City Attorney Kevin Staunton gave a presentation on Edina’s affordable housing solutions for the Excelsior City Council at the May 17 meeting. There was no formal action and the council will continue the discussion at an upcoming strategy session.

Staunton acknowledged that Excelsior city leaders have discussed affordable housing options and the purpose of the presentation was to give an idea of how another local city has handled the matter.

“I think you might find it helpful as you’re wrestling with the same issues,” Staunton said.

Come Home to Edina initiative

The Come Home to Edina program was administered by what is now the Edina Housing Foundation. This was a preservation strategy that began in the 1980s, Staunton said. A tax-increment financing district was created and a pool of funds was generated to fund second mortgages for individuals who couldn’t quite “make the sticker price,” Staunton said. Those people could get a second mortgage to make up the gap.

“Over time, the city has been able to ... fund purchases of housing, and to the tune of $5 million,” Staunton said.

Since 2007, 106 households have benefited from the initiative. It’s a revolving fund with loans that residents pay back with the second mortgage payments, Staunton said.

Another strategy is to produce new units. There are a variety of success stories such as 10 affordable units in Nolan Mains at 50th and France and 17 units in a project in the Grandview area. Some new builds are even 100% affordable, such as the 62-unit Amundson Flats.

Edina was able to get special legislation passed to create a housing tax-increment financing district. The city can use those funds to supplement the rents to create affordable housing, Staunton said.

Other preservation efforts

One idea is to solicit home purchases of properties that might be eligible for tear down to preserve them as a “more modest” housing option, Staunton said. The Housing Trust Fund would help finance the property so it can be sold to an eligible affordable housing occupant. The land is split from the building so the city or a trust owns the land and the affordable housing occupant can purchase the building, gain equity and when they sell the building, get equity back.

“The city gets equity back in the land and then you do it all over,” Staunton said.

A variation on that idea is for properties that have been owned for many years and are in “tough condition,” Staunton said. Edina authorized a program where it permits loans up to $30,000 to fix up the home in exchange for a right of first review when the time comes to sell the property.

It creates an affordability buffer by asking for a voluntary sale to the city, he said.

The second mortgage notion is probably the cheapest option, Staunton said. If the city can get some money then it can continue to revolve the funds.

Council discussion

Mayor Todd Carlson said he thinks Excelsior has a unique opportunity. The city doesn’t have as much land or development opportunity as Edina, he said. However, it does have large parcels where the city could get funding or require contributions to affordable housing, whether it’s in the form of a housing trust or purchasing housing the city doesn’t want to see torn down.

“For me, it’s all about scale,” Carlson said.

Staunton said that the discussion is within an affordable housing context, but Excelsior also has home preservation issues that it’s interested in. He suggested that city leaders consider affordable housing and address Excelsior heritage and character preservation in the city’s goals

Staunton said it is important for a city aiming for affordability to know the status to be able to measure its success or progress. On Excelsior’s rental side, such as apartments, it’s in “pretty good shape,” Staunton said.

“It’s the ownership side that’s probably more challenging and that’s true and all kinds of communities too,” Staunton said.

Councilmember Dale Kurschner said he likes the possibility of combining affordable housing with preserving old homes that people would otherwise tear down.

Staunton said the good news in a city like Excelsior is that there aren’t that many properties. Having two or three West Hennepin Affordable Housing Land Trust properties would make a big impact. He estimates that Edina has had four in the course of the last five to six years.

“It’s hard to make much headway in a bigger community because you do have to sink a lot of money into purchasing the property,” Staunton said.

Councilmember Lou Dierking asked how the Edina Housing Foundation was created.

The Edina Housing Foundation’s main role has been to administer the corpus of money in second mortgages. The City Council appoints some members and the Housing and Redevelopment Authorities appoints some members. It’s unique to its creation, Staunton said, adding it’s an idea for how Excelsior could raise funds.

“It was partly community leaders who wanted to do something to ... help with housing and the community and partly the development community and partly the city that all collaborated to create that,” Staunton said.

Kurschner asked what to do when the affordable units are no longer affordable. He said that some of the projects are only affordable for eight to 15 years.

“Right. And then it returns to it and you’ve lost control or the ability to do anything about the affordability,” Staunton said.

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