03-24-2003 - Laserfiche WebLink

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OPTIONS TO BE CONSIDERED Instead of 20–24 modest homes, this development would entail 12 or so executive homes with a potential $6 million value-added to the City’s tax base. Working with a willing seller would likely be more successful then attempting to do a larger infill housing development with unwilling private homeowners who do not want to divide their lots. A successful, attractive development that retains a significant number of trees on both City-owned and privately-held property may encourage the other private homeowners to reassess their positions. There is an existing house on each of the three parcels owned by Fyksen. One of these is a fairly substantial house in good condition that could probably be resold as is after the land is replatted. The other two houses are smaller and in a more distressed condition. These two should probably be demolished in order to provide the greatest flexibility in replatting the land for new houses. The cost of demolishing two existing houses means that the project probably will show an initial net loss. The long-term gain associated with developing the whole property with new homes should more than offset the initial cost. More study is needed to determine how much this initial loss might be and how the City will cover the loss. There are three financing options that could be considered for developing the Fyksen property: 1) Use Tax Increment Financing (TIF) to acquire the Fyksen parcels. 2) Use Special Projects/HRA funds to acquire the Fyksen parcels. 3) Find a private developer that would acquire both the City’s and Fyksen property. 1. Tax Increment Financing TIF financing can be used to acquire and assemble land for housing development. The City’s TIF Plan would have to be modified to reflect all properties in our designated Project Area. Some TIF increment can be spent outside the existing three TIF districts. However, these properties would have to be considered to be substandard. To establish a Housing TIF District, at least 80% of the fair market value of the improvements must be for uses for low and moderate-income housing. For owner-occupied housing, 95% of the units must be initially purchased by persons with income that is less than or equal to the income requirements for qualified mortgage revenue bonds under federal law. Generally, those requirements limit income to 100% of applicable median family income for 1 and 2 person households, 115% of median for 3 or more person households. The applicable median family income is the greater of the area (Mpls-St. Paul MSA) or the statewide median gross income. Therefore, the family of three or more could earn up to $76,000 (115% of $66,000) and still qualify to live in the homes. However, such households probably would not qualify for financing. To establish a Redevelopment District, at least 50% of the existing buildings would need to be blighted and at least 15% of the area would be covered by improvements. The former requirement appears doable, but the latter percentage may be in question. While additional housing in the community would be beneficial, the City would still have to show a public benefit is being addressed (eg. affordable housing and elimination of blight). The main