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Construction Grant for Multi -Family Development <br />Assist a developer in constructing multi -family rental units with a portion dedicated to meeting affordability <br />standards. Cost range: using up to all the funds the City has received and is holding. <br />Issues to Consider <br />In putting together a program or policy on how to spend the money, staff is taking into account the following <br />issues when making recommendations to the Council: <br />Income Verification: Staff will be responsible for verifying the recipient's income and household size for any of <br />the home -improvement programs. This commonly -accepted way of doing this is to examine the recipient's most <br />recent tax returns. Some jurisdictions rely on a "self reporting" form, but that would become extremely <br />time -intensive should allegations of fraud be made. In a multi -family situation, the developer/management <br />company will be responsible for reporting to City staff and likely will be using additional money from other <br />sources that will require reporting anyway. <br />Administering Payment: Staff will be responsible for paying the recipients of the funds and then assuring that <br />the money is spent for its intended purpose. Our program could be set up in a way that the contractors are paid <br />directly —both down and final payments. <br />Admin Fees: Right now, cities cannot use any of the money to cover staff time in administering these programs. <br />There may be some legislation introduced this year to allow cities to tack on an administrative charge for the <br />grants or loans. <br />Repayment of Loans: Staff does not have the capacity to process monthly loan payments. Should a loan <br />program be desired, cities can contract with third party agencies to administer one, but those costs cannot be <br />funded through LAHA money. Often, these agencies tack on a fee for their services that is paid by the <br />homeowner or an arrangement through the city's general fund. The city could structure a program as a <br />zero-percent/zero-payment/forgivable after X-years program (essentially a lien on the home) so that the money is <br />not used to "flip" a house or build resale value instantly before selling. Should it sell before the specified time, <br />the money is paid back at the time of closing in full or by a reduced amount. <br />Multi -Family Grants: The Council would need to be committed to assisting a developer constructing <br />multifamily housing with a measurable affordability component in Ramsey. <br />Not Using the Funds: The funds are meant for helping our residents or potential future residents. Should the <br />money not be used, it will go back to Minnesota Housing and used in other communities. <br />Time Frame/Observations/Alternatives: <br />Since some money needs to be committed, or spent by the end of next year, staff would like direction to prepare a <br />policy for adoption this spring and then start to work with residents and/or developers on using the money. <br />Funding Source: <br />LAHA Sales tax revenue <br />Recommendation: <br />Please provide direction on the types of projects the Council would like to see the money used for. Should the <br />Council want to explore a partnership with a third -party agency to administer housing improvement loan <br />programs, provide that direction as a partnership may take a few months to put together. <br />Outcome/Action: <br />Provide direction to staff. <br />