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HomeMy WebLinkAboutHousing & Redevelopment Authority Minutes 04-22-2010APPROVED MINUTES PLYMOUTH HOUSING AND REDEVELOPMENT AUTHORITY APRIL 22, 2010 PRESENT: Vice Chairman Paul Caryotakis, Commissioners Steve Ludovissie, David Miller and Bob Stein ABSENT: Chairman Jeff Kulaszewicz STAFF PRESENT: Housing Program Manager Jim Barnes, HRA Executive Director Steve Juetten and Office Support Specialist Laurie Lokken OTHERS PRESENT: Grace Management Representative Jody Boedigheimer 1. CALL TO ORDER Vice Chairman Caryotakis called the Plymouth Housing and Redevelopment Authority meeting to order at 7:00 P.M. Housing Program Manager Barnes announced the addition of item 3. D. to the agenda for discussion of the May HRA meeting. 2. CONSENT AGENDA A. Approve HRA Meeting Minutes from February 25, 2010. B. Plymouth Towne Square. Accept February and March 2010 housing reports. C. Vicksburg Crossing. Accept February and March 2010 housing reports. MOTION by Commissioner Ludovissie, seconded by Commissioner Miller, to approve the consent agenda. Vote. 4 Ayes. MOTION approved unanimously. 3. NEW BUSINESS A. Vicksburg Crossing. February And March 2010 Marketing Reports. Grace Management Representative Boedigheimer said there had been some pretty exciting, positive movement and a little negative movement. She said they only lost one resident due to the smoking changeover. She said that another resident, that had been a smoker, passed away and the apartment needs to be cleaned. Grace Management Representative Boedigheimer said there have been several deposits received, with another one in the mail this week. She said that two new residents were moving in by May 1St. She said there had been a lot of interest. She said that the Home and Garden Show didn't Approved Plymouth Housing and Redevelopment Authority April 22, 2010 Page 2 have any direct, positive activity but people stopped by and their presence there was still $50 well spent. She said May 5th would be a Cinco de Mayo open house. She said that having an open house with a resident function would be beneficial. She said there are a few people still expressing an interest but have homes to sell. She said they are getting close to being all full, as the second floor will be all full and the fourth floor only has a few apartments available. Commissioner Ludovissie said that the warmer weather may help as people are more likely to move then. Grace Management Representative Boedigheimer said that people are even just interested in getting out and looking around. Grace Management Representative Boedigheimer said that they have not lost any residents at Plymouth Towne Square due to going nonsmoking. Commissioner Stein asked if she had received a lot of negative feedback or complaints. Grace Management Representative Boedigheimer said that she is a little worried about one resident at Vicksburg Crossing. She said the resident has not signed anything that she agrees to the change but she has not given notice to move out either. Commissioner Ludovissie asked when that lease was up. Grace Management Representative Boedigheimer said it is a monthly lease at this point because she has been living there since near the beginning. Commissioner Ludovissie asked if she had legal representation at this point. Grace Management Representative Boedigheimer said that she was not aware of it yet but that she just doesn't have a good feeling about it. B. First Time Homebuyer Program. Foreclosure Notice On HRA Assisted Property (Verbal Update). Housing Program Manager Barnes said the sheriff's sale did occur at the end of March on this property. He said that we are in the six month redemption period. He said that within the past week, he had contacted and met with the homeowner. He said that he had also contacted the credit union lender that the homeowner is working with. He said that at this point, we are waiting for the credit union to go through their approval committee process to see if they will come in and write a new loan for her. He said we would then be able to look at ways that we could assist. He said that it may be as simple as just subordinating her mortgage but he does not know what the full package will be. He said we would require that it be a fixed mortgage with an interest rate consistent with what we are seeing today. He said a subordination would not require Board action. C. Sand Companies. Potential New Development. Housing Program Manager Barnes gave an overview of the proposal. Neil Fortier, Sand Companies, Inc., said they are proposing a 67 -unit facility and D. R. Horton is looking at the other portion of the property for development of 37 single family homes. He said their MHFA Tax Credit Financing application is due to the State of Minnesota on June 15, 2010. He said that they are initially looking for a letter of support from the city, which is a requirement of the State application. Approved Plymouth Housing and Redevelopment Authority April 22, 2010 Page 3 Mr. Fortier said this is classified as work force housing, which means that all individuals that move in to this facility are required to have income to pay the rent. He said that they require income to be at two times the rent on an annual basis. He said that they are looking at rents at 50 percent and income limits at 60 percent of area median income compared to Common Bond, which is at 30 percent of rents. He said the rents on the units would be $753 for a one bedroom, 901 for a two bedroom and $1,038 for a three bedroom. He said that they also request that the city participate by providing seven project -based Section 8 units for this facility. He said that would help their scoring on their application substantially. He said there have been some concerns expressed about that and he hoped that they could work toward a solution. He said that he spoke to a third party agency that would be willing to manage those seven units if that would be an option. He said that initially, the resident profile usually sees the first dozen or so callers are senior citizens. He said they want to pick that first unit with the best view. He said after that the calls are from married couples and single -female heads of household with two or three children. He said that this facility would have 26 three-bedroom units, so there will be quite a few households with five to six individuals. Mr. Fortier said that City support is essential in the application process. He said that without City support, Minnesota Housing Finance Agency (MHFA) would not take as hard a look at the application. He said that the city could participate in several different ways; such as Tax Increment Financing (TIF), waiver of fees or project -based Section 8 units. Jamie Thelen, Sand Companies, Inc., said there is flexibility to achieve various concept approval. He said they are looking to leverage local dollars with state and federal funding. He said most of their developments recently have had either TIF financing or the city waived fees. He said that also opens up funding from Metropolitan Council. He said that any city that participates with a match up to the amount they are giving that will open up community source funding, which is a pretty big bonus for the project. Commissioner Stein asked if it mattered what kind of funding the city gives. Mr. Thelen replied there are lots of different options, like waiving fees and TIF. He said that for some of the scoring, it makes a little bit of difference under the percentages and it is pretty competitive. Mr. Fortier said they believe they can work the density bonus on the parcel because of what is happening on the D. R. Horton parcel versus their parcel. He said that they talked about flexibility in zoning and the PUD would give them that point. He said SAC and REC reductions, even a minimal amount, would help. Mr. Fortier replied to HRA Executive Director Juetten that MHFA is revising their scoring sheet and the one included in their report is still preliminary. He said that they believe that MHFA is going to set minimums where they have not in the past. He said they could gain a point by fast track permitting and approval. Commissioner Stein asked why the city would provide seven project -based Section 8 units. Housing Program Manager Barnes replied that this is something that has been done in the past. Approved Plymouth Housing and Redevelopment Authority April 22, 2010 Page 4 He said that being an administrator of the Section 8 voucher program, we are allowed to project - base up to 30 percent of our vouchers, which means that we would dedicate those vouchers to a specific building for a specific period of time. Housing Manager Barnes stated that we have done this in the past for units at Stone Creek Village and Vicksburg Commons. He said that we have 13 project -based units currently in the community that are set aside specifically for these two buildings . He also indicated that providing project -based Section 8 vouchers will help the project receive state and federal funding. Commissioner Ludovissie said that there is always a problem of managing them internally. Housing Program Manager Barnes said that is a discussion that staff is having internally right now. He said that there are extra burdens that are placed on staff that work in the Section 8 program. Commissioner Ludovissie stated that the city doesn't get any administration fees for project -based vouchers. HRA Executive Director Juetten replied affirmatively and that for seven regular vouchers it would equate to approximately $4,800 annually in administrative fees. Commissioner Stein asked how project -based differs versus regular vouchers. HRA Executive Director Juetten replied that when a project -based unit is available, staff has to send letters to people on the wait list that would qualify for the unit along with running criminal background checks and forward those names to the apartment manager. The apartment manager then runs the applicants through their normal screening process. Once an applicant is approved for the project -based unit, staff proceeds with the typical certification process. With project -based, no voucher is issued. Once the tenant has resided in the project -based unit for one year, they then become eligible for a regular voucher if we have vouchers available. If a voucher is available, then it would be issued and the tenant could move to another apartment in Plymouth or anywhere else they choose. The project -based unit becomes vacant and the entire process would start over again with taking someone else from the wait list to fill the unit. Commissioner Stein asked if the project -based units remain permanently. Housing Program Manager Barnes added that the project -based units are negotiated for a specific period of time. Vice Chair Caryotakis asked if the seven vouchers would be added to our current allocation of 210 vouchers. Housing Program Manager Barnes replied negatively. Commissioner Ludovissie asked if they would become nonrevenue producing. HRA Executive Director Juetten said that we get the money from Housing and Urban Development (HUD) to pay for the housing assistance on the project -based units we just do not get the administrative fees. Mr. Thelen asked if they could be charged for the service the city provides. Housing Program Manager Barnes replied that staff will look into that option. HRA Executive Director Juetten asked if it was correct that they get points if they do both waiving fees and get tax increment, so if they only do one of them, they won't get as many points and they split it up somehow. Mr. Thelen replied that MHFA has some exclusions in the application and that it may be difficult to get points in both categories. He said that if you get a certain amount of tax increment you could claim it. He said that one thing that is really Approved Plymouth Housing and Redevelopment Authority April 22, 2010 Page 5 beneficial on Section 8 is that right now, tax credits are very difficult to sell. He said the syndicator would look highly on projects because they like the project -based idea. Commissioner Ludovissie asked if TIF is an option on this site and if it is an option for the City Council. Housing Program Manager Barnes replied that it could be a housing tax increment district and the Council has invited the Board to a meeting in May 2010 to discuss this project. HRA Executive Director Juetten said that would push Sand Companies, Inc. to the limit of their June 15th deadline. He said that the City Council set a study session for May 25 at 5:30 p.m. to finalize the letter with whatever they are comfortable with providing. He said that the discussion here was preliminary and that between now and May 25th, City staff and Sand Companies would address questions raised by the Board so that they could present a package to the Council. Housing Program Manager Barnes said that staff has been looking at possible options to provide financial assistance and other types of resources to their application that would assist them in scoring and hopefully being selected. He said that TIF is certainly one avenue and the City Council has used it from time to time in various projects. He said that they have had brief discussions at previous meetings, not particular to this project, where they are supportive for the right projects. He said that would be an option that would be discussed at the May meeting. He said that one of the things talked about was looking at the HRA reserve balance, which is about 1.4 million. He said that HRA Executive Director Juetten and himself have been looking at what potential needs would be for the short term and that they want to be mindful of Vicksburg Crossing and they want to make sure that the two senior buildings have some available cash in case something happens. He said that they feel it might be a viable option to look at doing a loan from our reserves for the proposed project. He said that structurally it might be similar to how tax increment is with a pay-as-you-go note. He said that way we could lessen all the upfront work of setting up a TIF district and that would save their development some fees right away. Commissioner Ludovissie asked if that would be like a lien against their property. Housing Program Manager Barnes replied that it would and that we would enter into a note, a mortgage and a loan agreement with them with all the stipulations and terms. He said it would be a different source of money than tax increment and then it also doesn't tie up any of those new tax dollars that are generated by their development. Commissioner Ludovissie asked if a loan would assist as much in terms of qualifying versus a grant. Housing Program Manager Barnes replied that TIF would be a loan. Mr. Thelen said that with the new scoring, they did talk about that if it was structured as a loan, it may not qualify. He said that they do look at TIF as qualifying and we could still set up a TIF district and get paid back with the TIF. HRA Executive Director Juetten said that the problem is that by June 15t , we could not provide a letter stating that the city would absolutely provide TIF because we would not have gone through the project process yet. Mr. Thelen said that it could be flexible and state that the city would still have to go through all the public hearings and it would not have to state TIF, it could state some other source. Housing Program Manager Barnes added that if this Board and the City Council reach an agreement at the May 25th meeting, we could put a Approved Plymouth Housing and Redevelopment Authority April 22, 2010 Page 6 letter together stating that we will commit "x" amount of dollars and it would still be our choice of funding sources that would best fit the city's needs. John Belisle, Sand Companies, Inc., added that it could state TIF and/or other sources as it wouldn't have to be that specific. Housing Program Manager Barnes said that the city doesn't like to waive fees because those fees are in place for a reason and they are needed by the departments that utilize them. He said that we could look at it if it would benefit their application, a portion of the assistance that we would provide would be in a form of a loan going directly to them in a pay as you go situation and then another portion is in the form of waiving some fee on the city's side. He said that we would make sure that if we waived fees, the HRA would make that department whole by transferring funds from the HRA reserves to which ever fund we waive the fees from. Commissioner Stein said that he liked that idea a lot. He said that part of the problem is that it's in a new part of the city and there are a lot of infrastructure costs, so all of those fees would have to be waived with TIF. He said with this way we would still get those fees back. HRA Executive Director Juetten said that staff is cognizant of that and understand that fees are important. He said that it has never been a policy or even an act of the Council to waive any fees and we are trying to come up with ways to help Sand Companies application but still get those fees paid. He said it might be that it would be a loan that would be structured similar to a First Time Homebuyer loan where it would be forgiven after 30 years, so it's not actually a loan if the project goes through. Commissioner Ludovissie said that he liked the idea of recirculating money. He said that his hope is that the project is successful, the loans are repaid, we benefit by getting the money back at some point from the project so the city and HRA can reuse that money for another project. Housing Program Manager Barnes said that was open for discussion by the Board. He said that as you think about tax increment, it is a pay as you go note and it's an obligation of ours to pay on it and we don't get the money back. Commissioner Stein asked for a worksheet for the meeting on May 25th that would line item all the fees when looking at waiving fees. HRA Executive Director Juetten replied that could certainly be provided. Commissioner Stein asked where the SAC and REC fees go. HRA Executive Director Juetten replied that SAC charges go to Metropolitan Council and there are sewer and water REC charges that the city charges on top of that and those go into the sewer and water funds to help pay for maintenance. Housing Program Manager Barnes asked about the possibility of seeing a few lower income units in the project and would they be open to working with Interfaith Outreach if they would be interested in the project. Mr. Belisle replied that they are currently working with Wilder Foundation in St. Paul, so they are familiar with that type of organization. Mr. Thelen added that there are some additional points for further restricting the 30 percent income. He said that the Approved Plymouth Housing and Redevelopment Authority April 22, 2010 Page 7 negative on that is that you could generate only so much net income and then once you start dropping rents, the amount of first mortgage that you could qualify for drops pretty fast. Housing Program Manager Barnes asked if they could look at this internally and see what affect it has. He said that if this would be something that Interfaith Outreach would be interested in they might be able to come to the table financially for a couple of those units to help keep that up or maybe we could find some other means to make it all work. He said that as we look at our housing portfolio in the entire city, we want to have a wide range of options out there. He said we would not want to turn the whole building down to 30 percent median income but maybe just a couple of units. He said that might be enough to help with points. Mr. Thelen asked if the city is looking at doing any homeless units. Housing Program Manager Barnes replied that they don't have to be but if there are additional points and they are set up to do them, they could look at that. Mr. Thelen said that they would have to do a minimum of four units. Housing Program Manager Barnes said to look at all options. Mr. Thelen said they struggle a little bit with homeless population but it makes a lot of sense to figure it in bigger metropolitan areas where there are just not enough services around and they are open to do that. Commissioner Ludovissie said then you go back to that project -based concept. He said that economically it compromises their deal and then there is the long term financial issue with that as well. He said that he agrees with trying to create some lower income housing opportunities. Commissioner Ludovissie said that he was interested in the time frame. Mr. Fortier replied that was one of the most difficult things with this type of project and that is why only a few developers do this. He said that the application is submitted June 15th, they hear if they are awarded the project on the last Thursday of October and then they immediately go into city processes to get approvals and start due diligence for financing. Commissioner Ludovissie asked how fast tracking would impact them. Mr. Thelen replied that they don't know that yet. Housing Program Manager Barnes asked if they had looked at the Metropolitan Council livable communities demonstration account money, which is separate from Minnesota Housing's Consolidated RFP. He said that there was $6.5 million available for housing and that he did not know if the city would have to apply for it directly or if the developer could apply. He said that if it would have to come from the city, it would be a joint application and he would need assistance to put that together. HRA Executive Director Juetten asked if they knew how many other people are looking for funding though the State. Mr. Thelen replied that the market on the tax credits is really hurt and that financing is difficult on some of them. HRA Executive Director Juetten asked if Arden Hills is going through the same funding cycle and does that help or hurt you if going for the same funding. Mr. Thelen replied they are. He said they are both going to be very similar projects but different sites. He said that Arden Hills is a community that doesn't have any tax credit projects and Plymouth is highly desirable because of the market. Approved Plymouth Housing and Redevelopment Authority April 22, 2010 Page 8 Commissioner Ludovissie asked for an estimate of the constructions costs per unit at their most recent project. Mr. Thelen said that right now on a project like this, it would be $120,000 to 125,000 per unit construction. He said that would be about $8.4 million and that has come down. He said the total project cost is almost $12.5 million, which is a pretty substantial project. Vice Chair Caryotakis asked if this fit well in terms of our priorities in meeting expectations with Metropolitan Council and our housing needs. Housing Program Manager Barnes said that it does meet many of our goals. He said that one of the things that we strive for in our comprehensive plan was that we were given a number of a little over 1,000 units at 60 percent of median income that we had to create new housing units in the next ten years. He said the fact that all 67 of them will be at 60 percent of median income would get us credit for that. He said that it is within the mission of HRA and the city to provide a wide range of housing options and the private market is handling the upper ends. D. May Meeting. Change Of Date. Housing Program Manager Barnes said the Board had been invited by the City Council for a joint meeting on Tuesday, May 25, 2010. He proposed to accept the invitation and then have their regular meeting right after the joint meeting. Commissioner Ludovissie asked if there was a lot of business pending for the May meeting. Housing Program Manager Barnes replied that there was not a lot on the May agenda at this point. Commissioner Stein suggested holding the meeting at 5:00 p.m. Housing Program Manager Barnes said that if they are duly noticed, they could take action on anything from their reserves at the joint meeting. HRA Executive Director Juetten suggested the HRA meeting start at 5:30 p.m. and then extend their meeting. Commissioner Ludovissie asked what the expectation for the letter is as there is no concrete or formal commitment about funds. Housing Program Manager Barnes said we would be making a commitment at the joint meeting if both the HRA and City Council were inclined to do so. HRA Executive Director Juetten said that once they get the letter if they are approved, then within six months they have to have all the details worked out and they have to have a contract otherwise the financing goes away. Vice Chair Caryotakis asked if the commitment is subject to loan approval. Housing Program Manager Barnes replied that it is subject to all their approvals and we will subject it to all the city's processes and approvals that they would need. Commissioner Ludovissie added so long as they are reasonable. Housing Program Manager Barnes stated that the next HRA meeting will be Tuesday, May 25, 2010 at 5:30 p.m. 4. ADJOURNMENT Approved Plymouth Housing and Redevelopment Authority April 22, 2010 Page 9 MOTION by Commissioner Ludovissie, seconded by Commissioner Miller, to adjourn the meeting at 7:55 p.m. Vote. 4 Ayes. MOTION approved unanimously.