
included new job creation, energy efficient improvements, ADA accesses, and public health benefits
and asked if these programs met the Boards expectations or if they had other suggestions for larger
or unusual investments.
The Board asked questions and provided feedback.
VIII. EXECUTIVE DIRECTOR’S COMMENTS – Received
IX. HRA COMMISSIONER COMMENTS – Received
X. ADJOURNMENT
Motion made by Commissioner Jackson, seconded by Commissioner Agnew, to adjourn
the meeting at 9:06 a.m.
Roll call:
Ayes: Agnew, Jackson, Pierce, Risser, and Hovland
Minutes/HRA/May 18, 2023
Page 3
Motion carried.
Respectfully submitted,
Scott Neal, Executive Director
Date: June 8, 2023 Agenda Item #: VI.B.
To:Chair & Commissioners of the Edina HRA Item Type:
Report / Recommendation
From:Bill Neuendorf, Economic Development Manager
Item Activity:
Subject:Resolution 2023-06: Authorizing an Interfund Loan in
connection with the Eden / Willson Tax Increment
Financing District
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 Resolution 2023-06 authorizing an Interfund Loan for advance of certain costs in connection with Eden
Willson Tax Increment Financing District.
INTRODUCTION:
This item pertains to the construction of roadway improvements at the intersection of Eden-Grange-Willson in the
Eden Willson TIF District.
In March 2023, the Housing and Redevelopment Authority entered into contracts with SEH, Inc, SM Hentges &
Sons and Braun Intertec to design, construct and inspect this roadway work.
The work began in late May so that the disruption would have minimal impact to roadways during the school year
and to allow the public and private investments to be completed at the same time.
The cost of this work will eventually be paid using incremental property taxes generated from the new Maison
Green apartments that are being constructed at 4917 Eden Ave (formerly Perkins). Those new property taxes
however will not begin flowing until 2025.
Due the timing and scale of this work, it is preferable to use existing financial resources to complete the work in
2023 with the expectation that these project costs will be combined with other public improvements the next time
the City seeks bond financing.
At that time, this internal loan will be repaid with interest.
Staff recommends approval of this Resolution.
ATTACHMENTS:
Description
Resolution 2023-06
RESOLUTION NO. 2023-06
RESOLUTION FOR ADVANCE OF CERTAIN COSTS IN CONNECTION WITH THE
EDEN / WILLSON REDEVELOPMENT TAX INCREMENT FINANCING DISTRICT
WHEREAS, the Edina Housing and Redevelopment Authority (the “HRA”) and the City of Edina, Minnesota (the
“City”) have heretofore approved the establishment of the Eden / Willson Redevelopment Tax Increment Financing District
(the "TIF District") within the Southeast Edina Redevelopment Project Area (the "Project Area"), and have adopted a Tax
Increment Financing Plan (the "TIF Plan") for the purpose of financing certain improvements within the Project Area, all
pursuant to Minnesota Statutes, Sections 469.174 to 469.1794, as amended (the “TIF Act”); and
WHEREAS, construction has commenced on the private redevelopment located within the boundaries of the
TIF District and the City and HRA have previously prepared designs for roadway improvements located in and immediately
adjacent to the TIF District to be coordinated with the completion of the private redevelopment and to have public and
private improvements delivered in a coordinated manner (the “East Grandview Transportation Public Improvements”).
WHEREAS, as part of the East Grandview Transportation Public Improvements, the HRA has entered into
contracts with Short Elliot Hendrickson (SEH) Incorporated, S M Hentges & Sons, Inc, and Braun Intertec Corporation to
design, construct and inspect a portion of the improvements in 2023-2024 consisting of a dual roundabout at the
intersection of Eden Avenue, Grange Road and Willson Road and coordinated with the completion of the private
redevelopment
NOW, THEREFORE BE IT RESOLVED by the Board of Commissioners (the “Board”) of the HRA as follows:
Section 1. Background.
1.03. The HRA has determined to pay for certain costs identified within the TIF Plan consisting of the design and
construction of the East Grandview Transportation Public Improvements (the “Qualified Costs”) pursuant to Minnesota
Statutes, Section 469.178, Subd. 7 of the TIF Act, which costs may be financed on a temporary basis from HRA or City
funds available for such purposes.
1.04. Under Minnesota Statutes, Section 469.178, Subd. 7 of the TIF Act, the HRA or City is authorized to advance
or loan money from the general fund or any other fund from which such advances may be legally authorized, in order to
finance the Qualified Costs; provided the loan or advance is authorized by resolution not later than 60 days after money is
transferred, advanced, or spent, whichever is earliest.
1.05. The City and HRA intend to reimburse themselves for the Qualified Costs from tax increments derived from
the TIF District in accordance with the terms of this resolution (which terms are referred to collectively as the "Interfund
Loan").
HRA Resolution 2023-06
Page 2
Section 2. Terms of Interfund Loan.
2.01. Subject to approval by the City, the HRA hereby authorize the advance of up to $2,000,000 from the City
Construction Fund or so much thereof as may be paid as Qualified Costs. The City and HRA shall reimburse themselves
for such advances together with interest at the rate stated below. Interest accrues on the principal amount from the date
of each advance. The maximum rate of interest permitted to be charged is limited to the greater of the rates specified
under Minnesota Statutes, Section 270C.40 or Section 549.09 as of the date the loan or advance is authorized, unless the
written agreement states that the maximum interest rate will fluctuate as the interest rates specified under Minnesota
Statutes, Section 270C.40 or Section 549.09 are from time to time adjusted. The interest rate shall be 4.00% and will not
fluctuate.
2.02. Principal and interest ("Payments") on the Interfund Loan shall be paid annually on each December 31 (each
a "Payment Date"), commencing on the first Payment Date on which the HRA has Available Tax Increment (defined below),
or on any other dates determined by the Executive Director of the HRA, through the Payment Date following last receipt
of tax increment from the TIF District.
2.03. Payments on this Interfund Loan are payable solely from "Available Tax Increment," which shall mean, on
each Payment Date, tax increment available after other obligations have been paid, or as determined by the Executive
Director of the HRA, generated in the preceding six (6) months with respect to the property within the TIF District and
remitted to the HRA by Hennepin County, all in accordance with the TIF Act. Payments on this Interfund Loan may be
subordinated to any outstanding or future bonds, notes or contracts secured in whole or in part with Available Tax
Increment, and are on parity with any other outstanding or future interfund loans secured in whole or in part with Available
Tax Increment.
2.04. The principal sum and all accrued interest payable under this Interfund Loan are pre-payable in whole or in
part at any time by the HRA without premium or penalty. No partial prepayment shall affect the amount or timing of any
other regular payment otherwise required to be made under this Interfund Loan.
2.05. This Interfund Loan is evidence of an internal borrowing by the City and HRA in accordance with Minnesota
Statutes, Section 469.178, Subd. 7 of the TIF Act and is a limited obligation payable solely from Available Tax Increment
pledged to the payment hereof under this resolution. This Interfund Loan and the interest hereon shall not be deemed to
constitute a general obligation of the State of Minnesota or any political subdivision thereof, including, without limitation,
the City or HRA. Neither the State of Minnesota, nor any political subdivision thereof shall be obligated to pay the principal
of or interest on this Interfund Loan or other costs incident hereto except out of Available Tax Increment, and neither the
full faith and credit nor the taxing power of the State of Minnesota or any political subdivision thereof is pledged to the
payment of the principal of or interest on this Interfund Loan or other costs incident hereto. The City and HRA shall have
no obligation to pay any principal amount of the Interfund Loan or accrued interest thereon, which may remain unpaid
after the final Payment Date.
2.06. The City may amend the terms of this Interfund Loan at any time by resolution of the City Council, including
a determination to forgive the outstanding principal amount and accrued interest to the extent permissible under law.
2.07. The HRA shall report in its annual report to the State of Minnesota (1) the amount of the Interfund Loan or
advance made in a calendar year; and (2) any amendment of the Interfund Loan or advance made in a calendar year.
HRA Resolution 2023-06
Page 3
Section 3. Effective Date. This resolution is effective upon the date of its approval.
Approved by the Board on June 8, 2023.
ATTEST: _______________________________
James B. Hovland, Chair
_______________________________
James Pierce, Secretary
STATE OF MINNESOTA)
COUNTY OF HENNEPIN) SS
CITY OF EDINA )
CERTIFICATE OF EXECUTIVE DIRECTOR
I, the undersigned duly appointed and acting Executive Director for the Edina Housing and Redevelopment Authority do hereby certify
that the attached and foregoing Resolution is a true and correct copy of the Resolution duly adopted by the Edina Housing and
Redevelopment Authority at its Regular Meeting of June 8, 2023, and as recorded in the Minutes of said Regular Meeting.
WITNESS my hand and seal of said City this ______________ day of ___________________, 2023.
Executive Director
Date: June 8, 2023 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:Resolution No. 2023-05 Supporting Affordable
Family Housing at 5780 Lincoln Drive
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:
Adopt Resolution No. 2023-05 Supporting Affordable Family Housing at 5780 Lincoln Drive
INTRODUCTION:
The Solhem Companies is proposing an 89 unit affordable housing development at 5780 Lincoln Drive that will
serve individuals and families. In addition to pursuing site plan approval, they are also applying for financial
support from Minnesota Housing, the Metropolitan Council, and Hennepin County. An early demonstration of
support from the Edina HRA will help leverage these additional funding sources.
The development still needs site plan approval, approval of a term sheet, and approval of a redevelopment
agreement prior to any City funding being fully committed.
ATTACHMENTS:
Description
Staff Report
Resolution 2023-05
Presentation
June 8, 2023
Chair and Commissioners of the Housing and Redevelopment Authority
Stephanie Hawkinson, Affordable Housing Development Manager
Resolution No. 2023-05 Supporting Affordable Housing at 5780 Lincoln Drive
Information / Background:
Solhem Development, LLC (Solhem) is seeking preliminary approval of $2,500,000 to support their
proposed “5780 Lincoln” development located at 5780 Lincoln Drive. This award will leverage financing
from Minnesota Housing Finance Agency (MHFA), Hennepin County, and the Metropolitan Council.
5780 Lincoln will be 100% affordable rental apartment building for individuals and families earning of the 50%
Area Median Income or less ($58,650 for a 4-person household). The 89-unit, 5 story, elevator building with
underground parking consists of studios, one, two, three and four-bedroom units. Eighteen of the 89 total
units will be set aside as Supportive Housing units, including units set aside for people who have experienced
homelessness or have a disability. In addition, five units will include rents and incomes restricted to 30%
AMI ($24,660 for a 1-person household). Solhem Development, LLC has an executed purchase agreement
with Njord Holdings, LLC, the existing owner of the site.
5780 Lincoln is located at the juncture of Lincoln Drive and Londonderry Road. The site is situated between
Highway 169 and Nine Mile Creek. While commercial and large multi-family properties skirt Highway 169,
directly to the east of the site is a residential neighborhood with single family homes. The 1.23-acre site is
part of an existing commercial strip mall site 2.59 acres in size.
Commercial uses are offered along the highway, offering hundreds of jobs within walking distance.
Londonderry Shops, a neighborhood shopping center with approximately 11,000 square feet, includes a
coffee shop, UPS Store, and restaurant. Target is 2.5 miles north, as is Knollwood Mall, which features a
grocery store.
Other community assets contribute to the value of the neighborhood. These include schools, parks, and
institutions, as well as neighborhood retail and services. This location is within the Hopkins School District.
Rasmussen College, offering two-year degrees and technical training, is 2.8 miles away.
STAFF REPORT Page 2
Financing Information
Solhem estimates the development cost to be approximately $37.9M. 5780 Lincoln’s financing structure
includes a first mortgage, deferred loans, and low-income tax credits. Key funding sources for 5780 Lincoln
will be:
First mortgage
Tax credit equity
MHFA deferred financing
City of Edina – deferred loan and/or TIF
Hennepin County AHIF
Met Council LCDA
Energy rebate
Deferred developer fee
The affordable rents allow for a mortgage of $8.3M, or 22% of the total development cost. The remaining
88% must be raised through other means. Solhem will request short-term bonds from Minnesota
Management and Budget so that the development qualifies for 4% Low-Income Housing Tax Credits,
leveraging $10,876,145 in equity.
Although Solhem requested $1,500,000 from Hennepin County in February, they were not awarded the
funding this round. The County primarily awarded funds to developments that had already received financial
awards from their respective cities. The County has stated they do not like to be the first funding source
committed. Solhem will reapply for County financing in addition to $1,500,000 from the Metropolitan
County LCDA program and $11.4M from MHFA. The development will also qualify for $35,000 in an energy
rebate and the Solhem will defer $1,700,000 of their fee (45%).
Funding Partner Criteria
The City’s public funding partners receive applications from throughout the regions they serve. They only
fund a fraction of the developments for which they receive proposals. Generally they all require that the
City be the first source of money committed for the application to be competitive. In addition, the
proposed developments must adhere to their funding criteria.
In July Solhem will seek funding from MHFA’s Consolidated RFP for deferred funding. MHFA awards funds
based primarily on application scoring per their Qualified Allocation Plan criteria. The development team
believes a minimum score 125 is necessary to receive a funding award. Up to 16 points are available based
on the percentage of funding that is secured by the time the application is submitted. 5780 Lincoln currently
has $1,735,000, or 4.58%, of committed funding, earning them 8 points. However, with an early preliminary
funding award from the HRA the development would receive 8 more points, thus increasing its chances of
getting a funding award from the state. Further, MHFA staff have indicated in conversations with Solhem that
a commitment of Edina funding in advance of the application is necessary when considering requests over
$10M.
To achieve over 125 points, the proposed development will also need to score well in other areas, including
the following:
STAFF REPORT Page 3
Large family housing – 2 and 3 bedroom units;
Includes some units to support people who have experienced homelessness and for people with
disabilities;
Includes some units that receive rent assistance;
Includes some deeply affordable units;
Remains affordable for 40 to 50 years;
Supports BIPOC and/or women owned business enterprises; and
Incorporate environmental sustainability.
Alignment with City Goals
Affordable Housing/Equity and Inclusion: 5780 Lincoln will bring 89 units of affordable family
housing to the west side of Edina. This serve to break up the concentration of affordable housing to
be almost exclusively in the Southdale area and will help advance the City’s goal of creating 1804
new units of affordable housing.
Sustainability: The proposed development is expected to qualify for Zero Energy Ready Home
(ZERH) certification through the Department of Energy program. The site is well-served by transit
with a transit stop is within a quarter mile of the development site on Smetana Drive and Bren
Road. Transit Route 612, a local route, connects the site to Hopkins and Uptown Minneapolis. The
route offers frequent service (within a ½ hour). The Metro Green Line is slated to open in 027. The
Opus Station will be .3 miles from the site. The enhanced transit option will provide service to Eden
Prairie to Downtown Minneapolis.
Health in all Policies: The 5780 Lincoln tenants will have ready access to outdoor recreational
opportunities. The Nine Mile Creek regional trail borders the site, a 15 mile long, paved trail
crosses the creek, wetlands, and woodlands, and connects to Hopkins, Minnetonka, and Richfield.
Within a half mile, Walnut Ridge Park offers fields, tennis courts, and a play area. In addition, the
apartments will support healthy living by being smoke free.
Next Steps
5780 Lincoln is in the early stages of the development process. The recent legislative approval of $1 Billion
for affordable housing coupled with the MHFA application deadline in July prompts the preliminary approval
of City support to occur now. The Resolution is needed to leverage significant funding from MHFA,
Hennepin County and the Metropolitan Council. The HRA and City Council will have many more
opportunities to review and make decisions on this development before it becomes a reality:
The site plan approval process requiring public hearings.
The Housing TIF District approval process, also requiring public hearings.
Approval of a term sheet and redevelopment agreement.
Solhem anticipates seeking full site plan approval once all financing is secured after the MHFA and Met
Council funds awards are announced in early 2024. Resolution No. 2023-05 sunsets December 31, 2025 if
closing does not occur by that time.
EDINA HOUSING AND REDEVELOPMENT AUTHORITY
CITY OF EDINA
COUNTY OF HENNEPIN
STATE OF MINNESOTA
HRA RESOLUTION NO. 2023-05
SUPPORTING AFFORDABLE HOUSING AT 5780 LINCOLN DRIVE
BE IT RESOLVED by the Housing and Redevelopment Authority of the City of Edina,
Minnesota as follows:
WHEREAS; the City of Edina recognizes the need to create affordable housing units
to supplement the stock of market rate units available in the marketplace; and
WHEREAS, Solhem Companies (the "Developer") proposes to construct a new multi-
family housing project on the site that consists of approximately 89 affordable rental apartment
units for individuals and families with an average household income at or below 50% median
income; and
WHEREAS, the Project will be owned by a limited partnership to be formed by the
Developer; and
WHEREAS, the Developer signed a Purchase Agreement for the property in August
2021 and is currently seeking funding from several sources to construct the Project in 2025;
and
WHEREAS, a variety of grants or other public financial assistance will be required to
build the Project including a deferred loan and low-income housing tax credits ("LIHTC") from
the Minnesota Housing Finance Agency (the "MHFA"), and financing from Hennepin County and
the Metropolitan Council; and
WHEREAS, the Edina Housing and Redevelopment Authority has access to funds that
have been collected or could be used to support the preservation and development of
affordable housing; and
WHEREAS, the Project is estimated to cost approximately $37,874,723 and the
Developer is requesting $2,500,000 in financing from the City through the Housing and
Redevelopment Authority; and
WHEREAS, the Developer must receive site plan approval prior to closing on the
financing; and
WHEREAS, this financing is a local contribution and will assist the Developer in
securing the approvals from the MHFA, Hennepin County and the Metropolitan Council for a
financing and LIHTCs.
NOW THEREFORE, BE IT RESOLVED, the Housing and Redevelopment
Authority of the City of Edina endorses the Developer's application to Minnesota Housing,
Hennepin County and the Metropolitan Council for financing and LIHTCs; and
BE IT FURTHER RESOLVED, the Housing and Redevelopment Authority shall
provide, in accordance with the requirements of this Resolution, a total of $2,500,000 in order to
facilitate the financing of the Project.
BE IT FURTHER RESOLVED, the Housing and Redevelopment Authority has the ability to
rescind the financing commitment if the development had not secured full financing by December 31,
2025.
Passed and adopted on this 8th day of June, 2023
Attest: _______________________________ ________________________________
James Pierce, Secretary James B. Hovland, Chair
Attest: _________________________
City Clerk
Early Financial Support for Affordable Housing
Resolution 2023-05 for 5780 Lincoln Drive
State Wide Context
“The affordability of homes has been a competitive advantage for Minnesota and our
employers, but a growing shortage of homes is pushing prices beyond the reach of many
individuals and families. New housing construction has not kept pace with household
growth since the Great Recession, as evidenced in the short supply of homes for rent or
sale.”
“As a state, we will realize an estimated $3.2 billion in investments and support more
than 30,000 jobs for each 10,000 additional homes we build.”
Goal: Build 300,000 new homes by 2030, across all types, prices, and locations to
stabilize prices and meet demand.
~ Minnesota Governor’s Task Force on Housing
“The increasing cost of housing –driven by too little
housing supply relative to housing demand-threatens
the vibrancy of the Twin Cities economy”
-Federal Reserve Bank of Minneapolis
November 1, 2022
Metro Context
Metro Context
•“The MSP region has not built enough homes and, as a result, housing is now too
expensive for many residents.”
•“The increased housing costs threaten the overall prosperity of the region and worsen
racial and economic gaps.”
•“Stable and affordable housing is the foundation for business and economic growth as
well as a host of other positive individual and systemic outcomes. Increasing housing
production and improving housing affordability will benefit families, firms, and the
entire MSP region for generations to come.”
~ Itasca Project Housing Innovation Report
City’s Guiding Documents
Identified in guiding documents as a way to meet various housing and sustainability goals
•Comprehensive Plan
•Climate Action Plan
•Housing Strategy Task Force Report
•Racial Equity Implementation Report
~Public engagement informed the creation of these documents~
City Goals
•Create 1804 new affordable housing units by 2030.
•Increase average population per developed acre by 4% by 2030.
Studies have found that for every 1% increase in population-weighted urban density, household travel CO2 emissions reduce by 0.12% to 0.48% 2,3. Based on these, establishing zoning ordinances and incentives guiding future growth into options which increase the density of existing developed land will have positive impact on decreasing total community wide emissions per household
•Promote more compact development that reduces sprawl and makes walking, biking, and transit more viable.
•Create a strong and growing tax base.
•Be an open and inclusive community.
Developers are partners in the City’s efforts to meet goals
Developer Risk
Many things can change the risk profile
of a deal.Some of which are listed
below:
Environmental concerns
Construction cost certainty
City approvals
Project timeline
Parking
Macroeconomic forces
Financing
Site Plan Approval
Grounding: Affordable Housing Definition
What does “affordable” mean?
Housing is affordable if the cost does not exceed 30% of household income.
For rental: Housing that is affordable to households with incomes at or below 60% of the Area Median Income (AMI), adjusted for family size.
In Edina, 45% renters are housing cost burdened. They pay over 30% of their income on rent.
~American Community Survey 2017-2021
Impacts on Surrounding Housing Values
A Study of the Relationship Between Affordable Family Rental Housing and Home Values in the Twin Cities –Maxfield Research –“We conclude from our research that there is little or no evidence to support the claim that the tax-credit family rental development in our study eroded surrounding home values”
The Impact of High-Density Apartments on Surrounding
Single-Family Home Values in Suburban Salt Lake County
–University of Utah Kem C Gardner Policy Institute -
“This study found apartments built between 2010 and
2018 have not reduced single-family home values in
suburban Salt Lake County. Single-family homes located
within 1/2 mile of a newly constructed apartment
building experienced higher overall price appreciation
than those homes farther away.”
America’s Working Communities and
the Impact of Multifamily Housing –
Harvard University Joint Center for
Housing Studies -“Working
communities with multifamily
dwellings have higher house values on
average than other types of working
communities.”
National Association of Home Builders, “Market Outlook: Confronting
the Myths about Apartments with Facts” (Washington, D.C.: Author,
2001), p. 4. –This study completed by the National Association of
Homebuilders found that between 1997 and 1999, single-family
values increased 2.9% for those homes within 300 feet of an
apartment building, compared with an increase of 2.7% for those that
weren’t located next to an apartment.
Impacts on Surrounding Housing Values
“Neighborhood Quality Affordable
housing contributes to significant
economic impacts, including increases
in local purchasing power, job creation
and new tax revenues. Affordable
housing has been shown to have a
neutral or positive effect on
surrounding property values. “
~ Enterprise Community Partners 2014 based on
research from the Center for Housing Policy
“The link between affordable housing construction and
property values has been studied before, with mixed results. A
look at federally subsidized rental housing in New York City,
conducted by researchers from New York University’s Furman
Center for Real Estate and Urban Policy, showed that property
values were typically not depressed by nearby affordable
projects. “In fact,” researchers wrote, they “led to increases in
many cases.” –if affordable housing is not obviously affordable,
it can have a positive impact on the neighborhood.
~Bloomberg: City Lab May 2, 2022
We find that affordable units in the city
of Alexandria are associated with a
small but statistically
significant increase in property values of
0.09 percent within 1/16 of a mile of a
development, on average—a distance
comparable to a typical urban block.
~Urban Institute April 19, 2022
“Despite public perceptions of affordable housing negatively
impacting nearby property values, there is evidence to
suggest that the impact is minimal if at all.Trulia, an online
residential real estate site, recently conducted
a study indicating that low-income housing tax credit (read
more on LIHTC here) projects have no impact on the value of
nearby properties. According to Trulia’s study, there was no
significant effect from 1996 to 2006 on home values located
near a LIHTC project.”
~Community and Economic Development in NC and Beyond
2017
Grounding: What is Affordable?
Affordable Housing Limitations
Rent is capped; cannot increase
to cover increases costs or
leverage more debt.
Rent is still higher than many
people can pay. Developers tend
to maximize in order to leverage
more debt to cover costs.
Basic Proforma
Uses:
Acquisition
+Hard Construction Costs
+Soft Construction Cost
+Developer Fee
+Financing Fees
TOTAL DEVELOPMENT
COST (TDC)
Sources:
Debt (NOI x 1.15 DCR = Debt
Service)
+Gap Financing (TIF, Deferred
Loans)
TOTAL DEVELOPMENT COST
Why the Need for Public Financing
The rents for affordable housing are not sufficient to leverage the debt needed to
fully finance an affordable housing development including, yet the construction
costs are similar as Market Rate developments:
•Acquisition
•Rehabilitation or new construction
•Third party reports: environmental studies, surveys, energy analysis
•Professional fees: Legal, accounting, architectural
•Financing fees: property taxes, interest, origination fees, reserves
Debt financing may account for 25%-60% of the total development cost in 100%
affordable housing developments.
Why a Need for Public Financing
*Simplified for discussion: mortgage and equity funding levels
will vary depending on project/NOI potential
Menu of Local Housing Finance Tools
Tax Increment Financing / Tax Abatement
Pooled TIF
Affordable Housing Trust Fund
Regulatory Incentives
•HRA Levy
•Revolving Loan Funds
•Public Project Bonding
Other Soft Fund Sources:
•Minnesota Housing
•Metropolitan Council
•Hennepin County
The top three sources are
HIGHLY COMPETITIVE
Example: 100% Affordable Development
Target households: low incomes, 30-60% AMI
Funding Partner Priorities
Minnesota Housing
Minimum threshold:
•New construction that are not age restricted to persons 55 years or older in which… at least 75% of the total HTC (housing tax credit) units contain two or more bedrooms and at least one-third of the 75% contain three or more bedrooms.
•Projects are not restricted to persons of a particular age group and a certain percentage is set aside for people with disabilities.
Other:equitable development; long term affordability; serves lowest income; supports community development initiatives; Financial readiness to proceed
To receive Minnesota Housing Financing, it is estimated that a development must score over 125 points.
Funding Partner Priorities
Metropolitan Council
LCDA program goals
•Maximize connections between housing, jobs, and regional amenities like parks, trails, and cultural centers
•Create more housing choices through introducing new housing types or preserving affordable housing, minimizing the project’s impact on climate change through sustainable site design and building practices
•Support economic opportunity by creating living wage jobs and training opportunities
•Realize more equitable development outcomes
Development Timeline
•Review sketch plan.
•HRA Resolution of support to
leverage partner funding.
•Apply to Minnesota Housing,
Hennepin County and the
Metropolitan Council for financing.
•Analyze for TIF financing and shepherd
through public approval process if
appropriate.
•Seek site plan approval.
•Formalize City’s financial support.
•Approve Redevelopment Agreement.
5780 Lincoln Apartments
•100% affordable –30-50% AMI
•89 units
•5-stories
•Studio, 1, 2, 3 and 4 bedroom units
•Complies with guided land use, but will require a zoning amendment
•Expected to qualify for Zero Energy Ready Home (ZERH) certification through the Department of Energy program.
Summary of Proposal
The developer requests $2.5 million in City
support to leverage other public financing
and to make the development viable.
-$28,089/unit compared to $47,500/unit at
The Sound on 76th and $24,067 for 4040
Flats (not including land)
This is early in the process. The building
design is not fully conceptualized and a
contractor has not formally bid.
This financial gap can be resolved through
the combination of:
-Tax Increment Financing
-Deferred loans
Possible Funding Sources
TIF –Creation of a Housing District
•One of the few locations where TIF is possible outside of the Greater Southdale area.
•25-year District
•~$1,000,000 possible
Pooled TIF
•~$4,319,170 remaining
Affordable Housing Trust Fund
•~$597,283 remaining 72nd & France
Proposed Development
Public Benefits
•Adds 89 units of affordable housing for
individuals and families.
•Brings affordable options to the west
side of Edina.
•Within .25 miles of public transit
options thus adhering to our goal of
creating affordable options near transit
corridors.
•Will comply with Climate Action Plan.
Resolution 2023-05
•Supports $2,500,000 in HRA Financing
•Total development cost (TDC) is estimated at $37,874,723
•Edina financing is 6.6% of TDC
•Committed support contingent upon the following
•Receiving site plan approval
•Sewer connection to Minnetonka
•Receiving all necessary financing to close
•Approval sunsets on December 31, 2025 to allow time to secure other sources of financing.
Estimated Sources
First Mortgage $ 8,347,000
Tax Credit Equity $10,876,145
Minnesota Housing $11,416,578
Hennepin County $ 1,500,000
Metropolitan Council $ 1,500,000
Deferred Developer Fee $ 1,700,000
City of Edina $ 2,500,000
TDC $37,874,723
Estimated Uses
Acquisition $ 2,600,000
Construction $26,250,000
Professional Fees $ 2,337,420
Financing Fees $ 1,966,000
Developer Fee $ 4,000,000
Reserves $ 721,304
TDC $37,874,723
Future Opportunities to Review
Regulatory Review Process
Site Plan Review –Planned Unit Development
•Public Hearing
Approval of Site Improvement Plan Agreement
Financing Approval
Possible creation of a Housing TIF District
•Public Hearing
Approval of gap financing (deferred loan)
Approval of Redevelopment Agreement