06-12-2024 Workshop Packet - Laserfiche WebLink

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STAFF REPORT TO: Mayor Fischer and Members of the City Council FROM: Corrin Wendell, AICP, Community Development Director DATE: June 12, 2024 RE: NeighborWorks and Metro Area Sales and Use Tax for Housing Discussion ACTIONS TO BE CONSIDERED To hear a presentation from the NeighborWorks organization and discuss the 0.25% Metro Area Sales and Use Tax for Housing and consider uses for this funding. BACKGROUND At the City Council’s March Workshop, the Council discussed the Minnesota 0.25% sales tax, established to address housing needs, serves as a crucial financial tool for cities in the state. This dedicated sales tax revenue is earmarked specifically for housing initiatives, enabling cities to fund affordable housing projects, combat homelessness, and enhance housing stability within their communities. It is the state’s first ongoing funding stream dedicated to housing. The city of Little Canada is expected to receive approximately $160,000 each year from the generation of sales tax. The entire amount distributed is based on the city distribution factor. The city distribution factor is the number of cost-burdened households in the county divided by the total number of cost-burdened households in eligible cities. “Cost-burdened household” is one in which the gross rent is 30 percent or more of household income or in which homeownership costs are 30 percent or more of household income. Data used for preliminary distributions factors was most recent estimates provided by the American Community Survey of the United States Census Bureau as of May 1, 2023. Data used when calculating 2024 aid amounts will be the most recent estimates as of May 1, 2024. The 0.25% sales tax applies to retail sales made into any of the following counties: Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and Washington Counties. By allocating a fraction of the sales tax to housing, cities in Minnesota can strategically invest in programs and developments that foster inclusive and accessible housing solutions, thereby contributing to the overall well-being and vitality of their residents. The tax demonstrates a commitment to addressing housing challenges and underscores the importance of creating thriving and equitable communities across the state. Introduction: City staff would like to provide an overview of the Minnesota 0.25% sales tax allocated for housing initiatives, highlighting its significance and impact on local communities. This dedicated sales tax is a pivotal financial resource that empowers cities across the state to address pressing housing needs, enhance affordability, and contribute to the overall well-being of residents.