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HomeMy WebLinkAbout2017/08/07 - ADMIN - Minutes - City Council - Study SessionSt. Louis Park OFFICIAL MINUTES M I N N E S O T A CITY COUNCIL SPECIAL STUDY SESSION ST. LOUIS PARK, MINNESOTA AUGUST 7, 2017 The meeting convened at 6:20 p.m Councilmembers present: Mayor Jake Spano, Tim Brausen, Steve Hallfin, Gregg Lindberg, Anne Mavity, and Susan Sanger. Councilmember absent: Thom Miller. Staff present: City Manager (Mr. Harmening), Economic Development Coordinator (Mr. Hunt), Community Development Director (Ms. Barton), Housing Supervisor (Ms. Schnitker), Planner (Ms. Monson), Housing Programs Coordinator (Ms. Olson), and Recording Secretary (Ms. Pappas). Guest: Derek Reise, STEP 1. Revised Redevelopment Proposal for The Elmwood Ms. Monson and Mr. Hunt presented. Ms. Monson noted that City Council approved a Planned Unit Development for the Elmwood in March, 2017, for a 6 story development with 85 dwelling units and 188 parking spaces. Ms. Monson explained that the construction costs were much higher than anticipated, so the developer is requesting a major amendment to the Planned Unit Development to construct a 5 story mixed-use building with 70 dwelling units and 127 parking stalls. Mr. Hunt noted that on May 15, 2017, the EDA approved a redevelopment contract which outlined the provision of Tax Increment Financing for the Elmwood project. The developer subsequently worked with architects, engineers, and builders to finalize the project's construction requirements and cost estimates. The project's final construction cost estimates ended up being significantly higher than originally anticipated, making the project financially infeasible despite the approved tax increment assistance. As a result, the developer submitted summary cost information for several scenarios, including the cost of the approved project and engineering cost cutting strategies. Based on this information, staff confirmed that the final construction estimates on a per unit basis were indeed extraordinarily high and that the developer should seek a reduced development plan for the site. Mr. Hunt explained that despite the reduction in the development plan, the pro forma remains over $3.2 million in qualified costs, making it financially infeasible. To offset a sufficient portion of these costs and retain the same number of affordable housing units as previously approved, it is proposed that the EDA reimburse the developer up to $950,000 through pay-as-you-go tax increment generated by the project - the same amount as previously approved. He added that given the project's reduced taxable market value, it will require 7.5 years, or approximately 1.5 additional years, to generate the proposed amount of assistance. Councilmember Sanger stated that while she is okay with the modification to the number of units and removal of some parking, she has questions related to the financing. She asked how the assets of seniors who may qualify to live in the development, along with any income an applicant may have, will be reviewed and taken into account,. Ms. Schnitker stated that assets are reviewed as part of the application process and could be considered income, depending on the calculation. Councilmember Sanger added that related to the TIF calculation, in the past, 20% of the units were affordable, and now there will be a higher percentage of affordable units. She asked how Special Study Session Minutes -2- August 7, 2017 this might impact the amount of TIF the city provides the developer. Mr. Hunt noted that TIF is not for underwriting affordable housing. It is for extraordinary costs of the project, adding that these costs are the same for a 5- or 6 -story building. Councilmember Sanger stated she understands that TIF is not used to subsidize affordable housing; however, she is asking staff for the calculation in order to understand whether the development will earn the same rate of return as before. Mr. Hunt stated staff did not do that calculation. Councilmember Sanger stated she is asking for the calculation now. Councilmember Mavity stated she will support the amendment and appreciates the developer retaining the affordable units. She noted that many residents have equity in their homes and are hoping to remain in St. Louis Park. She appreciates the opportunities the city provides for people to do so. Related to the TIF request, she noted that the city requires many things in this development, so requiring the cost estimate of any one item does not make sense. Mayor Spann stated he will also support this redevelopment proposal. He noted that he could not recall seeing a project come back with less than expected extraordinary costs in the past and therefore asking for less TIF. Mr. Hunt agreed and noted it had only happened if grants were received and then applied to a project. He continued that more often than not, the final costs go Up. Councilmember Brausen added he also is supportive of this request and appreciates the developer keeping the same number of affordable units. He stated that this is representative of projects around town, adding the city will continue to see costs increasing on developments. He felt it would be more difficult for developers to make a profit on these types of projects, noting that an 8.7 % profit does not seem excessive. It was the consensus of the council to move forward on the amendment and take action at the August 21 meeting. 2. Kids in the Park Rent Assistance Program Ms. Schnitker provided an overview of this program, which would assist low-income households who pay rent in St. Louis Park and whose children are in St. Louis Park schools. She stated that this program will help children to develop to their full potential, while keeping them safe with stable housing. The proposal is to provide rent assistance for up to 48 months, and the participants would receive a flat monthly rental assistance amount that would decrease annually over the four-year period. Eligible households would be required to have one parent working a minimum of 28 hours a week; to reside in rental housing located in St. Louis Park, and to be lease compliant. Disabled and elderly heads of households would be exempt from the employment requirement. Ms. Schnitker added that the program was developed in partnership with the St. Louis Park Emergency Program (STEP) and the St. Louis Park School District and is based on a similar program successfully administered in Richfield. In addition to the rent subsidy, STEP staff will meet with each household to assess their economic and social needs; to establish a plan to address those needs; to provide referrals; and to offer case management, as needed. Participant households would also be required to attend parent -teacher conferences and take an active role in their children's educational progress. The city Housing Authority would administer the program. Special Study Session Minutes -3- August 7, 2017 Additionally, she noted that approximately seven households would be served in the first year, with additional households added in future years. Councilmember Mavity thanked Mr. Reise from STEP and city staff for developing this program, adding that helping to keep kids in school is a benefit to the whole community. Councilmember Sanger stated that historically in Minnesota, it has not been the role of cities to support families. It has typically been handled by the state and county. She noted she is concerned about setting precedent and has concerns about this program. She added that she is well aware of families who are struggling with disruptions to their children's education. However, she asked how staff decided this program should continue for four years and not just to the end of the school year. She also asked how it would be determined if a family's struggles to keep their apartment is only related to financial issues. Ms. Schnitker explained that the four years provides stability and keeps children in the St. Louis Park School District. She added that it helps families have a plan in place to increase their economic and social status and to develop roots in the community over time. Councilmember Sanger stated that she understands but still has concerns about the city providing financial aid to families, as it is a slippery slope. She asked if instead the city could allocate money to STEP for the program and if in the future the city can withdraw from this program if needed. Ms. Schnitker stated staff did not consider this option because the city has a Housing Authority that has the expertise to administer the program. She added that staff looks at this as a partnership with STEP, who also has a role in administering the program. Councilmember Lindberg stated that this is a fantastic idea, noting the strong partnership strengthens the city's ties with the school district. He added, however, that he does share some of Councilmember Sanger's concerns and asked if there is some sort of reasonable performance measurement in place in order to see results. He noted that with staff to support it, the program makes sense. Councilmember Brausen commended staff on this innovative idea and stated that this program will give a necessary helping hand to families in need. He stated that it seems like a small amount of money to help families. Councilmember Brausen asked how the $65,000 figure was reached and if it should be increased to $100,000 to help more families. Ms. Schnitker stated that staff decided to start out modestly. As the program moves forward, they will be able to add more participants and could have up to 15 families in the program. Councilmember Hallfin stated he likes the idea and asked what the metric is in the first or second year of the program and how it is set up. Ms. Schnitker stated that families would need to stay income eligible or go off the program. They would have to continue to meet the income eligibility criteria, but there would be a grace period for discontinuing assistance. Councilmember Lindberg asked if this would also apply to a family if their child were to leave the school district or graduate. Ms. Schnitker answered yes and added that the city will also look to the Richfield model on these issues. Mayor Spano stated that he is supportive but certainly understands Councilmember Sanger's comments. He noted that cities are being asked to finance more items, as we have seen with SWLRT, softball fields, and more. He noted there needs to be a higher level conversation on Special Study Session Minutes 4- August 7, 2017 how much the city will need to be involved in this program. Mayor Spano stated staff should proceed as the majority of the council is in favor of moving forward. Ms. Schnitker stated that staff is hoping to begin taking applications in September and October. Mayor Spano asked if there will be a waiting list for applicants. Ms. Schnitker answered yes, adding that the city wants to give all families an opportunity to apply. Councilmember Mavity suggested staff work with STEP on the waiting list and on possibly starting fresh each year with the application process for families in order to respond to the needs that STEP is seeing. Councilmember Sanger stated this program and the discussion in the previous study session about the item related to affordable housing has a theme that is concerning to her. While it is well-intentioned, she is concerned about dealing with one-off issues that are not systemic. Additionally, she has concerns about addressing affordable housing issues for one family at a time and would rather the city focus efforts on housing affordability for all people so as to have longer -lasting effects. She suggested funding a revolving discounted loan program for apartment owners so that they can fix up their properties in exchange for keeping units affordable. This would benefit the surrounding neighborhoods, also. The meeting adjourned at 7:07 p.m. Written Reports provided and documented for recording purposes only 3. Elmwood Neighborhood Temporary Traffic Control