HomeMy WebLinkAbout05(I) - Approve Contribution of $32,125 in Local Affordable Housing Aid funds to Habitat for Humanity Report
ITEM: 5I
CITY COUNCIL AGENDA REPORT
MEETING DATE: July 22, 2025
PREPARED BY: Jason Wedel, City Manager
PRESENTED BY: Jason Wedel
AGENDA ITEM: Approve Contribution of $32,125 in Local Affordable Housing Aid
funds to Habitat for Humanity
RECOMMENDED ACTION:
Approve the contribution of $32,125 in Local Affordable Housing Aid funds to Twin Cities Habitat
for Humanity
BACKGROUND:
In 2023, the Minnesota Legislature approved new state funding for housing, including a first-ever
tax dedicated to affordable housing. The new 0.25% Metro Area Sales and Use Tax for Housing
provides a separate funding source called Local Affordable Housing Aid (LAHA) to cities located
within the seven-county metropolitan area with a population over 10,000. The City received two
payments in 2024 totaling $109,824.66. These funds can only be used to support affordable
housing.
Twin Cities Habitat for Humanity is currently in the process of constructing three 4-unit townhome
buildings near Ponds Park on 170th Street SE. The first building was completed in 2024 and the
City contributed $30,280 in LAHA funds. The second building is nearing completion and received
LAHA funds from the City in the amount of $31,190. Habitat for Humanity is now moving onto the
third and final building and is requesting $32,125 in LAHA funds to complete. The increase in
LAHA funds the City has contributed per building has increased by 3% to cover inflationary
increases.
To date three of the units in the first building have closed and the fourth unit will close later this
month. One unit in the second building has closed and two more units are scheduled to close in
August. There have not been any pre-sales for the third building.
The Habitat for Humanity townhomes will be sold to residents making 80% of the Area Median
Income (AMI) or less. The underlying land beneath the townhomes will be owned by the Scott
County CDA land trust. As such, the use of LAHA funds to support this project would be consistent
with the state requirements to use these funds for affordable housing projects.
FINANCIAL IMPACT:
The City currently has $48,354.67 in LAHA funds available. If this request of $32,125 is approved
the remaining balance would be $16,229.67.
The City will receive the first half of the 2025 LAHA proceeds from the State later this month which
is estimated to be $133,448.99 and will increase the available balance to $149,678.66 if this
request is approved.
City of Prior Lake | 4646 Dakota Street SE | Prior Lake MN 55372
Item 5I
Page | 2
ALTERNATIVES:
1. Motion and second as part of the consentagenda to approve the contribution of $32,125
in LAHA funds to Twin Cities Habitat for Humanity as outlined in their request dated July
8, 2025.
2. Motion and second to remove this item from the consent agenda for further discussion.
ATTACHMENTS:
1. Letter from Twin Cities Habitat for Humanity
8 July 2025
Mr. Jason Wedel
City Manager
City of Prior Lake
4646 Dakota Street SE
Prior Lake, MN 55372
RE: Request for Local Affordable Housing Aid
Dear Mr. Wedel:
Thank you for your previous financial support for the construction of the first two buildings of Towering
Woods, Habitat’s three-building new construction development of 12 for-sale townhomes located at 4661
170th Street SE in Prior Lake. The first building is complete, and all four units are now sold. The second
building is close to achieving a certificate of occupancy and one of those homes is now under contract.
As we prepare to begin construction on the third and final building, we have seen construction costs increase.
We understand there are some funds remaining in your previous receipt of LAHA, and so please let this letter
serve as our formal request for $32,125 to assist with the construction of the final building; construction
should be complete mid to late summer 2026. The City of Prior Lake’s support will help ensure these
townhomes are attractive not just today, but long into the future.
Per our previous correspondence, each townhome will be sold to income eligible homebuyers earning 80%
of area median income or below and will become part of the Scott County Community Land Trust
administered by the Scott County Community Development Agency. Inclusion in the Land Trust is a great
tool to ensure these homes remain affordable if the homeowner chooses to sell.
Please let me know if you need additional information. Thank you for your thoughtful consideration of this
request and for your support of affordable homeownership opportunities within the City of Prior Lake.
Sincerely,
Cecile Bedor
Chief Real Estate Officer