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HomeMy WebLinkAbout2025/10/06 - ADMIN - Minutes - City Council - Study SessionOfficial minutes City council special study session St. Louis Park, Minnesota Oct. 6, 2025 The meeting convened at 8:13 p.m. Council members present: Mayor Nadia Mohamed, Margaret Rog, Lynette Dumalag, Sue Budd, Tim Brausen, Paul Baudhuin Council members absent: Yolanda Farris Staff present: City manager (Ms. Keller), community development director/interim building and energy director (Ms. Barton), economic development manager (Ms. Monson), deputy finance director (Mr. Olson), redevelopment administrator (Mr. Porter-Nelson), deputy city manager (Ms. Walsh), planning manager (Mr. Walther) Guests: Shelby Conway, Housing Authority Commission vice chair Dominque Jones, PIPCLT Discussion items 1. Boards and Commissions check in with the city council: Housing Authority Ms. Olson introduced Shelby Conway, Housing Authority Commission vice chair. Ms. Conway updated the city council on the commission’s goals and approved work plan, including completed tasks, ongoing projects and strategies for addressing unaddressed work plan items. Ms. Conway noted items in the Housing Authority’s work plan, including: • Support for the citywide Vision 4.0 process by participating and encouraging others to participate and sharing information with the community on the process. • Oversee the administration of the Housing Authority’s core federally funded rental assistance programs, city-funded Kids in the Park program, and county-funded Stable Home Program. Oversight includes review and approval of program policies, ensuring sound fiscal policies and funding administration, approving the submission of competitive grant applications to secure new and renewal funding, reviewing and approving the HA budget, reviewing and approving the Annual PHA Plan before submitting to HUD, and reviewing and approving the five-year capital improvement plan for the Public Housing Program. • Provide direction and approve the Bring it Home state rental assistance program. Oversee the administration of the Bring it Home program once implemented. • Oversee the administration of programs that support or promote a well-maintained housing stock through the use of the city’s housing rehabilitation and design programs and affordable homeownership programs, including the first-generation and down payment assistance programs. Review the housing activity report annually and provide feedback and review and authorize the execution of contracts to administer these programs. Docusign Envelope ID: EA72428D-AB8D-497F-911F-F2A5A49BE904 Special study session minutes -2- Oct. 6, 2025 • When requested by council, provide input on strategies to promote the creation and preservation of affordable rental and homeownership options for low- and moderate- income households in St. Louis Park. Council Member Rog asked for more details on the project-based voucher related to Beltline Station. Ms. Olson stated that in order for the housing authority to enter into an agreement with Beltline, the board needed to determine if the board supported a project-based 20-unit plan. The developer presented it to the Housing Authority board and the board had the opportunity to ask questions. Then, the board needed to decide if they would offer support. The resulting authorization included requirements that the board presented to the developer that needed to be met. Council Member Rog asked what would happen if the Housing Authority board did not authorize project-based vouchers for the 20 units. Ms. Olson stated that without authorization, the 20 units would not receive project-based vouchers. Ms. Olson stated there have been times when the Housing Authority did not approve project-based vouchers, or approved them only for a shorter term, but added the decision is ultimately totally up to the Housing Authority board along with staff recommendations. Council Member Dumalag asked if there was anything in the audit processes to help mitigate questions. Ms. Olson stated that in 2024, the Housing Authority switched software. There were some great improvements to assist with the approval process, which tracks multiple models to approve invoices. She stated this change is beneficial to provide auditors with pertinent information for the city audit to ensure compliance and that all files meet regulatory requirements. Council Member Budd asked if there are any recommended changes to the housing rehabilitation and design program. Ms. Olson stated no. She noted the staff report, which both the city council and the Housing Authority receive, shows that most programs are being utilized well and that staff are monitoring ongoing. Council Member Budd asked if a program were being under- or over-utilized, would the board make a recommendation to the council. Ms. Olson stated the board would be consulted on the programs themselves, and the council would then approve the budget for those programs. Ms. Olson added that the Housing Authority board does not make budget recommendations to the city council. Council Member Rog asked if the Housing Authority would be tasked with making recommendations to the council about program growth beyond a specific dollar amount. Ms. Olson stated as new programs have been developed, the Housing Authority has given input and made recommendations to the city council. She stated that if the council was interested in a new program and wanted to direct the Housing Authority to consider it, that could be done. Council Member Rog stated her understanding is that members of the Housing Authority board thought they would be giving more input and recommendations to the city council than they have been. She would like to utilize the lens of those serving on the Housing Authority going forward to have them make recommendations to the city council. Docusign Envelope ID: EA72428D-AB8D-497F-911F-F2A5A49BE904 Special study session minutes -3- Oct. 6, 2025 Council Member Dumalag added that when she served on the planning commission, there were discussions about naturally occurring affordable housing (NOAH), and possibly in conjunction with another commission, those recommendations could be made to the council. Ms. Conway stated that in 2025, the Housing Authority has plans to review and set flat rents for 2026, review and set the 2026 utility allowances for rental assistance programs, renew the St. Louis Park Emergency Program (STEP) contract for the FSS program, and also discuss their 2026 budget. Ms. Olson stated as staff liaison, she appreciates the work of the Housing Authority board and noted they ask important clarifying questions and review all information before making decisions. Council Member Budd asked if the Housing Authority board is fully staffed. Ms. Olson stated that the board has no vacancies. Ms. Conway added that the board can make good and thoughtful decisions because of the staff and added that they work well together; the board appreciates staff direction as well. 2. Commercial Land Trust discussion Mr. Porter-Nelson presented the staff report. Mr. Porter-Nelson stated the policy question before the council is: Does the Economic Development Authority (EDA) support the proposed sale of 4300 36 ½ Street West to Partnership in Property Community Land Trust (PIPCLT) for $1,788,000, and support provision of permanent EDA financing of $2 million from the development fund to PIPCLT, including land write-down and renovation costs for the affordable commercial space project? Mr. Porter-Nelson provided a summary of the project, stating that PIPCLT proposes a renovation and subdivision of 4300 36 ½ St. W. into commercial condos, which will be sold to emerging entrepreneurs, with ownership of the land in trust by PIPCLT, allowing for permanent affordability of the spaces. The total anticipated project cost is $3.721 million, including purchase of the building by PIPCLT, construction costs, professional fees and soft costs required to divide the building into six commercial condos, and to build out a common space and common restrooms. Mr. Porter-Nelson stated that in 2022, the EDA had originally sought to purchase a property for affordable commercial space and approved the purchase of the building at 4300 36 ½ St. W. for $1.788 million. After purchasing the property, the EDA entered into a memorandum of understanding with PIPCLT in 2023 to work collaboratively on the project. In 2024, the EDA applied for grants from a variety of sources and received a total of $514,000 from Hennepin County and the Metropolitan Council to support the project. Design work, market feasibility analysis, project financial analysis, and other predevelopment work continued throughout 2025. Docusign Envelope ID: EA72428D-AB8D-497F-911F-F2A5A49BE904 Special study session minutes -4- Oct. 6, 2025 Ms. Jones provided background on PIPCLT, explaining that the group is a model that provides affordable commercial spaces for businesses. She stated the mission is to provide affordable commercial real estate for the community, noting the model is community-driven and community-owned land, very similar to housing with the community land trust model. PIPCLT wants to see neighborhoods revitalized and wants to make sure people have access to affordable commercial buildings. Council Member Brausen asked if grants would need to be repaid. Mr. Porter-Nelson stated that if the project did not move forward, grant monies may need to be returned, but noted the grants are considered pre-development. Ms. Monson stated that staff will confirm with the granting agencies if the grants will need to be paid back. Council Member Dumalag asked if, when the property was acquired, there were matching funds from the EDA. Ms. Keller stated that those funds are for affordable housing and not affordable commercial spaces. Council Member Dumalag asked how PIPCLT has worked with other entrepreneurs and any concerns around payments or costs. Ms. Jones stated that PIPCLT has learned a lot about the barriers that businesses face with renting commercial space. She noted there is much in place for affordable housing, but nothing for business owners and affordable commercial buildings. Therefore, there are many vacant commercial spaces that people cannot afford. Ms. Jones continued that down payments are something PIPCLT is looking into providing to business owners, as well as emergency funding in case of a crisis, and added that PIPCLT is also looking into making commercial spaces cheaper to own than to rent. Council Member Budd stated that with condos, there are homeowner association fees, and asked if offsetting association fees would alleviate costs. Ms. Jones stated that a subsidy from the city would help make spaces affordable, while commercial association fees could assist multiple commercial businesses in affording commercial spaces. Council Member Rog asked if the condo model requires total occupancy to work financially. Ms. Jones stated there is a phased approach, such as lease to own, with a 90% occupancy rate to be able to pay back the city subsidy. Council Member Rog stated she was surprised to see the report include information about two retail spaces and four offices and asked if something had changed. Mr. Walther stated that some of the space lends itself better to office space. Council Member Rog noted that in St. Louis Park, there are a lot of empty retail spaces as well as high vacancy in office spaces. She wants to be judicious in investing community dollars, stating she has concerns about investing resources in spaces that are not being filled. She asked what market studies had been done for this commercial space. Docusign Envelope ID: EA72428D-AB8D-497F-911F-F2A5A49BE904 Special study session minutes -5- Oct. 6, 2025 Mr. Porter-Nelson stated that a market analysis had been done. Ms. Jones added that PIPCLT relied on market research that the city conducted. Council Member Dumalag asked for clarification on the net rent figures. Mr. Porter-Nelson stated the rent-to-own option includes condo dues, but not numbers on rent-to-own outside of payment for square footage. Council Member Rog asked how PIPCLT is funded. Ms. Jones stated that they work with cities to raise a percentage of the cost as a down payment, and then they rely heavily on cities to make the space affordable. She stated PIPCLT is funded by the McKnight and Bush Foundations, as well as Transit-Oriented Development (TOD) and Transit-Oriented Community (TOC) grants, and they are working to become self-sustaining. Council Member Dumalag asked if the commercial spaces would need to put in their own HVAC. Ms. Jones stated any HVAC would be part of the development itself, but any additional build-out for a commercial or retail space will be the responsibility of the business owner. Council Member Dumalag asked if staff had done research on the estimated commercial benefit and revenue to the city. Mr. Porter-Nelson stated staff does look at that with Ehlers, the city’s financial consultant. Currently, the buildings are tax-exempt, and if sold to the marketplace today, the purchase price would be $1.78 million. Ms. Monson added that the appraisal stated that subdividing and renovating the space brought the value down to $1.1 million, because of the smaller sizes and less value than when purchased. Council Member Brausen stated he likes the concept of building wealth and giving businesses more opportunities but noted he does not see the value here when looking at subsidizing two- thirds of the cost of the spaces with a market that is declining for office space right now. He stated there is much more that can be done, like providing microgrants for those behind on rent, which is already being done by the city. He stated that the council is also considering not implementing the EDA levy this year, explaining that current real estate market conditions do not support it. He added that a commercial land trust may be feasible in a year or two, but he would not support it at this time. Council Member Baudhuin stated he is very torn on the item and has a lot of concerns. He stated the city did purchase the property to do something regarding affordable business ownership, but no matter what is decided, there will be some trailblazing as well as some risk. He added he is in favor of taking the next step and would like to see the city be leaders, noting he trusts the staff’s work as well. No matter what is done, there will be a significant amount of risk involved. Council Member Rog added that she is entirely supportive of the goal and was supportive of the project during its first proposal, however, the market and the economy have changed and there are now many unknowns. She is not supportive anymore, noting the risks are too great. She loves the work being done here and hopes the city can continue to collaborate with PIPCLT when conditions are more suitable for success. Docusign Envelope ID: EA72428D-AB8D-497F-911F-F2A5A49BE904 Special study session minutes -6- Oct. 6, 2025 Council Member Dumalag stated she appreciates the work done here but noted the world has changed a bit with business. Now, her priority is how to stabilize residents and people who can live in St. Louis Park. She cannot support the project presently, especially with other priorities within the city and she hopes PIPCLT has other funders who can support them. Council Member Budd noted there are a lot of unknowns, and the conditions have changed. She does not want to set up PIPCLT for failure, so she cannot support the project right now. Mayor Mohamed added she appreciated the conversation and noted she had campaigned around making city businesses more affordable. She is not supportive, especially now with a difficult budget season. She is not certain 2025 is the right year for the project. It was the consensus of the city council not to support the Economic Development Authority (EDA) proposed sale of 4300 36 ½ Street West to Partnership in Property Community Land Trust (PIPCLT) for $1,788,000, nor the provision of permanent EDA financing of $2 million from the development fund to PIPCLT, including land write-down and renovation costs for the affordable commercial space project, at the present time. Ms. Jones stated that this is not a sad moment for PIPCLT, and that their main goal is that everyone is successful. The project is long-term, and eventually, the city will get value in return. She stated the model can come at any time, and funds can be recouped in the future. The work PIPCLT is doing is focused on helping businesses sustain the work they are currently doing. Ms. Keller stated that staff have loved the collaboration and hope to continue to have these conversations in the future. Written Reports 3. Community Development Block Grant allocation changes 4. Housing and neighborhood-oriented system kick-off Council Member Budd stated there have been questions about the 30-day eviction assessment and asked when the topic will be addressed. Ms. Keller stated the eviction assessment will not be discussed this year, as staff must gather 18 months of data to review before moving forward. The meeting adjourned at 9:47 p.m. ______________________________________ ______________________________________ Melissa Kennedy, city clerk Nadia Mohamed, mayor Docusign Envelope ID: EA72428D-AB8D-497F-911F-F2A5A49BE904