06-26-2018 CCM Workshop (Joint Meeting with HRA Board)HUTCHINSON CITY COUNCIL
SPECIAL WORKSHOP
MEETING MINUTES
TUESDAY, JUNE 26, 2018, AT 4:00 PM
CITY CENTER — COUNCIL CHAMBERS
Call to Order
Mayor Forcier called the meeting to order at 4:00 p.m. Members present were Chad Czmowski,
Mary Christensen and John Lofdahl. Member absent was Steve Cook. Others present were Matt
Jaunich, City Administrator, Kent Exner, City Engineer and Marc Sebora, City Attorney.
DISCUSSION/REVIEW ITEMS
1. Joint Meeting with Hutchinson Housing and Redevelopment Authority
Introductions were made of HRA Board Members and City Council Members.
Jean Ward, HRA Director, presented before the group. Ms. Ward explained that the HRA
conducted a workforce housing study and noted that today the goals and results of that survey
will be discussed. Other topics of discussion will include workforce housing projections of
owner -occupied homes and rental homes; target area of owner occupied housing; builders cost
estimates for starter homes in southeast Hutchinson: split entry and slab -on -grade patio homes;
affordability gap definition; workforce homebuyer affordability: split entry and slab -on -grade
patio homes; Taskforce meeting information and rental housing. Ms. Ward explained that HRA
staff conducted an employer survey. The goals of the survey were to identify the number of
permanent job openings in the next three years; identify the wage rates of the job openings in the
next three years; determine housing affordability based on wage rates; determine employer
recommendations for additional workforce rental and homeownership; and project the need for
additional workforce housing in the next three years based on the employer survey data.
Judy Flemming of the HRA presented before the group. Ms. Flemming stated that Uponor
informed the HRA that they feel they will be filling job openings with area workers and there will
be no new housing needs. 3M indicated that only rental housing will be needed. 34 surveys were
distributed to Hutchinson employers with 23 responding and 17 of them completing the surveys.
Of the survey information received the total number of employees was 2904 with an average of
68% living in Hutchinson. When asked if employees have a problem finding housing in
Hutchinson 9 employers responded no and 6 responded yes with two not responding. Barriers to
problems finding housing was a split between cost and availability. Of those employees
commuting, the majority estimate their commute time between 16-30 minutes. Survey results
indicated that the majority of the type of housing most needed by employees were single family
homes to purchase and single family homes to rent. Survey results also indicated that in the next
three years, there will be 363 permanent position job openings and 466 temporary position job
openings. Based on the information from the surveys, a projection of 310 permanent job
openings with 68% living in Hutchinson means 210 additional rental units needed over the next
three years and 36 additional owner occupied units over the next three years. Owner occupied
housing data shows low for sale inventory of listings. There is an availability of over 200
existing lots with most in the southeast area to build workforce housing. The builders' cost
estimates for starter homes in southeast Hutchinson include a two bedroom/one bathroom with
expansion space split entry with a building cost of $215,300. A homebuyer with a household
income of $58,000 and above can afford with affordability gas of $35,000. The builders' cost
estimates for starter homes in southeast Hutchinson for a three bedroom/two bathroom slab on
grade patio home plan has a building cost of 5194,000. A homebuyer with a household income
of $54,000 and above can afford with affordability gap of $35,000. Ms. Ward explained that
affordability gap means the purchase price of a starter home minus the amount of the first
mortgage. Ms. Ward also explained the various incomes that can afford a newly construct split
entry starter home as well as the incomes that can afford a newly constructed slab -on -grade patio
starter home.
The results of the survey were discussed with the Workforce Housing Task Force. The Task
Force considered various points such as: Hutchinson has adequate lots — as of 12/31/17 there
were 216 lots available — many in the southeast area of Hutchinson; Hutchinson has a low
inventory of listings for sale housing; there is a need for new construction to expand our owner
occupied housing stock; the impact RFP from MHFA for affordability gap released in May 2018
was due June 12, 2018; the competitive impact application requires reasonable amount of impact
value gap request — estimated at around $25,000 per house and also requires a local leverage or
match (HRA estimated contribution at $10,000 per house); HRA survey of employers projects
363 permanent new employees in the next three years; owners of newly constructed starter homes
will need a minimum household income of around $58,000 per year or household wage rate of
$27.88 per hour with affordability gap available, without affordability gap a household income of
$66,500 is needed to afford a house costing $215,300; current starter home construction costs are
estimated at $194,000-$215,300; three interested builders have stated they could build a total of
five starter homes within the next year. The Taskforce unanimously supported the application to
the MHFA Impact Fund for affordability gap for five houses. Other strategies considered by the
Task Force to pursue for workforce owner occupied housing was 1.) Employer Assistance? The
Taskforce didn't think it was likely to get any assistance from employers; 2.) Ideas to reduce lot
costs? Lot costs will go up once all the vacant lots are gone and new developments are needed.
May have to consider small lots and higher densities to help lower costs in the future. Other
suggestions, could the SAC/WAC fees be reduced as well as consider the Land Trust Model,
although several members of the task force had concerns regarding the Land Trust Model; 3.)
Ideas to reduce building costs? Modular homes may be more affordable.
The Housing Task Force will meet later in the summer if needed to discuss rental housing.
Highfield Apartments has a Phase II plan for Outlot A consisting of 70 units (two 35 unit three-
story buildings) and a construction start date of September 2018 for the first building. Century
Court Apartments has a plan for 84 units (seven 12 unit buildings) with a construction start date
of three buildings in 2018.
Morgan Baum asked about building duplexes and then earning income from the neighboring unit.
Staff noted that lot sizes would need to be researched to see what is feasible. It was noted
however, that affordability gap funding is only available for owner occupied homes and not
rentals.
General discussion was held regarding projected job openings at local employers.
Ms. Ward explained that she will be researching how many units will be coming online this year
and next year and see what potential sites would be available for multi -family rental units.
Jaunich — are there other things that should be considered when establishing affordable housing?
Lofdahl spoke about reducing SACIWAC fees and how that effects other taxpayers. TIF Funds
are a good way to keep housing affordable.
Morgan Baum asked that the survey be distributed to employers outside of city limits in the future
or at least to those in the 55350 zip code.
Ms. Ward spoke of the importance of keeping the older rental units in good condition.
Motion by Christensen, second by Lofdahl, to adjourn at 5:15 p.m. Motion carried unanimously.
ATTEST:
Gary T. Forcier
Mayor
Matthew Jaunich
City Administrator