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HomeMy WebLinkAboutHousing and Redevelopment Authority Packet 04-25-2024Housing and Redevelopment Authority 1 of 1 April 25, 2024 CITY OF PLYMOUTH AGENDA Regular Housing and Redevelopment Authority April 25, 2024, 7:00 PM 1. CALL TO ORDER 2. PUBLIC FORUM—Individuals may address the HRA about any item not contained on the regular agenda. A maximum of 15 minutes is allotted for the Forum. If the full 15 minutes are not needed for the Forum, the HRA will continue with the agenda. The HRA will take no official action on items discussed at the Forum, with the exception of referral to staff for future report. 3. APPROVE AGENDA —HRA members may add items to the agenda for discussion purposes or staff direction only. The HRA will not normally take official action on items added to the agenda. 4. CONSENT AGENDA —These items are considered to be routine and will be enacted by one motion. There will be no separate discussion of these items unless HRA member or citizen so requests, in which event the item will be removed from the Consent Agenda and placed elsewhere on the agenda. 4.1 HRA Minutes - March 28, 2024 Meeting Housing and Redevelopment Authority Minutes 03-28-2024 5. PUBLIC HEARINGS 6. NEW BUSINESS 6.1 Scattered site property disposition HWR Garland Lane Proposal ODC Garland Lane Proposal 7. UPDATES 7.1 Staff Updates 2024 Work Plan (HRA) 1-25-2024 8. ADJOURNMENT 1 Regular Housing and Redevelopment Authority April 25, 2024 Agenda Number:4.1 To:Dave Callister, City Manager Prepared by:Steven Schmidt, Housing Manager Reviewed by:Grant Fernelius, Community and Economic Development Director Item:HRA Minutes - March 28, 2024 Meeting 1. Action Requested: Staff recommends approval of the March 28, 2024 HRA minutes. 2. Background: The March 28, 2024 minutes are attached. 3. Budget Impact: N/A 4. Attachments: Housing and Redevelopment Authority Minutes 03-28-2024 2 DRAFTED MINUTES PLYMOUTH HOUSING AND REDEVELOPMENT AUTHORITY MARCH 28, 2024 MEMBERS PRESENT: Chair Michelle Soderberg, Commissioners Wayne Peterson, James Williams, Joel Spoonheim, Kim Vohs, and Tony Kuechle ABSENT: Commissioner Ronald Kelner STAFF PRESENT: HRA Executive Director Grant Fernelius, Housing Manager Steven Schmidt, Housing Coordinator Shelonda Marie-Alves, Permit Technicians Michelle Bast and Emily Ammentorp OTHERS PRESENT: Mayor Jeffry Wosje, Homes Within Reach Executive Director Brenda Lano-Wolke 1. CALL TO ORDER Chair Soderberg called the Plymouth Housing and Redevelopment Authority meeting to order at 7:00 p.m. 2. PUBLIC FORUM Chair Soderberg opened and closed the Public Forum as there was no one present to speak. 3. APPROVE AGENDA MOTION by Commissioner Williams, seconded by Commissioner Peterson to approve the Agenda. Vote. 6 Ayes. MOTION passed unanimously. 4. CONSENT AGENDA 4.1. Approved minutes from February 22, 2024. 4.2. Plymouth Towne Square. Accept Monthly Housing Reports. 4.3. Vicksburg Crossing. Accept Monthly Housing Reports. MOTION by Commissioner Williams, seconded by Commissioner Vohs to approve the Consent Agenda. Vote. 6 Ayes. MOTION passed unanimously. 5. PUBLIC HEARINGS 5.1. Program Year 2024 Community Development Block Grant (CDBG) Annual Action Plan Public Hearing Housing Manager Schmidt gave an overview of the staff report. Commissioner Williams asked for clarification on the allocation. 3 Drafted Minutes Plymouth Housing and Redevelopment Authority March 28, 2024 Page 2 Housing Manager Schmidt confirmed that is based on the prior year’s income and does not include the estimated program income. Chair Soderberg opened and closed the Public Hearing as there was no one present to speak. 6. NEW BUSINESS 6.1. Homes Within Reach Presentation HRA Executive Director Fernelius gave an overview of the staff report. Commissioner Peterson asked if the HRA has done other projects over the last 30 years that have not come back or whether this was a unique thing tried in the 90s. HRA Executive Director Fernelius replied it is his understanding that this was a unique, one-off situation. Commissioner Vohs asked the rents at Valor Place. Housing Manager Schmidt replied the rents are about $1,300 or $1,350. Commissioner Williams asked if there is an estimate of the current property values on Garland. HRA Executive Director Fernelius replied he did not have that data as the properties have not been appraised and he did not review the assessment value. Chair Soderberg commented that Zillow shows the value at $400,000. Ms. Lano-Wolke presented information on community land trusts. Commissioner Peterson asked if the organization checks to ensure minimal maintenance is completed on the property. Ms. Lano-Wolke replied they drive by the properties to view the condition and respond to any neighbor complaints. Commissioner Williams asked if approved plans need to be provided for proposed capital improvements and whether those plans need to be approved by the organization. Ms. Lano-Wolke confirmed that is the process, stating this ensures the work is done correctly, and permits are pulled if necessary. She stated this also ensures the home is not over-improved as it would make the home not affordable for the next buyer. Commissioner Williams asked what would occur if someone were to sublease their property. 4 Drafted Minutes Plymouth Housing and Redevelopment Authority March 28, 2024 Page 3 Ms. Lano-Wolke replied if someone was renting the property, they would have to resolve the issue to remove the renter. She stated the ground lease is very specific in that renting is not allowed. She continues to review the benefits of shared equity homeownership. She provided more information on the Homes Within Reach currently located in the City of Plymouth. Commissioner Peterson asked if any of the homes are fitted to be accessible, and whether there would be a requirement to keep those homes accessible for the next owner. Ms. Lano-Wolke replied it is not a requirement for the homes to be accessible; some are, and some are not. She stated some homes have been rehabbed to be accessible, and they have worked with other homeowners to install handicap accessible improvements. Commissioner Kuechle asked who completes the underwriting of the income for the new buyer in subsequent sales of the home. Ms. Lano-Wolke replied the organization completes that in-house, following HOME and CDBG guidelines. Commissioner Spoonheim asked and received confirmation that the taxes are based on the total value of the land and home, as would be insurance. He asked for details on the primary funding the organization receives. Ms. Lano-Wolke replied their primary funding is provided by city partners, the Metropolitan Council, Hennepin County, the State of Minnesota, and other grants that may be solicited. She stated the organization also receives some donations. Commissioner Peterson noted donors could provide donations to MN Housing in return for a tax credit. He asked and received confirmation that could be a source of funding for the organization. Ms. Lano-Wolke confirmed that donors can provide donations through that source and specify this use for the funds. Commissioner Vohs commented it was his understanding that if a donation was to be project specific, it would need to be approved through the program. Ms. Lano-Wolke said she has not yet applied for that as it originally seemed the purpose was towards larger rental units. She has since learned that the funds could also be used for all housing purposes. Commissioner Vohs asked if it would be onerous to place a single-family home on the list. Ms. Lano-Wolke replied she is unsure how onerous that process would be but noted that she 5 Drafted Minutes Plymouth Housing and Redevelopment Authority March 28, 2024 Page 4 would most likely place the goal of 60 homes on the list rather than one particular home. HRA Executive Director Fernelius informed the HRA that staff is not looking for specific action tonight but is seeking feedback on whether staff should continue to pursue options on a potential land trust partnership. He stated staff could then bring those details back to the HRA for review and a decision. He advised ODC has also expressed interest and therefore could be invited to provide a similar presentation. Commissioner Kuechle commented he agrees with the staff assessment that managing two homes is not a good use of staff resources. He recognized the down payment assistance program and asked what else is available for affordable homeownership. Housing Manager Schmidt reviewed the current available programs of that nature. Commissioner Kuechle stated he likes this idea and the model to keep the home affordable year after year. He stated he would also be comfortable hearing a presentation from ODC. He supported staff continuing to work on this topic. Commissioner Spoonheim echoed that these rentals are not a great use of staff time, and it is important the properties remain affordable. He stated this was one option that looks great, but it would also behoove the HRA to hear more information from similar entities such as ODC or Habitat for Humanity. He noted the main goal is to keep the homes affordable. Commissioner Williams echoed the comments of Commissioner Spoonheim. He stated he would like to review all possible options with a feasibility study comparing the options to ensure they receive the best deal. Chair Soderberg agreed with the previous speakers. She stated there is value in the properties, and she is open to all plans. She wanted to ensure the homes remain affordable and to potentially expand other programing. Commissioner Peterson also agreed. He indicated he would be open to exploring partnerships for other properties in addition to the Garland homes. Commissioner Vohs concurred with the previous comments. He stated perhaps they could have a side-by-side comparison rather than a complete feasibility study in order to compare the options. He said he previously referred clients to Homes Within Reach and only received positive feedback. HRA Executive Director Fernelius commented staff will continue to work with Homes Within Reach and will also follow up with ODC. He specified staff would like to avoid a research project such as a feasibility study, which is why staff reached out to local groups that would be logical partners. He believed this is the path forward and agreed they could schedule presentations in the future to hear more about potential partnerships. He stated staff would like to move on these 6 Drafted Minutes Plymouth Housing and Redevelopment Authority March 28, 2024 Page 5 two properties fairly quickly. 7. UPDATES HRA Executive Director Fernelius provided a summary of his written report. 8. ADJOURNMENT MOTION by Chair Soderberg, with no objection, to adjourn the meeting at 8:08 p.m. 7 Regular Housing and Redevelopment Authority April 25, 2024 Agenda Number:6.1 To:Housing and Redevelopment Authority Prepared by:Steven Schmidt, Housing Manager Reviewed by:Grant Fernelius, Community and Economic Development Director Item:Scattered site property disposition 1. Action Requested: Discuss proposals and provide direction on disposition of two scattered site properties on Garland Lane N. 2. Background: In 1999 the HRA worked in collaboration with two non-profit housing agencies and a private developer to construct two accessible homes in Plymouth. These two homes were a first for the HRA in working on scattered site new development projects. The initial intent of the program was to promote homeownership and provide accessible housing to qualified families. In 2010, one of the original owners experienced financial difficulties and was in the process of losing the home to foreclosure. The owner then approached the HRA about purchasing the home and renting it back to them. The HRA agreed to the request. In 2020, the owner of the second home approached the HRA with a similar request, which was approved that same year. Since then both homes became vacant. One tenant passed away in May 2023 and the other moved out in December 2023. Before re-leasing the properties staff believes there is an opportunity re-evaluate the program and consider other options. DISCUSSION: At the March 28th HRA Meeting, staff requested feedback and direction from the HRA on whether to pursue disposition of the Garland Lane properties. Brenda Lano-Wolke, Executive Director of Homes Within Reach, a Community Land Trust organization, provided a presentation highlighting the benefits of the community land trust model. The HRA Board directed staff to gather additional information from HWR on the details of a proposal to sell the properties at 3315 and 3325 Garland Lane N. for inclusion in the community land trust program. A copy of HWR's proposal is attached. In brief, HWR would purchase the properties from the HRA for $350,000, complete rehabilitation work and then sell them through a community land trust to income qualified families. Staff has also received a letter of interest from Outreach Development Corporation (ODC) for ownership and operation of the two scattered site units as rental units. Under ODC's proposal, the HRA would donate or sell the properties for $1. ODC would rehab the units and then rent them out to income-qualified tenants. In addition to the property donation, ODC is also requesting that the HRA provide an on-going subsidy to the project by contributing project-based Housing Choice 8 Vouchers (HCV). The HRA Board asked that staff arrange for a presentation from ODC at the April meeting. STAFF ANALYSIS Based on what we know so far, the HWR and ODC proposals take different approaches to preserving affordable housing. The HWR proposal focuses on affordable home ownership. The HRA could recoup some of its initial investment in the properties and redirect those resources to other activities. The ODC proposal focuses on a rental model with a larger financial contribution from the HRA and on-going subsidies. Both concepts are worthwhile and have merit. A central question is whether the HRA wants to recoup some of its investment in the homes and use those funds for other housing priorities. RECOMMENDATION: Staff is seeking feedback and direction on the HWR and ODC proposals. If there is interest in either proposal, staff would come back with a term sheet or purchase agreement for formal consideration at a future meeting. 3. Budget Impact: N/A 4. Attachments: HWR Garland Lane Proposal ODC Garland Lane Proposal 9 April 15th, 2024 Steven Schmidt Housing Manager City of Plymouth 3400 Plymouth Boulevard Plymouth, MN 55447 RE: 3315 & 3325 Garland Lane N, Plymouth This is to inform you that West Hennepin Affordable Housing Land Trust would like to purchase 3315 and 3325 Garland Lane N, Plymouth, if a satisfactory agreement can be reached. The offer is based on a review and analysis of similar properties, size and condition, available within HWR’s service area. We are prepared to pay $350,000 for clear title to the properties. A summary of the amount offered is as follows: Plymouth HRA supports Homes Within Reach on an annual basis with CDBG funds. Rather than utilize these funds, a reduction in the offer was considered. 3315 Garland Lane N. Acquired by the HRA in 2020 for $185,000 , current estimated rehab needs, $64,322. 3325 Garland Lane N. Acquired by the HRA in 2000 for $163,000, current estimated rehab needs, $81,374. HWR addresses all health, safety and energy efficiency issues with properties we acquire. We purchase as is, with 45 days to close. In addition, this offer is made on the condition that no tenant is currently or will be permitted to occupy the property before the sale is completed. These homes would be placed in the HWR portfolio as community land trust properties. Via the terms of the CLT ground lease (99 years) the homes will remain affordable in perpetuity. If you have any questions about this matter, please contact us at (952) 401-7071. Sincerely, Brenda Lano-Wolke Brenda Lano-Wolke Executive Director WEST HENNEPIN AFFORDABLE HOUSING LAND TRUST 5100 Thimsen Ave., Ste. 120, Minnetonka, MN 55345 Telephone (952) 401-7071 Fax: (952) 224-2857 Email: info@homeswithinreach.org 10 March 22, 2024 Grant Fernelius, Community and Economic Development Director Steven Schmidt, Housing and Economic Development Manager , Mayor Jeffrey Wosje, Plymouth HRA Committee Dear friends: Outreach Development Corporation (ODC) hereby submits a letter of interest in partnering with the Plymouth HRA to acquire and maintain the two single family (SF) homes located at: 3315 Garland Lane: Parcel ID: 20-11822-24-0079 • Property last sold in December 2020 for $185,000 3325 Garland Lane: Parcel ID: 20-11822-21-0023 & 20-11822-24-0084 • Property last sold in January 2000 for $163,000 Finding affordable housing in safe neighborhoods for families with handicapped members is an ongoing challenge. Of the 408 households with disabilities currently on the Interfaith Outreach caseload, 299 report permanent disability and 215 physical disabil ities. We see this as a unique collaborative opportunity to help a couple of those households find and keep a safe place to call home. Prospective tenants would also be privy to services provided by Interfaith Outreach, a top-of- line school district, nearby employment opportunities, health care facilities, and other City services. Our initial thoughts about how we might partner with the HRA to create an affordable and sustainable long-term SF housing solution for these homes that meets our shared goals of preserving a continuum of affordable housing options in our community are these: We envision acquiring and operating these homes as 3-bedroom SF rental homes for households that earn 60% or less of the area AMI. This agreement could be in the form of a recorded land use restriction with an option for ODC to sell these homes in the future to a family that earns 110% or less of the AMI. Outreach Development Corporation / 1605 County Road 101 N / Plymouth, MN / 55447 www.odchousing.org / 763-777-1119 / - EIN: 41-1976895 11 Income levels are summarized below by Household size. 60% AMI 2 Person Household: $59,640 3 Person Household: $67,080 4 Person Household: $74,250 AMI @ 100% = $124,900 5 Person Household: $80,520 6 Person Household: $86,460 A for sale option would include restrictions to the new owner in the event of a resale, limited equity, etc. At 110% of AMI, a family of 4 could earn up to $137,390/year. Assuming a mortgage payment equal to 20% of their gross income, the family could potentially qualify for a loan up $360,000 at 6.50%. Rental Model If we elected to own and rent these two homes, the maximum gross rent we could charge for a 3-bedroom home at 60% AMI is $1,938/month, or $1,610/month if tenant pays for all utilities listed below. In order to maximize their long-term affordability we would ask the Plymouth HRA for either a Project Based (PBV) or Housing Choice Voucher (HCV) for the two homes. The current maximum payment standard for a 3-bedroom is $2,350/month or $2,022/month net, after deducting the utility allowance below. Based on a Section 8 rental payment, the amount we could afford to pay for the home and keep it affordable at 60% AMI is calculated as follows: Annual Gross rent: $2,022 x 12 $24,264 Maximum Payment Standard (less) 5% vacancy: ($1,210) Management Fee: 8% ($1,940) Real Estate Taxes: ($1,900) Assume 4d tax rate Insurance: ($1,500) Estimate Snow Plowing/Lawn Care: ($1,600) Tenant responsible for day to day Repairs and Maintenance: ($6,000) estimate Net Revenue: $10,114 If valued based on 8% return as a rental property, (based on a stabilized Net Revenue), the gross sale price is estimated at $126,425. Given the age of the property “1999” and initial feedback from a brief physical walk- through, there will be work needed to be completed at the properties, i.e., concrete floor – settling, mechanical equipment, roofs, insulation, etc. We would anticipate we will need to spend +-$80- $100K to upgrade this property. Based on the assumptions above, we would propose that; - ODC acquire the homes for $1; and ODC will cover all closing costs! - ODC cover all carrying costs from closing, through rehab and a new lease commencement. - ODC cover the cost of upgrades. - ODC enter a LURA with the HRA that requires us to rent to households that earn 60% or less of the AMI, with ability to sell in the future subject to a level of affordability. - The HRA provide a PBV or HCV from the City at or above the Payment Standards. Preference would be a PBV. 12 Notes: - Real Estate Taxes: - Currently the properties are tax exempt and would be placed on the tax roll once we purchased them. Taxes above based on a Fee Simple assessed value of $450K would be roughly $4,830. Once approved, the real estate taxes as low-income classification (4d), are estimated at $1,900. Below is a list of 2024 Assessed values for several of the homes in this cul-de-sac o 3305 @ $598,200 o 3295 @ $527,100 o 3285 @ $507,000 o 3275 @ $463,100 o 3320 @ $460,000 o 3310 @ $491,900 o 3300 @ $566,900 Published Section 8 Payment Standards For ZIP code: 55441 Unit Size Payment Standard Two Bedroom $1,740 Three Bedroom $2,350 Four Bedroom $2,660 Utility Allowances – Hennepin County SF Homes (assuming tenant pays for the following) Heating – Gas ($93) Cooking – Elec ($14) Water Heater – Gas ($21) Other Elec ($92) Water/Sewer ($72) Trash ($36) Total $328 Thank you for your consideration of this letter of interest. These are preliminary ideas that we would appreciate the opportunity to discuss further with you. We look forward to hearing from you. Sincerely, Ken Dayton, Chairman Outreach Development Corporation Senior Managing Director Jll Real Estate and Capital LLC T: 763-666-4565 Ken.Dayton@jll.com Outreach Development Corporation / 1605 County Road 101 N / Plymouth, MN / 55447 www.odchousing.org / 763-777-1119 / - EIN: 41-1976895 13 Regular Housing and Redevelopment Authority April 25, 2024 Agenda Number:7.1 To:Dave Callister, City Manager Prepared by:Grant Fernelius, Community and Economic Development Director Reviewed by: Item:Staff Updates 1. Action Requested: Receive update from staff on various projects and activities. 2. Background: The following is a brief summary of updates for this month. The HRA Work Plan is also attached for reference to provide context on progress made to date. Inclusionary Housing Policy On April 9th the City Council received a staff presentation on the proposed inclusionary housing policy that the HRA has been discussing since 2022. Several questions were asked about the zoning and land use elements that were discussed by the HRA, but not part of the draft policy. Other questions centered on enforcement practices to ensure that developers receiving assistance comply with the policy. Other questions focused on potential incentives that could be created to promote affordable home ownership opportunities in addition to rental housing. Staff plans to discuss the feedback and bring back the item for formal consideration in May. State Legislature The city is following two bills at the state capitol regarding housing. House File 4010 and Senate File 4254 would allow multifamily housing in any commercial zoning district by conditional use permit. The two bills have slight differences, but a key component would limit a city's ability to regulate parking standards for sites located with 1/4 mile of transit and dimensional standards (i.e. building height and setbacks) in certain situations. If passed, projects would be reviewed through an administrative process and not involve council or planning commission oversight. In addition, staff is monitoring legislation that would provide a supplemental appropriation of $50M for housing infrastructure bonds. These funds could provide support for existing affordable housing developments. Four Seasons Update Last week staff learned that the private developer interested in the Four Seasons site has decided not to move forward. The developer cited geotechnical correction costs as the primary reason for pulling out of the project. Staff has been in contact with another developer about the site and plan 14 to meet in the near future to learn about their interest. Additional updates will be provided as new information become available. Prudential Update Pre-demolition work continues on the former Prudential building along Bass Lake Road and 494. The contractor anticipates that building demolition will begin in early May and take several weeks to crush the building and site pavement. Site and infrastructure work would begin this summer. 3. Budget Impact: N/A 4. Attachments: 2024 Work Plan (HRA) 1-25-2024 15 1-City Center 2.0 2-Redevelopment Vision 3-Environment 4-City of Choice Commission Purpose The Plymouth Housing and Redevelopment Authority (HRA) promotes and contributes to the economic health of the community throu gh the creation and maintenance of affordable, workforce and life-cycle housing and active participation in the City’s development and redevelopment processes. 2024 Work Plan City Council Strategic Themes 1. City Center 2.0 - Reimagining Plymouth City Center – the city’s central area – remains a top priority for City Council. Known as City Center 2.0, the city's long-term vision involves exploring land uses and improving infrastructure to encourage redevelopment that will draw people to the area and support commerce, art, recreation, inclusion, and community vitality. 2. Redevelopment Vision - The primary objective of this theme is to consider how Plymouth can articulate its vision for long-range redevelopment citywide. The city will work to establish clear expectations for projects while partnering with developers to meet the desired outcomes. 3. Environment - Plymouth’s environmental efforts remain a priority, and the city will examine its impact and commitment to stewardship. 4. City of Choice - City Council determined that the city must build on its strengths in order to remain a city of choice for residents, businesses, organizations, visitors, and events. GOALS/PLANNING Strategic Priorities ON-GOING ▪ Monitor the HRA’s housing programs and services; the operations and finances of two senior buildings. ☐1 ☐2 ☐3 ☒4 ☐NA FIRST QUARTER ▪ Review HRA Strategic Plan ▪ Review TIF Program ▪ Review CDBG Annual Action Plan + Home Rehab Funds ▪ Review HRA’s scattered site rental program ☐1 ☐2 ☐3 ☒4 ☐NA ☐1 ☐2 ☐3 ☐4 ☒NA ☐1 ☐2 ☐3 ☒4 ☐NA ☐1 ☐2 ☐3 ☒4 ☐NA SECOND QUARTER ▪ Consider new programming for Naturally Occurring Affordable Housing (NOAH) ▪ Consider use of pooled TIF ☐1 ☐2 ☐3 ☒4 ☐NA ☐1 ☐2 ☐3 ☐4 ☒NA THIRD QUARTER ▪ Discuss HRA budget and tax levy ▪ HRA legislative priorities and recommendations ☐1 ☐2 ☐3 ☒4 ☐NA ☐1 ☐2 ☐3 ☒4 ☐NA FOURTH QUARTER ▪ Review annual Work Plan and new initiatives for 2025 ☐1 ☐2 ☐3 ☒4 ☐NA HOUSING AND REDEVELOPMENT AUTHORITY - HRA 2024 WORK PLAN 16