Loading...
03-26-2024 (Strategic Planning Session - Housing II)STRATEGIC PLANNING SESSION — HOUSING II MARCH 26, 2024 @ 3:45 P.M. MINUTES Members present: Mayor Gary Forcier called the session to order. Members present were Tim Burley, Pat May, Dave Sebesta and Chad Czmowski. Others present were Matt Jaunich, City Administrator and other city directors and staff 1) Review of Last Strategic Planning Session (Matt —10 minutes) Matt Jaunich, City Administrator, reminded the group of what was reviewed at the last strategic planning session which included the state of housing in Hutchinson, infrastructure costs for housing, financing housing/debt impact and the tax value of housing, vision for housing in the years to come, current challenges/barriers to housing, questions/conversations/developing ideas and/or directions and reviewing the next steps/action items/developing a plan. Mr. Janich also reviewed results/feedback from the community survey that was completed last year. 71% rated the overall design or layout of residential areas as excellent or good; 80% viewed their neighborhood as a good to excellent place to live; 48% rated the variety of housing options as good to excellent; 28% rated the availability of affordable quality housing as good to excellent; 60% rated the overall quality of new development as good to excellent; well -planned residential growth had a rating of 68%; and well -designed neighborhoods had rating of 68%. Mayor Forcier noted that citizens have expressed to him that they would like more cooperative/condominium-style housing such as Greencastle or Prairie Senior Cottages. He also commented that The Oaks & Pines facility is completely full as they learned at the last City Council meeting. Council Member May asked if any developers have come forward and requested assistance. Mr. Jaunich noted that the Highfield Apartments received TIF District funds for their multi -family apartment complex. Judy Flemming, HRA Executive Director, spoke about upfront loans provided by Minnesota Housing to developers. The program funding that was available for the Rolling Meadows development is no longer available. Funds were also made available for the Dale/South Grade apartment rehabilitation. Council Member Burley commented that questions he received surrounded around what is the land availability for development. Dan Jochum, Planning/Zoning/Building Director, noted that there is plenty of land availability within city limits however costs and infrastructure are the biggest challenges. Council Member Czmowski noted that the only comment he received was from a local developer that requested a residential TIF district. 2) City "Tools" that Can be Used to Assist Housing in Hutchinson (Andy — 30 minutes) Andy Reid, Finance Director, reviewed the funding tools available for housing and new development. These include developer equity and private financing; state funding; city fee reductions; housing trust fund; low or no cost for city land; City or HRA reserve funds; Tax Increment Financing; tab abatement; municipal bonded debt; and combination of any of these options. Mr. Reid reviewed further tax increment financing, tab abatement and municipal bonded debt options. Mr. Reid explained that when the City provides assistance through a public subsidy, such as TIF, the following criteria must be met: create or retain jobs, redevelop blighted areas, remediate polluted sites, construct affordable housing, and increase the tax base. There are risks to the City for providing assistance. The assistance should fill a financing gap for needed projects and encourages development that would not normally occur without assistance and a financial consultant needs to review and advise on the need for public assistance. Mr. Reid explained why affordable projects need assistance which is mainly to fill a funding gap. Mr. Reid noted that the most effective tools to address funding gaps for multi- family and single-family developments include TIF, tax abatement, municipal bonds, low or no -cost for City land and state funding. The other tools reviewed could be used in combination with these noted but wouldn't provide a significant level of funds alone. Mr. Reid explained in more detail the Tax Increment Financing tool. TIF allows for the increase in property tax revenues from a development project to be used to pay for qualifying costs. Most notable of TIF is that it is a public subsidy and the needs must be proven; must have a process outlining that the project would not get done without assistance; it is only generated after a development adds value to a property; County/City/School taxes are all captured on increased value; it is not an exemption from paying taxes; affordability is a requirement; and the County administers it and distributes revenues to the City. Mr. Reid ran through scenarios of using TIF for multi- family complexes and single -owner housing developments. City staff believes TIF is better suited for multi -family housing developments. Mr. Reid explained in more detail tax abatement. Tax abatement allows all or a portion of property tax revenues from a development project to be used to pay for qualifying costs. Most notable of tax abatement is that it is a public subsidy and the need must be proven; must have a process outlining that the project would not get done without assistance; abatement is generated after a development adds value to a property; county and school need to agree to abatement in order to capture their taxes along with City's taxes; abatement is not an exemption from paying taxes; affordability component is not a requirement with abatement; and the City administers abatement unlike TIF. The City tax levy would need to be increased for the subsidy paid each year. Mr. Reid ran through scenarios of using tax abatement for multi -family complexes and single- family developments. TIF worked best in the scenario compared to tax abatement for single-family development mainly because of providing a higher revenue stream. Mr. Reid then reviewed using general obligation special assessment bonds as a tool in financing single family developments. The City would assess each property for a share of the costs; the debt would need to be structured with timing assumptions for homes being built; and the City would assume significant risks of tax levy increases to fund debt service. Mr. Reid provided some scenarios of three-year deferred assessments and phased -in deferred assessments using G.O. bonds for a single-family development. Mr. Reid reviewed lesser risks and higher risks with the reviewed public assistance options. Lesser risks include state funding (difficult process to obtain), City fee reductions and low/no cost for City land, City or HRA reserve funds and housing trust fund, TIF with developer and tax abatement. Higher risks include municipal bonds, TIF bonds, tax abatement and City loans to developers. Mr. Reid noted that the City annually issues debt for roadway projects. Other current debt considerations are a needed fire ladder truck and other heavy equipment. This needs to be kept in mind. In summary, staff believes that TIF is the most effective tool for multi -family development. Municipal bonds and TIF bonds are the most effective tools for single family development. The City needs to be aware of other City debt needs when determining any potential contribution towards private development. Council Member Czmowski expressed that he feels using TIF for multi -family developments seems to be an obvious tool to use. He expressed that municipal bonding for infrastructure costs is the best tool for single-family development. Discussion was held how manufactured homes or tiny homes might fit into using the tools reviewed. 3) What is Being Done in Other Communities to Address Affordable Housing — "Ideas" (Dan — 10 minutes) Dan Jochum, Planning/Zoning/Building Director, provided an overview of developments that are occurring in other communities. These includes smaller lot sizes (more homes, smaller homes, smaller side yards), developments with private roads/alleys with garages on the back side, attached/condo housing (garage in the back, tuck under), and tiny homes. Council Member May noted that he would like to see different concepts put forth by the developers, such as multi -family condos/rowhomes/etc. 4) Questions/Conversations/Developing Ideas and/or Directions (Council Members and Attendees — 30 minutes) Council Member Sebesta asked if the zoning code would need to be revised at all to accommodate some different housing concepts. Mr. Jochum noted that the current zoning code is flexible. Staff needs to hear from developers on types of developments that they would like to deliver. Creative multi -family developments are what is desired. Developments with alleys are good concepts as well. 5) Next Steps/Action Items/Developing a Plan (10 minutes) Motion by May, second by Burley, to adjourn at 5:25 p.m.