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3.1 HR MIN 08-26-2013 DRAFT WORKSHOP MEETING OF THE ELK RIVER HOUSING AND REDEVELOPMENT AUTHORITY HELD AT THE ELK RIVER CITY HALL MONDAY, AUGUST 26, 2013 Members Present: Chair Wilson,Commissioners Chuba,Kuester,Motin,and Toth Members Absent: None Staff Present: Director of Economic Development Brian Beeman Assistant Director of Economic Development Clay Wilfahrt 1. Call Meeting To Order Pursuant to due call and notice thereof,the meeting of the Elk River Housing and Redevelopment Authority was called to order at 5:30 p.m. by Chair Wilson. 2. Consider Agenda MOVED BY COMMISSIONER CHUBA AND SECONDED BY COMMISSIONER KUESTER TO APPROVE THE AUGUST 26,2013 AGENDA WITH THE FOLLOWING CHANGES: MOVE ITEM 4.TO ITEM 3. MOTION CARRIED 5-0. 4. Discuss Small Cities Development Program Grant Structure and Guidelines with Central Minnesota Housing Partnership Brian Beeman introduced Jason Krebsbach,Community Development Director and Seth Thomas, Program Manager,with Central Minnesota Housing Partnership (CMHP). Mr. Krebsbach explained determining a target area is the first step of the process. He noted that the submittal to DEED is not set in stone,and they would have the ability to adjust it,if necessary. He explained that a"windshield" survey is done to identify areas in need,but does not show other issues that may be going on inside a home. So there is some flexibility to amend the funding structure. Mr. Krebsbach discussed three sections of the funding request process: 1) need,2) impact,and 3) cost effectiveness. 1) Need Demographic data would be collected for target area (windshield survey,research and census data,such as MnPro) to determine neighborhoods in need of rehab. He stated there is no set requirement,but a general rule of thumb is identifying an area of need where there are 50—70 percent of the homes are substandard. Mr. Krebsbach stated that generally the HRA should look for older neighborhoods in need of rehab with good solid homeownership levels. Discussion following regarding the definition of"substandard". Mr. Krebsbach stated that in the "windshield"survey,they are looking for exterior issues such as shingles,siding,windows and IIRA Meeting Minutes Page 2 August 26,2013 doors,deteriorating steps lack of railings and poor or no lighting. He explained that based on past projects,if a home shows exterior issues,there are likely interior issues as well,such as need to remove heating oil furnaces,upgrades to 200 amp service,or replaced plumbing. 2) Impact of Funding Mr. Krebsbach stated that while there is no actual requirement,DEED is looking to fund projects that have the most impact. The HRA's goal should be to find neighborhood that needs most work and having the greatest percentage of homes in need of rehab. 3) Cost effectiveness Mr. Krebsbach explained that DEED sets Small Cities Development Program Grant Structure at a maximum at$25,000 per project. CMHP uses a$20,000 max. Mr. Krebsbach stated that CMHP statistics reflect an average project cost of$18,000- $19,000. He stated that interest rates and terms are negotiable. He noted that CMPH has always used zero percent interest,deferred with 7 year term. 1/7 of the loan gets forgiven each year,and if the owner still lives in the home at end of 7 years, the loan is forgiven. He explained that the HRA could do a split,such as portion of the loan zero percent forgivable,and a portion of the loan at percent with a monthly payment. He noted that income limits would be much higher in Elk River, since Sherburne County is included as a metro county. Discussion followed regarding possible options for payback if a homeowner moved out before the end of the established term. Mr. Krebsbach explained that the Coon Rapids program is different,in that remodeling could be as simple as a kitchen or bathroom and that this type of remodeling would not be eligible with the Small Cities program. He suggested that the HRA could have an additional program for these types of improvements. Commissioner Kuester asked what the cap size is to be defined as a small city.Mr.Kresbach stated the maximum population is 50,000. Commissioner Chuba asked what happens if homes identified are functionally obsolete. Mr. Krebsbach stated that the policies and procedures book addresses homes that are financially dilapidated. He explained that when application comes in,an inspection is done to determine whether or not it is a financially viable project. Commissioner Chuba asked what options are there have if a structure is so bad it does not qualify. Mr. Krebsbach stated that some different type of funding mechanism would be required if a home needs to be demolished. Mr.Beeman asked how much Mr.Krebsbach would recommend budgeting for leverage funding. Mr. Krebsbach recommended the HRA set aside$50,000 in leverage funds. The HRA discussed this amount,as well as the option of budgeting funds for other types of projects. 3. Discuss 2014 HRA Budget Goals&Preliminary Budget Brian Beeman reviewed the 2014 HRA budget details. The following changes were made to the budget: • Eliminate Historic Context Study-$20,000 • Eliminate Market Study- $20,000 • Reduce grant leverage funds for SCDP from$200,000 to$50,000 • Eliminate funding for public art- $10,000 • Remaining funds at end of year to be used for future housing and redevelopment projects HRA Meeting Minutes Page 3 August 26,2013 Mr.Beeman noted that the HRA cash balance as of June 30,2013 was $849,513. He stated that the changes will be made in the budget and presented to the HRA at their September 3,2014 meeting for approval. 5. Adjournment There being no other business,Chair Wilson adjourned the meeting. The meeting of the Elk River Housing and Redevelopment Authority adjourned at 8:03 p.m. Minutes prepared by Debbie Huebner. Tina Allard City Clerk Stewart Wilson Chair,Housing and Redevelopment Authority