Laserfiche WebLink
I. Structurally substandard is defined under Minnesota Statutes, Section 469.174, <br /> Subdivision 10(b), which states: "For purposes of this subdivision, `structurally <br /> substandard' shall mean containing defects in structural elements or a combination of <br /> deficiencies in essential utilities and facilities, light and ventilation, fire protection <br /> including adequate egress, layout and condition of interior partitions, or similar <br /> factors, which defects or deficiencies are of sufficient total significance to justify <br /> substantial renovation or clearance." <br /> Definition of Substantial Renovation <br /> Because "Substantial renovation" can mean different things to different people, LHB <br /> has attempted to clarify exactly what it considers to.be "substantial renovation" as it <br /> relates to Minnesota Statutes, Section 469.174, Subdivision 10(a) (1). <br /> a. First LHB researched national standards as to how much building owners should <br /> budget for maintenance and repair on their buildings as a percentage of <br /> replacement cost of the building. <br /> 1. According to the University of California "Facilities Renewal Budget <br /> Model" report of 1999, building owners should budget between two and <br /> three percent of current replacement value of their buildings for maintenance <br /> and repair work. This does not include routine janitorial work and routine <br /> items such as changing light bulbs and filters. <br /> 2. According to the Building Research Board of the National Research Council, <br /> one and one-half to three percent of a building's replacement value should be <br /> budgeted for maintenance and repair. <br /> b. Based on this information, LHB utilized two and one-half percent as the desired <br /> amount of maintenance and repair that should be budgeted annually to keep a <br /> building in good working condition. We recognize through experience that only <br /> a small percentage of sophisticated building owners actually budget for and <br /> spend this amount of money every year on maintenance and repair. This is <br /> because most business owners are driven by other budgetary issues and tend to <br /> neglect the building maintenance and repair line items in their annual budgets. <br /> c. By establishing how much a building owner should be budgeting per year for <br /> maintenance and repairs, LHB is of the opinion that we could more easily <br /> establish an amount that would be considered "substantial" in comparison. If an <br /> owner is budgeting 2.5 percent of the building's replacement cost annually, it <br /> would be substantial to have to budget 20 percent at any given point of time. <br /> Most business owners or home owners would have to take out a loan to cover the <br /> cost of such a substantial building improvement. Assuming they had a fixed <br /> level of income to work with, they would have to keep the loan payment at a <br /> level very near the original 2.5 percent they should have been budgeting each <br /> year. In addition, they still would have to budget for the original 2.5 percent on <br /> top of the loan. In most cases, the mortgage terms would have to extend out to a <br /> Page 5 <br />