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11/21/2023 Resolutions 2023-307RESOLUTION 2023-307 WHEREAS, the City of Grand Island, Nebraska, a municipal corporation (the "City"), has determined it to be desirable to undertake and carry out urban redevelopment projects in certain areas of the City that are determined to be blighted and substandard and in need of redevelopment; WHEREAS, the Community Development Law, Chapter 18, Article 21, Reissue Revised Statutes of Nebraska, as amended (the "Act"), prescribes the requirements and procedures for the planning and implementation of redevelopment projects including redevelopment projects involving construction of workforce housing; WHEREAS, the City has prepared an incentive plan for construction of housing in the municipality targeted to house existing or new workers in the City of Grand Island, Nebraska, a copy of which is attached hereto as Exhibit A. WHEREAS, The City published and mailed notices of a public hearing on such Incentive Plan pursuant to the Section 2115.01 of the Act, and has on the date of this Resolution held a public hearing on the proposal to approve the Incentive Plan; and WHEREAS, the City has reviewed the Incentive Plan and determined that such incentive plan is necessary to prevent the spread of blight and substandard conditions within the municipality, will promote additional safe and suitable housing for individuals and families employed in the municipality, and will not result in the unjust enrichment of any individual or company. 1. The Incentive Plan is necessary to prevent the spread of blight and substandard conditions within the municipality, will promote additional safe and suitable housing for individuals and families employed in the municipality, and will not result in the unjust enrichment of any individual or company. 2. The Incentive Plan is approved in the form attached as Exhibit A and the Community Redevelopment Authority is authorized, subject to redevelopment plan approval by the Council, to enter into redevelopment contracts to provide tax increment financing assistance for construction of workforce housing. 3. This Resolution shall become effective for all redevelopment plans approved after January 1, 2024. NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND COUNCIL OF THE CITY OF GRAND ISLAND, NEBRASKA, approving a Workforce Housing Incentive Plan. BE IT FURTHER RESOLVED, that the Mayor and designees are hereby authorized to take all actions necessary to effect the purpose of this resolution. Adopted by the City Council of the City of Grand Island, Nebraska, November 21, 2023 -�/ R er G. Steele, l�%Iayor Attest: J' Granere, Deputy City Clerk WORKFORCE HOUSING 1NCENTIVE PLAN FOR THE MUNICIPALITY OF GRAND ISLAND, NEBRASKA PURSUANT TO THE NEBRASKA COMMUNITY DEVELOPMENT LAW Introduction: The 2018 Nebraska Legislature passed Legislative Bill 496 (the "Bill")which amended the Nebraska Community Development Law (the "Act"). The Bill was signed by the Governor in May of 2019. Subsequent amendments were made with the passage of Legislative Bill 1003 in 2020 and Legislative Bill 531 in 2023. Before the Legislative Bill 496 was passed, TIF was generally limited to pay costs of site purchase, utility extension, public infrastructure, sidewalks, planning and certain rehabilitation expenditures. The Bill, among other items, provided that tax increment financing (TIF) may be used for the actual construction of new workforce housing and rehabilitation costs exceeding 50% of assessed valuation on residential workforce housing units. Prior to utilizing TIF for workforce housing, any City that is not of the metropolitan class must (a) receive a housing study within the last 60 months and (b) hold a hearing on an incentive plan for the use of TIF for workforce housing. Workforce housing means: (a) Housing that meets the needs of today's working families; (b) Housing that is attractive to new residents considering relocation to a rural community; (c) Owner-occupied housing units that cost not more than two hundred seventy-five thousand dollars to construct or rental housing units that cost not more than two hundred thousand dollars per unit to construct. For purposes of this subdivision (c), housing unit costs shall be updated annually by the Department of Economic Development based upon the most recent increase or decrease in the Producer Price Index for all commodities, published by the United States Department of Labor, Bureau of Labor Statistics;(d) Owner-occupied and rental housing units for which the cost to substantially rehabilitate exceeds fifty percent of a unit's assessed value; and (e) Upper-story housing. §18-2103 (32) R.R.S. Rural community means any municipality in a county with a population of fewer than one hundred thousand inhabitants as determined by the most recent federal decennial census. The Hall County 2020 Census indicates a population of 62,895. §18-2103 (30) R.R.S. In 2019 the City of Grand Island (the "City") received a housing study entitled "Community Housing Study with Strategies for Affordable Housing" (the "Study"). The Study noted that Grand Island had a"tight" housing market for current and future residents that is a challenge to attract new businesses to locate here. The study found that 1,361 additional owner occupied and rental units were needed before the end of the planning cycle in December 2024. Between January 1 of 2019 and December 31 of 2022 permits for 688 units were issued leaving a need for an additional 673 units to be permitted and constructed in the last 2 years of the study period. The City of Grand Island has been using Tax Increment Financing (TIF) to encourage the development of housing since its first TIF project. The City of Grand Island partnered with the Ardor Group out of Lincoln to redevelop the Yancey Hotel as commercial space and condominium apartments. The next projects were a partnership between the City and Hoppe Homes to build the Cherry Park Apartments in southeast Grand Island in the mid 1990's. Based on the May 1, 2023 TIF report produced for the Community Redevelopment Authority of the City of Grand Island (CRA) 51 of the 91 TIF have projects included a housing component. Between January 1 of 2019 and October of 2023 the City and CRA have approved contracts for 1649 units of housing (827 Multifamily and 822 single family detached or single family attached). Build Grand Island a working group supported by The Grand Island Area Economic Development Corporation has applied for and received $2,000,000 of Rural Workforce Housing funds from the State of Nebraska with a match of $2,675,000. They recently received $845,000 from the Nebraska Affordable Housing Trust Fund for the completion of 15 units designated as affordable for 10 years to serve households making at or below 120% of area median income. They are in the process of applying for an additional $4,000,000 in Rural Workforce Housing funds that will be matched with at least $1,000,000 if awarded. The law requires that a workforce housing incentive plan be necessary to prevent the spread of blight and substandard conditions within the municipality, promote additional safe and suitable housing for individuals and families employed in the municipality, and will not result in the unjust enrichment of any individual or company. This Workforce Housing Incentive Plan shall be effective for the City of Grand Island, Nebraska, until modified pursuant to the Act. TIF for workforce housing for each project is to be implemented pursuant to a redevelopment plan recommended by the CRA, and approved after hearing by the Grand Island City Council pursuant to the Act except in the case of an expedited TIF application is allowed by the City of Grand Island. Expedited TIF applications that include workforce housing may under the provisions of this incentive plan be approved in the same manner as other eligible expedited TIF applications. This Workforce Housing Incentive Plan is intended to incent development of workforce housing that supports current and prospective employees of local and area businesses and public service corporations. IT IS NOT INTENDED AND WILL NOT BE USED TO CONSTRUCT HIGHER END HOMES OR CUSTOM BUILT HOMES. All redevelopment contracts between the CRA and a redeveloper providing TIF benefits for workforce housing will be negotiated on a case by case basis with TIF incentives to be determined by the CRA in amounts required to accomplish the goal of incenting the development of safe and decent workforce housing in the City of Grand Island. The CRA shall document that each project utilizing TIF far Workforce Housing shall not unduly enrich the redeveloper. This shall be accomplished by examining proposed profit on each owner occupied residence and the return on investment of each apartment project. Each redevelopment plan is unique and the capacity of each redeveloper is different. In each redevelopment contract for workforce housing the CRA shall set standards appropriate for each workforce housing development project related to residence or apartment size, construction standards, costs and rental rates. Workforce housing TIF incentives will be provided subject to the following requirements. Owner occupied housing: Spec housing development: TIF inay be used for actual construction costs to offset or reduce risks of (a) holding costs prior to sale; (b) reduction in sales price from realistic projected sale price; and for a reduction in sales price for the benefit of the a purchaser. The CRA shall insure that projections for construction and sales costs are reasonable in the market. The redeveloper must disclose a detailed project budget including a line item construction budget and sale price that is reasonable and consistent with current construction costs in the city of Grand Island. The redeveloper shall provide the CRA with actual costs for the completed project. Rental housing: TIF inay be used for actual construction costs to offset or reduce risk to profitability to incent investment in workforce housing apartments. The redeveloper must disclose a detailed project budget including a construction budget and 5 year profit and loss calculation that is reasonable and consistent with construction costs with and appropriate return on investment in the city of Grand Island. The redeveloper shall provide the CRA with actual costs for the completed project. Owner-occupied and rental housing units for which the cost to substantially rehabilitate exceeds fifty percent of a unit's assessed value: 1. For existing residences requiring rehabilitation in excess of 50% of assessed valuation, TIF inay be used for actual rehabilitation costs to offset or reduce risks of (a) holding costs prior to sale; (b) reduction in sales price from realistic projected sale price; and for a reduction in sales price for the benefit of the purchaser. The CRA shall insure that projections for construction and sales costs are reasonable in the market. The redeveloper must disclose a detailed project budget including a construction budget and sale price that is reasonable and consistent with construction costs in the city of Grand Island. The redeveloper shall provide the CRA with actual costs for the completed project. (Note, residential rehabilitation costs are an allowable TIF expenditure under the Act without necessity of qualifying for workforce housing approval.) 2. For existing apartments requiring rehabilitation in excess of 50% of assessed valuation TIF inay be used for actual rehabilitation construction costs to offset or reduce risk to profitability to incent investment in rehabilitation of workforce housing apartments.. The redeveloper must disclose a detailed project budget including a construction budget and 5 year profit and loss calculation that is reasonable and consistent with construction costs with and return on investment in the city of Grand Island. The redeveloper shall provide the CRA with actual costs for the completed project. (Note, residential rehabilitation costs are an allowable TIF expenditure under the Act without necessity of qualifying for workforce housing approval.) Upper-story housing. 1. For upper-story housing for apartments, TIF inay be used for actual rehabilitation construction costs to offset or reduce risks to profitability. The redeveloper must disclose a detailed project budget including a construction budget and 5 year profit and loss calculation that is reasonable and consistent with construction costs with and return on investment in the city of Grand Island. The redeveloper shall provide the CRA with actual costs for the completed project. 2. For upper-story condominium/townhomes requiring rehabilitation, TIF inay be used for actual construction or rehabilitation costs to offset or reduce risks of (a) holding costs prior to sale; (b) reduction in sales price from realistic projected sale price; and for a reduction in sales price for the benefit of the a purchaser. The CRA shall insure that projections for construction and sales costs are reasonable in the market. The redeveloper must disclose a detailed project budget including a construction budget and sale price that is reasonable and consistent with construction costs in the city of Grand Island. The redeveloper shall provide the CRA with actual costs for the completed project. (Note, residential rehabilitation costs are an allowable TIF expenditure under the Act without necessity of qualifying for workforce housing approval.) On all redevelopment projects requesting workforce housing TIF the CRA shall consider acceptable returns on investment for the type of housing proposed including cap rates. Approved by Grand Island City Council on November 21, 2023 with the passage of Resolution 2023-307.