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HomeMy WebLinkAbout05-06-10 Chair James Ostlund 1245 W. Highway 96 CommitteeJo Johnson Members JeffA EN HILLS Arden Hills, MN 55112 651.792.7800 Arlene Mitchell John Braun Arden Hills www.ci.arden-hills.mn.us (Vacant Seat) (Vacant Seat) Financial Planning and Council Liaison Brenda Holden Analysis Committee May 6, 2010 City Vision A strong community that values its unique environmental setting, strong residential neighborhoods, vital business community, well-maintained infrastructure, fiscal soundness, and our long-standing tradition as a desirable City in which to live, work, and play. Agenda Regular Committee Meeting Convenes 6:00 PM Call to Order 1. APPROVAL OF THE AGENDA 2. MINUTES A. April 13, 2010 - Regular Meeting 3. UNFINISHED AND NEW BUSINESS A. Arden Village Workforce Housing Revised Letter of Support Recommendation to City Council (Representatives from Sands Company will be present to answer questions on the Project and Tower) B. Next meeting agenda—Communications Tower Discussion 4. REPORTS A. Report from the City Council B. Financial Planning and Analysis Committee Comments and Requests 5. ADJOURNMENT A quorum of the City Council may be present at this meeting. S • - DIw ,HILLS MEMORANDUM DATE: May 6, 2010 TO: Financial Planning and Analysis Committee FROM: Sue Iverson, Finance Director James Lehnhoff, Community Development Director SUBJECT: Arden Village Workforce Housing Concept Proposal— Revised Letter of Support for Housing Tax Credit Application Action Request Review the request from Sand Companies, Inc for a letter of support for up to $575,000 in public assistance for their housing tax credit application with the Minnesota Housing Finance Agency as proposed in the May 10, 2010,memorandum. • Background At the September 14, 2009, City Council meeting, the Council approved a letter of support for Sand Companies, Inc. (SCI)housing tax credit application to the Minnesota Housing Finance Agency for the 55 unit Arden Village workforce housing project at 1296 County Road F. That letter of support offered up to $400,000 in public assistance, which could be in the form of Tax Increment Financing(TIF), waived fees, or a combination of sources. Applications with community financial support score higher and have a better chance of obtaining the housing tax credits, which are a key part of making the building affordable. The Minnesota Housing Finance Agency(MHFA) announced their awards at the end of January 2010; however, the Arden Village proposal was not selected at that time. MHFA encouraged SCI to resubmit their application for the next funding round. The housing tax credit applications are due by June 15, 2010. Revised Letter of Support City of Arden Hills FPAC Meeting for May 6, 2010 IlMetro-inet.uslardenhillslAdminlCommittees&CommissionsIFPAC120101050610-FPAC Memo-Arden Village-Sand Companies.doc Page 1 of 3 In order to submit a new application to MHFA, SCI is requesting a revised letter of support from the City. The revised letter of support is requesting up to $575,000 in public assistance. The • source of the assistance has not been determined, but potential sources include TIF and the proposal to sell the communications tower to the City. A letter of support is not an approval of tax increment financing, the proposal to sell the tower to the City, or any other form of public assistance. The project must still meet all TIF statutory requirements and undergo a detailed financial review by the City. However, the letter of support is a good faith commitment from the City to provide the requested support if the housing tax credits are approved by MHFA and if the project can demonstrate the need in accordance with the City's Business Subsidy Policy. Preliminary Public Subsidy Review The preliminary TIF analysis performed by Ehlers and Associates indicates that the Arden Village property would generate an estimated$252,000 over 26 years or$184,000 over 15 years. The complete TIF analysis will not take place until SCI is awarded the tax credits from MHFA, which is when the "but for"test will be completed to determine if and how much TIF is justified by the project. SCI is currently proposing to sell the tower to the City for a$1 provided there is a commitment for$575,000 in public assistance,which could be a combination of TIF and cash from the City. For example, if the project demonstrates that $184,000 in TIF is justified, then the City would pay the gap of$391,000 under the current proposal. The tower sale would essentially be a form • of public support for the project. Once the tower appraisal is complete, a more complete analysis will be possible and a counterproposal can be formulated. The request for support increased for two primary reasons. First, the City's approval of the project required additional stone on the exterior of the building. Secondly, the higher request takes into account the proposal to sell the tower to the City, which results in a loss of revenue to SCI. If the tower is not sold to the City, the need for public assistance would be reduced. However, the higher number allows the City to continue exploring the possibility of purchasing the tower but does not obligate the City to purchase the tower. SCI is also applying for a HOME grant from Ramsey County. According to Mary Lou Egan at Ramsey County Community Development, SCI may receive a small amount of funding, perhaps $35,000, in 2010 to support their tax credit application to MHFA. Funding from the County would increase SCI's chances of receiving the tax credits. The project may be eligible for up to $300,000 in support from the County,but they will not tie up the funds in 2010 for a project that is not scheduled to start until 2011. SCI will not know if additional County funds are awarded until May 2011,but Ms. Egan said the project has a good chance of being selected in 2011 because of its location and housing needs in Arden Hills. Grants received by SCI would be factored into the public subsidy evaluation and would reduce any requested need from the City accordingly. City of Arden Hills • FPAC Meeting for May 6, 2010 I\Metro-inet.uslardenhillslAdmin\Committees&COmmissionsIFPAC120101050610-FPAC Memo-Arden Village-Sand Companies.doc Page 2 of 3 • Land Use Approvals The Arden Village proposal received all necessary land use approvals at the March 8, 2010, City Council meeting. Timeline and Letter of Support The deadline for the housing tax credit application is June 15, 2010. In order to complete the tax credit application and meet the submittal deadline, SCI would need the letter of support from the City by June 1, 2010. MHFA will make its determination by October 28, 2010. If the tax credits are approved, SCI will move forward with the formal application for public assistance with the City. Assuming the tax credits are awarded and the public assistance request is finalized, SCI anticipates starting construction in early 2011 and opening in 2012. Attachment Proposed Letter of Support • City of Arden Hills • FPAC Meeting for May 6, 2010 \\Metro-inet.uslardenhillslAdminlCommittees&Commissions\FPAC120101050610-FPACMemo-Arden Village-Sand Companies.doc Page 3 of 3 S May 10, 2010 Minnesota Housing Finance Agency 400 Sibley Street, Suite 300 St. Paul,Minnesota 55101 Attention: Multifamily Underwriting RE: Housing Tax Credit Program& Super RFP. ARDEN VILLAGE—ARDEN HILLS. Dear Multifamily Development: The City of Arden Hills is a community made up of residents, businesses and institutions sharing a common history. One of the primary purposes of a community is to serve as a place of residence for its citizens. Assuming this charge, offering a mix of life cycle housing opportunities becomes a challenge for local governments especially in suburban markets. The City has a strong desire to support affordable and work-force housing and is an active participant in the Livable Communities Program. The City's 2030 Comprehensive Plan sets goals that emphasize the development of a variety of housing types that are suitable for a mix of incomes including work-force housing. Developers and the City must be partners to cooperatively develop housing plans to provide life cycle housing in Arden Hills. • To promote and participate in rental housing opportunities,the City has provided incentives for affordable housing developments. As a cost reduction measure to endorse Arden Village, the City has approved the project with a density bonus, flexibility in zoning and fast track permitting and approval. The City will also not be collecting the approximate $71,560 park dedication fee. The City of Arden Hills also proposes significant local financial contributions for this project as part of its participation and endorsement. If the project is selected for funding,the City Council supports the use tax increment financing (TIF) for the project or other funding means to achieve up to $575,000 in assistance. As part of the TIF, the project will need to meet all state guidelines for TIF, including the "but for test". The project also must be reviewed under the City's business subsidy policy. The proposed development is an excellent opportunity for the City of Arden Hills to meet a large portion of its housing goals. This endorsement is based upon the findings that the project will meet locally identified housing needs and that the proposed housing is in short supply in the local housing market. This need is evidenced by the gap between the local supply and demand for the proposed type of housing. The City Council's endorsement is evidenced by this letter of support for the proposed development. We respectively request funding approval for this needed development in the City of Arden Hills. Sincerely, • Stan Harpstead Honorable Mayor