04-27-2010 Council Work Session Packet

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Development Subsidy History April 19,2010 Page 2 — Deferral or forgiveness of development fees — Tax Increment Financing The use of most of these tools or programs is not a common occurrence in Orono, however. The relatively few examples of residential development subsidy from City and external sources are described below. CDBG Funding Housing rehabilitation funding is provided through the Hennepin County housing rehabilitation program, which is funded through the CDBG program. Orono is a member of a group of cities that pool their CDBG funds. Each year, approximately $100,000 in CDBG funding is allocated to the housing rehabilitation program which serves households throughout the group of cities on a first-come-first- served basis. No CDBG money has been expended for projects specifically in Orono since 2002; prior to that time, funds for rehabilitation projects in Orono were expended fairly regularly. Jim Graham of Hennepin County indicates that they have sent out two applications for housing rehab funding to Orono residents this year but those applications have not been returned as of yet. Combined Funding Periodically, Orono receives a portion of the pooled CDBG funds far an affordable housing project specifically in Orono. In 2000, $32,000 of Livable Communities Act (LCA) grant money (Grant #SG-00-37) from MHFA was added to other grants from CDBG and Met Council that totaled $131,000. This fund was then used to provide financial assistance to make three townhomes in the Lake Minnetonka Woods development (just east of the Navarre fire station) affordable to first-time homebuyers. The portion of the $32,000 used was $23,600. A refund to MHFA of the remaining $8,400 was processed in April 2004 to make it available for other affardable housing proj ects. DeferraUForgiveness of Development Fees During 2001 the City deferred approximately $160,000 of Park Dedication Fees and approximately $41,000 of sewer and water connection fees to assist with the development of the Orono Woods Senior Housing project on Highway 12 at Brown Road North. This is the only instance of such a deferral that I am able to identify. See the excerpt from PUD-2B Agreement below. It should also be noted that the Development Agreement between the Orono HRA and Orono Woods Senior Housing LLC provides that the City will reimburse itself for these deferred fees from the tax increment at the end of the 20-year TIF term. Note: In 2003 the City agreed to grant a rebate of Park Dedication fees for the costs of construction (but not the land cost or easement cost) of the public trail along Willow Drive and through the commercial outlots within the Stonebay development, but not including sidewalks along Kelley Parkway or within the residential development. There may be other instances where the City has credited a portion of the Park Fees for developer construction of public trails. I do not consider these rebates as a development subsidy.