HomeMy WebLinkAbout1998-09-02 PACKET 04.F.REQUEST OF CITY CC3UNCIL ACTI(7tV C(7UNGIL AGEPVDA
9�AEETIPdG ITEM #
DATE 9!2/98 �- . �•
PREPARED BY: Community Develapmenf Kim Lindquist
ORIGIRtATIP1G DEPARTMENT STAFF AUTHOf2
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Adopt a resolution electing to continue participaiing in the local Housing Incentives Account
Program under the Metropalitan Livabl� Communities Act for the 1999 calendar year.
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SUPPORTING DOCUMENTS
� MEMO/LETTER:1) John McCaol dated August 27, 1998
2) Metrapolitan Council dated August 7, 1998
� RESOLUTION: Draft
❑ ORDINANCE:
❑ ENGINEERING RECOMMENDATION:
❑ LEGAL RECOM(�ENDAT[ON:
� OTHEf3: Explanation of ALCHOR for the year 1998
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GOUI�CIL ACl'ION TAKEM1I: ❑ APPROVED ❑ DENBED ❑ OTHER
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TO: Honorable Mayor & City Council Members
Ryan Schroeder, City Administrator
FROM: John McCool, Senior Planner
DATE: August 27, 1998
SUBJECT: Affordable Life-Cycle Housing Opportunities Amounts (ALCHOA) —
Continued Participation
INTRODUCTION
The Metropolitan Council is seeking the City's renev�d participation and continued
cooperation in Livable Communities efforts. It is recommended that the City Council adopt
the attached resolution electing to continue participation in the Local Housing Incentives
Account Program for the 1999 calendar year.
BACKGROUND
in November 1995, the City elected to participate in the Local Housing Incentives Account
Program as established by the Metropolitan Livable Communities Act of 1995. The 1996
calendar year was the first year that the program was fui(y underway. The Act is intended
to stimulate housing, eco�omic and community development in the seven-county metro
area. Through voiuntary enroilment, cities gain access to more than $11 miliion in the
Metropolitan Livable Communities Fund. To participate, cities must negotiate affordable
and life-cycle housing goals with the Metropolitan Council.
The federal government states that to be affordable, housing should cost no more than 30
percent of a househoid's income. To implement the Livable Communities Act {LCA),
ownership-housing goals were estabiished to produce housing that is affordabie to families
with incomes less then 80 percent of the metropoiitan median income. In 19�, the
metropolitan median income was $43,680. The corresponding value of the housing was
$120,000 or less. For rental housing, affordability is targeted to households at 50 percent
or less of inedian income. In 1996, this was $27,300 and would include units tnat rent for
$685 or less.
Each year, the Metropolitan Council asks each participating community to complete their
survey that is used in reporting to the Legislature on the progress made by metro area
communities toward providing Iife-cycle and affordable housing. The report inciudes
Mayor, City Council, & City Administrator
Affordable and Life-Cycle Housing
August 27, 1998
Page 2
information on the production and cost of housing in each community and a summary of
local policies, officiai controis and programs designed to acliieve LCA goais.
On February 19, 1997, the City adopted an amendment to the City's Comprehensive Plan
relative to a Housing Action Plan. The main goai of the Action Plan is promoting affordable
housing within the City and to ensure a balanced range of housing opportunities within the
community for people of all ages, incomes, and origin. The City also made application for
the Livable Communities Demonstration Program in July 1998 to secure funds assisting
with the development of a transit hub in Cottage Grove entitled "Langdon Viilage Transit
Hub". This project is eligibie under the Livable Communities AcYs Housing Incentive
program as determined by the Metropolitan Council.
DISCUSSION
There are a number of ways communities can verify that the city has made those kinds of
expenditures to advance affordable and live-cycle housing in the community. The actual
financial involvement by the City, maintenance inspection programs that inspect and
verifies that it retains and maintains affordable housing in the community, land use
designations, housing plans, and officiai zoning controls that support some housing
development that meets the definition of affordable or life-cycie housing are just a couple
examples.
The Metropolitan Council has provided a summary how Affordable Life-cycle Housing
Opportunities Amounts (ALHOA) is determined. For the year 1998, the ALHOA amount for
Cottage Grove is $3,715.53. The City must verify that at least 85% of this amount was
spent in the 1995 in order to receive reimbursement in about June 1999 vJnen the LCA
survey form is sent to the City.
RECOMMENDATION
Adopt the resolution electing to continue participating in the Local Housing Incentives
Account Program under the Metropolitan Livable Communities Act for the 1999 calendar
year.
F:AGROUFSVPLANNI73GA199FVCITYCOUN\JU1kow�ki-mem.dor_
� Metropolitan Council
Working for the 1�egion, Planning for the Future
DATE:
TO:
FROM:
SUBJECT:
August 7, 1998
City Managers and Administrators
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AUG 1 1 1 �
Thomas C. McEiveen, Deputy Director, Community Developmeni Division
Certification of 1998 ALHOA
Thank you for your participarion in the 1998 Metropolitan Livable Communities Act (LCA) program.
Your community's commitment and involvement has contributed to the region's overall economic
compeririveness and made tangible progress in providing affordable and life-cycle housing for metro azea
residents.
Looking ahead to 1999, the Metropolitan Council seeks your wmmunity's renewed participation and
continued cooperarion in Livable Communities efforts. As part of the LCA legislarion, the Council
annually norifies each community of its "Affordable and Life-cycle Housing Opportunities Amount
(ALHOA)". The ALHOA is derived from the formula prescribed in law including mazket value, ta�c
capacity and tax rztes by the counry assessor. It is an amount of local expenditure to support or assist the
development of affordable and life-cycle housing or maintain and preserve such housing. The enclosed
ALHOA is the amount of tocal expenditure expected of the cammunity during 1998.
Communiries have some flexibility in determining which local expenditures fulfili the ALHOA
contriburion. Examples incbide local dollazs for housing assistance, development or rehabilitation
programs, local housing inspection and code enforcement, or local taaces to support a local or county
FiRA.
Incenrives for your community's renewed participarion include access to $11 million for housing
development, clean-up cf polluted sites for business and housing deve]opment, and mixed use
development. Als�, your community's ALHOA expenditure will be reported in the Council's Annuai
Housing Report Cazd required by the LCA.
Your community's intent to participate in the 1999 Metropolitan Livable Communiries program is needed
by Nov. 15. To help you in the preparation, a model resolurion is enciosed. Planning assistance for staff
or informarion presentarions for elected officials aze available by contacting your sector representative
(see below). Questions about the ALHOA can be referred to Guy Peterson at 602-1418.
We look forcvazd to continuing our regional commitment to affordable and life-cycle housing. Thank you
for your consideration.
Sector Representatives:
Anoka, Washington, and Ramsey Counties Guy Peterson
Dakota, Carver and Scott Counties Cazl Schenk
Hennepin County Tom Caswell
Minneapolis and St. Paul John Kari
230 East FS�ift�"i�tr�eeg�C�M�yfaCi�V�ICru�er��T�R1S��ALH� Zto�n6 5�J� 98 F� 291 TDD/TTY 291
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651-602-1418
651-602-1410
651-602-1319
651-602-1548
Metro Info Line 229-3780
An Eqiml Onponvnity Employer
BXPLANATION OF
AFFORDABLE LIFE-CYCLE HOUSING OPPORTUNITIES AMOUNTS
I •' .1 / :: '•:
Simply stated, here's how we determined your community's ALHOA for 1998.
Determine the average market value of your city's houses in 1995. Double it to arrive at a
base value. Find all of the 1995 high priced homes that are above this base value.
Subtract the base value from each of the high priced homes to arrive at an excess value
number. Add up all of those excess values. This is the base year excess number. It
doesn't change.
Do the same for the current year, this time using the current mazket values for the houses
and the current base value supplied by the Met Council.
If the current year's excess is bigger than the 1995 excess, subtract the 1995 excess from
the current yeaz. Multiply the resultant number times your city's taY rate. This is your
Affordable & Life Cycle Housing Opportunities Amount.
Definitions:
HOMESTEAD
A homestead is defined as properiy regularly "homesteaded" by its owners. For fazm
homes, it represented the assessment of the farm house, a gazage and one acre of land
only.
CONSUMER PRICE INDEX ( CPI )
The Consumer Price Index measures the inflation factor in the U.S. economy. The
Department of the Interior publishes this rate monthly along with a yearly average. For
this program, the yearly average CPI is used.
To ensure that this base value did not lose its meaning in future years the base value is
increased by the CPI each year. This increased value represents the effect of inflation on
the mazket value of houses in your city. Changing the base value every year, prevents
some houses that did not get included in the base year calculation getting inciuded in
future years just because their market value changed.
Refer to attached sample city printout for assistanee
Column A—Anytown
This is the name of your city
Column B-250,000
This is the 1997 value used for identifying homesteads in your city that were above this
hurdle number. T'his hurdle number was the resuIt of multiplying the base value (see
above for the definition of the base value) times the CPI change from 1995 to 1997.
Golumn C-255,736
This is the 1998 value used for identifying homesteads in your city that were above this
hurdle number. It is exactly like Column B, except the CPI change is now from 1995 to
1998.
Column D-200,000
This is the 1995 sum of all houses having values above the base value. It represents only
those houses that were above the base value, and reflects only the amount left over after
subtracting the base value from each house valuation. For example: If a high priced
house had a value of $ 240,000 and the base value for the city was $ 235 then that
high priced house had an excess of 5,000 ( 24Q000 - 235,000 = 5,000 ). The original
amount does not change. This original figure is used to determine if your city has had
any growth in high priced homes since 1995.
Column E-250,000
This is the 1998 sum of the high priced homes having values above the current hurdle
rate found in Column C. Like Column D, it represents only the excess amounts not the
entire home value.
Column F-50,000
Quite simply this is Column F minus Column E. ff your city has added higher priced
homes since 1995 you will have a balance in this column. If your city has not seen an
increase in the higher priced homes since 1995 there will be no balance in this column.
There is no negative balance in this column. All negative values become zero. This figure
is the basis for all subsequent calcutations on this form.
Column G-12,500.00
This number is your increased growth in higher priced homes ( Column F) multiplied by
your city's local ta�c rate ( Column K}. It represents the extra.pronertKt�es received by
your city on the higher priced homes identifaed in Column E.
Column H-230,000
This number is the total of ali homestead property t� capacity (not mazket value of the
properties) in your city times 4%. The number is calculated and supplied by the County
Auditor. Why 4%? Since all higher priced homes will have a value above $ 72,000, then
their ta�c capacity would be at Z%. However, since the program doubles the market value
to amve at the base vaiue, then the tax capacity on the homestead tax capacity should
also be double or 4%( 2% x 2= 4%).
Column I-57,500.00
This number is the result of multiplying the 4% Homestead Tax Capacity ( Column H)
times your city's local t� rate ( Column K).
Column J-12,500.00
This column is the lower of Column G or Column J. Simply stated it represents the
calculated e�ctra propert,v t�es your city receives from these higher priced houses. In
some cases these extra property taxes may be the 4% of Homestead Tax Capacity number
( Column J) rather than the Excess Crrowth number ( Column G). In these instances,
the growth of high priced homes is faster than 4% of the net tax capacity for the city.
Column K---25.000 %
This is your city's local tax rate for 1998 as certified by the county auditor.
Column L---12,500.00
This is the same as Column J. It represents the Affordable Life-Cycle Housing
Opportunities Amount for 1998.
Column M--125
This is the actual number of higher priced homes that had values above the hurdle rate in
1997.
Column N--150
This is the actual number of higher priced homes that had values above the hurdle rate for
1998.
Column 0-20.00%
This is the increase in higher priced homes from 1997 to 1998. For information only.
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RESOLUTION NO. 98-XXX
RESOLUTION ELECTING TO CONTINUE PARTIClPATING IN THE LOCAL
HOUSING INCENTIVES ACCOUNT PROGRAM UNDER THE
METROPOLITAN LIVABLE COMMUNITIES ACT
CALENDAR YEAR 1999
WHEREAS, the Metropolitan Livable Communities Act (Minnesota Statutes Section
473.25 to 473.254) establishes a Metropolitan Livable Communities Fund which is intended to
address housing and other development issues facing the metropolitan area defined by
Minnesota Statutes Sectio� 473.121; and
WHEREAS, the Metropolitan Livable Communities Fund, comprising the Tax Base
Revitalization Account, the Livable Communities Demonstration Account, and the Local
Housing Incentive Account, is intended to provide certain funding and other assistance to
metropolitan area municipalities; and
WHEREAS, a metropolitan area municipality is not eligible to receive grants or loans
under the Metropolitan Livable Communities Fund or eligible to receive certain polluted sites
cleanup funding from the Minnesota Department of Trade and Economic Development unless
the municipality is participating in the Local Housing incentives Account Program under the
Minnesota Statutes Section 473.254; and
WHEREAS, the Metropolitan Livable Communities Act requires the Metropolitan
Council to negotiate with each municipality to establish affordabie and life-cycle housing goals
for that municipality that are consistent with and promote the policies of the Metropolitan
Council as provided in the adopted Metropolitan Development Guide; and
WHEREAS, each municipality must identify to the Metropolitan Council the actions the
municipality pians to take to meet the established housing goais through preparation of the
Housing Action Pian; and
WHEREAS, the Metropolitan Council adopted, by resolution after a pubiic hearing,
negotiated affordabie and life-cycle housing goais for each participating municipality; and
Resolution No, 9&XXX
August 19, 1998
Page 2
WHERAS, a metropolitan area municipality which elects to participate in the Local
Housing Incentives Account Program must do so by November 15 of each year; and
WHEREAS, for calendar year 1999, a metropolitan area municipality that participated in
the Local Housing Incentive Account Program during the calendar year 1998, can continue to
participate under Minnesota Statutes Section 473.254 if: (a) the municipality elects to
participate in the Local Housing Incentives Account Program by November 15, 1998; and (b)
the Metropolitan Council and the municipality have successfuily negotiated affordable and life-
cycle housing goals for the municipality.
NOW, THEREFORE, BE IT RESOLVED THAT the City of Cottage Grove hereby elects
to participate in the local Housing Incentives Program under the Metropolitan Livabie
Communities Act during the calendar year 1999.
Passed this 2nd day of September, 1998.
John D. Denzer, Mayor
Attest:
Caron M. Stransky, City Clerk