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Home My WebLink About2024-01-11 HRA Regular Meeting Packet_2Agenda Housing and Redevelopment Authority Work Session Meeting City of Edina, Minnesota Community Room, Edina City Hall Thursday, January 11, 2024 8:00 AM I.Call to Order II.Roll Call III.2024 State Legislative Agenda: Aordable Housing Financing IV.Adjournment The Edina Housing and Redevelopment Authority wants all participants to be comfortable being part of the public process. If you need assistance in the way of hearing ampli*cation, an interpreter, large-print documents or something else, please call 952-927-8861 72 hours in advance of the meeting. Date: January 11, 2024 Agenda Item #: III. To:Chair & Commissioners of the Edina HRA Item Type: Advisory Communication From:Stephanie Hawkinson, Affordable Housing Development Manager Item Activity: Subject:2024 State Legislative Agenda: Affordable Housing Financing Discussion 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: No action required. INTRODUCTION: At the December 19th City Council Work Session, the 2024 Legislative Platform was reviewed. At this time, two items seeking legislative authorization to pursue the local process for creating a sustainable housing fund were removed in order to have a separate conversation as an HRA. The two items are: 1) Seeking authorization to impose a demolition fee, and 2) authorization to impose a single- family transfer tax. If the State Legislature grants authorization to pursue these two funding sources, then the City would commence with the public process to gather public input prior to the fee and tax being implemented, if so approved. ATTACHMENTS: Description Staff Report Presentation January 11, 2024 Chairs and Members of the Edina Housing and Redevelopment Authority Scott H. Neal, City Manager Stephanie Hawkinson, Affordable Housing Development Manager 2024 State Legislative Platform: Housing Finance Information / Background: On December 19, 2023 the City Council review the City’s 2024 State Legislative Platform. Two position items pertaining to the creation of a sustainable affordable housing fund were removed from the state legislative platform for dedicated discussion by the HRA. Positions are issues effecting cities in general and are not specific to Edina. The two positions that for HRA discussion are: 2.4 Authorize the City to Impose a Demolition Fee Currently, the City charges and collects a small permit fee for demolitions. These funds legally must be used to pay for the service provided in building inspections and permitting. The City requests the authority to impose a fee for single family, multifamily, and commercial properties that are demolished, with the purpose of generating revenue to preserve and create affordable housing in the community. The proposed rate is 2% of the permit value for single-family, multi-family, and commercial properties. The current permit fee for demolitions is $1,500. Similar fees, which target demolitions and generate funds for affordable housing, have been imposed in Lake Forest, Evanston, and Highland Park, IL. All funds would be allocated for the Affordable Housing Trust Fund. The City supports this because: • Demolition results in the loss of homes that tend to cost less than the homes that replace them. If this is a regular occurrence, this can result in the loss of naturally occurring affordable housing and price out lower- and middle-income households. • The revenue generated from these fees will be used to replace affordable housing in the community. • The Affordable Housing Trust Fund can only be used to preserve and create affordable housing. The City has several successful programs funded by the Affordable Housing Trust Fund, including the Affordable Ownership Preservation Program, which has preserved or built 14 affordable, ownership STAFF REPORT Page 2 homes in three years and the housing rehabilitation program, providing loans to over 40 Edina income-eligible households. 2.5 Authorize the City to Impose a Single-Family Transfer Tax The City requests special legislation granting permission for the City to impose a 0.5% transfer tax on the sale of single-family properties valued at more than $500,000. The City would request reasonable exceptions, including transfers to non-profit entities, Community Land Trusts, transactions to change a name, and others. All funds would be allocated for the Affordable Housing Trust Fund. This tax is widely used in places such as Los Angeles, Washington DC, Connecticut, Hawaii, New Jersey, Vermont, Washington State, and Illinois. The City supports this because: • Affordable Housing Trust Fund can only be used to preserve and create affordable housing. The City has several successful programs funded by the Affordable Housing Trust Fund, including the Affordable Ownership Preservation Program, which has preserved or built 14 affordable, ownership homes in three years. • Edina has lost over 1,000 moderately priced homes in the last 10 years. The transfer tax helps to capture some of the value in the higher priced homes to preserve and create moderately-priced homes. For both of these items, if the HRA recommends the City Council adopt these items as part of its legislative platform, the items would return to City Council for approval. The City would then pursue authorization with the state, and if authorization is granted, the City Council would then undertake the public engagement process. Currently as a statutory Plan B City, Edina does not have the authorization to pursue without legislative authority. The City Council approving this as part of its legislative platform does not guarantee legislative authority in this or any future legislative session. Legislative authority does not mean these items will be automatically implemented. Affordable and Attainable Housing Sources: Legislative Agenda HRA Working Session January 11, 2024 Housing Affordability At Risk Example: Single Family Housing Values (Historic) 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Single Family Residential (Standalone) Percentage of Parcels in the City of Edina by Amount <$0.3mm $0.3mm-$0.49mm $0.5mm-$0.69mm $0.7mm-$0.99mm > $1M Source: City of Edina 2 Housing Affordability At Risk Example: Single Family Housing Values (Projected) $304,100 $396,300 $659,900 $0 $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 Median Estimated Market Value Projected >< Historic 3 Median Estimated Market Value Single Family Residential (Standalone) / Tax Assessed Source: City of Edina $1 million Housing Affordability At Risk Example: Rental Expense Change in Rent Expense vs. Household Income Minneapolis/ St. Paul MSA - Minnesota 4 318 146 100 150 200 250 300 1986 1990 1994 1998 2002 2006 2010 2014 2018 2022 CPI Rent of Primary Residence (MSP)Median Household Income (MN) Source: Federal Reserve Economic Data, Real Median Household Income in Minnesota (CPI adjusted), Consumer Price Index for All Urban Consumers – Rent of Primary Residence in Minneapolis/St. Paul MSA Housing Needs Comprehensive Plan Housing Strategy Task Force Forecasted Need Completed % of Need Total Units 1804 338 18.7% <30% AMI 751 22 2.9% 31-50% AMI 480 155 32.3% 51-80% AMI 573 177 30.9% Goals Approved Completed % of Goal Affordable General Occupancy 794 214 132 17% Affordable Active Seniors 198 118 118 59% Market Rate General Occupancy 900 1822 1012 112% Senior Independent Living 360 118 118 33% Owned Multi-Family Units 250 0 0% Senior Assisted Living Units 200 0% Current Funding Available •Southdale II TIF Pooled Funds: $619,170 •Affordable Housing Trust Fund: $1,797,283 •Amundson Pooled Funds: $50,588 TOTAL: $2,467,041 Supports 8 Single family homes or one smaller multifamily Assessment / Planned Sources 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 for future 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)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). Sources: pro forma planning assumptions, see detail for each area 7 Illustrative Planning Assumptions Total Program (5-year deployment, 25-year program life) $50mm IMPACT ASSETS (program recycles) $50mm GRANT SUPPORT 8 CURRENT FUNDING CURRENT FUNDING Source: Illustrative planning assumptions, see detail in appendix, City staff for current funding of $2,416,453 (Southdale II Pooled $619,170 / Affordable Housing Trust Fund $1,797,283 from buy-in fees) $2.4mm REMAINING (December 2023)