HomeMy WebLinkAbout2022/11/28 - ADMIN - Agenda Packets - City Council - Study Session AGENDA
NOV. 28, 2022
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meeting or study session.
6:30 p.m. STUDY SESSION – council chambers
Discussion items
1. 60 min. Single-family rental density cap
2. 45-60 min. Solid waste program update
Written reports
3. Business program update
4. October 2022 monthly financial report
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civic TV cable channel 17. The agenda and full packet are available after noon on Friday on the city’s website.
If you need special accommodations or have questions about the meeting, please call 952.924.2505.
Meeting: Study session
Meeting date: November 28, 2022
Discussion item: 1
Executive summary
Title: Single-family rental density cap
Recommended action: No action required at this time. The purpose of this meeting is to discuss
the impact of a single-family rental density cap in St. Louis Park.
Policy consideration: Would creating a rental density cap in single-family neighborhoods
achieve the council’s desired outcome of preserving homeownership options? Does limiting the
number of single-family rentals per block align with the city’s adopted strategic priorities?
Summary: Council members submitted a study session topic proposal in April 2022 which
included the consideration of rental density caps as an option to promote “equity,
socioeconomic diversity and racial integration” and provide opportunities for
“equity/ownership/wealth-building”. Subsequently, three council members also expressed their
concern about a rise in corporate investor ownership.
This report provides information on the status of single-family rentals in St. Louis Park and
potential impacts, unintended consequences, and considerations of enacting a rental density
cap.
The increase of investor ownership of single-family (SF) houses has become more prevalent,
both nationally and in the Minneapolis-St. Paul metropolitan area since 2009. When the Great
Recession forced many homeowners out of their homes in the early 2009/2010, investors
picked up foreclosed single-family houses at low prices and converted them into rental
properties. St. Louis Park also saw a significant increase in single family rentals during that time.
Since 2010, the single-family rental market has continued to grow in some areas of the metro;
however, the single-family rental market in St. Louis Park has remained relatively constant.
Financial or budget considerations: City staff time to implement, manage, educate, and
monitor compliance of a single-family rental density cap.
Strategic priority consideration: St. Louis Park is committed to providing a broad range of
housing and neighborhood oriented development. St. Louis Park is committed to being a leader
in racial equity and inclusion in order to create a more just and inclusive community for all.
Supporting documents: Discussion. Rental density cap memo to the city council from the city
attorney (privileged/non-public).
Prepared by: Marney Olson, housing supervisor
Reviewed by: Karen Barton, community development director
Soren Mattick, city attorney
Brian Hoffman, director of building and energy
Michael Pivec, property maintenance and licensing manager
Approved by: Kim Keller, city manager
Study session meeting of November 28, 2022 (Item No. 1) Page 2
Title: Single-family rental density cap
Discussion
Background
Council members submitted a study session topic proposal in April 2022 which included the
consideration of rental density caps as an option to promote “equity, socioeconomic diversity
and racial integration” and provide opportunities for “equity/ownership/wealth-building”.
Subsequently, several council members also noted their concern about a rise in corporate
investor ownership.
The increase of investor ownership of single-family (SF) houses has become more prevalent,
both nationally and in the Minneapolis-St. Paul metropolitan area since 2009. When the Great
Recession forced many homeowners out of their homes in the early 2009/2010, investors
picked up foreclosed SF houses at low prices and converted them into rental properties. St.
Louis Park also saw a significant increase in SF rentals during this time. Since 2010, the SF rental
market has continued to grow in some areas of the metro; however, the SF rental market in St.
Louis Park has remained relatively constant.
Current single family rentals
The city has a total of 11,698 SF houses. The number of licensed SF rental houses for 2021 was
871, or 7.4% of the SF housing stock. The current number of SF rentals licensed for 2022 is 840
(7.2%).
1. Trend: A review of the SF rental licenses over the past 10 years shows that the number
of licenses has remained relatively consistent, varying between 826 and 898 licensed SF
rental houses annually.
2. Location: Although the SF rental properties are located throughout the city in every
census tract, SF rentals are more concentrated in the neighborhoods located in the
center of the city, north of Highway 7. There are pockets of greater concentration in the
southwest neighborhoods, as well as in the north central and the south neighborhoods
adjacent to Highway 100. Neighborhoods with higher property values tend to have
lower overall rental concentration and fewer SF rentals. (See map below*)
3. Owners: In the past several years, the number of investor-owned SF rental houses has
increased across the metro area, raising concerns in some cities. Reviewing a property
owner’s portfolio size can be helpful to differentiate between those who have a small,
local business and those who are large investors. Based on 2021 data provided by the
Minneapolis Federal Reserve, which identifies a non-homesteaded property as an
investor-owned SF rental, the number of investor-owned houses in St. Louis Park is
relatively low, with few owning multiple properties in the city. Less than 3% of the total
rental market in St. Louis Park is investor owned, and less than .5% of the total rental
market is owned by an investor with 10 or more properties. Additional details are
below:
• 10+ investor-owned properties: 0.4% (47) properties
• 5+ properties: 1% (115)
• 2+ properties: 2.6% (296)
Study session meeting of November 28, 2022 (Item No. 1) Page 3
Title: Single-family rental density cap
The following chart shows other metro city’s percentages of SF rentals owned by
investors with 2 or more SF properties, for comparison:
Edina 2% Bloomington 2.7% Brooklyn Park 3.1%
Hopkins 2.4% Minneapolis 5.6% Brooklyn Center 5.2%
Richfield 3.2% Golden Valley 1.9% Anoka 3.3%
Minnetonka 2% Eden Prairie 1.8% Champlin 1.5%
Robbinsdale 3.7% Roseville 2.6%
*Single family rentals heat map
Single family home sales in St. Louis Park
Data from the Minneapolis Area Association of Realtors:
• In 2021, 1093 (9%) SF houses sold in SLP.
Study session meeting of November 28, 2022 (Item No. 1) Page 4
Title: Single-family rental density cap
• Rolling 12 months (November 2021 – October 2022), 931 houses sold
• The median sale price over the past 12 months was $355,000, the average was
$376,775.
• In October 2022, the median sales price was $360,500 and the average was $369,599,
with 59 houses sold.
• The current affordable housing price for a family at 80% AMI in the metro area as set by
the Metropolitan Council is $355,600, which nearly matches the median sale price in in
St. Louis Park for the last 12 months. This means that roughly half (465) of the houses
sold in the last 12 months in St. Louis Park were sold at a price below the home value
affordable to a household with income at 80% AMI.
Demographics related to homeownership
2019 American Communities Survey data shows 85% of housing units in St. Louis Park were
occupied by white households. The next largest demographic of households is Black or African
American with 7%. Minnesota has one of the worst homeownership gaps in the nation. St.
Louis Park’s homeownership gap is even worse than the state’s homeownership gap with 63%
of white households owning their home, whereas only 8% of Black households are
homeowners, meaning that 92% of Black households in St. Louis Park are renters.
Minnesota communities with rental density restrictions
Communities in Minnesota that adopted rental density restrictions did so primarily to address
what they determined to be a correlation between concentrations of rental housing and
negative impacts on community livability. Their concerns focused on what they identified as
indicators of neighborhood quality of life criteria including increased nuisance complaints,
parking concerns, increased police incidents, decreased property maintenance levels and
decreased property values.
Of the six communities identified that adopted a rental density policy, all limited the
percentage of rentals per block ranging from 10% to 30% of the parcels. The 6 cities included
Winona, Northfield, and North Mankato which are all college towns, as well as West St. Paul,
Anoka and Champlin. The college towns adopted the policies in order to curb student rentals.
West St. Paul and Anoka are both communities with older modest housing that was attractive
to investors during the housing recession. Champlin adopted their policy in 2022.
Legal concerns and community opposition
In recent years, two communities that proposed adopting a rental density restriction policy
faced significant opposition during the adoption process: North Mankato and Brooklyn Center.
Despite community opposition, North Mankato chose to adopt a rental density cap policy
limiting rentals to 10% of a block due to the impacts from off-campus student housing.
Brooklyn Center introduced an ordinance in 2016 that would limit rental licenses for single-
family homes to 30% of the homes per block and faced strong opposition from residents and
others, including from the Minneapolis Area Association of Realtors. Brooklyn Center did not
move forward with the adoption of a rental density cap.
The City of Winona, a college town, enacted a rental density ordinance in response to impacts
from off-site student housing. The city stated that, as an unintended consequence,
Study session meeting of November 28, 2022 (Item No. 1) Page 5
Title: Single-family rental density cap
homeowners have obtained a rental license for their primary residence in an effort to limit
legitimate rentals.
The Minnesota Court of Appeals upheld Winona’s ordinance against challenges that it was not a
valid exercise of the City’s police power and that it was unconstitutional. Dean v. City of
Winona, 843 N.W.2d 249, 253 (Minn. Ct. App. 2014); 868 N.W.2d 1, 6 (Minn. 2015) (appeal
dismissed as moot). The Court held that a city may use its police power to limit the number of
lots on a block that are eligible to obtain certification as a rental property. Id. at 252. The Court
also found that an ordinance that establishes a neutral, numerical limit does not violate equal
protection or due process under the Minnesota Constitution. Id. Of note, in finding that the
ordinance had a rational basis, the Court acknowledged that the City’s 30% cap was “adopted
after a long, deliberate information-gathering process that considered public input, data, and
expert review,” including a memorandum from a consultant. Id. at 261. Therefore, it is
advisable to study the issue thoroughly and create a robust record before considering enaction
of a similar ordinance.
Northfield also has a rental density ordinance which they enacted largely in response to the
impact the local colleges were having due to the need for off-campus student rental housing.
They are currently considering repealing the rental density restriction. They cited the exclusive
nature of the policy and their experience related to homeowners seeking a rental license to
ensure that the 20% restriction limit is met on their block which prohibits legitimate rental
properties from being established. They also cited that the colleges have built more student
housing on campus and there is less need for off campus student housing.
Potential impacts of a rental density ordinance
There are a number of potential impacts, unintended consequences, and considerations
associated with the adoption of a rental density ordinance:
• Adoption of a rental density ordinance could result in an overall decrease in the number
of single-family rentals in neighborhoods, and in the city, over time. If the density
restrictions are set lower than what currently exists in the city, this would reduce the
number of SF rental houses over time.
• In other cities that have adopted rental density ordinances, some homeowners have
obtained a rental license for their house with no intention of renting it. The homeowner
simply acquires the license to either prevent another SF house on their block from
becoming a rental, thereby further reducing the overall percentage of rentals on their
block, or to make their home more marketable should they choose to sell it.
• SF rental houses provide an important option for larger households. Many households
seeking larger (3+ bedroom) housing units in St. Louis Park often rely on, and/or prefer,
single-family rentals to meet their space needs. An unintended consequence of a rental
density ordinance could be limiting the housing choices of larger households, which are
often households of color. Implementing such an ordinance could be perceived as
exclusionary to large families and households of color by making it more challenging to
find housing appropriate to meet their needs in the community. Additionally, given the
significant disparity in homeownership rates between White people and people of color,
especially Black households, this could contribute to the “whitening” and lack of
diversity in St. Louis Park neighborhoods.
Study session meeting of November 28, 2022 (Item No. 1) Page 6
Title: Single-family rental density cap
• If a restriction is imposed as a not-to-exceed percentage by block, SF house owners who
do not already have a rental license would be prohibited from obtaining a rental license
until the block drops below the compliance/percentage threshold. In a situation where a
homeowner needs to relocate for a period of time due to work or to care for a family
member, this could potentially force someone to leave their house vacant or to sell their
house against their wishes. This could result in displacement and impact a household's
ability to build wealth by maintaining ownership of the house.
• The city requires a rental license for any dwelling unit that is not owner occupied,
including any dwelling unit occupied by a relative of the owner. St. Louis Park has a
number of licensed properties where an owner is providing a family member with
housing. A restriction on rentals could impact the ability of families to assist other family
members with housing.
• Enacting a SF rental density ordinance would not guarantee that lower valued
properties wouldn’t be purchased and demolished to build a new house or transformed
with a significant addition.
• It is unknown how many of the SF rental houses have an affordable market value and
could provide affordable homeownership opportunities. An analysis of the number of
SF rentals that are valued as affordable would need to be undertaken to determine
which houses would potentially be accessible by first-time, first-generation, or lower
income buyers.
• Concerns and challenges related to an owner’s property rights to use and/or sell their
property.
• SF rentals provide opportunities for small investors to build wealth.
• Rental density caps can be seen as discriminatory, unwelcoming and perpetuate the
stereotype that renters cause problems and homeowners are better neighbors.
• Enforcement capacity and concerns. Any policy adopted would need to consider how
existing rental properties that are not in conformance with the new ordinance would be
remedied and how to ensure compliance with the policy.
• The ADU policy, along with allowing duplexes in R1 districts were zoning changes
intended to provide alternative housing options and higher densities within the
residential districts. Limiting the percentage of rentals in residential neighborhoods
could have an adverse impact on the future success of these recent initiatives.
• Research has shown that large-scale investors tend to avoid purchasing properties in
cities with strong tenant protections and rental licensing/inspection programs in place,
which St. Louis Park has.
Conclusions
Enacting a SF rental density ordinance could increase owner-occupied homeownership of
single-family homes in the city. Whether limiting the number of SF rental houses would
promote “equity, socioeconomic diversity and racial integration” or “equity/ownership/wealth-
building” is uncertain.
Limiting single-family rentals may continue to perpetuate segregation in our low-density
residential neighborhoods and limit housing choice for larger households. This would be in
direct conflict with the city’s strategic priorities of being a leader in racial equity and inclusion,
and of providing a broad range of housing.
Study session meeting of November 28, 2022 (Item No. 1) Page 7
Title: Single-family rental density cap
Given the relatively small percentage of SF rentals in the city, the very small percentage of
those that are owned by larger corporate owners, and the strong tenant protections and rental
inspection program St. Louis Park has, it is unlikely the city would see a significant increase in
the number of larger corporate owners acquiring SF houses for rental.
Cities that have enacted SF rental density ordinances have typically done so in response to a
specific problem impacting their city, such as in college towns or in areas experiencing a
significant problem with absentee corporate owners. It would need to be determined what
problem exists in St. Louis Park that can be effectively addressed through a SF rental density
ordinance.
In order to pursue enacting a rental density ordinance, the city would need to:
• ensure that the ordinance promotes a public purpose that serves the public interest;
• conduct a thorough and deliberate information-gathering process that includes public
input, data, and expert review prior to drafting and adoption; and
• ensure there is a sufficient connection between the ordinance and the desire to control
the number of such converted properties.
Next steps
If council wishes to further explore or adopt a rental density cap ordinance, a public purpose
rational to enact such an ordinance would need to first be established. Staff from building and
energy and community development departments would then begin the information-gathering
process and subsequently work with the city attorney to prepare an ordinance for council
consideration.
If council does not wish to pursue this policy at this time, staff will continue to monitor SF
rentals, particularly investor ownership, for future action if needed.
Meeting: Study session
Meeting date: November 28, 2022
Discussion item: 2
Executive summary
Title: Solid waste program update
Recommended action: The purpose of this discussion is to provide council with an overview of
the draft 2023 – 2028 hauler request for proposal (RFP).
Policy consideration: Does council agree with the proposed changes to the 2023 – 2028 RFP
outlined in this report?
Summary: Staff provided a written report to council on November 14, 2022 that included an
overview of the current solid waste program, history, and proposed changes.
Because of staffing challenges in the hauling industry, staff recommends maintaining the
current program and limiting major changes to the RFP to ensure the most cost-effective
program.
For a description of program changes recommended by staff see the “Discussion” section of
this report.
For a list of existing residential solid waste collection program components see Attachment A.
Financial or budget considerations: None at this time.
Strategic priority consideration: St. Louis Park is committed to continue to lead in
environmental stewardship.
Supporting documents: Discussion
Attachment A – Existing Solid Waste Residential Program
Prepared by: Kala Fisher, solid waste manager
Reviewed by: Jay Hall, public works director
Approved by: Kim Keller, city manager
Study session meeting of November 28, 2022 (Item No. 2) Page 2
Title: Solid waste program update
Discussion
Background
Staff provided a written report to council on November 14, 2022 that included an overview of
the current solid waste program, history, and proposed changes. For reference, the existing
residential solid waste program details have been included again as Attachment A.
Existing contract
The city currently holds a five-year contract (October 1, 2018 – September 30, 2023) for
residential solid waste services with Waste Management (WM), who uses a subcontractor for
the collection of yard waste (2022/2023 yard waste seasons only).
Existing program
Over the last two contract cycles (2013 – present), the solid waste program has been expanded
through the following major program changes:
• Switched from separating recycling into two streams to single-stream recycling in carts
• Added residential organics collection service
• Added and expanded multifamily organics drop-sites
• Transitioned organics to be collected separate from yard waste
• Included organics service in all solid waste rates to eliminate a separate signup fee
• Added every-other-week garbage collection option
• Eliminated high volume garbage service levels
• Gave residents access to the city’s brush site to pick up compost, drop off yard waste
Present considerations
With the current 2018 - 2023 solid waste collection contract expiring in less than a year, staff
have begun preparing Requests for Proposals (RFP) for the upcoming five years.
Limited residential program changes recommended
Haulers have been significantly impacted by changes to the labor market as a result of the
COVID-19 pandemic, changes to the commercial driver's license (CDL) requirements, and
ongoing challenges to retain trained staff.
Recommended changes are minimal to avoid additional resources (staffing/equipment) needed
to provide collection and because the well-established solid waste program has already
expanded over the last decade, as noted above. Instead, staff recommends focusing on
ensuring consistent services and fine-tuning education, outreach and participation in existing
programs.
New items for residential program RFP
• General – Encouraging contracts with more than one hauling company to build in
redundancy, though one hauler would also be considered. Request a staffing list in
proposals, in addition to requiring an itemized truck/equipment list as in past RFP’s.
• Recycling – Adding curbside mattress recycling rather than disposal or needing to deliver
to clean-up events or other drop-off locations for recycling.
Study session meeting of November 28, 2022 (Item No. 2) Page 3
Title: Solid waste program update
• Garbage – Add times outside of Saturdays to annual cleanup day events to make the
events more accessible. Elimination of the 20-gallon service levels (weekly and every-
other-week – makes up 7% of all service levels).
• Organics – No significant changes
• Yard Waste – No significant changes
Next steps
Listed below is a draft schedule showing the major steps to develop and award new collection
contracts. Staff will be in attendance at the December 19 council meeting to request
authorization to solicit proposals.
New contracts for garbage, recycling, organics and yard waste collection should be awarded
before the end of March 2023 to allow contractors time to adequately prepare for the work. If
this deadline cannot be met, extensions of the current contract will need to be negotiated.
Future actions Governing
body
Date
Draft Request for Proposal and contract completed Staff Dec. 2022
Council authorizes Request for Proposal Council Dec, 2022
Proposals received by staff Staff Jan. 2023
Proposals and staff recommendations reviewed with council Staff/council Feb. 2023
Staff negotiates collection contracts with vendors Staff Feb. 2023
Council approves new collection contracts Council Feb./Mar. 2023
Staff conducts public education outreach with residents Staff Apr.-Sept. 2023
New collection contracts begin Staff Oct. 1, 2023
Study session meeting of November 28, 2022 (Item No. 2) Page 4
Title: Solid waste program update
ATTACHMENT A
2018 – 2023
EXISTING SOLID WASTE PROGRAM
OVERVIEW
The City of St. Louis Park has organized garbage, recycling, organics and yard waste collection
for single family and multi-family dwellings of four units or less. In an organized collection
system, the city provides collection services through a contract(s). The city has a five-year
contract with Waste Management for all materials, that is effective October 1, 2018 –
September 30, 2023. Staff in the public works department (solid waste division) manage the
contract and oversee day-to-day operations, with billing support from the finance department’s
utility billing division.
GARBAGE
• Pay-As-You Throw (PAYT) Program for single family to four-unit residential properties
where the garbage rate increases as garbage service level (cart capacity) increases
• 11 Levels of Service (20* and 30-gallon every-other-week and 20*, 30, 60, 90, 120, 150,
180, 270, 360-gallon weekly) *20-gallon service levels being phased out, removed by end
of 2023
• Garbage must fit in cart with lid completely closed
• Residents may purchase “extra garbage stickers” from the city for bags of household
garbage that does not fit in their carts
• Weekly collection (5 days / week) from 7 a.m. to 6 p.m.
• City owned carts (30-,60-,90-gallon)
• Hauler provides cart storage, distribution and inventory
• Collection on city approved routes (routes determined and mapped by contractor
approved by city)
• Disposal (incinerated) at the Hennepin Energy Recovery Center (HERC) or alternatively at
a Hennepin County approved facility
• Optional walk-up service for garbage collection (at additional cost)
• Extra collection upon request (additional pick-up of regular, carted household garbage at
additional cost)
• Bulk collection upon request (pick-up of large, non-carted garbage at additional cost)
• Emergency or disaster services agreement in place
RECYCLING
• Single-sort collection (all materials comingled)
• Materials collected inside the cart include paper: newspaper, magazines, mail,
phonebooks, soft cover books, box board (i.e. crackers, cereal, pasta, toothpaste, pop
and beer boxes), corrugated cardboard (3’x3’); metal: steel and aluminum cans; glass:
bottles and jars; plastic: bottles, cups, containers, and jugs; cartons: aseptic (shelf-stable
cartons for soup, wine, non-refrigerated items) and table top (refrigerated cartons for
milk and juice) cartons.
Study session meeting of November 28, 2022 (Item No. 2) Page 5
Title: Solid waste program update
• Materials collected outside the cart include scrap metal: 2’ x 2’ maximum; large,
corrugated cardboard: greater than 3’ x 3’; extra recyclables
• Unlimited material collection, extra cart(s) at no cost
• Every other week collection (5 days / week) from 7 a.m. to 6 p.m.
• City owned carts (30-, 60-, 90-gallon)
• Extra collection upon request (additional pick-up at additional cost)
• Collection on city approved routes (routes determined by contractor and mapped by
city)
• Optional walk-up service (at additional cost)
• Appliance and electronics recycling collection upon request (pick-up at additional cost)
• Contractor provides revenue sharing with city
• Annual material composition analysis and report of end-market sales by contractor
• Contractor provides end market information (upon city request)
• Emergency or disaster services agreement in place
ORGANICS
• Collection of food scraps, certified compostable products, and food-soiled paper like
napkins and paper towels, and greasy pizza delivery boxes
• Weekly collection (5 days / week) from 7 a.m. to 6 p.m.
• City-owned carts (30- and 60-gallon)
• Organics must be bagged in certified compostable bags and be placed inside city-owned
organics carts
• Service to 11 multifamily drop-sites and six city buildings
YARD WASTE
• Collection of grass clippings, leaves, weeds, brush, and tree limbs
• Weekly collection (5 days / week, 2 routes / day) from 7 a.m. to 6 p.m.
• Collection from April to November
• Material for collection must be in a container or compostable bag, or tied and bundled
• Containers owned by residents
• Containers must be 40 pounds or less when filled
• Brush must be bundled in lengths of 4’ or less
• Tree limbs must be 4’ or less and have a diameter of 4” or less
• Special collection upon request (additional pick-up at additional cost)
CUSTOMER SERVICE
• Contractor staffed call center from 6 a.m. to 6 p.m. (Monday – Friday), 8 a.m. to 2 p.m.
(Saturdays when collecting during holiday weeks)
• Calls or emails responded to with 30 minutes or by 9 a.m. if received after hours
• Calls documented by contractor and city staff in city database (Cartegraph)
EDUCATION
• Educational tags issued to residents by contractor when collection material isn’t
properly prepared, or items not accepted are found
• Education letters to residents by city if education tag issues are not corrected
Study session meeting of November 28, 2022 (Item No. 2) Page 6
Title: Solid waste program update
• Resident education prepared by city (website, Park Perspective, Sun Sailor, social media,
email, mailings, brochures)
• Community outreach at city and community events
• Recycling Champion program to train residents to educate their neighbors
• Annual recycling guide by city
BUSINESSES
• Allow garbage, recycling, and organics collection from small businesses that have the
same collection parameters as residential customers (cart collection, level of service,
and along existing routes) and as long as one type of recycling service is also used
• Zero Waste Packaging Ordinance education and enforcement for affected businesses
OTHER
• Holiday tree collection in first three weeks of January
• Two clean-up day events per year by city and contractor for recycling of mattresses, box
springs, scrap metal, tires, appliances, bicycles, TVs, computers and other electronics,
holiday lights, textiles, reuse of building materials and disposal of large trash items.
• Two paper shredding events per year by city
• Three swap events to encourage reuse of clothing, gardening supplies, books, music and
other media
Meeting: Study session
Meeting date: November 28, 2022
Written report: 3
Executive summary
Title: Business programs update
Recommended action: None at this time. The purpose of this report is to provide an overview of
the EDA’s business programs, services, and resources.
Policy consideration: Do the small business programs, services, and resources identified in this
report support the city council’s strategic priority to provide a broad range of housing and
neighborhood-oriented development?
Summary: Small businesses are integral to the economic strength and vitality of St. Louis Park
and have a direct bearing on the community’s prosperity. The majority of St. Louis Park’s
businesses have fewer than 25 employees. The city recognizes the vital role these enterprises
play in its economy and has a vested interest in seeing its small businesses succeed and thrive.
Over many years, and more recently as businesses rebound from the COVID-19 pandemic, the
EDA has created a variety of programs, services, and resources aimed at assisting St. Louis Park’s
small businesses start, grow, and expand their enterprises.
The following report provides an overview of the city’s current small business assistance offerings
and identifies potential future initiatives.
Financial or budget considerations: Funding for the current business assistance programs and
services detailed in this report is included in the 2023 development fund budget. New programs
or services may require additional funds to be budgeted.
Strategic priority consideration: St. Louis Park is committed to providing a broad range of
housing and neighborhood oriented development. St. Louis Park is committed to being a leader
in racial equity and inclusion in order to create a more just and inclusive community for all.
Supporting documents: Discussion
Prepared by: Julie Grove, community and economic development analyst
Greg Hunt, economic development manager
Reviewed by: Karen Barton, community development director/EDA executive director
Approved by: Kim Keller, city manager
Study session meeting of November 28, 2022 (Item No. 3) Page 2
Title: Business programs update
Discussion
Background: Current small business assistance programs
Open to Business Program
The Open to Business Program began in St. Louis Park in 2011. Per its contract with the EDA, the
Metropolitan Consortium of Community Developers (MCCD) provides free, one-on-one
confidential business counseling to current and prospective entrepreneurs in St. Louis Park.
Through this program business advisors work with small business owners to access the technical
assistance and financing options they need to help grow their enterprises. Regular monthly
counseling sessions are held at city hall but can also be scheduled virtually. In 2021, MCCD staff
met with 10 new and existing local businesses providing a total of 85 hours of service. MCCD also
assisted one black/indigenous/person of color (BIPOC) resident business owner with securing a
bank financed loan in the amount of $341,700. Throughout this year, there was unprecedented
opportunities for small business relief capital in the form of grants as well as low-cost and
forgivable loans which reduced demand for traditional small business lending. During this time
MCCD staff focused its efforts on directing clients to the available relief grants and loans.
Recently, MCCD has seen traditional lending inquiries from clients and financial partners pick up
again as businesses are stabilizing and shifting back into growth mode. As a result, MCCD
anticipates assisting more clients in the next year. As evidenced in the first half of 2022, MCCD
advisors met with 14 clients and provided 100 hours of service in the city. Of the clients served,
29% were women, 43% were low income, and 43% were BIPOC.
St. Louis Park Revolving Loan Fund and Two Percent Loan Programs
The EDA currently offers local businesses two loan programs through its Revolving Loan Fund
(RLF) and Two Percent Loan Program. The Revolving Loan Fund was established in 2016 and
provides market rate gap financing for property and equipment purchases as well as capital
improvements enabling local businesses to grow and expand their enterprises, create
employment opportunities, and increase the city’s tax base. The maximum loan available for each
eligible project is $200,000 or 40% of total project cost, whichever is less. The program is
administered by Central Minnesota Development Corporation (CMDC).
In 2019, a new two percent loan program was launched specifically to encourage investment and
growth by local small businesses. Initially, this program targeted businesses in the Historic Walker
Lake area, but was expanded citywide during the COVID pandemic in 2020. The program is a joint
initiative with the Metropolitan Consortium of Community Developers (MCCD), (operator of the
Open to Business program). MCCD provides loan funds, and the EDA matches those funds up to
$75,000 at a 2% interest rate. The program aims to make it more affordable for local
entrepreneurs to make additional property and equipment investments in their small businesses.
To date, the EDA has provided five loans utilizing the Revolving Loan Fund and the Two Percent
Loan Program. Practical Systems received a $63,000 RLF gap loan to purchase and renovate its
building at 3230 Gorham Ave. The Block restaurant received two loans including a $150,000 RLF
gap loan and a $74,950 2% loan to purchase and renovate its building at 7007 Walker St. London
Square Associates obtained a $74,000 2% loan to renovate the “London Square” building at 6528
Lake St. This past year, Honey & Rye Bakehouse, woman-owned business, obtained a $200,000
Study session meeting of November 28, 2022 (Item No. 3) Page 3
Title: Business programs update
RLF gap loan to expand its business and purchase and renovate the commercial building at 4615
Excelsior Blvd.
Texa Tonka Façade Improvement Grant Program
In 2022, the EDA was awarded a Hennepin County Business District Initiative grant. With this
award, the EDA established the Texa-Tonka Façade Improvement Grant Program to stimulate
investment in the Texa-Tonka commercial area (excluding Texa Tonka Shopping Center). The goal
of the program is to provide an incentive to area businesses to make physical improvements to
their building fronts to enhance the overall esthetics of the district. The program provides
matching grants to reimburse eligible façade improvements up to fifty percent of the total
project cost up to a maximum of $10,000. Funds through this program are available on a first-
come, first-serve basis from summer 2022-December 2023, subject to funding av ailability. To
date, one façade grant has been awarded, and one application is currently pending. Additional
applications are anticipated this spring.
Elevate Business HC Program
Hennepin County launched Elevate Business HC in December 2020 to connect county business
owners and entrepreneurs to experts, capital, and resources to assist them at key points in their
entrepreneurial journeys. Specifically, Elevate Business HC is a hub where small businesses at any
stage can access free business resources, including free one-on-one consulting services from
trusted business advisors, events and webinars, peer connections, and other business resources.
The county has contracted with 23 diverse business advisors through this program and thus far,
more than 100 entrepreneurs have utilized its services. City staff refer current and prospective
entrepreneurs to these resources on a regular basis.
Minnesota Department of Employment and Economic Development (DEED)
In an effort to help small businesses grow and succeed in Minnesota, DEED recently unveiled a
new online Small Business Hub to help entrepreneurs start and grow their small businesses. This
Hub provides details on financial programs, resources, and expertise for small business owners. In
addition, DEED was recently approved for $97 million in small business financing support through
the State Small Business Credit Initiative (SSBCI). Utilizing this support, DEED is launching six new
financing programs before the end of the year. Two of its new programs were announced at the
end of October 2022: the Growth Loan Fund (funding for early-stage technology businesses) and
Loan Guarantee program.
Small Business Liaison
The city’s community and economic development analyst, Julie Grove, also serves as its Small
Business Liaison. In this role she is the point person for providing assistance to entrepreneurs and
business owners and managers to help them start, grow, expand or relocate their enterprises as
well as navigate local regulatory requirements. Some of the assistance provided this past year has
included guiding businesses as they look to start a business, referring businesses to the wide
variety of small business assistance resources and programs offered locally and by various metro
agencies and organizations, helping businesses search for appropriate available properties within
St. Louis Park, walking businesses through the permit, licensing, and zoning processes, and
responding to questions and concerns as they arise.
Study session meeting of November 28, 2022 (Item No. 3) Page 4
Title: Business programs update
Business Resources webpage
Included on the city’s web site is a web page outlining the various small business resources
available in St Louis Park and the metro area. Under the heading “Business”, information can be
found on starting or expanding a business, business support, financing options, obtaining city
approvals, finding available property, as well as a robust set of links to other agencies and
organizations that offer assistance and services. Several of these resources are specifically
designed to assist underrepresented small business owners, including women, Black, Indigenous
& People of Color / Asian American and Pacific Islanders (BIPOC/AAPI). This web page is
continually updated to ensure the most up to date information is available for local businesses,
property owners and residents.
Business retention and expansion
Over the last several years the city has partnered with the Minneapolis Regional Chamber of
Commerce on a joint business retention and expansion program to establish and maintain
relationships with St. Lous Park businesses. Through this program local businesses are visited by
chamber and city staff to express the city’s appreciation for the business’s contributions to the
local economy. The visits also serve to create and deepen relationships with local businesses,
further strengthening their ties to the community. Additionally, they enable staff to gather
pertinent information about local companies, address issues or concerns and provide information
on available resources.
Staff turnover and organizational changes at the Chamber, along with temporary city staff
shortages this past year, meant that business visits were limited in 2022. However, city staff were
able to meet with, establish and maintain relationships with a number of local businesses during
this time. This will be an area of focus for the city’s economic development staff in the coming
year.
Continued outreach
To further promote the city’s various small business assistance offerings, staff continually updates
its marketing streams including the city’s website, social media sites, and direct emails. Small
business assistance information is also highlighted in the Park Perspective, in newsletters, on Park
TV, and the city’s social media sites.
New proposed programs
Affordable commercial space initiative
In September, the EDA acquired an 8,600 square foot retail building at 4300 36th ½ Street West
just off Excelsior Boulevard. The vacant building is in good condition and lends itself to being
divided into four to seven retail/office spaces for small businesses. Staff is preparing a
Memorandum of Understanding (MOU) with the Partnership in Property Commercial Land Trust
(PIPCLT) under which the parties would agree to work cooperatively to divide the building into
separate commercial spaces. The objective is to sell those spaces to limited income small
businesses under a land trust arrangement. Under such an arrangement, the land trust would
retain title to the underlying land and lease it to individual businesses on a long-term basis.
Businesses would purchase (or lease to own) their spaces in the building which would be made
more affordable by taking the land cost out of their purchase price. The concept allows limited
Study session meeting of November 28, 2022 (Item No. 3) Page 5
Title: Business programs update
income entrepreneurs the rare opportunity to acquire their own commercial spaces at reduced
cost thereby enabling them to build assets and wealth. Staff hopes to bring the proposed MOU
with the commercial land trust to the EDA for its formal consideration in early 2023.
Advance commercial business assistance program
Staff have been working to develop a new program, called Advance, to assist prospective
entrepreneurs as they open new businesses or locations, help local small businesses expand, and
fill vacant commercial spaces within St. Louis Park. This will further diversify and strengthen the
community’s economic fabric. The program’s objectives would be to help advance prospective
entrepreneurs’ business aspirations, improve the odds of businesses successfully opening or
expanding in St. Louis Park, and provide an opportunity for wealth building while simultaneously
diversifying and strengthening the city’s commercial areas.
The program would provide qualified small businesses (those with one to 20 employees and
under $1 million dollars in annual revenue) with forgivable loans of up to $10,000 to be used for
commercial building repairs, tenant improvements or first-time commercial property acquisitions
as well as physical business startup expenses such as equipment or capital upgrades. Loan funds
would require a minimum of 1:1 match of applicant incurred eligible expenses. Women,
BIPOC/AAPI, and veteran-owned commercial businesses that meet the program’s size criteria
would be especially encouraged to apply. Staff is recommending that $200,000 be initially
allocated (enough for 20 loans) from the Development Fund to fund the initiative.
NLC/CIE Program
St. Louis Park has committed to participate in the National League of Cities (NLC) City Inclusive
Entrepreneurship Network (CIE) program in an effort to increase inclusive, entrepreneurship-led
economic growth in the community. As part of this commitment, city staff are working with NLC
and mySidewalk to gather data on local businesses including business types, locations, ownership
and identify those business owned by BIPOC/AAPI individuals. This information will allow staff to
better communicate with the business community and help develop a future business survey that
could be used to further assess business needs and opportunities. To kick off this endeavor, the
Mayor, several council members, and city staff attended the NLC City Summit on November 17-
19 in Kansas City.
Next steps:
Staff is routinely evaluating the city’s current small business assistance offerings and monitoring
other small business resources and programs that could potentially be provided to local
businesses. If the EDA is supportive of the proposed Advance commercial business assistance
program, staff will present a more detailed program description for its consideration at an
upcoming meeting for formal approval.
Meeting: Study session
Meeting date: November 28, 2022
Written report: 4
Executive summary
Title: October 2022 monthly financial report
Recommended action: No action is required.
Policy consideration: Monthly financial reporting is required as part of our financial
management policies.
Summary: The monthly financial report provides an overview of general fund revenues and
departmental expenditures comparing them to budget throughout the year.
Financial or budget considerations: Expenditures in October should generally be at about 83%
of the annual budget. General fund expenditures in total are running approximately 3.5% under
budget through October. Revenues tend to be harder to measure in the same way since they
aren’t spread as evenly during the year, examples of which include property taxes and State aid
payments. A summary of revenues and departmental expenditures compared to budget is
included with a few comments provided below.
License and permit revenues are exceeding the total annual budget at 128%. Some of the larger
permits include Beltline Residences, Risor Apartments, and the Bridgewalk Condominiums
renovation project. There is an additional $573,000 of permit revenue not included at this time
for new developments in the early stages of construction including Rise on 7, Arbor
House/Wooddale Avenue Apartments and The Mera. These projects will be reviewed by staff at
the end of the year to determine the portion of revenue that needs to be deferred to 2023 to
offset staffing costs for the on-going inspection work.
The other income at 197.5% of budget is primarily private activity revenue bond fees. This fee is
now collected as a lump sum upfront rather than over the life of the bonds and includes Rise on
7, Beltline and Arbor House.
Most departmental expenditures continue to be at or under budget. Some of the recreation
departments have a variance which is typical at this time of year because of seasonal
fluctuations from the summer months when temporary staffing costs tend to be higher. The
engineering variance is due to the portion of staff hours charged to capital project funds year to
date being less than what was budgeted. Some departments will be under budget due to staff
turnover and position vacancies, including human resources, community development,
information resources and racial equity and inclusion.
Strategic priority consideration: Not applicable.
Supporting documents: Summary of revenues and departmental expenditures – General Fund
Prepared by: Darla Monson, accountant
Reviewed by: Melanie Schmitt, finance director
Approved by: Kim Keller, city manager
Summary of Revenues & Departmental Expenditures - General Fund
As of October 31, 2022
2022 2022
2020 2020 2021 2021 2022 2022 Balance YTD Budget
Budget Audited Budget Audited Budget YTD Oct Remaining to Actual %
General Fund Revenues:
General Property Taxes 28,393,728$ 28,635,694$ 29,601,811$ 29,446,907$ 30,532,470$ 16,131,211$ 14,401,259$ 52.83%
Licenses and Permits 4,660,811 5,294,310 4,621,829 4,997,980 4,750,604 6,080,331 (1,329,727) 127.99%
Fines & Forfeits 280,000 126,192 231,000 150,965 231,000 114,046 116,954 49.37%
Intergovernmental 1,760,082 2,061,267 1,661,549 1,773,949 1,748,770 1,827,198 (78,428) 104.48%
Charges for Services 2,273,824 1,600,806 2,013,834 2,278,004 2,284,483 2,195,597 88,886 96.11%
Rents & Other Miscellaneous 1,456,102 1,201,119 1,499,091 1,472,637 1,589,934 1,430,613 159,322 89.98%
Transfers In 2,038,338 2,049,976 2,055,017 2,054,819 2,198,477 1,744,148 454,330 79.33%
Investment Earnings 210,000 486,468 200,000 (314,347) 200,000 71,303 128,697 35.65%
Other Income 621,280 3,442,900 593,300 606,695 526,829 1,040,427 (513,598) 197.49%
Use of Fund Balance 25,000 250,000 250,000
Total General Fund Revenues 41,694,165$ 44,898,732$ 42,502,431$ 42,467,610$ 44,312,567$ 30,634,871$ 13,677,696$ 69.13%
General Fund Expenditures:
General Government:
Administration 1,868,599$ 1,472,421$ 1,617,882$ 1,362,006$ 2,010,605$ 1,129,609$ 880,996$ 56.18%
Finance 1,124,045 1,194,828 1,129,591 1,190,180 1,178,516 842,454 336,062 71.48%
Assessing 808,171 792,277 798,244 767,705 821,530 668,360 153,170 81.36%
Human Resources 823,209 796,088 837,736 823,448 882,849 543,408 339,441 61.55%
Community Development 1,571,894 1,536,657 1,576,323 1,443,624 1,606,474 1,185,928 420,546 73.82%
Facilities Maintenance 1,265,337 1,246,439 1,349,365 1,413,873 1,407,116 1,154,048 253,068 82.02%
Information Resources 1,709,255 1,596,487 1,683,216 1,650,478 1,622,619 924,226 698,393 56.96%
Communications & Marketing 828,004 710,334 970,934 807,217 974,064 822,686 151,378 84.46%
Total General Government 9,998,514$ 9,345,531$ 9,963,291$ 9,458,531$ 10,503,773$ 7,270,718$ 3,233,055$ 69.22%
Public Safety:
Police 10,853,821$ 10,611,141$ 11,307,863$ 11,347,597$ 11,846,760$ 9,777,797$ 2,068,963$ 82.54%
Fire Protection 5,040,703 4,764,337 4,998,636 5,066,383 5,364,179 4,424,450 939,729 82.48%
Building 2,696,585 2,321,664 2,571,968 2,493,832 2,712,400 2,275,975 436,425 83.91%
Total Public Safety 18,591,109$ 17,697,142$ 18,878,467$ 18,907,812$ 19,923,339$ 16,478,222$ 3,445,117$ 82.71%
Operations:
Public Works Administration 273,318$ 216,899$ 249,256$ 239,575$ 255,766$ 194,587$ 61,179$ 76.08%
Public Works Operations 3,331,966 3,168,538 3,285,820 2,957,465 3,523,669 2,620,660 903,009 74.37%
Vehicle Maintenance 1,278,827 1,207,998 1,303,159 1,259,534 1,368,929 1,154,096 214,833 84.31%
Engineering 551,285 531,801 523,547 655,722 556,115 779,926 (223,811) 140.25%
Total Operations 5,435,396$ 5,125,236$ 5,361,782$ 5,112,296$ 5,704,479$ 4,749,269$ 955,210$ 83.26%
Parks and Recreation:
Organized Recreation 1,637,002 1,369,309 1,639,358 1,516,192 1,769,060 1,505,053 264,007 85.08%
Recreation Center 2,061,394 1,864,459 2,082,697 2,198,272 2,274,043 2,042,771 231,272 89.83%
Park Maintenance 1,906,363 1,802,534 1,916,643 1,857,392 2,034,509 1,765,036 269,473 86.75%
Westwood Nature Center 748,683 606,378 736,515 652,505 794,170 633,523 160,647 79.77%
Natural Resources 504,143 433,362 496,497 412,015 612,110 496,336 115,774 81.09%
Total Parks and Recreation 6,857,585$ 6,076,042$ 6,871,710$ 6,636,376$ 7,483,892$ 6,442,718$ 1,041,174$ 86.09%
Other Depts and Non-Departmental:
Racial Equity and Inclusion 314,077$ 272,994$ 341,293$ 185,280$ 292,194$ 135,103$ 157,091$ 46.24%
Sustainability 497,484 244,655 432,043 297,217 404,890 304,117 100,773 75.11%
Transfers Out 4,878,845 4,878,845
Contingency and Other 144,860 225,000
Total Other Depts and Non-Departmental 811,561$ 662,509$ 5,877,181$ 5,361,342$ 697,084$ 439,220$ 257,864$ 63.01%
Total General Fund Expenditures 41,694,165$ 38,906,460$ 46,952,431$ 45,476,356$ 44,312,567$ 35,380,147$ 8,932,420$ 79.84%
Study session meeting of November 28, 2022 (Item No. 4)
Title: October 2022 monthly financial report Page 2