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Affordable Housing Discussion; Elverum Planning & Economic Development MEMORANDUM TO: Honorable Mayor and Hopkins City Council Members FROM: Kersten Elverum, Director of Planning & Development DATE: July 14, 2017 SUBJECT: Affordable Housing Discussion Representatives of ResourceWest, ICA, BRCC and Community Action Partnership – Hennepin County will be at the July 18, 2017, Council work session to share their perspective on affordable housing in Hopkins. City staff will complement the presentation. The intent of the discussion is to lay the ground for future consideration of policies or programs that the City of Hopkins could enact to preserve existing and support future affordable housing. Attached is a fact sheet on Hopkins housing statistics, as well as a matrix of policies and programs currently being explored or enacted in metro communities. Additional information will be shared at the work session. attachment The Metropolitan Council has defined affordable housing as housing that does not cost more than 30% of the income of a household making 80% AMI or less, or $68,000 per year. In 2017, the area median income (AMI) for a household of four is $90,400. PERCENTAGE OF COST BURDENED HOUSEHOLDS VACANY RATES IN THE TWIN CITIES METRO, 2005-2015 On average, Minnesota families must earn $17.20 an hour and work 40 hours per week to afford a two-bedroom. What does housing look like in your community? City of Hopkins Housing Fact Sheet Source: MNcompass.org WHAT IS AFFORDABLE HOUSING? Vacancy rates continue to decline across the Metro Area, especially for affordable housing. As vacancy rates decrease, it means people who suddenly find themselves in need of an affordable place to live cannot find or access homes. Source: metrocouncil.org HOUSING TENURE Source: MNcompass.org 2017 HOME OWNERSHIP TYPES OF AFFORDABLE HOUSING Naturally Occuring Legally Binding Existing housing with rents that, due to the age and quality of the housing, naturally fall within the boundaries of affordability without government subsidy. *75% of Hopkins housing is naturally occurring affordable housing* Housing that is legally required to be maintained at an affordable rent for a period of time. There may be additional requirements that tenants living in the housing have incomes that qualify as affordable, though that is not always the case. There are a wide range of programs and policies that help create legally binding affordable housing. Each program has its own rules and regulations that are tied to it. *5% or 431 of Hopkins housing units are publicly subsidized* Edina Minnetonka St. Louis Park Hopkins 13% 18% 28% 49% Percent of Housing Units that are Naturally Occurring Affordable Rentals HOUSING BY COMMUNITY AFFORDABLE RENTS BASED ON % OF AREA MEDIAN INCOME Source: metrocouncil.org Household Income Level Affordable Home Price 80% AMI ($68,000)$236,000 60% AMI ($54,240)$185,000 50% AMI ($45,200)$151,500 30% AMI ($27,100)$85,000 Based on a number of financing assumptions... Source: metrocouncil.org # of Bedrooms 30% AMI ($27,120) 50% AMI ($45,200) 80% AMI ($68,000) 1 Bdr.$508 $848 $1,356 2 Bdr.$610 $1,017 $1,627 3Bdr. $705 $1,175 $1,880 Source: metrocouncil.org Strategy Description Findings /Consideration by Other Communities Preservation Strategies Organize an effort A number of cities have been doing - Meadowbrook and Crossroads sales received media attention because of their to track examples housing studies and research on scale, but the larger trend that exists sometimes goes undetected because many of trend; identify their housing inventory, apartment sales are of smaller buildings. buildings at risk particularly with upcoming Comprehensive Plans. - Less visible trend in central cities. -Number of units sold and price per unit has soared since 2010. Vacancies remain low despite rises in rent. Notice Period Softer approach than ROFR. Tenant Notice Periods are being considered by St. Louis Park, Golden Valley, Mpls, St. Paul and gov’t are given notice prior to and Bloomington. the sale of any building and may attempt to negotiate a purchase. Gives city time to approach preservation buyer to prevent displacement. City can also give service providers advance notice in order to support tenants. Developers may push back: “buyers will lower price if market fluctuates during 90 day period”. Bidding war between for-profit/not-for-profit developer could raise price. Right of First Owners are required to notify Difficult to know where to push for these ordinances since it’s hard to anticipate Refusal tenants and gov’t of purchase where such opportunities will arise. agreement, offering a defined period of time to meet price and Minnesota has a ROFR for manufactured home parks: limited because time period purchase building themselves. is only 45 days. Also difficult to anticipate purchases/know where to push for local ordinances. Rehab Financing in Municipalities could offer rehab Bloomington is using their HRA levy money to put $50k/year into NOAH fund to Return for financing (i.e. low interest loans, preserve developments. Affordability forgivable grants) in exchange for Commitments commitments to maintain Brooklyn Park is considering a proposal in conjunction with their Rental Rehab affordability over a set period of Program. time. -Potential to maintain affordability and enhance safety of residents. Property Tax and Tax breaks for properties receiving MN 4d property tax program: 40% tax break for subsidized rental properties. Local Rent Subsidy financial assistance in exchange for gov’ts could provide modest rent subsidy to make properties eligible for 4d tax Incentives rent and income restrictions break in exchange for affordability commitments i.e. 20% or more of units must be affordable at 60% AMI or below to be eligible. Increase Structure zoning to require owners Minneapolis has structured its zoning to accomplish this. Government to obtain city zoning approval Leverage Through before certain conversion actions Washington State: cities expressly zone manufactured parks so that attempts to Zoning can take place. change use requires zoning change/city approval Seattle: Allows more height for projects with AH Incentives to Landlord guarantee fund to cover Minneapolis HRA, Metro HRA, Dakota County CDA. Many models exist across Address Landlord certain landlord losses Minnesota. Concerns Prohibit Prohibit Discrimination Against Minneapolis and St. Louis Park are considering such an ordinance. Discrimination Section 8 and Other Recipients of Against Section 8 Government Assistance Policy has been suggested to Golden Valley, Bloomington and Eden Prairie. and Other Recipients of Government Assistance Just Cause Eviction Incorporate standard into leases In the case of the Crossroads apartments, new screening criteria was the reason requiring “good cause” for eviction. the leases of many tenants were not renewed. Prevents involuntary displacement Minnesota law: good cause standard for eviction from manufactured home parks. through lease non-renewals or notices to vacate. St. Louis Park and Minneapolis are considering adoption of this measure. It has been suggested to Golden Valley, Bloomington and Eden Prairie. Strategies to Replace or Create Affordable Housing Inclusionary Zoning Require or incentivize incentivizes Being considered in St. Louis Park, Edina, Minnetonka, Golden Valley, Eden Prairie, owners building market rate Minneapolis and others. apartments to include affordable units. Recommended for areas Seattle: developers required to provide or pitch in for A.H. experiencing gentrification, as causes of gentrification are conditions under which IZ is effective One for One Owner would be obligated to Minneapolis: has one for one provision for situations where an owner eliminates Replacement replace any affordable units SRO housing with the help of city financial assistance removed or rendered no longer Chicago: has one for one provision affordable Strategies to Mitigate Harm of Displacement Relocation Benefits When affordability can’t be Chicago SRO Ordinance: requires private property owners to pay tenants relocation preserved, the law requires that benefits, which can deter displacement actions by owner if the benefits are significant displaced tenants be paid enough relocation benefits in certain Portland: Recent ordinance requires landlords to pay relocation for no-case evictions situations, such as gov’t or rent increases of 10% or more. sponsored redevelopment or the closure of manufactured home parks.