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HomeMy WebLinkAbout04-23-1998 ECONOMIC DEVELOPMENT COMMISSION AGENDA April 23, 1998 7:30 A.M. MOUNDS VIEW CITY HALL CONFERENCE ROOM C CALL TO ORDER -7 36 A.M. 2. ROLL CALL (Present= P,Absent = A) Carlson Larson Goff Nelson X Field x Stigney(EDA Liaison) Sjoberg Whiting(Staff) Schmidt Jopke(Staff) C�crro I l 3. APPROVE EDC MINUTES February 26, 1998 Action: Motion f-ILt) Second 'oFF Vote Li—o March 26, 1998 Action: Motion El �- Second c- F Vote y- 4. SPECIAL BUSINESS Introduction of Kevin Carroll,the new Economic Development Coordinator 5. EDC BUSINESS A. Consideration of Application to MHFA to Participate in the Community Fix Up Fund Program e_pG -2 3 Action: Motion SOF F- Second FtELf> Vote 9-D Comments: B. Home Improvement Fair Action: Motion ,aw,s,-77 Second F/-LD Vote y- Comments: C. Update of Proposal for Tax Increment Financing for Development of a Hotel/Conference Center 6. Report of Commissioners,Staff and EDA Liaison 7. ADJOURN 1 0 S A.M. ECONOMIC DEVELOPMENT COMMISSION AGENDA April 23, 1998 7:30 A.M. MOUNDS VIEW CITY HALL CONFERENCE ROOM C CALL TO ORDER A.M. 2. ROLL CALL (Present = P,Absent = A) Carlson Larson Goff Nelson Field Stigney(EDA Liaison) Sjoberg Whiting(Staff) Schmidt Jopke(Staff) 3. APPROVE EDC MINUTES February 26, 1998 Action: Motion Second Vote March 26, 1998 Action: Motion Second Vote 4. SPECIAL BUSINESS Introduction of Kevin Carroll,the new Economic Development Coordinator 5. EDC BUSINESS. A. Consideration of Application to MHFA to Participate in the Community Fix Up Fund Program Action: Motion Second Vote Comments: B. Home Improvement Fair Action: Motion Second Vote Comments: C. Update of Proposal for Tax Increment Financing for Development of a Hotel/Conference Center 6. Report of Commissioners,Staff and EDA Liaison 7. ADJOURN A.M. l . ECONOMIC DEVELOPMENT COMMISSION AGENDA April 23, 1998 Ai/f C/h4vL /—i ,y�>f 7:30 A.M. MOUNDS VIEW CITY HALL _ f/,,t (' CONFERENCE ROOM C (2,-Zd G/e.-4.1.11) CALL TO ORDER A.M. 2. ROLL CALL (Present= P,Absent =A) Carlson Larson Goff Nelson Field Stigney(EDA Liaison) Sjoberg Whiting(Staff) Schmidt Jopke(Staff) 3. APPROVE EDC MINUTES February 26, 1998 Action: Motion Second Vote March 26, 1998 Action: Motion Second Vote 4. SPECIAL BUSINESS Introduction of Kevin Carroll,the new Economic Development Coordinator 5. EDC BUSINESS A. Consideration of Application to MHFA to Participate in the Community Fix Up Fund Program Action: Motion Second Vote Comments: B. Home Improvement Fair Action: Motion Second Vote Comments: C. Update of Proposal for Tax Increment Financing for Development of a Hotel/Conference Center 6. Report of Commissioners,Staff and EDA Liaison 7. ADJOURN A.M. Minutes of the Economic Development Commission City of Mounds View Ramsey County, Minnesota Regular Meeting March 26, 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 7:35 a.m. by Chairperson, Cindy Carlson. 2. ROLL CALL: Members present: Cindy€rlsoikand om Field. Members absent: Dan ► - on, orNchmidt, osem Goff, Steve Larson, and Brian Sober EDA Liaison present: �!' . - Stigney Sjoberg Staff present: City Administrator Chuck Whiting, Community Development Director Rick Jopke, Housing Inspector Steve Dorgan, and Finance Director Bruce Kessel A quorum was not present, therefore no official business could take place. 3. APPROVAL OF MINUTES: No Action 4. SPECIAL BUSINESS None. 5. EDC BUSINESS A. Consideration of Housing Improvement Program Chairperson Carlson summarized the general direction to staff to develop draft guidelines for EDC consideration which include no income guidelines, which would require minimal city staff administration, and would specify eligible and ineligible activities. Staff was directed to bring specific guidelines for EDC action at the next meeting. B. Review of TIF Funding Budgets City Finance Director Bruce Kessel reviewed his projections of the TIF funding budgets through the life of the TIF districts. The approved expenditures for the new community center will significantly impact the amount of funds available for the activities such as housing and Highway 10 redevelopment included in the TIF funding budgets recommended by the commission in the past. N:\DATA\GROUPS\ECONDEV\EDA-EDC\EDCMIN2.98 C. Update of Proposal for Tax Increment Financing for Development of a Hotel/Conference Center No action or discussion. D. North Metro I35W Corridor Coalition No action or discussion. E. Sale of Buildings in the Mounds View Business Park No action or discussion F. Status of the Economic Development Coordinator Position Community Development Director Jopke informed the Commission that 3 finalists had been selected and that additional interviews would be occurring. Chairperson Carlson agreed to participate in the interviews. 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 9:00 a.m. Respectfully Submitted, Rick Jopke Community Development Director N:\DATA\GROUPS\ECONDEV\EDA-EDC\EDCMIN2.98 1 Minutes of the Economic Development Commission City of Mounds View Ramsey County, Minnesota Regular Meeting February 26, 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 7:32 a.m. by Chairperson, Cindy Carlson. 2. ROLL CALL: Members present Cindy Carlson, Rosemary Goff,Tom Field, and Steve Larson. Members absent Dan Nelson, Ron Schmidt,and Brian Sjoberg EDA Liaison present None Staff present City Administrator Chuck Whiting, Community Development Director Rick Jopke, Housing Inspector Steve Dorgan 3. APPROVAL OF MINUTES: Motion/Second: Goff/Carlson to approve the minutes from January 29, 1998. Motion Carried 4 Ayes 0 Nays 4. SPECIAL BUSINESS A. Review of the current status of the request by Everest for tax increment financing assistance for Building N in the Mounds View Business Park. City Administrator Whiting updated the EDC on the status of the Everest TIF request for Building N. Whiting pointed out that Everest is requesting amendments to the previously approved development assistance agreement including changing the the name of the Developer entity,extending the deadline for substantial completion to December 31,2000,and expanding the list of TIF reimburseable improvement costs to include SAC,WAC,and park dedication fees, parking lot base and paving costs, and TIF application deposit. Whiting indicated that staff would be bringing this item to the City Council work session on March 2, 1998. N:\DATA\GROUPS\ECONDEV\EDA-EDCIEDC:vIIN2.9s 5. EDC BUSINESS A. Consideration of Proposal for Tax Increment Financing for Silverview Estates. This project involves the construction of a Holiday station store, two office buildings and a senior housing project at the intersaction of Silver Lake Road and Highway 10. Jopke reviewed the history of the project and the developers request for pay-as-you-go tax increment assistance.Jopke recommended that the EDC consider TIF assistance equal to approximately $1,000,000 on a present value basis instead of the $1,700,000 requested by the developer. Jopke introduced Jim Casserly, the City's financial consultant. Mr Casserly summarized his review of the request and the basis for the $1,000,000 recommendation.--> Marcel Ebensteiner, representing Silverview Estates, Inc. requested that the assistance to the office portion be increased from $167,000 to $240,000 to cover potential soil correction costs on the site of the one story office building. Ebensteiner also stated that they are also exploring the a number of options for the senior housing including the possibility of HUD financing and having some or all assisted living units. Chairperson Carlson informed the commission that she had contacted the developer of the Oakcrest Senior Apartment in Spring Lake Park and found out that there are 11 units vacant in the project and that there was a total of$750,000 of TIF bond funds provided to the project ($500,000 directly to the project and $250,000 for public improvements including lighting). Commissioner Larson pointed out that assisted living did not work at the Brightondale project in New Brighton. Larson indicated that that project was changed to full care. Larson also stated that affordable rates should not be the overriding issue because Mounds View already has a sufficient amiunt of affordable housing units and that what seniors are looking for is avoiding the ongoing maintenance of single family homes. Additonal items discussed included the impact of the single story office building on the adjacent wetlands, the timing of the construction of the office buidings,whether the office portion of the project should be handled separately from the housing portion, and whether the TIF assistance for the offices should be contingent on the completion of the two story office. The commission discussed amount of assistance, length of assistance, and eligible uses of funds for each portion of the project. Motion/Second: Goff/Larson to approve Resolution No. 98-EDC21 Motion Carried • 4 Ayes 0 Nays B. Consideration of Housing Improvement Loan Program Chairperson Carlson generally described the discussion that city staff had with Western Bank concerning possible home improvement loan programs. Housing Inspector Dorgan summarized the types of existing and possible programs that staff has investigated. N:\DATA\GROUPSIECONDEV‘EDA-BDOEDCM2.98 Commissioner Larson questioned why income limits should be included. Larson stated that emphasis should be placed on the end result of improving value, marketability, and aesthetics. The commisssion also discussed the need to define the type of improvements which any funds could be used for. Additional discussion cocerning this matter will occur at a future EDC meeting. 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 9:12 a.m. Respectfully Submitted, Rick Jopke Community Development Director N:\DATAIGROUPSIECONDEVTDA-EDCIEDCMIN2.98 1 To: Economic Development Commission Members From: Steve Dorgan, Housing Inspector MEMORANDUM Subject: Proposed Loan Program Date: April 16, 1998 BACKGROUND At the EDC meeting on March 26,the commission directed staff to submit a proposal for a home improvement loan program. Based upon the meeting, it has been determined that the amount of tax increment financing funds(TIF)available is insufficient for a program which would be sponsered entirely by the city. Staff has been evaluating programs which would attract the most reinvestment activity per dollar avaialble. Staff and lenders have concluded that an interest rate subsidy approach would be the most effective use of TIF funds. This program would involve the city subsidizing a portion of the loan interest by offering interest subsidies with tax increment funds to a rate of 4-6%as an incentive to stimulate home improvement within the city. HOME IMPROVEMENT LOAN PROGRAM Staff has been working with the Minnesota Housing Finance Agency(MHFA), Western Bank and the Center for the Energy and the Environment(CEE)to develop a proposal for an interest subsidy loan program for Mounds View homeowners. Because of insufficient TIF funds available,the city will need to rely on other funding sources for loans and provide subsidies to interest rates for loans issued through other lending sources. The EDC directed staff to develop a program with no income limits. This guideline would create a significant financial obligation for the city by subsidizing market rate loans(9%-13%rates). Particularly for loans not offered through an existing MHFA loan program(2%-8%rates). At this time, homeowners in the city have access to home improvement loans through the MHFA"Fix-up Fund"with interest rates between 2%-8%for homeowners with a maximum adjusted annual household income of $49,000. The city may also apply to MHFA for participation in the"Community Fix-up Fund"program. Under this program,the adjusted annual household income limit is increased to$69,920. However,the city must identify a specific need/objective for this program (i.e.homes built before 1965). The city should apply for these funds at this time so that MHFA can process the application and make funds available. MHFA program applications take approximately 30 days to process. Attached is a copy of the Community Fix-up Fund application for review. Staff has recently discussed options which would attempt to provide low-interest loans to all homeowners of the city with both Western Bank and CEE. Some of the concerns expressed include the significant expense to the city as a result of loans made to borrowers who do not qualify for MHFA programs. These loans will require a subsidy of a market rate loan over a potential 10-20 year period. This would be a significant expense to the city,and most likely deplete the subsidy funds in a short period of time. Particularly if the city is attempting to buy down a market interest rate of say 10%to a targeted 5% rate. In lieu of these circumstances and the limited amount of TIF funds available for a housing loan program, it may be suggested that a program be established which would buy down lower than average rates which already exist through the MHFA programs. In addition,as an attempt to provided subsidies for homeowners not qualifying for MHFA loans, provide a proportionate subsidy to DRAFT- 4/16/98 Terms of the City of Mounds View Interest Subsidy Program for Market Rate Home Improvement Loans Program Overview The Mounds View Economic Development Authority(EDA) is making available a program that would provide a 3%annual interest rate subsidy for new home imorivement loans which meet the criteria of the program. The loans origionated under this program can be for a term of up to 10 years. The maximum city subsidy for all loans issued in the first two years is $20,000 of tax increment funds (TIF). Aggregate subsidies for future years will decline each year as loan balances decrease. The loans will be market rate loans provided through Western Bank and subsidized by the City of Mounds View. The City will provide a 3% subsidy for all home improvement loans. 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 the lender for the purpose of subsidizing qualifying home improvement loans. Loans provided by lender(s)will be subsidized by amortization payments over a maximum of a 10 year period(i.e. a$10,000 loan at 10%, subsidized to a 7% rate will require a 3% interest payment of$ by the city 10 years. However 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 1-4 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. Participating lender(s) will utilize City of Mounds View Tax Increment Funds to write down market rate home improvement loans not to exceed $20,000 of total subsidy in the program's first two years. 3. Loans will be approved and origionated under Western Banks underwriting criteria. 4. Participating lender(s) will be responsible for servicing the loans. 5. Eligible improvements and eligible properties are determined by criteria adopted by the city. 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 by having checks issued to the applicant and contractor DRAFT- 4/14 potted 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 • I DRAFT- 4/16/98 Terms of the City of Mounds View Interest Subsidy Program for MHFA Home Improvement Loans Program Overview The Mounds View Economic Development Authority(EDA) is making available$40,000 of tax increment funds (TIF) for the purposes of buying down 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. Loans will be originated by participating lender(s). The city will apply for participation in the MHFA Community Fix-up Fund Program. Upon qualification, the MHFA will provide loans with more flexible eligibility requirements including a maximum household income limit of 69,920 and interest rates ranging between 2% - 8%. Maximum loan amounts through this program will be $35,000. The loans will be originated by the participating lenders of Western Bank and 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 the lender 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$10,000 loan at 8%, subsidized to a 5%rate will require a 3%interest payment of$ by the city. MHFA provides reductions based on some loans receiving reductions for early pay off.). Market rate loans will be provided by the lender and subsidized over the term of the loan with monthly payments (i.e. a$10,000 loan at 9% subsidized to a 5%rate will require a 4% interest payment of $ to be payed by the city over the life of the loan. Credit will be given for loans which are paid off early.). Target Properties All owner occupied residential properties having 1-4 units and having a household income of $49,000 or less within the city will qualify for the reduced rate loans. For MHFA loans received through the Community Fix-up Fund program,the city is required to identify a particular home improvement needs/objectives for the use of the funds. The city will identify the older housing stock within the city as the needs/objective. Over 50% of the homes in the city were built before 1965. Because these homes are typically in need of most updating, homes built before 1965 will be targeted for loans through the Community Fix-up Fund program. Program Guidelines 1. Underwriting of these loans will follow the MHFA procedural manuals and normal and prudent underwriting criteria. 2. Participating lender(s) will utilize City of Mounds View Tax Increment Funds to write DRAFT- 4/16/98 • 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) • Sidewalk • Gutters • Landscaping projects that are permanent improvements, such as trees, bushes, sod, terracing, etc. Ineligible Improvements • Saunas • Decks and patios • Gazebos • Hot Tubs • Non permanent landscaping fixtures such as swing sets, bird feeders, potted 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 ,�, COMMUNITYPROGRAM FIXCONCEPT-UP FUND ', PROGRAM GOAL Encourage partnership efforts between Minnesota Housing Finance Agency (MHFA), local lenders, nonprofit organizations, local governments, and community organizations by providing funds to assist a designated community in addressing its specific home improvement needs or objectives. ELIGIBLE PROGRAM APPLICANTS Applications must be submitted by participating MHFA Fix-up Fund lenders (or participating lender consortia), in partnership with a nonprofit organization delivering housing programs,or a city as defined by Minnesota Statute 462C.02, subd. 6 (including local governments, housing and redevelopment authorities, economic development authorities and port authorities). PROGRAM REQUIREMENTS • The Community Fix-up Fund (CFUF) is a program designed to address "targeted communimprovement funds.rehabilitation designated ommu ty where funds will home need for be targettedmust be defined as follows: 1) Specific geographic area within a city, with defined boundaries; or 2) By age of property within a city;or 3) Specific improvement need over a larger area (i.e. eliminating ground water contamination by replacing non-conforming septic systems on a county-wide basis.) • Lenders approved to participate in CFUF must first determine whether a potential borrower in the designated community qualifies for the Fix-up Fund. If not, CFUF serves as another low-interest financing option, with more flexible underwriting guidelines, to reach a larger segment of the market in the designated community. The underwriting guidelines which differ from the Fix-up Fund include: 1) Maximum income limit based on the geographic location of the household as identified below: Counties of Anoka, Carver, Chisago, Dakota, Hennepin, Isanti, Ramsey, Scott, Sherburne, $69,920 Washington and Wright. Olmsted County $69,460 Rice County $62,100 Nicollet County $61,640 Steele County $60,835 All Other Counties $59,750 2) Maximum loan amount of$35,000 and maximum loan term of 20 years. FUNDS AVAILABLE Funding will be available to meet anticipated need with 50% of funds going to Anoka, Carver, Chisago, Dakota, Hennepin, Isanti, Ramsey, Scott, Sherburne, Washington and Wright counties, and the other 50%available outstate. Lenders do not apply for a specific dollar amount of funds, but rather apply to access funds in the appropriate pool. The funds are available to the designated community as long as there are funds in that pool. Community Fix-up Fund 2/98 COMMUNITY FIX-UP FUND CONTACT PERSONS * PLEASE COMPLETE ALL INFORMATION ON THIS FORM TO ENSURE ALL PERSONS RECEIVE THE APPROPRIATE INFORMATION. 1. Indicate the name and address of the bank staff person, or persons if submitting the proposal as a consortia of lenders, who should receive the addendum to the Home Improvement Loan Programs Purchase Agreemant. Name: Name: Address: Address: Name: Name: Address: Address: • 2. Identify the name and address of the bank staff person, or persons if submitting the proposal as a consortia of lenders, who should receive a supply of CFUF Credit Applications and Notes. (If more than one office of a lending institution will be participating, please list each office separately if you would like MHFA to distribute this supply of forms.) Name: Name: Address: Address: Name: Name: Address: Address: 3. 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N d'd•-M:M M-MM. L 0 ,..m., ...,0,- -,0,—,0 --,0,,,0000000.0_0,0 r, 00:0,'0- -.n-0\:'fl -0 —',0Q.Q-0:000000'0.0 0 , , ,—, , ,, m,,,0,--0 % ,D N-d' N-O H1 d'.,1,1 0'Q:M M ?O-M',0'd'- - 00 n N 1 V Y W N 000000000000.1 M N-V1 00 —.V1 N'0 0 0 0 0 0 0 0 0 0 .a 0 0 0 0'00.00-- N d• V1,p v1 M 0 QO O O OOH 0'00 ,0 Q:N O Q `y 000, h , M O N, ,D M ri d• V, V1 N 0, ,, N,0 M 0 0\00 50 0 00 Lfl. M R d'N N N 00 0, O,O —N N L1. I6 N —— F N 00 0, O —N M.. Vl b n 00 O, 0 —N M d• N ,D N 00 M O —N M d•N C 00 00 00 O, O,O, M O,O,O, O,M O, 0 0 0 0 0 0 0 0 0 0 0 O, O, O, O• 0,O, M O` O,O, O1 O, O• 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 gcA L g 'N N N N N N N N N N N N N N N N F—I oU . ITo: Economic Development Commission Members From: Steve Dorgan, Housing Inspector MEMORANDUM Subject: Proposed Loan Program Date: April 17, 1998 HOME IMPROVEMENT FAIR Because of the cities aging housing stock, it is imperative that we encourage reinvestment to avoid blight and upgrade the quality of housing in the city. Numerous communities throughout the metropolitan area organize an annual fair which features local contractors,home improvement and remodeling, financial institutions and other various exhibits relating to home remodeling and improvement. Cities which have held fairs indicate investments in fairs are a break even venture with revenue coming from the rental booths. Home Improvement Fair sponsored by the city would not only promote home improvement and redevelopment within the city, but may also be used to promote other city services as well. As an example,the fair could be held at the new Community Center to kick off its opening. The fair would be a venue for marketing a city sponsored loan program, as well as other housing programs and funding sources. Regardless of whether a city sponsored loan program is approved, a Home Improvement Fair should be instituted. RECOMMENDATION Approve Resolution number 98-EDC recommending the appropriation of$2,500 in tax increment funds to promote and implement a"Home Improvement Fair"to occur in the Spring of 1999. Steve Dorgan,Housing Inspector 717-4023 Attachments: Resolution 98-EDC N:\DATA\GROUPS\ECONDEV\EDA-EDC\HOMELOANU.OAN4 26.3 r ECONOMIC DEVELOPMENT COMMISSION AGENDA May 28, 1998 7:30 A.M. MOUNDS VIEW CITY HALL CONFERENCE ROOM C 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 ;� ;7?PG�e `'�' / V April 24, 1998 ca-)l Action: Motion CJ Second Vote 4. SPECIAL BUSINESS20 IVA Introduction of David Piggott Executive Director,Metro East Development Partnership 5. EDC BUSINESS A. Discussion of Home Improvement Loan Subsidy Program ,j G Action: Motion Second Vote -06 17t / p►, Comments: w 1ifrB. Discussion of the Mermaid (Hotel/Banquet Center) I Action: Motion Second: Second ( /`f' Vote Comments: /IP/Ai C. Update on Development Proposals / d I. Walgreens OlikA4kdjtAL o C mments: • 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 ILVATAV AWNAECONDEMAZAWILUiFDC 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:IDATA\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 6 A 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. I*VII ll Steve Dorgan, ousing Inspector 717-4023 G/{, Attachments: Exhibit A -Proposed Market Rate Interest Subsidy Program Outline Exhibit B -Proposed MHFA Interest Subsidy Program Outline j U(i C N:\DATA\GROUPS\COMDEV\HOUSING\HOMELOAN\LOANS 28.98 t 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.) IV G 4 Credit will be given for loans which are paid off early. b1611/1 A Piot&I X1/1 /0 t-Properties o All owner occupiedresiden ' properties having 1-4 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 lc,,m(15 • `� Exhibit A DRAFT 5/22/98 be available to assist property owners in evaluating bids. Fees for these services will be paid by 6 City of Mounds View and payment administrated by the lender. 10. eat 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 iipp home improvement. 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. .1?)°\ /1. (2 Aet‘\19v1' S Exhibit B DRAFT 5/22/98 V tielV City of Mounds View Interest Subsidy Program 'fi'°� cv 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 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,4,Eirdliael4tett O-will be responsible for servicing the loans. . 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 ' • the from the date of closing to complete the improvement(s). 8. Loan proceeds will b AVM,.- -.,to the borrower upon loan closing.- 9. losing:9. Loan proceeds over$2,511 will be secured with a mortgage. 10. Lenders will offer a rem odeling counselor for any property owner d iring 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 in �'" � (-791 U • Roofing V (�I • Painting ` • Siding • Trim ;Th • 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 s \ V ° Vv • Gazebos A u`" • Hot Tubs , S • 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 S• cope of Services �,. ,itA /1,Aco j [c /fCity of Mounds View Responsibilities �/i 1. Develop program guidelines and supervise implementation. V- (� 2. Market the program to city homeowners. 3. Dictate change in program guidelines as funds or conditions demand or indicate 7 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. 58 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 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 • • OFFMEMO ICE 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. 34,03,99 14:09 C0M0.JNITY PARTNERS INC. 4 16127843462 NO.240 P001. COMNIUNITY PARTNERS . INCORPORATED • • POST OFFICE BOX 138. : NORTHFIELD.MN 55057-2019 (507)645-6044(PHONE) • . (507)645.6037(FAX) • To: .ck ;. Date `' -9s • M e.A A 44 z tij t o•..► C b D Pages: =, including this cover sheet Fax#: `I Z " �v`I- 3'IL 2 From: Z A v t Subject: t-Le 4,t CoMMENTS: i 3-oh„ r.� 11r +�+� 1-/.,,..1 800 ,0o0 (niAx.) 4 C 0 ucd...c.A % ,.10 FYr. r Se L,se'.t 4% ..y 1 and 4-G,e r t , -700) non TtF Ce,_, csf cv.. • (� (tout �L / Cr {y (1 ( ,,,L„sc oc Re14-- Ati -rro•-ti „ O-'�it -2.,.4s .t jr jj i f ( ;) LAs, ^S 4-4,eir eftrt,,cttr , a ZIP-.., S.4 % -}� rr4 7ecr Tr p. wovtell. 4 " ` emce Z, I ZC), 430a 60,4 u� ie` 5tAerc -lc: 4- , -?OO Co J t 'N (te . �roi��- Ts QCeests . c".3) QSs(..mt"c5 4-11c.� T- .eve-. `tr I^erecue. over trr-%c a„4.f +4e4' . Sots-,c 1C,�[ — e)(e'-.e C1e. co4c.t St 1S542e 4-Le t ,. i-i Serr Cao.ltJ i be cv.,e Cteitr. I\(40, , P t"Le C.fy 1ssut8 C,.o. 6e..ds , 4111 e14"1"cd-ed t - .ere.r1' Ca-le i_ -..& dcti-caSe.. CP-+,t.Y7C 1C:l CJT1UN1 FY PRRTNERS INC. 4 16127843462 NO.239 P882 Subject: Hotel Project Proposal Revised TIF Assumptions Date: April 1, 1998 Assumption$ 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 TIP Revenue Bond issued on 711/98; 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"). EceliguaacapageeProfile Hotel Facility Banquet Center Totals Development Costs $5,905,000 51,660,000 57,565,000 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 S 900,000 Annual=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 $1,525,000 2. $245,000 $2,120,000 $420,000 51,700,000) (1) Developers request is for$1,700,000. I 2 I 11 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 buil @ 219010, Mounds dint! Hwy View 11 Date of Valuation - May 5, 1998 11 Property Rights Appraised - Fee Simple 11 Name of Owner - The RIBO B & the ECJIlK 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 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 i 5' D To: Economic Development Commission Members From: Rick Jopke, Community Development Director M[MOBAMDVM 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. ■ uwacuduneS StevenE. 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. • Since r: /, 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 fmancial 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. ■ • 1--W.' ---j. ED jsCir --01 c* . . CO-1() ti ____,... : . , ft. .,., ,, . L,,, c,,,,, -&---4. T.: ^ LI* to It" :_ L ,i , cs cs. --____rg is• , 4117! A a. -CPsii, ill,5 rIA . t4,4,,,.Th . : :„,„,,,,A _ a. � NQ,c �e ;a - rts ki. 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IC P.. y .a+ • • _ Ca 0r• a A o ... r. : 0E - y 45. ..: C , r" ii H • - 0 : y a - _ Q r = ( 0 4r 0 1 Q a of GA 0 U M 0 OW U .0 0 _,r.i 0 R a; •r 0 0. a7 N CD r A a7 rP. .. 0.1« tC ,(�' G g U G V 0 • .i' C r'.+ R 4' V y ,C 1 1 a to U a U 0 ? 7, a.y «. CO 0 .r i, p r r « U « A r" 0 2 U 0 O U '.r y 0 C p .0 .0 _ �"', E: a of ..r C. k, G' .,4) '�_. .�., 0 "^' R R i 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; s , 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 1 ECONOMIC DEVELOPMENT COMMISSION AGENDA May 28, 1998 7:30 A.M. MOUNDS VIEW CITY HALL CONFERENCE ROOM C 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 N:\DATA\GROUPS\ECONDEV\EDA-EDC\AGENSI8.EDC 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 Devin 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. IlViiiist. 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 1-4 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 (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 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. 5 5 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 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. 04/03/98 14:09 COMMUNITY PARTNERS INC. 4 16127843462 NO.240 P001 INCORPORATED • • POST OFFICE BOX 138 : NORTHFIELD.MN 55057-2019 . (507)645-6044(PHONE) . (507)645-6037(FAX) To: Q,ck 3. • Date: 4- ►-93 M 4 v.A d s View C b b pages: including this cover sheet Fax#: (J ' Z ' -18 q- 3‘16 Z • From: Z a v c . Subject: t-ie L t (r 4..)c.Jr . COMMENTS: i 0 i,ttdGA� t ..�a .\(-T--. 7-011,.. 4-.41. 11r r- --L,c.1 800 ,000 (Max.) 6 C 1-4 i i , i , -700 00 TIF CQ42.titsf Co.. Se c ,se cS 44 6,y t 1 r' u rC Lt=3-c O c 1Z s ° - A ( I 4?0#1 • ,� Cr � -C- .t�CPr V frovccct ��a Y o 4 i,of -�i..,.4s . f { i . J LASin5 heir 21' #tNQl-er a Zle.„0, Seu -C;rS4 7eQr T j P wouid'1.i. 4 j }" `"-^ce. 2' 120, 000 6o-4 ukice. ` S , erc -tc 1, 7(30 , 0 J ‘.'% tie Voy-f,+ (r4C.eeccc . (..D IS►ssc�Mt.%425 4-11Q1- TIF Ce.se-. ,,cr 1,.crecu. over trr,c a„fc{ +LIQf . 54t-t 4c — 2Yei-. i. cJ L# C6 ' ct Se` S 4C 1S d -I-4t n.+ F+ Sets woJiC . be cone eto=er. q(so, A P I-Lte <<ir tssc.ed G.o. 6e.,ds , 4ht ea4-"M+aked r f �.tetes4 Ca.7e 1ao..l& �Ccr cse. - 04/03/98 12:15 COIIMINVITY PARTNERS INC. 4 16127843462 NO.239 P002 Subject: Hotel Project Proposal Revised TIF Assumptions Date: April 1, 1998 Ass ons 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"). 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 51,700,000 % of Development Costs 17% 42% 22% TIF-Acquisition $ 400,000 $ 400,000 $ 800,000 TIF -Project Costs $ 600,000 $ 300,000 S 900,000 Annual TIF Estimate $ 178,500 $ 40,000 $ 218,500 Preliminary Debt Projections Annual TIF Bond Issue Issuance Expenses NsiErscatiti 1. 5218,500 $1,900,000 $375,000 51,525,000 2. $245,000 $2,120,000 $420,000 $1,700,0003 (l) Developers request is for$1,700,000. 2 I APPRAISAL SUMMARY 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 @ 2190HwY 10, Mounds View 11 Date of Valuation - May 5, 1998 Property Rights Appraised - Fee Simple 11 Name of Owner - The RIBOB & the ELJIM Company, aka Elmen Enterprises 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 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. 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 i aD 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//, i Stven E Larson 2907 County Road H Mounds View MN 55112