Affordable Housing in SD 49 Area BRAD AHO EDEN PRAIRIE CITY COUNCILMEMBER FEBRUARY 26, 2019

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1 Affordable Housing in SD 49 Area BRAD AHO EDEN PRAIRIE CITY COUNCILMEMBER FEBRUARY 26, 2019

2 Agenda Affordable Housing Definition Affordability Issue Housing and Income Data Metropolitan Council Goals and Forecasts for Eden Prairie Metropolitan Council Affordability Definition Eden Prairie Current Affordable Housing Policies, Programs & Practices Tools Cities use for Affordable Housing Government Funding Sources Factors Impacting Affordability Questions

3 Affordable Housing Defined Housing affordability is calculated by a percentage of income 30 % or less of income for housing Area Average Median Income (AMI) is used as the base rate for calculating affordability Affordable housing is rental or owner-occupied housing that is affordable no matter what one's income is. The U.S. government regards housing costs at or below 30% of one's income to be affordable.

4 SD 49 Housing Value Data Avg Listing Price Median Home Sale Housing Inventory Fair Market Rents Active Listings Rented Owned Vacant Studio 1 Bedroom 2 Bedroom 3 Bedroom Median Household Income Bloomington $ 284,376 $ 171, % 48% 7% $ 699 $ 862 $ 1,086 $ 1,538 $ 60,378 Eden Prairie $ 397,198 $ 252, % 66% 2% $ 699 $ 862 $ 1,086 $ 1,538 $ 95,715 Edina $ 631,006 $ 367, % 84% 5% $ 699 $ 862 $ 1,086 $ 1,538 $ 82,791 Minnetonka $ 437,064 $ 250, % 81% 3% $ 699 $ 862 $ 1,086 $ 1,538 $ 84,017 Data from TheMLSonline.com

5 Housing Cost and Income Data House Cost 20% Down Payment 30 Yr Fixed Monthly Payment Taxes (1.17%) Insurance (Approximate) Total Monthly Monthly Income for 30% Annual Income for 30% $ 150,000 $ 30,000 $ 590 $ 146 $ 51 $ 788 $ 2,625 $ 31,504 $ 200,000 $ 40,000 $ 787 $ 195 $ 68 $ 1,050 $ 3,500 $ 42,005 $ 250,000 $ 50,000 $ 984 $ 244 $ 85 $ 1,313 $ 4,376 $ 52,506 $ 300,000 $ 60,000 $ 1,181 $ 293 $ 102 $ 1,575 $ 5,251 $ 63,007 $ 350,000 $ 70,000 $ 1,377 $ 342 $ 118 $ 1,838 $ 6,126 $ 73,509 $ 400,000 $ 80,000 $ 1,574 $ 391 $ 135 $ 2,100 $ 7,001 $ 84,010 $ 450,000 $ 90,000 $ 1,771 $ 439 $ 152 $ 2,363 $ 7,876 $ 94,511 $ 500,000 $ 100,000 $ 1,968 $ 488 $ 169 $ 2,625 $ 8,751 $ 105,012 $ 550,000 $ 110,000 $ 2,165 $ 537 $ 186 $ 2,888 $ 9,626 $ 115,514 $ 600,000 $ 120,000 $ 2,361 $ 586 $ 203 $ 3,150 $ 10,501 $ 126,015

6 Income and Payment Amounts Hourly Rate Annual Pay 30% of Annual Pay Monthly Payment $15 $31,200 $9,360 $780 $20 $41,600 $12,480 $1,040 $25 $52,000 $15,600 $1,300 $30 $62,400 $18,720 $1,560 $35 $72,800 $21,840 $1,820 $40 $83,200 $24,960 $2,080 $45 $93,600 $28,080 $2,340 $50 $104,000 $31,200 $2,600 $55 $114,400 $34,320 $2,860 $60 $124,800 $37,440 $3,120 $65 $135,200 $40,560 $3,380 $70 $145,600 $43,680 $3,640 $75 $156,000 $46,800 $3,900 $80 $166,400 $49,920 $4,160 $85 $176,800 $53,040 $4,420 $90 $187,200 $56,160 $4,680 $95 $197,600 $59,280 $4,940 $100 $208,000 $62,400 $5,200 At $15/hour a person can afford a studio or 1 bedroom apartment At $15/hour a person can afford a $150k house if they have the down payment of $30k

7 Metro Area Income EP Median household income is higher than County & Metro Area 5% population below poverty line 2015 Federal Poverty Line: Individual earning $11, Federal Poverty Line: Family of 2 earning $15, Federal Poverty Line: Family of 4 earning $24,250 Source: 2014 American Community Survey 5-Year Estimates

8 Income and Affordability Source: 2015 American Community Survey 5-Year Estimates

9 Metropolitan Council Affordability Goals More affordable units Higher density Transit Oriented Development SW LRT is driving higher density and development around the line especially near stations Met Council Goals for EP

10 What is Affordable Source: Metropolitan Council

11 Metro Median Home Sales Price Source: Minneapolis Area Association of Realtors

12 Metropolitan Council Forecasts for Eden Prairie Source: Metropolitan Council

13 Eden Prairie Affordable Housing Naturally Occurring Source: Metropolitan Council

14 Eden Prairie 5 Year Potential Single Family Development

15 Eden Prairie Current Affordable Housing Policies, Programs & Practices Aspire 2040 Comprehensive Plan Inclusionary Housing Land Use Densities, Districts and infill opportunities Housing Tools Current Affordable Housing Policies, Programs and Practices Affordable Homeownership First-Time Homebuyers Program (CDBG and pooled TIF) Homes Within Reach Program (West Hennepin Affordable Housing Land Trust (CDBG)

16 Eden Prairie Current Affordable Housing Policies, Programs & Practices Continued Maintenance of Owner-Occupied Houses via Housing Improvement Areas (Bonding & Special Assessments) Maintenance of Rental Units via License & Inspection Program (HRA Levy) Education/Collaboration via Property Manager s Group Preservation of Affordable Rental Housing via: TIF District Extensions (Colony, Lincoln Parc/Cascade, etc.) Pooled TIF for Naturally Occurring Affordable Housing (make affordability legally binding; new CIP item) Requiring Acceptance of (Sec. 8) Housing Choice Vouchers (Prairie Meadows, Lincoln Parc/Cascade)

17 Eden Prairie Current Affordable Housing Policies, Programs & Practices Continued Affordable Rental Housing Development Financing via: New TIF Districts (Elevate, Trail Pointe Ridge) Pooled TIF for Transit-Oriented Development (Elevate loan) Grants such as Livable Communities (Elevate, Trail Pointe Ridge/Smith Village) Resolutions of support for other financing (Elevate and Trail Pointe Ridge) Affordable Inclusionary Housing (secured with no subsidy) for: New Multifamily Rental (Prairie Bluffs, Southview, Trail Pointe Ridge) New Multifamily For-Sale Housing (Applewood Pointe/Smith Village) Multifamily Rehab/Conversions (Cascade for added units) Multifamily after TIF or other restrictions expire (Cascade, Trail Point Ridge)

18 Inclusionary Housing Policy Policy that requires that a given share of new construction be affordable by people with low to moderate incomes, regardless of City subsidy Increasingly adopted or in development around metro, particularly in SW Eden Prairie already seeing success since mid-2017 in integrating into development agreements (e.g. Smith Village, Lincoln Parc, Prairie Bluffs Senior Living) Incorporated as a useful tool into Aspire 2040

19 Regional Examples of Inclusionary Policies

20 Eden Prairie Staff Recommendations

21 Fair Housing Policy Positive affirmation of City commitment to fair housing principles Requirement for Met Council Livable Communities Act participation Peer cities adopting by resolution (administrative policy) Needs to be in place for Trail Pointe Ridge / Smith Village to begin drawing LCDA funds

22 Tenant Protection Ordinances Advanced Notice or Notice of Sale to tenants & City Tenant protection periods of 90 days (allowing tenants to stay for designated period after notice of sale) Eviction only for cause (material violation of the lease or an applicable law) No eviction for rescreening (reevaluating tenants based on new criteria) No eviction for substantial rent increases

23 Eden Prairie Aspire 2040 Housing Goals Promote and support reinvestment in older housing stock and neighborhoods that are approaching the life spans for some utilities, equipment, and structural elements Promote and work to locate new housing with convenient access to basic services, including stores, restaurants, services, transit, and parks Work in partnership with private and public sectors, and regional, state, and federal agencies to help finance innovative housing demonstration projects and housing development techniques Promote and encourage the provision of lifecycle housing opportunities for all age groups, household sizes, and income levels Promote and support the development of new affordable housing units to meet the community s share of the regional affordable housing need, as well as the community s affordable housing goals Lower development costs for low to moderate income, elderly, and special needs housing developments

24 Tools Cities Use to Provide Affordable Housing Tax Increment Financing (TIF) Land Trust Developments Development Agreements Trade affordability for density Provide tax incentives through TIF First Time Buyer Program Housing Rehabilitation Loan Program Federal Subsidies (Section 8 Vouchers) Co-op Conversions Modular Housing

25 Government Funding Sources Federal - Community Development Block Grants (CDBG) First Time Buyer Program Housing Land Trust Housing Rehabilitation Loan Program Housing Revenue Bonds Helps property owners finance improvements to multifamily developments Hennepin County Affordable Housing Incentive Fund (AHIF) Loans for rehab or construction of affordable housing Met Council Local Housing Incentive Account (LHIA) Loans to purchase property for affordable housing

26 Government Funding Sources Met Council Livable Communities Demonstration Account (LCDA) Met Council Transit-Oriented Development (TOD) Grants Met Council Corridors of Opportunity Local Implementation Capacity Grants Minnesota Housing Finance Agency (MHFA) - Low Income Housing Tax Credits (LIHTC) provides incentives for developers to include affordable housing in projects Minnesota Small Cities Development Program (SCDP) provides funding for housing grants for rehab of housing

27 Factors Impacting Affordability Market prices of lots - Eden Prairie is about 98% developed with a few small pocket of available land which drives up the price of land Market pricing of materials and labor Government Policies Government Regulations Government Fees Met Council policies to control urban growth drive up land prices Example: New home in Lake Elmo costs about $47k more than a comparable home in Hudson, WI due to 26.5% park dedication fees and $13k of state regulations New home cost as much as $82k to build in the Twin Cities vs. Chicago

28 Government Policies Housing First (Homebuilder Advocacy Group) Study New homes in Twin Cities cost more than in any other Midwest market and must start at about $375k as a result 85% of Twin Cities households can t afford a new home 33% of the cost of a new home is due to state, regional and local policies and fees 24% is the national average Fees and policies include: Park dedication fees Sanitary and Water hookup fees Erosion control and Watershed District requirements and fees Regional land use requirements

29 Government Regulations and Affordability Example Eden Prairie case in point Eden Gardens City staff wanted a development that was both Green and affordable Staff proposed purchasing a MnDOT surplus property and developing it in order to control the development Solicited developers for the project and selected one to sell the property to as long as they followed project plans and goals Green requirements pushed the prices up and in the end many of the desired features were not viable Affordability suffered and the prices were increased (from 350k and 419k and up) Higher density than surrounding neighborhood

30 Questions