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Home My WebLink About05-28-1998 ECONOMIC DEVELOPMENT COMMISSION AGENDA May 28, 1998 7:30 A.M. MOUNDS VIEW CITY HALL CONFERENCE ROOM C 1. CALL TO ORDER '7 715 A.M. 2. ROLL CALL (Present = P,Absent=A) 1C Carlson Nelson Goff Field Stigney(EDA Liaison) 9C Sjoberg Whitin (Staff)Schmidt gt Jopke(Staff) 3C Carroll(Staff) x - P (s ,4) 3. APPROVE EDC MINUTES April 24, 1998 Action: Motion A��t5 Second 6o % Vote y - 4. SPECIAL BUSINESS Introduction of David Piggott Executive Director,Metro East Development Partnership JoP% tioN.. 5. EDC BUSINESS A. Discussion of Home Improvement Loan Subsidy Program Action: Motion Second Vote Comments: B. Discussion of the Mermaid (Hotel/Banquet Center) Action: Motion Second: Second Vote Comments: 1) C. Update on Development Proposals I. Walgreens Comments: 2. Movie Theater Comments: D. Consideration of EDC Vacancy(Resignation of Steve Larson) Action: Motion Second Vote Comments: E. Consideration of Business Improvement Partnership Loan Program Action: Motion Second Vote Comments: 6. Report of Commissioners,Staff and EDA Liaison 7. ADJOURN 4 A.M. Next Meeting June 25, 1998 IL{OATAMU ECODEYNEo DCV,GENsleFoc Minutes of the Economic Development Commission City of Mounds View Ramsey County, Minnesota Regular Meeting April23, 1998 City of Mounds View, Conference Room C 2401 Highway 10, Mounds View, MN 55112 1. CALL TO ORDER: The meeting was called to order at 7:36 a.m. by Chairperson, Cindy Carlson. 2. ROLL CALL: Members present: Cindy Carlson, Ron Schmidt, Rosemary Goff, and Tom Field. Members absent: Dan Nelson, Steve Larson, and Brian Sjoberg EDA Liaison present: Roger Stigney Staff present: City Administrator Chuck Whiting, Community Development Director Rick Jopke, Housing Inspector Steve Dorgan, and Economic Development Coordinator Kevin Carroll. 3. APPROVAL OF MINUTES: Motion/Second: Field/Goff to approve the minutes from February 26,1998 and March 26, 1998. Motion Carried 4 Ayes 0 Nays 4. SPECIAL BUSINESS Chairperson Carlson introduced Kevin Carroll as the new Mounds View Economic Development Coordinator. Economic Development Coordinator Carroll summarized his background and experience in economic development as a City Council member and Port Authority member for the City of Rosemount and as a Board Member of the Dakota County Economic Development Partnership. 5. EDC BUSINESS A. Consideration of Application to MHFA to Participate in the Community Fix-up Program Housing Inspector Dorgan summarized the MHFA Community Fix-up Fund Program pointing out that participation in the program could expand the number of residents who could qualify for the reduced interest MHFA home improvement loans. Under this program, the annual adjusted household income limit would be increased from $49,000 to $69,920. Dorgan explained that the program requires that the target areas be designated or that certain age N:\DATA\GROUPS\ECONDEV\EDA-EDC\EDCMIN4.98 homes be targeted. Dorgan suggested that it would be appropriate to target homes built before 1965 because there are no areas of the City where there are concentrations of homes that need improvements. Over 50 %of the homes in the city were built before 1965 and these homes show the greatest need for home improvement. Dorgan stated that the staff recommended that the EDC pass Resolution No. 98-EDC-23 recommending EDA consideration to apply for the MHFA Community Fix-up Fund Program. Housing Inspector Dorgan also highlighted the current status of the development of a city sponsored home improvement loan program. Discussion followed concerning the need for such a program, limited city resources, alternate program guidelines, and what income limits should be used. Motion/Second: Field/Goff to approve Resolution No. 98-EDC-23. Motion Carried 4 Ayes 0 Nays B. Home Improvement Fair Housing Inspector Dorgan discussed the home improvement fairs and the potential benefits to the community. Dorgan recommended approval of Resolution No. 98-EDC-22 recommending EDA consideration to appropriate $2500 of TIF funds to develop a home improvement fair for the spring of 1999. Motion/Second: Field/Goff to approve Resolution No. 98-EDC-23 Motion Carried 4 Ayes 0 Nays C. Update of Proposal for Tax Increment Financing for Development of a Hotel/Conference Center Community Development Director Jopke summarized the current status of project pointing out that the city staff is in the process of trying to refine the potential acquisition and relocation costs to see if the project will work from an economic standpoint. 6. REPORTS FROM CHAIR, COMMISSIONERS,AND STAFF: None 7. ADJOURNMENT There being no further business before the Commission, this meeting of the Economic Development Commission adjourned at 9:05 a.m. Respectfully Submitted, Rick Jopke Community Development Director N:\DATA\GROUPS\ECONDEV\EDA-EDC\EDCMIN4.98 . SA ITo: Economic Development Commission Members From: Steve Dorgan, Housing Inspector MEMORANDUM Subject: Proposed Subsidized Home Loan Program Date: May 22, 1998 SUMMARY At the EDC meeting in April, the commission approved a recommendation to the EDA for an application to the Minnesota Housing Finance Agency(MHFA) for participation in the Community Fix-up Fund program as part of the proposed loan subsidy program. The EDA approved the application at their regular meeting held on May 4th, and staff submitted the application to the MHFA for review at there regular board meeting on May 28th. Participation in the Community Fix-up Fund program by the city is a component of the proposed loan subsidy program. The city will know if the application is approved after the MHFA board meets. The EDC also reviewed a draft outline for both a market rate and MHFA loan subsidy program. At the last EDC meeting,there was discussion relating to the guidelines, and more specifically to the eligible improvements for the proposed programs. Staff is seeking further direction from the EDC relating to the program outline. ACTION TO BE CONSIDERED Review the attached program outlines and provide direction to staff for the development of a final draft to be submitted at the next regular EDC meeting. 1*vest Steve Dorgan, ousing Inspector 717-4023 Attachments: Exhibit A-Proposed Market Rate Interest Subsidy Program Outline Exhibit B -Proposed MHFA Interest Subsidy Program Outline N:\DATA\GROUPS\COMDEV\HOUSING\HOMELOAN\LOAN5 28.98 Exhibit A DRAFT 5/22/98 City of Mounds View Interest Subsidy Program Terms for Market Rate Home Improvement Loans Program Overview The Mounds View Economic Development Authority(EDA) is making available tax increment funds that will provide a 3% annual interest rate subsidy for new market rate home improvement loans which meet the criteria of the program. The loans originated under this program will be for a term of up to 10 years. The maximum city subsidy for all loans and associated administrative costs issued in the first two years is $20,000. Aggregate subsidies for future years will decline each year as loan balances decrease. Aggregate subsidies will be paid by the city over the life of the loan. The loans will be provided through Western Bank and subsidized by the City of Mounds View. The program expects to provide subsidized loans for a period of at least two years. The City of Mounds View will provide funds in an account at Western Bank for the purpose of subsidizing qualifying market rate home improvement loans. Loans provided by Western Bank will be subsidized by amortization payments over a maximum of a 10 year period(i.e. a$10,000 loan at a market rate of 10%, subsidized to a 7%rate will require a 3% interest subsidy payment of$ by the city over a period of 10 years. The city's subsidy will be amortized over a 10-year payment.) Credit will be given for loans which are paid off early. Target Properties All owner occupied residential properties having I-4 units. No restrictions for household income or age of housingg will be required for this program. 0 ov -11n r {,v � ,La �d Also.A4Q tLCLQi toe no ekdt 13, (Ai ucve4.te+,.4s Program Guidelines 1. The City of Mounds View will subsidize 3%of the market interest rate for home improvement loans within the city. 2. Western Bank will utilize City of Mounds View tax increment funds to write down market rate home improvement loans not to exceed$20,000 of a total subsidy in the program's first two years. 3. Loans will be approved and originated under Western Banks underwriting criteria. 4. Western Bank will be responsible for servicing the loans. 5. Eligible improvements and eligible properties are determined by criteria adopted by the city(see Eligible Improvements). 6. Borrowers' must provide proof of income, a property tax statement, bid for work, and contractor warranties. 7. The property owner has 9 months from the date of closing to complete the improvement(s). 8. Loan proceeds will be dispersed by having checks issued to the applicant and contractor for completed work. 9. The city will offer a remodeling counselor for any property owner desiring assistance in evaluating and prioritizing improvements to their property. Remodeling counselors will also Exhibit A DRAFT 5/22/98 be available to assist property owners in evaluating bids. Fees for these services will be paid by the City of Mounds View and payment administrated by the lender. 10. Sweat equity projects are permitted. However, labor is not eligible for compensation. Sweat equity refers to an arrangement where the property owner(not a contractor) performs the home improvement. 11. Funds must first be used to abate any outstanding orders or code violations from the City of Mounds View. Eligible Improvements Eligible improvements will be based on guidelines established by the City of Mounds View. These improvements include: • Plumbing and electrical repairs • Heating, air conditioning, ventilation system, and chimney • Lead or asbestos abatement • Handicapped accessibility improvements • Carpeting and other floor coverings • Roofing • Painting • Siding • Trim • Window replacement and updates • Replacement of Doors • Masonry work • Steps • Driveways • Garage repair,replacement or new construction • Garage electrical (line extension, lights, outlets, door opener) • Exterior electrical (motion sensor lights, sidewalk lights, yard lights, door bells) • Exterior plumbing (such as sprinkler systems) • Sidewalks • Gutters • Landscaping projects that are permanent improvements, such as trees, bushes, sod, terracing, etc. • Other projects that are approved through MHFA loan guidelines Ineligible Improvements • Saunas • Decks and patios • Gazebos • Hot Tubs • Non permanent landscaping fixtures such as swing sets, bird feeders, potted Exhibit A DRAFT 5/22/98 plants, picnic tables, lawn ornaments, etc. • Labor costs of borrowers, residents, or unlicensed contractors • Personal property items, including furniture • Repairs to property used for business or trade purposes Scope of Services City of Mounds View Responsibilities: 1. Develop program guidelines and supervise implementation. 2. Market the program to city homeowners. 3. Dictate change in program guidelines as funds or conditions demand or indicate necessary. 4. Periodically review scope of work appeals and loan denial appeals. 5. Review periodic status reports provided by the Western Bank. 6. Monitor and evaluate Western Bank performance and loan program guidelines. 7. City will establish a list of qualified remodeling counselors to be made available to Western Bank. 8. Facilitate an information meeting of participating remodeling counselors to provide expectations of services for the program(i.e. Loan preapproval requirement for services, etc.). Western Bank Responsibilities: 1. Process loan applications. Western Bank will first attempt to place a borrower in the MHFA Home Energy, Great Minnesota Fix-up Fund or Community Fix-up Fund loan programs. 2. Verify that eligible applicants live in Mounds View and that the proposed property lies entirely within the city's boundary. 3. As part of the application process, Western Bank will provide borrowers a remodeling counselor through a rehabilitation remodeling counseling service after pre approval of a loan. If borrowers choose to use the remodeling service, the lender will administer payment of the service through city funds. 4. Manage loan fund and provide the City of Mounds View periodic reports as agreed. Exhibit B DRAFT S/22/98 City of Mounds View Interest Subsidy Program Terms for MHFA Home Improvement Loans Program Overview The Mounds View Economic Development Authority(EDA) is making available$40,000 in tax increment funds (TIF) for the purpose of subsidizing the interest rate of home improvement loans under this program. The loans will be Minnesota Housing Finance Agency (MHFA) originated by participating lenders and subsidized by the City of Mounds View. The city will provide interest subsidies for MHFA loans. Maximum loan amounts through this program will be $35,000. The loans will be originated by the participating lenders of Western Bank and Center for Energy and the Environment(CEE). The program expects to provide subsidized.loans for a period of at least two years. The City of Mounds View will provide funds in an account at participating lenders for the purpose of subsidizing qualifying home improvement loans. Loans provided by MHFA and originated by the lender will be subsidized in a lump sum payment from the city account(i.e. a$10,000 loan for a term of 10 years at 8%subsidized to a 5%rate will require a 3% interest payment of$ by the city. Target Properties All owner occupied residential properties having 1-4 units. For MHFA loans received through the Community Fix-up Fund program, the city has identified homes built before 1965 as the need/objective for the use of these funds. Homeowners qualifying for the Community Fix-up Fund program must have an adjusted household income of$69,900 or less. All other properties qualifying for MHFA loans mgay receive a reduced rate loan. `.3.c �. i-e"12 f j 1%S Qd-u . c ' - L11(e00 Program Guidelines 1. Underwriting of these loans will follow the MHFA procedural manuals and normal and prudent underwriting criteria. 2. Participating lenders will utilize City of Mounds View tax increment funds to write down the interest rate on the MHFA loans. MHFA loans will be written down to an effective rate of 5%. Loan interest differentials will be paid by the City of Mounds View. 3. MHFA,cFg an will be responsible for servicing the loans. 5. Eligible improvements and eligible properties are determined by the MHFA for the individual programs and are stated in the procedural manuals for each program. 6. Borrower's must provide proof of income, property tax statement, bid for work, and contractor warranty. 7. The property owner has 9 months from the date of closing to complete the improvement(s). 8. Loan proceeds will be dispersed to the borrower upon loan closing. 9. Loan proceeds over$2,500 will be secured with a mortgage. 10. Lenders will offer a remodeling counselor for any property owner desiring assistance in Exhibit B DRAFT 5/22/98 evaluating and prioritizing improvements to their property. Remodeling counselors will also be available to assist property owners in evaluating bids. Fees for these services will be paid from the City of Mounds View Home Improvement Loan Program administrative budget. 11. Sweat equity projects are permitted. However, labor is not eligible for compensation. Sweat equity refers to an arrangement where the property owner(not a contractor)performs the home improvement. 12. Use of funds is limited to eligible improvements allowable under MHFA's Great Minnesota Fix-up Fund and Community Fix-up Fund Programs. Funds must first be used to abate any outstanding orders or code violations from the City of Mounds View. Eligible Improvements Eligible improvements will be based on guidelines established by the MHFA. These improvements include: • Plumbing and electrical repairs • Heating, air conditioning, ventilation system, and chimney • Lead or asbestos abatement • Handicapped accessibility improvements • Carpeting and other floor coverings • Roofing • Painting • Siding • Trim • Window replacement and updates • Masonry work • Steps and sidewalks • Driveways • Garage repair,replacement or new construction • Garage electrical (line extension, lights, outlets, door opener) • Exterior electrical(motion sensor lights, sidewalk lights, yard lights, door bells) • Exterior plumbing (such as sprinkler systems) • Gutters • Landscaping projects that are permanent improvements, such as trees, bushes, sod, terracing, etc. • Other improvements that are approved through MHFA loan guidelines R,De.vv. AcClu-- oils Ineligible Improvements • Saunas • Decks and patios • Gazebos • Hot Tubs • Non permanent landscaping fixtures such as swing sets, bird feeders, potted Exhibit B DRAFT 5/22/98 plants,picnic tables, lawn ornaments, etc. • Labor costs of borrowers,residents, or unlicensed contractors • Personal property items, including furniture • Repairs to property used for business or trade purposes Scope of Services City of Mounds View Responsibilities: 1. Develop program guidelines and supervise implementation. 2. Market the program to city homeowners. 3. Dictate change in program guidelines as funds or conditions demand or indicate necessary. 4. Periodically review scope of work appeals and loan denial appeals. 5. Review periodic status reports provided by participating lenders. 6. Monitor and evaluate participating lenders performance and loan program guidelines. 7. City will establish a list of qualified remodeling counselors to be made available to the lender(s). 8. Facilitate an information meeting of participating remodeling counselors to provide expectations of services for the program(i.e. Loan pre-approval requirement for services, etc.). �J. lie✓'. work- is cpm. Participating Lenders Responsibilities: 1. Process loan applications. Lenders will first attempt to place a borrower in either the MHFA Home Energy, Great Minnesota Fix-up Fund or the Community Fix-up Fund loan programs. 2. Evaluate loan requests using MHFA underwriting guidelines. 3. Verify that eligible applicants live in Mounds View and that the proposed property lies entirely within the city's boundary. 4. As part of the application process, lenders will provide borrower a list of remodeling counselors after pre approval of a loan. If borrower chooses to use a remodeling counselor, the lender will administer payment of the city funds for the service. 5. Manage loan fund and provide the City of Mounds View periodic reports as agreed. s5 To: Economic Development Commission Members From: Rick Jopke, Community Development Director MEMORANDUM Subject: Discussion of the Mermaid (Hotel/Banquet Center) Date: May 22, 1998 Attached for your information is a copy of a recent report to the EDA concerning the Proposed Mermaid hotel/banquet facility. Staff will update the EDA on the current status of the project at the May 28, 1998 meeting. ■ Item No. Staff Report No. Meeting Date: 5/26/98 Type of Business: EDAB WK: Work Session;PH:Public Hearing; CA:Consent Agenda;EDAB:EDA Business Mounds View Economic Development Authority Staff Report To: Mounds View Economic Development Authority From: Rick Jopke, Community Development Director Item Title/Subject: Update of the Mermaid Hotel/Banquet Facility Project Date of Report: May 22, 1998 BACKGROUND: At the April 6, 1998 work session staff discussed the current status of the of the proposed project involving the expansion of the Mermaid to include an 11,700 square foot banquet facility and a 185-room hotel. The preliminary numbers provided by the developer show a need for$700,000 of TIF assistance for the banquet facility and additional$1,000,000 for the hotel. Project costs show a total of $800,000 for land acquisition. This may be low based on the amount of land to be acquired. The hotel developer has indicated that TIF assistance for the hotel must be structured to be of"direct benefit"to the hotel development and financial program. To use the TIF funds to acquire land only is not considered to be of"direct benefit." Some [U' assistance will be needed for financing eligible building and development costs. In reviewing the project as shown on the preliminary concept plan, big unknowns at this point are the costs of acquiring three parcels and a portion of a fourth parcel and relocating existing businesses. To assist in determining these costs, staff has contracted with the acquisition and relocation consultant firm of Evergreen Land Services. The acquisition and relocation consultant will handle negotiations with the property owners and work with the businesses which would be displaced by this project to find other sites and insure that they receive the benefits which are required by federal and state laws. The developer has indicated that if the City were to acquire the RentAll site and provide it to them at no cost, they could cover the remaining acquisition costs as part of the $1,700,000 TIF assistance. An appraisal has been completed for the RentAll property which indicates that the market value of the property is $520,000. This means that the total assistance that would need to be provided to meet the developers request would be $2,220,000. As previously indicated the amount of assistance that the projected tax increment could support would be $1,525,000. Staff will be prepared to discuss alternatives with the EDA at the May 26, 1998 meeting. This matter will also be discussed with the EDC at their May 28, 1998 meeting. INTER OFFICEMEMO To: Chuck Whiting From: Rick Jopke Subject: Mermaid Project Date: April 3, 1998 Attached is a recent fax received from Dave Maroney concerning the proposed Mermaid project. Dave has been in contact with John Seibert and has taken another look at the numbers. John Seibert/Charlie Hall have stated that they continue to need a total of$1,700,000 of TIF assistance for the project. The$1,700,000 includes $800,000 for land costs. Any land costs over and above $800,000 would require additional TIF assistance over and above$1,700,000. The developers have suggested that if the City were to acquire the Rentall business on the corner and provide the land at no cost to them that the$800,000 could cover the acquisition of the remaining parcels. They suggest that the costs for acquiring the Rentall business could come from TIF funds designated for Highway 10 redevelopment. Dave Maroney's projections show that the issuance of$2,120,000 of bonds would be required to provide $1,700,000 of assistance.Dave indicates that the project would generate$218,500 of TIF which would not pay back the bonds. Only $1,525,000 of bonds could be supported by$218,500 of annual increments. Evergreen Land Services is uncomfortable with providing acquisition and relocation costs without appraisals being done. However a ballpark number they have given me is a total cost of all 4 properties of$1,080,000.This would mean that$280,000 would have to be found from other funds such as the funds designated for Highway 10 redevelopment.Bruce's latest projections show approximately$50,000 to $100,000 a year available for Highway 10 redevelopment projects. The total shortfall based on Dave's numbers and Evergreen's projections would be$455,000. This could go higher if acquisition and relocation costs exceed.Evergreen's estimates. 04/03/98 14:09 COMMUNITY PARTNERS INC. + 161.27843462 NO.240 P001 .Ili t f.-c.-{i-alai-:-== _1 . . COM �2DMTY PARTNERS, . INCORPORATED • POST OFFICE BOX 1..34 : NORTHFIELD.MN 55057-2019 (507)645-6044(PHONE) . . (507)645-6037{,FAX) • R .TData: `'/- r 9s • • .• • • To: ck . M a v. d s Vic C.t b Pages: 7, including this cover sheet Fax#: `t Z - 78 q- 3llt.2. • From: D a`0 t Subject: 1-4e Li (rued . COMMENTS: i . 3-oh„ . ... 11, mc. 1-�,cA. Boo ,oao (Max. ) of 0 l.l�d��uS i•.�o �Yr. . e c,se� �� Y 'an� �ketr t , �ot,) ooJ T( F Ce�titsf co-. . ( r u'cl, sc� o c RPA4-- A ( lo•, t'Ovtc L ��1a� Ct �''^gncPr tt I+er - CA 4c 4 .r . USi ^5 -Piety Q4.11,1045-Q4.11,1045- i a Z140/ S.4 % ''C rs.4 TearTIP ,...,,,i ,d. }t , c„1 • Q2., 1Z0, 000 .� ) 700 oc t., Ce ljo�� ut, ic� Se., el-� cs � i 6 e. I- cro.cf..f (i aC.eei<s G) Asst.,M,^g 4-L1=1- 11F feve-, ,,tr i..ereetre over i-rl•-%e o.4 -1-4423' . S o r-,t 1C+,e — 2 a ii-k e CJ t.l f ea utd. 5 t l rs Li t d 4'4 t r1� f•. Sets. (.4 °-) . be 4,,,,t clever. Also, 1 P 4-tie C.fy Issued co. Be4,s , -Ik%I es4-1.-.sk ed i l tCrexI- Cd4c 6.1 0..Q. c.ccrec.5e. nw v�t:s ]. 15 CaTIUNITY PARTNERS INC. 4 16127843462 NO.239 P002 Subject: Hotel Project Proposal Revised TIF Assumptions Date: April 1, 1998 Assumptiong 1. TIF Hotel/Banquet Facility(105 rooms) JCS Development Proposal dated January 5, 1998 2. Tax increments captured for 15 years beginning in the year 2000 and ending in 2014. 95% of TIF available for debt service. 3. Taxable TIF Revenue Bond issued on 7/1/98; 15 year amortization;and for planning purposes, an interest rate of 7.25%. 4. Issuance expense budget provides for 24 months of capitalized interest,finance fees and legal costs. 5. Stable tax increment revenues and no project expansion. 6. Rent-All is acquired with funds from the Mounds View Economic Development Project Fund("pooled account"). PreliminatyBudget Profile hotel Facility Banquet Center Totals Development Costs $5,905,000 51,660,000 57,565,000 Tax Increment Assistance - $1,000,000 $ 700,000 51,700,000 % of Development Costs 17% 42% 22% TIP-Acquisition $ 400,000 $ 400,000 $ 800,000 TIF -Project Costs $ 600,000 $ 300,000 $ 900,000 Annual TIF Estimate $ 178,500 $ 40,000 $ 218,500 Preliminary Debt Projections Annual TIF Bond Issue Issuance Expenses Net Proceeds 1. $218,500 $1,900,000 $375,000 51,525,000 2. 5245,000 $2,120,000 5420,000 51,700,001) (1) Developers request is for 51,700,000. 1 2 I APPRAISAL SUMMARY 11 Appraisal Scope - Summary valuation approach to produce a market value estimate so the real estate may be purchased in fee. A Complete Appraisal 11 process with three approaches to value used to derive the final value estimate. 11 Property Appraised - A commercial store type building @ 2190 Hwy 10, Mounds View Date of Valuation - May 5, 1998 I Property Rights Appraised - Fee Simple 11 Name of Owner - The RIBOB & the ELJIM Company, aka Elmen Enterprises 11 Date of Inspection - May 5, 1998 Property Data - The subject is located at the northwesterly corner of Cty Rd H & Hwy 10 in Mounds View. The site, which is zoned B-3, Highway Business, and 11 - is 39,640 square feet in size, is improved with a one story, 3,116 square foot building that is 50% store, and 50% equipment service bay and storage warehouse. Highest and Best Use - The present use. Value Conclusions - $511,000 by the Cost Approach, $545,000 by the Sales Comparison Approach, & $507,000 by the Income Approach Reconciled Final Value Estimate - $520,000 I I I � D To: Economic Development Commission Members From: Rick Jopke, Community Development Director MEMORANDUM Subject: EDC Vacancy Date: May 22, 1998 Steve Larson has resigned from the EDC. The process has begun to fill the vacancy. The vacancy is being advertised in the Bulletin newspaper and on the city's webpage.June 15 is the deadline for filing applications. So far staff has received one application. It was from Greg Johnson who owns and operates a trailer hitch business on Highway 10. If EDC members know of people might be interested in serving on the commission, please let staff know so that we can get an application to them. • ■ Edward Jones Steven E.Larson 6209 University Ave. NE Investment Representative Fridley, MN 55432 (612)571-3061 EdwardJones April 23, 1998 Economic Development Commission City of Mounds View 2401 Highway 10 Mounds View, MN 55112 It is with regret that I an resigning from the Economic Development Commission. I am doing so for personal reasons. • Sincer: /, 40( St,ven E Larson 2907 County Road H • Mounds View MN 55112 E To: Economic Development Commission Members From: Kevin Carroll, Economic Development Coordinator MEMORANDUM Subject: Business Improvement Partnership Loan Program Date: May 22, 1998 INTRODUCTION Given the limited number(and the relatively small size)of parcels in Mounds View that are available for new commercial or industrial development, it is important that sufficient attention be devoted to making certain that we retain existing businesses and help them to expand or improve their operations. I believe that the "Business Improvement Partnership Loan Program"(hereinafter"the Program")that was started in 1995 was an important step in that direction. However, it appears that the Program has been largely inactive for over a year and a half, for reasons that presumably include limited public awareness of the Program, financial constraints, staff turnovers, and/or new or different EDC/EDA/City Council priorities. Rather than continuing to leave the Program"in limbo," it seems appropriate to determine whether the Program should be reactivated or officially discontinued. If it is to be reactivated,thought should be given to whether any changes should be made in the structure or eligibility requirements of the Program. This Memo has been prepared to provide some historical perspective, and to outline a proposed course of action for the EDC's consideration. HISTORY/CHRONOLOGY February 13, 1995: Resolution No. 95-EDA-23 adopted : "Resolution Supporting the Pursuit of a Small Business Loan Program for Mounds View Businesses." (After this date,the following presumably occurred: drafting and approval of generic "Participation Agreement"; drafting and approval of"Application for Business Loan Program"form;preparation of informational trifold brochure; preparation of one page "Low Interest Loans"flyer.) May 25, 1995: Resolution No. 95-EDC-9 adopted: "Resolution Recommending Amounts to Fund the Business Loan Program for 1995 and 1996." [$100,000 for 1995 and$300,000 for 1996] May 25, 1995: Resolution No. 95-EDC-10 adopted: "Resolution Recommending Approval of Small Business Loan for Dynex Industries." [Applicant requested ■ maximum loan of$50,000.00 to supplement an SBA 504 Loan of$1, 013,000...$25,000 from MV EDA at 2% and$25,000 from North Star Bank at 9 5/8% for 5 years,then adjusted annually to prime rate at that time....monthly payments of$238.81 and$310.00, respectively, from 10-1-85 to 9-1-2005.] June 5, 1995: Resolution No. 95-EDA-28 adopted: "Resolution Approving Business Loan for Dynex Industries." [Both loans are current in all respects,per telephone conversation with Jeff Neisen at North Star Bank on May 6, 1998.] September 28, 1995: Resolution No. 95-EDC-11 adopted: "Resolution Recommending Approval of Small Business Loan to Forcia Inc." [d/b/a Mister Donut...later,"Donut Connection"....applicant requested maximum loan of$50,000.00 $25,000 from MV EDA at 2%and $25,000 from Western Bank at 11.25 floating interest rate for 5 years...monthly payments of approximately$548.64 and$438.50, respectively, from 11/12/95 to 10/12/2000.] September 28, 1995: Resolution No. 95-EDC-12 adopted: "Resolution Approving the Establishment of a Loan Committee." October 9, 1995: Resolution No. 95-EDA-32 adopted: "Resolution Approving Business Improvement Loan for Forcia,Inc." [Both loans are current in all respects, per telephone conversation with Cindy Carlson of Western Bank on May 7, 1998; contact loan supervisor Beth Munroe at 290-8136 for more information.] January 23, 1996: Apparent date of informational letter to local businesses regarding the Business Improvement Partnership loan program. August 12, 1996: Resolution No. 96-EDC-15 adopted: "Resolution Recommending Approval of a Business Improvement Partnership Loan to Mounds View FINA." [Applicant requested maximum loan of$50,000.00....$25,000 from MV EDA at 2% and$25,000.00 from Western State Bank of St. Paul at 11% fixed for 10 years... monthly payments of$230.36 and $346.63, respectively, 9/21/96 through 8/21/2006.] August 12, 1996: Resolution 96-EDA-50 adopted: "Resolution Approving Business Improvement Partnership Loan for Mounds View FINA." [Both loans are current in all respects, per telephone conversation with Cindy Carlson of Western Bank on May 7, 1998; contact loan supervisor Beth Munroe at 290-8136 for more information.] (It is possible that another mailing to local businesses may have occurred between August 12, 1996 and the present, but I have not yet been able to verify that fact, or the actual date of any such mailing.) ■ ISSUES/ANALYSIS 1. Should the Business Improvement Partnership Program be"reactivated"? Recommendation: Yes. Rationale: The three loans that have been made under the Program thus far seem to have been complete successes. If there are funds available, we should build on those successes by making additional loans. The Program is, or could be, one of the most visible manifestations of the City's commitment to improving the local business climate. If handled properly,the Program could engender good will and generate favorable publicity for the businesses that we assist and for the City itself. 2. How much money is available for the Program? Answer: The 1998 Budget allocates $45,000.00 for"Business improvement partnership loans,"none of which has apparently been loaned,to date. This is 45%of the amount($100,000)that was budgeted or approved for the first year of the Program, but I have been told that funds that might otherwise be available for the Program are now being devoted to the Community Center. 3. To what extent should the Program be marketed or publicized? Suggestion: The Program should first be specifically targeted to conforming businesses that are located in buildings that are structurally sound, but that are unattractive, inefficient, outdated, or in need of improvement or renovation for other valid reasons. If loan funds then remain,press releases to the local media and/or feature stories in local publications should be used to publicize the Program in the least expensive manner. An effort should be made to avoid generating more interest than the City has the financial means to accommodate, in order to minimize ill will and/or claims of favoritism with respect to those who do receive loans. Reason: City money should not be used to improve non-conforming uses that the City may eventually want to eliminate or relocate, nor should City money be used for"patchwork"on structures that are in fundamentally poor condition. Ideally, loan funds would be used in a manner that would (literally)produce visible results, thereby improving not only the business in question but also the overall appearance of the City's business district. 4. What changes, if any,should be made in the Program? Suggestion: Eliminate the requirement that a business be in operation in Mounds View for two years before becoming eligible for the Program. Longevity could, however, be considered as a factor if the total loan proceeds requested by all ■ applicants exceeded available funds. Reason: The two year eligibility requirement was presumably imposed due to concerns about assisting a business that might be"here today and gone tomorrow." However, given the fact that loan proceeds will generally be used for interior and exterior structural and cosmetic improvements that will "stay" in the City, the City will benefit from any such improvements even if other businesses eventually occupy the"improved"business sites. Even if the two year requirement is eliminated, a request from a longstanding member of the local business community should be entitled to priority over a relative "newcomer,"all other things being equal. CONCLUSION The EDC should adopt a Resolution recommending the immediate reactivation of the Business Improvement Partnership Loan Program. Given the length of time that has passed since the Program was active, a Resolution would enable the EDC to "officially"reaffirm its commitment to the Program, and provide a formal action that could be publicized in order to generate new interest in the Program. At the meeting on May 28th,the EDC's input and guidance will be sought with respect to the specific businesses that staff should target for the Program, with the understanding that special emphasis will be being given to proposed improvements that would enhance the visual aesthetics of the commercial, industrial and retail sectors of the community. ■ , l'ii4 .L1_1*.-A . . i_.,...:4 . r.--..- (X-j, .sf ��-, ranX • i0 l ...... , L.,..--, lritio, ,cg, , iir .. ..i.4. r___,\.,.._ , : ...-..r . c,-_,- w. ., .., ' -,,,, L-- . %- %,-,-.4 ....2L.,, c..._..4 4.,0 p40 , A al.. 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O a � Gy � 7 • RG r MOUNDS VIEW ECONOMIC DEVELOPMENT COMMISSION RESOLUTION NO. 98-EDC-24 CITY OF MOUNDS VIEW COUNTY OF RAMSEY STATE OF MINNESOTA RESOLUTION RECOMMENDING THE REACTIVATION OF THE BUSINESS IMPROVEMENT PARTNERSHIP LOAN PROGRAM WHEREAS, on February 13, 1995 the Economic Development Commission adopted a Resolution supporting the pursuit of a business loan program ; and WHEREAS, on May 25, 1995 the Economic Development Commission adopted a Resolution approving funding for the business loan program for 1995 and 1996; and WHEREAS, on June 25, 1995 the Economic Development Authority adopted a Resolution approving the business loan program; and WHEREAS, the stated purpose of the business loan program was to "[help] Mounds View businesses thrive and prosper while improving the aesthetics of the commercial, industrial and retail sectors of the community;" and WHEREAS, the types of improvements eligible for the loan program included: repairing storefronts, windows, doors, etc.; upgrading interior design and configuration; painting, cleaning or staining the interior or exterior of a building; upgrading or replacing an existing business sign; new or upgraded landscaping; parking lot redesign or repair; stormwater discharge improvements; and ADA compliance upgrades; and WHEREAS, during 1995 and 1996 a total of three loans of$25,000.00 each were approved pursuant to the business loan program, each of which resulted in significant improvements to the visual aesthetics and/or operational efficiency of the businesses receiving the loans; and WHEREAS, each of the three loan recipients has made all of the required loan payments in full and on time; and WHEREAS, no business loans have been sought or granted since August of 1996, nor has the business loan program been actively marketed or publicized since that time, despite the fact that funds have been annually budgeted for the program; and WHEREAS, the availability of low interest loan funds could prompt some businesses in Mounds View to make improvements that might not otherwise be made, and that said improvements could improve the appearance of Mounds View's commercial district and enhance its tax base; and WHEREAS, the reactivation of the business loan program would demonstrate to Mounds View's businesses and residents the City's commitment to improving the local business climate; ..f NOW THEREFORE, BE IT RESOLVED that the Economic Development Commission of the City of Mounds View hereby recommends that the Economic Development Authority: a. approve the reactivation of the Business Improvement Loan Program, and B. authorize the funding of business improvement loans in a total amount not to exceed the $45,000.00 that was budgeted for such loans for 1998. Adopted this 28th day of May, 1998. ATTEST: Chair (SEAL) City Administrator ECONOMIC DEVELOPMENT COMMISSION AGENDA May 28, 1998 7:30 A.M. MOUNDS VIEW CITY HALL CONFERENCE ROOM C I. CALL TO ORDER A.M. 2. ROLL CALL (Present= P,Absent=A) Carlson Nelson Goff Stigney(EDA Liaison) Field Whiting(Staff) Sjoberg jopke(Staff) Schmidt Carroll(Staff) 3. APPROVE EDC MINUTES April 24, 1998 Action: Motion Second Vote 4. SPECIAL BUSINESS Introduction of David Piggott Executive Director,Metro East Development Partnership 5. EDC BUSINESS A. Discussion of Home Improvement Loan Subsidy Program Action: Motion Second Vote Comments: B. Discussion of the Mermaid (Hotel/Banquet Center) Action: Motion Second: Second Vote Comments: C. Update on Development Proposals I. Walgreens Comments: 2. Movie Theater Comments: D. Consideration of EDC Vacancy(Resignation of Steve Larson) Action: Motion Second Vote Comments: E. Consideration of Business Improvement Partnership Loan Program Action: Motion Second Vote Comments: 6. Report of Commissioners,Staff and EDA Liaison 7. ADJOURN A.M. Next Meeting June 25, 1998 ItWATA1GACGISIEEGNGENDA•EDC AGENS2l.EGC Minutes of the Economic Development Commission City of Mounds View Ramsey County, Minnesota Regular Meeting April 23, 1998 City of Mounds View, Conference Room C 2401 Highway 10, Mounds View, MN 55112 1. CALL TO ORDER: The meeting was called to order at 7:36 a.m. by Chairperson, Cindy Carlson. 2. ROLL CALL: Members present: Cindy Carlson, Ron Schmidt, Rosemary Goff, and Tom Field. Members absent: Dan Nelson, Steve Larson, and Brian Sjoberg EDA Liaison present: Roger Stigney Staff present: City Administrator Chuck Whiting, Community Development Director Rick Jopke, Housing Inspector Steve Dorgan, and Economic Development Coordinator Kevin Carroll. 3. APPROVAL OF MINUTES: Motion/Second: Field/Goff to approve the minutes from February 26,1998 and March 26, 1998. Motion Carried 4 Ayes 0 Nays 4. SPECIAL BUSINESS Chairperson Carlson introduced Kevin Carroll as the new Mounds View Economic Development Coordinator. Economic Development Coordinator Carroll summarized his background and experience in economic development as a City Council member and Port Authority member for the City of Rosemount and as a Board Member of the Dakota County Economic Development Partnership. 5. EDC BUSINESS A. Consideration of Application to MHFA to Participate in the Community Fix-up Program Housing Inspector Dorgan summarized the MHFA Community Fix-up Fund Program pointing out that participation in the program could expand the number of residents who could qualify for the reduced interest MHFA home improvement loans. Under this program, the annual adjusted household income limit would be increased from $49,000 to $69,920. Dorgan explained that the program requires that the target areas be designated or that certain age N:\DATA\GROUPS\ECONDEV\EDA-EDC\EDCMIN4.98 homes be targeted. Dorgan suggested that it would be appropriate to target homes built before 1965 because there are no areas of the City where there are concentrations of homes that need improvements. Over 50 % of the homes in the city were built before 1965 and these homes show the greatest need for home improvement. Dorgan stated that the staff recommended that the EDC pass Resolution No. 98-EDC-23 recommending EDA consideration to apply for the MHFA Community Fix-up Fund Program. Housing Inspector Dorgan also highlighted the current status of the development of a city sponsored home improvement loan program. Discussion followed concerning the need for such a program, limited city resources, alternate program guidelines, and what income limits should be used. Motion/Second: Field/Goff to approve Resolution No. 98-EDC-23. Motion Carried 4 Ayes 0 Nays B. Home Improvement Fair Housing Inspector Dorgan discussed the home improvement fairs and the potential benefits to the community. Dorgan recommended approval of Resolution No. 98-EDC-22 recommending EDA consideration to appropriate $2500 of TIF funds to develop a home improvement fair for the spring of 1999. Motion/Second: Field/Goff to approve Resolution No. 98-EDC-23 Motion Carried 4 Ayes 0 Nays C. Update of Proposal for Tax Increment Financing for Development of a Hotel/Conference Center Community Development Director Jopke summarized the current status of project pointing out that the city staff is in the process of trying to refine the potential acquisition and relocation costs to see if the project will work from an economic standpoint. 6. REPORTS FROM CHAIR, COMMISSIONERS,AND STAFF: None 7. ADJOURNMENT There being no further business before the Commission, this meeting of the Economic Development Commission adjourned at 9:05 a.m. Respectfully Submitted, Rick Jopke Community Development Director N:\DATA\GROUPS\ECONDEV\EDA-EDC\EDCMIN4.98 • SA ITo: Economic Development Commission Members From: Steve Dorgan, Housing Inspector MEMORANDUM Subject: Proposed Subsidized Home Loan Program Date: May 22, 1998 SUMMARY At the EDC meeting in April, the commission approved a recommendation to the EDA for an application to the Minnesota Housing Finance Agency (MHFA) for participation in the Community Fix-up Fund program as part of the proposed loan subsidy program. The EDA approved the application at their regular meeting held on May 4th, and staff submitted the application to the MHFA for review at there regular board meeting on May 28th. Participation in the Community Fix-up Fund program by the city is a component of the proposed loan subsidy program. The city will know if the application is approved after the MHFA board meets. The EDC also reviewed a draft outline for both a market rate and MHFA loan subsidy program. At the last EDC meeting,there was discussion relating to the guidelines, and more specifically to the eligible improvements for the proposed programs. Staff is seeking further direction from the EDC relating to the program outline. ACTION TO BE CONSIDERED Review the attached program outlines and provide direction to staff for the development of a final draft to be submitted at the next regular EDC meeting. s.� Steve Dorgan, ousing Inspector 717-4023 Attachments: Exhibit A-Proposed Market Rate Interest Subsidy Program Outline Exhibit B -Proposed MHFA Interest Subsidy Program Outline N:\DATA\GROUPS\COMDEV\HOUSING\HOMELOAN\LOAN5 28.98 � I • Exhibit A DRAFT 5/22/98 City of Mounds View Interest Subsidy Program Terms for Market Rate Home Improvement Loans Program Overview The Mounds View Economic Development Authority(EDA) is making available tax increment funds that will provide a 3% annual interest rate subsidy for new market rate home improvement loans which meet the criteria of the program. The loans originated under this program will be for a term of up to 10 years. The maximum city subsidy for all loans and associated administrative costs issued in the first two years is$20,000. Aggregate subsidies for future years will decline each year as loan balances decrease. Aggregate subsidies will be paid by the city over the life of the loan. The loans will be provided through Western Bank and subsidized by the City of Mounds View. The program expects to provide subsidized loans for a period of at least two years. The City of Mounds View will provide funds in an account at Western Bank for the purpose of subsidizing qualifying market rate home improvement loans. Loans provided by Western Bank will be subsidized by amortization payments over a maximum of a 10 year period(i.e. a$10,000 loan at a market rate of 10%, subsidized to a 7%rate will require a 3% interest subsidy payment of$ by the city over a period of 10 years. The city's subsidy will be amortized over a 10-year payment.) Credit will be given for loans which are paid off early. Target Properties All owner occupied residential properties having I-4 units. No restrictions for household income or age of housing will be required for this program. Program Guidelines 1. The City of Mounds View will subsidize 3% of the market interest rate for home improvement loans within the city. 2. Western Bank will utilize City of Mounds View tax increment funds to write down market rate home improvement loans not to exceed$20,000 of a total subsidy in the program's first two years. 3. Loans will be approved and originated under Western Banks underwriting criteria. 4. Western Bank will be responsible for servicing the loans. 5. Eligible improvements and eligible properties are determined by criteria adopted by the city(see Eligible Improvements). 6. Borrowers' must provide proof of income, a property tax statement, bid for work, and contractor warranties. 7. The property owner has 9 months from the date of closing to complete the improvement(s). 8. Loan proceeds will be dispersed by having checks issued to the applicant and contractor for completed work. 9. The city will offer a remodeling counselor for any property owner desiring assistance in evaluating and prioritizing improvements to their property. Remodeling counselors will also Exhibit A DRAFT 5/22/98 be available to assist property owners in evaluating bids. Fees for these services will be paid by the City of Mounds View and payment administrated by the lender. 10. Sweat equity projects are permitted. However, labor is not eligible for compensation. Sweat equity refers to an arrangement where the property owner(not a contractor) performs the home improvement. 11. Funds must first be used to abate any outstanding orders or code violations from the City of Mounds View. Eligible Improvements Eligible improvements will be based on guidelines established by the City of Mounds View. These improvements include: • Plumbing and electrical repairs • Heating, air conditioning, ventilation system, and chimney • Lead or asbestos abatement • Handicapped accessibility improvements • Carpeting and other floor coverings • Roofing • Painting • Siding • Trim • Window replacement and updates • Replacement of Doors • Masonry work • Steps • Driveways • Garage repair, replacement or new construction • Garage electrical (line extension,lights, outlets, door opener) • Exterior electrical (motion sensor lights, sidewalk lights, yard lights, door bells) • Exterior plumbing (such as sprinkler systems) • Sidewalks • Gutters • Landscaping projects that are permanent improvements, such as trees, bushes, sod, terracing, etc. • Other projects that are approved through MHFA loan guidelines Ineligible Improvements • Saunas • Decks and patios • Gazebos • Hot Tubs • Non permanent landscaping fixtures such as swing sets, bird feeders, potted Exhibit A DRAFT 5/22/98 plants, picnic tables, lawn ornaments, etc. • Labor costs of borrowers, residents, or unlicensed contractors • Personal property items, including furniture • Repairs to property used for business or trade purposes Scope of Services City of Mounds View Responsibilities: 1. Develop program guidelines and supervise implementation. 2. Market the program to city homeowners. 3. Dictate change in program guidelines as funds or conditions demand or indicate necessary. 4. Periodically review scope of work appeals and loan denial appeals. 5. Review periodic status reports provided by the Western Bank. 6. Monitor and evaluate Western Bank performance and loan program guidelines. 7. City will establish a list of qualified remodeling counselors to be made available to Western Bank. _ 8. Facilitate an information meeting of participating remodeling counselors to provide expectations of services for the program(i.e. Loan preapproval requirement for services, etc.). Western Bank Responsibilities: 1. Process loan applications. Western Bank will first attempt to place a borrower in the MHFA Home Energy, Great Minnesota Fix-up Fund or Community Fix-up Fund loan programs. 2. Verify that eligible applicants live in Mounds View and that the proposed property lies entirely within the city's boundary. 3. As part of the application process, Western Bank will provide borrowers a remodeling counselor through a rehabilitation remodeling counseling service after pre approval of a loan. If borrowers choose to use the remodeling service, the lender will administer payment of the service through city funds. 4. Manage loan fund and provide the City of Mounds View periodic reports as agreed. Exhibit B DRAFT 5/22/98 City of Mounds View Interest Subsidy Program Terms for MHFA Home Improvement Loans Program Overview The Mounds View Economic Development Authority(EDA) is making available $40,000 in tax increment funds (TIF) for the purpose of subsidizing the interest rate of home improvement loans under this program. The loans will be Minnesota Housing Finance Agency (FIFA) originated by participating lenders and subsidized by the City of Mounds View. The city will provide interest subsidies for MHFA loans. Maximum loan amounts through this program will be $35,000. The loans will be originated by the participating lenders of Western Bank and Center for Energy and the Environment(CEE). The program expects to provide subsidized.loans for a period of at least two years. The City of Mounds View will provide funds in an account at participating lenders for the purpose of subsidizing qualifying home improvement loans. Loans provided by MHFA and originated by the lender will be subsidized in a lump sum payment from the city account(i.e. a$10,000 loan for a term of 10 years at 8%subsidized to a 5%rate will require a 3% interest payment of$ by the city. Target Properties All owner occupied residential properties having 1-4 units. For MHFA loans received through the Community Fix-up Fund program, the city has identified homes built before 1965 as the need/objective for the use of these funds. Homeowners qualifying for the Community Fix-up Fund program must have an adjusted household income of$69,900 or less. All other properties qualifying for MHFA loans may receive a reduced rate loan. Program Guidelines 1. Underwriting of these loans will follow the MHFA procedural manuals and normal and prudent underwriting criteria. 2. Participating lenders will utilize City of Mounds View tax increment funds to write down the interest rate on the MHFA loans. MHFA loans will be written down to an effective rate of 5%. Loan interest differentials will be paid by the City of Mounds View. 3. MHFA, CEE and Western Bank will be responsible for servicing the loans. 5. Eligible improvements and eligible properties are determined by the MHFA for the individual programs and are stated in the procedural manuals for each program. 6. Borrower's must provide proof of income, property tax statement, bid for work, and contractor warranty. 7. The property owner has 9 months from the date of closing to complete the improvement(s). 8. Loan proceeds will be dispersed to the borrower upon loan closing. 9. Loan proceeds over$2,500 will be secured with a mortgage. 10. Lenders will offer a remodeling counselor for any property owner desiring assistance in Exhibit B DRAFT 5/22/98 evaluating and prioritizing improvements to their property. Remodeling counselors will also be available to assist property owners in evaluating bids. Fees for these services will be paid from the City of Mounds View Home Improvement Loan Program administrative budget. 11. Sweat equity projects are permitted. However, labor is not eligible for compensation. Sweat equity refers to an arrangement where the property owner(not a contractor)performs the home improvement. 12. Use of funds is limited to eligible improvements allowable under MHFA's Great Minnesota Fix-up Fund and Community Fix-up Fund Programs. Funds must first be used to abate any outstanding orders or code violations from the City of Mounds View. Eligible Improvements Eligible improvements will be based on guidelines established by the MHFA. These improvements include: • Plumbing and electrical repairs • Heating, air conditioning,ventilation system, and chimney • Lead or asbestos abatement • Handicapped accessibility improvements • Carpeting and other floor coverings • Roofing • Painting • Siding • Trim • Window replacement and updates • Masonry work • Steps and sidewalks • Driveways • Garage repair,replacement or new construction • Garage electrical (line extension, lights, outlets, door opener) • Exterior electrical(motion sensor lights, sidewalk lights, yard lights, door bells) • Exterior plumbing (such as sprinkler systems) • Gutters • Landscaping projects that are permanent improvements, such as trees, bushes, sod, terracing, etc. • Other improvements that are approved through MHFA loan guidelines Ineligible Improvements • Saunas • Decks and patios • Gazebos • Hot Tubs • Non permanent landscaping fixtures such as swing sets, bird feeders, potted Exhibit B DRAFT 5/22/98 plants,picnic tables, lawn ornaments, etc. • Labor costs of borrowers,residents, or unlicensed contractors • Personal property items, including furniture • Repairs to property used for business or trade purposes Scope of Services City of Mounds View Responsibilities: 1. Develop program guidelines and supervise implementation. 2. Market the program to city homeowners. 3. Dictate change in program guidelines as funds or conditions demand or indicate necessary. 4. Periodically review scope of work appeals and loan denial appeals. 5. Review periodic status reports provided by participating lenders. 6. Monitor and evaluate participating lenders performance and loan program guidelines. 7. City will establish a list of qualified remodeling counselors to be made available to the lender(s). 8. Facilitate an information meeting of participating remodeling counselors to provide expectations of services for the program(i.e. Loan pre-approval requirement for services, etc.). Participating Lenders Responsibilities: 1. Process loan applications. Lenders will first attempt to place a borrower in either the MHFA Home Energy, Great Minnesota Fix-up Fund or the Community Fix-up Fund loan programs. 2. Evaluate loan requests using MHFA underwriting guidelines. 3. Verify that eligible applicants live in Mounds View and that the proposed property lies entirely within the city's boundary. 4. As part of the application process, lenders will provide borrower a list of remodeling counselors after pre approval of a loan. If borrower chooses to use a remodeling counselor, the lender will administer payment of the city funds for the service. 5. Manage loan fund and provide the City of Mounds View periodic reports as agreed. 513 To: Economic Development Commission Members From: Rick Jopke, Community Development Director M[MORAMDUII Subject: Discussion of the Mermaid (Hotel/Banquet Center) Date: May 22, 1998 Attached for your information is a copy of a recent report to the EDA conceming the Proposed Mermaid hotel/banquet facility. Staff will update the EDA on the current status of the project at the May 28, 1998 meeting. ■ Item No. Staff Report No. Meeting Date: 5/26/98 Type of Business: EDAB WK: Work Session;PH:Public Hearing; CA:Consent Agenda;EDAB:EDA Business Mounds View Economic Development Authority Staff Report To: Mounds View Economic Development Authority From: Rick )opke, Community Development Director Item Title/Subject: Update of the Mermaid Hotel/Banquet Facility Project Date of Report: May 22, 1998 BACKGROUND: At the April 6, 1998 work session staff discussed the current status of the of the proposed project involving the expansion of the Mermaid to include an 11,700 square foot banquet facility and a 185-room hotel. The preliminary numbers provided by the developer show a need for$700,000 of TIF assistance for the banquet facility and additional$1,000,000 for the hotel. Project costs show a total of $800,000 for land acquisition. This may be low based on the amount of land to be acquired. The hotel developer has indicated that TIF assistance for the hotel must be structured to be of"direct benefit"to the hotel development and financial program. To use the TIF funds to acquire land only is not considered to be of"direct benefit." Some TIF assistance will be needed for financing eligible building and development costs. In reviewing the project as shown on the preliminary concept plan,big unknowns at this point are the costs of acquiring three parcels and a portion of a fourth parcel and relocating existing businesses. To assist in determining these costs, staff has contracted with the acquisition and relocation consultant firm of Evergreen Land Services. The acquisition and relocation consultant will handle negotiations with the property owners and work with the businesses which would be displaced by this project to find other sites and insure that they receive the benefits which are required by federal and state laws. The developer has indicated that if the City were to acquire the RentAll site and provide it to them at no cost, they could cover the remaining acquisition costs as part of the $1,700,000 TIF assistance. An appraisal has been completed for the RentAll property which indicates that the market value of the property is $520,000. This means that the total assistance that would need to be provided to meet the developers request would be $2,220,000. As previously indicated the amount of assistance that the projected tax increment could support would be $1,525,000. Staff will be prepared to discuss alternatives with the EDA at the May 26, 1998 meeting. This matter will also be discussed with the EDC at their May 28, 1998 meeting. INTER • • OFFICEMEMO To: Chuck Whiting From: Rick Jopke Subject: Mermaid Project Date: April 3, 1998 Attached is a recent fax received from Dave Maroney concerning the proposed Mermaid project. Dave has been in contact with John Seibert and has taken another look at the numbers. John Seibert/Charlie Hall have stated that they continue to need a total of$1,700,000 of TIF assistance for the project. The$1,700,000 includes$800,000 for land costs.Any land costs over and above $800,000 would require additional TIF assistance over and above $1,700,000. The developers have suggested that if the City were to acquire the Rentall business on the corner and provide the land at no cost to them that the $800,000 could cover the acquisition of the remaining parcels. They suggest that the costs for acquiring the Rentall business could come from TIF funds designated for Highway 10 redevelopment. Dave Maroney's projections show that the issuance of$2,120,000 of bonds would be required to provide $1,700,000 of assistance.Dave indicates that the project would generate$218,500 of TIF which would not pay back the bonds. Only $1,525,000 of bonds could be supported by$218,500 of annual increments. Evergreen Land Services is uncomfortable with providing acquisition and relocation costs without appraisals being done. However a ballpark number they have given me is a total cost of all 4 properties of$1,080,000.This would mean that$280,000 would have to be found from other funds such as the funds designated for Highway 10 redevelopment.Bruce's latest projections show approximately$50,000 to $100,000 a year available for Highway 10 redevelopment projects. _ The total shortfall based on Dave's numbers and Evergreen's projections would be$455,000. This could go higher if acquisition and relocation costs exceed.Evergreen's estimates. L 04,03/98 14:99 COMMUNITY PARTNERS INC. 4 16127843462 NO.240 P001 COWEVIUNITY PARTNERS, '` • . INCORPORATED • POST OFFICE BOX 138 = NORTHFIELD.MN 55057-2019 (507)645-6044 (PHONE) . . (507)645.6037(FAX) To: QIck S. Date: 4- i -93 M o%...,.,4c V t e ' C.b D Pages: Z inciudng this cover shot Fax#: `' z. - --78q- 3YG Z • From: n cAv t . Subject: Oa L 1 \c‘j( . COMMENTS: i �-ch, 4.... I is- 1-+c 1-4 c..1 Soo ,000 (Max. ) 4 C � utd��s � ..�a �Ys . rr f c v., S e r"../Se-4 4% �..y, i anc� 4-k e t r ( � 700 00 J T� f QZ,� t..7 (( Ct { p,,,CPr ( LArC`1=Sc p c Ret4-_ Ail T`0#1 (rovtc L t�ta� f o411ti -C 4,QS . . q) LA sq -,5 4.teir Z1 ► NC ter 41 ZIu/ Se" -ttrs4 4?ecr T( p W4u1 '1.1,. - wt f2. IZD 0 !f 700 acs ce � i �O �o�d �,�tic� Seter� cs i rte.t co'ccf cr6Cee:ts . CDASSVir►tt^45 4-11=1. 11 revp-, `er r..rrccks'e eve r -tl-.c 0.4 +4ej" . Sat►-ic 1C.,c — eYesi-qi* eie.lf c ct St iss4ed4-tic n� �. Sets. (-14"(A, �hI es--i•,Q{ed be cane e�orer. Also, � �' �t�e C��r Iss�.ed C,.o. 8e„ds , i 0.4ere.34 CCi.4e 61e�l& decrease. 1e: Z COMMUNITY PARTNERS INC. 4 16127843462 NO.239 P002 . Subject: Hotel Project Proposal Revised TIF Assumptions Date: April 1, 1998 1. TIF Hotel/Banquet Facility(105 rooms) JCS Development Proposal dated January 5, 1998 2. Tax increments captured for 15 years beginning in the year 2000 and ending in 2014. 95% of TIF available for debt service. 3. Taxable TIF Revenue Bond issued on 7/1/98; 15 year amortization;and for planning purposes, an interest rate of 7.25%. 4. Issuance expense budget provides for 24 months of capitalized interest,finance fees and legal costs. 5. Stable tax increment revenues and no project expansion. 6. Rent-All is acquired with funds from the Mounds View Economic Development Project Fund("pooled account"). Preliminary Budget Profile Hotel Facility Banquet Center Totals Development Costs $5,905,000 $1,660,000 $7,565,000 Tax Increment Assistance - $1,000,000 $ 700,000 $1,700,000 % of Development Costs 17% 42% 22% TIF-Acquisition $ 400,000 $ 400,000 $ 800,000 TIF-Project Costs $ 600,000 $ 300,000 $ 900,000 Annual TIF Estimate $ 178,500 $ 40,000 $ 218,500 preliminary Debt Projections Annual TIF Bond Issue Issuance Expenses Net Proceeds 1. 5218,500 $1,900,000 $375,000 $1,525,000 2. $245,000 $2,120,000 $420,000 $I,700,001 (l) Developers request is for$1,700,000. I 2 a I APPRAISAL SUMMARY 11 Appraisal Scope - Summary valuation approach to produce a market value estimate so the real estate may be purchased in fee. A Complete Appraisal 11 process with three approaches to value used to derive the final value estimate. 11 Property Appraised - A commercial store type building @ 2190HuiY 10, Mounds View Date of Valuation - May 5, 1998 Property Rights Appraised - Fee Simple 11 Name of Owner - The RIBOB & the ELJIM Company, aka Ehnen Enterprises 11 Date of Inspection - May 5, 1998 ' Property Data - The subject is located at the northwesterly corner of Cty Rd H & Hwy 10 in Mounds View. The site, which is zoned B-3, Highway Business, and 11 - is 39,640 square feet in size, is improved with a one story, 3,116 square foot building that is 50% store, and 50% equipment service bay and storage 11 warehouse. 11 Highest and Best Use - The present use. Value Conclusions - $511,000 by the Cost Approach, $545,000 by the Sales Comparison Approach, & $507,000 by the Income Approach Reconciled Final Value Estimate - $520,000 I I � D To: Economic Development Commission Members From: Rick Jopke, Community Development Director M{NORAMDUM Subject: EDC Vacancy Date: May 22, 1998 Steve Larson has resigned from the EDC. The process has begun to fill the vacancy. The vacancy is being advertised in the Bulletin newspaper and on the city's webpage.June 15 is the deadline for filing applications. So far staff has received one application. It was from Greg Johnson who owns and operates a trailer hitch business on Highway 10. If EDC members know of people might be interested in serving on the commission, please let staff know so that we can get an application to them. ■ Edward Jones Steven E. Larson 6209 University Ave. NE Investment Representative Fridley, MN 55432 a (612)571-3061 EdwardJones April 23, 1998 Economic Development Commission City of Mounds View 2401 Highway 10 Mounds View, MN 55112 It is with regret that I an resigning from the Economic Development Commission. I am doing so for personal reasons. • Sincer: /, 40°( St,ven E Larson 2907 County Road H Mounds View MN 5511Z