City Council Meeting Date: November 21, 2023
To: Mayor and City Council
City Administrator
From: Melissa Hanson, Housing Coordinator
Jake Reilly, Community Development Director
Title
Consider Resolution Accepting a Direct Legislative Appropriation of $300,000.
Body
Action Requested:
The Northfield City Council is asked to approve a Resolution accepting a Direct Legislative Appropriation of $300,000.
Summary Report:
During the 2023 regular session of the Minnesota Legislature, as part of the tax omnibus bill, the Legislature appropriated $300,000 to the City of Northfield from the state's general fund (generated by property tax revenue) to be used to fund infrastructure related to a cooperatively owned manufactured home park. (Att. 2, page 25) The funds were deposited into the City's account on or before July 15, 2023, as stated in the legislation as passed.
Background:
On occasion, State Legislators are offered the opportunity to propose direct appropriations to their districts, generally associated with the omnibus tax bill. In the 2023 regular session, the following appropriation - described as a grant - was included in that bill:
Regular Session 2023, Chapter 64, Article 15, Section 31.
APPROPRIATION; CITY OF NORTHFIELD; GRANT.
(a) $300,000 in fiscal year 2024 is appropriated from the general fund to the commissioner of revenue for a grant to the city of Northfield. This is a onetime appropriation. The grant must be paid by July 15, 2023.
(b) The grant under this section must be used by the city of Northfield to pay for infrastructure related to a cooperatively owned manufactured home park.
EFFECTIVE DATE.
This section is effective the day following final enactment.
If the Council chooses to accept the grant, staff recommends the entire amount be directed to the City's Capital Reserve Fund. Because the money must be used to fund infrastructure, this is the logical place to hold the money until it can be allocated to an appropriate project. Other requirements associated with the grant include that it be used in support of, "a cooperatively owned manufactured home park." State statute Section 327.14, subdivision 3(b) defines a manufactured home park as, "any site, lot, field or tract of land upon which two or more occupied manufactured homes are located, either free of charge or for compensation, and includes any building, structure, tent, vehicle or enclosure used or intended for use as part of the equipment of the manufactured home park." This definition sets the minimum threshold for where the infrastructure grant could be used, provided the park is owned by a resident-owner housing cooperative. There are no specific reporting requirements associated with the funds.
While there are no eligible properties within the City of Northfield's city limits, there are two manufactured home park properties that could be eligible if and when the ownership changes from private property to a housing cooperative model. The appropriation does not identify any specific manufactured home park neighborhood. City staff continue to monitor the on-going resident concerns involving the owners of both the Viking Terrace and Riverside (formerly Florella's) manufactured home communities and related efforts by local resident associations to purchase the park properties for conversion to a housing cooperative. Both neighborhoods could benefit from much needed infrastructure improvements and updates.
The Northfield Housing and Redevelopment Authority (HRA) is also exploring a proposal from Northcountry Cooperative Foundation for the development of a new subdivision in the remaining HRA-owned land at Southbridge. The proposed project could create a subdivision that would be required to meet the standard in the City's Land Development Code Article 5 - Subdivision of Land and would be built to the city standard for utilities, roadways, sidewalks and other related infrastructure. The current proposal is for that infrastructure to be turned back to the City, similar to the process for any subdivision, regardless of the construction method used for the houses. The proposed development would operate under a resident-owned housing cooperative model (in which the housing cooperative functions similarly to a homeowner's association) and the homes would be a mix of factory-built units. This is still very much in the early due diligence and planning phase. If the HRA chooses to move forward with the project, the grant could go toward a portion of the infrastructure costs associated with a new subdivision.
Alternative Options:
If the Council declines to accept the $300,000, it would be returned to the state's general fund.
The Council could allocate the $300,000 to a different fund.
Financial Impacts:
Maintaining and updating infrastructure is costly for all communities. Infrastructure maintenance and improvements in manufactured home parks are the responsibility of the park owner. There are infrastructure grants available to park owners through the Minnesota Housing Finance Agency (MN Housing). When awarded/used, those funds require some aspect of retention of long-term affordability. The primary financial impact of accepting the grant is an additional resource to support the repair, replacement, and/or maintenance of existing infrastructure or to support the construction of new infrastructure. The lawful and appropriate use of these funds - and other direct appropriations - is evaluated/documented in the city's annual financial audit.
Tentative Timelines:
This $300,000 appropriation was received by the City of Northfield in July 2023.
It is anticipated that most state appropriations from the 2023 legislative session would be spent by the end of fiscal year 2025, however, there is no stated required timeline.