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Memo Housing Issues I. INTRODUCTION . I BACKGROUND I In May of 1990, the Division of Planning and Economic Development prepared the City of Hopkins Housing Analysis. This report focused on the current housing issues in Hopkins based on the available data at the time and made several recommendations for future action. Two years have passed since the preparation of this report and a number of factors have changed. The City hired a full-time Housing Coordinator, new housing programs have been offered in Hopkins and the 1990 census data has begun to be available. In light of these changes and the constant need to re- evaluate the current housing situation, the City Council and the Community Development Department have set a goal of establishing a strategic plan to maintain and up-grade housing and neighborhood vitality. It is in response to this goal that the following report was prepared. I PURPOSE STATEMENT I The purpose of this report is to identify and evaluate the major housing issues of the City of Hopkins and formalize a strategy to ensure the long term viability of the city's housing stock and to provide for new housing opportunities for current and future residents. I METHODOLOGY I The fOllowing resources were used to obtain the information contained in this report: o 1980/1990 Census Data o Hennepin County Census Analysis Center o City of Hopkins Assessment Dept. Records o Lookinq Ahead at Housing - Metropolitan Council o City of Hopkins Comprehensive Plan - BRW, 1989 o City of Hopkins Housing Analysis - May 1990 page 2 I EXECUTIVE SUMMARY I An analysis of the available 1990 census data and past housing reports indicates that the following are the major housing issues for the City of Hopkins: o Less demand for rental units and starter homes o Hopkins housing stock is aging o Decline of the Westbrooke Area o Hopkins has a very high concentration of mUlti-family housing units o Image of the City has an affect on the real estate market o Affordability of housing is a growing problem o Hopkins has several single-family homes which are dilapidated and should be removed o New source of housing funds through the HOME Investment Partnership Program will be available in the near future The City currently offers an extensive variety of programs to address many of these issues. Additionally, various housing programs are available to Hopkins residents through other public and non-profit agencies such as MHFA which should be promoted by the City. Many new housing initiatives are also discussed as part of the report. However, many of these programs are not being proposed to be undertaken because of staff and financial limitations of the City. staff is recommending that funding for such programs continue to be sought from outside sources. Based on the major housing issues and the current programs available, staff has made 16 recommendations. Many of the recommendations deal with continuing to offer the programs the City has in place. Others, such as working towards the development of a landlord coalition, identifying properties for acquisition, sponsoring first-time home buyers seminars, and investigating the possibility of selling the 20th Avenue Townhomes to the residents are new activities. All the recommendations contained in this report are aimed at preserving Hopkins' housing stock and providing safe, affordable housing for the City's residents page 3 II. ANALYSIS OF HOUSING STOCK I HOUSING INVENTORY I TYPES OF DWELLINGS AVAILABLE Single Family Homes 2,620 (30%) Starter Homes <$90,000 1,518 Move Up Homes >$90,000 1,102 Duplexes and Triplexes 522 ( 6%) Apartments 4,168 (47%) Condominiums 1,017 (12%) Townhouses 376 ( 4%) Mobile Homes 100 ( 1%) total 8,803 Mobile Homes (1.0%) Condominiums (12.0%) Single Family Homes (30.0%) Duplexes and Triplexes (6.0%) Apartments (47.0%) Observations: * Hopkins has a much lower percentage of single-family homes than the average for Hennepin County (30% in Hopkins compared to and average of 55% in Hennepin County). * Hopkins has a much higher percentage of multi-family units than the rest of Hennepin County (69% in Hopkins compared to 44% in Hennepin County.) page 4 MEDIAN VALUE OF OWNER-OCCUPIED UNITS FOR SELECT CITIES city 1990 1980 % Change Minnetonka.................$121,000......$ 82,100 +47 New Hope...................$ 92,500......$ 70,000 +32 St. LouisPark.............$ 87,100......$ 61,600 +41 Hopkins....................$ 86,700......$ 64,600 +34 Brooklyn center............$ 79,400......$ 59,200 +34 Robbinsdale................$ 76,500......$ 56,500 +35 Hennepin county............$ 91,000......$ 63,600 +43 Observations: * The median value of owner-occupied housing units in Hopkins showed less than average increase in value when compared to Hennepin County as a whole. However, the percent of increase (34%) was consistent with other inner- ring suburbs. VALUE OF OWNER-OCCUPIED UNITS FOR SELECT CITIES CITY/I OF UNITS Hopkins Robbinsdale st. Louis Pk Mtka VALUE: (2,804) (4,386) (12,469) (14,319) LESS THAN $50.000 2% 2% 1% 0% $50,000- $99.999 69% 86% 73% 29% $100,000- $149.999 15% 10% 18% 41% $150,000- $199.999 6% 1% 5% 15% $200,000- $299.999 5% 0% 2% 9% MORE THAN $300.000 2% 0% 1% 5% page 5 MEDIAN RENT FOR SELECT CITIES Minnetonka....................$ 631 st. Louis Park................$ 511 New Hope. .....................$ 498 Hopkins.......................$ 493 Brooklyn Center...............$ 475 Robbinsdale. . . . . . . . . . . . . . . . . . . $ 471 Hennepin County...............$ 452 RENT COMPARISON FOR STUDIO, ONE, TWO AND THREE BEDROOM UNITS IN HOPKINS Average Rent Average Rent Percent 3/91 3/90 Change 1 Bedroom $ 466.00 $ 467.64 -0.35 2 Bedroom $ 559.66 $ 575.26 -2.71 3 Bedroom $ 816.43 $ 760.36 +7.37 Observations: * Average rents in Hopkins are slightly higher than the average for Hennepin County. * Average rents for 1 and 2 bedroom units fell from March 1990 to March 1991, while 3 bedroom units experienced a significant increase in rents. This represents a lack of 3+ bedroom units throughout the Metro Area. page 6 I DEMOGRAPHICS I POPULATION DISTRIBUTION BY AGE GROUP 32% 30% 29% 28% Median age City of Hopkins: 31.3 27% Median age Hennepin County: 32.7 26% 24% 22% 20% 18% 18% 16% 14% 12% 11% 10% 9% 8% 8% 8% 6% 4% 3% 2% 2% 0% 0-5 6 - 14 15 - 18 19 - 29 30 - 44 45 - 64 65 - 84 85+ Age Breakdown ~ Hopkins ~ Hennepin County Observations: * Hopkins has fewer than average youths (age 0-18) than the rest of Hennepin County. * Hopkins has a significantly higher percentage of 19- 29 year olds (reflective of the rental market) and fewer Adult 2's, Middle Agers and Empty Nesters than average. * Hopkins has a higher percentage of both Young and Older Seniors than average. * Because the age categories in the 1980 census differ from those used in the 1990 census exact comparisons can not be made. However, in 1980 the City had a higher than average percentage of 20-34 year olds and in 1990 the City continues to have a greater percentage of roughly this age group. This is reflective of the large number of rental units and the transitional nature of this type of housing. page 7 1990 AGE/SEX PYRAMIDS HOPKINS RICHFIELD* 90 90 90 90 30 80 30 80 70 70 70 70 60 60 60 60 A so so A so so g 40 40 g 40 40 e e 30 30 30 30 20 20 20 20 10 10 10 10 0 0 1.0 o.s 0.0 0.5 1.0 I ~ 1.0 o.s 0.0 OS 1.0 IS Percentage of Population Percentage of Population * RiChfield was used as a comparison due to its similarity to the County as a whole in terms of age distribution HOUSEHOLD CHARACTERISTICS FOR SELECT CITIES Familv Households Single Households Hopkins 3,827 4,146 48% 52% st. Louis Park 56% 44% Robbinsdale 65% 35% New Hope 66% 34% Minnetonka 71% 29% Brooklyn Center 73% 27% Hennepin Co. 61% 39% Observations: * Hopkins has the lowest percentage of family households and the highest percentage of single person households. This is a reflection of the high percentage of . rental units. page 8 III. HOUSING TRENDS . HOUSING BEHAVIOR OF THE DIFFERENT AGE GROUPS Youth (0 -19): This group is generally students living with their parent(s). Adult 1 (20-24) : Generally this group has left home for either college or their first job. Housing is typically close to school or job site. Many will seek housing together to reduce costs. Adult 2 (25-34): This group represents the typical first time home buyer. They have established themselves and are self- supporting. If financially able, they purchase a home. If not, they may rent or live with parents. . Middle Age (35-49) : This group has accumulated equity in their homes and may move up to a larger home or one with more amenities. Empty Nester (50-64) : Generally this group has finished or will be finishing their child rearing responsibilities. They tend to either stay in their current housing or buy something more suitable to their new lifestyle. Young Senior (65-74): Generally this group uses a variety of housing options depending on their health, finances and lifestyle. Older Senior (75+): This group will use a variety of housing options, but often needs services along with the housing. . source: Met Council, Looking Ahead At Housinq, 1988 page 9 . POPULATION PROJECTIONS BY AGE GROUP - TWIN CITIES METlROPOLITAN AREA Age Group 1990 2000 % Change Young Renter 172,000 148,000 -14.0 1st-time home buyer 425,000 333,000 -21.6 Move-up Buyer 491,000 601,000 +22.4 Empty Nester 269,000 365,000 +32.3 Young Senior 130,000 134,000 +0.03 Older Senior 101,000 122,000 +20.8 I POPULATION PROJECTIONS' EFFECTS ON HOUSING MARKETS I Based on the above stated projections, the effects on the various housing markets are believed to be as follows: Rental Market o The projected decrease in the renter age group will result in a lower demand for rental housing and may cause lower rents. Lower rents and/or higher vacancy rates will result in lower cash flow for building owners. Building :maintenance may suffer as a result. o Increases in the older population group (over 75 years old) as well as single-parent families with lower incomes will create a demand for lower-cost rental units and a greater demand for services. First-time Home buyer Market o The typical first-time homebuyers, the Adult 2's, are expected to decrease by more than 92,000 between 1990 and the year 2000. This decrease could cause housing prices to fall based on supply and demand. . page 10 Move-up Mark t o continued increases in the Middle Age group will likely result in continued demand for move-up housing. However, the significant decrease in the pool of first-time homebuyers will likely cause problems for those trying to sell their homes to move up. o Finding it difficult to sell, this group may find it necessary to remodel and stay in their homes. Young seniors Market o This group tends to use a variety of housing options such as existing single-family homes, condominiums and rental. Between 1990 and 2000, this group will only grow by three percent. Older Seniors Market o The older seniors, over 75 years old, will'grow significantly between 1990 and 2000, increasing by more than 21,000. This group, whether it stays in a single-family home or moves to a housing unit for elderly people, typically demands services, such as personal care, home maintenance and transportation. o A significant percentage of this population has very low incomes. page 11 IV. HOUSING PROGRAMS HOUSING PROGRAMS ADMINISTERED BY THE CITY OF HOPKINS/HRA Residential Rehabilitation Loan/Grant Proqram o Loans and grants for the correction of code violations, handicap accessibility and weatherization improvements. o Loans are at 3% interest over a 12 year period; income limits of $38,000 for household of four. o Grants are forgiven after 6 years; income limit of $24,000 for household of four o Homeowners must have equity equal to loan/grant o Funded with CDBG and revolving loan funds o Currently staff is administering 13 rehabilitation projects under this program First-time Home Buver Loan Proqram o Low interest (7.45%) mortgage loan program for individuals or families with an adjusted yearly income of $35,600 or less o Must be a first-time home buyer o Maximum purchase price of $85,000 o Funded through proceeds from the sale of tax exempt bonds; offered through Minnesota Housing Finance Agency. o First offered June 1991 HODkins HRA Subsidized Public Housing Proqram o 76 Elderly/Handicapped housing units at Dow Towers o 10 Townhomes located at 10th Ave. South o Rent based on ability to pay Section 8 Rental Assistance Program o certificates and Vouchers for rental assistance; currently over 105 in Hopkins o Administered through Metro HRA by the City o 20% increase in program over last year SDecial Needs Housinq Proqram o Grant through MHFA to rehabilitate property at 106 11th Avenue South for transitional housing o Meets current housing need while allowing for future redevelopment of site page 12 Truth In Housing o New ordinance effective 8/1/92; requires disclosure of code violations prior to sale o Properties inspected by outside evaluators o certain hazardous items must be corrected before new owner can occupy property Rental Property Inspection Program o Rental properties must be registered with City yearly o Multi-family units are inspected yearly to assure compliance with Housing Code Housing Revenue Bond o City sells bonds on behalf of developer o Percentage of project need to be available to low income households o Only eligible for large mUlti-family housing projects o Allows lower interest rate for new construction o Examples of projects include: st. Therese - $15 million Chapel View - $5 million . I I HOUSING PROGRAMS AVAILABLE IN HOPKINS MHFA Home Enerqv Loan Program o Loans to homeowners to complete energy saving improvements o Interest rate of 8.875%; no income quidelines o Maximum loan of $5,000 for 60 months MHFA Fix-up Fund o Loans to make general improvements o Interest rate varies with income o Maximum Income of $38,000/year o Maximum Loan of $15,000 for 15 years MHFA Deferred Loan o Basic and necessary repairs eligible o Maximum income of $8,500 o 0% interest deferred loan; forgiven after 10 years o Maximum loan of $9,000 page 13 MHFA Rvolvinq Loan Proqram o Basic and necessary repairs eligible o Maximum income of $15,000 o 3% interest installment loan o Maximum loan of $9,000 for 15 years MHFA Accessibility Loan Program o Funds used for accessibility improvements only o Maximum income of $15,000 o 0% interest deferred loan; forgiven after 5 years o Maximum loan of $10,000 MHFA Low Income Housing Tax Credit Proqram o Reduces federal income tax liability of qualifying rental property owners for up to ten years o Owners must agree to rent to low and moderate income tenants MHFA Rental Rehab Loan Proqram o Installment loan for rehab of rental property o Maximum loan of $8,000/unit; $40,000/bldg . o 7.45% interest for a maximum of 15 years o Most tenants must be low and moderate income MHFA Apartment Renovation Mortgage Program o Interest rate write-down on 1st mortgage o mortgage funds for purchase or refinancing of existing five+ unit rental buildings o Rent limits based on section 8 limits; 75% of tenants must be low income o 9.75% interest rate over 30 year term o Minimum loan of $100,000; maximum of $2,000,000 MHFA Apartment Renovation Incentive Loan Program o 0% interest; 30 year deferred subordinated loan o Matching loan on 3 to 1 basis o Rent limits based on Section 8 limits o Maximum of $2,500 per unit o Must have $1,000 of rehab funds and $500 in owner equity per unit to be eligible Community Enerqy services Program o Sponsored by NSP and Minnegasco o Provides free energy check ups, workshops, energy . saving materials and low interest loans page 14 Metro Paint-A-Thon o Sponsored by the Greater Minneapolis Council of Churches o serves low-income seniors and disabled homeowners by painting their home DeDartment of Enerqv Weatherization PrOqram/Enerqy Assistance Program o Available through West Hennepin Human Services o Assistance to renters and homeowners to make energy improvements to their dwellings/assistance in making utility payments There are a variety of other housing assistance services available through such organizations as Vail Place, Sojourner Shelter, etc... for individuals with special needs. I OTHER HOUSING PROGRAM OPTIONS I Scattered site Acquisition/Demolition Proqram ~ 0 Blighted property is purchased, the structure demolished and site is redeveloped. o example - Richfield's program o cost varies greatly with project; fairly expensive o must be voluntary sale, small or structurally unsound structure on buildable lot, good neighborhood o not necessarily targeted to low income home buyers, can be targeted to move-up market Sale of HRA Townhomes to Residents o Amenities needed to make them desirable (carpet, landscaping, etc...) o Emphasis of HOPE I Program; so funds may be available o Replacement of the subsidized units would be mandatory o HRA will be submitting an application for a planning grant to HUD Special Use Housinq o examples include transitional, homeless, handicapped housing, elderly housing, etc... o Projects are typically proposed by service providers page 15 senior community Services - HOME Program o General repair and maintenance program available to elderly residents in participating cities o CDBG eligible social service activity o Anticipated to request funds for 1993 CDBG program year Home Maintenance Workshops or Guides o Need Expertise o Work with Inspection Department or School District Tool Librarv o Lend tools to residents to make home improvements o Could possibly work with Rental Centers Appearance Award Proqram o Recognize owners who improve their property through remodeling projects, landscaping, etc... o Feature award winners in local newspaper o Relatively easy and inexpensive to administer Rehab/purchase Financinq for Mid-income Homeowners/Buvers o Taxable Revenue Bonds for source of funds Home Buyer's Seminars o In conjunction with local lender(s) o Focus on saving, credit analysis, borrower evaluation, types of mortgages, how to select a home, making repairs, City services, etc... Rehab Loan Proqram combined with Private Financing o Homeowner borrows what they can afford from local lender; remainder is financed through City loan or grant o May be difficult to qualify homeowners under lenders guidelines and city's income requirements Landlord Coalition/Manaqement Workshops o Emphasis on good management practices, tenant screening, maintenance, etc... o Recommendation of Springsted study page 16 HOME Investment Partnership Program o Hennepin County will receive $1.689 million through HOME Program to be awarded on a competitive basis to eligible cities and non-profits o Priority activities for the funds are as follows: + moderate rehabilitation for very low-income homeowners + rehabilitation/acquisition for homeless families and individuals + rehabilitation/acquisition for persons with special needs + new construction or rehabilitation for very low-income small or large families pagel? v. MAJOR HOUSING ISSUES Based on analysis of the 1990 census, past housing studies and reports, and the City of Hopkins Comprehensive Plan the following have been identified as the major housing issues facing Hopkins: Less demand for rental units and starter homes. Hopkins housing stock is largely comprised of multifamily and entry level housing. These types of housing units are usually occupied by young adults, 19-29 years of age. This group is expected to decrease substantially during the 1990's. Hopkins housing stock is aqing. Currently, over 50% of the housing stock is 20 years old or older, more than 30% is over 30 years old. These structures have an increased need for maintenance and updating. Decline of Westbrooke Area. The Westbrooke Patio Home and Condominium neighborhoods are experiencing a substantial need for rehabilitation and declining property values. This neighborhood represents 16% of the City's housing stock. Hopkins has a very high concentration of multi-family housin~ units. Approximately 60% of Hopkins housing units are mUlti-family units, as compared to an average of 30% throughout Hennepin County. This disproportionate amount of rental housing leaves the City vulnerable in a weak rental market. Imaqe of the City has an effect on the real estate market. The overall image of the City by its residents and non- residents is an important factor in maintaining the City's property values. Affordabilitv of housinq is a ~rowin~ problem. Finding affordable housing in the Metro Area is increasingly difficult for low income renters and first-time homebuyers. According to the Metropolitan Council, 30% of all renters in the Metro Area pay more than 30% of their income towards housing; 13% pay more than 50% of their income for housing. Hopkins has several sinqle family homes which are dilapidated and should be removed. Scattered throughout the City are several properties which are dilapidated and have a blighting influence on the City. Those properties should be removed and redeveloped when possible. New source of housinq funds throuqh the HOME Investment Partnership Program will be available in the near future. Hennepin County will be requesting proposals in May 1992 for activities to be funded under this new program. page 18 VI. RECOMMENDATIONS The following are staff's recommendations based on the identified housing issues. While the majority of the recommendations are to continue to offer current programs, there are also some new initiatives being recommended. It is important to realize, however, that while there are many worthwhile programs that could be proposed, limited personnel and financial resources put constraints on how many programs can be offered. Issue: Less demand for rental units and starter homes. Effect: with less demand, rental units will have to be either priced competitively or offer desirable amenities. since most rental units in Hopkins were built in the 1970's, many lack newer features. As a result, they will most likely have to be priced competitively, which will allow less money for maintenance and upgrading. Decreased demand for starter homes will be reflected in lower property values. Recommended Actions: Rental Properties: Enoourage the use of existing rental rehabilitation programs available through MHFA. Participate in joint mailings/advertising with MHFA to promote programs. continue to investigate possible souroes of funds for looal rental rehab loan program. Educate Hennepin County and MHFA of the need in Hopkins for new or expanded rental rehab programs. Determine interest for a landlord ooalition or landlord workshops. The Springsted study recommended organizing a landlord coalition for the westbrooke area property managers. Other property managers may also be interested in developing a group which would meet to discuss topics of interest. Sinqle-familv Properties: Continue to offer first-time home buyer loan funds through MHFA. page 19 Off r Home Buy r's Seminars in conjunction with a local lender. Both recommendations help to keep the single-family housing market strong by generating interest in purchasing a home in Hopkins. Issue: Hopkins housing stock is aging. Effect: Without proper maintenance, the aging housing stock will experience depreciated values and will have a blighting influence on the city. Updated features are also needed for the properties to be competitive with newer housing. Recommended Actions: Continue to offer the Residential Rehabilitation Loan/Grant Program and promote this program extensively. Promote the use of other available rehabilitation programs through MHFA and other agencies. Evaluate Truth-in-Housing Program and the possibility of strengthening the requirements aft r one year. Issue: Decline of the Westbrooke Area. Effect: Declining property values due to market conditions and the need for rehabilitation have a variety of effects on the City including a reduced tax base, blighting effects on the City, and an increased need for services due to inadequate screening of tenants. Recommended Action: Implement the recommendations outlined in the Springsted, Inc. study according to the work plan. Issue: Hopkins has a very high concentration of multi- family housing units. page 20 . Effect: The disproportionately high concentration of multi- family units means that in a poor rental market the effect on the City is much greater than on surrounding cities. Additionally, renters are typically more transitional which may effect their degree of involvement with the City. Recommended Action: Following the strategic planning process, the Planning and Zoning commission should review the current Land Use Plan to confirm that parcels currently zoned for mUlti-family are appropriately zoned. Issue: Image of the City has an effect on the real estate market. Effect: If the image of Hopkins is positive, the housing market will be less affected by decreasing numbers of first-time home buyers and renters. People will continue to look for housing in Hopkins due to its location and services. Recommended Action: continue to implement the recommendations outlined in the City's comprehensive Plan which includes such items as improving the image of Co. Road 3, developing a marketing and public relations plan, continue to work to bolster the image of the Downtown and to continue to promote the local festivals. Issue: Affordability of housing is a growing problem. Effect: When renters must pay over 30% of their income for housing they are unable to save for downpayroent and closing costs on the purchase of a home, pay for education, etc. . . Recommended Action: continue to locally administer the Section 8 Rental Assistance Program. Investigate ways to allow public housing residents to becom homeowners. The HRA will be submitting page 21 an application to HUD for HOPE I funds to explore the possibility of selling the 20th Avenue Townhomes to the residents. This would allow for new construction of public housing. Issue: Hopkins has several single-family homes which are dilapidated and should be removed. Effect: The deteriorated or obsolete properties have a blighting effect on the neighborhoods they are located in. Demolition of the structures and the redevelopment of the sites would have a positive effect on surrounding properties. Recommended Action: Identify those properties which should be demolished and begin efforts to acquire them. Establish a yearly budget for this activity and a source of funds and acquire identified properties as they become available. Agressively enforce the Nuisance Abatement Ordinance/Housing Code in regard to dilapidated housing units. Require the owner of the property to incur the cost of demolition of the unsafe structure. Issue: New source of housing funds through the HOME Investment Partnership Program will be available in the near future. Effect: If awarded the funds, the City will be able provide additional housing assistance to its residents. Recommended Action: Begin to structure a program which not only meets the housing needs identified in this report, but also will meet the priorities of the HOME Program. Staff recommends targeting the HOME funds for rehabilitation for very low-income homeowners. page 22 - . " ~ ~ \ \ :- , , 0.- ~ \ ~ . 0 ~ I l.f\ ,\ - :B-~J '~, . i '[3.. e:3 Type Tref (') 0 ~ . I ~ .4. ~ .4 . Split Rail' Fence (i) --- . - , Retaining Wall .,. 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