VII.1. First Reading Ordinance Amending Chapter 20 of the Hopkins City Code, Establishing an Affordable Housing Trust Fund; Needham
CITY OF HOPKINS
City Council Report 2025-023
To: Honorable Mayor and Council Members
Mike Mornson, City Manager
From: Revée Needham, Community Development Manager
Date: February 18, 2025
Subject: Ordinance Amending Chapter 20 of the Hopkins City Code, Establishing
an Affordable Housing Trust Fund
_____________________________________________________________________
RECOMMENDED ACTION
MOTION TO Approve a First Reading of Ordinance 2025-1222 Amending the Hopkins
City Code.
OVERVIEW
There is a one-time grant opportunity for the City of Hopkins to secure approximately
$150,000 to fund affordable housing programs through the Local Housing Trust Fund
Grant Program. The program matches funds 1:1 up to $150,000 for applicants to fund
housing trust funds. In order to apply for these funds, the City of Hopkins needs to
establish a housing trust fund.
Local Housing Trust Fund Grant Program
In 2021, the Minnesota Legislature appropriated $1 million in funding for a local housing
trust funds grant program. The program uses state funding to match a portion of new
housing trust fund dollars to encourage local investment in affordable housing across
Minnesota. These funds may come from any source other than the state or federal
government. In 2023, the Minnesota Legislature appropriated an additional $4.8 million
to the program. The grant funds:
• Must be used for households at or below 115% of state median income
• May be used for
o Development, rehabilitation or financing of housing
o Downpayment assistance
o Rental assistance
o Homebuyer counseling services
o Administrative expenses, up to 10% of grant
• Must be used within five years. Any unspent funds must be returned to
Minnesota Housing.
Eligible applicants to the grant program include cities, counties, tribal governments, and
collaborations between multiple eligible entities. The grant program provides a one-to-
one match on the first $150,000 of new revenue invested in housing trust funds by
cities and counties, and a one-to-two match on the next $150,000 of available funds,
pending fund availability. The RFP for the grant program opened on February 12, 2025,
Planning & Economic
Development
with applications due in March 19, 2025. To take advantage of this program, staff are
proposing establishing an affordable housing trust fund and applying to the program.
Affordable Housing
The City Council has heard several presentations on affordable housing in the recent
years including on September 13, 2022, March 14, 2023 and May 21, 2024. A more
comprehensive overview of affordable housing and specific affordable housing units in
Hopkins can be found in those presentations. In addition, the City Council has identified
affordable housing policies as a goal for the past several years. Cultivate Hopkins
identifies Affordable Housing as a goal and includes policy directives to support the
preservation, production, and protection of affordable housing units.
Local Housing Trust Funds
Local Housing Trust Funds (LHTF) are funds established by local governments by
dedicating local public revenue for housing. They are a consistent, flexible resource for
housing within a local jurisdiction. Trust funds help communities leverage public and
private resources and jumpstart projects that draw investment and jobs. LHTFs enable
prioritizing developments that maximize benefit to the community. As of February 2023,
there were over 20 LHTFs in Minnesota, including neighboring cities Eden Prairie,
Edina, Minnetonka, and St. Louis Park.
The common funding sources for LHTFs include:
• HRA levy
• TIF pooling
• Housing related funds (including land sale proceeds, in lieu of fees, etc.)
• Federal and State Formula Funds (CDBG, HOME, ARPA, etc.)
• One-time Funds (initial funding, annual appropriations, etc.)
• Donations (individual and organizational)
LHTFs are notable in their flexibility for responding to community needs. LHTFs can
fund a variety of programs and can be tailored to specific geographic areas, income
groups, types of housing, housing gaps (i.e. senior housing, etc.), and more. These
programs can change over time to adapt to the changing community.
Common programs include:
• Homebuyer Assistance
• Preservation (single family rehab, multi-family rehab, NOAH preservation)
• Gap financing (new construction, redevelopment)
• Creating deeper affordability
• Housing Stability (emergency housing assistance)
Hopkins Affordable Housing Trust Fund
Staff drafted an ordinance based on peer cities and State Statute. The attached draft
ordinance was reviewed by the City Attorney. This ordinance is simple and largely
mirrors State Statute requirements. Further program specifics would be developed later.
The City can fund the AHTF through multiple sources including the existing balance in
the Economic Development Fund, Local Affordable Housing Aid (LAHA) and/or a
General Tax Levy.
• Staff would recommend using existing fund balance in the Economic
Development Fund as a one-time match for Minnesota Housing’s Local Housing
Trust Fund Grant Program.
• While not eligible for the grant program local match, LAHA could be transferred
into the AHTF. In 2024, the City received $172,642. The Minnesota Department
of Revenue has not yet certified amounts for 2025.
• The City Council could also levy additional taxes for this purpose. The grant
application is scored higher if additional funds are committed to the AHTF after
the grant funds have been expended.
Through approval of this ordinance, City Council would authorize staff to apply to the
program. Staff will return on March 4th with a resolution for an internal transfer from the
Economic Development Fund to fund the AHTF to meet the grant program match
requirements. The maximum grant award is $225,000 if an entity matches with
$300,000 in local funds, depending upon application demand and availability. However,
given the high interest in the program, the maximum grant award may be $150,000 if an
entity matches with $150,000 in local funds.
AHTF Uses, LAHA, and Community Engagement
Staff are recommending the establishment of the AHTF and application to the State
matching program and then returning to the City Council with a funding plan when we
have a more complete picture. In addition to not knowing if we will receive the additional
AHTF dollars from the State, at this time, there is also uncertainty over cuts to federal
housing programs which could impact the funding for Dow Towers. We are also
waiting to hear back on available state funding for the sprinkler system at Dow Towers.
Therefore, staff are recommending waiting on final decisions for LAHA and other AHTF
fund uses until we know more about other funding sources.
Staff are recommending that we ask for feedback on the funding plan from the
community. There has been interest from several housing providers, developers, and
other interested members of the public regarding LAHA and other affordable housing
programs. To gather feedback, staff are proposing to add a webpage to the City
website outlining these affordable housing funding sources and distribute an online
survey to assess the prioritization of multiple areas of opportunity for affordable housing
policies (i.e. homeownership, rental rehabilitation, new construction, etc.). This survey
would also be shared with a more targeted list of service providers in Hopkins, such as
ICA Food Shelf, ResourceWest, and others. After gathering feedback and hearing back
on the local housing trust fund grant program application, staff would return with
recommendations on developing any policies or programs for the AHTF and/or LAHA
funds.
SUPPORTING INFORMATION
• Ordinance 2025-1222
• Hyperlink to Minnesota Statute 426C.16
• Hyperlink to Minnesota Housing Partnership’s Local Housing Trust Fund Overview
• Hyperlink to Local Housing Trust Fund Grants Program Webpage
CITY OF HOPKINS
HENNEPIN COUNTY, MINNESOTA
ORDINANCE 2025-1222
AN ORDINANCE AMENDING CHAPTER 20 OF THE HOPKINS CITY CODE
ESTABLISHING AN AFFORDABLE HOUSING TRUST FUND
THE COUNCIL OF THE CITY OF HOPKINS HEREBY ORDAINS AS FOLLOWS:
SECTION 1. Amending Chapter 20 of the Hopkins City Code to amend Article II, Section
20-19 to Section 20-23 as follows:
ARTICLE II. – AFFORDABLE HOUSING TRUST FUND.
Sec. 20-19. - Purpose
Pursuant to Minnesota Statutes, Section 462C.16, the City of Hopkins (the “City”) is
authorized to establish a local housing trust fund. The City is creating an Affordable
Housing Trust Fund to encourage the creation of affordable housing for rental housing
and owner-occupied housing, to promote the preservation of existing affordable housing
and naturally occurring affordable housing, and to provide rental assistance and
homeownership assistance to persons of very low income, low income, and moderate-
income.
Sec. 20-20. – Definitions
The following words, terms, and phrases, when used in this article, shall have the
meanings ascribed to them in this section, except where the context clearly indicates a
different meaning. Additionally, the words and phrases used in this article which are
defined in Minnesota Statutes, Section 462C.16, shall have the meanings ascribed to
them in those statutes.
Persons of very low income means individuals or families whose incomes do not
exceed 50 percent of area median income as most recently determined by the
United States Department of Housing and Urban Development for the Minneapolis-
St. Paul-Bloomington, Minnesota Metropolitan Statistical Area, as adjusted for family
size.
Persons of low income means individuals or families whose incomes do not exceed
80 percent of the area median income as most recently determined by the United
States Department of Housing and Urban Development for the Minneapolis-St. Paul-
Bloomington, Minnesota Metropolitan Statistical Area, as adjusted for family size.
Persons of moderate-income means individuals or families whose incomes exceed
80 percent, but do not exceed 120 percent, of area median income, as most recently
determined by the United States Department of Housing and Urban Development for
the Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin Metropolitan Statistical
Area, as adjusted for family size.
Sec. 20-21. – Establishing the Affordable Housing Trust Fund
Pursuant to the authority granted to the City under Minnesota Statutes, Section
462C.16, an affordable housing trust fund is established to provide the following:
(a) Grants, loans, and loan guarantees for the development, rehabilitation, or
financing of housing.
(b) Match other funds from federal, state, or private resources for housing
projects.
(c) Downpayment assistance.
(d) Rental assistance to persons of very low, low, and moderate income.
(e) Homebuyer counseling services.
(f) Payment of administrative expenses of the Affordable Housing Trust Fund in
the maximum amount of ten percent of the balance of the Affordable
Housing Trust Fund.
Sec. 20-22. – Funding Sources
The City Council may pledge sources of funding to the Affordable Housing Trust Fund,
which may include, but are not limited to:
(a) Private donations from individuals and corporations designated for the
Affordable Housing Trust Fund.
(b) Grants or loans from a state, federal or local government or private sources.
(c) The sale of real and personal property.
(d) Local government appropriations, development fees, and other funds as
designated from time to time by the City Council.
(e) Investment earnings from the Affordable Housing Trust Fund.
(f) Tax Increment Finance (TIF) pooled funds.
(g) Housing and Redevelopment levy funds.
(h) Payments in lieu of participation in current or future affordable housing
programs.
(i) Other sources of funding approved by the City Council.
Sec. 20-23. – Administration of the Affordable Housing Trust Fund
(a) The Housing Redevelopment Authority in and for the City of Hopkins (the
“Authority”) shall administer the Affordable Housing Trust Fund on behalf of
the City.
(b) Terms and Conditions of Repayment. The Authority shall determine the terms
and conditions of repayment of loans and grants from the Affordable Housing
Trust Fund, including but not limited to, the appropriate security and interest,
if any, should repayment be required. Interest on loans and grants shall be
established by the Authority from time to time or at the time of approval of a
specific project or program.
(c) Annual Report. The Authority shall report annually to the City on the use of
the Affordable Housing Trust Fund, including the number of loans and grants
made, the number and types of residential units assisted, and the number of
households provided rental assistance and down payment assistance. The
City shall post the report on its website.
Sec. 20-24 – 20-118. – Reserved
SECTION 2. SUMMARY PUBLICATION.
In accordance with Section 3.03 of the City Charter and Minnesota Statutes Section
412.191, the City Council determines the publication of the title and a summary of the
Ordinance would clearly inform the public of its intent and effect, and so City staff shall
have the following summary printed in the official City newspaper in lieu of the complete
ordinance:
ORDINANCE NO. 2025-1222
AN ORDINANCE ESTABLISHING AN AFFORDABLE HOUSING TRUST FUND
On March 4, 2025, the Hopkins City Council adopted Ordinance 2025-1222 that
amends Chapter 20 of the Hopkins City Code. The purpose of amending the City Code
was to establish an Affordable Housing Trust Fund.
A printed copy of the ordinance is available for inspection during regular business hours
at Hopkins City Hall and at the Hopkins Library and is available online at the City's
website located at www.hopkinsmn.com.
SECTION 3. EFFECTIVE DATE. The effective date of this ordinance shall be March 14,
2025.
First Reading: February 18, 2025
Second Reading: March 4, 2025
Date of Publication: March 13, 2025
Date Ordinance Takes Effect: March 14, 2025
By:___________________________
Patrick Hanlon, Mayor
ATTEST:
_______________________________
Amy Domeier, City Clerk