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REQUEST FOR COUNCIL ACTION Date: 2/12/2024 Item No.: 7.a. Department Approval City Manager Approval Item Description: Consider adoption of an ordinance establishing a Local Housing Trust Fund 1 2 Background 3 On November 6, 2023 the Roseville Economic Development Authority (REDA) engaged in a discussion 4 regarding the establishment of a Local Housing Trust Fund (LHTF). Meeting minutes are provided as 5 Attachment 3. LHTF's provide a flexible source of funding to address a variety of affordable housing 6 needs. LHTF's are also referred to as Affordable Housing Trust Funds given their purpose. LHTF's 7 must be established by ordinance. During this discussion, REDA members were presented with a draft 8 ordinance and provided the opportunity to ask questions and provide feedback to staff. During this 9 discussion, REDA members were advised that actual ordinance adoption would have to be a function of 10 the City Council and that staff would bring such action forward during the first quarter of 2024. 11 12 LHTF's are generally described as follows: 13 Must be established via an official action by a local government per Minnesota Statutes 14 462C.16. 15 Must be funded with one or more sources of dedicated public revenue. 16 The trust protects the allocated public revenue for housing uses in the community. 17 The local government may finance its LHTF with any sources of revenue available to the local 18 government. 19 LHTF's must report annually to the local government that created the fund (this is relevant only in 20 the sense that the ordinance proposed for adoption specifies that the REDA administers the 21 LHTF on behalf of the City, and as such, the REDA will hold reporting responsibility). 22 While the City has generally been successful in creating affordable housing through the use of existing 23 public finance assistance tools (namely tax increment financing), staff is recommending the 24 establishment of a LHTF at this time due to the passage of the Metropolitan Sales Tax and Housing Aid, 25 whereby the City is slated to receive an estimated $400,000 of revenue annually to address affordable 26 housing initiatives. Per the law establishing this tax, the money must be spent on a qualifying project 27 within three years. If a qualifying project doesn't materialize, the revenue can be transferred to a LHTF 28 for use on a future qualifying project. Qualifying projects are defined as projects to include emergency 29 rental assistance for households earning less than 80% of the area median income, financial support to 30 nonprofit housing providers, construction, acquisition, rehabilitation, permanent financing, interest rate 31 reduction, refinancing, and gap financing of housing. Beyond sales tax proceeds, the legislature also 32 provided one-time funding for local housing trust fund matching grants the REDA may want to pursue 33 depending on the requirements of the grant. 34 35 The ordinance proposed for adoption is provided in Attachment 1. The only revisions that have been 36 made since the REDA discussed the draft ordinance are: Page 1 of 3 Qbhf!4!pg!614