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HomeMy WebLinkAbout2022/11/14 - ADMIN - Minutes - City Council - Study Session Official minutes City council study session St. Louis Park, Minnesota Nov. 14, 2022 The meeting convened at 6:30 p.m. Councilmembers present: Mayor Jake Spano, Sue Budd, Lynette Dumalag, Larry Kraft, Nadia Mohamed, and Margaret Rog Councilmembers absent: Tim Brausen Staff present: City Manager (Ms. Keller), Deputy City Manager (Ms. Walsh), Engineering Director (Ms. Heiser), Finance Director (Ms. Schmitt), Building and Energy Director (Mr. Hoffman), Economic Development Manager (Mr. Hunt), City Attorney (Mr. Mattick), Community Development Director (Ms. Barton), Planning Manager/Deputy Community Development Director (Mr. Walther), Housing Supervisor (Ms. Olson), Housing Assistance Administrator (Ms. Randall), Communications and Technology Director (Ms. Smith), Chief Building Officer (Mr. Skallet) Guests: None. 1. Inclusionary housing policy proposed amendments. Ms. Olson presented the staff report. Councilmember Rog asked if the developer would need to replace one for one on a building that is naturally occurring affordable housing at 60%. Ms. Barton stated yes, or they could go lower, but not higher. Ms. Olson noted the policy recommendations and asked the council to weigh in with their thoughts.  Modify the for-sale property requirements.  Increase the affordability period to 26 years.  Add flexibility around the development mix for senior housing developments.  Provide additional clarity in the policy. Councilmember Kraft asked for an explanation on affordability pricing . Ms. Olson explained on a $350,000 affordability priced home, if pricing is below $750,000, the difference is considered minus the $350,000 and that is then the price used, which is the difference between the affordable price and the price the home is being sold for . She noted if the average for-sale price exceeded the affordability, it would be capped. She added this is for a new 10 or more-unit development. Ms. Olson stated the reason payment in lieu is used, is the unit would have to be sold at an affordable rate to a low-income buyer, and the money then goes into the affordable housing trust fund for other uses. DocuSign Envelope ID: 1253F444-E54D-482F-8DF9-F7D6FAE35426 Study session minutes -2- Nov. 14, 2022 Councilmember Kraft asked how often this scenario happens. Ms. Olson stated it has not happened yet, noting clarity about co-ops falling under the for-sale properties has been an issue. Ms. Barton stated the insurance requirements are for 10 years in a condo development, and usually developers do not want to do this. She added this was a deterrent to developers. Ms. Barton stated staff is hopeful the policy will help over time on condo development . Mayor Spano asked for a hypothetical situation on the for-sale policy. He also asked for the criteria on item #3 policy recommendation. Ms. Olson stated for the senior policy change, staff is open to two-bedroom, but it would not be required. Mayor Spano stated he would like criteria on this issue. Ms. Olson stated staff would want to have this conversation with developers at the beginning related to affordability and market rate, and which units would be affordable . Ms. Barton added affordable for seniors is mostly one bedroom and den. Councilmember Rog asked if there should be more conversation around the Beltline development. Ms. Barton stated all the affordable units at Beltline are in one building. She added the other development has affordability spread across the entire development. Councilmember Kraft asked if this would only be worked on at the front end or later . Ms. Barton stated this policy would give more flexibility for discussion at the beginning or later. Councilmember Kraft asked if TIF would be affected and the affordability level. Ms. Barton stated there is a look back provision, and if there is overperformance, then the city can recoup dollars. Mayor Spano stated he is supportive, but if staff will have authority to be flexible, he would like some clarity around the policy before agreeing to it, noting this is a substantial change . Councilmember Dumalag asked if there is any reason there have been issues with senior affordable housing. Ms. Randall stated the asset piece in the calculation with the two bedroom and with two people. Councilmember Rog asked if there is value in looking at the affordability levels the city is setting and if this is a barrier. Councilmember Rog added when looking at multi-generational housing, those living together may exceed the income levels as well. Ms. Olson stated in the policy it says that 50% must accept vouchers. Ms. Barton added the study will also give insight as to the senior populatio n, and affordability levels. DocuSign Envelope ID: 1253F444-E54D-482F-8DF9-F7D6FAE35426 Study session minutes -3- Nov. 14, 2022 Councilmember Kraft stated he is supportive but would like to see more guidelines from a fairness perspective, but also likes the flexibility and then would like staff to come back with policy changes. Mayor Spano added this would give him more comfort. Councilmember Dumalag agreed the flexibility is appreciated and she is supportive of the for- sale policy. Councilmember Mohamed asked how staff can investigate AMI without increasing numbers. Ms. Olson stated if a development is proposed staff looks at goals and what are the community needs, and then direct from that way. She added the affordable housing trust fund will also assist. Councilmember Mohamed stated some of the two-bedrooms are in the $200,000 range. She asked how the city and staff can encourage 30% AMI, adding she would love to see more of this. Ms. Olson stated that is a goal staff is working toward. Councilmember Mohamed asked about adding more townhomes in the city that are affordable . Ms. Barton stated townhomes are more challenging as the city is all developed and it’s more difficult for developers to find land for 10 townhomes versus 60-unit apartment buildings. She added the Sherman development has walk out first floor units, which are similar to townhomes. Councilmember Mohamed stated there are some families that are missing, including larger families with low income. She stated to find an apartment at 30% AMI is rare, and she would like to see more of that. Councilmember Kraft commended staff on the affordable housing as well as Councilmember Rog on pushing for 3-bedroom units. He stated the policy changes are making a difference. He stated the goals have been smashed for 50% AMI, and we are on track for 30% AMI for 2030 . He asked why the inclusionary housing policy is then not changed to 30% AMI at this point. Ms. Barton stated it’s possible to change this, but it would be difficult for developers as financially it won’t work for them. Councilmember Dumalag agreed, noting this is not a one-for-one issue. Ms. Barton added the policy as is allows more flexibility, while staff is pushing for more 30% AMI, and there will be more coming up. She added changing the policy to focus only on 30% AMI would tie staff’s hands and would be difficult for developers. Councilmember Mohamed asked what the criteria was for coming up with these numbers of AMI. Ms. Olson stated if council wants significant changes, a feasibility study should be conducted so all the economic impacts can be determined . Councilmember Kraft stated he would be interested in a feasibility study to address the 30% AMI and target the largest gap. DocuSign Envelope ID: 1253F444-E54D-482F-8DF9-F7D6FAE35426 Study session minutes -4- Nov. 14, 2022 Mayor Spano stated this should be tabled for now, and this can come back for more discussion . He noted this needs to be a regional initiative. Councilmember Rog added disability housing is also a concern and she has had folks reach out to her on this. She asked if this can be added to inclusionary housing for folks that don’t fall into the traditional ADA requirements and need adaptive and affordable places to live. Mr. Skallet explained the ADA requirements and adaptability and accessibility. He noted ADA units are equally dispersed on each floor, adding he can get more details to the council if needed. Ms. Barton added there is no one size fits all with accessibility, and the ADA does a good job of covering the broadest access, but there are different needs for individuals, so it’s difficult to build multiple accessible units. 2. 2023 final proposed budget and tax levies Ms. Schmitt presented the report. She noted the policy considerations for tonight:  The 2023 final property tax levy at $41,060,251 - which is a 7.02% increase over the 2022 final property tax levy.  A maximum HRA levy allowed by state statue at $1,582,696.  An EDA levy at $500,000. Councilmember Kraft stated he has no issue with the general levy adding staff has done a good job. He noted debt service is going up a lot, many are feeling the pain of inflation, and the education levies will be increasing 28%, so this puts more responsibility on the city. He asked about the EDA levy and what the projected balances are for this and next year. He added the development fund has been going down, some investments have been made, and he asked for the projections. Ms. Schmitt stated it will depend on whether the land sale goes through and if it does, it’s projected to be $13 million in the fund balance. She added if the land sale does not go through, the fund balance for the EDA levy will remain at $7 million. Councilmember Kraft asked if there are any updates on the land sale . Ms. Schmitt stated she is not aware of any updates. She added for next year, there are some sales projected and if the commercial property is completed, then the fund balance would go down. Councilmember Kraft asked about assumptions. Ms. Schmitt stated the variables are the property sales and the commercial building. Ms. Keller clarified the fund balance could be between $4.5 million and $13 million depending on the assumptions Ms. Schmitt noted. Councilmember Kraft stated the assets should turn into funds at some point . He asked how long the $4.5 million would last if it were only used for salaries. Ms. Schmitt stated 5-6 years. DocuSign Envelope ID: 1253F444-E54D-482F-8DF9-F7D6FAE35426 Study session minutes -5- Nov. 14, 2022 Councilmember Kraft stated it is not responsible of the city to move forward with the EDA levy, adding the city does not need that money this year, especially when we have assets that will turn into dollars. Mayor Spano stated the city has done this and should continue to utilize this fund to allow for purchasing properties if they are available. He stated he disagrees with Councilmember Kraft’s comments, and feels the EDA levy should continue, noting it’s not only used to pay salaries. Ms. Barton noted beyond salaries there are other programs funded through the development fund, as well as various studies. Councilmember Rog stated she agrees with Councilmember Kraft on his comments and would like to take a pause this year considering inflation, adding this can be added back next year if needed. She noted this fund is not in perpetuity, which was a good agreement, and each year council should review and consider the impacts. She stated there will be plenty of funds available, and this should be paused for 2023. Mayor Spano stated he supports the EDA levy, because there are more guardrails on what it can be spent on, freeing up more funding from the general levy. Councilmember Kraft noted his concerns about the transparency of the EDA levy has been addressed by staff, however he does not agree with adding $500,000 to the development fund this year, given everything else that is going on. Councilmember Dumalag asked if the $500,000 were taken away, what would be the cumulative effect. Ms. Schmitt stated it would go down to 5.6%. Councilmember Mohamed asked what the EDA levy might look like next year. Ms. Schmitt stated if the economy were in a better position, sh e would recommend an increase versus leaving it flat. Councilmember Mohamed asked if it puts the city in a risky position if there is no EDA levy this year. Ms. Schmitt stated she agrees with refining the dollar amount and coming back to council, but she does not think the EDA levy should be removed . Councilmember Mohamed stated she agrees with staff recommendations and the risks of next year are unknown, adding she does not think the council should ask staff to shave off the amounts, adding she would prefer having options going into the next few years. Councilmember Rog asked if the land sales go through, would Ms. Schmitt recommend having the EDA levy the next year. Ms. Schmitt stated yes, to cover core operational expenses. She added without the levy, there will be no cash to purchase properties. Councilmember Budd stated she agrees with staff recommendations, adding now is not the right time to forgo this. DocuSign Envelope ID: 1253F444-E54D-482F-8DF9-F7D6FAE35426 Study session minutes -6- Nov. 14, 2022 Mayor Spano asked what would happen if there was no development fund. Ms. Barton stated a different funding source would need to be found, adding the development fund was established through pooled increment dollars with no restrictions. She stated at one time there was $35 million in the fund, and it was depleted over the years, with no way to replenish it. Mayor Spano stated this fund has been a low interest loan over the years and has been an exceptional tool. He added there is a broader strategic need for this, and he would like to keep it. Councilmember Kraft stated this fund should be kept flat, given the economic times. Councilmember Rog stated she wants this tool and values it, but just not this year . She added she is not questioning the funds value and doesn’t hear the council talking as much about the taxpayers and what they have to say. She stated the EDA levy should be kept in perpetuity and feels strongly this tool is valuable. Councilmember Dumalag stated she is supportive of staff’s recommendations and is concerned about the development fund going this low. She explained she likes the flexibility but is concerned because it has been a tough year. She stated, however, the city needs to be prepared for unexpected things to come up, like a water main break, and she would hate to pull back on these investments. Ms. Schmitt stated staff could remove funds from all the levies, versus only taking funds out of one levy. She noted if council gives staff the flexibility, they can work up a new plan to bring back to council for review. Councilmember Kraft stated he appreciates staff’s efforts and asked if the land sale closes will that change anything for the other councilmembers. Councilmember Budd stated it would change it for her. A majority of the council support staff’s policy considerations. Councilmember Kraft noted with the HRA levy, he has an issue with TIF seeming like free money. He stated the city does not really know how much affordable housing is funded by TIF, and it seems to be going up. He asked if the city is using more TIF for this, shouldn’t there be a way to give taxpayers a break on the levy. Ms. Barton explained that TIF and levy dollars are not interchangeable and have different uses. Councilmember Kraft stated he understands this but added at the high level, how much can the city continue spending. Written Reports comments: Councilmember Dumalag stated she is supportive of the zoning, and noted a resident also commented they were supportive of the food service and restaurants and walkability to small business aspects. DocuSign Envelope ID: 1253F444-E54D-482F-8DF9-F7D6FAE35426 Study session minutes -7- Nov. 14, 2022 Councilmember Rog stated on the public art report related to the Dakota Bridge, the project remains unfinished, and there needs to be a future conversation around this. Ms. Heiser stated in next year’s CIP there will be a project to do a sanitary sewer replacement as well as a bridge to the dog park. She stated the project will use ARPA and storm utility funds. She noted this is related to material and construction costs, and the bids increased due t o inflation. She stated there is a question on if this project is needed, and it will be reviewed, as well as doing a public process and feedback. Communications/meeting check-in (verbal) Ms. Keller thanked staff for their plowing work on snowy roads today. She also noted the truth in taxation information was mailed as well as an insert and more information on understanding city taxes. She added any questions can be answered by staff. The meeting adjourned at 8:52 p.m. Written Reports 3. Proposed amendments to the zoning ordinance 4. Public art in new developments and public art update 5. Minnetonka Boulevard reconstruction project update (4023-7000) 6. Solid Waste program update 7. Twin Lake subwatershed improvements ______________________________________ ______________________________________ Melissa Kennedy, city clerk Jake Spano, mayor DocuSign Envelope ID: 1253F444-E54D-482F-8DF9-F7D6FAE35426