WEBVTT METADATA Video-Count: 1 Video-1: youtube.com/watch?v=rn52rGs4lrI NOTE MEETING SECTIONS: Part 1 (Video ID: rn52rGs4lrI): - 00:00:04: Meeting Introduction and 4D Tax Classification Discussion - 00:02:22: Geographic Distribution and Homeowner Resources Overview - 00:04:48: Richfield Affordability Comparisons to Other Communities - 00:07:29: Rental Housing, Tax-Exempt Land, and Tax Capacity - 00:10:49: Updated Financial Impacts and Other City Concerns - 00:13:17: 4D Tool Comparison and Housing Priority Ranking Results - 00:16:16: Homework Review: Subsidy Clarification and TIFF Discussion - 00:20:06: Housing Priorities Assessment and Mixed Income Preferences - 00:23:36: Length of Affordability and Goals for New Units - 00:25:35: Public Comment: Market Rate Obstacles Discussion - 00:27:06: Public Comment: Apartment Building Value and Goals - 00:29:49: Public Comment: Balanced Housing and Tax Burden - 00:31:59: Public Comment: Affordable Units and 4D Considerations - 00:33:59: Policy Thoughts and Affordability Level Discussions - 00:36:29: Public Comment: Keep 4D as Limited Tool - 00:38:37: Public Comment: 4D Percentage and Approach Concerns - 00:40:00: Public Comment: Policy Ideas and Concerns with 4D - 00:41:58: Internal Housing Collaboration and Community Buildings - 00:43:11: Next Steps: Policy Drafting and Meeting Adjournment Part: 1 1 00:00:04.640 --> 00:00:20.240 I'd like to uh call this uh joint city council and housing redevelopment authority meeting of April 20th, 2026 uh to order. Uh tonight we'll be discussing in a work session the continued discussion of 4D tax classification impacts and potential 2 00:00:20.240 --> 00:00:36.960 policy. And with that, I will uh turn the discussion over to assistant community development director uh >> thank you chair uh Hansen. Sorry, got to practice the new it's no longer chair Daniels. Chair Hansen, members of the HA 3 00:00:36.960 --> 00:01:00.800 and council member, do you want to start up the presentation please? You can see this one. Are you able to see? It would be it is possible since we are not all here to 4 00:01:00.800 --> 00:01:18.240 have folks move if it's easier. No, >> I guess I'm good. >> Okay. >> All right. So, you go to the next slide. There we go. So, just a reminder, back in February, we met and we covered some background, reminded everyone why we're talking about this topic. We provided 5 00:01:18.240 --> 00:01:34.000 some definitions of 4D and property taxes. We looked at the tax impacts of both preservation and new construction and we included some housing data to provide some context. We posed some questions for you. You asked for more information and we gave you some 6 00:01:34.000 --> 00:01:50.000 homework. We asked you to rank priorities for housing as it relates to the use of 4D as a tool. Next slide. So tonight we're going to go over your information requests. She had asked for some info on geographic distribution, um the resources that might be available 7 00:01:50.000 --> 00:02:06.240 for costburdened homeowners, comparison to other communities, the impact of tiff descertification. I'm also going to provide you some updated impact numbers using the 2026 tax capacity and classification and um we'll show the uh results of the 8 00:02:06.240 --> 00:02:22.959 priorities rankings and then um based on that what direction we see a potential council policy taking. and then we'll also talk about what what comes next. So, next slide. So, this is the the geographic distribution. The map shows 9 00:02:22.959 --> 00:02:40.560 where uh current 4D properties, the ones in pink, um are located as well as potentials and these are the Noah properties over 40 units that we talked about last time. I would say we don't really see a geographic distribution as a significant factor. um that the 10 00:02:40.560 --> 00:02:55.519 clustering down along 494 there is really just a function of where our multif family properties are located and I think we have felt over time that those properties located along 494 have historically um struggled more than perhaps other properties I think just 11 00:02:55.519 --> 00:03:11.280 due to the changing nature of that uh freeway. >> Could I ask a question? >> Sure. >> The No, I thought there were a lot more Noah properties in Richfield. >> So I think there are just these are only 40 units and more. Okay. >> So, we didn't look at we have a lot of 12 00:03:11.280 --> 00:03:27.200 11 unit buildings, 10 unit buildings, a lot of smaller properties when um council member um Hayford or Liry had called Richfield sized properties. I think are those smaller properties. I thought that was a really good way to think about some of our apartment. 13 00:03:27.200 --> 00:03:43.760 >> So, this may not be a comprehensive >> right. Um, I think if we were to consider a 4D program, which some communities have to really try to encourage preservation, we would want to look at those. I think that we um I I will argue that I I think we continue to 14 00:03:43.760 --> 00:04:01.040 not want to create a specific program, but instead to respond to if some of these larger complexes say we're going to be at risk of converting to non-affordable, then that's where 4D would come into play. So, this was kind of the the marker I used was 40 units 15 00:04:01.040 --> 00:04:18.000 because that's what preservation buyers have typically said would be the very minimum that they would consider. All right. So, in terms of homeowner resources, um because 4D shifts the tax burden onto others, including homeowners, um that was that question 16 00:04:18.000 --> 00:04:32.960 was asked, you know, are there resources available when that property tax gets higher? And we found that programs tend to be focused on prevention or in the case of down payment assistance, it's about setting people up for success to begin with so that you're in a a housing 17 00:04:32.960 --> 00:04:48.560 that you can afford. Um, but there is a t a property tax deferral program that's available through the state for seniors on uh with lower incomes. And then in general, the general population can um apply in through your taxes, right? You can get state tax refunds on your 18 00:04:48.560 --> 00:05:06.639 property taxes. Next page. So, you asked how Richfield compares to other communities in a variety of different ways. And so, the next three slides show both our current level of affordability and the affordability of a handful of other communities. The first slide is all 19 00:05:06.639 --> 00:05:24.160 housing, both ownership and rental. And I put the yellow line on there just to help you compare us visually to other communities. And that's at 80% of the area median income, which is sort of a a general marker of affordability. So, I won't go into in into depth uh on 20 00:05:24.160 --> 00:05:38.880 the comparison. I don't think there are many surprises here. We're more affordable than St. Louis Park in Bloomington. We're less affordable than Robinsdale and Brooklyn Center. Next slide. And this is uh those affordability affordability levels for 21 00:05:38.880 --> 00:05:55.039 ownership housing. And again, we use 80% as sort of a marker of affordability. And I would just note that these are home values as reported through the American Community Survey. So it's not necessarily what it would cost to own the home and to maintain it. So your taxes, insurance, utilities, or the cost 22 00:05:55.039 --> 00:06:10.800 to purchase something. Now, so just remember that this has some limits. We talked last time that maybe cost burden is a better measure, especially when we think about one of our goals being to keep Richfield as an affordable place to live. Next slide. The next slide is um 23 00:06:10.800 --> 00:06:26.560 renter affordability. And it's really small up on the screen, but you've had in your packet. Hopefully you can take a look at those numbers if you are interested in um thinking about this some more. In terms of rental housing, 60% of the area median income is the more standard affordability measure, 24 00:06:26.560 --> 00:06:41.520 especially in Richfield. And so that's where that yellow line is. There's some slight differences here, just that we are slightly more affordable in rental housing than say Robinsdale. Uh also keep in mind that these are 2023 numbers. The census um just recently um 25 00:06:41.520 --> 00:06:59.360 put out the 2024 um ACS data and we need to wait for the Metropolitan Council to do some manipulation of that data before it's available for us to use. Somebody else asked the question about uh subsidized housing and I would say that what that encompasses are those units 26 00:06:59.360 --> 00:07:13.840 that have an actual rental subsidy attached to the unit and Richfield has in fact a very small amount of this type of housing. and we have 191 units and all of which are restricted to either seniors or people with disabilities. So the last time we did a rental housing 27 00:07:13.840 --> 00:07:29.039 study which was back in 2012, we uh found that we had a much smaller number of subsidized units than our peer communities. For example, Edina has 462 units of subsidized housing in St. Louis Park 771. And again, that's subsidies that are 28 00:07:29.039 --> 00:07:45.199 attached to a unit. On the next slide uh is information about 4D as a percentage of all rental housing. And so you can see that um we are at 11% and that's including Hemple which technically won't 29 00:07:45.199 --> 00:08:02.319 be part of 4D until next year. But as you can see compared to other communities 11% is very similar to others where there's 12 and 13%. It's just Brooklyn Center that has a significantly higher percentage of its uh rental units in the 4D program. 30 00:08:02.800 --> 00:08:18.240 The next chart is about taxexempt land. It's another thing that came up just, you know, how that um how much land do we have that is taxexempt and therefore not um paying property taxes. And again, we really are not out of line with other 31 00:08:18.240 --> 00:08:34.719 communities, although there's a much more of a a variety here. But just a reminder, this includes parkland. And so, um you know, that can be a significant difference among communities. Some have golf courses and other things that are going to take up a lot of land. 32 00:08:34.719 --> 00:08:50.000 The next slide, next information is about tax capacity. That was another question about how do we compare to others in terms of our tax capacity. And I put this down as a per capita amount because I thought that um was a little easier to compare because of course our 33 00:08:50.000 --> 00:09:06.480 tax capacity is not going to be as large as Minneapolis's, right? But when you look at it on a per capita basis, we're not that far below um city of Minneapolis for example. So then the next slide uh also includes that tax capacity compares to a slightly 34 00:09:06.480 --> 00:09:22.160 different group of communities, but this shows um also the percentage of that tax capacity that's in a tax increment financing district. So you can see that we are at the uh it actually has let's see 2023 information back from the last 35 00:09:22.160 --> 00:09:38.320 time we had a tiff management plan prepared and as we talked about um last time or a couple times ago that we are having that updated and we did have this particular page updated just so you can have that information. So you can see in 2026 that we are now um we still have at 36 00:09:38.320 --> 00:09:53.440 the higher end in terms of number of districts but our um percentage of the tax base is just under 8%. And I do want to call out and remind you that tax increment is one of those few tools that we have to encourage investment in the community in the terms of new 37 00:09:53.440 --> 00:10:09.200 development and redevelopment. So so the the use of tax increment can also be seen as an indicator of investment in the community. And we would note that the last tiff management plan in 2023 we found that the market value of properties within our tiff districts 38 00:10:09.200 --> 00:10:29.200 have increased by nearly 300%. All right. In the next page, uh question was asked is do we have some districts that we'll be descertifying? Because one of the things that we looked at when we considered the Hemple um ask was the fact that we had two TIFF districts that came on back onto the um full tax roles 39 00:10:29.200 --> 00:10:47.800 um this year. And so are there others um upcoming? And again, this is from our TIFF management plan. So we had this page updated as well. And there are two districts that we expect to descertify in 2029 and 2030 which will add half a million dollars to our tax capacity. 40 00:10:49.120 --> 00:11:05.360 So I wanted to update the numbers um of the the sort of the financial impact of um using 2026 numbers and classification um rates um or tax rate pardon me because this wasn't available last 41 00:11:05.360 --> 00:11:21.839 month. So, you can see that um the cost of all of our current properties plus Hemple in the 4D program, there's a $445,000 tax shavings or cost or shift to other property owners. This is actually slightly less than the 2025 number, 42 00:11:21.839 --> 00:11:37.760 which was $477,000. Um you and I think that's a reminder, um that there are lots of things that go into valuation and tax values. it isn't, you know, not everything is held constant. So, you can't really measure 43 00:11:37.760 --> 00:11:54.640 for sure the exact um impact that way. But, so the cost to the median valued home of all those 4D properties is about $28 a year. The cost to an 11 unit apartment building is about $175 a year. And the cost of the Hemple um three 44 00:11:54.640 --> 00:12:12.240 properties is $745 a year. And that is about a dollar less than our estimates from last year. So those two dis tiff districts um being descertified did have that impact. Uh we were hoping maybe we'd see a little bit more of an impact 45 00:12:12.240 --> 00:12:28.480 but it turns out that apartment values went down about 1.5% from last year and the commercial properties went down about4% I believe it was or 66% sorry I have it right in front of me. So again there are just lots of factors that go into that. 46 00:12:28.480 --> 00:12:45.440 we can't really point to um just one thing. Um oh, and the other thing we talked about, of course, is that it's not just an impact of city taxes. That's the thing that we have most control over, but we did have them run on um the impact on 47 00:12:45.440 --> 00:13:01.040 county taxes, and it was about 9 cents. So again, it's that small small amount um of a shift, but again, in terms of the county, there's lots of stuff going on throughout the county um that's potentially having an impact. 48 00:13:01.040 --> 00:13:17.920 All right. Um the other one of the other things you asked us to look at was just, you know, what are other cities, other communities concerned about 40? What are they thinking? What are they doing? And I just did sort of a very small sampling of cities. They didn't go out and ask everyone, but in the case of Edina, St. 49 00:13:17.920 --> 00:13:33.120 Louis Park, Golden Valley, which if you go back to their tax capacities are higher than ours, um they have actual programs trying to encourage um owners to sign up for 40 and preserve affordability. Uh in the case of Minneapolis and St. 50 00:13:33.120 --> 00:13:48.320 Paul, they both have programs as well. St. Paul has shut down the program to any new applications. Um in the case of Minneapolis, they have reduced um their requirement to 50% of the area median income. So actually made it stricter. Um 51 00:13:48.320 --> 00:14:04.160 and they also did a study that was quite interesting in looking at the cost per unit um of subsidy for various um types of housing in their community. In terms of Brooklyn Park, they've had similar work sessions just like this, and they 52 00:14:04.160 --> 00:14:20.000 have decided they really would prefer to use other tools rather than 4D. Uh, Columbia Heights, I'd heard their mayor talk at some various um events that they're concerned about it, but when I reached out to their staff, they they really aren't studying it or looking at 53 00:14:20.000 --> 00:14:36.959 it right at this point. So I I don't think it hasn't necessarily sunk into a lot of communities yet that that this this reduction has an impact. So on the next slide, um we took a look last time a little bit at the difference um of 54 00:14:36.959 --> 00:14:55.680 using uh 4D for new development and also for Noah preservation. So TIFF and 4D are two tools that we can use to support both Noah preservation and new housing development. And this slide takes a look at it as um the cost difference between 55 00:14:55.680 --> 00:15:12.079 TIFF and 4D on a perunit basis. So on a perunit basis, the cost of TIFF is actually higher than 4D. However, when you look at the total subsidy over time, 4D could in theory be more expensive depending on the length of affordability. So, and for example, in 56 00:15:12.079 --> 00:15:27.120 the case of 4D being used for an allaf affordable tax credit development like Penn Station, 40 years is the length of time that they will likely be affordable. So then when you add that up versus a 26-year tax increment district, 57 00:15:27.120 --> 00:15:43.839 um it ends up being a larger per unit subsidy. uh you know something to consider though is of course while we might want to provide a lesser subsidy and therefore support a shorter period of time what happens to residents and the affordability of the property at the end of the affordability 58 00:15:43.839 --> 00:16:00.399 period do we end up with displacement because all of a sudden rents go way up and is that something that we are concerned about in the case of Noah preservation it's certainly a much lower per subsidy cost um per unit I'm sorry subsidy cost per unit but again we have older buildings 59 00:16:00.399 --> 00:16:16.320 things and they don't necessarily provide some of our housing priorities like accessible units and units with more bedrooms. And then also this is just a cost comparison. It doesn't address who bears the cost. So the next page is where we took your 60 00:16:16.320 --> 00:16:33.600 homework that you provided. Thank you for that. So these are the results of your homework where you ranked the different housing priorities. >> Uh Mr. Chair, could I could I ask a question on the subsidy slide? >> Yes, sure. Um, >> I'm just having trouble wrapping my head around the comparison. So, like at the 61 00:16:33.600 --> 00:16:49.839 end of the 26 year period of tiff, you have a 26 year old building that's paying full tax. >> But the Noah preservation thing, like we had a building that was worth a million dollars and it's it pays less for a period of time during the affordability and then it's still worth 62 00:16:49.839 --> 00:17:06.559 a million dollars, whatever it's gone up or down to over that time. So, like this isn't accounting for like the asset that's left over at the end, right? This is just sort of the subsidy for that defined period. >> Right. Right. Okay. Yep. Exactly. >> And then one other question. I assume that if a building were to combine 4D 63 00:17:06.559 --> 00:17:23.679 and TIFF, would that be possible if it were an exceptional increase in value like a gas station on a 5acre lot became a giant apartment building or would they pretty much never be combined? >> So, you could use both in theory. um when we took a look at um so I don't 64 00:17:23.679 --> 00:17:38.320 know if you remember back or if you were on one of these boards back when MWF was proposing a development for the old City Garage South site. um we looked at it and looked at it as a tax increment 65 00:17:38.320 --> 00:17:53.919 district and there was a certain amount of increment that was going to be generated and then they changed the tax rate the tax classification down and realized okay I don't know if this the amount of increment went down so much that it's I don't know if it would have 66 00:17:53.919 --> 00:18:09.840 been it would have made sense to do both so it will dep and same with Astro Commons there it's expensive to create a tax increment district for just a small amount of money, >> you just wouldn't do it. >> So now we have been hearing from like the Legion potentially they might be 67 00:18:09.840 --> 00:18:27.919 asking for they might qualify for 4D automatically, right, if they were to go the bond route. >> Um and then to also do a tax increment district. We'd have to see the numbers. I just don't know if it's going to be worth it. There has to be just a certain amount to make it worth. But just in 68 00:18:27.919 --> 00:18:44.320 case the skepticism comes up, we we would account for the much lower rate of tax when we're considering how much available increment there is. >> Sorry, was I maybe I wasn't answering the question he was asking. >> No, no, no. I think this was a different question. Sorry, this is a related question just to confirm. >> Sorry, >> you did answer my question correctly. 69 00:18:44.320 --> 00:19:00.240 >> Okay, so ask your second question again. Sorry. >> If if we were to somehow combine these, we would be accounting for much lower rate when we when we determine how much increment is available for the new property. Is that right? the base value would be >> like the the improved value is it like just based on the value of the land or 70 00:19:00.240 --> 00:19:16.160 is it based on the tax capacity as >> Oh, I see what you're saying. Would the 4D would be based on the total? That's a really good question. >> So, Sean, I think what you're getting at is um would we be accounting for that when we're putting together the development agreement? >> Yeah. 71 00:19:16.160 --> 00:19:33.840 >> Yes, we would look at that. And one of the things that we've talked about at a staff level is that um developers should not be able to and they they can't we don't believe according to HR attorneys um that they can't come back after the fact and ask for 4D because we have 72 00:19:33.840 --> 00:19:50.000 negotiated a deal uh based on previous assumptions. So they could certainly approach us. We could look at new numbers and make sure that the H still ends up in the same place or something like that. But in in theory, if we were to combine, we would combine to begin 73 00:19:50.000 --> 00:20:06.720 with so that everyone was uh fully um informed about what the impacts of that lower tax rate were going to be on the district as a whole. >> Okay. Thank you. >> Now, we'll go on to the next page. >> So, these are this is your homework 74 00:20:06.720 --> 00:20:24.160 results. Um the colors are the range of the ranking numbers. So what I took that as is sort of level of agreement. So in the case of the colors yellow or green is the highest level of agreement followed by yellow and um orange and then purple is the sort of the least 75 00:20:24.160 --> 00:20:42.000 amount of agreement on those topics. So the highest priority with moderate agreement is to maintain Richfield as an affordable place to live. Rehabilitate and preserve Noah housing were the next two priorities also with moderate agreement. diversify the tax base was a 76 00:20:42.000 --> 00:20:58.400 high priority, but there were a couple of outliers lo which lowered its priority ranking. And I call I use outliers in the statistical term, not trying to insult somebody um for having their opinion, right? Um 77 00:20:58.400 --> 00:21:15.200 deeper affordability ranked as one of the lowest priorities overall, but there were a couple of much higher rankings in there as well. all affordable housing ranked as the lowest priority with uh some level of agreement among everybody. And I just want to say too, I believe 78 00:21:15.200 --> 00:21:31.120 these are all priorities. Um we don't believe that people are saying that lower priorities aren't important, right? But it's a matter of making some choices, right? Because resources are limited. And I want to say if you hear things tonight or have heard things that make 79 00:21:31.120 --> 00:21:46.880 you want to reconsider your rankings, please feel free to resubmit. Um, we've used the results as a way to think about the 4D policy and the goals that we want to use potentially 4D to help us meet. So, I'm happy to um consider other 80 00:21:46.880 --> 00:22:01.840 rankings if you'd like. I just like it by Friday of this week. Next page. So, considering the priorities that you shared with us and our previous conversation, this is what we want to 81 00:22:01.840 --> 00:22:18.320 tell you that we've heard. Uh, we've heard that you feel that maintaining affordability for existing residents, Noah preservation and rehab, and diversifying the tax base are your highest priorities. We've heard that mixed income housing is preferred, that there is less support for prioritizing 82 00:22:18.320 --> 00:22:36.360 all affordable housing. We've heard that accessibility and units with a large number of bedrooms are high priorities for new construction over deeper affordability. And we've heard that deeply affordable, supportive, and all affordable housing are lower priorities. 83 00:22:36.880 --> 00:22:54.000 And kind of what we would say this means is that you sorry, next slide. You would like us to prioritize mixed income housing and commercial development, but given current market conditions, you need to be aware that 84 00:22:54.000 --> 00:23:10.799 that means development will likely remain slower. You should also be aware that the biggest priority of Henipin County, Minnesota housing, and the metropolitan council is for deeply affordable housing. So that means that grant applications to them for funding that don't provide deeply affordable 85 00:23:10.799 --> 00:23:27.760 housing may be less competitive for those grant dollars. And you should also remember be aware that there are some HR properties where all affordable may be the highest and best use even with a 4D tax classification rate. So while that ranked as a lesser priority, there may 86 00:23:27.760 --> 00:23:43.840 be situations where we want to consider all affordable developments in order to get those vacant properties back on the tax roles. And next page, we have some lingering questions that we would like to hear more from you about. The first is length 87 00:23:43.840 --> 00:23:59.840 of time. So as we talked about, all affordable properties or projects um with uh tax credits are likely to be affordable for 40 years. A tiff district the maximum is 26 years but sometimes they could be finished sooner. In the 88 00:23:59.840 --> 00:24:15.440 case of Hemple the time period is 15 years and while they won't receive 4D after 15 years there's no guarantee then that affordability will continue. So to remind you also the primary financing often dictates the length of that 89 00:24:15.440 --> 00:24:31.600 affordability period. So we we may not have a choice, but I I do want you to think about it and also think about it in the context of given the priority that you all have placed on maintaining Richfield as an affordable place to live, should we be working for as long an affordability period as possible or 90 00:24:31.600 --> 00:24:47.600 should we be looking to minimize that subsidy or that amount that we we are contributing? So that's kind of the first question. Um the second is that the priority rankings indicate that preserving what we have is the greatest priority. And in terms of new 91 00:24:47.600 --> 00:25:05.200 construction, we we want to hear, do you have a goal for a number of new affordable units that we should be working towards? And just a reminder I put up there that these are what the Metropolitan Council considers to be our fair share of new uh construction that 92 00:25:05.200 --> 00:25:20.720 we put forward. And the third question we'd like you to wrestle with a little bit is just what do you see as a desirable mixed uh amount of affordable housing in a mixed income building? If that's your priority, what what does that mean to you? I think we could stop 93 00:25:20.720 --> 00:25:35.200 at this point and have a little bit of discussion. I maybe putting you on the spot, although I put it in the staff report, so maybe you've been able to give a little bit of thought to that. Um, but so I welcome any feedback you have at this point or you can always share feedback that comes to you later 94 00:25:35.200 --> 00:25:57.679 with us. via email. >> Okay. Any uh any feedback or questions? >> Mr. Chair, I have a question. >> Commissioner, >> uh are you hearing from developers what the hold up or what the the obstacle is from market rate development? Is it 95 00:25:57.679 --> 00:26:14.799 still interest rates and construction costs? Is that still the primary reason or have things changed? that continues to be what I'm hearing from market rate developers. um liquidity at banks um also um has been 96 00:26:14.799 --> 00:26:30.320 brought up but generally yes it's construction costs interest rates uh and labor >> correct >> and uncertainty >> rents are flat uncertainty um during operation metro surge I did hear from developers who could not get lenders to 97 00:26:30.320 --> 00:26:48.480 look at projects in the Twin Cities areas >> um so hope you know hopefully those concerns um have lessened And but I I did hear that >> I was I was surprised earlier in the presentation you mentioned that the 98 00:26:48.480 --> 00:27:06.159 value market value of apartment buildings has gone down. Now we all know that office buildings has gone down but what what is causing the value of apartment buildings to decrease? >> We're not sure. Yeah. Is that just a Richfield thing? I um I don't know 99 00:27:06.159 --> 00:27:23.120 because we don't have because so many of our buildings are older. Um I don't know. Do you have any >> some of our newer buildings have been challenging their market values? Um in in petitioning for lower values. Um yeah, I I can't really say. I don't it 100 00:27:23.120 --> 00:27:39.600 is not a Richfield thing. This is happening throughout uh throughout the metro. >> Okay. Commissioner Hay for Deliri. >> U I know you know a theme we've had in like Richfield housing goals in the past 101 00:27:39.600 --> 00:27:57.200 is that 2011 or whenever it was that project was proposed on the north side of the city garage site um and that was rejected and there was housing study after that and mixed income housing was a big priority of a goal I think of 80% market rate and 20% within a single building. And then I recall in the years 102 00:27:57.200 --> 00:28:12.559 since that we heard from developers that just like they have affordable housing investors and they have market rate investors and for the most part they're not interested in collaborating in one building. So I guess my my question is does that still exist and then I have thoughts based on your answer like do do 103 00:28:12.559 --> 00:28:27.840 you still hear that people who would have trouble doing that at one building? Well, I we've successfully done several buildings since that time, right, with the 20% at 50% AMI because that is the requirement of a tax increment district. 104 00:28:27.840 --> 00:28:43.039 So, I do think that it certainly is possible. >> Can it get higher than that? I mean, the numbers, yeah, may or may not work out. >> Okay. >> Yeah, I don't I don't have anything to 105 00:28:43.039 --> 00:29:00.399 add. I mean, typ typically when we're asking for uh in our redevelopment districts, when we're getting some level of affordability, you're see you're seeing the subsidy go up, right? So, that amount of increment is really playing into whether or not those units 106 00:29:00.399 --> 00:29:16.799 can be provided. So, um, on districts where it looks like it's going to take us the full 26 years or for to to pay back um the investment, no, there isn't a capacity to to provide more affordability in that 107 00:29:16.799 --> 00:29:34.080 building. The numbers aren't supporting it. >> Okay. Um, I guess it just and I'm sort of speculating. It it seems like the goal of having mixed income housing might be incomplete with the goal of having richfieldsized buildings. Like it seems more challenging to do that in a 40 unit 108 00:29:34.080 --> 00:29:49.679 building to have 10 of the units affordable and 30. So I guess I would just reiterate I think a mix of a mix of housing options in an area and in the city is important to me, but having it specifically all within one structure is not that important to me. So I think 109 00:29:49.679 --> 00:30:06.480 like Pen Avenue is a good example where we had two market rate projects and now we have a more heavily subsidized affordable project. In a perfect world, maybe everything would be mixed income, but when we also have this goal of supporting smaller buildings and more incrementalism, I think it's it's perfectly fine to have some separate buildings as long as we're creating a 110 00:30:06.480 --> 00:30:32.679 balanced portfolio. >> Well, I I know one of the issues of the classifications. It shifts some of the tax burden to other property owners. Um would you say does TIF do that or is that that not really characteristic of TIF? 111 00:30:35.279 --> 00:30:54.240 >> I mean those buildings are paying they are still paying their full property taxes upfront and then they're being issued in refund depending on what the city is levying. Yes, that money is still getting paid somewhere. I think the difference is that um at the end of 112 00:30:54.240 --> 00:31:10.399 those tiff districts, the the value of those new projects has increased, you know, um I think the number that Julie cited was 300%. And so over time, the idea is that yes, there's a little 113 00:31:10.399 --> 00:31:26.159 upfront, but it's coming to you at the end of the district. In a in a 4D project, that isn't necessarily going to be the case. >> And I guess that's kind of what I was thinking is that with a tiff project is they are paying at the original 114 00:31:26.159 --> 00:31:42.640 rate or level. And so that uh with that I I guess I guess trying to clarify my own thinking, but I was thinking that a tip district does not shift the uh the burden. >> It it does for a time. Um I I think the 115 00:31:42.640 --> 00:31:59.440 thinking on it though is that the overall market rate of the of the project is going to increase enough um to pay the community back in some way. Um that obviously doesn't always happen. Um you know there are market forces that 116 00:31:59.440 --> 00:32:19.360 none of us can control. Uh none of us could have predicted the pandemic that hurt those uh office and commercial property values like they did. >> Commissioner Young, >> um I I'm a supporter of development and I'm a supporter of of creating 117 00:32:19.360 --> 00:32:37.279 affordable units. Um I really wrestle with this 4D question and I wrestled with it with the Hemple development because it does shift the tax burden to others. Yes, it's $28 or whatever it is. That's not a lot, but but some people are going to feel that. So, I like your 118 00:32:37.279 --> 00:32:52.880 policy thoughts. The last page of your presentation, I think I agree with everyone there that is approving 4D as a tool of last resort, uh, encouraging other tools first, not having a policy encouraging it, but but using it on a 119 00:32:52.880 --> 00:33:09.120 case- by case basis where it's required. I don't see the benefit to Richfield taxpayers from a large building that has 4D tax status and then we also put money in from the housing affordability trust fund. So additional I don't see the 120 00:33:09.120 --> 00:33:24.960 payback to Richfield taxpayers except that we're creating affordable units for the sake of creating affordable units and I think that's a worthy goal but we ought to also be able to find a way to have some other benefit to it also. And 121 00:33:24.960 --> 00:33:42.159 so like the Richfield size units that Commissioner Hayford was talking about that you've talked about, I think that's great. Or an HA or city-owned property where we're trying to encourage a building to be built is great. Um but 122 00:33:42.159 --> 00:33:59.440 only in limited cases would I feel comfortable supporting it. >> Could you go to the next slide, Michelle? >> I jumped ahead. >> No, thank you. There we go. we can segue to that and then and continue to reflect on the previous questions and ask your questions. But I can just say these are 123 00:33:59.440 --> 00:34:17.280 kind of where we are throwing these thoughts out, our initial thoughts. Um um so the um again the number of tools available to us are limited. So I think we do feel like there may be some cases where 4D is is appropriate. It's not our 124 00:34:17.280 --> 00:34:32.960 favorite, right? But um maybe it's something we we need to use. Um, so the idea of but approving it as a tool of last resort and perhaps prioritizing it for that Noah preservation when it means especially meeting our priorities. I 125 00:34:32.960 --> 00:34:50.000 think with Hemple we found it had lots of section 8 clients that lived there. It had um three-bedroom units and had met some of our priorities, right? And and also including rehab. Those those buildings need investment. And so if we can encourage investment and multiply 126 00:34:50.000 --> 00:35:05.440 our um you know we're investing with with matching investment. Continue to consider 4D on a case- by case basis. In other words, no program to encourage its use. Uh any project must further high housing priorities and your priorities 127 00:35:05.440 --> 00:35:21.280 came back with um large numbers of of bedrooms, accessibility, and section 8 friendly buildings or owners. In the case of new construction, maybe it's possible to use it in the case where we get richfieldsiz buildings or where um 128 00:35:21.280 --> 00:35:37.280 tiff isn't an option. And in those cases where all affordable is really the best choice for the site and then that really new development should look to other tools first, TIFF and the trust fund. Um a quick reminder about 4D is that 129 00:35:37.280 --> 00:35:53.440 projects can automatically qualify for 4D. for example, if they were to receive LITC, which would be really unusual without some contribution from you. But if it were to happen or bonding or other way, really our only control is to not provide any assistance to those projects 130 00:35:53.440 --> 00:36:09.520 through the HR. If a project were to make it through land use approvals, for example, and move forward without that local assistance, 4D could be automatic. So there might be no control. So I just always want to keep that in mind. Um, so yeah, if other people have questions on 131 00:36:09.520 --> 00:36:25.280 the policy thoughts, >> if I could just say one more thing. >> Yes, please. >> I think a mixed income building for the for the foreseeable future is how much up each affordability level as opposed to how much is market rate because I don't think interest rates or construction costs are coming down 132 00:36:25.280 --> 00:36:41.760 relative to rents. So, we're probably not going to get market rate development. It's probably going to be how much is 80%, how much is 60%. So, I think that's the the situation we're going to be in is evaluating these projects that are all affordable, but there are different levels of 133 00:36:41.760 --> 00:36:57.520 affordability. >> And just just to clarify there, I want to make sure I understand what you're saying. Um I think when we are saying an all affordable building, we're saying an income a building that is uh income restricted at all levels. So whether 134 00:36:57.520 --> 00:37:12.800 that be 80%, 60%. I think when we are using the term market rate, we're saying that there are some buildings, some units within a building that don't uh require uh an income qualification. >> And so I I want to make sure that we're 135 00:37:12.800 --> 00:37:29.280 all speaking the same language. Are you saying that um you would be supportive? You're are you looking for some unrestricted units in a building, whatever level that might be? >> Some unrestricted units in a building. For sure. >> Okay. >> Absolutely. 136 00:37:29.280 --> 00:37:46.960 >> Okay. Thank you, Mr. Chair. >> Mr. Chair, >> well, I I guess I would say that, you know, I certainly think we need to keep 4D as a tool in the tool box because, as it's been said, there are limited number of tools we have. Um, but I I do kind of like the idea of, you 137 00:37:46.960 --> 00:38:02.880 know, using it on a limited basis, you know, for special cases. You know, looking at the Hemple project, I supported that because I thought it was a very unique opportunity to preserve, you know, three Noah properties. Um, you know, and when you look at, you know, the cost to the average median 138 00:38:02.880 --> 00:38:19.680 valued home of $745, that's a pretty modest amount. But I do have to admit at the time I was a little concerned about setting a precedent. And what I don't want to do is open the floodgates, so to speak. Um, because I think if we get into too much shifting of uh taxation to 139 00:38:19.680 --> 00:38:37.040 other properties, you know, that's a problem. and and property taxes, you know, for some people who are we don't have even identified in our own minds, you know, is a is a burden. I know so that's certainly always a consideration. 140 00:38:37.040 --> 00:38:53.920 Um, council member, >> yeah, first my apologies for being so late, but I persisted and insisted on being here because this is such an important topic. So, my apologies and I appreciate your patience. Um, second, I want to thank you both u for this information that I've requested. Um, I found it very useful. Um, especially the 141 00:38:53.920 --> 00:39:10.400 one where 4D as percentage of all rental, that Richfield in the cities that you selected was the lowest. Uh, and I'm gratified to hear that, um, the members here are encouraging continued use of 4D. And I agree, it should be carefully used, but it still should be 142 00:39:10.400 --> 00:39:27.280 something that's left in the toolbox. We still have some capacity based on that stat. Um, to be quite honest, the rest of the stats as far as I mean, I was really amazed at how widely different the different cities are as far as different ranges of percentages for affordability. And so, to be quite 143 00:39:27.280 --> 00:39:42.320 honest, I wasn't it wasn't clear to me what kind of result to make from that. But the one that did stick out was that of the cities you selected, we're still fairly low as far as percentage of uh 4D properties. So on the one, I hope that 144 00:39:42.320 --> 00:40:00.480 encourages us to continue to use it. Uh it's good to hear that we're going to be selective about using it. Um I just want to give you that feedback that I do appreciate the work you did and I did find it useful. Thanks. >> Um I so I agree with pretty much all of the policy ideas. Um I think it's a good 145 00:40:00.480 --> 00:40:16.800 approach. I think my only concern is just thinking about like the way he had worked with Hemple and like planning that out for other Noah properties because it's not like we're going to have a pool of like 20 properties and we'll get to pick like the 12 that are the best. They're going to come one at a time and each time likely there will be 146 00:40:16.800 --> 00:40:32.560 organized support to approve it. So, how do we have a policy that is like clear-cut enough that it's realistic to say no even if there is organized support in favor of approving it? And I mean one idea might be that it rather than saying prioritize 147 00:40:32.560 --> 00:40:48.400 uh rehab or physical renovation that like that would be a prerequisite for any 40 applied to an existing property. But if you have other ideas to like really have teeth that we can rely on to be objective as these come in one at a time and not having the luxury of just getting to pick on the whole city level 148 00:40:48.400 --> 00:41:08.319 all at once. >> Yeah. I um have thoughts of testing with you know we we I sort of have the list right and I think we can look at the list and say you know that we we see that as an important property because it's it meets a lot of goals 149 00:41:08.319 --> 00:41:25.920 it's a well-run property you know and maybe run some scenarios and we could do that um and maybe it's just for us internally to know kind of um yeah it's really hard to know who who we might hear from in the future. I have 150 00:41:25.920 --> 00:41:41.440 heard from folks. Um, of the people I've heard from, I would say one maybe would have considered, but um, they're kind of well into their renovations and clearly showing that they were able to somehow find finance 151 00:41:41.440 --> 00:41:58.960 it without us. Um, so yeah, I mean, I have kind of the same thoughts, too. It's like which property would come next where it would feel imperative like it felt like um the Hample properties were to us. 152 00:41:58.960 --> 00:42:16.800 I was just going to add that internally within our department we work with um we've got the folks that are providing housing assistance. We've got the folks that are working on improving housing and then we've got the folks that are doing the inspections. We have a wealth 153 00:42:16.800 --> 00:42:34.480 of information to help us identify and I I think that we already know some particular buildings that are really important to our community for a variety of reasons. So um you know 154 00:42:34.480 --> 00:42:49.839 Julie's thoughts on testing them I think there are some good test cases to run it. Why is this so important to us? And then documenting that so that we can give you some clear direction. These are the things that you should be we think you should be looking for. These are the 155 00:42:49.839 --> 00:43:11.599 reasons this community is of particular um importance. They're all obviously important to our housing ecosystem, but this is where we think you should use your limited uh funding. All right. Any uh any final comments or 156 00:43:11.599 --> 00:43:30.000 questions? >> Go to the last slide. Michelle, I would just say our next steps will be to draft a policy. Uh and we welcome continued feedback from you if you as you are pondering to think about um and we'll especially the folks who couldn't be here make sure that they know that our 157 00:43:30.000 --> 00:43:45.520 email boxes are open for um more feedback. I think based on some of the priorities um I think we may also want to update our inclusionary housing policy. It's been a long time since we've done that. We may want to upd up update our trust fund priorities and 158 00:43:45.520 --> 00:44:04.560 then these would items be brought back to uh in some cases there'll be council priority or policies that they would adopt but in all cases keep you all informed um about what new directions we might have. >> All right. And with that, I will call 159 00:44:04.560 --> 00:44:12.760 this meeting ajourned. >> Thank you for your work on this. >> Great.