Minnesota APA Conference-September 2011

Affordable Housing-One City’s Journey to Implementation

September 30, 2011

Introductions

Doug Borglund, Community Development Director, City of Forest Lake

Jay Demma, Planner/Market Research, Bonestroo/Stantec

Tina Goodroad, Planner, Bonestroo/Stantec Barbara Dacy, Executive Director, Washington

County HRA

How it all started for Forest Lake…

An affordable housing project was proposed on a former community hospital site

Proposal for conversion to Spanish Immersion school and affordable housing development

Local concerns influenced PC and CC votes

City denied housing project

City was sued by the developer

Former Hospital Site- now school

36 Affordable town homes (rental)

Settled the lawsuit and approved the project – waived $150,000 in

project related fees, processed a Met Council grant for the project,

– as a PUD gave flexibility to many of its zoning standards.

– absorbed other related expense’s from the lawsuit.

The settlement of the lawsuit brought about positive change….

Results

– A promise to prepare a housing chapter focused on creation of new affordable housing.

– Creation of a Affordable Housing Task Force

– Completed a Comprehensive Housing Study to understand the need

– Prepared Goals, Polices and Implementation steps

2006 Forest Lake Housing Study

Household Growth Trends

5,433

11,1009,613

41,640

3,202

19,836

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

1980 1990 2000 2010 2020

No.

of

Hou

seh

old

sForest Lake

Study Area Total

Sources: U.S. Census; Metropolitan Council; DSU/Bonestroo

Age Distribution

City of Forest Lake

- 1,000 2,000 3,000 4,000

Under 5

5-9

10-17

18-24

25-34

35-44

45-54

55-64

65-74

75+

Age

Coh

ort

Number of People

201020001990

2.

1.

3.

Source: U.S. Census; DSU/ Bonestroo

Household Type

City of Forest Lake

0%

5%

10%

15%

20%

25%

30%

35%

40%

Marriedw/ child

Married nochild

Other Family Singles Roommates

Household Type

Pct

. of H

ouse

hold

s

1990

2000

Household Tenure

City of Forest Lake2000

0

200

400

600

800

1,000

1,200

1,400

Under 25 25-34 35-44 45-54 55-64 65-74 75 plus

Age Group

No.

of H

ouse

hold

s

0%10%20%30%40%50%60%70%80%90%100%

Owne

rshi

p Rat

e

Renter HHsOwner HHsOwnership Rate

Sources: U.S. Census; DSU/ Bonestroo

Household Income

Median Household Income 2006

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

$90,000

$100,000

Under25

25-34 35-44 45-54 55-64 65-74 75 plus

Age Cohort

Med

ian

Inco

me

Forest Lake

Metro Area

Source: Claritas, Inc.

Employment Growth Trends

3,430

6,359

9,0005,403

13,625

20,290

0

5,000

10,000

15,000

20,000

25,000

1980 1990 2000 2010 2020

No.

of

Jobs

Forest Lake

Study Area Total

Sources: MN DEED; Met Council; DSU Bonestroo

Distribution of Jobs and Wages by Industry

Distribution of Jobs by Industry & Average Annual WagesForest Lake and Metro Area 2005

0%

5%

10%

15%

20%

25%

30%

Nat. R

es. &

Min

ing

Constru

ction

Man

ufactu

ring

Trans./

Util.

Retail

Info

rmati

on

Finan

cial

Prof.

& Bus.

Svcs.

Health

/Educ

. Svc

s.

Hospit

ality

Other

Svcs.

Public A

dmin.

Industry

Pct

. of J

obs

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

Ann

ual W

ages

Forest Lake

Metro Area

Forest Lake Avg.Ann. Wages

Sources: MN DEED; DSU/Bonestroo

Housing ConditionsAge of Housing Stock as of 2000

City of Forest Lake

0

200

400

600

800

1,000

1,200

Pre-1940

1940s 1950s 1960s 1970s 1980s 1990s

Decade Built

No.

of H

ouse

hold

s

Owner-occupied Renter-occupiedSource: US Census

Recent Building Trends

Owner-Occupied Homebuilding TrendsCity of Forest Lake

1990-2006*

66

36

276

1539

235

0

50

100

150

200

250

300

90 94 98 02 06*

Year

No.

of U

nits

SF Homes

TH/ Condos

* Thru Sep 30, 2006.Sources: City of Forest Lake; DSU/ Bonestroo

Lifecycle Housing Model

Growth Potential: 2007-2020

2007-2020Housing Grow th

Potential (3,500 - 4,000 Units)

Renter Occupied Housing

(525 - 600 Units)

Ow ner Occupied Housing

(2,975 - 3,400 Units)

Single-Family Housing

(1,500 - 1,700 Units)

Multifamily Housing

(1,500 - 1,700 Units)

General Occupancy

(370 - 420 Units)

Age-Restricted (155 - 180 Units)

Growth Potential 2007-2020: Owned Housing

2007-2020Ow ner Occupied

Housing (2,975 - 3,400 Units)

Multifamily Housing* (1,500 - 1,700 Units)

Single-Family Housing

(1,500 - 1,700 Units)

Entry-Level ( 75 - 85 Units)

Executive(525 - 595 Units)

Entry-Level( 450 - 510 Units)

Executive (225 - 255 Units)

Move-Up (900 - 1,020 Units)

Middle-Market (825 - 935 Units)

Growth Potential 2007-2020: Rental Housing2007-2020

Renter Occupied Housing

(525 - 600 Units)

Age-Restricted(155 - 180 Units)

General-Occupancy(370 - 420 Units)

Market Rate (100 - 125 Units)

Affordable to HHs at 50% AMI

(270 - 295 Units)

Market Rate (125 - 145 Units)

Income-restricted (30 - 35 Units)

Independent (75 - 85 Units)

Assisted Living(20 - 25 Units)

Memory Care (30 - 35 Units)

Comprehensive Plan and Implementation

Land Use Decisions Supports Affordable Housing

New growth planned in the urbanized area of the City vs. pushing outward

Raised density to 10-15 units/ac for downtown and new mixed use areas (187 ac)

Traditional compact development pattern

Residential mixed, medium and high residential categories supports higher densities throughout the city

Designates higher density housing opportunities along major transportation and transit corridors

Land Use Decisions Supports Affordable Housing

Aggressive Housing Goals …. Existing Housing Stock

– Regulatory

+ Housing maintenance code; rental licensing; truth in housing; mixed use ordinance and accessory dwellings

– Funding

+ City funded activities aimed at rehabilitation or acquisition of existing properties

+ Utilize an existing Land Trust in the creation and preservation of long-term affordable ownership housing.

Aggressive housing goals…Increase Affordable Housing:

– Regulatory:

+ Adopt an Inclusionary Housing Policy

+ Increase density-land use and supportive zoning

+ Flexible zoning/use of PUD’s

+ Reduce minimums standards-garage size, setbacks, etc.

– Funding:

+ Create an affordable housing trust

+ Develop City funded programs

+ Waive city related development fees

Aggressive housing goals …Improve Housing Maintenance

– Regulatory:

+ Encourage maintenance and rehabilitation of older neighborhoods and identify City improvement projects for these neighborhoods

– Funding:

+ Create property tax policies that encourage the maintenance and rehabilitation of existing housing

+ Create new City programs for remodeling and maintenance programs

Regulatory Response to Affordable Housing

Created new mixed use zoning districts to mirror changes in land use.

Used form based codes to set design standards

Emphasis on compact development patterns

Regulatory Response to Affordable Housing

Adopted an Inclusionary Housing Ordinance

– Purpose is to encourage and provide for the development of affordable housing within Forest Lake

– Ensures a continued availability of a diverse supply of home ownership and rental opportunities for low to moderate income households in all new residential development

Regulatory Response to Affordable Housing

Applies to all new residential developments of 10 units or more

Must include a minimum of 20% affordable rental or 20% ownership of affordable units.– Monthly rent affordable at thirty to fifty percent (30-

50%) of area median income for Washington County adjusted by family size appropriate for the dwelling unit.

– For all affordable housing units available for-sale, housing costs must be affordable at 50% of the area median income for Washington County

– Units shall remain affordable for not less than 30 years

Regulatory Response to Affordable Housing

Housing Plan Required

Affordable units distributed throughout the development

Incentives may be offered

– Density bonus of up to 15%

– Zoning code modifications- setbacks, reduce lot size and width, parking, etc

– Reduction in street widths

– Reimbursement/reduction in fees-planning, building, SAC/WAC and park land dedication.

– Other incentives can be requested/negotiated

On the ground results…

Even before the Comprehensive Plan and regulatory tools were adopted and test:

– Total Units approved: 294

– Total Units under construction or completed: 234

– Total of $ 1.3 million (Met Council grants)

– Other financial resources: City fee waivers $600,000 to date on multiple projects

– Housing score in 2002 was 27 with the highest in 2009 of 76 and estimated to be in 70-80 range for 2011.

Trailside Senior Living (71 Affordable Units)

City helped project

$700,000 Grant & related fee

waivers.

Mill Pond (Phase 1 of 120 Affordable Workforce/Family Units)

City supported the project $300,000 in fee waivers and delayed

payment on other fees.

Forest Oak (Phase 1 of 72 Affordable Workforce/Family Units)

City provided $600,000 in grant

funds to support the project.

Creating Affordable Housing in Forest Lake, Minnesota

Presentation Outline

HRA Service Areas

Role in Forest Lake

Financing Model Descriptions

Outcomes

HRA SERVICE AREASWhat does the HRA do?

Mission

Through innovation, the Washington County Housing and Redevelopment Authority promotes community and economic development, and provides and maintains affordable, decent and safe housing opportunities in Washington County

Four Service Areas

Affordable Senior and

Family Housing

Rental Assistance Programs

Community Development

Foreclosure Prevention and

Home Buyer Education

Households Served

$17,078,071

8%26%

6%

60%

General Fund

Rental Assistance

Special Projects

Enterprise Funds

Budget Highlights 1,030 affordable housing

units

– 395 senior units

– 635 family units

522 households with rental assistance

2,152 households counseled since 2008; 1,012 foreclosures averted

ROLE IN FOREST LAKE

What has been done?

Existing Housing Data

Total Units Owner Rental Affordable Rental*

HRA Owned

Forest Lake 7,508 5,632 1,878 548 140

76% 24% 29% 25%

County 87,859 72,718 15,141 3,341 1,030

83% 17% 22% 31%

*Estimate of units affordable at <60% AMI

Affordable Housing Programs

Preservation of existing affordable housing

– Facilitate private or non profit investment

– HRA owned developments

New Construction

– Facilitate private or non-profit investment

– HRA owned developments

Preservation

Kilkenny Apartments Whispering Pines

New Construction (HRA)

John Jergens TrailSide Senior Living

New Construction (private)

Forest Ridge Apartments

Forest Oaks Apartments

Mill Pond Apartments

Autumn Hills Apartments

Hillcrest Apartments (affordability expired)

FINANCING MODELSHow is affordable housing

created?

Affordable Housing

“Affordable” typically means no more than 30% of HH income spent on housing costs (inc. utilities)

Affordable housing can be provided by private, non-profit, or public sector programs or combination of partners

Affordable Housing Dilemma

Challenges

Gap between affordable rents versus typical expenses

Finding land

Zoning issues

Long term affordability

Operating subsidy scarce

Owner credibility

Lengthy pre-development process

Solutions Construction

– Maximize low cost loans and/or grants to pay for:

+ Land

+ Improvements

Operating

– Minimize debt

– Obtain ongoing operating “subsidy” to pay for:

+ Debt

+ Gap

Affordable Rental Financing Models

Low Income Housing Tax Credit Program

Minnesota Housing Programs

Housing Revenue Tax Exempt Bonds

– Governmental purpose

– 501 (c)3

– Private activity bonds

Recovery Zone Bonds (now expired)

Federal Section 202 Program

Additional Tools

Tax Increment Financing

Metropolitan Council LCDA

Greater Minnesota Housing Fund

CDBG/HOME

Local HRA levies

Rent and Income

AMI INCOME RENT

30% $24,810 $558

50% $41,350 $931

60% $49,620 $1,117

Most programs require rent and/or income restrictions at 30% AMI, 50% AMI, 60% AMI or 80% AMI(e.g. 4 person HH and 2 BR)

Financing Affordable Rental Housing

Family

Low Income Housing Tax Credit Program (9% primary program)

Gap funding

– Minnesota Housing Super RFP (Family Housing Fund, Met Council, and other partners)

– Local contributions

Senior

Locally financed:

– Lower private sector involvement

– Minimal federal resources

– State priority on family development

– Requires local financial resources and/or credit enhancement

TrailSide Senior Living

Case study example

Photo does not show current construction

Library

TrailSide

Forest Oak Apartments

Future Private Sector Senior Living Facilities

TrailSide Senior Living

Transit Center

Washington CountyLibrary and Transit Center

Project Financing

USES

$ 885,000 Land

$ 7,256,039 Construction

$ 1,243,055 Soft costs

$ 150,000 Furnishings

$ 450,000 Financing

$ 520,641 Reserves

$ 10,700,398 Total

SOURCES

$ 8,455,000 Bonds*

$ 200,012 HOME

$ 112,646 City of Forest Lake

$ 700,000 Met Council

$ 928,393 HRA “GROW” Loan

$ 303,347 CDBG Grant

$10,700,398 Total*Wash. Co. GO Tax Exempt and Taxable Recovery Zone

Economic Development Bonds

Operating pro forma

Item Amount

Net Rent Revenues $566,600

Operating Expenses ($328,000)

Net Operating Income $238,600

HRA Levy/Tax increment $210,000

Debt Service ($311,072)

Cash Flow after financing $132,528

OUTCOMESWhat is the impact?

Positive Impacts

Tangible

– Citizens served!

+ Met Council affordable unit goals

– Real estate valuation and investment

– Implement objectives of comprehensive plan

Intangible

– Leverages additional investment

– Formed successful partnerships

Livable Community Goals

25% of goal accomplished

– 551 Affordable Unit Goal

– Met Council 2011-2020 Allocation of Affordable Housing Need by City/Township, September 2010

New construction since 9/2010:

– TrailSide (70 units)

– Forest Oaks Apartments (36 units; phase 1; total project 72)

– Mill Pond (120 units)

Real Estate Valuation

New construction (excludes TrailSide):

– $10,000,000

Preservation

– $7,000,000

– Preserve federal assistance contracts

+ Prevent properties becoming market rate

Community Development Goals

30% AMI households served

Provides option for local seniors to stay in community, or for seniors to be near families that live in city

Housing diversity

Minimize cost burden

Transit access: bus and trail

Success Factors

City adopted vision for specific areas

City understanding of the necessity to participate in the cost of providing affordable housing

County Board and HRA Board understanding of the necessity for levy

Flexible administrative procedures