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91-2171 l��C�rr��. � ' �� Council File �� /`-a/7� Green Sheet �� RESOLUTION CITY OF SAINT PAUL, MINNESOTA Presented By Referred To Co e . WHEREAS, the most important step towards adequate housing resources for the future is preservation of neighborhood vitality and the valuable existing housing stock; and WHEREAS, the Metropolitan Council Affordable Housing Task Force in its preliminary staff report includes (among other things) expanding the revenue base of the housing trust fund and establishing a regional community development fund to support housing; and WHEREAS, in 1990 tax increment housing districts were included in the calculation of local government aid reductions and are no longer viable tools for the City in meeting critical housing needs; and WHEREAS, last session language was passed that provides a tax break for a certain class of property for a "lease purchase" program administered by the Federal National Mortgage Association and that tax break should also be available for the Minnesota Housing Finance Agency and municipalities that implement a "lease purchase" program; and WHEREAS, there are a number of apartment complexes in Saint Paul that provide affordable housing that are at risk of being lost and create serious problems for the community due to substandard property conditions and inadequate property and tenant management; and WHEREAS, because renovation of homes means paying higher property taxes, families are discouraged from remaining in the City and rehabilitating their homes, and are provided with an incentive to move to the suburbs to find adequate housing; and WHEREAS, last session the City of Saint Paul pursued legislation that would allow the City to seek appointments of receivers to administer property and prevent waste and for assignments of rents and profits without being subject to limitations relating to the minimum amount of the original principal balance of the mortgage. NOW, THEREFORE, BE IT RESOLVED, that the City of Saint Paul supports the following: Increased funding for the Housing Trust Fund while retaining current income requirements; Establishment of a regional community development fund for housing and economic development needs in distressed areas; Exclusion of tax increment financing housing districts from the calculation of local government aid reductions; Amendment of language passed last session to authorize the Minnesota Housing Finance Agency (MHFA) and municipalities to take advantage of a tax break on a certain class of property (4-D) if they implement a lease purchase program; Page 1 of 2 ��i�� Council File �� ___�1 -2�� 1� Green Sheet �� RESOLUTION CITY OF SAINT PAUL, MINNESOTA Presented By Referred To Committee: Date Provision of state financial assistance to acquire and preserve housing complexes and improve property management; Provision of a deferment, for a maximum of five years, of any increase in the property tax of an individual that is a result of rehabilitation efforts, including home additions, on a residential property except that this deferment shall not be available for conversion to rental units, subdividing properties, or adding units; and Final passage of language regarding the ability of the City to request the appointment of receivers and the assignment of rents and profits under Minnesota law without being subject to current mortgage limitations as contained in Minnesota Statutes 559.17, Subd. 2 and 567.01, Subd. 2. Page 2 of 2 Yeas Navs Absent imon � Requested by Department of: OSW2tZ OI2 � . acca ee i e t tman —� une i By: Adopted by Council: Date �E� 5 1991 Form Approved by City Attorney Adoption Certified by Council Sec etary - .� �� By. sy: Approved by yor: Date � ��:fl `� 1991 Approved by Mayor for Submission to � Council By: l�r�`i-�i�`j"ti'`�`/ sy: PU��[SeED OEC 14'91 . � �'�y/a?��/ � DEPARTMENT/OFFICE/COUNCIL DATE INITIATED NO 1�H G O city counci� 11/25/91 GREEN SHEET INITIAUDATE INITIAUDATE CONTACT PERSON�PHONE �DEPARTMENT DIRECTOR �CITY COUNCIL Councilmember �nC1 x4473 pSSION �CITYATTORNEY �CITYCLERK NUMBERFOR MUST BE ON COUNCIL AQENDA BY(DATE) ROUTING �BUDGET DIRECTOR �FIN.8 MGT.SERVICES DIR. ORDER �MAYOH(OR ASSISTANn � TOTAL#OF SIGNATURE PAGES (CLIP ALL LOCATIONS FOR SIGNATURE) ACTION REQUESTED: Expressing continued support for a number of housing initiatives including increased funding of the Housing Trust Fund and exclusion of tax increment housing districts from the calculation of local government aid reductions. RECOMMENDATIONS:Approve(A)or Reject(R) pERSONAL SERVICE CONTRACTS MUST ANSWER THE FOLLOWING�UESTIONS: _PLANNING COMMISSION _ CIVIL SERVICE COMMISSION 1• HaS thiS pe�SOn/firm evef WOrked Undef a contract f0►thi8 department7 _CIB COMMITTEE _ YES NO 2. Has this person/firm ever been a city employee? _STAFF _ YES NO _DI3TRICT COURT _ 3. Does this personlfirm possess a skill not normally possessed by any current city employee? SUPPORTS WHICH COUNCIL OBJECTIVE? YES NO Explain all yes enswers on separate sheet and attech to green sheet INITIATINO PROBIEM.ISSUE,OPPORTUNITY(Who,What,When,Where,Why): Maintaining and improving its housing stock is of vital interest to the City. The City must work to enact State legislation that will help accomplish this. ADVANTAGES IF APPROVED: The City will work towards the passage of legislation that will make the City a more hospitable environment for home owners. DISADVANTAOES IF APPROVED: None. DISADVANTACiES IF NOT APPROVED: The City runs the risk of letting its housing stock deteriorate to unacceptiable levels. TOTAL AMOUNT OF TRANSACTION S COST/REVENUE BUDGETED(CIRCLE ONE) YES NO FUNDING SOURCE ACTIVITY NUMBER FINANCIAL INFORMATION:(EXPLAIN) �� NOTE: COMPLETE DIRECTIONS ARE INCLUDED IN THE GREEN SHEET INSTRUCTIONAL MANUAL AVAILABLE IN THE PURCHASING OFFICE(PHONE NO. 298-4225). ROUTING ORDER: Below are correct routings for the five most frequent rypes of documents: CONTRACTS(assumes authorized budget exists) COUNCIL RESOLUTION(Amend Budgets/Accept. Grants) 1. Outside Agency 1. Department Director 2. Department Director 2. Ciry Attorney 3. City Attorney 3. Budget Director 4. Mayor(for c�ntracts over$15,000) 4. Mayor/Assistant 5. Human Rights(for contracts over$50,000) 5. City Council 8. Finance and Management Services Director 6. Chief Accountant, Finance and Management Services 7. Finance Acxounting ADMINISTRATIVE ORDERS(Budget Revision) COUNCIL RESOLUTION(all others,and Ordinances) 1. Activiry Manager 1. Department Director 2. Department Acxountant 2. Ciry Attorney 3. Department Director 3. Mayor Assistant 4. Budget Director 4. City Council 5. City Clerk 6. Chief Accountant, Finance and Management Services ADMINISTRATIVE ORDERS(all others) 1. Department Director 2. City Attorney 3. Finance and Management Services Director 4. City Clerk TOTAL NUMBER OF SIGNATURE PAGES Indicate the#of pages on which signatures are required and paperclip or flag sach of these pages. ACTION REQUESTED Describe what the project/request seeks to accomplish in either chronologi- cal oMer or order of importance,whichever is mosf appropriate for the issue. Do not write complete sentences. Begin each item in your list with a verb. RECOMMENDATIONS Complete if the issue in question has been presented before any body,public or private. SUPPORTS WHICH COUNCIL OBJECTIVE? Indicate which Council objective(s)your projecUrequest supports by listing the key word(s) (HOUSING, RECREATION, NEIGHBORHOODS, ECONOMIC DEVELOPMENT, BUDGET,SEWER SEPARATION). (SEE COMPLETE LIST IN INSTRUCTIONAL MANUAL.) PERSONAL SERVICE CONTRACTS: This information will be used to determine the ciry's liabiliry for workers compensation claims,taxes and proper civil service hiring rules. INITIATING PROBLEM, ISSUE,OPPORTUNITY Explain the situation or conditions that created a need for your project or request. ADVANTAGES IF APPROVED Indicate whether this is simply an annual budget procedure required by law/ charter or whether there are specific ways in which the City of Saint Paul and its citizens will benefit from this projecUaction. DISADVANTAC3ES IF APPROVED What negative effects or major changes to existing or past processes might this project/request produce if it is passed(e.g.,traffic delays, noise, tax increases or assessments)?To Whom?When?For how long? DtSADVANTAGES IF NOT APPROVED What will be the negative consequences if the promised action is not approved?Inability to deliver service?Continued high traffic, noise, accident rate?Loss of revenue? FINANCIAL IMPACT Although you must tailor the information you provide here to the issue you are addressing, in general you must answer two questions: How much is it going to cost?Who is going to pay? . ��i��✓ BRIEFING PAPER HOUSING Background The most important step toward adeguate housing resources for the future is preservation of neighborhood vitality and the value of existing housing stock. Saint Paul is competing with the surrounding suburbs in a relatively weak housing market. The regional housing market can be summarized in the following way: 1) demand for total housing is near or at its peak; 2) demand for rental housing may decrease, causing lower rents or higher vacancy rates; 3) potential for an increase in rental units as a percentage of total units; 4) pockets of older, smaller units are at risk of serious deterioration; 5) new construction may be needed to meet special needs such as large family units; and 6) affordability as a major issue. Issue For the most part, there are abundant programs to address housing needs in Minnesota cities at the state and local level. However, these programs are underfunded and require a much more serious investment on the part of the federal and state governments. The following programs/concepts represent: 1) some needs that are not addressed by existing programs; 2) some tinkering with current programs authorized under statute to make them work better for the City of Saint Paul; or 3) reflect some preliminary recommendations by a Metropolitan Council Task Housing Force that may get some attention this session. Metropolitan Council Housing Task Force The Metropolitan Council Housing Task Force has made some preliminary recommendations on a number of housing-related issues. These recommendations are subject to further debate: Metropolitan URAP. A regional housing fund would be created to address housing aspects of neighborhood revitalization/ stabilization in the metropolitan area. The fund would also finance a program intended to provide tax relief to owners of residential rental property facing vacancy problems because of the physical, social and economic deterioration of a neighborhood. More detailed specification of eligible activities C�-�� BRIEFING PAPER HOUSING PAGE 2 should include coordination with existing state programs in order to promote their enhancement and avoid duplication. A board consisting of Metropolitan Council members, community representatives and other housing experts would govern the fund. The fund could be administered by the Minnesota Housing Finance Agency. To access the fund a municipality would need to have a housing plan approved by its local governing body and reviewed by the Metropolitan Council. The plan, in turn, must respond to the regional housing plan adopted by the Council. A municipality could receive financial assistance from the fund to complete the housing plan. There would be local matching requirements. While the City supports and recognizes that a metropolitan-wide URAP program would be an important step forward in responding to the pressing housing and economic development concerns within and around the Twin Cities area, the City of Saint Paul believes that funding for such a program should not be viewed as a substitute for URAP funding specifically targeted for inner-city concerns such as those which presently exist in Saint Paul. Expansion of the Housinq Trust Fund. Expansion of resources for the Housing Trust Fund would be coupled with expansion of the type of housing activities eligible and an increase in the income thresholds for households eligible to receive the benefits of the Housing Trust Fund. Preservation of Affordable Rental Housina There are a number of apartment complexes in Saint Paul that provide affordable housing that are at risk of being lost and, in some instances, create serious problems for the community due to substandard property conditions and inadequate property and tenant management. The preservation of these at risk affordable units and the improvement of the properties are essential to insure neighborhood quality, revitalization and stabilization. These units are located in privately-owned, federally subsidized developments and other rental housing apartment complexes. These units are at risk of being lost due to 1) the potential for existing owners to allow the federal subsidy contracts to expire and convert the affordable units to market-rate rents, and 2) the deteriorated condition of certain apartment buildings and lack of adequate property and tenant management are so severe that the units are substandard and have a high vacancy rate. The climate for rental housing investment requires new responses. High rental vacancies reflect over-building and decline in the young adult population which has been a major part of the rental market. Continuing decline will be a reality into the 1990s. In addition, federal tax law changes in the middle 1980s eliminated �cq�-�i7/�/ BRIEFING PAPER HOUSING PAGE 3 most incentives for new and continued investment in rental housing. This in part causes deferred maintenance, lower property management standards and even abandonment for the least attractive portion of the rental stock. Sizeable amounts of financial assistance will be required to preserve the units and improve the properties physical building conditions and property management. Lease Purchase Strateav Vacant housing continues to be a problem in spite of the fact that many families desperately need homes. City-wide over 430 properties have been placed on a vacant building list monitored and updated by the Environmental Health Division. Estimates from neighborhood sources indicate that this is conservative and that the number of vacant buildings exceed city estimates by 25 percent. If left unattended, these buildings have a serious detrimental impact on the surrounding neighborhood because they lack adequate property maintenance and can be targets of vandalism and other undesirable activities (drugs, vagrancy, etc. ) There are essentially two reasons vacant houses are precluded from housing the people that need them. First of all, there is an inability of some potential buyers to qualify for mortgages. Secondly, statistics point out that over 70% of the home buyers in a city's neighborhoods are presently living in that neighborhood prior to purchasing the home. In other words, people living in neighborhoods with a high percentage of vacant houses offer the most potential for home ownership in that neighborhood. However, the people in these neighborhoods are more likely to need special help in qualifying for a mortgage. Because of these two factors, a "lease purchase" program offers the most opportunity for home ownership. It would enable renters currently living in a given neighborhood to lease a house for a period of up to three years. During this time the "homebuyer in training" receives extensive counseling, help saving a down- payment, and other services. At the end of the lease period, the homebuyer would then qualify for a mortgage and purchase the house. Last legislative session, language was passed which allows a lease purchase program implemented by the Federal National Mortgage Association to utilize a property tax break on property classified as 4-D. This savings in property taxes is then escrowed and eventually will become the down payment on a house. This session, the Minnesota Housing Finance Agency will probably ��q�,�i�/ � BRIEFING PAPER HOUSING PAGE 4 pursue an amendment that would allow them to take advantage of that same tax break for a lease purchase program. This is an opportune time for the City of Saint Paul to ensure that municipalities might qualify for this tax break as well. Tax Deferment for Housing Rehabilitation There is a growing concern that existing tax laws are discouraging City residents from rehabilitating their homes. Under the current system, renovation of housing means paying higher taxes and residents of communities with an aging housing stock are encouraged to move to newer suburbs where the expense of maintaining their home will be lower. A deferment of property tax increases resulting from rehabilitation efforts would be an effective way of removing the present disincentive. Such a deferment would have to be carefully designed in order not to encourage use of the tax break for subdivision of properties, addition of units or conversion to rental units. Assiqnment of Rents The City of Saint Paul is engaged in a variety of programs to promote economic development and preserve affordable housing and has supported these programs by granting loans secured by mortgages. Additional security is available in the right to seek appointments of receivers to administer property and prevent waste and for assignments of rents and profits. However, Minnesota Statutes 559.17 and 576. 01 currently limit such appointments and assignments to projects in which the original mortgage principal is $500, 000 or :more. The Minnesota Housing Finance Agency has recently been authorized to waive this limitation in the public interest. Since loans made by the City of Saint Paul and its Housing and Redevelopment Authority are likewise in the public's interest and are similar in nature and intent to the loans of the Minnesota Housing Finance Agency, this limitation ought to be waived in this instance as well. Last session, the City of Saint Paul pursued legislation that would accomplish this. However, the language was contained in a conference committee report that passed the Senate but did not make the deadline in the House. � �1 cqr-a�7/ ✓ BRIEFING PAPER HOUSING PAGE 5 Housincr Tax Increment Financing Districts During the 1990 legislative session, changes in the tax increment financing law resulted in housing districts being subject to HACA/LGA penalties. As long as a local government must experience cuts in LGA and/or HACA whenever a housing district is certified, housing districts will not be feasible. Recommendation The City of Saint Paul should support the following: � Increased funding for the Housing Trust Fund while retaining current income requirements; Establishment of a regional community development fund for housing and economic development needs in distressed areas; Exclusion of tax increment financing housing districts from the calculation of local government aid reductions; Amendment of language passed last session to authorize the MHFA and municipalities to take advantage of a tax break on a certain class of property (4-D) if they implement a lease purchase program; Provision of state financial assistance to acquire and preserve housing complexes and improve property management; and Provision of a deferment, for a maximum of five years, of any increase in the property tax of an individual that is a result of rehabilitation efforts, including home additions, on a residential property except that this deferment shall not be available for conversion to rental units, subdividing properties, or adding units; and Final passage of language regarding the ability of the City to request the appointment of receivers and the assignment of rents and profits under Minnesota law without being subject to current mortgage limitations as contained in Minnesota Statutes 559. 17, Subd. 2 and 567. 01, Subd. 2 . � � ��/- �'i 7/ ✓ T A B L E O F C O N T E N T S Initiate PAGE CSSP {Apprvd by Committee, 9/13/91} . . . . . . . . . . . . 3 Property Tax Relief: Local Government Aid {Apprvd by Committee, 10/18/91) . . 5 Constitutional Dedication of Sales Tax {Apprvd by Committee, 10/18/91? . . 7 Fiscal Disparities {Apprvd by Committee, 10/18/91) . . . . . 8 Polluted Lands {Approved by Council, 9/19/91} . . . . . . . 10 MELSA Funding {Apprvd by Committee, 10/18/91} . . . . . . . 13 Housing Issues {Apprvd by Committee, 11/22/91j . . . . . . . 17 HRA Expansion of Powers {Apprvd by Committee, 10/18/91) . . 24 Substantial SuPnort Metropolitan Parks/Como Park Dept Service {Apprvd by Committee, 10/18/91? . . 27 � URAP {Apprvd by Committee, 10/18/91} . . . . . . . . . . . . 32 � Public Safety Issues {Apprvd by Committee, 11/22/91} . . . . 34 Maternal Child Health {Apprvd by Committee, 10/18/91} . . 39 Parking Tag Income {Apprvd by Committee, 10/18/91} . . . . . 41 Housing Court {Apprvd by Committee, 10/18/91} . . . . . . . 43 Photo Cop {No recommendation, lack of quorum, 11/8/91) . . . 45 Metropolitan Transportation Trust Fund {No recommendation, lack of quorum, 11/8/91) . 47 Immunization Transferability/Medical Records {Apprvd by Committee, 10/18/91� . . 49 Metropolitan State University {No recommendation, lack of quorum, 11/8/91) . 51 Presidential Primary Funding {No recommendation, lack of quorum, il/8/91} . 53 Cultural Tourism/Historical Preservation District {No recommendation, lack of quorum, 11/8/91} . 55 Monitor - Health Care Access {Apprvd by Committee, 10/18/91) . . . . . 58 Ayd Mill Road {Apprvd by Committee, 10/18/91} . . . . . . . 60 Service Charge Definition Change � {Apprvd by Committee, 10/18/91} . . 62