7.7 HRSR 02-02-2015
Request for Action
To Item Number
Housing and Redevelopment Authority 7.7
Agenda Section Meeting Date Prepared by
General BusinessFebruary 2, 2015Colleen Eddy, Economic Development Specialist
Item Description Reviewed by
Discussion of Demolition/ Site Stabilization Jeremy Barnhart, Deputy Director, CODD
programs
Reviewed by
Action Requested
Item presented for information.
Background/Discussion
At the January 5 HRA meeting, when discussing roadblocks to redevelopment and reinvestment, one of
the members mentioned that occasionally, demolition was more appropriate for some structures.
The Minnesota Department of Employment and Economic Development (DEED) has a Demolition
Loan program that HRA and EDA’s can access for such projects. Staff has suggested this option on
some projects, however, the HRA or City must own the property.
It might be appropriate for the HRA to develop a revolving loan program that is patterned closely after
this program.
The details of DEEDs program:
It helps development authorities with the costs of demolishing blighted buildings on sites that have future
development potential but where there are no current development plans. Some of the qualifying projects
include structures that become a threat to public safety because of inadequate maintenance, dilapidation,
obsolescence or abandonment. Upon completion of the demolition, the development authority
reasonably expects that the property will be improved and these improvements will result in economic
development benefits to the municipality.
Eligible Applicants: Development authorities, including cities, counties, port authorities, housing and
redevelopment authorities, and economic development authorities.
Eligible Costs: Demolition activities, including interior remediation such as asbestos abatement. Loans
would pay up to 100 percent of demolition costs for a qualifying site. The loans may also assist with site
acquisition costs.
Loan Terms and Conditions: Property and buildings must be publicly owned. The following terms apply:
Loans will be low-interest (2 percent)
Loans will be interest-free for first two years
Principal and interest payments will start in year three
Loan terms cannot exceed 15 years
If the site is developed, the remaining principal and interest (up to 50 percent of the loan) could be
forgiven based on development benefits.
Financial Impact
N/A
Attachments
Demolition Loan Application
N:\Departments\Community Development\Economic Development\HRA\Administrative\Agenda\2015\2-2-2015\7.7 sr Demolition
Loan.docxN:\Departments\Community Development\Economic Development\HRA\Administrative\Agenda\Year2014\2-3-2014\7.7 sr Housing
TIF Policy.docx
FY 15
DEMOLITION LOAN APPLICATION
TABLE OF CONTENTS
Introduction
Purpose/Background________________________________________________ ii
Funding Availability________________________________________________ ii
Deadlines/Requirements_____________________________________________ ii
Eligible Sites ii
Eligible Applicants_________________________________________________ iii
Eligible Program Costs_______________________________________________ iii
Eligible Bonding Costs_______________________________________________ iii
Required Appraisals or Assessments___________________________________ iii
Awarding Loans___________________________________________________ iv
Application
Cover Page _______________________________________________________ 1
Site Identification __________________________________________________ 2
Valuation ________________________________________________________ 2
Maps and Site Features ______________________________________________ 3
History ___________________________________________________________ 3
Current Conditions and Development Potential ___________________________ 3
Cost Analysis______________________________________________________ 4
Sources and Uses of Funds (Budget Table) ______________________________ 4
Analysis of Loan Need___________________________________ ___________ 4
Financial Information_______________________________________________ 6
Payment Information________________________________________________ _ 7
Local Government Resolution_________________________________________ 8
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Redevelopment
FY 15
MINNESOTA DEPARTMENT OF EMPLOYMENT AND ECONOMIC DEVELOPMENT
First National Bank Building
332 Minnesota Street, Suite E200
St. Paul, Minnesota 55101
Office of Brownfields and Redevelopment
651-259-7449
1-800-657-3858
DEMOLITION LOAN APPLICATION
***YOU MUST READ THE FOLLOWING NARRATIVE
TO FULLY UNDERSTAND THE APPLICATION PROCESS***
INTRODUCTION
PURPOSE/BACKGROUND:
Although the traditional Redevelopment Grant Program works well for sites
where there are costly detriments to site development, and the need to level the playing field between these
sites and undeveloped sites exist, there is also an untapped need for assistance with demolition and other
redevelopment activities when either there is no current development plan or future development visions are
hindered by current blight.
In some cases, despite a potential for future redevelopment, hazardous conditions or other public safety
factors may be a community’s immediate concern. In addition, securing and maintaining vacant dilapidated
structures is costly. Therefore, DEED has amended the Redevelopment Grant Program to include loan funds
for demolition activities when an imminent redevelopment opportunity does not currently exist.
FUNDING AVAILABILITY:
Available funding amounts vary, depending on Legislative appropriation.
DEADLINES/REQUIREMENTS:
The Demolition Loan Program operates on a semi-annual
Completed applications
application cycle. Applications are due February 1 and August 1 of each year.
and supporting documentation (3 copies)
must be received by DEED’s Office of Brownfields and
by 4:00 p.m
Redevelopment . on the due date to be considered for funding. An applicant may apply for
NOTE:
more than one project, but an individual (separate) application must be completed for each site.
Electronic copies will not be acceptedPlease fill out the entire application. All
in place of paper.
applications must be complete upon submission in order to qualify for a loan.
QUALIFYING PROJECTS:
A project qualifies for a loan if the following conditions are met:
1.The property and structures are owned by the development authority;
2.The structures on the property have been vacant for at least one year;
3.The structures constitute a threat to public safety because of inadequate maintenance, dilapidation,
obsolescence, or abandonment;
4.The structures are not listed on the National Register of Historic Places;
5.Upon completion of the demolition, the development authority reasonably expects that the property
will be improved and these improvements will result in economic development benefits to the
municipality.
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Redevelopment
FY 15
ELIGIBLE APPLICANTS “Development Authorities”:
Eligible applicants for this program are
statutory or home rule charter cities, economic development authorities, housing and redevelopment
. Note: Applicant must be the owner of the property at the
authorities, counties, or port authorities
time of the application or before disbursement of funds.
ELIGIBLE PROGRAM COSTS:
The Demolition Loan Program can pay up to 100 percent of the
acquisition and demolition costs for a qualifying site. “Demolition costs” means the costs of demolition,
destruction, removal, and clearance of all structures and other improvements on the project site, including
interior remedial activities, and proper disposal thereof. As used in this subdivision, “structure” has the
Costs incurred before the loan is awarded are
meaning given it in section 116G.03, subdivision 11.
not eligible for payment
.
TERMS:
Loans for acquisition and demolition costs may be made subject to the following terms and
conditions:
1.The agreement to repay the loan may be a general obligation of the development authority, payable
primarily from a dedicated source of revenue, or other security subject to review and approval by the
commissioner, and the development authority must deliver its bond or note to the commissioner,
along with an attorney’s opinion that security is binding and legal per bond counsel to secure the
loan;
2.The term of the loan may not exceed 15 years;
3.The loan shall bear interest at a rate equal to two percent, but interest will not accrue during the first
two years of the loan term.
4.The development authority shall make semiannual interest payments and annual principal payments
beginning in the third year of the loan until the end of the term;
5.The principal amount of a loan may not exceed $1,000,000;
6.Loan proceeds shall be disbursed for eligible demolition costs as incurred or paid by the borrower and
upon submission of invoices and other supporting documentation satisfactory to the commissioner;
7.An eligible borrower shall establish a dedicated source of revenue for repayment of the loan.
FORGIVENESS:
Thecommissioner may forgive principal of the loan and interest accrued but unpaid
thereon, if any, up to 50 percent of the original loan amount, not to exceed the costs of demolition, upon
completion of the redevelopment plan, if the project would otherwise have received grant funding in the
most recent semiannual grant round, based on the priorities in section 116J.575.
REQUIRED APPRAISALS OR ASSESSMENTS:
Land appraisals of the current (as-is) and expected
(pre-construction) value of the site are required so that DEED can determine the fair market value and
any business subsidy.Both appraisals must be done by an independent appraiser using accepted
appraisal methodology. In lieu of an appraisal, the applicant may use the current and projected assessed
values as determined by the local assessor. Values cannot be determined in any other manner. The value
of the property after the proposed development is completed is also requested. This estimate is generally
based on similar development projects in the city.
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Redevelopment
FY 15
AWARDING LOANS:
DEED will award loans to projects that provide the highest return in public
benefits for the public costs incurred and meet all of the statutory requirements. In order to evaluate the
applications for public benefits with respect to the costs incurred, the law specifies priorities that DEED
must consider.
To fulfill this requirement of reviewing applications in an objective and fair manner, the following
criteria have been assigned maximum point values in order to systematically award loans. All assigned
scores will be relative to scores awarded to other applications.
1. The extent to which the existing property conditions threaten public safety. Maximum = 15 points
2. The length of vacancy of the property. Maximum = 5 points.
3. The development potential of the property. Maximum = 10 points
4. The proximity of the property to existing sufficient public infrastructure. Maximum = 5 points.
5. The applicant’s financial condition and ability to repay the loan. Maximum = 15 points
6. Other public benefits, including but not limited to, health, safety, environmental benefits, blight
reduction, community stabilization, crime reduction and reduction of maintenance costs.
Maximum = 5 points
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Redevelopment
FY 15
1st National Bank Building 332 Minnesota Street, Suite E200 St. Paul, MN 55101-1351
Demolition Loan Application
Cover Page
Applicant (Public Entity)
: _______________________________________________________
Head of Applicant Agency
(e.g. Mayor): ___________________________________________
Applicant Address: ______________________________________________________________
City: _______________________________________ Zip Code: _______________________
If the applicant is a city, what form of government?
_________ Home Rule Charter _________ Statutory City
For reference, please give the State Statute number which gives the applicant authority to carry
out the activities for which you are requesting loan funds. ____________________
Project Contact for the Public Entity ____________________________________
Phone: ______-______-____________
E-mail: _______________________________________________________________________
Mailing Address: _______________________________________________________________
Project Manager for this project from the Public Entity, in the event of an award
_________________________________
Project Manager’s Phone & email __________________________________________________
Application Author
__________________________________________________________
Author’s Phone & email ________________________________________________________
Provide a written executive summary of the project, including the applicant’s involvement
in the project to date and how the applicant intends to manage the project should a loan be
awarded.
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FY 15
I. SITE IDENTIFICATION AND HISTORY
SITE INFORMATION
1. Name of Site: ______________________________________________________________
Site Address: _______________________________________________________________
City, County or Township: Zip Code: __________________________
Acreage of Site: Sq. Ft. of Site: __________________________
Minnesota Legislative District # _________A __________B
(Note: The Minnesota Legislature has a tool to look up legislative district numbers. You
must have a precise address and know the zip code of the site. Go to:
http://www.gis.leg.mn/mapserver/districts/index.html
In order to qualify for a loan, the property and structures must be owned by the
development authority
.
2. A. Does the applicant own the property? _________________________________________
B. If not, at what point will the applicant acquire the property? _______________________
C. What is the purchase price? _____________________________
Attach
the Purchase Agreement or other evidence of the commitment of both parties.
D. Is it anticipated that the development authority will retain ownership of the property once
the demolition is complete? _________________________________________________
Provide
3. a legal description of the site.
SITE VALUATION
4. What is the current appraised or assessed value of the Site? ___________________
Attach
the appraisal or assessor’s value.
5. What is the projected appraised or assessed value after the demolition activities have been
________________________________________
completed (prior to development)?
Attach
the appraisal or assessor’s value.
6. What is the projected value after the proposed development is complete? _______________
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FY 15
MAPS AND SITE FEATURES
Attach
7. an accurate and legible site and location map indicating the site showing locations of
prominent and relevant site features such as buildings, retaining walls, etc. (NOTE: maps
shall include property boundaries, a north arrow and bar scale). The map(s) should show the
following:
a) The current condition of the site including labeled structures and where and for what
activities DEED money will apply.
b) The proposed potential development of the site including labeled structures if
known.
provideNote: Photographs are a very important
8. Please current photographs of the site.
part of review process.
HISTORY
attach
9. Please a synopsis on the history and general background of the site. This includes,
but is not limited to, a description of the former and current uses of the site, as well as an
explanation of what has occurred on the site, leading to its current dilapidated condition.
CURRENT CONDITIONS
In order to qualify, structures on the property must have been vacant for at least one
10.
year.
How many buildings are currently on site?
Industrial ________ How many are occupied? ______ If vacant, for how long? ________
Commercial ______ How many are occupied? ______ If vacant, for how long? _________
Residential _______ How many are occupied? ______ If vacant, for how long? _________
11. Year building(s) was/were built: _______________________________________________
provide
12. Please evidence that the structures are not listed on the National Register of
Historic Places.
DEVELOPMENT POTENTIAL
13. Please attach a narrative of the development potential for the site. Please include
information such as the type of business, any potential future tenants, potential jobs
created, and any other potential economic benefit. Also please include any previous
development interest in the site.
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FY 15
II. COST ANALYSIS
14. How much money are you seeking from DEED? _________________________________
(May not exceed $1,000,000)
all
15. Fill out the budget table below indicating the uses, and amounts of funds that will be
used for eligible costs as defined on Page iii. The table should indicate the total project
budget non-incurred costs.
Demolition Uses of Funds for the Project (Budget Table)
Use of Funds (Activity) Amount Date Activity Will Occur
Acquisition
Demolition
Interior Abatement for
Demolition
Other:
Total
III. ANALYSIS OF LOAN NEED
16. Describe how the structures on the property constitute a threat to public safety, are
functionally obsolete, or are economically unfeasible to repair.
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FY 15
17. Describe how demolition of the site will reduce blight and improve the property’s
economic vitality, functionality and aesthetics.
18. Describe how close the property is to existing sufficient public infrastructure.
19. By providing hard data on current crime rates, and in a narrative, depict how demolition
and redevelopment of the site will reduce crime.
20. Describe how demolition of the site will reduce maintenance costs.
How much was spent on maintenance last year? _________________________________
How much was spent on maintenance in the last 5 years? __________________________
21. Describe how the community is stabilized, health is improved or any environmental
benefits are achieved by the demolition of the site.
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FY 15
IV. FINANCIAL INFORMATION
Historical Financial Statements:
22. Submit Financial statements should cover the past three
years. Financial Statements should include: Balance Sheets, Income Statements, Details on
existing debt agreements, Statements of Changes in Financial Position, and Notes to the
Financial Statements. If these Financial Statements are not audited, they must be signed and
dated by an authorized officer of the company. If the statements are more than 90 days old,
provide interim data or provide a Year-End Audit, from the current or previous two year
period.
23. The maximum term of the loan cannot exceed 15 years.
What is your proposed term? _________________
24. Are you issuing a bond or a note to repay the loan? _____________________________
25. If you are issuing a bond, what type of bond will you be issuing to repay and secure the
loan? ___________________________________
26. What is your time line for issuing your bond? ________________________________
27. If you are issuing a note, what additional security will you be offering to secure the loan?
_______________________
28. Provide your statutory authorization for issuing bonds or notes. ___________________
Please provide a statement that the statutory provision authorizes the use of proceeds of
such bonds to pay demolition costs and secure the loan.
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FY 15
VI. PAYMENT INFORMATION
Most loan payments take place through electronic funds transfer (EFT). To ensure proper
payment, a Vendor Number assigned by Minnesota Management & Budget is required.
Financial Contact Person: _____________________________________________________
Telephone Number or e-mail: __________________________________________________
State of Minnesota Vendor Number
: __________________________________________
If a Minnesota Vendor Number does not exist, please supply:
Minnesota Identification Number: ______________________________________________
and
Federal Employer Identification Number: _______________________________________
State Vendor info may be found at:
https://supplier.swift.state.mn.us/psp/fmssupap/SUPPLIER/ERP/h/?tab=SUP_GUEST
Vendor # conversions from the old system to the new SWIFT may be found at: - http://www.swift.state.mn.us/vendors
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FY 15
VII. LOCAL GOVERNMENT RESOLUTION
You must attach a resolution approving this application and committing the source of the
loan repayment from the governing body of the municipality in which the site is located. A
blank resolution has been attached for your convenience. You may chose to re-format this
resolution but make sure to include all of the statements that appear in the resolution.
RESOLUTION OF APPLICANT.
Applicants must adopt and submit the following resolution. This resolution must be adopted
prior to submission of the application package.
BE IT RESOLVED that__________________________ act as the legal sponsor for project(s)
(Applicant)
contained in the Demolition Loan Program to be submitted on________________
(Day, Month, Year)
and that ___________________________is hereby authorized to apply to the Department of
(Title of Authorized Official)
Employment and Economic Development for funding of this project on behalf of ____________.
(Applicant)
BE IT FURTHER RESOLVED that___________________________ has the legal authority to
(Applicant)
apply for financial assistance, and the institutional, managerial, and financial capability to ensure
adequate project administration.
BE IT FURTHER RESOLVED that the sources and amounts of the loan repayment and security
identified in the application are committed to the project identified and the _____________ has
the authority
(Applicant)
to incur debt by resolution of the board or council authorizing issuance of a bond or note,
payable to DEED to repay and secure the loan.
BE IT FURTHER RESOLVED that _____________________________ has not violated any
(Applicant)
Federal, State or local laws pertaining to fraud, bribery, graft, kickbacks, collusion, conflict of
interest or other unlawful or corrupt practice.
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FY 15
BE IT FURTHER RESOLVED that upon approval of its application by the state,
__________________________may enter into an agreement with the State of Minnesota for
(Applicant)
the above referenced project(s), and that _________________certifies that it will comply with
(Applicant)
all applicable laws and regulation as stated in all contract agreements.
NOW, THEREFORE BE IT FINALLY RESOLVED that the Mayor and the Clerk (for Statutory
Cities), or Title of Authorized Official(s),are hereby authorized to execute such agreements as
are necessary to implement the project on behalf of the applicant. Note: Do not include the
Pursuant to Minn. Stat. § 412.201, Statutory
proper name, only the title of the official(s).
Cities must authorize both the Mayor and Clerk to execute all contracts
, whereas Home
Rule Charter Cities or other public entities may differ.
I CERTIFY THAT the above resolution was adopted by the ___________________________.
(City Council, County Board, etc.)
of _______________________________________________ on__________________________
(Applicant) (Date)
SIGNED: WITNESSED:
________________________________ ________________________________
(Authorized Official) (Signature)
________________________________ ________________________________
(Title) (Date) (Title) (Date)
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