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021814CompleteAgenda CITY OF RICHFIELD, MINNESOTA TUESDAY, FEBRUARY 18, 2014 RICHFIELD MUNICIPAL CENTER 6700 PORTLAND AVENUE REGULAR HOUSING AND REDEVELOPMENT AUTHORITY MEETING COUNCIL CHAMBERS 7:00 P.M. AGENDA Call to order Roll call 1. Approval of the minutes of the Special HRA Worksession of January 22, 2014 2. HRA approval of the agenda 3. HRA Year End Review 2013 4. Consent Calendar contains several separate items which are acted upon by the HRA in one motion. Once the Consent Calendar has been approved, the individual items and recommended actions have also been approved. No further HRA action on these items is necessary. However, any HRA Commissioner may request that an item be removed from the Consent Calendar and placed on the regular agenda for HRA discussion and action. All items listed on the Consent Calendar are recommended for approval. A. Consideration of the approval of a revision to the Richfield Rediscovered Lot Sale and Credit Program Guidelines to make noise attenuation construction standards consistent with City ordinance S.R. No. 10 B. Consideration of the approval of the revisions to the bylaws of the HRA of Richfield, MN S.R. No. 11 C. Consideration of the approval of the consent to transfer property in the Urban Village development and authorize the execution of an Estoppel Letter substantially in the form attached to this report S.R. No. 12 Notes: 5. Consideration of a resolution adopting a modification to the Redevelopment Plan for the Richfield Redevelopment Project Area, establishing a 2014-1 Tax Increment Financing District (City Garage site) therein and adopting a Tax Increment Financing Plan therfor Staff Report No. 13 Notes: 6. HRA discussion items Notes: 7. Executive Director Report Notes: 8. Claims and Payroll Adjournment Auxiliary aids for individuals with disabilities are available upon request. Requests must be made at least 96 hours in advance to the City Clerk at 612-861-9738. HOUSING AND REDEVELOPMENT AUTHORITY MEETING MINUTES giAtseedRichfield, Minnesota Special Housing and Redevelopment Authority Worksession January 22, 2014 CALL TO ORDER The meeting was called to order by Chair Sandahl at 6:33 p.m. ROLL CALL HRA Members Sue Sandahl, Chair; Steve Quam; David Gepner; and Debbie Goettel. Present: HRA Members Doris Rubenstein. Absent: Staff Present: Julie Eddington, HRA Attorney; Jane Skov, IT Network Administrator; and Nancy Gibbs, City Clerk. Item # I DISCUSSION OF THE PROCESS FOR RETRIEVING ELECTRONIC AGENDA PACKETS IT Network Administrator Skov demonstrated how to navigate the computer for the new paperless agenda. ADJOURNMENT The meeting was adjourned by unanimous consent at 6:49 p.m. Date Approved: February 18, 2014 Suzanne M. Sandahl Chair Nancy Gibbs Steven L. Devich City Clerk Executive Director AGENDA ITEM#: 4A REPORT#: 10 STAFF REPORT .c4eed HOUSING AND REDEVELOPMENT AUTHORITY MEETING FEBRUARY 18, 2014 REPORT PREPARED BY: JULIE URBAN/KATE AITCHISON, HOUSING SPECIALISTS NAME,TITLE REPORT PRESENTER: KAREN BARTON, ASSISTANT COMMUNITY DEVELOPMENT DIRECTOR NAME,TITLE DEPARTMENT DIRECTOR REVIEW: S ri SI '�URE ' �� ,- iI REVIEWED BY EXECUTIVE DIRECTOR: , /.A.d-411 ITEM FOR BRA CONSIDERATION: Consideration of a revision to the Richfield Rediscovered Lot Sale and Credit Program Guidelines to make noise attenuation construction standards consistent with City Ordinance. I. RECOMMENDED ACTION: By Motion: Approve a revision to the Richfield Rediscovered Lot Sale and Credit Program guidelines to make noise attenuation construction standards consistent with City Ordinance. II. EXECUTIVE SUMMARY The Richfield Rediscovered program guidelines (Section VII D9) require homes constructed within certain airport noise contours to be built to provide high quality sound insulation. Section 541.19 of the City's Zoning Ordinance lays out the specific contours and required level of attenuation. The City Council recently approved revisions to Section 541.19. The Richfield Rediscovered guidelines should be revised to be consistent with these changes. III. BASIS OF RECOMMENDATION 02182014 RR Guidelines Revision.docx A. BACKGROUND • In 2007, as part of the settlement Consent Decree, the City agreed to adopt an ordinance to address airport noise attenuation. The Ordinance was adopted in 2009. • Since the original ordinance was adopted, some of the language was found to be unclear. On November 26, 2013, the City Council approved revisions to Ordinance 541.19, amending noise attenuation requirements for new residential construction in the 2007 60-62 and 63 or greater DNL contours. • There is currently one Richfield Rediscovered lot located within the affected contours that is available for sale. B. POLICY • The Housing and Redevelopment Authority (HRA) guidelines should be consistent with City Ordinances. C. CRITICAL TIMING ISSUES • There is currently one Richfield Rediscovered lot located within the affected contours that is available for sale. • The new ordinance is now in effect, and the Richfield Rediscovered guidelines should be made consistent with the ordinance to make construction expectations clear to potential buyers before they begin the application process. D. FINANCIAL • In 2013 the HRA revised the guidelines to allow for a reduction in the price of the lot commensurate with the increased cost of providing the sound attenuation measures. This was done to ensure that lots in the affected area were not at a competitive disadvantage with lots in the rest of the City. E. LEGAL • N/A IV. ALTERNATIVE RECOMMENDATION(S) • Recommend approval of the revised guidelines with additional changes. • Recommend denial of the revised guidelines. V. ATTACHMENTS • Proposed Revised Lot Sale Program Guidelines • Proposed Revised Credit Program Guidelines • Map of Noise Attenuation Areas for Residential New Construction VI. PRINCIPAL PARTIES EXPECTED AT MEETING • N/A RICHFIELD REDISCOVERED PROGRAM GUIDELINES LOT SALE PROGRAM II REVISED: r"np.il z0T3February 18,2014 PROGRAM OBJECTIVES 33 DEFINITIONS 33 PROGRAM BASICS 44 APPLICATION REQUIREMENTS 44 ADDITIONAL REQUIREMENTS 56 HOUSE DESIGN AND SITE DEVELOPMENT REQUIREMENTS 66 New House Standards 66 Site Standards 66 Construction Requirements 77 General Standards 77 Green Community Concepts 86 CITY REVIEW PROCEDURE 88 LOT SALE TO BUILDER/BUYER 99 PROGRAM MARKETING 101-8 DATA PRIVACY 1048 2 This document has been developed as a guidance tool for program administration. It should not be interpreted as constituting any contractual agreement or liability by the City or Housing and Redevelopment Authority(HRA). The HRA may modify or divert from the guidelines where it deems appropriate. I. Program Obiectives 1. To remove substandard, functionally obsolete housing on scattered sites throughout the City and replace with new, higher-valued housing. 2. To eliminate the blighting influence of substandard housing, thus improving residential neighborhoods. 3. To alleviate the shortage of housing choices for families. 4. To facilitate the construction of larger three- to four-bedroom, owner-occupied homes designed for families. 5. To facilitate the construction of multi-unit, owner-occupied homes designed to expand family opportunities or to serve elderly residents. These objectives will be achieved through the sale of lots by the Housing and Redevelopment Authority to Builder/Buyer teams for the development of newly constructed homes. II. Definitions Applicant: An individual who submits an application for a Richfield Rediscovered lot. The Applicant may be a Builder or the end Buyer. If the Applicant is a Builder, an end Buyer should be identified. If the Applicant is the Buyer, the Applicant must submit a signed contract between the Builder and the Buyer to build a home on the lot identified in the application. Buyer. An individual(s)who will build, own and occupy a new housing unit in Richfield. The Buyer will occupy the property and not offer it for rent. The Buyer may not also function as the Builder on a Richfield Rediscovered project. The Buyer and Builder must be unrelated separate legal entities. A speculative project by a Buyer may be considered if all other program requirements can be met. However, neither the Buyer, the Buyer's Builder or Builder's subcontractors, or the Builder's realty agents may occupy or purchase the property. Buyers, unless licensed in the trade specified, may not put any sweat equity into the construction of the foundation, wall/roof framing, shingling, exterior work, electrical/plumbing/HVAC systems or interior carpentry. Builder. Contractor who has signed a contract with the Buyer to build a home on the lot identified in the application. Contract for Private Development: A contract between the HRA and the Builder or Buyer that establishes the conditions under which the lot will be sold and the proposed house will be developed. Green Community Concepts Plan: A written plan indicating how the proposed development will incorporate green building features and concepts. Priority will be given to projects that incorporate green building features. HRA: Housing and Redevelopment Authority in and for the City of Richfield. Lot List: A listing of available lots for sale. Information regarding the lot location, size and sale price is provided. 3 Ill.Program Basics 1. HRA publishes a list of available vacant lots for purchase including sale price and development criteria. 2. Builder/Buyer team proposes a plan for a lot consistent with development criteria and program requirements and makes an offer to purchase. 3. HRA approves lot sale. 4. Lot is sold to Builder or Buyer. 5. Builder constructs new home. 6. Projects must be completed within one year of HRA approval of the project. IV.Application Requirements The following must be submitted for application to the program: 1. $525 application fee An application fee must be paid at the time of application. This fee is non-refundable and is not part of the lot price. 2. Application Form 3. Blueprints The layout of all levels, including basement and unfinished space, must be provided. 4. Elevations Elevations of all four sides of the house, including view of garage shall be provided. Colored renderings may also be required. 5. Site plan The site plan shall indicate the location of the new house, walkways and garage. 6. Landscaping plan A landscaping plan must indicate the location and type of trees, shrubbery, flowers and landscaping materials(e.g. rocks, mulch)and any existing trees to be preserved. 7. Detail of construction materials to be used on the project. 8. Green Community Concepts Plan The plan should indicate what Green Community Concepts will be incorporated into the project. 9. Construction timeline Construction must be completed with one year of the purchase of the property. 10. Signed contract with Builder 11. Purchase agreement If the Builder plans to purchase the lot, the application must include a valid purchase agreement between the Buyer and the Builder for the lot to be developed. 12. Financial capability statement A statement from a financial institution indicating willingness to provide sufficient construction capital to complete the project must be provided. 4 13. Builder References a. Five previous customers b. Three major suppliers, one being the construction supplier c. Building inspectors from two cities where the Builder has constructed new housing within the past three years 14. Proof of Builder's Comprehensive General Liability with Property Damage Protection. 15. Proof of sufficient worker's compensation insurance coverage by the Builder. 16. Written warranty program To be provided to the Buyer, which guarantees at a minimum, warranted repairs as required by Minnesota State Statute. V.Additional Program Requirements 1. The Applicant is expected to meet with an architectural/design consultant prior to submitting an application. A two-hour consultation is available through the HRA at a cost of $25 to the applicant. See the City's website(www.cityofrichfield.orq)for more information. This requirement may be waived if the applicant is using an architect for the project. 2. The site will be sold to the Builder or Buyer at the fair market value as appears on the Lot List. The HRA will not accept offers for less than the established sale price. 3. A Contract for Private Development is signed by the HRA and the Builder or the Buyer. The Contract is a standard form which includes conditions for acquisition and development of the property. The Contract will also establish a minimum required end-value for the property based on construction estimates provided by the applicant. The Builder or Buyer will be expected to agree to the terms of the Contract before the application can be scheduled on the HRA agenda. 4. All lots will have a required minimum end value that will be established in the Contract for Private Redevelopment. 5. The lot can be sold to either the Builder or the Buyer. If the lot is sold to the Builder, the Builder will pay cash for the lot at closing and submit a Letter of Credit or cash escrow for$10,000. The Letter of Credit must be from a financial institution incorporated in the Twin Cities metropolitan area. The cash escrow will be held in a non-interest bearing account. The Letter of Credit or cash escrow will be released once the construction and landscape work are completed and a final Certificate of Occupancy is issued. 6. If the lot is sold to the Builder and the Builder fails to complete construction as approved by the HRA, the Letter of Credit or cash escrow may be drawn upon by the HRA. In addition, the Contract for Private Development will contain a reverter provision, which will enable the HRA to reclaim ownership of the property in the event of a default in the Contract. In the event that the Builder fails to complete construction, the HRA may exercise its rights under the reverter provision, as well as draw upon the Letter of Credit or cash escrow. 7. If the lot is sold to the Buyer, the Buyer will pay cash for the lot at closing and a $10,000 mortgage in favor of the HRA will be filed on the property. The mortgage will be in first position. The HRA may consider subordinating its interest in appropriate cases. 8. If the lot is sold to the Buyer and the Buyer fails to complete construction as approved by the HRA, the HRA may exercise its rights provided in the mortgage. 5 • VI.House Design and Site Development Requirements The development of all sites shall meet the development criteria listed below, as reviewed and approved by the HRA. To maximize the development of a given lot, the HRA reserves the right to explore all development options without obligating the HRA to support any specific proposal, idea or solicitation. Housing design is a critical element of the program. Siding materials, exterior fagade presentation, roof, window, siding and building line variability, finished landscape, interior space function and use are all important issues of design to the HRA. The design requirements were created to ensure that the homes built on the HRA-sold lots blend in with the surrounding neighborhood and respond to the specific concerns of the HRA. All new houses built under the Richfield Rediscovered Program must meet the requirements of the City's Zoning Code and additional criteria, as listed in this document. A. New House Standards 1. New dwelling must be owner-occupied. 2. Three finished bedrooms are required. 3. Two finished bathrooms are required. 4. Two-car garage is required. 5. A full basement is required, unless the selected design results in a split-level or a garden-level type of basement. In the case of an "accessible" house, a basement may be omitted if it would otherwise prohibit accessible design elements. B.Site Standards 1. After construction, the site must be fully landscaped, including plantings around the foundation. The entire grounds shall be landscaped and be aesthetically pleasing in all seasons. Land forms and plant materials shall be used to define the site and blend neatly with adjoining properties. Specific lot line blending requirements may be required, as appropriate, for specific sites. At a minimum, the applicant must meet the "Landscaping and Screening Requirements" in the City's Zoning Code under Section 544.03, Subd. 4, General landscaping requirements and Subd. 5, Residential sites. The code is available on the City's website: httq://www.ci.richfield.mn.us To the greatest extent possible, existing trees should be preserved. Any trees removed must be replaced (they do not have to be the same species or in the same location) and should be labeled on the required landscape plan. 2. Utility meters shall be screened from street view and locations must be specified on plans. 3. Site drainage should be accommodated on the site so that water is directed away from the new home and the neighboring properties. Neighboring properties must not be disturbed by the creation of drainage swales. Specific storm water management requirements may be required, as appropriate, including the addition of gutters or on-site management for specific sites. Construction and the finished structure must not have a detrimental impact on storm water drainage patterns in the neighborhood. 4. All air conditioning units must be located in the rear yard of the house, or as approved by the HRA. 6 C.Construction Requirements 1. Existing trees identified on the landscape plan as being preserved, must be protected during construction. A tree wrap with board reinforcements shall be used on trees directly adjacent to active grading and construction areas. Damaged or destroyed trees must be replaced. 2. The construction site, neighboring properties and adjacent public streets shall be kept free of construction debris at all times. 3. No construction workers, construction equipment or construction material shall encroach upon neighboring properties. 4. The property shall have a new sanitary service line installed to the City sanitary sewer main consisting of schedule 40 PVC or equivalent. If there is an existing 6"sewer stub at the property line, it must be lined with 4" schedule 40 PVC or equivalent to the City's sanitary main, and it must include a"donut"at the end with cement. The line must be televised after installation to ensure the following: 1. There are no obstructions in the line. 2. The PVC liner is not protruding into the City's sanitary sewer main line. D. General Standards 1. The value of the new home must meet or exceed the minimum value specified in the Contract for Private Redevelopment. 2. All homes in the Richfield Rediscovered Program must be stick-built or high-quality modular, new construction. 3. Exterior materials (siding, soffit, doors and windows) should be low-maintenance and durable. Brick, aluminum, vinyl and fiber cement siding are preferred. Natural cedar lap is acceptable if properly stained or painted. Hardboard panels or hardboard lap siding are prohibited. Roof valleys must have metal valleys and not be woven. 4. Unit height and mass of the new house shall be compatible with the scale of the surrounding homes in the neighborhood. 5. Plans must present a balanced and pleasing distribution of wall, door and window areas from all views. 6. The dominance of the garage door must be minimized through placement, architectural detail, door design and utilization and design of windows. Garages, where the garage door faces the street, shall not be located closer to the front lot line than the foremost facade of the principal building facing the front property line. Garage sidewalls that face the street should appear to contain habitable space. This can be accomplished by incorporating windows and other design elements into the garage wall that are in character with the remainder of the dwelling. For lots that have alley access, the garage should be oriented to access the alley. 7. All building plans must have been prepared in consultation with an architect or qualified draftsperson. All requirements by the Building Inspections Division must be met. 8. All Richfield Rediscovered houses must meet or exceed Minnesota Energy Code requirements. 7 9. All new homes shall be built to provide high quality sound insulation. Recommendations for sound insulation measures may be provided on a site-by-site basis. All construction must conform to Burr sound attenuation building standards as required by Zoning Ordinance Section 541.19 for properties located within the 2007 60-62 DNL Contour)996-65+and/er 2007 63_-64or greater DNL contours. In cases where sound attenuation standards are required and an increase in costs can be documented, the HRA may consider a reduction in the price of the lot in an amount equal to 75 percent of the cost of sound attenuation measures up to a maximum of$7,500. 9. If a variance is required to construct the proposed development,the HRA may, at its sole discretion, choose to reject the application. 10. If the HRA accepts an application that needs a variance(s), sale of the property will be contingent upon the applicant obtaining the necessary variance(s). The Applicant is responsible for applying for the variance(s)at its own expense. The HRA, as owner of the property, will, however, cooperate with the application. E.Green Community Concepts Priority will be given to projects incorporating the green community concepts listed below. Any concepts the applicant would like considered during the application process should be explained in a written plan submitted with the application. A$5,000 rebate will be provided to the Applicant for projects that obtain certification through LEED for Homes, Minnesota GreenStar or Minnesota Green Communities. 1. Protect and conserve water and soil. To reduce water consumption, consider the use of water- conserving appliances, fixtures, and landscaping. Steps should be taken to minimize the loss of soil and sediment during construction and occupancy to reduce storm-water sediment and air pollution. 2. Minimize energy consumption. Reduce energy consumption by taking advantage of natural heating, cooling and day lighting, and by using energy-efficient appliances, equipment and lighting. 3. Enhance indoor environmental quality. Use non-toxic materials, ventilation and exhaust systems, and moisture control products and systems. 4. Use environmentally-preferable materials and resources. Use locally-produced, salvaged and/or manufactured materials, products with recycled content or from renewable sources, recyclable or reusable materials, and low-VOC-emitting materials. 5. Reduce waste. Reduce and manage wastes generated during the construction process and operation of buildings. If demolition occurs, sort and recycle leftover materials and debris. VII.City Review Procedure 1. Applicant reviews proposed project with HRA staff before plans are finalized. 2. Applicant submits application, plans, and application fee at least 45 days prior to the HRA meeting. 3. An application is considered to be received when delivered personally to HRA staff in a pre- arranged meeting. Following this meeting and upon receipt of the application fee, the lot will be 8 considered reserved and no additional applications will be accepted for the proposed lot while the application is under review. 4. If an application is determined to be incomplete, the applicant will have 30 days to submit a complete application. If a complete application is not received within 30 days, the application will be rejected and the lot will be made available for new applications. 5. HRA staff review application to ensure conformance with House Design and Site Development Requirements. 6. HRA staff may reject or accept an application at its sole discretion. 7. The Builder or Buyer executes a Contract for Private Redevelopment. 8. An application is determined to be complete and the Contract executed at least three weeks prior to the HRA meeting. 9. HRA staff publishes a legal notice of the public hearing and prepares a report and recommendation for the HRA. 10. HRA reviews application, conducts a public hearing, and takes action at the HRA meeting. 11. If approved, the Contract for Private Redevelopment is executed by the HRA. VIII. Lot Sale to Builder or Buyer 1. Upon approval of the application by the HRA, a closing will be scheduled between the HRA and the Builder or Buyer. 2. The HRA will prepare all statements, affidavits, documents, and general release forms required for closing. 3. The Builder applies for a building permit prior to closing. The Builder is responsible for acquiring the necessary building permits with the City of Richfield Building Inspections Division. If changes to the plans are required by the Inspections Division, the applicant must notify HRA staff. 4. The Applicant provides evidence to HRA staff that all requirements to proceed with construction, as determined in the Contract for Private Redevelopment, have been met. 5. The HRA conveys the property to the Builder or Buyer by Quit Claim Deed. The site will be sold to the Builder or Buyer at the fair market value as appears on the Lot List. 6. At closing with the Builder, the Builder provides a Letter of Credit or cash escrow for$10,000 to the HRA. 7. At closing with the Buyer, the Buyer signs a mortgage and promissory note for$10,000 in favor of the HRA. 8. Upon completion of the project, the Letter of Credit or cash escrow is released to the Builder or the Buyer's mortgage is released. A Certificate of Completion is executed by the HRA, releasing the obligations of the Contract for Private Redevelopment. 9 IX. Program Marketing Richfield Rediscovered program marketing is entirely at the discretion of the HRA. It may include the following: 1. Buyer Solicitation. The HRA may market the program to potential Buyers through promotional articles, direct mail, the Internet, or other methods as deemed appropriate. Buyers may be any financially capable individual or household, including first-time buyers, move-up buyers or empty- nesters. 2. Public Promotion. a. The HRA will periodically provide information about the program through articles in city publications, on the City's web site, on the Community Cable channel, or via press releases to promote community awareness. b. A public open house may be held to provide an opportunity for residents and other interested parties to collectively view the finished homes. The Parade of Homes Fall Showcase and Spring Preview may also accomplish this. A program information package will be mailed to all interested participants. The information packet may include the following: 1. Lot List 2. Richfield Rediscovered Lot Sale Procedural Guidelines 3. Application Form 4. Sample Contract for Private Redevelopment X. Data Privacy All information secured through the program is subject to the Data Privacy Act. 10 RICHFIELD REDISCOVERED PROCEDURAL GUIDELINES REDEVELOPMENT CREDIT PROGRAM Revised: 25;20-14February 18, 2014 PROGRAM OBJECTIVES 33 DEFINITIONS 33 PROGRAM BASICS 33 APPLICATION REQUIREMENTS 44 SECURING A SITE 56 PROPERTY EVALUATION CONSIDERATIONS AND PROCEDURES 55 HOUSE DESIGN AND SITE DEVELOPMENT REQUIREMENTS 66 NEW HOME STANDARDS 66 SITE STANDARDS 66 CONSTRUCTION REQUIREMENTS 77 GENERAL STANDARDS 77 GREEN COMMUNITY CONCEPTS 88 DISBURSEMENT OF FUNDS 99 SOLICITATION OF NEW DEVELOPMENT PROPOSALS gg GENERAL PROGRAM MARKETING 99 DATA PRIVACY 1048 2 This document has been developed as a guidance tool for program administration. It should not be interpreted as constituting any contractual agreement or liability by the City or Housing and Redevelopment Authority(HRA). I. Program Objectives • To remove substandard, functionally obsolete housing on scattered sites throughout the city with new, higher-valued housing • To eliminate the blighting influence of substandard housing, thus improving residential neighborhoods. • To alleviate the shortage of housing choices for families. • To facilitate"Market Rate Initiatives"which include: o Larger three-to four-bedroom, owner-occupied homes designed for families These objectives will be achieved through the acquisition of property by private Buyers and the development of newly constructed homes. II.Definitions Buyer. An individual(s)who will build, own and occupy a new single-family home in Richfield. The Buyer will occupy the property and not offer it for rent. The Buyer may not also function as the Builder on a Richfield Rediscovered project. The Buyer and Builder must be unrelated separate legal entities. A speculative project by a Buyer may be considered if all other program requirements can be met. However, neither the Buyer, the Buyer's Builder or Builder's subcontractors, or the Builder's realty agents may occupy or purchase the property. Buyers, unless licensed in the trade specified, may not put any sweat equity into the construction of the foundation, wall/roof framing, shingling, exterior work, electrical/plumbing/HVAC systems or interior carpentry. Builder. Contractor who has signed contract with the Buyer to build a single-family home on the lot identified in the application. Contract for Private Development: A contract between the HRA and the Buyer or Builder that establishes the conditions under which the lot will be sold and the proposed house will be developed. Green Community Concepts Plan: A written plan indicating how the proposed development will incorporate green building features and concepts. Priority will be given to projects that incorporate green building features. HRA: Housing and Redevelopment Authority in and for the City of Richfield. Seller. Owner of property identified as eligible by the HRA based on condition, size and marketability. Redevelopment Credit: To offset costs of acquisition and demolition, a redevelopment credit of$50,000 is available from the HRA for a Buyer who acquires the property directly from the seller for redevelopment. III. Program Basics • Program is first-come, first-serve, subject to funding availability. • Buyer purchases property, hires builder to demolish existing structures and constructs a new single-family home in conformance with program requirements. • A$50,000 Redevelopment Credit is available per completed property. 3 • Projects must be completed within one year of HRA approval of the project. IV.Application Requirements The following must be submitted for application to the program: 1. $525 application fee An application fee, in the form of a certified cashier's check made out to the Richfield HRA, must be paid at the time of application. This fee is non-refundable and is not part of the lot price. 2. Project Information Sheet 3. Purchase agreement The Buyer must present a valid purchase agreement for the lot it proposes to redevelop. The closing must be scheduled after the date of the HRA meeting. 4. Blueprints The layout of all levels, including basement and unfinished space, must be provided. 5. Elevations Elevations of all four sides of the house, including view of garage shall be provided. 6. Site plan The site plan shall indicate the location of the new house, walkways and garage. 7. Landscaping plan A landscaping plan may be hand-drawn by the applicants, but must indicate the location and type of trees, shrubbery, flowers and landscaping materials(e.g. rocks, mulch). The entire grounds shall be landscaped and be aesthetically pleasing in all seasons. Land forms and plant materials shall be used to define the site and blend neatly with adjoining properties. Specific lot line blending requirements may be required, as appropriate, for specific sites. 8. Green Community Concepts Plan The plan should indicate what Green Community Concepts will be incorporated into the project. 9. Detail of construction materials to be used on the project. 10. Construction timeline Construction must be completed with one year of the purchase of the property. 11. Signed contract with Builder 12. Financial capability statement a. A statement from a financial institution indicating willingness, with standard contingencies, to provide sufficient construction capital to complete the project. 13. Builder References a. Five previous customers b. Three major suppliers, one being the construction supplier c. Building inspectors from two cities where the Builder has constructed new housing within the past three years 4 14. Proof of Builder's Comprehensive General Liability with Property Damage Protection. 15. Proof of sufficient worker's compensation insurance coverage by the Builder. 16. Written warranty program a. To be provided to the Buyer, which guarantees at a minimum, warranted repairs as required by Minnesota State Statute. V.Securing a Site Participants identify a property on their own or from a list of Richfield Rediscovered-eligible properties provided by HRA staff. If the property has not already been qualified for the program, it must be evaluated for substandardness or market obsolescence. Upon request of a prospective Buyer, HRA staff may research the property, and arrange for a "Substandard Evaluation" to be conducted. An evaluator will inspect the interior for substandard qualification. The Buyer is responsible for negotiating with the Seller on a purchase price. Once a purchase agreement between the Seller and Buyer has been signed, the Buyer should submit an application form and required supporting documents. Only when HRA staff has received a complete application, can the $50,000 Redevelopment Credit be reserved. The reservation of funds is not an approval by the HRA. All applications must be brought to the HRA at a regularly-scheduled meeting for approval. VI. Property Evaluation Considerations and Procedures Properties with the lowest market values, poorest visibility, and/or a history of code violations, will be considered first for the program. To be eligible for the Richfield Rediscovered program, a house must be structurally substandard and meet at least of one of the criteria in Criteria A and all of Criteria B. Criteria A • Obsolete design for block and area in which it is located. • Deteriorated to the point that it has caused blight to other adjoining properties. • Detrimental to the health or safety of abutting properties. • Less than $140,000 in value, as determined by the City of Richfield Assessing Department. Criteria B • Site can be developed with a new home within city code requirements, including conformance with the Zoning Code and the Comprehensive Plan • Property does not cause negative impact on other redevelopment projects. Redevelopment projects may include: o Established commercial redevelopment areas o Right-of-way improvement projects such as 1-494, I-35W, Crosstown Highway 62, ,TH 77 and 66th Street o Negative airport noise zones o Stormwater/flood prevention improvement projects o Other, as determined by the HRA 5 At the request of an interested Buyer, staff will research the property and if it is believed that the property may qualify for the Richfield Rediscovered program, a "Substandard Evaluation" will be arranged. An evaluator will inspect the interior for substandard qualification. If a property meets the substandard test during the independent "Substandard Evaluation", application procedures can continue. If the substandard test cannot be met, the property cannot be considered for the Richfield Rediscovered program. At the discretion of staff, properties over 50 years old may also be required to be evaluated for historical significance through the Minnesota Historical Society. VII. House Design and Site Development Requirements Housing design is a critical element of the program. Siding materials, exterior façade presentation, roof, window, siding and building line variability, finished landscape, interior space function and use are all important issues of design to the HRA. The criteria were created to ensure that the homes built on the identified lots blend in with the surrounding neighborhood and respond to the specific concerns of the HRA. All new houses built under the Richfield Rediscovered Program must meet the requirements of the City's Zoning Code and additional criteria, as listed in this document. The development of all sites shall meet the development criteria listed below, as reviewed and approved by the HRA. To maximize the development of a given lot, the HRA reserves the right to explore all development options without obligating the HRA to support any specific proposal, idea or solicitation. A. New Home Standards 1. Existing buildings must be demolished. If an existing garage is in good condition, it may be retained upon review by HRA staff and the Building Official. 2. New dwelling must be owner-occupied and single-family. 3. Three finished bedrooms are required. 4. Two finished bathrooms are required. 5. Two-car garage is required. 6. A full basement is required, unless the selected design results in a split-level or a garden-level type of basement. In the case of an "accessible" house, a basement may be omitted if it would otherwise prohibit accessible design elements. B.Site Standards 1. After construction, the site must be fully landscaped, including plantings around the foundation. The entire grounds shall be landscaped and be aesthetically pleasing in all seasons. Land forms and plant materials shall be used to define the site and blend neatly with adjoining properties. Specific lot line blending requirements may be required, as appropriate, for specific sites. At a minimum, the applicant must meet the "Landscaping and Screening Requirements" in the City's Zoning Code under Section 544.03, Subd. 4, General landscaping requirements and Subd. 5, Residential sites. The code is available on the City's website: http://www.cityofrichfield.org. To the greatest extent possible, existing trees should be preserved. Any trees removed must be replaced (they do not have to be the same species or in the same location) and should be labeled on the required landscape plan. 6 2. Utility meters shall be screened from street view and locations must be specified on plans. 3. Site drainage should be accommodated on the site so that water is directed away from the new home and the neighboring properties. Neighboring properties must not be disturbed by the creation of drainage swales. Specific storm water management requirements may be required, as appropriate, including the addition of gutters for specific sites. Construction and the finished structure must not have detrimental impact on storm water drainage patterns in the neighborhood. 4. All air conditioning units must be located in the rear yard of the house or as approved by the HRA. C.Construction Requirements 1. Existing trees must be protected during construction. A tree wrap with board reinforcements shall be sued on trees directly adjacent to active grading and construction area. Damaged or destroyed trees must be replaced. 2. The construction site, neighboring properties and adjacent public streets shall be kept free of construction debris at all times. 3. No construction workers, construction equipment or construction material shall encroach upon neighboring properties. 4. The property shall have a new sanitary service line installed to the city sanitary sewer main consisting of schedule 40 PVC or equivalent. If there is an existing 6" sewer stub at the property line, it must be lined with 4" schedule 40 PVC or equivalent to the city's sanitary main, and it must include a"donut"at the end with cement. The line must be televised after installation to ensure the following: 1. There are no obstructions in the line. 2. The PVC liner is not protruding into the city's sanitary sewer main line. D.General Standards 1. The value of the new home must meet or exceed the minimum value specified in the Contract for Private Redevelopment. 2. All homes in the Richfield Rediscovered Program must be stick-built or high-quality modular, new construction. 3. Exterior materials (siding, soffit, doors and windows) should be low-maintenance and durable. Brick, aluminum, vinyl and fiber cement siding are preferred. Natural cedar lap is acceptable if properly stained or painted. Hardboard panels or hardboard lap siding are prohibited. Roof valleys should have metal valleys and not be woven. 4. Unit height and mass of the new house shall be compatible with the scale of the surrounding homes in the neighborhood. 5. Plans must present a balanced and pleasing distribution of wall, door and window areas from all views. 6. The dominance of the garage door must be minimized through placement, architectural detail, door design and utilization and design of windows. Front-loaded garages(where the garage door faces the street), shall not be located closer to the front lot line than the foremost facade of the principal building facing the front property line. Garage sidewalls that face the street should 7 appear to contain habitable space. This can be accomplished by incorporating windows and other design elements into the garage wall that are in character with the remainder of the dwelling. For lots that have alley access, the garage should be oriented to access the alley. 7. All building plans must have been prepared in consultation with an architect or qualified draftsperson. All requirements by the Building Inspections Division must be met. 8. All Richfield Rediscovered houses must meet or exceed Minnesota Energy Code requirements. 9. All new homes should be built to provide high quality sound insulation. Recommendations for sound insulation measures may be provided on a site-by-site basis. All construction must conform to Gwent-sound attenuation building standards as required by Zoning Ordinance Section 541.19 for properties located within the65-69 2007 60-62 DNL Contour and 70-7 ' do zone&2007 63 or greater DNL contours. 10. If a variance is required to construct the proposed development, the HRA may, at its sole discretion, choose to reject the application. 11. If the HRA accepts an application that needs a variance(s), sale of the property will be contingent upon the applicant obtaining the necessary variance(s). The Applicant is responsible for applying for the variance(s)at its own expense. - E. Green Community Concepts Priority will be given to projects incorporating the green community concepts listed below. Any concepts the applicant would like considered during the application process should be explained in a cover letter submitted with the application. 1. Protect and conserve water and soil. To reduce water consumption, consider the use of water- conserving appliances, fixtures, and landscaping. Steps should be taken to minimize the loss of soil and sediment during construction and occupancy to reduce storm-water sediment and air pollution. 2. Minimize energy consumption. Reduce energy consumption by taking advantage of natural heating, cooling and day lighting, and by using energy-efficient appliances, equipment and lighting. 3. Enhance indoor environmental quality. Use non-toxic materials, ventilation and exhaust systems, and moisture control products and systems. 4. Use environmentally-preferable materials and resources. Use locally-produced, salvaged and/or manufactured materials, products with recycled content or from renewable sources, recyclable or reusable materials, and low-VOC-emitting materials. 5. Reduce waste. Reduce and manage wastes generated during the construction process and operation of buildings. When demolition occurs, consider the sorting and recycling of leftover materials and debris. VIII. City Review Procedure 1. Applicant reviews proposed project with HRA staff before plans are finalized. 2. HRA Staff will review application to ensure conformance with House Design and Site Development Requirements. 3. HRA staff prepares a report and recommendation for the HRA. 8 4. A Contract for Private Redevelopment is reviewed and signed by applicants in advance of the HRA meeting. 5. HRA reviews application and takes action at the HRA meeting. 6. If approved, the Contract for Private Redevelopment is executed by the HRA. 7. Upon approval by the HRA, the applicant is responsible for acquiring the necessary building and demolition permits with the City of Richfield Inspections Department. If changes are required, the Buyer must notify HRA staff. IX. Disbursement of Funds Approved projects are eligible for a $50,000 Redevelopment Credit. The Credit will be dispersed upon completion of the project (including landscaping) and the issuance of a Certificate of Completion by the Building Official. A lender may require a portion of the Redevelopment Credit be held as an escrow as part of the interim financing of the project, only to be released upon project completion. The Buyers may also request the Redevelopment Credit to be issued in three installments. The first installment of$20,000 would be issued at the time of closing, the second for$20,000 when permits are pulled and the third for$10,000 when the project has been completed and a Certificate of Completion has been issued by the Building Official. A mortgage will be filed and a lien put on the house until the project has been completed. Filing fees are the responsibility of the applicant. The disbursement of funds will be outlined in the Contract for Private Redevelopment, to be executed by the HRA and the Buyer. X.Solicitation of New Development Proposals The HRA will advertise the Richfield Redevelopment program in publications or newspapers, by direct mail, or other methods as deemed appropriate, to solicit interest. When the HRA has property information, it will provide the address of the property, lot dimensions and contact information of the seller. Interested parties may contact the owners directly. All purchase negotiations and timing issues must be resolved between the parties. Properties identified by the applicant may also qualify. The HRA will review each one on a case-by-case basis. A program information package will be available upon request to interested Buyers. The information packet will include the following: • Richfield Rediscovered Procedural Guidelines • Sample Contract for Private Redevelopment • Application Cover Sheet • Project Information Sheet • Lot List XI. General Program Marketing Richfield Rediscovered program marketing is entirely at the discretion of the HRA. It may include the following: 9 promotional through Buyers 1. Buyer Solicitation. The HRA may market the program to potential Bu y g p articles, direct mail, the Internet, or other methods as deemed appropriate. Buyers may be any financially capable individual or family, including first-time buyers, move-up buyers or empty- nesters. 2. Public Promotion. a. The HRA will periodically provide information about the program through articles in city publications, on the City's web site, on the Community p � ' Y tY Cable channel, or via press releases to promote community awareness. b. A public open house may be held to provide an opportunity for residents and other interested parties to collectively view the finished homes. The Parade of Homes Fall Showcase and Spring Preview may also accomplish this. C. . XII. 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I. RECOMMENDED ACTION: By Motion: Approval of revisions to the Bylaws of the Housing and Redevelopment Authority of Richfield, Minnesota. II. EXECUTIVE SUMMARY Upon recent review of the Housing and Redevelopment Authority's (HRA) Bylaws by the HRA attorney, several revisions are recommended: • Changing Chairman to Chairperson throughout the document; • Adding the ability of the Community Development Director to act as Acting Executive Director; • Naming the HRA's official newspaper as City's official newspaper; and • Making it clear the Chair should sign resolutions. III. BASIS OF RECOMMENDATION 02182014 HRA By-law Amendmentsxxx A. BACKGROUND • At the January 22, 2014 HRA meeting, the HRA requested the HRA attorney review the HRA's Bylaws to allow the HRA Secretary to act as Chair in the event the Chair and Vice Chair are absent. • Upon review of the HRA's bylaws, the HRA attorney determined the bylaws already provide for the Secretary to act as Chair. However, several other suggested revisions were noted by the HRA attorney. • The suggested revisions are as follows: o Changing Chairman to Chairperson throughout the document; o Adding the ability of the Community Development Director to act as Acting Executive Director; o Naming the HRA's official newspaper as City's official newspaper; and o Making it clear the Chair should sign resolutions. B. POLICY • It is prudent to periodically review and update the HRA's bylaws to ensure they are reflective of current practices and legal requirements. C. CRITICAL TIMING ISSUES • N/A D. FINANCIAL • N/A E. LEGAL • The HRA attorney has reviewed the Bylaws and is recommending the revisions as stated. IV. ALTERNATIVE RECOMMENDATION(S) • Do not approve the revisions to the HRA's Bylaws. V. ATTACHMENTS • Revised Bylaws of the Housing and Redevelopment Authority of Richfield, Minnesota. • Red-lined Revised Bylaws of the Housing and Redevelopment Authority of Richfield, Minnesota. VI. PRINCIPAL PARTIES EXPECTED AT MEETING • N/A BYLAWS OF THE HOUSING AND REDEVELOPMENT AUTHORITY OF RICHFIELD, MINNESOTA ARTICLE I —THE AUTHORITY Section 1. Name of Authority. The name of the Authority shall be the "Housing and Redevelopment Authority of Richfield, Minnesota". Section 2. Seal of Authority. The seal of the Authority shall be in the form of a circle and shall bear the name of the Authority. Section 3. Office of Authority. The offices of the Authority shall be at City Hall in the City of Richfield, Minnesota, but the Authority may hold its meetings at such other place or places as it may designate by resolution. ARTICLE II —OFFICERS Section 1. Officers. The officers of the Authority shall be a Chairman, a Vice- Chairman, and a Secretary. Section 2. Chairman. The Chairman shall preside at all meetings of the Authority. Except as otherwise authorized by resolution of the Authority, the Chairman shall sign all contracts, deeds and other instruments made by the Authority. At each meeting the Chairman shall submit such recommendations and information he may consider proper concerning the business, affairs and policies of the Authority. Section 3. Vice-Chairman. The Vice-Chairman shall perform the duties of the Chairman in the absence or incapacity of the Chairman; and in case of the resignation or death of the Chairman, the Vice-Chairman shall perform such duties as are imposed on the Chairman until such time as the Authority shall select a new Chairman. Section 4. Secretary. The Secretary shall perform the duties of a Secretary for the Authority. The Secretary shall perform the duties as the Chair in cases where both the Chair and Vice-chair are absent or incapacitated. Section 5. Executive Director. The Authority shall employ an Executive Director who shall have general supervision over the administration of its business and affairs, subject to the direction of the Authority. He shall be charged with the management of the housing projects of the Authority. Section 6. Other Administrative Officers. The Authority may designate an assistant to the Secretary who shall keep the records of the Authority, shall act as recorder of the meetings of the Authority and record all votes, and shall keep a record of the proceedings of the Authority in a journal of proceedings to be kept for such purpose, and shall perform all duties incidental to his office. He shall keep in safe custody the seal of the Authority and shall have power to affix such seal to all contracts and instruments authorized to be executed by the Authority. The Authority may designate a Treasurer who shall have the care and custody of all funds of the Authority and shall deposit the same in the name of the Authority in such bank or banks as the Authority may select. The Executive Director and Treasurer shall sign all orders and checks for the payment of money and shall pay out and disburse such moneys under the direction of the Authority. Except as otherwise authorized by resolution of the Authority, all such orders and checks shall also be countersigned by the Chairman. The Treasurer shall keep regular books of accounts showing receipts and expenditures and shall render to the Authority, at each regular meeting (or more often when requested), an account of his transactions and also of the financial condition of the Authority. He shall give such bond for the faithful performance of his duties as the Authority may determine ARTICLE III — MEETINGS Section 1. Annual Meeting. The annual meeting of the Authority shall be held on the third Tuesday in January at 7:00 p.m. at the regular meeting place of the Authority. Section 2. Regular Meetings. Monthly meetings shall be held without notice at the regular meeting place of the Authority on the third Monday of each month, at 7:00 p.m. unless the same shall be a legal holiday, in which event said meeting shall be held on the next succeeding secular day. Section 3. Special Meetings. Special meetings of the Authority may be called by the Chairman, or two members of the Authority for the purpose of transacting any business designated in the call. The call for a special meeting may be delivered at any time prior to the time of the proposed meeting to each member of the Authority or may be mailed to the business or home address of each member of the Authority at least two (2) days prior to the date of such special meeting. At such special meeting no business shall be considered other than as designated in the call, but if all of the members of the Authority are present at a special meeting, any and all business may be transacted at such special meeting. Section 4. Quorum. The powers of the Authority shall be vested in the Commissioners thereof in office from time to time. Three Commissioners shall constitute a quorum for the purpose of conducting its business and exercising its powers and for all other purposes, but a smaller number may adjourn from time to time until a quorum is obtained. When a quorum is in attendance, action may be taken by the Authority upon a vote of a majority of the Commissioners present. Section 5. Order of Business. At the regular meetings of the Authority the following shall be the order of business: 1. Roll Call. 2. Approval of the Minutes of the Previous Meeting. 3. Reports of the Executive Director. 4. Unfinished Business. 5. New Business. 6. Adjournment. All resolutions shall be in writing and shall be copied in the journal of the proceedings of the Authority. Section 6. Manner of Voting. The voting on all questions coming before the Authority shall be by roll call and the yeas and nays shall be entered upon the minutes of such meeting. Section 7. Combining Administrative Offices: Compensation. The compensation of the Executive Director and other personnel of the Authority shall be determined by the Authority. Any two or more administrative offices may be combined. Section 8. Additional Duties. The officers of the Authority shall perform such other duties and functions as may from time to time be required by the Authority or the Bylaws or rules and regulations of the Authority. Section 9. Election of Appointment. The first Chairman shall, pursuant to this appointment, serve in the capacity of Chairman until the expiration of his term of office as Commissioner. The Vice-Chairman, Secretary and, except in the case of the First Chairman, the Chairman shall be elected at the annual meeting of the Authority from among the Commissioners of the Authority, and shall hold office for one year or until their successors are elected and qualified. The Executive Director shall be appointed by the Authority. Any person appointed to fill the office of Executive Director or any vacancy therein, shall have such term as the Authority fixes, but no Commissioner of the Authority shall be eligible for this office. Section 10. Vacancies. Should the office of Chairman, Vice-Chairman or Secretary become vacant, the Authority shall elect a successor from its membership at the next regular meeting, and such election shall be for the unexpired term of said office. Section 11. Additional Personnel. The Authority may from time to time employ or contract for such personnel as it deems necessary to exercise its powers, duties and functions as prescribed by the Municipal Housing and Redevelopment Law of Minnesota applicable thereto. Such personnel may be employees of the Authority, employees of other governmental organizations, or independent contractors. The selection and compensation of such personnel shall be determined by the Authority subject to the laws of the State of Minnesota. ARTICLE IV—AMENDMENTS Section 1. Amendments to Bylaws. The Bylaws of the Authority shall be amended only with the approval of at least three of the members of the Authority at a regular or a special meeting. Amended 04/21/80 Amended 01/21/86 Amended 12/15/86 Amended 08/18/03 H:CdAdmin:HRA:HRA Bylaws BYLAWS OF THE HOUSING AND REDEVELOPMENT AUTHORITY OF RICHFIELD, MINNESOTA ARTICLE I —THE AUTHORITY Section 1. Name of Authority. The name of the Authority shall be the "Housing and Redevelopment Authority of Richfield, Minnesota". Section 2. Seal of Authority. The seal of the Authority shall be in the form of a circle and shall bear the name of the Authority. Section 3. Office of Authority. The offices of the Authority shall be at City Hall in the City of Richfield, Minnesota, but the Authority may hold its meetings at such other place or places as it may designate by resolution. Section 4. Official News.-per. The official newspaper shall be the official news•aper desianated by the City a its official newspaper eac ear. ARTICLE II —OFFICERS Section 1. Officers. The officers of the Authority shall be a ChairmanChairperson, a Vice ChairmanChairperson, and a Secretary. Section 2. ChairmanChairperson. The ChairmanChairperson shall preside at all meetings of the Authority. Except as otherwise authorized by resolution of the Authority, the ChairmanChairperson shall sign all contracts, deeds, resolutions and other instruments made by the Authority. At each meeting the ChairmanChairperson shall submit such recommendations and information he or she may consider proper concerning the business, affairs and policies of the Authority. Section 3. Vice Chairman hair ep rson. The Vice-ChairmanChairperson shall perform the duties of the ChairmanChairperson in the absence or incapacity of the ChairmanChairperson; and in case of the resignation or death of the ChairmanChairperson, the Vice ChairmanChairperson shall perform such duties as are imposed on the ChairmanChairperson until such time as the Authority shall select a new ChairmanChairperson. Section 4. Secretary. The Secretary shall perform the duties of a Secretary for the Authority. The Secretary shall perform the duties as the ChairChairperson in cases where both the GhairChairperson and Vice-chairChairperson are absent or incapacitated. Section 5. Executive Director. The Authority shall employ an Executive Director who shall have general supervision over the administration of its business and affairs, subject to the direction of the Authority. He or she shall be charged with the management of the housing projects of the Authority. The Executive Director may designate the Ci hr's ••• _I. I- - ••„ -1 I - • _ .1• Ex- . i - D' - .r • • .- '•. she is absent or incapacitated. Section 6. Other Administrative Officers. The Authority may designate an assistant to the Secretary who shall keep the records of the Authority, shall act as recorder 409728v-12 JAE RC125-1 of the meetings of the Authority and record all votes, and shall keep a record of the proceedings of the Authority in a journal of proceedings to be kept for such purpose, and shall perform all duties incidental to his office. He or she shall keep in safe custody the seal of the Authority and shall have power to affix such seal to all contracts and instruments authorized to be executed by the Authority. The Authority may designate a Treasurer who shall have the care and custody of all funds of the Authority and shall deposit the same in the name of the Authority in such bank or banks as the Authority may select. The Executive Director and Treasurer shall sign all orders and checks for the payment of money and shall pay out and disburse such moneys under the direction of the Authority. Except as otherwise authorized by resolution of the Authority, all such orders and checks shall also be countersigned by the ChairmanChairperson. The Treasurer shall keep regular books of accounts showing receipts and expenditures and shall render to the Authority, at each regular meeting (or more often when requested), an account of his transactions and also of the financial condition of the Authority. He or she shall give such bond for the faithful performance of his duties as the Authority may determine ARTICLE III — MEETINGS Section 1. Annual Meeting. The annual meeting of the Authority shall be held on the third Tuesday in January at 7:00 p.m. at the regular meeting place of the Authority. Section 2. Regular Meetings. Monthly meetings shall be held without notice at the regular meeting place of the Authority on the third Monday of each month, at 7:00 p.m. unless the same shall be a legal holiday, in which event said meeting shall be held on the next succeeding secular day. Section 3. Special Meetings. Special meetings of the Authority may be called by the ChairmanChairperson, or two members of the Authority for the purpose of transacting any business designated in the call. The call for a special meeting may be delivered at any time prior to the time of the proposed meeting to each member of the Authority or may be mailed to the business or home address of each member of the Authority at least two (2) days prior to the date of such special meeting. At such special meeting no business shall be considered other than as designated in the call, but if all of the members of the Authority are present at a special meeting, any and all business may be transacted at such special meeting. Section 4. Quorum. The powers of the Authority shall be vested in the Commissioners thereof in office from time to time. Three Commissioners shall constitute a quorum for the purpose of conducting its business and exercising its powers and for all other purposes, but a smaller number may adjourn from time to time until a quorum is obtained. When a quorum is in attendance, action may be taken by the Authority upon a vote of a majority of the Commissioners present. Section 5. Order of Business. At the regular meetings of the Authority the following shall be the order of business: 1. Roll Call. 2. Approval of the Minutes of the Previous Meeting. 409728v12 JAE RC125-1 3. Reports of the Executive Director. 4. Unfinished Business. 5. New Business. 6. Adjournment. All resolutions shall be in writing and shall be copied in the journal of the proceedings of the Authority. Section 6. Manner of Voting. The voting on all questions coming before the Authority shall be by roll call and the yeas and nays shall be entered upon the minutes of such meeting. Section 7. Combining Administrative Offices: Compensation. The compensation of the Executive Director and other personnel of the Authority shall be determined by the Authority. Any two or more administrative offices may be combined. Section 8. Additional Duties. The officers of the Authority shall perform such other duties and functions as may from time to time be required by the Authority or the Bylaws or rules and regulations of the Authority. Section 9. Election of Appointment. The first ChairmanChairperson shall, pursuant to this appointment, serve in the capacity of ChairmanChairperson until the expiration of his term of office as Commissioner. The Vice-ChairmanChairperson, Secretary and, except in the case of the First ChairmanChairperson, the ChairmanChairperson shall be elected at the annual meeting of the Authority from among the Commissioners of the Authority, and shall hold office for one year or until their successors are elected and qualified. The Executive Director shall be appointed by the Authority. Any person appointed to fill the office of Executive Director or any vacancy therein, shall have such term as the Authority fixes, but no Commissioner of the Authority shall be eligible for this office. Section 10. Vacancies. Should the office of ChairmanChairperson, Vice-ChairmanChairperson or Secretary become vacant, the Authority shall elect a successor from its membership at the next regular meeting, and such election shall be for the unexpired term of said office. Section 11. Additional Personnel. The Authority may from time to time employ or contract for such personnel as it deems necessary to exercise its powers, duties and functions as prescribed by the Municipal Housing and Redevelopment Law of Minnesota applicable thereto. Such personnel may be employees of the Authority, employees of other governmental organizations, or independent contractors. The selection and compensation of such personnel shall be determined by the Authority subject to the laws of the State of Minnesota. ARTICLE IV—AMENDMENTS 409728v12 JAE RC125-1 Section 1. Amendments to Bylaws. The Bylaws of the Authority shall be amended only with the approval of at least three of the members of the Authority at a regular or a special meeting. Amended 04/21/80 Amended 01/21/86 Amended 12/15/86 Amended 08/18/03 Amended 02/ /14 H:CdA.amin•HRA•HRA Bylaws 409728v-12 JAE RC125-1 Document comparison by Workshare Compare on Friday, January 31, 2014 5:19:20 PM Input: Document 1 ID PowerDocs://DOCSOPEN/409728/1 Description DOCSOPEN-#409728-v1-Richfield_HRA_Bylaws Document 2 ID Powerpocs://DOCSOPEN/409728/2 Description DOCSOPEN-#409728-v2-Richfield_HRA_Bylaws Rendering set Standard Insertion Deletion Moved-from Moved to Style change Format change eyed dole Inserted cell Deleted cell Moved cell Split/Merged cell Padding cell Statistics: Count Insertions 35 Deletions 28 Moved from 0 Moved to 0 Style change 0 Format changed 0 Total changes 63 AGENDA ITEM#: 4C REPORT#: 12 STAFF REPORT L64#cQd HOUSING AND REDEVELOPMENT AUTHORITY MEETING FEBRUARY 18, 2014 REPORT PREPARED BY: KAREN BARTON, ASST. COMMUNITY DEVELOPMENT DIRECTOR NAME,TITLE REPORT PRESENTER: KAREN BARTON,ASST. COMMUNITY DEVELOPMENT DIRECTOR NAME,TITLE DEPARTMENT DIRECTOR REVIEW: /AIM- I 1111111111 vri REVIEWED BY EXECUTIVE DIRECTOR: r ITEM FOR HRA CONSIDERATION: Consideration of consent to transfer of property in Urban Village development and authorize execution of Estoppel Letter substantially in the form attached to this report. I. RECOMMENDED ACTION: By Motion: Consent to transfer of property in the Urban Village development and authorize execution of Estoppel Letter substantially in the form attached to this report. II. EXECUTIVE SUMMARY On January 31, 2014 Woodlake —VEF IV, LLC sold the Woodlake Centre to Woodlake Partners, LLC. Woodlake Partners, LLC is owned by Laurus Corporation located in Los Angeles. The Housing and Redevelopment Authority (HRA) previously provided an estoppel certificate to the new owner as required by the contract. The new owner has requested an additional estoppel certificate certifying the HRA's consent to the transfer of the property and that the HRA believes the mortgage placed on the property by the new owner is a "permitted mortgage" under the contract. Under the contract, a permitted mortgage is defined as a mortgage, the principal amount of which, when made and combined with all other Permitted Mortgages on the property, does not exceed 80% of the fair market value, determined by an appraiser, of the VEF Property and the VEF Minimum 02182014 Urban Village Consent to Transfer and Estoppelxxx Improvements. The new owner has promised to provide evidence that the mortgage placed on the property is a permitted mortgage. It is anticipated that such evidence will be provided on, or prior to February 18. If it is not received prior to HRA consideration, staff will delay execution of the Estoppel Certificate until such evidence is provided III. BASIS OF RECOMMENDATION A. BACKGROUND • On May 21, 2001 the HRA entered into an Amended and Restated Contract for Private Development with Richfield State Agency, Inc. related to the Urban Village redevelopment project. • The Contract was amended in 2005 by the First Amendment to Amended and Restated Contract for Private Development, dated January 25, 2005, between the HRA and M&I, as successor by merger to Richfield Agency, Inc. • In 2005 a portion of the redevelopment property subject to the contract (the Woodlake Centre located at 6601-6625 Lyndale Avenue) was purchased by Woodlake-VEF IV, LLC and it assumed certain responsibilities under the contract, including obligations to maintain and repair the property and insure the property. • On January 31, 2014 Woodlake —VEF IV, LLC sold the Woodlake Centre to Woodlake Partners, LLC. Woodlake Partners, LLC is owned by Laurus Corporation located in Los Angeles. • Prior to the sale, the new owner of the property executed an Assignment and Assumption of Amended and Restated Contract under which the new owner assumed all of the previous owner's obligations under the contract and provided the representations necessary under the contract to establish the new owner as a qualified transferee of the project. • The HRA previously provided an estoppel certificate to the new owner as required by the contract. • The new owner has requested an additional estoppel certificate certifying the HRA's consent to the transfer of the property and that the HRA believes the mortgage placed on the property by the new owner is a "permitted mortgage" under the contract. B. POLICY • 2008 Comprehensive Plan Goal: o Develop the Lakes at Lyndale area as a City Center o Provide an economic climate within Richfield that will encourage the availability of quality goods, services and employment opportunities for residents: • Encourage and support the development of strong commercial districts that respect the values and standards of the citizens of Richfield. C. CRITICAL TIMING ISSUES • Laurus Corporation's lender is requiring the documentation as part of the project financing. D. FINANCIAL • Laurus Corporation will receive the pay-go tax increment per the amended and restated contract. • The HRA will continue to receive a portion of the tax increment to pay administrative costs associated with the district. E. LEGAL • The HRA attorney drafted the Estoppel Letter. • The HRA attorney will approve the Estoppel Letter in its final form prior to execution. • Prior to the sale, the new owner of the property executed an Assignment and Assumption of Amended and Restated Contract under which the new owner assumed all of the previous owner's obligations under the contract and provided the representations necessary under the contract to establish the new owner as a qualified transferee of the project. IV. ALTERNATIVE RECOMMENDATION(S) • Do not consent to the transfer nor approve the Estoppel Letter. V. ATTACHMENTS • Estoppel Certificate VI. PRINCIPAL PARTIES EXPECTED AT MEETING • None [TO BE PLACED ON HRA'S LETTERHEAD] ESTOPPEL CERTIFICATE To: RAIT Partnership, L.P., its successors and assigns ("Lender") c/o RAIT Financial Trust Cira Centre 2929 Arch Street, 17th Floor Philadelphia, PA 19104-2870 Attention: Jamie Reyle, Esquire, Senior Vice President- Corporate Counsel Woodlake Partners, LLC ("Owner") c/o Laurus Corporation 1880 Century Park East, Suite 1016 Los Angeles, California 90067 Re: Purchase of Woodlake Centre, Richfield, Minnesota Ladies and Gentlemen: Reference is made to the Amended and Restated Contract for Private Redevelopment, dated May 21, 2001 (the "Amended and Restated Contract"), between The Housing and Redevelopment Authority in and for the City of Richfield, Minnesota (the "HRA") and Richfield State Agency, Inc. ("RSA"), as amended by the First Amendment to Amended and Restated Contract for Private Redevelopment, dated as of January 25, 2005 (the "TIF Amendment"), between the HRA and M&I Marshall & Ilsley Bank ("M&I"), successor to RSA (the Amended and Restated Contract as amended by the TIF Amendment is referred to herein as the "TIF Agreement"). The TIF Agreement covers certain real property described on Exhibit A hereto (the "Redevelopment Property"). We understand that on January 31, 2014 (the "Closing Date") (1) Owner purchased from Woodlake-VEF IV, LLC ("Seller") a portion of the Redevelopment Property, such portion being described on Exhibit B hereto (the "VEF Property"), and Owner granted a Permitted Mortgage in favor of Lender in connection therewith, (2) Owner purchased the Taxable Note, and (3) as a condition to such purchase and financing you have required that the HRA make certain representations to Owner and Lender and their respective successors and assigns, as follows (capitalized terms used herein and not defined herein shall have the meanings given to them in the TIF Agreement): 1. The TIF Agreement, the Taxable Note Resolution, the Tax Exempt Resolution, the Taxable Note and the Tax Exempt Note are in full force and effect and have not been amended except by the TIF Amendment. Effective as of the Closing Date, HRA hereby consents to and approves of the transfer of Seller's rights and obligations under the TIF Agreement to Owner concurrent with Owner's acquisition of the VEF Property and the Taxable Note. 338925v2 2. The Taxable Note is registered to Seller. Upon Owner's satisfaction of any transfer requirements set forth in Section 3.03(b) of the Taxable Note Resolution, the Taxable Note shall be registered by the HRA in the name of Owner, payable to the order of Owner. 3. The Tax Exempt Note is registered to M&I. 4. The Taxable Note is currently issued to Owner in the face amount of$7,000,000. As of the date hereof, the outstanding principal balance of the Taxable Note and the balances of the funds referred to in the Taxable Note and the Taxable Note Resolution are as follows: Principal Balance of Taxable Note $ Debt Service Fund Balance $ Prepayment Fund Balance $ The amount of the Available Tax Increment and Local Match Funds paid to Seller on account of the Taxable Note during the calendar year 2013 were as follows: • 5. The Tax Exempt Note is currently issued to M&I in the face amount of $2,500,000. As of the date hereof, the outstanding principal balance of the Tax Exempt Note and the balances of the funds referred to in the Tax Exempt Note and the Tax Exempt Note Resolution are as follows: Principal Balance of Tax Exempt Note $ Project Fund Balance $ Debt Service Fund Balance $ Prepayment Fund Balance $ Reserve Fund Balance $ The amount of the Available Tax Increment and Local Match Funds paid to M&I on account of the Tax Exempt Note during the calendar year 2013 were as follows: 6. No Event of Default (as defined in the TIF Agreement) on the part of Owner exists as of the date hereof and the HRA holds no present claims against Owner under or on account of the TIF Agreement. No Event of Default arose by virtue of(a) Owner's purchase of the VEF Property or the Taxable Note, or (b) Owner's granting of a Permitted Mortgage to Lender. 7. Effective as of the Closing Date, HRA hereby consents to Owner's granting of a Permitted Mortgage in favor of Lender against the VEF Property and agrees that Lender is a Permitted Mortgagee under the TIF Agreement. In the event Lender shall transfer its rights under the Permitted Mortgage, any successor to Lender under such Permitted Mortgage will be treated as a Permitted Mortgagee under the TIF Agreement. In the event Lender becomes the owner of the VEF Property pursuant to a foreclosure (or transfer in lieu of foreclosure) and becomes the hold of the Tax Exempt Note, HRA agrees to re-issue the Taxable Note in favor of Lender (or its designee) upon Lender's (or such designee's) satisfaction of any transfer requirements set forth in Section 3.03(b) of the Taxable Note Resolution. 338925v2 8. HRA agrees to deliver copies of all notices to be served upon Owner as a Redeveloper thereunder to an address designated by Owner in writing and copies thereof shall be delivered to Lender at the address set forth above or another address may be designated by Owner in writing. 9. HRA is making this Certificate with the understanding that: (a) Owner purchased the VEF Property and the Taxable Note in material reliance on this Certificate; and (b) Lender made a loan to Owner in material reliance on this Certificate. Executed on , 20 , at Richfield, Minnesota. THE HOUSING AND REDEVELOPMENT AUTHORITY OF THE CITY OF RICHFIELD, MINNESOTA By: By: Its: Vice Chair Its: Acting Executive Director STATE OF MINNESOTA ) ) ss. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this day of , by and , and and , respectively, of The Housing and Redevelopment Authority in and for the City of Richfield, Minnesota, a Minnesota public body corporate and politic, on behalf of such public body. Notary Public 338925v2 EXHIBIT A Redevelopment Property Lots 1, 2, 23, 24 and 25, Block 4, Lyndale Shores on Wood Lake, according to the recorded plat thereof, Hennepin County, Minnesota; and Lots 1 and 3, Block 1, Richfield Urban Village, according to the recorded plat thereof, Hennepin County, Minnesota Lot 1, Block 2, Richfield Urban Village, according to the recorded plat thereof, Hennepin County, Minnesota Lot 1, Block 3, Richfield Urban Village, according to the recorded plat thereof, Hennepin County, Minnesota Outlots A, B, C and D, Richfield Urban Village, according to the recorded plat thereof, Hennepin County, Minnesota That part of Lot 2, Block 1, Richfield Urban Village, according to the recorded plat thereof, Hennepin County, Minnesota, which lies westerly of a line drawn perpendicular to the north line of said Lot 2 from a point on the north line of said Lot 2, distant 126.70 feet west from the northeast corner of said Lot 2. 338925v2 EXHIBIT B VEF Property Lots 2 and 3, Block 1, and Outlots A and C, all in Richfield Urban Village, according to the recorded plat thereof, Hennepin County, Minnesota. Registered Property Certificate of Title No. 1146727 338925v2 AGENDA ITEM#: 5 REPORT#: 13 STAFF REPORT ed4ce HOUSING AND REDEVELOPMENT AUTHORITY MEETING FEBRUARY 18, 2014 REPORT PREPARED BY: JOHN STARK, COMMUNITY DEVELOPMENT DIRECTOR NAME,TITLE REPORT PRESENTER: JOHN STARK, COMMUNITY DEVELOPMENT DIRECTOR NAME,TITLE DEPARTMENT DIRECTOR REVIEW: iLAe`Lt■__ �. �f1 SIGNATM e. REVIEWED BY EXECUTIVE DIRECTOR: IT ITEM FOR HRA CONSIDERATION: Consideration of a Resolution Adopting a Modification to the Redevelopment Plan for the Richfield Redevelopment Project Area, Establishing 2014-1 Tax Increment Financing District (City Garage Site) Therein and Adopting a Tax Increment Financing Plan Therefor. I. RECOMMENDED ACTION: By Motion: Approve a Resolution Adopting a Modification to the Redevelopment Plan for the Richfield Redevelopment Project Area, Establishing 2014-1 Tax Increment Financing District (City Garage Site) Therein and Adopting a Tax Increment Financing Plan Therefor. II. EXECUTIVE SUMMARY Staff has recommended the creation of a TIF District on the 7600 block between Pleasant and Pillsbury Avenues as well as the south portion of the former City Garage site at 7700 Pillsbury Avenue (see map on page 3 of Appendix F of the attached TIF Plan). The only privately owned property (a residential house) located on the block has been excluded from the proposed TIF District. The purpose of this TIF District would be to clear the site of vacant and substandard buildings owned by the City and the Housing and Redevelopment Authority (HRA) (the former Gleason's Mortuary and former City Garage buildings) and to prepare the site for redevelopment. 02182014 2014-1 (Garage)TIF Plan Modificationxxx On January 14, 2014, the Richfield City Council approved holding a Public Hearing on February 25, 2014 for consideration of establishing a Tax Increment Financing (TIF) District for the former City Garage and Gleason's Mortuary sites. That action was the first taken by public bodies in Richfield relating to the establishment of this TIF District. Since that time, both the City Council and HRA have passed resolutions approving the demolition of buildings and confirming that the buildings in the proposed TIF District are substandard as well as adopting resolutions for the creation of an interfund loan for lending the TIF District funds to demolish the buildings. The Planning Commission also took action on January 27, 2014 with a finding that the proposed TIF Plan to determine that it is in compliance with the City's Comprehensive Plan. The TIF Plan estimates the generation and use of up to $6,182,220 plus interest of Tax Increment (see page 6-2 of the attached TIF Plan). This amount is estimated to be the maximum TIF that could be generated on the site and is included in the TIF Plan to give the City and HRA the greatest flexibility in the future generation and use of tax increment. The TIF Plan does not commit the HRA to pledge any amount of TIF to a future developer of the site. In the future, the HRA could elect to enter into a Redevelopment Agreement with a developer that would possibly pledge a portion of the available tax increment to that developer for qualified redevelopment costs. III. BASIS OF RECOMMENDATION A. BACKGROUND • The buildings on this site are hazardous and should be demolished in the interest of public safety. • The costs of demolition, environmental remediation and other "TIF Qualified Expenses" could be reimbursed by future tax increment funds if a TIF District is established. B. POLICY • THE HRA must take action to approve a Modification to the Richfield Redevelopment Project Area Redevelopment Plan and to Establish the 2014-1 Tax Increment Financing District (City Garage Site) and its Plan. C. CRITICAL TIMING ISSUES • The City Council is scheduled to hold a public hearing on the proposed Modification to the Redevelopment Plan for the Richfield Redevelopment Project Area, Establishing 2014-1 Tax Increment Financing District (City Garage Site) Therein and Adopting a Tax Increment Financing Plan Therefor on February 25, 2014 and will be relying, in part, on the actions taken by the HRA. D. FINANCIAL • The only immediate costs associated with this proposed TIF District would be the pledge to use TIF funds to reimburse an Interfund Loan from the City in an amount of up to $300,000 for environmental and demolition costs plus using TIF funds to reimburse consulting, legal and other administrative costs expended on creating the TIF District. E. LEGAL • HRA Legal Counsel has been involved in every step of this process and has reviewed the attached resolution. IV. ALTERNATIVE RECOMMENDATION(S) • Defer consideration of the attached Resolution to seek further information and request that the City Council continue their Public Hearing on the matter until after the HRA revisits the issue. • Do not approve the attached resolution and direct staff to identify alternate funding sources for the demolition and environmental abatement of publicly owned properties on the site. V. ATTACHMENTS • Resolution • A Modification to the Redevelopment Plan for the Richfield Redevelopment Project Area, Establishing 2014-1 Tax Increment Financing District (City Garage Site) Therein and Adopting a Tax Increment Financing Plan Therefor. VI. PRINCIPAL PARTIES EXPECTED AT MEETING • Rebecca Kurtz, Ehlers & Associates • Julie Eddington, HRA Attorney RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY CITY OF RICHFIELD HENNEPIN COUNTY STATE OF MINNESOTA RESOLUTION NO. RESOLUTION ADOPTING A MODIFICATION TO THE REDEVELOPMENT PLAN FOR THE RICHFIELD REDEVELOPMENT PROJECT AREA, ESTABLISHING 2014-1 TAX INCREMENT FINANCING DISTRICT (CITY GARAGE SITE)THEREIN AND ADOPTING A TAX INCREMENT FINANCING PLAN THEREFOR. WHEREAS, it has been proposed by the Board of Commissioners (the "Board") of the Richfield Housing and Redevelopment Authority (the "HRA") and the City of Richfield (the "City") that the HRA adopt a Modification to the Redevelopment Plan(the"Redevelopment Plan Modification")for the Richfield Redevelopment Project Area(the"Project Area")and establish the 2014-1 Tax Increment Financing District (City Garage Site)(the"District")and adopt a Tax Increment Financing Plan(the"TIF Plan")therefor(the Redevelopment Plan Modification and the TIF Plan are referred to collectively herein as the "Plans"), all pursuant to and in conformity with applicable law, including Minnesota Statutes, Sections 469.001 to 469.047,and Sections 469.174 to 469.1794, inclusive,as amended(collectively the "Act"),all as reflected in the Plans and presented for the Board's consideration; and WHEREAS,the HRA has investigated the facts relating to the Plans and has caused the Plans to be prepared; and WHEREAS, certain written reports (the "Reports") relating to the Plans and to the activities contemplated therein have heretofore been prepared by staff and consultants and submitted to the Council and/or made a part of the City files and proceedings on the Plans. The Reports include data, information and/or substantiation constituting or relating to the basis for the other findings and determinations made in this resolution.The Council hereby confirms,ratifies and adopts the Reports,which are hereby incorporated into and made as fully a part of this resolution to the same extent as if set forth in full herein; and WHEREAS,the HRA has performed all actions required by law to be performed prior to the adoption of the Plans. The HRA has also requested the City Planning Commission to provide for review of and written comment on the Plans and that the Council schedule a public hearing on the Plans upon published notice as required by law. NOW,THEREFORE,BE IT RESOLVED by the Board as follows: 1. The HRA hereby finds that the District is in the public interest and is a "redevelopment district" under Minnesota Statutes,Section 469.174,Subd. 10.Based on the findings set fort in the Plans,the HRA finds that the adoption of the proposed Plans conform in all respects to the requirements of the Act and will help fulfill a need to develop an area of the State of Minnesota which is already built up and that the adoption of the proposed Plans will help provide housing opportunities in the State and in the preservation and enhancement of the tax base of the City and the State and thereby serves a public purpose. 2. The HRA further finds that the Plans will afford maximum opportunity, consistent with the sound needs for the City as a whole,for the development or redevelopment of the Project Area by private enterprise in that the intent is to provide only that public assistance necessary to make the private developments financially feasible. 3. The boundaries of the Project Area are not being expanded. 4. The reasons and facts supporting the findings in this resolution are described in the Plans,which are incorporated herein by reference. 5. The HRA elects to calculate fiscal disparities for the District in accordance with Minnesota Statutes, Section 469.177, Subd. 3, clause b,which means the fiscal disparities contribution would be taken from inside the District. 6. Conditioned upon the approval thereof by the City Council following its public hearing thereon,the Plans,as presented to the HRA on this date,are hereby approved,established and adopted and shall be placed on file in the office of the Community Development Director of the City. 7. Upon approval of the Plans by the City Council,the staff,the HRA's advisors and legal counsel are authorized and directed to proceed with the implementation of the Plans and for this purpose to negotiate,draft,prepare and present to this Board for its consideration all further plans,resolutions, documents and contracts necessary for this purpose. Approval of the Plans does not constitute approval of any project or a Development Agreement with any developer. 8. Upon approval of the Plans by the City Council,the Community Development Director of the City is authorized and directed to forward a copy of the Plans to the Minnesota Department of Revenue and the Office of the State Auditor pursuant to Minnesota Statutes 469.175, Subd.4a. 9. The Community Development Director of the City is authorized and directed to forward a copy of the Plans to the Hennepin County Auditor and request that the Auditor certify the original tax capacity of the District as described in the Plans,all in accordance with Minnesota Statutes 469.177. Approved by the Board on February 18,2014. Chair ATTEST: Secretary As of February 11, 2014 Draft for HRA Modification to the Redevelopment Plan for the Richfield Redevelopment Project and the Tax Increment Financing Plan for the establishment of the 2014-1 Tax Increment Financing District (City Garage Site) (a redevelopment district) within the Richfield Redevelopment Project Richfield Housing and Redevelopment Authority City of Richfield Hennepin County State of Minnesota Public Hearing: February 25, 2014 Adopted: 0 E H L E R S Prepared by: EHLERS&ASSOCIATES, INC. 3060 Centre Pointe Drive, Roseville, Minnesota 55113-1105 651-697-8500 fax: 651-697-8555 www.ehlers-inc.com Table of Contents (for reference purposes only) Section 1 - Modification to the Redevelopment Plan for the Richfield Redevelopment Project Area 1-1 Foreword 1-1 Section 2 -Tax Increment Financing Plan for the 2014-1 Tax Increment Financing District(City Garage Site) 2-1 Subsection 2-1. Foreword 2-1 Subsection 2-2. Statutory Authority 2-1 Subsection 2-3. Statement of Objectives 2-1 Subsection 2-4. Redevelopment Plan Overview 2-1 Subsection 2-5. Description of Property in the District and Property To Be Acquired 2-2 Subsection 2-6. Classification of the District 2-2 Subsection 2-7. Duration and First Year of Tax Increment of the District 2-4 Subsection 2-8. Original Tax Capacity, Tax Rate and Estimated Captured Net Tax Capacity Value/Increment and Notification of Prior Planned Improvements 2-4 Subsection 2-9. Sources of Revenue/Bonds to be Issued 2-5 Subsection 2-10. Uses of Funds 2-6 Subsection 2-11. Fiscal Disparities Election 2-6 Subsection 2-12. Business Subsidies 2-7 Subsection 2-13. County Road Costs 2-8 Subsection 2-14. Estimated Impact on Other Taxing Jurisdictions 2-8 Subsection 2-15. Supporting Documentation 2-10 Subsection 2-16. Definition of Tax Increment Revenues 2-10 Subsection 2-17. Modifications to the District 2-11 Subsection 2-18. Administrative Expenses 2-11 Subsection 2-19. Limitation of Increment 2-12 Subsection 2-20. Use of Tax Increment 2-13 Subsection 2-21. Excess Increments 2-13 Subsection 2-22. Requirements for Agreements with the Developer 2-14 Subsection 2-23. Assessment Agreements 2-14 Subsection 2-24. Administration of the District 2-14 Subsection 2-25. Annual Disclosure Requirements 2-14 Subsection 2-26. Reasonable Expectations 2-15 Subsection 2-27. Other Limitations on the Use of Tax Increment 2-15 Subsection 2-28. Summary 2-16 Appendix A Project Description A-1 Appendix B Map(s) of the Richfield Redevelopment Project Area and the District B-1 Appendix C Description of Property to be Included in the District C-1 Appendix D Estimated Cash Flow for the District D-1 Appendix E Minnesota Business Assistance Form E-1 Appendix F Redevelopment Qualifications for the District F-1 Appendix G Findings Including But/For Qualifications G-1 Section 1 -Modification to the Redevelopment Plan for the Richfield Redevelopment Project Area Foreword The following text represents a Modification to the Redevelopment Plan for the Richfield Redevelopment Project Area. This modification represents a continuation of the goals and objectives set forth in the Redevelopment Plan for the Richfield Redevelopment Project Area. Generally, the substantive changes include the establishment of 2014-1 Tax Increment Financing District(City Garage Site). For further information,a review of the Redevelopment Plan for the Richfield Redevelopment Project Area is recommended. It is available from the Community Development Director at the City of Richfield. Other relevant information is contained in the Tax Increment Financing Plans for the Tax Increment Financing Districts located within the Richfield Redevelopment Project Area. Richfield Housing and Redevelopment Authority Modification to the Redevelopment Plan for the Richfield Redevelopment Project Area 1-1 Section 2- Tax Increment Financing Plan for the 2014-1 Tax Increment Financing District(City Garage Site) Subsection 2-1. Foreword The Richfield Housing and Redevelopment Authority(the"HRA"),the City of Richfield(the"City"),staff and consultants have prepared the following information to expedite the establishment of the 2014-1 Tax Increment Financing District(City Garage Site) (the "District"), a redevelopment tax increment financing district,located in the Richfield Redevelopment Project Area. Subsection 2-2. Statutory Authority Within the City, there exist areas where public involvement is necessary to cause development or redevelopment to occur. To this end,the HRA and City have certain statutory powers pursuant to Minnesota Statutes ("MS.'), Sections 469.001 to 469.047, inclusive, as amended, and M.S., Sections 469.174 to 469.1794, inclusive, as amended(the "Tax Increment Financing Act" or "TIF Act"),to assist in financing public costs related to this project. This section contains the Tax Increment Financing Plan (the "TIF Plan") for the District. Other relevant information is contained in the Modification to the Redevelopment Plan for the Richfield Redevelopment Project Area. Subsection 2-3. Statement of Objectives The District currently consists of five parcels of land and adjacent and internal rights-of-way. The District is being created to facilitate the construction of a multi-phase,rental housing development in the City. Please see Appendix A for further District information. The HRA has not entered into an agreement or designated a developer at the time of preparation of this TIF Plan,but development is likely to occur in 2015. This TIF Plan is expected to achieve many of the objectives outlined in the Redevelopment Plan for the Richfield Redevelopment Project Area. The objectives for the Redevelopment Project Area set forth in the Redevelopment Plan are incorporated herein by reference. The activities contemplated in the Modification to the Redevelopment Plan and the TIF Plan do not preclude the undertaking of other qualified development or redevelopment activities. These activities are anticipated to occur over the life of the Richfield Redevelopment Project Area and the District. Subsection 2-4. Redevelopment Plan Overview 1. Property to be Acquired-Selected property located within the District may be acquired by the HRA or City and is further described in this TIF Plan. 2. Relocation - Relocation services, to the extent required by law, are available pursuant to M.S., Chapter 117 and other relevant state and federal laws. 3. Upon approval of a developer's plan relating to the project and completion of the necessary legal requirements,the HRA or City may sell to a developer selected properties that it may acquire within the District or may lease land or facilities to a developer. 4. The HRA or City may perform or provide for some or all necessary acquisition,construction, relocation, demolition,and required utilities and public street work within the District. Richfield Housing and Redevelopment Authority Tax Increment Financing Plan for the 2014-1 Tax Increment Financing District(City Garage Site) 2-1 Subsection 2-5. Description of Property in the District and Property To Be Acquired The District encompasses all property and adjacent rights-of-way and abutting roadways identified by the parcels listed in Appendix C of this TIF Plan. Please also see the map in Appendix B for further information on the location of the District. The HRA or City currently owns the property to be included in the District. Subsection 2-6. Classification of the District The HRA and City, in determining the need to create a tax increment financing district in accordance with M.S., Sections 469.174 to 469.1794, as amended, inclusive, find that the District, to be established, is a redevelopment district pursuant to M.S., Section 469.174, Subd. 10(a)(1) as defined below: (a) "Redevelopment district"means a type oftax increment financing district consisting of a project, or portions of a project, within which the authority finds by resolution that one or more of the following conditions, reasonably distributed throughout the district, exists: (1) parcels consisting of 70 percent of the area in the district are occupied by buildings,streets, utilities,paved or gravel parking lots or other similar structures and more than 50 percent of the buildings, not including outbuildings, are structurally substandard to a degree requiring substantial renovation or clearance; (2) The property consists of vacant, unused, underused, inappropriately used, or infrequently used rail yards, rail storage facilities or excessive or vacated railroad rights-of-way; (3) tankfacilities,or property whose immediately previous use was for tank facilities,as defined in Section 115C, Subd. 15, if the tank facility: (i) have or had a capacity of more than one million gallons; (ii) are located adjacent to rail facilities; or (iii) have been removed,or are unused,underused, inappropriately used or infrequently used; or (4) a qualfing disaster area, as defined in Subd. 10b. (b) For purposes of this subdivision, "structurally substandard"shall mean containing defects in structural elements or a combination of deficiencies in essential utilities and facilities, light and ventilation,fire protection including adequate egress,layout and condition of interior partitions, or similar factors, which defects or deficiencies are of sufficient total significance to just substantial renovation or clearance. (c) A building is not structurally substandard if it is in compliance with the building code applicable to new buildings or could be modified to satisfy the building code at a cost of less than 15 percent of the cost of constructing a new structure of the same square footage and type on the site. The municipality may find that a building is not disqualified as structurally substandard under the preceding sentence on the basis of reasonably available evidence, such as the size, type, and age of the building, the average cost of plumbing, electrical, or structural repairs or other similar reliable evidence. The municipality may not make such a determination without Richfield Housing and Redevelopment Authority Tax Increment Financing Plan for the 2014-1 Tax Increment Financing District(City Garage Site) 2-2 an interior inspection of the property, but need not have an independent, expert appraisal prepared of the cost of repair and rehabilitation of the building. An interior inspection of the property is not required, ifthe municipality finds that(1)the municipality or authority is unable to gain access to the property after using its best efforts to obtain permission from the party that owns or controls the property;and(2)the evidence otherwise supports a reasonable conclusion that the building is structurally substandard. (d) A parcel is deemed to be occupied by a structurally substandard building for purposes of the finding under paragraph (a) or by the improvement described in paragraph (e) if all of the following conditions are met: (1) the parcel was occupied by a substandard building or met the requirements of paragraph (e), as the case may be, within three years of the filing of the request for certification of the parcel as part of the district with the county auditor; (2) the substandard building or the improvements described in paragraph(e)were demolished or removed by the authority or the demolition or removal was financed by the authority or was done by a developer under a development agreement with the authority; (3) the authority found by resolution before the demolition or removal that the parcel was occupied by a structurally substandard building or met the requirement of paragraph(e)and that after demolition and clearance the authority intended to include the parcel within a district; and (4) upon filing the request for certification of the tax capacity of the parcel as part of a district, the authority notifies the county auditor that the original tax capacity of the parcel must be adjusted as provided by§469.177, subdivision 1,paragraph (fl. (e) For purposes of this subdivision, a parcel is not occupied by buildings, streets, utilities,paved or gravel parking lots or other similar structures unless 15 percent of the area of the parcel contains buildings, streets, utilities,paved or gravel parking lots or other similar structures. 0 For districts consisting of two or more noncontiguous areas, each area must qualify as a redevelopment district under paragraph(a)to be included in the district, and the entire area of the district must satisfy paragraph (a). In meeting the statutory criteria set forth above the HRA and City rely on the following facts and findings based on determinations set forth in a Report dated January 9, 2014, by LHB, Inc., which is incorporated herein by reference and on file with the Community Development Director at the City: • The District is a redevelopment district consisting of five parcels. • An inventory shows that all of the parcels are occupied because they meet the requirements of M.S., Section 469.174, Subd. 10,para. 2 in that at least 15%of the area of each of the parcels is occupied by buildings,streets,utilities,paved or gravel parking lots or other similar structures.The occupied parcels consists of over 70%of the area of the District. • An inspection of the buildings located within the District finds that all of the buildings(which is more than 50 percent of the buildings)are structurally substandard as defined in the TIF Act. (See Appendix F). • Four of the five buildings are not in compliance with the building code applicable to new buildings,and the costs of modifying such buildings to satisfy the building code is more than 15% of the cost of Richfield Housing and Redevelopment Authority Tax Increment Financing Plan for the 2014-1 Tax Increment Financing District(City Garage Site) 2-3 constructing a new structure of the same square footage and type on the site. Pursuant to M.S., Section 469.176, Subd. 7,the District does not contain any parcel or part of a parcel that qualified under the provisions of M.S., Sections 273.111 or 273.112 or Chapter 473H for taxes payable in any of the five calendar years before the filing of the request for certification of the District. Subsection 2-7. Duration and First Year of Tax Increment of the District Pursuant to M.S., Section 469.175, Subd. 1, and Section 469.176, Subd. 1,the duration and first year of tax increment of the District must be indicated within the TIF Plan. Pursuant to M.S.,Section 469.176,Subd. lb., the duration of the District will be 25 years after receipt of the first increment by the HRA or City(a total of 26 years of tax increment). The HRA or City elects to receive the first tax increment in 2018, which is no later than four years following the year of approval of the District. Thus, it is estimated that the District, including any modifications of the TIF Plan for subsequent phases or other changes,would terminate after 2043,or when the TIF Plan is satisfied. The HRA or City reserves the right to decertify the District prior to the legally required date. Subsection 2-8. Original Tax Capacity,Tax Rate and Estimated Captured Net Tax Capacity Value/Increment and Notification of Prior Planned Improvements Pursuant to M.S.,Section 469.174,Subd. 7 and M.S.,Section 469.177,Subd. 1,the Original Net Tax Capacity (ONTC)as certified for the District will be based on the market values placed on the property by the assessor in 2013 for taxes payable 2014. Pursuant to M.S., Section 469.177, Subds. 1 and 2,the County Auditor shall certify in each year(beginning in the payment year 2017)the amount by which the original value has increased or decreased as a result of: 1. Change in tax exempt status of property; 2. Reduction or enlargement of the geographic boundaries of the district; 3. Change due to adjustments,negotiated or court-ordered abatements; 4. Change in the use of the property and classification; 5. Change in state law governing class rates; or 6. Change in previously issued building permits. ' In any year in which the current Net Tax Capacity(NTC)value of the District declines below the ONTC,no value will be captured and no tax increment will be payable to the HRA or City. The original local tax rate for the District will be the local tax rate for taxes payable 2014, assuming the request for certification is made before June 30,2014. The ONTC and the Original Local Tax Rate for the District appear in the table below. Pursuant to M.S., Section 469.174 Subd. 4 and M.S., Section 469.177, Subd. 1, 2, and 4, the estimated Captured Net Tax Capacity(CTC)of the District,within the Richfield Redevelopment Project Area, upon completion of the projects within the District,will annually approximate tax increment revenues as shown in the table below.Pursuant to M.S.,Section 469.1 77,subd.2,it is found and declared that all of the captured tax capacity generated upon full development of all property within the TIF District is necessary to finance or otherwise make permissible expenditures authorized by M.S.,Section 469.176,subd.4.The HRA and City request 100 percent of the available increase in tax capacity for repayment of its obligations and current expenditures,beginning in the tax year payable 2018. The Project Tax Capacity(PTC)listed is an estimate of values when the projects within the District are completed. Richfield Housing and Redevelopment Authority Tax Increment Financing Plan for the 2014-1 Tax Increment Financing District(City Garage Site) 2-4 Project Estimated Tax Capacity upon Completion(PTC) $399,126 Original Estimated Net Tax Capacity(ONTC) $19,028 Fiscal Disparities Reduction $0 Estimated Captured Tax Capacity(CTC) $380,098 Original Local Tax Rate 1.53946 Estimated Pay 2014 Estimated Annual Tax Increment(CTC x Local Tax Rate) $585,146 Percent Retained by the HRA 100% Tax capacity includes a 3%inflation factor for the duration of the District. The tax capacity included in this chart is the estimated tax capacity of the District in year 25. The tax capacity of the District in year one is estimated to be$190,625. Pursuant to M.S., Section 469.177, Subd. 4,the HRA shall, after a due and diligent search, accompany its request for certification to the County Auditor or its notice of the District enlargement pursuant to M.S., Section 469.175, Subd. 4,with a listing of all properties within the District or area of enlargement for which building permits have been issued during the eighteen(18)months immediately preceding approval of the TIF Plan by the municipality pursuant to M.S., Section 469.175,Subd. 3. The County Auditor shall increase the original net tax capacity of the District by the net tax capacity of improvements for which a building permit was issued. The City has reviewed the area to be included in the District and found no parcels for which building permits have been issued during the 18 months immediately preceding approval of the TIF Plan by the City. Subsection 2-9. Sources of Revenue/Bonds to be Issued The costs outlined in the Uses of Funds will be financed primarily through the annual collection of tax increments. The HRA or City reserves the right to issue bonds or incur other indebtedness as a result of the TIF Plan. As presently proposed,the projects within the District will be financed by a pay-as-you-go note. Any refunding amounts will be deemed a budgeted cost without a formal TIF Plan Modification. This provision does not obligate the HRA or City to incur debt. The HRA or City will issue bonds or incur other debt only upon the determination that such action is in the best interest of the City. The total estimated tax increment revenues for the District are shown in the table below: SOURCES OF FUNDS TOTAL Tax Increment $10,514,151 Interest $1,051,415 TOTAL $11,565,566 The HRA or City may issue bonds(as defined in the TIF Act)secured in whole or in part with tax increments from the District in a maximum principal amount of$6,182,219. Such bonds may be in the form of pay-as- Richfield Housing and Redevelopment Authority Tax Increment Financing Plan for the 2014-1 Tax Increment Financing District(City Garage Site) 2-5 you-go notes, revenue bonds or notes, general obligation bonds, or interfund loans. This estimate of total bonded indebtedness is a cumulative statement of authority under this TIF Plan as of the date of approval. Subsection 2-10. Uses of Funds Currently under consideration for the District is a proposal to facilitate the construction of a multi-phase, affordable, rental housing development. The HRA and City have determined that it will be necessary to provide assistance to the project(s)for certain District costs,as described below. The HRA has studied the feasibility of the development or redevelopment of property in and around the District. To facilitate the establishment and development or redevelopment of the District, this TIF Plan authorizes the use of tax increment financing to pay for the cost of certain eligible expenses. The estimate of public costs and uses of funds associated with the District is outlined in the following table. USES OF TAX INCREMENT FUNDS TOTAL Land/Building Acquisition $2,000,000 Site Improvements/Preparation $750,000 Other Qualifying Improvements $2,380,805 Administrative Costs(up to 10%) $1,051,415 PROJECT COST TOTAL $6,182,220 Interest $5,383,346 PROJECT AND INTEREST COSTS TOTAL $11,565,566 The total project cost,including financing costs(interest)listed in the table above does not exceed the total projected tax increments for the District as shown in Subsection 2-9. Estimated costs associated with the District are subject to change among categories without a modification to this TIF Plan. The cost of all activities to be considered for tax increment financing will not exceed, without formal modification,the budget above pursuant to the applicable statutory requirements. Pursuant to M.S.,Section 469.1763,Subd. 2,no more than 25 percent of the tax increment paid by property within the District will be spent on activities related to development or redevelopment outside of the District but within the boundaries of the Richfield Redevelopment Project Area, (including administrative costs, which are considered to be spent outside of the District)subject to the limitations as described in this TIF Plan. Subsection 2-11. Fiscal Disparities Election Pursuant to M.S.,Section 469.177,Subd. 3,the HRA or City may elect one of two methods to calculate fiscal disparities. If the calculations pursuant to M.S., Section 469.177, Subd. 3, clause b,(within the District)are followed,the following method of computation shall apply: (1) The original net tax capacity shall be determined before the application of the fiscal disparity provisions of Chapter 276A or 473F. The current net tax capacity shall exclude any fiscal disparity commercial-industrial net tax capacity increase between the original year and the current year multiplied by the fiscal disparity ratio determined pursuant to M.S., Section 276A.06, subdivision 7 or M.S., Section 473F.08, subdivision 6. Where the original net tax capacity is equal to or greater than the current net tax capacity,there is no captured tax capacity Richfield Housing and Redevelopment Authority Tax Increment Financing Plan for the 2014-1 Tax Increment Financing District(City Garage Site) 2-6 and no tax increment determination. Where the original tax capacity is less than the current tax capacity, the difference between the original net tax capacity and the current net tax capacity is the captured net tax capacity. This amount less any portion thereof which the authority has designated, in its tax increment financing plan, to share with the local taxing districts is the retained captured net tax capacity of the authority. (2) The county auditor shall exclude the retained captured net tax capacity of the authority from the net tax capacity of the local taxing districts in determining local taxing district tax rates. The local tax rates so determined are to be extended against the retained captured net tax capacity of the authority as well as the net tax capacity of the local taxing districts. The tax generated by the extension of the less of(A)the local taxing district tax rates or(B)the original local tax rate to the retained captured net tax capacity of the authority is the tax increment of the authority. The HRA will choose to calculate fiscal disparities by clause b. According to M.S., Section 469.177, Subd. 3: (c) The method of computation of tax increment applied to a district pursuant to paragraph (a)or (b) shall remain the same for the duration of the district, except that the governing body may elect to change its election from the method of computation in paragraph (a) to the method in paragraph (b). Subsection 2-12. Business Subsidies Pursuant to M.S., Section 1161993, Subd. 3,the following forms of financial assistance are not considered a business subsidy: (1) A business subsidy of less than$150,000; (2) Assistance that is generally available to all businesses or to a general class of similar businesses, such as a line of business,size, location, or similar general criteria; (3) Public improvements to buildings or lands owned by the state or local government that serve a public purpose and do not principally benefit a single business or defined group of businesses at the time the improvements are made; (4) Redevelopment property polluted by contaminants as defined in MS., Section 1161552, Subd. 3; (5) Assistance provided for the sole purpose of renovating old or decaying building stock or bringing it up to code and assistance provided for designated historic preservation districts,provided that the assistance is equal to or less than 50%of the total cost; (6) Assistance to provide job readiness and training services if the sole purpose of the assistance is to provide those services; (7) Assistance for housing; (8) Assistance for pollution control or abatement, including assistance for a tax increment financing hazardous substance subdistrict as defined under M.S., Section 469.174, Subd. 23; (9) Assistance for energy conservation; (10) Tax reductions resulting from conformity with federal tax law; (11) Workers'compensation and unemployment compensation; (12) Benefits derived from regulation; (13) Indirect benefits derived from assistance to educational institutions; (14) Funds from bonds allocated under chapter 474A,bonds issued to refund outstanding bonds, and bonds issued for the benefit of an organization described in section 501 (c) (3) of the Internal Revenue Code of 1986,as amended through December 31, 1999; Richfield Housing and Redevelopment Authority Tax Increment Financing Plan for the 2014-1 Tax Increment Financing District(City Garage Site) 2-7 (15) Assistance for a collaboration between a Minnesota higher education institution and a business; (16) Assistance for a tax increment financing soils condition district as defined under M.S., Section 469.174, Subd. 19; (17) Redevelopment when the recipient's investment in the purchase of the site and in site preparation is 70 percent or more of the assessor's current year's estimated market value; (18) General changes in tax increment financing law and other general tax law changes of a principally technical nature; (19) Federal assistance until the assistance has been repaid to, and reinvested by, the state or local government agency; (20) Funds from dock and wharf bonds issued by a seaway port authority; (21) Business loans and loan guarantees of$150,000 or less; (22) Federal loan funds provided through the United States Department of Commerce,Economic Development Administration; and (23) Property tax abatements granted under M.S., Section 469.1813 to property that is subject to valuation under Minnesota Rules, chapter 8100. The HRA will comply with M.S., Sections 1161993 to 1161995 to the extent the tax increment assistance under this TIF Plan does not fall under any of the above exemptions. Subsection 2-13. County Road Costs Pursuant to MS.,Section 469.175, Subd. 1 a,the county board may require the HRA or City to pay for all or part of the cost of county road improvements if the proposed development to be assisted by tax increment will,in the judgment of the county, substantially increase the use of county roads requiring construction of road improvements or other road costs and if the road improvements are not scheduled within the next five years under a capital improvement plan or within five years under another county plan. If the county elects to use increments to improve county roads,it must notify the HRA or City within forty- five days of receipt of this TIF Plan. In the opinion of the HRA and City and consultants, the proposed development outlined in this TIF Plan will have little or no impact upon county roads,therefore the TIF Plan was not forwarded to the county 45 days prior to the public hearing. The HRA and City are aware that the county could claim that tax increment should be used for county roads,even after the public hearing. Subsection 2-14. Estimated Impact on Other Taxing Jurisdictions The estimated impact on other taxing jurisdictions assumes that the redevelopment contemplated by the TIF Plan would occur without the creation of the District. However,the HRA or City has determined that such development or redevelopment would not occur "but for" tax increment financing and that, therefore, the fiscal impact on other taxing jurisdictions is $0. The estimated fiscal impact of the District would be as follows if the "but for"test was not met: Richfield Housing and Redevelopment Authority Tax Increment Financing Plan for the 2014-1 Tax Increment Financing District(City Garage Site) 2-8 IMPACT ON TAX BASE Estimated Estimated Captured Pay 2014 Tax Capacity(CTC) Percent of CTC Total Net Upon Completion to Entity Total Tax Capacity Hennepin County 1,236,174,443 380 098 0.0307% p Y > City of Richfield 22,509,172 380,098 1.6886% Richfield Schools ISD 280 29,072,073 380,098 1.3074% IMPACT ON TAX RATES Estimated Percent Potential Pay 2014 of Total CTC Taxes Extension Rates Hennepin County 0.498590 32.39% 380,098 189,513 City of Richfield 0.658890 42.80% 380,098 250,443 Richfield Schools ISD 280 0.275840 17.92% 380,098 104,846 Other 0.106140 6.89% 380,098 40,344 Total 1.539460 100.00% 585,146 The estimates listed above display the captured tax capacity when all construction is completed. The tax rate used for calculations is the estimated Pay 2014 rate. The total net capacity for the entities listed above are based on estimated Pay 2014 figures. The District will be certified under the actual Pay 2014 rates, which were unavailable at the time this TIF Plan was prepared. Pursuant to M.S. Section 469.175 Subd. 2(b): (1) Estimate of total tax increment. It is estimated that the total amount of tax increment that will be generated over the life of the District is$10,514,151; (2) Probable impact of the District on city provided services and ability to issue debt. An impact of the District on police protection is expected. The Richfield Police Department does track calls by location, type, and date, though not by type of property. With any addition of new residents or businesses,police calls for service will be increased. New developments add an increase in traffic, and additional overall demands to the call load. The City does not expect that the proposed development, in and of itself,will necessitate new capital investment. The probable impact of the District on fire protection is not expected to be significant. Typically new buildings generate few calls,if any,and are of superior construction. The existing buildings,which will be eliminated by the new development, have public safety concerns that include several unprotected old buildings with issues such as access,hydrant locations, and converted structures. The impact of the District on public infrastructure is expected to be minimal. The development is not expected to significantly impact any traffic movements in the area. It is anticipated that the Richfield Housing and Redevelopment Authority Tax Increment Financing Plan for the 2014-1 Tax Increment Financing District(City Garage Site) 2-9 current infrastructure for sanitary sewer,storm sewer and water will be able to handle the additional volume generated from a new development. It is also anticipated that there will not be additional costs associated with street maintenance, sweeping, plowing, lighting and sidewalks. The development in the District would be expected to contribute to sanitary sewer connection fees(SAC). The City currently does not collect water connection fees(WAC). The probable impact of any District general obligation tax increment bonds on the ability to issue debt for general fund purposes is expected to be minimal. It is not anticipated that there will be any general obligation debt issued in relation to this District and future projects,therefore there will be no impact on the City's ability to issue future debt or on the City's debt limit. (3) Estimated amount of tax increment attributable to school district levies. It is estimated that the amount of tax increments over the life of the District that would be attributable to school district levies, assuming the school district's share of the total local tax rate for all taxing jurisdictions remained the same,is$1,884,136; (4) Estimated amount of tax increment attributable to county levies. It is estimated that the amount of tax increments over the life of the District that would be attributable to county levies,assuming the county's share of the total local tax rate for all taxing jurisdictions remained the same,is$3,405,534; (5) Additional information requested by the county or school district. The City is not aware of any standard questions in a county or school district written policy regarding tax increment districts and impact on county or school district services. The county or school district must request additional information pursuant to M.S. Section 469.175 Subd. 2(b) within 15 days after receipt of the tax increment financing plan. No requests for additional information from the county or school district regarding the proposed development for the District have been received. Subsection 2-15. Supporting Documentation Pursuant to M.S. Section 469.175, Subd. 1 (a), clause 7 the TIF Plan must contain identification and description of studies and analyses used to make the determination set forth in M.S. Section 469.175, Subd. 3, clause (b)(2) and the findings are required in the resolution approving the District. Following is a list of reports and studies on file at the City that support the HRA and City's findings: • Report of Inspection Procedures and Results for Determining Qualifications of a Tax Increment Financing District as a Redevelopment Districts: Public Works TIF District. Submitted by LHB. January 9,2014. Subsection 2-16. Definition of Tax Increment Revenues Pursuant to M.S.,Section 469.174,Subd. 25,tax increment revenues derived from a tax increment financing district include all of the following potential revenue sources: 1. Taxes paid by the captured net tax capacity,but excluding any excess taxes,as computed under M.S., Section 469.177; 2. The proceeds from the sale or lease of property,tangible or intangible,to the extent the property was purchased by the Authority with tax increments; 3. Principal and interest received on loans or other advances made by the Authority with tax increments; Richfield Housing and Redevelopment Authority Tax Increment Financing Plan for the 2014-1 Tax Increment Financing District(City Garage Site) 2-10 4. Interest or other investment earnings on or from tax increments; 5. Repayments or return of tax increments made to the Authority under agreements for districts for which the request for certification was made after August 1, 1993; and 6. The market value homestead credit paid to the Authority under M.S., Section 273.1384. Subsection 2-17. Modifications to the District In accordance with M.S., Section 469.1 75, Subd. 4, any: 1. Reduction or enlargement of the geographic area of the District, if the reduction does not meet the requirements of M.S., Section 469.175, Subd. 4(e); 2. Increase in amount of bonded indebtedness to be incurred; 3. A determination to capitalize interest on debt if that determination was not a part of the original TIF Plan; 4. Increase in the portion of the captured net tax capacity to be retained by the HRA or City; 5. Increase in the estimate of the cost of the District,in cluding administrative expenses,that will be paid or financed with tax increment from the District; or 6. Designation of additional property to be acquired by the HRA or City, shall be approved upon the notice and after the discussion,public hearing and findings required for approval of the original TIF Plan. Pursuant to M.S.Section 469.175 Subd. 4(f),the geographic area of the District may be reduced,but shall not be enlarged after five years following the date of certification of the original net tax capacity by the county auditor. If a redevelopment district is enlarged,the reasons and supporting facts for the determination that the addition to the district meets the criteria of M.S., Section 469.174, Subd. 10, must be documented in writing and retained. The requirements of this paragraph do not apply if(1) the only modification is elimination'of parcel(s)from the District and(2)(A)the current net tax capacity of the parcel(s)eliminated from the District equals or exceeds the net tax capacity of those parcel(s) in the District's original net tax capacity or(B)the HRA agrees that, notwithstanding M.S., Section 469.177, Subd. 1, the original net tax capacity will be reduced by no more than the current net tax capacity of the parcel(s) eliminated from the District. The HRA or City must notify the County Auditor of any modification to the District. Modifications to the District in the form of a budget modification or an expansion of the boundaries will be recorded in the TIF Plan. Subsection 2-18.Administrative Expenses In accordance with M.S., Section 469.174, Subd. 14, administrative expenses means all expenditures of the HRA or City,other than: 1. Amounts paid for the purchase of land; 2. Amounts paid to contractors or others providing materials and services,including architectural and engineering services, directly connected with the physical development of the real property in the District; 3. Relocation benefits paid to or services provided for persons residing or businesses located in the District; or 4. Amounts used to pay principal or interest on, fund a reserve for, or sell at a discount bonds issued pursuant to M.S., Section 469.178;or Richfield Housing and Redevelopment Authority Tax Increment Financing Plan for the 2014-1 Tax Increment Financing District(City Garage Site) 2-11 5. Amounts used to pay other financial obligations to the extent those obligations were used to finance costs described in clauses(1)to(3). For districts for which the request for certification were made before August 1, 1979,or after June 30, 1982, and before August 1,2001,administrative expenses also include amounts paid for services provided by bond counsel, fiscal consultants, and planning or economic development consultants. Pursuant to M.S., Section 469.176, Subd. 3, tax increment may be used to pay any authorized and documented administrative expenses for the District up to but not to exceed 10 percent of the total estimated tax increment expenditures authorized by the TIF Plan or the total tax increments,as defined by M.S., Section 469.174,Subd.25, clause (1),from the District, whichever is less. For districts for which certification was requested after July 31,2001,no tax increment may be used to pay any administrative expenses for District costs which exceed ten percent of total estimated tax increment expenditures authorized by the TIF Plan or the total tax increments,as defined inM.S.,Section 469.174,Subd. 25, clause (1),from the District,whichever is less. Pursuant to M.S., Section 469.176, Subd. 4h, tax increments may be used to pay for the County's actual administrative expenses incurred in connection with the District and are not subject to the percentage limits of M.S.,Section 469.176,Subd. 3. The county may require payment of those expenses by February 15 of the year following the year the expenses were incurred. Pursuant to M.S., Section 469. 177, Subd. 11, the County Treasurer shall deduct an amount(currently .36 percent) of any increment distributed to the HRA or City and the County Treasurer shall pay the amount deducted to the State Commissioner of Management and Budget for deposit in the state general fund to be appropriated to the State Auditor for the cost of financial reporting of tax increment financing information and the cost of examining and auditing authorities' use of tax increment financing. This amount may be adjusted annually by the Commissioner of Revenue. Subsection 2-19. Limitation of Increment The tax increment pledged to the payment of bonds and interest thereon may be discharged and the District may be terminated if sufficient funds have been irrevocably deposited in the debt service fund or other escrow account held in trust for all outstanding bonds to provide for the payment of the bonds at maturity or redemption date. Pursuant to M.S., Section 469.176, Subd. 6: if, after four years from the date of certification of the original net tax capacity of the tax increment financing district pursuant to MS.,Section 469.177,no demolition,rehabilitation or renovation of property or other site preparation, including qualified improvement of a street adjacent to a parcel but not installation of utility service including sewer or water systems,has been commenced on a parcel located within a tax increment financing district by the authority or by the owner of the parcel in accordance with the tax increment financing plan, no additional tax increment may be taken from that parcel and the original net tax capacity of that parcel shall be excluded from the original net tax capacity of the tax increment financing district. If the authority or the owner of the parcel subsequently commences demolition,rehabilitation or renovation or other site preparation on that parcel including qualified improvement of a street adjacent to that parcel, in accordance with the tax increment financing plan,the authority shall certify to the county auditor that the activity has commenced and the county auditor shall certf the net tax capacity thereof as most Richfield Housing and Redevelopment Authority Tax Increment Financing Plan for the 2014-1 Tax Increment Financing District(City Garage Site) 2-12 recently certified by the commissioner ofrevenue and add it to the original net tax capacity ofthe tax increment financing district. The county auditor must enforce the provisions ofthis subdivision. The authority must submit to the county auditor evidence that the required activity has taken place for each parcel in the district. The evidence for a parcel must be submitted by February 1 ofthe fifth year following the year in which the parcel was certified as included in the district. For purposes of this subdivision, qualified improvements of a street are limited to (1) construction or opening of a new street, (2) relocation of a street, and(3)substantial reconstruction or rebuilding of an existing street. The HRA or City or a property owner must improve parcels within the District by approximately February 2018 and report such actions to the County Auditor. Subsection 2-20. Use of Tax Increment The HRA or City hereby determines that it will use 100 percent of the captured net tax capacity of taxable property located in the District for the following purposes: 1. To pay the principal of and interest on bonds issued to finance a project; 2. to finance,or otherwise pay public redevelopment costs of the the Richfield Redevelopment Project Area pursuant to M.S., Sections 469.001 to 469.047; 3. To pay for project costs as identified in the budget set forth in the TIF Plan; 4. To finance,or otherwise pay for other purposes as provided in M.S., Section 469.176, Subd. 4j; 5. To pay principal and interest on any loans,advances or other payments made to or on behalf of the HRA or City or for the benefit of the Richfield Redevelopment Project Area by a developer; 6. To finance or otherwise pay premiums and other costs for insurance or other security guaranteeing the payment when due of principal of and interest on bonds pursuant to the TIF Plan or pursuant to M.S., Chapter 462C. M.S., Sections 469.152 through 469.165, and/or M.S., Sections 469.178;and 7. To accumulate or maintain a reserve securing the payment when due of the principal and interest on the tax increment bonds or bonds issued pursuant to MS., Chapter 462C, M.S., Sections 469.152 through 469.165, and/or M.S., Sections 469.178. These revenues shall not be used to circumvent any levy limitations applicable to the City nor for other purposes prohibited by M.S., Section 469.176, Subd. 4. Tax increments generated in the District will be paid by Hennepin County to the HRA for the Tax Increment Fund of said District. The HRA or City will pay to the developer(s)annually an amount not to exceed an amount as specified in a developer's agreement to reimburse the costs of land acquisition, public improvements,demolition and relocation,environmental remediation,site preparation,and administration. Remaining increment funds will be used for HRA or City administration(up to 10 percent)and for the costs of public improvement activities outside the District. Subsection 2-21. Excess Increments Excess increments,as defined in M.S.,Section 469.176, Subd. 2,shall be used only to do one or more of the following: 1. Prepay any outstanding bonds; 2. Discharge the pledge of tax increment for any outstanding bonds; 3. Pay into an escrow account dedicated to the payment of any outstanding bonds; or 4. Return the excess to the County Auditor for redistribution to the respective taxing jurisdictions in Richfield Housing and Redevelopment Authority Tax Increment Financing Plan for the 2014-1 Tax Increment Financing District(City Garage Site) 2-13 proportion to their local tax rates. The HRA or City must spend or return the excess increments under paragraph(c)within nine months after the end of the year. In addition,the HRA or City may, subject to the limitations set forth herein,choose to modify the TIF Plan in order to finance additional public costs in the Richfield Redevelopment Project Area or the District. Subsection 2-22. Requirements for Agreements with the Developer The HRA or City will review any proposal for private development to determine its conformance with the Redevelopment Plan and with applicable municipal ordinances and codes. To facilitate this effort, the following documents may be requested for review and approval: site plan, construction, mechanical, and electrical system drawings,landscaping plan,grading and storm drainage plan,signage system plan,and any other drawings or narrative deemed necessary by the HRA or City to demonstrate the conformance of the development with City plans and ordinances. The HRA or City may also use an agreement to address other issues related to the development. Pursuant to M.S., Section 469.176, Subd. 5, no more than 25 percent, by acreage, of the property to be acquired in the District as set forth in the TIF Plan shall at any time be owned by the HRA or City as a result of acquisition with the proceeds of bonds issued pursuant to M.S., Section 469.178 to which tax increments from property acquired is pledged,unless prior to acquisition in excess of 25 percent of the acreage,the HRA or City concluded an agreement for the development or redevelopment of the property acquired and which provides recourse for the HRA or City should the development or redevelopment not be completed. Subsection 2-23.Assessment Agreements Pursuant to M.S.,Section 469.177, Subd. 8,the HRA or City may enter into a written assessment agreement in recordable form with the developer of property within the District which establishes a minimum market value of the land and completed improvements for the duration of the District. The assessment agreement shall be presented to the County Assessor who shall review the plans and specifications for the improvements to be constructed,review the market value previously assigned to the land upon which the improvements are to be constructed and,so long as the minimum market value contained in the assessment agreement appears, in the judgment of the assessor, to be a reasonable estimate, the County Assessor shall also certify the minimum market value agreement. Subsection 2-24.Administration of the District Administration of the District will be handled by the Community Development Director. Subsection 2-25.Annual Disclosure Requirements Pursuant to M.S., Section 469.175, Subds. 5, 6, and 6b the HRA or City must undertake financial reporting for all tax increment financing districts to the Office of the State Auditor,County Board and County Auditor on or before August 1 of each year. M.S., Section 469.175, Subd. 5 also provides that an annual statement shall be published in a newspaper of general circulation in the City on or before August 15. If the City fails to make a disclosure or submit a report containing the information required by M.S., Section 469.175 Subd. 5 and Subd. 6, the OSA will direct the County Auditor to withhold the distribution of tax increment from the District. Richfield Housing and Redevelopment Authority Tax Increment Financing Plan for the 2014-1 Tax Increment Financing District(City Garage Site) 2-14 Subsection 2-26. Reasonable Expectations The proposed redevelopment would not occur but for the financial assistance provided in this TIF Plan because of the increased costs related to redevelopment of the property including the high costs of demolishing the buildings and undertaking environment remediation at the site.Given the unique nature of the property,there is no reasonable expectation of any redevelopment occurring that would generate as much market value increases as is estimated to be generated by the proposed redevelopment. Therefore,the City and the HRA have concluded that substantial redevelopment at this particular site and any significant increase in market value is not reasonable expected to occur unless the City and the HRA provides tax increment assistance as described in this TIF Plan. As required by the TIF Act,in establishing the District,the determination has been made that the anticipated development would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future and that the increased market value of the site that could reasonably be expected to occur without the use of tax increment financing would be less than the increase in the market value estimated to result from the proposed development after subtracting the present value of the projected tax increments for the maximum duration of the District permitted by the TIF Plan.In making said determination, reliance has been placed upon City staff awareness of the feasibility of developing the project site(s)within the District. A comparative analysis of estimated market values both with and without establishment of the District and the use of tax increments has been performed as described above. Such analysis is included with the cashflow in Appendix D, and indicates that the increase in estimated market value of the proposed development (less the indicated subtractions) exceeds the estimated market value of the site absent the establishment of the District and the use of tax increments. The proposed project will permit redevelopment of an underutilized site in the City.The TIF Plan will afford maximum opportunity, consistent with the sound needs of the City as a whole, for redevelopment of the District by private enterprise. Any proposed development will be consistent with the City's comprehensive plan. As such, the TIF Plan conforms to the general plans for development of the City as a whole. Subsection 2-27. Other Limitations on the Use of Tax Increment 1. General Limitations. All revenue derived from tax increment shall be used in accordance with the TIF Plan. The revenues shall be used to finance, or otherwise pay public redevelopment costs of the the Richfield Redevelopment Project Area pursuant to M.S., Sections 469.001 to 469.047. Tax increments may not be used to circumvent existing levy limit law. No tax increment may be used for the acquisition, construction,renovation,operation,or maintenance of a building to be used primarily and regularly for conducting the business of a municipality,county,school district,or any other local unit of government or the state or federal government. This provision does not prohibit the use of revenues derived from tax increments for the construction or renovation of a parking structure. 2. Pooling Limitations. At least 75 percent of tax increments from the District must be expended on activities in the District or to pay bonds,to the extent that the proceeds of the bonds were used to finance activities within said district or to pay,or secure payment of,debt service on credit enhanced bonds. Not more than 25 percent of said tax increments may be expended,through a development fund or otherwise, on activities outside of the District except to pay,or secure payment of,debt service on credit enhanced bonds. For purposes of applying this restriction, all administrative expenses must be treated as if they were solely for activities outside of the District. Richfield Housing and Redevelopment Authority Tax Increment Financing Plan for the 2014-1 Tax Increment Financing District(City Garage Site) 2-15 3. Five Year Limitation on Commitment of Tax Increments. Tax increments derived from the District shall be deemed to have satisfied the 75 percent test set forth in paragraph(2)above only if the five year rule set forth in M.S., Section 469.1763, Subd. 3, has been satisfied; and beginning with the sixth year following certification of the District,75 percent of said tax increments that remain after expenditures permitted under said five year rule must be used only to pay previously committed expenditures or credit enhanced bonds as more fully set forth in M.S., Section 469.1763, Subd. 5. 4. Redevelopment District. At least 90 percent of the revenues derived from tax increment from a redevelopment district must be used to finance the cost of correcting conditions that allow designation of redevelopment and renewal and renovation districts under MS.,Section 469.176 Subd.4j. These costs include, but are not limited to, acquiring properties containing structurally substandard buildings or improvements or hazardous substances,pollution,or contaminants,acquiring adjacent parcels necessary to provide a site of sufficient size to permit development, demolition and rehabilitation of structures, clearing of the land,the removal of hazardous substances or remediation necessary for development of the land,and installation of utilities,roads,sidewalks,and parking facilities for the site. The allocated administrative expenses of the HRA or City,including the cost of preparation of the development action response plan,may be included in the qualifying costs. Subsection 2-28. Summary The Richfield Housing and Redevelopment Authority is establishing the District to preserve and enhance the tax base,redevelop substandard areas,and provide employment opportunities in the City. The TIF Plan for the District was prepared by Ehlers & Associates, Inc., 3060 Centre Pointe Drive, Roseville, Minnesota 55113,telephone(651)697-8500. Richfield Housing and Redevelopment Authority Tax Increment Financing Plan for the 2014-1 Tax Increment Financing District(City Garage Site) 2-16 Appendix A Project Description The 2014-1 Tax Increment Financing District (Garage Site) is being established to facilitate the redevelopment ofthe former City Garage Site and adjacent properties owned by the City and HRA.The HRA anticipates that multi-family housing will be developed on the site; however, the HRA has not received proposals for development,and a developer has not been identified. Appendix A-1 Appendix B Map(s) of the Richfield Redevelopment Project Area and the District Appendix B-1 The 2014-1 Tax Increment Financing District(City Garage Site) ° N rj w g o " w ° 8 "i ° a f , o 5 c - ° 'F o '� 5 0 522 g 8 o _. ,`I o N i' -- > T rc 00 a 0 z E ° z 'i = i u I' w o A r 'J £ 3 x i? a a i m z - E E. a x a o n u li w $ € F - - m 1; �g 1, 62nd ! p,..,_,___,__ ®tY-J�®.®®�� —� ®t U . 62nd card MUHL / �iIN�� • ''qq ( 63rd 69th ��p-pp� l — �EMMMMMF®F���--]]I1� L ! 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M @ME ]6th M®MMM -®I L — MML-N 11®f -II O7L�MMMIMMOJMM_MG�MMM MMMMMMMM ]64 76th - ®I Ir (`p$��� _ ®ggR�2 pIIIMMM IIIf�. 1 \ 2 : MMMU M Co%�mmmmm 1 ®®®® ®m®®®®mE LI 78th i11��1'1 ® l 1— _ iI�®O��IJ-' II 1 I �I- em 1-494 R g E R E R S R p E 8 8 g § .§ ?, m q _ S - E o S 8 R n - r E g r g m e E B n E 8 S S - g R < R E 9 E E - ! ' ° g - o d o o o x _ l E rc ° rc a I - 'a ? o 0 0 g g g „ ° y¢ 9 ?2 g _ ; ; ; ; ; V ? �J � � g G O 5 6 F n O • 3• ' N K u W ° -� t a d 'g 2 U 50 3 Legend The boundaries of the Richfield Redevelopment _ Richfield Redevelopment Project Area Project Area are coterminous with the corporate _I 2019-1 TIP District(City Garage Site) boundaries of the City of Richfield. /' Former PW Garage Site 1".`1:- i i I ■ ".„a �. • I., . I.,\ ,..,-,,,,,... , 4, i' 34-028-24-3, -0048 '. Ilan � ! 7600 Pillsb ry Ave lie , i .i.____ , -028-24-34-0070 21 .,7 t, 34-028-24- 4-006 � It 7608 Pillsb ry Aver Me;. ■ i. j a - i :- 4411114624111P 4 �- tf, .. a ' 0_® T _ 34-028-24-34-0072 tF, 'Address Pending i,r i.- , { s t r AIL ..,„ - ._ i - w - .ti, i Vi - -- ■ i1 J '.: ....? I 34-028-24-34-0073 ' .,; '�� i 7700 Pillsbury Ave. __ . a } .-; O j i dTi r - - L ." III i ' -.�.--'. 4r�+r��' - � 1�.. ate , . Z , � - -ii i y, • N 0 25 50 100 150 200 Feet Appendix C Description of Property to be Included in the District The District encompasses all property and adjacent rights-of-way and abutting roadways identified by the parcels listed below. Parcel Numbers Address Owner 34-028-24-34-0070 211 76th St. W Richfield HRA 34-028-24-34-0049 7600 Pillsbury Richfield HRA 34-028-24-34-0067 7608 Pillsbury Richfield HRA 34-028-24-34-0072 Pending City of Richfield 34-028-24-34-0073 7700 Pillsbury City of Richfield Right-of-way Appendix C-1 Appendix D Estimated Cash Flow for the District Appendix D-1 1/22/2014 Base Value Assumptions-Page 1 el EHLERS 2014-1 TIF District(Garage Site)-No Inflation City of Richfield,MN Multi-Family Housing Development ASSUMPTIONS AND RATES DistrictType: Redevelopment Maximum/Frozen Local Tax Rate: 153.946% Est.Pay 2014 District Name/Number: 2014-1 TIF Current Local Tax Rate:(Use lesser of Current or Max.) 153.946% Est.Pay 2014 County District#: TBD State-wide Tax Rate(Comm./Ind.only used for total taxes) 53.0000% Est.Pay 2014 First Year Construction or Inflation on Value 2016 Market Value Tax Rate(Used for total taxes) 0.16019% Est.Pay 2014 Existing District-Specify No.Years Remaining Exempt Class Rate(Exempt) 0.00% Inflation Rate-Every Year: 3.00% Commercial Industrial Preferred Class Rate(C/I Pref.) Interest Rate: 5.50% First $150,000 1.50% Present Value Date: 1-Feb-16 Over $150,000 2.00% First Period Ending 1-Aug-16 Commercial Industrial Class Rate(C/I) 2.00% Tax Year District was Certified: Pay 2014 Rental Housing Class Rate(Rental) 1.25% Cashflow Assumes First Tax Increment For Development: 2018 Affordable Rental Housing Class Rate(Aff.Rental) 0.75% Years of Tax Increment 26 Non-Homestead Residential(Non-H Res.1 Unit) Assumes Last Year of Tax Increment 2043 First $500,000 1.00% Fiscal Disparities Election[Outside(A),Inside(B),or NA] Inside(B) Over $500,000 1.25% Incremental or Total Fiscal Disparities Incremental Homestead Residental Class Rate(Hmstd.Res.) Fiscal Disparities Contribution Ratio 33.7176% Est.Pay 2014 First $500,000 1.00% Fiscal Disparities Metro-Wide Tax Rate 163.1210% Est.Pay 2014 Over $500,000 1.25% Agricultural Non-Homestead 1.00% BASE VALUE INFORMATION (Original Tax Capacity) Building Total Percentage Tax Year Property Current Class After Land Market Market Of Value Used Original Original Tax Original After Conversion Area/ Map# PID Owner Address Market Value Value Value for District Market Value Market Value Class Tax Capacity Conversion Orig.Tax Cap. Phase 34-028-24-34-0070 Richfield HRA 211 76th St.W. 184,001 100% 184,001 Pay 2014 Exempt - Rental 2,300 34-028-24-34-0049 Richfield HRA 7600 Pillsbury 152,000 100% 152,000 Pay2014 Exempt - Rental 1,900 34-028-24-34-0067 Richfield HRA 7608 Pillsbury 152,000 100% 152,000 Pay 2014 Exempt - Rental 1,900 34-028-24-34-0072 Richfield City Pending 519,252 100% 519,252 Pay 2014 Exempt - Rental 6,491 34-028-24-34-0073 Richfield City 7700 Pillsbury 515,000 100% 515,000 Pay 2014 Exempt - Rental 6,438 ROW ROW 0 0 100% 0 Pay 2014 - 0 100% 0 Pay 2014 - 0 0 1,51r,.5? 1,622,253 0 19,028 Note: 1.Base values are based upon City and HRA appraisals.Base values will be finalized at the time the property becomes taxable. Prepared by Enters&Associates,Inc.-Estimates Only N:UtinnsetaMtichrieldvlousing-ED-Redevelopment\TIF\TIF Oislnch12014-1 Redevelopment TIF-City Garage Ste\TIF cashflow-TIF Plan for 2018.x6 • 1/22/2014 Base Value Assumptions-Page 2 0 EHLERS It AetNS IN PUBLIC rINANCI 2014-1 TIF District(Garage Site)-No Inflation City of Richfield,MN Multi-Family Housing Development PROJECT INFORMATION(Project Tax Capacity) Estimated Taxable Total Taxable Property Percentage Percentage Percentage Percentage First Year Market Value Market Value Total Market Tax Project Project Tax Completed Completed Completed Completed Full Taxes Area/Phase New Use Per Sq.Ft./Unit Per Sq.Ft./Unit Sq.Ft./Units Value Class Tax Capacity Capacity/Unit 2016 2017 2018 2019 Payable Rental-North 125,000 125,000 106 13,250,000 Rental 165,625 1563 0% 100% 100% 100% 2019 Rental-South 125,000 125,000 16 2,000,000 Rental 25,000 1,563 0% 100% 100% 100% 2019 TOTAL 15,250,000 190,625 Subtotal Residential 122 15,250,000 190,625 Subtotal Commercial/Ind. 0 0 0 Note: 1.Market values for the north side are based metro-area senior housing developments. TAX CALCULATIONS ota Isca oca oca Inca -fate-wi'e 'ar at Tax Disparities Tax Property Disparities Property Value Total Taxes Per New Use Capacity Tax Capacity Capacity Taxes Taxes Taxes Taxes Taxes Sq.Ft./Unit Rental-North 165,625 0 165,625 254,973 0 0 21,225 276,198 2,605.64 Rental-South 25,000 0 25,000 38 487 0 0 3,204 41,690 2,605.64 TOTAL 19d,625 0 190,625 293,460 0 0 24,429 317,889 Note: 1.Taxes and tax increment will vary signficantly from year to year depending upon values,rates,state law,fiscal disparities and other factors which cannot be predicted. 2.Tax rates are estimates from Hennepin County's 2013-2014 Proposed Tax Rates. WHAT IS EXCLUDED FROM TIF? MARKET VALUE BUT/FOR ANALYSIS Total Property Taxes 317,889 Current Market Value-Est. 1,522,253 less State-wide Taxes 0 New Market Value-Est. 15,250,000 less Fiscal Disp.Adj. 0 Difference 13,727,747 less Market Value Taxes (24,429) Present Value of Tax Increment 4,549,031 less Base Value Taxes (29,293) Difference 9,178,716 Annual Gross TIP 264,166 Value likely to occur without Tax Increment is less than: 9,78716 Prepared by Ehlers 8 Associates,Inc.-Estimates Only N:VAmrrsola\oichf Id\lousing-ED-Redevelopment\TIF\TIF Districts\2014-1 Redevelopment TIF-City Garage Sire\TIP cashflow-TIF Plan for 2018.kb 1222014 Tax Increment Cashfcw-Page 3 0 EHLERS_ 2014-1 TIF District(Garage Site)-No Inflation City of Richfield,MN Multi-Family Housing Development TAX INCREMENT CASH FLOW Project Original Fiscal Captured Local Annual Semi-Annual State Admin. Semi-Annual Semi-Annual PERIOD %of Tax Tax Disparities Tax Tax Gross Tax Gross Tax Auditor at Net Tax Present ENDING Tax Payment OTC Capacity Capacity Incremental Capacity Rate Increment Increment 0.36% 10% Increment Value Yrs. Year Date - - - 8/01/16 - - - - 2/01/17 - - - - 8/01/17 - - - - 2/01/18 100% 190,625 (19,028) - 171,597 153.946% 264,166 132,083 (475) (13,161) 118,447 103,422 0.5 2018 8/01/18 132,083 (475) (13,161) 118,447 204,077 1 2018 2/01/19 100% 196,344 (19,028) - 177,316 153.946% 272,970 136,485 (491) (13,599) 122.394 305,302 1.5 2019 8/01/19 136,485 (491) (13,599) 122,394 403.818 2 2019 2/01/20 100% 202,234 (19,028) - 183,206 153.946% 282,038 141,019 - (508) (14,051) 126,460 502,883 2.5 2020 8/01/20 141,019 (508) (14,051) 126,460 599,296 3 2020 2/01/21 100% 208,301 (19,028) - 189,273 153.946% 291,378 145.689 (524) (14,516) 130,648 696,236 3.5 2021 8/01/21 145,689 (524) (14,516) 130,646 790,561 4 2021 2/01/22 100% 214,550 (19,028) 195,522 151946% 300,998 150,499 (542) (14,996) 134,962 885,433 4.5 2022 8/01/22 150,499 (542) (14,996) 134,962 977,746 5 2022 2/01/23 100% 220,987 (19,028) - 201,958 153.946% 310,907 155,453 (560) (15,489) 139,404 1,070,547 5.5 2023 8/01/23 155,453 (560) (15,489) 139,404 1,160,863 6 2023 2/01/24 100% 227,616 (19,028) - 208,588 153.946% 321,113 160,556 (578) (15,998) 143,981 1,251,648 6.5 2024 8/0124 160,556 (578) (15,998) 143,981 1,340,003 7 2024 2/01/25 100% 234,445 (19,028) - 215,417 153.946% 331.625 165,813 (597) (18,522) 148,694 1,428,808 7.5 2025 8/01/25 165,813 (597) (16,522) 148,694 1,515,237 8 2025 2/01/26 100% 241.478 (19.028) - 222,450 153.946% 342,453 171,226 (616) (17,061) 153,549 1,602,099 8.5 2026 8/01/26 171,226 (616) (17,061) 153,549 1,686,635 9 2026 2/01/27 100% 248,722 (19,028) - 229,694 153.946% 353,605 176,803 (636) (17,817) 158,549 1,771,589 9.5 2027 8/0127 176,803 (636) (17,617) 158,549 1,854,269 10 2027 2/01/28 100% 256,184 (19,028) - 237,156 153.946% 365,092 182,546 (657) (18,189) 163,700 1,937,351 10.5 2028 8/0128 182,546 (857) (18,189) 163,700 2,018,208 11 2028 2/01/29 100% 263,870 (19.028) - 244,841 153.946% 376,924 188,462 (678) (18,778) 169,005 2,099,452 11.5 2029 8/0129 188,462 (678) (18,778) 169,005 2,178,521 12 2029 2/01/30 100% 271,786 (19,028) - 252,758 153.946% 389,110 194,555 (700) (19,385) 174,469 2,257,962 12.5 2030 8/01/30 194,555 (700) (19,385) 174.469 2,335,277 13 2030 2/01/31 100% 279,939 (19,028) - 260,911 153.946% 401,662 200,831 (723) (20,011) 180,097 2,412,951 13.5 2031 08/01/31 200,831 (723) (20,011) 180,097 2,488,545 14 2031 02/01/32 100% 288,337 (19,028) - 269,309 153.948% 414,591 207,295 (746) (20,655) 185,894 2,564,484 14.5 2032 08/01/32 207,295 (746) (20,655) 185,894 2,638,391 15 2032 02/01/33 100% 296,988 (19,028) - 277,959 153.946% 427,907 213,954 (770) (21,318) 191,865 2,712,629 15.5 2033 08/01/33 213,954 (770) (21.318) 191,865 2,784.882 16 2033 02/01/34 100% 305,897 (19,028) - 286,869 151946% 441,823 220,812 (795) (22,002) 198,015 2,857,454 16.5 2034 08/01/34 220,812 (795) (22,002) 198,015 2,928,084 17 2034 02/01/35 100% 315,074 (19,028) - 296,046 153.946% 455,751 227,875 (820) (22,706) 204,350 2,999,022 17.5 2035 08/01/35 227,875 (820) (22,706) 204,350 3,068,062 18 2035 02/01/36 100% 324,526 (19,028) - 305,498 153.946% 470,302 235,151 (847) (23,430) 210,874 3,137,400 18.5 2036 08/01/36 235,151 (847) (23,430) 210,874 3,204,881 19 2036 02/01/37 100% 334,262 (19,028) - 315,234 153.946% 485,290 242,645 (874) (24,177) 217,594 3,272,650 19.5 2037 08/01/37 242,645 (874) (24,177) 217,594 3.338,605 20 2037 02/01/38 100% 344,290 (19,028) - 325,262 153.946% 500,728 250,364 (901) (24,946) 224,516 3.404,837 20.5 2038 08/01/38 250,364 (901) (24,946) 224,516 3,469,296 21 2038 02/01/39 100% 354,619 (19,028) - 335.590 153.946% 516,628 258,314 (930) (25,738) 231,846 3,534,022 21.5 2039 08/01/39 258,314 (930) (25,738) 231,646 3,597,015 22 2039 02/01/40 100% 365,257 (19,028) - 346,229 153.946% 533,006 266,503 (959) (26,554) 238,989 3,660,266 22.5 2040 08/01/40 266,503 (959) (26,554) 238,989 3,721,825 23 2040 02/01/41 100% 376,215 (19,028) - 357,187 153.946% 549,875 274,937 (990) (27,395) 246,553 3,783,631 23.5 2041 08/01/41 274,937 (990) (27,395) 246.553 3,843.784 24 2041 02/01/42 100% 387,501 (19,028) - 368,473 153.946% 567,250 283,625 (1,021) (28,260) 254,343 3,904,177 24.5 2042 08/01/42 283,625 (1,021) (28,260) 254,343 3,962,953 25 2042 02/01/43 100% 399126 (19,028) - 380098 153.946% 585,146 292,573 (1,053) (29,152) 262,368 4,021,961 25.5 2043 08/01/43 292,573 (1,053) (29,152) 262,368 4,079,389 26 2043 02/01/44 Total 10,552,138 (37,987) (1,051,415) 9,462,736 Present Value From 02/01/2016 Present Value Rate 5.50% 4,549,031 (16,376) (453,265) 4,079,389 Prepared by Ehlers 8 Aaonetee,l c.-Estimates Orly N:Nf mrsotaV ticMeWUlwrsing-ED-RedarebpneM\TFlTIF Districts 12014-1 RedeWabpme,t TT-City Garage SRe\TIF casMbw-TIF Plan Im 2016As Appendix E Minnesota Business Assistance Form (Minnesota Department of Employment and Economic Development) A Minnesota Business Assistance Form(MBAF)should be used to report and/or update each calendar year's activity by April 1 of the following year. Please see the Minnesota Department of Employment and Economic Development (DEED) website at http://www.deed.state.mn.us/Community/subsidies/MBAFForm.htm for information and forms. Appendix E-1 Appendix F Redevelopment Qualifications for the District Appendix F-1 REPORT OF INSPECTION PROCEDURES AND RESULTS FOR DETERMINING QUALIFICATIONS OF A TAX INCREMENT FINANCING DISTRICT AS A REDEVELOPMENT DISTRICT Public Works TIF District Richfield,Minnesota LHB Project No. 130637.00 January 9,2014 ■ X1. ,� , 0,4 et'4... 7*---� ' �1, t fir, ,. ...►,�, A.....• I .., . r -, ... k, 1 .„,..,,,,.. , , r . , /• l w itk,, 'F' l � ■}:bS 1 tit 1: Prepared For The City of Richfield Prepared by tEB LHB, Inc. 701 Washington Avenue North, Suite 200 Minneapolis, Minnesota 55401 TABLE OF CONTENTS PART 1 —EXECUTIVE SUMMARY 3 Purpose of Evaluation 3 Scope of Work 4 Conclusion 4 PART 2—MINNESOTA STATUTE 469.174, SUBDIVISION 10 REQUIREMENTS 4 A. Coverage Test 5 B. Condition of Buildings Test 5 PART 3 —PROCEDURES FOLLOWED 6 PART 4—FINDINGS 6 A. Coverage Test 6 B. Condition of Building Test 8 1. Building Inspection 8 2. Replacement Cost 8 3. Code Deficiencies 8 4. System Condition Deficiencies 9 C. Distribution of substandard structures 10 PART 5 -TEAM CREDENTIALS 11 APPENDIX A Property Condition Assessment Summary Sheet APPENDIX B Building Code and Condition Deficiencies Reports APPENDIX C Building Replacement Cost Reports Code Deficiency Cost Reports Photographs Page 2 PART 1 —EXECUTIVE SUMMARY PURPOSE OF EVALUATION LHB was hired by the City of Richfield to inspect and evaluate the properties within a Tax Increment Financing Redevelopment District ("TIF District") proposed to be established by the City. The proposed TIF District is located immediately South of 76th Street on the West side of Pillsbury Avenue, bisected by 77th Street (Diagram 1). The purpose of LHB's work is to determine whether the proposed TIF District meets the statutory requirements for coverage, and whether five buildings on six parcels, located within the proposed TIF District, meet the qualifications required for a Redevelopment District. E 76th Street . 'gym*c._ i 1 i 44 a j K 2; i )!■ , '1 r''''*1:7:.:,71::. i , ' 1 , 40,iiii ,1 Int + • . , 4...,,d ° ' 77th Street r i.,„,,,,,„, p' 6 C r i n, 1 _l ' Diagram 1 —Proposed TIF District Page 3 SCOPE OF WORK The proposed TIF District consists of six (6) parcels with five (5) structures. The buildings were inspected on December 4, 2013. Building code and Condition Deficiency reports are located in Appendix B. CONCLUSION After inspecting and evaluating the properties within the proposed TIF District and applying current statutory criteria for a Redevelopment District under Minnesota Statutes, Section 469.174, Subdivision 10, it is our professional opinion that the proposed TIF District qualifies as a Redevelopment District because: • The proposed TIF District has a coverage calculation of 95 percent which is above the 70 percent requirement. • 80 percent of the buildings are structurally substandard which is above the 50 percent requirement. • The substandard buildings are reasonably distributed throughout the geographic area of the proposed TIF District. The remainder of this report describes our process and findings in detail. PART 2—MINNESOTA STATUTE 469.174,SUBDIVISION 10 REQUIREMENTS The properties were inspected in accordance with the following requirements under Minnesota Statutes, Section 469.174, Subdivision 10(c), which states: Interior Inspection "The municipality may not make such determination [that the building is structurally substandard] without an interior inspection of the property..." Exterior Inspection and Other Means "An interior inspection of the property is not required, if the municipality finds that (1) the municipality or authority is unable to gain access to the property after using its best efforts to obtain permission from the party that owns or controls the property; and (2) the evidence otherwise supports a reasonable conclusion that the building is structurally substandard." Documentation "Written documentation of the findings and reasons why an interior inspection was not conducted must be made and retained under section 469.175, subdivision 3(1)." Page 4 Qualification Requirements Minnesota Statutes, Section 469.174, Subdivision 10 (a) (1) requires two tests for occupied parcels: A. Coverage Test ..."parcels consisting of 70 percent of the area of the district are occupied by buildings, streets, utilities, or paved or gravel parking lots" The coverage required by the parcel to be considered occupied is defined under Minnesota Statutes, Section 469.174, Subdivision 10(e), which states: "For purposes of this subdivision, a parcel is not occupied by buildings, streets, utilities, or paved or gravel parking lots unless 15 percent of the area of the parcel contains building, streets, utilities, or paved or gravel parking lots." B. Condition of Buildings Test ..."and more than 50 percent of the buildings, not including outbuildings, are structurally. substandard to a degree requiring substantial renovation or clearance;" 1. Structurally substandard is defined under Minnesota Statutes, Section 469.174, Subdivision 10(b), which states: "For purposes of this subdivision, `structurally substandard' shall mean containing defects in structural elements or a combination of deficiencies in essential utilities and facilities, light and ventilation, fire protection including adequate egress, layout and condition of interior partitions, or similar factors, which defects or deficiencies are of sufficient total significance to justify substantial renovation or clearance." a. We do not count energy code deficiencies toward the thresholds required by Minnesota Statutes, Section 469.174, Subdivision 10(b)) defined as "structurally substandard", due to concerns expressed by the State of Minnesota Court of Appeals in the Walser Auto Sales, Inc. vs. City of Richfield case filed November 13, 2001. 2. Buildings are not eligible to be considered structurally substandard unless they meet certain additional criteria, as set forth in Subdivision 10(c)which states: "A building is not structurally substandard if it is in compliance with the building code applicable to new buildings or could be modified to satisfy the building code at a cost of less than 15 percent of the cost of constructing a new structure of the same square footage and type on the site. The municipality may find that a building is not disqualified as structurally substandard under the preceding sentence on the basis of reasonably available evidence, such as the size, type, and age of the building, the average cost of plumbing, electrical, or structural repairs, or other similar reliable evidence." "Items of evidence that support such a conclusion [that the building is not disqualified] include recent fire or police inspections, on-site property appraisals or Page 5 housing inspections, exterior evidence of deterioration, or other similar reliable evidence." LHB counts energy code deficiencies toward the 15 percent code threshold required by Minnesota Statutes, Section 469.174, Subdivision 10(c))for the following reasons: • The Minnesota energy code is one of ten building code areas highlighted by the Minnesota Department of Labor and Industry website where minimum construction standards are required by law. • The index page of the 2007 Minnesota Building Code lists the Minnesota Energy Code as a "Required Enforcement" area compared to an additional list of"Optional Enforcement" chapters. • The Senior Building Code Representative for the Construction Codes and Licensing Division of the Minnesota Department of Labor and Industry confirmed that the Minnesota Energy Code is being enforced throughout the State of Minnesota. • In a January 2002 report to the Minnesota Legislature, the Management Analysis Division of the Minnesota Department of Administration confirmed that the construction cost of new buildings complying with the Minnesota Energy Code is higher than buildings built prior to the enactment of the code. • Proper TIF analysis requires a comparison between the replacement value of a new building built under current code standards with the repairs that would be necessary to bring the existing building up to current code standards. In order for an equal comparison to be made, all applicable code chapters should be applied to both scenarios. Since current construction estimating software automatically applies the construction cost of complying with the Minnesota Energy Code, energy code deficiencies should also be identified in the existing structures. PART 3—PROCEDURES FOLLOWED LHB was able to inspect four of the five buildings during the day of December 4, 2013. The inspector did not have access to the interior of the single family home on parcel no. 3 on December 4th. It was later decided that inspection of that structure would not be necessary based on the substandard condition of the remaining buildings in the proposed TIF District. PART 4—FINDINGS A. Coverage Test 1. The total square foot area of each parcel in the proposed TIF District was obtained from City records, GIS mapping and site verification. Page 6 2. The total square foot area of buildings and site improvements on the parcels in the proposed TIF District was obtained from City records, GIS mapping and site verification. 3. The percentage of coverage for each parcel in the proposed TIF District was computed to determine if the 15 percent minimum requirement was met. The total square footage of parcels meeting the 15 percent requirement was divided into the total square footage of the entire district to determine if the 70 percent requirement was met. Finding: The proposed TIF District met the coverage test under Minnesota Statutes, Section 469.174, Subdivision 10(e), which resulted in parcels consisting of 95 percent of the area of the proposed TIF District being occupied by buildings, streets, utilities, paved or gravel parking lots, or other similar structures (Diagram 2). This exceeds the 70 percent area coverage requirement for the proposed TIF District under Minnesota Statutes, Section 469.174, Subdivision (a) (1). .J 76th Street ri ilm- Ti- ir It ' I ui j7Q:.. 77th Street S �Y' ' 6 mim Diagram 2—Coverage Diagram Shaded area depicts a parcel more than 15 percent occupied by buildings,streets,utilities, Paved or gravel parking lots or other similar structures Page 7 B. Condition of Building Test 1. Building Inspection The first step in the evaluation process is the building inspection. After an initial walk-thru,the inspector makes a judgment whether or not a building"appears"to have enough defects or deficiencies of sufficient total significance to justify substantial renovation or clearance. If it does,the inspector documents with notes and photographs code and non-code deficiencies in the building. 2. Replacement Cost The second step in evaluating a building to determine if it is substandard to a degree requiring substantial renovation or clearance is to determine its replacement cost. This is the cost of constructing a new structure of the same square footage and type on site. Replacement costs were researched using R.S. Means Cost Works square foot models for 2013. A replacement cost was calculated by first establishing building use (office, retail, residential, etc.), building construction type (wood, concrete, masonry, etc.), and building size to obtain the appropriate median replacement cost, which factors in the costs of construction in Richfield, Minnesota. Replacement cost includes labor, materials, and the contractor's overhead and profit. Replacement costs do not include architectural fees, legal fees or other "soft" costs not directly related to construction activities. Replacement cost for each building is tabulated in Appendix A. 3. Code Deficiencies The next step in evaluating a building is to determine what code deficiencies exist with respect to such building. Code deficiencies are those conditions for a building which are not in compliance with current building codes applicable to new buildings in the State of Minnesota. Minnesota Statutes, Section 469.174, Subdivision 10(c), specifically provides that a building cannot be considered structurally substandard if its code deficiencies are not at least 15 percent of the replacement cost of the building. As a result, it was necessary to determine the extent of code deficiencies for each building in the proposed TIF District. The evaluation was made by reviewing all available information with respect to such buildings contained in City Building Inspection records and making interior and exterior inspections of the buildings. LHB utilizes the current Minnesota State Building Code as the official code for our evaluations. The Minnesota State Building Code is actually a series of provisional codes written specifically for Minnesota only Page 8 requirements, adoption of several international codes, and amendments to the adopted international codes. After identifying the code deficiencies in each building, we used R.S. Means Cost Works 2013; Unit and Assembly Costs to determine the cost of correcting the identified deficiencies. We were than able to compare the correction costs with the replacement cost of each building to determine if the costs for correcting code deficiencies meet the required 15 percent threshold. Finding: Four (4) out of five (5) buildings (80 percent) in the proposed TIF District contained code deficiencies, exceeding the 15 percent threshold required by Minnesota Statutes, Section 469.174, Subdivision 10(c). Complete Building Code and Condition Deficiency reports for the buildings in the proposed TIF District can be found in Appendix B of this report. 4. System Condition Deficiencies If a building meets the minimum code deficiency threshold under Minnesota Statutes, Section 469.174, Subdivision 10(c), then in order for such building to be "structurally substandard" under Minnesota Statutes, Section 469.174, Subdivision 10(b), the building's defects or deficiencies should be of sufficient total significance to justify "substantial renovation or clearance." Based on this definition, LHB re-evaluated each of the buildings that met the code deficiency threshold under Minnesota Statutes, Section 469.174, Subdivision 10(c), to determine if the total deficiencies warranted "substantial renovation or clearance" based on the criteria we outlined above. System condition deficiencies are a measurement of defects or substantial deterioration in site elements, structure, exterior envelope, mechanical and electrical components, fire protection and emergency systems, interior partitions, ceilings, floors and doors. The evaluation of system condition deficiencies was made by reviewing all available information contained in City records, and making interior and exterior inspections of the buildings. LHB only identified system condition deficiencies that were visible upon our inspection of the building or contained in City records. We did not consider the amount of "service life" used up for a particular component unless it was an obvious part of that component's deficiencies. After identifying the system condition deficiencies in each building, we used our professional judgment to determine if the list of defects or deficiencies are of sufficient total significance to justify "substantial renovation or clearance." Finding: In our professional opinion, four (4) out of five (5) buildings (80 percent) in the proposed TIF District are structurally substandard to a degree requiring substantial Page 9 renovation or clearance, because of defects in structural elements or a combination of deficiencies in essential utilities and facilities, light and ventilation, fire protection including adequate egress, layout and condition of interior partitions, or similar factors which defects or deficiencies are of sufficient total significance to justify substantial renovation or clearance. This exceeds the 50 percent requirement of Subdivision 10a(1). C. Distribution of substandard structures Much of this report has focused on the condition of individual buildings as they relate to requirements identified by Minnesota Statutes, Section 469.174, Subdivision 10. It is also important to look at the distribution of substandard buildings throughout the geographic area of the proposed TIF District(Diagram 3). Finding: The substandard buildings are reasonably distributed throughout the geographic area of the proposed TIF District. I ftesi ,, i, , —, #{ i i �i 77th Sir j« IT 6 , .t yr ' f(. ox.. "—ET Diagram 3 —Substandard Buildings Shaded area depicts parcels with substandard buildings Page 10 PART 5 -TEAM CREDENTIALS Michael A. Fischer,AL4,LEED AP-Project Principal/TIF Analyst Michael has twenty-four years of architectural experience as project principal, project manager, project designer and project architect on municipal planning, educational, commercial and governmental projects. He is a Senior Vice President at LHB and currently leads the Minneapolis office. Michael completed a two-year Bush Fellowship at the Massachusetts Institute of Technology in 1999, earning Masters Degrees in City Planning and Real Estate Development. Michael has served on over 35 committees, boards and community task forces, including a term as a City Council President, Chair of a Metropolitan Planning organization, and most recently, Chair of the Planning Commission in Edina, Minnesota. He was one of four architects in the country to receive the National "Young Architects Citation" from the American Institute of Architects in 1997. Phil Waugh—Project Manager/TIFAnalyst Phil is a project manager with 13 years of experience in historic preservation, building investigations, material research, and construction methods. He previously worked as a historic preservationist and also served as the preservation specialist at the St. Paul Heritage Preservation Commission. Currently, Phil sits on the Board of Directors for the Preservation Alliance of Minnesota. His current responsibilities include project management of historic preservation projects, performing building condition surveys and analysis, TIF analysis, writing preservation specifications, historic design reviews, writing Historic Preservation Tax Credit applications,preservation planning, and grant writing. M:\13Proj\130637\400 Design\406 Reports\TIF Report\Final Report\Richfield Public Works Redevelopment TIF Analysis 1-9-13.doc APPENDICES APPENDIX A Property Condition Assessment Summary Sheet APPENDIX B Building Code and Condition Deficiencies Reports APPENDIX C Building Replacement Cost Reports Code Deficiency Cost Reports Photographs Page 11 APPENDIX A Property Condition Assessment Summary Sheet I IN Richfield Public Works 1'9'14 Proposed Redevelopment TIF District Summary Spreadsheet Coverage Area of coverage Building 15X of No.of Buildings No.of buildings TIF Survey Method Site Area Coverage Percent No.of Budding Code Map No PION 0wner/6usiness Property Address Improved or Vacant Used (S.F.) Improvements of Improvements 4uantlty Building. Repkc<meM Replacement Deficiencies Exceeding 15% determined (S.F.) (SF.) Cost Cost Criteria substandard 1 WA Cary of Rkhikid Unassigned Vacant Exkdpr 2,250 2,200 97.8% 2,250 2 34-028-2434-0070 RICMadd11106 211 West 761hSi. Improved IMe629610edor 31,267 31,267 100.0% 31,267 $ 1,118,962.00 118],84430 $19%55080 1 1 3 34-028-2434-0049 R1cM114 MA 7600 Pillsbury Ave. Imprmed Exterior 9,149 5,000 54.7% 9.149 NOTE1 NOTE1 NOTE1 0 0 4 340282434-0087 RIc0kMNRA 7508 PMSbury Ave. Vacant Exknor 9,149 0 0.0% 56 34-028.2434.0072 City ofRkhfkM Unassigned Improved IntenoaExlenof 89,677 80,709 90.0% 89,677 5 1106.532.00 $120979.80 $180.339.00 1 1 50 34-02824.54-0072 CBy of RkMeN Unassigned improved IMenor7Extedor See SA $ 1,135,477.00 $170,32155 $255,74900 1 1 8 34-0282434-0073 Cily of Richfield 7699 Pillsbury Ave. Improved Interior/Exterior 40,793 37,121 91.0% 40293 $ 472,864.00 $70929.60 $77,099.00 1 1 182,285 173,138 4 4 85158 Subtotal Coverage Percent 95% 1.Curing the Initial site 81916 It did not appear necessary to Inspect the lMerkratms structure. Percent of building exceeding 25 percent code deficiency threshold 8t4% Percent of buildings determined substandard: 80% Page loll APPENDIX B Building Code and Condition Deficiencies Reports RICHFIELD TIF DISTRICT CODE/CONDITION DEFICIENCY/CONTEXT ANALYSIS January 9,2014 Map No. &Building Name: Map No. 2-Mortuary(with 2nd floor apartments) Address&PID: 211 West 76th Street, PID 34-028-24-34-0070 Inspection Date(s)& Time(s): December 4,2013, 9:45 AM January 4,2014; 12:30 PM Inspection Type: Interior and Exterior Summary of Deficiencies: It is our professional opinion that this building is Substandard because: - Substantial renovation is required to correct Conditions found. - Building Code deficiencies total more than 15%of replacement cost. Estimated Replacement Cost: $1,118,962 Estimated Cost to Correct Building Code Deficiencies: $ 199,550 Percentage of Replacement Cost for Building Code Deficiencies: 17.8% Description of Condition Deficiencies Minnesota Statutes, Section 469.174, Subdivision 10, states that a building is Structurally Substandard if it contains "defects in structural elements or a combination of deficiencies in essential utilities and facilities, light and ventilation, fire protection including adequate egress, layout and condition of interior partitions, or similar factors, which defects or deficiencies are of sufficient total significance to justify substantial renovation or clearance." A. Defects in Structural Elements 1. The roof has leaks in the mortuary and apartment areas. 2. There is a large hole in the south wall of the 2nd floor apartment. 3. Floor joists in the 2nd floor apartment have been notched or cut excessively for plumbing in violation of IBC 2308.10.4.2. B.Combination of Deficiencies 1. Essential Utilities and Facilities a. The building does not have an accessible entrance. Provide accessible parking stalls, signage, and path to the entry. b. Doors lack handles meeting requirements for accessibility. c. The restrooms are not accessible. d. The building lacks the plumbing fixtures required for its size and occupant load. e. The building is not connected to utilities: water, sewer, gas and electrical services are capped at the street. f. Electrical outlets at sinks,kitchen counters and garage should be GFCIs. g. All appliances are missing from apartment kitchens. 2. Light and Ventilation a. Ventilation system is inadequate. Install fresh/makeup air for entire building. b. Install combustion air for gas-fired furnaces and water heaters c. The garage lacks a system to ventilate vehicle exhaust. d. Apartment kitchen stoves lack range hoods. 3. Fire Protection/Adequate Egress a. The required 2-hour fire separation of the A-3-Occupancy on Main Level and the R Occupancy on the 2nd Floor is not provided. b. The required 2-hour fire separation of the garage and the mortuary(or 1-hour separation with a sprinkler system)is lacking. c. The plywood and wood stud partition between large west side meeting rooms does not meet Code for fire protection of combustible wall materials. d. Front door lacks an accessible approach. e. Exit doors lack panic hardware. f. Thresholds at doors exceed allowable 1/2". g. There is a greater than Y2"change in level on the outside of the door as well. h. Stair from 2nd Floor apartments does not meet requirements for size of risers and treads. i. North stair from 1st floor to basement is too steep to meet Code. j. Southwest stair from 1st floor to basement: railing is too low and does not meet Code requirements for extensions. k. Guard rail at top of southwest stair does not meet Code requirements for height and spacing of balusters. 4. Layout and Condition of Interior Partitions/Materials a. There are unpatched openings in walls. b. Mortuary ceiling has numerous missing,stained and broken ceiling tiles. c. Apartment walls have many holes and breaks in the finish drywall particularly at plumbing locations. d. Carpet is stained,mildewed and torn and has been partially removed in places. e. Apartment kitchen floor sheet vinyl is stained and worn. 5. Exterior Construction a. The roof lacks adequate ventilation. b. The flat roof lacks required insulation. c. The flat roof has numerous leaks. d. The apartment roof has several large leaks and at least one significant hole. e. There are cracks and holes in the stucco wall surface. f. Many windows and door liter are broken and have been boarded up. Overview of Condition Deficiencies The building at 211 West 76th Street is a former mortuary and funeral home with attached residential units on the north side. The mortuary building is a 1-story CMU structure with a precast concrete plank floor over a full basement. The roof structure is lightweight steel joists with steel decking. The apartment building is wood stud construction with an exterior brick veneer. The floor and roof structures are of dimensional lumber. The building has been vacant for many years. It is filled with debris and is in disrepair. It currently lacks all utility connections. Stained and moldy ceiling finishes indicate numerous holes in the roofs. In total, the defects and deficiencies in this building are of sufficient total significance to justify substantial renovation or clearance. Description of Code Deficiencies 1. Building lacks accessible parking stalls, signage, and path to the entry. 2. Building lacks required combustion/make up air. 3. Building lacks an exhaust system for garage. 4. 1St floor restrooms do not provide required accessibility: clear floor area,fixture clearances,grab bars,entry and access. 5. Building lacks an accessible drinking fountain. 6. Stairs do not meet code requirements for riser and tread size. 7. Southwest stair guard rail and handrails do not meet code for height,extensions and size of gaps between guard balusters. 8. Exit doors lack panic hardware. 9. Building lacks the required fire-rated partition and door between mortuary and garage. 10. Building lacks the required 2-hour fire separation between the residential units and the mortuary 11. Thresholds at doors exceed allowable 1/2". 12. Kitchen ranges require ducting to exterior. Energy Code In addition to the building code deficiencies,the existing building does not comply with the current energy code; however,these deficiencies are not included in the estimated costs to correct code deficiencies or listed as condition deficiencies. - Buildings exterior envelope(walls,roof and foundation walls/perimeter slab)do not have insulation with R-values needed to meet current energy code requirements. - Building's heating,cooling and lighting are not as efficient as current energy code would require. RICHFIELD TIF DISTRICT CODE/CONDITION DEFICIENCY/CONTEXT ANALYSIS January 9,2014 Map No. &Building Name: Map No. 5A-Vehicle Storage Garage(west side of yard) Address&PID: Address Unassigned PID 34-028-24-34-0072 Inspection Date(s)&Time(s): December 4,2013, 10:45 AM Inspection Type: Interior and Exterior Summary of Deficiencies: It is our professional opinion that this building is Substandard because: - Substantial renovation is required to correct Conditions found. - Building Code deficiencies total more than 15%of replacement cost. Estimated Replacement Cost: $806,532 Estimated Cost to Correct Building Code Deficiencies: $ 180,339 Percentage of Replacement Cost for Building Code Deficiencies: 22.4% Description of Condition Deficiencies Minnesota Statutes, Section 469.174, Subdivision 10, states that a building is Structurally Substandard if it contains "defects in structural elements or a combination of deficiencies in essential utilities and facilities, light and ventilation, fire protection including adequate egress, layout and condition of interior partitions, or similar factors, which defects or deficiencies are of sufficient total significance to justify substantial renovation or clearance." A.Defects in Structural Elements 1. The roof is significantly corroded and leaks in a number of locations. 2. The corrosion of the metal roof deck is such that it is unsound. B.Combination of Deficiencies 1. Essential Utilities and Facilities a. There are no restroom facilities. b. There is no water or drain plumbing. c. The building does not have an accessible entrance. Provide accessible parking stalls, signage, and path to the entry. d. Doors lack handles meeting requirements for accessibility. e. The building is not connected to utilities: electrical services are capped at the street. f. Electrical outlets throughout garage should be GFCIs. 2. Light and Ventilation a. The garage lacks a system to ventilate vehicle exhaust. 3. Fire Protection/Adequate Egress a. The building lacks the second exit(person door)required by IBC Table 1019.1. b. South door lacks an accessible approach. c. Exit door lacks panic hardware. d. Threshold at door exceeds allowable 1/2". 4. Layout and Condition of Interior Partitions/Materials a. All interior materials are in poor condition. 5. Exterior Construction a. The roof has numerous leaks. b. The exterior walls need repainting. c. Many of the overhead doors are in poor condition or non-functional and in need of replacement. d. The south door is broken and does not open or close properly. Overview of Condition Deficiencies The former City of Richfield vehicle storage garage has CMU walls with brick veneer panels at the north end. The roof structure is light gauge steel trusses with metal deck. A central wide flange beam divides the 58' span. The building was vacated several years ago and shows significant decay. Many of the 15 overhead doors are in poor condition. The person door at the south side is badly rusted and coming apart. The roof has been leaking in several areas. According to Dave Conrads of the City of Richfield, roofing contractors have refused to do any further work on the roof because of the danger of workers or equipment breaking through the rusted decking. To make the building usable under current building codes, an accessible toilet room and all the associated plumbing and fixtures would need to be installed. An additional exit door would also need to be provided. In total, the defects and deficiencies in this building are of sufficient total significance to justify substantial renovation or clearance. Description of Code Deficiencies 1. Building lacks accessible parking stalls, signage,and path to the entry. 2. Building lacks an exhaust system for garage. 3. Electrical outlets throughout garage should be GFCIs. 4. The building's roof does not meet IBC requirements and should be replaced including metal decking. 5. Building lacks required restroom facilities. 6. Building lacks an accessible drinking fountain. 7. The building lacks the second exit(person door)required by IBC Table 1019.1. 8. The existing exit door is non-functional. 9. Exit door lacks panic hardware. 10. Thresholds at doors exceed allowable 1/2". Energy Code In addition to the building code deficiencies,the existing building does not comply with the current energy code;however,these deficiencies are not included in the estimated costs to correct code deficiencies or listed as condition deficiencies. - Building's exterior envelope(walls,roof and foundation walls/perimeter slab)does not have insulation with R-values needed to meet current energy code requirements. - Building's heating, cooling and lighting are not as efficient as current energy code would require. RICHFIELD TIF DISTRICT CODE/CONDITION DEFICIENCY/CONTEXT ANALYSIS January 9,2014 Map No. &Building Name: Map No. 5B -Vehicle Maintenance Garage Address&PID: Address Unassigned PID 34-028-24-34-0072 Inspection Date(s)& Time(s): December 4,2013, 9:45 AM Inspection Type: Interior and Exterior Summary of Deficiencies: It is our professional opinion that this building is Substandard because: - Substantial renovation is required to correct Conditions found. - Building Code deficiencies total more than 15%of replacement cost. Estimated Replacement Cost: $1,135,477 Estimated Cost to Correct Building Code Deficiencies: $ 255,749 Percentage of Replacement Cost for Building Code Deficiencies: 22.5% Description of Condition Deficiencies Minnesota Statutes, Section 469.174, Subdivision 10, states that a building is Structurally Substandard if it contains "defects in structural elements or a combination of deficiencies in essential utilities and facilities, light and ventilation, fire protection including adequate egress, layout and condition of interior partitions, or similar factors, which defects or deficiencies are of sufficient total significance to justify substantial renovation or clearance." A.Defects in Structural Elements 1. The roof has leaks in a number of locations. B.Combination of Deficiencies 1. Essential Utilities and Facilities a. The building does not have an accessible entrance. Provide accessible parking stalls, signage, and path to the entry. b. Doors lack handles meeting requirements for accessibility. c. The restrooms are not accessible. d. The building lacks the plumbing fixtures required for its size and occupant load. e. The building is not connected to utilities: water,gas and electrical services f. Electrical outlets at sinks,kitchen counters and throughout garage bays should be GFCIs. 2. Light and Ventilation a. Ventilation system is inadequate. Install fresh/makeup air for entire building. b. Install combustion air for gas-fired furnaces and water heaters c. The garage lacks a system to ventilate vehicle exhaust. 3. Fire Protection/Adequate Egress a. Front door lacks an accessible approach. b. Exit doors lack panic hardware. c. Thresholds at doors exceed allowable 1/2". d. There is a greater than Y2"change in level on the outside of the door as well. e. Stair from mezzanine(s)does not meet requirements for size of risers and treads. f. Guard rail at mezzanine does not meet Code requirements for height and spacing of balusters. 4. Layout and Condition of Interior Partitions/Materials a. There are unpatched openings in walls. b. A wooden mezzanine has been built in 2 bays; it does not have adequate guard rails or clearance from the ceiling. 5. Exterior Construction a. The roof lacks adequate ventilation. b. The roof has numerous leaks. c. The exterior walls need repainting d. Many of the overhead doors are broken and in need of replacement. Overview of Condition Deficiencies The former City of Richfield vehicle maintenance garage has CMU walls with brick veneer panels at the east side. The roof structure consists of light gauge steel trusses with metal deck. A central wide flange beam divides the 58' span. The building was vacated several years ago and shows signs of decay. Many of the 17 overhead doors are in poor condition. Both person doors are badly rusted and require excessive force to operate. The roof has been leaking in several areas. In total, the defects and deficiencies in this building are of sufficient total significance to justify substantial renovation or clearance. Description of Code Deficiencies 1. Building lacks accessible parking stalls,signage, and path to the entry. 2. Building lacks required combustion/make up air. 3. Building lacks an exhaust system for garage. 4. Restrooms do not provide required accessibility: clear floor area, fixture clearances, grab bars, entry and access. 5. Building lacks an accessible drinking fountain. 6. Wooden mezzanine violates code requirements for guard rails and height. Its combustible material is not compatible with the rest of the building. 7. Exit doors lack panic hardware. 8. Thresholds at doors exceed allowable 1/2". Energy Code In addition to the building code deficiencies,the existing building does not comply with the current energy code; however,these deficiencies are not included in the estimated costs to correct code deficiencies or listed as condition deficiencies. - Building's exterior envelope(walls,roof and foundation walls/perimeter slab)does not have insulation with R-values needed to meet current energy code requirements. - Building's heating, cooling and lighting are not as efficient as current energy code would require. RICHFIELD TIF DISTRICT CODE/CONDITION DEFICIENCY/CONTEXT ANALYSIS January 9,2014 Map No.&Building Name: Map No. 6 -Maintenance Office Address& PID: 7699 Pillsbury Ave S. PID 34-028-24-34-0073 Inspection Date(s)& Time(s): December 4,2013, 11:00 AM Inspection Type: Interior and Exterior Summary of Deficiencies: It is our professional opinion that this building is Substandard because: - Substantial renovation is required to correct Conditions found. - Building Code deficiencies total more than 15%of replacement cost. Estimated Replacement Cost: $472,864 Estimated Cost to Correct Building Code Deficiencies: $ 77,049 Percentage of Replacement Cost for Building Code Deficiencies: 16.3% Description of Condition Deficiencies Minnesota Statutes, Section 469.174, Subdivision 10, states that a building is Structurally Substandard if it contains "defects in structural elements or a combination of deficiencies in essential utilities and facilities, light and ventilation, fire protection including adequate egress, layout and condition of interior partitions, or similar factors, which defects or deficiencies are of sufficient total significance to justify substantial renovation or clearance." A. Defects in Structural Elements 1. The roof leaks in a number of locations. B. Combination of Deficiencies 1. Essential Utilities and Facilities a. The building lacks accessible restrooms. b. The building does not have an accessible entrance. Provide accessible parking stalls, signage, and path to the entry. c. Doors lack handles meeting requirements for accessibility. d. The building lacks an accessible drinking fountain. e. The break area does not meet requirements for accessibility: counters are too high and adequate knee space is not provided at the sink. f. Electrical outlets at sinks should be GFCIs . 2. Light and Ventilation a. The restrooms lack a functioning ventilation system 3. Fire Protection/Adequate Egress a. The building lacks the second exit(person door)required by IBC Table 1019.1. b. South door lacks an accessible approach. c. Exit door lacks panic hardware. d. Threshold at door exceeds allowable 1/2". e. Interior doors to storage area should be fire-rated. 4. Layout and Condition of Interior Partitions/Materials a. Walls are worn and in need of painting. b. Ceiling tiles are broken and missing and stained and moldy in places due to roof leaks. c. Paint is peeling from the gyp board ceiling in the men's locker room. d. VCT floors are damaged in places, stained and generally worn. Some areas have had flooring partially removed,exposing adhesive on the concrete slab. e. Carpeted areas show damage and wear and tear. Some carpet is partially rolled up while in other places carpet tiles have been removed. f. Concrete block near the west door in storage area is damaged and spalled. Shows signs of leakage. g. Plumbing in men's locker room showers has been ripped out leaving holes in the walls. h. Wood interior window frames/trim are decaying and damaged from moisture. 5. Exterior Construction a. The roof has numerous leaks. b. The exterior walls need repainting. c. The west storage door is damaged—the bottom is duct-taped. d. Window frames and doors are corroded: Overview of Condition Deficiencies The former City of Richfield maintenance office building was constructed in 1963 as part of the vehicle maintenance garage to the north. The concrete block storage area at the north side of the office is the southern end of that garage which was severed when West 77th Street was re-aligned.The office portion is brick-faced CMU with light gauge steel roof joists and metal deck above. The building is in poor condition and would need significant remodeling to make it usable. To make the building usable under current building codes, two accessible toilet rooms and all the associated plumbing and fixtures would need to be installed. An additional exit door would also need to be provided. In total, the defects and deficiencies in this building are of sufficient total significance to justify substantial renovation or clearance. Description of Code Deficiencies 1. Building lacks accessible parking stalls, signage, and path to the entry. 2. Electrical outlets at sinks should be GFCIs . 3. The building's roof does not meet IBC requirements and should be replaced . 4. Building lacks required accessible restroom facilities. 5. Building lacks an accessible drinking fountain. 6. The building lacks the second exit required by IBC Table 1019.1. 7. Interior and exterior doors lack Code compliant hardware; they have knobs not levers. 8. Exit doors lack panic hardware. 9. Thresholds at doors exceed allowable 1/2". 10. Doors to the storage area do not meet code: they need to have a 45-minute fire-resistance rating. Energy Code In addition to the building code deficiencies,the existing building does not comply with the current energy code; however,these deficiencies are not included in the estimated costs to correct code deficiencies or listed as condition deficiencies. - Building's exterior envelope(walls,roof and foundation walls/perimeter slab)does not have insulation with R-values needed to meet current energy code requirements. - Building's heating,cooling and lighting are not as efficient as current energy code would require. APPENDIX C Building Replacement Cost Reports Code Deficiency Cost Reports Photographs Appendix G Findings Including But/For Qualifications Additional information to be added to prior to the public hearing But-For Analysis Current Market Value 1,522,253 New Market Value-Estimate 15,250,000 Difference 13,727,747 Present Value of Tax Increment 4,549,031 Difference 9,179,716 Value Likely to Occur Without TIF is Less Than: 9,178,716 Appendix G-1