HRSR INFORMATION 10-04-2004 , II RMATION
•
City of
Elk 0-,
River
MEMORANDUM
TO: Housing & Redevelopment Authority
FROM: Heidi Steinmetz, Assistant Director of Economic Development S
DATE: October 4, 2004
SUBJECT: Powers and Duties of Housing and Redevelopment Authorities
Attachments
• Powers and Duties of Housing and Redevelopment Authorities
Staff and Commissioner Lieser attended the September 2004 Minnesota National
Association of Housing&Redevelopment Officials (NAHRO) conference in St. Cloud.
• Commissioner Lieser will provide a summary of the sessions she attended regarding the
attached Powers and Duties of Housing and Redevelopment Authorities information.
LEONARD
• STREET
AND
DE I NARD
POWERS AND DUTIES OF
HOUSING AND REDEVELOPMENT
AUTHORITIES
NAHRO — Fall 2004
• Steven B. Mayeron,Associate
Leonard, Street and Deinard
612.335.1502; steve.mayeron @leonard.com
Barbara L. Portwood,Shareholder
Leonard, Street and Deinard
612.335.1594; barbara.portwood @ leonard.com
Mark S. Ulfers,Executive Director
Dakota County Community Development Agency
651.675.4400; mulfers @dakotacda.state.mn.us
UNCOMMON WISDOM ,
COMMON SENSE
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I. WHAT POWERS CAN HOUSING AND REDEVELOPMENT AUTHORITIES
EXERCISE?
A. Only What is Written. HRAs are creature of state law, created either by special law
or generally by a city or county under Minnesota Statutes, Section 469.001 through 469.047 (the
"Act"). They may exercise the powers, and only the powers, granted under state law.
B. Undertake Projects. HRAs are authorized to "undertake, prepare, carry out and
operate projects, and to provide for the construction, reconstruction, improvement, extension,
alteration or repair of any project or part thereof'under Section 469 Subd. 1(4).
1. Redevelopment Project. Any work or undertaking to acquire and clear land;
install or construct public improvements; to conduct an "urban renewal project" as
defined in the statute.
2. Housing Project. Any work or undertaking to provide decent, safe and
sanitary housing for low income persons. Such work may include the acquisition or
provision of buildings, land, equipment, facilities, and other property necessary or
convenient appurtenances, streets, sewers, water service, utilities, site preparation,
landscaping and other purposes.
3. Housing Development Project. Any work or undertaking to provide housing
for persons of moderate income and their families. This work may include the planning
of buildings and improvements, the acquisition of real property needed immediately or in
the future for housing, the construction, reconstruction, alteration and repair of new or
existing buildings and the provisions of all equipment, facilities and other real or personal
property for necessary or convenient appurtenances, streets, sewers, etc., site preparation,
landscaping, administrative, community health,recreation or welfare or other purposes.
4. Interest R eduction Program. A p rogram t o write d own the interest rate o n
financing for the construction, rehabilitation and purchase of housing units intended
primarily for occupancy by low or moderate income individuals. An HRA may use the
program to pay interest on its housing bonds, financing from a private developer. Interest
reduction may also be used for a commercial rehabilitation program for small and
medium sized buildings. There are income limits for tenants or owner-occupants of the
housing assisted, and a requirement that the HRA receive a share of the equity of the
assisted property upon its sale.
C. Scattered Site Acquisition. Minnesota Statutes, Section 469.012, subd. 1(7),
provides that an HRA may undertake, without adoption of an urban renewal plan, the acquisition
of real property and the demolition, removal, rehabilitation, or reconstruction of buildings and
improvements are substandard, and the power of eminent domain may be used to acquire land
only if the land contains buildings and improvements which are vacated and substandard.
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• Section 469.012, subd. 1(7) contains a definition of "substandard"O o what constitutes substandard buildings or
improvements.
D. Acquisition of Assisted Housing. Section 469.012, subd. 1(30), allows an HRA to
acquire and sell real property that is benefited by federal housing assistance payments, other
rental subsidies, o r interest r eduction p ayments o r c ontracts for the purpose o f p reserving the
affordability of low and moderate income multifamily housing within the HRA's area of
operation.
E. Rehabilitation Loan and Grant P rogram. Section 469.012, subd. 6, allows an
HRA to undertake a program to provide housing rehabilitation loans and grants for property
within the HRA's area of operation which is owned by persons of low and moderate income. An
HRA is authorized under Section 469.012, subd. 1(8), to establish the level of income
constituting low or moderate family income.
F. Parking Facilities. Section 469.012, subd. 12, allows an HRA to operate and
maintain public parking facilities in connection with any of its projects.
G. Commercial Rehabilitation Loan Program. Cities have the authority to establish
and undertake programs for municipal commercial rehabilitation loans for small and medium
size buildings. Such programs are intended to provide lower than market rate interest to finance
• rehabilitation of commercial buildings. If a city establishes such a program, it may also by
ordinance, designate its HRA to exercise any and all powers available to the City on behalf of the
City.
H. Acquisition and Sale of Property. HRAs are authorized to acquire real or personal
property which the HRA determines is necessary to carry out a project or to eliminate one of the
conditions found to exist in the resolution adopted creating the HRA. The power of eminent
domain may be used to acquire must contain buildings and improvements which are vacated and
substandard. Property acquired may be sold only after considering the sale at a public hearing,
notice of which has been published at least once not less than ten or more than thirty days before
the hearing. I f the property is located in a redevelopment project, the H RA must restrict the
ability of the purchaser to transfer the property until improvements required to be constructed in
accordance with the redevelopment plan have been completed.
II. WHERE CAN THEY DO IT?
A. In their Area of Operation. HRAs may act within their area of operation.
1. Area of Operation is defined under Minnesota Statutes, Section 469.002, Subd.
8 as the area within the territorial boundaries of the City, County or group of counties, in
the case of a city HRA, county HRA or multi-county HRA, respectively.
S
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2. A county or multicounty may not undertake a project in a city within its area of
operation without the adoption of a resolution of the city and any city HRA declaration
that there is a need for the county or multicounty HRA to act within the city.
3. Cities with city HRA's created before June 8, 1971, may not be included in the
area of operation of any county or multicounty HRA unless the city HRA is assumed by
the County HRA.
B. Almost Anywhere With A Joint Powers Agreement. Any two governmental units
that have the same powers, or similar powers, including powers which are the same except for
the jurisdiction in which they may be exercised, may exercise the power jointly pursuant to a
joint powers agreement.
1. The statute sets out elements which must be included in the agreement,
including a statement of the purpose; the method for exercising the power; and how the
activities will be funded.
2. There is an exception to the requirement that both parties to a joint powers
agreement have common powers when a county is a party to the agreement. In that case
a county may agree to perform for the other governmental unit any power that the other
governmental unit could perform for itself.
III. FINANCING.
A. Corporate Purpose Financing. Under Section 469.034, Subd. 1, an HRA is
authorized to issue bonds to finance any of its corporate purposes. It may issue revenue bonds,
which are p ayable only from the revenue o f t he project financed o r otherwise pledged t o the
bond. It may also issue its general obligation bonds to which the HRA pledges its full faith and
credit.
B. General Obligation Housing Development Bonds. A city HRA may pledge full
faith and credit of its city, and a county or multicounty HRA may pledge the full faith and credit
of its county or counties to its bonds issued to finance housing development project if the
following conditions are met:
1. The HRA must find that the revenues pledged to the bonds will equal or
exceed 110% of debt service in each year;
2. The HRA and its city or county must each h old public hearings with respect to
the issuance of the bonds, and the city or county must approve the issuance of the bonds;
3. The maximum amount of general obligation bonds that may be issued and
outstanding is the greater of (a) 1/2 of 1% of the taxable market value of the city our
county whose general obligation is pledged, and(b) $3,000,000;
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4. The project must provide housing for either the elderly or for individuals and
families with incomes not greater than 80% of the median family income for the
applicable metropolitan statistical area. If, after three years, the project is having
unanticipated vacancies, units may be rented to non-qualifying tenants.
C. Tax Increment Bonds. Pursuant to Sections 469.174 through 469.179, HRAs are
authorized to create tax increment financing districts to provide a source of funding for its
projects. The HRA may issue its general obligation or revenue bonds secured by the tax
increment, or the city may issue its general obligation bonds, secured by a pledge from the HRA
of the tax increment. The tax increment and the proceeds of tax increment bonds may be used to
pay "public redevelopment costs", defined as the entire cost of a housing project, housing
development project or interest reduction project.
D. Conduit Financing.
1. Housing Revenue Bonds. County HRAs or any municipal HRA which has
been authorized by ordinance of its city to exercise powers under Chapter 462C may
issue single family mortgage revenue bonds or multifamily housing revenue bonds. The
proceeds of single family mortgage revenue bonds are used to provide a secondary
market for b elow m arket r ate m ortgages made t o 1 ow and moderate income first time
• homebuyers. The proceeds of multifamily housing revenue bonds are loaned to
developers to finance the construction or acquisition and rehabilitation of multifamily
housing facilities.
2. Industrial Development Bonds. HRAs are authorized under Sections 469.152
to 469.1651 to issue revenue bonds to finance manufacturing projects. The bonds must
be secured by a revenue agreement with a developer pursuant to which the developer will
make payments sufficient to pay debt service on the bonds.
IV. RULES OF CONDUCT FOR HRAS.
A. OPEN MEETING LAW:
1. Controversies regarding violations of Open Meeting L aws are embarrassing
and typically arise in the when emotions are high, either because of politics in general or
the consideration of a divisive issue. The penalties include removal from office and
potentially the costs of defending claims of violations. The rules, as summarized below,
are fairly simple and apply whenever enough commissioners to constitute a quorum
are in the same place (even if it is around a the drinking fountain).
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2. The s tatute requiring open meetings is Minnesota S tatutes C hapter 1 3D,
which generally provides as follows:
a. General Rule. The general rule is that:
i. all meetings of an BRA or any of its committees must be open to the
public;
ii. notice of meetings must be given (a schedule of regular meetings must
be kept on file and special meetings must be posted (and mailed to
anyone who has asked for notice at least 3 days in advance) or
published in the official newspaper at least 3 days in advance);
iii. a meeting constitutes any gathering of at least a quorum of
commissioners;
iv. votes must be recorded;
v. written materials viewed at the meeting must be made available to the
general public.
b. Exceptions. Meetings may be closed for:
i. the development of strategies for labor negotiations; •
ii. the discussion of data that would identify the victims of reported
abuse;
iii. the discussion of allegations against an individual subject to the
HRA's authority;
iv. job performance evaluations;
v. any information subject to attorney—client privilege.
3. Required Closing. Meetings must be closed when certain non-public data is
discussed(e.g. charges against an individual)
4. Penalties. Penalties for violation of the open meeting law include $300 per
occurrence and removal from office for 3 or more violations.
5. Serial Meetings. Be aware that a series of meetings or phone calls discussing
Board business may constitute a meeting, even if there is never more than a quorum
participating at any one time.
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• 6. Electronic o c Meetings. The open meeting statute permits meetings from by
video-conference if the following conditions are met:
■ all members of the board participating in the meeting must be able to hear and see
one another and see all discussion and testimony presented at any location;
• members of the public who are present at the regular meeting location must be
able to hear and see all discussion,testimony and votes of members of the board;
• at least one member of the board must be physically present at the regular meeting
location; and
• each location from which a member participates must be open and accessible to
the public.
Clearly, meetings are not permitted by conference call without the video component and
compliance with the foregoing rules.
Note that email correspondence is particularly susceptible to violate the open meeting
law. Commissioners should be careful not to send emails regarding board business.
Once such an email is sent, it is impossible to control who may receive it in violation of
the open meeting law and they leave a clear trail of any violations.
• B. DATA PRACTICES ACT:
The default is that all government data is public unless it falls into specific exceptions that permit
it to be classified as nonpublic. Nonpublic data includes things like individual educational
records, employment records, security information, labor relations information and health data
on individuals.
C. CONFLICT OF INTEREST:
Two separate Minnesota Statutes govern conflicts of interest for HRA commissioners, Section
469.009, which applies specifically to HRA commissioners and employees and Section 471.87,
which applies more broadly to government officials.
1. Minnesota Statutes, Sections 469.009 applies specifically to HRAs. It requires
generally that a commissioner disclose potential conflicts and that he not take part in any
discussions or actions regarding a matter as to which he has a conflict, and is summarized as
follows:
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a. Disclosure. Before taking any action that could substantially affect a
commissioner's or an employee's financial interests, or those of an organization with
which she is associated, the commissioner or employee is required to:
i. prepare a written statement describing the action and the potential
conflict;
ii. submit the statement to the HRA within 1 week of becoming aware
of the conflict.
The written statement is required to be entered into the HRA's minutes at the next
meeting.
The statute concludes that there is a potential conflict if the commissioner knows, or has
reason to know, that the organization the commissioner is affiliated with is likely to be a
participant in a project of the HRA.
Failure to make appropriate disclosure is a gross misdemeanor.
b. Effect of Disclosure. Once a commissioner discloses a conflict she:
i. shall not attempt to influence any employees regarding the matter;
•
ii. shall not take part in any discussion regarding the matter; and
iii. is not counted toward a quorum on the matter.
c. Conflicts Prohibited. Any commissioner or employee who knowingly takes
part in any manner in making any sale, lease or contract in his official capacity in which
he has a personal financial interest is guilty of a gross misdemeanor.
2. Minnesota Statues, Section 471.87- 88
a. Section 471.87 applies to any"public officer,"which is a term broad enough to
apply to an HRA commissioner.
b. Conflicts Prohibited -again. A public officer who is authorized to take part
in any manner in making any sale, lease or contract in his official capacity, shall not
voluntarily have a personal financial interest in that sale, lease or contract, or personally
benefit from them.
c. Exceptions. Section 471.88 includes specific, narrow exceptions to the
general prohibition, including things like (a) contracts with a volunteer fire department
for the payment of compensation to its members, and (b) use of a bank for which a
commissioner works to make loans or provide trust services. While Section 471.88 does .
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Snot by its terms apply to HRAs, the generally innocent nature of the "conflicts" it
describes indicates the scope of the rule in Section 471.87.
D. GIFT'BAN
1. M innesota S tatues, S ection 1 0A.07 was enacted in 1994 and generally prohibits
commissioners from receiving "gifts" from a company, or representative of a company, with
whom the HRA does business. For this purpose, "gift"is defined to mean:
• money,
• real or personal property,
• a service,
• a loan,
• a forbearance or forgiveness of debt;
• a promise of future employment
that is given and for which full value is not paid.
2. The statute provides exceptions for:
• • campaign contributions,
• providing advice or information to assist a commissioner to do her job (like this
session),
• a trinket or memento of insignificant value,
• plaques recognizing individual services,
• food or beverage given at a reception, meal or meeting away from the recipient's
place of work by an organization before whom the recipient appears to make a speech
or answer questions as part of a program.
The prohibition does not apply if you are given a gift because of your membership in a group
made up largely of people who aren't governmental officials if they all receive the gift as well
(e.g. a meal for your Rotary Club sponsored by a developer you do business with).
1111
2519777v1 9
ISSN 0012-5822 Perspectives
iNFORMAll''
Downtown
Idea Exchange Ten pet peeves about downtowns
Rae publication of the
0 Downtown Research&Development Center
By Kent Robertson, Ph.D. friendly downtown?Not only will
28 West 25th Street—8th Floor
New York,NY 10010-2705 this encourage walking,but it also
Phone:(212)228-0246•Fax:(212)228-0376 A line I often use when speak- prolongs a visitor's stay, thus mak-
Email:info @DowntownDevelopment.com ing at workshops or conferences is ing downtown look more vital with
Website:www.DowntownDevelopment.com
"I have never met a downtown I increased pedestrian flow in front
Editor didn't like" Having said that, I do of businesses.
Paul Felt, ext. 119 observe many annoying features of Inconsistent store hours.Too
pfelt @DowntownDevelopment.com
the downtowns I visit, whether as frequently there is little consistency
Customer Service a consultant or a tourist. This col- as to when a potential customer
Mary Pagliaroli, ext. 101
mpagliaroli @DowntownDevelopment.com umn provides me with the opportu- can rely on businesses being open.
nity to vent. It presents 10 of my Varying hours diminishes potential
Reprints and Permissions
Mary Dalessandro,ext. 103 pet peeves about downtowns and spillover because people tend to
mdalessandro @DowntownDevelopment.com downtown development practices, stop at more than one establishment
Publisher features that, unfortunately, I have on a trip. Moreover, many stores
Margaret DeWitt, ext. 106 witnessed far too frequently. have limited evening and Sunday
msdewitt @DowntownDevelopment.com Downtowns oriented more hours, ignoring prime times when
Downtown Idea Exchange®is published twice monthly toward tourists than local resi- busy two-income households prefer
by the Downtown Research&Development Center.The
Center provides news,information and analysis for suc- dents.I understand the importance to shop.
cessful downtown revitalization through its newsletters, of tourism as an economic base for Suburban-looking downtown
books,reports,and website. many downtowns,but some have buildings. You've all seen what
(4)Alexander Communications Group carried this to such an extreme that I'm referring to: Modern-looking
CELEBRATING 50 YEARS• 1954-2004 the needs of and impact upon local buildings that relate poorly to the
®2004 Alexander Communications Group,Inc.All residents are neglected. If residents street and their neighbors, contain i
rights reserved.No part of this publication may be
reproduced,stored in a retrieval system,or transmit- avoid downtown because it is too uninteresting and frequently blank
ted in any form or by any means,electronic,mechani- crowded with visitors, the business- walls, and appear to be better situ-
cal,photocopying or otherwise,without the prior writ-
ten permission of Alexander Communications Group. es are not marketing toward the ated in a location surrounded by
Subscription Order Form: needs of local residents, or because acres of parking than in a tradition-
parking and traffic regularly over- al downtown.
Please start/renew my one-year flow into nearby residential areas, Downtown business owners
subscription to Downtown Idea then a rebalancing of priorities with their heads in the sand.
Exchange for$197.*
seems in order. Downtown development profession-
NAME The proliferation of indoor als know the type: Business owners
TITLE shopping centers. When located in who fail to keep up to date with mar-
downtown, these developments keting, merchandising, and display
FIRM/ORGANIZATION often are not the economic catalyst trends, and who often do not support
ADDRESS they are promised to be. They tend downtown promotional efforts. In a
CITY STATE ZIP to capture customers inside their downtown I worked with recently, a
walls, greatly reducing any of the retail business was furious about a
PHONE desired spillover to the rest of series of rock and pop concerts that
FAX downtown. were held on the street in front of
EMAIL N15 The lack of places to sit. It their establishment—citing access
MAIL: 28 West 25th Street–8th Floor always amazes me that many difficulty for regular customers
New York,NY iooio downtowns do not provide enough and refused to participate in the
FAX: (212)228-0376 benches, ledges, steps, outdoor events.The ultimate irony was that
fa N PHONE: (800)232-4317 cafes, etc., for people to sit. Isn't it the store specialized in selling CDs
EMAIL: into@DowntownDevelopment.com
clear to everyone that ample places and other music-related merchandise
*North America,$197.Elsewhere,$227
(includes airmail delivery). to sit are essential to a pedestrian- to fans of rock music!
2 Downtown Idea Exchange • www.DowntownDevelopment.com September 15, 2004
Poorly located parking facili- Copycat downtowns.The thereby reducing this distinctive-
ties. Parking lots and structures unique qualities offered by each ness. I worry that this trend in
gofound in the most inappropriate individual downtown are what set downtown development is some-
places—major downtown intersec- them apart from other generic com- thing we need to be acknowledging
tions, right on the main commercial mercial settings and other down- and addressing more than we are.
street, along pedestrian corridors— towns.Yet increasingly, downtowns Kent Robertson,Professor of Community
drive me crazy. In this focus on dri- have adapted the same tried-and- Development at St. Cloud State University
vers rather than pedestrians, it is true strategies for streetscapes,retail (Minnesota), has published more than 25
obvious that downtown planners articles on downtown development and
P mix, events, promotions, and "spe- led downtown workshops for communities
have overlooked a very basic tenet: cial amenities" (the ubiquitous and at conferences nationwide. Contact
All drivers become pedestrians once farmers market comes to mind), him at kent @stcloudstate.edu. •
they arrive at their destination.
Uninteresting windows.Do
the owners of some downtown busi- Volunteers and events tied to community /
nesses ever walk in front of their — continued from page 1 to our annual appeal," a maili f
establishments to see what image sent out three months prior
they are projecting?On a typical in the three-block district.
The school is generous both November,Garwig says. /
downtown street, windows can "It can be difficult , t vol-
with ran e from barren to overstuffed cash and in-kind donations,
g including Lawrenceville Main unteers to help with •.ne-a-
with merchandise and advertising to thon,but we try to . e it fun by
tasteful and inviting. busi- Street's rent-free office space, says
g Ann Garwig, executive director.The having a nice ogether and
nesses located on suburban strips, •Viding back
downtown street-level windows school also provides
have the potential to say a lot about Lawrenceville Main "Certainly don't co
r %-round information
Street use of its golf to the callers," she
the type of business located inside on any event as b: : says. "Also,because
il p passersby stop course at no charge the golden egg."to entice assersb to sto in. g gg." we don't do cold
Stand-alone office develop- for its annual Golf
P- calls,people are
ments.The increasing presence of Scramble, its biggest j
g p fund-raising event of the year. This ore willing to get involved."
large, isolated office developments "People don't like to ask for
that relate poorly to the downtown
year's golf outing is expected to net / p
between$8,000 and$10,000. /' money," Garwig says, and on the
fabric-even if they include attrac- other end, "People don't like to get
tive landscaping and so-called pub- The boarding school also 1:
p g p use of its development office a phone calls from paid solicitors"
lic plazas—is disturbing to me. So all volunteer solicitors
its bank of phones for vol s
to use during an annual • e-a- making calls during Lawrenceville
Homework from the thon drive each Febru. Main Street's phone-a-thon are
downtown professor "A lot of towns gave a col- donors themselves, Garwig says,
So there you have my per- lege or university , ;'ght have and start off their calls by identify-
sonal list of downtown pet facilities like tha sometimes ing themselves as Lawrenceville
peeves. I'm sure each reader has communities w' ave a company Main Street donors and volunteers.
his or her own list of bothersome that does tele ' eting," Garwig
downtown trends. Please email Neighborliness helps
says. "So °es you can make a
me one or two pet peeves that / fund-raising efforts
partners ere, and they'll allow
truly annoy you, together with a phone-a-thon hone-a-thon is a critical
you to eir bank of phones.We
brief rationale and your name, just d' one night a year." component of our annual fund-rais-
position, and organization by ing efforts," says last year's fund-
November 15.The peeves I re- itors all volunteers and
raising chairperson,Art Schonheit-
ceive from readers will form the «
donors themselves er. It provides us with an opportu-
basis of a follow-up column to be
• published in a forthcoming issue During the phone-a-thon, "we nity to talk to donors personally,
of Downtown Idea Exchange. , 1 all people who have given pre- thank them for what they've done
viously but have not yet responded in the past, and bring them up to
September 15, 2004 Downtown Idea Exchange • www.DowntownDevelopment.com 3