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10-15-24 Special HRA Agenda October 15, 2024 — 6:30 PM Golden Valley City Hall Hybrid Meeting 1.Call to Order 1.A.Roll Call 2.Consent Agenda Approval of Consent Agenda - All items listed under this heading are considered to be routine and will be enacted by one motion. There will be no discussion of these items unless a Commission Member so requests in which event the item will be removed from the general order of business and considered in its normal sequence on the agenda. 2.A.First Amendment and Assignment of Contract for Development - 208 Meander 2.B.Adopt HRA Resolution No. 24-04 Approving the Housing Improvement Area (HIA) Policy for the City of Golden Valley 3.Adjournment HRA SPECIAL MEETING AGENDA Housing and Redevelopment Authority meetings are being conducted in a hybrid format with in- person and remote options for attending. Remote Attendance Options: Members of the public may attend this meeting by watching on cable channel 16, streaming on CCXmedia.org, streaming via Webex, or by calling 1-415-655-0001 and entering access code 2632 916 6135 and webinar password 1234. City of Golden Valley HRA Special Meeting October 15, 2024 — 6:30 PM 1 EXECUTIVE SUMMARY Community Development 763-512-2345 / 763-512-2344 (fax) Golden Valley Housing and Redevelopment Authority Meeting October 15, 2024 Agenda Item 2.A. First Amendment and Assignment of Contract for Development - 208 Meander Prepared By Christine Costello, Housing & Economic Development Manager Summary On October 17, 2023 the Housing and Redevelopment Authority in and for the City of Golden Valley (“HRA”) and Greater Metropolitan Housing Corporation (“GMHC”) entered into a Contract for Development (“Contract”) for development of a home as part of the Home Ownership Program For Equity (“HOPE”) at the property located at 208 Meander Road, Golden Valley (“Property”). On June 18, 2024 the parties entered into a Closing Date Extension Addendum to the Contract extending the closing date for the Property to December 31, 2025. In September 2024 GMHC informed the HRA that it wished to amend the Contract to change the legal entity the Property is conveyed to consistent with the requirements of paragraph 7.2 of the Contract. GMHC requested the Property be conveyed to GMHC Holding LLC, a Minnesota Limited Liability Company in good standing. GMHC indicated that this is a requirement of their lender. In an effort to accommodate this request, a First Amendment and Assignment of Contract for Development was prepared for approval at a special HRA meeting on October 15, 2024. This First Amendment provides consent for the conveyance of the property to GMHC Holding, LLC after closing, which occurred on October 2, 2024. Additionally, the First Amendment also amends Exhibit A to the Contract to update the legal description. Legal Considerations The City Attorney drafted the First Amendment and Assignment for Contract for Development for 208 Meander. GMHC has reviewed and signed the First Amendment and Assignment for Contract for Development. Equity Considerations The Home Ownership Program for Equity 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. Dedicated publicly owned land for more affordable housing for homeownership is a valuable resource to meet our affordable housing goals. 2 Recommended Action Motion to adopt the First Amendment and Assignment of Contract for Development for 208 Meander. Supporting Documents First Amendment and Assignment to Contract for Development 208 Meander 3 4 5 6 7 8 9 EXECUTIVE SUMMARY Community Development 763-512-2345 / 763-512-2344 (fax) Golden Valley Housing and Redevelopment Authority Meeting October 15, 2024 Agenda Item 2.B. Adopt HRA Resolution No. 24-04 Approving the Housing Improvement Area (HIA) Policy for the City of Golden Valley Prepared By Christine Costello, Housing & Economic Development Manager Summary In the 2023 Housing and Redevelopment Authority (HRA) work plan, one key housing strategy to be considered for implementation included a Housing Improvement Area (HIA) policy. The intent of an HIA policy allows for the renovation of older common interest communities within Golden Valley. An HIA allows these communities with an association expanded rehabilitation options for their community. Those commonly interested in an HIA are townhomes and condominiums, but manufactured home parks can also be included, though none are located within Golden Valley. Recently City staff received an inquiry from a local condominium association about the potential interest in establishing an HIA. Though interest was expressed from one condominium association, the proposed policy would be available for consideration citywide to all townhome and condominium associations who meet the goals and criteria of the proposed HIA policy. Generally, HIAs are a tool that cities can utilize to financially facilitate general improvements to townhomes and/or condominiums upon receiving a majority of the association’s approval and support. It can often be more difficult for buildings or structures (townhomes and condominiums) under shared ownership to obtain financing for improvements, particularly for condominiums, as the individual units often cannot be counted as sufficient collateral when securing a loan from a bank. Through an HIA, cities can act as the initial funding source, through general obligation bonds, for the improvements, which are then paid back over the term of the HIA through a special assessment. As part of the evaluation criteria a townhome or condominium association will have to provide evidence that they have explored other funding sources and that an HIA was a last resort for financing. HIA financing is structured so that it is paid in the shortest term possible while remaining affordable for the association members. It is important to note that bonding for HIAs does not impact the City’s bond rating. The October 8th Council work session discussion on the HIA policy included questions regarding what the obligations are for the City and taxpayer related to payment, potential default of payment, and potential requests for renegotiated terms. The City's Municipal Advisor from Ehlers Inc., was in attendance to answer questions from City Council. They explained that an assessment gets paid along 10 with property taxes, so a resident whose condominium or townhome has an HIA would have to skip paying taxes all together. Though this can happen, it is very uncommon. There is a cushion in the interest rate on the assessment to cover any shortfalls. In addition, unpaid taxes are resolved through tax forfeiture or foreclosure and the City would get a fee at this point. The Municipal Advisor stated that an example of the overall process is the same as what a City would use for street reconstruction projects. In addition, it was discussed that the HRA levy could also potentially be used as well as a combination of cash and bonds because that financing did not need to be strictly bonds. It would be structured in a development agreement in which the mechanics of the HIA financing would be clearly defined. Financial or Budget Considerations Finance staff has no concerns about the HIA policy and would work closely with the City's Municipal Advisor and Bond Counsel during any HIA process, including the structuring and review of the development agreement. Legal Considerations The attached HIA policy has been reviewed by legal counsel to ensure its compliance with State Statute. In addition, the policy was formatted in the City's new policy template to allow for easy review and access in the future. Equity Considerations The HIA policy would assist in preserving and promoting economically diverse housing options in our community by maintaining quality housing stock in Golden Valley for households with a variety of income levels, ages, and sizes. Recommended Action Motion to adopt HRA Resolution No. 24-04 establishing a Housing Improvement Area (HIA) Policy for the Golden Valley Housing and Redevelopment Authority (HRA). Supporting Documents HRA Resolution No. 24-04 - HIA Policy Exhibit A - Golden Valley HIA Policy 11 HRA RESOLUTION NO. 24-04 A RESOLUTION APPROVING THE GOLDEN VALLEY HOUSING IMPROVEMENT AREA (HIA) POLICY WHEREAS, the Housing and Redevelopment Authority in and for the City of Golden Valley (hereinafter “HRA”) and the City Council for the City of Golden Valley have elected to provide a Housing Improvement Area (HIA) policy for common interest communities in the City of Golden Valley; and WHEREAS, maintaining housing quality is a goal in the 2040 Comprehensive Plan; and WHEREAS, the preservation of Naturally Occurring Affordable Housing (NOAH) within the community is an important component of the City and HRA’s overall affordable housing goals; and WHEREAS, the Policy identifies certain goals, eligible uses, and evaluation criteria that the City and/or HRA intends to require, in connection with the consideration of potential City and/or HRA approvals for financing of common element housing improvements of a condominium, townhome, or other common interest community such as a manufactured home park. NOW THEREFORE, BE IT RESOLVED,by the Housing and Redevelopment Authority in and for the City of Golden Valley, Minnesota that this HRA adopts the Golden Valley Housing Improvement Area (HIA) Policy attached hereto as Exhibit A. Adopted by the Housing and Redevelopment Authority of the City of Golden Valley, Minnesota this 15th day of October, 2024. ____________________________ Gillian Rosenquist, HRA Chair Attested: Noah Schuchman, Executive Director 12 O FFICIAL C ITY P OLICY C ITY OF G OLDEN V ALLEY General Informa�on Policy Title: Housing Improvement Area (HIA) Policy Department: Community Development Policy Owner (job �tle): Housing & Economic Development Manager Policy ID: 24-XXX Council & HRA Approval Date: 10/15/2024 Resolu�on Number: 24-XXX Effec�ve Date: 10/15/2024 ☒New ☐ Updated Policy Overview Policy Descrip�on: This policy is to establish the City and HRA's posi�on rela�ng to the use of Housing Improvement Area (HIA) financing for private housing improvements. Purpose & Scope: This Housing Improvement Area Policy (this “Policy”) establishes the condi�ons under which HIAs may be approved by the Golden Valley City Council or Housing and Redevelopment Authority (HRA) and provides a framework within which requests for the establishment of HIAs will be considered. Defini�ons: • Associa�on means a homeowners associa�on or similar en�ty. • Blight or Blighted Area has the meaning given to it in Minn. Stat. § 469.002, as may be amended from �me to �me. • Enabling Ordinance means the ordinance adopted by the City Council or HRA establishing the Housing Improvement Area. • Housing Improvement Area (“HIA”) means a defined area within the city where housing improvements are made or constructed and the costs of the improvements are paid in whole or in part from fees imposed within the area. • Housing improvements has the meaning given in the city's enabling ordinance. Housing improvements may include improvements to common elements of a condominium or other common interest community or to a manufactured home park. • Housing Unit means real property and improvements thereon consis�ng of a one-dwelling unit, or an apartment or unit as described in chapter 515, 515A, or 515B, respec�vely, or a manufactured home in a manufactured home park that is occupied by a person or family for use as a residence. • Naturally Occurring Affordable Housing (NOAH) means exis�ng owner-occupied or rental residen�al housing (a) where at least 20% of the units are affordable to 60% AMI; (b) that is classified in the Class B or C real estate categories; or (c) was constructed between 1940 and 1990. Related Documents, Materials & Resources: • HIA Procedure and instruc�ons • HIA Applica�on • Minnesota Statutes, Chapter 148A Policy I. Authority Pursuant to Minnesota Statutes, Sec�ons 428A.11 to 428A.21, the City of Golden Valley (“City”) and the Housing and Redevelopment Authority (“HRA”) are authorized to establish HIAs within its corporate limits. Within an HIA the City or 13 HRA may lend funds to an Associa�on for the purpose of funding the cost of improvements made to common elements of their property(s). The City or HRA may lend funds to the Associa�on from either available City or HRA cash or proceeds from the City or HRA’s issuance of taxable bonds. Loan repayment is accomplished through the imposi�on of HIA fees on the owners of units included in the HIA. It is the judgement of the Council and HRA that HIAs shall be created on a selec�ve basis. The City or HRA will consider the establishment of a HIA only when the applicant can demonstrate a benefit to the public and only on a last resort basis, when the Associa�on is unable to obtain other financing for needed repairs or improvements. The Council and HRA consider the crea�on of a HIA to be a privilege, not a right. Although approval for another HIA may have been granted previously by the City or HRA for a similar project, the Council and HRA are not bound to approve subsequent requests based on earlier approvals. Each applica�on will be considered separately based on the criteria in this Policy and the City or HRA’s financial posi�on. II. HIA Goals and Eligible Uses The City and HRA will consider using HIA financing to assist private property owners only in those circumstances in which the proposed private project addresses one or more of the following goals: A. To promote neighborhood stability and revitaliza�on removal or remedia�on of blight or the upgrading of the exis�ng Housing Units in the City. B. HIA Financing shall not be used to remove, displace or disenfranchise communi�es, including, but not limited to communi�es of color, low socio-economic status, immigrant, and those at the intersec�on of these or similar iden��es. C. To correct housing or building code viola�ons. D. To maintain or obtain FHA mortgage eligibility for an Associa�on within the designated HIA. E. To increase or prevent the loss of the tax base of the City in order to ensure the long-term ability of the City to provide adequate services for its resident. F. To preserve Naturally Occurring Affordable Housing (NOAH). G. To preserve a variety of housing styles and values within the community. H. To stabilize or increase the number of owner-occupied Housing Units within a neighborhood or associa�on. I. To meet other public policy goals of the City Council as adopted from �me to �me, including but not limited to the promo�on of quality urban design, quality architectural design, energy efficiency or conserva�on, or decreasing the capital or opera�ng costs of the City. III. Evalua�on Criteria The City and HRA will only consider establishing a HIA if all of the following criteria are met: • The project is compliant with the City’s Comprehensive Plan, zoning ordinances, City code and state and federal laws, regula�ons and policies. • The project meets one or more of the HIA goals listed in sec�on II herein. • The HIA financing complies with all applicable City financial policies. • The HIA funds will not provide 100% of the funding for the Associa�on’s long range replacement schedule and the Associa�on is also contribu�ng its own current and future funds to the project. • The association must have a third party conduct a facility needs assessment to determine and prioritize the scope of improvements. The association may be required to make changes to its bylaws to ensure adequate enforcement authority to protect common area improvements financed through the HIA from substandard building components for which the homeowner is responsible. • The association must adopt a financial plan that has been prepared by an independent third party with designation as a Community Associations Institute (“CAI”) certified reserve specialist which must conform to CAI reserve study standards and comply with Minnesota Statutes 515B.3-114 through 515B.3-1141. 14 • The Associa�on has explored all other funding sources and has provided evidence that none are feasible. HIA financing is last resort financing and shall not be provided to projects unless no other financing op�ons are available. The Associa�on must provide at least the following to show that no other financing op�ons are available: o Verifica�on that the Associa�on has completed an assessment showing that no other financing op�ons are available; and o Leters from at least two private lenders confirming a lack of financing op�ons. • The term of any bonds or other debt incurred for the HIA mature in 20 years or less. The term shall be determined by the City or HRA in its sole discre�on. • The HIA financing is structured so that it is paid in the shortest term possible while remaining affordable for Associa�on members. • The Associa�on enters into an agreement with the City or HRA (the “Development Agreement”) that requires, at a minimum, the following terms: o Establishment of a reserve fund o Staffing requirements o Annual repor�ng and financial audi�ng requirements with regular updates to the financial plan not less than once every five years o Condi�ons of disbursement o Required dues increases o No�fica�on to new owners of levied fees, including the individuals that purchase property a�er the ini�al development o Limita�ons on prepayment of fees, if any o Minimum number of bids to be submited for the project work o Development and construc�on plans rela�ng to the project o Hiring of a construc�on manager and/or owner’s representa�ve to monitor performance of the general contractor • The Associa�on provides the City or HRA adequate financial guarantees to ensure the repayment of the HIA financing and its performance of all its obliga�ons in the Development Agreement. Financial guarantees may include, but are not limited to, the pledge of the Associa�on’s assets, including its reserves, opera�ng funds or property. • The project, including the use of HIA financing, is supported by a majority of the owners within the Associa�on. The Associa�on shall provide official verifica�on of the results of a vote of the Associa�on’s membership. • The Associa�on has adopted a financial plan that provides sufficient financing for the con�nued maintenance and opera�on of the Associa�on’s common elements and a long-range plan to complete and finance capital improvements therein. Said financial plan shall not rely on HIA financing. • All improvements financed by the HIA are solely to the Associa�on’s common elements, as that term is defined in Minnesota Statutes, Chapter 515B, and are primarily exterior improvements and other improvements integral to the habitability of the building, for example, boilers, HVAC, structural improvements and the like. All improvements must be permanent in nature and the scope of improvements must be determined and documented by a facility needs assessment conducted by a third party. • The project must: o Provide significant improvement to the HIA; o Comply with all applicable federal, state and local laws, regula�ons, and policies; o Provide a significant increase to the tax base or prevent the loss of tax base; and o Not be of poor quality. • The financial structure of the project must receive a favorable review by the City’s Finance Director, or their designee, the City’s Municipal Advisor, and the City’s Bond Counsel. The review must include a review of the performance and level of outstanding debt of previous HIAs. 15 • The association shall provide adequate financial guarantees to ensure repayment of the financing and the performance of the administrative requirements of the development agreement. Financial guarantees may include but are not limited to the pledge of the homeowner association’s assets including reserves, operating funds and/or property. • The Associa�on must be current on all charges, fees, taxes, special assessments and other debts and obliga�ons payable to the City and HRA. IV. Other Provisions • The Associa�on shall submit the required applica�on, along with all required suppor�ng documenta�on, including a pe��on signed by at least 60% of the property owners of the Associa�on, prior to any City or HRA review. Coordina�on and partnering with other lending agencies to finance the Improvements is allowed and encouraged. • The City Council will establish an applica�on fee , which shall be included in the City’s fee schedule. • HIA is responsible to pay all City third party consul�ng costs, including but not limited to Municipal Advisor and Bond Counsel rela�ng to the review of the feasibility of the HIA and dra�ing of all legal documents related to establishment of the HIA. 16