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03.18.2025 PC MinutesCHANHASSEN PLANNING COMMISSION REGULAR MEETING MINUTES MARCH 18, 2025 CALL TO ORDER: Chairman Noyes called the meeting to order at 6:00 p.m. MEMBERS PRESENT: Chairman Eric Noyes, Jeremy Rosengren, Perry Schwartz, Ryan Soller, and Katie Trevena. MEMBERS ABSENT: Edward Goff, and Steve Jobe. STAFF PRESENT: Eric Maass, Community Development Director PUBLIC PRESENT: Linda Paulson 7603 Frontier Trail Allison Streich Executive Director, Carver County Community Development Agency Debbie Lloyd 7302 Laredo Drive PUBLIC HEARINGS: 1. ORDINANCE XXX: DENSITY BONUSES AMENDMENT Eric Maass, Community Development Director, reviewed Housing Policy 1.7.2 from the 2040 Comprehensive Plan. He said that the City Code would need metrics for how it is applied, but the City Code does not currently have any standards in effect. He said this had been in the 2040 Comprehensive Plan for some years. He said that two development projects are interested in exploring this density bonus and they requested that the city clarify the information. He reviewed the 2040 Income Limits for the Metro Area at 80 percent Annual Median Income, 50 percent Annual Median Income, and 30 percent Annual Median Income (AMI). He explained the steps they took to draft the ordinance, which included research by reaching out to other cities to identify similar bonuses and they met with two private developers to gauge the usability of the ordinance. Mr. Maass explained that the second step was to draft ordinance section one and read the suggested language. He stated that he spoke with the developers about the usability and that developers sometimes find it difficult to find 80 percent AMI-eligible renters. He reviewed the developers' feedback about 60 percent AMI and that typically those projects require financial incentives in order to be viable. He explained that the Planning Commission suggested a contract to enforce the bonuses between the city and a developer. Mr. Maass explained the bonus units should be provided throughout the development, and they should be the same design, size, and materials as the market rate units. He stated that the unit type should be consistent with the rest of the development to create a variety of units. He said that the affordable units shall not be charged any fee that is also not levied Planning Commission Minutes – March 18, 2025 2 against market-rate renters. The City Council would have the sole discretion to approve or deny the requested density bonus. It could also be denied if the infrastructure adjacent to the development site is deemed insufficient by the city to support the increased density. Mr. Maass reviewed the ordinance timeline and explained that the Planning Commission would complete a public hearing on the draft ordinance and recommendation. He explained that they received public comments at the City Council, which he included in the packet. Chairman Noyes asked if there was a list of acceptable denial reasons. He asked if the city could deny a development to not oversaturate the market, or if it was specific criteria. Mr. Maass answered that the City Council had broad discretion over the approval or denial for a density bonus request. Commissioner Schwartz asked about the motivation for a developer to include the bonus units in their development. Mr. Maass responded that the incentive would be additional units. Although they would be restricted in the rents they could charge, certain sizes or scales of apartments would still have costs of maintenance and management. This would help spread the costs across units to make it more affordable for the whole building. Commissioner Schwartz asked if it could deem the project economically infeasible. Mr. Maass answered that they would not be required to incorporate the bonus units. Commissioner Rosengren asked if there was a floor of the number of units you could see per zone. Mr. Maass responded that the floor would be eight units per acre as that was the least dense zoning district that would be deemed eligible for a potential density bonus. Commissioner Rosengren said that smaller numbers of units would make certain parts of the ordinance difficult to comply with. He said it would be harder to maintain consistency in the unit layouts and distribution if there were fewer units. He expressed concern about the ability to comply with lower levels and if it would make sense to put a floor on it to help make the distribution more feasible. Mr. Maass said that Mr. Rosengren’s concerns made sense. He thought they could make the ordinance work with the developer in a smaller ordinance. He said he hesitated to put a floor of the base number of units per building because he did not have a strong basis for establishing the floor beyond the base zoning district density allowance. Commissioner Rosengren said they would rely on the approval mechanism to make sure a proposal fits within the parameters. Mr. Maass confirmed this information. Commissioner Trevena asked about the developers' interest and how many units they were contemplating. Mr. Maass answered that one developer showed interest in two different projects. He said one project was approximately 58 units, and the other was between 40 and 50. Commissioner Trevena asked about the city’s target for affordable units. Mr. Maass responded that the Metropolitan Council determines the gross amount of affordable housing required for the metro area and then distributes the amount to all the communities within the seven -county metro Planning Commission Minutes – March 18, 2025 3 and then requires cities to plan for providing that amount of affordable housing. They are given the opportunity through the land-use controls to create affordable housing for anything guided for anything at least eight units per acre net density. He did not have the specific numbers of affordable housing on hand in Chanhassen at this time. Commissioner Schwartz asked if the developer had to promote or advertise that they had affordable units within the development. Mr. Maass answered that they would make it known. Commissioner Schwartz asked if a prospective renter would know if they qualified for affordable housing. Mr. Maass answered that it was up to the prospective renter to know if they qualified for affordable housing. Commissioner Schwartz asked if the developer noticed that the applicant qualified for an affordable unit if the developer would likely notify the applicant that they were qualified. Mr. Maass responded that they would likely be incentivized to tell the individual that they were qualified. Commissioner Schwartz asked if there were not enough market-rate applicants to fill a development, the affordable units still had to remain available. Mr. Maass answered that the affordable units had to remain available for those who qualified for them. He explained that the building owner could not rent an affordable unit if the renter did not qualify for it. Commissioner Rosengren reviewed point six which said a household that was income eligible at initial occupancy can remain for additional rental periods if the income does not exceed 140 percent. He asked if someone living in the units had to prove their income each year. He asked if there was an ordinance that explained the compliance or if it was up to the tenant and the building management. Mr. Maass said that the city receives annual income statements for the individual renters within the affordable units to verify that they are within the AMI. The city would flag someone outside of the AMI. The renter would receive a period to find a new housing option when their income no longer complies with the AMI. Commissioner Rosengren said that the builder manager would collect the information from the tenant. Mr. Maass confirmed that the city’s role was verification. Chairman Noyes asked about future market-rate housing projects, if developers would be asked to consider affordable solutions. Mr. Maass answered that when a project is contemplated, they will check with the city staff about what to be aware of when it relates to the project. He said it was in the City Code, so they would share it with a developer who would be interested and eligible. Chairman Noyes clarified that it was not a requirement for them to do affordable housing. Mr. Maass confirmed that affordable units would not have to be provided with every market-rate project. Chairman Noyes said that the Metropolitan Council had encouraged an increase in affordable housing opportunities. He said that there had been pushback from communities on how the Planning Commission Minutes – March 18, 2025 4 Metropolitan Council approached the topic. He asked if this was the start of a path that would lead towards trying to comply with what they were asking for. Mr. Maass answered that the purpose of the ordinance was to follow up with a policy in the 2040 Comprehensive Plan. Commissioner Soller commented that they feel compelled to decide because it was already strategically decided when the Comprehensive Plan was finalized. He said that the housing policy permits them to make an ordinance that puts policy in place, but the plan itself does not compel them to put the ordinance into effect. He said that the City of Chanhassen was not prescribed to do this ordinance. Mr. Maass explained that the housing policy was in the Comprehensive Plan and was reviewed by various commissions and the City Council and ultimately adopted by the city. He said that it was an aspirational policy, but it did not have teeth until it was a specific ordinance with specific rules and regulations. He said that the policy uses the word “may,” so the city has the choice to work towards the policy. Commissioner Soller said he viewed it as an exchange. They were permitting going over the zoning requirement in exchange with the developer following the affordable housing requirements that they set out in the ordinance. He said it seemed to be a common exchange that other cities in the metro area have put into ordinance. He asked what drove the decision around 80 percent AMI and where they landed on 80 since other metro cities had 50 or 60 AMI ranges. Mr. Maass answered that what drove the 80 percent was the feedback was for an opportunity for it to be a tool that does not require financial participation from the City, County, State, or Federal Government to offset the loss of rental revenue. They specifically said 80 percent AMI or less, in case someone wants to utilize the tool without asking for TIF from the city. Commissioner Soller clarified that it helps reduce the financial entanglement of the city. He said that the city would not be out anything financially, but it would be a net-neutral way that the city can incentivize affordable housing. He said that other tools to incentivize affordable housing would require financial participation. Mr. Maass confirmed this statement, and he said that they may still see requests of TIF, but the hope was that it created an opportunity where it did not always have to be a request. Commissioner Soller asked if the twenty years was a standard found in other ordinances. He asked if that was long enough to guarantee a long-term strategic position that favored affordable housing. He asked if the bonus units could go up to market rate after twenty years. Mr. Maass answered that the twenty years were based on the other policies from other cities that they reviewed. He said that housing stock that was not new was often more affordable than new housing stock built in the twenty years since. He asked Commissioner Soller to repeat his second part of the question. Commissioner Soller said that they see the value increase in the city and asked if twenty years was long enough. Mr. Maass responded that the longest range they saw in their research was twenty-five years. If the city thought that was important, they could increase the range. Planning Commission Minutes – March 18, 2025 5 Chairman Noyes said that Chanhassen was unique since they did not have a lot of land to develop. There would be a supply-and-demand issue at some point. Mr. Maass reviewed the information from the 2040 Comprehensive Plan with respect to the affordable housing need allocation. He said that Chanhassen’s 2021 to 2030 allocation of need was 806 housing units. He stated that 464 of those were at or below 30 percent AMI, 197 of those between 31 and 50 percent AMI, and 145 units were between 51 and 80 percent AMI. Commissioner Schwartz said that the 80 percent AMI was the threshold of people who would qualify for affordable housing. He said that was the smallest percentage of people compared to the 30 and 50 percent AMI. Mr. Maass said that the hardest housing to construct was the 30 percent, but it was difficult to find the 80 percent group. The sweet spot was between 50 to 60 percent since those individuals were often seeking affordable housing. Commissioner Schwartz said that the challenge was for the people in the 30 percent AMI bracket to find affordable housing. Mr. Maass confirmed this information. Chairman Noyes opened the public hearing. Allison Streich, Executive Director at the Carver County Community Development Agency, expressed support for this ordinance. She thought this was a great tool to provide affordable housing. She said that when the community supports abundant housing, the whole community benefits. She stated that affordable housing allows people to live and work in the community. Chanhassen imports 94 percent of its workforce, so affordable housing allows more individuals to live in the community. She said that the housing cost burden in Chanhassen was relatively high. The housing cost burden is when a household pays more than 30 percent of their income to their housing expenses. She stated that Chanhassen has 21 percent of their rental households are cost burdened, and an additional 22 percent are significantly cost burdened and paying 50 percent or more of their income to housing expenses. Ms. Streich said that the demand for housing units in Chanhassen was 6,829 and they needed 169 subsidized units. She explained these units were for those with 30 percent AMI and they were the most difficult to find and build because they required so much subsidy. The demand for affordable rental was 152 units. Affordable rentals were considered 60 percent AMI or below. She said there was a demand for housing with income limits up to 80 percent AMI. Debbie Lloyd, 7302 Laredo Drive, stated she had a pre-written statement. She asked if the role of the Planning Commission was to question what was presented to represent the community’s interest or to rubber-stamp everything that was presented. She said that it should be to understand the ramifications of their decision which impact the entire community. She voiced appreciation for all the questions asked so far. She reviewed the CBD moratorium which was imposed on July 17, 2023. The community thought that the moratorium was established because of the uproar of building the venue apartments. She said that Roers Development submitted their plans to the city. The real intent of the moratorium was to prevent a retail drive-through from being built in a parking lot that was privately owned. She said that the community was misled. She said that Planning Commission Minutes – March 18, 2025 6 during the moratorium, the Planning Department introduced an amendment to the parking code for the CBD which reduced the parking requirements for Roers Development, which was before the development was known to the citizens of the community. She said that the third attempt at the development has caused the density bonus amendment to be considered, as discussed in the City Council meeting on March 10. She reviewed each question. One question was about sixteen cities being contacted by the Planning Department to see if they had a similar amendment. Only one city had a density amendment, which was Bloomington. She asked if they saw a visual of how many properties could be impacted by this amendment and what their adjacent neighborhoods were. She thought that it would be a valuable tool to understand the impact of the amendment. She said that notification of neighbors within 500 feet would only go out once an amendment was proposed. She voiced concerns about the drawbacks to existing neighborhoods and the impact on property values. She said that this amendment notification draws a strict parallel to the parking amendment. She said that the Bloomington Code specifically requires public health, safety, and general welfare. She read the PUD from the code, which stated that PUD offers enhanced flexibility to develop a site with the relaxation of most zoning district standards. The PUD zoning allows for a greater variety of uses, such as internal transfers of density, construction phasing, and potentially lower development costs. In exchange for this flexibility, the development plan must have a significantly higher quality and more sensitive proposal. She said that density within a PUD should be calculated on net acreage located within the property lines following the land use plans. She said that developers could double-dip with the flexibility of a PUD and an even higher bonus density. Linda Paulson, 7603 Frontier Trail, continued to discuss concerns. She said that there were other financial mechanisms to create affordable housing. She said a density bonus could harm property values and the general nature and feel of neighborhoods. She said the bonus density provides greater density than the code. She said that concerning the ordinance, she asked if income- eligible families included single people and if developers could use other tools and incentives along with a density bonus. She said that they wanted the City of Chanhassen to communicate about how it would impact neighborhoods. She said that it was ironic that the Chanhassen Mayor may be fending off other State of Minnesota proposed zoning reformed bills in the legislature that limited local decision-making. She said she had attended a lot of meetings, and the City Council discussed updating the 2050 plan. She expressed concerns with the Metropolitan Council, since they were unelected bureaucrats. She stated that the new Secretary of HUD eliminated the density housing destruction of the metro areas. He called for opportunity areas. She said that they did not need to deal with the HUD statistics, but she said they should get on track with the new rules coming out. She said it would be important to wait until what was coming up from the federal level so that Chanhassen can remain the great city that it currently is. She expressed the importance of holding off on the decision. Chairman Noyes closed the public hearing. Commissioner Schwartz said that 94 percent of the workforce coming into Chanhassen did not live here. He asked if it was because they could not afford to live here. Mr. Maass answered that there could be a myriad of different reasons, but it would be fair to say that there was a lack of affordable housing options to provide someone a chance to live and work in the city depending on their income. Planning Commission Minutes – March 18, 2025 7 Commissioner Soller asked if there were ripple effects if they started exceeding the density requirements by going up to 25 percent more. He asked if it would impact the infrastructure, such as parking or setback requirements. He said if a developer starts coming forward with a project that had a 25 percent increase but asked for a variance to build a structure that would comply, how the Planning Commission should think of it in terms of criteria. Mr. Maass answered that the project would have to meet the standard zoning district requirements. If a project had to request a variance and the aspect that was triggering the variance, they would not have a basis for the variance. Commissioner Soller asked if the variance would be in effect before the Roers Development would go through, that development would not be able to max out 25 percent of additional housing units because of the confinement of the property. Mr. Maass answered that the property would not have the capacity for 25 percent more units and they requested TIF, so the city had latitude on the architecture and unit count. Commissioner Soller asked if the ordinance puts all the approval and denial power in the hands of the staff. Mr. Maass responded that it would be in the hands of the City Council. Commissioner Soller asked when the decision maker was determining the decision, if the ordinance went far enough in specificity or if the ambiguous nature was more common which allowed more latitude for the City Council to evaluate based on the circumstances of the time. Mr. Maass answered that the geographic distribution allowed for specific metrics. He explained that he worked with the City Attorney to develop the language so that the City Council would have the sole discretion. Chairman Noyes asked if the City Council had sole discretion if it provided awareness and input from citizens regarding the project. Mr. Maass responded that any project would come under a site plan application, which required a public hearing that would allow for formal feedback. They also hold neighborhood meetings. Commissioner Rosengren said that a lot of cities have stronger language that requires developers to do these projects. He said that the language in this ordinance is not as strong, since it says ‘may.’ He stated it would be a way for Chanhassen to provide more affordable housing in a light touch way since it is not mandating anything. He stated it allows direct feedback for the City Council if they see things out of line. Commissioner Schwartz said that Chanhassen should do something. He said that the word may was a critical word in the ordinance. He said that Chanhassen has a role to serve the needs of all people and not to exclude people from the city with the fear that the quality of life would diminish. Chairman Noyes said it was a tool that they were putting in the toolbox. He said they needed continuous and easy ways for citizens to weigh in on projects. He said that people need the visibility to weigh in on these things, so he agreed with the definition of lightly dipping their toes into the option for affordable housing. He did not want hard numbers to require the use. He liked Planning Commission Minutes – March 18, 2025 8 that there would be a heavy analysis of any project that would request to utilize the density bonuses. Commissioner Schwartz said it was there for a developer to use if they chose to use it. Commissioner Soller said he was skeptical about 80 percent, but when he heard that there was a high demand for that range. He said houses were expensive in the City of Chanhassen. He thought that the AMI chart was helpful for people to understand. He encouraged them to erase the stigma around affordable housing. Chairman Noyes asked about the language being 80 percent or lower. He said if someone came forward with a project below 80 percent and the economics did not work if there would be consideration of a TIF request. Mr. Maass answered if a TIF request was made, it required its own public review process in addition to a plat process. Mr. Maass discussed the definition of inclusionary housing policy. He said that the policy required affordable housing, but this language did not make that requirement. He said that the example of 80 percent AMI was taken from the City of Shoreview. Commissioner Rosengren moved, Commissioner Schwartz seconded that the Planning Commission recommend adoption of the Ordinance establishing regulations associated with density bonuses for affordable housing as presented. All voted in favor and the motion carried unanimously with a vote of 5 to 0. GENERAL BUSINESS: APPROVAL OF MINUTES: 1. APPROVAL OF PLANNING COMMISSION MINUTES DATED MARCH 4, 2025 Commissioner Trevena moved, Commissioner Rosengren seconded to approve the Chanhassen Planning Commission summary minutes dated March 4, 2025, as presented. All voted in favor, and the motion carried unanimously with a vote of 5 to 0. COMMISSION PRESENTATIONS: None. ADMINISTRATIVE PRESENTATIONS: Mr. Maass reminded the commissioners that the April 1 Planning Commission meeting has been rescheduled for April 8. He noted that Commissioner Schwartz and Commissioner Goff were finalizing their terms tonight. He appreciated their public service. Commissioner Schwartz thanked the Planning Commission for the time together. Commissioner Trevena noted that she would miss Commissioner Schwartz. Planning Commission Minutes – March 18, 2025 9 Mr. Maass said that the April 14 City Council meeting would recognize all outgoing commissioners for their service. They were invited to take their name tags tonight for a memento. Chairman Noyes asked about the update to the Nez Perce Connection. Mr. Maass said that the Planning Commission by-laws allowed for discussion of items during specific sections of the agenda. They can ask these questions during the Administrative Presentation item. He said that it was an active land use application, so he requested that they do not discuss the question since the neighborhood was not made aware that it could be talked about this evening. Chairman Noyes said it could be discussed next time. Commissioner Soller asked if Chair Noyes’ term as chair was a one-year term or a two-year term. Chair Noyes stated they would vote on the chair in April. Commissioner Schwartz asked about the Lake Ann Golf Course. Mr. Maass answered that he did not think it was an active discussion. Mr. Maass said that the Chanhassen Community Center would have a neighborhood open house on March 25 from 5 to 7 p.m. hosted by the apartment developer for the Avienda project. The City Council will receive a briefing on this information on March 24. Chairman Noyes asked if the presentation would be made public after the meeting. Mr. Maass said that he could include any additional documentation in the agenda packet. The current documents are already included in the City Council agenda packet. CORRESPONDENCE DISCUSSION: None. OPEN DISCUSSION: None. ADJOURNMENT: Commissioner Schwartz moved, Commissioner Trevena seconded to adjourn the meeting. All voted in favor and the motion carried unanimously with a vote of 5 to 0. The Planning Commission meeting was adjourned at 7:08 p.m. Submitted by Eric Maass Community Development Director