7.0. HRSR 06-24-2002 • Item # 7
City of
Elk -�
River
MEMORANDUM
TO: Housing and Redevelopment Authority
Mayor & City Council
FROM: Catherine Mehelich, Director of Economic Development
DATE: June 24, 2002
SUBJECT: Consider Affordable Housing Initiatives
Issue
The city has received a request for an apartment project. At this time the proposed project
is for market rate apartments, however the developer is open to including affordable units
with assistance from the city. Staff requests the HRA and Council discuss and provide
direction to staff regarding if affordable housing (housing that does not exceed 30% of a
household's income) should be a component of this and other proposals.
The City of Elk River Housing Plan, completed by Central MN Housing Partnership last
fall, suggested that the city consider providing financial/resource assistance to multi-family
housing projects that will develop affordable rental units. The city may consider
encouraging the development of affordable units by offering various forms of participation,
including use of Tax Increment Financing and Tax Abatement.
Requested Action
Following discussion,if the HRA and Council provide staff direction to pursue affordable
housing in new developments then details on financing options will be presented at a later
date.
Attached Information
• 2002 Law Summaries, Housing,LMC Cities Bulletin
2002 Law Summaries
training or testing required by state or federal law or for leased by veterans organizations,payment of various
• that required for the employee to maintain his/her current utility bills for buildings owned or leased by,and used as
position unless such training is required for a license, the primary headquarters of,veteran's organization,and
registration or certification.Effective Aug.1,2002.AH expenditures by veteran's organizations of up to $5,000
annually for meals and other membership events held in
Unpaid leave for foster parents recognition of military service;and
Chapter 380 (HF3648/SF3431*),Article 5,of the 2002 • Requirement that the Gambling Control Board draft
omnibus jobs and economic development bill,provides model rules related to linked bingo games and electronic
that foster parents are eligible for school conference and bingo devices and report back to the Legislature by
activity unpaid leave from work.Effective Aug. 1,2002.AH Feb.1,2003.
Youth �
employment
i
Housing
Chapter 380 (HF3648/SF3431*),Article 6,of the 2002 _
omnibus jobs and economic development bill,gives Base budget cuts to MHFA
priority to rojects in whichYouthbuild labor is used for at
least 25 percent (or$50,000) of the grant,whichever is less, Chapter 220 (HF351*/SF264),Budget Reconciliation,
Phase I,Article 12,Section 5,reduces the FY 2003 budget
as long as the work performed is appropriate for that for the Minnesota Housing Finance Agency (MHFA)by
program and does not increase project costs.Effective Aug. $216,000 and also sets up further base budget reductions
'1 1,2002.AH
of$457,000 in both FY 2004 and 2005.The provisions
direct MHFA to emphasize administrative cost savings and
Farmers'markets and community potlucks reductions in overhead in order to minimize the impact
Chapter 384 (HF3406/SF3256*) increases the dollar limits on funding for housing programs.Further reference to the
on sales of food prepared for a community event or MHFA budget reduction can be found in the summary of
farmers'market from$1000 to$5,000 or less in a calendar the Phase I budget reduction.Effective March 1,2002.AH
year for purposes of exempting the seller from obtaining a
state license and inspection.If the food is not prepared in a Livable Communities Act modifications
kitchen that is licensed or inspected,the seller must post a
• Chapter 246 (HF2899*/SF2711) expands the eligibility to
visible sign or placard stating that:"These products are receive Livable Communities Act grants under the livable
homemade and not subject to state inspection."Prepared communities demonstration account and the inclusionary
foods sold under this subdivision must be labeled to
housing account to include housing and redevelopment
accurately reflect the name and address of the person authorities,economic development authorities,and port
preparing and selling the foods.The law,amending MS authorities.Projects are required to be located in eligible
28A.15,became effective May 21,2002.RS municipalities.Elections to participate or to revoke
participation in the local incentives housing account that
Omnibus gambling bill occur by November 15 will become effective for the next
Chapter 386 (HF3073*/SF2940) makes a number of calendar year.Elections to participate will be considered
technical and other changes to the laws governing lawful effective until revoked.Effective March 22,2002.AH
gambling.Various effective dates.ABH
Some of the of the more notable provisions include: Inclusionary housing
• Expansion of the use of net profits for disaster relief to Chapter 315 (HF3169/SF2881*) applies to situations
include,not only natural disasters,but also situations that where a development application includes affordable
create actual or imminent serious threats to persons' housing single-family or rental units as a portion of the
health and safety or catastrophic losses to property or the project and gives cities the discretion,in situations where
environment; an applicant for a subdivision,planned unit development,
• Repeal of the prohibition against the use of pull-tab site plan,or other similar type action agrees to establish (1)
dispensing devices at licensed premises where pull-tabs sales prices or rents for housing affordable to low-and
are also sold by employees of the lessor; moderate-income households;(2) maximum income limits
• Increase in the maximum starting prize of a progressive for initial and subsequent purchasers or renters of afford-
bingo game from$300 to $500 and an increase in the able units;and (3) means to maintain the long-term
total annual limit on such prizes per organization from affordability of the units,including land trusts and equity
$36,000 to$48,000; sharing.This law also gives cities discretionary authority to
• Increase in the maximum prize for a single pull-tab from prepare housing fiscal impact notes for use at public
0 $500 to$599; hearings prior to the adoption or amendment of official
• Amendments to the definition of"lawful purpose"to controls.The housing fiscal impact is defined as the
allow payment of property taxes on premises wholly
LS 22 LMC Cities Bulletin
f
I
F
2002 Law Summaries
increase or decrease in costs that a housing development Salvation Army will operate 60 units of transitional
would incur as a result of an official control amended or housing on that site.The project on the VA campus in
i adopted by a municipality after Aug. 1,2002.The law Minneapolis will have 218 permanent housing units that
becomes effective Aug.1,2002.AH/RS will be operated by MAVC.This provision became
effective May 23,2002.AH
Low-income housing sales tax exemption -
Chapter 377 (HF 2498*) the 2002 omnibus tax act, - insurance
Article 3,Section 13 expands the sales tax exemption for $°
construction materials for low-income housing to include Note:Please see the additional discussion on the workers'
projects where ownership is in a participating party or in a
compensation Special Compensation Fund (SCF) under
partnership of such an entity and a public housing authority. the Budget I & II sections of this document,in particular
Under present law,a qualifying owner must be a Chapter 220 (HF 351*/SF 264)Article 13,section 9,and
public housing authority,an entity exercising the powers of Chapter 374 (HF3270*)Article 8,section 6.
a housing authority,a limited partnership of which the
housing authority is the general partner,or a nonprofit Workers' compensation amendments
corporation.This bill would permit other types of entities Chapter 262 (HF3348/SF3136*) makes changes to
such as a for-profit corporation or other entity to be an Minnesota's workers'compensation statutes,MS 176.129.
owner or a partner in a public housing project.This Among the law's provisions is clarification of benefits
section clarifies that the sales tax exemption applies to when a parent is presumed to be the guardian of the
Holman replacement units in the city of Minneapolis. employee and to whom and how benefits will be paid.The
This section also narrows the benefit of the sales tax law makes clear that payments to an estate upon the death •
exemption.For projects where less than 100 percent of the of an employee must be made within 14 days of notice to
units are"low-income"this sales tax exemption is pro- the insurer of the appointment of a personal representative
rated to only those low-income units.The sales tax of the estate.Within 14 days of notice to the insurer of the
exemption is administered as a refund rather than an up- death of the employee,the insurer must send notice to the
front exemption.Effective for sales and purchases made estate,at the deceased employee's last known address,that
• after July 31,2002.For purchases made before July 1, this payment will be made after a personal representative
owners of such housing projects must apply to the Dept.of has been appointed by a probate court.
Revenue for sales tax refunds.GC/AH The law provides new definitions for"paid indemnity
losses"and"standard workers'compensation premium."
Sales tax exemption for materials used to construct "Paid indemnity losses"means gross benefits paid for
housing in border cities temporary total disability,economic recovery compensa-
Chapter 377,Article 3,provides for an exemption from lion,impermanent,partial disability,temporary partial
sales tax for gross receipts for construction materials used disability,impairment compensation,permanent total
for housing located in border city zones.Effective for sales disability,vocational rehabilitation benefits,or dependency
after June 30,2002.AH -
benefits,exclusive of medical and supplementary benefits.
In the case of policy deductibles,paid indemnity losses
Permanent and transitional housing for veterans include all benefits paid,including the amount below
and single adults deductible limits."Standard workers'compensation premium"
Chapter 393 (HF3618*),the omnibus bonding bill, means the data service organization's designated statistical
allocates $16.2 million in the bonding provisions for the reporting pure premium after the application of experi-
Minnesota Housing Finance Agency for two projects to ence rating plan adjustments,but prior to the application
develop or rehabilitate units for transitional and permanent of premium discounts,policyholder dividends,other
housing for veterans and single adults who are homeless or premium adjustments,expense constants,and other deviations
at risk of becoming homeless.There is also a listing of this from the designated statistical reporting pure premium.
project in the description of the bonding provisions at the Self-insured employers must report payments to funds.
beginning of the law summaries.Loans and grants for two MS 176.129 was amended to require that on or before
projects are to be used for housing to be located on federal April 1 of each year,all self-insured employers shall report
Veterans Administration property in Minneapolis and St.
paid indemnity losses and insurers shall report paid
Cloud and will include provision of resident support indemnity losses and standard workers'compensation
services and collaboration among local and federal units of premium in the form and manner prescribed by the
• government as well as community agencies.The Minnesota commissioner.On June 1 of each year,the commissioner
Assistance Council for Veterans (MAVC) will administer 60 shall determine the total amount needed to pay all estimated
units of permanent housing at the site in St.Cloud.The liabilities,including administrative expenses,of the special
June 12, 2002 LS 23