Council - Regular Meeting

like to call this uh special work session of the housing redevelopment authority and the city council to order.

Yes, I pass it to the community development director, Julie Urban,

assistant Thank you, uh, Vice Chair, uh, Hansen and members of the HA and members of the council. Uh, so we're here tonight, uh, to talk about, uh, the 4D tax classification. And if you'll remember, back in January of 2025, the council and the HA considered a request from Hemple Companies to approve a 4D1 tax classification for three apartment complexes in order to preserve affordability and rehabilitate the buildings. The low-income rental classification or 4D provides a reduction in tax class rate from 1.25% to 0.25%. While the classification offers a cost savings to owners of affordable housing, the savings requires the city to either collect fewer taxes or shift the tax burden to other property taxpayers in the community. The city council asked that staff conduct further study into the costs and benefits of the 4D1 tax classification and bring a potential policy back to policymakers for consideration. Given the significant and complex issues raised by this topic, staff is going to present information at this work session, answer any immediate questions, and then ask policymakers to consider several questions and bring feedback to a second work session on April 20th. So I at that I'm going to go um through a presentation a little more formally and you can go ahead and go to the next page and I'm going to give you some background that you heard a year ago but it was a year ago so I'm going to assume maybe you don't remember absolutely everything about that and and for two of you it was your very first meeting. So if you remember anything from it I'm really impressed. So, so I'm going to um repeat myself for some of the things that I've said before. Um so, again, this is a a policy

topic that actually Mayor Suppel suggested in the formal policy process. And so, um here we are to have a deeper look at the 4D tax classification. So 4D again is a special tax classification rate of 0.25% for affordable housing whereas the standard apartment classification is 1.25 25%. To be eligible for 4D, the owner must agree to rent and income restrictions serving households earning 60% of the AMI area median income or below. And the property must receive financial assistance from federal, state, or local government that require those income and rent restrictions. At least 20% of the units in a building must meet the 60% AMI requirements and the 4D tax rate only applies to affordable units. The owner must annually certify and use the tax savings for one or more eligible uses. They include property maintenance, property security, improvements to the property, rent stabilization, or increases to reserves. Projects within a city that receive, for example, federal low-income housing tax credits through the federal government automatically qualify for the 4D tax status. Only cities with more than 2% of tax capacity in 4D can say no to the classification. Cities with less than 2% only have discretion in cases where an owner is requesting local assistance and isn't receiving state or federal funding. So 4D is a tool that can be used to encourage the development of affordable housing and preserve and improve naturally occurring affordable or Noah housing. But while it provides again tax savings to the property owner, the savings become a cost to a city's tax capacity and a city must either accept fewer taxes or shift the cost burden to

other property um taxpayers in the jurisdiction. The classification rate applies to taxes paid to all taxing jurisdictions, but our focus is going to be on the impact to city taxes. So, next slide, please. Um, so just a a quick primer on the very nonsimple Minnesota property tax system in case you aren't all um up and aware and knowledgeable about it. Um, so a property has a taxable market value and that market value is multiplied by the tax classification rate. So examples of tax classification include apartments, commercial, industrial, homestead properties, non-homesteaded, single family properties, things like that. So each of those have their own tax classification rate. You multiply the value times the tax classification rate and that gives you the tax capacity. And then you take the tax capacity and you multiply that by the city or the county or the school district's tax rate and that's what you come up with the amount of taxes to be paid. This is a very simplified version as I think you all know that there are multiple taxing jurisdictions. There's fiscal disparities. There are value exclusions. There are different class rates at different valuations. There are special reductions for uh people like veterans who own homes, for land trust properties. All of that is part of the big pot that gets mixed together to come up with what your tax rate is. But this is the simple version. So if you go to the next slide, I'll just show an a very very generously rounded numbers to show how the different um tax class in the case of the 4D um what an impact that has. So, say we have an 11 unit apartment building and we're going to give it a round value of a million

dollars. If we apply that 1.25% tax classific tax classification rate, that gives us a tax capacity of $12,500. We then take that tax capacity, apply it to, in this case, the city's um tax rate, which in 2025, pay 2025 is 54.734%. that gets a tax bill of $7,000. If this same building were taxed at the 4D tax classification rate, you would apply 0.25% to that million dollar value to get a $2,500 tax capacity. Multiply that by the city's tax rate and you'd get a tax bill of $1,400. Yes.

Um, we can try questions along the way. Sure. In this example, I'm assuming that. Yeah, I'm making some general assumptions. Yep. Yep. Right. You could you could technically qualify. So like in the case of Well, when we get to hemp, I'll explain some of that more, but yeah. Yep. So, in case of this, again, just giving you an example to show you, um, it's a significant cost savings, $5,600 in city taxes.

So, to to clarify, because this is something I wasn't clear on until recently, the 4D rate only applies to the number of units that are low income. So, if they've 20%, the other 80% pays. Exactly. Yep.

All right, we can go to the next slide. Michelle gets back to her seat. All right. So, I'm just going to remind you a little bit about the Hemple deal, we'll call it. Um, so Hemple, uh, so so a little bit of background of how we got to Hemple and to 4D, uh, where we're at. But several years ago, after the crossroads at Penn at 76 and Penn uh converted to the concier, housing advocates presented several tools and strategies to cities throughout the metro area, urging them to adopt them in order to help preserve Noah housing. 4D was one of these tools. At the time, several cities created 4D programs that were designed to specifically encourage its use and encourage preservation. The Richfield City Council at the time did not see 4D as a tool that would offer much benefit to Richfield and determined that we shouldn't create a specific program. They suggested that any requests be addressed on a case-byase basis. So then when Hample came along at the end of 2024, um we had to consider it on its individual merits. So they um there were three Noah apartment buildings that went up for sale. New Orleans Court, Richland Court, and Winton House is about 236 units total. And Hemple Companies approached the city's HRA and asked if the city would help to fill the financing gap with funds from our affordable housing trust fund and a 4D tax rate. So, the HA ended up agreeing to a $1.77 million um financial assistance and the 4D tax classification rate. Uh, and that 4D tax benefit was a worth of about $5.5 million to them over the course of their financing. So, it was a big it was a big um benefit to them and a big reason that the

preservation could go forward. So, the HA um approval of this financing Sorry, John. Yes, sure. Yeah, those aren't great, but Okay. So, question about that. The 1.7 million went into the project and they're given the 4D tax status, which is I read in the presentation, they have to reapply for every year.

They do. Yep. And they'll have to certify that they're in compliance with the requirements. And in their case, there is uh 24 units that are going to be affordable at 70% of AMI, so won't qualify. Now, I haven't seen their first certification yet to see if that's a given or if it may vary over time. Yeah. So, what happens to the 1.7 million if if we've given that to them with under the assumption that it's all going to be affordable at 60% AMI. What what happens to that money? It's just still in the project and there's no repayment or no penalty. No, we gave it to them as a deferred loan. There they would have to pay it back if they were not in compliance. Okay. Thanks.

Yeah. I mean, there are other strings on them from their other funders. So, um, we're not the only ones that there would be problems, right, if they weren't in compliance. So, the reason that the 4D tax class would came into effect was because as a condition of that assistance, we required affordability and affordable rents. We could have just given them the money and not placed those restrictions on. I take that back. We could not have because our affordable housing trust fund requires us to put restrictions on. Um, we did give them some apartment remodeling money and that wouldn't have had those restrictions. So, so there may have been a tiny bit of flexibility, but not really. So, several factors led to your decision ultimately to say yes to this. Um, they have 24 three-bedroom units, which is a very rare um thing in Richfield in terms of our rental housing stock. They had 48 rental assistance households in the buildings. Um there was a risk of displacement. There were two other biders on the properties and they were outofstate folks who would have um purchased them, put a bunch of money in and then raised the rents. And then they're also putting over $7 million in rehab investment into the buildings over the course of the next 10 years. So, and the other reason that was a big factor for several of you was that we are going to see an increase in our tax capacity from two tiff districts that are going um offline in this um payable year, a tax year. So, you can go to the next page. So, I wanted to look a little bit about just there are 4D properties in Richfield before these three came along. And just so you're aware of of what those properties are, we have so eight total now. And in the case of four of them, they were not at our discretion.

Richfield Tower, Sheridan Court, Robert Will, and uh Linda Plaza all um automatically qualified because of I think they're all federally funded in some way that requires them to provide affordable housing. I will point out the season's park was at our sorry, go ahead. So, Richville Towers is a HUD uh 202 building. I forget what the exactist which says that in order to because of the funding they received to construct and to operate, they they're subsidized units. The federal government says you have to only rent to people with certain incomes, affordable units. And so, as a result, they automatically qualify for 4D under the state statute. Sheridan Court is a similar HUD financed property. Robert will has some 4% tax credits as does Lindo Plaza and those are federal. So in the case of Seasons Park, the council at the time was also fearing displacement of all 420 folks and agreed to it. I will point out at that time the rate was 75%. So it didn't seem like such a big deal. And we actually the way we structured the deal is most of their financing came from other places. We just gave them the HA gave them $150,000 in a deferred loan to so a more minimal amount. It was the restrictions that was most important to them so that they would qualify for 4D. Mayor,

so you said, you know, when we first approved this it was at 075. If the legislature would decide to raise the rate, would those all bounce back up? So, it's just at whatever rate the legislature,

right? Exactly. Which is, you know, another limit of this tool, right? We're um we we don't get to decide what that rate is. It's somebody it's out of our control. Um so, and then just a reminder again that um or sorry, I was jumping ahead to the next one. The the other thing to point out is too in terms of we have a new building under construction, Penn Stations at 65th and Penn Station 65th and Penn and that will qualify for 4D tax status as well that receive federal fat federal tax credits and so again that's not at our discretion. What wasn't in our discretion was we could have chosen not to sell them the H's property. So so we did have some something to say about that. Um and then the Astra Commons project which um unfortunately is really struggling to get financing so may or may not proceed but if it were to proceed that would also automatically qualify for 4D. So the next slide please. So just in terms of numbers, these are the impacts of those eight properties. And I'm making another assumption. These are payable 2025 numbers because the rates while the values are out for 2026, the rates aren't haven't been published. I would hope by April I could give you 2026 numbers. I'm also assuming that Hemple is is within these calculations. They technically aren't because they didn't close until after the deadline of March 31st. they won't receive the 4D benefit until payable 2027. But I'm making some assumptions just so you can see this is what the situation is currently. So the total tax savings or cost is $477,000 and that's.5% of our total tax capacity. And when you talk about what does that shift to other taxpayers in the community, the cost to a median valued

home, which we used $319,000, that cost annually is $28. And the cost to an 11UN apartment building is about $176. I feel it's important to think about those others other than just the single family home. We have a lot of little 11 unit apartment buildings and they are often um small owners and they charge pretty affordable rents but they're not going to be coming to us for 4D unless we were to create some sort of program specific to them but but so they're bearing this cost as well and their their tenants are bearing the cost. So we can go to the next page. So again, 4D is a tool that we can use and frankly there's a lot of things we want to accomplish when it comes to housing, right? These are all our various policies and priorities that we um govern our work, right? And is a lot of we'll we'll hear the HS's um year in review at the next meeting. And you know, we we accomplish a lot and and we do a lot and we need tools to do that. So, we have the strategic plan, we have inclusionary housing policy, we have trust fund priorities, and then there's some unofficial priorities that I've heard from a variety of you over time, like are there properties are there high numbers of school kids? It's important to to not displace school kids. Um, are there properties where really all affordable is the highest and best use? Um, I've heard um one of you mention that it's nice to see Richfield-sized buildings and so what can we do to get a smaller property and then sometimes there may be challenging apartment properties where we want to maybe use extra tools to help maybe turn those buildings around or invest in those. So again, it's a lot we want to accomplish. We need tools and it's important to note too that there are competing priorities and some of it needs to balance like the strategic plan for example maintaining housing affordability and at the same time diversifying or really increasing our tax base that can that can be a

challenge right and we have to decide what's the right balance you can go to the next page so preservation is one of the primary goals and things that can be accomplished using 4D and And I do want to point out when the legislature reduced the rate to 0.25% the calls started to come in. So we've heard inquiries from about five owners to date and representing about 875 units. They may not all be affordable that would qualify, but just so you know that's the potential. So I wanted to think about what what is the potential if if we were to grant 4D to everybody who came in the door. Um you know what it would what would it look like? So, I didn't look at like what would happen if we gave it to every single apartment complex, but I did look at the ones that are um 40 units or more. Those are typically what's identified as if they were to to turn over um a preservation buyer isn't going to be interested in any building that's less than 40 units. And that's probably even a stretch to do a 40unit building, but so so that's why I chose that. And there are 14 Noah properties with more than 40 units in the community representing about 2100 units. If all of those were to become uh a 4D eligible, there would be about $1.5 million in tax savings andor cost, which is equates to $100 shift in a med to a median valued homeowner and a $600 shift a year to an 11UN apartment building. So again, this is just about trying to give you an idea of the scope that we could potentially um be be looking at.

Madam um Chair Hansen, can I ask a question? Um so this is only current buildings that we have. It's not potential projects that are out there.

Right now I'm just talking about preservation. Yeah, we'll we'll talk a little bit later now about new development. what does that mean and what's the impact and the cost there. We can go to the next slide on time. So I just wanted to give a little bit of data context for you um about you know what is our existing affordability and um sorry the numbers ended up being quite tiny. Not sure how I did that. Um and and these are kind of old numbers. Um the census is not very up to date right now in what they're publishing. So, we do the best we can. And this also will include we have about a thousand single family rentals as well. And so, it's hard to pull out just apartments and what's affordable in just apartments. But just overall, we have about 5,000 units according to the uh American Community Survey that are less than 60% of the AMI. So, that's about 64% of our housing stock. So, again, just to give you an idea of kind of what the potential is out there. And then I think it's also important to as you know our age our housing stock is aging and we have about 4,000 units that are more than 55 years old. So again in need of investment potentially and you know could come to us or it's something that we could accomplish perhaps with 4D to get greater investment in our housing stock. And another um factor to think about is that we do have 40% of our renters are cost burdened. So they pay more than 30% of their income in rent. And I didn't make on the slide, but we also have homeowners who are cost burdened and that's at about 24%. So when we talk about shifting the burden to others, um we're not necessarily shifting it like in a community like Edina when they shift it ends up being pennies number one because of their huge tax base and then just they have um just greater incomes, right? And people to be able to absorb that kind of uh tax shift. So we can go

to the next page. So some of the questions we're going to send you home with um we're calling it your homework which we'll we'll pull together and send out to you separately so you know clearly what kinds of things we want you to think about. But when you think about preservation want you to think about what are your priorities? What what do you want to achieve? Um you know what would be a desirable reasonable length of time um to apply an affordability period. So we went with 15 years for Hemple. When it's come to new developments, we've typically gone with the 26 years that a TIF district provides. So, so you have to think about too what what do you think is a reasonable ask? You should be aware that sometimes the primary funer determines what that needs to be. That was the case with um Seasons Park. Um I think we ended up at 35 years maybe. Whatever it is matches the primary funer. So you can go to the next page or slide. So now um as Mayor Supple pointed out, you know, we also have new developments coming online and so I wanted to take a look at what's the difference. So we have another tool when it comes to new development that we've typically used over the years and that's tax increment financing. So I wanted to take a look at what's the difference between a property that would get a 4D tax class rate and one that's in a tax increment district. So um what I did was created some hypothetical um projects but you it may look a little familiar that 42 all affordable building that receives tax credits is very similar to u Penn Station and so that's a case where what we are getting with that project are 42 affordable units we're getting several large bedroom sizes I believe it's eight three and four bedroom units we're ating units at a variety of income uh income affordability levels 30 50 and 60 their annual taxes will be about $13,000. So

I'm calling that building A that's this all affordable 4D building and then we can look at a building B. So, if we had gone for a market rate option on that particular property, chances are we would have had to accept an 84 unit building because that's what would have cash flowed for market rate. Um, so in that case, if they'd have done a housing tiff district, they would have had 67 market rate units and 17 affordable units affordable at either 50 or 60% of the AMI. So in the case of a tax increment district, the first potentially up to 26 years, we would collect a base annual taxes in this case of this hypothetical situation of $7,000 a year. However, once the tiff district expired, it would increase to $129,000 per year. So, the difference is right in building A, we get 25 more affordable units with deeper affordability, potentially larger sizes, um, bedroom sizes. In the case of while the tiff district is going on, we would get $6,000 more in taxes with that building A. However, once the building or sorry, the tiff district expires, we'd get a significant amount of more taxes with that building B. So, I just wanted you to sort of get some of those numbers and think about, you know, what's what's the difference? What's the cost? Um, what's the benefit in terms of taxes?

Mr. Chair, question to clarify. So in the example of Penn Station, they automatically receive 40 because they're getting federal taxes. Correct. And don't those have an expiration date? I believe the afford the affordability period is either 30 or 40 years. I need to double check that.

If you know, if they refinanced in a way and they wanted to maintain their affordability, which there might be an incentive to do because quite a bit of their funders would require repayment at that point. Um, it would depend, right? So, if they went off, right, then they would pay the regular tax rate if they in perpetuity continued to I mean, that's often a goal. Typically a goal is to try to to preserve affordable buildings and keep them affordable as long as possible.

Yeah, it's hard to say. We we haven't had a project, a 9% project. You know, we have a 4% project with Lindo Plaza, just the 20% of the units. I I have no idea what they would do at the end if if that's less likely for them to keep that going in perpetuity. I'm guessing probably so as opposed to the law all affordable. So in this example, hypothetical example, we did not give them 4D. Um we a couple of the folks who have asked about 4D are in tax increment districts and we've said to them, well, we need to know that upfront. You can't you're changing the deal. you're affecting how much we collect in admin. You're you're you're messing with the deal. So, it would be something we'd have to consider upfront if we would accept it. Yeah. And put on restrictions in such a way. So, we've always looked at the housing tiff district as that we're not automatically requiring income and rent levels that would trigger 4D that we would have to intentionally do that. the other piece. Sorry. Okay. Go ahead. What happens?

Yeah. And I think with Hemple, we reached out and they didn't really respond or didn't it didn't raise to the level of something they were concerned about. I we do um I can talk further to our financial consultants. I think back with Hemple with Henipin County, his response was well, it's a gigantic pool that has lots of different factors going into it. Um it's you you just wouldn't be able to really calculate the impact on that. um the schools it is a little more complicated and we we kind of left it alone with Hemple but yeah we can certainly have some more conversations about that. The other thing to point out too in a tiff district that we do typically collect admin um dollars and while that doesn't go into the city's um tax uh capacity it does help support the work of the HA. So, so there is additional benefit there besides that base of $7,000. Any other questions? There's kind of a lot of information. Um, so again, just to give you a little bit of um background data too about um some of the projects that have been constructed in the last I think I go back to 2012 because that's when the Lindell Plaza um at 65th and Lindell when that was constructed. That was sort of the first in the new era of uh construction. And this just shows you the blue are the market rate and the red are the affordable units that we've been constructing. So it was about 114 affordable or incomerestricted units out of almost 1,300 total constructed. So about 9% of the new construction in this era have been um income restricted or affordable.

I would point out of some of the new two of the new construction projects though part of their affordability was to preserve adjacent Noah buildings which was we felt was a big win in the case of both the Chamberlain and the Riley that we were able to preserve and improve 55 Noah units. We can go to the next one slide Michelle and this is just additional data on um bedroom size. I think we've been more successful in our affordable buildings and getting some of those larger bedroom sizes that we've said that we would like. And then if we go to the next page, again, these are some questions for you to wrestle with. Um, you know, I guess we need a better understanding. We need to think about, uh, is our preference really a mix of market rate and affordable housing units? Is that the preference? When would an all aaffordable development be accept acceptable preferred? You know, what are the conditions in which you would like to see all affordable or or maybe there aren't conditions? These are just some things we'd like to hear more from you about. Is there a number of affordable units we should be aiming to provide over the next 10 years? Um, do we focus on preserving existing affordable housing using 4D? Um, a and really creating affordable units through what's called filtering. So, you build new market rate and then affordability filters down. If if that's what you think is the best way to provide affordable units, then we have to think about how do we provide accessible units. Our Noah housing is not accessible, right? um how do we create larger bedroom sizes? How do we get more deeply affordable units? And then are there some other priorities are that we're missing that we should be thinking about when we consider new developments? And you go to the next slide. And these are just some general observations and

questions, things that just have been popping up in Melissa's and my conversation and things for you to think about. And just a reminder that there are many factors that are out of our control that impact our tax capacity and affect people's tax bills. It's not just the 4D tax rate, right? There's just a lot of things that are going into it. Things like um commercial valuation, right? And what's happened to those values and how they've gone down and that's put pressure on others. So, it isn't just this that's putting pressure on our tax capacity. Um just the the fact that the tiff districts coming offline really has helped to soften the impact of that Hemple decision and that was a positive. Um another thing to think about is the city really has a significant number of tax exempt properties that add value to the community that aren't in a tax base. Right? Do we not have churches, schools, and parks that they don't pay property taxes? Right? And so so is there a value to those kinds of uses? And is affordable housing one of those things that has that intrinsic value that maybe doesn't come through the property taxes, but how much of that can the city really afford? Um, what value does the community place on new affordable housing options? And this is something to um that that we just feel strongly about as staff is that putting both tax increment and 4D together can only be considered at the very beginning of the deal. So, as you know, what's potentially coming before you is the Legion development and and that's going to need to be factored into any sort of discussion if there's any sort of financial assistance. So, we're not going to consider it after the fact. And then, um something to think about at the legislative level, we had been advocating as part of the legislative platform that um there's some there's been some interim financial assistance to some communities to make up for the

4D loss. Richville does not qualify and the amount is pretty small. Maybe instead should we be advocating for a higher tax uh rate 40 tax rate instead of just asking for financial assistance. I think we've been told that either ask is not is probably a long shot is a big is a big long shot. So final slide here and then we can um talk about more questions. But so this is your homework that we're going to ask you to do. And again, we'll I'll send out a re revised copy of the um presentation. I made a few adjustments since it went out in your packet. And I'll give you the notes version so there's a little bit more explanation about stuff in case you don't remember absolutely everything that was said or don't really want to relisten to this presentation. But so we're going to ask you to review the information that was presented. Um we want you to reach out to staff with questions. We're happy to sit down with you or to answer emails, however you want to do that. Um, back on slide eight, we're going to ask you to rank those different priorities. Tell us what's most important to you so that we know when we um are planning and talking to developers, you know, what what do we really need to push for? Um, we want you to provide those priorities to us by April 10th so that we can work on that a little bit before we come back to you and then to bring your feedback and your ideas for policies and priorities at the April work session. And again, it'll be one that'll be before the HRE meeting. The council's uh schedule was booked for quite some time. So, with that, if you have other um questions, comments that we haven't covered, we're happy to answer those. And this Melissa has anything to add.

I I just wanted to add, well, one, thank you, Julie. That was awesome. Um, but also a as you're going through this, be mindful of the fact that there could be you could have different priorities for preservation versus new. So, I I don't I think it would be a good thing as you're going through these questions uh to think about those things separately. Um, is it something that you would consider in more cases for preservation versus new based on some of these impacts that Julie talked about? um because we'll we'll kind of the questions pull at that, but we're going to pick at that with you in April um as we try to come up with a way to move forward.

Uh any additional questions? Uh Mayor

Supple. She is well absolutely thoughts on that, but I think that would be good.

Commissioner Young, get it raised just for Richfield or would the ask the legislature be for the entire state?

I think it would be. Yeah. I don't I don't know that there's ever been a special request for a specific rate. I mean, we could certainly ask, but I mean, it was interesting and when this first came up as a tool back in 2018, and everybody's, oh, this is a great thing. Everybody should do this. And I'm like, well, wait a minute. It's not that great of a thing for Richfield. We don't have that kind of tax base. And I was sort of looked on as a obstructionist, you know, because it because depending on your tax base, it really isn't that bad of a thing. Dina, she would love to find someone who's willing to take her up on it um so that she could preserve more of their Noah housing. Yeah, Columbia Heights is in a worse condition than we are. So, calendar, you know, of the tax once they come offline. Be nice to see a calendar of that.

I mean that's percentage of rental properties in the city. compared to other cities. Also, percent law requires properties.

Oh, it's depend state law that says if they get federal off as far as trying to understand they would say that you know affordable area.

No, you want us to consider whe It'd be nice if we list it nice and part of the city. That's two birds.

Yes.

Thank you. schedule. What happens when people have LGA Well, not just remind So that property negative Okay. So is there any chance of we

could We can decide how many years we are going to require the income restrictions. How do how do other how do other communities handle that? Do they uh do they generally set a sunset period or or can these districts almost live in perpetuity?

So it it varies. So, some of the communities that have a program for 4D, one of them is Minneapolis, and I believe it's a 10-year commitment they ask for, and then every year they have to annually certify. So, you could in theory not if you don't turn in your paperwork, for example, too bad. You you you lost it. Yep. Because the city has to say, "Okay." Um, I want to say Edina and St. Louis Park also have programs and I can't remember if they're 10 or 15 years. So it so it varies um a little bit. Julie, could you just share Mini what Minneapolis is doing with their program right now?

Well, they're making changes because they just sort of have now realized, oh, what used to be just a positive, it was we don't really notice the impacts. When it went down to 0.25%, all of a sudden they realized, I don't know if we can afford this anymore. So I don't they don't accept any new applicants. St. Paul has closed their program as well is my understanding. So

Mayor Sel's like a short it works sometimes and doesn't. Um so in some ways a good thing intended as a good thing for to lower it to 0.25 is actually having effect Columbia. I also think that um some of the discussions we've been having and I know some of the cons conversations that Mayor Supple has been having um I think that Richfield is on the front end of this. I think that we have kind of been saying hey this doesn't seem like it it's an all good um and like Julie said we she would be in a meeting and be looked at like what do you mean? Um, so I I do think we are on the leading edge of this and people are just starting to figure out that there could be complications.

It was it was mentioned during the presentation about people who are income burdened for affording their housing. Um, and it was mentioned that 20% of owners of I assume single family homes are income burdened. Could the owner of a single family home qual or apply for 4D status? only um properties that are in the land trust. So, you know, the HA works with homes within reach to do land trust properties and those qualify for 4D. There is a pre who what's the CL? It's not just veterans. Does it have it be veterans who were in combat or what was the

there's a disabled veterans and then there's a there's a market value exclusion for um veterans to up to $300,000. Again, depends on classifications, but if you uh we did put together a map of all of the taxexempt properties in the community and there were scattered single family homes and we started poking around at those and and that's what some of those are. There's also a proposal to make um there's a proposal to lower all land trust homes to 0.25 or there was Oh, they did it. Well, it wasn't on the chart I was looking at. Okay. So, um yeah. So, there there are quite a few throughout the community.

All right. Additional questions. Uh council member Hford. Um I I don't actually have any additional questions. I just wanted to give a little bit of feedback now. I appreciate the structure of having lots of time to think through our answers, but since this is our only opportunity together to talk about it. Um just going back to your example of the all affordable 4D building versus the TIFF building that's mixed income. In general, I like the TIF building that's mixed income more is like my high level feedback. I I think right now we're in a political situation in Richfield in which there is broad support for affordable housing and people really support it. But I think over the last and I haven't even been here this whole time, but my impression over the last 30 years is there's been a certain bargain with the community that we want to support mixed income housing. We want to support new development. Not all communities are as supportive of new development as we are. And part of that bargain is that new development is at least going to pay its fair share over time. Um, and when we have these 4D things where we're probably losing money on basic police services, snow plowing, etc. if they're only paying 0.25. I I think I do want to minimize that um within reason. The situations in which I'm most open to it would be ones where they can truly prove there's a high likelihood of displacement through a significant rent increase. One of my skepticisms with Hemple was looking at the effect of concierge, it was significant displacement, but in terms of where we're at today, the rents that they are charging there are 60% AMI rents or very close. So we're essentially without reducing the tax rate of concierge, we're already getting this affordability from them. Um I don't want to continue to recreate that situation. I also just as a sort of reminder to us when we look at the chart of the recently constructed apartment buildings, it the first instinct I I had was like, "Oh, wow. We're barely building any affordable." But then I was reminded of of Julie's reminder about filtering because if we relied on filtering we would have zero new affordable because new housing in

general is more of a luxury product and affordability comes through time. So just to bear that in mind and bear in mind that at least according to this ACS data 5,000 of 8,000 units in Mitchfield are already um 60% AMI de facto or or better or cheaper. So, in general, I'd like a posture where we're continuing to focus on on TIFF and basically minimizing 4D to exceptional circumstances or situations where we're required to do it. But, of course, I'll give it more thought in the email answers. Mayor Subel.

Um the other thing that's not that's kind of tangental to this is those cost burden um single family homeowners and the smaller apartment buildings. I don't want to keep shifting to them. So if we can figure out some way to protect them, I don't know if there's some tradeoff for a circuit breaker or something because I know it it's kind of like a water balloon. It's going to get pushed somewhere. So, it's not going to go away, but I don't want to forget about the fact that there are other costbur.

All right. Any uh additional questions or comments? Guess seeing uh any additional comments from staff. I I think just to remind you that we will send out um everything by email. so that you can look it over and remember that April 10th deadline. We'll send you a reminder a few days before. Um, and thank you very much for the discussion. Anything else, J? All right, seeing no uh further discussion, we'll call this meeting adjourned.