Trying to make the most of Richfield’s booming housing market and its long slate of ongoing redevelopment projects, city leaders are exploring the creation of a new taxing authority.
The city already has a housing and redevelopment authority to administer a variety of programming that aids residential and commercial activity, but the Richfield City Council and HRA discussed creating a new, more powerful and flexible body to further spur economic growth.
Many cities have both an HRA and an economic redevelopment authority, and the establishment of the latter in Richfield has been on the city’s radar for about a year and a half, Community Development Manager John Stark said during a March 20 study session with the Richfield City Council and the city’s HRA.
Officials reached consensus that the city should continue exploring the establishment of an EDA, figuring it into budget considerations for 2018.
“There are subtle differences between economic development and housing redevelopment, and we really haven’t been undertaking economic development activities,” Stark explained.
One reason for the move is that an EDA can conduct all the activities an HRA can, but more, he noted. The potential authority of EDA extends beyond housing and commercial property.
“Most cities our size have loan programs, grant programs for economic development,” Stark said. “We really don’t have that. We did decades ago, and there was no good funding source to replenish the funds in that.”
An EDA typically funds measures such as loans for economic development, venture capital for new or growing businesses, housing loans and studies on economic development. Like an HRA, an EDA would have its own separate levy and be an entity unto its own, separate from the city.
With a budget of $560,000 per year, an EDA in Richfield would mean an added 28-33 cents per year for the average Richfield homeowner in a $175,000 to $200,000 house, according to Stark.
Creating an EDA would free up funds for programs such as Richfield’s Transformation Home Loan Program, which encourages homeowners to improve the city’s housing stock by undertaking renovations, according to Stark.
The annual budget for the program used to be $140,000, but this year it was cut back to $115,000, “and five weeks into the year it was gone,” he said.
Richfield ought to position itself to take advantage of a hot housing market in the city, City Manager Steve Devich. Programs such as the home loans help families not only come to Richfield, but stay in the community as they grow.
“That’s the problem we’ve always fought against,” Devich said.
An EDA might also help bolster the city’s Kids at Home program, which aims to minimize housing instability for families so they can stay in Richfield, he added.
Additionally, perhaps an EDA could help establish another program like the Transformation Home Loan, except for businesses, he said.
An EDA could enable more resources for programs that lend entrepreneurial expertise to small-business owners, too, such as the Open to Business Program that helps get small businesses off the ground, Devich said.
The bulk of the program’s users are first- and second-generation Americans starting their own businesses, Stark mentioned. City Councilmember Maria Regan Gonzalez said she knows several such Richfield residents with businesses in Minneapolis, “and I really wish they would be here in Richfield. … I think that’s one of the things, just looking to the future, that will help us build kind of the urban hometown feel.”
An EDA might also help make up for potential funding decreases in the U.S. Department of Housing and Urban Development’s Community Development Block Grant Program, Councilmember Edwina Garcia suggested. Having recently returned from a National League of Cities conference, Garcia made a pessimistic report regarding the CDBG program.
“Talk about bleak,” Garcia said. “CDBG – it’s gonna be gone.”
She further lamented, “I don’t think we have anything to look forward to in terms of support or partnerships at all with the federal government.”
CDBG represents “another big gap that we’re gonna have to fill here,” Devich said.
With the blessing of the city council and HRA, city staff will spend upcoming months further assessing the need for and EDA while compiling a list of possible uses for such an entity, Stark announced.
Contact Andrew Wig at [email protected] or follow him on Twitter @RISunCurrent.