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8.2 SR 07-06-2020Request for Action Cty Elk - River To Item Number Mayor and City Council =8.2 Agenda Section Meeting Date Prepared by Public hearings I June 1, 2020 Zack Carlton, Planning Manager Item Description Reviewed by Concept Plan: CHDC Affordable housing and TIF Cal Portner, City Administrator Reviewed by Request Amanda Othoudt, Economic Development Director Action Requested Review the conceptual development and TIF request. Provide informal, non -binding, feedback for the applicant. If the City Council supports the project and the requested TIF application: Adopt, by motion, a resolution of support for the project and TIF application to support the applicant's state tax credit application. If the City Council supports the project, but does not support the requested TIF application: Adopt, by motion, a resolution of support for the project to support the applicant's state tax credit application. Background/Discussion The applicant, Community Housing Development Corporation, proposes to construct a 55-unit apartment building in the FAST — Hillside Estates zoning district at the corner of Twin Lakes Road and 175"' Avenue. The property is zoned FAST — Hillside Estates and supports high density residential uses, including apartment buildings. Hwy 10�.� �69 I i The Comprehensive Plan also guides the property for high -density Figure i residential uses and is consistent with other residential uses adjacent to the 4-lane segment of Twin Lakes Road. High density residential areas are generally used to buffer single-family areas from busy roadways and the project, Comprehensive Plan, and zoning reflect this practice. The 2018 housing study identifies an unmet need for affordable housing in Elk River and this project would address some of the gap in housing needs. The proposal includes two phases with similar 55-unit apartment buildings. The Elk River Vision A nelcoming community nvith revolutionary and spirited resourcefulness, exceptional p o w E A E u s r service, and community engagement that encourages and inspires prosperity ,� g /� Tax Increment Financing The applicant applied for 15-year, $780,000 of Tax Increment Financing (TIF). On May 26, 2020, the Joint Finance Committee reviewed the request and recommended the Housing and Redevelopment Authority consider a letter of support for the project with TIF, subject to the applicant receiving an allocation of tax credits and a demonstrated need for the affordable housing units. Supporting the conceptual project does not require support for the TIF application. Resolution of Support The applicant also requested the Council consider the project independent of the TIF application. If supportive, they request a resolution of support for the project with or without the TIF application for state tax credit funding. The resolutions do not approve the project or the TIF application and the city will not be required to approve future land use applications for the site should the resolution be adopted. However, high density residential uses are a permitted use on this site and a future site plan application, consistent with all standards in the ordinance, would not require Council review or a public hearing. Financial Impact The applicant has requested a 15-year $780,000 pay as you go tax increment financing application. Attachments ■ Location Map ■ Applicants Narrative ■ Conceptual site plan and renderings ■ Resolution supporting the project with TIF ■ Letter of support dated July 6, 2020 ■ Resolution supporting the project without TIF ■ Letter of support dated July 6, 2020 N:\Public Bodies\Agenda Packets\07-06-2020\Fi1ia1\8.2 sr CHDC Proposal.docx 75 �01 � 751757105 75 0 . 4. ,4P i 757•. { 75-757-1�110 _ II-j 2�5- • ` I +► y 4 4 . 46 .40 75-757-0115 e y 75-757 210 r 770-610 4 41 y k_ 75-757-1i120 ' � � �- 75-002�405 75-01y2-4 75-71]—QOA#] s.l 4 . 7542-4315 1}1S 5-01}2 4340 1,05 CommunityHousingDevelopment Partnership Easement Vacation Case No: EV 20-03 Rive Description of Project Narrative Detailed description/scope of project. As guided in the FAST plan, Community Housing Development Corporation (CHDC) proposes to develop two three-story new construction affordable apartment buildings on the Southeast corner of Twin Lakes Road NW and 175th Ave NW in Elk River in two phases. The apartment buildings will consist of approximately 55 units each with a mix of one, two and three bedroom units and surface and underground parking spaces. Common amenities will likely include storage, roof decks, fitness / physical therapy room, library, community room, patio area, ball court, playground and community garden. Hillside Heights Apartments is an alternative development concept anticipated to serve subsidized households, families and senior active adults. CHDC has had success developing multi -generational housing and has seen positive outcomes including reduced loneliness and increased security and youth enrichment. What is the purpose of the Easement Vacation? What is being proposed? As shown in the attached site plan, CHDC will build a corner of the building in the vacated area, opening up site space and circulation for a second building, site amenities and parking. It is the key that unlocks the site. The vacation makes it possible for the development to accomplish all the planning and zoning objectives for the 1751h Avenue and Twin Lakes Road site in FAST Hillside Heights subarea including: • Density at 26 units/acre. (page 38) • Attractive, activated corner, streetscape and pedestrian connection along Twin Lakes Parkway. (pages 55-57) How is the request consistent with City of Elk River Comprehensive Plan? The vacation is necessary to develop the site that is consistent with the comprehensive plan in the following ways: Provide more housing type choices for the growing number of families in Elk River. "As the percentage of `family households' increased more substantially between 2000 and 2010 than the County and the State." (page 70) Diversify the housing types. "As of 2010, 80% perfect of the housing units in Elk River were owner occupied." and "...it is important for communities to have a mixture of both owner - occupied and renter -occupied units." (page 71) Create 55 units of housing for individuals and families at 50% of the area median income. "In 2010, 40.7% of renters paid over 30% of their household income in rent..." meaning that they are rent burdened. (page 73) Help meet the demand of "the strong need to provide affordable housing for people of all ages." (page 78) Provide stable, affordable senior housing for "the notable increase in apartment rental needs in Elk River by members of the baby boom generation." (page 78) Provide 55 units of affordable housing within a half mile of the Northstar Commuter Rail Station. "Affordable housing is important to a strong economy and a healthy community." (page 79) What has changed to warrant the Easement Vacation? CHDC entered into a purchase agreement for the site in February 2020 with the goal of redeveloping the land as guided in the FAST Plan. It needs site control of the corner in order to apply for the capital funding it needs from the state in July, 2020. CHDC is a developer and owner of affordable multifamily housing. Its mission is to sustain high - quality and affordable homes, to enhance the community over the long term, and to create and maintain healthy living. CHDC owns approximately 44 properties, comprised of more than 3,600 housing units. It takes a unique, businesslike approach to affordable housing by keeping overhead costs small and structuring its properties and operations to be financially self-sustaining over the long term. Founded in 1991, CHDC has provided stability to Minnesota residents and communities for more than 25 years as a developer and owner. How compatible is it with surrounding properties? The proposed apartment building is compatible with the office building to its northwest and with the multifamily developments to its south surrounding the Elk River Northstar Commuter Rail Station. The development's other neighbors are single family homes and open spaces. However, in addition to the compatibilities described in the second section above, the proposed site plan is compatible with the guidance in the Hillside Heights subarea in the FAST Plan including: • Stacked three story residential. (page 38) • A variety of housing options. (page 55) • Innovative stormwater practices (considering permeable paving, rain gardens, underground tanks) and energy generation (considering geothermal, solar ready). (page 59) • Open space connections and views. (pages 41, 46, 55) • Landscape buffers. (pages 41, 46) • Paths and crosswalk to the commuter rail station. (page 40) The DNR must by notified and provide comment if adjacent to water. Not applicable What are the benefits to the City? • Significantly increases the city's tax base —from $4,480 currently to an estimated $40,108. • Increases the number and diversity of jobs that offer stable employment and/or attractive wages and benefits. o The building will employ at least two on -site property management staff with salaries estimated to be around $50,000 each. o The project will create 150 temporary construction jobs at an estimated $51.00 per hour. • Rehabilitates a high profile, priority site as identified in the FAST Plan. • Furthers the housing needs identified in the city's 2018 housing study. CHDC intends to own the development indefinitely. It will be a good neighbor and ensure the development remains a community asset for decades to come. VICINITY PLAN n HILLS nYjNGgKFsA y: rae .... .... 4,. a �: 4' K Iraq �* \ t Hillside Heights Apartments ELK RIVER, MN / 05.19.2020 / 20-0009 CONCEPT PLAN 1 Hillside Heights Apartments 01 2�5, 50, 100, ELK RIVER, MN / 05.19.2020 / 20-0009 CONCEPT PLAN 2 F i � Ii LEVEL 1 PLAN I II 11 PRELIMINARY CONCEPT z D IM m M D 0 z 1%0- Rea/ ,PP a R T [K j2PR zaR a aR I jaeR a9R z aR 1 BR 2BR 2BR FE z BR 1 BR zaR zaR i �sROPE ON PHASE, PRASE2 --------------- — — — — — — — — — 11 11 ED 1:1 PROGRAM TO INCLUDE: LOBBY CLUBROOM LEASING OFFICE FITNESS & PHYSICAL THERAPY © BUILDING SERVICE STORAGE Hillside Heights Apartments 01 2�5, 50, 100, '- ELK RIVER, MN / 05.19.2020 / 20-0009 CONCEPT PLAN 3 LEVEL 2 PLAN PRELIMINARY CONCEPT --------- ------------------------- --- - ------- a 9q/ 1BR 3BR 28R j 1BR 38R 20 FLOOR I zs,000 Asa I 38R 25 000 I I I 28R 3 8R 1 BR 8R FM 2BR I I I I 2 8R I I ' I I ::zeR I I ' I I , 1 eR 28R � I I I I MnRnnrf� --- I I PHASE I'PHASE2 I PROGRAM TO INCLUDE: a STORAGE u Hillside Heights Apartments 01 2�5, 50, 100, ELK RIVER, MN / 05.19.2020 / 20-0009 CONCEPT PLAN 4 LEVEL 2 PLAN PRELIMINARY CONCEPT l I lI / � I I I I I I I I I ------------------------------- --- - -------------------- F 9J/ 1RR 3BR 2BR j i 1aR aeR j i � ------------ 1BR 16UNITS /FLOOR 25,000 NSF 2 BR j 3BR 1 3 aR 2 BR 1 BR 2BR 2BR Ffir 2 BR PROGRAM TO INCLUDE: STORAGE LIBRARY ROOF DECK u Hillside Heights Apartments 01 2�5, 50, 100, ELK RIVER, MN / 05.19.2020 / 20 0009 CONCEPT PLAN 5 CORNER PERSPECTIVE PRELIMINARY CONCEPT Hillside Heights Apartments ELK RIVER, MN / 05.19.2020 / 20-0009 PRELIMINARY CONCEPT 6 SOUTHERN APPROACH PRELIMINARY CONCEPT � Hillside Heights Apartments ELK RIVER, MN / 05.19.2020 / 20-0009 PRELIMINARY CONCEPT 7 ENTRANCE DRIVE PRELIMINARY CONCEPT Hillside Heights Apartments ELK RIVER, MN / 05.19.2020 / 20-0009 PRELIMINARY CONCEPT 8 City of Elk River City of Elk River City Council Resolution 20- A Resolution of the City Council of the City of Elk River Expressing Support for the Proposed Use of Tax Increment Financing for a Project By Community Housing Development Corporation WHEREAS, the Housing and Redevelopment Authority in and for the City of Elk River (the "HRA") and the City of Elk River, Minnesota (the "City') have received a request to assist an entity to be formed by Community Housing Development Corporation (the "Developer") with certain costs of construction of an approximately 55 unit multifamily rental housing development in the City of Elk River (the "Project"); and WHEREAS, the City engaged Maxfield Research and Consulting, LLC on February 15, 2018, to conduct a comprehensive housing market study update to our original study completed in December of 2015. The study projects housing demand from 2017-2025 and provides recommendations on the amount and type of housing that could be built in the City to satisfy demand from current and future residents through 2025. The study showed a demand for affordable rental housing in the City; and WHEREAS, a need has been identified for additional affordable housing within the City and that the proposed housing fills a need in the local housing market that currently has an unmet need; and WHEREAS, the success of the tax credit application is predicated on local support of the proposal; and WHEREAS, the Developer has requested that the City indicate its support of the use of tax increment for the Project; and WHEREAS, the Board of Commissioners of the HRA and the Joint Finance Committee have reviewed the proposal and recommend that the City Council support the use of tax increment for the Project. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Elk River, Minnesota, as follows: The City Council supports the Project and the use of tax increment financing for the Project; provided, however, that authorization of tax increment financing for the Project is solely within the discretion of the City Council following all legally required proceedings pursuant to Minnesota Statues 469.174 through 469.1794, as amended, including but not limited to (i) a public hearing and approval by the City Council of the City; (ii) determining that tax increment financing assistance is necessary for the Project; (iii) verification of development financing need that substantiates that "but for" the use of tax increment financing the Project would be unable to proceed based on an analysis performed by the City's municipal advisor; and (iv) the negotiation of a development agreement addressing (among other things) the conditions under which the City or the HRA will provide financial assistance. 2. The City Council supports the Developer's application to MHFA for tax credits for the Project. The City Council authorizes the Mayor to provide a supplemental letter regarding the use of tax increments if needed in support of the Developer's application for low income housing tax credits. Passed and adopted this 6Ih day of July 2020. John J. Dietz, Mayor ATTEST: Tina Allard, City Clerk i City of • -- 1ver July 6, 2020 Jennifer Ho, Commissioner Minnesota Housing Finance Agency 400 Wabasha St N UNIT 400, St Paul, MN 55102 Re: Housing Tax Credit Threshold Letter — Hillside Heights Apartments Dear Commissioner Ho: The City of Elk River City Council, at its meeting on July 6, 2020, reviewed and preliminarily endorsed Hillside Heights Apartments housing development proposal that proposes the new construction of approximately 55 affordable rental units in the City of Elk River near its Northstar Commuter Rail Station. This endorsement is based upon the findings that the project will meet locally identified housing needs and that the proposed housing is in short supply in the local housing market. This need is evidenced by the following sources: 1. A comprehensive housing market study update completed by Maxfield Research & Consulting for the City of Elk River in February 2018. The study projects housing demand from 2017 through 2025 and provides recommendations on the amount and type of housing that could be built in Elk River. Below is how this study aligns with the development of Hillside Heights Apartments: a. Hillside Heights Apartments is an alternative development concept containing 55 total units anticipated to serve 12 subsidized households, 27 affordable families and 16 affordable senior active adults. b. The plan shows strong demand for rental housing (55 units) c. The following table summarizes how the development meets the identified needs: Hillside Heights Remaining Demand Apartments Demand Study Reference Page 44 and Table Subsidized 34 12 22 CR-2 Page 44 and Table Affordable 35* 27 8 CR-2 Affordable Senior Active Page 46 and Table Adult 40 16 24 CR-2 *Note: 60-unit Elk Midge Lodge netted out 13065 Orono Parkway Elk River, MN 55330 Phone: 763.635.1000 www.ElkRiverMN.gov d. The 0% vacancy rates for affordable rental housing and senior housing at all levels indicate a pent-up demand for this type of housing. e. Additional demand for Hillside Heights Apartments will also likely come from outside Elk River in the larger submarket area. 2. The 171" Avenue Focused Area Study ("FAST"). The council approved plan outlines short - and long-term development and transportation goals for the 175th Avenue and Twin Lakes Road intersection —the development sitein the FAST Hillside Heights subarea including: a. Density at 26 units/acre. b. A variety of housing options. c. Attractive streetscape and pedestrian connection along Twin Lakes Road. d. Paths and crosswalk to the commuter rail station. The City's current Comprehensive Plan supports the development of Hillside Heights Apartments in the following ways: a. Provides more housing type choices for the growing number of families in Elk River. b. Diversifies the housing types. c. Creates 55 units of housing for individuals and families at 50% of the area median income. d. Helps meet the demand of "the strong need to provide affordable housing for people of all ages." e. Provides stable, affordable senior housing for "the notable increase in apartment rental needs in Elk River by members of the baby boom generation." f. Provides approximately 55 units of housing within a half mile of the Northstar commuter rail station. 4. The market study completed by Market Analyst Professionals in April 2020 concludes sufficient demand for the development, and projects it will be well positioned in the local area. As stated above, The City of Elk River has confirmed that Hillside Heights Apartments contributes to the goals of development in the FAST Plan. The plan identifies specific geographic areas targeted for a variety of housing options including affordable housing and growth in Elk River, and the Hillside Heights Apartments site is in the Hillside Heights district as a priority target area. As part of its endorsement, the City also proposes local financial assistance using tax increment financing. The City of Elk River City Council preliminarily supports the allocation of $780,000 plus interest in tax increment financing for a term of up to 15 years for the Hillside Heights Apartments proposal. This assistance will be in the form of pay-as-you-go tax increment financing. The City Council endorsement is evidenced by the City Council's approval of Resolution 20-xx a copy of which is included with this letter. Sincerely, Mayor John Dietz City of Elk River City of Elk River City Council Resolution 20- A Resolution of the City Council of the City of Elk River Supporting the Tax Credit Application for Proposed Community Housing Development Corporation Multiple Family Housing Project and Recognizing that the Project Would Help Meet Identified Housing Needs WHEREAS, the City of Elk River is a municipal corporation and political subdivision duly organized and existing under the constitution and laws of the State of Minnesota; and WHEREAS, the City of Elk River completed a housing study in 2018 and affordable housing is identified as a community need; and WHEREAS, Community Housing Development Corporation has submitted a conceptual review application to construct 55 units of multiple -family rental housing (the "Pro)ect") at the southeast corner of Twin Lakes Road and 1751h Ave NW (PID 75-002-4320); and WHEREAS, Community Housing Development Corporation will be submitting a Low Income Housing Tax Credit application to the Minnesota Housing Finance Agency in July of 2020 for the Project; and WHEREAS, the Project would help meet the locally identified housing needs of the City of Elk River in that affordable housing is in short supply in the local housing market; and WHEREAS, adoption of this resolution does not constitute land use approval of the Project in that Community Housing Development Corporation must apply for land use approvals for the Project which must be processed as required by state law and city ordinance before the City Council will have the information necessary to decide whether to approve the Project. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Elk River, Minnesota, as follows: The Project will meet an identified need to provide additional affordable housing needs in the community. Passed and adopted this 6th day of July 2020. John J. Dietz, Mayor ATTEST: Tina Allard, City Clerk City of • -- 1ver July 6, 2020 Jennifer Ho, Commissioner Minnesota Housing Finance Agency 400 Wabasha St N UNIT 400, St Paul, MN 55102 Re: Housing Tax Credit Threshold Letter — Hillside Heights Apartments Dear Commissioner Ho: The City of Elk River City Council, at its meeting on July 6, 2020, reviewed and preliminarily endorsed Hillside Heights Apartments housing development proposal that proposes the new construction of approximately 55 affordable rental units in the City of Elk River near its Northstar Commuter Rail Station. This endorsement is based upon the findings that the project will meet locally identified housing needs and that the proposed housing is in short supply in the local housing market. This need is evidenced by the following sources: 1. A comprehensive housing market study update completed by Maxfield Research & Consulting for the City of Elk River in February 2018. The study projects housing demand from 2017 through 2025 and provides recommendations on the amount and type of housing that could be built in Elk River. Below is how this study aligns with the development of Hillside Heights Apartments: a. Hillside Heights Apartments is an alternative development concept containing 55 total units anticipated to serve 12 subsidized households, 27 affordable families and 16 affordable senior active adults. b. The plan shows strong demand for rental housing (55 units) c. The following table summarizes how the development meets the identified needs: Hillside Heights Remaining Demand Apartments Demand Study Reference Page 44 and Table Subsidized 34 12 22 CR-2 Page 44 and Table Affordable 35* 27 8 CR-2 Affordable Senior Active Page 46 and Table Adult 40 16 24 CR-2 *Note: 60-unit Elk Midge Lodge netted out 13065 Orono Parkway Elk River, MN 55330 Phone: 763.635.1000 www.ElkRiverMN.gov d. The 0% vacancy rates for affordable rental housing and senior housing at all levels indicate a pent-up demand for this type of housing. e. Additional demand for Hillside Heights Apartments will also likely come from outside Elk River in the larger submarket area. 2. The 171" Avenue Focused Area Study ("FAST"). The council approved plan outlines short - and long-term development and transportation goals for the 175th Avenue and Twin Lakes Road intersection —the development sitein the FAST Hillside Heights subarea including: a. Density at 26 units/acre. b. A variety of housing options. c. Attractive streetscape and pedestrian connection along Twin Lakes Road. d. Paths and crosswalk to the commuter rail station. The City's current Comprehensive Plan supports the development of Hillside Heights Apartments in the following ways: a. Provides more housing type choices for the growing number of families in Elk River. b. Diversifies the housing types. c. Creates 55 units of housing for individuals and families at 50% of the area median income. d. Helps meet the demand of "the strong need to provide affordable housing for people of all ages." e. Provides stable, affordable senior housing for "the notable increase in apartment rental needs in Elk River by members of the baby boom generation." f. Provides approximately 55 units of housing within a half mile of the Northstar commuter rail station. 4. The market study completed by Market Analyst Professionals in April 2020 concludes sufficient demand for the development, and projects it will be well positioned in the local area. As stated above, The City of Elk River has confirmed that Hillside Heights Apartments contributes to the goals of development in the FAST Plan. The plan identifies specific geographic areas targeted for a variety of housing options including affordable housing and growth in Elk River, and the Hillside Heights Apartments site is in the Hillside Heights district as a priority target area. The City Council endorsement is evidenced by the City Council's approval of Resolution 20-xx a copy of which is included with this letter. Sincerely, Mayor John Dietz Concept Plan: CHDC - Hillside Heights 75-757 Q170 III; , TS�757 206 ; f i4 46 75-002-0206 . 5r-0115 _ a 75-757-42 0 t , i 5 —002-' ,. i 4� 75-757—..0 — `�'►75-002405 75-740-0040 Ar a . .• ,fir• TL -hs f . � r '�, � ' � � -� -ram ,.rr',��`�, �'�.iF� l ����. �... � �e`.t_ r-� t•`q .r �.. z hhh Yi•L i6 I - �iY1 i R. 4�r3 _ I '�" � 1k • "a r 14 Community Housing Development Partnership Elks. Easement Vacation Case No: Ell 20-03 ver Background ■ CHDC requesting Preliminary support for proposed 55-unit apartment project ■ Letter and resolution of support for state funding app. ■ Supported by Comprehensive Plan/FAST ■ Conforms with Zoning — FAST (D) Hillside Heights ■ Permitted use — land use applications would not be reviewed by cc during a future meeting. ■ Also seeking preliminary support for a 15-year $780,000 TIF application ■ HRA reviewed earlier PHASE 1 , PHASE 2 --------------- �I lot4 SITE PLAN PRELIMINARY CONCEPT so!—� qr i c R Hillside Heights Apartments ELK RIVER, MN. 11 05.19.2020 / 20-0009 CORNER PERSPECTIVE PRELIMINARY CONCEPT ■ ■ ,er jylJ�[(i Hillside Heights Apartments `4- /';` ELK RIVER, MN 105, 192020 ! 20-0009 PRELIMINARY GQNI 6 SOUTHERN APPROACH PRELIM I NARY CONCEPT URBANWORKSHillside Heights Apartments �a�e� ,l_��; ELK RIVER,MN 1 05.192020 i 20-0009 PRELIMINARY CONCEPT 7 IPENTRANCE DRIVE RELIMINARY CONCEPT Z Hillside Heights Apartments ELK RIVER, MN / 05. 19.2020 / 20-0009 PRELIMINARY CONCEPT Action Requested ■ Review the conceptual development and TIF request. Provide informal, non -binding, feedback for the applicant. ■ If the Council supports the project and/or TIF ■ Adopt, by motion, a resolution supporting the project with or without TIF to accompany the applicant's state tax credit application. PHASE 1 , PHASE 2 --------------- �I lot4 SITE PLAN PRELIMINARY CONCEPT so!—� qr i c R Hillside Heights Apartments ELK RIVER, MN. 11 05.19.2020 / 20-0009