7.7 HRSR 05-01-2017Request for Action
ToItem Number
Housing and Redevelopment Authority7.7
Agenda Section Meeting DatePrepared by
General BusinessMay 1, 2017Amanda Othoudt, EDD
Item Description
Reviewed by
HRAFinancial Policy Annual ReviewCal Portner, City Administrator
Reviewed by
Action Requested
Consider the changes made to the HRABlighted Properties Commercial/Industrial Forgivable Loan
Program and the HRA Blighted Properties Residential Properties Forgivable Loan Program.
Background/Discussion
Staff, in conjunction with our attorney and financial advisor, rHRA loan
programs and policies and made the following changes:
Changes to the HRA Blighted Properties Commercial/Industrial Forgivable Loan Progra include:
1.Changed loan amount from $75,000 to $74,999.
2.Added that the policy requires Entity Guarantees.
3.Jobs created must be maintained for a period of 2 years from the benefit dateinstead of the date
of closing as defined in Minnesota Statutes, Section 116J.993, Subdivision
4.Updated reference to MN Statutes.
Changes to the HRA Blighted Properties Residential Properties Fo
1.Principal amount of the loan changed from $75,000 to $15,000.
2.Application fee increased from $100 to $500 plus legal and any o
by the HRA.
3.Changes to the general terms of the program allowing a clawback
property owner fails to occupy the property as their primary residence for less
4.The HRA will forgive the loan principal and interest accrued but unpaid thereon, up to 100
percent of the original loan amount, not to exceed the costs of 5 years of
maintaining the property as an owner occupied dwelling. Upon request from the HRA, the
property owner will provide evidence that the property has been owner-occupied for 5 years.
5.Removed the request for an extension of the loan.
Financial Impact
None
Attachments
HRA Blighted Properties Commercial/Industrial Forgivable Loan Pr
HRA Blighted Properties Residential Properties Forgivable Loan P
Housing and Redevelopment Authority
Blighted Properties Forgivable
Commercial/Industrial Loan Policy
Guidelines & Application
AmendedMarch, 2017
HRA Adopted
City Council Adopted
Original Amended:November 2015
HRA Adopted November 2, 2015
City Council Adopted: November 2, 2015
Original Adopted: September 2015
City Council Adopted: September 21, 2015
HRA Adopted: September 8, 2015
City of Elk River
Housing and Redevelopment Authority
13065 Orono Parkway
Elk River, MN 55330
763.635.1040
www.elkrivermn.gov
Error! Bookmark not defined.
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 he
construction, create and retain employment opportunities and pro
redevelopment of structurally substandard properties.
The focus is on commercial, retail, industrial, manufacturing, and t-related
industries to increase the local and state tax base and improve
program can be used toward the purchase of properties deemed str
substandard.
II. TO APPLY
Applications will be accepted on an ongoing basis. Projects will
attached Application Review Worksheet. The applicant shall compl
the attached application to the city, along with a processing feo cover
processing expenses. Once application is deemed complete, it wil
cities Executive Director and HRA (process may take up to six we
III. PURPOSE
The Blighted Properties Forgivable Commercial/Industrial Loan fu
used for business start-ups, expansions, and relocations where jobs are created and
tax base is generated. This can be accomplished by the following
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 renewa
and competitiveness;
3.
Increase local tax base;
4.
Improvement of employment and economic opportunity for citizens
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 mu
the following criteria:
Blighted Properties Forgivable Commercial/Industrial Loan Policy & Guidelines
Page 2 of 1717
498473v2 JSB EL185-13
1.
The minimum wage for a job to be considered a new or retained job shall be the gre
of $15.00 per hour or 150% of state or federal minimum wage, whi
exclusive of benefits required by law.
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
workforce skills;
5.
The project results in the sale and/or redevelopment of properti
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 r
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
Blighted Properties Forgivable Commercial/Industrial Loans are a
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
the following activities:
a.
Property acquisition, demolition, soil prep, or building reconst
b.
VI. BUSINESSES ELIGIBILITY
Any project meeting the above criteria, and located or proposed
the city limits of Elk River as defined by this program, may be eligible for a Housing
and Redevelopment Authority Blighted Properties Forgivable Comme
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 orie
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 $74,999 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 1717
498473v2 JSB EL185-13
created for every $15,000 requested. To receive maximum loan am
applicant would need to create five new FTE positions. The minim
job to be considered a new or retained job shall be the greater 5.00 per hour or
150% of state or federal minimum wage, whichever is greater, exc
required by law.
Loan Structure
All Housing and Redevelopment Authority Blighted Properties Forg
Commercial/Industrial Loans shall be structured as direct loans.
Applicant must provide at least 50% of project cost through othe
down payment requirements may vary depending on project and prim
institution. Blighted Properties Forgivable Commercial/Industri
be used as equity upon approval of primary lending institution
The HRA may require additional agreements to be signed by the bo
(i.e. mortgage, promissory note, security agreement, personal guentity
guarantees, business subsidy agreement).
Other HRA Incentives
Projects can combine the Blighted Properties Forgivable Commerci
Loan with all other incentives (i.e.: Micro Loan Program, Tax Ab
Evaluate Building(s) Existing Condition
An evaluation must be conducted to determine if the building(s) is structurally
substandard by a licensed structural engineer, or city building
experience in inspection and facility assessment projects. Struc
shall mean containing defects in structural elements or a combination of deficiencies
in essential utilities and facilities, light and ventilation, fi
adequate egress, layout and condition of interior partitions, or
defects or deficiencies are of sufficient total significance to justify substantial
renovation or clearance.
Deliver a written narrative analysis of the property describing
or does not meet the criteria as structurally substandard as e
Minnesota Statutes Section 117.025, subdivision 7.
Call of Loan
Blighted Properties Forgivable Loan terms are set by the HRA. Pr
meet the terms may be required to repay all or a portion of the
the loan agreement. A job creation extension may be granted upon review of the
Housing and Redevelopment Authority on a case by case basis, exc
required by law. Repayment terms will vary depending on the use
collateral securing the loan. Specific repayment terms will be defined in the loan
agreement in the event repayment of part or the entire Blighted
Forgivable Commercial/Industrial Loan is required. A loan shall
payable in full if a business relocates outside of the city of Eer prior to the
maturity date of the loan. Jobs created must be maintained for
from the date of closing.Benefit Date as defined in Minnesota Statutes, Section
Blighted Properties Forgivable Commercial/Industrial Loan Policy & Guidelines
Page 4 of 1717
498473v2 JSB EL185-13
116J.993, Subdivision 2.
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 ap
Personal guarantees and entity guarantees may be made part of al
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 Redev
Authority has approved the loan application. Any costs incurred prior to the
approval of the loan application are generally not eligible expe
must submit project timeline with application; timeline will ass
creation goal deadlines.
The applicant will be responsible for all legal, recording, and other fees
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 ad
non-refundable $2,000 processing fee, all legal and filing fees shall be
borrower at loan closing.
X. PROCEDURAL GUIDELINES FOR APPLICATION AND APPROVAL
1.
All applicants shall first contact a primary lending institution
additional equity is needed, and if so, how much.
2. The applicant and the primary lender (if applicable) shall
Staff to obtain information about the Housing and Redevelopment
Properties Forgivable Commercial/Industrial Loan program, discuss the project,
and obtain application forms.
3. The applicant shall complete and submit an application for
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 i
applicable.
4. The HRA is a governmental entity and as such must provide p
public data it receives. Data deemed by Applicant to be nonpublic data under
Minn. Sat.
State law should be so designated or marked by Applicant. See
Sections 13.59, Subd. 1, respectivelyMinnesota Statutes, Chapter 13, as amended.
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:
Blighted Properties Forgivable Commercial/Industrial Loan Policy & Guidelines
Page 5 of 1717
498473v2 JSB EL185-13
a. The availability and applicability of other governmental gr
loan programs.
b. Whether the proposed project will result in conformance wit
and zoning codes.
c. Whether it is desirous and in the best interests of the pub
funding for the project.
7.
The HRA Commissioners will review each application in terms of i
with the goals of the Citys Comprehensive Plan and Housing and
Redevelopment Authority Strategic Plan and in relation to the pr
impact on the communitys economy and will evaluate the project
terms of the following:
a. Project Design - Evaluation of project design will include
review of proposed activities, time lines and a capacity to impl
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 demonstra
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 applicab
Sufficient collateral.
Certificate of Good Standing from the Minnesota Secretary of State
c. All other information as required in the application and/or
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
Blighted Properties Forgivable Loan Program criteria and demonst
how the proposed activities will meet at least oneof the following
objectives listed on page two of this application.
8.
The Housing and Redevelopment Authority will recommend the appro
denial, or request a resubmission.
9.
A simultaneous closing with the primary lender is required to ex
Blighted Properties Forgivable Commercial/Industrial Loan Policy & Guidelines
Page 6 of 1717
498473v2 JSB EL185-13
Blighted Properties Forgivable Commercial/Industrial Loan documents.
10.
Loan proceeds will be disbursed upon execution of the Blighted P
Forgivable Commercial/Industrial Loan documents at closing.
OR
Loan proceeds will be disbursed upon evidence of eligible demolis as
incurred or paid by the borrower and upon submission of invoices
supporting documentation satisfactory to the commission.
11.
XI.LOAN POLICY REVIEW
The above criteria will be reviewed on an annual basis to ensure
reflected in this document are consistent with the housing and redevel
authority goals set forth by the City.
XII. RIGHT OF REFUSAL
The Elk River Housing and Redevelopment Authority may deny any p
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 $74
HRA Blighted Properties Forgivable Commercial/Industrial Loan Pr
subject to the provisions and requirements set forth by Minnesota Business
Law Statute 116J.993 and the City of Elk River Business Subsidy
All applicants will be required to submit annual progress report
Redevelopment Authority until job creation requirements are met.
Blighted Properties Forgivable Commercial/Industrial Loan Policy & Guidelines
Page 7 of 1717
498473v2 JSB EL185-13
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 PhoneEmail
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
Blighted Properties Forgivable Commercial/Industrial Loan Fund A
Page 9 of 17
498473v2 JSB EL185-13
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 pr
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 NAMETERMS AMOUNT
Bank Loan __________ $_________
Blighted Properties Forgivable Commercial/Industrial Loan Fund A
Page 10of 17
498473v2 JSB EL185-13
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. $_________ $___________ $__________
Blighted Properties Forgivable Commercial/Industrial Loan Fund A
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498473v2 JSB EL185-13
Other__________ $_________ $___________ $__________
Other__________ $_________ $___________ $__________
IV. JOB & WAGE GOALS
How many employees do you currently have?
Guidelines require a minimum of one job created for every $15,00
Jobs to be Created*
Please provide the following information on jobs you expect to c-years.
Average Are the Jobs Expected
Number Hourly Annual Permanent or Hiring
Job Titleof Jobs WageSalaryTemporary? Date
Program Objectives
(Check all that apply)
_____ The project contributes to the fulfillment of the citys 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 exng building code
violation.
Blighted Properties Forgivable Commercial/Industrial Loan Fund A
Page 12of 17
498473v2 JSB EL185-13
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
Blighted Properties Forgivable Commercial/Industrial Loan Fund A
Page 13of 17
498473v2 JSB EL185-13
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 Compl
During the Proposed Project Duration
_______G) Letter of Commitment from the Other Sources of Financ
Stating Terms and Conditions of their Participation in
Project
_______H) Application Fee of $2,000
_______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 Hou
Authority to check credit references and verify financial and ot
agree to provide any additional information as may be requested by the HRA.
APPLICANT SIGNATURE _______
BY
DATE
Blighted Properties Forgivable Commercial/Industrial Loan Fund A
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498473v2 JSB EL185-13
APPLICATION REVIEW WORKSHEET
TO BE COMPLETED BY CITY STAFF
In the event of multiple applicants, and limited funds dedicated
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 Bl
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.
wages and benefits equal to at least $15.00/hr
Creates new jobs. The mi
nimum wage for a job to be considered a new or retained job
shall be the greater of $15.00 per hour or 150% of state or federal minimum wage,
whichever is greater, exclusive of benefits required by law. (5
Increases tax base (5 points
The project can demonstrate that investment of public dollars in
(5 points)
The project provides higher wage levels to the community or will add value to
current workforce skills. (5 points)
The project results in the sale and/or redevelopment of structur
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.
points if any boxes are unchecked.
Applicant included a realistic implementation /project schedule
Applicant has the ability to administer and monitor project (5 points)
Applicant has the ability to conform to city, state and federal
Applicant has agreed to annual progress reports and submission o
all new hires (5 points)
Subtotal Section 2 (maximum 20 points)
Points
3. Impact :
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
Blighted Properties Forgivable Commercial/Industrial Loan Fund A
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498473v2 JSB EL185-13
$35,000 and over/job 20 points
Increase in the local real estate tax base
>$500,000 20 points
$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 270 points)
*minimum of 60 points must come from this section in order for p
Points
4. Wage Level of new jobs created
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 465 points.
Blighted Properties Forgivable Commercial/Industrial Loan Fund A
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498473v2 JSB EL185-13
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Residential and Redevelopment Authority
Blighted Properties Demolition &
Forgivable Residential Loan Program
Policy Guidelines & Application
HRA Adopted February 1, 2016
City Council Adopted: February 16, 2016
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 Pro
498470v1 JSB EL185-13498470v2 JSB EL185-13
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 2
Eligible Program Costs 2
Terms 2
Forgiveness 2
Required Appraisal/Assessment 2
Awarding Loans 3
Modifications to the Policy __________________________________________3
Preferred Score ___________________________________________________ 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
Agreement _______________________________________________________________10
Application Review Worksheet ______________________________________________ 11
Blighted Properties Demolition & Forgivable Residential Loan Pro
498470v1 JSB EL185-13498470v2 JSB EL185-13
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:
Availablefunding amounts vary per budget cycle.
DEADLINES/REQUIREMENTS:
Applications are due on the first Monday of each
month. Completed applications and supporting documentationmust be received by the city
by 4:30 p.m
of Elk River . on the due date to be considered for funding.
APPLICATION FEE:
The applicant must submit an application fee of $500[plus legal and
any other out-of-pocket costs incurred by the HRA]at the time of submittal.
QUALIFYING PROJECTS:
A project qualifies for a loan if the followingconditions are
met:
Upon completion of the project, the property and structures will be owner-occupied
1.
dwellings;
The structures constitute a threat to public safety because of inadequate maintenance,
2.
dilapidation, obsolescence, or abandonment;
Upon completion of the demolition, the HRA reasonably expects that the property will
3.
be improved and these improvements will result in redevelopment benefits to the
municipality.
The structure must be defined per MN State Statue 117.025, Subdivision 7 as
4.
“structurally substandard”. "Structurally substandard" means a building:
that was inspected by the appropriate local government and cited for one or
(1)
more enforceable housing, maintenance, or building code violations;
in which the cited building code violations involve one or more of the
(2)
following:
a roof and roof framing element;
(i)
support walls, beams, and headers;
(ii)
foundation, footings, and subgrade conditions;
(iii)
light and ventilation;
(iv)
1
498470v1 JSB EL185-13498470v2 JSB EL185-13
fire protection, including egress;
(v)
internal utilities, including electricity, gas, and water;
(vi)
flooring and flooring elements; or
(vii)
walls, insulation, and exterior envelope;
(viii)
in which the cited housing, maintenance, or building code violations have not
(3)
been remedied after two notices to cure the noncompliance; and
has uncured housing, maintenance, and building code violations, satisfaction
(4)
of which would cost more than 50 percent of the estimated market value for
the building, excluding land value.
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 Blighted Properties Demolition & Forgivable
Residential Loan program can pay up to $15,000 of the 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 11. Costs incurred before the loan is awarded are not
eligible for payment.
TERMS:
Loans for demolition costs may be made subject to the following terms and
conditions:
The agreement to repay the loan must be a generalpersonalobligation of the property
1.
owner, payable primarily from a dedicatedidentifiedsource of revenueincome of the
property owner, or other security subject to review and approval by the HRA
commission.
2.The term of the loan may not exceed 5 years;
3.The loan shall bear interest at a rate equal to two percent.;
2.
If the property owner ceases to occupy the property as his/her/their primary residence
3.
prior to the fifth anniversary of the closing date, the property owner will immediately
repay the principal amount of the loan and accrued interest to the date of repayment;
The principal amount of a loan may not exceed $15,000;
4.
Loan proceeds shall be disbursed for eligible demolition costs as incurred or paid by the
5.
borrower and upon submission of invoices and other supporting documentation
satisfactory to the commission;.
FORGIVENESS:
The HRA will forgive the principal of the loan and interest accrued but
unpaid thereon, if any,up to 100 percent of the original loan amount, not to exceed the costs of
demolition, after 5 years of maintaining the property as an owner occupied dwelling. Upon
request from the HRA, the property owner will provide evidence that the property has been
owner occupied for 5 years.
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
2
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the fair market value. 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.
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 thecosts incurred, the law
specifies priorities that the HRA must consider. Awards are based on the availability of funds.
SIMULTANEOUS MICROLOANS
The simultaneous use of different HRA microloan programs by any one borrower or for any
one project is prohibited.
CALL OF LOAN
A loan shall become due and payable in full if the owner-occupant relocates outside of the city
of Elk River prior to the maturity date of the loan.
COST OF REVIEW
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 $500 processing fee, which is paid at the time of
application, [plus legal and any other out-of-pocket costs incurred by the HRA]. In addition to
the processing fee, all legal and filing fees shall be paid by the borrower at loan closing.
PROCEDURAL GUIDELINES FOR APPLICATION AND APPROVAL
All applicants shall first contact a primary lending institution
1.
the financing of the overall project.
The applicant shall then meet with city staff to obtain information
2.
program, discuss the project, and obtain application forms.
The applicant shall complete and submit an application form to t
3.
$1,000500 processing fee [plus legal and any other out-of-pocket costs incurred by the
HRA]. The fee is used to cover processing expenses and any remaining
returned to the applicant. The applicant must provide a letter
conventional financing from the primary lending institution.
The HRA is a governmental entity and as such must provide public
4.
it receives. Data deemed by Applicantapplicant to be nonpublic data under State law
should be so designated or marked by Applicant. See Minn. Sat. Sections 13.59, Subd. 1,
respectivelyapplicant. See Minnesota Statutes, Chapter 13, as amended.
The application will be reviewed by the city staff to determine
5.
policies and ordinances and to consider the following:
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498470v1 JSB EL185-13498470v2 JSB EL185-13
a. The availability and applicability of other governmental gr
microloan programs.
b. Whether the proposed project after demolition will result i
building and zoning codes.
c. Whether it is desirous and in the bestinterests of the public to provide funding
for the project.
The HRA Commissioners will review each application in terms of i
6.
the goals of the citys Comprehensive Plan and Housing and Redev
Strategic Plan and in relation to the projects overall impact on the communitys
economy.
7.
The HRA Commissioners will evaluate the project application in t
a. Project Design - Evaluation of project design will include review of proposed
activities, time lines and a capacity to implement the project.
b. Financial Feasibility - Availability of funds, private involvement, financial
packaging and cost effectiveness.
Appropriate ratio of private funds to Microloan funds.
Sufficient cash flow to cover proposed debt service as demonstrated by
financial statements and projections.
Letter of Commitment from applicant pledging to complete the pro
during proposed project duration, if the loan application is app
Letter of Commitment from other financing sources stating terms and
conditions of their participation in the project if applicable.
c. All other information as required in the application and/or a
as may be requested by the Economic Development staff.
.
d. Project compliance with all city codes and policies
e. Microloan Objectives - the applicant must demonstrate how the proposed
activities will meet at least oneof the following objectives:
The project contributes to the fulfillment of the citys approve
economic development and/or redevelopment plans.
The project prevents or eliminates slums and blight.
The project brings a structure into compliance with an existing
violation.
8. A written request for an extension shall be accompanied by a copy of current financial
statements and a $500 upfront processing fee. The processing fe
processing expenses. The application for an extension beyond th
include a letter of denial from a conventional lender.
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498470v1 JSB EL185-13498470v2 JSB EL185-13
9. The HRA Commissioners will approve, deny, or request a resubmiss of any
8.
application submitted under this policy.
8.MICROLOAN POLICY REVIEW
The above criteria will be reviewed on an annual basis to ensure
this document are consistent with the economic development goals set forth
9. RIGHT OF REFUSAL
The HRA may deny any application if it is found not consistent w
Comprehensive Plan and Housing and Redevelopment Authority Strategic Plan, or
Mississippi Connections Plan and in relation to the projects ov
communitys economy.
PREFEREDPREFERREDSCORE:
10.
9.
Precedence will be placed on applications which meet a preferre
fulfill this requirement of reviewing applications in an objective and fair man
following criteria have been assigned maximum point values in or
loans. All assigned scores will be relative to scores awarded t
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498470v1 JSB EL185-13498470v2 JSB EL185-13
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.
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498470v1 JSB EL185-13498470v2 JSB EL185-13
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.
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498470v1 JSB EL185-13498470v2 JSB EL185-13
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
10.How many buildings are currently on site?
Residential _______ How many are occupied? ______ If vacant, for how long?
11.Year building(s) was/were built:
II. COST ANALYSIS
14.How much money are you seeking from the HRA? ________________________________
(May not exceed $15,000)
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.
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498470v1 JSB EL185-13498470v2 JSB EL185-13
III. SOURCES AND USES OF FUNDS
Demolition Uses of Funds for the Project (Budget Table)
Use of Funds (Activity)AmountDate 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.
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.
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498470v1 JSB EL185-13498470v2 JSB EL185-13
V. FINANCIAL INFORMATION
Historical Financial Statements:
22. Submit Financial statements should cover the past three
years. Financial Statements should include: Personal Tax Returns, Personal Financial
Statement, and details on existing debt agreements. A commitment letter from the primary
financial institution must accompany the application.
23.The maximum term of the loan cannot exceedAre you committed to using the property as
your primary residence for at least5 years.?
What is your proposed term? __________________________________
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498470v1 JSB EL185-13498470v2 JSB EL185-13
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
Three Years of Personal Tax Returns
1.
Details of Existing Debt Agreements
2.
_______H) Letter of Commitment from Applicant Pledging to Complete
During the Proposed Project Duration
_______I) Letter of Commitment from the Other Sources of Financ
Stating Terms and Conditions of their Participation in
Project
_______J) Application Fee of $500 [plus legal and any other out-of-pocket
costs incurred by the HRA]
______K) Inspection report by an appropriate local government wh
the property is cited for one or more enforceable housing, maintenance, or
building code violations.
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498470v1 JSB EL185-13498470v2 JSB EL185-13
VI. AGREEMENT
I / We certify that all information provided in this application
my/our knowledge. I / We authorize the City of Elk River Housing and Redevelopment Authority
to check credit references and verify financial and other inform
additional information as may be requested by the HRA.
APPLICANT SIGNATURE_________________________________________________
BY
DATE
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498470v1 JSB EL185-13498470v2 JSB EL185-13
APPLICATION REVIEW WORKSHEET
TO BE COMPLETED BY CITY STAFF
In the event of multiple applicants, and limited funds dedicated
1.
attached worksheet will be used to determine how the funds will ated.
The project meets the criteria set forth in Section IV of the Bl
Forgivable Residential Loan Policy. Check those which apply.
Upon completion of the project, the property and structures will-occupied
dwellings; (50 points)
The current primary structure constitutes a threat to public saf
maintenance, dilapidation, obsolescence, or abandonment; (10 poi
Upon completion of the demolition, the HRA reasonably expects th
improved and these improvements will result in redevelopment benefits
(10 points)
The project results in the sale and/or redevelopment of structur
as inspected by the appropriate local government and cited for oor more enforceable
housing, maintenance, or building code violations. ; (5 points)
Subtotal Section 1 (maximum 75 points)
2. Consideration of Capacity. Check those which apply. Must meet all four to score 20 points.
any boxes are unchecked.
Applicant included a realistic implementation /project schedule;
Applicant has the ability to administer and monitor project; (5
Applicant has the ability to conform to city, state and federal
Applicant has obtained a letter of commitment to finance the project from th
lender; (5 points)
Subtotal Section 2 (maximum 20 points)
3. Vacancy, Development Potential and Proximity to City Service
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498470v1 JSB EL185-13498470v2 JSB EL185-13
The length of vacancy of the property;
0-1 year: 1 point
o
2 years: 2 points
o
3 years: 3 points
o
4 years: 4 points
o
5+ years: 5 points
o
Subtotal Section 3 (maximum 10 points)
Subtotal Sections 1-3 (maximum 105 points)
Sub - Total Points: of a possible 105 points.
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498470v1 JSB EL185-13498470v2 JSB EL185-13
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