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09-22-2003 HR MIN MEETING OF THE ELK RIVER • HOUSING AND REDEVELOPMENT AUTHORITY HELD AT LIONS PARK CENTER MONDAY, SEPTEMBER 22, 2003 Members Present: Chair Toth,Commissioners Thompson,Lieser and Motin Members Absent: Commissioner Wilson Staff Present: Executive Director Catherine Mehelich,Director of Economic Development Assistant Heidi Hall,City Administrator Pat Klaers,Director of Planning Michele McPherson,Senior Planner Scott Harlicker,Recording Secretary Debbie Huebner 1. Call Meeting To Order Pursuant to due call and notice thereof,the meeting of the Elk River Housing and Redevelopment Authority was called to order at 5:00 p.m.by Chair Toth. 2. Consider September 22,2003 HRA Agenda COMMISSIONER THOMPSON MOVED TO APPROVE THE SEPTEMBER 22, 2003,HRA AGENDA AS PRESENTED. COMMISSIONER MOTIN SECONDED THE MOTION. THE MOTION CARRIED 4-0. 3. Consider Consent Agenda COMMISSIONER MOTIN MOVED TO APPROVE THE CONSENT AGENDA AS FOLLOWS: 3.1. AUGUST 25,2003 HRA MINUTES 3.2. CHECK REGISTER 3.3. REVENUE/EXPENDITURE SHEET 3.4. BALANCE SHEET COMMISSIONER THOMPSON SECONDED THE MOTION. THE MOTION CARRIED 4-0. 4. Open Mike There was no one present for Open Mike. 5. Housing Work Plan—Session VI -Elk River Housing Study Senior Planner Scott Harlicker presented staff's housing research. Mr.Harlicker explained that currently 84%of the 6,587 total dwelling units are single family and 16%are multi- family. He reviewed the various types of housing,age of the housing stock,lot availability, rental stock,age of the rental stock,and affordability issues. Mr.Harlicker reviewed a comparison of Elk River to seven area communities,based on 2000 Census housing information. HRA Minutes Page 2 September 22,2003 • Mr.Harlicker discussed the Needs Analysis in his report to the HRA dated August 25,2003. He stated that the City needs to make a policy decision regarding their role in assessing housing needs and goals;whether to serve as a mini-regional center for the area,or to meet local needs. He discussed the ratio of multi-family to single-family,and the ratio of townhouse units to single-family. Mr.Harlicker then reviewed staff's analysis of "affordable"housing. The following options were presented for consideration if the City determines there is a need for additional housing: 1. Zone land appropriately to allow development of additional multi-family units. 2. Redevelopment of older dwellings for replacement with multi-family units. 3. Allow accessory or"mother-in-law"apartments to single-family dwellings. 4. Amend the zoning code to allow higher densities,and offer density bonuses if builders include affordable units in a development. 5. Establish a housing preservation and rehabilitation program. 6. Utilize tax increment financing to redevelop blighted residential areas and/or new construction of low and moderate-income housing. Chair Toth asked where the mobile homes were located that were mentioned in staff's report. Mr.Harlicker stated that some are in Wapiti Park and the others are scattered throughout the rural residential areas of the city. Chair Toth asked if mobile homes are still allowed. Mr.Harlicker explained that the City does allow them with restrictions such as placement on a permanent foundation. He noted that the homes that are coming into Elk • River are generally doublewides and have the appearance of a traditional single-family home. Commissioner Leiser asked if the median values are comparable to market values. She felt that the median value may seem affordable but in reality the market value is not. Mr. Harlicker stated that the data was obtained from Sherburne County Assessor's office and that staff combined the assessed valuation of the building and land to determine the median value for the study. He stated that if the HRA was interested in a market value study,a great deal more research would be necessary. Commissioner Motin asked if the most recent Trott Brook Farms townhomes and Eull property was included in the housing inventory. Mr.Harlicker stated that all property that has been final platted was included. Chair Toth asked if the City is receiving inquires for affordable housing. He stated that it is difficult for the HRA to determine if the housing inventory is adequate or if they need to expand it. Director of Planning Michele McPherson stated that the City needs to make a determination whether or not they wish to provide a higher percentage of"affordable" or multi-family housing,and if so,review the options provided by staff to expand it,not let the market dictate what the City should do. Chair Toth asked how they can determine if there is a need for more affordable housing. Ms.McPherson stated that the City's policy makers need to establish a policy based on what percentage they feel is a good balance for the community. • HRA Minutes Page 3 September 22,2003 • Chair Toth asked if the manufacturing clients have stated whether or not their employees can afford to live in Elk River. Director of Economic Development Catherine Mehelich stated that they have not heard of a need for more affordable housing from manufacturers during the business retention visits. Commissioner Thompson stated that it appears the rental rates are competitive.He asked if the vacancy rate of 6-8%was good or bad. Ms.Mehelich stated that the 2001 Housing Study by Central Minnesota Housing Partnership indicated a vacancy rate of 2%. She explained that the vacancy rate has likely gone up due to the low interest rates,making it more affordable for people to buy their own homes. Commissioner Thompson stated that he was in favor of a housing policy,based on a regional basis. Commissioner Leiser stated that she felt the City has a good balance of housing,but that she would support looking at adding additional affordable starter homes. Commissioner Motin stated that townhomes are often"starter"homes and that the City has recently approved over 600 new units. He stated that he would support looking at the possibility of rezoning to create additional R4 property. He felt that a 10-mile radius would be appropriate for determining housing needs. Ms.McPherson asked the Commission if they wished to look at regional housing needs. Commissioner Thompson stated that he would be in favor of looking at the regional area. S He stated that of the options proposed by staff,he would first like to look at rezoning, secondly-density bonuses,third-housing rehabilitation,and lastly,tax increment financing. Ms.McPherson stated that staff would expand their research of adjacent communities to include: amount of vacant land available for multi-family housing,vacancy rates (in the communities with apartments),identify possible rezoning sites for R4 housing,and provide more information on density bonuses. Chair Toth asked if staff could contact employers regarding the need for affordable housing. Ms.Mehelich stated that housing affordability is a question asked of manufacturers during Business Retention and Expansion visits,and that housing doesn't seem to be a concern. Ms.Mehelich stated that staff would send out an informal survey regarding where their employees are commuting from,why they live outside of Elk River,and if affordability of housing is an issue. Ms.McPherson stated that if the City determines that the balance of housing is satisfactory, a less detailed annual analysis could be done to check on the city's housing stock. City Administrator Pat Klaers asked if the Commission felt the City has an affordability problem. Commissioner Thompson stated that he did not. The rest of the Commission concurred dthat the City does not have an affordability issue at this time. Commissioner Motin asked how the City could determine how many homes are rental homes. Mr.Harlicker stated that the Census data indicates whether homes are owner- occupied or not. He stated that the City does not have a housing inspection program for home rentals on buildings with fewer than four units. HRA Minutes Page 4 September 22,2003 • Commissioner Lieser stated that she would be interested in a market rate analysis included with the median value. 6. Downtown Revitalization Project Update Ms.Mehelich provided an update on the Downtown Revitalization Project. She stated that a draft development agreement should be ready for the HRA's review and consideration at a regular meeting within the next 30 to 60 days. Ms.Mehelich explained that the financial feasibility of the project depends on the City and developer's ability to receive financial assistance from a variety of resources,and in July the HRA and City Council authorized MetroPlains to submit a financing application to the MN Housing Finance Agency for the Jackson Block project. Notification of financing award from MHFA is anticipated the end of October. In addition to the MHFA application,the financial plan prepared by MetroPlains is dependent upon funds from the Small Cities Development Program(SCDP),administered by the MN Department of Employment and Economic Development(DEED). These grants will be contingent upon final project approval and does not commit the City or HRA to final project approval. She noted that a larger portion of the City's SCDP application would include a request for grant funds to be used for commercial and rental property rehabilitation within the downtown area. The grant funds may be provided to property owners as a deferred low S interest loan that could be used to leverage the City's existing Micro Loan Redevelopment Financing Program and conventional financing. The rehabilitation of adjacent properties supports the City's revitalization objective to recognize buildings that have potential for rehabilitation. Rehabilitation must include building,fire and energy efficiency code improvements,and can include façade improvements. A portion of the SCDP application will include a request for gap financing of the Jackson Block project. Commissioner Lieser asked for clarification on the"gap", since she thought that the Jackson Block Development did not have a gap. Ms.Mehelich explained that the financial plan for the Jackson Block has always included funds from the SCDP grant and that the largest share of the grant request will be for rehabilitation downtown. Commissioner Motin expressed his concern that he cannot support the rehabilitation and raising the value of properties such as the Main Street block in the vicinity of the meat market,and the cinema block east to the proposed new project site,if these areas have potential for future redevelopment. Commissioner Motin asked if the grant request would be specific as to what the dollars are expended. Ms.Mehelich stated yes,that upon completion of eligible expenditures,the City would then request funds for repayment of the work. Commissioner Lieser asked if the Jackson Block project financing will help pay for the Bluff Block project. Ms.Mehelich stated yes,that this will be detailed in the developer agreement. COMMISSIONER LEISER MOVED TO RECOMMEND THAT THE CITY • COUNCIL AUTHRIZE STAFF TO PROCEED IN SUBMITTING A SMALL CITIES DEVELOPMENT PROGRAM APPLICATION TO THE MINNESOTA HRA Minutes Page 5 September 22,2003 • DEPARTMENT OF EMPLOYMENT AND ECONOMIC DEVELOPMENT FOR THE PURPOSE OF OBTAINING GRANT FUNDS FOR A COMMERCIAL AND RESIDENTIAL REHABILITATION,AND NEW RESIDENTIAL RENTAL CONSTRUCTION IN THE DOWNTOWN REVITALIZATION PROJECT AREA. COMMISSIONER MOTIN SECONDED THE MOTION. THE MOTION CARRIED 4-0. 7. Adjournment There being no other business,COMMISSIONER THOMPSON MOVED TO ADJOURN THE MEETING. COMMISSIONER MOTIN SECONDED THE MOTION. THE MOTION CARRIED 4-0. The meeting of the Elk River Housing and Redevelopment Authority adjourned at 6:07 p.m. Respectfully submitted, L.A.; kRZ.an..., Debbie Huebner Recording Secretary •