8.1 HRSR 05-04-2015
Request for Action
To Item Number
Housing and Redevelopment Authority 8.1
Agenda Section Meeting Date Prepared by
Work SessionMay 4, 2015Colleen Eddy, Economic Development Specialist
Item Description Reviewed by
Update on Demolition Loan Policy Amanda Othoudt, EDD
Reviewed by
Suzanne Fischer, Director COD
Cal Portner, City Administrator
Action Requested
After the regular meeting, the HRA will adjourn to a work session to discuss a Demolition Loan
Application and Policy.
Background/Discussion
Discussions at previous HRA meetings included the challenges associated with redevelopment and
reinvestment. The Commission considered implementing a demolition loan policy to facilitate the
process.
Staff has researched two Demolition Loan Program Policies and Applications. One is offered through
DEED, and the other is offered through a local community.
Information from both documents was compiled and submitted to our attorney, who in turn drafted the
attached for further discussion at the HRA work session.
Financial Impact
N/A
Attachments
Demolition Loan Policy
DEMOLITION LOAN
APPLICATION INSTRUCTIONS
The following documents are attached to the application and must be completed, signed, and returned to the
City of Elk River HRA (“HRA”):
Loan Application (Individual or Business)
Addendum to Application
IRS Form 4506-T
Authorization to Release Information
Data Privacy Act
The following documents are required and must be submitted with the application:
Current Photo ID
: Copy a state-issued photo ID (i.e., Minnesota driver's license) from all adult
household members. ID Number must be legible on the copy.
Proof of ownership
: For example: Deed, Warranty Deed, Quit Claim Deed, or Certificate of Title. If
you have purchased your home/commercial building on a Contract for Deed, submit a copy of the
Contract for Deed. A Title Commitment showing all ownership interests and encumbrances against the
property is also required.
Income Verification
: All household members who receive wages from employment must submit copies
of the two (2) most recent and consecutive pay stubs. Household members receiving Social Security
must submit the most recent Social Security Benefit Letter. Household members who are self-employed
must provide all related schedules from your last two (2) years Federal Income Tax Returns and a year-
to-date income statement for the business. Documentation of child support and all other forms of
income must be submitted.
Federal Income Tax Returns
: All owners must submit copies of the two (2) most recent Federal
Income Tax Returns including all W-2's, 1099's and all other Forms and Schedules. Please re-sign the
copy of each tax return for our records.
Property Tax Statement
: A copy of your most recent Sherburne County Property Tax Statement.
Mortgage Verification
: A copy of the most recent monthly statement from all mortgages, second
mortgages, home equity loans and lines of credit - verifying the outstanding principal, monthly payment
amount and that the mortgage payments are current (no unpaid late charges). If your mortgage has been
in Modification, please submit a copy of the Modification Agreement with all required signatures.
Credit Report Fee
: $15.00 per married couple; $15.00 per non-married borrower. Please make check
payable to City of Elk River. The fee is non-refundable.
Please mail the above documents to the City of Elk River HRA at 13065 Orono Parkway, Elk River, MN
55330.
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ELK RIVER
DEMOLITION LOAN
OTHER REQUIRED DOCUMENTS
The following documents must be submitted by the Applicant to the City of Elk River HRA before the
Applicant can receive final approval for the program and the Loan can be closed:
Applicants are encouraged to first consider the Elk River Fire Department's house burning/training
program demolition option.
Plans and Specifications for the New Home/Commercial Building that comply with all applicable City
ordinances, rules and regulations and is equal to or greater in square footage than the Current
Home/Commercial Building.
Construction Contract for the construction of the New Home/Commercial Building on the Property on
which the Owner intends to demolish the Current Building which shall include the cost of demolition of
the Current Home/Building.
Evidence that the Owner has sufficient funds to construct the New Home/Commercial Building
according to the Plans and Specifications and the Contract.
Evidence that the Owner has sufficient income to pay the first mortgage on the New Home/Commercial
Building and the Elk River HRA Mortgage.
Three demolition bids by contractor(s).
Contractor bids, proposals or estimates are the Applicant's responsibility. Applicant should call licensed
contractors and obtain written bids. The bids must be written by a licensed contractor and contain the
following items:
Contractor's name, address, license number, telephone number, and the date; Applicant's name
and project address;
Detailed description of the work to be done including brand names, quantities and all costs;
Contractor's signature;
A space for the Applicant's dated signature. Do not sign the bid until closing on the loan.
Contractor Acknowledgement (attached).
Each contractor Applicant intends to hire must fill out and sign the Contractor Acknowledgement.
Applicant does not need this form signed by the other contractors who only gave you bids but will not
be doing the work.
DELIVER COMPLETED DOCUMENTS TO:
City of Elk River HRA
13065 Orono Parkway
Elk River, MN 55330
Phone: 763.635.1000
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Housing and Redevelopment Authority (HRA)
DEMOLITION LOAN CRITERIA
The purpose of the HRA Demolition Loan Program is to provide loans to demolish blighted single-family,
duplex or commercial properties in Elk River.
Loan Amount
The HRA loan (“Loan”) may be up to $15,000 and be evidenced by a Promissory Note
(“Note”) in favor of the HRA.
Loan Security
The Note will be secured by a mortgage on the Applicant’s Property (“Property”) in favor
of the City (“Mortgage”). The Mortgage may be subordinate in position behind the
Applicant’s first mortgage on the Applicant’s Property.
Interest Rate
The interest rate shall be a fixed rate at 3%. The monthly payment shall be fixed at time
of Closing.
Loan Term
The maximum term of any Loan shall be 10 years; however, the Loan shall become due
upon sale, transfer of title, death or refinancing of the Applicant’s first mortgage,
whichever occurs first.
Loan Documents
All Loan Documents, including the Note and Mortgage shall be in a form and substance
acceptable to the HRA.
Eligible Properties
Elk River single-family, duplex or commercial properties that qualify as blighted. See
the Blight Qualification standard below.
Demolition Bids
Applicants are encouraged to first consider the Elk River Fire Department's house
burning/training program demolition option. If that option is not feasible, applicants
must obtain three demolition bids. The demolition contractor will be required to obtain all
necessary City permits, pay applicable fees and provide for appropriate handling and
abatement of any hazardous materials encountered. All contractors must be licensed and
insured.
Blight Qualification (for Demolition Loan Only)
Once an Applicant’s application is received, Elk River Code Enforcement/Housing Inspector will arrange, by
appointment, an inspection of the applicable property of the Home/Commercial Building to establish if the
Property is in a blighted condition according to the City’s criteria (“Blighted Condition”). In addition, the
inspector will make a determination as to the potential presence of hazardous materials on the property and will
obtain a statement from the Applicant about any knowledge of the property's use for production, storage,
deposit, or disposal of any toxic or hazardous wastes or substances or asbestos products whatsoever, during the
time the Applicant owned the property and before the date the Applicant purchased the property. If a property
satisfies the City’s criteria for Blighted Condition, the application process can continue. If the property does not
meet the City’s criteria of Blighted Condition, the City will notify the Applicant in writing indicating the
reasons why the property cannot be considered as being in a Blighted Condition.
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APPLICATION & LOAN DISBURSEMENT PROCESS
The City of Elk River HRA (“HRA”) is the program administrator. Please call the City of Elk River at
763.635.1000 to answer any questions about Elk River’s loan program and/or your project.
DO NOT SIGN ANY CONTRACTS OR START YOUR PROJECT UNTIL THE HRA HAS APPROVED
THE APPLICATION AND ALL DOCUMENTS REQUIRED BY THE HRA INCLUDING, BUT NOT
LIMITED TO, A NOTE AND MORTGAGE, HAVE BEEN PROPERLY EXECUTED AND THE LOAN
CLOSING HAS TAKEN PLACE. ANY PROJECT BEGUN BEFORE A LOAN CLOSING HAS TAKEN
PLACE WILL BE INELIGIBLE FOR PARTICIPATION IN THE PROGRAM.
Application Process
: Completed applications will be processed by the HRA on a first-come, first-served basis, as
funds are available until all program funds are committed. A Loan will be closed and funded after the Loan has been
approved and all applicable Loan Documents necessary in the opinion of the HRA have been executed by the
Applicant and HRA.
Rehabilitation Consulting
: City staff will be available to advise all Applicants about proposed projects and
conduct an optional initial inspection of the Applicant’s property and the house and/or commercial property and will
review bid(s) for reasonableness.
Loan Costs
: A credit report fee paid by Applicant at time of application; mortgage registration tax and filing fee
and title policy shall be paid by the Applicant at the closing of the Loan. The title policy in favor of the HRA may
be financed from the Loan proceeds.
Contractors & Permits
: Contractors must be properly licensed by the State of Minnesota when required. All
permits required by the City of Elk River must be obtained prior to the start of construction.
Total Project Cost
: It is the Applicant's responsibility to obtain the amount of funds necessary to finance the entire
cost of the demolition of the building on the Property and the construction of the New Home or other building
proposed for the Property. If the final cost exceeds the loan amount, the borrower must obtain the additional funds.
Borrower's contribution to project cost must be paid prior to release of loan funds.
Work Completion
: Weather permitting, work must be completed within six months of the date of the loan closing.
Disbursement Process
: Loan funds will be held in escrow at one of the Banks that the City of Elk River utilizes or
by the Title Company issuing the Title Policy to the HRA until the work has been completed in accordance with the
applicable contract and the following items have been received by the HRA:
Final Invoice
1. from each contractor showing all amounts paid and due.
Lien Waiver
2. . Original from each contractor.
Completion Certificate
3. signed by each contractor and the borrower.
Permits Closed
4. . Have the inspector sign the permit card, or have the inspector leave a message at
the City of Elk River 763.635.1000.
Final Inspection
5. and approval by City of Elk River staff.
It may take up to 10 business days after receipt of above items to prepare checks. Payment checks to contractors
must be countersigned by the borrower. Lien waivers must be provided before the funds will be released.
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DEMOLITION LOAN APPLICATION
(Individual)
I. APPLICANT INFORMATION
APPLICATION DATE:
Applicant Name:
Street Address: City State Zip
Applicant Birthdate: Applicant Social Security Number:
Home Telephone: Work Telephone(s):
E-mail Address:
Disabled Household: Yes No Marital Status: Married Not Married Separated
Co-Applicant Name:
Co-Applicant Birthdate: Co-Applicant Social Security Number:
Property Address of Proposed Demolition: Elk River 55330
II. OTHER HOUSEHOLD MEMBERS EXCLUDING APPLICANT AND CO-APPLICANT
NAME DOB RELATIONSHIP STUDENT SOCIAL SECURITY NUMBER
(MM/DD/YY) (Child, Friend, Parent) (Y/N)
________________________ _________ _______________ ________ _________________________
________________________ _________ _______________ ________ _________________________
________________________ _________ _______________ ________ _________________________
________________________ _________ _______________ ________ _________________________
Ill. INCOME INFORMATION
Sources of income include but are not limited to: wages, salaries, overtime, tips, bonuses, commissions, self-employment,
cash for work, regular pay for the armed forces, welfare (MFIP, GA, MSA), workers compensation, unemployment
benefits, pensions, severance pay, child support, alimony, education grants, scholarships, VA student benefits,
disability/social security payments, retirement benefits, death benefits, annuities, life insurance dividends, lump sum
payments, net income from rental property, regular cash contributions.
* Income is to be projected for the upcoming 12 months.
* Include all full time, part time, sporadic, and/or seasonal income.
* List separately all sources of current and anticipated income for one year following the date of the application.
* All household members 18 and over receiving income must be included.
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Name Sources and/or Anticipated Occupation Projected Gross
Sources of Income Annual Income:
________________________ ______________________ __________________ $________________
________________________ ______________________ __________________ $________________
________________________ ______________________ __________________ $________________
________________________ ______________________ __________________ $________________
IV. EMPLOYMENT INFORMATION
Applicant Employment Information
:
_____________________________ Self-employed? Yes No (If self-employed, an interim statement
Applicant Name must be submitted detailing income and expenses for the year-to-date)
_____________________________ _________________________________________________________
Employer Name Employer Address
__________________ ______________________ ______________________ ______________________
Date of Employment HR Contact Name Phone Number Fax Number
Co-Applicant Employment Information
:
_____________________________ Self-employed? Yes No (If self-employed, an interim statement
Co-Applicant Name must be submitted detailing income and expenses for the year-to-date)
_____________________________ _________________________________________________________
Employer Name Employer Address
__________________ ______________________ ______________________ ______________________
Date of Employment HR Contact Name Phone Number Fax Number
V. CREDIT INFORMATION
(attach additional sheet if necessary)
Financial Institution/Creditor Current Balance Monthly Payment
Mortgage(s): ___________________________ ____________________ ________________________
___________________________ ____________________ ________________________
Auto(s): ___________________________ ____________________ ________________________
___________________________ ____________________ ________________________
Credit Cards: ___________________________ ____________________ ________________________
___________________________ ____________________ ________________________
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Other Loans: ___________________________ ____________________ ________________________
___________________________ ____________________ ________________________
VI. PROPERTY INFORMATION
1. Is the dwelling an owner-occupied single family home or duplex or commercial building located within Elk River?
Yes No
2. Are you the owner of record on this property? (check one) Yes No
List all other owners of record: ______________________________________________________
If no, do you hold a contract for deed? (check one) Yes No
3. Year home was built: ____________
4. Year home was purchased: ____________
5. Purchase price: $____________
6. Are you current on your mortgage payments? Yes No
If no, is/has your loan been modified? Yes No
If your loan has been modified please send the modification agreement signed by both lender and yourself.
7. What is (are) the outstanding balance(s) on mortgage(s)? $____________
Monthly payment: $____________
8. No loan will be granted to properties with an existing reverse amortization mortgage, interest-only option
mortgage or other negative amortization mortgage product or products.
Does your existing mortgage fall into one of these categories? (check one) Yes No
9. Do you have any other outstanding liens on the property? (check one) Yes No
If yes, what are they and what are the current balances? ________________________
10. Is any portion of the dwelling rented? (check one) Yes No
11. Is a home occupation conducted from the residence? (check one) Yes No
12. Have your property taxes and/or any special assessments been paid up to date? (check one) Yes No
13. If you are recently divorced and retained the property, has a Quit Claim Deed been filed?
(check one) Yes No
VII. PROJECT FINANCING
Name and Address of Bank:
_______________________________________ Contact:________________________________
_______________________________________ Phone:_________________________________
_______________________________________ Email:__________________________________
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PROJECT SUMMARY
:
Requested Loan Amount: $__________________________________
Total Project Costs: $__________________________________
Project Start Date:___________________________ Expected Completion Date:__________________________
BRIEFLY DESCRIBE PROJECT
:___________________________________________________________________
______________________________________________________________________________________________
______________________________________________________________________________________________
PROJECT DETAILS
:
Applicant $$ Private $$ Loan $$ Total Cost
Total Project Costs and HRA Funds
PROJECT FINANCING DETAILS:
Applicant
Bank Loan Loan Other Other
Contribution
Amount
$ $ $ $ $
% of Total
% % % % %
Term of Loan
Yrs Yrs Yrs Yrs Yrs
Interest Rate
% % % % %
Monthly
$ $ $ $ $
Payment
Lien Position
stndrd
(1, 2, 3)
Has this funding
been approved?
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VIII. DEMOLITION
Applicants are encouraged to first consider the Elk River Fire Department's house burning/training
program demolition option or submit three demolition bids.
IX. CERTIFICATION
Have any of the owners ever gone through bankruptcy? Yes No
If yes, when? __________________________________
Are all current and previous taxes due paid in full for the property and owners? Yes No
If no, please identify business/property for which there is delinquent taxes and the circumstances surrounding the
delinquency:
____________________________________________________________________________________________
X. SIGNATURES
By signing this form, I/we acknowledge that I/we have been informed of my/our rights regarding information
collected from and about me/us for the purpose of determining my/our eligibility for the Elk River Program and
its ongoing administration.
I/We understand that the information in this application will be used to determine eligibility for the Elk River
Program and that this information will be verified.
I/We, the undersigned, certify, subject to penalty under Federal law, that the above information is true and
correct to the best of my/our knowledge and belief, and I/we understand, accept and agree to the above
provisions.
PLEASE SIGN BELOW:
_________________________ __________ _________________________ __________
Applicant Date Co-Applicant Date
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DEMOLITION LOAN APPLICATION
(Business)
I. APPLICANT INFORMATION
APPLICATION DATE:
Applicant Name: Title: SSN:
Name of Business:
Ownership:_____ Proprietorship:_____ Partnership:_____ Corporation:_____ Non-Profit:_____
Business Address: City State Zip
Phone: Email: Website:
Co-Applicant Name: Title: SSN:
Phone: Email: Website:
Business License #: Federal Tax ID#:
Legal Structure of Business:
(Sole Proprietorship, Partnership, S-Corp, C-Corp, LLC)
Landlord (if applicable): Phone:
Landlord Address: City State Zip
Terms of Lease:
Property Address of Proposed Demolition: Elk River 55330
II. CREDIT INFORMATION
(attach additional sheet if necessary)
Financial Institution/Creditor Current Balance Monthly Payment
Mortgage(s): ___________________________ ____________________ ________________________
___________________________ ____________________ ________________________
Auto(s): ___________________________ ____________________ ________________________
___________________________ ____________________ ________________________
Credit Cards: ___________________________ ____________________ ________________________
___________________________ ____________________ ________________________
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Other Loans: ___________________________ ____________________ ________________________
___________________________ ____________________ ________________________
III. PROPERTY INFORMATION
1. Is the dwelling an owner-occupied single family home or duplex or commercial building located within Elk River?
Yes No
2. Are you the owner of record on this property? (check one) Yes No
List all other owners of record: ______________________________________________________
If no, do you hold a contract for deed? (check one) Yes No
3. Year home was built: ____________
4. Year home was purchased: ____________
5. Purchase price: $____________
6. Are you current on your mortgage payments? Yes No
If no, is/has your loan been modified? Yes No
If your loan has been modified please send the modification agreement signed by both lender and yourself.
7. What is (are) the outstanding balance(s) on mortgage(s)? $____________
Monthly payment: $____________
8. No loan will be granted to properties with an existing reverse amortization mortgage, interest-only option
mortgage or other negative amortization mortgage product or products.
Does your existing mortgage fall into one of these categories? (check one) Yes No
9. Do you have any other outstanding liens on the property? (check one) Yes No
If yes, what are they and what are the current balances? ________________________
10. Is any portion of the dwelling rented? (check one) Yes No
11. Is a home occupation conducted from the residence? (check one) Yes No
12. Have your property taxes and/or any special assessments been paid up to date? (check one) Yes No
13. If you are recently divorced and retained the property, has a Quit Claim Deed been filed?
(check one) Yes No
IV. PROJECT FINANCING
Name and Address of Bank:
_______________________________________ Contact:________________________________
_______________________________________ Phone:_________________________________
_______________________________________ Email:__________________________________
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PROJECT SUMMARY
:
Requested Loan Amount: $__________________________________
Total Project Costs: $__________________________________
Project Start Date:___________________________ Expected Completion Date:__________________________
BRIEFLY DESCRIBE PROJECT
:___________________________________________________________________
______________________________________________________________________________________________
______________________________________________________________________________________________
PROJECT DETAILS
:
Applicant $$ Private $$ Loan $$ Total Cost
Total Project Costs and HRA Funds
PROJECT FINANCING DETAILS:
Applicant
Bank Loan Loan Other Other
Contribution
Amount
$ $ $ $ $
% of Total
% % % % %
Term of Loan
Yrs Yrs Yrs Yrs Yrs
Interest Rate
% % % % %
Monthly
$ $ $ $ $
Payment
Lien Position
stndrd
(1, 2, 3)
Has this funding
been approved?
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V. DEMOLITION
Applicants are encouraged to first consider the Elk River Fire Department's house burning/training
program demolition option or submit three demolition bids.
VI. CERTIFICATION
Have any of the owners ever gone through bankruptcy? Yes No
If yes, when? __________________________________
Are all current and previous taxes due paid in full for the property and owners? Yes No
If no, please identify business/property for which there is delinquent taxes and the circumstances surrounding the
delinquency:
____________________________________________________________________________________________
VII. SIGNATURES
By signing this form, I/we acknowledge that I/we have been informed of my/our rights regarding information
collected from and about me/us for the purpose of determining my/our eligibility for the Elk River Program and
its ongoing administration.
I/We understand that the information in this application will be used to determine eligibility for the Elk River
Program and that this information will be verified.
I/We, the undersigned, certify, subject to penalty under Federal law, that the above information is true and
correct to the best of my/our knowledge and belief, and I/we understand, accept and agree to the above
provisions.
PLEASE SIGN BELOW:
_________________________ __________ _________________________ __________
Applicant Date Co-Applicant Date
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ADDENDUM TO APPLICATION
Information for Government Monitoring Purposes
The information being requested below is for determining compliance with federal equal credit opportunity, fair housing
and home mortgage disclosure law. You are not required to furnish this information, but are encouraged to do so. The
law provides that a Lender may not discriminate on the basis of this information, or on whether you choose to furnish the
information. If you choose not to furnish this information and you have made the application in person, we are required to
note ethnicity, race and sex on the basis of visual observation or surname. Please check below if you choose not to
furnish the inforn1ation.
DATE OF APPLICATION:____________________
APPLICANTCO-APPLICANT
APPLICANT NAME:
CO-APPLICANT NAME:
o
o
I do not wish to furnish this information
I do not wish to furnish this information
ETHNICITY:
(select only one) ETHNICITY:
(select only one)
o
o
Hispanic or Latino
Hispanic or Latino
o
o
Not Hispanic or Latino
Not Hispanic or Latino
oo
oo
GENDER:
Female Male GENDER:
Female Male
RACE:
(select one or more) RACE:
(select one or more)
o
o
White
White
o
o
Black/African American
Black/African American
oo
Asian Asian
oo
American Indian/Alaska Native American Indian/Alaska Native
oo
Native Hawaiian/Other Pacific Islander Native Hawaiian/Other Pacific Islander
o
o
American Indian/Alaska Native & White
American Indian/Alaska Native & White
o
o
Asian & White
Asian & White
o
o
Black/African American & White
Black/African American & White
o
o
American Indian/Alaska Native & Black/African
American Indian/Alaska Native & Black/African
American American
o
o
Other Multi Racial
Other Multi Racial
______________________________________ ___________________________________
APPLICANT SIGNATURE CO-APPLICANT SIGNATURE
This Section For Lender Use
Greater Metropolitan Housing Corporation
Application received by: mail face-to-face interview telephone
Staff Name: ___________________________________________ Date:_____________________________
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THIS FORM MUST BE SIGNED AND RETURNED WITH THE APPLICATION
AUTHORIZATION TO RELEASE INFORMATION
I have applied for a loan through the Elk River HRA. As part of the application process, city staff may verify
information contained in my/our loan or grant application and in other documents required in connection with
the loan. This verification process can be conducted either prior to closing or subsequent to closing, and may be
performed either by city staff or by independent third parties, as a part of the origination, processing,
underwriting, closing or quality control programs.
I authorize you to provide to the City of Elk River and to any investor to whom the city may sell my loan, to
any servicer or any funder of the program for which I have applied, any and all information and documentation
that they request.
Such information includes, but is not limited to employment history, income; bank, money market and other
financial account balances; credit history; copies of income tax returns and property information.
A copy of this authorization may be accepted as an original. Your prompt reply is appreciated.
Thank you.
___________________________________ XXX-XX-_______ _____________
Print Name Social Security # (last 4 digits) Date
___________________________________
Signature
NOTE: Use a separate form for each individual who is an applicant, guarantor or other individual whose
Only one person signs each form
information is considered in the application. .
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