Housing Authority Approves Rent Increases, Defers Loan Payments
The Housing and Redevelopment Authority approved rent increases for its homebuyer program and granted a loan payment deferral for a major affordable housing development during its January 14 meeting.
The board voted 5-1 to approve changes to the Rental Homes for Future Homebuyers Program, including a 5% rent increase for current tenants and higher eligibility requirements for new participants. The increases will affect 21 rental properties in the program, with current residents seeing monthly rent increases ranging from $55 to $71. New tenants will pay rents set at Metropolitan Council's 50% area median income level of $1,615 per month.
HRA Administrator Anna Salvador said the rent increases are necessary to maintain safe and quality housing after significant capital improvements completed in 2024. The program, which has helped 60 households purchase homes to date, provides affordable rental housing with homeownership coaching over approximately five years. Salvador emphasized that despite the increases, most participants maintain healthy escrow contributions for future down payments.
The board unanimously approved Aeon's request to defer $395,445 in loan payments for 2025 on the Blooming Meadows South development. Dr. Eric Anthony Johnson, Aeon's president and CEO, explained that the 306-unit complex faced financial challenges following the pandemic, including 63% revenue loss due to nonpayment of rent and increased maintenance costs. The deferred payments will be added to the loan's maturity date in 2040, with regular payments expected to resume in 2026.
Staff also provided an update on sanitary sewer funding impacts, noting that new Sewer Availability Charges of $2,026 per unit could affect housing development costs. The city implemented the fees to fund $55 million in sewer improvements needed by 2040, with staff planning to return by March with potential exemptions for affordable housing projects.
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Votes (2)
Proposed Changes to the Rental Homes for Future Homebuyers Program
Dissent: One commissioner voted against the motion, though the specific identity or detailed reasons for dissent beyond general concerns raised earlier were not explicitly recorded for the vote.
Moved by Doubling [25:29] · Seconded by Carter [25:36]
The proposed amendments include increasing program eligibility for new households to 60% AMI (from 50%), while maintaining the 80% AMI ceiling, and incorporating the Met Council's 50% AMI rent as a new threshold for rent setting and increases. Staff emphasized the need for rent increases to cover significant capital improvements and maintain housing quality, balancing this with the program's goal of homeownership readiness. Commissioners raised concerns about the real-world impact of a 5% increase on low-income tenants, the timing of improvements, and the potential impact on the program's success rate in achieving homeownership. Staff confirmed that current policies allow a 5% annual increase and that financial readiness education is part of the program.
AON Loan Deferral Request
Dissent: None, the motion passed unanimously, although a commissioner voiced strong reservations prior to the vote.
Moved by Commissioner Wooten [45:52] · Seconded by Commissioner Say [45:52]
AON requested a deferral of their 2025 biannual loan payments for the Blooming Meadows South project, citing significant revenue loss during the pandemic, increased unit turnover costs, and ongoing efforts to refinance and secure funding for comprehensive rehabilitation. The HRA staff noted the financial risk given the HRA's secondary position as a lender and the potential for future subsidy requests. Dr. Johnson from AON explained the severe financial challenges faced by the organization and emphasized their commitment to the project and partnership with the city. Commissioners debated the long-term assurances for repayment and the opportunity cost of using the HRA levy, with one commissioner expressing conditional support for this one-time deferral.
Notable Quotes (8)
The purpose of the Rental Homes for Future Homebuyers Program is to offer affordable rents to support a pathway to homeownership for income qualifying households.
rents needed to increase to guarantee we could continue to maintain safe and quality housing.
I think it's really it would be a really good idea to actually speak to the tenants and where they're at because I understand you know there's the paperwork where their income is at but you know like I grew up in low income housing and know that the reality can be very different in the sense that there can be so many unexpected costs...
SOME OF THE IMPROVEMENTS HAVE BEEN MADE. THEY'RE GOING TO BE MADE WHERE IMPROVEMENTS SHOULD HAVE BEEN. WE SHOULD HAVE BEEN MAKING THEM OVER A PERIOD OF TIME AND NOW AS IT APPEARS TO ME THAT MAYBE THE BURDEN OF THOSE IMPROVEMENTS NOT BEING MADE IN A TIMELY MANNER IS BEING BORNE BY THE PAY THE CURRENT TENANTS.
GIVEN THE FINANCIAL SITUATION OF THE MEADOW SOUTH AND SECONDARY POSITION OF THE HRA AS LOAN. THERE IS FINANCIAL RISK THAT THEY WILL NOT BE ABLE TO MAKE FUTURE PAYMENTS ON THE LOAN
AFTER THE PANDEMIC AND THE EVICTION MORATORIUM WE BASICALLY SPACED ACROSS THE PORTFOLIO. WE LOST ROUGHLY 63% OF OUR REVENUE ACROSS THE ORGANIZATION TURNS TO NONPAYMENT OF RENT
I HAVE A PERSONAL STAKE IN THIS ONE BECAUSE I WAS HERE TO GET DEAL DONE AND I FEEL BLOOMINGTON IS A GREAT PARTNER AND WE DO NOT WANT TO DO ANYTHING TO DISRUPT THAT RELATIONSHIP.
I WILL SUPPORT THIS ONE THIS YEAR BUT IF THINGS START FALLING APART IF NEXT YEAR WE HAVE TO COME BACK AND DO THIS AGAIN IT'S REALLY HARD TO JUSTIFY THE CONTINUED PUBLIC SUPPORT
Ordinances & Resolutions (5)
Approving amendments to the Rental Homes for Future Homebuyers Management and Admission Policies.
Loan provided by the HRA to AON for the acquisition and improvements of Village Club/Blooming Meadows.
Established by the HRA to support the Blooming Meadows project, capturing increases to property value.
First city-wide fee adopted by Bloomington to fund sanitary sewer improvements, effective January 1, 2025.
Program outlining necessary sewer improvements between now and 2040, totaling $55 million.
Source document
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Other Topics from This Document
Rental Homes for Future Homebuyers Program Amendments
AON Loan Deferral Request for Blooming Meadows
Sanitary Sewer Funding Update
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