7.1.
CC Regular Session
- Meeting Date:
- 03/26/2013
- By:
- Tim Gladhill, Community Development
Information
Title:
Consider Request for Local Contribution from MWF Properties for Apartment Development in The COR and Provide Staff Direction on Potential Sources
Background:
The City has been contacted by MWF Properties, located in Minneapolis, MN, regarding a potential development of Outlot B, RAMSEY TOWN CENTER 11TH ADDITION. The Property is currently owned by the City of Ramsey Housing and Redevelopment Authority (HRA). A case has been prepared for the HRA's consideration for March 26, 2013 as well. The Developer desires to construct an approximately 47-unit rental apartment development on the Property.
The Developer is also seeking City financial participation as part of an application to the Minnesota Housing Finance Agency (MHFA) for Section 42 tax credits, a competitive financing opportunity also known as the Housing Tax Credit (HTC). According to the MHFA website, the Housing Tax Credit is a reduction in tax liability to developers and investors in exchange for providing affordable housing. This is not assistance given directly to a tenant. The Housing Tax Credit is part of the Internal Revenue Service (IRS) Tax Code, and not a City funded program.
The Developer is requesting a local contribution of $510,000. According to the Developer, a contribution of this amount would provide four (4) selection points . The Developer will present background on the HTC Application and the forecasted range of points that would be necessary for a successful application. According to the Developer, the local contribution can be satisfied by a number of ways including, but not limited to (or combinations thereof) Tax Increment Financing (TIF), grants, reduction in land costs, and regulatory cost reductions.
Staff discussed the Metropolitan Council's Livable Communities Act (LCA) as a potential funding source. The Developer has stated that they are somewhat concerned about timing of this program. The City could also consider utilization of the Anoka County Housing and Redevelopment Authority (ACHRA) levy as a potential funding source. The Developer also inquired as to whether the City would be interested in assisting through Tax Increment Financing (TIF). In addition, the Developer also inquired if the City would be willing to waive certain application, license, or development fees or fast track approval processes.
Before continuing discussions with the Developer, Staff is seeking policy feedback as to whether the City Council is interested in pursuing TIF, LCA funding, land reduction, County HRA funding, or other options available through the Tax Credit program for the project.
It should be noted that the Developer has noted implications of the required design guidelines for The COR. Staff has had some preliminary discussions with the Developer on alternative locations within The COR with design standards more complimentary to their current business model. The Developer seems generally interested in exploring alternative locations as well.
Furthermore, the Developer has requested review with the City Council at this time due to timing of the Application. The Application is due in June, but will take a considerable amount of time on the Developer's part to prepare the Application.
The Developer is also seeking City financial participation as part of an application to the Minnesota Housing Finance Agency (MHFA) for Section 42 tax credits, a competitive financing opportunity also known as the Housing Tax Credit (HTC). According to the MHFA website, the Housing Tax Credit is a reduction in tax liability to developers and investors in exchange for providing affordable housing. This is not assistance given directly to a tenant. The Housing Tax Credit is part of the Internal Revenue Service (IRS) Tax Code, and not a City funded program.
The Developer is requesting a local contribution of $510,000. According to the Developer, a contribution of this amount would provide four (4) selection points . The Developer will present background on the HTC Application and the forecasted range of points that would be necessary for a successful application. According to the Developer, the local contribution can be satisfied by a number of ways including, but not limited to (or combinations thereof) Tax Increment Financing (TIF), grants, reduction in land costs, and regulatory cost reductions.
Staff discussed the Metropolitan Council's Livable Communities Act (LCA) as a potential funding source. The Developer has stated that they are somewhat concerned about timing of this program. The City could also consider utilization of the Anoka County Housing and Redevelopment Authority (ACHRA) levy as a potential funding source. The Developer also inquired as to whether the City would be interested in assisting through Tax Increment Financing (TIF). In addition, the Developer also inquired if the City would be willing to waive certain application, license, or development fees or fast track approval processes.
Before continuing discussions with the Developer, Staff is seeking policy feedback as to whether the City Council is interested in pursuing TIF, LCA funding, land reduction, County HRA funding, or other options available through the Tax Credit program for the project.
It should be noted that the Developer has noted implications of the required design guidelines for The COR. Staff has had some preliminary discussions with the Developer on alternative locations within The COR with design standards more complimentary to their current business model. The Developer seems generally interested in exploring alternative locations as well.
Furthermore, the Developer has requested review with the City Council at this time due to timing of the Application. The Application is due in June, but will take a considerable amount of time on the Developer's part to prepare the Application.
Notification:
No notification required at this time.
Observations/Alternatives:
Peter Worthington, of MWF Properties, will be presenting the project proposal to the City Council. There are multiple site plan review items that need to be addressed, which will be addressed at a future date if necessary. At this time, Staff is seeking feedback on potential City participation prior to spending additional time discussing and reviewing further with the potential Developer.
The Developer is seeking Section 42 tax credits, administered through the Minnesota Housing Finance Agency (MHFA). The Developer is asking that the City participate financially in order to increase the chance of successful award of said financing. The program does provide options other than cash contribution that count as the local match, which will be presented by Mr. Worthington. Evaluation of the HTC Applications are based on a points system, and City participation includes additional points. A copy of the current HTC Self Scoring Sheet is attached for the City Council's review.
As stated, there are a number of ways to satisfy the local contribution including, but not limited to TIF, grants, reduction in land costs, or regulatory cost reductions. One potential funding source is the Metropolitan Council Livable Communities Program or the Anoka County Housing and Redevelopment Authority levy. Furthermore, the Property is located within TIF District #14. Again, Staff recommends a broader policy discussion on TIF District #14 before identifying this as a potential funding source. However, TIF utilization for public infrastructure (e.g., roads) would be one potential use of TIF for this project that would benefit both the City and the development.
The deadline for Livable Communities funds is anticipated to be on or about May, 2013 (based on previous funding rounds). Staff will revisit this funding source when the funding cycle is opened for 2013, and bring back a case for consideration by the City Council. Staff will continue to work on identifying additional ways to address the local contribution, if directed to do so by City Council.
Alternative #1. The City Council could direct Staff to continue discussions with the Developer to identify an appropriate funding source for the Local Contribution. Staff would recommend a housing grant as the preferred method to satisfy the Local Contribution. Staff is seeking feedback on the use of TIF #14, likely for required public improvements. The City Council could also direct Staff to explore other parcels where the cost of development could lead to a reduction in the requested Local Contribution.
Alternative #2. The City Council could deny the request for a Local Contribution. It is unlikely that the project would move forward without the Local Contribution.
Alternative #3. The City Council could postpone a decision, pending review by the HRA related to housing assistance and land sale discussion.
The Developer is seeking Section 42 tax credits, administered through the Minnesota Housing Finance Agency (MHFA). The Developer is asking that the City participate financially in order to increase the chance of successful award of said financing. The program does provide options other than cash contribution that count as the local match, which will be presented by Mr. Worthington. Evaluation of the HTC Applications are based on a points system, and City participation includes additional points. A copy of the current HTC Self Scoring Sheet is attached for the City Council's review.
As stated, there are a number of ways to satisfy the local contribution including, but not limited to TIF, grants, reduction in land costs, or regulatory cost reductions. One potential funding source is the Metropolitan Council Livable Communities Program or the Anoka County Housing and Redevelopment Authority levy. Furthermore, the Property is located within TIF District #14. Again, Staff recommends a broader policy discussion on TIF District #14 before identifying this as a potential funding source. However, TIF utilization for public infrastructure (e.g., roads) would be one potential use of TIF for this project that would benefit both the City and the development.
The deadline for Livable Communities funds is anticipated to be on or about May, 2013 (based on previous funding rounds). Staff will revisit this funding source when the funding cycle is opened for 2013, and bring back a case for consideration by the City Council. Staff will continue to work on identifying additional ways to address the local contribution, if directed to do so by City Council.
Alternative #1. The City Council could direct Staff to continue discussions with the Developer to identify an appropriate funding source for the Local Contribution. Staff would recommend a housing grant as the preferred method to satisfy the Local Contribution. Staff is seeking feedback on the use of TIF #14, likely for required public improvements. The City Council could also direct Staff to explore other parcels where the cost of development could lead to a reduction in the requested Local Contribution.
Alternative #2. The City Council could deny the request for a Local Contribution. It is unlikely that the project would move forward without the Local Contribution.
Alternative #3. The City Council could postpone a decision, pending review by the HRA related to housing assistance and land sale discussion.
Recommendation:
Staff recommends that the City Council direct Staff to pursue potential funding sources for the Local Contribution, but not formally agree to the Local Contribution at this time. It is also recommended that staff prepare a TIF analysis for this project to determine potential revenue from the project. This direction would not authorize Staff to submit any application for grant or other funding. Said authorization would come at a future date with a specific grant fund identified.
Funding Source:
There is not additional funding required to continue discussions with the potential Developer. The funding source for a local contribution would need to be determined in the near future, based on discussion (if approved).
Council Action:
Motion to direct Staff to continue/not continue discussions regarding local contribution for MWF Properties related to a Minnesota Housing Finance Agency (MHFA) Housing Tax Credit Application.
Attachments
- Site Location Map
- Request for Local Contribution
- Concept Plan (Basic)
- Initial Site Plan Review Comments
- Tax Credit Background
- Tax Credit Scoring Sheet
Form Review
| Inbox | Reviewed By | Date |
|---|---|---|
| Diana Lund | Diana Lund | 03/20/2013 08:00 AM |
| Chris Anderson | Chris Anderson | 03/20/2013 02:50 PM |
| Brian Hagen | Tim Gladhill | 03/21/2013 10:16 AM |
| Kurt Ulrich | Kurt Ulrich | 03/21/2013 03:25 PM |
- Form Started By:
- Tim Gladhill
- Started On:
- 03/15/2013 02:58 PM
- Final Approval Date:
- 03/21/2013