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ARDEN HILLS CITY COUNCIL WORK SESSION – OCTOBER 27, 2025 8 Community Development Director Reilly said when mortgage bankers talk about affordable housing, it means they are looking for anyone to pay no more than 30% of their income. That includes all fees, property taxes, insurance, mortgage insurance, HOA fees and parking fees. Fixed expenses that don’t change. Councilmember Holden asked if utilities were included. Community Development Director Reilly said the mortgage companies don’t put that in there because you can change how much energy you use. Affordable housing does not generally include utilities. That is different than subsidized housing where someone is getting help paying, then utilities are typically included. Affordable housing is always tied to an area median income (AMI) that includes earned income. The median income in the Twin Cities area is just under $100,000 per year. Arden Hills median income is just under $ 130,000 per year. That is a household income. It doesn’t matter if there is one adult or three adults with ten kids. Councilmember Holden said the AMI can be counted differently, sometimes its 7-counties, sometimes it 10-counties. She asked what is being used to calculate this AMI. Community Development Director Reilly said the Arden Hills calculation is just counting Arden Hills. The Twin Cities area calculation is using the 7-county. HUD breaks everything down into affordability ranges. Someone is considered a qualified owner if they make at least 100% of the AMI. That doesn't mean someone can afford a home, but they would qualify. To qualify as true affordable housing, is that housing costs are 30% of the AMI. Community Development Director Reilly said there is potential for Habitat to come into Rice Creek Commons and build a bunch of single-family homes, they would be subsidizing that with several mortgage products, all the way down to something that is affordable. Their focus is only on deeply affordable, so people making 30% of the AMI or below. Community Development Director Reilly said the Shoreview rental, modern 2-bedroom apartment has subsidized affordable units in both of those brand-new buildings. Community Development Director Reilly said there is naturally occurring affordable housing. It’s affordable through age or the fact that someone has paid off the mortgage and is only paying property taxes. Community Development Director Reilly said there is a national housing context in crisis. We stopped building homes for too long. Now there are not enough places for people to live. More than 30% of homes are occupied by adults living alone or pairs. No one is building starter homes. Wages haven’t kept pace with the cost of inflation or the cost of constructing anything new. Difficulty finding a home that meets the income is an issue nationwide. Community Development Director Reilly said the missing middle products aren’t built anymore. These are 4-, 6- and 8-plexes. He provided some information from the Federal Reserve Bank that shows how housing production has ebbed and flowed over time. There was a decline in construction during the crash and we haven’t gotten back there yet.