Good evening and welcome to tonight's Town Talk. I'm city manager Scott Neil. This year we planned a series of town talks around topics important to a diner residence. Tonight we're going to talk about affordable housing. Affordable housing development manager Stephanie Hockenson will share the city's affordable housing goals. We'll talk about the need for affordable housing in our community and the city's response to that need. Stephanie will speak for about 30 minutes. After her presentation, we will take questions. We will end tonight's Town Talk when there are no more questions or at 8 o'clock, whichever is first. However, you can continue to ask questions and make comments online at bettertogetheradina.org for the next week. The online conversation closes Wednesday, October 15th. Now I'd like to formally introduce Stephanie Hockenson. Stephanie has served as the city's affordable housing development manager for seven years. She earned a bachelor's degree from Duke University and a master's degree in public and nonprofit management from the University of Minnesota Humphrey Institute and School of Social Work. She brings together, she brings knowledge of both the developer and the public funding procedures processing to our workplace. Stephanie understands all steps of the development process, including feasibility analysis, financial modeling, site selection and acquisition, pre development funding, assembling and development team, securing financing and shepherding developments through closing and construction. She excels at project management as well as bringing project partners and stakeholders together to work efficiently and transparently. Her highly efficient working style and dedication to affordable housing makes Stephanie an integral part of our community development team. Please help me welcome Stephanie Hockenson. Thank you, Steph. So in addition to that, some of you may be wondering who I am and why it's me that's talking to you today. Well, I'd like to say it's because I spent a fair amount of my junior high school lunch times at the Arby's on France Avenue, or I spent all of my meager allowance and summer wages at Southtown, 50th and France. But it's not that. I began my professional life in housing. Fundamentally, I believe that with stable housing, children can function better in school, people can maintain stability in their workplace, and people have better health comes. I believe access to safe and secure housing is fundamental to a safe and secure society. And I believe there are economic benefits to it as well. If people are a daily house and they can do better in school and their jobs and have better health outcomes, that's better for everybody. So I started working at Project for Pride and Living, a nonprofit in Minneapolis, that is an owner and developer of Affordable Housing. From there, I went to work for the city of St. Paul for 11 years as a housing project manager, working with neighborhood groups on their single family housing projects, as well as some apartment developments. But then I decided that I needed to know a different perspective. And so I became a consultant for housing developers, while I'm primarily working in the Twin Cities, to really get the nuts and bolts of what it takes to be on the development side of things. After six and a half years of doing that, I really wanted to return to the public sector. This opportunity came up and I was thrilled to be hired as the city's very first Affordable Housing Development Manager. Before I dive in, I want to let you know about a new program that's being launched by the Adina Housing Foundation called the Heroes Program. Excuse me as I click on something. This program is for people that work in the city serving this people of Adina, be they nurses, teachers, police, whether or not they plow our streets. We want them to have the opportunity to live closer to their jobs where they can live where they serve. But I'll get more on this later. Tonight's talk is not intended to be comprehensive. Just some highlights to focus on ownership housing and what the city is doing to make home ownership possible to young households with children starting out and to help seniors who may have called Adina their home be able to live in community when they want to downsize from their home. There are three pillars or areas that we focus on. And these are to preserve and improve the quality of existing affordable housing while discouraging displacement of our residents. Diversifying the housing stock through targeted redevelopment to provide a variety of ownership and rental housing opportunities at a range of income levels and to strengthen protections for renters to promote housing stability. The city as a government entity, we tend to get involved where the marketplace does not. That is part of what is one role of government. And so with market rate, a code and zoning compliance single family homes, we have very little role. But where we come in is where there are gaps in what has been provided in the marketplace. So, to lay the groundwork regardless of why I work on affordable housing, I want to respond to some of the reasons why the city cares about affordable housing. One reason city leaders and staff are interested in affordable housing is because many residents have been requesting it. Every two years, the city engages a research firm to conduct a quality of life survey to measure. Resident satisfaction with city services. And to gauge interest on various topics. The survey data is useful. It helps guide our work. It lets us know what you the residents want from your city. And it lets us know what concerns you may have. The 2025 Edina Quality Life Survey provided residents the opportunity to give us feedback. And what we learned through the survey is that one of the top four most serious issues facing the city is the need for more affordable housing. Now for the charts. So, to be more specific, 74% of respondents said that the city needed to preserve the remaining stock of smaller starting homes. This is an increase from 66% just two years ago. 37% of the people responded that median density developments such as town homes need to be developed. Fewer people responded to wanting accessory dwelling units in high density multifamily housing. But that's not really very surprising. As 93% of the residential land use is zoned for single family housing, those responses make sense. Because that is the type of housing that we have most of. The survey helps the city understand what residents like about the city to learn what residents want. Staff also looks at data. And the data seems to align with what we're hearing in the survey results. Now this is a big slide. Housing, what it's saying in sum is housing is getting more expensive. The percentage of high-end luxury homes is increasing. And the percentage of lower cost entry level homes is decreasing. Now if you look at the very top line that is dark gray, hopefully it's turned out, those are homes that are between three and four hundred thousand dollars. And the green line at the bottom are homes that are under three hundred thousand dollars. As you can see, especially since 2021, those numbers have fallen dramatically. Conversely, the red line are homes over a million dollars and the lighter gray line and the yellow line rather are homes between seven hundred and a million dollars. Those numbers are increasing. In 2023, it was estimated that fewer than 16% of the housing stock was valued at less than five hundred thousand dollars. Now please keep in mind the Met Council considers affordable ownership, affordable housing to be three hundred and six thousand dollars. So there's very little that is considered affordable ownership in the city. Now that is based at three hundred thousand comes from looking at what the income is for a family of four and eighty percent of the area median income. Another reason why housing of this value, this level is hard to find, is research is showing that people are staying in their homes. If a home is paid off, if you bought a home in the 70s, 80s, 90s and it may be paid off, the alternatives for moving are slim. For age restricted senior housing, rents can exceed three thousand dollars a month. And if you have a house that's paid off, moving, the options out there are just not favorable to moving. So the supply of the older homes that may be smaller, they're also not going up on the market that often. So there's just fewer opportunities for young families starting out and there are a few opportunities for people who want to downsize to a smaller home. Edina used to be a place where a traditional family of one, working adult, could afford a home. And this person could be in a typical professional field or a laborer and they could find a home, a skilled worker, they could find a home in Edina. And that opportunities are fading. This is true nationwide, but the gap between incomes and housing costs in the city are wider than we're seeing in other communities. So for the city, there's research out there that for a city to be truly healthy, there needs to be a range of housing types and housing costs to attract families with the young children and to attract workers to work in the places of employment. I'm not getting the slide events. Okay. As we know, the reduction of low and moderate priced housing is not just due to inflation, nor is it because there's more demand for housing than there is supply, which dries up the cost. In Edina, we are also experiencing a physical loss of my moderate priced homes due to tear downs and rebuilds. Although this has a positive impact of property taxes collected, it also impacts who can buy a home in this community. In the past 10 years, we've lost over 1,000 homes that have been demolished and replaced with luxury homes. As of mid September this year, there have been 40 permits pulled for demolitions. In 2023, and the reason the data is a couple years old is because we track the homes that have been rebuilt after being torn down, and it can take 18 months or more to rebuild a home. But in 2023, the average price of a tear down was over $600,000. So not even in the affordable range. These homes are replaced with homes valued at over $2 million. I don't have all the data, like I said, for sunset because those homes are still under construction. So many residents have expressed interest in preserving smaller homes, but there's only so much the government can do. There are private property laws. So people have a right to sell their home to a developer. People have a right to buy home and tear down. And I'm not being disparaging of that. People build new homes to suit their needs. When I'm saying that there is an impact on neighborhoods, there is an impact on who then can move into the city. So these purple dots on this map show where there's concentrations of tear downs and rebuilds. So those neighborhoods where there's high concentration, those neighborhoods have been pretty dramatically transformed from being neighborhoods of smaller, more affordable homes, to becoming neighborhoods of larger and more luxury homes. Okay. I like this slide, but admittedly a lot of people do not. It's a lot of numbers. So what I'm trying to show here is this is for a family of four. And these are current Edina residents. 57% of households of four in Edina have incomes less than 120% of the area median income. So a majority of households of four in Edina have incomes of less than 100%, 20% of area median income. 32% of Edina families of four have household incomes between 30% and 60% of the area median income. The maximum price of a home that that group of people can afford is $238,000. They're just aren't homes valued at that level. So 57% of Edina households of four cannot afford a median priced home of $700,000. The max they could afford is about 490. And this is based on the 30 year mortgage at market interest rates. Why is this important? There are currently people in Edina that call Edina home. Yet it's challenging for them to lay down roots if the housing costs are wildly out of reach. Secondly, with a household size of four, there's a high probability that they have school aged children. Currently our school system, 20% of the school children are open and rolled. If we want to attract school aged children to the city, I think we need to look at the cost of housing. This next slide is for seniors. This is for households of two that are up to 100% of area median income. So these could be seniors who raise their families here and want to stay. Or they want to move into the city because their grandchildren live here and they want to be closer to their children and grandchildren. In this category, this group of people, 65% of these seniors have incomes from jobs, social security, pensions, cash from dividends that is less than 100% of the area median income. 45% of existing Edina seniors have incomes that qualify for subsidized rental housing. Downsized into a smaller affordable house is simply not possible unless they currently have a home with equity that they can use to buy in another home. Many seniors have opted to move into lower priced condominiums, but that is not without challenges with unknown changes in HOA fees. As with families of four, majority of seniors are getting priced out of the housing market. Many are choosing to remain in their single family houses that are required when the average incomes and average housing prices were much more aligned. For seniors who want to move out of their homes for social or health or other reasons, the options are simply limited. In addition to existing Edina residents not being able to afford to buy a home median priced home Edina or having income to rent a mercury department, many of the jobs that are based in Edina pay wages that are less than what is needed to buy or even rent here. This means that many people are traveling into the city each day for work. Pre-pandemic numbers estimated that 40,000 people traveled into the city each day for work. This means cars on the roads. And let me tell you, staff here about congestion. We hear about those cars on the roads. So in addition to a housing issue, this is actually a climate issue as well. Many of our Edina employers provide essential services. They're nurses and lab techs in our home as personal care attendants. So teaching our children or driving them to school, they're police officers, and they're people that, like I mentioned before, repair roads. They need to show up for work, regardless of how far they have to drive. Therefore, there's a broad benefit to having housing within the city that is affordable to people that work here. So what are we doing about this? I've told you about the problems. Is there? What are our responses? When I was first hired, I was tasked with trying to figure out how to create affordable ownership opportunities. This was a daunting task. And truthfully, I questioned my decision. How were we going to create affordable ownership opportunities in the city? The median housing values seven years ago were high, and they continue to grow. And much faster rate than incomes. Yet in 2021, we created the Affordable Ownership Preservation Program, building upon our experience of using community development block grant for the city. And we also created the community land trust. And so what a community land trust is, it's a nonprofit. They buy a moderate priced home that still may be out of reach for a lot of these workers and a lot of these families. And they separate the ownership of the home from the land. So the nonprofit continues ownership of the land, and they sell the home for a far reduced price to a home owner. And they sell the home for affordable for 99 years because of this ground lease that they don't own the land. So they can't keep all the equity that is when the home is increasing value. They can only capture that when they sell the home, a portion of that increase. And this keeps the home continues to be affordable. Well, prior to 2021, we supported it through our block grant allocation from the federal government. And it was, we were able to buy maybe one home a year for many years from 2007 to 2021. We could preserve one home a year. But in 2021, the HRA made a significant investment to proactively seek moderate priced homes and homeowners that want to sell their home homeowners who have to said that they don't want their home torn down. That they have really fond memories of raising their families in those homes. And they wanted to go to another homeowner. They don't want, they want someone else to have history in that house. And they also don't want to deal with the staging, you know, and all the things that are needed to sell a home. So we sent out a postcard to every homeowner that had a home valued up to $425,000 and said we're a third option between staging it and between the house. And we're not selling it outright as is to a developer. We will partner with our community land trust to buy the home, have the community land trust fix it up and then sell. We started out with just partnering with homes within reach, but in more recent years after 2021, we added Twin Cities Habitat for Humanity. It made a difference. As you can see from this chart between 2007 and now we have preserved 36 thus far more on the way modest homes through this program. Just since 2021, 22 of that 36 homes have been preserved through this program. Another thing that we're helping with homeowners is the Home Rehab Program. This allows people to fix up their homes at very low rates so they can stay in their homes. We had a Home Rehab Program again using our Black Grant funds that was administered by the county, but they were it was very deeply affordable. We wanted to hit a different bracket of the population that program still exists, but slightly higher income folks where we can lend them money deferred until they sell their home. The loan is forgiven if the home is sold back to the HRA or one of our partners. Since that program started in 2021, 58 homeowners have benefited have taken out home rehab loans. These homeowners are in 17 of our neighborhoods. The priority for this program is code violations and energy upgrades, but in some cases we have helped with getting lifts put in their homes so people can remain when the stairs are no longer tenable. It's a 2% interest that simple interest deferred. 30,000 is a maximum that can be borrowed. It's one and like I said, it's 100% forgiven if the home is sold to one of our partners. There are income limits and there are home value limits to this program. Another program that we had that has been suspended now due to lack of funds was the come home to a Dina program that was offered through the Dina Housing Foundation. This is a down payment assistance program that where the second mortgage, if people didn't wanted to buy home that was beyond their reach for what they qualified for a first mortgage, we could provide a second mortgage to help them purchase the home. The principal of this mortgage was deferred until they sold it or until term. This program has been around since mid 80s, but it went through a revamping in 2007 and since that time between 2007 and beginning of this year, we helped 183 households buy home in Edina with originating almost $9 million. So how this was financed is old mortgages would get paid off and they would finance new mortgages. And so it was a revolving program that was self-sustaining. But what has happened is there's been a far greater increase because as I mentioned, the gap between housing prices and incomes is growing. So more and more people became reliant on these type of programs to be able to buy a home. And so and more people are staying in their home. So there's not this recycling of funds. So we have temporarily suspended the program, opening it again when there's been $2 million or so repaid in old mortgages. Reason for that amount is once we open the program, there's usually a lot of interest and it takes a while to find a home. And so we don't want someone to become reliant on it, that this is how they think they're going to buy into a home in the city and then find out that funds have run out again. So this program was used to help people like condos, town homes, single family homes. There are income limits again and there are price caps on the cost of the home. And the people you would lend up to 25% of the value of the home at a cap of $90,000. A lot of people took advantage of this. We had teachers aides, we have a police officer, at least one. We have a chef in a local restaurant, we have daycare workers, we have people that work for the county. All sorts of folks have benefited from this program. So challenge to these programs is scarcity of financial resources. The Affordable Ownership Preservation Program and the Home Rehab Program, those are funded out of our Affordable Housing Trust Fund. These are funds that developers pay in when they're building an apartment, a market rate apartment, and they choose to not include affordable units within those market rate apartments. They pay the city a fee. We use that fee, it's put in the Affordable Housing Trust Fund, and that is what financed the Housing Preservation Program and the Home Rehab Program and a few other programs. None of these programs were financed through the tax levy. This was all through the Affordable Housing Trust Fund that was paid with these buy-in funds from developers. We also have a program, we get money from the state called LAHA, Local Affordable Housing Aid, and that's based in a formula. It's a sales tax that has been added in the last couple years, and then based on a formula throughout the state, we get an allocation. So in 2024, we received a little over $300,000. In 2025, we're receiving a little rate, $875,000. Another source of funding that is, there's no more coming into it, is the pooled funds from the Southdale to TIFF District. Now the district is closed, that is no longer a TIFF District, but there is old pooling funds that per state legislation, the funds must be used for affordable housing. All right, I talked in the beginning about a hero's program. This new program is to observe existing, moderately priced homes and provide down payment assistance programs similar to the Come Home to Edina program for hometown heroes. These are folks that work in the fire department, that work in the police department, that work in the schools, that work in the healthcare industry, that work in the city. There are income limits, and there are home value limits, but this is up to $100,000 of down payment assistance to a lot of these people who have to show up for work, be able to live closer to their job. We hope to roll out this program in November. I'm already getting calls from people that are interested, a few nurses, a few people that have worked in the high school that have found out about this program and they're already getting geared up to participate. As I said, $100,000 up to 25% of the home value, not to exceed $100,000. 25% of a household income has to go to the first mortgage costs. It's deferred until term or sale. It can be shared appreciation or interest only. The maximum home price is $600,000. Like I said, there's income limits. This will be all online. The major thing is you have to work in Edina in one of these industries. As a municipal employee, as a healthcare professional, as a teacher, educator, and in those fields generally. So that's me for tonight. I think I went over my time. I apologize, but we have some calling numbers. If you have any questions for me. Thank you, Stephanie, for that informative and thoughtful presentation. Stephanie will now stand for questions. If you have a question, call 312-535-8110. With the access code 2634-706-1036 and password 5454. There's no attendee ID number. Press star three on your telephone keypad when you're ready to ask a question. Communications director Jennifer Benerat will mute your line and place you into the queue until it's your turn to speak. Do we have any questions tonight? We don't have anyone on the line, but we do have a member of the audience like to ask a question. Very good. We don't usually have a live studio audience, so this is a treat. Stephanie mentioned that that's really loud. That 40,000 workers travel into Edina. Is that people working here traveling through here? We're both. The data we have is that those are traveling into the city in order to reach their jobs in the city. In the city. So there are people that live outside of Edina who work inside Edina. I didn't realize there were 40,000 workers in Edina. I have 40,000 jobs. The area median income, the 30% when you calculate that, is that 30% pre-tax or after income tax and stuff? That is gross income. That's gross income. I just one suggestion on one of the charts you showed how the percentage of various price homes were changing over time early on. That one. That's not adjusted for inflation. No, that is not. This comes from our assessing department. It would be helpful to get a real true picture of it or adjusted either by average area median income over time or consumer price index or something to see. Because obviously there's going to be just inflation, even if housing prices were keeping up, they would just drop off the market anyway. I agree. I think what's telling about this slide is how the different lines are changing. The top line took a deep dive below the other lines where if everything were adjusted purely, kept on track, it all go up pretty much the same rate. I hear what you're saying. I think that overly dramatizes the thing because you're not adjusting for income. It's not just the affordability. It's just the price of the house. It's still a serious problem, but it's just not quite adjusting as much. Thank you. Hi, tariffs and high interest rates from the Fed make this a very difficult issue to solve from the demand and the supply side. Why is right now a time to focus on affordable housing? I think we should always focus on affordable housing is truthfully, but now is a time people are struggling. With meeting their housing needs and truthfully, it's a lot more expensive. If you it's higher up in the hierarchy of needs and it's a lot more expensive dealing with housing, the unhoused dealing with. Emergency medical room care dealing with educational issues when there's lack of stability. So kids are moving around to different schools. Those ultimately have much higher costs in the long run than figuring out housing costs and permanent sheltering costs now. In your slides, you also mentioned that 20% of a DINOS students are open and rolled. Why is that an issue that a DINOS looking to solve through affordable housing? One of the reasons what they were seeing is that households of four, as I said, 57%, actually more than 57% cannot afford a median priced home in Edina. So it's presumed that those are households that there's household for that there's children in the household. If housing costs are so high and if young families cannot afford a home in the city because they're starting out in their career, they're just younger. Their incomes have not grown to a high level. Then they're not feeding those kids into the school district early. So one way to help build up a school population is creating housing that young families can move into. So they can raise their kids in the community starting at kindergarten, have them go up through the system. Because that's a lot of times how schools track, like who starts at kindergarten, who's going to match rate to the next grade level and keep those classrooms full starting at a younger age. And just one more question. How are Edina's mortgage rate buyback programs adjusting for the increase in interest rates? I don't know if I have a good answer to that because they don't necessarily in the sense that housing costs adjust to the interest rates. So when interest rates are really low, sellers tend to be able to sell their homes for a higher amount because people can borrow what they can borrow. And that has to include principal interest insurance and taxes. And so that they calculate what the amount of house they can buy using all those variables. And so if interest rates are high, that means the principal, the amount of the house has to shrink. And so the market sometimes does that fluctuation where housing price go down when interest rates are high. So our programs don't necessarily deal with that because it happens on the other end. And what issue do you think is more effective to target the amount of affordable housing that's available in a Dina by expanding building projects or preserving current single family homes? There's only so much we have control over. So existing single family homes, the people that live in them, they can choose who they want to sell to. It would be more effective for us to be able to buy those, but people may not want to sell them to us because the materials to build those homes costs more than what would be able to pay today. And so it would be more effective to be able to preserve all the smaller homes. But people may not want to sell to us. People may want to buy one of those homes and tear it down. They may not want to, you know, the developer may come to them first and offer them cash on hand. So it may be more effective to sell that way. But if we have land, we could choose to build homes, but it still would be a little bit more expensive. Good question, so thank you. Anyone else in the room have a question? All right, let me check those phone lines. I have no callers online. Okay. Yes. It's actually a follow on to the other ladies question about filling up the schools. And I don't know if you can speak for the school district, but I remember hearing we cannot speak. My understanding was one of the reasons for that. Having students living in the city is because state aid is for to schools is tied to enrollment. And if they don't have if the schools aren't filled, they don't get enough money to operate their buildings. I don't know if you can comment on that or not. I don't think we can comment on the school aid formula. I don't know enough about it to comment on it, but I can tell you this. We can we can consult and confer with the school district on a very regular basis with regards to housing kind of questions. They're just as maybe more interested in the kind of housing that is being built and more importantly almost where it's being built. So we talk about that with them. When we have new projects coming in, we share that information with them. They are in a mode where they'd like to see more more kids in a diner and more kids in a diner school. So we know that's that's something they're interested in and we talk about it quite a bit. Okay, anybody else tonight? Thank you. That's all that's all we've got for tonight. As a reminder, you can continue to ask questions and make comments about affordable housing online at our better together at dina.org site for the next week. The online conversation closes on Wednesday, October 15th. Our next town talk will be Tuesday, November 25th about the development of Fred Richards Park. And we have one more plan for later this year on a diner liquor operations. If you have ideas for town talks in 2026, please let me or any one of the any member of the city's communications department know what your ideas are. And we thank you, Stephanie for spending spending some time here tonight and on this very important topic. And thank you to our audience. Thanks. Thank you.