HomeMy WebLinkAboutCity Council Packet 05-25-2010 Special.pdfCITY OF PLYMOUTH
AGENDA
SPECIAL COUNCIL MEETING
WITH THE HOUSING AND REDEVELOPMENT AUTHORITY
MAY 25, 2010, 5:30 p.m.
MEDICINE LAKE CONFERENCE ROOM
1. CALL TO ORDER
2. DISCUSSION TOPICS
A. Consider providing various forms of assistance to Sand Companies to help
facilitate the development of a 67 -unit work -force housing project
proposed to be located at the intersection of County Road 47 and
Vicksburg Lane and provide staff direction with the project support letter
to the Minnesota Housing Finance Agency (MHFA).
B. ADJOURN
Special Council Meeting 1 of 1 May 25, 2010
City of Agenda 8 . 1PlymouthNumber: v
Adding Qkelity to Life
To: Laurie Ahrens, City Manager
SPECIAL JOINT
COUNCIL MEETING Prepared by: Jim Barnes, Housing Programs Manager
AND HRA MEETING Reviewed by: Steve Juetten, Community Development Director
May 25, 2010 Sand Companies — Single Family/Multiple Family planned
Item: unit development located at the northwest corner of
Vicksburg Lane and County Road 47.
1. ACTION REQUESTED:
Consider providing various forms of assistance to Sand Companies to help facilitate the
development of a 67 -unit work -force housing project proposed to be located at the
intersection of County Road 47 and Vicksburg Lane and provide staff direction with the
project support letter to the Minnesota Housing Finance Agency (MHFA).
2. BACKGROUND:
Sand Companies recently presented a schematic plan to the Planning Commission, Housing and
Redevelopment Authority (HRA) and City Council (Council) on the proposed construction of a
67 -unit work -force multi -family apartment building to be located at the northwest corner of
Vicksburg Lane and County Road 47 (see attached location map and site plan).
The primary source of funding for the proposed development is expected to come from MHFA
and the Low Income Housing Tax Credit Program (Tax Credits). Other MHFA programs and
Hennepin County programs are being investigated as well. Further, Sand Companies is
requesting financial assistance from the Council and HRA. This assistance will help fill an
expected financing gap as well as provide points to increase the scoring of the highly
competitive Tax Credit application process. Without assistance from the City, the current
estimated application score is 66 points, with the requested City assistance, the estimated score
would increase to 80 points. In the past two years the minimum score range for selected
projects has been 68-79.
Sand Companies is requesting the following assistance:
Direct financial assistance;
Waiving a portion of City charged development fees; and
Providing Project -Based Section 8 vouchers.
Financial Assistance
Sand Companies is requesting direct financial assistance in the amount of $600,000 or
approximately $9,000 per unit. This compares to $44,000 per unit for Stone Creek Village and
10,000 per unit for Vicksburg Commons. Providing direct financial assistance would add 2
points to the MHFA application.
Staff has reviewed the request and has come up with four options the City and HRA could
consider if the desire is to provide Sand Companies with direct financial assistance.
A. The use of existing excess TIF dollars — New legislation created through the 2010
Minnesota Jobs Bill allows the City/HRA to utilize unspent increment from existing TIF
districts to facilitate development. This legislation requires a funded project to be started
between now and July 2011. If you recall during a recent update on our tax increment
districts, the City's TIF district 7-4 currently has a fund balance of $869,000, which is not
currently needed. District 7-4 is in place to assist in covering any short fall in district 7-5A,
however, a short fall is not projected until 2012 and the annual increment generated by
district 7-4 will be more than sufficient to cover that short fall at that time. If this option is
not selected the funds would be returned to the county for redistribution. The City's portion
would be approximately ten percent.
B. Create a new TIF District specifically for this project — The City or HRA could
create a new Housing TIF district. The negative of this option is the $30,000 - $40,000 of
additional expenses that would be incurred to cover the set-up administrative costs, expenses
that would increase the cost of the project. The current estimate of increment would be
approximately $850,000. If this option were selected, staff would recommend issuing a pay-
as-you-go note to the developer and pay the obligation over 25 years.
C. Utilize HRA Reserves — The HRA currently has an unobligated balance of 1.4
million dollars. These funds have been accumulated over time to cover unforeseen expenses
in either of the senior buildings, Section 8, general operations, or to fund special project(s)
identified by the HRA. If this option is selected it would lower the available amount of
reserve funds the HRA would have for future projects.
D. Any combination of the above options — The Council and HRA could choose to
combine the different options above (i.e. use some excess increment and some HRA
reserves) rather than just do one option or another.
Waiving of Fees
Sand Companies has requested the City waive a portion of some of the development fees
associated with the project. The waiving of fees for park dedication and/or City SAC and WAC
fees would provide two additional points in the scoring (one for each waiver). Based on current
fee rates, the project will pay a total of $435,000 in park dedication and an estimated $132,525
in City SAC and WAC fees. The application does not stipulate the amount that has to be
waived of the fees, so at this point Sand Companies is requesting a waiver of $2,000 in park
dedication and $2,000 in City SAC and WAC fees.
The City Council has never considered waiving fees in the past because the fees are earmarked
for specific purposes for the long term health of the parks system and City infrastructure. One
option would be for the City to waive the fees and the HRA approve a transfer of an equal
amount of funds from their reserve account to the funds where the fees were waived.
The Park Dedication fund has a current balance of $2,560,657 and the Utility Trunk fund has a
balance of $16,476,004.
Project -Based Section 8 Vouchers
Sand Companies has asked the HRA to consider providing a minimum of seven Project -Based
Section 8 vouchers to the project. If the seven vouchers are guaranteed for a minimum of 10
years, 5 points would be added to the MHFA application.
3. BUDGET IMPACT:
There will be a financial impact to the City or HRA if financial assistance is provided to the project.
The impact will depend on which option(s) are selected. If TIF is selected, the taxes paid by either a
new district or TIF district 7-4 will be captured for a period of time and the City and County will not
receive their portion for that period of time. If The HRA reserves are selected then the impact will
be to the HRA reserve account.
4. RECOMMENDATION:
Staff is recommending the following:
a. Waive $2,000 in Park Dedication fees — reimbursed with HRA reserves
b. Waive $2,000 in SAC/WAC fees — reimbursed with HRA reserves
c. Commit Seven Project -Based Section 8 vouchers for a 10 year period
d. Provide a forgivable loan from the HRA reserves in the amount of $300,000
e. Provide a forgivable loan from excess increment in TIF district 7-4 in the amount of
300,000
5. ATTACHMENTS:
Location Map
Site Plan
Draft City/HRA Commitment Letter
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May 25, 2010
Minnesota Housing Finance Agency
400 Sibley Street, Suite 300
St. Paul, Minnesota 55101
Attention: Multifamily Underwriting
RE: Housing Tax Credit Program & Super RFP.
WEST VIEW ESTATES — PLYMOUTH.
Dear Multifamily Development:
The City of Plymouth is a community made up of residents, businesses and institutions sharing a
common history. For years, many people have thought life is good in Plymouth and now many
more people are in on the secret. Money magazine ranked Plymouth as the number one Best
Place to Live in the United States. A sense of home, parks and award winning schools helped put
Plymouth at the top.
One of the primary purposes of a community is to serve as a place of residence for its citizens.
Assuming this charge, offering a mix of life cycle housing opportunities becomes a challenge for
local governments especially in the suburbs. The City has a strong desire to support affordable
and work -force housing and is an active participant in the Livable Communities Program. The
City's Comprehensive Plan sets goals that emphasize the development of a variety of housing
types that are suitable for a mix of incomes including work -force housing. Developers and the
City must be partners to cooperatively develop housing plans to provide life cycle housing in
Plymouth.
To promote and participate in rental housing opportunities, the City has provided incentives for
affordable housing developments. As a cost reduction measure to endorse West View Estates, if
the project is selected for funding the City will provide the project with a density bonus,
flexibility in zoning and fast track permitting and approval. The City will also waive $2,000 in
local development fees and $2,000 in local WAC charges.
The City of Plymouth also proposes significant local financial contributions for this project as
part of its participation and endorsement. If the project is selected for funding, the City Council
and the Plymouth Housing and Redevelopment Authority supports the use tax increment
financing (TIF) for the project or other funding means to achieve up to $600,000 in assistance.
In addition to waiving a portion of the development fees and providing financial assistance to the
project, the Plymouth HRA will commit seven Project -Based Section 8 Vouchers to the project
for a period of ten years.
The proposed development is an excellent opportunity for the City of Plymouth to meet a portion
of its housing goals. This endorsement is based upon the findings that the project will meet
locally identified housing needs and that the proposed housing is in short supply in the local
housing market. This need is evidenced by the gap between the local supply and demand for the
proposed type of housing.
The City Council's and the Plymouth HRA's endorsement is evidenced by this letter of support
for the proposed development. We respectively request funding approval for this needed
development in the City of Plymouth.
Sincerely,
The Honorable Kelli Slavik
Mayor, City of Plymouth
Sincerely,
Jeff Kulaszewicz
Chair, Plymouth HRA