Minnetonka staff presents 2027 Economic Improvement Program with $225,000 HRA levy and $500,000 Pathways proposal

Staff presented the first draft of Minnetonka’s 2027 Economic Improvement Program (EIP) at the Economic Development Advisory Commission meeting on June 11, laying out funding sources and proposed allocations for housing programs.

The presentation framed the EIP as a five‑year forecast focused on 2027 and tied the schedule to a city zoning code rewrite that will be reviewed at a July 20 city council study session. Staff said the EIP will return to the commission for additional review in August and be considered by council in September.

On funding, staff described six EIP funds and singled out three housing‑related pools. The development account (a legacy fund created from retired TIF in 1993) supports TIF analyses, pass‑through grants and lines of credit. The Affordable Housing Trust Fund, created during the pandemic to provide rental assistance, has received transfers of TIF revenue and is earmarked for projects such as rental assistance, unhoused response and pathways to homeownership. Staff reported the metro housing sales tax (LAHA) had initial allocations of roughly $300,000 and $800,000 in successive years and is accumulating toward project funding.

For 2027 specifically, staff said the commission should consider a $225,000 HRA levy. “We’re proposing a $225,000 levy this year for the HRA,” staff said, clarifying $25,000 would cover ongoing administration while $100,000 would be available for Homes Within Reach capital projects. Staff also proposed a $500,000 allocation from the Affordable Housing Trust Fund to support Pathways, rental assistance and unhoused response programs.

Commissioners probed program design and trade‑offs. One commissioner questioned whether Pathways—programs that assist buyers with down‑payment or forgivable loans—could push up market prices by adding buying power, saying, “it puts extra money into the system and in aggregate increases the marginal prices of all housing in the city.” Staff responded that different programs target distinct income bands and purposes: Homes Within Reach and HIA focus on lower income or preservation projects while Pathways and down‑payment assistance reach somewhat higher‑income first‑time buyers and include forgiveness components.

Commissioners also requested more housing market metrics, including vacancy, months of supply and time‑on‑market, to better assess whether subsidies should prioritize preserving affordable stock or increasing supply. Staff said Minnetonka uses Minnesota Realtors data and past housing studies and offered to provide updated metrics before the next meeting.

The commission did not take a formal vote on the EIP draft; staff will return with additional materials and incorporate commissioner feedback ahead of council review in July and formal consideration in September.