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HomeMy WebLinkAboutCCAgenda_04Feb4_wksp• CITY OF FALCON HEIGHTS COUNCIL WORKSHOP AGENDA February 4, 2003 5:00 PM 5:00 PM • Supper and discussion with Representative Alice Hausman • Discussion -Housing and Redevelopment Authority Economic Development Authority • Discussion -Newly introduced legislation from Rep. Phil Krienke regarding the "Taxpayer"s Bill of Rights" 7:00 PM • Discussion with Senator Ellen Anderson • CITY OF FALCON HEIGHTS COUNCIL WORKSHOP AGENDA February 4, 2003 5:00 PM 5:00 PM • Supper and discussion with Representative Alice Hausman • Discussion -Housing and Redevelopment Authority Economic Development Authority The City has the authority to establish an HRA/EDA under State statute. Is it preferable to have this latitude? Low-cost loans and grants to local businesses under an EDA structure are possible. There is additional levy authority for HRA/EDA functions such as redevelopment, business improvements, business area improvements, etc. • Discussion -Newly introduced legislation from Rep. Phil Krienke regarding the "Taxpayer"s Bill of Rights" 7:00 PM • Discussion with Senator Ellen Anderson • °~ '-- ~ ~ aA- ' ~ .,'` . a .. -- ; .,~ ~ ... ..Y.. _ ."" HousingResour'ce CenterTM Success Stories... "Jt is people Jike yQU ar~d your organizatian that make it so passible for r»e ~to stay Jiving in my hotrxe. " A cornrnent made from a HousingResourz:e ~i@nt8f Cl%er)l" GMHC .has found that individual attention to each homeowner is very important and critical for understanding the program requirements and having a successful experience when making investments in their properties. In addition, we have found that without our services people are not willing or likely to take on projects to continue the upkeep of their properties. Examples include: Aging. homeowners living in a two story home with -only, one bathroom located on the second floor. They want to stay in their home but due to health issues they need a bath on the first floor. The center provides the needed help with the planning, financing, and construction process. Or a new family enjoys living in their present neighborhood because they are close. to good schools, have access to public transportation and they love their location. Their family is expanding and rather than move to another home, they want to add another bedroom. Again we can provide the needed-help in the construction of the addition. GMHC will- assist the very low-income individuals and families with emergency repairs problems. 'For example, an individual needing a plumber or an elderly individual needing help with sewer line repairs. We were able to refer them to the appropriate services to solve their .emergency problems. GMHC has .also- set aside "last resort" funds as grants to assist homeowners repair life and safety issues even though they have no funds. Following are some stories regarding the high quality services GMHC provides: C©d Has Answered .M~y Pr~,ye.r....... A woman came into the HousingResource CenterTM in July holding a copy of our brochure, saying "I know God has answered my prayer." We asked her how we could help. She said the fall before she purchased a foreclosed. VA home and also received a $50,000 rehab loan at the same time. She had hired contractors to do the work but they didn't complete the' job, had disappeared and all the money was spent: She said she had six kids and had lived through the winter without heat and no walls in her bathroom, only the studs. She had heated the house with a space heater oven & clothes dryer. They all slept in the same room to keep warm. We inspected the house and found they had taken out the furnace and had not replaced it, as well as left a lot of unfinished work. She was also out of money at this point and couldn't afford to fix the rest of the house. Our staff assisted her & her family by finding a new furnace that we were able to get donated, some of our contractors agreed to finish the bathroom walls, and through an energy assistance program were able to have her windows replaced. This was a free service we provided through the HousingResource CenterTM. • HousingResource Center TMSuccess Stories Continued... C] l~ ~'hcre A .~lul.~rlher .in the ~c~use?`:'`~..... On February 7, 2001 the resource center received a call from a resident n Robbinsdale concerning a need for a plumber to repair the water line to kitchen sink and faucet. Earlier that day she had gone to Robbinsdale City Hall for some assistance: They had no assistance available and referred her to this office. I went to the home to assess the extent of the need. The water was spraying all over the walls when she would attempt to draw water in the kitchen sink. In an attempt to find a solution to the problem and assist in resolving the issue is when I began to Team the severity of her condition. She had been a nurse in a Florida hospital when an accident occurred which resulted in Hepatitis "C". When this was revealed her husband left her and their 7 year-old daughter. Becoming very ill she returned to Minnesota with her daughter. She entered into a year long chemo-therapy program and the Hepatitis went -into remission. However, recently she found that the Hepatitis returned and another year long of chemo-therapy would be necessary. In the mean time, Ernest sought out the possible use of "last resort" funds and was given authorization for its use. I was able on short notice secure a company who would make the necessary repairs. One Monday, February 5`s making a final inspection she indicated that she had become very ill and went to the doctor who preliminarily indicated that the likelihood of colon cancer was evident. Following is her letter thanking us: Mr. Ditch: "My name is ....... And recently I.had to contact you to receive some help repairing a plumbing problem. .You were very helpful and the job was done just. two days after I had contacted you.. Carolyn Olson was very instrumental in the process. I just wanted you to know how much I appreciated all your help and kindness. I did not take your help and guidance for granted. I am so very grateful for ALL your help. Sincerely, M.R." • S~eci.al G.i.ft...... This senior lady living in Brooklyn Center has little income. The electric service was pulling away from the facia board and,could have created a real hazazd. Following is her letter thank us: Mr. Ditch: Thank you again for all you and the Housing Resource Enter did for me. It is people like you and your organization that makes it so possible for me to stay living in my home. You~aze a special gift from God. Take care & God's Blessings, P.H." Mortgage .For~clt3sure Assis~tarlce [1.~..r~.ctic~n....... A woman with 5 children came to our office for assistance. She lived with her mother in her mother's home. She had quit work two years earlier to take care of her ill mom, who had now died. The mom left the house to this daughter, one of 10 children, since she was poor and other siblings had good jobs and resource, the siblings agreed #o this as well. The woman also brought her attorney along, who really was of no help since this was not his expertise. The problem was that as her mom was seriously ill, the mortgage payments had fallen behind. The lender wanted to foreclose. The daughter was back at work, however her credit wasn't the best. The lender, a credit union, wanted the mortgage paid off, even if that meant selling the house to someone else, they did not care. In order for her to keep the house the lender, our staff asked for an appointment with the credit union and the outcome was that we were able to convince them to leave the existing mortgage in place for two years, with the daughter making payments, until her credit was cleared up and then the credit union would give the daughter a new mortgage. HousingResource Center TM Success Stories Continued... • Renavativ.n :Viakes .fit safe..... While in conversation with representatives from three Native American tribes regarding how we -could assist some of their elders repair the homes they own, we mentioned our. services to Roseville residents. One of the. guests mentioned they have an elder who is in her own home, has a bad hip, and the only bathroom is in the basement which had a very unstable handrail. (This must have been a .basement home at one time and when the first floor was added they did not add an additional bathroom.) .They asked us if we would help her and said they would also make some grant funds available. We will now be able to renovate athree-season porch malting it into a bathroom and laundry area. We were able to help her secure additional funds from a Ramsey County program, We are about to begin this renovation that was delayed due to an illness of the owner. _~.fardahle .Hau.s.~n~ Far ~~11...... The Northeast Center visited with the Ministerial Alliance in northeast Minneapolis to inform various church staff of our Centers and services. One church asked if we could help them. A parishioner willed a duplex, in need of extensive repair, to the church. However an elderly woman in 90's lived upstairs. They felt it was no longer safe for her to living alone, she had no relatives to assist her 'and they did not know what to do. We contacted Catholic Eldercaze. They found appropriate housing for her and -our Resource Center staff rented a truck and moved her furniture. We then asked.the pastor if there was someone in the parish that was having housing issues that may want to purchase the home. They said they had an immigrant family with three children all living in atwo-bedroom apartment. We met with this family and both parents. were working. They were interested and we were able to assist them with obtaining a 203k rehab/purchase loan and assisted with the repairs. This was a happy ending for everyone involved. • LaSI' ~\.JaI'1:........ Other things are really simple: For example, an elderly lady, with very few financial resources, .trying to stay in her home. Her hot water heater broke and needed to be replaced and she couldn't afford it. We gave her a "last resort" grant to purchase a new hot water heater and found a qualified installer to do the installation for free. Flipping; in flc~rall... , .... . To: Autumn Lubin, Property Flipping Task Force "Home to Stay" program Autumn, Had occasion to talk with M.J. yesterday and what a rewazding conversation. Without any input from me, M.J brought up the work that was done to their home and how wonderful it was and what change it made. She went on saying the work was perfect and then describing the various aspects of it, roof, gutter, exterior doors,. etc. She was really pleased with the new bathroom, saying she had seen nothing like it. She mentioned that her husband said "now I suppose you'll never want to move." M.J. was also very complimentary of the contractor, Lake States, and construction manager Warren Ditch. What an impact "Home to Stay" has had on this and other families. From, Keith Tuttle, Property Flipping Task Force • 3 .p Star Tribune April 19, 2003 By Neal Gendler Bremer Bank first to offer program helping workers buy homes ecord-low interest rates during the past year have helped offset record-high home prices, enabling any people with modest incomes to buy their first homes. And higher apartment vacancies and a slowdown of rent increases have opened the doors to decent apartments for others. But for a sizable number of people, hopes of buying a home or moving to a convenient, desirable apartment are stymied by not having enough cash. One Twin Cities-area employer, Bremer Financial Corp., has inaugurated an unusual public-private program to help solve such problems for its workers. St. Paul-based Bremer said the program is intended to show employers the self-interest benefits of giving their workers cash for housing needs. "A lot of folks can handle a monthly payment, but they have difficulty [meeting] the origination fee and cash qualifications," said Stan Dazdis, Brewer's CEO. Some renters have trouble coming up with the cash . for the first-and last-month rent payments and security deposit that often aze required before they sign a lease. The new program, called IZEAL/I~LP, is a joint project of Bremer Financial -- owner of Bremer Bank -- the Greater Twin Cities United Way and the Greater Metropolitan Housing Corp. (GMHC), with help from Fannie Mae, the nation's largest source of home-mortgage funds. United Way will offer the program to other businesses wanting to serve community interest while making their companies more attractive places to come to work and to remain. Business-sponsored GMHC will take the applications and administer the program for Bremer and other businesses that choose to use it. Fannie Mae gave technical help designing the program and opening access to the secondary market, where mortgages aze resold as securities, with the proceeds used to fund more mortgages. The acronym REAL/IIELP stands for the Rental Employee Assistance Loan Program and Homebuyer Employee Loan Program. Brewer's program -- hoped to be the template for others -- offers qualifying employees five-year loans of up to $5,000 to buy a first home and up to $2,000 to make first and last rent payments plus security deposits. The loans are forgiven if the employee remains with Bremer for five years. Dardis said Bremer, which has worked to boost affordable housing through work with United Way and other agencies, didn't start the program for "the traditional profit motive," even though it expects to benefit. "First, it's the right thing to do," he said. "It's not what you say -- it's all about what you do. This is an opportunity to show "The Bremer Difference.' It's an opportunity to differentiate ourselves as an employer." It's also a way to retain good workers, he said, which is why the repayment obligation doesn't vanish until the end of five years; an employee leaving or laid off early must repay the remaining loan balance remaining according to a normal amortization schedule. Community service At a recent news conference announcing the program, St. Paul Mayor Randy Kelly called employer- assisted housing "the wave of the future." He said the program is "part of a broad effort to address the very serious affordable-housing problem in the Twin Cities. We can lick this, but it will take some time." Bremer Financial is owned by the nonprofit Otto Bremer Foundation and employees. Dardis said REAL/HELP connects both with the foundation's work and with requirements that the regulated banking companies serve their communities. "We want a specific example of serving the community," he said, and encouraging homeownership is a way to build communities. United Way CEO Jim Colville said that REAL/HELP, which was a year in development, "is a program that we believe will be a real asset to our community." It fits in a three-part "housing connections" initiative that includes "helping employers to understand the issues of affordable housing ...how it affects their employees, their community around them." Other parts include helping to expand capacity of housing agencies and dealing with the discovery that one of the barriers to housing is the need for "service components" such as day care and transportation. "To make this thing really work, the people need sort of customized services. We're in the service business," Colville said. GMHC, which works to improve the availability and quality of affordable housing, will administer the program and take applications from employees of Bremer and other participating companies, said President Carolyn Olson. Four GMAC Housing Resource Centers offer consumers housing information, including first-time home-buyer classes and assistance with financing mortgages and improvements; foreclosure- prevention programs; construction management help, and administration of other agencies' programs. "We believe [REAL/HELP] is one of the best public-private housing initiatives," Olson said. Although it's new in the Twin Cities, it's not the first such program in the nation. Fannie Mae has helped more than 500 employers throughout the country create assistance programs, said Kerri McClimen, a communications manager in Chicago. In the Twin Cities azea, only a handful of employers are believed to have such extensive housing-assistance programs, said Missy Thompson, director of Fannie Mae's Minnesota Partnership Office in St. Paul. She said some banks provide assistance to their employees. "There's quite a bit of employer-assisted housing in Duluth, but it's been pretty unusual in the Twin Cities area," she said. Olson said many financial institutions waive the usual origination fee of 1 percent of the loan amount for employees who finance with them. How it works Barriers to ownership such as requirements for down-payment and closing-cost cash have been falling for several years, as Fannie Mae, its sibling Freddie Mac and many lenders have developed programs to reduce those burdens.But the idea of employers simply paying those costs is something new. Dazdis said the idea grew from his conversation with Steve Meades, president of Bremer Twin Cities Bank, about "United Way and our commitment there. What we wanted to do was to make real sure that with our new and expanded Twin Cities presence, we were very cognizant of the needs of the Twin Cities community. Affordable housing was very obvious," Dardis said. The discussion then turned to wanting to help Bremer employees avoid housing problems. Two trends were important: rising home prices and incomes that didn't keep up with the cost of buying • homes. In the Twin Cities, the median home price -- the point with half the sales for more, half for less -- is $189,000. According to Bremer, "On average, a modest three-bedroom home sells for $148,000; a family would have to earn $50,000 per year to qualify for purchase." S In addition, before the economy hit the brakes, Bremer was having trouble finding enough qualified employees. Dardis expects an economic recovery in which employers again will be competing for workers. "You look for ways to become the employer of choice ...ways to differentiate yourself. Steve and his management team took that discussion and came back to us with this approach." Patricia Rossez, Bremer's vice president for community development, said the company is enthusiastic about the initial response by employees, although the number of inquiries wasn't tallied. Bremer Financial has 1,800 employees in three states. The program is focused in the Twin Cities metro area, where about 600 employees work, and Dardis estimated that half would meet Brewer's eligibility criteria. Although participating employees can obtain mortgage loans wherever they want, Dardis threw in an additional inducement: Bremer will waive the origination fee for its workers fmancing with the bank. The area's usual origination fee fora 30-year loan at market rate with no points is 1 percent of the loan amount, so a Bremer employee borrowing $120,000 would save $1,200. Dardis said Brewer's REAL/I-iELP loans would be at market rate.Bremer will put a lien on the house to protect the bank from an employee quitting and refusing to repay the remaining balance, he said. To be eligible for Brewer's REAL/ HELP plan, an employee must be older than 18 and employed by Bremer for at least six months; have total household income of less than $60,240 in the nine-county Twin Cities area, or less than $41,360 if the home is in Kanabec or Mille Lacs counties; be regularly scheduled to work 20 hours a week or more, and not have received a REAL or HELP loan for the same type of housing previously. For HELP loans, employees must be first-time buyers or not have owned a home in the past 36 months. Hoping for others Leaders of participating organizations hope that other businesses will see the benefit of replicating the program launched by Bremer. "I think the potential is quite good," Fannie Mae's Thompson said. "I think that employers are learning that they have to offer a lot of different benefits and opportunities." She said some Minnesota cities still have a shortage of workers and "are intrigued by the idea ofemployer-assisted housing."She said Fannie Mae's employer-assisted housing director will be in Minnesota next month to provide seminars in Mankato and the Twin Cities. Colville said United Way has a relationship with about 2,000 businesses, and "we want to offer them this template." The program Bremer developed with United Way can "engage companies in a discussion of how affordable housing is a community issue they need to be talking about." He said he had no idea what the level of acceptance might be, although he expects "limited initial response just become of the economy." The REAL/HELP model also might be a way to deal with the problem of workers living far from their jobs, helping "people get where they need to be instead of where they have to be," he said.Dardis said that nationally, only 3 to 4 percent of employees eligible for such programs use them. He attributed the low number to lack of awareness and some negative connotations. "When you start talking about affordable housing, people ask, 'Isn't that like welfare?' "But even college graduates -- including his own children -- have trouble finding housing they can afford, he said. "There are so many families that are faced with this phenomenon of constantly rising house prices but incomes that don't keep up." He said Brewer's program is available to all eligible employees, and the money can be used for improving the property as well as for a down payment. What Bremer gets is the employee's service for five years and the ability "to demonstrate commitment to affordable housing and to being part of the solution." "We think we have something of real substance for our employees. And United Way is excited about it because they think they've got a way to leverage with other employers and say, 'We'll work with you.' I just • think it's awin-win for everyone." ### _~ ~~ ,r Star Tribune 1998 .] .~)L1~11i~ en a neighborhood is slipping, the telltale signs mount: unkempt yards, houses in poor repair, reluctance among residents to invest in improvements. But neighborhood decline doesn't have to happen. A northeast Minneapolis program, three years old this week, is showing how to preserve housing and neighborhoods. The HousingResource Center program has worked so well that this year it was expanded to far northwest Minneapolis and four suburbs; its sponsors celebrated the expansion Thursday with an open house at the new northwest office at 44th and Penn Ave. N. The three-year results of the HousingResource Center in northeast Minneapolis suggest how much residents served by the new northwest center will benefit: a lot. The northeast center has helped about 2,000 people get free expert advice on home repairs; assistance finding financing or getting grants; training for home ownership; help with foreclosure prevention, and more. The program is part of the Greater Minneapolis Metropolitan Housing Corporation (GMMHC), a business- supported nonprofit agency that aids housing for low- and moderate-income people. The agency began in 1970 as a response to urban problems. For most of its life GMMHC has provided predevelopment assistance to nonprofit housing developers; such assistance includes timely loans to enable projects to go forward (more than 14,000 housing units costing nearly $700 million). GMMHC also has built and rehabilitated homeowner housing (more than 1,000 units costing over $75 million). The resource center idea, once only an experiment, has become an effective tool; a third center is likely in south Minneapolis. The northwest center serves Minneapolis west of the Mississippi River and north of Lowry Avenue, as well as Robbinsdale, Brooklyn Center, Crystal and New Hope. The McKnight Foundation provided half the start-up funds of $100,000; the rest came from the four suburbs, Minneapolis, Hennepin County and a federal agency. The new center is finding differences from the northeast experience. Although northeast home ownership was above average, there were problems with aging and substandard housing and an aging population. A lot of fix-up was needed. In the suburbs, houses often are small and residents want additions; such investment can help reverse the decline of first-ring suburbs. So the University of Minnesota's Design Center for American Urban Landscape is designing home-addition options to guide residents who seek help at the northwest center, As in northeast Minneapolis, the northwest center will provide advice on renovation and construction. That center also should play a useful community role when the big Humboldt Corridor project, funded in part by the 1998 Legislature, begins to affect and reshape area housing. The lesson in all this: Housing and neighborhoods can be preserved. GMMHC is showing the way. ~. ~ ~ ~ ~~ .~ ~ 3, Star Tribune September 18, 2001 Tr~ist bril~lgs eity affordable l~loi~sirlg al~d a vvl~lole lot ~Tlore Agrand opening Thursday celebrated the near-completion of a significant housing development in the Elliot Park neighborhood just southeast of downtown Minneapolis. The $29.5 million project, called East Village, has competitive market-rate housing and, just as important, affordable housing - a need cited by city mayoral candidates. .7 East village "looks great, it is great; it has such a fantastic impact on Elliot Park and the community," says Alan Arthur, president of the nonprofit Central Community Housing Trust (CCHT), project developer. Mayor Sharon Sayles Belton told the grand opening that she wants "to see project like this in all 13 wards." Council Member Joan Campbell, defeated in the recent primary, tearfully said East Village would be "part of my legacy: ' Ted Mondale, Metropolitan Council chairman, called East Village " a dream become reality." Mostly the trust, now 15 yeazs old, restores run-down, troubled and historic buildings. It now owns or controls more than 1,100 housing units in or near downtown. Many are affordable to low-income tenants who help the city's economy by working downtown. East Village's 179 units include multistory apartment buildings and connected townhouses -and more. Already, it has a coffee shop, with a restaurant and minimarket to follow. Its 350 underground pazking spaces will reduce neighborhood parking problems. East Village is opposite the city's Elliot Park at the intersection of 8~` St. and l ltt' Av. S. The trust was started after Convention Center construction in the 1980s displaced nearby residents. It has undertaken nearly two dozen projects that preserve important housing in or near downtown. Among them is Paige Hall, 727 5~` Av. S. Paige Hall's 51 efficiency and 18 single-bedroom apartments have had affordable rents of $205 to $40 a month. Its renters last year had an average income of $15,764. Another is the historic 70-room Continental Hotel, just off the Nicollet Mall on S. 12th Street, which serves adults often formerly homeless. • In cooperation with the University of St. Thomas, which is displacing housing to expand its Minneapolis campus, the trust will add three housing floors to its 34-room Lamoreaux building on 7~' St. and 1St Av. N., where rents have ranged from $210 to $280. St. Thomas is providing $1 million toward the expansion. And the trust is working with the nonprofit Hope Community of south Minneapolis and for-profit entrepreneurs to redevelop the area around Franklin and Portland Avs. The cost estimate is $45.2 million. 8 ~~-~.~st l~i•ings city affor~abie i~ousi~~~ anc~ ~ ~vlloie ]ot galore Continued.... Plans call for 200 to 300 rental units and a Children's Village Center. In cooperation with the Bridge for Runaway Youth,-the trust has the Archdale Apartment for Homeless Youth at 1600 1St Av. S., opened a few years ago to provide decent housing for youths off the streets. The trust has been improving life in the city -not only for lower-income tenants but for their neighbors. One building had been cited for more than 400 code violations before the trust stepped in. Now, the trust will be expanding into two or three adjacent neighborhoods, according to a new strategic plan adopted by its board. CCHT, which employs staff of 22 and has its own office building on Park Avenue neaz Interstate Hwy. 94, has demonstrated its community worth. Its presence should be welcomed by the next mayor to help address affordable housing issues. East Village has involved government and private help, including $600,000 in Neighborhood Revitalization Program (NRP) aid channeled through the Elliot Pazk Neighborhood organization. The CCHT buildings, though mainly in the Elliot Park neighborhood, are also in the Phillips and Stevens Squaze neighborhoods, as well as downtown. The investment to date totals $70 million. East Village's funding partners included the Family Housing Fund, Greater Minneapolis Metropolitan Housing Corp., the Metropolitan Council, Minneapolis Community Development Agency, Minneapolis Foundation, and other local and state bodies. The names of 1,000 people who helped East Village in some way will be posted there. Designed my the Miller Hanson Partners architectural and planning firm, East Village embodies, an announcement says, "new urbanism": human scale, pedestrian orientation, green spaces, community access, public safety and a sense of resident-ownership. Once the site held deteriorated housing, commercial buildings and parking lots. Looking ahead, CCHT has created a fund advisory board. It includes former St. Paul Mayor George Latimer and Emily Ann (Staples) Tuttle, former Hennepin County Board member. So in this, a month when Minneapolis celebrates East Village, let's also celebrate Central Community Housing Trust for making a difference in inner-city neighborhoods and in the lives of many city residents. 9 ~~ Cities that are paj~f of the l~lorth rUretro aJ~~/ COrrICIOr Coarition - Arden f-rills, brew Brighton, r~7ounds View, Roseville, ~r7oreView al,C1 Circle f'ines- are planning to contract with the Greafer 6~lrnneaporis etroporitan Dosing Corp., a nonprofit pf t~grarr~. Minnesota r~ L_J St. Paul Pioneer Press Tuesday, May 22, 2001 ~'it~ ~~~s hc~~usnb ~l~l~ra~~rl~erlt a.SS~~tal~c~ BJ/ NQnCy Ng0 STAFF WRITER At a time when the housing stock is aging and revitalization is a key word in the north metro, residents of Anoka and Ramsey County cities along Interstate 35W could get one-stop service when seeking advice on buying or improving homes. Cities that are part of the North Metro 35W Corridor Coalition- Arden Hills, New Brighton, Mounds View, Roseville, Shoreview and Circle Pines -are planning to contract with the Greater Minneapolis Metropolitan Housing Corp., a nonprofit home improvement and revitalization program. ,~~ ~.~r f~ L ~ u ~ ~ ~ , _;, CJ. ~t~ r, ~. ~..J _7 ,^ ~~,~ 1. R f1~ a~=i; ~lt~rt. The agency's fourth housing resource center would be located on the former Art Larson property in Shoreview, on County Road I near Lexington Avenue. All participating cities must formally approve the agreement before the contract becomes active. Shoreview has already signed on. Arden Hills is scheduled to vote on the issue at the May 29 council meeting. Although Blaine is part of the 35W Coalition, which addresses housing and transportation issues in seven cities along the interstate, the city will not participate because it already contracts with an agency to provide housing information. ff all goes as planned, the new housing office could open in July. The housing resource agency gives free financial and technical advice on housing issues, regardless of a resident's income level. Among the services provided are on-site visits. At a resident's request, construction managers visit homes and look at work being proposed. They provide estimated costs for projects, such as storm damage recovery, remodeling or addition projects. Residents would then know what they should expect to be charged when hiring a contractor. Financial services would also be offered, such as resources for rebates or loans. For a year, the city of Roseville has been contracting with the housing corporation, working out of the program's northeast Minneapolis office. Cathy Bennett, Roseville economic development specialist, said residents would now be referred to the Shoreview location. "It's been a successful program," she said. "It's kind of a one-stop shop to help people through the (housing) process." Bennett said more than 300 residents used the resource center during the first nine months the program was offered. She said residents are saving money, including one resident who saved at least $10,000 when redoing a roof. She said the resource center also saves time for city staff and allows them to work on other issues. North Metro Each city's contribution to the housing resource center is based on several factors, including the age of housing stock and median home values. Public and private resources will also help fund the program. The housing resource center might serve several cities outside of the coalition as well. 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II t0 O) t O O O O Oo o O O I 0 0 O ~ J F- F- Q Z F - ~ n u ~ f -- F - ~ * . a ~_ Z` In .~ N Z O E E 0 U LL 0 0 • N N U c F a~ w o m `"~ c ~ ~ N O O O paj Gf o Z ~ ~ o ~ ~ a ~ U cU m cU ~ g~ `m o;OL m ~g ~ > > ~ N ~. C +`~ 7 t0 _ ~ N W N m L N K U ~T i E Z K g. 0 g f O U LL PART IV REGULATORY AND DEVELOPMENT FUNCTIONS OF CITIES Chapter 17: Community development and redevelopment • C I. Criteria for awarding business subsidies required ........................................................................................... l II. Structures ................................................................................................................................................... .. 2 A. Housing and redevelopment authorities ................................................................................................ .. 2 1. Elements of an HRA .............................................................................................................................. .. 2 2. Area of operation ................................................................................................................................... .. 3 3. Membership ........................................................................................................................................... .. 3 4. Powers .................................................................................................................................................... ..4 5. Contracting ............................................................................................................................................ .. 5 6. Financing .............................................................................................................................................. .. 5 7. Certifications to state ............................................................................................................................. .. 5 8. Federal certification ................................................................................................................................. 6 9. Pros and cons of the HRA ....................................................................................................................... 6 a. Pros ...................................................................................................................................................... 6 b. Cons ................................................................................................................................................... .. 6 B. General city development powers ......................................................................................................... .. 7 C. Economic development authorities/port authorities .............................................................................. .. 7 D. Municipal or area redevelopment agencies ........................................................................................... .. 8 E. City development districts ......................................................................................................................... .. 9 F. Municipal industrial development ............................................................................................................... 9 G. Minnesota Housing Finance Agency ..................................................................................................... 10 H. Department of Trade and Economic Development ............................................................................... 11 I. Minnesota Technology, Inc ....................................................................................................................... 11 III. Programs .................................................................................................................................................... 11 A. Housing bonds ....................................................................................................................................... 11 /3 r~ ~~ B. Industrial parks ...................................................................................................................................... 12 C. Industrial revenue bonds ........................................................................................................................ 13 D. Commercial rehabilitation ..................................................................................................................... 13 E. Tax increment financing (TIF) .................................................................................................................. 13 F. Property tax abatement .............................................................................................................................. 15 G. Community development block grants .................................................................................................. 16 H. Transportation ........................................................................................................................................ 16 1. Railroads ................................................................................................................................................ 16 2. Airports .................................................................................................................................................. 16 3. Mass transit .............................................................................................................................•--............ 17 I. Advertising ............................................................................................................................................... 17 1. Bureau of information and publicity ..................................................................................................... 18 J. City district heating system ....................................................................................................................... 18 K. Contributions to economic development organizations ........................................................................ 18 • L. Contributions to hospitals, artistic organizations ...................................................................................... 19 M. Rural development grants ...................................................................................................................... 19 N. E-commerce ready cities ........................................................................................................................ 19 O. Corporations created by cities ............................................................................................................... 19 IV. How this chapter applies to home rule charter cities ................................................................................. 20 i• `y • CIIAPT&R 17 Chapter 17 Community development and redevelopment This chapter deals with the major structures and programs for encouraging and guiding the economic development and redevelopment of a community. Economic development tools can be applied to any size city. These tools are interrelated and a city may use several for one project. Without council coordination and guidelines, a real danger exists for citizen criticism of alleged misuse of these tools. • ware. r~ wrCkrt~„a, 589 N. W. 2d It should be noted here that public financing of a privately owned facility 793 (Mi°°' 1999). does not make public space in the facility a public forum for free speech purposes. This chapter is divided into three sections. The first section describes the requirement for a city to establish criteria for awarding business subsidies before any subsidy can be made. The second section addresses the various development agencies or structures cities may create, or that are available to provide development assistance. The third section addresses the programs or tools available for encouraging development and redevelopment. I. Criteria for awarding business subsidies required II. Structures III. Programs IV. How this chapter applies to home rule charter cities . Criteria for awarding business subsidies required • Minn. Stat. §§ 1167.993 to Prior to awarding any subsidy, as defined by law, to any business, a city and t t 6~.99s, any ~p,~ EDA, port authority, non-profit created by a local government, See specifically Minn. Stxt. ~ and other units and divisions of cities, must hold a public hearing and adopt 1167.994, 4~bd. 2. criteria for awarding business subsidies. The criteria must include a policy More infoanation is available regarding the wages to be paid for any jobs created. (Copies of the criteria from the Minnesota Department adopted by cities are found on the Dept. of Tourism and Economic of Tourism and Economic Development's web site. Development at http://www.dtedstate. mn.us/02x0 Sfasp HANDBOOK FOR M7MVESOTA CnzBS 17-1 /S • CHAPTER 17 M;iu,. stet. ; 1 I6J.99a, S~~M. 3. Once the criteria are established, the grantor and the recipient must enter into subsidy agreements that meet the statutory requirements. The agreement must include an obligation to repay part or all of the subsidy if the recipient does not meet its obligations. Mann. Stat. ~ 1167.993, subs 3. Types of assistance meeting the defmition of a business subsidy include grants, contributions of real or personal properly or infrastructure; the principal amount of a loan at rates below those commercially available to the recipient; any reduction or deferral of any tax or any fee; any guarantee of any payment under any loan, lease or other obligation; or any preferential use of government facilities given to a business. Minn. Stat. § 1167.993, subd 3. There are several exceptions this definition, including a business subsidy of less than $25,000, and subsidies for redevelopment, pollution control and land clean up, housing, industrial revenue bonds and other similar programs. Mann. Stat. § 11 GJ.994, subtle 7 Recipients must provide grantors with information on their progress toward and s. the goals outlined in the agreement. Grantors must submit the annual Minnesota Business Assistance Form (MBAF) to the Dept. of Tourism and Economic Development (DYED) for each business subsidy agreement. Local government agencies in cities with a population of 2,5000 or more must submit an MBAF regardless of whether they have awarded business • subsidies. Local government agencies in cities with a population of 2,500 or less are exempt from filing the MBAF if they have not awarded a subsidy in the past five years. II. Structures A. Housing and redevelopment authorities The predominant method of delivering and administering housing and redevelopment programs in Minnesota is through a legal public agency, accountable to city government. A city may establish this public agency, which is often the housing and redevelopment authority (HRA). There are over 230 HRAs in Minnesota. 1. Elements of an HRA Mann. Sint. y~§ 469.001 to ,~ j~A is a public corporation with power to undertake certain types of 469.047. housing and redevelopment or renewal activities. While state legislation "creates" a housing and redevelopment authority in each city, it is up to the city council to formally establish an HRA before it can do business and use Mann. stint. § ar,9.oo3' its powers. Once a council legally establishes an HRA, it may undertake certain types of planning and community development activities on its own with council approval. • 17-2 HANDBOOK FOR MINNESOTA CITIES /~ • CRAFTER 17 Minn. Stat. ~ 469.003, st,ba. ~. To create a housing and redevelopment authority, the city council must, by resolution, make the following fmdings required bylaw: Substandard, slum, or blighted areas that cannot be redeveloped without governmental assistance; or, A shortage of affordable, decent, safe, and sanitary dwelling accommodations available to low-income individuals and families. Minn. Stat. ~ 469.003, subds. 2 The council must pass this resolution after a public hearing. A copy of this and 4. resolution must go to the commissioner of DTED. 2. Area of operation Minn. Stat. § 469.004, sabds. I, The area of operation of a city HRA is the corporate limits of the city. Z' County and multi-county HRAs operate in areas that include all the political subdivisions within the county or counties, except they may not undertake any project within the boundazies of a city that has not adopted a resolution authorizing the county or multi-county HRA to exercise powers within that city. Minn. Stat. ~ 469.004, subd. s. Establishment of a county ormulti-county HRA precludes the formation of city HRAs, unless the county or multi-county HRA and the commissioner of • DTED agree to let the city form one. 3. Membership Minn. Stat. $ 469.003, s~ba. 6. ~ ~~, consists of five commissioners who are residents of the city. The mayor appoints and the council approves the members who serve five-yeaz, staggered terms. City councilmembers often serve on the HR.A. The entire membership of an HRA may consist of councihnembers. 24 C. F. R.. 964.41 Federal regulations require that at least one member on a Public Housing Agency Board, which may be the HRA, an EDA or other public housing authority. This rule applies to any public housing agency that holds a public housing annual contributions contract with HUD or that administers Section 8 tenant-based rental assistance. The rule does not apply to state-financed public housing projects or Section 8 project-based assistance. A "small PHA exception" also exists. Minn. Stat. ~ 469.003, Cuba. ~. The city clerk must file a certificate of appointment for each commissioner to a city HRA and send a certified copy to the commissioner of DTED. Minn. Stat. § 469.01 I, State law allows the HRA to adopt bylaws. suba. 2. • HANDBOOK FOR MINNESOTA CITIES 17-3 I'7 CHAPTER 17 Minn. Stat. $ 469.01 I, subs. a. Commissioners may accept compensation of up to $75 for each meeting they attend. Commissioners who are elected officials may receive daily payment for a particular day only if they do not receive any other daily payment for public service on that day. Commissioners who are public employees may not receive daily payment, but may not suffer loss in compensation or benefits as a result of their service. 4. Powers Minn. Star. § 469.012, subd. 1. ~ glZA is primarily responsible for the planning and implementation of redevelopment andlor low-rent housing assistance programs within its area of operation. An HRA has all the powers necessary to carry out the state HRA Act, but does not have the power to levy and collect taxes or special assessments except with respect to certain redevelopment projects including, but not limited to, the following powers: • To sue and be sued; To employ staff and an executive director; To undertake projects within its area of operation and to provide for the construction, reconstruction, improvement, extension, alteration, or • repair of any project or part of a project; T ll b d l b i • o se , uy, own, an ease property y any means necessary, ncluding the power of eminent domain; To cooperate with and use state and federal financial assistance programs; • To develop rehabilitation and code enforcement techniques; • To issue bonds for any of its corporate purposes backed by the pledge of revenues, grants, or other contributions; To implement renewal or redevelopment programs using tax increment financing; • To own, hold, improve, lease, sell, or dispose of real or personal property; To designate substandard, slum, or deteriorating areas needing redevelopment, and unsafe, unsanitary, and overcrowded housing; • To make necessary expenditures to carry out the purposes of the HRA law; and, • To develop and administer an interest reduction program to assist the financing of the construction, rehabilitation, or purchase of low or moderate-income housing. • 17-4 HANDBOOK FOR MINNESOTA CITIES B C7 CxAM'BR 17 Minn. Seat. § 469.0]2, subd. 4. While HRAs have the legal authority to "do whatever is necessary and convenient" to implement redevelopment, they are subject to the ordinances and laws of the city. The city council must approve HRA plans before the Minn. swt. § a69.o2a. housing and redevelopment authority may begin implementation. 5. Contracting Minn. stet. § 469.o1s. All HRA construction work and purchases of equipment, supplies or materials that involve expenditure of $35,000 or more if the HRA is located in a city of under 2,500, and $50,000 for all other HRAs located in cities, must be competitively bid. There are limited exceptions for emergencies and certain projects. 6. Financing Minn. Stet. §§ 469.033 and Operating funds, capital improvements, and debt retirement expenses for 469'034' HRA projects maybe financed by any one, or combination of, the following methods: Federal grants; • Revenue bonds the HRA or local governing body sell; • General obligation bonds the local governing body sells; • Tax increments from redevelopment projects; • A limited mill levy for redevelopment projects and planning activities; • A limited mill levy for informational and relocation services. Mi„n. Stet. § 469.003, subds. 4, 6. Minn. Stet. § 469.003, subd. 7. Minn. Stet. § 469.013. 7. Certifications to state The following documents relating to the establishment and activities of local HRAs must go to the commissioner of the DTED: • Resolution of need; Certificates of appointment or reappointment of FiRA commissioners; • Project reports; • Applications for federal assistance; • Contracts with federal agencies; Redevelopment plans; and, • Low rent public housing prof ect and management plans. In addition, annual financial reports must go to the state auditor. . HANDBOOK FOR MINNESOTA CtTB:s 17-5 14 CAAPTBR 17 8. Federal certification In order for a local HRA to use federal Dept. of Housing and Urban Development (HUD) assistance programs, it must submit a transcript of organizational documents to the HUD area office. 9. Pros and cons of the HRA While H1tAs have demonstrated competence and professional expertise in many areas, any special purpose agency like an HRA will have some pros and cons. a. Pros Fiscal self-sufficiency. Due to the nature of the programs an H1LA. addresses, it can fund projects usually outside the general government budget with minimal, direct impact on the city budget. The enabling legislation also allows for aone-third mill levy and the use of revenue bonds. Greater efficiency. Because of the specialized functions of an HI2A, it can organize its operations in a certain area better than general government, • focusing resources on the delivery of a specific program rather than on a wide-range of conventional services. Fle~bility. An HRA can act swiftly to meet a problem and has the flexibility to be more innovative than a city council in developing new approaches. Furthermore, it has the ability to coordinate public and private resources to solve problems. b. Cons Operating too independently. Because it is somewhat free of political pressure, an HRA can administer programs with only a minimal amount of accountability for its actions. Fragmentation of the local government functfon. An HRA can run the risk of operating at cross-purposes or in contradiction to city policies, which can result in conflict with and duplication of efforts. Responsiveness to public opinion. HRA operations, insulated from the electoral process, can risk being insufficiently responsive to public opinion or community thinking. • 17-6 HANDBOOK FOR MR~lNESOTA CITIES ao CHAPTER 17 B. General city development powers Cities have authority to aid and cooperate in the planning, construction or operation of economic development and housing and redevelopment projects. Minn. stet. §469.041. The following is a partial list of actions cities may take, with or without compensation: • Dedicate, sell, convey, or lease any of its interests in any properly or grant easements, licenses or any other rights or privileges to an HRA; • Furnish parks, playgrounds, recreational, community education, water, sewer, and drainage facilities or other works adjacent to or in connection with housing and redevelopment projects; Do any and all things necessary or convenient to aid and cooperate in the planning, undertaking, construction or operation of the projects; and, Minn. Stet. §469.043, subd. 2. • Grant a partial tax exemption of up to 50 percent of all local taxes for • Minn. Stet. §§ 469.192. Laws establishing the purposes are Minn. Stet. §§ 116J.415, 469.001 to 469.068, 469.090 to 469.1081, 469.124 to 469.134, 469. l 52 to 469.165, or any special law. Judd Supply Co. v. City of Princeton, 448 N.w.2d 895 (Minn. App. 1989). housing projects in a redevelopment district. A statutory city, a home rule charter city, an economic development authority, a housing and redevelopment authority or a port authority may make a loan to a business, a for-profit or nonprofit organization, or an individual for any purpose the entity is otherwise authorized to carry out under any of the laws cited. Private development projects that receive public financial or other assistance will not necessarily become public projects that trigger competitive bidding or other state laws applicable to public works. C. Economic development authorities/port authorities Two development approaches gaining in use are the port authority and the economic development authority. Minn. Stet. §§ 469.048 to Over 25 cities now have the powers of a port authority under special laws a69.os9, and many more have created economic development authorities. • HANDBOOK FOR MEQNESOTA CITIES 17-7 ~I CHAPTER 17 Minn. Stat. §§ 469.090 to All cities may create economic development authorities that have most of x69.1 osz, the powers of port authorities. The city may consolidate the economic The Minnesota Department of development authority (EDA) with an existing HRA or the city may grant Trade and Economic the authority HRA powers. The city council may create an EDA by passing Development publishes the Economic Development an enabling resolution. Before adopting the enabling resolution, the city Aulhorittes Hcrndbook. This book must first .conduct a public hearing. The enabling resolution establishes a is not available online. DTED board of commissioners for the EDA. The city council can choose to serve may be contacted at 500 Metro sgnare Bldg, 121 E. 7`h Place, st. as the EDA board of commissioners or create a board composed of a cross- Paul, MN 55101-2146 (651) section of the community. The mayor, with approval of the council, 297-1291 or (soo) 657-Hass. appoints the commissioners. The boazd may consist of three, five or seven visit thou web site ar. http:/hvww.dted.state.mn.us/ members who serve six-year terms. The board is subject to the open meeting law. For a copy of this book, and for sample trosolutions and by laws for an EDA, contact dte League's Research Department at (651) 281-1220 or (800)925-1122. Minn. Stet. § 469.192. See also ~ EDA is authorized to make a loan to a business, afor-profit or nonprofit various parts of Minn. slat, §§ 469.090 to 469.1082. organization or an individual. The loan must be for a purpose the EDA is authorized to carry out under the law. An authorized purpose must deal with or contribute to economic or industrial development. EDAs have the ability to use pooled bond reserving. Inmost development programs, each bond • issue is independent of any other bond issue with a separate .service or sinking fund account. EDAs, however, may create a single common bond reserve fund. Under this arrangement, each project's revenues go into a common fund, which in ttlrn pays the bondholders on all projects. Through this pooling mechanism, the security of each project's bonds increases and borrowing costs decrease as long as the pool has the necessary volume and diversity of cash flow. Minn. scat. § 469.102. EDAs cannot own and operate facilities or issue debt without an election. The city must authorize the issuance of debt in the resolution creating the EDA. Also, EDAs cannot act outside of districts that are contiguous and qualify as blighted under the tax increment law. D. Municipal or area redevelopment agencies Minn. Stitt. §§ 469.109 to Any municipality or group of municipalities may establish a public body, 469.12x. known as a municipal or area redevelopment agency, in and for the area the municipality covers. This law defines municipalities as home rule charter or statutory cities, counties, towns or school districts. • 17-8 HANDBOOK FOR MINNHSOTA CITIES ~a C xArTER 17 Minn. Stale §§ 469. ] l 0, subd. I ] ; The law includes only rural areas, which generally means all areas that are 469. ~ t t. not within the boundary of any city having a population of 50,000 or more and not immediately adjacent to urbanized and urbanizing areas with a population density of more than 100 persons per square mile, or areas with an unemployment rate of 6 percent or more. The restrictions limit applicability of the law to rural areas and to the Iron Range. Minn. Stale §§ 469.] 11; 469.115. The establishment of the municipal or area redevelopment agency is similar to the establishment of an HRA. A municipal or area redevelopment agency has similar powers to an HRA. E. City development districts Minn. Scat. §§ 469.1z4 to Any home rule charter or statutory city may designate development districts 369'134' within the boundaries of the city. Within these districts, cities may: Adopt a development program to acquire, construct, reconstruct, improve, alter, extend, operate, maintain or promote developments aimed at improving the physical facilities, quality of life, and quality of transportation; Promote pedestrian skyway systems; and, • . Install special lighting systems, street signs and street filrniture, landscaping of streets and public property, and snow removal systems. Minn. scat. § 469.1 z7. The law encourages pedestrian skyway systems, underground pedestrian concourses, people-mover systems, andpublicly-owned parking structures. It exempts these structures from taxation even when they are attached to privately-owned buildings. F. Municipal industrial development Minn. Scat. § 469.152 to For the purpose of attracting industrial and commercial development and a69.t6s1. encouraging local governments to prevent economic deterioration, any Mann. star. § a69.tsz. home rule charter or statutory city or its redevelopment agency has the power to promote industrial development by: Acquiring, constructing, and holding lands, buildings, easements, improvements to lands and buildings, capital equipment, and inventory for industrial projects; Issuing revenue bonds and entering into revenue agreements to finance these activities to promote industrial projects; and, Minn. Star. § 469.155, subds. I- . Refinancing health facilities. 4. HANDBOOK FOR MrMVESOTA C1T1E5 17-9 ~3 • • cxArrsR 17 Under the legislation, cities assist industries in starting operations and use generated revenues to repay the costs. This law is the basis for issuing most industrial revenue bonds. Minn. Stet. j 469.153, sohd. 2. Industrial projects eligible for assistance include any revenue-producing enterprises engaged in assembling, fabricating, manufacturing, mixing, processing, storing, warehousing or distributing any products of agriculture, forestry, mining or manufacturing, or in research and development activity, in these fields. Minn. Stet. § 469.155, subd. 14. The law prohibits a city from operating any of these projects as a business or in any other manner. G. Minnesota Housing Finance Agency Minn. stet. ~h. a62A. The goals of the Minnesota Housing Finance Agency (1VIF~A) are to For more information on MHFA provide decent, affordable housing to low- and moderate-income people; to programs contact them at 400 preserve the existing housing stock in Minnesota; to preserve existing Sibley Street Suite 300, st. Paut, neighborhoods and prevent them from deteriorating; and, to promote energy MN 55101-1998, (651) 296-7608 or (800) 657-3769, or visit: conservation in residential housin g- httpl/www.mhfa.state.mn.us! The Legislature created the MHFA in response to a shortage of affordable housing for low- and moderate-income people. Private enterprise and private investment were unable, without public assistance, to provide an adequate supply of safe, sanitary, and decent housing at affordable prices and rents. Due to high construction costs and interest rates, new construction has been seriously curtailed, and home repairs and improvements are unaffordable for low- and moderate-income homeowners. This situation has made the MHFA and other housing programs more important than ever. The sale of state tax-exempt bonds is the primary financing for MFHA programs. The nature of these bonds allows the MHFA to make below-market interest rate loans for the construction or rehabilitation of single- and multi-family housing. Appropriations from the Legislature provide additional funding for programs, including: the promotion of energy conservation; an increase in home ownership opportunities for first-time homebuyers; home improvement grants to very low-income homeowners; and programs to improve the housing available to Native Americans, large families, and the disabled. • 17-10 HANDBOOK FOR MINNESOTA Cfi7E5 ~4 • CI~IAPTER 17 H. Department of Trade and Economic Development Minn. stet. gyn. t1GJ. The Minnesota Dept. of Trade and Economic Development (DYED) is the For more information contact p~ary development agency for Minnesota. DYED staff is responsible for a MDTED at 500 Metro Square wide range of grant and loan programs, as well as for providing technical Building, 121 East Seventh assistance to businesses and communities. Place, St. Paul, MN 55101-2146, (651) 297-1291 or (800) 657- 3858, or visit their web site at: http:/hvww.dtedstate.mn.us/O 1x0 Ofasp Minn. star. §§ 16J.411 to DYED also provides grants for contamination cleanup and redevelopment 16J.42a. and redevelopment, administers the rural development program, makes The Center for Rural Policy and challenge grants to regional organizations to encourage private investment Development may be contacted at ~ rural areas, and administers a revolving loan fund to provide loans to new 120 Alumni Foundation Center, Mankato, MN (507) 389-2599 and ex andin business 1n rural Minnesota. Local overntnent units p g g or visit their web site at: i11C1uding Cities, may receive these loans if the community has established a http:/hvww.mankato.msus.edu/de local reviving loan fund and can provide at least an equal match to the loan pt/ruralmn/ received. I. Minnesota Technology, Inc. Minn. scat. gyn. t 160. Minnesota Technology, Inc. (MTI) is a public corporation of the state created by the Legislature in an attempt to combine the best features of a private development corporation and a governmental development agency. MTI's purpose is to foster long-term economic growth and job creation while using the existing development infrastructure. Minnesota Technology, Inc.'s MTI focuses on applied research and technology transfer and early stage main office is at 11 13 Avenue South, Minneapolis MN 55401 futldin for small manufacturers. MTI ma rovide financial assistance, g y p (6l2) 373-2900 or (soo) 32s- including loan guarantees, direct loans, interest subsidies, equity 3073, or visit their web site at investments and joint ventures. http://www.mi nnesotatech nology. , org/about/contact.asp?C=7 III. Programs A. Housing bonds Minn. star. ch. 4e2c. Cities may use revenue bonds for financing single- and multi-family housing, primarily for the benefit of low- and moderate-income families. The law contains single- and multi-family housing criteria and the specific actions cities must take to comply with the law. Federal law limits the issuance of housing revenue bonds. Bonding authority is allocated by a state formula. IiANDB00K FOR MINNESOTA CTCIFS 17-1 I ~~ i CFiAPTSR 17 B.Industrial parks An industrial park is a tract of land suitable for industrial use because of location, topography, proper zoning, availability to utilities, and accessibility to transportation. Asingle body has administrative control of the tract. In some cities, an industrial park maybe little more than a tract of unimproved land, while in other cities it may be totally served by city services and have restrictive building requirements. An industrial park's purpose is to attract industrial development. Advantages and disadvantages of industrial parks are sometimes justified and sometimes unsubstantiated. Advantages include reduced site development costs and site readiness. Disadvantages include the initial cost of acquiring and improving the land and installing city services, as well as the potential for the land to become subject to county and school district taxation before the city finds a private buyer. Property a city holds for later sale for economic development purposes remains tax exempt for a period of eight years, or until buildings or other improvements that are constructed after acquisition reach one-half occupancy. Currently, private enterprise creates most new industrial park development by establishing afor-profit community development corporation. A city can cooperate with that corporation through its land-use controls and methods of financing public improvements. Many cities have also established industrial parks complete with streets, water, and sewer, in spite of the possible tax ramifications. The city then sells or leases a portion of the park to a business needing a location for its building. Minn. Star. § 4(19.185;\ The law authorizes any city owning lands that are not restricted by the deed Minn. star. ~ a6s.o3s. to convey the lands for nominal consideration, to encourage and promote industry, and to provide employment for citizens. In fording that a A.G. Op. 476-B-2 (Mar. 2, 1961). conveyance of land for an indoor arena was not within the statute, the attorney general concluded the conveyance must encourage and promote industry and provide employment for citizens. A more direct promotion of industry is necessary, beyond the fact that more potential customers might be in town as a result of athletic contests. Because the Legislature may not constitutionally authorize the expenditure of public funds for private City ofPipestone v. Madsen, 287 purpOS6S, there maybe some doubt about the constitutionality ofthis law. Minn. 357, 178 N.W.2d 594 However, the courts have upheld the municipal industrial development X1970). revenue bond law against the same objection. The laws that authorize the granting of lands presumably override any charter restrictions as to bids or voter approval of the disposition of such lands. However, they have no effect in granting authority to convey land a city holds in trust for a particular purpose. 17-12 HANDBOOK FOR MIIJNESOTA C1TIEs CRAFTER 17 The city's attorney can best advise the city concerning the legality of a purchase of land for resale. Local circumstances are important in determining the legality. C.Industrial revenue bonds Minn. Stet. 3~ 469.152 to The municipal industrial development laws help cities attract new a69.16s. commercial and industrial development, and keep existing businesses in the city. The law authorizes the council to issue revenue bonds, and use the proceeds to acquire and construct industrial sites and facilities. The city then leases these facilities to private industry and uses the rental fee proceeds to retire the bonds. For more information contact MDTED at 500 Metro Square Building, 121 East Seventh Place, St. Paul, MN 55101-2146 (651) 297-1291 or (800) 657- • 3858, or visit their web site at http Jhvww.dted.state.mn.us/0l x0 Ofasp A city may issue industrial revenue bonds, also known as municipal revenue bonds, without public referendum. It cannot pledge the full faith and credit of a community as security for these bonds. Thus, the city may not tax property owners to pay principal and interest on the bonds. If a city decides to investigate the use of industrial bond financing, it should contact the Dept. of Trade and Economic Development. The department provides the city with information, advice, and technical assistance. This assistance is important, due to the adoption of federal and state laws allocating issuance authority among the states and their political subdivisions. The commissioner of Securities must approve the project. D. Commercial rehabilitation Minn. srat. s a69.1s4. Cities have authority to carry out programs for the rehabilitation of small- and medium-sized commercial buildings. The city must adopt a program ordinance that provides for the adoption of program regulations, including a definition of small- and medium-sized commercial buildings. Loans under the program maybe for amounts up to $200,000. The city may finance the program through the sale of revenue bonds. E. Tax increment financing (TIF) Minn. Stat. $§ 469.174 to Tax increment financing authority is available to most cities. Cities with 469'1799' housing and redevelopment authorities, economic development authorities, port authorities, redevelopment agencies, those cities administering development districts or development projects, or cities exercising port authority powers under a general or special law may use tax increment financing. Certain recent amendments, however, may make the use of this development tool impractical. • HANDBOOK FOR MINNESOTA CITIES 17-13 a~ CHAPTER 17 Tax increment financing is a funding technique that takes advantage of the increases in tax capacity and property taxes from development or redevelopment to pay public development or redevelopment costs. The difference in the tax capacity and the tax revenues the property generates after new construction has occurred, compared with the tax capacity and tax revenues it generated before the construction, is the captured value. The taxes paid on the captured value are called increments. Unlike property taxes, increments are not used to pay for the general costs of cities, counties, and schools. Instead, increments go to the development authority and are used to repay public indebtedness or current costs the city incurred in acquiring the property, removing existing structures, or installing public services. Thus, the property owner in a TIF district continues to pay the full amount of properly taxes. Tax increment financing involves only the increased property taxes generated within the district. It does not pre-empt the amount of property taxes currently derived from the redevelopment area, nor does it directly affect the amount or rate of general ad valorem taxes the city levies. The result of a TIF project is an increased tax base that will benefit all local taxing jurisdictions. Additionally, TIF districts usually create new jobs and help stimulate the economy. . Tax increment financing is used to encourage four general types of private development: redevelopment, renovation and renewal, growth in low- to moderate-income housing, and economic development. Minn. Stat. § 469.175, subs. s. The city using tax increment financing must report annually to the county board, the county auditor, the school board, and the state auditor as to the status of the TIF district or districts and publish the report. The state auditor has established a uniform system of accounting and financial reporting for TIF districts. The city must annually submit to the state auditor a financial report in compliance with these standards. Minn. Stst. ~ 4G9. t 771, subas. 1 The state auditor may audit TIF districts. If the state auditor notifies a TIF ana 2b. authority of an alleged violation, a copy of the notice i3 also forwarded to the county attorney. If no action is brought within one year, the county attorney must notify the state auditor, who then notifies the attorney general. If the attorney general finds a substantial violation, the attorney general will petition the state tax court to suspend the authority's power to use TIF for a period of up to five years. • 17-14 1"lA1`IABOOK FOR MINNESOTA CITIES ~3 • CH P 17 TER A Minn. Stat. 3 469.177, s~bd. s. The TIF agreement with the developer is a complex document. Assistance from a financial advisor and the city attorney is necessary in order to " anticipate the many potential problems. An agreement can establish a see Protecting City Interests in TIF Agreements" in Minnesota minimum market value for tax increment assessment oses as well as p~ ~ cities, June/ruly, 1998, p. 19. A provide that the developer pay a certain level of taxes regardless of any copy maybe obtained from the classification rate changes or levy decreases The agreement should be Leaguo Research Service by calling (651) 281-1220 or (800) entered into before the assembly and acquisition of the land on which the 925-1122, completed improvements are to be located. Sce also Brookfreid v. Cou>rry of Ramsey 609 N.W.2d 868 (Minn, 1998); Lake Superior Paper lndu3'tires Y. Stat¢ and County Uf Sr. Louis, 624 N. W.2d 254 (Minn.20O1). Sce Minn. Stet. §§ 469. ] 77, The 2001 tax reform legislation, which reduced class rates and provided for subds. 1b, 1 l; 469.1771, subd. 1; 469.1792; 469.1793; 469.1799; the state takeover of the eneral education le resulted in several char es g ~~ g ana a69.1 s 1a. to various statutes to accommodate the changes. The continued viability of TIF in the future has been considerably reduced by these changes. Walker Auto Sales v. City of Cities should use extreme care in establishing a TIF district and should Richfield, 635 N.W.Zd 391 (Minn. App. 2001), follow all rocedural re ments otherwise a court ma find the district p gU1re ~ y was not properly established. • Given the complexity of the laws governing the use of TIF, cities or HRAs should not undertake this method of financing community development projects without the advice of an attorney and professional consultants. F. Property tax abatement Minn. Stat. §§ 469.1812 to A city may grant an abatement of some or all of the taxes or the increase in a69.1s1s. taxes it imposes on a parcel of property if the city expects the benefits of the proposed abatement agreement to at least equal the costs of the proposed agreement. The city must also determine that the agreement is in the public interest because it will increase or preserve tax base, provide employment opportunities, provide or help acquire or construct public facilities, help redevelop or renew blighted areas, or help provide access to services for residents of the city. Property taxes in a TIF district cannot be abated unless the period of the abatement will not occur until after the district is decertified. A resolution must be adopted after notice and public hearing, specifying the terms of the abatement. There are statutory limits on the duration and amount of the abatement. Bonds maybe issued in an amount equal to the sum of the proposed abatements to provide funds for projects. School districts and counties have similar abatement powers. A city, county, and school district can agree to abate their taxes on the same property. • HANDBOOK FOR MINNESOTA CITIES 17-IS ~9 CHAPTER 17 Abatements may be used to phase-in property tax increases that are caused by large increases in market value. Due to the imposition of levy limits on cities over 2,500 population, tax abatement may not be a viable program for these cities. G.Community development block grants Moro infotrnation is available The Community Development Block Grant (CDBG) program, under the on the Ht7D web site at: U.S. De t of Housin and Urban Develo ment httpJ/www.hudgov/ P • g p (HCTD), provides cities with federal funding to initiate and continue a diverse array of housing and community development proj ects. H. Transportation In addition to the basic authority of cities to construct and maintain streets, cities maybe involved in alternative methods of transportation. For some cities, public transportation systems are of major importance in the overall plan for community development and redevelopment. 1. Railroads Mina. stet. ch. 39sA. The Regional Railroad Authorities Act (RRAA) allows counties and other local units of government to provide for the improvement and preservation of local rail service. One or more municipalities may form a regional railroad authority. Before a city may organize an authority, however, it must ask the county to organize an authority. If the county or counties do not organize an authority within 90 days after receiving the request, the city or cities may organize under a resolution they adopt after a public hearing. Cities may also loan or donate money; dedicate, sell, or lease city property to an authority; and, provide public improvements to authority property. The commissioner of Transportation has the power to pay a portion of a regional railroad authority's cost of acquiring a rail line. 2. Airports Minn. Stet. § 360.032; Any city may own and operate an airport, and may zone to prevent airport Minn. Stet. § 360.061 to ~~~• 360.074. • 17-16 HANDBOOK FOR MINNESOTA CITIES 3p • • CfL4P1'ER 17 3. Mass transit Minn. Stet. § 412.227, subd. 32. Some Minnesota cities operate mass transit systems, either under the Minn. stet. § 17a.z7. general authority of the statutory city code, charter provisions, or special laws. The law authorizes cities to have commuter van pools for employees. Some of these state grants are discussed an MDOT's web site: A variety of state grants to assist public transit systems are available. http://www.dot.state.mn Contact the Minnesota Department of Transportation for more information. .us 1. ~ Advertising Minn. stet. § a69. ~ x9. Cities have wide discretion in using city funds to promote their communities. Because the laws treat certain types of cities differently, this discussion will deal with the laws governing the use of city money for advertising purposes. Mmn. stet. § a69.ia9. Except for first class cities (Minneapolis, Duluth, St. Paul), the council of any statutory or home rule charter city may appropriate money each year for advertising. A city may use the appropriated money only for the purpose of advertising the municipality and its resources and advantages, including cooperative programs of more than one city. Minn. scat. § a69.ts7. First class cities may levy a tax not to exceed .00080 percent of their taxable market value. Minn. stAt. § a69. ~ ss. Second class and third class cities may levy a tax for advertising agricultural, industrial, business, and the community's other resources. A.G. Op. 59-A-22 (May 23, The council has considerable discretion in deterrn;ning what constitutes 19ss). advertising. The attorney general has ruled, for example, that a survey of A.G. Op. 59-A-22 (May 20, business and business development is permissible; that the council may 196s). decide whether the cost of a city progress report is a legitimate advertising A.G. Op. 469-B-2 (May 25, expenditure; that the city may pay for signs outside city limits advertising 1959)• the city; that under similar authority to levy a tax to advertise the A.G. Op. 476-8-5 (Oct. 29, agricultural, industrial, business, and general resources, the city could pay 19x9). for a parade float if the council determined that the float would advertise the city; and that whether the law authorized Christmas decoration was a fact question for the council. Mitchell v. City of St. Poui, 1 la ~ far back as 1911, the Minnesota Supreme Court held that a contract with Minn. 1a,13o rr.w. 66 (1911). a publicity bureau was a reasonable means to promote the general welfare of See 16 McQuillin, Municipal the city. It is important, of course, that whatever a city chooses to do should corporations § aa.ao. be within the bounds of the public rather than the private interest and benefit the community as a whole. • HANDBOOK FOR MINNESOTACITffiS 17-17 31 CHAPTER 17 1. Bureau of information and publicity Minn. stet. , 469.1 s6. Any statutory city may establish and maintain a bureau of information and publicity. The purpose of the bureau is to furnish tourist information; provide outdoor advertising; and prepare, publish, and circulate information about the recreational facilities, businesses, and industrial conditions of the community. This law does not authorize a special tax levy. Because the statutes give every city the authority to appropriate money for advertising, this would seem to include authority to maintain a bureau of information and publicity. It is doubtful the publicity statute provides any additional authority for statutory cities. Sverkerson v. City of Almost all the home rule charters cities have adopted since 1930 or 1940 Minneapolis, 204 Minn. 338, 2s3 contain omnibus is of ower authorizin the ci without more a llclt N.W.2d I55 (1939). gran P g ty~ xp grants of authority, to do anything appropriate for a city that the Legislature might have authorized. It seems cleaz from the Minnesota cases, that such grants of power authorize expenditures for advertising. AG. Op. 59-A-22 (Dec. 8, 1965). The attorney general has ruled that under such a charter provision, the city may promote business and industrial development, and hire a staff for that purpose. It seems likely a charter city, without an omnibus grant but with a typical general welfare clause, has authority to make expenditures for • advertising the city, as long as the particular expenditures aze for a public purpose. J. City district heating system Minn. Stat. § 412.321, s~bd. t; ~y city may acquire, construct, own, and operate a city district heating Minn. Stat. §465.74 system, and issue and sell general obligation bonds to finance any city expenditures related to the acquisition or operation of a district heating ' system. Cities may issue revenue bonds payable solely from all or portions of revenues the city gets from a district heating system. The city itself, by ordinance, may authorize a redevelopment agency to exercise any and all of the city's powers to issue these revenue bonds. K. Contributions to economic development organizations Minn. sect. § 469.191. Cities may appropriate up to $50,000 annually out of the general revenue fund to any incorporated development society or organization of the state for promoting, advertising, improving, or developing the economic and agricultural resources of the city. • 17-18 HANDBOOK FOR MINNESOTA CITIES 3a i CHAF'fER l7 L. Contributions to hospitals, artistic organizations Minn. Stat. S 465.037 (hospitals); Cities may make grants to private, nonprofit or public hospitals that serve Minn. Stat. X471.941 (artistic the city, or to artistic organizations that provide an opportunity for people to organizations). participate in the creation, performance or appreciation of a wide range of artistic activities. M.Rural development grants For more information contact A variety of grants and loans are available to cities from the U. S. Dept. of Rural Development State Office 410 Farm Ctedit Service A culture rural develo ment ro am. Sewer, water, rural enterprise, gn ~ p p ~ Building 37s Jackson Street St. housing, and other types of grants and loans are available. Paul, MN 65101-1853. Phone: 6s 1-602-7800.Orvisit their web site at: http://www.nxrdev.usda.8ov/mn/i ndex.html N. E-commerce ready cities • M. s. 3 i 16J.o37. Cities that meet certain conditions maybe designated e-commerce ready For more information, contact cities by the Dept. of Trade and Economic Development. MDTED at 500 Mean Square Building, 121 East Seventh Place, St. Paul, MN 55101-2146. Phone: (651) 297-1291 or (800) 657-3858. Or visit their web site: http://www_dted.state.mn.us/0I x0 Ofasp O. Corporations created by cities Minn. Brat. ~ a6s.717. Several cities have created non-profit corporations for a variety of reasons, mostly involving community development. Cities are now prohibited from creating non-profit corporations unless authorized by special legislation. A joint powers entity can incorporate itself, but must comply with all applicable public sector laws (open meeting, gift law, conflicts of interest, competitive bidding, etc.). • HANDBOOK FOR MwNESOTA CITIES 17-19 33 s CxArTER 17 IV. How this chapter applies to home rule charter cities All of the tools this chapter lists aze available to charter cities. 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