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6. HRSR 03-06-2006ITEM # 6. ver MEMORANDUM TO: Housing & Redevelopment Authority Heritage Preservation Commission FROM: Catherine Mehelich, Director of Economic DevelopmentG~~~ DATE: March 6, 2006 SUBJECT: Discuss Amendments to the Redevelopment Financing Program of the Micro Loan Fund Policy Attachments • February 13, 2006 Staff Report to the EDA re: Amendments to Micro Loan Fund Policy • 15C Draft Revised Micro Loan Fund Policy dated February 2006 Background The Economic Development Authority is considering amendments to its Micro Loan Fund Policy which provides loans for manufacturing business expansion under the Industrial Incentive Program and for the rehabilitation of Downtown District buildings under the Redevelopment Financing Program. The Redevelopment Financing Program has been utilized twice in the past 10 years. Issue The EDA has requested both the HRA and HPC's input on the terms of Redevelopment Financing Program and how it may be better utilized to encourage the restoration of commercial buildings in the Downtown District. City E ver MEMORANDUM TO: Economic Development Authority FROM: Catherine Mehelich, Director of Economic Development DATE: February 13, 2006 SUBJECT: Discuss Draft Amendments to Micro Loan Fund Policy Attachments • EDA Finance Committee Minutes, September 28, 2005 • 1" Draft Revised Micro Loan Fund Policy dated February 2006 Background At its September 28, 2005 meeting, the EDA Finance Committee discussed the level of financial assistance provided to manufacturing companies entering the City of Elk River. The meeting minutes are attached. Issue Part of the Finance Committee's discussion led to the following suggested amendments to the Micro Loan Fund Policy: • All public financing assistance being requested for a project must be included in the project's sources and uses at the time of application. • Clarified that job creation goals could not be double-counted if the project is receiving more than one type of public financing assistance. • Increase the amortization for real estate uses to 20 years. In addition the draft policy includes several staff suggested revisions. Staff Recommendation Staff recommends that the EDA review the draft revised policy and provide feedback on any additional revisions. Following the EDA's input staff will make the revisions and bring a final version back for EDA adoption at next month's regular meeting. Staff is also reviewing the City's Business Subsidy Policy, Tax Increment Financing Policy and Tax Rebate Financing Policy for amendments to be presented to the EDA for consideration in the next couple months. City of .. Elk River The Light Industrial Hub of the NorthzvestMetro Economic Development Micro Loan Fund Policy & Guidelines And Application 1s` Draft February 2006 Revised: June 2004 September 1999 Economic Development Authority for the City of Elk River 13065 Orono Parkway Elk River, NIN 55330 763.635.1040 ELK RIVER ECONOMIC DEVELOPMENT MICRO LOAN FUND POLICY & GUIDELINES 1`~ Draft February 2006 I. PURPOSE The Economic Development Authority for the City of Elk River (EDA) recognizes the need to stimulate private sector investment into manufacturing facilities and equipment in order to create new jobs, boost productivity and retain existing jobs for local residents. Additionally, the need exists to encourage investment in the expansion and/or rehabilitation of commercial and retail buildings in order to maintain the economic viability of Elk River's Downtown District . Subsequently, the purpose of this program is to provide low interest, long-term (i.e. greater than one year) loans as incentives for industrial development within the City of Elk River and to encourage commercial and retail business owners in the Downtown District to rehabilitate their existing buildings. II. LOAN PROGRAMS In order to meet the economic and community development objectives of the EDA, two distinct loan programs exist within the Micro Loan Fund to promote business growth in Elk River. Industrial Incentive Program Purpose: The purpose of the Industrial Incentive Program is to encourage industrial development that supports the tax base and brings quality jobs to the city. Amount: Up to $100,000 of secondary financing not to exceed 20% of the project cost. Equity: Must have private-sector commitments for 50% of the project cost. Borrower to provide 10% or more of project financing. Rate: Fixed; 2 points below the lowest prime rate published in the Wall Street Journal the day the loan is closed, or 3%, whichever is greater. Term: Financing with a balloon payment in 5-years. The balloon payment must not be longer than the balloon payment of the participating bank. Loans may be amortized up to the following limits: 20-years on real estate uses; 10-years on equipment uses. Extension: In the event that the Borrower is unable to obtain conventional financing to replace the Micro Loan at the end of five years, the loan Elk River Economic Development Authority Page 2 of 15 Micro Loan Fund Policy & Guidelines 1'~ Draft February 2006 maybe extended up to two additional years at a market rate of interest. Criteria: 1. Borrower must be an industrial firm and create one new full-time job for each $20,000 loaned within 2 years. Said jobs must pay a minimum wage of $10.00 per hour excluding benefits required by law. Loans in excess of $75,000 shall meet the attached City of Elk River Business Subsidy Policy for new job and wage goals, as well as a 5-year location requirement. In the case where the multiple sources of public financing are requested (e.g. Micro Loan and Tax Increment Financing) job creation goals shall not be double-counted. 2. Borrower must comply with the provisions of the city's Industrial and Business Park zoning ordinances as applicable. Redevelopment Financing Program Purpose: The Redevelopment Financing Program is available to business and property owners in the Downtown District (DD) for the rehabilitation and restoration of their buildings. Amount: Up to $50,000 of secondary financing (not to exceed 40% of the project cost. Equity: Must have private-sector commitments for 50% of the project cost. Borrower to provide 10% or more of project financing. Rate: Fixed; 2 points below the lowest prime rate published in the Wall Street Journal the day the loan is closed, or 2%, whichever is greater. Term: Financing with a balloon payment in up to 3-years. Loans may be amortized up to the following limits: 20-years on real estate uses; 10-years on equipment uses. Extension: In the event that the Borrower is unable to obtain conventional financing to replace the Micro Loan at the end of three years, the loan may be extended up to two additional years at a market rate of interest. Criteria: 1. At a minimum, 20% of Micro Loan dollars must be used for the improvement of the building facades. 2. Borrower must be located in the Downtown District (DD) (see attached magi). Elk River Economic Development Authority Page 3 of 15 Micro Loan Fund Policy & Guidelines 15C Draft February 2006 III. USES 1. Permitted Fund Uses: a. Building construction b. Land acquisition c. Machinery d. Furniture, fixtures, and equipment (FF&E) e. Renovation and modernization of buildings £ Exterior renovation of retail, commercial and industrial buildings g. Public infrastructure needed for economic development expansions h. Investment real estate with a minimum of 50% of the space pre-leased 2. Ineligible Fund Uses: a. Expenditures for the construction and/or renovation of residential units b. Working capital c. Refinancing of existing debt d. Inventory IV. BUSINESSES ELIGIBILITY Any project meeting the above criteria, and located or proposed to be located within the city limits of Elk River as defined by this program, may be eligible for an Economic Development Micro 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. • Religious, political, and pornographic enterprises are not eligible to use the Economic Development Micro Loan Fund. V. MICRO LOAN FUND TERMS & CONDITIONS 1. Loan Structure All Economic Development Micro Loans will be structured as participation loans and will be serviced by the project's primary lending institution. Such an arrangement allows for the central distribution and collection of funds and simplifies the financing process for all parties involved. A participation agreement will be signed by the borrower, primary lender and the EDA. The agreement will include the following provisions, among others: • If Borrower does not meet the job and wage goals specified in the Subsidy Agreement, the interest rate will change to 2 points above the participating bank's rate, effective from the two year anniversary of the loan closing. Upon subsequent achievement of the jobs and wage goals, the interest rate will revert back to the rate when the loan was originated, effective from the date of attainment of the job and wage goals. • If Borrower defaults on the loan, the EDA will collect all further payments during the default based on a pro-rata basis with the participating bank Elk River Economic Development Authority Page 4 of 15 IVlicro Loan Fund Policy & Guidelines 1`~ Draft February 2006 excluding the distribution of proceeds resulting from the foreclosure on collateral. The EDA may require additional agreements to be signed by the borrower (i.e. security agreement, personal guarantees, subsidy agreement). 2. Simultaneous Micro Loans The simultaneous use of different Micro Loan Fund Programs by any one borrower or for any one project is prohibited. 3. Call of Loan A loan shall become due and payable in full if a business relocates outside of the city of Elk River prior to the maturity date of the loan. 4. Late Payment Charge A late payment charge of 8% of the installment amount may be enforced. VI. REGULATION FOR NEW CONSTRUCTION AND IMPROVEMENTS All buildings which public funds will be used for construction or renovation are to be brought into conformance with city codes and policies. Repairs may include the following systems and portions of real property: a. Mechanical heating, plumbing, and electrical b. Structural; including the facade of the structure and energy related improvements. c. Hook-up to city services (i.e. water, sewer) VII. LOAN SECURITY AND GUARANTEES Applicant must be able to secure the loan by providing the EDA with a minimum of a subordinate mortgage upon the building and/or assets or other approved collateral. Applicant must demonstrate the financial means to repay the loans, as determined by the Economic Development Authority. Whenever possible, personal guarantees will be made part of any loan agreement. VIII. TIMING OF PROJECT EXPENSES No project should commence until the Elk River Economic Development Authority has approved the loan application. Any costs incurred prior to the approval of the loan application are generally not eligible expenditures. No building construction should commence until the required City permits are secured. The applicant will be responsible for all legal, recording, and other fees required for protection of a security interest in the loan, payable by anon-refundable 1 processing fee, which is paid at the time of application. Elk River Economic Development Authority Page 5 of 15 Micro Loan Fund Policy & Guidelines 15~ Draft February 2006 IX. PROCEDURAL GUIDELINES FOR APPLICATION AND APPROVAL 1. All applicants shall first contact a primary lending institution to determine if additional equity is needed, and if so, how much. 2. The applicant and the primary lender shall then meet with City Staff to obtain information about the Micro Loan program, discuss the project, and obtain application forms. 3. The applicant shall complete and submit an application form to the City, along with a processing fee of 1% of the loan request. (The fee is used to cover processing expenses and will be returned only if application is denied.) The applicant must provide evidence of their ability to meet the equity requirements or provide a letter of commitment for conventional financing from the primary lending institution. 4. The application will be reviewed by the City staff to determine if it conforms to all City policies and ordinances and to consider the following: a. The availability and applicability of other governmental grants and/or loan programs. b. Whether the proposed project will result in conformance with building and zoning codes. c. Whether it is desirous and in the best interests of the public to provide funding for the project. 5. The EDA Finance Committee and EDA Commissioners will review each application in terms of its consistency with the goals of the City's Comprehensive Plan and Economic Development Strategic Plan and in relation to the project's overall impact on the community's economy. Redevelopment Loan applications will also be reviewed by an HRA member in conjunction with the EDA Finance Committee. They will also evaluate the project application in terms of the following: a. Project Design -Evaluation of project design will include review of proposed activities, time lines and a capacity to implement. b. Financial Feasibility -Availability of funds, private involvement, financial packaging and cost effectiveness. • Appropriate ratio of private funds to Micro Loan funds. • Sufficient cash flow to cover proposed debt service as demonstrated by financial statements and projections. • Business must show a positive net worth. Elk River Economic Development Authority Page 6 of 15 Micro Loan Fund Policy & Guidelines 1`~ Draft February 2006 • Letter of Commitment from applicant pledging to complete the project during proposed project duration, if the loan application is approved. • Letter of Commitment from other financing sources stating terms and conditions of their participation in the project if applicable. • Sufficient collateral. All other information as required in the application and/or additional information as may be requested by the Economic Development 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 Micro Loan Fund criteria and demonstrate how the proposed activities will meet at least one of the following objectives: • The project contributes to the fulfillment of the city's approved and adopted economic development and/or redevelopment plans. • The project prevents or eliminates slums and blight. • The project increases the local tax base. • The project brings a structure into compliance with an existing building code violation. A written request for an extension shall be accompanied by a copy of current financial statements and a $500 upfront processing fee. The processing fee is used to cover processing expenses and will be returned if request is denied. The application fox an extension beyond the original term should include a letter of denial from a conventional lender. Refinancing will not be allowed solely for the purpose of reducing the interest rate due to lower market interest rates. The EDA Finance Committee will recommend the approval, denial, or request a resubmission. A recommendation from the Finance Committee will be forwarded to the EDA for final action. X. LOAN POLICY REVIEW The above criteria will be reviewed on an annual basis to ensure that the policies reflected in this document are consistent with the economic development goals set forth by the City. Elk Rivex Economic Development Authority Page 7 of 15 Micro Loan Fund Policy & Guidelines 1`~ Draft February 2006 XI. COMPLIANCE WITH STATE STATUTES Each company receiving assistance in excess of $75,000 from the EDA Micro Loan Fund shall be subject to the provisions and requirements set forth by Minnesota State Statute 116J.993 and the attached City of Elk River Business Subsidy Policy summarized below: Progress Reports The borrower shall file a report annually for two years after the closing of the loan or until all goals set forth in the application have been meet, which ever is later. Reports shall be completed using the format drafted by the State of Minnesota and shall be filed with the City in March of each year for the previous year. Maintain Facility The borrower agrees to maintain and operate its facility at the site where the loan is used for a period of 5-years after the date the loan is closed. Goal Attainment In addition to attaining or exceeding the jobs and wages goals set forth in Section IV of the Application, the borrower agrees to achieve at least one of the goals for community development set forth in Section IX, part 5, subdivision (e) of the Micro Loan Fund Policy. Redevelopment loans in the Central Business District are exempt from job creation and wage goals stated in Section IX, part 5, subdivision (e) provided the loan amount does not exceed 50% of the project cost. Failure to Comply Businesses failing to comply with the above provisions will be subject to fines, repayment requirements in accordance with the state statute, and be deemed ineligible by the State to receive any loans or grants from public entities for a period of 5-years. XII. RIGHT OF REFUSAL The Elk River Economic Development Authority may deny any project which it deems inappropriate according to the guidelines established in this document. Elk River Economic Development Authority Page 8 of 15 Micro Loan Fund Policy & Guidelines 1'~ Draft February 2006 ELK RIVER ECONOMIC DEVELOPMENT MICRO LOAN FUND APPLICATION I. CONTACT INFORMATION Legal Name of Business: Address: City /State /Zip Contact Person(s) Business Phone Home Phone Check One: Social Security No. Federal ID # I1. NATURE OF LOAN REQUEST Which Micro-Loan Program are you applying for? Industrial Incentive Program Redevelopment Financing Program Amount Requested: $ Total Project Cost: $ Type of project: New construction for a start up business. New construction for an existing business. On site expansion Equipment purchase Remodeling: (czrcle one) Commercial /Retail /Industrial Other Proprietor Partnership Fax Email _Corporation State ID # Elk River Economic Development Authority Page 9 of 15 Micro Loan Fund Application Revised June 2004 Please give a brief summary of your business and its products or service: Please give a brief summary of the project: 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: Elk River Economic Development Authority Page 10 of 15 Micro Loan Fund Application Revised June 2004 Proposed Sources of Financing SOURCE NAME Bank Loan Bank Loan Other Private Funds Applicant Contribution Other Fed Grant/Loan State Grant/Loan EDA Micro Loan Tax Increment Financing Tax Rebate Financing Total Financing Collateral Assignments Description of Collateral To Bank 1 To Bank 2 To Private Sources To Other Sources To Federal Govt To State To EDA Micro Loan TERMS AMOUNT Lien Position Elk River Economic Development Authority Page 11 of 15 Micro Loan Fund Application Revised June 2004 Value of Collateral Book Value Cost Existing Liens Land $ $ $ Buildings $ $ $ Machinery & Equip. $ $ $ Other $ $ $ Other $ $ $ IV. )OB & WAGE GOALS Present # of Employees Total Payroll Jobs To Be Created* Please brovide the following information on iobs you expect to create Within 2-years. ob Title Number of Jobs Average Hourly Wage Annual Salary Are the Jobs Permanent or Temporary? Expected Hiring Date *lt loan is for Job retention only, please explain in Business Plan. Program Objectives (Check all that apply) The project contributes to the fulfillment of the city's approved and adopted economic development and/or redevelopment plans. The project prevents or eliminates slums and blight. The project increases the local tax base. The project brings a structure into compliance with an existing building code violation. Elk Rivex Economic Development Authority Page 12 of 15 Micro Loan Fund Application Revised June 2004 IV. PROJECT CONTACTS Attorney Name Address Phone Accountant Name Address Financing Sources (lenders,Lpartners, etc... Name Address Name Address Phone Name Address Phone Name Address Phone Parent CompanX Name Address Elk River Economic Development Authority Page 13 of 15 Micro Loan Fund Application Revised June 2004 Others Name Address Phone Name Address V. 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 fox Past Two Years C) Financial Projections for Two Years D) Resume of Owner/Management E) Personal Financial Statements of Proprietor, Partners, Guarantors F) Letter of Commitment from Applicant Pledging to Complete During the Proposed Project Duration G) Letter of Commitment from the Other Sources of Financing, Stating Terms and Conditions of their Participation in Project H) I) J) Fee (1% of amount of loan request). Elk River Economic Development Authority Page 14 of 15 Micro Loan Fund Application Revised June 2004 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 and the Finance Committee to check credit references and verify financial and other information. I / We agree to provide any additional information as may be requested by the City and the Finance Committee. DA APPLICANT NAME BY BY Elk Rivex Economic Development Authority Page 15 of 15 Micro Loan Fund Application Revised June 2004 _ -~-~ g- -- - - - - ~ 6 ST 12 ~ R1 . 6 ' ~ ST LION S ~ ; 11 2 PARK ~ 1 5 2 9 5 5 H T 6 ~ ~ 3 . ~ ~ 12 Z 1 A 4 1~ ~ ~p' ~L p ~ j '~ ~U ~ ~ ~ ~.~ 4 T S ~ ~ 0 ~~ ~~ ' ~'' ' ' ~ 4 H T EET fl~ j. F- J ~O ~ ~, O E T cS Er KBD. w o ~ 1 ~ T ~ 4TH I iA V ~' -'~ y~v I 2ND ST ~, ,~ , .~ ~ .~ t'v~. ~ _ .tr ~v~~'. '~ h ~~ .~ ~ . ~ ~ [t ~ Y."_ ~tr~; ~ } "1 ~~ µ ` Ax 1. Yi r I4 .13~ ~ X1~r " r ~ ' '~ ,~ _;~.,.. , y a ' ::r ~l ,.. - - f" C - is ~' \ i a' ar -ram .G'~J ~w ~ ~a ~ /~ \~r +~ 3 r.ti !' ~'. ..:4vil ,1 ei ,~ x i . ~ - . E \L`v "i'~M 4 ~ ~ iti ,, ~ f Location Map ~o N El •~.• DOWNTOWN DISTRICT (DD) R1Ver Case Number: AND CENTRAL BUSINESS DISTRICT (CBD) INFORMATION ~'~'~ •-...- ver MEMORANDUM TO: Housing and Redevelopment Authority ~~ FROM: Heidi Steinmetz, Assistant Director of Economic Development DATE: March 6, 2006 SUBJECT: Eminent Domain Resolution Attachments • City of Elk River Resolution 06-23 • House File 2895 ("League" bill), February 16, 2006 Background A joint City Council, EDA and HRA meeting was held on February 13, 2006 regarding the proposed eminent domain legislation fox the current session of the Minnesota State Legislature. The session began on March 1, 2006. Staff was directed to draft a resolution for the City Council to consider at the February 22, 2006 Council meeting. The EDA and HRA provided input to the draft resolution prior to the Council meeting. Update The attached resolution in general support of the League of Minnesota Cities' efforts to preserve the authority of Minnesota cities to use eminent domain (with modifications) was adopted by the City Council on February 22, 2006. Also, after the City Council, EDA and HRA joint meeting took place, it was announced that Rep. Pete Nelson, (R) District 17B (Chisago City, Wyoming, Stacy area), is the chief author of the "League" bill in the House of Representatives and the co-author is Rep. Morrie Canning, (R) District 9A (Moorhead area). Senator Don Betzold, (DFL) District 51 (Blaine, Spring Lake Park, Fridley, area), will sponsor the Senate companion bill. An updated version of the bill is attached. RESOLUTION Ob-23 A RESOLUTION OF THE CITY OF ELK RIVER A RESOLUTION IN GENERAL SUPPORT OF THE LEAGUE OF MINNESOTA CITIES' EFFORTS TO PRESERVE THE AUTHORITY OF MINNESOTA CITIES TO USE EMINENT DOMAIN (V1/ITH MODIFICATIONS). WHEREAS, the City of Elk River is currently authorized under Minnesota State Statutes to egerase eminent domain for public purposes including redevelopment, housing and securing property for infrastructure and other revitalization efforts that provide employment opportunities, improve the City's tag base and to mitigate conditions caused by blight; and, WHEREAS, redevelopment activities are essential for Minnesota cities to mitigate deteriorating properties that cause valuation losses to surrounding properties and create an atmosphere where property reinvestment ceases, and also to correct market conditions and to combat public safety issues; and, WHEREAS, the City of Elk River understands that while eminent domain is a necessary tool for the City, it is also a great responsibility that potentially changes the lives of those it affects; and, WHEREAS, the City of Elk River on very few occasions has egerdsed or threatened to egerdse its authority of eminent domain to acquire properties to implement redevelopment plans created through public meetings and lengthy public processes and for traditional public improvements (and, in recent uses, such actions were only threatened at the request of the affected landowner for tag reasons); and, WHEREAS, it is critical that the City of Elk River maintains its authority of eminent domain for traditional public improvement acquisitions such as public road easements, parks, utilities and infrastructure; and, WHEREAS, the Elk River City Council, in conjunction with the City's Economic Development Authority and Housing and Redevelopment Authority, recognizes that the changes proposed in the Johnson-Bakk bill and sirnilaz bills to modify state and federal statutes and regulations will severely undermine the ability of local communities to undergo critical redevelopment activities and to secure necessary public improvements; and, WHEREAS, the City of Elk River recognizes that improvements to the current eminent domain processes are appropriate to ensure transpazenry for all those involved and that some reasonable restrictions on the use of eminent domain may be warranted; and, WHEREAS, the League of Minnesota Cities is proposing legislation that would preserve the authority of Minnesota does to use eminent domain while suggesting amendments to improve the eminent domain process, but that additional reasonable restrictions on eminent domain use may be appropriate. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Elk River to generally support the League of Minnesota Cities' efforts to preserve the authority of Minnesota rides to use eminent domain, provided that additional restrictions on a city's approval of the use of eminent domain be included which still reserves the derision-making in the City Council (e.g., requiring that such approval would require asuper-majority vote of the Council instead of a mere simple majority; and requiring that, in the case of an economic development project, that substantially all of the property encompassing the development project area be purchased by the developer or be subject to binding purchase agreements with the developer prior to any action by the City Councl to authorize the use of eminent domain). Passed and adopted this 21n day of February ?006 , ~:J ~-~~ ,~ „ ~ ~ ~-' ~ J Stephai~ie Klinzing, Mayor-J ~ ATTEST: ~ ~ °. ~~~//~.. Joan Schmidt, City Clerk ~.% H.F. No. 2895, as introduced - 84th Legislative Session (2005-2006) Page 1 of 11 ¢: Legislature Horne ~ Links to the 1Norld (Help (Ac ~;#f. ~I~nnes~t~ l~~~is~ c~~' R+~pre~entt~ves House I Senate I Joint Departments and Commissions I Bill Search and Status I S#atutes, Laws, and Rules H.F. No. 2895, as introduced - 84th Legislative Session (2005-2006) Posted on Feb 16, 2006 1.1 A bill for an act 1.2 relating to eminent domain; providing for and regulating the use of eminent 1.3 domain; providing for notice, hearing, appeal, and other procedural requirements; 1.4 allowing attorney fees under certain conditions; providing for a right of first 1.5 refusal; providing definitions; making clarifying, conforming, and technical 1.6 changes; amending Minnesota Statutes 2004, sections 117.036; 117.055; 1.7 117.075, by adding subdivisions; 117.085; 117.51; 117.52, subdivision 1, by 1.8 adding a subdivision; 163.12, subdivisions 1 a, 1 b; 469.012, subdivision 1 g; 1.9 proposing coding for new law in Minnesota Statutes, chapters 117; 469. 1.10 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 1.11 Section 1. Minnesota Statutes 2004, section 117.036, is amended to read: 1.12 117.036 APPRAISAL AND NEGOTIATION REQUIREMENTS 1.13 Tli "~v /1111~ITIA\I AC 1'f~Al']C ~Tt~ AD TEA\I t+~l1~TA TI/'1\I v~~~i--~~ ~v 1.14 1.15 Subdivision 1. Application. This section applies to the acquisition of property 1.16 , 1.17 under this chapter. 1.18 Subd. 2. Appraisal. (a) Before commencing an eminent domain proceeding under 1.19 this chapter, the acquiring authority must obtain at least one appraisal for the property 1.20 proposed to be acquired. In making the appraisal, the appraiser must confer with one or 1.21 more of the fee owners or contract purchasers of the property, if reasonably possible. 1.22 Notwithstanding section 13 44 or any other law to the contrary the acquiring 1.23 authority must provide the fee owner or contract purchaser with a copy of the appraisal 1.24 at the time an offer is made, but no later than 20 days before presenting a petition under 1.25 section 117.055, 1.26 a+se+ and inform the fee owner or contract purchaser of the right 2.1 to obtain an appraisal under this section. Upon request the acquiring authority must make 2.2 available to the fee owner or contract purchaser all appraisals of the property. 2.3 (b) The fee owner or contract purchaser may obtain an appraisal by a qualified 2.4 appraiser of the property proposed to be acquired. The fee owner or contract purchaser 2.5 is entitled to reimbursement for the reasonable costs of the appraisal from the acquiring 2.6 authority up to a maximum of $1,500 for single family and 2.7 two-family residential property agricultural property and minimum damage acquisitions 2.8 and $5 000 for other types of property provided that the fee owner or contract purchaser 2.9 submits to the acquiring authority the information necessary for reimbursement, ~e~+~ed 2.10 including_a copy of the fee owner's or contract purchaser's 2.11 appraisal, within a99 90 days after `"~ ~••~~~~ ~~~~~••~~ receiving the appraisal from the http://www.revisor.leg. state.mn.us/bin/bldbill.php?bill=H2895.O.html&session=ls84&print... 2/28/2006 H.F. No. 2895, as introduced - 84th Legislative Session (2005-2006) Page 2 of 11 2.12 authority under paragraph (a) and at least 30 days before a condemnation commissioners' 2.13 hearing. For purposes of this paragraph, a "minimum damage acquisition" means an 2.14 interest in property that a qualified person with appraisal knowledge indicates can be 2.15 acquired for a cost of $10 000 or less For purposes of this paragraph "agricultural 2.16 property" has the meaning given in section 583.22 subdivision 2. 2.17 (c) The awiring authority must pay the reimbursement to the fee owner or contract 2.18 purchaser within 30 days after receiving a copy of the appraisal and the reimbursement 2.19 information. Upon agreement between the acquiring authority and either the fee owner 2.20 or contract purchaser the acquiring authority maypay the reimbursement directly to 2.21 the appraiser. 2.22 Subd. 3. Negotiation. In addition to the appraisal requirements under subdivision 2, 2.23 before commencing an eminent domain proceeding, the acquiring authority must make a 2.24 good faith attempt to negotiate personally with the fee owner or contract purchaser of the 2.25 property in order to acquire the property by direct purchase instead of the use of eminent 2.26 domain proceedings. In making this negotiation, the acquiring authority must consider 2.27 the appraisals in its possession including any appraisal obtained and furnished by the fee 2.28 owner or contract purchaser if available, and other information that may be relevant to a 2.29 determination of damages under this chapter. 2.30 Subd. 4. Condemnation commissioners' hearing. Notwithstanding section 13.44, 2.31 an appraisal must not be used or considered in a condemnation commissioners' hearing, 2.32 nor may the appraiser who prepared the appraisal testify unless a copy of the appraiser's 2.33 written report is provided to the opposing arty at least five days before the hearing. 2.34 Sec. 2. Minnesota Statutes 2004, section 117.055, is amended to read: 2.35 117.055 PETITION AND NOTICE. 3.1 Subdivision 1. Petition. In all cases a petition, describing the desired land, stating by 3.2 whom and for what purposes it is proposed to be taken, and giving the names of all persons 3.3 appearing of record or known to the petitioner to be the owners thereof shall be presented 3.4 to the district court of the county in which the land is situated praying for the appointment 3.5 of commissioners to appraise the damages which may be occasioned by such taking. 3.6 Subd. 2. Notice. (Notice of the objects of the petition and of the time and place of 3.7 presenting the same shall be served at least 20 days before such time of presentation upon 3.8 all persons named in the petition as owners as defined in section 117.025, subdivision 3, 3.9 and upon all occupants of such land in the same manner as a summons in a civil action. 3.10 (b) The notice must state that: (~ a party wishing to challenge the public purpose, 3.11 necessity or authority for a taking must appear at the court hearing and state the objection; 3.12 {2) failure to appear and object is deemed a waiver of any objection; and (3) a court order 3.13 ap rp oving the public purpose, necessity, and authority for the taking is final unless an 3.14 appeal is brought within 60 days after service of the order on the party. 3.15 ~If any such owner be not a resident of the state, or the owner's place of residence 3.16 be unknown to the petitioner, upon the filing of an affidavit of the petitioner or the 3.17 petitioner's agent or attorney, stating that the petitioner believes that such owner is not 3.18 a resident of the state, and that the petitioner has mailed a copy of the notice to the 3.19 owner at the owner's place of residence, or that after diligent inquiry the owner's place 3.20 of residence cannot be ascertained by the affiant, then service may be made upon such http://www.revisor.leg. state.mn.us/bin/bldbill.php?bill=H2895.O.html&session=ls84&print... 2/28/2006 H.F. No. 2895, as introduced - 84th Legislative Session (2005-2006) Page 3 of 11 3.21 owner by three weeks' published notice. If the state be an owner, the notice shall be 3.22 served upon the attorney general. Any owner not served as herein provided shall not be 3.23 bound by such proceeding except upon voluntarily appearing therein. Any owner shall 3.24 be furnished aright-of-way map or plat of all that part of land to be taken upon written 3.25 demand, provided that the petitioner shall have ten days from the receipt of the demand 3.26 within which to furnish the same. Any plans or profiles which the petitioner has shall be 3.27 made available to the owner for inspection. 3.28 Sec. 3. Minnesota Statutes 2004, section 117.075, is amended by adding a subdivision 3.29 to read: 3.30 Subd. 1a. Appeal of order. A party wishing to challenge the public purpose, 3.31 necessity, or authority for a taking must appear at the court hearing required by subdivision 3.32 1 and state the objection. Failure to appear and object is deemed a waiver of any objection. 3.33 A court order approving the public purpose, necessity, and authority for the taking is final 3.34 unless an appeal is brought within 60 days after service of the order on the part~r. 4.1 Sec. 4. Minnesota Statutes 2004, section 117.075, is amended by adding a subdivision 4.2 to read: 4.3 Subd. 1 b. Attorney fees. If the court determines that a taking is not for a public 4.4 purpose or is unlawful. the court may award the owner reasonable attornev fees. 4.5 Sec. 5. Minnesota Statutes 2004, section 117.085, is amended to read: 4.6 117.085 COMMISSIONERS, POWERS, DUTIES. 4.7 The commissioners, having been duly sworn and qualified according to law, shall 4.8 meet as directed by the order of appointment and hear the allegations and proofs of all 4.9 persons interested touching the matters to them committed. They may adjourn from time 4.10 to time and from place to place within the county, giving oral notice to those present of 4.11 the time and place of their next meeting. All testimony taken by them shall be given 4.12 publicly, under oath, and in their presence. They shall view the premises, and any of 4.13 them may subpoena witnesses, which shall be served as subpoenas in civil actions are 4.14 served, and at the cost of the parties applying therefor. If deemed necessary, they may 4.15 require the petitioner or owner to furnish for their use maps, plats, and other information 4.16 which the petitioner or owner may have showing the nature, character, and extent of the 4.17 proposed undertaking and the situation of lands desired therefor. In proper cases they may 4.18 reserve to the owner aright-of-way or other privilege in or over the land taken, or attach 4.19 reasonable conditions to such taking in addition to the damages given or they may make 4.20 an alternative award, conditioned upon the granting or withholding of the right specified. 4.21 Without unreasonable delay they shall make a separate assessment and award of the 4.22 damages which in their judgment will result to each of the owners of the land by reason 4.23 of such taking and report the same to the court. The commissioners shall not reduce the 4.24 amount of the damages awarded because the land being taken is, at the time of the taking, 4.25 valued under section 273.111, designated as an agricultural preserve under chapter 473H. 4.26 The commissioners, in all such proceedings, may in their discretion allow and show 4.27 separately in addition to the award of damages, reasonable appraisal fees not to exceed a 4.28 total of $F89 $1.500 for single family and two-family residential property, agricultural http ://www.revisor.leg. state.mn.us/bin/bldbill.php?bill=H2895.O.html&session=ls84&print... 2/28/2006 H.F. No. 2895, as introduced - 84th Legislative Session (2005-2006) Page 4 of 11 4.29 property and minimum damage acquisitions and $5 000 for other types of property. Upon 4.30 request of an owner the commissioners shall show in their report the amount of the award 4.31 of damages which is to reimburse the owner and tenant or lessee for the value of the land 4.32 taken, and the amount of the award of damages, if any, which is to reimburse the owner 4.33 and tenant or lessee for damages to the remainder involved, whether or not described in 4.34 the petition. The amounts awarded to each person shall also be shown separately. The 4.35 commissioners shall, if requested by any party, make an express finding of the estimated 5.1 cost of removal and remedial actions that will be necessary on the taken property because 5.2 of existing environmental contamination. 5.3 Sec. 6. [117 226] RIGHT OF FIRST REFUSAL. 5.4 (a) If the governing body of the acquiring authority determines that publicly owned 5.5 propert~r acquired under this chapter has not been used and is no longer needed for the 5.6 purpose for which it was originally acquired the authority must offer to sell the property 5.7 to the owner from whom it was acquired If the former owner can be located the acquiring 5.8 authori~ must offer to sell the pro~ertkat the current fair market value of the property. If 5.9 the current fair market value is less than what the acquiring authority paid for the property 5.10 the acquiring authority must offer to sell the property for the amount that the acquiring 5.11 authorit~r paid when it or~inallkacquired the property. 5.12 (b) The acquiring authorit~r must attempt to locate the former owner bv: 5.13 (1) sending notice of the right of first refusal by first class mail to the last known 5.14 address of the former owner; and 5.15 (2) providing two weeks' published notice of the right of first refusal in a newspaper 5.16 of general circulation. 5.17 (c) If the former owner cannot be located or declines to repurchase the property 5.18 within 60 dales of providing the notice described in paragraph (b) the acquiring authority 5.19 shall prepare a certificate attesting to the same and record the certificate in the office of the 5.20 countX recorder or county registrar of titles as appropriate to evidence the termination of 5.21 the right of first refusal. 5.22 (d) This section shall not apply: 5.23 (1) if the acquiring authority has an alternative use for the property and the property 5.24 would remain in public ownership or 5.25 (2) to acquisitions of property for transportation purposes made by the commissioner 5.26 of transportation. 5.27 Sec. 7. Minnesota Statutes 2004, section 117.51, is amended to read: 5.28 117.51 COOPERATION WITH FEDERAL AUTHORITIES. 5.29 In all acquisitions undertaken by any acquiring authority and in all voluntary 5.30 rehabilitation carried out by a person pursuant to acquisition or as a consequence thereof, 5.31 the acquiring authority shall cooperate to the fullest extent with federal departments and 5.32 agencies, and it shall take all necessary action in order to insure, to the maximum extent 5.33 possible, federal financial participation in any and all phases of acquisition, including the 5.34 provision of relocation assistance, services, payments and benefits to displaced persons. 6.1 6.2 http://www.revisor.leg. state.mn.us/bin/bldbill.php?bill=H2895.O.html&session=ls84&print... 2/28/2006 H.F. No. 2895, as introduced - 84th Legislative Session (2005-2006) Page 5 of 11 6.3 Sec. 8. Minnesota Statutes 2004, section 117.52, subdivision 1, is amended to read: 6.4 Subdivision 1. Lack of federal funding. In all acquisitions undertaken by any 6.5 acquiring authority and in all voluntary rehabilitation carried out by a person pursuant 6.6 to acquisition or as a consequence thereof, in which, due to the lack of federal financial 6.7 participation, relocation assistance, services, payments and benefits under the Uniform 6.8 Relocation Assistance and Real Property Acquisition Policies Act of 1970, United States 6.9 Code, title 42, sections 4601 to 4655, as amended by the Surface Transportation and 6.10 Uniform Relocation Assistance Act of 1987, Statutes at Large, volume 101, pages 246 6.11 to 256 (1987), are not available, the acquiring authority, as a cost of acquisition, shall 6.12 provide all relocation assistance, services, payments and benefits required by the Uniform 6.13 Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended by 6.14 the Surface Transportation and Uniform Relocation Assistance Act of 1987, and those 6.15 regulations adopted pursuant thereto, and either (1) in effect as of d8S January 1, 6.16 2006, or (2) becoming effective after X88 January 1, 2006, following a public 6.17 hearing and comment. Comments received by an acquiring authority within 30 days after 6.18 the public hearing must be reviewed and a written response provided to the individual or 6.19 organization who initiated the comment. The response and comments may be addressed in 6.20 another public hearing by the acquiring authority before approval. 6.21 Sec. 9. Minnesota Statutes 2004, section 117.52, is amended by adding a subdivision to 6.22 read: 6.23 Subd. 1a. Reestablishment costs limit. For purposes of relocation benefits paid in 6.24 accordance with this section the limitation in Code of Federal Reaulations title 49, section 6.25 24 304 with respect to reimbursement of reestablishment expenses for nonresidential 6.26 moves an acquiring authority shall reimburse up to $50 000 for such expenses. 6.27 Sec. 10. Minnesota Statutes 2004, section 163.12, subdivision 1 a, is amended to read: 6.28 Subd. 1a. Petition, notice, and access to information. (a) Upon passage of the 6.29 resolution specified in section 163.11, subdivision 2, a petition must be presented to the 6.30 district court of the county in which the land is located. The petition must describe each 6.31 tract of land through which the highway passes, state the purposes for which the land is 6.32 proposed to be taken, and list the names of all persons appearing of record or known to 6.33 the county to be the landowners. 7.1 (b) Notice of the objects of the petition and of the time and place of presenting the 7.2 notice must be served, together with a copy of the resolution, upon each occupant of 7.3 each tract of land through which the highway passes at least 20 days before the hearing 7.4 under subdivision 1 b. If an owner is not a resident of the state, or the owner's place of 7.5 residence is unknown to the county, service may be made by three weeks' published 7.6 notice following the filing of an affidavit on behalf of the county by the county's agent or 7.7 attorney stating that the county: 7.8 (1) believes that the owner is not a resident of the state; and 7.9 (2) has either mailed a copy of the notice to the owner at the owner's last known 7.10 residence address or, after diligent inquiry, the owner's place of residence cannot be 7.11 ascertained by the county. http ://www.revisor.leg. state.mn.us/bin/bldbill.php?bill=H2895.O.html&session=ls84&print... 2/28/2006 H.F. No. 2895, as introduced - 84th Legislative Session (2005-2006) Page 6 of 11 7.12 If the state is an owner, the notice must be served upon the attorney general. An owner 7.13 not served as provided in this subdivision is not bound by the proceeding, except if the 7.14 owner voluntarily appears in the proceeding. 7.15 (c) Within ten days of an owner's demand, the owner must be furnished a 7.16 right-of-way map or plat of all that part of the owner's land to be taken. Any applicable 7.17 plans or profiles that the county possesses must be made available to the owner for 7.18 inspection. 7.19 (d) The notice must state that• U a party wishing to challenge the public purpose 7.20 necessity or authority for the taking must appear at the court hearing and state the 7.21 objection' (2) failure to appear and object is deemed a waiver of any objection; and (3) a 7.22 court order approving the public purpose necessity and authority for the taking is final 7.23 unless an appeal is brought within 60 des after service of the order on the party. 7.24 Sec. 11. Minnesota Statutes 2004, section 163.12, subdivision 1 b, is amended to read: 7.25 Subd. 1 b. Finding of necessity. When proof of service of the notice required in 7.26 subdivision 1 a is filed with the court, the court shall hear all competent evidence offered 7.27 for or against granting the petition at the time and place fixed in the notice or otherwise set 7.28 by the court. On finding that the proposed taking is necessary and authorized by law the 7.29 court shall order the proceedings to commence pursuant to the remaining provisions of 7.30 this section. The court order finding the taking necessary and authorized by law is a final 7.31 order and must be appealed within 60 days from its service on the party. 7.32 Sec. 12. Minnesota Statutes 2004, section 469.012, subdivision 1 g, is amended to read: 7.33 Subd. 1g. Get property; eminent domain. (a) An authority may, within its area of 7.34 operation, acquire real or personal property or any interest therein by gifts, grant, purchase, 8.1 exchange, lease, transfer, bequest, devise, or otherwise, and by the exercise of the power 8.2 of eminent domain, in the manner provided by chapter 117, acquire real property which it 8.3 may deem necessary for its purposes, after the adoption by it of a resolution declaring that 8.4 the acquisition of the real property is necessary: 8.5 (1) to eliminate one or more of the conditions found to exist in the resolution adopted 8.6 pursuant to section 469.003 or to provide decent, safe, and sanitary housing for persons 8.7 of low and moderate income; or 8.8 (2) to carry out a redevelopment project. 8.9 (b) Real property needed or convenient for a project may be acquired by the 8.10 authority for the project by condemnation pursuant to this section and section 469.401. 8.11 8.12 , 8.13 8.14 , 8.15 8.16 8.17 8.18 , 8.19 , 8.20 ~ , http: //www.revisor.leg. state.mn.us/bin/bldbill.php?bill=H2895.O.htm1&session=ls 84&print... 2/28/2006 H.F. No. 2895, as introduced - 84th Legislative Session (2005-2006) Page 7 of 11 8.21 , 8.22 {d}am Property acquired by condemnation under this section may include any 8.23 property devoted to a public use, whether or not held in trust, notwithstanding that the 8.24 property may have been previously acquired by condemnation or is owned by a public 8.25 utility corporation, because the public use in conformity with the provisions of sections 8.26 469.001 to 469.047 shall be deemed a superior public use. Property devoted to a public 8.27 use may be so acquired only if the governing body of the municipality has approved 8.28 its acquisition by the authority. 8.29 {e~~ An award of compensation shall not be increased by reason of any increase 8.30 in the value of the real property caused by the assembly, clearance or reconstruction, or 8.31 proposed assembly, clearance or reconstruction for the purposes of sections 469.001 8.32 to 469.047 of the real property in an area. 8.33 Sec. 13. [469 401] ACQUISITION BY EMINENT DOMAIN UNDER THIS 8.34 CHAPTER. 9.1 Subdivision 1. Application. Sections 469.401 to 469.403 apply to the exercise of 9.2 eminent domain~owers by a condemning authority under this chapter if the property 9.3 interest to be acquired b r~eminent domain is intended to be sold transferred or otherwise 9.4 conveyed to a person or nongovernmental entity without the power of eminent domain. 9.5 Subd. 2. Public hearing and notice required. Prior to adoption of a resolution 9.6 authorizinq the use of eminent domain the governing body of the condemning authority 9.7 must hold a public hearing_on theproposed a~uisition after published notice in a 9.8 newspaper of general circulation in the governing body's jurisdiction and on the governing 9.9 body's Web site if applicable which must be made at least one time not less than two 9.10 weeks nor more than 60 des prior to the date of the hearing. The notice must reasonably 9.11 describe the property interest to be acquired state that the purpose of the hearing is to 9.12 consider acquisition by eminent domain state that comments may be submitted orally 9.13 at the hearing or in writing prior to or at the hearing and specify an address to which 9.14 written comments may be mailed Not less than two weeks before the hearing notice of 9.15 the hearing must also be mailed to the owner of each parcel proposed to be acquired but 9.16 defects in the notice do not invalidate the acquisition. For the purpose of giving mailed 9.17 notice owners are determined as provided bisection 429.031 subdivision 1 paragraph 9.18 (a) The resolution authorizing the use of eminent domain must not be adopted at the same 9.19 meeting or on the same da ryas the public hearing 9.20 Subd. 3. Resolution. The resolution authorizinq the use of eminent domain must: 9.21 (1) identify and describe the public benefits that are known or expected to result 9.22 from theprogram or project for which theproperty interest is proposed to be acquired 9.23 (2) identify and describe the private benefits that are known or expected to result 9.24 from the anticipated conv~ance of the property interest proposed to be acq_uired~ 9.25 (3) summarize and respond to any oral comments made at the public hearing or 9.26 written comments received at orprior to the public hearing; and 9.27 (4) address how the a ~uisition of the property interest serves one or more identified 9.28 public purposes and why the acquisition of the property is reasonably necessary to 9.29 accomplish those purposes. 9.30 Subd. 4. Summary of findings. The governing bow of a condemning authority http ://www.revisor.leg. state.mn.us/bin/bldbill.php?bill=H2895.O.html&session=ls84&print... 2/28/2006 H.F. No. 2895, as introduced - 84th Legislative Session (2005-2006) Page 8 of 11 9.31 must summarize the findings adopted in the resolution authorizing the use of eminent 9.32 domain in the notice of petition required under section 117.055. 9.33 Sec. 14. [469.402] DEFINITIONS. 9.34 Subdivision 1. Sco e. For purposes of sections 469.401 to 469.403 the following 9.35 terms have the meanings given to them. 10.1 Subd. 2. Abandoned. "Abandoned" means that at least 75 percent of a building's 10.2 area has been substantially unoccupied for at least one year prior to the date of inclusion 10.3 in a blighted area. 10.4 Subd. 3. Blighted area. "Blighted area" is an area where the condemning authority 10.5 finds that the conditions provided in clauses (a) (b) and (c) exist: 10.6 (a) the land is or has been in urban use; 10.7 (b) at least one of the following conditions exist: 10.8 (1) 50percent or more of the buildings in the area are structurally substandard 10.9 or abandoned or a combination thereof; 10.10 (2) 30 percent or more of th~arcels in the area constitute an environmentally 10.11 contaminated area; or 10.12 (3) (i) 20 percent or more of the buildings in the area are structurally substandard 10.13 or abandoned or a combination thereof and ii an additional 30 percent or more of the 10.14 buildings in the area are obsolete as evidenced by lack of investment based on limited 10.15 buildingpermits for repair or improvements in the previous five years; and 10.16 (c) at least one of the following conditions is present: 10.17 (1) diversit~of ownership or defective or unusual conditions of title prevent the 10.18 free alienability of land within the area; 10.19 (2) there is inadequate infrastructure in the area; 10.20 (3) the crime rate in the area is higher than in the remainder of the county or 10.21 municipality; 10.22 (4) 30percent of the tax parcels have had delinquent taxes or special assessments for 10.23 a period of two years or more prior to inclusion in the area or 10.24 (5) negative market conditions exist in the area. 10.25 Subd. 4. Environmentally contaminated area. "Environmentally contaminated 10.26 area" means: 10.27 (1) a~ parcel that would be eligible for contamination cleanup grants from: (i) the 10.28 Department of Employment and Economic Development's contamination cleanup grant 10.29 account under section 116J 552 subdivision 3 or 116J.554 subdivision 2 clause (2); or 10.30 ii) the Metropolitan Council's tax base revitalization account under section 473.252; or 10.31 (2) an area that qualifies as a soils condition district under section 469.174, 10.32 subdivision 19. 10.33 Subd. 5. Inadequate infrastructure. "Inadequate infrastructure" means any 10.34 publics owned physical infrastructure including sanitary sewer systems water systems, 10.35 streets wastewater treatment and pretreatment systems storm water management systems, 10.36 natural gas systems and electric utility systems which are inadequate to serve either 11.1 existing or projected users in the blighted area because the system is undersized, does not 11.2 meet current design standards or is significantly deteriorated. 11.3 Subd. 6. Market area. "Market area" means the geographic or locational http: //www.revisor.leg. state.mn.us/bin/bldbill.php?bill=H2895.O.html&session=ls84&print... 2/28/2006 H.F. No. 2895, as introduced - 84th Legislative Session (2005-2006) Page 9 of 11 11.4 delineation of the market for a ~ecific category of real estate. 11.5 Subd. 7. Negative market conditions. "Negative market conditions" are evidenced 11.6 by one or more of the following factors for similarlX classified property: (1) market values 11.7 are lower than in the remainder of the market area are increasing at rates materially lower 11.8 than in the remainder of the market area or are decreasing compared to the remainder of 11.9 the market area U vacancy rates are higher than in the remainder of the market area; 11.10 or U other comparable evidence of negative market conditions in the blighted area 11.11 compared to the market area as a whole. 11.12 Subd. 8. Public nuisance. "Public nuisance" has the meaning given in section 11.13 609.74. 11.14 Subd. 9. Structurally substandard. "Structurally substandard" means a building 11.15 that contains defects in structural elements or a combination of deficiencies in essential 11.16 utilities and facilities I~ht and ventilation and fire protection including adequate egress, 11.17 which significant defects or deficiencies justify substantial renovation or clearance. A 11.18 building is not structurally substandard if it is in compliance with the building code 11.19 applicable to new buildings or could be modified to satisfy the building code at a cost of 11.20 less than 20 percent of the cost of constructing a new structure of the same square footage 11.21 and type on the site The municipalitkor condemning authority may find that a building is 11.22 not disqualified as structurally substandard under the previous sentence on the basis of 11.23 reasonably available evidence such as the size type and age of the building the average 11.24 cost of plumbing electrical or structural repairs or other similar reliable evidence. The 11.25 municipality or the condemning authority may not make such a determination without an 11.26 interior inspection of the property but need not have any independent expert appraisal 11.27 prepared of the cost of repair and rehabilitation of the building. An interior inspection 11.28 of the propel is not required if the municipality finds that: (1) the municipality or 11.29 condemning authority is unable to gain access to the property after using its best efforts to 11.30 obtain~ermission from the paw that owns or controls the property and (2) the evidence 11.31 otherwise supports a reasonable conclusion that the building is structurally substandard. 11.32 Items of evidence that support such a conclusion include recent fire or police inspections, 11.33 on-site property tax appraisals or housi~ inspections exterior evidence of deterioration, 11.34 or other similar reliable evidence Written documentation of the findings and reasons why 11.35 an interior inspection was not conducted must be made and retained. Failure of a building 12.1 to be disqualified under the provisions of this subdivision is a necessary but not sufficient 12.2 condition by itself to determine that the building is substandard. 12.3 Sec. 15. [469 403] LIMITATION ON USE OF EMINENT DOMAIN. 12.4 Subdivision 1. Limitation. Notwithstanding any other provision of law, no 12.5 condemning authority under this chapter may exercise the power of eminent domain if the 12.6 property interest to be acquired is intended to be sold transferred or otherwise conveyed 12.7 to a person or nongovernmental entity without the power of eminent domain unless the 12.8 condemning authority finds that the use of eminent domain is necessary to accomplish one 12.9 or more of the purposes in subdivision 2. 12.10 Subd. 2. Purposes. For purposes of carr~ring out the powers and authority provided 12.11 under this chapter a condemning authority with the power of eminent domain under 12.12 this chapter may exercise that power to acquire land to accomplish one or more of the http://www.revisor.leg. state.mn.us/bin/bldbill.php?bill=H2895.O.html&session=ls84&print... 2/28/2006 H.F. No. 2895, as introduced - 84th Legislative Session (2005-2006) Page 10 of 11 12.13 following purposes: 12.14 (a) the possession occupation or enjoyment of the land by the general public or 12.15 by public agencies; 12.16 (b) to remedy a public nuisance; 12.17 ;~ to carry out a program to remedy or improve an environmentally contaminated 12.18 area; 12.19 (d) to carry out a program to remedy or improve a blighted area or 12.20 (e) to facilitate development of housing for low or moderate income persons as 12.21 defined under any federal state, or local program. 12.22 Subd. 3. Economic development. The public benefits of economic development 12.23 including an increase in tax base tax revenues employment or general economic health, 12.24 shall not b r~themselves constitute a public purpose except asprovided in subdivision 4. 12.25 Subd. 4. Exceptions. Notwithstanding any other provision of law a condemning 12.26 authority under this chapter may condemn property if one or more of the following forms 12.27 of financial assistance are present: 12.28 (1) a grant awarded by a state agency for economic development related purposes, if 12.29 a single business receives $200 000 or more of the grant proceeds; 12.30 (2) arrant award to local units of~overnment or development authorities under 12.31 sections 116J.551 116J.559 116J.571 and 116J.8731; 12.32 (3) a loan or the guaranty orpurchase of a loan made by a state agency for economic 12.33 development related purposes if a side business receives $500 000 or more of the loan 12.34 proceeds; 13.1 (4) a reduction credit or abatement of a tax assessed under chapter 297A or 290 13.2 where the tax reduction credit or abatement applies to a geographic area smaller than the 13.3 entire state and was granted for economic development related purposes; or 13.4 (5) an appropriation by the legislature to acquire or better property in whole or in 13.5 part with the proceeds of state general oblation bonds authorized to be issued under 13.6 article XI section 5 clause U of the Minnesota Constitution. 13.7 Financial assistance does not include payments by the state of aids and credits under 13.8 chapter 273 or 477A to a political subdivision. 13.9 Subd. 5. Disclosure. All applicants must indicate on applications for financial 13.10 assistance under subdivision 4 whether the use of eminent domain may be necessary to 13.11 acquire property for the project. 13.12 Sec. 16. EFFECTIVE DATE. 13.13 Sections 1 to 6 and 10 and 11 are effective for condemnation proceedings that 13.14 are commenced on or after August 1 2006 Sections 7 8 and 9 are effective for all 13.15 acquisitions in which the initial notice of eligibility is given on or after August 1, 13.16 2006 Sections 12 to 15 apply to anLr property that is included in a redevelopment plan 13.17 established on or after August 1, 2006. 13.18 Sec. 17. SUNSET. 13.19 Sections 14 and 15 expire January 1, 2009. http://www.revisor.leg. state.mn.us/bin/bldbill.php?bill=H2895.O.html&session=ls84&print... 2/28/2006 H.F. No. 2895, as introduced - 84th Legislative Session (2005-2006) Page 11 of 11 Please direct all comments concerning issues or legislation to your House_ Member or State Senator. For Legislative Staff or for directions to the Capitol, visit the Contact Us page. General...questions or comments. http://www.revisor.leg. state.mn.us/bin/bldbill.php?bill=H2895.O.html&session=ls84&print... 2/28/2006