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HomeMy WebLinkAbout04-09-2007 CITY OF MOUNDS VIEW ECONOMIC DEVELOPMENT AUTHORITY MEETING AGENDA MOUNDS VIEW CITY HALL Monday, April 9, 2007 6:00 PM 1. CALL TO ORDER 2. ROLL CALL: President Marty, Vice President Stigney, Commissioner Flaherty, Commissioner Hull, Commissioner Mueller 3. APPROVAL OF AGENDA 4. PUBLIC INPUT: Citizens may speak to issues not on tonight’s agenda. Before speaking, please give your full name and address for the minutes. Also, please limit your comments to three minutes and sign in on the sign-in sheet located on the podium. 5. APPROVAL OF MINUTES A. March 12, 2007, EDA Minutes. 6. CONSENT AGENDA 7. EDA BUSINESS A. Continued Discussion Relating to Business Resource Guide / Toolbox B. Review Housing Replacement Program Policy and Requirements 8. REPORTS 9. NEXT EDA MEETING: Monday, April 23, 2007 @ 6:30 p.m. 10. ADJOURNMENT PROCEEDINGS OF THE MOUNDS VIEW EDA 1 CITY OF MOUNDS VIEW 2 RAMSEY COUNTY, MINNESOTA 3 4 Regular Meeting 5 March 12, 2007 6 Mounds View City Hall 7 2401 Highway 10, Mounds View, MN 55112 8 6:09 P.M. 9 10 11 1. CALL MEETING TO ORDER 12 13 2. ROLL CALL: President Marty, Vice President Stigney, Commissioner Hull, 14 Commissioner Flaherty, and Commissioner Mueller. 15 16 NOT PRESENT: None. 17 18 3. APPROVAL OF AGENDA 19 20 MOTION/SECOND: Mueller/Flaherty. To Approve the Monday, March 12, 2007 Agenda as 21 Presented. 22 23 Ayes - 5 Nays – 0 Motion carried. 24 25 4. PUBLIC INPUT 26 27 None. 28 29 5. APPROVAL OF MINUTES 30 31 A. February 22, 2007 EDA Minutes 32 33 To be approved at the next EDA meeting. 34 35 6. CONSENT AGENDA 36 37 None. 38 39 7. EDA BUSINESS 40 41 A. Resolution 07-EDA-230, Consideration of a Request for Demolition 42 Assistance, Housing Replacement Program, 2617 Sherwood Road 43 44 Community Development Director Ericson explained that the property was deemed unfit for 45 Mounds View EDA March 12, 2007 Regular Meeting Page 2 habitation and the property owners made some minor improvements to avoid demolition and 46 then the property was sold to the Krigs who would like to demolish the building and construct a 47 new home on the site. He then reviewed the Housing Replacement Program with the EDA and 48 said that Staff fully supports the funding request for demolition as Staff feels that demolition and 49 rebuilding of a new home on the site is in the best interest of the property owner, the City and the 50 neighborhood. 51 52 Commissioner Flaherty asked how much is in the fund. 53 54 Director Ericson indicated the fund is approximately $150,000. 55 56 Commissioner Flaherty said that this will assist with housing stock and keep residents in the City 57 and he thinks this is a very good program. He then asked what assurance there is that a new 58 home will be built on the site. 59 60 Director Ericson indicated that the documents can be structured to require a building permit 61 within one year and/or funds can be required to be refunded should a home not be built on the 62 property. 63 64 Vice President Stigney asked if the new owners were planning on replacing or remodeling when 65 they purchased the property. 66 67 Mr. Krig said he was not sure at the time. 68 69 Vice President Stigney said he assumes that the costs involved would have been reflected in the 70 purchase offer. 71 72 President Marty commented that he would like a timeline or an expiration date listed in the 73 Resolution. 74 75 Commissioner Mueller asked what would happen if the City assisted with the demolition and the 76 plans for construction did not meet the City’s Code requirements. 77 78 Mr. Krig indicated that the plans for construction have already been submitted. He then said that 79 their intent is to start the foundation immediately after demolition is completed. 80 81 President Marty commented that it is a really nice lot. 82 83 Mr. Krig explained that they added the garage so the estimate will be increased somewhat. 84 85 Commissioner Mueller asked if the property owner is willing to pay to demolish the garage. 86 87 Mounds View EDA March 12, 2007 Regular Meeting Page 3 Mr. Krig agreed. 88 89 MOTION/SECOND: Mueller/Hull. To Approve Resolution 07-EDA-230 Consideration of a 90 Request for Demolition Assistance, Housing Replacement Program, 2617 Sherwood Road. 91 92 Commissioner Flaherty said he would like to put this on the Agenda to review this policy at a 93 future date. 94 95 MOTION/SECOND: Stigney/Marty. To Amend the Resolution to Include 50% of the Cost of 96 Demolition Not to Exceed $4,000. 97 98 Vice President Stigney said that they purchased the property in 2006 and got the property with 99 the costs in mind so he does not think that it is fair to ask the City to cover all the costs of 100 demolition. 101 102 Commissioner Flaherty said he would like to discuss the policy at a later date for this very 103 reason. He then said that he would like to postpone any further requests under the policy until 104 the policy is reviewed. 105 106 Commissioner Mueller said that she thinks that this is an opportunity that has been available in 107 the past and these people would like to use this opportunity. She then said that she would like to 108 help individual residents just as the City uses its funds to help businesses. She further said that 109 this will assist the City in eliminating a blight and bringing a new home to the City. 110 111 President Marty said that this property was blighted so the City was trying to figure out how to 112 clean up the property. He then said that in purchasing this property with this house on it the 113 owner must have realized that the house would need to be demolished and that must have been 114 figured into the price paid for the property. He also said that he would like to review the policy. 115 116 Commissioner Hull said that demolishing this home and building a new home will increase taxes 117 and the City will recover the $8,000 fairly quickly. 118 119 Ayes – 2(Marty/Stigney) Nays – 3 Motion carried. 120 121 Ayes – 4 Nays – 1(Stigney) Motion carried. 122 123 Ms. Krig indicated that they paid what the mortgage company had asked for the property and saw 124 that there was an addition on the home and considered demolishing the old part and rebuilding on 125 the newer one and the draftsman recommended demolishing and rebuilding. She then indicated 126 that the City made them aware of this program and encouraged them to apply. She further said 127 that they did not know about the program until two weeks ago and they were going to do this 128 themselves. 129 Mounds View EDA March 12, 2007 Regular Meeting Page 4 130 Ms. Krig further said that they have lived in Mounds View for 31 years and this will be their 131 fourth house here and they would like to stay. 132 133 Director Ericson explained that the City is under no obligation to fund the request. Staff can 134 bring this forward for consideration. 135 136 B. Premium Stop Redevelopment Update 137 138 Community Development Director Ericson provided an update for the EDA on the resident 139 meetings noting that the residents seemed pleased with the proactive steps the City is taking. 140 They also appreciate the additional buffering and locating the buildings closer to the corridor and 141 the increased landscaping. 142 143 Director Ericson indicated that some residents would rather see residential in the southeast 144 portion of the property. Staff does not anticipate that area to develop for a number of years. He 145 then explained that Staff had informed the residents that they do not have to move and that this is 146 merely a vision for how the area could redevelop in the future but residents are under no 147 obligation to accept offers of redevelopment at this time. 148 149 Economic Development Coordinator Backman explained that the request for proposal concept is 150 where there would be competing plans presented to the City for review and consideration. The 151 RFQ process is a little different as it would end in a list of qualified developers who have an 152 interest in development within the City. 153 154 Vice President Stigney asked for a Staff recommendation. 155 156 Economic Development Coordinator Backman said that he prefers the RFP process as it gives 157 the City options of what could be done on the site. The RFQ process is good if the City is 158 already set on a specific plan. 159 160 President Marty said that he sees an issue with advertising for an RFP on private properties that 161 the City does not own so it would seem the RFQ would be more appropriate. 162 163 Commissioner Flaherty indicated that the City only controls one parcel in this area so he would 164 lean more toward an RFQ than an RFP. 165 166 Director Ericson said that the City could put a sign up on the property and not use the RFP or 167 RFQ process. He then said that there are people out there that may want to submit a proposal but 168 who would not be qualified to go through the RFP or RFQ process. 169 170 Economic Development Coordinator Backman said that the City can either accept the offers, 171 Mounds View EDA March 12, 2007 Regular Meeting Page 5 decline the offers, or take one or more elements of different proposals to come up with a 172 modified plan that will work for the City. 173 174 Vice President Stigney said he is uncomfortable changing the setbacks. 175 176 MOTION/SECOND: Marty/Mueller. To Go With Staff Recommendation to Market the 177 Premium Stop Site Area According to the Redevelopment Plan. 178 179 Vice President Stigney said he would like to see Staff bring back a timeframe of when the 180 $600,000 will be repaid. 181 182 Ayes – 5 Nays – 0 Motion carried. 183 184 C. Review Draft of Mounds View Economic Development “Toolbox” Document 185 186 Economic Development Coordinator Backman reviewed the “toolbox” document with the EDA. 187 188 Commissioner Mueller thanked Staff for putting this together because she wanted to make sure 189 that there were other tools that could be used for development within the City. 190 191 Economic Development Coordinator Backman said that HUD has an economic development 192 toolbox as do other planning organizations. 193 194 Vice President Stigney would like to carry this over to the next meeting to allow time for his 195 comments on the document. 196 197 MOTION/SECOND: Stigney/Mueller. To Continue this Discussion to the Next EDA Meeting. 198 199 Ayes – 5 Nays – 0 Motion carried. 200 201 8. REPORTS 202 203 None. 204 205 9. NEXT EDA MEETING: Monday, March 26, 2007 at 6:30 p.m. 206 207 10. ADJOURNMENT 208 209 President Marty adjourned the meeting at 7:00 p.m. 210 211 Respectfully submitted, 212 213 Mounds View EDA March 12, 2007 Regular Meeting Page 6 214 Recorded and transcribed by: 215 Joan Lenzmeier, Recording Secretary 216 TimeSaver Off Site Secretarial, Inc. 217 Mounds View Business Toolbox City of Mounds View Department of Community Development 763-717-4020 www.ci.mounds-view.mn.us April 3, 2007 2 Mounds View Business Toolbox A. Site Location Assistance The City of Mounds View maintains information on development opportunities within the community. These include vacant parcels, available building spaces, and redevelopment properties. Comprehensive plan, zoning, street, water, sewer, utility, and other maps are available for businesses, developers, realtors, engineering and architectural firms. B. Development Review Services Businesses considering Mounds View as an expansion or relocation are encouraged to contact staff at the Mounds View City Hall for various services, including construction and building services, licenses, and zoning reviews. The Community Development staff evaluates developer proposals and reviews project plans that are presented by businesses and/or architectural/engineering firms. As such, staff does consider setbacks, permits, and rezoning that may facilitate projects. C. Business Development Programs The City of Mounds View collaborates with several other entities that provide services to our local businesses. These include the Twin Cities North Chamber of Commerce (located in Mounds View), the DEED Small Business Development Center (in Minneapolis), and the Ramsey County Workforce Investment Board (also referred to as Workforce Solutions, located in North St. Paul). In addition to several annual events, the Twin Cities North Chamber of Commerce hosts these monthly business education and networking events: 1) Twin Cities North Chamber of Commerce – www.twincitiesnorth.org A. Breakfast Club This activity occurs twice monthly and is held at the Mounds View Community Center. The Chamber hosts a formal morning breakfast networking event attended by area member businesses. The event attracts traditionally 30 participants interested in marketing their organization and exchanging best practice ideas. The group meets the second and forth Thursday at 7:30 a.m. The cost is $5 per person. B. Business Smartz The Chamber provides a practical business education forum in its guaranteed Business Smartz Seminar series. The Business Smartz 3 program takes place the first Tuesday of the month, traditionally in the morning. This hour and a half long seminar is focused on educational topics that are practical and beneficial to business owners and key management in small to mid-sized organizations. Topics vary. The cost per event is $15. C. Evening Exchange Evening Exchange is a monthly afternoon networking event-taking place at an area business. Evening Exchange is designed to create a relaxed networking environment where business professionals from all company sizes can discuss partnership opportunities and exchange ideas. The event generally occurs the second Wednesday of the month. Location varies. No cost except for beverages. D. Monthly Educational Luncheon The TCN Chamber hosts a monthly networking and educational luncheon. The event includes an average of 50 participants and is intended to connect with both new area businesses as well as those with deep roots in the community. A featured presenter discusses issues pertinent to members in the northern Twin Cities suburbs. Location varies. Cost is $16 per person. E. north yp network As an offering geared toward early stage business professionals, the north yp network serves as the Chamber’s young professionals networking and education group (ages from 21 to 35+/-). The north yp network holds events twice a month: one social/networking; one educational. The group self directs its agenda and is run by an active committee. Location and cost varies. 2) DEED Small Business Development Center (SBDC) – www.mnsbdc.com The state’s SBDC offers individual advice and guidance concerning the formation, management, financing and operation of businesses. Counseling is provided at no charge to qualified businesses, although there may be a fee for certain out-of- pocket costs incurred by the SBDC. To qualify for counseling, the business must be “small” as defined by the U.S. Small Business Administration. Individuals who are considering starting a business are also eligible for counseling. How does the program work: The client must sign a “Request for Counseling” form and must agree to participate in surveys designed to measure the effectiveness of the SBDC program. To maximize the value of the counseling, clients should prepare a draft business plan before meeting with the counselor. SBDC counselors have significant experience in the private sector, and many have extensive management and financial consulting backgrounds. To learn more about the services, Mounds View businesses can contact the local SBDC office located in at the University of St. Thomas (Minneapolis campus). You can contact Michael Ryan at 651-962-4500. 4 3) DEED Business Services DEED Business Services staff serve the business community in Ramsey County, and around the state, with business development and workforce-related services. Services including helping startup and expanding businesses, coordinating specialized business development products and services to employers, brownfield redevelopment assistance, and labor market information. Local businesses can contact Cheryl Beaumier, Business Services at 651-779-5645. D. Workforce Development Programs Minnesota WorkForce Centers (WFCs) provide the tools, resources and services needed for job search, career planning and training needs. WorkForce Centers are a collaboration of partners. People seeking work, businesses seeking employees, students, and those looking for a first job or returning to the workforce, will find services to meet their needs, most offered at no cost. Each WFC house houses a Resource Area that operates similar to a library. The Ramsey County WorkForce Center that services businesses in the City of Mounds View is located in North St. Paul. The Center provides a variety of services to employers to meet their employee recruitment and retention needs. Some services provided include training seminars, training grants, job fairs, and wage subsidies to name a few. Businesses may contact Cheryl Beaumier, Business Services at the Minnesota Department of Employment & Economic Development at 651-779-5645. Businesses can also visit the Department’s website at www.deed.state.mn.us. Some of the workforce programs available to employers include: 1) Minnesota’s Job Bank The Minnesota Department of Employment and Economic Development (DEED) is responsible for administering various state and federal programs that provide workforce development services. Minnesota’s Job Bank is an Internet-based self- service system where member employers and job seekers can find each other. Employer members can post job openings to be searched by job seekers. Employer members can also search for job candidates and contact them by email. Job seeker members can post a resume to be searched by employers. Members can also search for job openings, contact employers by e-mail, and apply online. 2) Work Opportunity Tax Credit (WOTC) & Welfare-to-Work Tax Credit (WtW) WOTC allows employers to take a federal income tax credit when they hire persons from certain targeted groups. For most groups, the maximum credit is 40% of the first $6,000 in qualified wages for a savings of $2,400. The WtW Tax Credit is a two-year program involving the hiring of long-term family assistance recipients that provides tax savings up to $8,500 for each eligible new hire. 3) Customized Training Programs. The Metro Consortium for Customized Training is an association of the Customized Training divisions of the 10 metropolitan area community and technical colleges and Metropolitan State University. It facilitates customized 5 training for Minnesota employers using the expertise and resources of the 10 institutions. For example, Anoka-Ramsey Community College has collaborated with the Consortium and customized training programs for various occupations pertaining to the medical device industry. 4) Minnesota Vocational Rehabilitation (VR) Program The VR Program helps Minnesotans with significant disabilities get ready for, find and keep their chosen jobs and careers. E. Business Finance Loans & Grants For both existing businesses desiring to expand and for businesses new to the City there are federal, state and local financial assistance programs. All local financial assistance is at the discretion of the Mounds View EDA. 1) Small Business Administration Loan Programs – SBA 504 Loan / 7a Loan The U.S. Small Business Administration provides a wide array of programs to help small businesses, including financial and federal contract procurement assistance, management assistance, and specialized outreach to women, minorities, and veterans. The SBA 504 Loan program provides fixed-rate, long-term financing for land, buildings and manufacturing equipment or machinery. SBA 504 Loans feature a 10 to 20 amortization, fixed-loan payments, below market interest rates, and a low downpayment. The deal structure is 50% bank loan (1st position), 40% SBA 504 (2nd position), and 10% equity injection. (A new business and a special-purposed building require 20% equity injection.) The program’s minimum and maximum loan amounts are $50,000 and $750,000 respectively. How does the program work: Businesses should contact the certified development company authorized by SBA to originate and service SBA 504 loans in their geographic area. SPEDCO is a non-profit certified development company located in New Brighton whose mission is to help small businesses obtain financing for job creation, to fund business expansion and to promote economic development in Minnesota. SPEDCO can handle SBA Loan financing for businesses wishing to expand or locate in Mounds View. They provide long-term, fixed rate loans through the SBA 504 Loan program and also provide 7(a) loan packaging consulting services to banks and their customers. For more information call 651-631-4900. 2) State of Minnesota Business Financing Programs The Department of Employment and Economic Development encourages the creation of high quality jobs through business growth, expansion and retention. Business Development Services help companies expand or relocate in Minnesota, find and train employees, promote international trade, and finance business expansions. The most likely funding program applicable to Mounds View businesses would be the Minnesota Investment Fund (MIF). It’s designed for 6 businesses acquiring “fixed assets” (such as equipment, buildings, and land) and adding new employees as a result. This program provides companies below- market financing. Virtually all types of businesses are eligible, except retail. The maximum award is $500,000. The applicant is the city. Terms are negotiated. 3) Ramsey County Business Loan Program The Ramsey County Business Loan Program provides gap financing that can be used in conjunction with other private and public funds. Who can apply: In general, loans are restricted to commercial, industrial, or service oriented businesses located in or moving to Ramsey County. In addition, businesses must be registered to do business in the State of Minnesota and demonstrate a need for public financing. How does the program work: Loans are typically made for the purchase of capital equipment, land and building acquisition, and building rehabilitation or new construction. Application fees are low, and rates and terms are more flexible than the market. Loans of up to $250,000 are provided. To request an application, or to obtain more information, you can contact Denise Beigbeder at the Ramsey County Community and Economic Development office at 651-266-8005. 4) Bonds used for Development By state law cities can issue bonds. These debt instruments can be taxable or tax-exempt. Not all bonds are general obligation. Pure revenue bonds are also common, especially for development. Bonds can be used to pay project costs and for the first two or three years of interest payments. This reduces the need for short-term revenue. There are several types of bonds the City could consider for development projects: a) Revenue Bonds. Various bonds used to finance industrial, commercial and medical facilities, multifamily rental housing, nursing homes and some nonprofit activities. b) Industrial Revenue Bonds. Allows cities to issue tax-exempt bonds to finance fixed assets. In the typical transaction, the city issues the bonds and becomes the legal owner of the asset (e.g. building). The City then leases back or sells the asset to the company. The firm’s repayment coincides with bond payback. c) Essential Function Bonds. Certain types of economic development are considered by the state to be “essential functions” of a city. Sometimes called “housing revenue bonds”, these bonds are not general obligation bonds backed by the full faith and credit of the City. Revenues generated by the project pay the bond and can be used for a variety of housing options (market and nonmarket rate). d) Common Bond Revenue Bonds. State and local governments may issue tax-exempt or taxable revenue bonds on behalf of private borrowers to provide lower interest rates on long-term financing. In general, manufacturing, medical facility, nonprofit or nursing home 7 projects are eligible for tax-exempt revenue bonds and those issued for commercial projects are taxable. Bonds issued through the Common Bond Fund are investment-grade instruments with a rating based on the security provided by the fund. e) Bank Qualified Bank Direct Tax-Exempt Loans. These are cost- effective tax-exempt financing for capital projects for small manufacturing companies and nonprofit organizations. 5) Business Improvement Partnership Program The City’s Economic Development Authority has a vested interest in helping Mounds View businesses thrive and prosper while improving the aesthetics of the commercial, industrial, and retail sectors of the community. Accordingly, the Mounds View Business Improvement Partnership Program has been established to partner with local businesses by providing 2% interest loans for exterior and interior building improvements. Who can apply: Any business owner with a facility or property located in Mounds View. How does the program work: The City’s Economic Development Authority, in partnership with local banks, will provide improvement loans to existing Mounds View businesses at a minimum of $10,000 and a maximum of $50,000. The City participates by providing half of the loan amount at a 2% interest rate. 6) Tax Rebate Financing (TRF) In 2000 the City of Mounds View adopted policies pertaining to Tax Rebate Financing (also known as Tax Abatement). An abatement is a property tax repayment rather than an exemption from paying property taxes. It is a method to finance up-front costs and provide additional equity to a development or to finance a public improvement. For eligible redevelopment and development projects, all or a portion of City real estate taxes can be rebated for up to 15 or 20 years. Ramsey County and the Mounds View School District can also rebate all or a portion of their share of real estate taxes. Who can apply: Any developer or business owner with a facility or property located in Mounds View, or any developer or business owner intending to construct a facility in Mounds View. How does the program work: The developer or business owner completes a Tax Rebate Financing (TRF) application and submits the application and the required $1,000 application fee to the City’s Community Development Department. Economic Development staff reviews and analyzes the information and presents it to the City’s Economic Development Authority. The maximum applicants may abate is $200,000 per year or up to 10% of the City’s levy. There is no minimum abatement or rebate. 8 7) Tax Increment Financing (TIF) TIF is considered the premier tool for economic development in Minnesota. Since 1986 the biggest single development program in the City of Mounds View’s Toolbox has been the use of Tax Increment Financing (TIF). TIF, in brief, is the ability to capture and use all increased local property tax revenues from new development within a defined geographic area. TIF payments to developers can be used for eligible uses, such as land acquisition, demolition, utilities, parking, relocation, administration, etc. There are different types of TIF districts, including redevelopment, economic development, housing, and soils condition districts. Mounds View currently has four tax increment financing districts—three redevelopment districts and one economic development district. Who can apply: Any developer or business owner with a facility or property located in Mounds View, or any developer or business owner intending to construct a facility in Mounds View. How does the program work: The developer or business owner completes a Tax Increment Financing (TIF) application and submits the application and the required $5,000 application fee to the City’s Community Development Department. Economic Development staff reviews and analyzes the information and presents it to the City’s Economic Development Authority. The EDA gives preference to the use of “pay as you go” assistance to finance development or redevelopment projects. Item No: 7A Meeting Date: April 9, 2007 Type of Business: EDA Administrator Review: _____ WK: Work Session; PH: Public Hearing; CA: Consent Agenda; CB: Council Business City of Mounds View Staff Report To: Mounds View Economic Development Authority From: Aaron Backman Item Title/Subject: Discussion of the Draft of the Mounds View Business Toolbox of Economic Development Tools Available to Businesses Background: On January 23, 2007 Councilmember Mueller asked if the City of Mounds View had or could have a “Project Kit” or “Toolbox” which summarized economic development programs. City Administrator Ulrich requested that Backman prepare this document. A draft was prepared and presented to the Mounds View Economic Development Commission (EDC) at its February 16th meeting. The EDC members had several suggestions regarding its availability, types of resources and services presented, potential project examples, etc. A number of those suggestions were incorporated into the version attached for the EDA’s review. The Economic Development Toolbox was first presented to the Mounds View EDA at its March 12, 2007 meeting. Due to time constraints, commissioners asked that further discussion of the toolbox or resource guide be held at the March 26th EDA meeting. At the March 26th EDA meeting commissioners indicated their preference that the document be intended for EDA and staff use. As an internal document they expressed a desire to change its title from Mounds View Business Resource Guide back to Mounds View Business Toolbox. Additionally, an introductory page will be eliminated and the business finance section moved to the end of the document. Finally, a statement will be added indicating that financial assistance by the City of Mounds View is at the discretion of the M.V. EDA. Recommendation: Staff seeks input from the EDA regarding the revised draft of the Mounds View Business Toolbox of economic development tools available for businesses. Respectfully submitted, ____________________________ Aaron Backman Economic Development Coordinator \\Trout\CommDev\Economic Development\EDA\Staff Reports\Staff Report EDA 07\Staff Report 4-9-07 EDA Item #7A Draft of M.V. Business Toolbox.doc Item No: EDA-7B Meeting Date: April 9, 2007 Type of Business: EDA Business City of Mounds View Staff Report To: Mounds View Economic Development Authority From: Jim Ericson, Community Development Director Item Title/Subject: Review Housing Replacement Program Guidelines and Criteria Introduction: Created in 1995, the Housing Replacement Program is a voluntary program that allows the City to purchase blighted residential properties from willing sellers. A secondary facet of the program involves providing demolition assistance for property owners who would like to remain in the community rather than building new elsewhere. Due to concerns raised by the Office of the State Auditor (which were resolved in 2004) the program had seen little use until recently. This report will serve as an opportunity to review the program guidelines and funding criteria and make changes deemed appropriate. Discussion: Purpose: The purpose of the Housing Replacement Program, as stated in the attached program summary, is to reduce the social costs of blight, improve residential neighborhoods and increase the tax base. Objectives: There are three stated objectives for this program—replace deteriorated lower value housing with larger, higher valued housing; eliminate blight; and increase the availability of quality housing for families. Criteria: The home will likely be substandard in some way or exhibit some level of blight. This is defined as follows: 1. Substandard as to condition, property value, size or usage. 2. Obsolete and having a faulty design for block and area in which it is located. 3. Deterioration which has caused blight to other adjoining properties 4. Detrimental to the safety or health of abutting properties in the block. Participation in the program is voluntary. To acquire a property for demolition and resale, the parcel must be represented on the list created in 2004 to satisfy concerns raised by the Office of the State Auditor. The City is under no obligation whatsoever to acquire a property. Demolition: The program has a second funding option for property owners who desire to remain in the community by providing demolition assistance. (See attached article from the Dec 14, 2000 edition of the Focus.) The house must still satisfy the “blight” criteria but there is no requirement that it be represented on “the List”. As the EDA has become aware, there are no criteria that apply to the demolition assistance. Potential Criteria: It would seem to make sense that there be some funding guidelines associated with the demolition component of the program, aside from property eligibility. The following are a few potential criteria the EDA could consider for inclusion in the program: • Financial status of applicant (funding could be based on “need”) • Residency requirement (applicant must be a resident for certain number of years) • Ownership requirement (applicant shall have owned and lived in the property) • Neighborhood analysis (city may want to target a specific neighborhood) Financial Status: It is somewhat difficult to determine financial need and it may even be problematic to require that the applicant demonstrate financial hardship in this regard. The City would NOT want to provide such assistance to an individual who might be financially unable to complete the rebuild of the home, thus it may be the case that the applicant demonstrate that funding has been secured for the new home construction to be eligible for the demolition assistance. On the other hand, if an applicant is wealthy and is applying for the assistance because he or she can, the City may want criteria that guards against providing assistance to those without a need. Residency Requirement: Staff recommends that the applicant be a Mounds View resident. Funding should be prioritized to benefit residents who have lived in the community for a certain number of years. Ownership Requirement: The program requirements could be revised to ONLY apply to applicants who have lived in the subject property for a minimum number of years. Adopting such a provision would eliminate from funding eligibility a Mounds View resident who has purchased a foreclosed or abandoned home for demolition and redevelopment. While such a requirement makes sense, it might be advisable to build some discretion into the requirement as it might be in the City’s best interest to encourage a demolition rather than see a piece-meal rehab of a blighted property. Neighborhood Analysis: The program guidelines already state the following--Properties should be equally distributed by location and value throughout the City when possible, and provide a viable financial mix of properties to support Program financial requirements. Certainly other criteria could be added beyond these mentioned above. Recommendation: Review the attached program guidelines. If the EDA feels amendments are in order, a revision would be prepared and brought back for formal review and consideration at the next EDA meeting on April 23, 2007. _____________________ Jim Ericson Community Development Director