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8.2 SR 06-20-2023�, Elk s �- River Request for Action To Item Number Ma Tor and CinT Council 8.2 Agenda Section Meeting Date Prepared by General Business une 20, 2023 Brent O'Neil, Economic Develo ment Director Item Description Reviewed by Duffy Development Compan�T Request for Support of Cal Pormer, Ci r Administrator Coachman II State Funding Application Reviewed by Action Requested Approve, byT motion, a letter of support for Duffy Development CompanyT state funding application for the proposed Coachman II housing project. Background/Discussion DuffyT Development (DuffyT) is proposing an affordable housing project on propertyT it owns near the North Star Station. This propertyr is adjacent to Coachman Ridge ApaYtments, also owned by Duffyr as is The Depot at Elk River Starion nearby. The proposed project is for appro�matelyT 50 units targeting residents aged 55 and older with affordable rents for incomes at 30% to 50% of area median income. This correlates to rent range from $600 to $1,250 depending on the size of the unit The total project is expected to cost $15 to $18 million. To support the affordabilityT component, DuffyT `vill applyT for funding through the iVlinnesota Housing Finance AgencyT, which includes low-income housing tax credits. DuffyT has requested support from the cityT to ensure their strongest application is submitted. The application is due in mid JulyT. State a`vards are tyTpicallyT determined annually in DecembeY, with projects commencing 6-12 months afteY. There are t�vo primaryT `vayTs the cityT can support the application. First, is an expression of support for the application, which is included in the attached draft letter. Second, is an expression of local financial commitment or financial participation in the project, which results in additional points within the application scoring rubric. The project has been presented to the Housing and Redevelopment Authorit�r (HRr�) in `vork session at its MayT and June meetings. The HRA has also reviewed the cityT's 2018 housing stud�T by Maxfield as part of this request. The HRr� expressed support for the project and application based on the need for 55+ affordable housing as identified in the housing studyT. The HRr� also provided feedback on potential local financial participation, suggesting that an incentive could be considered based on the total need and impact, but that additional review and analysis would be necessary prior to any foYmal consideYation. The HRA also expYessed a benefit of the project is that substantial YesouYces to suppoYt this ty�pe of project in Elk River aYe from exteYnal souYces. Additional requests to support the project would require working through established city processes and protocols, including, for example in the case of a tax incentive, a formal application and thorough review. The parcel in question is guided towards multi-familyT residential. As it is presentlyT zoned FAST, it would require a rezoning to a multi-familyT housing district. The Elk River Vision A 2a�elcolning co�nlnunity 2a�ith T evolutiona� y and spizzted T esou� cefulness, exceptional se�vice, and coln�nunity engagelnent that encou�ages and ins�iz•es pTo�pe�zty. rowEREo ar �I'1 ���� Update�l• January 2023 Due to the identified need for this tyTpe of housing, the Comprehensive Plan supporting multifamil�r housing on this parcel, and the HRr�'s support of the project, it is recommended the Council provide a letter of support for the Duff�r project state housing application. Financial Impact N/A Mission/Policy/Goal Elk River Mission Attachments ■ Letter from Duff�T to HRA ■ PreliminaryT Site LayTout ■ Draft LetteY of SuppoYt ■ Maxfield Housing StudyT Summary N:\Public Bodies\�lgenda Packets\06-20-2023\Final\x8.2 sL DuifS� Coachman II letteL oi supportdocx DUFFY DEVELOFMENT COMPANY REAL FSTATE DE`✓1�LOPN'IENT AI�ID CONS'�'R[TC'TIOI>I �VIANA�GEIVII�,NT April 25, 2023 Mr Brent O'Neil Economic Development Director City of Elk River 13065 Orono Parkway Elk River, MN 55330 Re: Senior Housing Proposal Dear M�Neil, `��-e,v--� Duffy Development Company is a developer specializing in affordable and workforce housing. The City has been a strong partner in our past developments, The Depot and Coachman Ridge, near the Northstar Rail parking lot. Duffy Development has secured another parcel in the same area and would like to add additional housing for a very under�erved population: Lower-income, independent senior, members of the community. Until recently, creating new construction affordable housing for senior citizens has been nearly impossible in Minnesota. The focus of the state housing finance agency has been on housing for working families, much like what we have done with The Depot and Coachman Ridge. In the past couple of years, Minnesota has provided small amounts of funding for senior housing. The funding could only support 2-3 developments in the entire state. However, it is expected that the state legislature will approve a substantially larger funding source for the next biennium, most of which will be from a source that is one-time money available only due to the large current state budget surplus. I give you this background because we are in a uniquely strong position to create a new asset here in Elk River. Duffy Development is proposing a 45-55 unit independent senior housing development for ages 55+. All units will be affordable to incomes at or below 60% of the area median income with rents that will be at 30% and 50% of area median income. To put this in perspective, rents on a one-bedroom home will range from $600 -$1,045 and two- bedroom homes will be $725 -$1,250. The primary source of financing for developments such as these, comes from Minnesota Housing, the state's housing finance agency. To access the financing, Minnesota Housing uses an RFP application one time per year. The applications are substantial, and to secure the funding, it is a very competitive process. It is typical that for every development funded through Minnesota Housing, four or five other developments are rejected. 12708 Wayzata Blvd. ° Suite 400 ° Minneapolis, MN 55305 PH. (952) 544-6769 ° FAX (952) 544-6091 Therefore, we come before the City to ask for help in submitting the strongest possible application, and give this project the best chance of securing a portion of these state resources for the residents of Elk River. The application scoring is made up of 23 different scoring criteria. Much of the scoring is based on location and population served. There are two specific scoring items based on the degree of support an application receives from other funding partners, such as cities, counties or philanthropic organizations. It is within these scoring criteria where the City of Elk River could be most helpful to create a competitive funding application. We are happy to discuss this in further detail before the Monday meeting but examples of support we have received from other cities include: Tax Increment Financing (TIF), direct grants/loans, waivers of fees (Park Dedication, SAC/WAC, Building Permit, etc.) or combinations of any of these together. Our deadline for an application submittal to Minnesota Housing is mid-July. Any City action would need to be completed by the end of June. We would like to work with the City to secure support of this project as soon as possible to make sure we have all needed approvals by the end of June. We look forward to a robust discussion at your upcoming meeting on May 1St Thank you for considering this request, and thank you for your past support of The Depot and Coachman Ridge. Sincerely, � ' Jeffrey J. Von Feldt ,.�h '�__ � / </ � � `\ \ / / \ / / � `�\ \ / / � � � � ` \ \ \ � � � \ � m TWIN LAKES ROAD NW \ \ \ \ \ \ \ � . \ ,. � \ � � _, � � ��_ , � , � 1� \ �� _ � \ \ ^.:F_�,d� � \ �� \ � \ . �- _ • � � '�_ __ ' — �A : 9 SIDRr � � � � � sQ . Sp �'� '�, -. �_� 4N� �N�T 4P �., ' � � . . . . � \ 4Rp��,Q / Aa.. i , . ._ \\ � � � . � \ � ......... .....�,, " . � ,�" � 1 � i I � f jil � � � � � � � � � � _� I — — — — — — — J �\SITE PLAN SCALE: 1:20 � ( � __� , r. ;' I � _ �.T " � � ;,._, I I l/ \ ' �� City E June 20, 2023 Mr. John DuffyT Mr. Jeff Von Feldt ❑X Sent via email to Duffy Development Company, Inc. jduffyr@duffydevelopmentcom 12708 Wayrzata Blvd., Suite 400 jvonfeldt@duffyrdevelopmentcom Minnetonka, MN 55305 RE: Proposed Elk River Affordable Senior Apartments (Coachman Ridge II) Dear Mr. Duffy and Mr. Von Feldt At its most recent meeting, the Elk River Cit�T Council reviewed the proposed Coachman Ridge II affordable senior housing development proposal which proposes a 45-55-unit, ne��, multifamil�T construction project in the CityT of Elk River. We understand that yTou `vill be submitting a funding application through the Minnesota Housing Finance AgencyT (MHFA) Consolidated RFP process in JulyT of 2023, and that the project is proposed to target individuals 55+ and with incomes at 30% to 50% of aYea median income. The need for this tyTpe of housing in Elk River is evidenced byT the Comprehensive Housing Market StudyT Updates completed for the cit�T byT Maxfield Research on FebruaryT 15, 2018, and PreliminaryT AnalyTsis for Elk River Apartments completed for Duffy Development by Market Analyst Professionals on Mayr 20, 2023. The proposed parcel for the propertyT is adjacent to other multifamily propertyT and the North Star light rail station. The cityT's Comprehensive Plan guides the propertyT for multifamily use and would be subject to standard local entitlement processes if approved for state funding. The City- Council moved to support �rour application at its June 20, 2023, meeting. On behalf of the Council, please accept this letter of support for yTour application to the MHFA. Sincerel�T, John J. Dietz May or 13065 Orono Parkway Elk River, MN 55330 763.635.1000 E1kRiverMN.gov P 0 W E R E D e r ������� April 3, 2023 Elk River HRA Meeting v2 Comparison of Units Added since 2018 Maxfield Housin� Study The City of Elk River received a completed housing needs assessment in early 2018. Since that time, several housing units have been constructed towards satisfying the identified needs for additional housing. The study recommended a minimum of 690 to 785 new housing units be developed in Elk River through 2025. Staff has evaluated the number of units constructed since 2018 through March 31, 2023. A breakdown of those units by type along with the recommended breakdown by type is listed below. Rental (multi-family) housin�: 235 to 275 units recommended (165 market rate and 90 affordable at mid-point). 108 units have been constructed (40 at market and 68 affordable), and another 232 have been permitted and are underway (180 market and 52 affordable). Senior housin�: 115 to 140 units recommended. 35 constructed approximately (includes for-sale 55+ community). Sin�le family housin�: 360 units recommended. 431 units constructed/permitted. Notes: Sherburne Co. also conducted a study through Maxfield, completed in 2020, with a horizon through 2030. For Elk River, it anticipated rental demand of new 480 units through 2030. Estimated permitted and completed units in Elk River since this study is approximately 290. The Jackson Hills I project occurred between the two studies.