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2025-11-12 - AGE - HRA Work Session November 12, 2025 — 6:30 PM Golden Valley City Hall Council Conference Room 1.Affordable Housing Trust Fund Policy and Application HRA WORK SESSION AGENDA HRA Work Sessions 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 work sessions. The public is invited to attend HRA Work Sessions and listen to the discussion; public participation is only allowed by invitation of the HRA. Discussion Item(s) City of Golden Valley HRA Work Session November 12, 2025 — 6:30 PM 1 EXECUTIVE SUMMARY Community Development 763-512-2345 / 763-512-2344 (fax) Golden Valley Housing and Redevelopment Authority Work Session November 12, 2025 Agenda Item 1. Affordable Housing Trust Fund Policy and Application Prepared By Christine Costello, Housing & Economic Development Manager Summary In March 2025, The Housing and Redevelopment Authority (HRA) approved the establishment of an Affordable Housing Trust Fund (AHTF). The AHTF ordinance formalizes and complies with Minnesota State Statute 462C.16, and makes the City eligible to apply for any future State financing allocated for affordable housing. The AHTF is a permanent endowment and continually renewable source of revenue to provide loans and grants to for-profit and non-profit housing developers for the acquisition, capital, and soft costs necessary for the creation of new affordable rental and owner- occupied housing, and for the acquisition, rehabilitation and preservation of existing multi-family residential rental housing including naturally occurring affordable housing (NOAH). At an August 2022 HRA work session the HRA Commissioners were agreeable to an AHTF but had questions about long term funding and a dedicated source(s) for the AHTF. It was recommended at that time that an incremental approach be taken to allow staff to take advantage of grant funding from Minnesota Housing and other sources. Purpose of the AHTF The AHTF should only be used to assist proposed projects or programs to develop or preserve affordable housing opportunities for low- and moderate-income households. The types of uses that the housing trust fund will include, but are not limited to, the following uses per State Statute 462C.16: Making of loans at interest rates below or at market rates in order to strengthen the financial feasibility of proposed projects Guaranteeing of loans Gap financing for affordable housing developments Financing of acquisition, demolition, and disposition for affordable housing developments Financing of rehabilitation, remodeling, or new construction of affordable housing Funding to facilitate affordable homeownership opportunities including down payment assistance, second mortgages, closing costs, etc. Any other used as permitted by applicable law and approved by the council To the extent possible the affordable housing trust fund will be secured by liens, letters of credit, tax increment, or other forms of reasonable security. 2 To the extent possible, loans from the affordable housing trust fund will be repaid with interest at rates established from time to time by the city or which are established at the time of approval of a specific project or program. The intent of the AHTF is to support existing programs such as the HOPE Program and the preservation of naturally occurring affordable housing. In the future, additional programs and initiatives can be introduced in the community. It would be the goal that future programs may include emergency rental assistance and support for seniors to remain in their home with more energy efficiency measures to reduce housing cost burdens. Proposed AHTF Policy and Application It is proposed that the AHTF will be managed by the HRA and the HRA Executive Director or their designee will administer and supervise the AHTF program and the City's Finance Department will administer the funds. The HRA is tasked with establishing the rules, policy, and guidelines to assist the implementation, administration, and evaluation of the AHTF policies and procedures over time. It is proposed that the HRA approve award of funds initially to specific project requests based on demonstrated need and advancement of City priorities such as encouraging and assisting in the development of affordable housing for families who are part of the workforce. Preserving naturally occurring affordable housing (NOAH), as rental housing costs are increasing, and creating tools and incentives for the redevelopment or substantial renovation of NOAH units. This has the potential in assisting the City’s Comprehensive Plan goal of creating at least 222 new units of affordable housing with at least 106 units created for those at 30% of area median income. The application process would require submittal of an application, a non-refundable fee of $5,000, submitting financial statements and any additional documentation needed. Initially staff would review the application for completeness and then staff would submit application to the HRA for review and consideration during an HRA work session, in which the proposed project would be discussed to determine if it advances the City's priorities, then the HRA would provide their preliminary approval or denial of the proposed project. If preliminary approval is received a deposit will be negotiated to pay for all fees and expenses incurred by the City. Then the process of negotiating a development agreement can commence with the HRA providing final approval or denial of the proposed project's development at an HRA meeting. Financial or Budget Considerations The primary source of funding for the AHTF would be HRA levy funds. Other potential sources of funding may include, but are not limited to the following: Private cash donations from individuals and corporations designated for the affordable housing trust fund Payments in lieu of participation in current or future affordable housing programs Matching funds from a federal or state housing trust fund; or a state program designated to fund a housing trust fund Principal and interest from affordable housing trust fund loan repayments and all other income from trust fund activities The sale of real and personal property Federal and state grants Local government appropriations, development fees and other funds as designated from time to time by the city council 3 Tax increment finance (TIF) pooled funds Two funding sources to further explore for the AHTF are TIF pooled funds and Local Affordable Housing Aid (LAHA) from the State. TIF Pooling refers to the use of tax increments for activities located outside of the boundaries of the district from which they were collected. Unlike most states, Minnesota TIF laws permit increment to be "pooled" or spent outside of the district on other activities. The amount that may be pooled is, however, subject to percentage limits. Staff will come back to a future HRA work session with our financial consultant, Ehlers to discuss TIF pooling. LAHA are funds distributed by the Minnesota Department of Revenue to help municipalities in the State develop and preserve affordable housing. The State has specific qualifying projects that can use LAHA funds. The use of LAHA and qualifying projects can be found on the Minnesota Housing webpage for LAHA under the Distribution of Aid section. For LAHA funds through 2025, per Minnesota Housing they need to be committed by December 31 in the third year following the year the aid was received, and the funds must be expended by December 31 in the fourth year following the year after aid was received. For example, in 2024, Golden Valley received $137,095.15. These funds need to be committed by December 31, 2027, and expended by December 31, 2028. If the City is unable to expend funds on a qualifying project we can make a request to Minnesota Housing requesting that the funds be transferred to our AHTF. City staff will need to come back before the HRA to discuss proposed qualifying projects for commitment and expenditure. Though LAHA funds are separate from our AHTF we would still require the applicant to complete an application and come before the HRA for consideration. Currently a request from Habitat for Humanity has been made for LAHA funds for the preservation of an existing affordable housing unit in the City. HRA staff will come back before the HRA for consideration of the request from Habitat for Humanity. Legal Considerations The City Attorney is reviewing the proposed policy and addition or corrections from the HRA work session would be incorporated before final legal approval. Equity Considerations The AHTF policy has been reviewed and further advances the equity goals and strategic directive of fostering a healthy mix of housing stock that accommodates various price points and life stages. Recommended Action Discussion of the proposed policy and application for Golden Valley's Affordable Housing Trust Fund Supporting Documents Golden Valley Ordinance No. 794 AHTF Minnesota Statute Section 462C.16 DRAFT AHTF Policy DRAFT AHTF Application 4 5 6 7 8 9 O FFICIAL C ITY P OLICY C ITY OF G OLDEN V ALLEY General Information Policy Title: Affordable Housing Trust Policy Department: Community Development Policy Owner (job title): Housing & Economic Development Manager Policy ID: Council Approval Date: Resolution Number: Effective Date: ☐New ☐ Updated Policy Overview Policy Description: The Affordable Housing Trust Fund (AHTF) was established by City of Golden Valley on March 4, 2025, by Ordinance No. 794. The AHTF prioritizes creation and preservation of affordable housing opportunities as well as contributes to Golden Valley housing programs such as Home Ownership Program for Equity (HOPE), which is designed to provide affordable owner-occupied housing opportunities. The AHTF will focus on households that are at or above 30% AMI to at or below 80% AMI. This focus supports the goals of Golden Valley’s Comprehensive Plan to increase housing opportunities at a cost that low- and moderate-income households can afford without compromising their ability to pay for other essential needs. As well as City Council’s 2030 Strategic Directive to foster a healthy mix of housing stock that accommodates various price points and life stages. Purpose & Scope: The AHTF is a consistent and flexible funding source designated to provide loans and/or grants to for-profit and non- profit housing developers for the acquisition, capital, and preservation necessary to achieve Golden Valley’s affordable housing goals. The primary funding source of the AHTF will come from the HRA levy and funds received from the Minnesota Department of Revenue, known as the Local Affordable Housing Aid (LAHA). Other sources of funding could include but are not limited to the following:  Tax Increment Financing (TIF) pooled funds  Private cash donations from individuals and corporations designated for the AHTF  Federal and state funds  The sale of real and personal property  Payments in lieu of participation in current or future affordable housing programs  Earnings from AHTF activities such as investment earnings, loan repayments, and any other income  Local government appropriations, development fees, and other housing related funds as designated at any time by the HRA Eligible Activities for the AHTF will include:  New construction, rehabilitation, and preservation of affordable housing  Gap financing for single family and multifamily projects  Homebuyer assistance programs such as down payment assistance, loans, and homebuyer counseling services  Rental assistance programs  Affordable housing development or preservation loans or grants  Revolving loan  Land acquisition  Other uses as permitted by law and approved by the HRA Eligible Activities for LAHA are set by the State of Minnesota and include:  Emergency rental assistance for households earning less than 80 percent of area median income as determined by the United States Department of Housing and Urban Development 10  Financial support to nonprofit affordable housing providers in their mission to provide safe, dignified, affordable and supportive housing; and  Projects designed for the purpose of construction, acquisition, rehabilitation, demolition or removal of structures, construction financing, permanent financing, interest rate reduction, refinancing, and gap financing of housing to provide affordable housing to households that have incomes which do not exceed: o For homeownership projects, 115% of the greater of state or area median income as determined by the United States Department of Housing and Urban Development o For rental housing projects, 80% of the greater of state or area median income as determined by the United States Department of Housing and Urban Development  Housing developed or rehabilitated with funds under this section must be affordable to the local work force Projects are prioritized that provide affordable housing to households that have incomes that:  For homeownership projects, do not exceed 80 percent of the greater of state or area median income as determined by the United States Department of Housing and Urban Development  For rental housing projects, do not exceed 50 percent of the greater of state or area median income as determined by the United States Department of Housing and Urban Development. Definitions: Affordable Housing – Housing units available for rent at prices that fall below the market rate, which is, in most instances, determined by the income level of area residents. Affordable housing also has support behind it, such as nonprofit organizations and government subsidies. Eligibility for affordable housing is also impacted by AMI and is to cost no more than 30 percent of a household’s monthly income. Area Median Income (AMI) means the median income for the Hennepin County area adjusted for family size, as published by the United States Department of Housing and Urban Development. Market-rate Housing is housing that already exists or is part of a proposed development that is based on existing area market values and demand, rather than relying on any kind of subsidies or government assistance. Persons of very low income means families and individuals whose incomes do not exceed 50 percent of area median income, as median income was most recently determined by the United States Department of Housing and Urban development for the Minneapolis-St. Paul- Bloomington, Minnesota-Wisconsin Metropolitan Statistical Area, as adjusted for smaller and larger families or the Area Median Income calculated annually by Minnesota Housing for establishing rent limits for the Housing Tax Credit Program, whichever is higher. Persons of low income means families and individuals whose incomes do not exceed 80 percent of the area median income, as median income was most recently determined by the United States Department of Housing and Urban development for the Minneapolis- St. Paul- Bloomington, Minnesota- Wisconsin Metropolitan Statistical Area, as adjusted for smaller and larger families or the Area Median Income calculated annually by Minnesota Housing for establishing rent limits for the Housing Tax Credit Program, whichever is higher. Persons of moderate income means families and individuals whose incomes exceed 80 percent, but do not exceed 120 percent, of area median income, as median income was most recently determined by the United States Department of Housing and Urban development for the Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin Metropolitan Statistical Area, as adjusted for smaller and larger families or the Area Median Income calculated annually by Minnesota Housing for establishing rent limits for the Housing Tax Credit Program, whichever is higher. Preservation – home rehabilitation of existing single-family unit to retain affordability. Project – may mean a single-family house or a multifamily apartment complex, either as owner-occupied property or rental 11 Workforce Housing – Housing units that targets middle-income households, typically those earning 50-115% of the area median income (AMI), who may not qualify for traditional affordable housing programs but still struggle with housing costs and at least one member per unit who is gainfully employed at the time of entry into the unit. Related Documents, Materials & Resources: AHTF Application Ordinance No. 794 Minnesota Statute §462C.16 Policy The AHTF is managed by the Housing and Redevelopment Authority in and for the City of Golden Valley (the “HRA”). The HRA Executive Director, or designee, will administer and supervise the AHTF program and the City’s finance department will administer the fund. The HRA may also establish rules, policies, and guidelines to assist in the implementation, administration, and evaluation of the AHTF policies and procedures over time to improve housing needs in Golden Valley. The HRA may approve awards of funds to specific project(s) based on demonstrated need and the advancement of City priorities. As development competition for the AHTF increases, the HRA may issue a Request for Proposal (RFP) no more than twice per year for the funds. The goals of the AHTF are to promote the health, safety and economic welfare of the present and future residents of the City by providing availability of a range of housing choices affordable to persons and families who comprise the City’s workforce. By encouraging and assisting in the development of affordable housing for families who are part of the workforce. Preserving naturally occurring affordable housing (NOAH), as rental housing costs are increasing, and creating tools and incentives for the redevelopment or substantial renovation of NOAH units. This also assists in meeting the City’s Comprehensive Plan goal of creating at least 222 new units of affordable housing with at least 106 of those being at 30% of area median income. Advancing the best interests of the residents of the community to develop initiatives to provide various affordable housing programs to aid in the development, financing, preservation, and acquisition of affordable housing. The AHTF is expected to result in public good and encourages development projects that contribute to economic growth and community revitalization. The following is a list of possible use of funds provided through the AHTF. Other uses of funds may be considered.  Acquisition and construction of affordable housing units  Gap financing for affordable units created at the extremely low, very low, and low-income levels  Grant funds for the difference between units at low income levels of 60% of AMI and extremely low-income levels of 30% of AMI  Purchase, rehabilitation and long-term preservation of NOAH units to be affordable to households at or below 60% of AMI  Home rehabilitation of existing single-family owner-occupied units to retain affordability  Low cost financing or grants in support of accessory dwelling units  Predevelopment services in support of affordable housing creation  Land acquisition and land banking for affordable housing creation  Support for the difference between affordable rents and market rate rents to preserve affordable housing due to loss of subsidy, expiring tax credit developments or sale of NOAH property  Infrastructure improvements  Other activities to support affordable housing as determined by the HRA 12 Applicant/Developer Applicant/Developer must submit financial statements and documentation of experience in housing development. To the extent that a developer cannot demonstrate the proper strength in a particular area, the developer will be required to hire or joint venture with an entity that has strength in that particular area. Applicant/Developers must demonstrate the following:  Professional development experience, reasonable financial strength, and the ability to undertake the proposed project,  The ability to obtain sufficient financing; and  Sufficient capability to manage the project successfully after completion or hire a professional management company with experience in managing affordable housing in compliance with AHTF requirements. Applicant/Developer who do not have the experience may enter into a joint venture agreement with experienced developers. Application 1. Applicant submits the completed application, along with a non-refundable initial application fee of $5,000. The applicant will work with staff to assure all appropriate information is supplied. 2. Staff reviews the application. 3. Staff submits applications to the HRA and a HRA work session is held to discuss proposed project for preliminary approval of the proposal. 4. If preliminary approval is granted, the applicant shall submit a deposit to pay all fees and expenses incurred by the City. 5. The process of negotiating a development agreement commences between the HRA and applicant. 6. The HRA must recommend approval of the proposal and grant final approval or denial of the proposal. 13 AFFORDABLE HOUSING TRUST FUND APPLICATION A. APPLICANT INFORMATION Name of Corporation/Partnership___________________________________________________ Address ____________________________________________________________________________ Primary Contact _____________________________________________________________________ Address ____________________________________________________________________________ Phone___________________________Email_________________________________________ _____ Attorney:_____________________________________________________________________ ______ Address ____________________________________________________________________________ Primary Contact _____________________________________________________________________ Address ____________________________________________________________________________ Phone___________________________Email_________________________________________ _____ Brief description of the corporation/partnership’s business, including history, principal product or service: ______________________________________________________________________________ 14 ______________________________________________________________________________ ______________________________________________________________________________ __________________ Description of the proposed project: ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ __________________ B. PROJECT INFORMATION 1. The project will be: _____Housing _____Owner-Occupied _____Rental _____Preservation _____Single-Family _____Rental _____Mixed-Use Redevelopment _____New Construction _____Rehabilitation _____Other (describe)________________________________________________________________ 2. The project will be:_____ Owner Occupied _____Leased Space _____Housing _____Other (Describe)________________________________________________________________ 3. Project Address ___________________________________________________________________ 4. Include a copy of site title for legal verification 5. Site Plan and Preliminary Construction Plans Must Be Attached: _____Yes _____No 6. Funds Requested (Amount)for: Land/Property Purchase $________________________ Rehabilitation/Preservation $________________________ Site Improvements $______________________________ 15 Soil Contamination $________________________ Housing Hard Costs $________________________ 7. Current Real Estate Taxes on Project Site $________________________ 8. Estimated Real Estate Taxes upon Completion: $________________________ 9. Construction/Rehabilitation Start Date: _____________________________ Construction/Rehabilitation Completion Date: _____________________________ 10. If Phased Project Include Timeline with Percentage completed Each Year C. PUBLIC PURPOSE It is the policy of the City of Golden Valley that the use of the Affordable Housing Trust Fund should result in a benefit to the public. Please indicate how this project will serve a public purpose. Select all that apply. ________New development, which will result in additional private investment in the area. ________Enhancement or diversification of the City’s economic base. ________The project contributes to the fulfillment of the City’s Comprehensive Plan. ________ Removal of blight or the rehabilitation of a high profile or priority site. ________ Significantly increase the City’s tax base. ________ Provides affordable housing. ________ Provides variety of mixed-income housing options. ________ Other:___________________________________________________________________ D. SOURCES & USES (Can include as an attachment) SOURCES NAME AMOUNT 16 Bank Loan ________________________ $________________________ Other Private Funds ________________________ $________________________ Owner Cash Equity ________________________ $________________________ Fed Grant/Loan ________________________ $________________________ State Grant/Loan ________________________ $________________________ Tax Increment ________________________ $________________________ Local Loan ________________________ $________________________ TOTAL $________________________ USES AMOUNT Land/Property Acquisition $________________________ Site Development $________________________ Construction/Rehabilitation $________________________ Machinery & Equipment $________________________ Architectural & Engineering Fees $________________________ 17 Legal Fees $________________________ Interest during Construction $________________________ Debt Service Reserve $________________________ Contingencies $________________________ TOTAL $________________________ 18 NOTICE TO APPLICANT: Data Practices Act The information you supply in your application to the HRA will be used to assess your eligibility for financial assistance. The HRA will not be able to process your application without this information. Minnesota Statutes, Chapter 13 (Minnesota Government Data Practices Act) governs whether the information that you are providing to the HRA is public or private. If financial assistance is provided for the project, the information submitted in connection with your application will become public, except for those items treated as private data under the Minnesota Government Data Practices Act. I have read the above statement and I agree to supply the information to the HRA with full knowledge of the matters contained in this notice. I certify that the information submitted in connection with the application is true. Applicant Name________________________________________Date_________________________ 19