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7.3. HRA AGENDA 05-07-2018 ��i Eof lk — - Request for Action River To Item Number Housing and Redevelopment Authority 7.3 Agenda Section Meeting Date Prepared by General Business May 7, 2018 Amanda Othoudt,EDD Item Description Reviewed by Downtown TH 10 and Lowell Ave TIF Analysis Cal Portner, City Administrator Proposal Reviewed by Action Requested Approve,by motion,the proposal by LHB,Inc. to perform a Redevelopment TIF analysis. Background/Discussion The City of Elk River is exploring the redevelopment of several parcels in downtown Elk River near the ISD #728 Building and Elk River Meats. As part of the project,the city is pursuing a redevelopment plan for the area. To determine the boundary of this redevelopment plan,it is necessary to inspect each of the properties within the proposed development district. At the April 2, 2018, meeting,it was the consensus of the HRA to proceed with allowing LHB to survey and inspect the properties in the downtown area and bring that information back to the HRA and City Council to determine the next steps in this redevelopment process. LHB provided the city with a proposal to perform an inspection of the former ISD #728 and Elk River Meats properties within the proposed district. Both property owners have been contacted and are supportive of the project and have consented to the inspection. LHB will inspect both the interior and exterior of the building and evaluate the coverage of the district. In order for the city to consider this area as a redevelopment TIF district, 70% of the area of the district must be occupied by buildings, streets,utilities, or other similar structures, and more than 50% of the buildings must be structurally substandard. A building is structurally substandard,if it is not in compliance with the building code for new buildings or could be brought into compliance for more than 15% of the cost of building a new building of the same type. In the event that one of the buildings would not qualify within the proposed redevelopment district under the substandard test,it may be necessary to include two additional buildings into the district. The buildings in consideration are the properties along the west side of Jackson Ave. LHB will be in the area in the next few weeks to perform inspections of several properties within the proposed development district. The Elk River Vision A Y�elcoming community nvith revolutionary and spirited resourcefulness, exceptional P U W E H E o s r service, and community engagement that encourages and inspires prosperity ,g /` UR Financial Impact The cost of the proposal was not budgeted in 2018. However, the cost of the proposal could be paid by savings in other line items which are realized at the end of the year in combination with HRA reserve funds if necessary. Attachments ■ LHB Proposal (April 11, 2018) ■ Map of Proposed Project Area ■ Alternative Project Area Map April 11, 2018 Amanda Othoudt Economic Development Director City of Elk River 13065 Orono Parkway Elk River, MN 55330 ELK RIVER TH 10 AND LOWELL REDEVELOPMENT TIF ANALYSIS Dear Amanda, Thank you for the opportunity to submit a proposal for a Redevelopment TIF analysis in Elk River, Minnesota. LHB is a full-service architecture, planning and engineering firm with 250 employees in our Minneapolis, Duluth, Cambridge, and Superior, Wisconsin offices. Our Government studio has extensive experience working with local governments on their planning, design, architectural and engineering needs. Having been personally involved on various city councils and planning commissions, I understand how cities function and the importance of maintaining the support of your appointed and elected officials and community throughout the process. PREVIOUS EXPERIENCE LHB has significant experience with a variety of inspection and facility assessment projects, including the analysis of over 200 TIF Districts. Examples include: • City of Columbia Heights TIF inspection services • City of St. Paul TIF inspection services • City of St. Anthony Village, NW Quadrant TIF inspection services • City of St. Louis Park TIF District inspection services • City of Mound TIF District “1-2” inspection services • City of Osseo TIF inspection services • City of New Richmond, WI TIF inspection services • Minnesota State Colleges and Universities system facility assessments • State of Minnesota Facility Assessments • Property Condition Assessments for the St. Paul Department of Planning and Economic Development (Franklin/Emerald Neighborhood) • Condition surveys for every DNR facility in the State of Minnesota, 2014 Page: 2 TH 10 and Lowell TIF Analysis – April 11, 2018 TEAM CREDENTIALS Michael A. Fischer, AIA, LEED AP - Project Principal/TIF Analyst Michael has 32 years of experience as project principal, project manager, project designer and project architect on planning, urban design, educational, commercial and governmental projects. He has become an expert on Tax Increment Finance District analysis assisting over 100 cities with strategic planning for TIF Districts. He is an Architectural Principal at LHB and currently leads the Minneapolis office. Michael completed a two-year Bush Fellowship, studying at MIT and Harvard in 1999, earning Masters degrees in City Planning and Real Estate Development from MIT. He has served on more than 50 committees, boards and community task forces, including a term as a City Council President and as Chair of a Metropolitan Planning Organization. Most recently, he served as Chair of the Edina, Minnesota planning commission and is currently a member of the Edina city council. Michael has also managed and designed several award-winning architectural projects, and was one of four architects in the Country to receive the AIA Young Architects Citation in 1997. Phil Waugh – Project Manager/TIF Analyst Philip is a project manager with 13 years of experience in historic preservation, building investigations, material research, and construction methods. He previously worked as a historic preservationist and also served as the preservation specialist at the St. Paul Heritage Preservation Commission. Currently, Phil sits on the Board of Directors for the Prese rvation Alliance of Minnesota. His current responsibilities include project management of historic preservation projects, performing building condition surveys and analysis, TIF analysis, writing preservation specifications, historic design reviews, writing Historic Preservation Tax Credit applications, preservation planning, and grant writing. Jonathan Pettigrew, AIA – Inspector Jonathan Pettigrew has worked in architecture and construction for the last twenty years in Minnesota, California and Washington. His experience includes a variety of commercial and residential project types and scales, from single-family homes to a 300,000 square foot multi-building office complex. He has significant experience in code reviews and building systems inspections and analysis. Jonathan received his Minnesota architect’s license in 2004. He brings a strong interest in sustainability and an eye for detail to his work. He enjoys working with clients, consultants and contractors to bring projects together successfully. Phil Fisher – Inspector For 35 years, Phil Fisher worked in the field of Building Operations in Minnesota including White Bear Lake Area Schools. At the University of Minnesota, he earned his Bachelor of Science in Industrial Technology. He is a Certified Playground Safety Inspector, Certified Plant Engineer, and is trained in Minnesota Enterprise Real Properties (MERP) Facility Condition Assessment (FCA). His FCA training was recently applied to the Minnesota Department of Natural Resources Facilities Condition Assessment project involving over 2,000 buildings. Page: 3 TH 10 and Lowell TIF Analysis – April 11, 2018 SCOPE OF SERVICES LHB will provide the following services based upon the terms and conditions described below. 1. Survey the TIF District to determine if it meets applicable coverage test. A. To meet the coverage test, parcels consisting of 70 percent of the area of the district must be “occupied” by buildings, streets, utilities, or paved or gravel parking lots. B. A parcel is not considered “occupied” unless at least 15% of its total area contains improvements. 2. Conduct a visual review of building(s) interior and exterior: A. Obtain property owner’s consent for inspection. B. Document property conditions relative to Minnesota Statutes Section 469.174 Subdivision 10. 3. Estimate building(s) replacement cost: A. Replacement cost is the cost of constructing a new structure of the same square footage and type on the site. B. A base cost will be calculated by establishing the building class, type and construction quality. C. Identify amenities, which increase the value of the building over the standard construction quality level. D. Review building permits for each parcel. E. The base cost and cost of amenities will be totaled to determine the replacement cost for the property. 4. Evaluate building(s) existing condition: A. “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.” 5. Determine Building(s) Code Deficiencies: A. Determine technical conditions, which are not in compliance with current building code applicable to new buildings. B. Provide opinion of probable cost to correct identified deficiencies. C. Compare cost of deficiency corrections to replacement value of building. 6. Prepare and deliver report: A. Prepare a written narrative analysis of the District describing why the property within the District does or does not meet the criteria as “structurally substandard” as established in Minnesota Statutes Section 469.174, subdivision 10. B. Deliver final reports via email PDF. Page: 4 TH 10 and Lowell TIF Analysis – April 11, 2018 ASSUMPTIONS 1. LHB will inspect up to six total buildings, including five commercial structures and one institutional/office building. We will inspect both the interior and exterior of the buildings and evaluate the coverage of the parcel(s). The Client will provide the following: • A scalable parcel map and/or aerial photo of the area to be inspected, including GIS information with specific parcel data, including parcel area measured in square feet. • A list of all parcels affected including name of owner, current known business or resident name and address. • Available information regarding the condition of the structures, including past building permit information, and known code violations. STANDARD OF CARE LHB shall perform services consistent with the professional skill and care ordinarily provided by other professionals practicing in the same or similar locality under the same or similar circumstances. Any report prepared by LHB represents a professional opinion based upon information available and arrived at in accordance with generally accepted professional standards. Other than as contained in the report, LHB makes no express or implied warranty. Short of complete deconstruction to examine every element at every location, no assessment can reveal all conditions which may exist. Additional testing, assessment, or demolition, may uncover conditions which would make it necessary to modify LHB’s conclusions or recommendations. Any report prepared for the purpose described in this Agreement is for the exclusive use by those to whom the report is addressed. LHB will not and cannot be held liable for the unauthorized reliance upon this report by any third party. COMPENSATION We propose to work on an hourly basis with the following key staff: Project Principal, Michael Fischer (TIF analysis) $270/hour Project Manager $165/hour Project Architect/Inspector $145/hour Project Administrator $85/hour 1. We will work on an hourly basis not to exceed Five Thousand Eight Hundred dollars ($5,800) including reimbursable expenses for the inspection of the Elk River Meat Market and School District facility, including a full report outlining the findings for the proposed TIF District. If one or both buildings does not appear to be substandard, we will also inspect four additional commercial buildings fronting Jackson Avenue NW. In this scenario: 2. We will work on an hourly basis not to exceed Eleven Thousand Four Hundred dollars ($11,400) including reimbursable expenses for the inspection of six buildings, including a full report outlining the findings for the proposed TIF District. Page: 5 TH 10 and Lowell TIF Analysis – April 11, 2018 Payments are due and payable upon receipt of our invoice. Unpaid balances 60-days after invoice date shall bear interest at the rate of 8% annually. Failure to make timely payment to LHB is a material breach of this Agreement and may, at LHB’s sole discretion, result in a suspension or termination of services, and may, at LHB’s sole discretion, result in the termination of the Client’s limited license authorization to use LHB’s copyrighted Instruments of Service. ADDITIONAL SERVICES If there is a material change in the circumstances or conditions that affect the scope of work, schedule, allocation of risks or other material terms, LHB shall notify the Client. The Client and LHB shall promptly and in good faith enter into negotiation to address the changed conditions including equitable adjustment to compensation. The fees and costs for any additional services will be based upon LHB’s Standard Hourly Rates and Standard Reimbursable Schedule. SCHEDULE The final report typically requires 30-45 days to complete from the time we are authorized to start. We can make preliminary conclusions prior to our full report being completed if necessary to allow other consultants and the client to begin their work. CONSEQUENTIAL DAMAGES LHB and Client waive consequential damages for claims, disputes or other matters in question arising out of or relating to this Agreement. LIMIT OF LIABILITY To the maximum extent permitted by law, the Client agrees to limit LHB’s liability for the Client’s damages to the sum of Ten Thousand Dollars ($10,000) or the amount of fee paid to LHB, whichever is greater. This limitation shall apply regardless of the cause of action or legal theory pled or asserted. USE OF LHB’S DOCUMENTS The documents prepared by LHB are solely for use with respect to this project. All documents prepared by LHB pursuant to this Agreement are the instruments of services to the Project and LHB shall retain all common law, statutory and other reserved rights, including copyright. LHB grants to Client a nonexclusive limited license solely for the purposes of evaluating and executing the Project. The Client shall not assign, delegate, sublicense, or otherwise transfer any license granted herein to another party. To the extent the documents are transferred or are modified, supplemented or otherwise altered by the Client, subsequent design professional, or any other party, the Client agrees to indemnify, defend and hold LHB harmless for any claims, demands, damages or causes of action arising out of such transfer or modification, supplementation or alteration. OTHER CONDITIONS The laws of the State of Minnesota shall govern this Agreement. Any provision of this agreement later held to violate a law or regulation shall be deemed void. All remaining provisions shall continue in force. Page: 6 TH 10 and Lowell TIF Analysis – April 11, 2018 The Client recognizes that materials prepared by others may be subject to copyright protection and warrants to LHB that any documents provided by the Client do not infringe upon the copyright held by another. Unless the parties mutually agree otherwise, the parties shall endeavor to settle disputes by mediation. A demand for mediation shall be filed, in writing, within a reasonable period of time after a claim, dispute or other matter in question has arisen. LHB and the Client, acting through the Client's legal representative, will, to the fullest reasonable extent, cooperate and coordinate efforts in preparing necessary responses to any third party challenges to the inspections. The Client agrees to pay LHB its regular hourly rates for time spent as a result of a third party legal challenge If the terms and conditions of this Agreement are acceptable, please sign and return a copy to LHB. CLIENT NAME LHB, INC. 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