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2. HRSR 04-01-2019 The Elk River Vision A welcoming community with revolutionary and spirited resourcefulness, exceptional service, and community engagement that encourages and inspires prosperity Request for Action To Housing and Redevelopment Authority Item Number 2. Agenda Section Work Session Meeting Date April 1, 2019 Prepared by Amanda Othoudt, EDD Item Description Main Street and Gates Redevelopment Project Reviewed by Cal Portner, City Administrator Reviewed by Action Requested Receive an update on the Main and Gates redevelopment project and provide staff direction. Background/Discussion At their November 7, 2017, meeting, the HRA expressed interest in purchasing residential properties along east Main Street connecting to Highway 169 for a potential redevelopment project that would align with the Mississippi Connections Plan. There are seven properties in the proposed redevelopment area and four properties have been purchased. Staff is working with the property owners of two more properties within the redevelopment area. Interfund loan resolutions were approved by the HRA and Council in December in the event a TIF District is created to pay for acquisition, demolition and site prep costs incurred as part of this project. If the HRA plans to create a Redevelopment TIF District, a blight analysis will need to be conducted before the properties are demolished. To qualify as a redevelopment TIF District, more than 50% of the buildings will need to be found to be substandard. In addition, the Council will have to pass a resolution declaring the buildings to be substandard and either finance the demo costs itself (the city) or enter into an agreement with a private developer to demo the buildings. Attached is the statutory language on the process. Staff received estimates for the cost to demo the four properties of $74,150. Financial Impact The estimated budget for the project is $1,096,250 which includes acquisition, appraisal and demolition costs. The HRA will utilize reserve funds for the purchase and demolition of the properties. Attachments  Demolition Estimates  Summary TIF Districts, June 2017  Budget  Project Area  LHB Proposal PROPOSAL Date 1/3/2019 ESTIMATE # 8738REV City of Elk River 13065 Orono Parkway Elk River, MN 55330 326 Gates Ave N c/o City of Elk River 13065 Orono Parkway Elk River, MN 55330 Turf Enterprise Incorporated Rep Keith Phone #763-323-7111E-mail www.TurfEnterpriseInc.com TOTAL DUE Subtotal Sales Tax (7.525%) PO BOX 411 ELK RIVER, MN 55330-0411 I hereby accept this estimate for the project described above and authorize Turf Enterprise Inc. to begin work on or after __________, 20____. I understand that any changes hereafter that result in additional supplies, materials and labor will be subject to an increase of price above and/or beyond the estimated price shown on this orginal estimate. Any such changes should be advised and approved in advance. Deposit of 50% of total estimate due before start date. Balance will be due upon receipt in full upon satisfactory completion of this project. "COMMITTED TO SERVICE. A COMPANY YOU CAN TRUST" X____________________________DATE_________ IN WITNESS WHEREOF,the Contractor and Owner hereby represent that they have read this Pricing Agreement , and agree to its terms. Turf Enterprise Inc X_____________________________DATE_________ Prices listed herein include all labor, materials, installation, and taxes. This proposal may be withdrawn if not accepted within 30 days. All work to be completed in a workmanlike manner according to standard practices. Any alterations or deviations from the above specifications involving extra costs will be executed only upon written orders, and will become an extra charge over and above the estimate. All agreements contingent upon strikes, accidents or delays beyond our control. Owner to carry fire, wind damage and other necessary insurance. Our workers are fully covered by Workmen's Compensation insurance. Keith@TurfEnterpriseInc.com Description Qty Total Demolition of 326 Gates Ave NW Elk River MN 55330 Proposed Demolition of two story Single Family Home & Detached garage INCLUDED - One time Mobilization IN and OUT - Demolition of structure & foundations - Removal of impervious surfaces limited to parking lot & sidewalk - Sub-grade site - Export demolition debris - Temporary Erosion control - Winter Conditions - Utilities to include Gas and Power disconnect - Top seed disturbed areas of site work EXCLUDED - Asbestos testing, removal or disposal - Landscape renovation, sod or trees - Tree removal - Misc personal items within property - Soil correction 1 16,700.00 ***Sewer & Water disconnect at curbstop add $1500 0.00 ***Sewer & Water disconnect at Main (Under street/road easement) TBD 0.00 $16,700.00 $16,700.00 $0.00 PROPOSAL Date 1/3/2019 ESTIMATE # 8735REV City of Elk River 13065 Orono Parkway Elk River, MN 55330 City of Elk River c/o 414 Main Street NW Elk River, MN 55330 USA Turf Enterprise Incorporated Rep Keith Phone #763-323-7111E-mail www.TurfEnterpriseInc.com TOTAL DUE Subtotal Sales Tax (7.525%) PO BOX 411 ELK RIVER, MN 55330-0411 I hereby accept this estimate for the project described above and authorize Turf Enterprise Inc. to begin work on or after __________, 20____. I understand that any changes hereafter that result in additional supplies, materials and labor will be subject to an increase of price above and/or beyond the estimated price shown on this orginal estimate. Any such changes should be advised and approved in advance. Deposit of 50% of total estimate due before start date. Balance will be due upon receipt in full upon satisfactory completion of this project. "COMMITTED TO SERVICE. A COMPANY YOU CAN TRUST" X____________________________DATE_________ IN WITNESS WHEREOF,the Contractor and Owner hereby represent that they have read this Pricing Agreement , and agree to its terms. Turf Enterprise Inc X_____________________________DATE_________ Prices listed herein include all labor, materials, installation, and taxes. This proposal may be withdrawn if not accepted within 30 days. All work to be completed in a workmanlike manner according to standard practices. Any alterations or deviations from the above specifications involving extra costs will be executed only upon written orders, and will become an extra charge over and above the estimate. All agreements contingent upon strikes, accidents or delays beyond our control. Owner to carry fire, wind damage and other necessary insurance. Our workers are fully covered by Workmen's Compensation insurance. Keith@TurfEnterpriseInc.com Description Qty Total Demolition of 414 Main Street NW Elk River MN 55330 Proposed Demolition of Single story Single Family Home, Detached garage & Chainlink Fence INCLUDED - One time Mobilization IN and OUT - Demolition of structure & foundations - Removal of impervious surfaces limited to parking lot & sidewalk - Sub-grade site - Export demolition debris - Temporary Erosion control - Winter Conditions - Utilities to include Gas and Power disconnect - Top seed disturbed areas of site work EXCLUDED - Asbestos testing, removal or disposal - Landscape renovation, sod or trees - Tree removal - Misc personal items within property - Soil correction 1 18,150.00 ***Sewer & Water disconnect at curbstop add $1500 ***Sewer & Water disconnect at Main (Under street/road easement) TBD $18,150.00 $18,150.00 $0.00 PROPOSAL Date 1/3/2019 ESTIMATE # 8736REV City of Elk River 13065 Orono Parkway Elk River, MN 55330 City of Elk River c/o 426 Main Street NW Elk River, MN 55330 Turf Enterprise Incorporated Rep Keith Phone #763-323-7111E-mail www.TurfEnterpriseInc.com TOTAL DUE Subtotal Sales Tax (7.525%) PO BOX 411 ELK RIVER, MN 55330-0411 I hereby accept this estimate for the project described above and authorize Turf Enterprise Inc. to begin work on or after __________, 20____. I understand that any changes hereafter that result in additional supplies, materials and labor will be subject to an increase of price above and/or beyond the estimated price shown on this orginal estimate. Any such changes should be advised and approved in advance. Deposit of 50% of total estimate due before start date. Balance will be due upon receipt in full upon satisfactory completion of this project. "COMMITTED TO SERVICE. A COMPANY YOU CAN TRUST" X____________________________DATE_________ IN WITNESS WHEREOF,the Contractor and Owner hereby represent that they have read this Pricing Agreement , and agree to its terms. Turf Enterprise Inc X_____________________________DATE_________ Prices listed herein include all labor, materials, installation, and taxes. This proposal may be withdrawn if not accepted within 30 days. All work to be completed in a workmanlike manner according to standard practices. Any alterations or deviations from the above specifications involving extra costs will be executed only upon written orders, and will become an extra charge over and above the estimate. All agreements contingent upon strikes, accidents or delays beyond our control. Owner to carry fire, wind damage and other necessary insurance. Our workers are fully covered by Workmen's Compensation insurance. Keith@TurfEnterpriseInc.com Description Qty Total Demolition of 426 Main Street NW Elk River MN 55330 Proposed Demolition of Single story Single Family Home & Detached garage INCLUDED - One time Mobilization IN and OUT - Demolition of structure & foundations - Removal of impervious surfaces limited to parking lot & sidewalk - Sub-grade site - Export demolition debris - Temporary Erosion control - Winter Conditions - Utilities to include Gas and Power disconnect - Top seed disturbed areas of site work EXCLUDED - Asbestos testing, removal or disposal - Landscape renovation, sod or trees - Tree removal - Misc personal items within property - Soil correction 1 18,800.00 ***Sewer & Water disconnect at curbstop add $1500 ***Sewer & Water disconnect at Main (Under street/road easement) TBD $18,800.00 $18,800.00 $0.00 PROPOSAL Date 1/3/2019 ESTIMATE # 8737REV City of Elk River 13065 Orono Parkway Elk River, MN 55330 City of Elk River c/o 430 Main Street NW Elk River Turf Enterprise Incorporated Rep Keith Phone #763-323-7111E-mail www.TurfEnterpriseInc.com TOTAL DUE Subtotal Sales Tax (7.525%) PO BOX 411 ELK RIVER, MN 55330-0411 I hereby accept this estimate for the project described above and authorize Turf Enterprise Inc. to begin work on or after __________, 20____. I understand that any changes hereafter that result in additional supplies, materials and labor will be subject to an increase of price above and/or beyond the estimated price shown on this orginal estimate. Any such changes should be advised and approved in advance. Deposit of 50% of total estimate due before start date. Balance will be due upon receipt in full upon satisfactory completion of this project. "COMMITTED TO SERVICE. A COMPANY YOU CAN TRUST" X____________________________DATE_________ IN WITNESS WHEREOF,the Contractor and Owner hereby represent that they have read this Pricing Agreement , and agree to its terms. Turf Enterprise Inc X_____________________________DATE_________ Prices listed herein include all labor, materials, installation, and taxes. This proposal may be withdrawn if not accepted within 30 days. All work to be completed in a workmanlike manner according to standard practices. Any alterations or deviations from the above specifications involving extra costs will be executed only upon written orders, and will become an extra charge over and above the estimate. All agreements contingent upon strikes, accidents or delays beyond our control. Owner to carry fire, wind damage and other necessary insurance. Our workers are fully covered by Workmen's Compensation insurance. Keith@TurfEnterpriseInc.com Description Qty Total Demolition of 430 Main Street NW Elk River MN 55330 Proposed Demolition of Single story Single Family Home w/Asphalt parking lot INCLUDED - One time Mobilization IN and OUT - Demolition of structure & foundations - Removal of impervious surfaces limited to parking lot & sidewalk - Sub-grade site - Export demolition debris - Temporary Erosion control - Winter Conditions - Utilities to include Gas and Power disconnect - Top seed disturbed areas of site work EXCLUDED - Asbestos testing, removal or disposal - Landscape renovation, sod or trees - Tree removal - Misc personal items within property - Soil correction 1 14,500.00 ***Sewer & Water disconnect at curbstop add $1500 0.00 ***Sewer & Water disconnect at Main (Under street/road easement) TBD 0.00 $14,500.00 $14,500.00 $0.00 MN Statute 469.174 Subd. 10. Definition of a Redevelopment district. "Redevelopment district" means a type of tax increment financing district consisting of a project, or portions of a project, within which the authority finds by resolution that one or more of the following conditions, reasonably distributed throughout the district, exists: (1) parcels consisting of 70 percent of the area of the district are occupied by buildings, streets, utilities, paved or gravel parking lots, or other similar structures and more than 50 percent of the buildings, not including outbuildings, are structurally substandard to a degree requiring substantial renovation or clearance; (2) the property consists of vacant, unused, underused, inappropriately used, or infrequently used rail yards, rail storage facilities, or excessive or vacated railroad rights-of-way; (3) tank facilities, or property whose immediately previous use was for tank facilities, as defined in section 115C.02, subdivision 15, if the tank facilities: (i) have or had a capacity of more than 1,000,000 gallons; (ii) are located adjacent to rail facilities; and (iii) have been removed or are unused, underused, inappropriately used, or infrequently used; or (4) a qualifying disaster area, as defined in subdivision 10b. For purposes of this subdivision, "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. A building is not structurally substandard if it is in compliance with the building code applicable to new buildings or could be modified to satisfy the building code at a cost of less than 15 percent of the cost of constructing a new structure of the same square footage and type on the site. The municipality may find that a building is not disqualified as structurally substandard under the preceding sentence on the basis of reasonably available evidence, such as the size, type, and age of the building, the average cost of plumbing, electrical, or structural repairs, or other similar reliable evidence. The municipality may not make such a determination without an interior inspection of the property, but need not have an independent, expert appraisal prepared of the cost of repair and rehabilitation of the building. An interior inspection of the property is not required, if the municipality finds that (1) the municipality or authority is unable to gain access to the property after using its best efforts to obtain permission from the party that owns or controls the property; and (2) the evidence otherwise supports a reasonable conclusion that the building is structurally substandard. Items of evidence that support such a conclusion include recent fire or police inspections, on-site property tax appraisals or housing inspections, exterior evidence of deterioration, or other similar reliable evidence. Written documentation of the findings and reasons why an interior inspection was not conducted must be made and retained under section 469.175, subdivision 3, clause (1). Failure of a building to be disqualified under the provisions of this paragraph is a necessary, but not a sufficient, condition to determining that the building is substandard. A parcel is deemed to be occupied by a structurally substandard building for purposes of the finding under paragraph (a) or by the improvements described in paragraph (e) if all of the following conditions are met: (1) the parcel was occupied by a substandard building or met the requirements of paragraph (e), as the case may be, within three years of the filing of the request for certification of the parcel as part of the district with the county auditor; (2) the substandard building or the improvements described in paragraph (e) were demolished or removed by the authority or the demolition or removal was financed by the authority or was done by a developer under a development agreement with the authority; (3) the authority found by resolution before the demolition or removal that the parcel was occupied by a structurally substandard building or met the requirements of paragraph (e) and that after demolition and clearance the authority intended to include the parcel within a district; and (4) upon filing the request for certification of the tax capacity of the parcel as part of a district, the authority notifies the county auditor that the original tax capacity of the parcel must be adjusted as provided by section 469.177, subdivision 1, paragraph (f). For purposes of this subdivision, a parcel is not occupied by buildings, streets, utilities, paved or gravel parking lots, or other similar structures unless 15 percent of the area of the parcel contains buildings, streets, utilities, paved or gravel parking lots, or other similar structures. For districts consisting of two or more noncontiguous areas, each area must qualify as a redevelopment district under paragraph (a) to be included in the district, and the entire area of the district must satisfy paragraph (a). The term of a Redevelopment District is 25 years after receipt of first increment. MN Statute 469.174 Subd. 10a. Definition of a Renewal and Renovation District. "Renewal and renovation district" means a type of tax increment financing district consisting of a project, or portions of a project, within which the authority finds by resolution that: (1)(i) parcels consisting of 70 percent of the area of the district are occupied by buildings, streets, utilities, paved or gravel parking lots, or other similar structures; (ii) 20 percent of the buildings are structurally substandard; and (iii) 30 percent of the other buildings require substantial renovation or clearance to remove existing conditions such as: inadequate street layout, incompatible uses or land use relationships, overcrowding of buildings on the land, excessive dwelling unit density, obsolete buildings not suitable for improvement or conversion, or other identified hazards to the health, safety, and general well-being of the community; and (2) the conditions described in clause (1) are reasonably distributed throughout the geographic area of the district. For purposes of determining whether a building is structurally substandard, whether parcels are occupied by buildings, streets, utilities, paved or gravel parking lots, or other similar structures, or whether noncontiguous areas qualify, the provisions of subdivision 10 apply. The term of a Renewal and Renovation District is 15 years after receipt of first increment. MN Statute 469.176 Subd. 4j. Spending Limitations for a Redevelopment or Renewal and Renovation District. At least 90 percent of the revenues derived from tax increments from a redevelopment district or renewal and renovation district must be used to finance the cost of correcting conditions that allow designation of redevelopment and renewal and renovation districts under section 469.174. These costs include, but are not limited to, acquiring properties containing structurally substandard buildings or improvements or hazardous substances, pollution, or contaminants, acquiring adjacent parcels necessary to provide a site of sufficient size to permit development, demolition and rehabilitation of structures, clearing of the land, the removal of hazardous substances or remediation necessary to development of the land, and installation of utilities, roads, sidewalks, and parking facilities for the site. The allocated administrative expenses of the authority, including the cost of preparation of the development action response plan, may be included in the qualifying costs. Project:Parcel AddressEstimated Acquisition CostsActual Acquisition Costs & Closing CostsAppraisals Estimated DemoDemo Estimate Received75‐401‐0130 430 Main Street 170,186.00$                    1,000.00$             20,000.00$             16,000.00$              75‐401‐0135 426 Main Street 121,392.00$                    450.00$                 20,000.00$             20,300.00$              75‐401‐0140 420 Main Street 450.00$                 20,000.00$            75‐401‐0145 414 Main Street 121,922.00$                    1,000.00$             20,000.00$             19,650.00$              75‐401‐0105 326 Gates Ave 111,238.00$                    450.00$                 20,000.00$             18,200.00$              75‐401‐0110 425 3rd Street 450.00$                 20,000.00$            75‐401‐0115 419 3rd Street 450.00$                 20,000.00$            Totals 992,000.00$                         524,738.00$                    4,250.00$             100,000.00$          74,150.00$              Total Project Budget 1,096,250Utilities 577.19$              Maintenance 5,065.00$          Property Taxes 6,390.32$          Insurance 1,830.00$          Total 13,862.51$        Gates/Main Street Redevelopment Project 13 0.7 © Bolton & Menk, Inc - Web GIS 0 Legend Redevelopment Area A - Main Street/Gates/3rd Street NW This drawing is neither a legally recorded map nor a survey and is not intended to be used as one. This drawing is a compilation of records, information, and data located in various city, county, and state offices, and other sources affecting the area shown, and is to be used for reference purposes only. The City of Elk River is not responsible for any inaccuracies herein contained. Disclaimer: 11/22/2017 9:59 AM 91 Feet City Limits Urban Service Area Parcels (1-24-2017) Park Areas January 7, 2019 Amanda Othoudt Economic Development Director City of Elk River 13065 Orono Parkway Elk River, MN 55330 MAIN AND GATES REDEVELOPMENT TIF ANALYSIS Dear Amanda, Thank you for the opportunity to submit a proposal for the Main and Gates 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 Elk River Main and Gates TIF Analysis – January 7, 2019 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 Preservation 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 Elk River Main and Gates TIF Analysis – January 7, 2019 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 Elk River Main and Gates TIF Analysis – January 7, 2019 ASSUMPTIONS 1. LHB will inspect up to seven buildings on seven parcels. 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) $276/hour Project Manager $165/hour Project Architect/Inspector $145/hour Project Administrator $85/hour We will work on an hourly basis not to exceed Thirteen Thousand Eight Hundred dollars ($13,800) including reimbursable expenses for the inspection of the properties, including a full report outlining the findings for the proposed TIF District. 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. Page: 5 Elk River Main and Gates TIF Analysis – January 7, 2019 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. 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. Page: 6 Elk River Main and Gates TIF Analysis – January 7, 2019 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. By: (Signature) By: (Signature) Its: (Title) Its: Principal (Title) Name: (Printed Name) Name: Michael A. Fischer, AIA (Printed Name) C:\Users\MAFISCH\Documents\MIKE DOCUMENTS\LHB\TIF\TIF Agreements\2019 Agreements\Elk River Main and Gates Redevelopment TIF Analysis 1-7-19.docx Redevelopment ProjectMain and Gates City Council Project Area City Council Project Budget City Council rdrd Acquired the following propertiesProperties left to acquire326 Gates419 3425 3426 Main414 Main426 Main430 Main Critical Properties Property Inventory and City Council Critical Properties Property Inventory and City Council City or Developer to pay cost for demo?to cost $74,150.Preliminary costs to demo HRA properties estimated of demo.Establishing a TIF District to reimburse city for cost Blight Analysis –LHB $13,800 Demolition and Shovel Ready Site City Council Property Use?Minnesota Real Estate Journal (MREJ) EventsRealtorPush site via Catalyst/MnCAR Marketing to Developers City Council