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HomeMy WebLinkAbout02-27-2003 Housing Workshopk Y /o a 6\ // You Are Invited to attend o HOUSING WORKSHOP to be held by the Orono City Council Time:7:00 p.m. Date Thursday, February 27.2003 Place:Orono City Council Chambers Purpose The purpose of rU' •^i'hshop is to enable public officiols ond community lenders to gain o better understonding of the key issues and elements reloted to the provision of affordable housing. The workshop will include presentotions by a panel of speakers with o brood range of expertise in the areo of affordable housing. ; h. 0 I City of Orono 2750 Kelley Parkway P.O. Box 66 Crystal Bay. MN 55323 (952) 249-4600 Fax: (952) 249-4616 FAX TRANSMISSION COVER SHEET Date: To: Fax: Re: Sender: *’'/3 (3 ~T rTy> fll-i f ^ <r. '^l V< (ai-T ft! / r. ! -} /' u j YOU SHOULD RECEIVE SL PAGE(S), INCLUDING THIS COVER SHEET. IF YOU DO NOT RECEIVE ALL THE PAGES. 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OvbrsPv | li k/f-'V\(,yA 3t^S Nc-i U \ SI \fVv-t‘ W' / / 1 j c __ f M in',^1 ij/i:c\lt{ <'7v? V u:Jh'CjULjLe^ 3^T ^ K\ 7f^-^ V? 3 *f C r 5r,/^,,- A),/ 7 f^ 7. ^ '“^18. \UilA<,r'lrj!t'fr'.r ^lftC>\»>A[^ltfg<WM UwfclAigt V f C Ci-‘ 4‘ t J **/A / * '— i?uiS<h i' Lu^KL Uyi^L^k'f- ';s-is-4> •3 3 J'/ / 10. fJ ^ 7i n<li^ !> t K ,f fee za /V , /At,'rr/^/ lu. 12. In__r/y c. f i . )fv ■_, s4HL HA/ 13. 14. 15. X;VD«a\AdM«talralUt Suppon\(rMiM - Old)\FORM!l .Pj BUC, ATT . ...,.... Hovf ing Workskop 7:00 p.m., Thursday, February 27,2003 Purpose of Workshop The purpose of the housing workshop is to provide the City Council, and other public ofTlcials attending the workshop, with information regarding the who, why, what, and how of providing a broader range of housing options to serve a range of housing needs, particularly affordable housing. As the workshop is an educational opportunity, the focus of the workshop will be enabling the City Council to become as fully informed as possible regarding the various issues and elements of affordable housing through a structured dialogue with a panel of experts In the area of affordable housing. This is not the time for the Council to be taking positions or making decisions regarding affordable housing. Rather, it is an opportunity to gather as much information as possible about affordable housing. Format of Workshop The workshop will be structured to minimize presentations in favor of facilitating substantial dialogue between the panel of speakers and the Council, so that the Council has an opportunity to get all of its questions answered. If others attending the workshop have questions for the panel, they may provide written questions to the City Administrator, who will try to work them into the dialogue as time and opportunity permit. Workshop Agenda The agenda for the workshop is as follows; 1. 2. 3. 4. 5. Brief introductory remarks by each of the speakers Presentation and questions/answers regarding who is served by providing affordable housing options, and the benefits of providing a broader range of housing options. Presentation and questions/answers regarding the types and designs of housing developments d.at can be used to provide affordable housing options. Presentation and questions/answers regarding the approaches and programs that can be used to provide and preserve affordable housing. Other questions/answers f TO:Mayor Peterson and Couneil Members FROM:Rt)ii MiM)rsc, City Administrator DATE l•■ebrllarv 25. 2003 SUBJECT: Housing Workshop—7:00 p.m., Thursday, Kchruary 27,2003 Tliis memo, as well as the attachments, is to provide background information related to the housing worksliop. Purpose of Workshop 'I’hc purp<».sc of the housing w»>rksht»p is to provide information regarding the who, why. what, and how of providing a broader range of housing options to serve a range of liousing needs, and parlieularly affordable housing. I he workshop is an educational opportunity. I he focus of the wi>rkshop w ill he sharing information and obtaining answers to que.stions. Desired Oulcome of Workshop I'he desired oulcome of the workshop is that the (’onncil will have the information it needs to he able to move to the next steps in a planning proee.ss regarding the provisi«)n of housing to serve a range of housing needs. Format of Workshop The w»)rkshop w ill be structured to minimi/c presentations in favor of facilitating substantial dialogue between tlie panel of six*akers and the Couneil. .so that the Couneil has an opportunity to get all of its questions an.swcrcd. Wo rksh o p Agenda 1 he agenda for the workshop Is as tbllows: I 1 X 4. Itrief introduetiiry remarks b> each of the s|ieakers Presentation and question.s/answers regarding who is ser\cd by providing afli*ru.'ble housing i'ptions. and the benefits of providing a broader range of housing options. Pre.sentation and question.s/answers regarding the types and design.s t>f housing tlcNelopmenls that can be used to pro\ ide af fordable housing options. Presentation and que.stiiujs'answers regarding the approaches and programs Uiat can be used to provide and pre.ser\e allbrdable housing. (>lher questii>ns'answers List of Speakers Ron ('lark: Muilder of both up.seale and atfordable housing. Jt*e I rrigit: Huilder and manager of alTordablc rental housing for botli seniors and non-seniors. J Jan Callison: President ofthe West I lennepin Alfordable I lousing Land Trust (Wl lAI !L T) and Minnetonka C’itv Council memher. Steve Cramer: Deputy Hxecutive Director of the Hennepin County lIRA -Department oTHousing. Community Works, and Transit. Jonathan Inirmer: lixecutive Director ofthe Supportive Housing Consortium Mark RulV: Hxecutive Vice President/DirecU»r. l-hlers Associuie.s—fmancial consultants. Background Infornmtion 'The following is background information to provide a eontext for the pre.scntations and discussion. Definitions: Affordable Housing: 'The definition of affordable housing is based on the general goal that a fai. ’iy or household shobld not have to pay more than .10% of its ineome for housing. The atfordability of housing is tied to hou.sehold income. I lousing a.ssistance programs are generally targeted to households with ineomes below 80 “/o ofthe median household income in the metro area. 'The 2<M)2 median household income in the metro area is $76,700, Highly percent of the median income is $61..160. (iiven the current low interest rates, a family at K0% of median income could afford a home valued tit $ 178.000. A family at 50% of median income ($.18..150) could afford a home valued at $111.000. Workforce Housing: Workforce housing is housing to serve the employees ol businesses and other employers in the community. A supply of housing alTordablc to the hK'al wt*rkforee can In; important to recruiting and retaining employees. I.ifc-cyck; Housing: Life-cycle housing is a range of housing options that can ser\ e the housing needs of hou.seholds at each stage of their lil'e-eycle. .Some examples are: -Rental housing, for those who are at a transitional point in their life-cycle that Kitcr matches a rental housing arrangement, or for those whose incomes do not allow homeowiiership. —(,)ualit>. I«>wer ct*st housing ft>r first time homebuyers. -lloiLsing options lor “empty ncsters". tho.se who.se children are grown, and who no longer need the large Imme. and don’t want the responsibility <d‘home and yard maintenance. -IKuising options for active .senit»rs —rental, condo ownership. ciH>perative ownership. -Housing options for .seniors w ho need .some lev el of care or a.s.sistance. L‘’hli rni Perspective Hecause housing neeils change with changing ilemographics. ;md because housing generally la.sl.s for many veais. it is im|Hii tant that housing i.ssues lx* approached with a U»ng term perspective. The supply of land lor housing is not unlimited. The long temi planning for hmising involves identifying future housing needs and the types of housing options that will meet those needs. Some Recent Histo»7 In May of 1999,the Lake /\rea cities held a housing workshop, attended by Mayors and City Council members of the Lake Area cities. This woikshop introduced the concepts of affordable, workforce, and life-cycle housing, and generated significant discussion regarding the provision of a broader range of iiousing options. Three outcomes in Orono that can be traced at least partially to the housing workshop are as follows: 1. 2. The re-guiding of two areas in the city to allow greater density to enable a broader range of housing options. The re/oning of a commercial parcel to enable the construction of the Orono WcH>ds senior housing development. A tour of townhou.se developinents to enable the City Council to sec the range of styles, designs, layouts, and quality oftownhou.se developments in the area. The outcome of the tour was that the Council preferred townhouse developments with the following characteristics: 1. I wo to three units per building, to avoid an institutional character 2. Design and layout that a\oids tlie street view being dominated by garage doors. 3. Quality construction Prourams for Sustaininu Affordability Attached is a memo from Jennifer Chaput regarding programs used in other cities to prov ide long tenn affordability of owner-occupied housing. Also attached is infoi.nation regarding the West Hennepin AITordable Iiousing Land I'rust (WIIAHLT)and how a land trust can be used to provide permanently affordable housing . Outline of fopics and Questions Attached is an outline of topics and questions that was used in planning the housing w orkshop. I lousinu Data for Orono and Other Lake Area cities. Wendy Uottenberg has worked with the City Assessor to prepare information regarding the number of ht)using units that meet the Met Council’s definition of “affordable” in Orono, as well as in the cities of Mound. Spring Park, and ShorevuKHl. fhey are also working to provide information regarding the number of rental units, and the median sale price of homes, for Orono. Spring Park. Mound, and Shorewood. The affordabilitv information obtained at this time is as follows: Orono: 343 homes of 2930 total homes, or 11.7% Spring Park: 96 homes of 277 total homes, or 35% Mound: 1942 homes of 3532 total homes, or 55% 1 Affordable Houses ^2002^ Mound: 1942 of 3532, or 55% Orono: 343 of 2930, or 11.7% Shorewood: 194 of 2553, or 7.5% Spring Park: 96 of 277, or 35% Wayzata: 99 of 1136, or 8.7% 4 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 niclro area. Currently, the cities of Minnetonka. Chaska and Woodbury are the only metro area cities using l and Tru.sts to maintain housing affordability. Locally, the West Hennepin Affordable Mousing I.and Trust (WIIAIILT) has been in e.xistenee for appro.ximately a year and a half and has been responsible for assi.sting both Minnetonka and Chaska to provide more affordable units within their communities. Jan Callison. a City of Minnetonka Council member, is the lixeeutive Director of this non-profit organi^ation. Land Trusts ensure long term affordability by splitting the ownership of the home and land. Ilie Land Trust purchases a home on the open market and then sells it by removing the price of the land. Therefore, the buyer ow ns the house and the Land Trust owns the land beneath it. leasing the land back to the home owner for their u.se. Since the Land Trust is a non-profit, operating solely on donations from fund raising, the City is expected to assi.st financially by providing or purchasing the land initially. W'hen the home owner decides to sell the property, the Land Trust completes an appraisal and provides the seller with 25% of the appreciation. This allows the property to stay affordable over time. The I.and Trust is responsible fi>r screening prospective buyers and approving the next home owner. It is anticipated that cities would pay the Land Trust for this .service. The Metropolitan Council is fimily behind using Land Trusts to maintain aifordable housing, providing participating cities l.ivable C'ommunities Act (LCA) points. I’urther explanation about C'ommunity Land Tru.sts is attached, as Hxhibii A. Hcnncnin Countv C’ilics In I lennepin County, the cities of Minnetonka. Plymouth. Chaska and Chanhassen have used a variety of metlnuls tt> provide and sustain affordable housing in new developments. The following is a brief overview of how each C'ity chooses to provide affordable housing: 1. City of Minnetonka (former C’ommunity Development Specialist. Bob Streetar) Within the last decade, the C'ity of Minnetonka developed Ju.st over one hundred alTordable housing units through deed restrictions. The process required a great deal of work for City .stall', .significant funding from the City and resulted in units that were only alTordable for three to f»>ur years following construction. 'The C'ity used the av erage annual increa.se in the metro area (through the MLS listings) to determine the resale value of each property annually . Dae to rising costs and a tight housing market over the past few years, tlie housing was unable to maintain its atldrdabilitv. The C'ity prefers .ind is committed to the u.se of a Land Trust (s|vcitlcaily WILAI. T) to maintain affordability. The C'ity determined that an affordable housing price is between $90,000 uml $I20.(MM), serving people at about 80% of the median or less, instead of using tlie Metrop«ilitan Council’s figure of affordability. For new construction, the City requires that between 10-20% of the development be alTordable through the Fund Trust. 2. City of C'haska (Director of Planning and Development. Kevin Kingwuld ) The City of Chaska has recently created the Chaska Community Land Trust, with the a.ssistunce of the (’ity of Minnetonka, to provide sustainable alfordable housing. file City provides developers with significant density bonu.ses tm their sites in exchange for at least .'^0% of the units as affordable units. Of the 30%. 25% become affordable through deed restrictions and the remaining 5°b through the Land Trust. The City believes that the only permanently affordable units developed are those through the l.and Trust since re.strictions on deeds are lifted after 30 years. A case study from the City of Chaska is featured in the Mayor's Regional Housing Task Force, attached as Fxhibit B. 3. City of Chanhassen (Director of Planning. Bob (ienerous) The C'ity of C'hanha.s.sen u.ses deed re.strictions in their affordable housing developments. The City u.ses the consumer price index or a simple annual intlation percentage rather than an average annual increase (provided by the Ml which proved to imike htuising unatTordable in a short period of time. The City reduces the cost of the development, to allow for affordable units, by permitting higher densities, clu.ster development, relief from infrastructure costs or reducing developer fees. 4. City of Plymouth (• lousing Manager. James Barnes) The City of Plymouth also chooses to u.se deed restrictions tin alfordable housing units to maintain affordability. The Housing and Redevelopment Autliority (HR/\) enters into an agreement with the develo|x*r and rectirds restrictions on the deed for resale values over 30 vears. Tlic Plymouth Cit> C'ouncil has investigated l and Trust but have determined that the\ are not intere.sted in creating or joining one at this time. If the (’ity is interested in pursuing affordable housing, there are a number of representalixes from cities and the local Land Trust that would be willing to speak with the Council about their successes. 3 West Hennepin FORDABLE 0USIN6 LAND TRUSl I'hc West Hennepin AITordable Housing Land rrust (*’WHAHI/r*) was created as a non-prulit eorporation in May of 2001 to provide pemianentl\ affordable lumie ownership opportunities for low- to moderate-income people in suburban I lennepin County. I'or a one-time inve.stment of approximately $70,000 per property. \VI lAHL T provides a permanently alTordable home. Wl lAI II. f maximi/es the effeeti\eness of the public inve.stment, while providing the benefits ol home-ownership to households that are otherwise unable to buy a house. It partners public and private funds to address the need for alTordable housing in suburban I lennepin C'ounty. Miised on the eommunity land trust model. WHAIIL T acquires single family properties, retains ownership of the land, and sells the homes on the land to qualifying families. The land is leased to homeL>wners through a ‘)‘>-year renewable ground lease that atTords the owner mo.st of the .same rights as an> other property *»wner. I'he renu>val of the market value of the land from the mortgage equation provides initial affordability. Permanent affordability is obtained through; (I) a pricing formula that pro\ ides the owner with a fair amount of equity while ensuring that the resale price of the home is affordable and (2) ii tesale restriction that requires the homeowner to .sell the house to either another low- to moderate-income household or t*> Wl lAI II. f. Wl lAI II. I currently owns homes in Minnetonka and Kichilcld. but is available to ser\ e all of suburban I lennepin County. It provides homes to first-time homebuyers earning 8()“'o or less of area median income. It generally purchases existing homes for no more than $l<)0.()()0 and sells them t»i qualifying households for no more than $120,000. H> contrast the median sales price for a home in the I win Cities area in July 2(M)2 was $l ‘)0.()00; the median sales price for a home in Minnetonka in 2001 was $246,000. Wl lAI II. I was created in response to efforts b\ the City of Minnetonka to tlc\ cl«)p new methoils and t»>ols locallx that would help increase the number of affordable homes available and that would make etTicient use of financial resources for affordable housing. WHAIII. I has received financial and other support frenn: the I'amilx Housing f und, l annie Mae Minnesota Partnership Otfice. Hennepin County, the McKnight l-ouiulaiion the Metrt>poliian Council, the IT C. (iambic and P. W. Skogmo lund of the Minneapolis foundation. Minne.sota Housing finance Agency, the ('ity of Minnetonka, the City of Richlield. Local Initiatives Suppi>rt Corpi»ration. St. Luke Presbyterian Church (Minnetonka) and individual donors. V\i>l llciiiicpin MItUilahIc lltfUMnp I anJ IriiM ^101 Ihimscn \\c . Sic ’(Hi. Minnetonka. M\ Icfcpluuu! *-*52 lOl ?07l I-iiuul Wll.MIl 1 inn ri ca>iii a } AI'fordahlc I lousing Workshop I'opics I'hc lolIt)vving is a preliminary listing of topics to be covered, and questions to be answered, at the affordable housing workshop. -Definitions -alTordable housing -life-cycle housing -workforce housing Who would be served by the provision of affordable housing units in Orono? -Owner occupied units meeting the Met Council's affordability guidelines -Rental units affordable ti> households at .*'0% to 80% of median inct^me Is it feasible for alTordable housing to be developed in Orono. given the high cost of land? What are the various rc.sources available to make an alTordable housing project feasible i.e. technical assistance, funding sources, program administration assistance, etc. W'hat role can I lennepin C’ounty play in the development of affordable housing, and what re.sources are available through I lennepin County? C'an an alTordable httusing program specifically target alTordable units and alTordability assistance tt> Ort>no residents and those who work in Orono? What types i>f programs can be set up to prevent the first owner of an affordable unit from receiving a windfall at the time of sale, and to en.sure the units remain at an affordable cost level over the long term? I'Aplanation of a land trust as a tcH>l to enable altordabic housing —how dws it work, what are its benefits, what are its weaknes.ses. lutw is land placed into a land trust. Is it pt»ssible to develop alTordable housing in Orono as part of a development with an twerall density of .'^-4 units per acre? If so. what »ire the elements Uiat would need to Ik* brought ti*gethcr to make this succeed? Ron Clark provide the develo|vcr’s ivrspcctiv e on the deveK>pmcnt of affordable i>wner- »>ecupieil units. What tv pe. si/e. and quality of units could the City expect to be developed as alTordable owner-occupied unit.s? Joe lirrigo prov ide the developer's perspective on the development ol affordable lenlal units. What iy|V. si/e. densilv and quality of units ct>uld the City expect to be developed as alTordable rental units? i •What arc (he key elements that need to be put in place to make alTordable housing possible? -Is there a role the City needs to play in the provision of affordable housing? What is “inclusionary zoning ” in relation to affordable housing? Describe some examples of affordable housing that have been provided through inelusionary zoning. What role should the preservation of existing alTordable housing play in an overall alTordable housing program? What can be done to maintain existing alTordable hou: ing? What programs are available to assist in the preservation of existing affordable housing? Objections typically raised regarding alTordable housing: "project density —property management —increased demand for social services and schools —who will reside in (he housing -transportation impacts —design/ae.sthetie values —public costs to develop the housing