## Richfield City Council Agenda April 20, 2026 -- 6:00 PM ## Richfield Municipal Center ## Council Chambers ## 6700 Portland Avenue South 1. Call to Order ## 2. Item Discussion a. Continue discussion of 4d(1) tax classification impacts and potential policy. 3. Adjournment Auxiliary aids for individuals with disabilities are available upon request. Requests must be made at least 96 hours in advance to the City Clerk at 612-861-9739. Includes Materials - Materials relating to these agenda items can be found in the Council Chambers Agenda Packet book located by the entrance. The complete Council Agenda Packet is available electronically on the City of Richfield website. Page 1 of 25 ## City Council Meeting 4/20/2026 ## Agenda Section: Item Discussion Agenda Item: 2.a. ## Report Prepared By: ## Julie Urban, Assistant Community Development Director ## Department Director: ## Melissa Poehlman, Community Development Director ## Item for Consideration: Continue discussion of 4d(1) tax classification impacts and potential policy. ## EXECUTIVE SUMMARY At a work session on February 17, 2026, the City Council and Housing and Redevelopment Authority (HRA) members discussed the 4d(1) tax classification, which provides a reduced tax classification rate for affordable rental housing. The reduced tax rate provides a cost-savings for affordable housing while shifting the cost to other taxpayers. This work session is a follow-up to that discussion and will provide information that was requested at the February work session, review the impacts of 4d(1) using 2026 data, consider policymakers' housing priorities, and suggest a framework for a 4d policy. ## RECOMMENDED ACTION Listen to the presentation from staff, ask questions, offer feedback, and provide direction on the following questions: • What is a desirable/reasonable length of time for an affordability period? • What is our goal for number of units of affordable new construction? • What does a mixed-income building look like to you? i.e., what’s the ratio of market-rate to affordable? ## HISTORICAL CONTEXT • Following a request from Hempel Companies in January 2025 to approve the 4d(1) tax classification for three apartment complexes, the Council asked staff to bring additional information and a potential policy to policymakers. • A work session was held on February 17, 2026, to discuss the issues. A second work session was scheduled to continue the discussion. ## EQUITABLE OR STRATEGIC CONSIDERATIONS OR IMPACTS • There are two desired outcomes in the Strategic Plan that are impacted by the 4d(1) tax classification including maintaining Richfield as an affordable place to live and creating a diversified tax base. Page 2 of 25 • Creating and preserving affordable housing can support the desired outcome of reducing inequities and barriers for traditionally excluded communities. ## POLICIES (RESOLUTIONS, ORDINANCES, REGULATIONS, STATUTES, ETC.) • Following the work session, staff will craft a 4d(1) policy for consideration by the Council and HRA. Updates to the City's Inclusionary Housing Policy and Affordable Housing Trust Fund priorities may also be forthcoming. ## CRITICAL TIMING ISSUES • Depending on the outcome of the work session, a formal policy would be brought before both bodies in May or June. ## FINANCIAL IMPACT • Updated information on the financial impacts of 4d(1) are provided in the presentation. ## LEGAL CONSIDERATIONS • Information on the legal issues relating to the 4d(1) tax classification was provided at the February work session. ## ALTERNATIVE RECOMMENDATION(S) ## N/A ## ATTACHMENTS 1. CC-HRA 4d Presentation revised 4.20.26 Page 3 of 25 4d (1) Tax Classification, cont. ## Joint Work Session ## City Council –Housing & Redevelopment Authority April 20, 2026 Page 4 of 25 Where we left off... •Covered background, definitions, tax impacts, data, etc. •Posed questions •Requests for more information •Housing priorities homework Page 5 of 25 ## Tonight’s Agenda Information requests: Geographic distribution Resources for cost burdened homeowners Comparison to other communities Impact of TIF decertification ## Updated Impact Numbers Priorities Policy Direction To-do List ## Taxable Market Value x Tax Class = Tax Capacity Page 6 of 25 $1,000,000 x 1.25%= $12, 500 $12,500 x 54.734% = $7,000 $1,000,000 x 0.25%= $2,500 $2,575 x 54.734% = $1,400 Page 7 of 25 ## Homeowner Resources •Foreclosure counseling •Property tax deferral program for seniors •State property tax refund •Resources invested in down payment assistance – sets people up for success Page 8 of 25 2% 3% 3% 1% 3% 1% 1% 1% 16% 8% 17% 10% 10% 20% 13% 9% 46% 27% 36% 21% 61% 67% 35% 38% 36% 62% 44% 68% 25% 11% 50% 52% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% ## RichfieldGolden ValleyRosevilleEdinaRobbinsdaleBrooklyn ## Center ## St. Louis ParkBloomington ## 2023 Total Affordability 80%+ 51-80% 31-50% ## < 30% AMI ## Comparisons Page 9 of 25 1% 3% 3% 1% 3% 0% 0% 0% 3% 4% 8% 10% 3% 6% 7% 5% 44% 18% 22% 9% 65% 81% 22% 24% 52% 76% 67% 81% 29% 12% 71% 71% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% ## RichfieldGolden ValleyRosevilleEdinaRobbinsdaleBrooklyn ## Center ## St. Louis ParkBloomington ## 2023 Owner Affordability 80%+ 51-80% 31-50% ## < 30% AMI Page 10 of 25 3% 2% 2% 2% 4% 2% 3% 3% 32% 18% 31% 11% 22% 42% 20% 16% 30% 17% 35% 17% 32% 28% 24% 25% 19% 31% 21% 29% 22% 18% 26% 35% 17% 33% 10% 41% 19% 9% 28% 21% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% ## RichfieldGolden ValleyRosevilleEdinaRobbinsdaleBrooklyn ## Center ## St. Louis ParkBloomington ## 2023 Renter Affordability 80%+ 61-80% 51-60% 31-50% ## < 30% AMI Page 11 of 25 % of rental in 4D ## Richfield11% ## Edina12% ## Golden Valley13% ## Robbinsdale13% ## St. Louis Park13% ## Bloomington13% ## Brooklyn Center21% ## Sources: 2023 Met Council Housing Stock Data, 2025 Hennepin County ## Certification of MN Low-Income Rental Classification (LIRC) Assessor Report 4d as % of all rental Page 12 of 25 Ta x-exempt land % of tax-exempt land* ## Richfield15% ## Robbinsdale13% ## Edina15% ## Brooklyn Center18% ## St. Louis Park27% ## Golden Valley29% ## Bloomington31% *Excludes ROW and bodies of water ## Source: 2025 Hennepin County GIS Parcel Dataset Page 13 of 25 ## Tax Capacity ## City ## Tax Capacity Used for ## Local Rate 2026 PayablePopulation ## Tax Capacity Per ## Capita ## RICHFIELD$ 48,250,755 36,491 $ 1,322 Bloomington$ 185,538,909 89,978 $ 2,062 Brooklyn Center$ 32,993,262 31,755 $ 1,039 Brooklyn Park$ 115,281,625 86,000 $ 1,340 Edina$ 192,305,068 53,662 $ 3,584 Hopkins$ 29,393,267 19,079 $ 1,541 Golden Valley$ 59,761,188 22,556 $ 2,649 Minneapolis$ 676,965,569 428,579 $ 1,580 Minnetonka$ 145,285,364 53,812 $ 2,700 St. Louis Park$ 96,604,144 49,899 $ 1,936 Page 14 of 25 ## TIF District/Tax Capacity Page 15 of 25 ## Decertifying TIF Districts Page 16 of 25 $445,000 tax savings/cost 0.46% of total tax capacity Cost to median-valued home = $28.19 Cost to 11-unit apartment building = $175.54 Cost of Hempel to median-valued home = $7.45 Cost of Hempel on County taxes = $.09 Impacts of 4d in Richfield - 2026 Page 17 of 25 ## Peer Perspectives ## Edina/St. Louis Park/Golden Valley: 4d programs for NOAH preservation Minneapolis: Program reduced to 50% AMI; considers per unit subsidy cost ## St. Paul: Program closed Brooklyn Park: considered a policy (similar concerns); prefer to use other tools to preserve housing ## Columbia Heights: Not studying Page 18 of 25 ## New Development: TIF vs. 4d ## Subsidy Comparison Affordable building with 4d Subsidy = $1,261/unit/year $37,843 over 26 years $50,444 over 40 years $7,299 over 15 years $12,651 over 26 years $19,464 over 40 years NOAH preservation with 4d Subsidy = $487/unit/year Market-rate building with TIF Subsidy = $1,455/unit/year Page 19 of 25 ## Priorities Moderate agreement (range = 6) Some agreement (range = 7) Less agreement (range = 9) Wide range (range = 11) Outliers (range = 11-13) 11.4 9.8 9.8 9.6 9.4 8.4 8.1 7.1 6.6 6.6 5.0 4.5 4.3 2.6 Develop all-affordable rental housing on sites: "highest and best use" Create/preserve deeper affordability in rental housing Create/preserve supportive housing Improve challenging apartment properties Promote energy-efficient buildings Create/preserve properties with high numbers of school children Create/preserve housing options for Housing Choice Voucher holders Develop Richfield-sized rental properties Create/preserve rental housing with larger bedroom sizes Create physically-accessible rental housing options ## Diversify the Tax Base ## Preserve Naturally Occurring Affordable Housing rental properties ## Rehabilitate NOAH housing Maintain Richfield as an affordable place to live ## Average Ranking of Housing Priorities and Level of Agreement Page 20 of 25 What we heard •Maintaining affordability for existing residents, NOAH preservation and rehab, and diversifying the tax base are high priorities. •Mixed-income housing is preferred; there is less support for prioritizing all-affordable housing. •Accessibility and large bedroom units are high priorities for new construction (over deeper affordability). •Deeply affordable, supportive, and all-affordable housing are lower priorities. Page 21 of 25 What that means •The priority for new development will be mixed-income housing (and commercial if market rebounds). •Market isn’t supporting market-rate housing right now, so development will likely remain slower. •Biggest priority of County, State, Met Council is for 30% AMI housing. Without prioritizing it, our developments will be less competitive for outside funding. •There are some properties where highest and best use may be all-affordable housing. Developing these properties will continue to be challenging if we don’t consider these development options. Page 22 of 25 ## Lingering Questions •What is a desirable/reasonable length of time for an affordability period? (Penn Station = 40 years; TIF districts = 26 years or less) –If we’re investing in a property, should we be seeking a maximum number of years of affordability? •What is our goal for number of units of affordable new construction? –Current Met Council “fair share”: •30% AMI = 132 units •31-50% AMI = 53 units •51-80% AMI – goal met •What does a mixed-income building look like to you? i.e., what’s the ratio of market-rate to affordable? –Note: Investors and funders may not agree Page 23 of 25 ## 4d Policy Thoughts •Approve 4d as a tool of last resort •Prioritize use of 4d for NOAH preservation when it meets priorities and includes rehab •Continue to consider 4d on a case-by-case basis (i.e., no program to encourage its use) •Any project must further high housing priorities: large bedroom sizes, accessibility, Section 8-friendly •New construction: possible use of 4d for Richfield-sized buildings where TIF isn’t an option and where all-affordable is best choice for the site •New development should use other tools first (e.g., TIF, Trust ## Fund) Page 24 of 25 ## Next Steps Draft a 4d policy ## Update Inclusionary Housing Policy Update Trust Fund priorities Bring items to Council and HRA Page 25 of 25