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9.1. HRSR 01-03-2017 Request for Action To Item Number Housing and Redevelopment Authority 9.1 Agenda Section Meeting Date Prepared by General Business January 3, 2017 Amanda Othoudt, EDD Item Description Reviewed by Saxon Motors and Elk River Lodge Site Discussion Cal Portner, City Administrator Reviewed by Action Requested For discussion. Background/Discussion Staff met with Pat Briggs and a developer last September to discuss the construction of multiple apartment buildings on the Saxon and Elk River Lodge properties. The sketch plan he provided included 384 units in four buildings and demolition of the existing buildings. The parcels were recently re-zoned to residential with the FAST zoning changes. Staff recently contacted Mr. Briggs regarding his plans to redevelop the properties. After a long discussion, Mr. Briggs indicated that he would entertain an offer from the HRA to purchase these properties. An appraisal will need to be completed to determine the fair market value of the properties. Provided the HRA can reach an agreement with Mr. Briggs before February 1, 2017, the HRA could apply for DEED’s Demolition Loan Program. This program assists development authorities with the costs of demolishing blighted buildings on sites that have future development potential but where there are no current development plans. The program can pay up to 100% of the acquisition and demolition costs for a qualifying site including demolition, destruction, removal, and clearance of all structures and other improvements on the project site, including interior remedial activities, and proper disposal thereof. The maximum loan amount for any project is $1 million. Currently, loans have a 2% interest rate and no interest or payments for the first 2 years. If the site is developed over the term of the loan, then 50% of the remaining loan balance would be forgiven. Eligible applicants include cities, counties, port authorities, housing and redevelopment authorities, and economic development authorities. Financial Impact N/A Attachments  Site Map  State Demolition Loan Program City LimitsUrban Service AreaParcels (4-1-2016)Park Areas \[ĻŭĻƓķ tğƷƩźĭƉ .Ʃźŭŭƭ tƩƚƦĻƩƷǤ 5źƭĭƌğźƒĻƩʹŷźƭ ķƩğǞźƓŭ źƭ ƓĻźƷŷĻƩ ğ ƌĻŭğƌƌǤ ƩĻĭƚƩķĻķ ƒğƦ ƓƚƩ ğ ƭǒƩǝĻǤ ğƓķ źƭ ƓƚƷ źƓƷĻƓķĻķ Ʒƚ ĬĻ ǒƭĻķ ğƭ ƚƓĻ͵ ŷźƭ ķƩğǞźƓŭ źƭ ğ ĭƚƒƦźƌğƷźƚƓ ƚŅ ƩĻĭƚƩķƭͲ źƓŅƚƩƒğƷźƚƓͲ ğƓķ ķğƷğ ƌƚĭğƷĻķ źƓ ǝğƩźƚǒƭ ĭźƷǤͲ ĭƚǒƓƷǤͲ ğƓķ ƭƷğƷĻ ƚŅŅźĭĻƭͲ ğƓķ ƚƷŷĻƩ ƭƚǒƩĭĻƭ ğŅŅĻĭƷźƓŭ ƷŷĻ ğƩĻğ ƭŷƚǞƓͲ ğƓķ źƭ Ʒƚ ĬĻ ǒƭĻķ ŅƚƩ ƩĻŅĻƩĻƓĭĻ ƦǒƩƦƚƭĻƭ ƚƓƌǤ͵ ŷĻ /źƷǤ ƚŅ 9ƌƉ wźǝĻƩ źƭ ƓƚƷ ƩĻƭƦƚƓƭźĬƌĻ ŅƚƩ ğƓǤ źƓğĭĭǒƩğĭźĻƭ ŷĻƩĻźƓ ĭƚƓƷğźƓĻķ͵ 95 0.6 ЊЋΉЋВΉЋЉЊЏ ЋʹЋЊ ta CĻĻƷ ЏЏЎ Љ λ .ƚƌƷƚƓ ε aĻƓƉͲ LƓĭ Ώ ĻĬ DL{ FY 15 DEMOLITION LOAN APPLICATION TABLE OF CONTENTS Introduction Purpose/Background________________________________________________ ii Funding Availability________________________________________________ ii Deadlines/Requirements_____________________________________________ ii Eligible Sites ii Eligible Applicants_________________________________________________ iii Eligible Program Costs_______________________________________________ iii Eligible Bonding Costs_______________________________________________ iii Required Appraisals or Assessments___________________________________ iii Awarding Loans___________________________________________________ iv Application Cover Page _______________________________________________________ 1 Site Identification __________________________________________________ 2 Valuation ________________________________________________________ 2 Maps and Site Features ______________________________________________ 3 History ___________________________________________________________ 3 Current Conditions and Development Potential ___________________________ 3 Cost Analysis______________________________________________________ 4 Sources and Uses of Funds (Budget Table) ______________________________ 4 Analysis of Loan Need___________________________________ ___________ 4 Financial Information_______________________________________________ 6 Payment Information________________________________________________ _ 7 Local Government Resolution_________________________________________ 8 2¤£¤µ¤«®¯¬¤³ 0 ¦¤ ¨ FY 15 MINNESOTA DEPARTMENT OF EMPLOYMENT AND ECONOMIC DEVELOPMENT First National Bank Building 332 Minnesota Street, Suite E200 St. Paul, Minnesota 55101 Office of Brownfields and Redevelopment 651-259-7449 1-800-657-3858 DEMOLITION LOAN APPLICATION ***YOU MUST READ THE FOLLOWING NARRATIVE TO FULLY UNDERSTAND THE APPLICATION PROCESS*** INTRODUCTION PURPOSE/BACKGROUND: Although the traditional Redevelopment Grant Program works well for sites where there are costly detriments to site development, and the need to level the playing field between these sites and undeveloped sites exist, there is also an untapped need for assistance with demolition and other redevelopment activities when either there is no current development plan or future development visions are hindered by current blight. In some cases, despite a potential for future redevelopment, hazardous conditions or other public safety structures is costly. Therefore, DEED has amended the Redevelopment Grant Program to include loan funds for demolition activities when an imminent redevelopment opportunity does not currently exist. FUNDING AVAILABILITY: Available funding amounts vary, depending on Legislative appropriation. DEADLINES/REQUIREMENTS: The Demolition Loan Program operates on a semi-annual application cycle. Applications are due February 1 and August 1 of each year. Completed applications and supporting documentation (3 copies) must be receiveBrownfields and Redevelopment by 4:00 p.m. on the due date to be considered for funding. An applicant may apply for more than one project, but an individual (separate) application must be completed for each site. NOTE: Electronic copies will not be accepted in place of paper. Please fill out the entire application. All applications must be complete upon submission in order to qualify for a loan. QUALIFYING PROJECTS: A project qualifies for a loan if the following conditions are met: 1. The property and structures are owned by the development authority; 2. The structures on the property have been vacant for at least one year; 3. The structures constitute a threat to public safety because of inadequate maintenance, dilapidation, obsolescence, or abandonment; 4. The structures are not listed on the National Register of Historic Places; 5. Upon completion of the demolition, the development authority reasonably expects that the property will be improved and these improvements will result in economic development benefits to the municipality. 2¤£¤µ¤«®¯¬¤³ 0 ¦¤ ¨¨ FY 15 ELIGIBLE APPLICANTS : Eligible applicants for this program are statutory or home rule charter cities, economic development authorities, housing and redevelopment authorities, counties, or port authorities. Note: Applicant 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 100 percent of the acquisition and 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 th meaning given it in section 116G.03, subdivision 11. Costs incurred before the loan is awarded are not eligible for payment. TERMS: Loans for acquisition and demolition costs may be made subject to the following terms and conditions: 1. The agreement to repay the loan may be a general obligation of the development authority, payable primarily from a dedicated source of revenue, or other security subject to review and approval by the commissioner, and the development authority must deliver its bond or note to the commissioner, to secure the loan; 2. The term of the loan may not exceed 15 years; 3. The loan shall bear interest at a rate equal to two percent, but interest will not accrue during the first two years of the loan term. 4. The development authority shall make semiannual interest payments and annual principal payments beginning in the third year of the loan until the end of the term; 5. The principal amount of a loan may not exceed $1,000,000; 6. Loan proceeds shall be disbursed for eligible demolition costs as incurred or paid by the borrower and upon submission of invoices and other supporting documentation satisfactory to the commissioner; 7. An eligible borrower shall establish a dedicated source of revenue for repayment of the loan. FORGIVENESS: The commissioner may forgive principal of the loan and interest accrued but unpaid thereon, if any, up to 50 percent of the original loan amount, not to exceed the costs of demolition, upon completion of the redevelopment plan, if the project would otherwise have received grant funding in the most recent semiannual grant round, based on the priorities in section 116J.575. REQUIRED APPRAISALS OR ASSESSMENTS: Land appraisals of the current (as-is) and expected (pre-construction) value of the site are required so that DEED can determine the fair market value and any business subsidy. Both appraisals must be done by an independent appraiser using accepted appraisal methodology. In lieu of an appraisal, the applicant may use the current and projected assessed values as determined by the local assessor. Values cannot be determined in any other manner. The value of the property after the proposed development is completed is also requested. This estimate is generally based on similar development projects in the city. 2¤£¤µ¤«®¯¬¤³ 0 ¦¤ ¨¨¨ FY 15 AWARDING LOANS: DEED will award loans to projects that provide the highest return in public benefits for the public costs incurred and meet all of the statutory requirements. In order to evaluate the applications for public benefits with respect to the costs incurred, the law specifies priorities that DEED must consider. To fulfill this requirement of reviewing applications in an objective and fair manner, the following criteria have been assigned maximum point values in order to systematically award loans. All assigned scores will be relative to scores awarded to other applications. 1. The extent to which the existing property conditions threaten public safety. Maximum = 15 points 2. The length of vacancy of the property. Maximum = 5 points. 3. The development potential of the property. Maximum = 10 points 4. The proximity of the property to existing sufficient public infrastructure. Maximum = 5 points. 5. 6. Other public benefits, including but not limited to, health, safety, environmental benefits, blight reduction, community stabilization, crime reduction and reduction of maintenance costs. Maximum = 5 points 2¤£¤µ¤«®¯¬¤³ 0 ¦¤ ¨µ FY 15 1st National Bank Building 332 Minnesota Street, Suite E200 St. Paul, MN 55101-1351 Demolition Loan Application Cover Page Applicant (Public Entity): _______________________________________________________ Head of Applicant Agency (e.g. Mayor): ___________________________________________ Applicant Address: ______________________________________________________________ City: _______________________________________ Zip Code: _______________________ If the applicant is a city, what form of government? _________ Home Rule Charter _________ Statutory City For reference, please give the State Statute number which gives the applicant authority to carry out the activities for which you are requesting loan funds. ____________________ Project Contact for the Public Entity ____________________________________ Phone: ______-______-____________ E-mail: _______________________________________________________________________ Mailing Address: _______________________________________________________________ Project Manager for this project from the Public Entity, in the event of an award _________________________________ hone & email __________________________________________________ Application Author __________________________________________________________ ________________________________________________________ Provide a written executive summary in the project to date and how the applicant intends to manage the project should a loan be awarded. 1 FY 15 I. SITE IDENTIFICATION AND HISTORY SITE INFORMATION 1. Name of Site: ______________________________________________________________ Site Address: _______________________________________________________________ City, County or Township: Zip Code: __________________________ Acreage of Site: Sq. Ft. of Site: __________________________ Minnesota Legislative District # _________A __________B (Note: The Minnesota Legislature has a tool to look up legislative district numbers. You must have a precise address and know the zip code of the site. Go to: http://www.gis.leg.mn/mapserver/districts/index.html In order to qualify for a loan, the property and structures must be owned by the development authority. 2. A. Does the applicant own the property? _________________________________________ B. If not, at what point will the applicant acquire the property? _______________________ C. What is the purchase price? _____________________________ Attach the Purchase Agreement or other evidence of the commitment of both parties. D. Is it anticipated that the development authority will retain ownership of the property once the demolition is complete? _________________________________________________ 3. Provide a legal description of the site. SITE VALUATION 4. What is the current appraised or assessed value of the Site? ___________________ Attach 5. What is the projected appraised or assessed value after the demolition activities have been completed (prior to development)? ________________________________________ Attach 6. What is the projected value after the proposed development is complete? _______________ 2 FY 15 MAPS AND SITE FEATURES 7. Attach an accurate and legible site and location map indicating the site showing locations of prominent and relevant site features such as buildings, retaining walls, etc. (NOTE: maps shall include property boundaries, a north arrow and bar scale). The map(s) should show the following: a) The current condition of the site including labeled structures and where and for what activities DEED money will apply. b) The proposed potential development of the site including labeled structures if known. 8. Please provide current photographs of the site. Note: Photographs are a very important part of review process. HISTORY 9. Please attach 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 10. In order to qualify, structures on the property must have been vacant for at least one year. How many buildings are currently on site? Industrial ________ How many are occupied? ______ If vacant, for how long? ________ Commercial ______ How many are occupied? ______ If vacant, for how long? _________ Residential _______ How many are occupied? ______ If vacant, for how long? _________ 11. Year building(s) was/were built: _______________________________________________ 12. Please provide evidence that the structures are not listed on the National Register of Historic Places. DEVELOPMENT POTENTIAL 13. Please attach a narrative of the development potential for the site. Please include information such as the type of business, any potential future tenants, potential jobs created, and any other potential economic benefit. Also please include any previous development interest in the site. 3 FY 15 II. COST ANALYSIS 14. How much money are you seeking from DEED? _________________________________ (May not exceed $1,000,000) 15. Fill out the budget table below indicating the uses, and amounts of all funds that will be used for eligible costs as defined on Page iii. The table should indicate the total project budget non-incurred costs. Demolition Uses of Funds for the Project (Budget Table) Use of Funds (Activity) Amount Date Activity Will Occur Acquisition Demolition Interior Abatement for Demolition Other: Total III. ANALYSIS OF LOAN NEED 16. Describe how the structures on the property constitute a threat to public safety, are functionally obsolete, or are economically unfeasible to repair. 4 FY 15 17. Describe how demolition of the site will reduce blight economic vitality, functionality and aesthetics. 18. Describe how close the property is to existing sufficient public infrastructure. 19. By providing hard data on current crime rates, and in a narrative, depict how demolition and redevelopment of the site will reduce crime. 20. Describe how demolition of the site will reduce maintenance costs. How much was spent on maintenance last year? _________________________________ How much was spent on maintenance in the last 5 years? __________________________ 21. Describe how the community is stabilized, health is improved or any environmental benefits are achieved by the demolition of the site. 5 FY 15 IV. FINANCIAL INFORMATION 22. Submit Historical Financial Statements: Financial statements should cover the past three years. Financial Statements should include: Balance Sheets, Income Statements, Details on existing debt agreements, Statements of Changes in Financial Position, and Notes to the Financial Statements. If these Financial Statements are not audited, they must be signed and dated by an authorized officer of the company. If the statements are more than 90 days old, provide interim data or provide a Year-End Audit, from the current or previous two year period. 23. The maximum term of the loan cannot exceed 15 years. What is your proposed term? _________________ 24. Are you issuing a bond or a note to repay the loan? _____________________________ 25. If you are issuing a bond, what type of bond will you be issuing to repay and secure the loan? ___________________________________ 26. What is your time line for issuing your bond? ________________________________ 27. If you are issuing a note, what additional security will you be offering to secure the loan? _______________________ 28. Provide your statutory authorization for issuing bonds or notes. ___________________ Please provide a statement that the statutory provision authorizes the use of proceeds of such bonds to pay demolition costs and secure the loan. 6 FY 15 VI. PAYMENT INFORMATION Most loan payments take place through electronic funds transfer (EFT). To ensure proper payment, a Vendor Number assigned by Minnesota Management & Budget is required. Financial Contact Person: _____________________________________________________ Telephone Number or e-mail: __________________________________________________ State of Minnesota Vendor Number: __________________________________________ If a Minnesota Vendor Number does not exist, please supply: Minnesota Identification Number: ______________________________________________ and Federal Employer Identification Number: _______________________________________ State Vendor info may be found at: https://supplier.swift.state.mn.us/psp/fmssupap/SUPPLIER/ERP/h/?tab=SUP_GUEST Vendor # conversions from the old system to the new SWIFT may be found at: - http://www.swift.state.mn.us/vendors 7 FY 15 VII. LOCAL GOVERNMENT RESOLUTION You must attach a resolution approving this application and committing the source of the loan repayment from the governing body of the municipality in which the site is located. A blank resolution has been attached for your convenience. You may chose to re-format this resolution but make sure to include all of the statements that appear in the resolution. RESOLUTION OF APPLICANT. Applicants must adopt and submit the following resolution. This resolution must be adopted prior to submission of the application package. BE IT RESOLVED that__________________________ act as the legal sponsor for project(s) (Applicant) contained in the Demolition Loan Program to be submitted on________________ (Day, Month, Year) and that ___________________________is hereby authorized to apply to the Department of (Title of Authorized Official) Employment and Economic Development for funding of this project on behalf of ____________. (Applicant) BE IT FURTHER RESOLVED that___________________________ has the legal authority to (Applicant) apply for financial assistance, and the institutional, managerial, and financial capability to ensure adequate project administration. BE IT FURTHER RESOLVED that the sources and amounts of the loan repayment and security identified in the application are committed to the project identified and the _____________ has the authority (Applicant) to incur debt by resolution of the board or council authorizing issuance of a bond or note, payable to DEED to repay and secure the loan. BE IT FURTHER RESOLVED that _____________________________ has not violated any (Applicant) Federal, State or local laws pertaining to fraud, bribery, graft, kickbacks, collusion, conflict of interest or other unlawful or corrupt practice. 8 FY 15 BE IT FURTHER RESOLVED that upon approval of its application by the state, __________________________may enter into an agreement with the State of Minnesota for (Applicant) the above referenced project(s), and that _________________certifies that it will comply with (Applicant) all applicable laws and regulation as stated in all contract agreements. NOW, THEREFORE BE IT FINALLY RESOLVED that the Mayor and the Clerk (for Statutory Cities), or Title of Authorized Official(s), are hereby authorized to execute such agreements as are necessary to implement the project on behalf of the applicant. Note: Do not include the proper name, only the title of the official(s). Pursuant to Minn. Stat. § 412.201, Statutory Cities must authorize both the Mayor and Clerk to execute all contracts, whereas Home Rule Charter Cities or other public entities may differ. I CERTIFY THAT the above resolution was adopted by the ___________________________. (City Council, County Board, etc.) of _______________________________________________ on__________________________ (Applicant) (Date) SIGNED: WITNESSED: ________________________________ ________________________________ (Authorized Official) (Signature) ________________________________ ________________________________ (Title) (Date) (Title) (Date) 9