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5.3. SR 10-13-2003Item 5.3. MEMORANDUM TO: FROM: DATE: SUBJECT: Mayor and City Council Catherine Mehelich, Director of Economic Development~/~ October 13, 2003 HRA Downtown Revitalization Project Update Attachments · Downtown Revitalization Project Description, July 2003. · MetroPlains Development Preliminary Time Table. · Fact Sheet - Small Cities Development Program. · Small Cities Development Program - Proposed Rehabilitation Areas. · Draft Commercial and Mixed-Use (Residential) Building Rehabilitation Program. Background In the past few months the HRA has been considering staff's research to issues and questions raised by the public with regard to MetroPlains' attached concept for the redevelopment of the Jackson Block and Bluff Block. At its July meeting the I-IRA directed staff to proceed in preparing a Development Agreement with MetroPlains. Staff continues to work closely with the project attorney and the developer to prepare a draft agreement for the HRA's review and consideration at a regular meeting within the next 30 to 60 days. The development agreement will include a provision that requires the developer to present, prior to final project approval by the HRA and Council, a parking plan for the construction and post construction period. The financial feasibility of the project depends on the city and developer's ability to receive financial assistance from a variety of resources. In July the HRA and City Council authorized MetroPlains to submit a financing application to the MN Housing Finance Agency for the Jackson Block project. Notification of financing award from MHFA is anticipated the end of October. In addition to the MHFA application, the financial plan prepared by MetroPlains is dependant upon funds from the Small Cities Development Program (SCDP), administered by the MN Department of Employment and Economic Development (DEED). River PROJECT DESCRIPTION JULY 2003 ~ Enhancing, Downtown Elk River's Role As a Vital Retail, Commercial and Residential Area. Primary Goal of Downtown Revitalization Project: To assure the long-term viability of downtown by mak- ing a connection to the rest of the community and by utilizing the riverfront location. Redevelopment will enhance downtown Elk River's role as a residential; retail and commercial area and also revitalize invest- ment in the downtown business district. Development Objectives: · Mixed use (residential/retail/service) · Consideration of the historic context study results · Strengthen connection to the community · Traditional downtown design elements · Brick, stucco, stone materials with visual breaks in the building design · Increased residential density · Pedestrian orientation · increase exposure to the riverfront · Recognize those buildings that have potential for rehabilitation · Replace market/economic obsolete buildings · Multiple types of housing products (i.e. townhomes, senior rental coops, market rate apartments) · BLUFF BLOCK DEVELOPMENT -- 10,000 s.f. commercial on first floor along Main Street ($13/s.f. avg. rent) -- 52 units of for-sale housing -- 3 and 4 stories -- 70-80 below grading parking stalls for housing & commercial residents -- Connection to City's Riverwalk development · JACKSON BLOCK DEVELOPMENT -- 10,000 s.f. commercial on first floor along Jackson Street and at the corner of Jackson and Main -- 32 units rental housing (16 1-bedroom units at $600 per month & 16 2-bedroom units at $700 per month) m 3 stories -- Up to 52 below grade parking units for housing residents and commercial and 18 surface units · BLUFF BLOCK DEVELOPMENT · JACKSON BLOCK DEVELOPMENT ELK RIVER REVITALIZATION PRELIMINARY TIMETABLE July '03 Purchase Agreement or Memo of Understanding w/City of Elk River July 24, '03 MHFA Application Aug-Oct '03 Development Agreement Sept. '03 Environmental Review Sept.-Oct. '03 TIF Conclusion Oct. '03 DTED Application/Small Cities Group Nov. '03 MHFA Award Sept.'03-Jan. '04 Site Acquisition/Relocation Sept.-Nov. '03 Plan Preparation Nov.- Dec. '03 Plan Approvals Jan.-June '04 Pre-sales of 'For Sale' Units Jan.-March '04 Financial Closings Jan.-March' 04 Jurisdictional Authorities Sign-offs/Approvals April-May '04 Demolition May-June '04 Infrastructure Improvements June'04-June '06 Construction of Two Phases Communities- Assistance Programs- Financial Resources- [Fact Sheet:1 Small Cities Dev... Page 1 of 2 Small Cities Fact Sheet Development Program Program purpose To' provide decent housing, a suitable living environment and expanding economic opportunities, principally for persons of low-and-moderate income. How It Works Provides federal grants from the U.S. Department of Housing and Urban Development (HUD) to local units of government on a competitive basis for a variety of community development projects. Eligible Applicants Cities and townships with populations under 50,000 and counties with populations under 200,000. Indian tribal governments, which can receive funds directly from HUD, are ineligible for this program. Minimum requirements Small Cities Pro,am projects must comply with fair housing and equal opportunity requirements. HUD's web site has more information about fair housing and Equal opportunity ~,~ ,o,.,~,,.~. requirements. Proposed projects must meet one of three national obi ectives: 1. Benefit to low-and-moderate income persons; 2. Elimination of slum and blight conditions; or 3. Elimination of an urgent threat to public health or safety. In addition, proposed project activities must be eligible for funding, project need must be documented, and the general public must be involved in the application preparation. Eligible projects State program rules subdivide grant funds into three general categories: Housing Grants. Small Cities Development Program (SCDP) funds are granted to a local government which, in turn, loans funds for the purpose of rehabilitating local housing stockJ Loans may be used for owner-occupied, r, ental,.single-family or multiple family h9using rehabilitation. Loan agreements may allow for deferred payments or immediate monthly payments. Interest rates may vary, and loan repayments are retained by grantees for the purpose of making additional rehabilitation loans. SCD._____~P funds may also be used to assist new housing construction proiqcts. Funds may also be used for land acquisition, site improvements, infrastructure or housing unit construction. In all cases, housing funds must benefit low-and- htm ://www.dted. state.nm.us/02x01 x01 x05. asp 1/31/2003 Communities- Assistance Pro.ams- Financial Resources- [Fact Sheet:] Small Cities Dev... Page 2 of 2 moderate income persons. Public Facility Grants. SCDP funds are granted for wastewater treatment projects, including collection systems and treatment plants; fresh water projects, including wells, water towers, and distribution systems; storm sewer projects; flood control projects; and, street projects. ~Comprehensive Grants. Comprehensive projects frequently i~nclude housing and public facility acti~,ities described above. In addition, comprehensive projects may include an economic development activity, which consists of loans from the grant recipient to businesses for building renovation/construction, purchase of equipment, or working capital. The most common economic development activity is rehabilitation of local commercial districts. Maximum available The maximum grant award for a Public Facility or Housing project is $600,000. The maximum grant for a Comprehensive project is $1.4 million. Other funds required The amount of other funds required is variable and contingent on the project type, other available sources of funds for the project, and the financial capacity of the applicant and local benefiting residents. Terms The length of project period is normally between two and three years, depending on the size and scope of the project. Application accepted Part I pre-applications of the Business and Community Development application can be submitted year-round. Complete applications (including Part II) must be submitted by ~ 1 of each year. Grant awards The annual review and ranking period will commence on ~ 1. Grant awards will be announced each March. Approving authority Department of Trade and Economic Development. Disbursement of funds Grant monies are disbursed as project costs are incurred. Contact Oop~right © 1999- 2003, Minnesota Department of Trade and Economic Developrnent. All righls reserved, http ://www. dted. state.mn.us/02x01 x01 x05. asp 1/31/2003 City of Elk River Downtown Revitalization Project Commercial and Mixed-Use (Residential) Building Rehabilitation Program Purpose The City of Elk River is notable for its downtown commercial district adjacent to the Mississippi River. There are many intact and historically unique buildings. The Commercial and Mixed-Use Building Rehabilitation Program has been designed to enhance the City's Redevelopment Financing Program (Micro Loan) and to provide the financial incentive necessary for property owners and business tenants to bring their properties up to desirable community standards. The City believes that it is crucial to preserve the older buildings, maintain the tax base and generally enhance the economic viability of the city core. New housing in the downtown will generate increased business further justifying renewed reinvestment. Eligible Improvements Building owners may make exterior improvements that will prevent or eliminate blighting conditions where the property has been determined to be substandard. Building improvements and repairs must correct defects and deficiencies that affect the safety, energy consumption, habitability, handicapped accessibility, or appearance of the property. Conditions of Participation Participants in the Commercial and Mixed-Use Rehabilitation Program must agree to the following program requirements: · Building condition inspection/evaluation · Approval by the State Historic Preservation Office · Asbestos and lead evaluations; abatement where required. Temporary relocation may be required if abatement is necessary. Costs may be included in loan. · Competitive bidding and federal labor standards ~revailing wages, weekly payroll reviews, etc.) will apply to the entire project. Residential rental properties must agree to rent units to low and moderate income tenants at rents, including utilities, no more than HUD Fair Market rents. Financial Assistance Commercial Properties. The City of Elk River (with SCDP Program funds) will provide 5-year deferred loan financing for up to 40 percent of the project cost for eligible improvements. The City will commit its Redevelopment Financing Fund (Micro Loan) for up to $50,000 of the balance of the project, in addition to private sources - either new equity investment or commercial financing. Participants who retain ownership of the property for 5-years or more will not have to repay the loan. Repayment in full will be required if property ownership is transferred 5-years following closing. Residential/Mixed-Use Properties. Under the Residential Rehabilitation component, owners may request up to $15,000 per unit to make health and safety codes and energy efficiency improvements. There is no match requirement; however property owners will be responsible for financing improvements in excess of $15,000. At least 51% of the units must be occupied by low and moderate-income households and rent levels shall not exceed the HUD Fair Market rents. Owners will be encouraged to use other public financing as might be available through the Minnesota Housing Finance Agency. DO~TO~ ~VITALIZATION PROJECT ELK RIVER M~SOTA NOT TO SGALE