Item Description:
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Neg Agmt PR00007145 with Glencrest Group to extend the affordability period for an affordable housing property, 03/19/25-12/31/55, NTE $5,000
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Resolution:
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BE IT RESOLVED, that the Executive Director be authorized to negotiate Agreement PR00007145 with Glencrest Group, or affiliated entity, to extend the affordability period for an affordable housing property, during the period March 19, 2025 through December 31, 2055, with a not to exceed amount of $5,000; that following review and approval by the County Attorney's Office, the Chair be authorized to sign the agreement on behalf of the authority; and that the Controller be authorized to disburse funds as directed.
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Background:
Due to recent housing, economic, and demographic trends, Minnesota cities need more affordable housing. Already burdened low- and moderate-income tenants are increasingly paying more than 30 percent of their income on rent and utilities. At the same time, many rental property owners are faced with increased operating and maintenance costs, as well as market opportunities to increase rents.
Minnesota Statute 273.128 provides that qualifying low-income rental properties are eligible for 4d (1) tax classification (qualification requires a recorded affordability declaration against the property). According to state statue, eligible units use the 4d (1) tax class rate of 0.25 percent. The regular rental class rate of 1.25 percent would apply to non-qualifying units.
Lakeview Commons offers 64 units of affordable housing in the City of Plymouth, most of which have 3 bedrooms, and one leased to a local service provider. The project was originally financed through the Low-Income Housing Tax Credit (LIHTC) program, which restricted rent affordability and incomes to at or below 60 percent of the area median income (AMI). Due to rent restrictions and large unit sizes, currently 40 units are rented by families using the Plymouth Housing and Redevelopment Authority’s federal Housing Choice Vouchers.
The 30-year LIHTC extended use period ended in late 2024. As loans begin to amortize this spring, the project would need to increase rents to afford debt payments. The owner prefers to maintain affordability if feasible.
The requested Hennepin County Housing and Redevelopment Authority (HCHRA) investment of $5,000 and accompanying restrictive covenant will secure rents at 60 percent of AMI for up to 30 years and make the property eligible for 4d (1) tax classification.
According to Minnesota State Statute 383B.77, HCHRA project investments must be approved by the city in which the project is located. The City of Plymouth provided municipal consent on February 25, 2025.
Current Request: Negotiate Agreement PR00007145 with Glencrest Group to extend the affordability of a property in Hennepin County, during the period March 19, 2025 through December 31, 2055 with a not to exceed amount of $5,000.
Impact/Outcomes: Up to 64 units of housing in Hennepin County may remain affordable for households at or below 60 percent of AMI.
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Recommendation from County Administrator: Recommend Approval