12a. Livable Communities ActCITY OF
CHANHASSEN
690 COULTER DRIVE • P.O. BOX 147 • CHANHASSEN, MINNESOTA 55317
(612) 937 -1900 • FAX (612) 937 -5739
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TO: Don Ashworth, City Manager
FROM: Kate Aanenson, AICP, Planning Director
DATE: September 6, 1995
SUBJ: Livable Communities Act
Action ty City Administrator
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Dote Submitted to Commission
Date Submitted to Council
In its last session, the State Legislature passed the Metropolitan Livable Communities Act.
Municipalities are not required to participate under the act but provides incentives and
funding for those who do participate. The city can determine how they want to participate.
While the city is not required to participate, there will be a review by the legislature of those
communities who do and do not participate. If the city choses not to participate, it could
possibly have a negative impact for funding requests from MNDOT or any other state funding
source. It could also have an affect on the city's request for a MUSA expansion.
Attached please find supplemental information about the act and how the city can participate.
The Metropolitan Council has provided a Housing Goal Agreement in the information. Goals
are to be set once, although the legislature is requiring all communities to update their
comprehensive plans by 1998, and it is probable that the housing goals could be reviewed.
The Met Council has put together bench marks that the city should be meeting in regards to
affordable housing issues. The city is being compared to other communities in establishing
their housing goals (see map). The housing goals include owner and rental. If the City
Council elects to participate, a Housing Goal Agreement must be submitted to the Met
Council by November 15.
Please take the time to read through this information. Staff will provide a more detailed
information about the act and the city's options at the Council meeting. This is being
provided to keep you informed and give staff direction on possible goals. No action is
required at this time.
MEMORANDUM
LIVABLE COMMUNITIES QUESTIONS AND ANSWERS
1. What is the Metropolitan Livable Communities Act?
The Metropolitan Livable Communities Act ( "Act ") was enacted in June 1995 and is the Legislature's
attempt to address various issues facing the seven - county metropolitan area. The Act establishes a
Metropolitan Livable Communities Fund which consists of three accounts: the Tax Base Revitalization
Account; the Livable Communities Demonstration Account, and the Local Housing Incentives Account.
Metropolitan municipalities are not required to participate in the programs under the Act, but the Act
provides incentives and funding to those municipalities that do participate.
2. What is the incentive to participate?
The benefits are clear. Cities, towns and, in some cases, counties have access to resources that will
improve their communities and neighborhoods. In addition, the legislation puts local units of govern-
ment in the driver's seat. Communities can not only choose whether to participate; they also have
flexibility in determining how they're going to use the resources available.
3. What is the incentive to provide lower -cost housing in our community?
Affordable housing is an investment in communities and their residents. It fulfills a commitment to
young families, single people and older residents that they can find a home they can afford in the com-
munity of their choice.
4. What are "affordable" housing and "life- cycle" housing?
Housing is "affordable" if it costs no more than 30 percent of a family's income. For ownership hous-
ing this income amount is 80 percent of median, an amount that in 1994 could afford a home costing
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approximately $115,000. For rental housing this income is 50 percent of median. In 1990 this was
approximately $500 per month.
"Life- cycle" housing refers to housing available for people at all stages of their lives, offering a choice
' and variety of housing types and cost to accommodate people's changing needs and preferences as their
incomes and circumstances change.
5. What are the affordable and life -cycle housing opportunities amount?
The Affordable and Life -Cycle Housing Opportunities Amount ( "ALHOA amount ") is an amount,
established by formula in the Act, that a participating municipality must spend to create affordable and
' life -cycle housing or to maintain existing affordable and life -
cycle housing. A participating municipality's ALHOA amount is established each year
6. Does the ALHOA amount have to be a property tax levy?
No. The ALHOA amount can be derived from a levy, or it can be derived from fundsfrom another
source. Regardless of the source of funds for the municipality's ALHOA amount, a participating munici-
pality that did not meet its negotiated affordable and life-
' cycle housing goals, and did not spend 85 percent of its ALHOA amount to create affordable and life -
cycle housing opportunities in the previous year, must distribute the entire ALHOA amount to a local
housing and redevelopment authority to create affordable and life -cycle housing opportunities in the
t municipality, or to the Metropolitan Council for distribution through the Local Housing Incentives
Program.
7. If my municipality elects by November 15, 1995, to participate in the Local Housing Incen-
tives Account Program, must the municipality spend an ALHOA amount in calendar year 1996?
No. Because of various timing provisions in the Act, the ALHOA amount requirement does not apply
until your municipality's election to participate in the Local Housing Incentives Account Program made
by November 15, 1996, for calendar year 1997.
8. If my municipality elects to participate in the Local Housing Incentives Account Program
by November 15 1995, but is unable to agree on housing goals with the Metropolitan Council,
must the municipality participate in the program?
No. A municipality is not participating in the Local Housing Incentives Account Program unless two '
conditions have been met.
a. The municipality has elected to participate in the program; and
b. The Metropolitan Council and the municipality have negotiated and agreed on affordable ,
and life -cycle housing goals for the municipality.
If the municipality and the Metropolitan Council do not successfully negotiate housing goals, your
municipality may not participate in the Local Housing Incentives Account Program. '
9. Must my municipality participate in the Local Housing Incentives Account Program? I
No. Participation in the program is voluntary, but a municipality that does not participate may at some
later time elect to participate in the program. However, a municipality which later elects to participate
must establish that it has spent or agrees to spend on affordable and life -cycle housing an amount
equivalent to what it would have spent on affordable and life -cycle housing had goals been established
for the period in which the municipality was not participating.
10. If my municipality has met its housing goals in the previous calendar year, may my munici-
pality participate in the Local Housing Incentives Account Program?
Yes. However, your municipality will not be eligible to receive grants from the Local Housing Incentives
Account Program if it met its affordable and life -cycle housing goals. Your municipality still will be
eligible for grants and loans under the Livable Communities Demonstration Account and Tax Base
Revitalization Account programs.
11. What if my municipality chooses not to participate in the Local Housing incentives Ac-
count Program?
Municipalities that elect not to participate in the Local Housing Incentives Account Program are not
eligible to participate in the Tax Base Revitalization Account and Livable Communities Demonstration
Account programs under the Act. The Metropolitan Council is required by the Act to take into account
your municipality's participation in the Local Housing Incentives Account Program when making
discretionary funding decisions. In addition, your municipality will not be eligible to apply for funds
under the Department of Trade and Economic Development's polluted sites clean -up program if your
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I municipality is not participating in the Local Housing Incentives Account Program.
12. If my municipality elects to participate in the Local Housing Incentives Account Program,
but does not have the capacity to create additional affordable and life-
[ cycle housing opportunities, can my municipality give its ALHOA amounts to other municipalities
to meet negotiated housing goals?
Yes. A municipality that has negotiated housing goals, but might not have adequate resources to create
or maintain affordable and life -cycle housing opportunities still could be considered a participating mu-
nicipality. However, the municipality would be required to distribute its ALHOA amount to the Metro-
politan Council for distribution to other participating municipalities or distribute its ALHOA amount to a
local housing and redevelopment authority for creating affordable and life -cycle housing opportunities
within the municipality. The Act permits municipalities to enter into agreements with adjacent municipali-
ties to cooperatively provide affordable and life -cycle housing. The Metropolitan Council will work with
municipalities to help municipalities create affordable and life -cycle housing opportunities and avail
themselves of the incentives and funding available under the Act and from other sources.
' 13. If my municipality is using local resources to make payments on a mortgage for an afford-
able or life -cycle housing opportunity created prior to the Act, can these resources count toward
expenditures of the municipality's ALHOA amount?
Yes. As long as the use of the funds is directly related to your municipality's efforts to meet its afford-
able and life -cycle housing goals, these local resources can be considered an expenditure of ALHOA
amounts.
14. Are the goals for affordable and life -cycle housing, as proposed by the Metropolitan Coun-
cil, achievable?
The goals proposed by the Metropolitan Council are intended to be "long- term" goals. Your munici-
pality will establish an action plan that identifies the steps your municipality intends to take to move
toward its long -range goals. Beginning in 1998, your municipality's annual progress in meeting its
negotiated affordable and life- cyclehousing goals will be measured against the annual goals your
municipality sets forth its action plan. Progress toward the goals will depend on private marketplace
efforts, the availability of affordable and life -cycle housing resources and the use of local controls to
create an environment to meet goals.
15. Do the Metropolitan Council and a municipality negotiate and set housing goals annually? I
No. The Act envisions negotiated housing goals as a one -time process. That is why the goals are long
term in nature. The Metropolitan Council will propose affordable and life -cycle housing goals that
encourage your municipality to address key housing benchmarks.
16. After the Metropolitan Council and a municipality negotiate and set affordable and life -
cycle housing goals for the municipality, what happens next?
The municipality must prepare an action plan that describes how it intends to meet its negotiated goals.
The municipality has until June 30, 1996, to submit the action plan to the Metropolitan Council.
17. Does the Metropolitan Council have to approve the action plan?
The Act does not require the Metropolitan Council to approve a municipality's action plan. However,
the Metropolitan Council will comment on the plan's content in relation to the negotiated goals that
have been established, and it will attempt to identify potential resources available to the municipality to
help the municipality meet its negotiated affordable and life -cycle housing goals.
18. What should the action plan look like?
The suggested format will be modeled after the one used for the housing element of your comprehensive
plan.
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CALENDAR YEAR 1996
WHEREAS, the Metropolitan Livable Communities Act (1995 Minnesota Laws Chapter 255) establishes a Metropolitan
' Livable Communities Fund which is intended to address housing and other development issues facing the metropolitan area
defined by Minnesota Statutes section 473.121; and
' WHEREAS, the Metropolitan Livable Communities Fund, comprising the Tax Base Revitalization Account, the Livable
Communities Demonstration Account and the Local Housing Incentives Account, is intended to provide certain funding and
other assistance to metropolitan area municipalities; and
' WHEREAS, a metropolitan area municipality is not eligible to receive grants or loans under the Metropolitan Livable
Communities Fund or eligible to receive certain polluted sites cleanup finding from the Minnesota Department of Trade and
' Economic Development unless the municipality is participating in the Local Housing Incentives Account Program under
Minnesota Statutes section 473.254; and
WHEREAS, the Metropolitan Livable Communities Act requires the Metropolitan Council to negotiate with each munici-
pality to establish affordable and life -cycle housing goals for that municipality that are consistent with and promote the
policies of the Metropolitan Council as provided in the adopted Metropolitan Development Guide; and
WHEREAS, by June 30, 1996, each municipality must identify to the Metropolitan Council the actions the municipality
plans to take to meet the established housing goals; and
' WHEREAS, the Metropolitan Council must adopt, by resolution after a public hearing, the negotiated affordable and life -
cycle housing goals for each municipality by January 15, 1996; and
WHEREAS, a metropolitan area municipality which elects to participate in the Local Housing Incentives Account Pro-
gram must do so by November 15 of each year; and
WHEREAS, for calendar year 1996, a metropolitan area municipality can participate under Minnesota Statutes section
473.254 only if: (a) the municipality elects to participate in the Local Housing Incentives Account Program by November
' 15,1995; (b) the Metropolitan Council and the municipality successfully negotiate affordable and life -cycle housing goals
for the municipality; and (c) by January 15, 1996 the Metropolitan Council adopts by resolution the negotiated affordable
and life -cycle housing goals for each municipality;
' NOW, THEREFORE, BE IT RESOLVED THAT the [specific municipality] hereby elects to participate in the Local
Housing Incentives Program under the Metropolitan Livable Communities Act during calendar year 1996.
By. Mayor
By:
Clerk
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RESOLUTION NO.
RESOLUTION ELECTING TO PARTICIPATE IN
THE LOCAL HOUSING INCENTIVES ACCOUNT PROGRAM
UNDER THE METROPOLITAN LIVABLE COMMUNITIES ACT
Funding Accounts
The Metropolitan Livable Communities Act (MN Stat. Ch. 473.25) created the Livable Communities
Fund, consisting of three accounts:
■ The Tax Base Revitalization Account, which provides grants for polluted site cleanup;
• The Livable Communities Demonstration Account, designed to fund a variety of community
development projects through loans or grants; and
• The Local Housing Incentives Account, which provides grants to help cities work toward
affordable and life cycle housing goals through a voluntary program.
Criteria, by law, for the fund (all three accounts) include:
■ Helping to change long -term market incentives that adversely impact creation and preservation
of living -wage jobs in the region's fully developed area.
• Creating incentives for developing communities to include a full range of housing ■
opportunities.
• Creating incentives to preserve and rehabilitate affordable housing in the fully developed area, '
and
■ Creating incentives for all communities to implement compact and efficient development.
Each of the accounts is described on the following pages.
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TAX BASE REVITALIZATION PROGRAM
GUIDELINES AND CRITERIA
' Program Summary and Purpose: The Metropolitan Livable Communities Act (MN Stat. Ch. 473.25) created a
Tax Base Revitalization Account to make grants to clean up contaminated land for subsequent commercial/
industrial re- development, to make it available for economic redevelopment, job retention and job growth.
Amount of Funds Available: Approximately $6.5 million in funds will be available for grants annually; grants
will be awarded on a competitive basis.
Eligible Applicants: Statutory or home rule charter cities that are participating in the Metropolitan Livable
Communities Housing Incentives Program are eligible to apply; as are metropolitan counties (Anoka, Carver,
Dakota, Hennepin, Ramsey, Scott Washington) for projects in eligible communities.
Eligible Uses of Funds: Eligible expenditures under this program include costs to implement an approved Re-
sponse Action Plan (RAP) developed in conjunction with the MPCA for hazardous waste, or an abatement program
meets requirements of the V -PIC program (for petroleum) or AHERA standards (for asbestos). Costs incurred in
the preparation of the plan (e.g., investigating the extent and/or nature of contamination) are not eligible expendi-
tures under this program. These funds may be used to provide a portion of the local match required for a grant
from DTED's Contamination Cleanup Grant Program.
Project Selection Criteria: The Metropolitan Council is required to consider certain factors in order to ensure the
highest return in public benefits for the public costs incurred. In order to evaluate and rank applications, the
following criteria will be assigned point values in order to systematically and fairly compare the applications.
Applications will be ranked according to the extent that the address the following:
preserve and/or increase living wage jobs in the fully developed area;
promote compact and efficient development;
increase the tax base of the recipient municipality;
represent innovative partnerships among government, private for - profit and non - profit sectors;
are not eligible for clean-up funding from other public sources;
will not require extensive new infrastructure (beyond that which is already planned);
make more efficient use of currently underutilized public service capacity (e.g., roads and highways, transit,
wastewater, utilities, telecommunications infrastructure, etc.);
result in a net gain in jobs /industry for the region;
increase the number of living wage jobs in/near areas of concentrated poverty and demonstrate sensitivity to
linkages with local residents;
reflect demonstrated market demand for commercial/industrial land in the proposed site area; and
are consistent with the redevelopment component of the municipality's comprehensive plan (in re: Minn. Stat.
section 473.859, subd. 5).
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Application Cycle: Beginning in 1996 there will be two grant cycles per year: a spring cycle (RFPs in February,
applications deadlines in May, and awards announced in July) and a fall cycle (RFP in September, application
deadline in November and awards announced in January). If applications for grants exceed the available funds for
an application cycle, no more than one -half of the funds may be granted to projects in a single city, and no more ,
than three- quarters of the funds may be granted to projects located in cities of the first class. This program is being
coordinated with complementary programs at the MN Pollution Control Agency (MPCA) and MN Department of
Trade and Economic Development (DIED). ,
Next Steps: Information workshops for this program and DTED's grant program are scheduled for Thursday,
Sept. 7 (9:00 am -12:00 noon), Maplewood City Hall, 1830 E. Co Road B in Maplewood; and Monday, Sept. 11 '
(1:00 pm - 4:00 pm), Golden Valley City Hall, 7800 Golden Valley Rd. in Golden Valley.
For more information contact Hal Freshley, Metropolitan Council staff, at 291 -6467. 1
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EXAMPLES
SITE 1: City X is redeveloping a 6.9 acre parcel (formerly a trucking terminal) to create a new industrial park for
light manufacturing. The PCA determined that there is extensive petroleum contamination on the site. Since
petroleum does not qualify as a hazardous substance, the City applies to MC for $87,000 to pay for treatment of
the removed soil.
SITE 2: The former owner of this 17.5 acre site went bankrupt, leaving the site in public hands through tax
forfeiture. The parcel is in a prime location, with good highway and rail access. An approved clean-up plan will
cost $370,000. City Y applies to DTED for 50% of the clean-up cost, pays for 12% out of TIF funds, and applies
to MC for the remaining 38% -- $140,600.
' SITE 3: Zymogen Laboratories in City Z has recently received a very large long -term contract, and will be increas-
ing their workforce by 50 %, however the company will need additional space for shipping and receiving if they stay
at their current location. A parcel adjacent to their current site has a building on it that they could use as a ware-
' house, but the building has deteriorating asbestos insulation. City Z applies to MC for $12,000 to match the
company's investment in removing the asbestos.
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LIVABLE COMMUNITIES DEMONSTRATION PROGRAM
GUIDELINES AND CRITERIA
August 1995
Program Summary: The Metropolitan Livable Communities Act (Minn. Stat. Ch. 473.25) authorizes
the Metropolitan Council to establish the Livable Communities Demonstration Account, and make grants
or loans for community development activities to municipalities participating in the Local Housing Incen-
tives Program (Ch. 473.254) or to metropolitan area counties on behalf of participating cities.
Purpose: The Act states that the Account may be used for projects that:
1) link development or redevelopment with transit,
2) link affordable housing with employment growth areas,
3) intensify land use that leads to more compact development or redevelopment,
4) involve development or redevelopment that mixes incomes of residents in housing, including
introducing higher value housing in lower income areas to achieve a mix of housing
opportunities, or
5) encourage public infrastructure investments which connect urban neighborhoods and suburban
communities, attract private sector redevelopment investment in commercial and
residential properties adjacent to the public improvement, and provide project area
residents with expanded opportunities for private sector employment.
Amount of Funds Available: Approximately $4.6 million will be available in 1996, and $4.1 million in
1997 and subsequent years.
Form of Award: Grants and loans.
Grant and loan amounts and terms: To be determined.
Eligible Applicants: Municipalities participating in the local housing incentives program.
Location of Eligible Projects: Projects must be located in municipalities participating in the local
housing incentives program.
Eligible Uses of Grant and Loan Funds: Community development projects that meet the purposes of
the account (as described above), and support the housing goals, principles for livable communities, or
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' related policies in the Regional Blueprint. Eligible uses are expected to be site plans or other site - specific
planning costs, design and consulting costs, and construction of demonstration projects. Uses not antici-
pated to be eligible include comprehensive planning or other general planning costs.
Projects could demonstrate new development, infill or redevelopment on large or small sites, in fully
developed or developing communities. Components of proposed projects also could be eligible, and
' proposals that connect or integrate existing land uses. Mixed -use development proposals are encouraged.
Innovation and creativity in project and site design are encouraged.
It is expected that applicants could apply in different categories - -e.g. new development, redevelopment,
locating in proximity to each other or linking housing, jobs and transit. Number and type of categories to
be determined.
Project Selection Criteria: Priority will be given to proposals using innovative partnerships among
government, private for - profit, and nonprofit sectors, and to projects that best meet the purposes in the
law.
' Additional selection criteria will favor projects that result in livable communities. For example, projects
that provide walkable, pedestrian- oriented areas; provide good access for transit use and safe, comfort-
able places to wait for transit; broaden the mix of housing options (type and affordability level) in a
' community; foster a sense of place; provide a community or town center; incorporate design for safety in
public or private spaces; and involve community residents and businesses in defining needs, desires, land
use and design.
Application Cycle: One or two cycles yearly, beginning in 1996. If two cycles occur per year, applica-
tion deadlines would be in May and November, with awards announced in July and January. If one cycle,
applications would be due in September, awards announced in December 1996.
NEXT STEPS:
TASKS: Finalize Project Criteria, building on criteria in the Livable Communities Act and in the
Regional Blueprint. Consider whether priority should be given to certain proposals/locations. Determine
Uses of Fund, which uses should receive grants, which should receive loans. In doing this, consider how
best to leverage private investment with the available dollars. Discuss grant/loan amounts, terms.
COMPLETED: October 1995
PROCESS:
' Hold roundtable discussions in September to get input from local staff and officials, developers
and design practitioners, and others with an interest in livable communities, as well as
informal input.
' Review local and national information sources, including successful models and projects.
• Consult with administrators of loan/grant programs.
• Participate in Department of Trade and Economic Development workshops (Sept. 7 and 11) on
' its contaminated site cleanup grant program, to explain the Demonstration Program,
answer questions, get feedback.
EXAMPLES
Project A is on a portion of a redevelopment site in an older city that had been in industrial use. An
adjacent area has been redeveloped as a small business park, providing space for small enterprises includ-
ing a sign - making company. The city has been working to redevelop this site as a mixed -use housing and
commercial area. The site has transit access along a major collector street that is adjacent to the site. It is
close to an older employment concentration, providing jobs paying low to middle- income wages.
The city applied for a loan and grant from the Demonstration Account to assist with the housing and
commercial part of the project. The city plans to build townhouses and condominiums that will be afford-
able to a variety of income levels. Along the collector street, the proposal calls for locating small busi-
nesses providing neighborhood services such as a drugstore, convenience store and coffee shop. One
business has told the city it will commit to the project, encouraged to do so by the 15 percent tax reduc-
tion (enacted by the 1995 Minnesota Legislature) for locating along a transit line. Other businesses have
also expressed interest. A small public square is planned in an area near the businesses and transit stop
that will connect to the townhouses via a pedestrian walkway. The proposal also calls for rerouting a
street from its original configuration to connect directly to the collector street, to allow better pedestrian
accessibility to the bus stop and neighborhood businesses.
This proposal received a $500,000 loan, as a match for the local contribution, to complete a financing
package for the construction of 50 townhouses and two 3 -story condominium buildings. The proposal
also was awarded a $75,000 grant to undertake a process with community residents and businesses to
develop and refine the project's design.
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TASK: Develop Procedures, Application form(s), Timing of Loan/Grant Cycle, Selection Process.
Decide whether to form a grant review committee, or conduct staff review based on predetermined
criteria, with recommendations to the Livable Communities Advisory Committee. Discuss weighting
system for selection criteria. Determine whether maximum loan/grant amounts should be set, and what
those amounts should be.
' COMPLETED: December 1995
PROCESS:
• Consult with staff administering other loan/grant programs, within and outside the Council.
• Get input from local staff and officials, developers, others, through meetings described above and
other discussions.
' If you have questions about the Livable Communities Demonstration Program, or to participate in
roundtable discussions on the development of the program, contact Joanne Barron of the
Metropolitan Council staff at 291 -6385.
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LOCAL HOUSING INCENTIVES ACCOUNT
GUIDELINES AND CRITERIA
Program Summary: The Metropolitan Livable Communities Act (Minn. Statutes Chapter 473.25) created
the Local Housing Incentives Account (LHIA) which authorizes the Metropolitan Council to make grants to
eligible municipalities to meet negotiated affordable and life -cycle housing goals that are consistent with and
promote the policies of the Metropolitan Council.
Purpose: The LHIA provides incentives for municipalities to create and/or maintain affordable and life -cycle
housing opportunities.
Source and Amount of Available Funds: For 1996, $1,000,000 from the proceeds of solid waste bonds
issued by the Council; for 1997 and each subsequent year, $500,000 from the Livable Communities Demon-
stration Account; for 1998 and each subsequent year, $1,000,000 from the Council's general levy. Beginning
in 1998, the LHIA may receive funds from cities that have not met their negotiated housing goals and/or have
not spent 85 percent of their Affordable and Life -cycle Housing Opportunities Amount (ALHOA). The
Council is working cooperatively to link the LHIA funds to those of other housing funders, e.g., the Minne-
sota Housing Finance Agency, the Family Housing Fund and others; the potential pool for 1996 is $5.1
million.
Grant Terms and Amounts: To be determined.
Eligible Applicants: Any municipality in the seven - county region that (1) elects to participate in the LHIA
program, i.e., negotiates affordable and life -cycle goals with the Council; (2) has its negotiated housing goals
adopted by the Council; (3) identifies to the Council the actions it plans to take to meet the established hous-
ing goals.
Location of Eligible Projects: LHIA funds may be used for affordable and life -cycle housing projects in
eligible, participating communities.
Eligible Uses of Grant Funds: For certain costs associated with projects that help municipalities meet their
housing goals, including, but not limited to acquisition, rehabilitation and construction of permanent afford-
able and life -cycle housing. Projects proposing homeownership opportunities for families with low and
moderate incomes are strongly encouraged. The LHIA funds must be matched on a dollar- for - dollar basis by
the municipality receiving the funds.
Project Selection Criteria: The funds in the account must be distributed annually by the Council to munici-
palities that have not met their affordable and life -cycle housing goals and are actively funding projects de-
' signed to help meet the goals. The legislation gives priority to those municipalities that: (1) have net fiscal
disparities contributions of $200 or more per household; (2) demonstrate that the proposed project will link
employment opportunities with affordable housing and life -cycle housing; (3) provide matching funds from a
source other than its ALHOA; and (4) utilize innovative partnerships between government, private for - profit,
and nonprofit sectors. The Council may take other criteria into consideration when determining whether an
application will be selected, including (a) the documented need for the proposed type of residential housing in
the proposed geographic area; (b) projects that serve families and children; (c) the relationship of the proposed
development to public facilities, sources of employment, and services, including public transportation, health,
education and recreation facilities; (d) participation in the Hollman settlement.
Application Cycle: Annually, beginning PP
innin in 1996. Applications for LHIA funds will be accepted from July
through August, with final selection and award by the Council in October.
Action Steps
Over the next few months, staff intends to contact a number of parties (advocacy and professional groups)
believed to have an interest in the design of the LHIA guidelines and criteria and application materials. Staff
may also hold special informational sessions and contact staff at certain cities for input. Recommended guide-
lines and criteria will be available in October.
Timelines
J
ulv /August/September 1995
Staff discussions of draft guidelines and criteria
' Discuss draft criteria and issues with the Metro HRA Advisory Committee
Discuss mutual interests and possible linkages with the MHFA
Discuss draft guidelines and criteria with the Housing Implementation Group
Present draft guidelines and criteria to the LCAC
Present draft guidelines and criteria to the CDC
' Staff meetings and negotiations with municipalities
Meet with interested parties (e.g., advocates, professional organizations, etc.)
October 1995
Develop recommended guidelines, criteria and application materials
November 15. 1995
Cities must elect to participate in the LHIA program
December 15. 1995,
Submit recommended guidelines, criteria and application materials for approval
January 15. 1996
Council adopts goals negotiated goals
June 30, 1996
Housing action plans from municipalities are due to the Council
July 1. 1996,
Grant application cycle begins
August 30, 1996,
Grant application cycle ends
October 1996,
Grant award selections announced
Staff Resource: David Long, Office of Local Assistance; telephone: 229 -5005.
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Housing Goals Agreement
Definitions
Affordability
Housing is defined as affordable if it costs no more than 30- percent of a household's income. The Index and Benchmarks in the
housing agreement are based on the following:
Ownership: homestead values for 1994 of $115,000 or less. This is the approximate unit cost affordable to housholds with
incomes at 80- percent of the 1994 regional median income.
Rental: 1990 census, rents of $500 or less per month. In 1990 this rent level was affordable to households with incomes at 50-
percent of regional median income.
Life -Cycle Housing
Life -cycle housing is a term used to refer to the availability of housing for people of all stages of their lives. Communities with a
wide variety of housing types for ownership and rent are in a good position to meet the people's changing needs as their incomes
and preferences change. The Index and Benchmarks in the housing agreement are based on the following:
Type: 1993 Council estimate of the percent of all housing units that were not single - family detached.
Owner/Renter Mix: 1990 census, percent owner - occupied/percent rental housing units.
Density
Units per acre. Derived from the 1990 census of unit types and the Council's interpretation of 1990 aerial photography of the
region.
Single- Family Detached: All single - family detached housing units and duplexes divided by the Council estimate of acreage with
single - family housing.
Multifamily: 1990 census count of multifamily units divided by the Council estimate of land with multifamily housing develop-
ment.
Index
The community's current housing situation.
Benchmark
The current housing situation for the community's geographic sector and planning area.
Goals
The community's goals for housing affordability, life -cycle housing and density.
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How to Open Doors to Affordable Housing
Many factors affect the production and cost of housing. Some ways local governments can provide more affordable
' housing in their communities are:
Finding opportunities in land -use ordinances, fees or administrative processes to reduce the purchase price or
cost of new or rehabilitated housing. Authority for land -use regulation is provided to local governments in order
to protect the public health, safety and welfare. Land use regulations also protect against inappropriate land use
and safeguard the natural environment. Adhering to land -use objectives helps keep development costs down and
r allows for housing opportunities for all residents. Local governments can impose fees and exactions to recoup the
costs of development. When used appropriately, this mechanism helps cities recover public costs associated with
development. Review and approval processes involving subdivisions, building permits, sewer and water facilities
' and environmental impacts are necessary. However, short, succinct and uncomplicated procedures can help keep
the cost of development down.
' Linking up with the financial resources to get affordable housing built. The funding environment for affordable
housing has changed dramatically over the last decade. During the 1970s and early 1980s, housing was easier to
produce because federal finds, such as those from the Section 8 New Construction program, were available. In
addition, a favorable tax climate provided incentives for developers to produce affordable housing. Today, with
most federal funding no longer available, affordable housing requires combining public and private finds in com-
plex housing deals. To plan and produce affordable units, local governments need to seek out and use the fman-
cial tools that are available today.
Using land -use ordinances or other means to locate affordable, life -cycle housing near employment concentra-
' tions, or link people who live in a distant locale to jobs. Access to affordable housing in the community of their
choice is a shared value of many metro area residents. Many also prefer to work in or near the community in which
they live. Unfortunately, many residents are denied the option because affordable housing is not available near their
place of employment or they aren t qualified for the jobs near their homes. In addition, getting to and from job sites
is often a problem due to inadequate transportation services. Providing access to employment, whether through
location of affordable housing or transportation services, is a vital link to a healthy regional — and local --
' economy.
Educating residents on housing issues to build community support for proposed housing developments.
Opposition to affordable housing by prospective neighbors and other city residents is often based on misinformation
' and fears. Residents may express opposition to specific types of housing, to changes in the character of the com-
munity, to certain levels of growth, to any and all development, or to economic, racial or ethnic diversity. A
compelling case can be made that the development is, in fact, in the city s best interest. The community needs to
make the case.
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Suggested Actions for Local Governments
These actions will help create an environment more conducive to the production of affordable and life-
cycle housing, but producing the housing is recognized for what it is -- a difficult task. It requires politi-
cal will. It takes resources, which have dwindled, and include not only money but support services to '
meet the needs of assisted families. It takes expertise.
The Council will work with local governments in a partnership to meet the goal of more affordable and
life -cycle housing in the region. Some of the factors discussed in this section are directly under the
control of local government, such as land -use ordinances. In other areas, linkages need to be made with
resources to get the housing built. The Council will provide assistance to local governments toward this
end. - -
Finding opportunities in land -use ordinances, fees or administrative processes to
reduce the purchase price or cost of new or rehabilitated housing.
Examples of Local Action:
• Reduce required lot sizes. '
• Encourage zero lot line development or other innovative site planning techniques.
bonuses for developing at higher densities. '
❑ Offer density bo g p b b
❑ Allow planned unit developments or mixed -use development. '
❑ Allow some housing without two -car attached garages. '
• Reduce surfacing width or depth requirements for residential streets.
• Implement flexible land - clearing ordinances that protect the environment and are cost effective. '
❑ Allow for a variety of housing types, including manufactured and accessory housing, through '
local zoning ordinances.
❑ Establish criteria that ensure that fees are related and fairly proportioned to the need for facilities
and services generated by the proposed development.
• Exempt or provide reduced fee schedules for affordable housing. '
• Impose linkage ordinances which require the developer to pay a fee in lieu of construction into a
housing trust fund, or make equity contributions to low -and moderate - income housing projects. I
• Reduce or consolidate reviews by advisory bodies to the municipality s elected council or board. '
• Implement a simplified permit process.
Linking up with the financial resources to get affordable housing built.
' Examples of Local Action:,
❑ Work with the Metropolitan Council staff to make the best use of currently available programs.
' Identify tools available through the Minnesota Housing Finance Agency and the Department of Housing
and urban Development, as well as identify local funds that may be available to develop housing opportu-
nities. For more information on these and other programs, call the following organizations: Department
of Housing and Urban Development (370 - 3000); Metropolitan Council housing staff (291 - 6456); and the
Minnesota Housing Finance Agency (296- 7608).
' Communities can make use of such local fiscal initiatives as:
• Housing Revenue Bonds *: Tax exempt bonds can be used to fund a multi- family development,
providing 20- percent of the units for families at 50- percent of the median regional income.
' Tax Increment Financing (TIF): TIF can be used to write down land costs. Restructions also
apply.
• HOME: This is a federal grant program to rehabilitate existing rental properties.
• Community Development Block Grant (CDBG): These funds facilitate the development of
affordable housing.
• Metropolitan Council Credit Enhancement Program: This program allows HRAs to back
' their bonds with the Metropolitan Council s AAA credit rating.
' Employ Local HRA Levy.
❑ Become informed about available tools and how to use them, and look for ways to provide these
opportunities to residents. Seek advice and guidance from the Metropolitan Council, Minnesota Housing
Finance Agency, local banks or other experts to link complex programs in order to take full advantage of
opportunities. The Minnesota Housing Finance Agency alone offers 16 different home improvements
programs, 14 homeownership programs and 17 rental programs. Some of these are as follows:
• Low- Income Housing Tax Credits: Offers a 10 -year reduction in tax liability to owners and
investors in these categories: eligible low income, new construction, rehab or existing rental
housing with rehab.
• Housing Trust Fund: Provides funds for development, construction, acquisition, preservation
and rehab of low- income rental housing and homeownership.
' Affordable Rental Investment Fund: Provides funds for acquiring, rehabilitating or construct
ing new affordable rental housing.
' Community Reinvestment Act Incentive Program (CRAIP): Provides set -aside of mortgage
revenue bond funds (below - market interest rate first mortgage financing) to assist local
lenders in meeting homeownership needs of their communities and their Community Reinvestment
Act (CRA).
• Minnesota Communities Program (MCP): Provides cities with spot loan set- asides of
mortgage revenue bond funds (below - market interest rate first mortgage financing) for specialized
homeownership projects undertaken to address locally identified housing needs.
• Low - and Moderate - Income Rental: Provides for acquisition and rehab or permanent and
construction financing for multifamily low- and moderate- income rental housing (minimum of 5 '
units).
Locating affordable housing near employment concentrations, or using reverse ,
commute programs to link people who live in a distant locale to jobs.
Ex am p les of Local Action:
❑ Participate in or create a reverse commute program. '
❑ Implement Land -use regulations that promote higher - density, affordable development close to I
new employment sites or public transportation.
❑ Participate in programs that may target the provision of affordable housing near job sites. I
❑ Partner with local businesses to offer training and re- training opportunities for lower- income
households. '
Educating residents on housing issues to build community support for proposed
housing developments. I
Examples of Local Action: '
• Prepare materials and programs to educate residents about affordable and life -cycle housing and
its benefits to the community. '
• Establish housing or human services commissions or task forces to work on affordable and
life -cycle housing issues. I
Benchmarks,: ST, PRANCI•
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Housing Goals and Benchmarks
How to Use the Index
Preparing Action Plans
The agreed -upon goals should be considered in the preparation of action plans by a community. The
action plan should be based on a comparison of its index to the benchmarks for each of the six measures
across the three categories (affordability, life -cycle and density). There are three possible situations for
each measure: the index is lower than the benchmark range, within the benchmark range, or above the
benchmark range.
In each case where an index is below the benchmark range, the city's action plan should set forth imple-
mentation activities that will help it move towards the benchmark. For example, if a city has multifamily
housing density that is below the benchmark range, it should consider actions such as increasing the
density allowed in future development, imposing a minimum density standard, and/or creating incentives
to encourage higher density development, such as density bonuses in a Planned Unit Development Ordi-
nance.
If an index is within the benchmark range, the city should plan actions to maintain its position within the
range. For example, if a city has an owner /renter mix that is within the benchmark range its plan might be
a review of land use plans for future development to assure there is sufficient land for development of the
types of housing that would keep the city within the range.
If an index is above the benchmark range, the city's objective should be to stay within the range. For
example, if a city has a percentage of single family housing valued below $115,000 that is above its
benchmark range, it can increase the amount of higher priced housing in the commuity as long as it does
not result in the affordable ownership percent falling below the benchmarks.
goals.pm5 8 -16/95
Imo•
DRAFT
HOUSING GOALS AGREEMENT .
' METROPOLITAN LIVABLE COMMUNITIES ACT
PRINCIPLES
The city of - - - - - -- supports:
1. A balanced housing supply, with housing available for people at all income levels.
2. The accommodation of all racial and ethnic groups in the purchase, sale, rental and
location of housing within the community.
3. A variety of housing types for people in all stages of the life - cycle.
4. A community of well- maintained housing and neighborhoods, including ownership and
rental housing.
5. Housing development that respects the natural environment of the community while
' striving to accommodate the need for a variety of housing types and costs.
6. The availability of a full range of services and facilities for its residents, and the
improvement of access to and linkage between housing and employment.
' GOALS
' To carry out the above housing principles, the City of - - - - -- agrees to use benchmark indicators
for communities of similar location and stage of development as affordable and life -cycle housing
goals for the period 1996 to 2010, and to make its best efforts, given market conditions and
resource availability, to remain within or make progress toward these benchmarks.
II CITY INDEX II BENCHMARK I GOAL I
I '
' Affordability
Ownership % %
Rental % %
I Life -Cycle
' Type (Non - single family I % %
detached)
Owner /renter Mix � /% () / ()%
' I Density
Single - Family Detached /acre /acre
' I Multifamily /acre /acre
' To achieve the above goals, the City of - - - - -- elects to participate in the Metropolitan Livable
Communities Act Local Housing Incentives Program, and will prepare and submit a plan to the
Metropolitan Council by June 30, 1996, indicating the actions it will take to carry out the above
' goals.
CERTIFICATION
Mayor Date