Heat. Heat. [music] [music] [music] [music] [music] Heat. Heat. [music] Heat. Heat. [music] Heat. Heat. Heat. Heat. Heat. Heat. [music] >> [music] [music] >> Heat. Hey, Heat. Heat. Heat. [music] [music] [music] [music] >> [music] [music] [music] [music] [music] [music] [music] [music] >> Heat. Heat. [music] [music] [music] >> [music] [music] [music] [music] [music] [music] [music] [music] >> I'm on Call please. >> Vice Chair Yang >> here. >> Council member Buouie >> here. >> Council member Coleman >> here. >> Council member Kim >> here. >> Council member Jo >> here. >> Council President Maker >> here. >> Chair Johnson >> here. >> All seven are present. >> All right. Thank you guys. Um so we have two presentations today. uh one on the tax increment financing, so TIFF, and then another on the community development block grant, so CDBG. And first up, I have Miss Wolf, who will be presenting um on TIFF as well. The presentations are attached as well for folks who are looking in. This is item number one for discussion. So, thank you, Miss Wolf, for making the time over to uh come across the the street here to give us this presentation. We appreciate just you taking some of our questions in advance. Um I think we were able to cover quite a few things in our previous conversation, but just to preface there were several um different topics that came up throughout the year last year as a part of the budget process. There was a tiff district that was descertified last year which prompted questions as well. So I was just wanting to in more insight when it came to just learning more about the process um overall and the process after descertification. And so upon review of just Miss Wolf's presentation as well, there's actually quite a few different things in here that I think will be um not new information to our council members, but definitely good refreshers, especially for community members who may have been watching um our TIFF presentations that we've now had every year since we've been here. [laughter] Um but really, really excited to hear your presentation. Welcome, Miss Wolf. >> Good morning, Chair Johnson. Thank you, members of the city council. Uh my name is Jenny Wolf with PEED. I will be presenting today on tax increment financing with annual update information. The summary of topics listed here is all included in my slides but many uh will be very brief as they have been included in prior presentations. Um for example, what is tiff? TIF is authorized by state law and enables the HR to capture the increased taxes to finance development that otherwise would not occur. Here is an illustration from the state department of revenue that I like to use as a classic example of tiff. It demonstrates that when properties have declining values due to blighting factors and disinvestment, the taxing jurisdictions will benefit from a stabilized taxable value, creating a steady revenue stream, and then they'll realize the gain when the tiff district expires, increasing the overall tax base. How does tiff work? At a high level, when a new tiff district is certified by the county, they set the original market value tax capacity that will be fixed for the taxing jurisdictions and then they calculate the increased taxa tax capacity each year and remit the portion of taxes from the increased value to the tiff authority. All properties within a tiff district pay their tax bill like any other property and the distribution of the taxes is what is handled differently. The taxes from the value in place prior to the creation of the tiff district will continue to be sent to the taxing jurisdictions. The local tax capacity based taxes from the increased value will be sent to the tiff authority and in the case of HR or the port authority. All property taxes generated from other tax levies would be sent to the applicable taxing jurisdictions on the full value of the development which includes market valuebased taxes for the school district and state levied taxes for commercial properties. This slide includes illustrations from the office of the state auditor reflecting the full payment of taxes by tiff properties and the purpose of capturing the increased taxes to pay the eligible costs that enabled the development to occur. Um and this slide shows a graphical depiction of the distribution of an annual tax payment. And this is an actual um this is actually the proposed uh tiff district um graphic. Um [snorts] so this reflects a uh housing only project. So there isn't any commercial um taxes and it uh reflects a pledge of 65% of the collected tax increments to cover the eligible costs enabling the development to occur. And this is approximately 53%. You can see a little over half of the pie um of the total tax payment which is the lighter blue slice. And then the remaining 35% of the collected tax increments are for admin and pooling for affordable housing. And this equates to an additional 28% of the tax payment. Um and that is 8% in the orange slice for admin and 20% in the gray slice slice for affordable housing. This leaves 19% of the tax payment that is remitted to taxing jurisdictions. That's the darker blue slice. Um and then I further reflex reflect in the bar chart um the large distribution of market value based taxes to the school district in the green bar which in this case reflects an amount 16 times greater than without the creation of the tiff district. Uh, Miss Wolf, I have a question from Council President Baker. >> Thanks, Chair Johnson. First of all, Miss Wolf, thank you so much. These I feel like every time we see presentation like this, the slides get even more clear and helpful. So, thank you. Um, and I know that one of our discussion points today is going to be that um, the decisions we make about that gray part of the pie chart pooling and sort of things that go beyond just helping the project happen. I'm a Can you say a little bit more about I think the green and and blue parts of the bar chart? How in particular is the school district affected and not affected when a tiff district is created? What what do they still get and what do they not still get maybe is the way to phrase that question. >> Um thank you um Chair Johnson, Council President Nre. So the school district is unique in that they they get to determine what their um tax capacity base levy will support for school operations. and then the state of Minnesota provides the difference. Um what what is shown here in the green is the market value based. So that's their referendum taxes. So that is outside of the state funding that. So that's when they do a referendum for a capital project or an operating um uh support uh referendum. So this this example illustrates that the school district otherwise doesn't get that revenue stream for their referendum based and that's because market value taxes are not captured in tiff districts. >> I see. So, just to say that another way, if a property's value increases by $100,000 because of the development, the school district's levy takes into account that new $100,000, the total market value, even if it's some of it is going into a tip district, and gets that amount into their levy referendum. >> Correct? And then the only part where they don't receive the full value is in their normal property tax allocation that would come from the county. >> Right. The um Chair Johnson and uh Council President Naker, it's based on what is um the tax base. So the tax capacity base is what the school district can maximize their levy and then the um state will then you know cover their operating for the you know per pupil or whatever. Um so that that's how they're protected in in tiff unlike you know the county andor the city. >> I got it. Okay. Thank you. >> Thank you. Please continue Miss Wolf. Um, okay. So, the next two slides just describe the two types of tiff districts used by the HRA. A redevelopment tiff district and a housing tiff district. Both which are allowed to capture tax increments for a total of 26 years. I will just highlight the main difference in the two when creating a new tiff district. A redevelopment tip district. Um, for a redevelopment TIFF district, the proposed boundaries of the TIF district are required to exhibit qualifying conditions, including substandard buildings, and the redevelopment to occur in the district is not what's prescribed in state law, although the eligible use of tax increments is. And for a housing tiff district, the resulting project when development is completed is what is prescribed in state law, namely incomerestricted rental or ownership housing with a prescribed percent affordable to a set household income. Um, both types of tiff districts allow tax increments to be spent outside of the tiff district boundaries for qualifying affordable housing projects. State law allows tax increments to be ex expended on activities geographically outside the tip district boundaries commonly known as pooling. A redevelopment tiff district has a limit of up to 35% for a pooling which includes admin costs and housing tiff districts are similarly limited although expenditures for qualifying housing projects are considered within a tiff district boundary even when they are outside um of the limit. Um, peed staff track and monitor pulled tax increments for affordable housing from existing tiff districts as shown on the following slide and housing projects for um housing projects affordable requirements mirror a housing tip district. Um so on this slide um I am showing the uh what's been generated um from the tiff districts the captured tax increments and these are retained in the tiff district. So even though the term pooling is used, the balances stay with that tiff district. Um unlike some other temporary rules the state has allowed. But for pooling, the the tax increments stay in the tiff district until they're available for a project. Um we do oftent times pool because one district alone cannot support the total the total cost needed to fill a gap in a project. Um so what this shows is we currently have $14 million um with 11 million generated from redevelopment tiff districts and 3 million generated from housing tiff districts and these balances have accumulated over multiple years. Um an allocation of poolled tax increments to a project must be authorized by the HA board. Examples of prior approvals are shown on the following slide. Um, so this is 6.5 million shown here for five different projects with three of the projects also including housing tiff districts namely 520 pay and ppl's two projects at Highland Bridge. Uh, as previously stated, >> Miss Wolf, we also have another question, so I don't want to get too far and wait for Piff to ask it. Council President, >> thanks Chair Johnson. So just again to put this another way, Miss Wolf, make sure I understand it. So when we are considering creating a tiff district, what we're essent and and doing pooling, what we're essentially saying to the developer is um when you create this additional tax value that we didn't have before, um you will pay that full amount in taxes. Some of it we'll use to pay off the debt from the project you did and some proportion of it we'll use for building affordable housing in this tip district or in the project area if it's a redevelopment tip district somewhere else in the city do so essentially we're um we're using the carrot of tax increment financing to the developer to gain this pool of dollars to be used for affordable housing that we otherwise wouldn't have. I want to make sure I'm stating that right. And then I also um is there a limit on what percentage of I guess you just said that that the percentage that can be pulled is the 35% in a redevelopment tip district and 10% affordable housing. >> Um Chair Johnson, Council President Ner. So for a redevelopment tip district, the maximum pooling is 35% and at least 10% of that would have to be for affordable. We can use all of it for affordable once we cover our admin costs and generally our admin our admin is limited to up to 10% as well but it's rare that we hit that limit. So we can use you know up to 35% for pooling for affordable housing >> and then affordable housing any percent can be allocated to other affordable housing projects that aren't the projects that the tip district was created for. >> Correct. >> Okay. Thanks, >> Commissioner Buouie. Oh, sorry, Council Member Buy. >> Oh, yeah. Chair or Chair Johnson. >> Yes. [laughter] Okay. >> Okay. >> Chair Squidward. Um I um I have a question around the 35%. Is that like we could pull up to 35% or 35% of what is pulled can go towards the development? >> Um Chair Johnson, um Council Member Buouie. So it's of what the tax increments we collect is 35% of what we collect >> we can then spend on admin and pooling for affordable housing. The other 65% of what we collect has to be used for the project in the tiff district. So it has to reimburse the developer for their costs or it has to actually you know uh pay pay for costs of the project in the tiff district. And as a followup for when you say pay for cost of 65% is that um like the developer's fee is that the actual capital that goes into building the the project and if you can just distinguish between like the 65% and the 35% because I'm um I just want to make sure I'm hearing you correctly. >> Um yeah, Chair Johnson um Council Member Buouie. So um the 65% has to go to the eligible costs um for that tiff district. So in the case of a redevelopment tiff district, it could go to acquisition, it could go to demolition, it could go to site work. Um the developer incurs those costs and then re reimburse them over time from that 65%. Okay. >> Thank you. Uh okay. So um as previously detailed, TIFF is a state authorized financing tool and there are specific requirements that must be followed. This is a highlevel list of requirements. I'm not planning to walk through it. Um but just so you know, there are statutory requirements as this is a a state uh uh finance tool. Um, so now I'm going to talk about our existing tiff districts. For pay 2026, there are 57 tiff districts that are generating tax increment. Um, there's 47 administered by the HR and 10 by the port authority. The anticipated collections total 32.7 million with 28.5 million for the HR districts, which is 87%. Um, of the 47 H tiff districts generating increment, 26 are housing tiff districts and of those 26, 24 of those are rental housing. Uh, as shown in the past, we continuously track what percent of our tax base is captured in tiff districts. This slide shows a five-year history and reflects our current capture rate of 6.08%. 08%. Um, we do have some new tip districts. There's seven new districts that have been established and will begin collections this year or later. Um, six were authorized by the HR board and three of those are at the heights and one was authorized by the port authority for the Fairview St. Joe's site. The H is also proposing to establish a redevelopment tip district for the Gulier Plaza site downtown and that item will be introduced this afternoon at the H board meeting. Uh these next four slides include the specific outcomes for the H tip districts that are generating increment this year or planned for future years. I will not walk through each slide. However, um I do want to just highlight the total summary. Um 7,400 new housing units, nearly 2 million square ft of commercial uses, over 300 hotel rooms, and 4,000 parking stalls, all within the TIFF district boundaries. Without TIFF as a tool, these outcomes and the resulting increase in the tax base would not have occurred. Uh the table here includes the unodudited collections for pay 2025. There were 46 H tiff districts and 12 port tiff districts generating increment in in 25 and the overall collections were 90% of the expected revenue. The reduction in the uh actual collections to what was expected are due to petitions um for the values and some of those are settled multi-year petitions that are settled um reducing the um the percent collected. Um this slide just details the number and type of debt obligations for the HR for pay 25. Most of our debt obligations include payo notes. These obligations do not have scheduled payments and the HA pledges tax increments as they are received. There isn't any risk to the city or HA if the collections fall short of projections. Miss Wolf, can you um just we're I appreciate you that we're moving through these quite quickly and can you actually go back to the previous slide on the collections and then can you just share a little bit more about so total expected total actuals? Is this a point in time or is this overall for the projects? Is this like you know the collection rates when I'm looking at the collection rates what does that actually what does that 86% actually mean? Could you just kind of go through each column so people understand what this graph is actually sharing? >> Uh, Chair Johnson. Yes. Um, so this is just what um was received from the pay 25 tax settlement. So we receive, you know, you pay your taxes in May and we receive those in July. The second half paid in October. We receive in two pieces. We receive a payment in early December. And then the county sends what's called a a final cleanup payment of anything that they collect by the end of the calendar year. So we received that in January. So this just reflects what we received in those three settlements uh last year. So in July, December, and January of this year compared to what the county told us we should expect to receive from our tip districts. Uh and similarly for the port authority. Um the reason that you would see 86% um versus 94% is the petitions. So when a tiff district settles a petition um the county will issue a refund and then they'll take that refund out of our collections in that year. So, um, what I'm not showing you here, and I can follow up and show you, but I can tell you what was current taxes that we received, what was delinquent taxes that we received, and what was refunds that were, you know, reduced our collections. But that's why it's kind of variable. Um, but it does just reflect those three settlements that the H received in the port. And as a quick followup just for like pay 2023 2024 collections like is that percentage pretty on par with where they have been as well historically? >> Chair Johnson. Um I can provide that detail but I think last year was um quite a few petitions settled for apartments. Um and um so I think that was it was pro this year was probably a lower collection rate um on our housing for sure on our housing tip districts. >> Okay. Thank you. Uh Council Member Buouie >> Chair Johnson uh thank you so much. I uh just had a question particularly around um this slide when you can you define what is the tax petitions and what does you know being settled or pending means? Um uh Chair Johnson, uh Council Member Buouie. So, um so the a property owner has the right to petition the value that the county assesses, right? So they assess they send that out in the tax statement in March. They'll send the most current assessed value for the following pay year. Every every property owner has the opportunity to petition that value. Um that process is not fast. um it can take quite a few years. They um there's onus on both the county and the property owner to um detail why they think their property is overvalued. And so when a petition settles, that means a refund has been issued. When um it's a pending petition, that means the county holds back tax increments because they think they might um send a refund before our next collection. So the county doesn't want to be doesn't want to send the HRA and TIFF authority the the taxes if they think they're going to have to issue a refund. So they'll hold back uh a pending amount and then in the next collection they'll settle that. So they'll either give us the money back or they'll keep it because they did issue the refund. So does that >> Council President just a quick followup. Is that process um handled through the county or is the city? Oh, the the county. Thank you. >> Yes, they have an entire board for it [laughter] um that I used to sit on. But yes, council president. >> Thanks, Madam Chair. I'm just noticing I'm glad you went back to the slide. I'm noticing the difference in the amount captured from redevelopment tip districts versus housing tip districts, even though we have fewer redevelopment than housing tip districts. I'm wondering if that is because redevelopment tip districts just end up be being more valuable because they're typically taking a blighted property and creating something some new um either market rate or commercial property. And so the the change in the taxable value is just greater versus an affordable housing development where the end the the final product may not have as great of a change of tax capacity. And I'm asking this in part because um I know we talk a lot about affordable housing tiff districts. Redevelopment tiff districts I think tend to be more problematic for us as a body just because they're often not affordable. They're market rate. They're um commercial. They're taking something. They're taking blight and um improving it which is the public benefit, but they're not creating affordable housing. But what I heard you say earlier about pooling for affordable housing from these projects and the the much higher number of dollars coming in from redevelopment tip districts. I guess I'm wondering is it the case that redevelopment tip districts actually have a greater impact on our ability to build affordable housing because of the huge amount of value they create even though the project itself is not affordable housing. And I know that was a long way of asking that question. >> Chair Johnson, Council President Nre. Um I would agree with your statement. Um I think the main driver in um the large redevelopment um tiff uh collections is we have some very large tiff districts and those so Minnesota event tiff district in downtown um that's you know 20% of our total capture. Um and then we have um the riverfront Renaissance and we have the Emerald Gardens um out at at um University and um uh I'm blinking on the at the border Minneapolis and St. Paul. So those large those are large redevelopment tip districts that have contributed to pooling for affordable housing. Um and then otherwise most most housing projects are or housing tip districts as you mentioned are single single projects. So they're on scale they're never going to create what um a large redevelopment site would create such as um Riverfront Renaissance or Emerald Gardens which had you know multiple blocks and Ford site for example Ford site would be our next on par with Minnesota Events where by the time it's fully built out it'll be capturing you know that 20%. Um, so that's probably, you know, I mean, but they do redevelopment tip districts, um, do have more ability to, uh, fund pooling for affordable housing. Um, and they can be anywhere in the city. So, I mean, I think that's, you know, two benefits there. >> Thank you. >> All right, moving on. Um uh so now I'll finish with the topic of descertification. Um so first I want to cover what is statutoily required. All tiff districts have a statutory length for collections which is 26 total years for housing and redevelopment tiff districts. State law, however, limits the spending within the TIFF district that could result in early descertification of the district. The driver is the law that limits pooling. For a redevelopment tip district, the maximum pooling is 35% of the tax increments. However, pooling not only applies to expenditures outside the tiff district boundaries, but pooling is also defined as an expenditure within the tiff district that is after a certain date and this date is 5 years from the certification date. This therefore restricts the use of collected tax increments and when a determination has been made that no additional spending is allowed, the tiff district must be descertified. Um in summary for a redevelopment tiff district if the qualifying expenditures not deemed limited by pooling aka in district expenditures are completed and they fall below the 65% of the actual collections the district must be descertified. So in the case of Westminster the district the port authority descertified. So their pooling was 75% because they did not elect to do the additional 10% for affordable housing. So they had collected enough increments to cover what were the qualifying in district expenditures and therefore they could no longer continue to collect um and we closed the cop mobile tiff district a few years ago um for that reason as well um that we could no longer uh keep it open because we did not have enough indistrict expenditures. Council President Maker, >> I'm sorry. I don't understand that. >> So, can we just have it said? >> It seems very important. I'm just wondering if you could say it one more time maybe more slowly. >> I almost want to be I almost wanted to ask here just for to basically even rephrase the the question and just what is being answered. So, I think we are being walked through the statutory requirements which I think makes sense. And if you could just share a little bit more of like an example, maybe subbing in hypotheticals and adding in amounts and just so we can understand the percentage pieces. I think that would be really really helpful for folks like myself who are visual learners as well. I want to follow what you're sh what you're sharing. Could you give an example and could you share just like put numbers into it and the why we would potentially descertify early or not be allowed to pull anymore? Um, Chair Johnson, Council, um, President Naker, council members, I will try. Um, so it's kind of I think I've covered this before that it's more or less a math exercise, right? So, if we've collected $100, um, we would have to spend or um, yeah, $100 we would have to spend $65 of that that we've collected in the district for qualifying project costs. Um, and so that if we only had $63 that qualified, we would have $2 over what we could keep. Um, and if that $63 was not going to grow in the future because we already paid for all of the costs, we already, you know, fully reimbursed like the Westminster, the port fully paid all the obligations. That $63 was not going to grow. and they already have $2 that they couldn't spend. So, that's when they descertify it to no longer collect going forward. >> Yes, Council President. >> Thank you. I understand that. I think the five-year rule is where I got confused. Mhm. >> Yeah, it's uh Chair Johnson, Council President Naker, it is um that was something that the state law had amended originally and there's kind of these pre pre82 pooling or whatever. So, there was TIFF districts where they didn't limit the pooling to actually expenditures in your TIF district. It was just everything outside of it. So you could you could create a new expenditure in year 23 of your tiff district if you had tax increments. So what the state law um how the state law was amended is they said we're going to also limit the length of expenditures. And so that's where they created this five-year rule and then in times where there's been you know like um recession or delays in developments they extended that to 10 years. We did that recently for the Ford TIFF district. We extended our five-year rule to 10 years because of the delay um in building out uh the housing units at at Ford site. So, we allowed ourselves more time to have those in district um costs that are not limited by pooling. So, put another way, maybe, um, this five-year rule made it even more difficult to reach our $65 that we had to spend. Previously, we could sort of come up with another project that could use those $2, but now we can't after five years that the district was started. And so, when we reach when we can't spend 65 anymore, we have to close it. And that's harder easier to reach. >> Yeah. Correct. And so just to be clear too like in this example and also from my understanding the 65 like in this case it would be $65 that are given and is that annually would that be an annual piece or just overall there'd be $65 >> overall total total it's your total collected. So you don't >> Yes. Um, Chair Johnson, um, if you if you're still incurring, um, indistrict costs, like you're paying back debt, you can exceed that 65% um or be lower than it, but once once you've incurred the last cost or you think you're going to, like you can project forward and say, well, I think we're going to have more than what we can spend. um then you would start setting aside those tax dollars to pay off your IND district costs. Um but it is it it's annual or it's cumulative. Okay. >> Through through the life of the district. Um it's not it's not an annual measurement. >> Okay. Thank you. >> Council member Buoie. Sorry. >> Thank you. Chair Johnson. Um I just have another question just just trying to get the the picture clearer um with using the example that you gave but I also want to just ask in a different type of version. Um so like my understanding when a developer is building a project those like the cost could be pretty stationary but until you start actually developing there's some flexibility with those numbers. Uh but what we whatever we certify is like that ceiling. So if you're saying like the $100, but we can only reimburse up to 65. Um so are you saying if a if a developer does not incur um up to that ceiling at 65, then that's when we descertify. So does that mean if a development actually costs less then you know the the commission or the H commission is more incentivized to descertify that or if a project takes longer. Um I'm just trying to understand like what are the factors that goes into those decisions? >> Um Chair Johnson um council member Buouie um that's a good question. So um most most of the talk about if we have all these costs and we we don't have enough are probably more for um like phase developments like the Ford site. Um so I'll give an example um which the the pie chart that I show here which is you know what's proposed for the Gulier plaza right so the developer will have to demonstrate that they had the eligible cost once the project's done and that'll set the principal amount that we'll reimburse over time with the 65% that we collect plus interest. So what could happen in that case is the collections could come in greater than we expected and we would we would still give 65% but we may pay that obligation off in 15 years. And so and that would be an instance where we've paid it off. That's our only in district cost and now we have to close the district because we maximized the pooling. We kept 35%. we gave them only 65%. Um so it it's um if if the development does cost less and we end up reducing the amount um of the principal amount of a note that could be a factor as well but we would still be sending them 65% to pay that note back. Um, so I think the um I think the good the best way to look at it is is it's generally collections come in quicker, you know. So if we set up an obligation to pay off over the life of the tip district with our projections and the collections come in faster >> or greater, you know, um that obligation pays off early and that's when we would have a situation where we have to close the district early. >> All right. And I see a question from council president ner as well and then I have just a quick clarifying question as well. Um, thank thanks to everyone for your patience with all of these questions. I really appreciate Miss Wolf your explanation. So, 35% is the max that we can pull for affordable housing. What if we had decided for this particular project we're only going to pull 10%. Um, and the 90% is going to the eligible project costs. Can you how would this apply in that case? Would it be that once we've like the 90% has to be the amount that we pay to the project for the life of the project and as soon as that's done we close or if collections were coming in higher could we go back down to 65% and use the extra for more pooling than we expected? >> Um Chair Johnson Council President Nrevel agreements and our um our TIFF notes call out the pledge. So, we can't change it once we've issued that note. So, if we're pledging 90% um because we expect to only, you know, keep the 10%. Um, and that note pays off early and the reason it pays off early is because we've collected more tax increments or quicker, we maybe would not have incurred as much interest. So, two things could happen. we might have room in our tiff budget that we could still collect tax increments um and then do pooling at the end so once the developers note is paid off but it'll depend on what the tiff plan budget um what condition it's in at the time that happens. Um, so an example of that is the Shepard Davvern rental housing tiff district. Um, where that note paid off early and I and we brought forward an amendment um that was approved by HA board and city council to increase the budget um in the TIF plan and allow us to continue to capture tax increments and use those exclusively for additional affordable housing anywhere in the city. um because that tiff district performed better um than what was expected. Thank you. Even though we had pledged 90%. Yep. >> All right. That actually took my second half of the question. So I was like, "Oh, okay. I don't have a follow-up. We can continue." >> Uh okay. I think I've covered the statutory reasons. So now um I'm going to cover if not statutoily required should the HRA elect to close a district early. Um first I want to just state that the HA only keeps a district open to pool for affordable housing. Um so if a TIF district has met its development objectives and covered all obligations, it can be closed early even if pooling opportunities exist. Alternatively, a district may be kept open to pool tax increments for qualifying housing projects. Um, and those that housing tip district though I'll just say has to remain income restricted for us to continue to collect tax increments. Um, so Shepard Davern was just mentioned. Um, and this was shown on a few slides back with an available balance of 1.828 828 million to be expended on qualifying affordable housing projects and is expected to generate 500,000 per year going forward and has a final collection year of 2031. Um but for the HR board and city council's decision to amend that tiff district and keep it open um we would not have those dollars existing today the 1.828 828 million or the ongoing half a million dollars each year into 2031 being the statutory um final collection year. Um and we only keep a district open to pool for affordable. Um upon descertification, the tax capacity captured in the tip district becomes available uh for the taxing jurisdictions. And I have a graphic um from the state auditor that I'd like to show you. Um uh so this shows the impact on the city tax rate with tiff and without tiff and without tiff is the district is descertified. The tax rate would decline all things equal. On the other hand, the release tax capacity could result in an increase to the levy and then while maintaining the same tax rate. So you basically have two Yeah. Well, two two somewhat two options. If you want to reduce taxes, you don't raise the levy and you uh allow the tax rate to fall because you have a greater tax capacity. All things equal, just looking at a tiff district when it expires, or you increase the levy to capture that increased tax capacity from the descertifying tiff district. Um, so for pay 2026, the HA has 47 tiff districts and of those 47, we have five that have obligations that were fully paid by the end of last year. Um, so we have two housing tiff districts. The affforementioned Shepard Davern and then we also have Highland Point housing tiff district also has paid off its tiff note early and has enough budget so it hasn't had to come forward to be amended. Um, and we are continuing to collect and retain those dollars for pooling for affordable housing. Um, and on the slide earlier, I think I I think I showed about 500,000 from that one. Uh, I I would have to go back. Um, so anyway, so so there is a balance shown. Um, that one only generates about 2 270 a year. Um, and then we have three subdists within the redevelopment riverfront renaissance redevelopment tiff district. Um, which TIFF district includes two additional subdists that have existing debt obligations, the upper landing and the US Bank. Um, the final collection year for the Riverfront Renaissance is coming up here in 2028. Um, however, we do have uh five districts or subdists that I'm expecting to pay their obligations in full this year in 2026. Um, allowing early descertification. Um this is the Emerald Park redevelopment tiff with three subd districts, the failen village uncommitted subdist um and the pioneer and redevelopment tiff district downtown here. Um as previously mentioned, we may collect and spend tax increments from housing and redevelopment tiff districts if legally permissible after debt is retired. for the five districts that I just mentioned. Um, future HRA action will be needed to authorize early descertification. Um, this is required because we have maximized our pooling from those three districts or subdists. Um, so now I'm going to show the districts that are descertifying by their statutory terms. And those three that I just mentioned, um, we will be proposing some HA board action to descertify those early. Um, and then this table shows the anticipated capture tax capacity projections when accounting for the certifications and accounting for new tiff coming online. Um you will see here the overall captured tax capacity rate uh remains below 6.2%. And this goes through 2034 um taxpayer. Um lastly, I will provide a very high level impact for pay 27 with the districts that will descertify as of 123126 either by their statutory term or early as as mentioned. Um when a tip district is closed, the captured tax capacity is returned to the tax base and could result in a reduction in the city tax rate as was shown in that graphic if the levy is not increased. Um, a rough estimate is that this would be a 9 $911 per year in city taxes for a median valued home um from those that are statutoily expiring. So, those that are required to close because they've met their term and then a reduction of $1827 per year when including the early descertification of the three districts listed. Um, the $1827 represents 1.2 26% reduction of the annual tax payment um to the city. And this is a median value home and it's based on pay 26 information. It's just very high level of what that would mean. Um but we don't have any information yet for pay 27 of course. So just wanted to give that example that that's what we're talking about in terms of of uh impacts. >> Okay. So, um, Miss Wolf, can you just simply share at least for the last couple of slides in simple terms? Um, so we have a couple of different t districts that will most likely be brought forward for early descertification. we look at the project projected release tax capacity like what a lot of this actually translates to and then also just what what hap what happens to the financing afterwards what happens to like the the total amounts do they shift now downward upward like what exactly do the last few slides mean in simple language >> um chair Johnson so the when a tip district is descertified that means that Those properties in the tiff district will no longer the taxes increased taxes will no longer be sent to the HA as a tiff authority. They will be part of the overall tax base. So we will no longer collect tax increments from that tip district. Um we still have money that we've retained. We still have reporting requirements. we still have to spend all of those dollars we have have collected um in accordance with the adopted tiff plan and the requirements. So it doesn't change the spending side but we will no longer collect additional tax increments. >> Right. So in in regards to that and in short just also making sure that we understand it doesn't change the the overall like the tax value itself is just basically rolling back on to the normal tax base. We just aren't collecting as the city >> the well the H as the authority correct. Yep. >> Okay. >> Yep. >> Yep. >> Council president. >> Thanks Madam Chair. I have two questions from the whole presentation. Um Miss Wolf once a district can descertify early. Obviously when it has to descertify, you're coming to us, right? But when it can but doesn't have to descertify early, do you come to us to ask whether or not we want to descertify early like and and give us kind of the pros and cons of that decision? In other words, this is how much we would continue to pull for affordable housing if you kept it open. This is how much would go back to the tax base if you didn't. Um, Chair Johnson, Council President Ner, I have not. So, an example of that is the Highland Point um housing tip district that paid its obligation off early. We've been just continuing to we know the project is affordable. It's income restricted due to tax credits. Um so, we've continued to collect those dollars and we're reflecting those as available for um furthering affordable housing in our community. So our um peed resource team um keeps track of that and that's what they identify for a project that's looking for money. Um and then that project that request would come to the HA board but I have not came to the HA board to say do you want to close this or keep it open. So, just to my colleagues, that might be something we want to consider as a policy change if we I think one of the reasons we had this briefing was because we've gotten questions from folks in the community about tip districts staying open, closing. So, we might want to have that decision point as a matter of policy. I'm just I'm just bringing it up. Um, and then my other question, Miss Wolf, is how how do we decide on any given tip district when we're establishing it um how much to pull for affordable housing? Do we always just do the 35% because that gives us the most flexibility or is that a decision point? >> Um, Chair Johnson, Council President Naker. Um, so our H application does put forward um tiff guidelines and it mentions that uh criteria is to pull 25% for affordable housing um as applicable. and we've used that as applicable to mean if the project isn't producing its own affordable that it would be applicable to pool. Um and then it's uh we start at the maximum and then we can ratchet down from that if the project isn't going to happen. Right? So so it's kind of a how much do we need to give so the project still happens. Um >> and and that comes to us when we approve the tiff district that percentage of pooling is part of that and you explain why the number was set where it was. >> Yes. Correct. >> Can you also share a little bit more about the application process? So what happens? We have an application, we have these pieces, but on the back end as well when it comes through to what exactly does that look like on the back end? What are the steps to get it to the final piece um before it comes to the board? Um, Chair Johnson. So, um, if it's a um housing project, um, it'll start with the housing director, um, Jules Ataga. Um, he will discuss the project. We don't fixate on TIFF. When a project comes forward, we evaluate the project itself. Um, and then we, you know, determine what is the best course to have it happen. Um, so it so it our application does um include a request for TIFF, but we don't solely say that that's the only thing we're going to look at. Um, so for projects that there's other funding sources out there, if it is um does have affordable components, we would be looking for it to go um to other funders um as well. Um if it's a market rate project, we might be looking for it to um apply for pass through grants or other sources as well. Um but one of the determinations that has to be made if it's a redevelopment tiff district is that the site even qualifies. As I mentioned, a redevelopment tiff district can only qualify based on its current conditions. So um if it doesn't meet that requirement, then we're kind of ending conversation. um the developer has to pay for that cost of that study. Um and if they and and we won't do that until we receive an application. So they would have to submit the application to the HA requesting that we establish the tip district. Um and then we would uh work to get this the report um from LHB that says it can qualify. Then we would engage um our municipal advisor to talk about the project to make sure that they actually need a subsidy for the project to happen meeting the butt for test. Um and that's under the assumption that we really don't have other tools um at our in our toolbox for for non-affordable housing. Um and TIFF is one of those tools. So, um, so that's kind of where the tiff is the more the focus. >> All right, I see a couple questions that have popped up. Council member Coleman, I'll start here and then I'll go to council member. >> Thanks, Trey. Thanks so much, Miss Wolf. This presentation is really helpful. Um, I'm going back to the uh tax capacity captured in TIFF slide, and I'm just curious about these five-year trends. I think that they it's super helpful to see these. it feels like they don't totally match the what the public narrative has been around our use of tiff in the city. And so I guess curious for any thoughts you have on this slide or any like color commentary you want to add. Um but specifically I guess I'm wondering about um well sorry and I had gone back even further to the tax the one about the last five years rather than the next five years but there's definitely overlap between the two. I I guess I'm curious if you could just kind of comment on if that's been a result of the projects that have been available to the city, if you feel like that's been a result of intentional decision- making by the HR board or others within peed to kind of go down. And then a separate question that's less commentary, more just fact-based is um it's my is it 10% of the city's tax base that can be captured by TIFF is that and is that a legal requirement or is that a city policy? Could you touch on that a little bit? Um, Chair Johnson, Council Member Coleman. Um, the 10% is not of any state law, and that is something that, um, came out of the finance office many, many years ago. Um, in talking with the credit rating agencies in order for the city to maintain its AAA credit rating. Um, the rating agency looks at what is their capacity to levy taxes. And so, if it's captured in TIF, they can't levy taxes on that. um because they're looking at, you know, their um geo bond credit rating, right? So, they are pledging the full faith and credit and taxing powers of the city. So, if they have um more than 10% captured in TIFF, that might be a reason to not um give the AAA rating. Um so, that's where the 10% comes from. Um it has been um something that has been measured every year. Um and it's used when we're when we receive requests. It's used to project going forward. Um and the I think this slide here shows um you know two things. the great recession, you know, in in the late 2000s and the declining values and I think not until maybe 20 19 um did we actually recover to where we had been. Um so obviously with declining values that puts a lot of pressure on um on that percentage. Um so the percentage um has been shrinking all things equal every year um since then since um values recovered because now values have been gaining. Um and you can see here that the city's tax rate or tax base has been growing until between 24 and 25. Um and then the tiff um percent change has been growing but not as much or actually declined. And the reason the decline you'll see is because a diff district um was descertified. You know, that's going to be a reason why um you'll see a decline there. So from 24 to 25 um that pro there's probably Williams Hill with the port and the Coke Mobile with this with the HA are reasons why that um and then also just declining values. Um I think you know we're our tip districts are largely um I would say more rental and commercial than ownership housing. Um whereas the city's tax base is more ownership housing. So that might be where if you see a reduction in one it doesn't mirror the other. Um I've tried to kind of look and see you know the makeup of it but it it's uh you know it's hit or miss. So, um, but so, yes, the narrative has been that we're that we're, you know, including more tiff than, um, than what we should. Um, but if we compare to the 10%, we are not clearly. >> All right. I'm going to go uh to council member Buouie and then I'll have council bringing ask the last question only because I want to get us to the second part of the presentation as well. Yeah, I Yeah, I I see you. I'm You're going to be the last question. Um and so we'll do those two and then we'll end this part. And if you have follow-ups, I think Miss Wolf is willing to talk about TIFF um any day. I do appreciate um being able to have this kind of come back through this body. I think one piece that wasn't necessarily touched on in the presentation that would be helpful, especially when we're thinking about the respective tiff areas. So when port tiff is descertified, when housing tiff is descertified, redevelopment tiff, to whom does the the if there is any resources or uh leftover pulled tiff that needs to be allocated or utilized, to whom has the authority to do that and like what is the process when there is a balance left um that can be utilized? This was a topic for discussion last year because a port district tiff had rolled over and there were uh there was I think amounts left that the question was whether or not that could be brought on to the end of the budget cycle to be used for um council purposes and it was like actually we're going to roll this back into the general levy to relieve uh relieve the cyber attack um deficit that we were left in as a city but it didn't require council approval. Um, and so just kind of sharing a little bit more about like what that process looks like on the back end for each one could be sent probably as a follow-up because I think it would be helpful um, and pertinent to the conversation especially surrounding the budget. >> Um, Chair Johnson, I'll just add real quick and I will send that, but I'll just add real quick as you saw from the actual collections slide for pay 25, we did not collect what we expected, right? And that was because of the refunds. So, um, sure. >> When a tiff district is descertified, so if it was descertified for 25 was its last collection year, the county can issue a refund for those 25 taxes for up to three years later. >> So, that causes um a resulting holding on to dollars until you know they're not going to be captured back. Um, so Coke Mobile was was descertified 2024. Um, we still have one more year of where we could and we got a negative collection in 25 because refunds were issued, we could still get a negative collection. And so until we we um are assured that we're not going to be um sitting there with the H general fund having to bail out a tip district because we closed it and returned the dollars. Um, that's, you know, why there isn't an immediate here you go. I think, um, you could ask the port authority what kind of analysis they did to make sure with Westminster they were comfortable returning what they did because I know they did that analysis because they too have been um, hit with uh, negative collections due to refunds being issued. So, um, but I can follow up with that. >> Okay. Thank you. Yeah, and I appreciate that clarity as well. But that is helpful just to visualize and to take in. Um and I think for the port it's like yes that clarification and then also when a refund is when they return the funding back to the city the ultimately what is the process on the back end for that. Um so we commissioner or sorry council member Buouie and then council Yang and then we'll wrap. Thank you, Chair Johnson, and thank you so much, uh, Miss Wolf, for just like your your wealth of knowledge and the patience as we're, you know, asking you to kind of reiterate yourself and re um, you know, dive deeper into this topic. I just wanted I definitely want to follow up um, and I'll make sure I can send some emails or some questions particularly around the followup. And I know we're going to have more of of these conversations um in the future in terms of you know how the taxes are collected and like what's captured. And I know especially in my war there's a couple tiff districts that's been um um brought forth in terms of um certain blighted areas. On that note um and you talked about um just like some past examples. I'm just really curious just to learn more about, you know, what was the rationale um with the city going in a direction where we um source out a third party um to be able to determine blight. Um and I asked this question just because as we're, you know, just going over all the different reasons and scenarios of when tip districts were designed, it really appears as if it's like it's driven by the developer, right? The developer has an area, they want to build a project, they have the capital, they already know the language, they're, you know, familiar with this as a financing tool and they have that relationship or make that um um uh request through the city. Uh but for certain areas that you know maybe that is very blighted like for example the Sears site or the Kmart site or you know like have the city has recognized mass blight um where developers have not looked at you know investing in that area. Where do you see in terms of like the city um on its own really leading or taking leadership in terms of trying to create a tip district or is that solely on that developer uh requesting that um that tip district? >> Um Chair Johnson, Council Member Buouie. Um I think at times the city has taken on um determining blight and I can say we did that with the Ford site. Um, we did that because Ford was going to start demolishing buildings and unless we made the determination of blighting conditions um without a developer at hand um we would have lost that tool in our toolbox to help with redeveloping the site. So it it has happened but not not very often. I mean I think it's for for something large and impactful and the Sears site is probably um along those lines as well. Um and so yes, the city could, you know, take that on. We could engage, we will always engage a third party because they're the experts in the field. Um but we could engage that without um a developer and then we could, you know, make those determinations and findings. Thank you. >> Thank you, uh Council Vice President Yang. >> Thanks, Chair Johnson. Jenny, I really appreciate the presentation today. Even if this is like my seventh refresher on TIFF, I am always learning, getting clarification from you. So, I encourage you to continue doing this for the council. I just have a um I I want to go back to something that the council president said earlier, which is um around this question on policy for the pooling. For me, I I do want to share with folks that I'm interested in in making sure that when there is a district that can be up for descertification that we do get info about it even if in the end we don't decide to desertify it and instead do the pooling instead. It just be helpful to to understand that. Um and I I remember when Insight St. Paul came sometime last year and said, "Hey, the council should consider descertifying these, you know, this handful of districts that I didn't realize that that that we could have done that." And so it was new information for me that I I believe it's really important for the council to understand in terms well for transparency and for us us to be able to decide what are the trade-offs that we would want to make um in a in a decision like that knowing that this isn't this is an opportunity for us to to reduce um the amount that we could be um putting on to um our property owners when it comes to the levy. Um, and at the same time, if we decided to do the pooling, it's more money for affordable housing. And so I, it seems like maybe this might be like in how we're operating now, it's an unwritten practice or policy that PD's um PD's following, which I'm very supportive of. I don't think in my seven years here that it was something that the council voted on. However, um it would be helpful to understand is this something that we needed do need to have a written policy for if we were to decide to operate differently from from here on out. So, if you can clarify that, that'd be really helpful. Overall, again, I I wanted to name I'm very supportive of the pooling. I think we're just in a I would say a very difficult time with with um the tax burden that we're often hearing from residents and just figuring out how do we close our budget. And so, I would love to get all that information um chair Johnson um cultiv vice president um um I I think that's something that we can discuss with peed leadership. Um, I'll just share that, you know, the housing team has, um, you know, full-on applications for projects within the city and desires from developers. That's about, you know, 24 projects long um requesting, you know, tens of millions of dollars um from us and they're all chasing the same dollars. Um but we can talk internally about um what kind of information to put together for that. Um I >> miss I'm sorry to not to interrupt you in the response. However, I do see director McMahon in the audience and I do want to have a chance you shared with peed leadership. So, I'm actually going to ask if uh director McMahon would also just be able to come. Um I think this is a important question for this topic for I think it's a practice um piece that council vice president is asking and so we're just wondering around um you know whether or not this is a I think this seems like it's a piece of whether it has to be a resolution or does it have to be something that HR or the city council would take formal action on. Is it something that would just be worked on in partnership? Hi, chair, council members. Thank you. Um, I think it's something that we've worked on in partnership. State law is pretty prescriptive and so when we're talking about policies and sort of rules and guidelines to follow, state law being as prescriptive as it is with TIFF is really the benchmark, right, to make sure that we're following and working under within that. We do have practices, standard practices that we've done over the years. And those are things that always in discussion, right, continuing with you all. there are things that also impact other departments when we talk about you know the 10% and things like that. So it really is is a larger conversation and sometimes sight specific and so those those general practices and guidelines that we have internally guide our work and again state statute is really the the policy framework if you will to ensure that we're working under. And so if a tiff district is looking to descertify and there is maybe well if we have an opportunity to descertify a tax a tiff district especially if it's maybe in the ward of that council member is there an ability for the council members to be notified about that even if the ultimate decision is to leave it open. uh chair council members. Yeah, absolutely. you right to have the continued conversation about what districts are in each ward and throughout you know throughout the course of the term actually right like where is it in process I think it's a conversation before certifying a district as well because that's what really you know establishes the spend plan so it's a conversation in the ward if there were to be aative district established that's part of the conversation with the policy maker as well as during the course of the term kind of status and where it is along along the overall years of the term I did say this is going to be the last question. I so I'm going to hold us to that just because I do want to be able to have uh Beth come up and talk about CDBG director McMahon, but I appreciate that clarification. I think it's just opportunities, you know, I didn't want to talk about PED leadership with you sitting in the room to be able to just ask. Um I think when we have opportunities to not have to prescribe things to the form of a resolution or to a um policy direct policy change because we can just operate with that practice in mind. I think that's always a great opportunity to capitalize on. So thank you council vice president for raising the question and thank you for coming up and being put on the spot. Director McMahon. >> Thank you. >> Okie do. Okay. I'll welcome up Beth at this time um to talk about the community development block grant. >> Good morning, Chair Johnson, council members. Um my name is Beth. I'm the grants administrator for PEED. I work on our um federal, state, and regional grants, but here to talk about our federal grant CDBG. Um so our team uh in peed for federal grants um is comprised of our CFO um deputy director Nicole Green um myself as the grants administrator uh grants compliance supervisor Jessica Degan and then we have three specialists that work with our partners and our city departments Austria Zong and Chu and our um our team manages which is um not only CDBG, but there's three entitlement grants through HUD um that include our home partnership program and our emergency solutions grant as well. Um all of our funds are um allocated through uh the consolidated plan. Um consolidated plan is a 5-year plan. Um our most recent one just started in 2025. Um we program uh cycle is June 1 through May 31st. Um, we approve our annual action plan around April every year. So, you would have recently saw the 26 plan come through in April. Um, in our consolidated plan, our five-year plan, we identify our goals. Um so most recently we're development of new housing, housing rehabilitation, economic development, um some public services, public improvements and some remediation of substandard properties are the ones that are in our 25 and 29 plan. And this will guide um all five plans under that annual action plan for 25 through 29. Um when working with CDBG um we always have to meet national objectives that is in the regulations. Um most frequently um and required we have to spend no less than 70% of our funds on low to moderate uh income activities. Um and that can be achieved through area benefit um through low to moderate income housing um limited clientele which means um a select population um that is at or below 80% uh area medium income and then we can create jobs for uh low to moderate income individuals as well. Um the remaining 30% can be spent on uh slum blight activities and again um it can be done in an area or a spot basis. We do not have a certified area in St. Paul. So all of our sllight activities are on a spot. Um you can also spend these type of dollars on urgent need. Um we have not had that type of need. Um we don't see hurricanes and you know natural disasters. Not that it can't happen. it just hasn't. Um, so our HUD formula grants um have been uh not keeping up with inflation um and actually declining a little bit. Um so this uh graphic just shows um our 2026 alloca allocation at 6.7 million, just a little over. Um, our home uh declined at 1.3 this year and our emergency solution holds pretty steady at just over half million. So, what we can expect for 2027, um, this administration's been a little hard to project. Um the president's budget came in with a significant um decrease to uh the civilian agencies um and it actually proposed zeroing out any funding for CDBG and home. However, um May 21st the um House Transportation Housing and Urban Development related agencies appropriation subcommittee uh voted to advance their spending bill which provided level funding for CDBG. they restored it in the budget. Um, however, it did come with a 60% cut to our home program, uh, and a 6% cut to ESG. Um, one thing that was positive out of the bill, um, was that they are proposing that, um, a regulation called BABA, by American, Build America, Build America by America, um, would be exempt to CDBG and home uh, projects for 27 and prior years. Um, this particular regulation's been causing a little bit of uh delay and uh increase in costs for some of our projects that we've been funding with these grants. Um, so that would be a welcome change. And then the Senate has not proposed yet and they don't have a date, at least when I checked last. Um, so we are still waiting for what their bill is going to look like. >> I see a question from Council President Ner. >> Thanks, Chair Johnson. Just to clarify, um, and I'm sorry if I missed this, the Trump administration proposed zero dollars in funding for CDBG at home, meaning zero dollars at all or zero increase. >> Zero dollars at all. Basically cutting eliminating the CDBG home >> and the transportation housing urban development committee is recommending that funding remain level with last year >> for CDBG >> for CDBG and the six. Okay. >> Yeah. So um if we look back at what happened in 2026 funding president's budget zeroed it out um the both the Senate and um housing had put in some form of funding. Um CDBG is typically very has wide bipartisan support. It's um you know widely used in all of our states, all of our areas. Um, and there's been a couple of uh home uh housing affordable housing bills that have been proposed. Um, a lot of policy work that's been done in the last year. Nothing that's been, you know, approved and put in place yet, but um, there's wide support behind these type or, you know, the activities that these bill or these funds support. Um so prior to uh the new administration um HUD had a proposed rule that was about ready to be uh put into effect. However, all rules were suspended. Um this would proposed rule um would change our timeliness um which is something that I know uh you folks have uh had um some interest around is our timeliness and our spending. Um we are hoping that at some point this rule will get released and put in effect but right now it's still still pending. Um so just you know what is timeliness? uh basically 60 days prior to the end of our program year. So our program starts June 1, which means um by April 1st, we have to have no more than one and a half times our uh annual grant. So our most recent annual grant on hand and that includes um grant amount plus program income in our line of credit. So that's the system through um HUD that uh tracks our dollars. So um we need to be below that 1 and a half time amount in order to uh be considered timely. And then um if we are not timely that's when you hear the word spend down. Um so what causes us to not be timely is um sometimes so it's increased or unused funding. Um increased funding would be when we get program income. Sometimes we'll have uh large projects that have been financed in previous years. Um they'll pay off to refinance or um just pay off early because sometimes they're selling. Um so that would increase a large chunk of dollars coming back. Um we have returned funds from programs or projects that aren't used. Some projects um don't actually go. um so they um won't use the funds reserved or um they won't spend as much money as they thought they did in some of the programs and they'll return funds that way. Um when we have that uh we'll introduce some outcycle projects um and those funding requests either come through the PEDh application for funds or um sometimes we'll get the funding requests through other departments. So our um funding is mostly allocated through the uh city's bianual CIB process. Uh we get roughly 6.7 millions in in CDBG. Um CIB allocates about $4 million of that each year. Um and we we budget so we we can safely say we budget 4 million a year. Um the remaining funds are um we allowed to spend 20% on admin and then uh 15% on public services. So the 4 million um is in plan one of the two-year. So, they do it for a two-year process. >> Um, but we have a question from Council President Ner. >> Thanks, Chair Johnson. Um, did you say that we have that there's a the 15% is the max that we can spend on non- capital? >> Um, right. Correct. On public services, >> you said program, but does that mean I guess I'm wondering um is the amount that we're sending through CIB the amount that we have to send through CIB? Could we could we choose to use more of CDBG on non- capital and allocate it ourselves? For example, >> Chair Johnson, Council President Akre, um we are um required to spend no more than 15% on public services and no more than 20% on admin. Um the remaining amount um isn't required to go through CIB, but it is required to have some kind of allocation process. Um so CIB process has been what was established many years ago. Um but it isn't the only process available to be used. It's just what we we have used. >> Thank you. >> Can you repeat those percentages for me? >> Um no more than 20% of the grant amount on administration and no more than 15% on public services. >> Okay. Thank you. >> So, this little bar chart just um shows what our uh allocation looks like. Um we um have been getting uh less dollars than we used to in the past. And when you consider uh inflation and the decrease in funding, um obviously there is way more need than we have funds available to to address. Um, currently the non- capital funds that we're using in CDBG um are are capital city youth employment. So that's our commonly known as Right Track. Um, so our parks department runs that program. $540,000 in 26 is going to fund that. Um, and then H 100,000 goes through public health Ramsey County. Um, it's the black nurse program. So those are currently the only two public service dollars that we use. um per 26. And then um we use uh roughly 1.4 uh for program administration. That's mainly spent by peed in the city attorney's office. Um and then peed also spends what we call um project delivery or what HUD calls project delivery. We call them direct project costs. Um and that's about another $435,000 that is spent out of the grant. >> All right. I have a follow-up question from Council Member Coleman. >> Thanks, Sarah. Just a quick question on this. How how do those spending totals compare to that 15 and 20% respectively? Are we hitting that threshold or are we do we have some room to wiggle? >> Chair Johnson, uh, Council Member Coleman, we are well below our 15%. >> Cool. Thank you. >> Um, as a followup as well, um, I believe the district councils counted under this historically and just wondering where um, or if we had alternative where that 300,000 went within this model for this year. >> Yep. Um Cher Johnson, um district councils were previously considered in our public service budget for 345,000. Um in 2026, those funds through the consolidated plan process that you approved in April um were allocated to some additional projects. Um I'll identify them on a slide later here, but it was went to two projects that did not make um the funding requests through CIB. One was the North End Neighborhood Organization's business program and it um also increased the amount that went to uh Neighbor Works because CIB had only allocated 85,000 and we were able to uh restore some of their funding. Okay. >> Yes. Uh, Council President Naker, >> thanks for Johnson. Following up on Miss Coleman's question, it does look I think it's 900,000 would be the 15% of the 6 million and we are well below that in terms of the program expenses or services. um how would the decision what would be the mechanism to decide that we didn't want that we only wanted 85% of the dollars to go through the CIB process versus being allocated by the council. So, um, be we would need to make a decision basically prior to the 2-year process for CIB, um, which I know is going to be coming up this next year because this last one allocated, um, 26 and 27 or recommended 26 and 27. Um, so if there want to be a change, that would be the time to make that change um, for the 4 million that's already been allocated. um for any additional funds that would be available. So like the 345,000 that we know is there for um has not been allocated for 27. Um we would it it's up for discussion. I mean we don't have a process to allocate that 345. Um we knew we had the extra money so that's why it came through the annual action plan the way it did um this time. So it was proposed and available for you through the action plan process. Um if there is a different process that you know we are considering we can definitely um consider options. We do need to follow federal procurement. Um so there you know we would need to make sure that we're whatever process it is meets those guidelines. I know that the public hearing I think on some of these items with the CIB's recommendations I believe are going to be taking place on the 8th of June I think is when they're doing some of their recommendations for certain projects. But can you share a little bit about how like for example I have a couple of different um organizations that have come to me with youth complex ideas or community center ideas and so I just um wanted to just ask like how does you know some of these are broader big I would say bigger programs and then some of them are specific projects that are maybe happening in a particular area. How do they get to this stage? Um, when it comes to just like for example like the the community center allocation, if there are other folks that are wanting to think about how to make sure that they're able to get through the process for CIB and to be considered, what is that look like? >> Um, so OFS owns the process. So um on how they approach CIB that's a question we need to provide to or we need to pose to the CIB staff in OFS. Um I have an idea but I can't you know speak for it. Um so the process that's coming up this year isn't for CDBG because our process occurred previously. So we'll be on the the next year because we're every two years they do the community process one year CI um CDBG >> the next year for two years at a time each way. >> Um the so peed um we actually compete in that CIB process with our partners and other city departments um for that $4 million. Um so occasionally depending on the project if it fits the program that we we have allocated funds for um they could make applications to peed >> for um the funds that we have and we don't have a community center obviously program um but there occasionally we do have returned funds you know like I said those autocycle projects when that um happens, we usually notify OFS. Um that's when we get those um requests through other departments. It's how we've funded some of um like North End Community Center was a recipient, you know, a few years ago because we had uh some projects after CO that and didn't go. So, we had some extra funds. We were able to help out our uh other departments with some of their capital projects. >> Okay. And I guess just one final question. Um, looking back at the goals that are just from the consolidated plan and I know approving the consolidated plan happens, but um, from a I guess from a from a under from my understanding, how do we determine like where we spend those resources um, per goal? So like for example, I see housing rehabilitation on the goals. I'm just not aware of the housing rehabilitation investments that we currently have internally. So, I'm just wondering what does that look like when we say those goals, when we approve those plans, what exactly because we don't I think our rehab program was discontinued, I think. Um, so I'm just wondering how does that match up? >> Sure. So, um, our five-year plan um has an extensive community engagement process. It takes about a year. Um, the neighborhood and community um, you know, that community engagement that takes place, that's where those goals get identified. So, it's, you know, where we see the needs and there's also like this whole needs analysis that gets done. Um I can definitely um provide you more information at a later time on the consolidated plan process. But so those are identified there um in our annual action plan um which takes place every year. Um it's a quicker three-month engagement process um that identifies where we're going to allocate those funds. Um the funds have to match up with those goals, but they don't necessarily have to fund all of those goals. >> Um peed in and our multif family uh project that we ask for funds for um does some housing rehabilitation. So there is um in the multif family we have that we did suspend our single family. Um but just because we sus suspended the activity doesn't mean that the need and the goal still isn't in the plan. Okay. And the annual action plan comes when? I'm >> sorry. >> When is the annual action plan coming? >> Um, so it usually um shows up on a council agenda in April. >> So the previous action so it would be for next year. >> So in April you just approved to 26 because be again our we run different than the regular city budget. Our program year is June 1 to May 31st. >> Okay. Thank you. >> Yeah. >> All right. I appreciate that as well and you you coming in and talking about this too. I think if folks have follow-up questions, would we direct them to you or to deput to deputy director Green or >> I'm happy to answer any any questions. So, yeah, Chair Johnson, whatever whatever questions your team has, just send them my way. >> Sounds good. Thank you. >> Thanks. >> Okie dok with that. Um just a quick thing for folks while I have you is just you'll be getting an email from all of us about uh the budget meeting dates and things that will be coming and so keep a lookout for that otherwise we are adjourned >> [music]