City Council Meeting Date: April 16, 2024
To: Mayor and City Council
City Administrator
From: Jake Reilly, Community Development Director
Title
Consider Resolution Authorizing Submittal of an Application to Minnesota Housing for a deferred, forgivable, no-interest loan to develop workforce housing at 1000 Division Street
Body
Action Requested:
The Northfield City Council Approves a Resolution authorizing an application to Minnesota Housing for a deferred, forgivable, no-interest loan to develop workforce housing at 1000 Division Street with community partners.
Summary Report:
Minnesota Housing recently announced the availability of up to $39 million in deferred funding, which is all the biennial funding available for 2023/2024 for the Workforce Housing Development Program. This competitive funding program targets small to medium-sized cities, communities or areas in Greater Minnesota with rental workforce housing needs. Funding is available to build market rate residential rental properties in communities with proven job growth and demand for workforce rental housing. Communities are required to secure funds that match one dollar for every two dollars in funding offered through this program.
These funds will be administered through a Request for Proposals (RFP) process. Applications are due April 30, 2024 at noon. Community Development staff was approached by Rebound Partners and Community Action Center staff in April to participate in the application. The application must be submitted by an Eligible Recipient. Northfield is an Eligible Recipient.
An Eligible Recipient is one of the following Eligible Project Areas:
• A home rule charter or statutory city with a population exceeding 500 located outside of a Metropolitan County.
• A community that has a combined population of 1,500 residents located within 15 miles of a home rule charter or statutory city located outside a Metropolitan County.
• An area located outside of a Metropolitan County that serves a federally recognized Indian Tribe in Minnesota, or their associated Tribally Designated Housing Entity as defined by United States Code, title 25, section 4103(22), as approved in writing by Minnesota Housing.
• An area served by a Joint County-City Economic Development Authority.
Eligible project areas with fewer than 30,000 people will be given preference. Refer to Minnesota Statute 462A.39 for additional information. Eligible housing types are market rate residential rental properties that serve employees of businesses located in an eligible project area. A portion of the units can have rent restrictions or income restrictions. Eligible activities include the following or a combination of the following:
• New construction
• Acquisition and rehabilitation of a property that creates new housing units. This program would only fund those new units of housing.
• Adaptive reuse of an existing property that is not currently used for housing.
The project proposed by Rebound Partners would provide eight units of market rate rental homes including four family sized townhomes with three bedrooms, two one-bedroom apartments, and two studio apartments. It would redevelop the property at 1000 Division Street to do so and would add much needed housing close to downtown and with easy access to transportation routes to job centers in Northfield.
Additional minimum application requirements are below. Northfield meets or exceeds all of the requirements.
• Project Area Rental Vacancy Rate: The average vacancy rate for rental housing located in the eligible project area, and in any other city located within 15 miles or less of the boundaries of the area, has been 5% or less for at least the prior two-year period.
• Eligible Uses: Funds will be used on qualified expenditures (refer to the WHDP Guide for more information).
• Match: Secured matching funds of one dollar for every two dollars requested in funding
• Community Need: One or more letters of support from one or more businesses located in the eligible project area, or within 25 miles of the area that employ a minimum of 20 full-time employees in aggregate.
• Maximum Award Amount: Funding request cannot exceed 50% of the project’s total development costs.
Letters of support will be provided by major employers in Northfield and City staff will work closely with CAC and Rebound Partners’ staff. CAC’s grant writer will complete the application on behalf of the project partners.
Alternative Options:
None recommended.
Financial Impacts:
The project partners anticipate requesting at most $800,000 for the project. Applications are limited to 50 percent of the project’s total development costs. Rebound Partners has committed to the matching funds.
Tentative Timelines:
Minnesota Housing typically announces awards annually in the fourth quarter.