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HomeMy WebLinkAboutCity Council Minutes 08-23-1993 SpecialMINUTES STUDY SESSION AUGUST 23, 1993 A special meeting study session of the Plymouth City Council was called to order by Mayor Bergman at 5:05 p.m. in the Council Conference Room of the City Center, 3400 Plymouth Blvd., on August 23, 1993. PRESENT: Mayor Bergman, Councilmembers Helliwell and Tierney ABSENT: Councilmembers Edson and Vasiliou ALSO PRESENT: Ellie Singer, Board of Zoning Adjustments and Appeals member STAFF PRESENT: Assistant City Manager Lueckert, City Clerk Rauenhorst BOARD OF ZONING ADJUSTMENTS AND APPEALS VACANCY The City Council interviewed the following candidates for a vacancy on the Board of Zoning Adjustments and Appeals: Michael L. Engel, Jeffrey Mayer, Walter L. Thurman, and Michael R. Kobs. Mayor Bergman stated that an appointment would be made at the August 30 Council meeting. The meeting was adjourned at 6:00 p.m. Cit Clerk MINUTES STUDY SESSION AUGUST 23, 1993 A special meeting study session of the Plymouth City Council was called to order by Mayor Bergman at 6:00 p.m. in the Council Conference Room of the City Center, 3400 Plymouth Blvd., on August 23, 1993. PRESENT: Mayor Bergman, Councilmenbers Edson, Helliwell, and Tierney ABSENT: Councilmember Vasiliou STAFF PRESENT: City Manager Johnson, Assistant City Manager Lueckert, Bond Counsel Dan Nelson, Housing Specialist Dale, and City Clerk Rauenhorst HARBOR LANE APARTMENTS - PROPOSED LOW INCOME HOUSING AGREEMENT City Manager Johnson presented a proposed agreement for the Harbor Lane Apartments rehabilitation project which was prepared by Bond Counsel Dan Nelson, Best and Flanagan. Dan Nelson, Best and Flanagan, stated the applicant has received bonding authority from the State for the Harbor Lane project in the amount of $9,135,000. He presented a draft Low Income Housing Agreement between the City and the owner of the Harbor Lane Apartments project which would be entered into in addition to the State and Federal requirements for this bond financed project. The agreement focuses on protecting the existing Section 8 tenants of the project and other lower income tenants by capping rent levels until the completion of the rehabilitation of the project, and requiring the owner to make his rehabilitation improvements to units in the project without regard to the incomes of the tenants. Attorney Nelson explained that under federal bonding requirements, the owner must guarantee that 20 percent of the units will be occupied by people with less than 50 percent of the current HUD established median income of the Minneapolis -St. Paul area, which is 51,000 for a family of four. He said income limits are as follows: 4 person family - 25,500; 3 person family - $22,950; 2 person family - $20,400; 1 person family - $17,850. Attorney Nelson stated the developer must meet this 20 percent requirement whether or not additional criteria is agreed to with the City. The developer is willing to work with the City to develop a low income housing agreement which would impact rents beyond this 20 percent requirement. Council Study Session August 23, 1993 Page 2 Attorney Nelson stated the City cannot require the developer to have a specified number of Section 8 holders in the units. Individuals holding Section 8 certificates have freedom to move where they want, and the City has a limited number of certificates. He said it is likely that Section 8 holders will remain in the building following renovation. The Harbor Lane apartment rents are currently $80 to $100 below typical rent levels due to the age and condition of the building. The developer has indicated that deferred maintenance has caused problems with occupancy. Councilmember Edson asked if rents have been increased in the last year. Housing Specialist Dale responded that rents were recently increased by Steven Scott Management firm, who is the court appointed management company. The average rents are currently $435 for 1 -bedroom, $599 for 2 -bedroom, and $789 for 3 -bedroom. He stated this complex still has among the lowest rents in Plymouth, especially as it relates to three bedroom units which are difficult to find elsewhere in the City. He stated there has been a history of problems at Harbor Lane, and this has never been considered a well constructed building. It had about 70 percent occupancy rate before Gaughan Companies took over the building several years ago. They did some major improvements but were unable to snake the project a success. He stated there are limited amenities at Harbor Lane apartments, however, the units are large. It was constructed in the early 1970's and it is difficult for the owner to compete with the newer apartments in the City. Attorney Nelson reviewed details of the proposed low income housing agreement. He said the owner would agree not to raise the rent on any units leased to existing Section 8 tenants for a period of two years from the date of the agreement. The owner further represents that the he does not currently expect to increase rents for existing Section 8 tenants above the HUD fair market rent limits after the two year period. The owner would agree that, in addition to the Section 8 tenants described above, 45 additional units in the project would be leased to tenants whose incomes, adjusted for family size, do not exceed 50 percent of the HUD median family income for the Minneapolis -St. Paul area. The owner would further agree to not increase the rents on any units leased to the lower income tenants from the date of the agreement until the completion of the rehabilitation work. Attorney Nelson said this would in essence be a rent freeze for the 45 units for the 12 to 15 month construction period. He stated the developer is willing to work with the City if the City is interested in providing some sort of City subsidy to lower income tenants who do not now reside in the project. Attorney Nelson stated the owner won't guarantee frozen rents beyond the rehabilitation period because the insurance company guaranteeing the bonds will not agree to this provision. Pidge Hodowanic and LaDonna Hoy represented Interfaith Outreach. Ms. Hodowanic stated Interfaith Outreach assisted 129 Harbor Lane households in 1992/93, spending Council Study Session August 23, 1993 Page 3 18,223 in 1992, and $12,247 so far in 1993, for housing assistance. She stated they want the City to be aware that there are a large number of people served by Interfaith Outreach who could be forced out of their apartments because of increased rents. She stated there is increased homelessness in Plymouth and many are families. Ms. Hodowanic stated the high housing prices in Plymouth also snake it difficult for first time home buyers. She stated they have no suggestions for resolving these problems, but she wanted to bring them to the City's attention. Councilmember Edson asked what income guidelines are used by Interfaith Outreach for providing housing assistance. Ms. Hoy stated they do not have income criteria. They provide housing subsidy on a case-by-case basis. She stated they sometimes provide housing assistance for only one month and other times on a continuing basis. Interfaith Outreach has occasionally subsidized Section 8 certificate holders; however, the majority they subsidize are the working poor who are at the edge of their financial ability to retain their apartment. Manager Johnson stated staff had discussed with the owner the possibility of freezing the market rents in the Harbor Lane project for a longer period of time than through the renovation. The insurance company that will guarantee the bonds would not agree to this time extension. Attorney Nelson stated the City is making a positive effort to retain affordable housing in the City. He has never seen a situation where a city has imposed limits beyond the 20 percent federal requirement. Housing Specialist Dale briefly reported on a local rental assistance program conducted by St. Louis Park called MAX 200. This program provided a maximum of $200 per month assistance to individuals, with a two-year limit for assistance. The funds came from the City's Section 8 operating reserve account. Housing Specialist Dale stated that CDBG monies cannot be used for rental assistance; however, the HRA could consider the possibility of using its Section 8 operating reserve, Senior Housing Project rental subsidy reserve, or HRA unallocated tax levy funds, as available, to start such a program in the future. The Council generally concurred with the proposed low income housing agreement. The meeting was adjourned at 7:05 p.m. S iu llc e t 74— Ci y Clerk