Request for Committee Action

2022-00637 - Minneapolis Public Housing Authority Scattered Site Family Expansion Project Housing Revenue Bonds

2022-00263 - 2021 Metropolitan Council Livable Communities Account grant awards

2022-00104 - Land Sale: 1910 25th Ave N to Community Housing Resources (aka Minneapolis Public Housing Authority)

2022-00103 - Land Sale: 2807-2811 Emerson Ave N to Community Housing Resources (aka Minneapolis Public Housing Authority)

2021-00651 - 2021 City Budget revisions: American Rescue Plan Act funding

2018-01428 - Guiding principles in support of investments in public housing

The Minneapolis Public Housing Authority (MPHA) plans to develop 84 two and three-bedroom apartment homes in 16 small apartment buildings (four to six units each) through its Family Housing Expansion Project, which aims to provide deeply affordable family housing in Minneapolis. All 84 units will utilize Project Based Vouchers and each household will pay no more than 30% of their income towards rent. Of the 84 units, 64 units will be available for families with incomes up to 30% Area Median Income (AMI) and 20 units will be available for families with incomes up to 60% AMI. Seventeen units (20%) will provide housing for families experiencing homelessness and will be filled through Hennepin County Coordinated Entry.

Of the 16 proposed sites across the city, 14 are existing MPHA properties and two parcels are being purchased by Community Housing Resources, an MPHA affiliate, from the City of Minneapolis. The existing MPHA properties are duplexes on sites that can now accommodate additional housing units due to the Minneapolis 2040 Plan and subsequent zoning changes.

In a unique partnership, MPHA selected Frerichs Construction and Rise Modular Manufacturing as a team on this project. The modular construction will provide a singular building type across the 16 sites, which has a 4- and 6-unit variant. MPHA expects an accelerated development timeline and other efficiencies with the modular construction.

MPHA is following the guiding principles of the Memorandum of Understanding (MOU) that was established between MPHA and the City of Minneapolis regarding investments in public housing. Those principles include long-term public ownership and affordability, post-redevelopment protection of the property and management by MPHA, and resident consultation and resident protection. The Family Housing Expansion Project will be controlled by a long-term ground lease and include affordability restrictions that ensure the properties are reserved for low and very low-income households. MPHA, as the owner and controller of Community Housing Resources, the fee owner, and Family Housing Resources LP, the developer, will be ultimately responsible for management and maintenance of the properties.

Currently 13 of the MPHA owned sites have units occupied by existing tenants and these tenants will not be permanently displaced by the construction process. MPHA submitted a relocation plan that was reviewed by a third party under contract with the City and was found compliant with the City's relocation requirements. MPHA has worked with its impacted tenants to identify temporary relocation options, and to inform tenants regarding their relocation rights and protections. Once construction is complete, residents can return, their housing benefits will continue, and their rent calculation will remain the same.

Residents of the existing public housing units provided feedback on project design before anyone else and were offered the opportunity to participate in a Resident Design Advisory Panel. This Resident Design Advisory Panel consisted of residents that would be temporarily relocated, residents currently living in MPHA fourplexes, and other residents in MPHA’s scattered site housing. They met monthly from September 2021 through February 2022. The virtual meetings allowed residents to provide tours of their own living spaces and engage directly with the project’s architects on design decisions. Resident input influenced the design of kitchens and resident storage, material and color selections throughout the buildings, and site design.

PROJECT FINANCING

The total development costs for the project are currently estimated at $49,222,208. MPHA will contribute $8,100,000 in developer equity and will defer $1,323,912 of its developer fee (which is the maximum amount of deferred fee that is supportable by cash flow). The total developer fee is $3,624,985, which complies with the City’s developer fee policy. Notably, this project includes rooftop solar arrays that will provide an additional source of funding for the project as well as allow the project to utilize Solar Tax Credits. Please see the attached Project Data Worksheet for the financial details of the project.

Housing Revenue Bonds

The City received a bond application from Community Housing Resources, an affiliate wholly controlled by MPHA (on behalf of Family Housing Resources LP), requesting up to $26 million in tax-exempt Housing Revenue Bonds to support the development of the MPHA Scattered Site Family Housing Expansion Project.

Staff recommends approval of the issuance of up to $26 million in tax-exempt entitlement multifamily housing revenue bonds. The requested bond issuance will enable the project to meet the required 50% test. The bonds will be issued in one or more series and will be used to finance acquisition, construction, and equipping of the project, as well as long-term debt. The bonds will also generate approximately $19.3 million in 4% tax credit equity to the project as a source of funds.

The status of the City’s HRB entitlement is shown in the table below.

Bond Purchaser/Underwriter: US Bank (prior to conversion), Citibank (post-conversion)

Tax Credit Equity Investor: US Bank affiliate

Bond Counsel: Kennedy & Graven

City Council Members:

Elliott Payne, Ward 1

Michael Rainville, Ward 3

Jeremiah Ellison, Ward 5

Jamal Osman, Ward 6

Jason Chavez, Ward 9

Andrew Johnson, Ward 12

Linea Palmisano, Ward 13