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04-30-84 agenda • CITY OF RICHFIELD, MINNESOTA Office of City Manager Council Letter No. 163 Agenda April 30, 1984 The Honorable Mayor and Members of the City Council City of Richfield Subject: CONSIDERATION OF LEGIO14 LAKE DEVELOPMENT CONCERNING HOUSING AND PARK IMPROVEMENTS • Council Members: BACKGROUND On April 2, 1984, the City Council, HRA, Planning Commission and Community Services Commission met to discuss the future of Legion Lake and the potential for developing housing on the site on the east side of Portland Avenue at 64th Street. Discussion centered on the future physical development of the Legion Lake area and the development of townhouses at 64th Street and Portland Avenue for first time homebuyers. The major point of consideration was the impact each activity would have on the other. The Mayor requested the staff to study the issues raised during that meeting. Timing, as it relates to the park planning process and the need to inform MHFA of the plans for use of the tax exempt housing revenue bonding authority by September 1, 1984, was a special concern. STATUS OF MASTER PARK PLAN The first step in the preparation of a master plan for Legion Lake requires the following engineering data: (1) a topographic manp; (2) boundary survey; (3) study of the lime sludge pits: (4) storm sewer/ponding requirement study; and, (5) soil borings. 1). The topographic map has been ordered. Mark Hurd will have the area flown and complete the topographic on or about June 1, 1984. • 2). Orr-Schelen-Mayeron and Associates, Inc. (OSM) has been engaged to do the boundary survey. The boundary survey is to be complete the first week of June, 1984. Council Letter No. 165, Page two 3). A study of the lime sludge pits will be done for economic and space considerations. OSM is scheduled to complete the lime sludge pit study on or about the end of May, 1984. 4). An agreement has already been made between the City and OSM for a storm sewer/ponding requirement study to meet the requirements of watershed management organizations. It is anticipated OSM will complete the Legion Lake storm sewer study sometime between June 1 and June 15, 1984. 5). Soil borings are scheduled to be done by Geotechnical in two phases. The initial phase should be complete in May, 1984. The second phase is scheduled to answer any questions raised by the data gathered in the first phase, to incerspace additional borings as needed, and to coordinate with the storm sewer study. This second or follow-up phase is scheduled for completion by the end of June, 1984. When the above technical data is complete, the information is coordinated into a composite map. This work is usually done ® by a landscape architect. The period of July and August does not apepar to be sufficient to complete both the composite map and a master plan for Legion Lake prior to September 1, 1984. Gair and Associates, a subsidiary of OSM, can provide the necessary engineering background to coordinate the composite map so that all the necessary elements are included and there is no duplication of effort. Roger Martin of the University of Minnesota offers experience in preparation of master plans and his work with advanced architectural students has provided for the countless hours needed to research a master plan and add the creativity so important to such a plan. It is the conclusion of the Community Services Department staff that although a master plan for Legion Lake cannot be complete by September 1, 1984, the city should proceedf with the gathering of technical data as outlined above and enter into an agreement with Gair and Associates and Roger Martin to provide a composite map of Legion Lake by September 1, 1934 and a master plan of Legion Lake to be completed by the end of calendar year 1984. 0 • Council Letter No. 163 Page three HOUSING STATUS The staff of the Department of Community Development has pursued the questions related to use of the MHFA bonding authority. Research of these questions resulted in three written communications to the HRA which were discussed at their April 16, meeting. A copy of each communication is attached and a synoposis appears below. HRA letter number 17 responds directly to issues raised at the April 2, 1984 meeting. It indicates there is no flexibility with the September 1 reporting deadline. It is law. That is, by that date, Richfield must indicate to MHFA whether or not any of the $4,000,000 in bonding authority will be utilized in 1984. If bonds will not be sold during 1984, the authorization will be lost. With regards to other issues, the letter indicates that the housing development program may be modified somewhat so long as its basic integrity is not substantially altered. Thus, units must still be affordable to first time home buyers with an income between $25,000 and $35,000 and the ratio of "non-bond proceeds" must be at 29.82 percent or greater. (The income limits may be lower, but not higher). However, the site location for the housing may be • shifted and the number of units modified. The letter indicates again that the PADA site is still the most desirable location but discusses a reduction in units to approximately 30. The remaining 10 units could be located near 66th and Rae Drive where the HRA is currently developing new housing and purchasing property (see attached site plans). Memorandum number 17 explores three thoughts; (1)the use of the bonding authority to finance the purchase of existing housing, (2)the importance of housing programs in receiving grants for park improvement projects, and (3)the apparent intended use of land aquired by the city in the PADA area. The letter contains details on each point, however, it is appropriate to repeat here that use of the bonding authority to permit the purchase of existing housing was found to be financially infeasible because it would require substantial cash contributions from the City and/or the HRA. Housing developments for families such as the one proposed at PADA and the one proposed at Rae Drive are important for obtaining a high Policy 39 ranking. A high rank results in increased elgibility for grants for park development. Finally, memorandum number 16 is a copy of a recent newspaper article. It indicates that quality, affordable housing is being constructed in the Twin City Metro area. The result of the HRA review of these communications on April 16th, was the adoption of a motion that staff proceed with an evaluation of the following sites in order of preference: 40 • Page Four -Rae Drive/PADA combination (40 units; 30 at PADA, 10 at Rae Drive) -PADA alone (30 units) -Rae Drive alone (10 units) The three projects prioritized by the HRA and three other alternatives have been studied by staff. Each alternative was evaluated according to four criteria listed below. The results of the evaluation follow: -whether the non-bond proceed contribution to the bond issue would drop below 29.82 percent; -what affect utilizing CDBG funds to acquire the property at 66th Street and Rae Drive would have on marketing new units to moderate income families who purchase them with tax exempt mortgages; -the cost implications of developing housing on more than one site and reducing the number of units in the project; -whether a modified project can be developed to meet the MHFA deadline of September 1, 1984. • THE NON-BOND PROCEED CONTRIBUTION The attached table (A) indicates the type and percentage of contribution for six alternative projects. The six projects are the original proposal of 40 to 48 units at PADA; 40 units, with 30 units at PADA and 10 units at Rae Drive; 30 units at PADA; 18 units, with 8 units at PADA and 10 units at Rae Drive; 10 units at Rae Drive; and 8 units at PADA. The number of units, density, size of bond issue, non-bond proceed contribution, and percentage of contribu- tion attributable to each source, varies from alternative to alternative. Note in column one, the original PADA proposal was 40 to 48 units at 12.5 to 15 units/acre, and a 29.82 percent non-bond contribution for a $4 million bond issue. Seventy five percent of the contribution would come from tax increment proceeds from the development and would be utilized to help keep interest rates in an affordable range. The HRA was contributing approximately 13 percent of the nonbond proceeds as land writedown and administrative expenses incurred in acquiring the site and preparing the program. The developer was contributing approximately 12 percent of the nonbond proceeds. To retain the integrity of the original bonding authority application, alternative proposals would have to equal or exceed the 29.82 percent contribution. However the number of sites, number of units, and percentage of non-bond contribution attributable to each source could vary. By examining the columns and project alternatives, it can be determined that all alternatives except the one in column 6, (8 units at PADA with a 25.8 percent contribution) appear to be feasible. The contribution attributable to • each source varies with each project. The land writedown increase at Rae Drive occurs because of the need to acquire privately owned improved property. CDBG funds would be used for this purpose. The reduction in tax increment is the • Page Five esult of a decrease in the number of units and the higher property value at Rae Drive because of existing structures. The percentage of non-bond contribution in columns 2 through 5 exceeds 29.82b. Thus, it may be possible to return some of the CDBG subsidy to the HRA in the future through the use of a second lien which has been utilized in the past with Vo-Tech houses. If all of the tax increment is not needed, a portion of it could be ;Wade available to other taxing jurisdictions. EFFECTS OF UTILIZING CDBG As indicated in the original PADA bond program and application to MHFA, the housing units would be marketed to families having incomes in the $25,000 to $35,000 range. However, if CDBG funds were committed to a Rae Drive site, there would be additional income limit requirements for those units. Since site acqusition would be financed with CDBG funds, all ten units would be marketed to families of the following sizes and incomes: Family Size Maximum Income 2 $20,200 3 $22,750 4 $25,300 5 $26,850 6 $28,450 Some of the eligible families would fall slightly below the Richfield median income of $24,941. While it is more difficult to qualify families in the $19,000 to $23,000 income range, there are methods for reducing interest rates further than the tax exempt rate, if necessary, by utilizing a new CDBG interest rate reduction concept that was recently discussed by the City Council and/or tax increment generated by the project and committed to interest reduction. Further analysis of the need for additional interest reduction and the amount of funds available is needed. COST IMPLICATIONS OF HOUSING ON MORE THAN ONE SITE There are three general catagories of costs that are affected by decreasing the number of units in the development and/or increasing the number of sites. Tax increment revenues are also impacted. Costs affected include those for construction; marketing; bond issuance; and, tax increment revenue. Construction costs are increased because housing on more than one site requires additional planning preparation costs (site, buildings, surveys, soils), and additional building materials (particularly since Rae Drive units would be duplex units rather than 4 to 6 units per building). With fewer units, the cost per unit increases. Construction costs could also increase if two developers rather than one would be responsible for development. • • Page Six Marketing costs may increase since there are two different sites to advertise. A larger marketing staff would also be necessary. Bond issuance costs per unit increase as the size of the project (number of units) is reduced. Cost of issuance include: services of bond counsel and the underwirter, bond marketing to the public, expenses of the trustee and administration, and a default reserve. The original 40 unit project at PADA (or 30 units at PADA and 10 units at Rae Drive) would have an approximate issuance cost of 12.5 percent of the size of the issue ($500,000 for $4 million in bonding authority). An 18 unit project would have an approximate issuance cost of 16.6 percent of the size of the issue ($300,000 for $1.8 million in bonding authority). A 8 to 10 unit project would have an approximate issuance cost of 20.0 percent of the size of the issue ($200,000 for $1 million in bonding authority). Costs may be reduced by undertaking a joint issue with another community which is also selling bonds. (Please note, these are not out of pocket expenses to the HRA since they are paid by the bond issue and the developer.) Tax increment is affected by the present value of structures and other • improvements on a proposed site and the number and value of new units to be constructed. The PADA site contains only two structures so that the present value is relatively low and a number of new units would be constructed which would result in an increased increment. The Rae Drive site has several existing structures and thus, has. a relatively high present value. Also, the number of new units constructed would be low. Ten units at Rae Drive would produce an estimated increment of $135,000 over 20 years or $10,500/unit (column #5). That same unit, at PADA, would produce a tax increment of $22,443 over 20 years (column 1). The $135,000 increment at Rae Drive may be insufficient to provide enough interest subsidy to make the units affordable to those families which must be eligible when CDPG funds are utilized for site acquisition. However, this issue needs further evaluation before a definitive statement may be made. MEETING THE SEPTEMBER 1, 1984 DEADLINE The HRA can meet the deadline with the PADA, PADA/Rae Drive, or Rae Drive sites. The HRA and City already own the PADA site. The HRA has negotiated or is in the process of negotiating the needed sites for the Rae Drive/66th Street development in conjunction with another concept. It is assumed the sites may be acquired from their owners on a voluntary basis. There are sufficient CDBG funds available to acquire the needed property. However, further direction is needed to determine which concept staff should pursue. With information presented at the meeting of April 2 to the HRA, City Council, Planning Commission, and Community Services Advisory Commission, and • on April 16 to the HRA, it should be possible to determine whether Richfield should utilize the $4,000,000 in bonding authority to produce family housing at PADA or elsewhere. Since the April 2 meeting, staff has determined: • Page Seven -the September 1 deadline for notifying MHFA of the intent to sell bonds ;rust be met. -the bond application and program may be modified if it does not affect the percentage of non bond proceed contribution and eligibility of first time home buyers within the stated income limits, -the unit density at PADA may be reduced and all the bonding authority can still be utilized by including the Rae Drive site as part of the PADA development proposal, -providing housing affordable to moderate income families assists in funding park development, -the open space adjacent to the existing houses at 6425 and 6429 Portland Avenue can be utilized for any public purpose including housing and/or park. As a result of followup to the April 16 HRA meeting, staff has determined: -That each of the development concepts prioritized by the HRA is feasible: Priority 1 - family housing at PADA/Rae Drive (30 units at PADA, 10 at Rae Drive) Priority 2 - PADA housing (30 units) Priority 3 - Rae Drive housing (10 units; although the need for interest • writedown and the availablility of tax increment and CDPG for the purpose requires further evaluation); -That a concensus of opinion must be reached concerning the pursuit of PADA housing at this time so that the HRA may proceed with development and utilize the $4,000,000 in bonding authority; -That if PADA is not pursued further and there is a concensus to proceed on Rae Drive, the HRA will assume the lead role with project implementation. To proceed with development at PADA and/or Rae Drive, the HRA must be prepared to: -Accept higher bond issuance costs for only a 10 unit project at Rae Drive -further analyze the need for reducing mortgage interest rates at Rae Drive and the availability of funds to do so, -request a special use permit to develop duplex type housing at 1016 West 66th Street and 901-03 Rae Drive -find acceptable the negotiated price for property at 1016 West 66th Street and 901-03 Rae Drive. -solicit development proposals for a Rae Drive and/or PADA concept. The City Council must be prepared to: 0 • Page eight -Accept or reject a PADA housing development concept at this time with its need for rezoning and an amendment to the Comprehensive Plan -Consider a special use permit request for duplex type housing at Rae Drive/66th Street The Planning Commission must be prepared to: -Accept or reject a PADA housing development concept at this time with the need for rezoning and an amendment to the Comprehensive Plan -Consider a special use permit request for duplex type housing at Rae Drive/66th Street It is now time for the City Council, HRA, Planning Commission and Community Services Commission to consider the importance of housing opportunities for families and park development and the interrelationship of these two elements and to then make a decision. ALTERNATIVES The alternatives include: 1. Place the PADA project on hold until 1985 while proceeding with the preparation of a Legion Lake Park master plan; 2. Proceed with a PADA housing project in 1984 while preparation of the Legion Lake master plan proceeds; and 3. Undertake an alternatiave housing project of ten dwelling units at the alternative site on Rae Drive while proceeding with the preparation of a Legion Lake Park master plan. ANALYSIS BY CITY MANAGER In 1982, the Planning Commission found the purchase of property in the 6400 block of Portland Avenue for park and open space purposes to be consistent with the Comprehensive Plan. The Planning Commission did not officially comment on the location of housing on this site at that time. During 1983, HRA staff proceeded with the PADA housing project plans. Once MHFA bonding authority was obtained, the Planning Commission was once again asked to amend the Comprehensive Plan. Rezoning of the PADA site was also presented. The Planning Commission at its February, 19814 meeting voted 9-0 on the motion to recoirmend to the City Council that the comprehensive plan not be amended, • and that rezoning of the area should be denied at the Portland Development Area (PADA) . • Page Nine The Planning Commission said in support of their action that when the PADA site was purchased by the City it was made very clear the land was for city park purposes. Also, it was noted that without a park development plan for Legion Lake, the redevelopment jof the area as a whole should be further studied. The first step in development planning calls for master or comprehensive plan. This is no less true for the park site at Legion Lake. Once a plan is adopted, then development issues abutting the spark site can be better evaluated. Richfield will be eligible to seek MHFA bonding authority in the future. It may be possible to consider a park project in 1985. The public subsidy to do just a ten unit housing project may be too excessive. An analysis is underway by staff at the time of dictating this report and will be available at the April 30 meeting. At this point, it can only be said that a limited 10 unit project at Rae drive may be financially justified. RECOMMENDATIONS BY CITY MANAGER 1. Complete the park master plan for Legion Lake by December 31, 1984; • 2. Delay any consideration of a housing project for Portland Avenue until completion of the park master plan; and 3. Continua the feasibility analysis for 10 unit housing at Rae Drive. Respectfully submitted, John G. Cartwrig t City Manager JGC/eja 0 COLUMN * 1 2 3 9 4 5 0 Program PADA #1 PADA/Rae Drive#1 PADA #2 PADA/Rae Drive #2 Rae Drive #1 PADA #3 Number of 40 to 48 40 units 30 units 18 units 10 units 8 units units: (40 to 48 (30 at PADA) (30 at PADA) (8 at PADA) (10 at Rae Drive) (8 at PADA) at PADA) (10 at Rae Drive) (10 at Rae Drive) Density:* 12.5 to 15/acres Size of $410007000 bond issue: Percentage non-bond 29.82% -?roceed ($1,192,826) contribution: % of local contribution attributable to each source: 8 to 9/acre 9.4/acre $4,000,000 33.8% ($1,352,101) $2,500,000 35.85% ($ 896,386) 8 to 10/acre $1,800,000 38.4% ($ 691,277) 8/acre $1,000,000 43.3% ($ 433,715) 10/acre (38,452 s.f. site) $1,000,000 25.8% ($ 257,561) Tax 75% 56% 69% 33% 31% 35% Increment: ($897,700) ($755,777) ($620,415) ($229,653) ($135,362) ($90,290) Land 10% 31% 17% 52% 61% 38% Writedown: ($120,234) ($413,634) ($151,234) ($358,934) ($262,400) ($96,534) Developer: 12% 10% 10% 9% 7% 12% ($1401000) ($1401000) ($ 86,000) ($ 60,000) ($ 32,000) ($32,000) HRA 3% 3% 4% 6% 1% 15% Administration:($34,892) ($ 42,690) ($ 38,737) ($ 42,690) ($ 3,953) ($38,737) *To help evaluate these densities the following should be helpful. The typical block in Richfield developed with single family homes has a density of about 5 or 6 units per acre. The density at Coach Homes is approximately 15 units per acre. The 700 units at Century Court Apartments on Lyndale Avenue are at a density of about 30 units per acre. The recently completed Lake Shore Drive condominium with 178 units is at a density of approximately 44 units per acre. ?--?. c A HOUSING AND REDEVELOPMENT AUTHORITY Office of Executive Director HRA Letter No. 17 Agenda April 16, 1984 Housing and Redevelopment Authority Commissioners City of Richfield SUBJECT: Information concerning MHFA Financed Housing Proposal at the Portland Avenue Development Area (PADA) Dear Commissioners: On April 2, 1984, the HRk, City Council, Planning Commission, and Commtmity Services Advisory Commission met in a study session to consider housing development within the area of Legion Lake known as PADA and the impact housing may have on park development. A number of issues were discussed. Staff was directed to evaluate these issues and answer questions raised during the session. The Mayor requested staff to make a recommendation to the four groups within a month. 1%.4.3 letter responds to the issues related to developing housing. It provides some initial responses and proposes a modification to the DADA housing proposal which may make it more acceptable. If the modification.is acceptable to the HRA, and staff' determines it is feasible, the $4,000,000 in bonding authority.for financing housing may be retained and affordable family housing may be built. Some of the major issues discussed April 2, included: -The proposed density of the PADA development 12.5 to 15 units/acre was thought to be too high; -A need for another comprehensive plan of the Legion Lake area to determine appropriate park uses and whether additional new housing on the fringe of Legion Lake would be desirable. (Zhe Setter, Leach and Lindstrom study supported housing adjacent to Portland Avenue. However, this study has been questioned as to its comprehensiveness.) -Utilizing the authority granted to the City/HRA by MHFA to issue up to $4,000,000 in tax exempt housing mortgage revenue bonds during 1984. -Relocating the housing proposed for the PADA project to another site (s). Discussions with MHFA and bond counsel have resulted in the determinations indicated below. MHFA indicated that: -there is no flexibility with the September it 1984 reporting deadline to the MhFA which requires confirmation of our intent to issue bonds before the end of 1984. September 1, 1984, is it; or the bonding authority is lost. 4. HRA Letter No. 17 -2- -the PADA housing program may-be modified through an amendment process provided our bond counsel determines that modifications to the program submitted to MHFA (for which bonding authority was granted) would comply with state law and not affect the tax exempt status of the bonds. -there is some flexibility in site selection for utilizing the $4,000,000 since there are no specific rules or administrative guidelines that prevent changing sites. Followup discussions with our bond counsel further clarified MHFA comments. Bond counsel determined that the PADA housing program could be modified without affecting the integrity of our application if these conditions were met: -The percentage of HRA and City contribution to the project (ie. "non-bond proceeds") must be the same or greater than in the original application. The application indicated an amount equivalent to 29.82 percent of the issue, or approximately $•1.2 million was to be contributed. The contribution sources included tax increment from the proposed project, the land write down to the developer, the developer and lender contribution and expenses incurred by the HRA in assemblying the site and establishing project feasibility. Each of these are indicated as sources of contribution to the PADA project. -The program's purpose remains the same as originally presented. The bond proceeds would be utilized to finance mortgages for first time homebuyers. The units constructed would have an estimated maximum sale price of $72,000. Buyers would have annual incomes in the $25,000 to $35,000 range. With a clearer understanding of what modification may be made to the PADA program while still retaining the authority to issue bonds, it is appropriate to evaluate possible alternatives to the PADA site. As discussed during the study session, there are seven sites of one acre or more which are vacant or underutilized which have development potential. During the study session someone indicated an eighth site should be considered; another part of Legion Lake. Staff has identified a ninth alternative. The ninth alternative will-be discussed as a new concept following a brief review of the sites identified April 2. The review which follows is a comparative analysis of PADA and the alternative sites. PADA The site is 3.2 acres in size, is located adjacent to an arterial street, is isolated and development will have minimal impact on adjoining uses, is readily available for development at minimal acquisition cost, but requires modification of the Comprehensive Plan , rezoning from single family to multi-family and a housing design sensitive to airplane noise. This development would be compatible with the already exist- ing development adjacent to Portland Avenue. It is located in noise zone 3 which is suitable for family housing. The need for a Legion Lake park master plan has been identified as first priority in the process to determine if housing should be located at the proposed site. MA Letter No. 17 -3- 66th and Cedar The site is approximately 2.9 acres in size. It is in noise zone 2, closer to the airport than PARA. This zone had been deemed as an inappropriate location for family housing by the Metro Council and MN Pollution Control Agency. Their guidelines discourage housing which would have outdoor activity space for families. At a density of 10 units/acre, the number of units would approximate 29. This would produce a tax increment smaller than that which would be generated by the three development concept proposals already discussed by the HRA. A high tax increment is needed to help finance redevelopment activities north of 66th Street adjacent to Cedar Avenue. Because of these conditions, this site is not suitable for family housing. 16th and 77th The site is about 1 acre in size. It is in noise zone 1 and is located directly under a high airplane noise flight pattern. There is no direct public access. The most reasonable access would be through park land. Soil conditions are questionable. The Comprehensive Plan and zoning ordinance would have to be amenaeo Vrom singie- family to multi-family. This site is not appropriate for family housing. It's availablility for purchase is not known. 77th and Colfax The site is about 2.75 acres. It is not adjacent to an arterial street. It is within the ILN study area. A portion of the site may be needed to resolve traffic circulation problems in the area. The highest and best use of the site may be development of greater intensity than family housing, such as apartments or commercial uses. Staff believes the commercial environment of the site is not conducive to housing and marketing ownership housing at this location may be difficult. Finally, the avail- ability of this parcel for purchase is not known. 77th and Emerson The site is approximately 1.1 acres, and is not adjacent to an arterial roadway. The development of this parcel should be related to a higher density comprehensive development concept which reflects its proximity to 1494 and 135W. This site is also within the ILN study area. Its availability for acquisition is not known. 35W and 1494 The site is about 11 acres. This site is not appropriate for family housing as the highest and best use would be commercial and/or office and multi unit housing at greater densities such as 30 to 40 units per acre. The site is presently for sale at seven dollars per square foot. It is within the ILN study area. i HRA Letter No: 17 -4- 62nd and Queen The site is approximately 1.4 acres. It has no access from a public street and questionable soil conditions. This is the lowest parcel in the area and collects run off water which flows to a catch basin at the north edge of the property. Commercial and residential uses abut this parcel with no contiguous rights-of-way. The Comprehensive Plan would need to be amended. The zoning is multi-family. This parcel does not have an environment suitable for family housing because of its close proximity to both commercial development and Highway 62. The availablity of this parcel for acquisition is not known. Taking site characteristics into consideration, it is understandable why ?ADA has been identified as the most desireable site for developing family housing. It is the largest parcel which is readily available, it is already owned by the city and HRA; it is adjacent to uses that are likely to remain after park development (ie. The American Legion and Funeral Home) and it has been evaluated for soil, water, and topographic conditions and found buildable. Because PADA is one continuous site (versus a number of smaller sites), there are economies to be achieved in the cost of acquisition and building construction. The coordination of construction and the marketing of the completed project is also more efficient. This is not meant to infer that there are not other sites where family housing would be suitable. An eighth site on another portion of Legion Lake was mentioned April 2; a ninth alternative site could be considered, a limited number of smaller scattered sites (sites less than one acre in size) could be considered for combining into a project and a combination of the six less desireable sites mentioned above could also be considered. A question was raised about the possiblity of relocating to another area of Legion Lake adjacent to 66th Street. Some concerns about a 66th Street location include: -Conflict with present park uses such as swimming pool, ice arena parking, and archery range. -Neighbors adjacent to an alternative site will likely be as concerned as neighbors to PADA. -The vista of Legion Lake from 66th Street would be blocked. -Soil conditions at other locations are unknown. -relocating the housing development means 3.2 acres of potentially prime land would be lost from the proposed 105 acre park development, whereas only approximately 2 acres of marginal park development land would be lost at the PADA site since the balance is already a residential use. -the requirement to modify the Comprehensive Plan and rezone regardless of the location adjacent to Legion Lake. HRA Letter No. 17 -5- A limited number of smaller sites (sites less than one acres) could be considered for combining into one scattered site multi unit development for families. Concerns with this approach are: -there are not enough readily identifiable sites to develop approximately 40 units of housing. -the efficiency of building on one site would be lost, thereby increasing the cost of each housing unit and perhaps missing the moderate income target of the program. -no site negotiations have been initiated and the availability of land for purchase is unknown. -the smaller sites are likely already developed with housing and it would be difficult to secure the amount of tax increment a project such as PADA generates to meet the requirement of the bond application. e there are not enough funds to acquire enough sites to accomplish a 40 unit type project. -there is not enough time to pursue the acquisitions, modifications to the comprehensive plan, rezoning requests, and other procedures which would likely be required and still keep the revenue bond allocation. Some combination of the six larger, less desireable sites could be made to produce a project, however, for the reasons discussed above, it would be a less desirable alternative for both the city and potential homebuyers. Other communities could perhaps provide more suitable sites with the bonding bonding authority we did not use. There remains a ninth alternative that the staff is presently investigating. The concept includes utilizing the PADA site with another site. PADA would be developed jointly with the site adjacent to 66th street and Rae Drive. Vo- tech is presently constructing a twin home on the site occupied by 920 West 66th Street. The HRA has authorized the acquisition of 910 West 66th Street. Staff did negotiate a purchase price for 1016 West 66th Street, but the HRA recently decided not to proceed with this acquistion. And the HRA has authorized negotiations for acquiring 941-03 Rae Drive. By assembling these four parcels into a 1.25 acre site, eight new twin home type units could be constructed. (Contractors other than Vo-Tech may be involved in construction). When combined with the two units now being developed 1.0 units of ownership housing for first time home buyers would result. The resultant density would be eight units/acre. By developing 10 units on 66th Street, the PADA development could be reduced to approximately 30 units instead of the proposed 40 to 48 units. The PADA density would be reduced from 12.5 to 15 units to 9.4 units per acre. The result would be two family housing developments with a a duplex type density. A typical block with single family detached housing would have a density of five to six units/acre. The feasibility of this concept would be determined by responses to the following concerns: ,,s -whether the "non bond proceed" contribution to the bond issue would drop below 29.82 percent HRA Letter No. 17 -what affect utilizing Rae Drive would have tax-exempt mortgages -6- CDBG funds to acuire the property at 66th Street and on marketing units to moderate income families with -the cost implications of developing housing on more than one site -whether this modified project can be developed in time to meet the MHFA deadline of September 1, 1984. To retain the FIFA bonding authority and provide for the construction of new affordable family housing there appears to be only two options; pursue PADA as originally proposed or further evaluate the potential of the two site concept at PADA and Rae Drive and pursue it if feasible. The pursuit of either of these options will require the committment of additional resources. For the PADA project as originally proposed, this intially includes the administra- tive costs necessary to prepare for amending the comprehensive plan and rezoning the parcel, completing the development guide and site survey, soliciting development proposals, preparing development plans, and preparing bond documents. If the Rae Drive concept is added, the additional resources, would include CDBG funds already budgeted for acquisition;,901 - 03 Rae drive and 1016 West 66th Street would be acquired. Because of the additional resouces needed, it would be important to proceed only if the HRA strongly supports this concept. It is clear that in selecting a course of action, there remains a number of persons, members of the City Council, Planning Commission and Community Services Commission that will have to be convinced that housing at PADA will not jeopardize the development of a recreational area at Legion Lake, and that the benefits of affordable housing for young families is important to Richfield. It is recommended that the HRA adopt a motion directing staff to proceed with an evaluation of the PADA/Rae Drive concept. Respectf y?ubmitted, 44V x?- t& John G. Cartwri t Executive Director JCG/eja i HOUSING AND REDEVELOPMENT AUTHORITY Office of Executive Director April 16, 1984 HRA Memorandum No. 17 Housing and Redevelopment Authority Commissioners City of Richfield Dear Commissioners: SUBJECT: Further analysis of an MHFA Housing Mortgage Project This memo discusses the opportunity for an "existing housing" mortgage revenue bond program, the impact of Metropolitan Council Policy 39, and the apparent intent of acquisition of land proposed for inclusion within PADA. "Existing Housing" Mortgage Revenue Bond Program" An "existing" program provides the HRA a method for financing the sale of affordable existing housing to young couples in their family formation years. Related to this is the opportunity to provide older homeowners, "empty nestors", a mechanism to sell their homes to younger families, particularly if the older family has suitable housing alternatives to relocate to (ie. a rollover program such as one in connection with the Market Plaza development). The HRA/City Council approved Housing Plan indicates "the size of the affordable existing housing supply in Richfield and the rate of sales of that housing" indicate there is an adequate housing market for this type of bond program to facilitate family ownership. A majority of the existing [Richfield] single family homes have an estimated market value below $75,000 (a requirement for existing housing sales by MHFA programs)." Richfield could utilize its $4,000,000 in mortgage revenue bond authority for an "existing" program provided the following concerns were adequately addressed: -There was adequate time prior to September 1, 1984,to develop a program (Adequate time appears to be available). -The HRA's position of November 15, 1982, when staff presented an "existing" revenue bond program for consideration, had significantly changed and that the HRA was now prepared to support the program with necessary funds. At that time the HRA was requested to contribute between $300,000 to one million dollars to make a competitive application. The application was not prepared because the HRA felt the cash needs were to high. • -2- -The funds necessary to proceed with an alternative to PADA and ensure the integrity of the bond application would require an approximate $1.2 million cash contribution from the HRA. (The HRA has provided approximately, $200,000 to the PADA project, the balance of the contribution, $1,000,000, would come from tax increment, developer contribution, and lender contribution. In an "existing" program, none of the aforementioned sources of funding would be available. CDBG monies may not be used for this purpose). -Bond Counsel determines that an "existing" program has not dramatically changed the application to MHFA and that it is similar to new construction, and therefore a suitable change. Preliminary indication is that a change could be made. Bond Counsel would find this change acceptable. -The question of affordability since new housing is more affordable to first time buyer because energy and maintenance costs are lower. -The population increase would be less with?an existing housing program. New construction adds additional units to the housing supply and results in an increased population. Existing housing sold without MHFA mortgages would rollover and produce additional population through the operation of the normal market forces. -MHFA routinely provides below market interest rate financing for the purchase of existing housing by first time homebuyers. Thus, utilizing the $4,000,000 for an existing housing program may not be the best use of these limited funds. -Based upon the aforementioned preliminary research, the rollover housing concept does not appear to be financially feasible for Richfield. If $3 million were allocated to this program, the local per unit subsidy would be approximately $22,500. This can be contrasted to a PADA local per unit subsidy of $5,000. (It is assumed that $1 million will be allocated to the Rae Drive project). Metropolitan Council Policy 39 Since 1971, the Metropolitan Council has used its responsibilities for reviewing all grant applications involving state or federal funds, to reward communities which plan for, and provide, low and moderate income housing opportunities. The Council has done so based on Policy 39 of the housing chapter, Metropolitan Development Guide. Policy 39 establishes funding priorities based upon each community's lower cost housing opportunities, and its plans, policies and programs to provide such housing in the future. Communities are ranked, based on criteria which measure local housing peformance. The ranking is then applied when applications from local governments are submitted for state or federal funding. Grants for transportation, criminal justice, parks and open space, and aging programs can be ranked and awarded, based in part on the Policy 39 ranking. 0 -3- Richfield's ranking is important for receiving grant monies for park and open space development. When the city applies for either a federal Land and Water Conservation Act (LAWCON) grant or a State of Minnesota Legislative Commission on-Minnesota Resources (LCMR) grant, the Metropolitan Council will consider Policy 39 when processing the application. In evaluating a LAWCON or LMCR grant request, one-third of the ranking evaluation is based on a community's rank with Policy 39. Because Richfield has performed well in housing, we have ranked high in application evaluations for park and open space grant monies. The city has reveived LAWCON and LMCR grants totalling $143,750 for the development of Monroe Fairwood Park, and $166,000 for the development of Adams Hill Park. An LMCR grant was also responsible for improvements at Sheridan Park, the Wood Lake Nature Center boardwalk, and the Taft Park fishing dock. Since these grants can cover as much as 75 percent of project costs, they have been significant in reducing the amount of local funds for park development. Repayment of these grant funds is not required. Richfield is currently ranked 8th of 188 communities. The. ranking for the first 12 communites follows: Rank Citv Points 1 St. Paul 85.5 2 Minneapolis 84.5 3 Farmington 83.0 19 4 Rosemount 78.5 5 Coon Rapids 77.5 6 Maple Wood 77.5 7 Hastings 71.5 8 Richfield 70.5 9 Prior Lake 70.0 10 Belle Plaine 69.5 11 Robbinsdale 69.5 12 Mound 69.0 Six of Richfields 70.5 points were provided because of the approvals given the PADA project by the City Council and HRA during 1983. Not issuing bonds or developing new project such as PADA reduces our points by 4 since 2 points could be retained by substituting another housing program. An "existing" housing-mortgage program could receive only four of the six points PADA received because it does not have a new construction element. The Intended Use of Accuired Land The City and HRA acquire property for a number of public purposes. Some of these include housing, redevelopment, right-of-way and parks. The HRA acquired the properties at 6425 and 6429 Portland Avenue to develop affordable housing. In analyzing the area, it was determined that a portion of the adjacent open space of Legion Lake was necessary for a feasible project. Hence, a limited amount of park property was included within PADA. -4- If this property was at some time limited to development for park purposes only, it would not be appropriate to propose a housing use. However, according to legal counsel, none of the Certificates of Title or underlying deeds contain restrictions which discuss the use of the property within PADA for park purposes. Further, resolutions which authorized the acquisition of properties within the PADA site appear sufficiently broad to permit any appropriate public use. Thus, housing at PADA appears not to be restricted by any previous actions. ectfu b Led, ohn G. C rtwri t Executive Director • is 0 HOUSING AND REDEVELOPMENT AUTHORITY Office of Executive Director April 16,1984 HRA Memorandum No.-16 Housing and Redevelopment Authority Commissioners City of Richfield Subject: Affordable Housing Construction Dear Commissioners: Staff ha-s proposed the construction of affordable townhouse units at PADA. The Minneapolis Star and Tribune of April 14, contained an article in the Shelter section entitled, "Some area builders prove 'affordable' is not just a dream". It is attached. The article helps to illustrate that quality and affordable housing may be constructed. The Metropolitan Council recently completed a competition for developers who construct homes in the under $75,000 price range. There were two categories for townhouse condominiums; $60,000 to $75,000 and under $60,000. • .espectfu y tted„ ohn G. Part right ? xecutive Dir ctor ?J 0 0 0 0 Some area buWers prove `affordab e' is not just a dream By Ingrid sondstreax Shift Heller How's this for an affordable house: A 166square tool, (wo-bedroom rambler with cuslom built oak cnhlneis, triple glared alpdows, a full, unfinished basement end gninge on a halt-orre, landscaped M. For $81,000. Five percent down ($2.200). And monthly payments, Including principal, Inlerest. Inwlrance and (rues, of around $640. fiord to believe, you say? Well,ll's true. And this very house, built by Marv Ilnrl:uen Conslruclloa Co. Of Victoria, won a lop prize this week Ia The Metropolitan Council's affordable housing competition. It look first place In The under- $10,000, single-fnmlly-home division of the compolllan. And there's more. In fact, there ore 11 more winners, all of which were anookinrcd Friday py 7aanne Irnt 1,)n, hmulny, plern!r of the council. "We want to show off the best of whnl's available around The Toils t'llui In she area In The $75.000• owl under range of housing," Barron said. Inlesesl roes and finsnrlog Ph- kah(s OW bel;e1` now (ol (list- time hook.- buyers who have been Uniting for the chance to enter The housing rnarkel. (louses priced within their reach are Indeed being built by Twin Cllles builders, and the counril wanted to set the word out. Even though the competition only was nrgotutred In roily February. area builders from Ilaslinip to New Hope. Vlctnrin to Anoka already In the socalled "aftordoble housing" market submllled 58 entries, Including single family homes, eondomlulums and townhouses. The competitors were judged by a team of six housing and building Professionals on the basis of value for the money, general appeal. Ilreab1111y, energy efficiency, an of space, workmanship and how The home, fit into the neighborhood. Ike requirements were that They be priced under $75,000 and located In an area alreody served by public sewer and water. The council held affordable- housing competitions In 1177 and 117$, the 81`31 outgrowth of recommendations by The council's model-cost housing advisory commlllee, appointed at [be direction of the Minnesota Legislature under the 1171 Ilnd Planning Act "We wooled to figure out how to get store affordable housing built," Barron said. "And we wanted to give sonic public exposure to housing el the lower end of like price range." , The competitions were discontinued because of lack of money for prizes. This year there still was no money, wid Barron, but "there ere so many new things appearing on the market that we wanted to hold the ecmpelltlos anyway. We went The pubik.l(y and to get the public out to see the homes." For that purpose, the council will sponsor a public tour of the winning homes April 2621. "This sort of competition, like the Parade of Homes. alerts everyone that (here Is affordable housing for the first-lime buyer," sold Mae Control continued on page 2S p ?t4 1 T S. i7 r, x:41 r r' q?????•- , red sew M..".?„i --.k.:..«z: -....?.....u W...:.i. _..? -,.... - .. -. :.k ....- ?.M.--'a-.a..ri Winner In $58,000 S60.0O0 townhouse dlvlelon, 813 23rd Av.1tE. Stall Photos by Dunk! Olack Winner In $60,000 576,000 townhouse division, 2945 Francs Av. N.. Bobbinadata. First place for staple-fsmlty home, under $70,000; 1100 771h fit., Vicloris. a?=Hi, ill'", n« x n w r n M xc`: c '? S-??:v?°v° ? G^n`?n ° g°?o?i ? ?,7di `'? ?$ i?pp" QZ•<^??° '?'Oy`•3S7o a, il t: „^. of ,°. °?ia g?RAe i ,g°P°8 x P ?i ? M?t ~P ^ ""?njn''4;"_?Nm ho??p ?;?nS. 9S? °?.pv ? n•? G1 f?° p?w??.wa 3a????4Gxcwh SrS?bS S?y..6GG S n ?A v gF..3 u 9a C °ao I 4 !7g `fir"n "?° 11n^ S g Va n P 3 ^, w e+K G' 6 n P r w o pp n? ('? « N. N ti i ?e1Ct W;; oe ^Y°Y ??? owl ?r'n ?.°<iC ?'+1 ?s ? ?i a ?V RRp ?^ ? ^ 77 p a ?.. 0a7 3'? {`pj•- ?c?'e ,c •S ??? ? eS ?5?? ?R? s yeaC s ?•J r 68^ 6sg u ?:?^ ? 21 ;Rqpl V1:> . ¦ E¦ # e ?n (30 ri .1 ol s wC S l ? lit I 'I r r [lip Cob N pN Yt. t O t a L I V 0 L V I 'QQ" V e t 9 1 ?t • i. Minneapolis Star and Tribune 4S Sat.. April 14, 1984 0 . Contest Continued form page 2S Coachman Oaks of Eagan. The winners in the under-556.000 townhouse division were: ¦ First placm 102E Shore Dr., Circle Pines, $55,600, Northway Construction Co. of Shoreview. ¦ Second place: 10617 Hummingbird St. NW., Coon Rapids, $33,900, Mardon Homes of Arden Hills. ¦ Honorabie mention: 679 Desoto SL. St. Paul, $53.71175, East Side Neighborhood Development of St. ` Paul. The winners in the $56,000-to-560,000 townhouse division are: ¦ First place: 813 23rd Av. NE, Minneapolis, S59,900. Baton Corp. of Minneapolis. ¦ Second place: 20215 Hunter Court, Lakeville, $5000, George Branton Construction Co. of Bloomington. ¦ Honorable mention: 15560 Cornell Trail. Rosemount, $57.900, Winds Crossing Co. of Rosemount. The winners in the 560.0004&&5,000 townhouse category are: ¦ First place: 2945 France Av. N„ Robbinsdale. $73,900, Baton Construction Co. of Minneapolis. ¦ Second place: 10665 Sherman Dr., Eden Prairie, $66.900, Baton Construction Co. ¦ Honorable mention: 102C South Dr., Circle Pines, S63,900, Northway Construction Co. ¦ Special energy-consciousness consideration 4460 McColl Dr., Savage. $67,900. Glendale Woods, Inc., Burnsville. • • z . kel. (L w 00 fV!-rlf'Riy LINT. `' \ tpNt F[-WMNy IY,LL ts+Nt. elpewtu ._ ?ea?• 1317, uRlvg 10 UNITS .9 0 Ih 1 II ? oe rE? a rAF Fr 8/ACRE RAE DRIVE DEVELOPMENT AREA r 1 ?' • 14 Gjg7aNO WPr-f5F- 4 l d i ? 30 UNITS 9/ACRE PORTLAND AVENUE DEVELOPMENT AREA WITY OF RICHFIELD h? Co MMO t-f ,!5 Gjeg55N t3ul:;,F9r- "P?uP?TY Lr? ? C -3- M/Hoverson, S/Kauth, to recommend approval of the special use permit to allow the addition of a solarium on the Burger King restaurant. Motion carried: 9-0 M/Luettinger to recommend denial of additional parking facilities through use of adjacent property. Motion failed for lack of a second. M/McDermott, S/Hoverson, to recommend approval of the s ecial use permit request which would allow parking on adjacent property bezeen 11 a.m. and 2 p.m., Monday through Friday, with the foAowing stipulations: 1. That a gate be provided which would permit pedestrian access to the adjacent apartment parking lot. 2. That orderly pick-up of litter on the apartment parking lot site and throughout the neighborhood be maintained. 3. That the parking lot on the apartment site be closed to access from the Burger King site on federal holidays. 4. That the city be given the right to cancel the portion of the special use permit related to parking on the apartment site upon a 30-day written notice to the landowner and Burger King. 5. That overflow parking only be accessible on weekdays between 11 a.m. - 2 p.m., and that the access gates remain locked on weekends. Motion carried: 8-1. Voting against: Luettinger. ITEM #5, INFORMATIONAL LETTER #6, CASE #84-RZ-2 - PORTLAND AVENUE DEVELOPMENT AREA City Planner, Rick Jopke, presented the staff report. Commissioner Quam asked about airport noise on the site and Mr. Jopke responded that the project was designed to limit outside activities and would be reviewed by Metropolitan Council. Commissioner Anderson asked about the source of this housing proposal; Mr. Kraft responded that it was a part of the proposal of a consultant who was hired to study the Legion Lake site as a park. Commissioners Hoverson and McDermott pointed out that the property concerned was acquired some time ago for park purposes and was found by the Planning Commission to be in conformance with the Comprehensive Plan only if used for park purposes. -4- Commissioner Ahlquist asked if development of Legion Lake as a park was assured, given federal and state budgets.. Mr. Kraft said that only with federal and private sources would development occur soon, and this was now not assured. Mr. Logeland (didn't give address or spell name) appeared to voice his concerns about the project and to indicate his desire for the property to remain park land. Art Thole, 6339 Portland Avenue South, said that he was concerned that the site would be extremely crowded with over 40 families residing on a very small site. Lyndon Barsness, 6334 Portland, said that overcrowding of the site would depreciate property values and put a stress on the neighborhood. He questioned whether the townhouses would be constructed with quality materials and voiced his strong support of maintaining plans to use the property as park land. Mrs. Jacobson, 6436 Portland Avenue South, said that putting a townhouse development on the site would be a perfect example of spot zoning. John Swanberg, 6329 Portland, expressed his opposition to use of the site for townhouse development. Eugene Matthews said maintained so that it Mary Jo Nohrer, 6345 of a townhouse devel moving in and out. purpose. he was concerned about how the site would be built and would not look unsightly. 5th Avenue South, said she moved to Richfield to get out opment which was very loud and had a lot of residents She epxressed opposition to using the site for that M/Jensen, S/Hoverson, to close the public hearing. Commissioner Hoverson said that she was concerned that architects had worked on site plans, and that the city had applied for money for a townhouse project before the comprehensive plan was amended. When the acquisition of the site was approved as in conformance of the comprehensive plan, she said, it was made very clear by the planning commission that the site should be used only for park development. She said that she was not in favor of amending the comprehensive plan for this project, because she did not see any benefit which the city would receive from this development. It would be spot zoning. Moreover, since the street has been deemed "undesirable" for single-family residential use because of noise and traffic, that same site should then also be deemed unsuitable for a housing project which would attract a large number of families with children. M/Hoverson, S/Kauth, to recommend to the city council that the comprehensive plan not be amended, and that rezoning of the area should be denied at the Portland Development area. Commissioner Luettinger said that he would like to see moderate income housing and would vote for rezoning of that area. -5- Commissioner Ahlquist said that given the uncertain status of the Legion Lake property as a park sil-e, the redevelopment of that area as a whole should be further studied. Motion carried: 9-0 ITEM #6, INFORMATIONAL LETTER X67 - 76TH STREET/HIGHWAY 77 INTERSECTION Rick Jopke presented the information to commissioners. ITEM #7, INFORMATIONAL LETTER #8 - REPORT ON AIRPORT ZONING ORDINANCE Rick Jopke presented the information to the commissioners. ITEM #8, INFORMATIONAL LETTER #9 - MTC SUBREGIONAL TRANSIT STUDY Rick Jopke presented the information to the Planning Commission. ITEM #9 INFORMATIONAL LETTER #10 - ORDINANCE AMENDMENT TO ALLOW PROFESSIONAL OFFICES `-N "R" RESIDENCE ZONING DISTRICTS BY SPECIAL USE PERMITS The commissioners changed two items in the ordinance as presented. In item 4, the words "or collector" were deleted: In item 8, the clause should be changed to read: "Any such permit issued by the City of Richfield shall be issued for use by the owner or by an entity controlled by the owner, and shall terminate if the usage or ownership of the site changes." M/Hoverson, S/Kauth, to forward the proposed ordinance amendment to the city council with those two changes. LIASON REPORTS Liaison reports were given. •