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Woodbury HRA adopts policy to lend LAHA funds to build deeply affordable units
Summary
The Housing and Redevelopment Authority approved HRAD 1.7 to provide subordinate loans (not grants) for new affordable housing, prioritizing units at or below 50% of area median income and securing affordability with mortgages and deed restrictions. Staff said loans will be tailored to project needs and repaid funds will revolve to future projects.
The Housing and Redevelopment Authority unanimously adopted HRA resolution 26-04 on June 24, approving HRAD 1.7, the Affordable Housing Development Assistance Policy.
Jamie (staff) told the board the policy establishes a formal application, underwriting and compliance-monitoring process and would use the city’s Local Affordable Housing Aid (LAHA) fund—and in some cases HUD program dollars—to provide subordinate loans to new construction. "It prioritizes units serving households equal to or less than 50% of the area median income," Jamie said, describing eligibility and security: loans would be secured by a mortgage, promissory note and a land-use or deed restriction and generally capped at a 30-year affordability period or co-terminous with a senior financing instrument.
The policy prohibits grant requests and expects developers to pay application fees and associated closing costs; staff said loan terms would vary by project and that funds are intended to be patient and recyclable: repaid dollars would strengthen the city’s pool for future projects. Jamie said the program is first-come, first-served and loan amounts will be limited to the fund balance available at the time of application.
Members pressed staff on fund restrictions, timing and eligible uses. Jamie explained LAHA is a metro-area sales tax created by the legislature in 2023 and distributed by the Department of Revenue based on measures of cost-burdened households; she said Woodbury received roughly $845,000 in 2025 and that LAHA requires funds to be committed within three years and spent on the committed project by year four. On eligible costs, Jamie said Woodbury funds may support land acquisition, site preparation, general construction, sustainability features and soft costs directly tied to the affordable units, but not non-housing amenities.
Board members also discussed program risk and the possibility of forgivable loans. Staff said most assistance will be deferred-payment loans—possibly zero-interest or up to 2%—and that forgiveness would be rare, reserved for projects demonstrating exceptional public benefit because forgiving loans can affect tax-credit equity calculations.
The HRA voted on the resolution by roll call; all five members present voted yes, with one member noting a reservation. Staff said each proposed loan will return to the HRA and City Council for final approval and underwriting details.
