02-27-2003 Housing Workshop - Laserfiche WebLink

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TO: FROM: DATE: Ron Moorsc. City Administrator Mike OalTron, Planning Director Jennifer Chaput, City Planner January 31.2003 SUBJECT: AtTordable I lousing In 2002, the Majors ’ Regional Housing Task I'orcc released a report which outlined methods for providing and sustaining alTordablc housing in the metro area. I he report identified land tru.sts: cooperative housing programs: second mortgage and mortgage forclosure prevention programs as mechanisms for sustaining affordable owner-occupied housing. SustainlBg Affordability Within I lennepin County, cities are choosing to maintain long term anbrdablc housing through deed restrictions or community land trusts. 1. Deed Restrictions I ypically. cities provide developers with significant density bonuses in exchange for a certain pere .ntage of affordable units in a new development. Additionally, developer costs are further reduced through lower infrastructure standards (reduction in w idth requirements of paved roads), reduced development fees, or by allow ing developers to leave units partially unfinished (such as basements), so the buyer is credited lor the cost of improvements. I he initial purcha.se price of a^ordable units is outlined in a development contract or a separate agreement between the city and the developer. The City determines what is “alTtirdable" for the first buyers, keeping the property alTordable through restrictions placed on the deed. Tlie deed restricts the resale value by stating that an established formula (determined by the C'ity). such as the consumer price index or average annual increase according to the MI.S in the metro area, will be used to determine resale value of the pri>perty for future bujers. fhe restrictions i>n a propertj are effective for no longer than 30 \ears. as permitted by state statute. 1 he index chosen may or may not keep the property affordable ovei the 30 year period and returns the property to market value at the end of this time period. TIte City is required to annually send each affordable home owner a letter stating the res.ile v alue of the Imme. if the owner cln»oses to sell. 2. Cummunih Eand Trusts I he concept of a Community Land Trust is fairly new and not w idely in use in the