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HomeMy WebLinkAboutHousing & Redevelopment Authority Minutes 01-20-2005MINUTES PLYMOUTH HOUSING AND REDEVELOPMENT AUTHORITY January 20, 2005 PRESENT: Chair Susan Henderson, Commissioners Steve Ludovissie, Jenny Flansburg, Tim Bildsoe, and Jim Kovach ABSENT: None STAFF PRESENT: Executive Director Anne Hurlburt, Housing Program Manager Jim Barnes, HRA Specialist Tracy Jones, Senior Planner Marie Darling, and Office Support Representative Barb Peterson OTHERS PRESENT: Dave MacGillivray of Springsted, Inc., Financial Advisor to the City of Plymouth and the HRA, John Commers, Springsted, Inc. Project Manager, and Jody Boedigheimer, Grace Management. Chair Henderson called the Plymouth Housing and Redevelopment Authority meeting to order January 20, 2005, at 7:00 PM. Housing Manager Barnes noted there are two replacement items for Item 3A. 2. CONSENT AGENDA A. Approval of the December 16, 2004 HRA Meeting Minutes. B. Plymouth Towne Square — Accept monthly housing reports. MOTION by Commissioner Bildsoe, seconded by Commissioner Flansburg, approving the consent agenda. Vote. 5 Ayes. MOTION approved. 3. PUBLIC HEARING A. HOUSING REVENUE BONDS Housing Manager Barnes stated that at the Oct. 5, 2004 HRA Board meeting, the Board approved the development of a new independent senior apartment building located at the southwest corner of Highway 55 and Vicksburg Lane. He said staff is proposing a 75 unit facility which they feel would fit the needs of the community better than the 50-60 unit facility previously proposed. Commissioner Bildsoe questioned why staff didn't raise the number of units to the allowable 100 units rather than 75. He also asked how the higher density of 75 units would affect the traffic Plymouth Housing and Redevelopment Authority January 20, 2005 Page 2 studies that have previously been done. Director Hurlburt replied that 60 units were based on the minimum number according to the Comprehensive Plan. Housing Manager Barnes said the reason they did not propose 100 units was because staff was being cautious. Director Hurlburt said that a higher number of units would not affect the traffic study as senior housing has a low impact on traffic than a day care facility, which was used in the traffic studies. Commissioner Bildsoe commented that Plymouth Towne Square has 99 units, is successful, and still has a wait list. Housing Manager Barnes explained the difference between Plymouth Towne Square and the new senior building, indicating that the proposed building would be a mix of market rate and affordable units. Commissioner Bildsoe said he feels an opportunity to build a senior apartment building will probably not happen again and suggests expanding the number of units at this time. Director Hurlburt said we would still want to meet the 35% affordability goal. Commissioner Ludovissie agreed with Commissioner Bildsoe that a higher density on the site makes sense but commented that the driver for more units would be the market. Director Hurlburt said the number could be raised but the bond sale would need to be restructured and this information would need to be relayed to our architects so they can stay on schedule. Commissioner Flansburg asked what the negatives of raising the number of units would be. Mr. MacGillivray replied that the Pro forma and the revenues drive the transaction. When going to a larger number, the mix of those units would drive the financing and the risk trade-offs, such as whether the City or HRA needs to step in annually to help the cash flow. Housing Manager Barnes gave a brief description of what the proposed project would look like. He said it will be 75 units with a mix of 1 bedroom, 1 + den, and two bedrooms. The design will blend in with the Shops at Plymouth Creek. There will be upgraded amenities such as washers and dryers in units. Based on the current Pro forma the cost for each unit would be $85,000. He said it would be a mix of market rate and affordable units. Housing Manager Barnes stated that the bonds are housing revenue bonds that will have a general obligation pledge from the City of Plymouth, which means if there is a shortfall in the payments for the debt service, the City will guarantee them, however, the funds would come from the HRA. Mr. MacGillivray explained the mechanics of the Housing Revenue Bonds. He said there are two transactions that are moving forward. One is a $7.8 million general obligation housing project bond which will be discussed tonight. The other transaction is for the tax increment bonds for the commercial development. The TIF bonds will be used for road improvements and acquisition of the HRA senior site. The City will be the issuer. The bonds are tentatively scheduled to be sold on March 8, 2005 for both transactions. Mr. MacGillivray described the procedure for selling the bonds. He said that the construction cost will not be known until July but the general feeling is that the bond market is moving upward and it would be better to sell them now to get a better interest rate. Mr. MacGillivray said that bonds can be issued without the approval of voters. Specific statutory authority permits the sale without voter approval if there is a good expectation that the net revenues from the operating facility each year will exceed 110% of the annual debt service. Plymouth Housing and Redevelopment Authority January 20, 2005 Page 3 Mr. MacGillivray stated that the most crucial assumption is that rents currently listed in the Pro forma are attainable and that those rents are raised every year by 2% for the next 30 years. Mr. MacGillivray spoke about the risks. The first is construction risk. If bids are taken in July and come in at $8 million, the shortfall would have to come from the HRA reserves or another source. Housing Manager Barnes said a meeting had been held with the City of Plymouth Finance Director, himself, and Springsted to talk about the risks regarding issuing the bonds prior to receiving the construction bids. After hearing the risks it was the recommendation of the City's Finance Director to sell the bonds in March. Housing Manager Barnes explained where the funds would come from to cover costs in the event the construction bids come in higher than anticipated. Chair Henderson asked if we increase the units to 100 what will that do to the cost. Mr. MacGillivray said it depends if the revenue will increase which will depend on the mix of units. Housing Manager Barnes said that two bedrooms will bring higher revenues and explained how the unit mix could be adjusted. Mr. MacGillivray described the debt service shortfall risk. He stated that Springsted is recommending the City retain any unused surplus from the operating budget in a dedicated fund to prepay bonds and reduce the debt service. Mr. MacGillivray commented that many cities would need to have a debt service reserve, which is one year of debt service. Because Plymouth has the resources, Moody's Investors Service will not require this. Mr. MacGillivray explained the process if a shortfall in revenues should exist. Mr. MacGillivray stated that Springsted is recommending a formal management review process for the financial performance of this project at a minimum of once every two years. Commissioner Ludovissie commented on the construction numbers. He asked how close we could get to the number before selling the bonds. Housing Manager Barnes said the numbers are based on a project that Dakota County did for a cost of $77,000 per unit. He feels the $85,000 per unit is pretty close. Discussion occurred regarding the construction cost. Commissioner Ludovissie asked about the cost of prep work for the site. Housing Manager Barnes said it is not expected to be expensive. Commissioner Bildsoe asked whether soil tests have been done. Housing Manager Barnes said the tests are being done right now. Director Hurlburt stated all costs would go up if the number of units were raised. Commissioner Bildsoe said the levy limits are a concern from the Cities viewpoint. Director Hurlburt said the HRA has never levied to the maximum. Commissioner Flansburg asked for clarification regarding the soil tests. Housing Manager Barnes described how the soil tests are performed. Director Hurlburt stated that Dana Spicer did not use the land where the apartment will be located. Plymouth Housing and Redevelopment Authority January 20, 2005 Page 4 Chair Henderson said she is worried about current vacancy rates. Housing Manager Barnes indicated staff has researched this issue and contacted many comparable apartment complexes. Discussion occurred about whether or not to do a full market study. Commissioner Ludovissie asked Commissioner Bildsoe how the other City Council members would feel about a higher number of units. Commissioner Bildsoe said he feels they would probably like to maximize the number and be able to provide more housing. Commissioner Bildsoe commented that there are not many sites left in Plymouth to build on. Mr. MacGillivray said at some point there will have to be a bond sale. There will be a special meeting of the City Council on March 8, 2005, at 7:00 p.m. Director Hurlburt suggested the HRA could meet at 6:00 that night. Mr. MacGillivray said if the HRA wants to add more units the Pro forma would need to be reviewed. Chair Henderson asked how long that would take. Director Hurlburt asked if the two separate bond issues could be sold separately. Mr. MacGillivray replied that would be possible. However, he stated that if we wait to do that in July when the bids come in there would be more cost involved and we risk having a higher interest rate. Commissioner Bildsoe asked if any of the other Commissioners want to raise the number of units. Commissioner Ludovissie said it makes perfect sense to raise the number but should have good justification to do so. Commissioner Flansburg said she is in favor of more units. Commissioner Kovach said he is in favor of increasing the size. Director Hurlburt said she doesn't know what the Pro forma would tell us and feels it is riskier but it should be looked at because we probably won't be able to find another site. Commissioner Bildsoe asked about the specific age of residents in that facility. Housing Manager Barnes said the regulations require seniors 55 and older. Commissioner Bildsoe asked Mr. MacGillivray what Springsted's feeling would be about going to a higher number of units. He replied that they only prepared the Pro forma and didn't do a market study. Commissioner Flansburg asked how changing the size would affect the selling of the bonds in March. Mr. MacGillivray said they would continue selling the bonds for the 75 -unit building and then hold a new public hearing for the larger project. He said it could still be done in the beginning of March. Commissioner Bildsoe spoke about selling the bonds through a negotiated process rather than a competitive process. He explained the difference in the two methods. Mr. MacGillivray said Springsted feels there needs to be a good reason to move from a competitive bid process to a negotiated process. Springsted recommends a competitive process because the bond market will look at this as a general obligation bond with a Aaa rating and there is a lot of interest for these types of bonds among the buyers. He said it could be done either way. Discussion occurred regarding each type of sale. Chair Henderson opened the Public Hearing. Acknowledging that no one wanted to speak in this issue, the Public Hearing was closed. Plymouth Housing and Redevelopment Authority January 20, 2005 Page 5 MOTION by Commissioner Bildsoe, seconded by Commissioner Kovach approving the revised attached resolution to issue G.O. Housing Revenue Bonds for the new senior apartment project in the amount of $7,825,000 and request the City Council affirm their G.O. backing of the bonds. Vote. 5 Ayes. MOTION approved. MOTION by Commissioner Bildsoe, seconded by Commissioner Ludovissie, to hold a public hearing to consider an increased bond issue in an amount not to exceed $12 million for a larger senior apartment project. Vote. 5 Ayes. MOTION approved. Director Hurlburt stated that the date for the Public Hearing will be set and a special meeting will be called if necessary. 4. NEW BUSINESS A. REGULATORY POLICY REPORT Director Hurlburt introduced the study on the impact of regulatory policies and their effects on housing affordability. Director Hurlburt mentioned that this presentation was already given to the Planning Commission and that the Planning Commission had requested additional information from staff before taking action on any of the policies. She added that the Planning Commission will be discussing the report again at their February 16th meeting. HRA Specialist Jones and Senior Planner Darling gave an overview of the January 12, 2005 staff report. HRA Specialist Jones outlined the seven potential regulatory policy changes to encourage housing affordability. Senior Planner Darling gave a summation of each of the seven potential changes; reducing parking requirements for apartments, modifying the 25% impervious surface coverage requirement, allowing alternative water main materials, reducing minimum lot area and width for single-family homes, reducing setbacks, modifying density and allowing more units per structure. Senior Planner Darling recommended that the City consider five of the seven policies in the near future. These policies included: reducing parking requirements for apartments, modifying the 25% impervious surface coverage requirement, allowing alternative water main materials, reducing minimum lot area and width for single-family homes and reducing setbacks. Senior Planner Darling also recommended that the City consider the remaining two policies during its Comprehensive Plan update process. These policies included: modifying density and allowing more units per structure. Commissioner Flansburg asked for clarification on which policies were of immediate priority. Senior Planner Darling said the top three which they would like to look at sooner rather than later would be reducing parking requirements for apartments, modifying the 25% impervious surface coverage requirement and allowing alternative water main materials. Director Hurlburt explained how the water main materials became one of the top priorities. With street reconstruction projects in the works the City felt this was a good time to review what type Plymouth Housing and Redevelopment Authority January 20, 2005 Page 6 of materials to use while the streets were being dug up. Director Hurlburt said the affordability of street projects affects everyone in the City. Chair Henderson asked Senior Planner Darling if HRA should take any action tonight. Senior Planner Darling replied only if the HRA felt comfortable doing so. Director Hurlburt said any recommendations would be taken first to the Planning Commission on anything that requires a zoning ordinance or comprehensive plan amendment. She said if the HRA would like to make a recommendation on allowing alternative water main materials it would be timely to do so this evening. Commissioner Flansburg asked for background information on the water main materials. Discussion occurred regarding types of materials used now versus the PVC which is being proposed. Commissioner Ludovissie remarked that PVC has probably improved since it was first manufactured. Commissioner Ludovissie suggested that they could make a motion on the water main materials tonight and then look at the other items during a future meeting. MOTION by Commissioner Ludovissie, seconded by Commissioner Kovach that the City Council consider allowing Polyvinyl Chloride (PVC) piping to be used for water mains. Vote: 5 ayes. Motion approved. Housing Manager Barnes said the other items will be looked at again in March. B. NAMING OF NEW SENIOR BUILDING Housing Manager Barnes said we need to start thinking about a name for the new senior building. Commissioner Bildsoe stated he would like some additional time to consider this item and suggested the Commissioners e-mail additional suggestions to Housing Manager Barnes. The Board agreed. Meeting adjourned at 9:25 PM. 1IRA/Minutes/2005/01-20-05