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5.3. SR 03-24-2003MEMORANDUM TO: FROM: DATE: Mayor & City Council Catherine Plehelich, Director of Economic Developmen . March 24, 2003 SUBJECT: Public Hearing on MN Investment Fund Grant Application for Sportech, Inc. Expansion Item 5.3. Attachments · Residential Anti-Displacement, Relocation Assistance and Displacement Minimization Plan and Resolution of Adoption · Local Government Resolution and Compliance Certification · Resolution Requesting Designation of the EDA as a Local Development Organization · Staff memo to the EDA dated March 10, 2003 regarding Local Development Organization Background At its meeting on March 24, 2003, the Elk River City Council will conduct a pubhc hearing on the grant application to the MN Department of Trade and Economic Development 0DTED). The City of Elk River seeks $200,000 from DTED under its MN Investment Fund Program. If awarded, the DTED grant funds will be used by the City to supplement other sources of public and private financing in support of a 20,000 square foot expansion proposed by Sportech, Inc., 15703 Jarvis Street, Elk River. The MN Investment Fund is a grant that is awarded to cities in order to provide loans to assist expanding businesses. As the loan is paid back to the city over the specified loan term the community is able to retain the full $200,000 to be used as a revolving loan fund for economic development purposes. The purpose of the public hearing is to discuss the funding request to DTED and to discuss the impact this proposed grant application has in meeting the City's stated housing and community development objectives. Following the public hearing, the City Council may consider adoption of the applicable resolutions. Staff will be present at the City Council meeting to discuss details of the proposed MN Investment Fund grant application. In addition, Chris Carlson, CEO of Sportech, Inc., may be present at the Council meeting to answer any questions about the project. City Council Public Hearing on MIF Grant Application For Sportech, Inc. Expansion March 24, 2003 Page 2 of 3 Issues At its February 18 meeting, the Elk River City Council authorized the submission of an application to DTED on behalf of Sportech, Inc. A requirement of DTED is that a public hearing on the matter be held prior to submission of the application. The public hearing is an opportunity for citizens to discuss the following items: · Housing and Community Development Needs and Strategies · Details of the funding request to DTED Housing and Community Development Needs and Strategies Citizens should be given the opportunity to discuss the housing and community development needs, as well as possible ways to meet the needs listed below: · Public facilities (i.e., streets, water, sewer, etc.) · Public services (i.e., fu:e protection, library, etc.) · Housing (i.e., owner and renter, etc.) · Economic Development It should be noted that citizens, through the city's update of its Comprehensive Plan, have recently discussed the listed needs. Details of Proposed Project and Funding Request to DTED Local manufacturer, Sportech, Inc., designs, produces and markets snowmobile and ATV accessories. Sportech, Inc. wishes to complete its third expansion in Elk River with the construction of a 20,000-square foot freestanding building to be located adjacent to its present facility located at 15703 Jarvis Street. in addition, Sportech, Inc. wishes to purchase machinery and eqmpment necessary to its expansion of operations. The company wishes to begin construction of the new facility as soon as possible, with anticipated occupancy in July of this year. The purchase of equipment will be timed as appropriate to the availability of the new space. The project includes the following estimated costs and proposed financing: ESTIMATED COSTS Building Construction Equipment PROPOSED FINANCING $750,000 The Bank of Elk River $676,545 $216,493 Owner Equity $ 89,948 MN Investment Fund $200,000 $966,493 $966,493 Totals At its March meeting the EDA took action to recommend that the City Council consider establishing the following MN Investment Fund loan terms to Sportech, Inc.: Loan Amount: Loan Purpose: Term: Security: $200,000 Equipment Financing 7-year amortization at an interest rate of 2% 1 ~t hen position on the new equipment City Council Public Hearing on MTF Grant Application For Sportech, Inc. Expansion March 24, 2003 Page 3 of 3 Sportech, Inc. currently employs 23 full-time equivalent positions. The company anticipates hiring, within 2-years of official building occupancy, up to 15 new full-time employees at a wage of not less than $15.00/hour plus benefits. In order to meet the federal objectives for the grant funds, Sportech, Inc. will be required to have a minimum of 51% of the new positions be taken by or made available to persons of low-to-moderate income. Anti-Displacement, Relocation Assistance and Displacement Minimization Plan Although the displacement of residents and/or businesses is not anticipated with the proposed Sportech, Inc. project, the City Council is requested to adopt a Residential Anti-Displacement, Relocation Assistance and Displacement Minimization Plan in order to meet the federal grant objectives. The attached drafted plan for Residential Anti-Displacement, Relocation Assistance and Displacement Minimization is provided for City Council review, as well as the attached Resolution adopting the Residential Anti-Displacement, Relocation Assistance and Displacement Minimization Plan. Local Government Resolution and Compliance Certification The attached Local Government Resolution is also provided for the City Council's consideration. The Local Government Resolution formally authorizes the Mayor and Director of Economic Development to submit the application to MN DTED and to execute agreements as necessary to implement the project on behalf of the city. The resolution also certifies that the City of Elk River will comply with all applicable laws and regulations as described in the Compliance Certification, which is attached to the fore mentioned resolution. Authorization for Local Development Organization The City can avoid the federal program requirements on the reuse of the funds by requesting authorization to transfer federal Small Cities funds to a Local Development Organization (LDO), such as the EDA or HRA. The request must be made by the attached resolution of the City Council and submitted to DTED for approval. The federal requirements would have been met on the fzrst loan to business, Sportech, so the LDO would not have to comply with federal requirements on the reuse. DTED asks that the LDO utilize policies and procedures for the reuse of funds for economic development activities utilizing the EDA's Micro Loan Policies, but without the federal requirements attached. No further reporting is required to DTED. At its March meeting the EDA took action to recommend that the City Council consider authorizing the EDA as a Local Development Organization. A copy of the staff memo to the EDA regarding the Local Development Organization issue is attached for information. Action Requested After conducting the public hearing on the DTED grant application, and, after discussion of the city's housing and community development needs, the City Council will be asked to adopt the following attached resolutions: · Resolution Adopting a Residential Anti-Displacement, Relocation Assistance and Displacement Minimization Plan · Local Government Resolution · Resolution Requesting Designation of the EDA as a Local Development Organization It is anticipated that the DTED grant application be submitted on approximately April 3~a. Formal notification from DTED is expected within two weeks. CITY OF ELK RIVER RESOLUTION A RESOLUTION ADOPTING A RESIDENTIAL ANTI-DISPLACEMENT, RELOCATION ASSISTANCE AND DISPLACEMENT MINIMIZATION PLAN FOR THE CITY OF ELK RIVER WHEREAS, temporary or permanent displacement or persons, families or businesses may occur in the City of Elk River as a result of certain housing, redevelopment, or economic development projects; and, WHEREAS, as a result of these projects, the temporary or permanent displacement of persons, families or businesses should be mitigated with the adoptions of a Residential Anti- displacement and Relocation Assistance and Displacement Minimization Plan. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Elk River hereby adopts the Residential Anti-Displacement, Relocation Assistance and Displacement Minimization Plan for the City of Elk River. I CERTIFY THAT the above resolution was adopted by the City Council of the City of Elk River on March 24, 2003 SIGNED: WITNESSED: Mayor (Date) City Clerk (Date) F:~SHRDOC\Industrial Siting\Sportech Expansion\MIF Application\Antidisplacemnt plan & resolution.doc CITY OF ELK RIVER RESIDENTIAL ANTI-DISPLACEMENT, RELOCATION ASSISTANCE AND DISPLACEMENT MINIMIZATION PLAN This plan requires the following: The City will replace all occupied and vacant livable Iow/moderate income dwelling units demolished or converted to a use other than as Iow/moderate income housing in connection with an activity with funds provided under the Housing and Community Development Act of 1974, as amended. All replacement housing will be provided within three years after the commencement of the demolition or conversion. Before entering into a contract committing the City to provide funds for an activity that will directly result in such demolition or conversion, the City will make public and submit to the Minnesota Department of Trade and Economic Development, Business and Community Development Division the following information in writing: 1. A description of the proposed assisted activity; The location on a map and number of dwelling units by size (number of bedrooms) that will be demolished or converted to a use other than as Iow/moderate income dwelling units as a direct result of the assisted activities; A time schedule for the commencement and completion of the demolition or conversions; The location on a map and the number of dwelling units by size (number of bedrooms) that will be provided as replacement dwelling units. If such data are not available at the time of the general submission, the City will identify the general location on an area map and the approximate number of dwelling units by size and provide information identifying the specific location and number of dwelling units by size as soon as it is available; The source of funding and a time schedule for the provision of replacement dwelling units; The basis for concluding that each replacement dwelling unit will remain a Iow/moderate income dwelling unit for at least 10 years fro the date of initial occupancy; Information demonstrating that any proposed replacement of dwelling units with smaller dwelling units (e.g., a 2-bedroom unit with two l-bedroom units) is consistent with the housing needs of Iow- and moderate-income households in the jurisdiction. The City may request the Minnesota Department of Trade and Economic Development to recommend that the U.S. Department of Housing and Urban Development approve an exception to required replacement housing if there is an adequate local supply of vacant F:\SHRDOC\Industrial Siting\Sportech Expansion~VllF ApplicationXAntidisplacemnt plan & resolution.doc Iow/moderate income dwelling units in standard condition. Exceptions will be reviewed on a case-by-case basis. The City will provide relocation assistance to any lower income person displaced by demolition of any dwelling unit or the conversion of a Iow/moderate income dwelling unit to another use in connection with an assisted activity. Consistent with the goals and objectives of activities assisted under the Act, the City of Elk River will take the following steps to minimize the displacement of persons from their homes. 1. Planning utility shut offs at times most convenient to residents and business owners Providing information and referral services to individuals who must temporarily leave their homes or businesses Schedule public facility construction and equipment storage to be completed as quickly as possible and at times most convenient to residents and business owners Definitions for the purposes of this plan are as follows: A Low/moderate income dwelling unit is a unit with a market rent, including utility costs, that does not exceed the applicable fair market rent for existing housing and moderate rehabilitation, as established under the Section 8 existing housing program. A Vacant livable dwelling unit is a unit that is in standard condition or has been raised to a standard condition, suitable for rehabilitation; or in dilapidated condition and occupied less than a year from the date of the grantee agreement. A Livable dwelling unit is a unit that is in standard condition or has been raised to a standard from a substandard condition, suitable for rehabilitation. A Standard livable dwelling unit is a well-built unit with adequate space for persons living there. There are no major defects in the structure and only minor maintenance is required. Such dwelling will have the following characteristics: reliable roofs; sound wells and foundations; adequate and stable floors, walls and ceilings; surfaces and woodwork that are not seriously damaged nor have paint deterioration; sound windows and doors; adequate heating, plumbing, and electrical systems which do not present safety hazards; adequate insulation for local climatic conditions; and is in compliance with local building and housing codes. A Substandard conditions dwelling unit, suitable for rehabilitation: will show a lot of deferred maintenance with permanent damage to structural items. Conditions contributing to substandard dwelling, include but are not limited to sagging, cracked, rotting or leaking roofs, walls, foundations, ceilings, floors, doors, and windows; deteriorated surfaces and woodwork; unreliable heating, plumbing, or electrical systems which present safety hazards or inadequate insulation. The cost of rehabilitation of the unit should be determined as economically feasible. F:\SHRDOC\Industrial Siting\Sportech ExpansionWIIF Application~Antidisplacemnt plan & resolution.doc CITY OF ELK RIVER RESOLUTION A LOCAL GOVERNMENT RESOLUTION FOR THE CITY OF ELK RIVER RELATING TO THE SUBMISSION OF A BUSINESS AND COMMUNITY DEVELOPMENT APPLICATION TO THE MINNESOTA DEPARTMENT OF TRADE AND ECONOMIC DEVELOPMENT ON BEHALF OF SPORTECH, INC. BE IT RESOLVED that the City of Elk River act as the legal sponsor for project contained in the Business and Community Development Application to be submitted on approximately April 3, 2003 and that the Mayor and the Director of Economic Development are hereby authorized to apply to the Minnesota Department of Trade and Economic Development for funding of this project on behalf of Sportech, Inc. BE IT FURTHER RESOLVED that the City of Elk River has the legal authority to apply for financial assistance, and the institutional, managerial, and financial capability to ensure adequate construction, operation, maintenance and replacement of the proposed project for its design life. BE IT FURTHER RESOLVED that the City of Elk River has not incurred any costs and has not entered into any written agreements to purchase property. BE IT FURTHER RESOLVED that the City of Elk River has not violated any Federal, State, or local laws pertaining to fraud, bribery, kickbacks, collusion, conflict of interest or other unlawful or corrupt practice. BE IT FURTHER RESOLVED that upon approval of its application by the state, the City of Elk River may enter into an agreement with the State of Minnesota for the above-referenced project, and that the City of Elk River cedifies that it will comply with all applicable laws and regulations as stated in all contract agreements and described on the Compliance Certification of the Business and Community Development Application. AS APPLICABLE, BE IT FURTHER RESOLVED that the City of Elk River has obtained credit reports and credit information from Sportech, Inc. and Christopher and Debra Carlson. Upon review by the City of Elk River and its legal counsel, Gray, Plant Mooty, no adverse findings or concerns regarding, but not limited to, tax liens, judgments, court actions, and filings with state, federal and other regulatory agencies were identified. Failure to disclose any such adverse information could result in revocation or other legal action. NOW, THEREFORE BE IT RESOLVED that the Mayor and Director of Economic Development, or their successors in office, are hereby authorized to execute such agreements, and amendments thereto, as are necessary to implement the project on behalf of the applicant. I CERTIFY THAT the above resolution was adopted by the City Council of the City of Elk River on the 24th day of March, 2003. SIGNED: WITNESSED: Mayor Date City Clerk Date F:\SHRDOC\Industrial Siting\Sportech Expansion~4IF Application\Local Govt Resolution.doc Compliance Certification Single Audit Act Amendment of 1996 (P.L. 104-156, Chapter 75 of title 31, USC), which establishes audit requirements for state and local governments receiving federal funds. OMB Circular A-87 - Establishes Principles for Determining Costs Applicable to Grants and Contracts with State Local and Federally recognized Indian Tribal Governments. Section 504 of the Federal Rehabilitation Act of 1973; the Americans with Disabilities Act (ADA), MN Statutes 1990, Chapter 363, Chapter 363 MN Human Rights Act - Require that all public facilities and programs be designed and constructed to be accessible to the physically handicapped. The Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments, the AUAR, (Federal Register March 11, 1988, Volume 53, Number 48) B Establishes requirements for procurement and financial management. Title VI of the Civil Rights Act of 1964 (P.L. 88-352) and subsequent regulations - It ensures access to facilities or programs regardless of race, color, national origin or sex. Executive Order 11246, as amended by Executive Orders 11375 and 12086 and subsequent regulations - prohibit employment discrimination on the basis or race, color, religion, sex or national origin. Title II of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 as amended and subsequent regulations, the Uniform Act - Identifies procedures for the acquisition of property and the relocation of persons and businesses. 8. Executive Orders 11988 and 12148, Flood Plain Management - Requires action to minimize the impact of floods on assisted projects. Executive Orders 11625 and 12138 - Encourage recipients to award construction, supply and professional service contracts to minority and women's business enterprises. 10. The Flood Insurance Purchase Requirements of Section 102a of the flood Disaster Protection Act of 1973, (P.L. 93-234) - Requires the purchase of flood insurance in communities where such insurance is available for construction or acquisition projects in any area having special flood hazards. 11. The National Environmental Policy Act, NEPA of 1969 (42 USC, Section 4321 et. seq.) and other related acts related to the environment - Requires an analysis of projects, environmental impact and a description of efforts to mitigate the impact. Other related acts refer to environmental quality. Compliance Certification MN Investment Fund Grant Application Page 2 of 3 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. Section 401f of the Lead-Based Poisoning Prevention Act, as amended (42 USC, Section 4831b) requires the removal and prohibits the use of lead-based paint. Federal Fair Labor Standards Act (29 USC, Section 201 et. seq.) - Requires that employees be paid at least minimum wage and that they be paid one and one-half times their basic wage for all hours worked in excess of the prescribed work week. State Laws, the Davis Bacon Act (40USC, Section 276a - 276a5), Copeland (Anti- kickback Act, 40 USC 276c) and the Contract Work Hours and Safety Standards Act of 1962 (40USC, Section 327-333) - Requires payment of wages, at hourly rates, as established by the Department of Labor. Section 3 of the Housing and Urban Development Act of 1968, as amended - Encourages the employment and training of lower-income people and awarding of contracts to businesses located with the community receiving assistance. Title VIII of Civil Rights Act of 1968, as amended and executive order 12259 - Requires equal opportunity in housing and non-discrimination in the sale or rental of housing and actions to affirmatively further fair housing. Requirements specified in the Housing and Community Development Act of 1974, as amended - establishes the Small Cities Development Grant program. Act Discrimination Act of 1975 - Prohibits discrimination on the basis of age. Minnesota Statutes Sections 176.181 - 176.182 - Requires recipients and subcontractors to have workers compensation insurance coverage. Clean Water Act and Executive Order 11288 - Requires protection of surface and ground water resources. Minnesota Statutes Sections 471.87 and 471.88 - Forbids public officials from engaging in activities, which are, or have the appearance of being, in conflict of interest. The Minnesota Government Practices Act - Protects the privacy of individuals who participate in Community Development-assisted programs by prohibiting the public disclosure of participant=s income and other personal information. Antitrust or unfair trade practices laws - Regulates and controls the sale of goods and services and prohibits deceptive and unfair competition between businesses. 43 U.S.C. Section 18.100, entitled Limitation on use of appropriated funds to influence certain federal contracting and financial transactions. Requires a certification that no federal funds have been utilized to lobby or gain undue influence. Executive Order 12549, Debarment and Suspension (43 CAR, Part 12 and Section 12.510) - Requires a certification regarding Federal debarment, suspension and other responsibility matters. FSSHRDOC~Industrial Siting\Sportech ExpansionhMIF Application\Compliance Certification.doc Compliance Certification MN Investment Fund Grant Application Page 3 of 3 26. 27. 28. 29. 30. 31. Executive Order 91 - 3, Wetlands - Requires grant and loan recipients to apply the principles of no-net-loss of Wetlands during the conduct of their project. The Drug Free Workplace Act (P.L. 100-690, Title V, Subtitle D) - Requires that grantees certify that they will provide a drug free workplace. Section 519 of Public Law 101-144 (1990 HUD Appropriations Act and Section 104(I) of HAD Act) - Requires that each local unit of government adopt, enforce a policy prohibiting the use of excessive force by law enforcement agencies within its jurisdiction against any individuals engaged in nonviolent civil rights demonstrations. Section 1352, Title 31, U.S. Code- Requires that language of certification regarding lobbing for contracts, loans and agreements be included in award documents for all sub awards at all tiers. Section 319 of Department of Interior and Related Agencies Appropriations Act, known as the Byrd Amendment prohibits the use of federally appropriated funds for influencing any Executive or Legislative Branch personnel in the awarding Federal contracts, grants, or loans. It also requires, where appropriate, the completion of Disclosure Form SF-LLL. Subpart C of 24 CFR Part 12 - Provides for Disclosure/Update from applicants/recipients of HUD assistance relating to the amount of assistance received, sources and uses of funds, and interested parties, and requires the completion of HUD Form 2880. M.S. 290.9705 - Requires that 8 percent of each payment paid to out-of-state contractors for work in Minnesota must be withheld on any contracts that exceeds or could reasonable be expected to exceed $100,000, unless the requirement is waived. The City of Elk River will comply with the Compliance Certification, and as so stated in the accompanying Local Government Resolution. Authorized Official Date F:\SHRDOC\Industrial Siting\Sportech ExpansionWllF Application\Compliance Certification.doc CITY OF ELK RIVER RESOLUTION RESOLUTION OF THE CITY OF ELK RIVER REQUESTING DESIGNATION OF THE ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF ELK RIVER AS A LOCAL DEVELOPMENT ORGANIZATION WHEREAS, the City of Elk River (the "City") would like to better utilize the Small Cities federal funds; and, WHEREAS, if the City retains these funds and their repayment, the funds retain the federal designation and guidelines forever; and, WHEREAS, the City by resolution, can request from the Minnesota Department of Trade and Economic Development (MNDTED), authorization to transfer federal Small Cities Development Program (SCDP) funds to a Local Development Organization (LDO); and, WHEREAS, the Economic Development Authority of the City of Elk River (the "EDA") is interested in being designated as an LDO and is a non-profit organization serving the community and economic development needs of a non-entitlement area; and, WHEREAS, the EDA shall adopt procedures and guidelines for the use of the federal funds, the repayment of the federal funds plus any interest accrued, earned or paid thereon. NOW, THEREFORE BE IT RESOLVED by the City Council of the City of Elk River that the City hereby requests approval from MNDTED to designate the EDA as a Local Development Organization (LDO), serving the community and economic development needs of the City and, therefore, authorize them to receive the repayments from the Minnesota Investment Fund SCDP Set-Aside loan to Sportech, Inc. I CERTIFY THAT the above Resolution was adopted by the City Council of the City of Elk River on the 24th day of March, 2003. SIGNED: WITNESSED: Mayor Date City Clerk Date F:\SHRDOC\Industrial Siting\Sportech Expansion\MIF Application\LDOresolution.doc TO: FROM: DATE: SUBJECT: MEMORANDUM Economic Development Authority Catherine Mehelich, Director of Economic Developmen~7~/~ March 10, 2003 MN Investment Fund Grant Application - Sportech Expansion Issue The City Council has authorized staff to submit a MN Investment Fund grant application to the MN Department of Trade & Economic Development (DTED). The grant funds will be used to provide a loan for the Sportech, Inc. expansion project. The DTED funds are part of the Small Cides federal funds. The use of the federal funds requires the City to meet federal program requirements, such as completing an environmental assessment, and providing benefit to lo,v-moderate income. If the City retains the repayment of the funds, after loaning to a business, the funds retain the federal designation and guidelines forever. Completing the federal program requirements for each re-use of the funds can be often times unnecessary and me-consuming to a project. The City can avoid the federal program requirements on the reuse of the funds by requesting authorization to transfer federal Small Cities funds to a Local Development Organization (LDO), such as the EDA or HRA. The request must be made by resolution of the City Council and submitted to DTED for approval. The federal requirements would have been met on the f~rst loan to business, Sportech, so the LDO would not have to comply with federal requirements on the reuse. DTED asks that the LDO utilize policies and procedures for the reuse of funds for similar activities, but without the federal requirements attached. No further reporting is required to DTED. Recommendation Staff recommends that the EDA request that the City Council consider making a request from DTED to designate the Elk River Economic Development Authority in the City of Elk River as a Local Development Organization (LDO), and authorize the EDA to receive the repayments from the MN Investment Fund SCDP Set-Aside loan to Sportech, Inc.