012125 HRAREGULAR HOUSING AND REDEVELOPMENT AUTHORITY MEETING
RICHFIELD MUNICIPAL CENTER, COUNCIL CHAMBERS
JANUARY 21, 2025
7:00 PM
Call to Order
Open Forum
Please refer to the HRA agenda and minutes web page for additional ways to submit comments.
Appr oval of t he M inut es
Approval of the minutes of the Regular Housing and Redevelopment Authority meeting of December 16, 2024.
AGENDA APPROVAL
1.Approval of the Agenda
2.Consent Calendar contains several separate items which are acted upon by the HRA in one motion.
Once the Consent Calendar has been approved, the individual items and recommended actions have
also been approved. No further HRA action on these items is necessary. However, any HRA
Commissioner may request that an item be removed from the Consent Calendar and placed on the
regular agenda for HRA discussion and action. All items listed on the Consent Calendar are
recommended for approval.
A.Consideration of a resolution authorizing the execution of a Developer Agreement with the West Hennepin
Affordable Housing Land Trust, dba Homes Within Reach, for the acquisition, rehabilitation and sale of
houses under the New Home Program.
Staff Report No. 1
B.Consider a resolution approving an extension of a Contract for Private Redevelopment with Beacon
Interfaith Housing Collaborative for the development of 6613-25 Portland Avenue.
Staff Report No. 2
3.Consideration of items, if any, removed from Consent Calendar
OTHER BUSINESS
4.Consideration of a Memorandum of Understanding supporting a request for financial assistance and 4d tax status
from Hempel Real Estate for the acquisition and preservation of three affordable rental communities.
Staff Report No. 3
HRA DISCUSSION ITEMS
5.HRA Discussion Items
EXECUTIVE DIRECTOR REPORT
6.Executive Director's Report
C LAIMS
7.C laims
8.A djournment
Auxiliary aids for individuals with disabilities are available upon request. Requests must be made at least 96
hours in advance to the City Clerk at 612-861-9739.
HOUSING AND REDEVELOPMENT
AUTHORITY MEETING MINUTES
Richfield, Minnesota
Regular Meeting
December 16, 2024
CALL TO ORDER
Chair Vrieze Daniels called the meeting to order at 7:00 p.m. in the Council Chambers.
HRA Members
Present:
Erin Vrieze Daniels, Chair; Gordon Hanson; Sean Hayford Oleary; and
Mary Supple
HRA Members
Absent:
John Young
Staff Present: Melissa Poehlman, Executive Director; Jan Youngquist, Economic
Development Manager; and Michelle Friedrich, City Clerk.
OPEN FORUM
Chair Vrieze Daniels noted the process of remote Open Forum participation. Executive Director
Poehlman explained remote participation can be requested ahead of time by contacting a
Housing and Redevelopment Authority (HRA) staff person via phone or email. No residents
participated in the Open Forum public comment opportunity.
APPROVAL OF THE MINUTES
MOTION: made by Supple, seconded by Hanson to approve the minutes of the regular Housing
and Redevelopment Authority Minutes from November 18, 2024.
Motion carried: 4-0
ITEM #1
APPROVAL OF THE AGENDA
MOTION: made by Hayford Oleary, seconded by Hanson to approve the agenda.
Motion carried: 4-0
HRA Meeting Minutes -2- December 16, 2024
ITEM #2
APPROVAL OF THE CONSENT CALENDAR
Executive Director Poehlman presented the consent calendar.
A. Consideration of the approval of an Amendment to the Agreement with
the Center for Energy and Environment to provide loan and remodeling
advising services to Richfield homeowners for 2025. (Staff Report No. 25)
MOTION: made by Hayford Oleary, seconded by Vrieze Daniels, to approve Consent
Calendar item 2.A.
Motion carried 4-0
ITEM #3
CONSIDERATION OF ITEMS, IF ANY, REMOVED FROM THE CONSENT
CALENDAR
None.
ITEM #4
CONSIDERATION OF APPROVAL OF A FUNDING AGREEMENT IN THE AMOUNT OF
$750,000 WITH HOPTIMISTIC, LLC
Economic Development Manager Younquist provided an overview of the history of funding
agreement assistance for developments and outlined the Housing and Redevelopment
Authority (HRA) request.
Tim Dahlman, owner of Luce Line Brewing Company, shared that his business has been
operating since 2020. He emphasized the quality of his beverages and the dedication of his
staff. Mr. Dahlman also highlighted his collaborations with the cities of Wayzata and
Plymouth to organize community events. He noted that his establishments are dog-friendly
and aim to create a welcoming and enjoyable environment for the local communities.
Commissioner Supple and staff discussed the $750,000 funding gap, which aligns with the
HRA request as estimated by the developer.
Commissioner Hayford Oleary and staff reviewed the potential applicability of SAC credits for
the project.
The HRA Commission expressed consensus in support of the funding agreement with
Hoptimistic, LLC.
MOTION: made by Supple, seconded by Hanson, to approve the funding agreement in the
amount of $750,000 with Hoptimistic, LLC.
The Commission acknowledged the amount was reasonable and commented on the positive
impact the project would have on energizing the downtown area. Chair Vrieze Daniels noted
the project aligns with the vision for the downtown Richfield location.
Motion carried 4-0
HRA Meeting Minutes -3-December 16, 2024
ITEM #5 HRA DISCUSSION ITEMS
None.
ITEM #6 HRA EXECUTIVE DIRECTOR’S REPORT
Executive Director Poehlman reported that Aster Commons received $3 Million of LCDA federal
funding, and Penn Station received $850,000 of Met Council LHIA funding.
ITEM #7 CLAIMS
MOTION: made by Hanson, seconded by Supple to approve the following claims:
U.S. BANK 12/16/2024
HRA Checks: #37164-37178 $8,730.47
Section 8 Checks: #136327-136403 $225,504.84
TOTAL $234,235.31
Motion carried: 4-0
ITEM #8 ADJOURNMENT
The meeting was adjourned by unanimous consent at 7:14 p.m.
Date Approved: January 21, 2025
Gordon Hanson
Acting Chair
Michelle Friedrich Melissa Poehlman
City Clerk Executive Director
AGENDA SECTION:Consent Calendar
AGENDA ITEM #2.A.
STAFF REPORT NO. 1
HOUSING AND REDEVELOPMENT AUTHORITY
MEETING
1/21/2025
REPORT PREPARED BY: Celeste McDermott, Housing Specialist
OTHER DEPARTMENT REVIEW:
EXECUTIVE DIRECTOR REVIEW: Melissa Poehlman, Executive Director
1/15/2025
ITEM FOR COUNCIL CONSIDERATION:
Consideration of a resolution authorizing the execution of a Developer Agreement with the West
Hennepin Affordable Housing Land Trust, dba Homes Within Reach, for the acquisition, rehabilitation
and sale of houses under the New Home Program.
EXECUTIVE SUMMARY:
The Housing and Redevelopment Authority's (HRA) New Home Program (Program) provides affordable
homeownership opportunities in the community through new construction, acquisition and rehabilitation, and
down payment assistance. As part of the Program, the HRA works with the West Hennepin Affordable
Housing Land Trust (WHAHLT), dba Homes Within Reach, to purchase and rehabilitate homes to be sold to
income-qualifying households. WHAHLT is a Community Land Trust that allows moderate-income buyers to
achieve affordable homeownership by holding ownership of the land, and reducing the burden of down
payment and large mortgage payments on the homeowner. The model ensures ongoing affordability
throughout the lifetime of the property and with multiple owners.
WHAHLT is seeking to continue providing affordable housing in Richfield through this model. The proposed
Developer Agreement (Agreement) between the HRA and WHAHLT details the terms of this continued
partnership through 2025. Under the terms of the Agreement, the HRA would provide up to $240,000 to
WHAHLT for the purchase and rehabilitation of up to three single-family homes. WHAHLT would then resell
the homes to households earning no more than 80% of the Area Median Income (AMI). Funding for this work
will come from the Affordable Housing Trust Fund (AHTF).
RECOMMENDED ACTION:
By motion: Approve a r esolution authorizing the execution of a Developer Agreement with the West
Hennepin Affordable Housing Land Trust, dba Homes Within Reach, for the acquisition, rehabilitation
and sale of up to three houses under the New Home Program.
BASIS OF RECOMMENDATION:
A.HISTORICAL CONTEXT
Under the Program, the HRA has worked with several developers over the years to either build new
homes or purchase and rehabilitate existing homes. These homes are then sold to households earning
no more than 80% of the AMI.
Since 2002, WHAHLT has successfully purchased, rehabilitated and sold 13 homes and constructed 3
new homes in Richfield.
Funding for the work of the Program has varied by year, with most recent projects funded with local
Community Development Block Grant funds and the AHTF, as well as pooled Tax Increment Financing.
B.EQUITABLE OR STRATEGIC CONSIDERATIONS OR IMPACTS
The Program furthers equity goals by providing a path to affordable home ownership for low-income
households.
The Program supports the 2023-2027 Strategic Plan outcome of maintaining Richfield as an affordable
place to live.
C.POLICIES (resolutions, ordinances, regulations, statutes, exc):
The objectives of the Program are to:
Eliminate the blighting influence of substandard housing, thus improving residential
neighborhoods;
maintain and improve the existing housing stock while preserving housing affordability;
develop quality housing with long-term affordability, to the greatest extent possible, and
coordinate with developers to provide affordable housing for families.
Purchasing and rehabilitating homes to provide affordable housing carries out the policies of the City’s
Comprehensive Plan, including: support the rehabilitation and upgrading of the existing housing stock;
promote the development, management and maintenance of affordable housing in the City through
assistance programs, alternative funding sources, and the creation of partnerships whose mission is to
promote low to moderate income housing.
D.CRITICAL TIMING ISSUES:
WHAHLT has identified one property in Richfield that they would like to develop under the Program. The
Agreement must be approved before they can include the property in the Program and request
reimbursement.
The Agreement provides for HRA staff to approve the acquisition of the specific property
and to review income documentation prior to the final sale.
E.FINANCIAL IMPACT:
The 2025 budget includes $240,000 for acquisition and rehabilitation through the Program for WHAHLT
to purchase and rehab up to three homes ($80,000 per property).
F.LEGAL CONSIDERATION:
The Agreement was prepared by HRA legal counsel.
ALTERNATIVE RECOMMENDATION(S):
Do not approve a resolution authorizing execution of a Developer Agreement with the West Hennepin
Affordable Housing Land Trust, dba Homes Within Reach.
PRINCIPAL PARTIES EXPECTED AT MEETING:
N/A
ATTACHMENTS:
Description Type
Resolution Resolution Letter
Agreement Contract/Agreement
HOUSING AND REDEVELOPMENT AUTHORITY
IN AND FOR THE CITY OF RICHFIELD, MINNESOTA
RESOLUTION NO. 1494
RESOLUTION APPROVING DEVELOPER AGREEMENT WITH WEST HENNEPIN
AFFORDABLE HOUSING LAND TRUST DBA HOMES WITHIN REACH
WHEREAS, the Housing and Redevelopment Authority in and for the City of Richfield,
Minnesota (the “Authority”) intends to provide $240,000 from Community Development Block grant
funding (“CDBG funds”) and/or Affordable Housing Trust Fund ("AHTF funds") to the West
Hennepin Affordable Housing Land Trust dba Homes Within Reach, a Minnesota nonprofit
corporation (“WHAHLT”), for the purposes of acquiring and rehabilitating homes in the City of
Richfield, Minnesota; and
WHEREAS, the Authority has proposed that WHAHLT use the CDBG and/or AHTF funds
to purchase, rehabilitate, and resell one or more properties to households earning at or below 80%
of the area median income; and
WHEREAS, there has been presented before the Board of Commissioners of the Authority
a Developer Agreement (the “Developer Agreement”) to be executed by the Authority and
WHAHLT, which sets for the terms of the CDBG and/or AHTF funds to be provided to WHAHLT
and the agreement by WHAHLT to purchase, rehabilitate, and resell the properties; and
NOW, THEREFORE, BE IT RESOLVED, by the Board of Commissioners of the Housing
and Redevelopment Authority in and for the City of Richfield, Minnesota as follows:
1.The Developer Agreement is hereby in all respects authorized, approved, and
confirmed, and the Chair and the Executive Director are hereby authorized and directed to execute
the Developer Agreement for and on behalf of the Authority in substantially the form now on file
with the Executive Director but with such modifications as shall be deemed necessary, desirable,
or appropriate, the execution thereof to constitute conclusive evidence of their approval of any and
all modifications therein.
2.The Chair and the Executive Director are hereby authorized to execute and deliver
any and all documents deemed necessary to carry out the intentions of this resolution and the
Developer Agreement.
3.This resolution shall be in full force and effect as of the date hereof.
Adopted by the Housing and Redevelopment Authority in and for the City of Richfield,
Minnesota this 21st day of January, 2025.
Gordon Hanson, Acting Chair
Sean Hayford Oleary, Secretary
1
DEVELOPER AGREEMENT
(West Hennepin Affordable Housing Land Trust dba Homes Within Reach)
THIS DEVELOPER AGREEMENT (the “Agreement”), made and entered into as of
this 21st of January, 2025 (“Effective Date”), by and between the Housing and Redevelopment
Authority in and for the City of Richfield (“Authority” or “HRA”), a body corporate and politic
under the laws of the State of Minnesota, having its principal office at 6700 Portland Avenue,
Richfield, Minnesota (“HRA”) and the West Hennepin Affordable Housing Land Trust (dba
Homes Within Reach), a nonprofit corporation under the laws of Minnesota, having its principal
office at 5100 Thimsen Ave, Suite 120, Minnetonka, MN 55345. (“Developer” or “WHAHLT”).
RECITALS
A.The HRA intends to provide WHAHLT with up to $240,000 in Community
Development Block Grant funds (“CDBG Funds”) or Affordable Housing Trust Fund
funds (“AHTF Funds”) for the purposes of acquiring and rehabilitating up to three homes
in the City of Richfield (the “City”) to be resold to people earning at or below 80% of the
area median income.
B.The HRA desires WHAHLT to purchase, rehabilitate, and resell up to three
properties eligible to be purchased, rehabilitated and resold with CDBG Funds or AHTF
Funds (the “Eligible Properties”) and WHAHLT has agreed to do so pursuant to the terms
and conditions of this Agreement.
C.The City and the HRA have previously established a New Home Program pursuant
to the authority granted in Minnesota Statutes, Sections 469.001 through 469.047.
D.WHAHLT will utilize the Community Land Trust model to purchase, rehabilitate,
and resell the property(ies) to an income-qualified buyer(s), and will retain ownership of
the land to ensure long-term affordability.
E.The grant of the CDBG Funds or AHTF Funds to WHAHLT is for the purpose of
providing affordable housing within the City and to assist in carrying out the objectives of
the New Home Program, which are in the best interests of the City, and the health, safety
and welfare of its residents and in accord with the public purposes and provisions of the
applicable state and local laws and requirements.
F.In performing its obligations under this Agreement, WHAHLT must adhere to the
restrictions for the use of CDBG Funds or AHTF Funds set forth in this Agreement.
AGREEMENT
1.Scope of Work.
A.Developer. The HRA hereby designates WHAHLT as a Developer to purchase,
rehabilitate, and resell Eligible Properties in accordance with the terms and conditions of this
Agreement.
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B.Memorandum of Understanding. WHAHLT shall purchase, rehabilitate and resell
Eligible Properties based on the Memorandum of Understanding of the parties set forth in
EXHIBIT A.
C.Criteria. WHAHLT will identify Eligible Properties that WHAHLT would like to
acquire under this Agreement. Prior to the acquisition of an Eligible Property, WHAHLT shall
provide the HRA with a Developer Pro Forma in the form set forth in EXHIBIT B.
D.Compliance with Required Programs. To the extent required by federal, state, and
local law and regulation, WHAHLT agrees to comply with the program requirements of:
(i)Equal opportunity and discrimination provisions of all applicable State and Federal
laws, rules, and regulations;
(ii)Section 504 of the Rehabilitation Act of 1973, as amended;
(iii)Fair housing requirements of section 104(b) and section 109 of Title I of the
Housing and Community Development Act of 1974, as amended, including Title VI of the Civil
Rights Act of 1964, the Fair Housing Act, and other applicable fair housing laws;
(iv)All Lead Laws and Rules, including Minn. Stat. Sections 144.9501 through
144.9512, Minnesota Rules 4761.2000 through 4761.2700, and Federal Regulations including
Residential Lead-Based Paint Disclosure Program (Section 1018 of Title X) and the Renovation,
Repair, and Painting Rule (TSCA 406(B)).
(v)The Hennepin County Affirmative Action Policy.
WHAHLT further agrees to provide HRA with a timely certification that the requirements listed
in this Section have been met.
E.Resale of Property. After WHAHLT completes the rehabilitation of an Eligible
Property, WHAHLT will market said Eligible Property and execute a purchase agreement with an
end buyer earning at or below 80% of the area median income.
F.Reports. WHAHLT shall provide HRA with a report of its activities on an as-
needed basis, including but not limited to reports related to the income of the end buyer of each
Eligible Property.
2.Term. This Agreement is effective as of the Effective Date and until December 31, 2025.
3.Acquisition, Relocation and Displacement. WHAHLT shall be responsible for carrying
out all acquisitions of real property necessary for implementation of this Agreement. WHAHLT
shall conduct all such acquisitions in its name and shall hold title to all real property purchased
and shall be responsible for preparation of all notices, appraisals, and documentation required in
conducting acquisition under the regulations of the Uniform Relocation Assistance and Real
3
Property Acquisition Act of 1970, as required under 49 CFR Part 24. WHAHLT shall als o be
responsible for providing all relocation notices, counseling, and services required by said
regulations. In addition, WHAHLT shall comply with the acquisition and relocation requirements
of the Minn. Stat. Sections 117.50 through 117.56 (the “Minnesota Relocation Act”).
4.Labor Standards, Employment and Contracting. WHAHLT shall notify the HRA prior to
initiating any rehabilitation activities, including advertising for contractual services, which will
include costs likely to be subject to the provisions of Federal Labor Standards and Equal
Employment Opportunity and related implementing regulations.
5.Documentation. WHAHLT must maintain the following records and reports relating to
Eligible Properties acquired pursuant to this Agreement: income documentation for buyer of
property financed with CDBG Funds or AHTF Funds, appraisals, environmental reports, purchase
agreements, settlement statements, and deed document number/filing information per property.
WHAHLT shall submit copies of the foregoing documentation to HRA with respect to any Eligible
Property acquired pursuant to this Agreement prior to closing with the buyer. The HRA will issue
a clear to close once documentation has been submitted.
6.Suspension and Termination. If WHAHLT materially fails to comply with any term of this
Agreement after written notice and an opportunity to cure, this Agreement may be terminated. The
time period for said opportunity to cure will be dependent upon the relevant time period
requirements of the applicable law, regulation, program, or otherwise.
7.Notice. All communications, notices, and demands of any kind which either party may be
required or may desire to give to or serve upon the other shall be made in writing, and such notice
shall be deemed sufficiently given if and when it is addressed to then other party as provided below
and either (a) delivered personally, (b) deposited in the United States mail, registered or certified,
with postage prepaid, (c) deposited with an overnight delivery service for next day delivery, or (d)
telecopied:
To HRA: Richfield Housing and Redevelopment Authority
Attention: Melissa Poehlman, Executive Director
6700 Portland Avenue
Richfield, Minnesota 55423-2599
Fax: (612) 861-8974
To WHAHLT: West Hennepin Affordable Housing Land Trust
Attention: Brenda Lano, Executive Director
5100 Thimsen Avenue
Suite 120
Minnetonka, MN 55345-4117
8.Data Practices. WHAHLT agrees to abide by the provisions of the Minnesota Government
Data Practices Act and all other applicable State and Federal laws, rules, and regulations relating
to data privacy and confidentiality, and as any of the same may be amended.
4
9.Access to Records. HRA shall have the authority to review any and all procedures and all
materials, notices, and documents prepared by WHAHLT in implementation of this Agreement.
10.Indemnification. WHAHLT agrees to hold harmless, indemnify and defend HRA, its
elected officials, officers, agents, and employees against any and all claims, losses, or damages,
including attorneys’ fees, arising from, allegedly arising from, or related to, the provision of
services under this Agreement by WHAHLT, its employees, agents, officers, or volunteer workers.
11.Independent Contractor. Nothing in this Agreement is intended, nor may be construed, to
create the relationship of partners or employer/employee between the parties. WHAHLT, its
officers, agents, employees, and volunteers are, and will remain for all purposes and services under
this Agreement, independent contractors.
12.Entire Agreement. The entire agreement of the parties is contained in this document. This
Agreement supersedes all previous written and oral agreements and negotiations between the
parties relating to the subject matter of this Agreement except as provided in paragraph 17 of this
Agreement.
13.Severability. The invalidity, illegality or enforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this Agreement, all of which
shall remain in full force and effect.
14.Assignment of Agreement. The parties shall not assign this Agreement without the express
written consent of the other party.
15.Modification. No provision, term or clause of this Agreement shall be revised, modified,
amended or waived except by an instrument in writing signed by both parties.
16.Counterparts. This Agreement may be executed in any number of counterparts and each
such counterpart shall be deemed to be an original, all of which, when taken together, shall
constitute one agreement.
17.Headings. The titles to the sections and headings of various paragraphs of this Agreement
are placed for convenience of reference only and in case of conflict, the text of this Agreement,
rather than such titles or headings shall control.
18.Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of
the successors and assigns of each of the parties hereto.
19.Invalidity. If for any reason any portion or paragraph of this Agreement shall be declared
void and unenforceable by any court of law or equity, it shall only affect such particular portion or
paragraph of this Agreement, and the balance of this Agreement shall remain in full force and
effect and shall be binding upon the parties hereto.
20.Governing Law. This Agreement shall be governed and construed in accordance with the
laws of the State of Minnesota.
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21.Electronic Signatures. This Agreement may be executed with electronic signatures.
(Signature page follows)
S-1
IN WITNESS WHEREOF, the Authority has caused this Agreement to be duly executed
in its name and behalf and WHAHLT has caused this Agreement to be duly executed in its name
and behalf as of the date first above written.
HOUSING AND REDEVELOPMENT AUTHORITY
IN AND FOR THE CITY OF RICHFIELD, MINNESOTA
By ________________________________
Its Acting Chairperson
By ________________________________
Its Executive Director
WEST HENNEPIN AFFORDABLE HOUSING LAND
TRUST
By ________________________________
Its Executive Director
A-1
EXHIBIT A
PROCEDURES
Memorandum of Understanding
Properties, In General:
WHAHLT will identify, purchase, and rehabilitate up to three Eligible Properties for
subsequent resale to households earning at or below 80% of the Area Median Income.
The HRA agrees to cover $80,000 of the Development Gap for Eligible Properties.
Development Gap means the estimated total development costs less the sales price of the
improved property up to a maximum gap amount as shown on “Exhibit B” or other developer
pro forma approved by the HRA.
Identification of Eligible Property:
WHAHLT will identify Eligible Properties.
WHAHLT will provide the HRA with the identity of the Eligible Property so that the HRA
may decide whether the HRA will use CDBG or AHTF funds to acquire said Eligible Property.
Purchase of Eligible Property:
WHAHLT will identify one or more Eligible Properties and only purchase an Eligible Property
after receipt of the HRA’s express written consent.
HRA may express its written consent via email to WHAHLT at blano@homeswithinreach.org.
WHAHLT shall be responsible for the timely completion of all CDBG or AHTF required
documentation.
Rehabilitation of Eligible Property:
After WHAHLT has purchased an Eligible Property, WHAHLT will submit a rehabilitation
plan to the HRA and the HRA will agree in writing to the plan, prior to WHAHLT beginning
its rehabilitation efforts at that Eligible Property.
Subsequent Resale of Certain Eligible Property to End Buyer:
After WHAHLT completes the rehabilitation of an Eligible Property, WHAHLT will market
said Eligible Property and execute a purchase agreement with an end buyer whose household
income is at or below 80% of Area Median Income.
WHAHLT will maintain long-term affordability by retaining ownership of the land through
its land trust.
Reimbursement of Acquisition/Rehabilitation Costs (or Payment of the Development Gap):
WHAHLT will use its own funds to purchase an eligible property.
Following the acquisition of the property, WHAHLT may request that the HRA provide
payment up to $65,000 of the estimated Development Gap.
The remaining $15,000 will be paid upon sale of the Eligible Property and submittal of all
required documentation to the HRA.
The maximum amount of reimbursement available under this Agreement is $80,000 per
Eligible Property up to a total of $240,000.
B-1
EXHIBIT B
DEVELOPER PRO FORMA
Sources & Uses - Preliminary
Name of Property:
Date:
Sources: Comments
Homebuyer Mortgage $
20__ AHIF $Project Costs
20__ Richfield Tax Increment $Land & Project Costs
20__ HOME $Land
20__ MH Impact $Project Costs
20__ Bond Proceeds $Land
20__ Met Council $Rehab
Total $
Uses:
Acquisition Costs $
Closing Costs $
Inspection/other $
Acquisition
costs $
Adm Fee $
Project Fee & HOME
Fee
Holding/Closing Costs/
LC/ Taxes $
Special Assessments
of $_______
Rehab Costs $
Total $
AGENDA SECTION:Consent Calendar
AGENDA ITEM #2.B.
STAFF REPORT NO. 2
HOUSING AND REDEVELOPMENT AUTHORITY
MEETING
1/21/2025
REPORT PREPARED BY: Julie Urban, Asst. Community Development Director
OTHER DEPARTMENT REVIEW:
EXECUTIVE DIRECTOR REVIEW: Melissa Poehlman, Executive Director
1/15/2024
ITEM FOR COUNCIL CONSIDERATION:
Consider a resolution approving an extension of a Contract for Private Redevelopment with Beacon
Interfaith Housing Collaborative for the development of 6613-25 Portland Avenue.
EXECUTIVE SUMMARY:
On June 20, 2023, the Housing and Redevelopment Authority (HRA) approved a Contract for
Private Redevelopment (Contract) with Beacon Interfaith Housing Collaborative (Beacon) to
develop 38 units of affordable, supportive rental housing, with the target population of neuro-diverse
youth on the HRA-owned property located at 6613-25 Portland Avenue (Project).
Beacon has applied twice for Low Income Housing Tax Credits (LIHTC) for the Project and been turned
down for funding both times. The Contract expires January 31, 2025, and Beacon has requested an
extension of the Contract to allow them to apply for LIHTC again this year.
Beacon has made significant progress on the Project since the Contract was passed, including receiving land
use entitlements and being awarded several grants from Hennepin County, the Metropolitan Council, the
Federal Home Loan Bank, and the Red Lake Nation for a total of $7.798 million. Beacon's partnership with
the Red Lake Nation will also enable them to serve Native young adults in the Project with Project-based rental
subsidies and culturally-specific support services.
RECOMMENDED ACTION:
By motion: Approve the attached resolution approving an extension of the Contract for Private
Redevelopment with Aster Commons Limited Partnership and Aster Commons GP LLC for the
development of up to 38 units of affordable, supportive housing at 6613-25 Portland Avenue.
BASIS OF RECOMMENDATION:
A.HISTORICAL CONTEXT
Beacon Interfaith Housing Collaborative is a non-profit housing developer that has developed
deeply affordable, supportive housing throughout the Twin Cities. At Aster Commons, Beacon is
proposing to prioritize service to neuro-diverse youth and young adults, and supportive
housing services would be provided on-site. The 38 efficiency units will be affordable
at 30% and 50% of the Area Median Income (AMI).
The property is made up of remnant parcels from the Portland Avenue roundabout project. The HRA
has been seeking a viable development proposal for the site since 2009.
On April 18, 2022, the HRA approved a Preliminary Redevelopment Agreement with Beacon. On
January 17, 2023, the HRA extended the Preliminary Redevelopment Agreement until January 31,
2024.
On June 20, 2023, the HRA approved a Contract for Private Redevelopment with Beacon. The
Contract provides a $500,000 grant from the Affordable Housing Trust Fund (AHTF) and sale of the
property for one dollar.
The City Council granted entitlements to the Project on November 28, 2023.
Beacon applied for LIHTC funding from Minnesota Housing in 2023 and again in 2024 but has not
been awarded funding.
B.EQUITABLE OR STRATEGIC CONSIDERATIONS OR IMPACTS
Supporting housing stability for people with disabilities and low incomes furthers the community's
commitment to equitable opportunities for all.
The Project furthers the City's Strategic Plan goal of maintaining Richfield as an affordable place to
live.
C.POLICIES (resolutions, ordinances, regulations, statutes, exc):
The 2040 Comprehensive Plan calls for a full range of housing choices that meets residents' needs at
every stage of their lives and ensures a healthy balance of housing types that meet the needs of a
diverse population with diverse needs.
The Metropolitan Council has identified the City's share of housing affordable at 30% of the AMI to be
66 units by 2030.
The proposed project meets several priorities of the AHTF, including:
Housing with units affordable at 30% of the AMI
Housing with accessible units
Housing with supportive services
Housing with resident rental subsidies
D.CRITICAL TIMING ISSUES:
The current Contract expires on January 31, 2025. Beacon is requesting a one-year extension for the
Contract, and they are asking for an 18-month extension for the start and completion of construction,
based on the amount of time it's currently taking to get tax credit projects to closing.
Beacon plans to apply for LIHTC funding in February and July (if needed) of this year.
E.FINANCIAL IMPACT:
There is no financial cost to the HRA to extend the Contract.
With an extension of the Contract, the HRA will continue to hold the property for the Project, so there
could be an opportunity cost in the event a viable project is proposed by another developer.
F.LEGAL CONSIDERATION:
The HRA Attorney prepared the Contract.
ALTERNATIVE RECOMMENDATION(S):
Do not extend the Contract.
PRINCIPAL PARTIES EXPECTED AT MEETING:
N/A
ATTACHMENTS:
Description Type
Resolution Resolution Letter
Request for Extension Backup Material
Contract for Private Development Backup Material
RC125-390-1001257.v1
HOUSING AND REDEVELOPMENT AUTHORITY
IN AND FOR THE CITY OF RICHFIELD, MINNESOTA
RESOLUTION NO. 1495
RESOLUTION APPROVING AN EXTENSION OF A CONTRACT FOR PRIVATE
REDEVELOPMENT WITH ASTER COMMONS LIMITED PARTNERSHIP AND ASTER
COMMONS GP LLC
WHEREAS, the Housing and Redevelopment Authority in and for the City of Richfield,
Minnesota (the “Authority”) was created pursuant to Minnesota Statutes, Sections 469.001 through
469.047, as amended, and was authorized to transact business and exercise its powers by a
resolution of the City Council of the City of Richfield, Minnesota (the “City”); and
WHEREAS, Aster Commons GP LLC, a Minnesota limited liability company (the
“Redeveloper”), has proposed to acquire certain property located in the City (the “Redevelopment
Property”) from the Authority and to transfer the Redevelopment Property to Aster Commons
Limited Partnership, a Minnesota limited partnership (the “Partnership”);
WHEREAS, the Partnership has proposed to construct on the Redevelopment Property a
multifamily housing project consisting of approximately 38 supportive housing units (the “Minimum
Improvements”); and
WHEREAS, to make the Minimum Improvements economically feasible for the Partnership
to construct, the Authority has proposed to provide a grant to the Redeveloper in the principal
amount of $500,000 (the “Grant”) with pooled tax increment from the Affordable Housing Trust
Fund; and
WHEREAS, on June 20, 2023, the Board of Commissioners of the Authority (the “Board”)
approved a Contract for Private Redevelopment (the “Contract”) between the Authority, the
Partnership, and the Redeveloper, which sets forth the terms of the development of the Minimum
improvements and the Grant; and
WHEREAS, in order to obtain all necessary financing to complete the Minimum
Improvements, the Redeveloper is requesting an extension of the Contract deadline set forth in
Section 3.2 (h) for one year to January 31, 2026; and
WHEREAS, the Redeveloper is requesting an extension of the Contract deadline to
commence construction on the Minimum Improvements set forth in Section 4.3 for 18 months to
January 1, 2027;
WHEREAS, the Redeveloper is requesting an extension of the Contract deadline to
substantially complete construction of the Minimum Improvements set forth in Section 4.3 for 18
months to March 30, 2028.
NOW, THEREFORE, BE IT RESOLVED, by the Board of Commissioners of the Housing
and Redevelopment Authority in and for the City of Richfield, Minnesota as follows:
1.The Contract is hereby amended.
2
RC125-390-1001257.v1
2.The Chair and the Executive Director are hereby authorized to execute and deliver
any and all documents deemed necessary to carry out the intentions of this resolution and the
Contract.
Adopted by the Housing and Redevelopment Authority in and for the City of Richfield,
Minnesota this 21st day of January, 2025.
Gordon Hanson, Acting Chair
ATTEST:
Sean Hayford Oleary, Secretary
January 13, 2025
Julie Urban
Assistant Community Development Director
City of Richfield
6700 Portland Avenue, S.
Richfield, MN 55423
Re: Aster Commons Redevelopment Agreement Extension Request
Julie,
Let me start by saying thank you for all the assistance and confidence the City of Richfield
has provided in support of the Aster Commons project. This project, when completed, will
provide much-needed homes to 38 individuals. We are grateful for this support.
As you are aware, Because of the make up of the population (individuals), Aster Commons
does not fit neatly in with the priorities of the Minnesota Housing Finance Agency (MHFA).
They prioritize large family units and senior housing. Despite this, we at Beacon and our
team believe that this is the right project for this location. It offers so many opportunities to
the new residents.
We have been successful in obtaining funding from our other partners, including the City of
Richfield a. Land donation $610,000 b. Trust Fund Grant $500,000; Hennepin County a.
$1,950,000 in capital funding, b. $285,000 annually in services funding and c. rental
assistance for up to 19 units; Metropolitan Council a. $1,000,000 TOD b. $850,000 LCDA;
Federal Home Loan Bank a. $3,000,000 AHP; and the Red Lake Nation a. $100,000. In all,
we have secured $7,798,921. In addition to these secured sources, we also have a pending
application for a new HUD funding source called CoC Builds. Our $7.5 million request, if
awarded, will leave us with a very small gap to fill and we are hopeful the MHFA will be
open to being a partner in this much needed project.
Due to the timing of MHFA’s and HUD’s funding cycle we are seeking a one-year extension
on the Redevelopment Agreement. We believe that this will allow us the appropriate
amount of time to secure the remaining funding and close on the project.
Please feel free to reach out to me at jbarnes@beaconinterfaith.org or 612-619-5868 if you
have any questions or wish to discuss further.
Sincerely,
Jim Barnes
Senior Housing Development Project Manager
Beacon Interfaith Housing Colaborative
AGENDA SECTION:OTHER BUSINESS
AGENDA ITEM #4.
STAFF REPORT NO. 3
HOUSING AND REDEVELOPMENT AUTHORITY
MEETING
1/21/2025
REPORT PREPARED BY: Julie Urban, Asst. Community Development Director
OTHER DEPARTMENT REVIEW:
EXECUTIVE DIRECTOR REVIEW:
ITEM FOR COUNCIL CONSIDERATION:
Consideration of a Memorandum of Understanding supporting a request for financial assistance and 4d
tax status from Hempel Real Estate for the acquisition and preservation of three affordable rental
communities.
EXECUTIVE SUMMARY:
Three Richfield apartment communities, New Orleans Court, Richland Court, and Winton House
(Properties), were recently listed for sale after having been under the same ownership and management for
decades. The Properties, containing a total of 236 units (current estimate of 477+ residents) are located
along 77th Street at Wentworth, and on 14th and Cedar Avenues (see attached map). The Properties, built in
the 1960s, are considered Naturally Occurring Affordable Housing, or NOAH properties. The buildings
contain a mix of one, two, and three bedroom units, and rent levels are considered affordable to households
earning between 50% and 60% of the Area Median Income (AMI). The Properties are currently home to 43
Housing Choice Voucher or Section 8 (HCV) households (73 residents) and five Kids@Home Program
families (23 residents).
Hempel Real Estate is seeking to purchase the Properties and maintain their affordability. Hempel is
a local real estate firm that has acquired and preserved several NOAH communities over the past
few years. Hempel would utilize equity from the Greater Minnesota Housing Fund's NOAH Impact
Fund, which contributes equity to NOAH acquisitions in exchange for preserving affordability for 15
years.
Hempel is requesting assistance from the City's Housing and Redevelopment Authority (HRA) to be able to
ensure affordability, limit rent increases, and undertake rehabilitation work ($2.578 million). Hempel is seeking
up to $1.77 million in financial assistance from the HRA in exchange for limiting rents and capping resident
income levels, which would enable the Properties to qualify for 4d tax status (0.25% compared to a non-
affordable apartment rate of 1.25%). The 4d tax classification offers the Properties a combined annual
savings estimated at $352,050 (using pay 2025 values and tax rates).
Following a due diligence period, Hempel will be prepared to request a specific amount of
assistance, and a formal agreement will be brought to the HRA for consideration, likely in February.
To prepare for that agreement and provide direction to staff and Hempel, staff is recommending that
a Memorandum of Understanding (MOU) be approved that lays out Hempel and the HRA's
commitment to exploring HRA financial assistance for the project under the following terms:
Melissa Poehlman, Executive Director
1/16/2025
up to $1,570,000 in the form of a 15-year, forgivable, deferred loan;
up to $200,000 in Apartment Remodeling Loans;
rent and income limits in all one and two bedroom units at 60% AMI, qualifying the units for 4d tax
classification status;
rent and income limits in all three bedroom units at 70% AMI,
acceptance of Section 8 and Kids@Home rental assistance, and
required meeting(s) of property management and staff to share tenant/landlord resources and
introduce Section 8, Kids@Home, and Public Safety staff.
The forgivable loan would be provided from the City's Affordable Housing Trust Fund (Trust Fund). A small
amount of funding remains in the Trust Fund; however, additional funds would need to be transferred from the
Spending Plan in order to meet the full $1.57 million commitment. The Apartment Remodeling Loans can be
funded through repayments that the current property owner will need to make upon sale of the Properties. The
cost burden for the 4d tax classification is shifted to other tax payers; however, that shift will be offset by new
tax capacity that will be added to the City's tax base in 2026 upon the de-certification of two Tax Increment
Financing districts (TIF).
Because the classification affects the City's tax capacity, the City Council will also be asked to consider the
request. Consideration of the formal agreement by the HRA will follow Council action.
Supporting the purchase of the Properties by a preservation-oriented buyer guarantees continued
affordability for the Properties and offers many benefits to the residents and the community,
including the following:
housing stability for the 477+ residents, including no displacement of current residents;
preservation of the affordability of larger apartment units, including 24 three bedroom and 132 two
bedroom apartments;
preservation of housing for 43 HCV and 5 Kids@Home households and continued partnership with a
preservation-oriented owner to provide more deeply affordable housing opportunities for rental
assistance clients, the majority of whom earn less than 30% of the AMI (80% of the current HCV
residents in the Properties earn less than 30% of the AMI);
an investment of up to $2.5 million in physical improvements to the aging buildings including safety and
security, building mechanicals, roofs and windows, energy-efficiency measures, amenity
improvements, paint, flooring, lighting, and kitchen upgrades, and
local ownership with in-house property management services offering opportunities to partner for the
benefit of residents.
Failure to support a preservation-oriented buyer could result in the Properties being purchased by a market-
rate buyer who could raise rents, displace residents, and/or displace rental assistance residents. Following
the work session on January 14, the developer was able to obtain additional information from the seller's
broker regarding other offers on the property. According to the broker, there were three other offers in the
"best and final" round for purchase of the three properties, all of which were from groups seeking to "flip"
(fully renovate and resell) the properties. The broker stated with certainty that one of these offers would be
accepted if Hempel was unable to move forward.
RECOMMENDED ACTION:
By Motion: Adopt a resolution approving the execution and delivery of a Memorandum of
Understanding with Hempel Holdings, LLC.
BASIS OF RECOMMENDATION:
A.HISTORICAL CONTEXT
In 2018, The Concierge (fka Crossroads at Penn) at 7700 Penn Avenue South was purchased,
rehabilitated, and rents increased. While much-needed physical improvements were made to the aging
complex, many people were displaced as a result of the ownership change and subsequent rent
increases.
On J anuary 14, 2024, the HRA and C ity C ouncil held a work session to discuss the request. A dditional
information was requested at the work session that is provided on the attached map of the P roperties
and in the E quity and S trategic and F inancial Impact sections of this staff report.
B .E QU ITAB L E OR S T R AT E GIC C ON S ID E R AT ION S OR IMPAC T S
P reserving the C ity's NOA H apartment communities furthers the S trategic P lan goal to maintain
Richfield as an affordable place to live. The C ity's rental housing is also occupied by a significant
number of B lack, Indigenous, and P eople of C olor (B IP O C ) residents and residents with lower
incomes. Investing in housing stability is an investment in the health and vitality of these communities.
W hile 43% of Richfield renters are considered "cost-burdened" and pay more than 30% of their income
for housing, the 5-year A merican C ommunity S urvey (2019-2023) found that 22% of Richfield
homeowners are as well. A pproval of a tax shift could help one group in need, while hurting another.
A pproximately 35% of owner-occupied households (3,500) are age 65 or older; however, it is unknown
how many of those that are 65 or older are also "cost-burdened."
C .P OL IC IE S (resolutions, ordinances, regulations, statutes, exc):
Minnesota S tatutes 273.128 provides a property tax break for affordable rental properties under the
L ow Income Rental C lassification P rogram (L IRC ), commonly referred to as the 4d program. The
C lass 4d property class rate is 0.25%, and the typical classification for rental housing is
1.25%. Affordable rental properties are eligible for the 4d tax classification when a property
restricts at least 20% of the units at rents affordable at 60% of the AMI and when financial
assistance is provided by federal, state or local government requiring these rent and income restrictions.
D .C R IT IC AL T IMIN G IS S U E S:
Hempel recently signed the purchase agreement, is in the due diligence period, and anticipates closing
on the properties within 60 to 90 days.
Hempel will be required to submit earnest money in F ebruary and is looking for an indication from the
HRA and C ity C ouncil that they are in support of providing financial assistance before that time.
A pplications for 2026 4d property tax status are due to Minnesota Housing by March 31st.
The C ity C ouncil will consider a resolution for the use of the 4d tax classification at their meeting on
January 28, 2025. HRA consideration of a formal agreement will be brought forward if the C ouncil
approves use of the 4d tax classification.
E .F IN AN C IAL IMPAC T:
The NO A H Impact F und is providing over $8.7 million in equity to the acquisition and preservation of the
P roperties; however, a financial gap remains. High interest rates, high operating costs, the large number
of units, modest rents, and limit to the amount of equity the NO A H Impact F und can provide create the
gap that Hempel is asking the HRA to fill with funds from the Trust F und, A partment Remodeling L oans,
and with 4d tax status.
$200,000 of the request can be provided with A partment Remodeling L oans, funded from repayments
of loans that were made to the current property owner. The remainder would be funded by the Trust F und
and 4d tax status. F ollowing the due diligence period, which includes physical inspections of the
P roperties, a final determination of the amount needed will be made. There is a small amount of funds
remaining in the Trust F und, and additional funds are available ($2.8 million) in the S pending P lan fund
that could be transferred to the Trust F und for the assistance.
The HRA has authority from the L egislature until the end of 2026 to transfer pooled tax increment from
three TIF districts to the Trust F und. The HRA 's financial consultant estimates that there will be
additional funds available to transfer and replenish the Trust F und.
E hlers, the C ity/HRA 's financial consultant, reviewed the proposal and determined that, if the HRA were
to provide the requested assistance, the returns on investment to Hempel would not exceed what is
typical in the market. The returns are well below an average 10% return on equity over 20 years.
The amount of per unit subsidy is similar to what the HRA has committed/is considering committing to
other proposed all-affordable developments, A ster C ommons and P enn S tation. In both those cases,
the projects are able to bring in state, federal, and private funding sources that are not available to this
NOA H preservation. Those developments will also qualify for the 4d tax classification.
The P roperties' current Net Operating Income (NOI) does not support the price being paid for the
P roperties, so the HRA assistance is helping to "overpay" for the P roperties, although the price is
similar to the assessed value, which is based primarily on comparable sales. D ue to confidentiality
agreements, the seller's broker cannot disclose offer amounts; however, she noted that all four final and
best offers were similar. In the case of a market-rate developer, the only way to make these numbers
work would be by converting the P roperties to a higher class, and using increased rents to fund the
"overpayment."
The Hennepin County Assessor felt confident that the methodology for establishing the current market
value of the properties was sound, especially given that there have been a number of comparable sales
in the past couple of years.
Forty-three HCV recipients reside in the Properties (out of 177 total HCV holders living in Richfield). If
the Properties were to sell to a non-preservation buyer and rents raised, the loss of this housing for rent-
assistance clients could impact the viability of the HCV program. Eighty percent of these HCV
households earn less than 30% of the AMI.
The 4d tax classification provides a benefit to the property owner but shifts the burden to other
taxpayers. If 4d is approved for the Properties, all taxing jurisdictions will have their tax capacity reduced
by $278,432. The City taxes paid by the owner of the median-valued home would increase by an
estimated $9.97 annually. To avoid the additional tax burden on other properties, the City would need to
lower its levy by a commensurate amount, which is unlikely given current budget constraints. There will
be some impact from reduced tax capacity on other taxing jurisdictions as well. In the case of Hennepin
County, the impact, however, is spread across a much larger tax base and is also impacted by 4d
classifications in other communities. The school tax capacity is also larger than the City's, plus the
amount levied on taxpayers is calculated differently, which makes the impact less direct. Schools also
receive per pupil spending, so a potential loss of the 66 Richfield Public Schools (RPS) students in the
event of a purchase that causes displacement could also have an impact on the school's budget. RPS
was notified of the request.
The increase in tax capacity anticipated in 2026 when two large TIF districts de-certify will offset the
reduced tax capacity from the 4d tax classification. That benefit will be partially lessened, however, by a
consequent reduction in Local Government Aid.
An additional $3.88 million in up-front funding to Hempel would be necessary to make up for the benefit
of the 4d tax classification.
F.LEGAL CONSIDERATION:
The NOAH Impact Fund requires 15 years of affordability, that a minimum of 40% of the units be
affordable at 60% of the AMI and the remainder at 80% of the AMI, and that the property accept
Housing Choice Vouchers. A Declaration of Restrictive Covenants will be filed against the Properties to
memorialize the terms.
If assistance is approved, staff would recommend that the HRA file its own declaration requiring that all
one and two bedroom units charge rents affordable at 60% AMI and three bedroom units affordable at
70% AMI and that units be restricted to households meeting those income requirements. The limits will
be required for 15 years.
Providing assistance and placing rent/income restrictions will make the Properties automatically eligible
for the 4d tax classification.
ALTERNATIVE RECOMMENDATION(S):
1. Approve the MOU with modifications.
2. Decide not to approve the MOU.
PRINCIPAL PARTIES EXPECTED AT MEETING:
Josh Krsnak, Hemple Companies
ATTACHMENTS:
Description Type
Resolution Resolution Letter
Memorandum of Understanding Contract/Agreement
Map of Properties Backup Material
RC125-402-1000914.v1
HOUSING AND REDEVELOPMENT AUTHORITY
IN AND FOR THE CITY OF RICHFIELD, MINNESOTA
RESOLUTION NO. 1496
RESOLUTION APPROVING THE EXECUTION AND DELIVERY OF MEMORANDUM OF
UNDERSTANDING WITH HEMPEL HOLDINGS, LLC, OR A SUBSIDIARY THEREOF
WHEREAS, the Housing and Redevelopment Authority in and for the City of Richfield,
Minnesota (the “Authority”) has recently learned that there are three naturally occurring
affordable housing properties (“NOAH”) properties up for sale in the City of Richfield (the “City”)
and a preservation buyer is interested in purchasing the properties; and
WHEREAS, the NOAH properties consist of the New Orleans Court Apartments and
Townhomes (located at 50 West 78th St), the Richland Court Apartments (located at 1300-1324
East 78th St), and the Winton House Apartments (located at 7500/7544 Cedar Ave); and
WHEREAS, the Authority proposes to work with Hempel Holdings, LLC, a Minnesota
limited liability company, or a subsidiary thereof (collectively, the “Redeveloper”), to preserve
and maintain the affordability of the three existing NOAH properties; and
WHEREAS, the Board of Commissioners of the Authority (the “Board”) has been
presented with a Memorandum of Understanding (the “MOU”) between the Authority and the
Redeveloper, which sets forth the understanding of responsibilities of and actions to be taken
by the Redeveloper and the Authority with respect to the purchase and redevelopment of the
NOAH properties by the Redeveloper; and
WHEREAS, the Board has reviewed the MOU and finds that the execution thereof by the
Authority and performance of the Authority’s obligations thereunder are in the best interest of the
City and its residents; and
NOW, THEREFORE, BE IT RESOLVED, by the Board of Commissioners of the Housing
and Redevelopment Authority in and for the City of Richfield, Minnesota as follows:
1.The MOU presented to the Board and on file with the staff of the Authority is hereby
in all respects approved, subject to modifications that do not alter the substance of the transaction
and that are approved by the Chair and Executive Director; provided that execution of such
document by such officials shall be conclusive evidence of approval.
2.The Chair and Executive Director are hereby authorized to execute the MOU on
behalf of the Authority and to carry out the Authority’s obligations thereunder.
3.This resolution shall be in full force and effect upon its adoption.
(The remainder of this page is intentionally left blank.)
2
RC125-402-1000914.v1
Adopted by the Housing and Redevelopment Authority in and for the City of Richfield,
Minnesota this ____ day of January, 2025.
Gordon Hanson, Acting Chair
ATTEST:
Sean Hayford Oleary, Secretary
RC125-402-1000569.v3
MEMORANDUM OF UNDERSTANDING
This Memorandum of Understanding (the “MOU”) is entered into as of January ___, 2025 (the
“Effective Date”), between the Housing and Redevelopment Authority in and for the City of Richfield,
Minnesota (the “Authority”) and Hempel Holdings, LLC, a Minnesota limited liability company, or a
subsidiary thereof (collectively, the “Redeveloper”).
RECITALS
WHEREAS, the Authority has recently learned that there are three naturally occurring affordable
housing properties (“NOAH”) properties up for sale in Richfield and a preservation buyer is interested in
purchasing the properties; and
WHEREAS, the NOAH properties are located at the following addresses:
New Orleans Court Apartments and Townhomes are located at 50 West 78th St, Richfield, and
consist of eleven separate structures containing 104 affordable rental apartment and townhome units.
Prospective tenants will earn 60% AMI or less (3 BR Townhomes at 70% AMI or less). The property
includes 56 one bedroom, 24 two bedroom and 24 three bedroom units with 60 surface parking spaces and
24 garages;
Richland Court Apartments are located at 1300-1324 East 78th St, Richfield, and consist of two
separate structures containing 90 affordable rental apartment units. Prospective tenants will earn 60% AMI
or less. The property includes 90 two bedroom units, with 50 surface parking spaces and 21 garages; and
Winton House Apartments are located at 7500/7544 Cedar Ave, Richfield, and consist of 2 separate
structures containing 42 affordable rental apartment units. Prospective tenants will earn 60% AMI or less.
The property contains 24 one bedroom and 18 two bedroom units with 50 surface parking spaces and 19
garages; and
WHEREAS, the Redeveloper proposes to preserve and maintain the affordability of the three
existing NOAH properties, which is a long-term commitment to the community of Richfield and by
preventing displacement, ensuring affordable housing for workers and families, and supporting the stability
of local schools and neighborhoods, the Redeveloper will create lasting social benefits for the entire
community; and
WHEREAS, the Redeveloper is partnering with NOAH Impact Fund, a social impact fund
organized by Greater Minnesota Housing Fund, a Minnesota non-profit corporation and Community
Development Financial Institution, for the purpose of providing equity capital and preserving NOAH
properties in the Twin Cities metro area; and
WHEREAS, the term of this MOU will be six months after the date of execution, with an option to
extend for six additional months with administrative approval from the Executive Director of the Authority;
and
WHEREAS, entering into this MOU, the Authority does not make any assurances to the
Redeveloper regarding the feasibility of the proposed project and does not make assurances to the
Redeveloper regarding the ultimate outcome of the proposed project; and
RC125-402-1000569.v3
WHEREAS, the parties have executed this MOU to document their understanding with respect to
the proposed redevelopment project;
NOW, THEREFORE, the parties agree as follows:
A.Responsibilities of Redeveloper. The Redeveloper will, at its expense, complete the following:
1.Submit sources and uses statement for the redevelopment properties;
2.Submit monthly and annual income and expense budget;
3.Develop and provide 10-year operating proforma, along with assumptions and estimated
return on investment, with and without public finance assistance;
4.Provide information regarding any grants and/or equity investments the Redeveloper will
pursue, including the NOAH Impact Fund;
5.Agree to accept Section 8 and Kids@Home rental assistance;
6.Limit income levels and rents at 60% of the AMI for all one and two bedroom units and
70% of the AMI for all three bedroom units; and
7.Agree to meetings between property management and City housing staff to discuss ways
to best serve residents.
B.Responsibilities of the Authority. The Authority will be responsible for the following:
1.Maintain open lines of communication with the Redeveloper throughout the term of this
MOU; and
2.Consider potential subsidies for the proposed project, including but not limited to funding
from the Affordable Housing Trust Fund in the amount of up to $1,570,000, 4(d) tax status, and
one or more apartment remodeling loans of up to $200,000.
3.The Authority agrees to explore the following potential subsidies:
(a)Up to $1,570,000 in assistance from the Affordable Housing Trust Fund in the form
of a 15-year, forgivable deferred loan.
(b)Up to $200,000 in Apartment Remodeling Loans for rehabilitation work to the
properties.
C.Transfer or Assignment. The Redeveloper shall not assign or transfer their rights under this MOU
in full or in part without the prior consent of the Authority, which the Authority may grant or withhold in
its sole and absolute discretion.
D.Termination of MOU.
RC125-402-1000569.v3
1.If the Redeveloper fails to fulfill any of its responsibilities under this MOU, the Authority
may, after giving 30 days’ written notice to the Developer to fulfill such responsibility, terminate
this MOU.
2.Notwithstanding any other provisions of this MOU to the contrary, the term of this MOU
shall expire 180 calendar days after the Effective Date; provided, however, that the Authority may
agree to extend the term of this MOU for an additional 180 days with the administrative approval
of the Executive Director of the Authority.
E.Notices. Notice or demand or other communication between the parties shall be sufficiently given
if sent by email, regular mail, postage prepaid, return receipt requested or delivered personally to the
following addresses:
As to the Authority: Housing and Redevelopment Authority
in and for the City of Richfield, Minnesota
6700 Portland Avenue South
Richfield, MN 55423
Attn: Melissa Poehlman, Executive Director
As to the Redeveloper: Hempel Holdings, LLC
10500 Crosstown Cir, Suite 600
Eden Prairie, MN 55344
Attn: Josh Krsnak, CEO
F.Not a Binding Agreement. Neither the Authority nor Redeveloper intend this MOU to be a binding
agreement. This MOU does not constitute a development agreement. The Authority’s obligations under
this MOU are limited to those responsibilities specifically set forth in Section B of this MOU. The
Authority shall have no other implied obligations.
(The remainder of this page is intentionally left blank.)
RC125-402-1000569.v3
IN WITNESS WHEREOF, the parties have caused this Memorandum of Understanding to be duly executed
in their names as of the date and year first above written.
THE HOUSING AND REDEVELOPMENT
AUTHORITY IN AND FOR THE CITY OF
RICHFIELD
By
Gordon Hanson
Its Acting Chair
By
Melissa Poehlman
Its Executive Director
HEMPEL HOLDINGS, LLC
By
Its
RC125-402-1000569.v3
EXHIBIT A
LEGAL DESCRIPTION
[insert legal description]