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ARDEN HILLS CITY COUNCIL WORK SESSION – OCTOBER 27, 2025 12 <br /> <br />Community Development Director Reilly said low income tax credits come in two different <br />percentages. It is hard to get the credits. They tend to be affordable to people at 50% or below of <br />the AMI and often include subsidized units in the deeply affordable level that are often dedicated <br />to people with disabilities. Working with developers who understand how LIHTC projects work <br />is helpful. LIHTC credits come with less than a 1% risk to the municipality. <br /> <br />Mayor Grant isn’t wild about 30% AMI housing. He thinks it will pose some financial <br />constraints that may be hard to overcome. LIHTC could have some units dedicated but when <br />someone constructs a new building they aren’t going to make half the units LIHTC. <br /> <br />Councilmember Rousseau is generally in favor of the options in the memo. She would have <br />questions regarding the local religious institutions and the sacred settlements. She thought it could <br />be addressed with ADUs, assuming there are no regulatory concerns. She liked the initiatives that <br />Shoreview is implementing with density bonuses, net gain unit requirements, lot reductions, <br />developer fee deferments and inclusionary housing. <br /> <br />Discussion ensued regarding the number of owner occupied parcels. Owner occupied would <br />include single family homes and owned manufactured homes. Apartment homes, age-restricted <br />properties, non-single family homes and manufactured homes that are rented could be a mix of <br />owned or rented. Community Development Director Reilly will update the table in the agenda <br />information for the next meeting. <br /> <br />Councilmember Holden said she asked how often people in the buildings were asked to submit <br />their income for LIHTC units. She was told they never provide income information after they <br />move in. She would like to know what the rules are for those credits. <br /> <br />Community Development Director Reilly said he has never heard of any place that doesn’t <br />require recertification of people living in affordable homes. However, just because a person’s <br />income increases does not mean they will be asked to leave. The share of what they are paying <br />will increase. <br /> <br />Councilmember Holden said you could have a LIHTC building where 50% of the residents are <br />paying market rate. <br /> <br />Community Development Director Reilly confirmed. The purpose of affordable housing is to <br />focus on housing stability first. Residents have a safe place to live and their income can increase <br />until they can pay what the market rate is. That’s why HUD’s subsidy levels and fair market rents <br />are directly connected. <br /> <br />Councilmember Holden asked how successful are inclusionary housing policies or ADUs with <br />reducing affordable housing needs. It wasn’t successful in Minneapolis. <br /> <br />Community Development Director Reilly said it depends. Are ADUs being produced because <br />they are allowed or is there enough flexibility in the market that people can produce more housing <br />units? He isn’t aware of any examples where large expensive homes have been demolished to <br />develop 3, 4, 6 or 8-unit buildings. Minneapolis has changed their review process after some <br />issues. ADUs are still expensive. Just because they are allowed, doesn’t mean they’ll be <br />produced. It’s possible but the homeowners that are interested in them can’t afford the mortgage <br />or can’t get a home equity loan to get the construction capital.