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05-09-23 HRA Work Session Agenda May 9, 2023 — 6:30 PM Golden Valley City Hall Hybrid Meeting 1.Housing and Redevelopment Authority Annual Report and Work Plan 2022-2023 2.Review Preliminary Term Sheet Regarding Developer's Request for Renovation and Renewal Tax Increment Financing for 8200 Golden Valley Road and 8240 Golden Valley Drive HRA WORK SESSION AGENDA Housing and Redevelopment Authority Work Sessions are being conducted in a hybrid format with in- person and remote options for attending. Remote Attendance: Members of the public may attend this meeting by streaming via Webex, or by calling 1-415-655-0001 and entering access code 2461 970 6788. Additional information about attending electronic meetings is available on the City website . Discussion Item(s) HRA Work Session meetings have an informal, discussion-style format and are designed for the HRA to obtain background information, consider policy alternatives, and provide general directions to staff. No formal actions are taken at these meetings. The public is invited to attend HRA Work Session meetings and listen to the discussion; public participation is allowed by invitation of the HRA. City of Golden Valley HRA Work Session May 9, 2023 — 6:30 PM 1 EXECUTIVE SUMMARY Community Development 763-512-2345 / 763-512-2344 (fax) Golden Valley Housing and Redevelopment Authority Work Session May 9, 2023 Agenda Item 1. Housing and Redevelopment Authority Annual Report and Work Plan 2022-2023 Prepared By Alma Flores, Community Development Director Cherie Shoquist, Housing and Economic Development Manager Summary The priorities for 2022 and the proposed priorities for 2023 are based on the long term economic goals identified in the 2040 Comprehensive Plan, the Housing and Redevelopment Authority's 5-Year Housing Strategic Plan 2020-2025 and meeting the City's Council's Organization Priorities around Strategic Development and Redevelopment with continued ways to support and invest in affordable house. Housing Strategic Priorities: Preserve Existing Housing Develop New Mixed Income Housing Expand Access To Housing Choice and Opportunity for Black, Indigenous, People of Color, and Low-Income Homeowners and Renters Economic Strategic Priorities: Promote Redevelopment Districts Promote Economic Development and Redevelopment Support Entrepreneurs and Small Businesses Equity Considerations Housing: The goal of the City's Mixed Income Housing Policy is to preserve and promote economically diverse housing options in our community by creating high quality housing in Golden Valley for households with a variety of income levels, ages, and sizes. Economic Development: The City of Golden Valley defines economic prosperity for all as the intentional provision of economic opportunities and resources for all communities by finding solutions to support economic growth and inclusion of historically marginalized communities and those facing economic hardship. As an employer and municipality, the City of Golden Valley is determined to identify and disrupt barriers to economic inclusion. 2 Supporting Documents 2022 Annual Report and 2023 Work Plan 3 HOUSING AND REDEVELOPMENT AUTHORITY 2022 ANNUAL REPORT AND 2023 WORK PLAN 4 2022 Housing and Redevelopment Authority Commissioners Gillian Rosenquist (Chair 2022) Shep Harris Maurice Harris Denise La Mere-Anderson Kimberly Sanberg City Staff Tim Cruikshank, Housing and Redevelopment Authority Director Alma Flores, Community Development Director (2023) Marc Nevinski, Physical Development Director (2022) Cherie Shoquist, Housing and Economic Development Manager Purpose and Mission Golden Valley's Housing and Redevelopment Authority (HRA) is a separate legal authority that guides and supports redevelopment projects to: provide a sufficient supply of adequate, safe, and sanitary dwellings in order to protect the health, safety, morals, and welfare of the residents of Golden Valley remove blight, clean up environmental contamination, and provide for new development to enhance the community and increase the City's taxable valuation remedy the shortage of housing for low- to moderate-income residents preserve and promote economically diverse housing options in Golden Valley 5 Table Of Contents 2022 Overview page 4 Housing Accomplishments page 5 Economic Accomplishments page 9 Housing and Economic Development Work Plan page 10 6 2022 Overview The priorities for 2022 and the proposed priorities for 2023 are based on the goals in the 2040 Comprehensive Plan, Housing and Redevelopment Authority 5-Year Housing Strategic Plan 2020- 2025, City Council Legislative Priorities, and the City’s organizational priorities, including its diversity, equity, and inclusion initiatives. Housing Providing a variety of housing choices allows people to find high-quality, affordable, environmentally sustainable housing that meets their needs in the communities where they want to live. A full range of housing types can help increase the resilience of a community as it experiences changing demographic and economic conditions. The housing implementation actions identified in the 2040 Comprehensive Plan include: Maintain housing quality Expand the variety of housing options Increase housing affordability Encourage environmentally sustainable housing Advance equity in housing practices and policies The Housing and Redevelopment Authority 5-Year Housing Strategic Plan 2020-2025 includes three main priorities: Preserve existing Naturally Occurring Affordable Housing (NOAH) and provide tenant protections Develop new affordable housing to increase and diversify housing options and opportunity Increase diversity of voices in decision-making Economic Development As Golden Valley strives to create a climate for meaningful economic growth and provide a strong economic base for its residents and employees, it also seeks to be competitive with other cities in the metropolitan area. Because of its excellent proximity to downtown Minneapolis, access to major highways and future transit, educated residents, and high-quality amenities, Golden Valley continues to be a preferred location for businesses looking to locate or expand. At the same time the City faces challenges, including limited space for development, aging buildings and infrastructure, increasing highway congestion, and a shortage of affordable housing. Understanding our business base and the importance of their investments in the community are critical to our competitive advantage in the region. Implementation of our Economic Competitiveness actions identified in the 2040 Comprehensive Plan include: Understand the local business environment Develop economic partnerships Retain and expand existing job base Strengthen link between land use and economy 7 Promote amenities to attract workers Housing Accomplishments Strategic Priorities Preserve Existing Housing Develop New Mixed Income Housing Expand Access To Housing Choice And Opportunity For Black, Indigenous, People of Color, And Low-Income Homeowners And Renters Preserve Existing Housing Preservation Of Naturally Occurring Affordable Housing Reviewed number of properties in the City that include Naturally Occurring Affordable Housing (NOAH) units. Developed a process to monitor the potential sale and transfer of ownership of NOAH properties. Met with non-profit affordable housing organizations to plan for a potential partnership, if necessary, to support the acquisition of a NOAH property in the event of a sale to maintain affordability. Promoted the 4d Property Tax Abatement Program to existing owners of subsidized and NOAH properties in the City to preserve long-term affordability. Tenant Protection The Tenant Protection Ordinance provides a protected period of time following the sale of an affordable housing building. The goal is to protect lower-income tenants in the city. Under the ordinance, new owners of affordable housing buildings would be required to pay relocation benefits to tenants if the owner increases the rent, re-screens existing residents, or implements non-renewals of leases without cause within a three-month period following the ownership transfer of the property and the tenant chooses to move due to these actions. Further developed a plan to identify a potential sale and change in ownership of a subsidized or naturally occurring affordable housing property in the City. Refined communication tools for residents in the event of a sale and change in ownership. Updated avenues for enforcement of remedies by tenants and the City. Advanced Notice of Eviction In addition to the Tenant Protection Ordinance, researched an Advance Notice of Eviction ordinance that would provide an additional notice of 14-30 days for evictions not including a material lease violation. Housing Improvement Area (HIA) Met with additional association members to discuss the HIA tool to support the renovation of older common interest communities (townhomes and condominiums) in the city. Identified the requirements of a HIA program and began discussions of the potential to fund the program with the City’s Finance Director. 8 STAR Program Held quarterly meetings engaging rental property owners and managers in the STAR Program and developed a multiyear plan for informative meeting topics. Food, Rent, And Housing Navigation Services Provided ARPA funds to provide food and rent assistance to residents through PRISM due to the ongoing negative impacts of COVID-19, slow return to full employment, rent increases, food price increases, limited availability, and the end of the eviction moratorium. o Establish a housing navigator position for PRISM to employ a full-time case manager that will focus on housing-related issues, provide assistance to senior citizens needing to transition to affordable housing, cover application fees, build relationships with landlords, and keep renters stable in the community. Develop New Mixed Income Housing Development of New Mixed Income Housing The Golden Valley Mixed Income Housing Policy requires that a portion of new housing units in eligible projects must meet affordability requirements set forth in the Policy. The Policy acts as an implementation tool to aid the City in meeting its short-term and long-term housing goals. The following actions advanced the Mixed Income Housing Policy to lead to the current and future development of new affordable housing units. Communicated the City’s commitment to achieving its mixed income and affordable housing goals to developers, property owners and managers, brokers, lenders, investors, and funders as well as residents and other stakeholders. Met with housing developers regarding mixed income housing development opportunities in the City. Developed an Affordable Housing Plan to be completed by developers in compliance with the Mixed Income Housing Policy and incorporated into development agreements as an exhibit. Continued the process of creating form legal agreements, program guidelines, and affordability compliance monitoring tools with the City Attorney. Reviewed the City’s Tax Increment Financing (TIF) capacity with the City’s Finance Director to incentivize affordable housing development, and planned revisions to the TIF program guidelines and the application for Housing Development or Redevelopment TIF. Revised the list of affordable housing development resources available at the local, county, regional, state, and federal levels and strengthened professional partnerships with funders. Public Land Disposition Policy Identified the first three specific parcels for single family affordable housing redevelopment under the Public Land Disposition Policy. Affordable Ownership Provided referrals to Hennepin County and Minnesota Housing Programs for Down Payment Assistance. Provided referrals to Hennepin County and Minnesota Housing Programs for Rehabilitation Loans. 9 Home Ownership Program for Equity Launched the Home Ownership Program for Equity (HOPE) program to develop affordable single family or duplex homes on City-owned vacant lots identified in the property disposition policy. The program purpose is to provide affordable, owner-occupied, single family housing in Golden Valley. The City will provide a land write down as an incentive for development of homes affordable at less than 115% of Area Median Income, with a priority for affordability at 80% or 60% of Area Median Income. Qualified developers to construct single-family homes on three HOPE Round 1 City owned vacant parcels: o 1605 Douglas Drive North (Twin Cities Habitat for Humanity in partnership with Homes Within Reach) o 208 Meander Road (Greater Metropolitan Housing Corporation in partnership with Homes Within Reach) o 47XX/4707 Circle Down (Greater Metropolitan Housing Corporation in partnership with Homes Within Reach) Commissioned surveys, appraisals, and Phase 1 environmental studies to ensure proper understanding of land for disposition. The priority of the HOPE program is for proposals from organizations that have demonstrated success in building relationships of trust with Black, Indigenous and people of color and in serving first generation homebuyers. The qualified HOPE Round 1 developers have demonstrated success in serving Black, Indigenous and people of color homebuyers; Habitat serves over 80% homebuyers of color and GMHC serves 70% homebuyers of color. Supported the Minnesota Housing Community Impact Fund application for Twin Cities Habitat for Humanity and Greater Metropolitan Housing Corporation. Submitted an application to the Metropolitan Council for Local Housing Incentives Account funding for the two Greater Metropolitan Housing Corporation homes. Expand Access to Housing Choice and Opportunity for Black, Indigenous, People of Color, And Low-Income Homeowners and Renters Fair Housing and Section 8 Anti-Discrimination Policy The Fair Housing Policy ensures fair and equal housing opportunities are available to all persons in housing and development activities funded by the City. This is City policy regardless of race, color, religion, immigration status, gender, gender identity, sexual orientation, marital status, status with regard to public assistance, creed, familial status, national origin, cultural background, age, or disability. Provided prompt and meaningful access to housing discrimination information and representation. Considered options to adopt and enforce a Section 8 Anti-Discrimination Ordinance when the City of Minneapolis is legally in a position to move forward with implementation of their source of income ordinance. Condemn Discriminatory Covenants and Participate in Just Deeds Identified opportunities to condemn the use of discriminatory covenants, discharge discriminatory covenants of HRA-owned property, and participate in the Just Deeds Coalition. 10 2023 Housing Study and Housing Dashboard Engaged Maxfield Research& Consulting to conduct a five-year update to the Housing Study including 2020 United States Census data. Created a housing dashboard that includes housing development in the city and tracks progress on the City’s affordable housing goals. Ensure Multiple Perspectives and Voices in Decision-Making Sought input from established city resident groups and commissions, including the Diversity Equity and Inclusion Commission, and Golden Valley Affordable Housing Coalition. Held quarterly meetings with the Golden Valley Affordable Housing Coalition. Participated in an Affordable Housing Forum with Building and Equitable Golden Valley. Evaluated various ways to authentically and regularly engage residents. Connected with and sought input from those who may be most impacted by decisions related to housing programs and policies, including seniors, young people, businesses, renters, multifamily property owners, and racially and culturally diverse residents. Housing Resources Updated housing resources lists available on the City’s website and for residents that contact the City for information and assistance. o Resources For Homeowners o Resources For Homebuyers o Rental Housing Resources For Tenants 11 Economic Accomplishments Strategic Priorities Promote Redevelopment Districts Promote Economic Development And Redevelopment Support Entrepreneurs And Small Businesses Promote Redevelopment Districts Focus attention for redevelopment efforts to redevelopment districts: o Douglas Drive Corridor o Highway 55 West o I-394 Corridor o Winnetka Ave and Medicine Lake Road Promote Economic Development and Redevelopment Worked with developers and the business community to revitalize key business centers, both commercial and industrial. Redeveloped undervalued, underutilized, blighted, and/or contaminated properties. Recruited new businesses and industries that are complementary to the community’s existing employment base. Strengthened relationships with DEED, Hennepin County, Greater MSP, Hennepin County, and the Golden Valley Business Council to attract new business and grow existing business. Support Entrepreneurs and Small Businesses Open to Business Open to Business offers free advice and consultation for Golden Valley residents who are business owners or entrepreneurs. This program is funded by the City and the County and provided by the Metropolitan Consortium of Community Developers (MCCD). It can help determine the feasibility of a new business or help business owners find capital or develop marketing strategies. All consultation is one-on-one and can provide entrepreneurs with the information they need to bring a new business to the area. Provided Golden Valley residents, entrepreneurs, and business owners with Open to Business services. Attend Regular Meetings of the Golden Valley Business Council along with the City Council Representative. Elevate Business Elevate Business offers Hennepin County businesses no-cost business support designed to help businesses at any stage grow and thrive. Hennepin County has contracted with more than 25 professional business advisors and specialized consultants to offer free expert support to local 12 businesses in a wide range of areas, including accounting, finance, legal, marketing, social media, web development, and human resources. Connected Golden Valley residents, entrepreneurs, and business owners with Elevate Business services. 13 2023 Work Plan HOUSING Strategic Priorities Preserve Existing Housing Develop New Mixed Income Housing Expand Access To Housing Choice And Opportunity For Black, Indigenous, People Of Color, And Low-Income Homeowners And Renters Preserve Existing Housing Preservation Of Naturally Occurring Affordable Housing Continue to explore preservation with current property owners and plan for potential future acquisition by non-profit housing organizations in the event of sale. Communicate Tenant Protection Ordinance rights and responsibilities with property owners, managers, and tenants. Promote the 4d Property Tax Abatement Program to existing owners of subsidized and NOAH properties in the city to preserve long-term affordability and explore changes that may increase participation. Housing Improvement Area (HIA) Consider developing priorities and guidelines for the use of the HIA tool to support the renovation of older common interest communities (townhomes and condominiums) in the city. Tenant Protection In addition to the Tenant Protection Ordinance, further consider an Advance Notice of Eviction ordinance that would provide an additional notice of 14-30 days for evictions not including a material lease violation – if not adopted by the state legislature in the 2023 session. STAR Program Increase participation by rental property owners and managers in the STAR Program and quarterly meetings. Develop New Mixed Income Housing Development Of New Mixed Income Housing Artessa Cooperative:The HRA approved Artessa Cooperative at Golden Valley, located at 6650 Country Club Drive. Artessa Cooperative is the first development approved under the Mixed Income Housing Policy. Artessa is a mixed use multifamily ownership development with 78 units; 9 will be affordable at 80% of Area Median Income and 69 will be market rate. The unit mix includes 14 1- Bedroom plus Den units, 15 2-Bedroom units, and 49 3-Bedroom plus Den units. The 9 affordable units are comprised of 1 1-Bedroom Unit and 8 1-Bedroom plus Den units. All units include 2-Baths. Parking includes 128 indoor parking spaces and 34 surface spaces. 14 Amenities include a great room, wellness studio, entertainment suite, theatre, patio, rooftop deck, business center, hospitality suite and 2 guest suites. The project is located on Country Club Drive adjacent to the Luce Line trail with convenient access from Highway 55 and to downtown Golden Valley. The affordable units will remain affordable for 40 years. Construction is expected to begin in the summer of 2023 and to be completed with initial occupancy in late 2024. The total development cost is approximately $42.3 million. Sentinel Golden Valley Apartments and Wells Fargo Redevelopment: Sentinel Holdings Company proposes mixed use housing and commercial development at 8200 Golden Valley Road and 8250 Golden Valley Drive. This is the first multifamily rental development proposed under the City’s Mixed Income Housing Policy. The 303-unit mixed income multifamily rental development (Multi-Family Building, Phase 2) includes 46 units affordable at 60% of Area Median Income for a period of twenty years, and 257 market rate units. The units are a mix of studio,1, 2, and 3 bedroom apartments. The building will be wrapped around a 450 space parking ramp. The building will be five to six stories in height with ground level walk up units. Amenities will include a great room, wellness studio, entertainment suite, theatre, patio, rooftop deck, business center, hospitality suite, and guest suites. The commercial development will be the replacement and relocation of the Wells Fargo Bank on the southwest corner of the site (Wells Fargo Bank Building, Phase 1). The affordable units will remain affordable for 40 years. Construction of the bank building is expected to begin in summer 2023 and be complete in spring 2024. Construction of the multi-family building is expected to be complete within 18-24 months of construction start; to begin in the spring of 2024 and completed by the end of 2025. The total development cost is an estimated $109 million. Continue to meet with and communicate the City’s commitment to achieving its mixed income and affordable housing goals to developers, property owners and managers, brokers, lenders, investors, and funders as well as residents and other stakeholders. Make local resources available and/or partner with county, regional, and State government to provide resources for developers to build new affordable and market rate housing in the city. Complete form legal agreements, program guidelines, and affordability compliance monitoring tools with the City Attorney. Mixed Income and Affordable Housing Funding Strategies •HRA Levy: Continue the HRA Levy to support affordable housing and economic development. •Tax Increment Financing (TIF): Use housing or redevelopment TIF to spur development. •4d Tax Abatement: Expand program participation and ensure long-term affordability. •Housing Bonds: Consider bonding authority if needed for affordable housing development or preservation. 15 •Land Write-Down on Publicly Owned Property: Develop a program to provide a land write-down on property identified in the Public Land Disposition Policy for affordable homeownership. •Philanthropic Funds: Connect developers to philanthropic funds for affordable housing development. •Partnership with Hennepin County, Metropolitan Council, and the State: Leverage county, regional, and state resources for affordable housing development. Local Affordable Housing Trust Fund Continue to explore the establishment of an Affordable Housing Trust Fund with levy and other funding resources. Affordable Housing Trust Fund dollars may be dedicated to: •Affordable housing development or preservation loans or grants •Matching funds to leverage county, regional, state, and federal resources •Rental assistance •Down payment assistance •Homeownership affordability or value gap funds •Homebuyer counseling services Up to 10 percent of the fund may go towards administrative expenses. Housing Study and Housing Dashboard Supervise completion of the five-year update to the housing needs study. Update the housing dashboard that includes housing development in the city and tracks progress on the City’s affordable housing goals based on the 2023 Housing Study. Affordable Ownership Provide referrals to Hennepin County and Minnesota Housing Programs for Down Payment Assistance. Provide referrals to Hennepin County and Minnesota Housing Programs for Rehabilitation Loans. Expand Access to Housing Choice and Opportunity for Black, Indigenous, People of Color, and Low-Income Homeowners and Renters Home Ownership Program for Equity (HOPE) HOPE Round 1: Construction is expected to begin in the summer of 2023 to be available for occupancy by home buyers in mid 2024 on three City owned parcels. The approval of the development agreements and the land sale transfer will be brought to the HRA and City Council in May and June of 2023. o 1605 Douglas Drive North: Twin Cities Habitat for Humanity in partnership with Homes Within Reach o 208 Meander Road: Greater Metropolitan Housing Corporation in partnership with Homes Within Reach o 47XX/4707 Circle Down: Greater Metropolitan Housing Corporation in partnership with Homes Within Reach 16 HOPE Round 2: Construction is expected to begin in the summer of 2024 to be available for occupancy by home buyers in mid 2025 on four City owned parcels. The approval of the development agreements and the land sale transfer will be brought to the HRA and City Council in 2023 and 2024. 1611 Lilac Drive N: Greater Metropolitan Housing Corporation to develop 4 units; 2 duplexes 1131 Lilac Drive N: Magnolia Homes, LLC to develop a duplex 1211 Lilac Drive N: Twin Cities Habitat for Humanity to develop 1-2 units; either a single family home or a duplex 504 Lilac Drive N: Twin Cities Habitat for Humanity to develop 1 unit; a single family home HOPE Round 3: Additional parcels for development will be identified. Importantly, the process and timeline for development of HOPE properties will be refined and improved based on the experience of Round 1. Fair Housing and Section 8 Anti-Discrimination Policy Provide prompt and meaningful access to housing discrimination information and representation. Prepare to adopt and enforce a Section 8 Anti-Discrimination Ordinance. Participate In Just Deeds Continue active participation in the Just Deeds Coalition. Ensure Multiple Perspectives and Voices in Decision-Making Seek input from established city resident groups and commissions, including the Golden Valley Affordable Housing Coalition and others. Evaluate various ways to authentically and regularly engage residents. Connect with and seek input from those who may be most impacted by decisions related to housing programs and policies, including seniors, young people, businesses, renters, multifamily property owners, and racially and culturally diverse residents. 17 ECONOMIC DEVELOPMENT Strategic Priorities Promote Redevelopment Districts Promote Economic Development And Redevelopment Support Entrepreneurs And Small Businesses Promote Redevelopment Districts Focus attention for redevelopment efforts to redevelopment districts: o Douglas Drive Corridor, North Wirth o Highway 55 West, Valley Square o I-394 Corridor o Winnetka Avenue and Medicine Lake Road Promote Economic Development and Redevelopment Work with developers and the business community to revitalize key business centers, both commercial and industrial. Redevelop undervalued, underused, blighted, and/or contaminated properties. Recruit new businesses and industries that are complementary to the community’s existing employment base. Strengthen relationships with DEED, Hennepin County, Greater MSP, Hennepin County, and the Golden Valley Business Council to attract new business and grow existing business. Promote economic development and redevelopment in the city, including: o Tax Increment Financing (TIF) o Redevelopment project assistance o Public/private financial packages o Brownfield assistance o Commercial rehabilitation/small business loans o Commercial façade programs o DEED Minnesota Investment Fund (MIF) o DEED Job Creation Fund (JCF) o Metropolitan Council Livable Communities Demonstration Account (LCDA) o Hennepin County Transit Oriented Development (TOD) Business Assistance Update the business assistance subsidy program policy, guidelines and application. 18 Support Entrepreneurs and Small Businesses How To Start and Grow a Business in Golden Valley Develop a communications plan to connect entrepreneurs and businesses to available resources. Establish a media presence, including information on financial assistance, technical assistance, location assistance, and licensing. Build relationships with local entrepreneurs and businesses. Open to Business and Elevate Business Connect Golden Valley resident and business owners or entrepreneurs to Open to Business and Elevate Business resources. Track the number of businesses served, including the percentage women entrepreneurs, Black, Indigenous, and People of Color entrepreneurs, and the percentage of low-income entrepreneurs. Annual Business Forum Explore holding or joining an annual business forum in partnership with the Minnesota Department of Employment and Economic Development (DEED), Minnesota Department of Labor and Industry (DLI), Hennepin County Elevate Business, MCCD Open to Business, and the Golden Valley Business Council. 19 EXECUTIVE SUMMARY Community Development 763-512-2345 / 763-512-2344 (fax) Golden Valley Housing and Redevelopment Authority Work Session May 9, 2023 Agenda Item 2. Review Preliminary Term Sheet Regarding Developer's Request for Renovation and Renewal Tax Increment Financing for 8200 Golden Valley Road and 8240 Golden Valley Drive Prepared By Cherie Shoquist, Housing and Economic Development Manager Alma Flores, Community Development Director Summary Background March 21, 2023 the City Council approved the Land Use and Zoning Map Amendments and Preliminary Plat for 8200 Golden Valley Road and 8240 Golden Valley Drive 1; Resolution No. 23-016 - Amending the Future Land Use Map 2; Ordinance No. 760 - Amending the Zoning Map 3; and the Preliminary Plat (Golden Valley Apartments). bit.ly/3Vv4MXK February 27, 2023 the Planning Commission held an Informal Public Hearing and approved the Zoning Map Amendment changing the guided land use for 8200 Golden Valley Road and 8240 Golden Valley Drive from Neighborhood Mixed Use to Community Mixed Use. bit.ly/42HWbU7 Proposed Development Sentinel Holdings Company proposes an estimated $109 Million mixed use housing and commercial development at 8200 Golden Valley Road and 8250 Golden Valley Drive. The 303-unit mixed income multifamily rental development (Multi-Family Building, Phase 2) includes 46 units affordable at 60% of Area Median Income for a period of twenty years, and 257 market rate units. The units are a mix of studio,1, 2, and 3 bedroom apartments. The building will be wrapped around a 450 space parking ramp. The building will be five to six stories in height with ground level walk up units. Amenities will include a great room, wellness studio, entertainment suite, theatre, patio, rooftop deck, business center, hospitality suite, and guest suites. The commercial development will be the replacement and relocation of the Wells Fargo Bank on the southwest corner of the site (Wells Fargo Bank Building, Phase 1). Currently, 8200 Golden Valley Road is a 2.74 acre site with a single-story Wells Fargo bank and 8240 Golden Valley Drive is a 1.06 acre site with a vacant former Park Nicollet medical clinic. The total site area is 3.8 acres. Mixed Income Housing Policy Requirements This is the first multifamily rental development proposed under the City’s Mixed Income Housing Policy. The multifamily rental development creates ten or more units, receives approvals under a 20 Zoning Map Amendment and Comprehensive Plan Map Amendment, and requests finance assistance from the City. The location, number, type, and size of affordable housing units to be constructed: The 46 units affordable at 60% Area Median Income ($70,380 for a household of four) include 5 studio units ($1,233 rent); 29 1-bedroom units ($1,320 rent) and 12 2-bedroom Units ($1,584 rent), with income as calculated by Minnesota Housing under the Low Income Housing Tax Credit program, and rents based on the Area Median Income for the metropolitan area that includes Golden Valley adjusted for bedroom size (2022). The affordable housing units range in size from 525-1,100 square feet, and are located on every level of the development. Rental terms and occupancy requirements: 15% of the units will be affordable at 60% of Area Median Income and include requirements to maintain affordability for 20 years. Timetable for completion of the units: Construction is expected to be complete within 18-24 months of construction start; to begin in July 2024 and completed by June 2026. Restrictions to be placed on the units to ensure their affordability: The affordability requirements will be incorporated into the Affordable Housing Performance Agreement and/or Tax Increment Financing Agreement and a Declaration of Affordable Housing Covenants will be recorded with the title. The proposed development compliance with the requirements of the Mixed Income Housing Policy is outlined below: POLICY REQUIREMENT PLAN MET Affordable Units All rental residential developments that add or create ten or more units. At least 15% of the units must be affordable to households with incomes at or below 60% of Area Median Income 46 units, 15% of the units must be affordable to households with incomes at or below 60% of Area Median Income Yes Calculation of Units 46 affordable units 46 affordable units Yes Period of Affordability At least twenty (20) years Twenty (20) years Yes Location of Units Within the development Within the development Yes Construction of Units Concurrent with market rate units Concurrent with market rate units Yes Size and Design of Units Consistent with and comparable to market rate units in the same development Consistent with and comparable to market rate units in the same development Yes Exterior/Interior Appearance Indistinguishable in style and quality from the market rate units in the same development Indistinguishable in style and quality from the market rate units in the same development Yes 21 Distribution of Units Incorporated into the overall project Incorporated into the overall project and on every level of the development Yes Tenants Affordable units shall be rented only to income eligible families during the period of affordability Affordable units shall be rented only to income eligible families during the period of affordability Yes POLICY REQUIREMENT PLAN MET Financial or Budget Considerations Tax Increment Financing Request On September 6, 2022 the Developer, Sentinel Holdings Company, submitted an application for Tax Increment Financing to the City. The Developer has estimated the total development cost applicable to the bank portion of the development is $4,869,480 and the multi-family building is $103,964,485, bringing the total cost of the combined development to $108,833,965. The Developer requests Tax Increment Financing to assist in providing 46 affordable units, acquiring the sites, demolishing the substandard structure, completing public improvements, and other eligible activities. Renewal & Renovation TIF District Eligibility: The HRA entered into a professional services agreement with LHB, Inc., to conduct an inspection and evaluation report to determine whether the proposed TIF District including 8200 Golden Valley Road and 8250 Golden Valley Drive qualifies for a Tax Increment Financing District. The March 31, 2023 LHB, Inc., report found that the proposed TIF District qualifies for a Renewal and Renovation Tax Increment Financing District under Minnesota Statutes, Section 469, 174 Subd. 10(a) as fifty percent of the buildings are structurally substandard, 100 percent of the other buildings require substantial renovation or clearance, and the substandard buildings are reasonably distributed. Need for Assistance: Staff engaged municipal advisor Baker Tilly Inc, to conduct a TIF analysis and determine the need for assistance. In order to make the finding that the project would not be likely to proceed “but-for” the requested financial assistance, Baker Tilly reviewed project cost and operating assumptions provided by the Developer. Using this information, Baker Tilly prepared a project pro forma and performed an unleveraged Internal Rate of Return (IRR) analysis which provided an estimate of the potential return on investment to the Developer with and without the requested TIF assistance. The table below identifies the projected Unleveraged Rate of Return for the project without assistance and with the requested TIF assistance, based on the inclusion of 15% of the units as affordable at 60% of the AMI. Unleveraged IRR Analysis Calculations Return Without Assistance 5.39% With TIF Assistance (10-Years)6.75% As a result of the analysis, including adjustments to the project costs mentioned above, the calculated potential return on investment for the project without TIF assistance is 5.39%. This anticipated return without assistance falls below the third-party benchmark of 6.86%. The feasibility benchmark is 22 established by the PriceWaterhouseCooper (PWC) Real Estate Developer Survey. Therefore, the project would be unlikely to proceed but-for the requested TIF assistance. Additionally, by projecting the rate of return with the TIF assistance and determining the projected return as 6.75% an amount that is right in-line with the identified feasibility threshold of 6.86%, the TIF assistance in the proposed principal amount of ranging from an estimated up to $10,976,000 to up to $11,243,000 will not result in an excessive rate of return being realized by the Developer. Therefore, the projected TIF assistance amount is reasonable. Use of TIF Revenue in Renewal & Renovation District The proposed Tax Increment Financing terms include: The HRA agrees to invest in the project by providing a Renewal and Renovation Tax Increment Financing District ranging from up to an estimated $10,976,000 to an up to an estimated $11,243,000 in principal amount TIF via a PAY-AS-YOU-GO NOTE, generated by the Project based on an interest rate of 6%. The final TIF amount will be determined by the parties based on the contractor's final construction timeline and will be included in the TIF Agreement, which will be before the Council for consideration on June 20, 2023. The maximum in annual TIF payments equal to 90% of the TIF principal amount on a PAY-AS- YOU-GO basis until the principal amount of the TIF has been satisfied The maximum duration of TIF District is 15 years from the first increment Timeline DATE ENTITY EVENT May 9, 2023 HRA Work Session Review Term Sheet May 16, 2023 HRA Special Session Consider Approval of Term Sheet May 19, 2023 Staff Baker Tilly County and School District receive impact letters and draft TIF plan (At least 30 days prior to public hearing) May 22, 2023 Planning Commission Review TIF Plan and consider a finding that the development is consistent with Comprehensive Plan June 8, 2023 Staff Baker Tilly Publication of notice of public hearing in Sun Post Newspaper (10-30 days prior to public hearing) (Deadline June 1, 2023) June 20, 2023 HRA Meeting Review TIF Plan and consider adopting a resolution approving creation of TIF Plan and TIF District 23 June 20, 2023 City Council Meeting Hold public hearing and consider adopting a resolution approving creation of TIF Plan and TIF District After June 20, 2023 Staff Baker Tilly Notification to County and State of TIF Plan July – September, 2023 Developer Demolition of vacant building July 2023 – June 2024 Developer Phase I Construction – Wells Fargo July 2024 – June 2025 Developer Phase II Construction – Sentinel Golden Valley Apartments DATE ENTITY EVENT Legal Considerations The Preliminary Term Sheet regarding the developer's request for Renovation and Renewal Tax Increment Financing to construct the multifamily rental and commercial bank development and related legal agreements have been review by the City Attorney. Equity Considerations This development meets the City's goals to preserve and promote economically diverse housing options in our community by creating high quality housing in Golden Valley for households with a variety of income levels, ages, and sizes. Under Fair Housing Law, future residents will not face housing discrimination. The law is intended to prevent discrimination of the protected classes--race, color, creed, religion, national origin, sex, marital status, disability, public assistance, sexual orientation, gender identity or familial status. Lastly, by linking this incentive to affordable housing development provides much needed housing to economically disadvantaged people and households and provides an opportunity for the mixing of incomes to further future residents’ access to social networks and opportunities. Supporting Documents Sentinel Term Sheet Sentinel Term Sheet Presentation 24 Preliminary Term Sheet This Term Sheet, dated as of _______, 2023, is intended to set forth the general terms upon which the Developer (as defined below) and the Housing and Redevelopment Authority of the City of Golden Valley, MN (the “HRA”) may be willing to enter into a Development Agreement (the “Development Agreement”). 1.Developer: Sentinel Holdings Company (or a limited partnership or other entity to be formed thereby or affiliated therewith) (“Developer”). 2.Property: 8240 Golden Valley Dr.; 8200 Golden Valley Rd.; Golden Valley, MN 55427 portion of PID: 3111821140043; 3111821140044, subject to a final plat of the Property. 3.Developer Conditions, as determined to date: a.Execution of one or more Development Agreements in mutually agreeable form and acceptable to lenders. b.Securing necessary financing for the construction of the Minimum Improvements c.Site Control 4.HRA Conditions, as determined to date: a.Establishment of a new Renewal and Renovation TIF District subject to approval after all proceedings required by law b.HRA approval of Construction Plans c.City Council approval of: i.Final Plat ii. Planning Application for Conditional Use Permit for bank drive-thru iii. Easement vacation application d.Execution of one or more Development Agreements 5.Minimum Improvements: Improvements to the Property will include the construction and equipping of a multifamily rental housing facility with approximately 303 units (the “Multi-Family Building” also known as Phase 2) with a mix of studio, 1, 2 and 3-bedroom units, of which 46 units will be allocated to tenants earning 60% of the area median income (AMI) or below per the Housing and Urban Development (HUD) annual rental maximums for a 20-year period. Common area amenities will include a great room, wellness studio, entertainment suite, theatre, patio, rooftop deck, business center, hospitality suite, and guest suites. 6.Public Improvements: In addition to the private improvements planned in connection with the Project, Developer shall be solely responsible for the cost of all public improvements required by the Projectand shall deposit with the City an amount sufficient to cover 150% of the estimated cost of such public improvements. The City shall construct all required public improvements, which shall include: a. Sidewalk and/or trail around the perimeter of the site including ADA ramps b. Storm Sewer extension from Golden Valley Drive to Wisconsin Avenue 25 c. Water main relocation in Golden Valley Road d. Modifications to center median in Golden Valley Road at closed driveway e. Mill and overlay Wisconsin Avenue and Golden Valley Road following completion of the improvements 7.Construction Schedule: Commence construction on the Wells Fargo Bank (the “Bank Building” also known as Phase 1) on or around July 1, 2023 and substantially complete construction on or around June 30, 2024. The multifamily development will commence construction on or around July 1, 2024 and substantially complete construction on or around June 30, 2026. For the purpose hereof, “Commence” shall mean beginning of physical improvement to the Property, including grading, excavation, or other physical site preparation work; and “Complete” shall mean that the Minimum Improvements are sufficiently complete for the issuance of a Certificate of Occupancy. Upon Completion, the HRA will issue a “Certificate of Completion” in recordable form. 8.Public Assistance: Subject to all terms and conditions of the Development Agreement(s) and satisfaction of the requirements of applicable law including a final “but for” analysis, the HRA will reimburse the Developer for costs of construction of the Multi-Family Building as follows: a.The HRA would invest in the project by approving a Renewal and Renovation Tax Increment Financing District and a TIF PAY-AS-YOU-GO note with a principal amount ranging from $10,976,000 to $11,243,000, generated by the Project based on an interest rate of 6%. The final TIF amount will be determined by the parties based on the contractor's final construction timeline and will be included in the TIF Agreement, which will be before the Council for consideration on June 20, 2023. The PAYGO note will be payable from 90% of the tax increment generated from the Multi-Family Building and Wells Fargo Building, on a PAY-AS- YOU-GO basis until the principal amount of the TIF has been satisfied b.as determined by the HRA, for a period of up to 15 years. The PAYGO note will be issued and the loan will be advanced upon completion of the Multi-Family Building and proof of expenditure of Qualified Costs for such building. “Qualified Costs” means costs of construction of the Multi-Family Building, including without limitation, demolition of existing structures, site improvements, utilities, building construction and parking and any other expenses incurred by the Developer in connection with construction of the Multi-Family Building and eligible for payment in accordance with the TIF Act. 9.Mixed-Income Housing: The Developer agrees the Minimum Improvements will conform in all respects to the City’s Mixed-Income Housing Policy and Minnesota Statutes, Section 469.174 through 469.1794, as amended (the “TIF Act”) as follows: a.At least 15% of the rental units must be occupied by or available for rent to persons whose income does not exceed 60% of the area-wide median family 26 that figure is determined and announced from time to time by HUD, as adjusted for family size (“AMI”). At least 15% of the units (i.e. 46 units in the Multi-Family Building) must be rented to households whose incomes do not exceed 60% of AMI; b.Those units will also be subject to rent restrictions such that rents shall not exceed 60% of AMI , as applicable; c.The restrictions will remain in place for 20 years; d.Income certifications will be obtained from each qualifying tenant annually and retained for the 20 years; e.A household that was income eligible at initial occupancy may be treated as qualifying for additional rental periods as long as the income of the household does not exceed 140% of the applicable AMI; thereafter the first available unit must be rented to a household meeting the applicable income limitation; f.The restrictions will be set forth in a Declaration of Restrictive Covenants recorded against the applicable portion of the Property and restricting subsequent owners of the Multi-Family Building in a form that is mutually agreeable; g.The Developer shall not concentrate qualifying tenants in any floor or any area of any building in the facility. The units occupied by qualifying tenants shall reflect the unit mix of the whole facility and shall be located throughout the facility. 10. Fees: The City will require the Developer to pay for 100% of the costs of establishing the TIF district and to pay for the reasonable out-of-pocket legal, financial consultant and administrative fees associated with this transaction. Developer will sign a separate deposit agreement with the City and deposit funds with the City to cover these costs. 11. Labor and Contracting Requirements: a.The Developer shall prepare, and utilize in its contract with the General Contractor and all subcontracts, a sub-contractor addendum, acceptable to the HRA, which outlines fair labor law compliance, and allows general contractor to withhold payment or cancel contract if violations are reported (the “Subcontract Addendum”). b.Developer shall prohibit use of all disqualified contractors on state "disqualified" list; review list prior to construction commencement with respect to each subcontractor; remove any subcontractor added to the list. c.Developer and all contractors and subcontractors shall comply with all federal, state, and local labor laws. d.If a claim is filed with the Minnesota Department Labor regarding any contractor or subcontractor doing work on the Property, Developer shall fully cooperate with the Department, including taking any reasonable action required by the Department or that Developer otherwise elects to take. Developer shall also fully enforce the contracts with the General Contractor and subcontractors, including enforcing and requiring the General Contractor to enforce the Subcontract Addendum. 27 e.General Contractor will use and enforce the Subcontract Addendum (or a substantially similar addendum) with all subcontractors, and the General Contractor shall, and shall require all subcontractors to, cooperate with the Department of Labor regarding any claim filed with the Department, including taking any action reasonably required by the Department or that Developer otherwise elects to take. f.Developer shall certify to the HRA that proper payments to all contractors, subcontractors, and project laborers have been paid prior to the issuance of a Certificate of Completion as a prerequisite to receipt of PAYGO Note or other assistance. g.Failure to comply with the above points will be an event of default under the development agreement. 12.Miscellaneous: a.Transfer of the Property or of the Development Agreement or PAYGO note payments will be subject to HRA consent except for certain limited exceptions including mortgage financing and rentals of housing units in the ordinary course of operations. b.Developer covenants to pay property taxes and maintain customary insurance. c.Developer must keep all units in compliance with local codes and other applicable state and local building codes to ensure the units are decent, safe, and sanitary at all times. d.Developer and its agents must adhere to Equal Opportunity, Affirmative Marketing, and Fair Housing practices in all marketing efforts, eligibility determinations and other transactions. The Equal Housing Opportunity logo or statement (“We do business in accordance with the Federal Fair Housing Law. It is illegal to discriminate against any person because of race, color, religion, sex, handicap, familial status, or national origin.”) must be used in all advertising of vacant units. e.Additional conditions of assistance remain under consideration. The Developer acknowledges that except for Section 10 above which shall be binding upon Developer, this Term Sheet shall not be deemed conclusive or legally binding upon either the Developer or the HRA, and neither the Developer nor the HRA shall have any obligations regarding the property defined below, unless and until a definitive Development Agreement is approved by the HRA board and executed by both the Developer and the HRA. 28 Preliminary Terms of Development Wells Fargo Bank Sentinel Golden Valley Apartments 8200GOlden Valley Road & 8240 Golden Valley Drive Sentinel Holdings Company Housing and Redevelopment Authority May 9, 2023 Alma Flores, Community Development Director Cherie Shoquist, Housing and Economic Development Manager 29 Wells Fargo Bank | Sentinel Golden Valley Apartments 30 31 Preliminary Terms of Development •Review and Discuss Preliminary Terms: May 9 HRA Work Session •Affordable Housing under the Mixed Income Housing Policy •Tax Increment Financing Assistance •Consider Approval of Preliminary Terms:May 16 HRA Special Session •Consider Recommendation and June 20 HRA/City Council Meeting Approval of Request for Tax Increment Financing: 32 Mixed Income Housing Policy Preserve and promote economically diverse housing options in our community by creating high quality housing in Golden Valley for households with a variety of income levels, ages, and sizes. 33 Mixed Income Housing Policy For Rental Developments •15% of the units affordable at 60% AMI for 20 years •10% of the units affordable at 50% AMI for 20 years Add or create ten or more units and receive approvals under a: •Conditional Use Permit •Zoning Map Amendment •Comprehensive Plan Map Amendment •Planned Unit Development or •Receive Financial Assistance from the City –TIF Request 34 Sentinel Apartments Golden Valley •8200 & 8240 Golden Valley Road •Units: 303; 46 units affordable at 60% AMI •5 Studio •29 1-BR •12 2-BR •Parking spaces: 450 •Amenities: great room, wellness studio, entertainment suite, theatre, patio, rooftop deck, business center, hospitality suite, guest suites •Construction: Summer 2024 –Summer 2026 •Estimated Market Value: $109 M 35 Affordable Housing Plan Sentinel Apartments Golden Valley Policy Requirement Plan Met Affordable Units All rental residential developments that add or create ten or more units. At least 15% of the units must be affordable to households with incomes at or below 60% of Area Median Income 46 units, 15% of the units must be affordable to households with incomes at or below 60% of Area Median Income Yes Calculation of Units 46 affordable units 46 affordable units Yes Period of Affordability At least twenty (20) years Twenty (20) years Yes Location of Units Within the development Within the development Yes Construction of Units Concurrent with construction of market rate units Concurrent with construction of market rate units Yes Size and Design of Units Consistent with and comparable to market rate units in the same development Consistent with and comparable to market rate units in the same development Yes Exterior/Interior Appearance Indistinguishable in style and quality from the market rate units in the same development Indistinguishable in style and quality from the market rate units in the same development Yes Distribution of Units Incorporated into the overall project Incorporated into the overall project and on every level of the development Yes Tenants Affordable units shall be rented only to income eligible families during the period of affordability. Affordable units shall be rented only to income eligible families during the period of affordability. Yes 36 Tax Increment Financing Analysis Tom Denaway, Municipal Advisor Baker Tilly 37 Tax Increment Financing •What is TIF? •A method of capturing tax base growth resulting from new development •Property within TIF District pays their full property tax amount based on new value •The future increased local property taxes generated by the new development are captured over time as increment •Pay -as-you-go TIF reimburses the Developer for their TIF eligible improvements over time •Developer is only eligible to receive revenue as generated by the project •TIF Districts have a fixed term for capture, then new development is added to tax base 38 Tax Increment Financing Annual Taxes Generated (Dollars)$$$$$ $$$$ $$$ $$ Duration of TIF District (Years) New Tax Base (post-project; flows to General Fund and all taxing jurisdictions)Base Taxes (continues to City, County, School District and other taxing jurisdictions) Incremental Taxes (portion used to finance TIF-eligible expenditures) 39 Tax Increment Financing Analysis •Renewal & Renovation TIF District Eligibility •Parcels comprising 70% of the area of the District are occupied •20% of the buildings are “Structurally Substandard” •30% of the other buildings require substantial renovation or clearance •Structurally Substandard = Cost of bringing the existing building into code-compliance is greater than 15% of the cost of constructing a new building of the same size and type. •Proposed District Qualifies •Qualification of District as eligible based on review by LHB Engineering •100% of parcels in District are occupied •50% of the buildings are “Structurally Substandard” •100% of the other buildings require substantial renovation or clearance 40 Tax Increment Financing Analysis •Need for Assistance •The table below identifies the projected Unleveraged Rate of Return for the project without assistance and with the requested TIF assistance, based on the inclusion of 15% of the units as affordable at 60% of the AMI •Third-Party Benchmark for project feasibility identified as 6.86% •Projected return without assistance falls significantly below this threshold •Project return with assistance is essentially right inline with identified benchmark. 41 Tax Increment Financing Analysis | Preliminary Terms •Use of TIF Revenue in Renewal & Renovation District: The proposed Tax Increment Financing terms include: •The HRA agrees to invest in the project by providing a Renewal and Renovation Tax Increment Financing District ranging from up to an estimated $10,976,000 to an up to $11,243,000 in principal amount TIF via a PAY-AS-YOU -GO NOTE, generated by the Project based on an interest rate of 6%. •The principal TIF amount is subject to the construction timeline to be finalized prior to June 20, 2023. •The maximum in annual TIF payments equal to 90% of the TIF principal amount on a PAY-AS- YOU -GO basis until the principal amount of the TIF has been satisfied •The maximum duration of TIF District is 15 years from the first increment 42 Timeline DATE ENTITY EVENT May 9, 2023 HRA Work Session Review Term Sheet May 16, 2023 HRA Special Session Consider Approval of Term Sheet May 19, 2023 Staff Baker Tilly County and School District receive impact letters and draft TIF plan (At least 30 days prior to public hearing) May 22, 2023 Planning Commission Review TIF Plan and consider a finding that the development is consistent with Comprehensive Plan June 8, 2023 Staff Baker Tilly Publication of notice of public hearing in Sun Post Newspaper (10-30 days prior to public hearing)(Deadline June 1, 2023) June 20, 2023 HRA Meeting Review TIF Plan and consider adopting a resolution approving creation of TIF Plan and TIF District; recommend approval of TIF and related legal agreements June 20, 2023 City Council Meeting Hold public hearing and consider adopting a resolution approving creation of TIF Plan and TIF District; approve TIF and related legal agreements After June 20, 2023 Staff Baker Tilly Notification to County and State of TIF Plan July –September 2023 Developer Demolition of vacant building July 2023 –August 2024 Developer Phase I Construction –Wells Fargo July 2024 –June2026 Developer Phase II Construction –Sentinel Golden Valley Apartments 43 QUESTIONS? THANK YOU. Cherie Shoquist 763-593-3983 cshoquist@goldenvalleymn.gov www.goldenvalleymn.gov 44