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an°OF REQUEST FOR COUNCIL CONSIDERATION Agenda Section: 4. OUNDS STAFF REPORT Report Number: 9 5-1 41WS W USYM AGENDA SESSION DATE December 4, 1995 Report Date: 11 30 95 DISPOSITION Item Description: Discussion of TIF Funding for Housing Programs Administrator's Review/Recommendation: - No comments to supplement this report 47.444- - - Comments attached. Explanation/Summary (attach supplement sheets as necessary.) ,SUMMARY; In September, Cathy, Paul and I attended a meeting with Arlin Waelti, John Utley and Pamela Souku, attorneys' from Gray, Plant and Mooty, who generously spent an hour and a half with us discussing housing programs using tax increment funds. Both Arlin Waelti and John Utley were contributors to the original Tax Increment Financing laws. In addition, they have established housing programs for other cities using Tax Increment Financing. Examples of housing programs in Crystal and Robbinsdale are listed below. The City of Crystal has created, through special legislation, a housing replacement program. The City purchases a home through voluntary acquisition, demolishes the home and hires a contractor to build a new home or sell raw land to developer. The special legislation allowed the City of Crystal to bring the current value of the property down to zero making increments much larger than if having to use the current appraised value. The City of Robbinsdale has a similar program. They identified several single family owner-occupied houses in the City that were in very poor condition and sent letters to the owners stating that they would be interested in purchasing their homes. A few home owners responded indicating interest in selling. The home owners and the City agree on a purchase price that is, generally, at or below the assessed value. After they agree upon the price, they ask the home owners to sign a waiver of their relocation benefits. Upon sale, they put out a bid for a contractor for demolitition and reconstruction of the site. The City requires that a contractor complete the construction within a certain period of time. We discussed Mounds View's options for housing programs using Tax Increment Financing (TIF). Unfortunately, we cannot use TIF for owner-occupied single-family because an interest rate reduction (or a revolving loan fund), similar to the business loan the City of Mounds View, is not allowed under TIF law. They gave several additional options that would be allowed under the TIF laws to establish housing programs. Four examples are listed below: 9 4 , t Je er rgm n