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Home My WebLink About03 06 2015 Work Session #2 - Ron Clark Development Proposal b� PRI2+r r~ U 4646 Dakota Street SE Prior Lake,MN 55372 �'rNNE5Of' CITY COUNCIL WORK SESSION REPORT MEETING DATE: MARCH 9, 2015 PREPARED BY: DAN ROGNESS, COMMUNITY& ECONOMIC DEVELOPMENT DIRECTOR PRESENTED BY: DAN ROGNESS AGENDA ITEM: 2. RON CLARK DEVELOPMENT PROPOSAL DISCUSSION: Introduction The purpose of this agenda item is to discuss a proposed 68-unit affordable rental housing development for families, located south of Pike Lake and north of County Highway 42. Ron Clark Construction is proposing to construct this workforce housing project, nearly identical to one they recently completed in Savage north of Arby's. In order to be competitive to receive Housing Tax Credits (HTC) from Minnesota Housing Finance Agency (MHFA) in June, a local financial contribu- tion is necessary. The HTC financing mechanism is critical to achieve affordable rents or households at/below 60% of the area median income adjusted annually by family size. History The site under consideration for a multi-family housing project is approximately 21 acres; however, due to extensive wetlands and a large stormwater ponding easement, about five acres is buildable. The property is zoned High Density Res- idential (R-3), which would allow the proposed multi-family housing project by Conditional Use Permit (CUP). The 2030 Comprehensive Plan guides this 86- acre area as Planned Use, Sub-Area A, Pike Lake West, for 50% Low Density Residential, 25% High Density Residential, and 25% Commercial. Therefore,this proposed project would satisfy the high density residential component(25%of 86 acres = 22 acres) within Sub-Area A, Planned Use. In 2007, the city approved a Final PUD Plan for this site to include 11 residential townhomes and 8 townoffice units. However, the developer did not move forward with this project. Since then, various other ideas have been reviewed with City staff, but the wetland and pond easement constraints were difficult to work around for townhomes. The Ron Clark proposal is the first one to consider a single 3- story multi-family building that appears to work better on this constrained site. Current Circumstances Ron Clark's proposed housing project will compete against other multi-family housing projects for Housing Tax Credits through MHFA; the application deadline is June 2, 2015. Attachment#5 shows how MHFA allocates more points for fed- eral, local and/or philanthropic contributions that can include a variety of sources (grants, tax increment financing, tax abatement, land donation, fee waiver, etc.). This project, with a very low base market value of$100,000 for payable 2016, is a good candidate for TIF. A target project assistance level of$700,0004800,000 would likely be feasible within a 15-year period. One other opportunity related to this project is the completion of an east-west street connection from Pike Lake Trail west to a future planned collector within the northeast quadrant of County Highways 21/42 (see Attachment#4). It's pos- sible to consider using some of the tax increment proceeds to pay the estimated $600,000 cost (including sewer/water), which may require extending the TIF Dis- trict term to its maximum of 26 years. Otherwise, nearly 2/3 of the length of this street would need to be assessed against adjacent property that includes a wet- land and 3-4 single family homes. Conclusion The need for affordable (workforce) housing for families is supported in two doc- uments, including a 2011 Scott County Housing Needs Assessment by Maxfield Research and the Metropolitan Council's allocation of affordable housing need as part of the Council's Housing Policy Plan (see Attachment#5). 1. County Needs Assessment — shows that Prior Lake has 85 affordable general occupancy, non-senior, rental units (Bluff Heights = 37 and Kes- trel Village = 48); the report shows a 10-year demand of 95 such rental units between 2011-20. 2. Met Council Allocation — shows a 10-year allocation need of 1,166 affordable units between 2011-20; a draft document for Thrive 2040 shows a 10-year allocation need of 1,050 units between 2021-30. ISSUES: Ron Clark Construction would like feedback on whether the use of TIF, or any other possible local contribution, has potential City support for their proposed workforce rental housing project. ALTERNATIVES: For discussion only RECOMMENDED N/A MOTION: ATTACHMENTS: 1. Location Map 2. Preliminary Site Plan 3. Building pictures and elevations (examples) 4. Future supporting road network—2030 Comprehensive Plan 5. MHFA local contribution points; 2011 Housing Needs Assessment for Scott County; and Met Council 2011-20 allocation need for affordable housing 2 Ron Clark Construction Multi-Family Housing Site i a i d �i .. AL .. ...-�.r...��:_:: ``IIS�II owl MA 3 s + of -r r ' z Disclaimer: Map and parcel data are believed to be accurate, but accuracy is not guaranteed. This is nota Map Scale legal document and should not be substituted for a title search,appraisal, survey, or for zoning 1 inch = 374 feet verification. 3/4/2015 dao I I — Ar- ,k CL / LU � , (il LLI su / �•� bi w LU � 3 s gy <, k IYr� { �a r.� 1 r a� t VILLAGI COMM NC, < i tf 77 ♦"aha. Y 4 Y E t x � x r r i "+ire x t r i 3 SPUlTFACE CrtJ CFBTF4M ALUMINUM CFB TRIM BRICK ASPHALT LES CFB PANEL SIDING CULTURED STONE VENEER CFB SHAKE 4'CFB LAP SIDING 6'CFB LAP SIDING BALCONY SIDING s i n Exterior Elevation-1 CULTURED ASPHALT CFB SHAKE STONE ALLMINIAaf 4'CFB LAP CFB PANEL SPLIT FACE 6'CFB LAP SHINGLES SOW vmW CFO TRl'rBALCDNY BRICK CFBTRIM SIDING SIDING CMU SIDING, ASPHALT ALUHANLM4'CFBLAP CFBTRIM SPUT 6'�ULP CULTURED BRICK CFBTRIM PANEL CFB SHAKE SHINGLES BALCONY SM FACE CW SIDING STOW VENEER SIDING SIDING rl Exterior Elevation-2 n Exterior Elevation-3 R s s.S"a MKT �— Exterior Elevations t �� a f iel.(612)818fi0ro Pmlaq NIl1Iltlaf'. 1laviabll�MAWf. a ...t.. �u, fav'(612)tl]O66GG Isaa:O.Ye: Ravimn OMe: Planned Use - Area A - Future Street Support Network - Prior Lake, MN F '� Pike fake �u. . � l E qC?N e f into t q { s . 41 d. <<;W ••^k£ . s� Disclaimer: Map and parcel data are believed to be accurate, but accuracy is not guaranteed. This is not a Map Scale legal document and should not be substituted for a title search,appraisal, survey, or for zoning 1 inch = 523 feet verification. 1/8/2015 Developer Minnesota Selection Priorities Claimed Housing Awarded 5. Federal/Local/Philanthropic Contributions 2 to 10 Points Points are awarded for projects that are receiving contributions from the federal government;a local unit of government;an area employer;and/or a private philanthropic, religious or charitable organization. Identity of Interest exclusion: Contributions from any part of the ownership entity will be considered general partner cash and excluded from the calculation unless the contributions are awarded by local units of government or nonprofit charitable organizations pursuant to a funding competition. Total federal/local/philanthropic contributions$ divided by Total Development Cost$ equals(rounded to the nearest tenth) ❑ 20.1%and above-10 points ❑ 5.1-10%-4 points ❑ 1S.1–20%–8 points ❑ 2.1–5%–2 points ❑ 10.1-15%–6 points ❑ 0–2%–0 points Federal/Local/Philanthropic Contributions include: • Monetary grants/donations • Tax increment financing-calculate Net Present Value(NPV)by using NPV discounted by Applicable Federal Rate(AFR) • Tax abatement(calculate NPV by using NPV discounted by AFR) • Land donation or city write down of the development site • In-kind work and materials donated at no cost • Local government donation/waiver of project specific costs,assessments or fees(e.g.SAC/WAC) • Reservation land not subject to local property taxes • Reservation land with long-term low cost leases • Deferred loans with a minimum term that is co-terminus with the HTC Declaration with an interest rate at or below the AFR • Grants from nonprofit charitable organizations converted to deferred loans with a minimum term that is co-terminus with the HTC Declaration with an interest rate at or below the AFR. Award letter from the nonprofit charitable organization contributor must be provided at the time of application verifying the project specific(restricted) contribution • Below Market Interest Rate(BMIR)Loans–calculate NPV based on the difference between the AFR and the BMIR rate (e.g. RD 515, NHASDA first mortgage). • Historic Tax Credits To qualify for points for tax increment financing or tax abatement,there must be satisfactory documentation that the contribution is committed to the development at the time of application. At the time of application,written documentation from the contributor justifying the amount and the terms of the contribution must be provided and be consistent with current market comparable costs. The documentation must be in the form of a project specific letter of intent,city or council resolution, letter of approval,statement of agreement or eligibility,or memorandum of understanding. In the case of Historic Tax Credits,at the time of application written documentation of eligibility through evidence of Historic Register listing or approval of Part 1—Evaluation of Significance. Within 6 months of the date of selection(Minnesota Housing Board selection date)the applicant must provide Minnesota Housing with documentation of a firm commitment,authorization or approval of the federal/local/philanthropic contribution(s). The documentation must state the amount,terms and conditions and be executed or approved at a minimum by the contributor. Documentation containing words synonymous with"consider"or"may",(as in"may award")regarding the contribution,will not be considered acceptable, Lack of acceptable documentation will result in the reevaluation and adjustment of the tax credits or RFP award,up to and including the total recapture of tax credits or RFP funds. 2016 HTC Self-Scoring Worksheet 6 of 22 Rev.05/2014 Salartinn Prinritiac SCOTT COUNTY HOUSING STUDY CONCLUSIONS AND RECOMMENDATIONS Prior Lake - Summary of Demographic and Housing Condition Findings Key demographic and housing market findings for Prior Lake from the housing study are high- lighted below. For a comparison, figures for Scott County are shown as well. Demographic and Housing Characteristics Summary Prior Lake Scott County 2n3,f. .7; k3z °fie GenecalOccupancyRen#a(t�u;inB. Distribution and vacancy rate of rental units by type Market rate 145 / 4.1% 1,827 / 3.2% Affordable 85/ 0.0% 449 / 1.8% Subsidized 46/ 0.0% 349 / 0.9% Average rent for market rate unit $713 $886 Average square foot for market rate unit 830 972 Average rent per square foot $0.86 $0.91 Distribution and vacancy rate of senior housing by type Affordable/Subsidized Active Adult 39/ 0.0% 307/ 1.3% Market Rate Active Adult-Rental 54/ 0.0% 368/ 1.4% Market Rate Active Adult-Ownership 80/ 1.3% 147/ 2.4% Congregate 139/ 2.2% 218/ 2.8% Assisted Living 92/ 6.5% 188/ 5.9% Memory Care 38/ 0.0% 90/ 0.0% Prior Lake Projected Housing Demand,2010 to 2020 General Demandi 2,379 E For-Sale Demand ffen`tal Det�and 1,999 Single-Family MultifamilyMMFR&Aate Affordable Sud ici�edj 1,199 800 =. 247:.::.' 95 v? 38 Modest Move-up Executive Modest Move-up 60 300 839 i F, 320 480- Ese •DemandI 284 Senior Rental ?;9en[bit wnership? i . ... 284 Sub/Aff MR Adult Congregate AL Mc 84 129 3 51 17 Note: Because households are mobile and are willing to seek out various housing products in adjacent communities,these demand figures may experience fluctuations. Community Number of Affordable Units Independence 36 Inver Grove Heights 872 Jordan 114 Lake Elmo 465 Lakeville 2,260 N y 0 j ( m C Lauderdale 35 CD < o a a Lexington 8 1 3 :3 Lilydale 28 m (D m Lino Lakes 560 o.i)o o Little Canada 72 -N m 3 n K, Long Lake 40 moa o G 3a D o a (D Loretto 3 s Q � 0 CD Mahtomedi 27 0, ° x !y Maple Grove 1,764 (D ? �1 m Maple Plain 19 �. � _ Maplewood 388 o(Do �� N m Marine on St. Croix 0 o o Q w Mayer 172 0 a� o Medicine Lake 0 n g O ID Medina 506 ID � , a m Q. Mendota 3 a ro H y a Mendota Heights 43 y 3 Minneapolis 4,224 b Q a Z Minnetonka 378 o a rd. ':m Crm0_ Minnetonka Beach 0 y a y Co Minnetrista 209 Mound 68 0 �.a (a Mounds View 65 i o, a Z, Z New Brighton 137 t-- N New Germany 11 o(D a v New Hope 213 Z^ ; Z Newport fi8 a North Oaks 56 0 0 0 North St. Paul 108 n Norwood Young America 194 o LD.o Oak Park Heights 23 E ° S Oakdale 184 C, Orono 310 = ^ $ Osseo 26ID y Plymouth 1,045 y (D o ,; Prior Lake 1,166 o Ramsey 636 Richfield 765 Robbinsdale 133 Rogers 373 Rosemount 1,000 Roseville 201 Savage 1,237 i Shakopee 2,105 Shoreview 94 Shorewood 53 South St. Paul 104 Spring Lake Park 19 Spring Park 31 St.Anthony 312 St. Bonifacius 0 St, Francis 74 St. Louis Park 501 St. Paul 2,625 St. Paul Park 438 Stillwater 233 Allocation o/Affordable Housing Need(as of December 2013) 2 Metropolitan Council CVW_� l Table for discussion of affordable housing need allocation 202-1 - 2-050 DRAFT FOR DISCUSSION ONLY Community Development Committee Forecasted Pre-adjusted ("Equal share") Allocations Adjusted Allocations growth in Total (At or Total (At or! sewered below 80% At or below 31% to 51% to below 80% At or below 31% to 51% to Community households AM[) 30% of AMI 50% of AMI 80% of AMI AMI) 30% of AMI 50% of AMI 80% of AMI Maple Grove 3,300 1,381 592 430 359 1,466 725 427 314 Maple Plain 100 42 18 13 11 35 18 9 8 Maplewood 1,700 712 305 222 185 576 252 168 156 Mayer 150 63 27 20 16 _ 41 22 15 4 Medicine Lake 0 0 0 0 0 0 0 0 0 Medina 500 209 90 65 54 281 113 89 79 Mendota 10 _ 4 2 1 1 _ 4 2 1 1 Mendota Heights 400 167 72 52 43 229 98 70 61 Minneapolis 11,400 4,772 2,046 1,487 1,239 4,949 1,820 1,562 1,567 Minnetonka 2,000 837 359 261 217 1,115 437 388 290 Minnetonka Beach 10 4 2 1 1 6 3 1 2 Minnetrista 850 356 153 111 92 439 188 125 126 Mound 300 126 54 39 33 101 47 25 29 Mounds View 100 42 18 13 11 36 13 12 11 New Brighton 800 335 144 104 87 331 152 87 92 New Germany 50 21 9 7 5 14 6 _ 2 _ 6 New Hope 500 _ 209 90 65 54 174 85 59 30 Newport 300 126 54 39 33 95 43 20 32 North Oaks 90 38 16 12 10 57 23 17 17 North St. Paul 300 126 54 39 33 91 47 17 27 Norwood Young America 700 293 126 1 91 76 206 95 30 81 Oakdale 800 335 144 104 87 306 137 99 70 Oak Park Heights 250 105 45 33 27 _ 112_ 43 35 34 Orono 400 167 72 52 43 220 85 69 66 Osseo 150 63 27 20 16 47 25 7 15 Plymouth _ 2,500 1,047 449 326 272 1,308 585 406 317 Prior Lake 2,500 1,047 449 326 272 1,136 493 361 282 Ramsey 1,700 712 305 222 185 583 306 198 79 Richfield 800 335 144 104 87 301 154 95 52 Robbinsdale 300 126 54 39 33 98 49 17 32 Rogers 1,500 628 269 196 163 699 336 214 149 Rosemount 2,500 1,047 449 326 272 1,083 477 347 259 DRAFT FOR DISCUSSION ONLY March 2, 2015 Page 3 of 4