4. HRSR 09-29-2015
Request for Action
To Item Number
Housing Redevelopment Authority 4.
Agenda Section Meeting Date Prepared by
General BusinessSeptember 29, 2015Amanda Othoudt, EDD
Item Description Reviewed by
HRA Strategic Plan Workshop Cal Portner, City Administrator
Reviewed by
Action Requested
Information presented for discussion only. Action is to be taken at the October 5, 2015, HRA meeting.
Background/Discussion
Staff has included the Blighted Properties Commercial/Industrial Forgivable Loan program as approved
by the HRA on September 8th and subsequently the City Council on September 21. Staff would like to
discuss the recently approved commercial/industrial program, and the amount of funds to be allocated
towards this program from the HRA reserves.
Also, included in the packet is the HRA Blighted Properties Residential Forgivable Loan program as
discussed at the September 8th HRA meeting with the following changes and additions:
Awarding Loans: Removal of the former scorecard.
Addition of an Application Review Worksheet (Staff Scorecard).
Addition of an Attachment Checklist.
Financial Information: Changes to the language and financial information obtained for loan
purposes.
Staff will present the final HRA Blighted Properties Residential Forgivable Loan program to the HRA on
October 5 and subsequently to the City Council for final approval on October 19.
Financial Impact
To support this program, the HRA would appropriate a predetermined amount of reserves from the
HRA fund balance at the October 5 meeting for each program separately. As of September 25, 2015, the
HRA has a fund balance available for Housing and Redevelopment purposes of approximately $1 million.
Attachments
HRA Blighted Properties Commercial/Industrial Forgivable Loan Program
HRA Blighted Properties Residential Forgivable Loan Program
Residential and Redevelopment Authority
Blighted Properties Demolition &
Forgivable Residential Loan Program
Policy Guidelines & Application
City of Elk River
Housing and Redevelopment Authority
13065 Orono Parkway
Elk River, MN 55330
763.635.1040
www.elkrivermn.gov
Blighted Properties Demolition & Forgivable Residential Loan Program
BLIGHTED PROPERTIES DEMOLITION & FORGIVABLE
RESIDENTIAL LOAN PROGRAM APPLICATION
TABLE OF CONTENTS
Introduction
Purpose/Background 1
Funding Availability 1
Deadlines/Requirements 1
Application Fee 1
Qualifying Projects 1
Eligible Applicants 1
Eligible Program Costs 1
Terms 2
Forgiveness 2
Required Appraisal/Assessment 2
Awarding Loans 3
Application
Cover Page _______________________________________________________ 4
Site Identification __________________________________________________ 5
Valuation ________________________________________________________ 5
Maps and Site Features ______________________________________________ 5
History ___________________________________________________________ 6
Current Conditions and Development Potential ___________________________ 6
Cost Analysis_______________________________________________________ 6
Sources and Uses of Funds (Budget Table) ______________________________ 7
Analysis of Loan Need_______________________________________________ 7
Financial Information________________________________________________ 8
Attachment Checklist ______________________________________________________ 9
Application Review Worksheet ______________________________________________ 10
Blighted Properties Demolition & Forgivable Residential Loan Program
BLIGHTED PROPERTIES DEMOLITION &
FORGIVABLE RESIDENTIAL LOAN PROGRAM POLICY
INTRODUCTION
PURPOSE/BACKGROUND:
The city of Elk River Housing and Redevelopment Authority
(HRA) has developed a program to meet the untapped need for assistance with demolition and
other redevelopment activities when either there is no current development plan or where 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 become a community’s immediate concern. Securing and maintaining vacant
dilapidated structures is costly. Therefore, the Elk River HRA has created the Blighted
Properties Demolition & Forgivable Residential Loan program to include loan funds for
demolition activities when an imminent redevelopment opportunity does not currently exist.
FUNDING AVAILABILITY:
Available funding amounts vary per budget cycle.
DEADLINES/REQUIREMENTS:
The Blighted Properties Forgivable Residential Loan
Program operates on a semi-annual application cycle. Applications are due February 1 and
Completed applications and supporting documentation (3 copies)
August 1 of each year.
by 4:30 p.m
must be received by the city of Elk River . on the due date to be considered for
funding. An applicant may apply for more than one project, but an individual (separate)
NOTE:Electronic copies will not be accepted
application must be completed for each site.
Please fill out the entire application. All applications must be
in place of paper.
complete upon submission in order to qualify for a loan.
APPLICATION FEE:
The applicant must submit an application fee of $100 at the time of
submittal.
QUALIFYING PROJECTS:
A project qualifies for a loan if the following conditions are
met:
1.Upon completion of the project, the property and structures will be owner-occupied
dwellings;
2.The structures constitute a threat to public safety because of inadequate maintenance,
dilapidation, obsolescence, or abandonment;
3.The structures are not listed on the National Register of Historic Places;
4.Upon completion of the demolition, the HRA reasonably expects that the property will be
improved and these improvements will result in economic development benefits to the
municipality.
ELIGIBLE APPLICANTS:
Eligible applicants for this program must be the owner of the
property at the time of the application or before disbursement of funds.
ELIGIBLE PROGRAM COSTS:
The Demolition Loan Program can pay up to 75,000 of
1
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 meaning given it in section 116G.03, subdivision
Costs incurred before the loan is awarded are not eligible for payment
11. .
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 property owner,
payable primarily from a dedicated source of revenue, or other security subject to review
and approval by the HRA commission.
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 property owner shall make monthly 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 $75,000;
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 commission;
FORGIVENESS:
TheHRA may forgive the 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 project is eligible after 5 years of maintaining the
property as an owner occupied dwelling. The applicant must submit a formal request for loan
forgiveness to the HRA.
REQUIRED APPRAISALS OR ASSESSMENTS:
Land appraisals of the current (as-is)
and expected (pre-construction) value of the site are required so that the HRA 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.
2
AWARDING LOANS:
The HRA 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 the HRA 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.
3
Blighted Properties Demolition & Forgivable
Residential Loan Application
Cover Page
Applicant:
____________________________________________________________________
Applicant Address: ______________________________________________________________
City: _______________________________________ Zip Code: _______________________
Project Manager Contact (if different from above)___________________________________
Phone: ______-______-____________
E-mail: _______________________________________________________________________
Mailing Address: _______________________________________________________________
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.
4
I. SITE IDENTIFICATION AND HISTORY
SITE INFORMATION
1. Name of Site: ______________________________________________________________
Site Address: _______________________________________________________________
City: Zip Code:__________________________________ __________
Acreage of Site: Sq. Ft. of Site: __________________________
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 property owner 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? _______________
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 the HRA money will apply.
b) The proposed potential development of the site including labeled structures if
known.
5
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?
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.
II. COST ANALYSIS
14. How much money are you seeking from the HRA? ________________________________
(May not exceed $75,000)
all
15. Fill out the budget table below indicating the uses, and amounts of funds that will be
used for eligible costs as defined. The table should indicate the total project budget non-
incurred costs.
6
III. SOURCES AND USES OF FUNDS
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
IV. 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.
7
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.
21. Describe how the community is stabilized, health is improved or any environmental
benefits are achieved by the demolition of the site.
V. FINANCIAL INFORMATION
Historical Financial Statements:
22. Submit Financial statements should cover the past three
years. Financial Statements should include: Tax Returns, Balance Sheets, Income
Statements, and details on existing debt agreements. Credit report will be obtained by third
party reporting on all three credit bureaus. 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 owner.
23. The maximum term of the loan cannot exceed 15 years.
What is your proposed term? _________________
24. Are you issuing a note to repay the loan? _____________________________
27. If you are issuing a note, what additional security will you be offering to secure the loan?
8
VI. ATTACHMENTS CHECK LIST
Please attach the following:
______A) Residential Loan Program
1. Site Information
2. Site Valuation
3. Maps and Site Features
4. History
5. Current Conditions
_______B) Cost Analysis
_______C) Sources and Uses of Funds
_______D) Analysis of Loan Need
_______E) Financial Statements
1.Three Years of Personal Tax Returns
2.Three Years of Bank Statements
3.Details of Existing Debt Agreements
4.Credit Report
_______H) Letter of Commitment from Applicant Pledging to Complete
During the Proposed Project Duration
_______I) Letter of Commitment from the Other Sources of Financing,
Stating Terms and Conditions of their Participation in
Project
_______J) Application Fee of $150 (Includes credit report processing fee)
VI. AGREEMENT
I / We certify that all information provided in this application is true and correct to the best of
my/our knowledge. I / We authorize the City of Elk River Housing and Redevelopment Authority
to check credit references and verify financial and other information. I / We agree to provide any
additional information as may be requested by the HRA.
APPLICANT SIGNATURE_________________________________________________
BY
DATE
9
APPLICATION REVIEW WORKSHEET
TO BE COMPLETED BY CITY STAFF
In the event of multiple applicants, and limited funds dedicated to the program, the
attached worksheet will be used to determine how the funds will be allocated.
The project meets the criteria set forth in Section IV of the Blighted Properties
Forgivable Residential Loan Policy. Check those which apply.
Upon completion of the project, the property and structures will be owner-occupied
dwellings; (50 points)
The current primary structure constitutes a threat to public safety because of inadequate
maintenance, dilapidation, obsolescence, or abandonment; (10 points)
The structures are not listed on the National Register of Historic Places; (5 points)
Upon completion of the demolition, the HRA reasonably expects that the property will be
improved and these improvements will result in economic development benefits to the
municipality; (10 points)
The project results in the sale and/or redevelopment of structurally substandard properties
as determined by a licensed structural engineer; (5 points)
Subtotal Section 1 (maximum 80 points)
2. Consideration of Capacity. Check those which apply. Must meet all four to score 15 points. 0 points if
any boxes are unchecked.
Applicant included a realistic implementation /project schedule; (5 points)
Applicant has the ability to administer and monitor project; (5 points)
Applicant has the ability to conform to city, state and federal requirements;(5 points)
Applicant has credit score of 680 or above; (5 points)
Subtotal Section 2 (maximum 15 points)
3. Vacancy, Development Potential and Proximity to City Services
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The length of vacancy of the property;
1 year: 1 point
o
2 years: 2 points
o
3 years: 3 points
o
4 years: 4 points
o
5+ years: 5 points
o
The development potential of the property (5 points)
The proximity of the property to existing city services (5 points)
Subtotal Section 3 (maximum 15 points)
*minimum of 11 points must come from this section in order for project to be considered
Subtotal Sections 1-3 (maximum 110 points)
Sub - Total Points: of a possible 110 points.
11
Housing and Redevelopment Authority
Blighted Properties Forgivable
Commercial/Industrial Loan Policy
Guidelines & Application
City Council Approval: September 21, 2015
HRA Approval: September 8, 2015
City of Elk River
Housing and Redevelopment Authority
13065 Orono Parkway
Elk River, MN 55330
763.635.1040
www.elkrivermn.gov
ELK RIVER HOUSING AND REDEVELOPMENT AUTHORITY
BLIGHTED PROPERTIES FORGIVABLE
COMMERCIAL/INDUSTRIAL LOAN POLICY
GUIDELINES & APPLICATION
I. OVERVIEW
The Housing and Redevelopment Authority for the City of Elk River (HRA)
recognizes the need to stimulate private sector investment to help spur new
construction, create and retain employment opportunities and promote the sale and
redevelopment of structurally substandard properties.
The focus is on commercial, retail, industrial, manufacturing, and technology-related
industries to increase the local and state tax base and improve economic vitality. The
program can be used toward the purchase of properties deemed structurally
substandard.
II. TO APPLY
Applications will be accepted on an ongoing basis. Projects will be scored based on
attached Application Review Worksheet. The applicant shall complete and submit
the attached application to the city, along with a processing fee of $2000 to cover
processing expenses. Once application is deemed complete, it will be reviewed by the
cities Financial Advisor, Executive Director and HRA (process may take up to six
weeks).
III. PURPOSE
The Blighted Properties Forgivable Commercial/Industrial Loan funds are to be
used for business start-ups, expansions, and relocations where jobs are created and
tax base is generated. This can be accomplished by the following means:
1.Creation of permanent private-sector jobs in order to create above average
economic growth;
2.Stimulation or leverage of private investment to ensure economic renewal
and competitiveness;
3.Increase local tax base;
4.Improvement of employment and economic opportunity for citizens in the
region to create a reasonable standard of living; and
5.Stimulation of productivity growth through improved commercial, retail,
manufacturing or new technologies.
IV. PROJECT ELIGIBILITY AND REQUIREMENTS
The Blighted Properties Forgivable Commercial/Industrial Loan must be based on
the following criteria:
Blighted Properties Forgivable Commercial/Industrial Loan Policy & Guidelines
Page 2 of 15
1.Creation of new jobs must equal a minimum of $12.19/hr. including benefits.
2.Increase in tax base
3.The project can demonstrate that investment of public dollars induces private funds;
4.The project provides higher wage levels to the community or will add value to current
workforce skills;
5.The project results in the sale and/or redevelopment of properties deemed structurally
substandard;
6.Whether assistance is necessary to retain existing business; and
7.Whether assistance is necessary to attract out-of-state business.
A Blighted Properties Forgivable Commercial/Industrial Loan is required to meet clause
5.). A loan cannot be made solely on a finding that the conditions in clause 5.), 6.) or 7.)
exist. A finding must be made that a condition in clause 1.), 2.), 3.), or 4.) also exists.
Blighted Properties Forgivable Commercial/Industrial Loans are awarded to businesses
that meet all project and job requirements as outlined within. Projects are evaluated on a
first-come, first-served basis and awarded based upon meeting program criteria.
V. ELIGIBLE ACTIVITIES
1.Blighted Properties Forgivable Commercial/Industrial Loan may be used for
the following activities:
a.Property acquisition, demolition, soil prep, infrastructure, or building
construction.
b.Purchase furniture, fixtures, and equipment (FF&E) along with new
construction.
VI. BUSINESSES ELIGIBILITY
Any project meeting the above criteria, and located or proposed to be located within
the city limits of Elk River as defined by this program, may be eligible for a Housing
and Redevelopment Authority Blighted Properties Forgivable Commercial/Industrial
Loan as further defined herein:
Business must be a for-profit corporation, partnership, or sole
.
proprietorship
Business must be a small business as defined by the Small Business
Administration (SBA).
Business must have a positive net worth.
non-profit corporations, casino, sports facilities and sexually oriented
businesses are noteligible to usethe Housing and Redevelopment
Authority Blighted Properties Forgivable Loan Program.
VII. BLIGHTED PROPERTIES FORGIVABLE
COMMERCIAL/INDUSTRIAL LOAN TERMS & CONDITIONS
Loan Amount
There is a maximum of $75,000 per Blighted Properties Forgivable
Commercial/Industrial Loan. Federal guidelines require a minimum of one job to be
Blighted Properties Forgivable Commercial/Industrial Loan Policy & Guidelines
Page 3 of 15
created for every $15,000 requested. To receive maximum loan amount of $75,000,
applicant would need to create five new FTE positions. Wage and benefits must be
equal or greater than $12.19/hr.
Loan Structure
All Housing and Redevelopment Authority Blighted Properties Forgivable
Commercial/Industrial Loans shall be structured as direct loans.
Applicant must provide at least 50% of project cost through other means. Equity
down payment requirements may vary depending on project and primary lending
institution. Blighted Properties Forgivable Commercial/Industrial Loan funds may
be used as equity upon approval of primary lending institution
The HRA may require additional agreements to be signed by the borrower
(i.e. mortgage, promissory note, security agreement, personal guarantees, business
subsidy agreement).
Other HRA Incentives
Projects can combine the Blighted Properties Forgivable Commercial/Industrial
Loan with all other incentives (i.e.: Micro Loan Program, Tax Abatement, TIF, etc.)
Evaluate Building(s) Existing Condition
An evaluation must be conducted to determine if the building(s) is structurally
substandard by a licensed structural engineer with experience in inspection and
facility assessment projects. Structurally substandard shall mean containing defects in
structural elements or a combination of deficiencies in essential utilities and facilities,
light and ventilation, fire protection including adequate egress, layout and condition
of interior partitions, or similar factors, which defects or deficiencies are of sufficient
total significance to justify substantial renovation or clearance.
Deliver a written narrative analysis of the property describing why the property does
or does not meet the criteria as “structurally substandard” as established in
Minnesota Statutes Section 117.025, subdivision 7.
Call of Loan
Blighted Properties Forgivable Loan terms are set by the HRA. Projects which don’t
meet the terms may be required to repay all or a portion of the loan as determined in
the loan agreement. A job creation extension may be granted upon review of the
Housing and Redevelopment Authority on a case by case basis, except as otherwise
required by law. Repayment terms will vary depending on the use of funds and
collateral securing the loan. Specific repayment terms will be defined in the loan
agreement in the event repayment of part or the entire Blighted Properties
Forgivable Commercial/Industrial Loan is required. A loan shall become due and
payable in full if a business relocates outside of the city of Elk River prior to the
maturity date of the loan. Jobs created must be maintained for a period of 2 years
from the date of closing.
Blighted Properties Forgivable Commercial/Industrial Loan Policy & Guidelines
Page 4 of 15
VIII. LOAN SECURITY AND GUARANTEES
Applicant must secure the loan by providing the HRA with a minimum of a
subordinate mortgage upon the building and/or assets or other approved collateral.
Personal guarantees and entity guarantees may be made part of all loan agreements.
Key person life insurance may be required as determined by the HRA based on loan
amount and company ownership partners.
VIII. TIMING OF PROJECT EXPENSES/PROJECT TIMELINE
No project should commence until the Elk River Housing and Redevelopment
Authority has approved the loan application. Any costs incurred prior to the
approval of the loan application are generally not eligible expenditures. Applicant
must submit project timeline with application; timeline will assist in determining job
creation goal deadlines.
The applicant will be responsible for all legal, recording, and other fees required for
protection of a security interest in the loan, payable by a non-refundable $2,000
processing fee, which is paid at the time of application. In addition to the
non-refundable $2,000 processing fee, all legal and filing fees shall be paid by the
borrower at loan closing.
X. PROCEDURAL GUIDELINES FOR APPLICATION AND APPROVAL
1.All applicants shall first contact a primary lending institution to determine if
additional equity is needed, and if so, how much.
2. The applicant and the primary lender (if applicable) shall then meet with City
Staff to obtain information about the Housing and Redevelopment Blighted
Properties Forgivable Commercial/Industrial Loan program, discuss the project,
and obtain application forms.
3. The applicant shall complete and submit an application form to the City, along
with a non-refundable processing fee of $2,000. The applicant must provide
evidence of their ability to meet the equity requirements or provide a letter of
commitment for conventional financing from the primary lending institution if
applicable.
4. The HRA is a governmental entity and as such must provide public access to
public data it receives. Data deemed by Applicant to be nonpublic data under
State law should be so designated or marked by Applicant. See Minn. Sat.
Sections 13.59, Subd. 1, respectively.
5. The application will be reviewed by the City staff to determine if it conforms to
all City policies and ordinances and to consider the following:
a. The availability and applicability of other governmental grants and/or
loan programs.
b. Whether the proposed project will result in conformance with building
and zoning codes.
Blighted Properties Forgivable Commercial/Industrial Loan Policy & Guidelines
Page 5 of 15
c. Whether it is desirous and in the best interests of the public to provide
funding for the project.
7.The HRA Commissioners will review each application in terms of its consistency
with the goals of the City’s Comprehensive Plan and Housing and
Redevelopment Authority Strategic Plan and in relation to the project’s overall
impact on the community’s economy and will evaluate the project application in
terms of the following:
a. Project Design - Evaluation of project design will include
review of proposed activities, time lines and a capacity to implement.
b. Financial Feasibility - Availability of funds, private involvement, financial
packaging and cost effectiveness.
Appropriate ratio of private funds to the Blighted Properties
Forgivable Loan funds.
Sufficient cash flow to cover proposed debt service as demonstrated
by financial statements and projections.
Ability to demonstrate a positive net worth.
Letter of Commitment from applicant pledging to complete the
project during proposed project duration, if the loan application is
approved.
Letter of Commitment from other financing sources stating terms
and conditions of their participation in the project if applicable.
Sufficient collateral.
Certificate of Good Standing from the Minnesota Secretary of State
c. All other information as required in the application and/or additional
information as may be requested by the Housing and Redevelopment
Authority.
.
d. Project compliance with all city codes and policies
e. Program Objectives - In addition to quality job and wage
creation/retention requirements, the applicant must meet all of the
Blighted Properties Forgivable Loan Program criteria and demonstrate
how the proposed activities will meet at least one of the following
objectives listed on page two of this application.
8.The Housing and Redevelopment Authority will recommend the approval,
denial, or request a resubmission.
9.Loan proceeds will be disbursed upon execution of the Blighted Properties
Forgivable Commercial/Industrial Loan documents. A closing to execute the
Blighted Properties Forgivable Commercial/Industrial Loan documents will only
occur upon the following: Evidence of Applicant’s portion of project funds
Blighted Properties Forgivable Commercial/Industrial Loan Policy & Guidelines
Page 6 of 15
have been disbursed or escrowed; or written confirmation from the primary
lender that Applicant has met equity requirements for the project and primary
Lender has either funded their portion of the project; Lender has fully funded
the project and is seeking take out financing by HRA for HRA’s portion of the
project; or Lender is requesting simultaneous closing for the funding of the
project.
XI. LOAN POLICY REVIEW
The above criteria will be reviewed on an annual basis to ensure that the policies
reflected in this document are consistent with the housing and redevelopment
authority goals set forth by the City.
XII. RIGHT OF REFUSAL
The Elk River Housing and Redevelopment Authority may deny any project which it
deems inappropriate according to the guidelines established in this document.
XIII. COMPLIANCE WITH MN BUSINESS SUBSIDY LAW
Each company receiving assistance in the principal amount of $75,000 from the
HRA Blighted Properties Forgivable Commercial/Industrial Loan Program shall be
subject to the provisions and requirements set forth by Minnesota Business Subsidy
Law Statute 116J.993 and the City of Elk River Business Subsidy Policy.
All applicants will be required to submit annual progress reports to the Housing and
Redevelopment Authority until job creation requirements are met.
Blighted Properties Forgivable Commercial/Industrial Loan Policy & Guidelines
Page 7 of 15
ELK RIVER HOUSING AND REDEVELOPMENT AUTHORITY
FORVIABLE COMMERCIAL/INDUSTRIAL LOAN
APPLICATION
I. CONTACT INFORMATION
Legal Name of Business:
Project Site Address:
City / State / Zip
Contact Person(s)
Business PhoneFax
Home Phone Email
Check One:Proprietor CorporationPartnership
Federal ID #State ID #
II. NATURE OF LOAN REQUEST
Does your project involve the redevelopment of structurally substandard property?
Yes
No
Amount Requested: $Total Project Cost: $
Project timeline:
Please give a brief summary of your business and its products or service:
Blighted Properties Forgivable Commercial/Industrial Loan Fund Application
Page 9 of 15
DRAFT
Please give a brief summary of the project and how it complies to the criteria for approval of
the blighted properties forgivable commercial/industrial loan program:
Please describe how this loan will impact your project:
III. FINANCING
Project Costs
$
Land
$
Site improvements
$
Buildings (attach plans & costs)
Equipment/Machinery/Fixtures
$
(attach list and estimated costs)
$
Remodeling
$
Industrial Inventory/Working Capital
$
Other (attach description)
Total Costs $
Comments:
Proposed Sources of Financing
SOURCE NAME TERMS AMOUNT
Bank Loan __________ $_________
Blighted Properties Forgivable Commercial/Industrial Loan Fund Application
Page 10 of 15
DRAFT
Bank Loan __________ $_________
Other Private Funds __________ $_________
Applicant Contribution $_________
Other __________ $_________
Fed Grant/Loan __________ $_________
State Grant/Loan __________ $_________
HRA Blighted $
Properties Forgivable Commercial/Industrial Loan Program
Tax Increment Financing $
Tax Abatement $
Total Financing $_________
Collateral Assignments
Lien
Description of Collateral Position
To Bank 1
To Bank 2
To Private Sources
To Other Sources
To State
To HRA Micro Loan
HRA Blighted Properties Forgivable C/I loan
Value of Collateral
Book Value Cost Existing Liens
Land $_________ $___________ $__________
Buildings $_________ $___________ $__________
Machinery & Equip. $_________ $___________ $__________
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Other__________ $_________ $___________ $__________
Other__________ $_________ $___________ $__________
IV. JOB & WAGE GOALS
How many employees do you currently have?
Guidelines require a minimum of one job created for every $15,000 requested.
Jobs to be Created*
Please provide the following information on jobs you expect to create within 2-years.
Average Are the Jobs Expected
Number Hourly Annual Permanent or Hiring
Job Title of Jobs Wage Salary Temporary? Date
Program Objectives
(Check all that apply)
_____ The project contributes to the fulfillment of the city’s approved and adopted
housing and redevelopment authority and/or redevelopment plans.
_____ The project prevents or eliminates slums and blight.
_____ The project increases the local tax base.
_____ The project brings a structure into compliance with an existing building code
violation.
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V. PROJECT CONTACTS
Attorney
Name
Address
Phone ______
Accountant
Name ______
Address
Phone
Financing Sources (lenders, partners, etc…)
Name ______
Address
Phone
Name ______
Address
Phone
Parent Company
Name ______
Address
Phone
Others
Name ______
Address
Phone
______
Name
Address
Phone
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VI. ATTACHMENTS CHECK LIST
Please attach the following:
______A) Written Business Plan:
1. Description of Business
2. Ownership
3. Management
4. Date Established
5. Products/Services
6. Future Plans
_______B) Financial Statements for Past Two Years
_______C) Financial Projections for Two Years
_______D) Resume of Owner/Management
_______E) Personal Financial Statements of Proprietor, Partners,
Guarantors
_______F) Letter of Commitment from Applicant Pledging to Complete
During the Proposed Project Duration
_______G) Letter of Commitment from the Other Sources of Financing,
Stating Terms and Conditions of their Participation in
Project
_______H) Fee of $2,000 of amount of loan request
_______I) Certificate of Good Standing
VI. AGREEMENT
I / We certify that all information provided in this application is true and correct to the best
of my/our knowledge. I / We authorize the City of Elk River Housing and Redevelopment
Authority to check credit references and verify financial and other information. I / We
agree to provide any additional information as may be requested by the HRA.
APPLICANT SIGNATURE _______
BY
DATE
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APPLICATION REVIEW WORKSHEET
TO BE COMPLETED BY CITY STAFF
In the event of multiple applicants, and limited funds dedicated to the program,
the attached worksheet will be used to determine how the funds will be allocated.
The project meets the criteria set forth in Section IV of the Blighted Properties
Forgivable Commercial/Industrial Loan Policy. Check those which apply. Must meet first
four to score 20 points. 0 points if any of the first four boxes are unchecked.
Creates new jobs with wages and benefits equal to at least $12.19/hr
Increases tax base
The project can demonstrate that investment of public dollars induces private funds
The project provides higher wage levels to the community or will add value to
current workforce skills.
The project results in the sale and/or redevelopment of structurally substandard
properties as determined by a structural engineer. (additional 100 points given)
Subtotal Section 1 (maximum 120 points)
2. Consideration of Capacity. Check those which apply. Must meet all four to score 20 points. 0
points if any boxes are unchecked.
Applicant included a realistic implementation /project schedule
Applicant has the ability to administer and monitor project
Applicant has the ability to conform to city, state and federal requirements
Applicant has agreed to annual progress reports and submission of salary surveys for
all new hires
Subtotal Section 2 (maximum 20 points)
3. Impact : Points
Number of new jobs as a result of the project:
*Award five points per job created up to 150 points
Ratio of loan funds to jobs created/retained
$15,000 or less/job 80 points
$15,001-$24,999/job 60 points
$25,000-$34,999/job 40 points
$35,000 and over/job 20 points
Increase in the local real estate tax base
>$500,000 20 points
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$250,000 to $500,000 15 points
<$250,000 10 points
Immediacy of Impact
*20 points awarded if project will begin within 6 months
Subtotal Section 3 (maximum 250 points)
*minimum of 60 points must come from this section in order for project to be considered
4. Wage Level of new jobs created Points
Minimum hourly wage of jobs created/retained:
Over $21/ hour 5 points
$18-21 / hour 4 points
$14-17 / hour 3 points
$11-13 / hour 2 points
Below $11/ hour application disqualified
5. Project size:
The project will result in the construction of square feet.
80,000+ 50 points
65,000+ 40 points
50,000+ 30 points
35,000+ 20 points
25,000+ 10 point
Subtotal Sections 4-5 (maximum 55 points)
Sub - Total Points: of a possible 445 points.
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