City Council Meeting Date: June 3, 2025
To: Mayor and City Council
City Administrator
From: Jake Reilly, Community Development Director
Melissa Hanson, Housing Coordinator
Title
Consider Greater MN Housing Fund Grant Application for Housing Development Property Adjacent to Meadows Park.
Body
Action Requested:
The Northfield City Council is asked to consider a resolution authorizing application to the Greater Minnesota Housing Infrastructure Grant Program for up to $800,000 to support the infrastructure needed to develop up to 40 units of housing affordable to those making at most, 150% of the area median income ($124,188). Rice County area median income is $82,792.
Summary Report:
Staff is working with the Community Action Center to develop a grant application to Minnesota Housing’s new Greater Minnesota Housing Infrastructure Grant program. The program uses general obligation infrastructure bonds to support cities, counties and Tribal Nations creating sites for workforce and affordable housing in Greater Minnesota.
Grant funds can be used to cover up to 50% of capital costs of physical public infrastructure necessary to support a qualifying housing development. This may include sewers, water supply systems, utility extensions, streets and more, necessary to support single-family, multifamily, homeownership and rental housing development. Capital costs to develop the infrastructure for the homes is estimated at $1,200,000 based on existing projects let for bid in 2024 and 2025.
Applicants’ matching funds may include in-kind contributions, such as donation of land. The land in question for this grant application is adjacent to Meadows Park in the southeastern corner of the City. The match must be committed in the grant application. Staff has identified the following methods for generating the required $800,000 in matching funds:
• Selling or gifting the land at estimated market value (currently expected to be $78,700) for a total of at least $1,416,600 to address the required match.
• Downpayment assistance funds at $25,000 per home for a total of at least $450,000.
• Affordable housing trust fund dollars for affordable housing units of at least $150,000.
• In-kind staff time, site preparation cost and other related administrative costs ($200,000).
Background
History
The area consists of 41.7 acres of land in the southeast corner of the City of Northfield. The land designated for park development was previously preliminary platted as a component of the phased Fargaze Meadows Planned Unit Development in 2005-2007 and designated as Outlots C and D, dedicated to single-family home development. The entire area was originally conceived as having 141 housing units of varying scale and unit counts, a five-acre park, and infrastructure including stormwater retention ponds, sidewalks and trails. Outlots C and D were to have 14 units. The Great Recession negatively impacted the project, and the two parcels of land were acquired by the City of Northfield through land forfeiture proceedings on July 1, 2013.
The city council designated the Park and Recreation Advisory Board (PRAB) as the lead to facilitate a master plan for the area. In 2015 the city adopted the Meadows Park Master Plan which designated all of the nearly 42 acres as a park. Several scenarios were contemplated during the master planning process including a mix of housing and parkland and several different park designs. Today, a decade later, the land still consists of agricultural land surrounded by single-family homes, a stormwater pond and adjacent spoils pile and other agricultural land to the east and south. A local farmer leases the land from the City.
Comprehensive Plan
The project envisioned in the grant application complies with the City’s adopted Northfield 2045 comprehensive plan, which has an overall vision of creating a place where all can thrive, including having safe and secure housing and economic opportunities, and sustainable, resilient, and economical infrastructure investments. The policy direction of the city’s comprehensive plan to focus on development and redevelopment opportunities that are connected to existing infrastructure, including in this area which is identified as a priority growth area within the city limits. The plan also sets the stage for the city to intervene - when appropriate - in the case of market failures and uncertainty. This grant application addresses the following comprehensive plan strategies:
• Access Strategy 2: Develop in a compact, sustainable, and fiscally responsible pattern
• Access Strategy 6: Design for resiliency and sustainability
• Housing and Economic Security Strategy 4: Support the local workforce
• Housing and Economic Security Strategy 6: Grow in a compact, sustainable development pattern
• Housing and Economic Security Strategy 8: Build more housing
• Housing and Economic Security Strategy 9: Support at-risk sellers, buyers, and tenants
• Housing and Economic Security Strategy 10: Create programs to support affordable and sustainable homes and neighborhoods.
• Resilient Infrastructure Strategy 2: Plan water, stormwater, and wastewater infrastructure to be resilient
• Resilient Infrastructure Strategy 3: Plan streets for safety and stormwater management
Strategic Plan
The 2025-2028 Strategic Plan identifies the creation of at least 100 units of housing each year between 2026 and 2028. It also identifies a goal to right-size of city services with community needs and addressing the tax base mix and related burden on single family home property owners.
Should MN Housing award this grant, the approach will require a new public planning process to address a new outcome for the area. Staff has committed time and resources to a thorough title search and evaluation of potential barriers to success.
Alternative Options:
An alternative is to decline to apply for the grant. A second alternative is to change the request or the origin and/or makeup of the match.
Financial Impacts:
Cost impacts: Long-term maintenance costs. Use of downpayment and affordable housing trust fund dollars.
Revenue impacts: Subsidy of one half of the initial infrastructure cost is a cost reduction to the municipality. Additional tax capacity generated by additional housing units.
Tentative Timelines:
Grant application due June 12, 2025
Grant award announcement anticipated by year end 2025
Community process anticipated in 2026, if awarded.
Infrastructure construction anticipated 2026-2027