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HomeMy WebLinkAbout1990 01-08 HRAP• HRA AGENDA CITY OF BROOKLYN CENTER JANUARY 8, 1990 (following adjournment of City Council meeting) 1. Call to Order 2. Roll Call 3. Resolution: a. Approving the Brooklyn Center Housing and Redevelopment Authority Budget for the Year 1990 Pursuant to MSA Chapter 469.033, Subdivision 6 and MSA Chapter 469.107, Subdivision 1 4. Adjournment • • CITY OF BROOKLYN CENTER Council Meeting Date 1 /8 /90 Agenda Item Number 3 CZ. REQUEST FOR COUNCIL CONSIDERATION 0 *********************************************************** * * * * * * * * * * * * * * * * * * * * * * * * * * * * * ** ITEM DESCRIPTION: EDA /HRA BUDGET FOR 1990 *********************************************************** * * * * * * * * * * * * * * * * * * * * * * * * * * * * * ** DEPT. APPROVAL: v lc j T i EDA Coordinator Signature - title ****************** * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * ** ** * .. - * * * * * * * * * * * * * * * * * * * ** MANAGER'S REVIEW /RECOMMENDATION: No comments to supplement this report • Comments below /attached *********************************************************** * * * * * * * * * * * * * * * * * * * * * * * * * * * * * ** SUMMARY EXPLANATION: (supplemental sheets attached In 1989, the EDA/HRA completed a comprehensive analysis of Brooklyn Center's current housing inventory and its projected housing needs. Upon completion of the housing study, the EDA started the development of an implementation program /policy of the study. The 1990 EDA/HRA budget reflects a proactive role and long -term commitment on the part of the EDA /HRA to the redevelopment and revitalization of the community based upon the study and the implementation plan. The EDA budget establishes a full -time assistant's position to the coordinator. The primary responsibilities of the position will be the development of neighborhood coalitions to foster neighborhood support and participation for neighborhood oriented housing programs. As an example, this individual would be responsible for establishing first -time home buyers programs, low interest rehab loans, neighborhood beautification projects, as well as other housing and redevelopment related projects. The position would involve the acquisition of properties and their disposal. A significant increase in professional services is also proposed. During 1990, the EDA will be conducting a market analysis of the city's commercial and industrial base. In essence, the same type of study just completed for housing. Upon completion of the industrial /commercial study, the EDA would again use professional assistance in developing a policy /plan for the implementation of the study. Combined with the housing plan, Brooklyn Center would then have a complete policy for the redevelopment of the community. Professional consultant services are also contemplated for specific project development plans. The Earle Brown Heritage Center in terms of expenditures is the most significant part of the EDA/HRA budget. By April 1990, the restoration of the site should be completed. Because this will be the first year of actual operations on the farm, that part of the EDA/HRA budget attributed to the Heritage Center represents our best estimates of anticipated costs. With actual operating experience, future budgets for this operation will be more precise. In 1990, the EDA /HRA will take a more active role in coordinating efforts to enforce Chapter 12 (Housing Maintenance) of the City's ordinances. Activities will include identifying chronic compliance problems and eliminating the same. Also, the EDA /HRA will be completing its list of properties for potential acquisition followed by restoration and /or demolition of existing structures. I. Introduction: Brooklyn Center Housing Implementation Plan: Discussion Outline - First Draft The City of Brooklyn Center is a first ring suburb whose housing stock primarily serves the "entry level" market. The City's approximately 12,000 housing units consist of 8,400 units being owner occupied and 3,600 being rental units. Of the housing stock, 82% of all units were constructed prior to 1960. The City's 1988 population was projected to be 29,420, or 6% below the 1980 census total. As a fully developed city, Brooklyn Center has begun planning for the next decade and century. Several studies have outlined goals and objectives for the city. Among the studies is the May, 1989 study "The Brooklyn Center Housing market: A Study of Trends and Their Impact on the Community." The study recommended numerous strategies and policies for the city to review. The strategies are grouped into three major categories - for sale market - rental market - community livability The strategies can be grouped by type of action. For example, the strategies can be further grouped as: - City involvement in the housing stock through such activities as housing maintenance code enforcement, and the provision of incentives and programs - In cooperation with the county, school district, board of realtors, and civic groups market and promote the city and its schools. The three general strategy types suggest a multiple city role in preserving and developing its housing stock. II. Current City Role in Housing The City has taken an active role in preserving and expanding its housing stock. Since 1980, the City has issued tax exempt mortgage revenue bonds as well as approved several multifamily revenue bonds. In addition, the City has annually received $195,000 in community development block grants (CDBG) and has levied for the Housing and Redevelopment Authority (HRA). The CDBG funds have been used for housing rehabilitation while levy funds have been used for acquisition of substantial buildings. The use of federal and local funds, and tax exempt bonds are not the only means employed by the City. The City has adopted and enforced a housing maintenance code, and requires the licensure of all rental property owners. III. Proposed City Involvement The City's role in housing can include, but not be limited to: - policy development - policy implementation - housing developer (redeveloper) - provider of financial incentives - coordinator in framing programs available from public and private agencies Policy Development: A. B. The City Council has adopted housing policies and must discuss and debate policy in, at least the following policy issues: (The issues are identified and subsequent sections outline implementation strategies). continued housing maintenance enforcement truth -in- housing ordinance advisory report code enforcement C. cooperative agreement with Minnesota Housing Agency (MHFA) and their agencies regarding housing rehabilitation and single family mortgage rather than locally issued bonds D. spot redevelopment program E. - ~~ neighborhood development southeast or city -wide F. subsidized housing - level of housing subsidized - city role in preserving project based housing use -of city financial resources 3 amount of use type of use - one time expenditures leveraging - matching 1 H. occupied conversion of single family rental to owner I. multi- family preservation - landlord technical assistance - city as receivership administrator - property acquisition and disposition - role of non - profits A. Housing Maintenance Enforcement 1. Role of Housing Inspectors as Providers of Information regarding available housing programs - preparation of an information brochure - in- service training (annual session) regarding programs and new legislation 2. Housing Inspectors and 1989 Legislation Regarding Substandard Rental Housing - legal analysis and training session preparation of management process coordination with assessor and Housing Court - implementation in 1991 3. Licensure and Technical Assistance - develop a fact book for rental housing owners. Fact book can include information regarding: - building maintenance police and fire safety procedures (book can be developed in conjunction with the Multifamily Housing Association (MHA)) - sponsor training sessions for rental apartment owners. (Alternative: require a management plan including a process for tenant screening as a condition for a license). Sessions can include: tenant screening landlord rights - housing court - public financing programs City can enter into an agreement with the MHA to provide the sessions. - encourage establishment of a building owners alliance which could: - exchange information - provide a link to the City - enter into joint contracts for services such as: develop "in house" capability to assemble evidence for housing court presentations police data - require copy of housing inspection report to be made available to tenants of the building. Cost: To be determined SL Truth -in- Housing Ordinance tenant screening - solid waste - maintenance - capital improvements Purpose - Provide prospective home buyer with a report on,the home's condition. - Report be advisory - Report will be completed by licensed reviewers - Report be basis for city assistance in correcting certain conditions (emphasis on single family units s now rented) - Report be required for sale of all duplex and single family units Cost: Report to be a fee for service. Property .owner pays for the report. No direct city cost. C. MHFA and City Cooperative Programs 1. General Operation Y - identify a local lender(s) willing to originate loans and mortgages. (Community Reinvestment Act requirements and city's deposits prior involvement with MHFA should be criteria in the identification process) - in cooperation with MHFA, Realtors, neighborhood groups, and other civic groups develop a marketing program. Elements of the program can include - housing information fair - newsletters (City Manager) - school sponsored programs - media advertising and articles - identify city staff person responsible to liaison with MHFA and other agencies as well as participate in marketing programs: new staff person - salary level - funding source 2. MHFA Programs that Assist Cities and Require Applications - Communities Program - provides city with access to mortgage bond funds to meet specific goals. MHFA annually issues tax exempt mortgage revenue bonds. The community's program receives a set aside of mortgage funds for cities to meet local housing goals that are'compatible with the MHFA's criteria. $7.0 million is available annually and no one city can receive $1.0 million: Local Match: No (See Appendix A for additional information.) Application Time: anytime during the year - Housing Preservation Grants - approved by the 1989 legislature, the program provides grants to cities for establishing revolving loan programs for the acquisition improvement or rehabilitation or residential buildings. The grant must be used in a specific area of the city that meets the following requirements: - 70% of the housing units are at least 35 years old 60% of single family housing is owner occupied - average market value of homes in the area's owner occupied housing is not more than 100% of the purchase price of MHFA's existing purchase limits - the geographic area must be contiguous committee Laca1_ Match: Yes. - _ $1 to $1 Eligible local match sources: - general fund or special fund - federal grants - foundation grants public improvements - bond issuance costs - fees from community development activities Advisory Committee: City must establish a Available State Funds: $1.5 million Date of Availability: Announcements: February 1990 Grants: July 1990 - Neighborhood Preservation Loans - provides property improvement loans for preserving designated neighborhoods. Eligible borrowers include owners of rental property who rent to low and moderate income tenants, nonprofit groups :, low and moderate income persons and families. -Up to 25% of the - funds to a neighborhood may be loaned to entities not meeting the criteria. Local Match: 25% local; 75% state Amount Available: $10.0 million Date of Availability: Announcement - February 1990 Awards -July 1990 Local Match Use: interest writedown, insurance reserve or neighborhood preservation activities 3. MHFA Programs that are Individual Property Oriented The following MHFA programs are available to individual property owners: the City, however, should consider proposing to MHFA that a portion of the program be included in the neighborhood loan or communities program. In effect, the City should request a set- aside. - Purchase Plus - provides borrowers with the ability to raise funds to simultaneously purchase and rehabilitate, or refinance and rehabilitate existing housing through a single mortgage. Targeted neighborhoods can be included. Local subsidies can be used to write down costs. Local Match: No Available State Funds: $10.0 million Program Availability: July 1990 - Rental Rehabilitation Loan Program - provides low - interest financing for making energy conservation and other basic improvements to rental residential property. Implementation: Local. Participation of two organizations, administering entity and lender, is needed. Administering entity can be a public or non - profit agency which - identifies properties - recruits a lender - assists owner acts as escrow agent Amount Available: $1.0 million - Rehabilitation Loans. The MHFA offers a variety of rehabilitation loans and grants. Some of the programs encourage local participation. Among the programs are: - local participation home improvement loans - home improvement loans - home energy loans - deferred loans - revolving loans - Federal Programs. The federal housing initiatives are being reevaluated and it is probable that 1989 pending federal legislation will change the federal housing policy. Despite the federal review of its housing programs, there are two programs that could assist the city with rental housing: - Section 108 Loan Guarantee. Provides communities with front -end financing for development projects that cannot be financed from annual grants. Section 108 is a loan guarantee program. The maximum guarantee is three times the applicant's annual entitlement. The principal security for the ZPa ,.is the applicant's annual entitlement amount. Loan guarantees can be used for real property acquisition, rehabilitation of publicly owned property, housing rehabilitation and CDI3G eligible activities. In fiscal year 1988, $144 million was the federal limit. It is possible that under pending legislation the 108 program can be eliminated. Section 223(f) Existing Multifamily Rental Housing. This program permits the purchase or refinancing of existing apartment projects. It also allows for purchase and conversion of an existing rental project to cooperative mortgage insurance program. The project must contain at least five units and must be at least three years old. Eligible applicants include HRA, non - profits, builders, developers, and investors. Private. Resources. The central cities of Minneapolis and St. Paul have been able to develop housing with the assistance of grants from the McKnight Foundation. The two cities ;. have established the Twin Cities Housing fund. The City of Brooklyn Center as an inner ring city adjacent to Minneapolis exhibits the similar housing problems. The city should consider: discussing with the Foundation the possibility of. private : assistance in suburban communities - presenting a proposal for a housing initiative to a private foundation - Spot Redevelopment. City is currently acquiring with local funds individual parcels considered to be blighted., or in need of substantial rehabilitation. Acquired properties are disposed to developers for new construction on rehabilitation. The city estimates that approximately 60 to 80 properties could be acquired over the next three to five years. The city should review the program with the following issues to be discussed: - Use of Tax Increment Financina (TIF) A scattered site TIF project could be established as either a redevelopment or housing district. The district would need to meet the criteria established in the 1989 amendments. Such criteria include restrictions on use of income or income of the owner occupants ($44,000 /year). Assuming a $40,000 base value for a homestead $400 tax capacity) and a new homestead at $80,000 ($920), and a 100% tax rate, the increment would be $500. For 60 parcels, the maximum increment per year could be $30,000. - Recapture of Subsidy The city will usually dispose the property at cost lesser than the acquisition cost. To recover all or a portion of the subsidy it could in combination with TIF or separately require the new homeowner to reside there for at least 5, 7, or 10 years. If there is a sale prior to the minimum residence period, a portion of the equity can be paid to the city as payment for the "up front" costs. The portion paid to the city. - Design Guidelines The city as part of this program and other housing initiatives in target neighborhoods, should offer exterior design guidelines. The guidelines can emanate from such sources as: - design competition among local architects provision of architectural services - citizens advisory committee working with selected architect(s) - other - Developer: City or Contractor Some public agencies, Minneapolis and Dakota County, have or are building single family houses on publicly owned lots. The Dakota County program builds on tax forfeit property while Minneapolis is contemplating a renewal of its program. In Dakota County, the HRA has acted as both general contractor or has hired a general contractor. - Program Financing (Housing Units) Construction loans can be obtained from available public funds or the issuance of construction loan notes that are permitted E. Neighborhood Renewal _under_.chapter.469. Dakota County has issued such notes:' - Permanent mortgage financing is completed with tax exempt mortgage bonds. The Maxfield report suggests that the city develop and implement a concentrated renewal program in the southeast neighborhood. In structuring such a program, the following issues are used: Citizen Involvement A citizen's planning council must be established. The council can assist in program development as well as marketing program. The city should consider developing or at least have the capacity to have a city -wide citizen involvement program. Public Improvements A possible incentive for individual home improvements could be public improvements such as curb and gutter. The improvements could be installed if the neighborhood indicates a --, willingness for individual investment. Another type of public improvement that could stimulate investment would be construction of the pathway system Cost: -::To be determined Funding Sources: HRA, EDA, or block grant CoV) Subsidized Housing The.:Maxfield report's total number of multifamily rental-units approximates 3600. There are 708 subsidized rental units in the city, of which 538 are Section 8; The remainder are 236 or 221 d3 projects. The Section 8 units include 385 certificates and 153 project based units. Of the city's rental units, section 8 represents 15% of the total rental units. The policy options available-to the city are limited but could include: - advocacy for a regional fair share plan incentives to cities having a large number of subsidized units. Such incentives can include priority for MHFA programs, and other state programs, and increased state aids • H. G. Use of City Financial Resources Available resources to the city include - HRA levy - $130,000 /yr - EDA levy - $180,000 /yr - CDBG - $195,000/yr - Fund Balances in EDA or HRA N/A The city can also issue bonded debt for - Tax increment - housing bonds (essential function) - redevelopment activities Operating principles for the use of city funds should - leverage other funding sources - recycle funds through revolving loan funds - recapture all or a portion of the subsidy - combine funds where needed to stimulate the program - be accounted for in a development account Conversion of single family rental to owner occupied housing The city should implement a program to encourage conversion from single family rental to homeownership. Elements of a program could be: - identify annually with the assistance of the assessor and county auditor single family rental rental properties (As part of its technical assistance role, the urban county should be requested to provide such a service.) write to property owners and renters informing them of the city's rental to owner program - conduct the required housing maintenance code inspection - provide the owner and renter with a copy of the report work with MHFA to provide a set -aside for home improvement loans to the absentee owner so that their property will be more salable. If the loan is paid from the sale proceeds, the loan is interest free. set aside tax exempt bonds for mortgages - develop a deferred loan process for down payment assistance - work with realtors to market the program Preservation (To be completed. Research regarding receivership statute is not complete and meeting with non - profit groups.) >t> BROOKLYN CENTER: SUBSIDIZED HOUSING The following information regarding the city's subsidized bousing was suppied by the Metropolitan Housing and Redevelopment Authority, HRA. (The date available is of October 28, 1989) Table I: Project based Section 8, Section 236, Section 221D3 Housing by unit size and mortgage. City of Brooklyn Center Project Total Units Bedrooms Mortgage Type 1 2 3 . 4 5 Emerson Chalet 18 6 12 0 0 0 MHFA Section 8 Ewing Square 23 0 0 16 7 0 MHFA Section 8 Ponds 112 0 59 53 0 0 MHFA Section 8 Shingle Creek 122 77 45 0 0 0 HUD 236 Victoria Town Homes 48 0 0 48 0 0 HUD 221 D3 TOTAL 323 83 116 117 7 0 The Shingle Creek project can prepay its mortgage as early as 1994 while the Victoria project has a 2001 prepayment date. In addition to the project based units, the city also participates in the Section 8 voucher or contract program. The Metropolitan HRA administers the program, Table II presents contract information by applicant type. Table II: Section 8 contracts by Type of Applicant: City of Brooklyn Center, October 28, 1989 Type Number % Total Elderly 73 19.0 Handicapped 13 3.4 Disabled 17 4.4 Family 282 73.2 TOTAL 385 100.0 In addition to type, the Metroloitan HRA reports the average annual income of applicant.by type and family size. Table III present income information. Table III: Annual Income by Type and Family Size City of Brooklyn Center, October 28, 1989 Family Size Type 1 2 3 4 5 Elderly $ 8021 $ 8954 - - Handicapped $ 5750 $ 9274 - - Disabled $ 6531 $ 7757 - - Family $ 11,232 $ 7397 $ 8817 $ 13,741 $ 10,452 (EHRABDGT) Member introduced the following resolution and moved its adoption: WHEREAS, the Brooklyn Center Housing and Redevelopment Authority has considered the attached budget and finds that this budget is necessary for the operation of the Brooklyn Center Housing and Redevelopment Authority during the year 1990: NOW, THEREFORE, BE IT RESOLVED by the Housing and Redevelopment Authority for the City of Brooklyn Center that the attached budget of the Economic Development Authority for said City is hereby approved. BE IT FURTHER RESOLVED that a copy of this resolution, together with the attached budget, be submitted to the City Council of the City of Brooklyn Center. Passed by the Housing and Redevelopment Authority of the City of Brooklyn Center this 8th day of January, 1990. Date HRA RESOLUTION NO. RESOLUTION APPROVING THE BROOKLYN CENTER HOUSING AND REDEVELOPMENT AUTHORITY BUDGET FOR THE YEAR 1990 PURSUANT TO MSA CHAPTER 469.033, SUBDIVISION 6 AND MSA CHAPTER 469.107, SUBDIVISION 1 President The motion for the adoption of the forgoing resolution was duly seconded by member , and upon vote being taken thereon, the following voted in favor thereof: and the following voted against the same: whereupon said resolution was declared duly passed and adopted.