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HomeMy WebLinkAbout0729 SpecialSPECIAL COUNCIL MEETING MINUTES July 29, 2002 CALL TO ORDER AND PLEDGE OF ALLEGIANCE: Present were Mayor Haugen, Councilmembers Gundlach, Petersen, Zieska and LeMair, City Manager Boyles, City Attomey Pace and Recording Secretary Meyer. OLD BUSINESS: Consider Approval of Motion Authorizing Preparation and Signature Development to be Known as Jeffers Pond Family Townhomes. of a Letter of Support for a Housing Bo¥1es: Reviewed the agenda item in connection with the staff report, noting the proposed projects in the Jeffers Pond development. Further advised that the only item before the Council at this point in the project was considering what level of support, if any, the City would provide for a specific affordable housing project. Noted that the need to consider the item at this time was because the applicant's request to Minnesota Housing Finance Agency for funding was due by August 1st. The applicant is requesting support in the amount of $250,000. Jim Deanovic .(Developer): Explained that the MHFA like to see the cities provide the maximum funds available to them, and then the MHFA tries to fill the gap, in this case $947,000. When a city gets a project approved, it is typically because they have tried very hard to make the project financially viable. The more a City gives, in the form of land, fee assistance, cash, TIF, etc., the greater the point value the project receives and the higher likelihood of assistance. Discussed his participation in the 2020 Vision and Strategic Plan process, and the information he garnered from that process. Now the developers want to become part of the solution. Discussed the 40-unit project, and that only 7 units would be market rate. Further noted that the rents are 50% of the median income in Scott County -- $900 for a 2-bedroom unit, and $1000 for a 3- bedroom. However, to qualify, applicants cannot make over 60% of the median income in Scott County. LeMair: Asked if the housing will be for Prior Lake residents and what the application process is. Deanovic: Noted that five units are proposed for specifically current Prior Lake residents. Otherwise, the availability would be open. Typically, the units will go to those persons working in the Prior Lake area. Also noted that Scott County has also advised that there are T21 funds available but that have to be tied to an affordable housing project. So, there is an investment, but you do often get something back. LeMair: Asked how the applications and the facility is managed. Deanovic: Advised that the management is done by the management division of his development company. There is an extensive criminal background check of applicants, as well as reviews of job status and any tenant problems in previous locations. Hau,qen: Asked about Mr. Deanovic's experience with other affordable housing developments. Deanovic: Discussed similar projects in Eden Prairie, Farmington and Plymouth, indicating that typically 65% of the people using the units are wage-earners, 20% are on a pension or social security, and just 15% are on public aid. Often times there are a lot of female head-of-household. LeMair: Asked how the developer ardved at the needed assistance of $947,000. 16200 Eagle Creek Ave. S.E., Prior Lake, Minnesota 55372-1714 / Ph. (952) 447-4230 / Fax (952) 447-4245 AN EQUAL OPPORTUNITY EHPLOYER City Council Meeting Minutes July 29, 2002 Deanovic: Explained that the limited revenue the project generates, in this case, rent, versus the expenses to build the project, leaves you with the amount of money for a mortgage. In a tax credit project, the mortgage does not pay for the total development costs. That is where you get the $947,000 gap. The object then is to fill the gap with city, MHFA and other funds dedicated to affordable housing. LeMair: Asked if the gap in this case deals just with the development of the affordable housing project and its land. Deanovic: Confirmed. LeMair: Asked how the Council can be sure that the gap number doesn't change. Deanovic: Advised that the developer bears the responsibility for any cost overruns. When the developer signs with the MHFA, it becomes the developers responsibility to complete the project as projected. So, there is an incentive for the developer to do the project dght, or it will cost him over the long run. Petersen: Asked how the MHFA gets its funding, especially given the shortfall at the state level. Deanovic: Advised that most of the MHFA funding is federal tax credit. The resoumes for gap coverage often comes from the Met Council, Home funds, and grants. The MHFA acts as the broker. Gundlach: Asked how the project plays out over 20-30 years. Deanovic: Advised that if the project is set up well in the beginning, the projects work great. Much of the responsibility is in the management of the facility after its built. Gundlach: Asked how the project could be affected with respect to affordable housing if the project is sold somewhere in the future. Deanovic: Advised that part of the program is that the rents must be guaranteed, enfomed by the MHFA and the federal government. The project going in has a 30 year commitment. Also provided pictures of the proposed units and further discussed the project. Boyles: For comparison purposes, noted that the last project that the City provided assistance to for affordable housing was Creekside, which had a 54-unit building with 11 affordable units. That figure to about $41,500 per unit in assistance. Using the same math, this project would be approximately $7600 per unit for 26 years, which is the life of the TIF. Hau.qen: Reviewed the evolution of this project which began with the strategic planning process. Advised that the developers originally had planned 1700 units for the overall Jeffers site, which has now been reduced to approximately 900 units with the additional considerations of the possibility of the transit site, nature center, the interpretive center, the Fire Station site, the trails, and the school site. Deanovic: Advised that this overall project is absolutely in cooperation with Herb Wensmann and the Jeffers Estate. Petersen: Asked about the park land around the lake. Deanovic: Advised that the park has always been part of the estate. What the plan tries to do is be responsive to the wish list. Without speaking for the estate, he believes the intent is to have the school in that area. Petersen: Asked if the land for the Fire Station would be donated. City Council Meeting Minutes July 29, 2002 Deanovic: Advised that they are working on the detail of including both an interpretive center, day care and satellite fire station on the site. So far, the plan seems to be agreeable and worth pursuing. For the school distdct site, it seems this would be a way for the district to buy land at today's pdces and know that the land would be available. Boyles: Reviewed what he pemeived to be the Council's direction in that $250,000 toward an affordable housing project seems like a good investment in the needs of the community, but they need to hear what other things that the taxpayer is getting. Talked about the additional park land dedication, the interpretive center to be constructed, the fire station site to be donated to the City, the 15 buildable acres would be available for purchase at cost within 5 years by the school, that the transit station would be provided. Deanovic: Noted that even if the Council commits $250,000 to the affordable housing project, that doesn't mean the MHFA will select this project. If the project is selected, he believed there would be funds available for the transit center. Herb has committed to the school site. The park issue is still evolving. The estate wants to do a park, but there are some maintenance issues still unresolved. Pace: Advised that implicit in approving any application for funds and committing dollars to the project, is the fact that the Council would be approving a portion of a project that is not yet before the Council for approval. Recalled that there will be a Comprehensive Plan amendment and zoning changes necessary on this project that this Council will consider dudng its normal approval process. Advised that if the Council wishes to allocate funds to this affordable housing project, it needs to be contingent upon a written understanding with the developer that commitment to any funds does not predispose the Council to approving any such portion of the project that it may not otherwise be approved. Concemed about contract zoning. Deanovic: Advised that he expected such parameters and that they are not asking for carte blanche approval of the overall project. Agreed to signing a waiver excepting the issues of any further Comprehensive Plan or zoning ordinance amendments. Zieska: Noted that he is working under the assumption that the project will go through any and all necessary approval processes, and that the issue tonight is outside that scope and strictly the question of assistance for affordable housing. Believed that the numbers proposed in this project make it viable and realistic, and he would support this type of affordable housing component at this level of assistance. Petersen: Would also support a $250,000 contribution given the parameters identified by the City Council. Asked if the project is not approved by the MHFA, the commitment becomes void. Deanovic: Believed that the project is a good candidate for MHFA funds if supported by the City. Gundlach: Liked the project and the overall concept for the site. Concerned about directing funds for a project that there are no details for at this point. Boyles: Advised that there are a number of sources where the funds could come from including TIF. At this point that analysis has not been completed. Gundlach: Noted that his point is that the funding source is not identified, and therefore believed that committing assistance was premature. Asked what the revenue would be from the TIF district. Pace: Advised that the number would need to be run, but that our Economic Development Authority also has the powers of a Housing Authority. A district can be done. City Council Meeting Minutes July 29, 2002 Boyles: Advised that a preliminary analysis shows that the increment would be sufficient to return the $250,000 requested in assistance. Hau.qen: Asked what was provided for the Creekside project. Bo¥1es: Advised that $456,000 was provided over a 22 year span. The project was an $11 million dollar project. Comparably, this project is approximately $6 million. Gundlach: Repeated that the point is that there was significant analysis. Further believed it somewhat irresponsible to approve something without that analysis. Boyles: Noted an email distributed eadier this evening indicates $340,099 would be available through increment, assuming 26 years. Hau.qen: Believe the key question is not how to provide the assistance, but whether the Council supports the concept of the project at a pdce tag of $250,000 given the parameters identified. If the appropriate contingencies are defined in protection of the City's position, believe the Council could support the project. Gundlach: Repeated that he needed to see the analysis before he is comfortable approving this type of expenditure. Pace: Suggested that the letter of support provide the contingency that the City purports to fund the monetary commitment by TIF, subject to that revenue being available. The preliminary numbers indicate that the project is well within the viability of the project. If the project does not meet the but-for analysis, the funding is not provided. This is not a consideration of whether we are providing TIF. Zieska: Added that the situation is unusual, but that at this point, the intent is that the Council approve a conceptual agreement to provide assistance in the amount of $250,000 provided all other aspects and issues for the project ara found acceptable to the City. Pace: Asked for clarification as to whether the land for the fire station would be donated. Deanovic: Advised that the estate was amenable to the idea, if both the interpretive center and fire station would fit on the site. Boyles: Suggested that the letter will be constructed just as for Keystone, Creekside and Lakefront Plaza. MOTION BY ZIESKA, SECOND BY LEMAIR, TO DIRECT STAFF TO PREPARE A LETTER OF SUPPORT FOR THE REQUESTED AMOUNT OF ASSISTANCE WITH THE CONTINGENCY THAT BY AGREEING TO THE AFFORDABLE HOUSING PROJECT IN CONCEPT AND THE ASSISTANCE THEREFORE, THE COUNCIL IS IN NO WAY IMPLYING APPROVAL FOR THE PROJECT UNLESS IT MEETS ALL THE CRITERIA BY CITY ORDINANCES AND STANDARDS. Deanovic: Cautioned that if the letter is received as not strong enough support, it could be the stumbling block for the project. Pace: Advised that she sees the motion as two documents - one supporting the project, and a second with the developer setting out the parameters of that support. Zieska: Advised that he would amend the motion to indicate two letters. 4 City Council Meeting Minutes July 29, 2002 LeMair: Accepted the amendment to the motion. Gundlach: Asked if the letter of support committed the City to the project. Pace: Advised that it does not commit the City because other agencies would not be pdvy to the agreement with the developer. VOTE: Ayes by Haugen, Petersen, Zieska and LeMair, Nay by Gundlach, the motion carded. Gundlach: Stated he supported the project, but could not support the motion without more specific analysis. Deanovic: Thanked the Council for their decision and support on a difficult issue. A motion to adjourn was made and seconded. The meeting adjourned at 6:15pm. Frank Boyles, ~r 5