5.6. SR 10-27-2003River
Item 5.6.
MEMORANDUM
TO:
Mayor and City Council
CC:
FROM:
DATE:
Housing & Redevelopment Authority
Catherine Mehelich, Director of Economic Development//~
October 27, 2003
SUBJECT: Consider Small Cities Development Program Grant Application for
Downtown Revitalization Project, Public Hearing & Resolutions
Attachments · Notice of Public Hearing
· Map of Downtown Revitalization Project Areas
· Draft Commercial and Mixed-Use (Residential) Building Rehabilitation Program
Local Government Resolution and Compliance Certification
· Resolution Identifying "Slum and Blighting" Conditions
Background
At its meeting on October 27, 2003, the Elk River City Council will conduct a public hearing on
the grant application to the MN Department of Employment & Economic Development
(DEED). The City of Elk River seeks grant funding from DEED under ks Small Cities
Development Program (SCDP). If awarded, the SCDP grant funds will be used by the City to
meet two federal objectives: to benefit low and moderate-income residents, and to alleviate blight
conditions in the downtown target area. Funds will be requested to reduce the costs of financing
commercial and residential building improvements in the downtown target area, and to reduce
the cost of developing new rental housing in the target area by supplementing other sources of
private and public financing.
The purpose of the public hearing is to discuss the funding request to DEED and to discuss the
impact this proposed grant has in meeting the City's community development objectives.
Following the public hearing, the City Council may consider adoption of the applicable
resolutions. The grant is contingent upon the City's final approval of the proposed Bluff Block
and Jackson Block projects. Application does not commit the City to final approval.
Small Cities Development Program Grant Application
October 27, 2003 City Council Meeting
Page 2 of 3
Staff will be present at the City Council meeting to discuss details of the proposed SCDP grant
application. In addition, staff anticipates attendance from business and property owners within
the downtown target area, some of which have indicated interest in the rehabilitation program.
Details of Proposed Project and Funding Request to DEED
Commercial and Mixed-Use (Residential) Rehabilitation
The largest portion of the City's SCDP application will include a request for grant funds to be
used for commercial and rental property rehabilitation within the downtown area. The attached
Commercial and Mixed-Use (Residential) Building Rehabilitation Program outlines how financial
assistance could be provided to commercial and residential rental property owners.
The grant funds are proposed to be provided to property owners as a deferred 0% interest loan
that could be used to leverage the City's existing Micro Loan Redevelopment Financing Program
and private financing. The rehabilitation of adjacent properties in the downtown supports the
City's revitalization objective to recognize buildings that have potential for rehabilitation.
Rehabilitation must include building, accessibility, fa'e, and energy efficiency code improvements,
as well as facade improvements.
The following areas, highlighted on the attached map, will be included in the SCDP grant
application for the purposes of commercial and residential rental rehabilitation:
· "Brick Block" - the west side of Jackson Avenue between Main Street and Hwy 10
· Block of properties between Sunshine Depot and Mikols River Studios
The above-mentioned blocks contain 13 commercial buildings and 5 residential rental units.
New Residential Rental Construction
A portion of the SCDP application will include a request for gap financing of the residential
portion of the proposed MetroPlains Jackson Block development, described as follows:
· 32 units residential rental housing (16 1-bedroom units at $600 per month, and 16 2-
bedroom units at $700 per month.
· 10,000 square feet commercial on the first floor along Jackson Street and at the comer of
Jackson and Main.
· Up to 52 below grade parking traits for housing residents and commercial, and 18 surface
units.
Administration
The SCDP application will include a request for administrative costs related to implementing the
projects as described above. Staff has had discussions with the Tri-County Action Program, Inc.
(TRI-CAP) for the administration of the grant funds. TRI-CAP has subrrdtted a contract for
administrative services proposal to staff and TRI-CAP is experienced in administering
rehabilitation programs, including a SCDP project in Foley, MN. Upon grant award, staff
recommends that the City consider contracting with TRI-CAP for the project administration.
Small Cities Development Program Grant Application
October 27, 2003 City Council Meeting
Page 3 of 3
Action Requested
After conducting the public hearing on the SCDP grant application, staff recommends that the
City Council adopt the following attached resolutions:
· Local Government Resolution and Compliance Certification
The Local Government Resolution formally authorized the Mayor and Director of Economic
Development to submit the application to DEED and to execute agreements as necessary to
implement the project on behalf of the city. The resolution also certifies that the City of Elk
River will comply with all applicable laws and regulations as described in the attached
Compliance Certification.
· Resolution Identifying "Slum and Blighting" Conditions
The application for rehabilitation funds requires a local resolution that summarizes the
general conditions and states that the conditions, which exist in the target area, meet the
statutory requirements and definitions necessary to meet the federal objective. The Tax
Increment Finance Redevelopment District Eligibility Assessment and Building Condition
Reports, completed by S.E.H. Engineers earlier this year, was evaluated by staff to determine
conditions and specific properties that meet the slum and blight definition.
Formal notification from DEED on the grant award is anticipated in early March of next year.
For publication on Wednesday, October 15, 2003 and
Wednesday, October 22, 2003.
Please contact Catherine Mehelich with any questions at (763) 653-1041.
NOTICE OF PUBLIC HEARING
CITY OF ELK RIVER
The City of Elk River will conduct a public hearing on Monday, October 27, 2003, at
6:30 p.m. to be held at the Elk River High School Little Theater, 900 School Street,
Door H on the north side of the building, to consider a grant application to the Minnesota
Department of Employment and Economic Development (DEED). The City of Elk River
seeks grant funding from DEED under its Small Cities Development Program. If
awarded, the DEED grant funds will be used by the City to supplement other sources of
public and private financing to benefit low and moderate-income residents and to
alleviate blight conditions in the downtown target area. Funds will be requested to
reduce the costs of financing commercial and residential building improvements in the
downtown target area. Funds are also being requested to reduce the cost of developing
new rental housing in the target area.
The purpose of the public heating is to discuss the funding request to DEED and to
discuss the impact this proposed grant application has in meeting the City's community
development objectives.
All persons desiting to appear at the pUblic heating will be afforded an opportunity to
express their views with respect to the proposed Small Cities Development Program
application and the impact this grant has in meeting the City's community development
objectives. Interested persons may also file written comments expressing their views
with Director of Economic Development to the date of the public hearing.
If you would like information regarding the above-described public hearing, please
contact the Director of Economic Development, Catherine Mehelich, at Elk River City
Hall, (763) 635-1041.
Catherine Mehelich
Director of Economic Development
City of Elk River
City of Elk River
Downtown Revitalization Project tDRA~Tl
Commercial and Mixed-Use (Residential) Buildin
Rehabilitation Program
Purpose
The City of Elk River is notable for its downtown commerdal 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 finandal 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 (prevailing 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 I-F. JD Fair Market rents.
Financial Assistance
Commerdal 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 commerdal financing.
Partidpants 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 iow 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.
CITY OF ELK RIVER
RESOLUTION NO. 03-
A LOCAL GOVERNMENT RESOLUTION FOR THE CITY OF ELK RIVER
RELATING TO THE SUBMISSION OF A BUSINESS AND COMMUNITY
DEVELOPMENT APPLICATION TO THE MINNESOTA DEPARTMENT OF
EMPLOYMENT AND ECONOMIC DEVELOPMENT ON BEHALF OF THE
CITY OF ELK RIVER MN 55330
BE IT RESOLVED that the City of Elk River act as the legal sponsor for project contained
in the Business and Community development Application to be submitted on approximately
October 31, 2003 and that the Mayor and the Director of Economic Development are
hereby authorized to apply to the Minnesota Department of Employment and Economic
Development for funding of this project on behalf of the City of Elk River.
BE IT FURTHER RESOLVED that the City of Elk River has not violated any Federal,
State, or local laws pertaining to fraud, bribery, kickbacks, collusion, conflict of interest or
other unlawful or corrupt practice.
BE IT FURTHER RESOLVED that upon approval of its application by the state, the City
of Elk River may enter into an agreement with the State of Minnesota for the above-
referenced project, and that the City of Elk River certifies that it will comply with all
applicable laws and regulations as stated in all contract agreements and described on the
Compliance Certification of the Business and Community Development Application.
NOW, THEREFORE BE IT RESOLVED that the Mayor and Director of Economic
Development, or their successors in office, are hereby authorized to execute such
agreements, and amendments thereto, as are necessary to implement the project on behalf of
the applicant.
I CERTIFY THAT the above resolution was adopted by the City Council of the City of Elk
River on the day of ,2003.
SIGNED:
WITNESSED:
Stephanie Klinzing Date Joan Schmidt Date
Mayor City Clerk
Catherine Mehelich Date
Director of Economic Development
S:\Downtown RevitalizationkFinancing\SCDP\Local Govt Resolution2.doc
Compliance Certification
Single Audit Act Amendment of 1996 (P.L. 104-156, Chapter 75 of title 31,
USC), which establishes audit requirements for state and local governments
receiving federal funds.
OMB Circular A-87 - Establishes Principles for Determining Costs Applicable to
Grants and Contracts with State Local and Federally recognized Indian Tribal
Governments.
Section 504 of the Federal Rehabilitation Act of 1973; the Americans with
Disabilities Act (ADA), MN Statutes 1990, Chapter 363, Chapter 363 MN Human
Rights Act - Require that all public facilities and programs be designed and
constructed to be accessible to the physically handicapped.
The Uniform Administrative Requirements for Grants and Cooperative Agreements
to State and Local Governments, the AUAR, (Federal Register March 11, 1988,
Volume 53, Number 48) B Establishes requirements for procurement and financial
management.
Title VI of the Civil Rights Act of 1964 (P.L. 88-352) and subsequent regulations - It
ensures access to facilities or programs regardless of race, color, national origin or
sex.
Executive Order 11246, as amended by Executive Orders 11375 and 12086 and
subsequent regulations - prohibit employment discrimination on the basis or race,
color, religion, sex or national origin.
Title II of the Uniform Relocation Assistance and Real Property Acquisition Policies
Act of 1970 as amended and subsequent regulations, the Uniform Act - Identifies
procedures for the acquisition of property and the relocation of persons and
businesses.
8. Executive Orders 11988 and 12148, Flood Plain Management - Requires action to
minimize the impact of floods on assisted projects.
Executive Orders 11625 and 12138 - Encourage recipients to award construction,
supply and professional service contracts to minority and women's business
enterprises.
10.
The Flood Insurance Purchase Requirements of Section 102a of the flood Disaster
Protection Act of 1973, (P.L. 93-234) - Requires the purchase of flood insurance in
communities where such insurance is available for construction or acquisition
projects in any area having special flood hazards.
11.
The National Environmental Policy Act, NEPA of 1969 (42 USC, Section 4321 et.
seq.) and other related acts related to the environment - Requires an analysis of
projects, environmental impact and a description of efforts to mitigate the impact.
Other related acts refer to environmental quality.
Compliance Certification
Small Cities Development Program Grant Application
Page 2 of 3
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Section 401f of the Lead-Based Poisoning Prevention Act, as amended (42 USC,
Section 4831b) requires the removal and prohibits the use of lead-based paint.
Federal Fair Labor Standards Act (29 USC, Section 201 et. seq.) - Requires that
employees be paid at least minimum wage and that they be paid one and one-half
times their basic wage for all hours worked in excess of the prescribed work week.
State Laws, the Davis Bacon Act (40USC, Section 276a - 276a5), Copeland (Anti-
kickback Act, 40 USC 276c) and the Contract Work Hours and Safety Standards
Act of 1962 (40USC, Section 327-333) - Requires payment of wages, at hourly
rates, as established by the Department of Labor.
Section 3 of the Housing and Urban Development Act of 1968, as amended -
Encourages the employment and training of lower-income people and awarding of
contracts to businesses located with the community receiving assistance.
Title VIII of Civil Rights Act of 1968, as amended and executive order 12259 -
Requires equal opportunity in housing and non-discrimination in the sale or rental of
housing and actions to affirmatively further fair housing.
Requirements specified in the Housing and Community Development Act of 1974,
as amended - establishes the Small Cities Development Grant program.
Act Discrimination Act of 1975 - Prohibits discrimination on the basis of age.
Minnesota Statutes Sections 176.181 ~ 176.182 - Requires recipients and
subcontractors to have workers compensation insurance coverage.
Clean Water Act and Executive Order 11288 - Requires protection of surface and
ground water resources.
Minnesota Statutes Sections 471.87 and 471.88 - Forbids public officials from
engaging in activities, which are, or have the appearance of being, in conflict of
interest.
The Minnesota Government Practices Act - Protects the privacy of individuals who
participate in Community Development-assisted programs by prohibiting the public
disclosure of participant=s income and other personal information.
Antitrust or unfair trade practices laws - Regulates and controls the sale of goods
and services and prohibits deceptive and unfair competition between businesses.
43 U.S.C. Section 18.100, entitled Limitation on use of appropriated funds to
influence certain federal contracting and financial transactions. Requires a
certification that no federal funds have been utilized to lobby or gain undue
influence.
Executive Order 12549, Debarment and Suspension (43 CAR, Part 12 and Section
12.510) - Requires a certification regarding Federal debarment, suspension and
other responsibility matters.
F:\SHRDOC\Downtown Revitalization\Financing\SCDP\Compliance Certification.doc
Compliance Certification
Small Cities Development Program Grant Application
Page 3 of 3
26. Executive Order 91 - 3, Wetlands - Requires grant and loan recipients to apply the
principles of no-net-loss of Wetlands during the conduct of their project.
27. The Drug Free Workplace Act (P.L. 100-690, Title V, Subtitle D) - Requires that
grantees certify that they will provide a drug free workplace.
28.
Section 519 of Public Law 101-144 (1990 HUD Appropriations Act and Section
104(I) of HAD Act) - Requires that each local unit of government adopt, enforce a
policy prohibiting the use of excessive force by law enforcement agencies within its
jurisdiction against any individuals engaged in nonviolent civil rights demonstrations.
29.
Section 1352, Title 31, U.S. Code- Requires that language of certification regarding
lobbing for contracts, loans and agreements be included in award documents for all
sub awards at all tiers. Section 319 of Department of Interior and Related Agencies
Appropriations Act, known as the Byrd Amendment prohibits the use of federally
appropriated funds for influencing any Executive or Legislative Branch personnel in
the awarding Federal contracts, grants, or loans. It also requires, where
appropriate, the completion of Disclosure Form SF-LLL.
30.
Subpart C of 24 CFR Part 12 - Provides for Disclosure/Update from
applicants/recipients of HUD assistance relating to the amount of assistance
received, sources and uses of funds, and interested parties, and requires the
completion of HUD Form 2880.
31.
M.S. 290.9705 - Requires that 8 percent of each payment paid to out-of-state
contractors for work in Minnesota must be withheld on any contracts that exceeds
or could reasonable be expected to exceed $100,000, unless the requirement is
waived.
The City of Elk River will comply with the Compliance Certification, and as so stated in the
accompanying Local Government Resolution.
Authorized Official Date
F:\SHRDOC\Downtown Revitalization\Financing\SCDP\Compliance Certification.doc
CITY OF ELK RIVER
RESOLUTION NO. 03-
RESOLUTION IDENTIFYING "SLUM AND BLIGHT" CONDITIONS
WHEREAS, the City of Elk River is undertaking a program of downtown revitalization
and redevelopment; and
WHEREAS, the City of Elk River has identified a specific area hereafter referred to as the
"Slum/Blight Area" in which revitalization activities will occur; and
WHEREAS, the Elk River City Council has assessed the condition of the buildings and
the other characteristics of the Slum/Blight Area and has determined that the area can be
characterized as blighted by reason of dilapidation, obsolescence, overcrowding, faulty arrangement
or design, lack of ventilation, light and sanitary facilities, excessive land coverage or deleterious land
use or obsolete layout or any combination of these or other factors which are detrimental to the
safety, health, morals, or welfare of the community, in accordance with M.S. 469.002, Subd. 11.
FURTHERMORE, the Elk River City Council has identified deteriorating conditions of
the commercial and residential units, the inability of commercial structures to meet codes, the
general condition of deteriorating storefronts and rear entrances of the commercial buildings, and
rental units in mixed-use buildings that do not meet code requirements as contributing to the slum
and blighting conditions of the targeted slum/blight area.
THEREFORE, BY RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
ELK RIVER THE AREA IDENTIFIED AS THE TARGET AREA (SEE ATTACHED
MAP) IS CHARACTERIZED BY CONDITIONS MEETING THE DEFINITION OF
"SLUM AND BLIGHT".
Passed and adopted this 27th day of October 2003.
ATTEST:
Stephanie A. Klinzing, Mayor
joan Schmidt, City Clerk
S :\EDA\HRA\ RES OLUTI\2003 \ slum- blight resolution.doc
Jackson and Brick Block Comprehensive Revitalization
Program Summary - 2003
Housing Rehabilitation/Mixed Unit buildings
(3 Buildings/5 Units)
Use of Funds SCDP Other Total
Residential
Rehabilitation $75,000 $25,000 $100,000
Project
Administration $10,000 - 0 - $10,000
TOTAL $85,000 $25,000 $110,000
Commercial Rehabilitation
(13 Buildings @ average cost of $68,394)
Use of Funds SCDP Other Total
Commercial
Rehabilitation $390,000 $499,122 $899,122
Project
Administration $ 35,100 -0- $ 35,100
TOTAL $425,100 $499,122 $924,222
New Residential Rental Development
(32 Units - 60% of median income/50% of median rents)
Use of Funds SCDP Other Total
Construction Loan $600,000 $3,464,580 $4,064,580
Project
Administration $18,000 - 0 - $ 18,000
TOTAL $618,000 $3,464,580 $4,082,580
TOTAL REVITALIZATION PROJECT INVESTMENT
Use of Funds SCDP Other Total
Rehabilitation $465,000 $524,122 $ 989,122
New Construction $600,000 $3,464,580 $4,064,580
Project
Administration $ 63,100 - 0 - $ 63,100
General
Administration $ 40,000 - 0 - $ 40,000
TOTAL $1,168,100 $3,988,702 $_~, 156,$02