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051815CompleteAgenda CITY OF RICHFIELD, MINNESOTA MONDAY, MAY 18, 2015 RICHFIELD MUNICIPAL CENTER 6700 PORTLAND AVENUE REGULAR HOUSING AND REDEVELOPMENT AUTHORITY MEETING COUNCIL CHAMBERS 7:00 P.M. AGENDA Call to order 1. Approval of the minutes of the (1) Special Concurrent HRA & City Council Worksession of April 14, 2015 and (2) Regular HRA Meeting of April 20, 2015 2. HRA approval of the agenda 3. 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 resolution authorizing the use of an Affordable Housing Initiative Fund loan for the acquisition of 7316 Clinton Avenue by the West Hennepin Affordable Housing Land Trust S.R. No. 14 B. Consideration of the approval of authorizing the Chairperson and Executive Director to execute a contract with a qualified demolition contractor for demolition of the structures at 7309 10t" Avenue in an amount not to exceed $12,000 S.R. No. 15 4. Consideration of a request to amend a Promissory Note and mortgage related to the New Home loan provided to Michael Solin of 924 66t" Street West Staff Report No. 16 5. Consideration of a resolution authorizing the Richfield HRA to reduce the original tax capacity of the Gramercy Park Cooperative Tax Increment District due to Homestead Market Value Exclusion Staff Report No. 17 6. Consideration of a resolution authorizing the Richfield HRA to reduce the original tax capacity of the Lyndale Gateway, LLC Tax Increment District due to Homestead Market Value Exclusion Staff Report No. 18 7. HRA discussion items 8. Executive Director Report 9. 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. CITY COUNCIL MINUTES Richfield, Minnesota � ' � � � Special Concurrent Housing and Redevelopment Authority and City Council Worksession April 14, 2015 CALL TO ORDER The meeting was called to order by Mayor Goettel at 5:28 p.m. in the Bartholomew Room. HRA Members Mary Supple, HRA Chair, Pat Elliott; Debbie Goettel; Doris Rubenstein; Present: and David Gepner. Council Members Debbie Goettel, Mayor; Pat Elliott; Michael Howard (arrived at 6:24 p.m.); Present: Edwina Garcia; and Tom Fitzhenry. Staff Present: Steven L. Devich, City Manager/HRA Executive Director; John Stark, Community Development Director; Pam Dmytrenko, Assistant City Manager/HR Manager; Karen Barton, Assistant Community Development Director; and Cheryl Krumholz, Executive Coordinator. Item #1 DISCUSSION REGARDING CEDAR POINT HOUSING AREA PROPOSALS (HRA MEMO NO. 13/COUNCIL MEMO NO. 24) City Manager/HRA Executive Director Devich explained the goal of the worksession is to provide an introductory overview of the proposed projects and gather feedback from the policy- makers. Proposals would be refined and at a future meeting, policy-makers would determine the primary proposal and alternate(s) to move forward. The following development teams presented their proposals: . Kristi Olson, Gary Tushie . Anderson Companies • Mesaba Capital • Pablo Murillo . Sperry Van Ness/Northco • Sand Companies ADJOURNMENT The worksession was adjourned by unanimous consent at 6:50 p.m. Date Approved: May 18, 2015. HRA Special Worksession Minutes -2- April 14, 2015 Mary B. Supple HRA Chair Cheryl Krumholz Steven L. Devich Executive Coordinator HRA Executive Director HOUSING AND REDEVELOPMENT � � AUTHORITY MEETING MINUTES y� � Richfield, Minnesota � Regular Meeting April 20, 2015 CALL TO ORDER The meeting was called to order by Chair Supple at 7:00 p.m. ATTENDANCE HRA Members Mary Supple, Chair; Doris Rubenstein; David Gepner and Debbie Goettel; Present: and Pat Elliott. Staff Present: Karen Barton, Acting Executive Director. Item #1 APROVAL OF THE MINUTES OF THE (1) REGULAR HRA MEETING OF MARCH 16, 2015 M/Goettel, S/Elliott to approve the minutes. Motion carried 5-0. Item #2 HRA APPROVAL OF AGENDA M/Elliott, S/Goettel to approve the aqenda. Motion carried 5-0. Item #3 CONSIDERATION E AT 7309U 1I0 N AVENUE THROUGH THECRICHFIELp EAL PROPERTY LOCA REDISCOVERED PROGRAM S.R. NO. 13 Acting Executive Director Barton presented Staff Report No. 13. Commissioner Goettel asked what determines if the lot is Richfield Rediscovered or Habitat for Humanity. Commissioner Elliott inquired about the purchase price of 7308— 10t" Avenue. Commissioner Rubenstein commented on the value of homes that have been purchased and then are turned into real assets to the community on the east side of Richfield. M/Goettel, S/Rubenstein that the followinq resolution be approved: 2 April 20,2015 HRA Meeting HRA RESOLUTION NO. 1201 RESOLUTION OCA�ED AT 73 9R OTH A�NUE AL PROPERTY Motion carried 5-0. This resolution appears as HRA Resolution No. 1201. Item #4 HRA DISCUSSION ITEMS Commissioner Elliott stated his concerns regarding controlling rumors in reference to the Cedar Point II redevelopment process. Commissioner Gepner stated there are stitt lots available to redevelop in Richfield. Commissioner Rubenstein requested increasing the marketing of Richfield programs available to residents. Item #5 EXECUTIVE DIRECTOR REPORT Acting Executive Director Barton gave an update on the Cedar Point II redevelopment process. Staff has requested additional information from the developers that presented to the City Council and HRA on April 14, 2015. Also, an additional developer has shown interest and will be sitting down with Community Development staff to discuss the project. ltem #6 CLAIMS AND PAYROLL M/Goettel, S/Elliott that the followinq claims and pavrolls be approved: U.S. BANK 04/20/15 Section 8 Checks: 126585-126674 � 157,608.25 HRA Checks: 32232-32272 140,814.46 TOTAL $ 298,422.71 Motion carried 5-0. ADJOURNMENT The meeting was adjourned by unanimous consent at 7:17 p.m. Date Approved: May 18, 2015 Mary B. Supple HRA Chair Karen Barton Karen Barton Acting City Clerk Acting Executive Director AGENDA ITEM#: 3A REPORT#: 14 STAFF REPORT ;�r►� � j '� HOUSING AND REDEVELOPMENT AUTHORITY MEETING MAY 18, 2015 REPORT PREPARED BY: JULIE URBAN, HOUSING SPECIALIST NAME,TITLE REPORT PRESENTER: ��N BARTON, ASSISTANT COMMUNITY DEVELOPM T DIRECTOR NAME,TITLE DEPARTMENT DIIZECTOR REVIEW: � � SIGN REVIEWED BY EXECUTNE DIRECTOR: �` 1 ITEM FOR HRA CONSIDERATION: Consideration of a resolution authorizing the use of an Affordable Housing Initiative Fund loan for the acquisition of 7316 Clinton Avenue by the West Hennepin Affordable Housing Land Trust. I. RECOMMENDED ACTION: � By Motion: Adopt the resolution authorizing use of an Affordable Housing Initiative Fund loan for the acquisition of 7316 Clinton Avenue b the West Hennepin Affordable Housin Land Trust. II. EXECUTIVE SUMMARY The West Hennepin Affordable Housing Land Trust (WHAHCT) received an award of$120,000 from Hennepin County's Affordable Housing Initiative Fund (AHIF) to provide affordable housing in scattered sites across suburban Hennepin County. WHAHLT has entered into a purchase agreement with the Greater Metropolitan Housing Corporation to acquire the property at 7316 Clinton Avenue, utilizing $15,000 of the allotted funding. Hennepin County requires that a City or the Housing and Redevelopment Authority (HRA) provide a resolution authorizing the use of AHIF within its community. 051815 7316 Clinton AHIF.docx By selling the new home to WHAHLT, the property will maintain long-term affordability through multiple owners who qualify by earning 80% of the area median income or less. III. BASIS OF RECOMMENDATION A. BACKGROUND • In March 2014, the HRA sold the two lots at 7312 and 7316 Clinton Avenue to the Greater Metropolitan Housing Corporation (GMHC) for the construction of two new, affordable homes through the New Home Program. • Upon purchase of 7316 Clinton Avenue, WHAHLT will retain ownership of the land in perpetuity and sell the structure to a qualifying buyer (land trust). . AHIF requires recipients to serve households earning less than 80 percent of the Twin Cities Area Median Income (TCAMI). B. POLICY • A goal of the City's Comprehensive Plan is to ensure sufficient diversity in the housing stock to provide for a range of household sizes, income levels and needs through the following policies: o Promote the development of a balanced housing stock that is available to a range of income levels. o Promote the development, management and maintenance of affordable housing in the City through assistance programs; alternative funding sources; and the creation of partnerships whose mission is to promote low to moderate income housing. • The HRA has partnered with WHAHLT in the past to provide long-term affordable housing opportunities on a scattered-site basis. C. CRITICAL TIMING ISSUES • Closing on the property is scheduled for May 27, 2015. D. F�aNCIaL • The HRA used Community Development Block Grant (CDBG) funds to purchase the property, which requires that the new home be sold to a household earning less than 80 percent of the Twin Cities area median income. • WHAHLT is requesting the authorization to use $15,000 of AHIF towards the acquisition of this property. E. LEGAL • The resolution is required by Hennepin County before AHIF funds can be used. IV. ALTERNATNE RECOMMENDATION(S� • Do not adopt the resolution authorizing the use of AHIF funds for the acquisition of 7316 Clinton Avenue. V. ATTACHMENTS • ResaJution VI. PRINCII'AL PARTIES EXPECTED AT MEETING • N/A HRA RESOLUTION NO. RESOLUTION AUTHORIZING THE USE OF AN AFFORDABLE HOUSING INCENTIVE FUND LOAN FOR THE PURCHASE OF 7316 CLINTON AVENUE WHEREAS, Hennepin County Housing and Redevelopment Authority (HCHRA) in Resolution No. 14-HCHRA-0022 has approved the use of a $15,000 Affordable Housing Incentive Fund loan for the 7316 Clinton Avenue project, contingent upon the Richfield Housing and Redevelopment Authority's consent to the HCHRA's participation in the project; and WHEREAS, the 7316 Clinton Avenue project will increase/preserve the supply of affordable housing in the City of Richfield by providing one affordable single-family home; and WHEREAS, the loan from the HCHRA will complete the financing required for the project to proceed. BE IT RESOLVED, that the participation of the Hennepin County Housing and Redevelopment Authority in the project is hereby approved. � Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this 18th day of May, 2015. Mary B. Supple, Chair � ATTEST: Doris Rubenstein, Secretary AGENDA ITEM#: 3B REPORT#; 15 STAFF REPORT 1►' � '` HOUSING AND REDEVELOPMENT AUTHORITY MEETING . . MAy 18, 2015 REPORT PREPARED BY: JULIE URBAN/KATE AITCHISON,HOUSING SPECIALISTS N,v�tE TrrLc REPORT PRESENTER: ��N BARTON,ASSISTANT COMMUNITY DEVELOPME T DIlZECTOR NAME,TITLG DEPARTMENT DIRECTOR REVIEW: � NATURE REVIEWED BY EXECUTIVE DIRECTOR: '�'j � ITEM FOR HRA CONSIDERATION: Consideration to authorize the Chairperson and Executive Director to execute a contract with a qualified demolition contractor for demolition of the structures at 7309 10th Avenue in an amount not to exceed $12,000. I. RECOMMENDED ACTION: By Motion: Authorize the Chairperson and Executive Director to execute a contract with a qualified demolition contractor for demolition of the structures at 7309 10th Avenue in an amount not to exceed $12,000. II. EXECUTIVE SUMMARY In May 2015 the Housing and Redevelopment Authority (HRA) acquired the property at 7309 10th Avenue. The HRA plans to demolish the existing substandard structure and make the lot available for new home construction through the Richfield Rediscovered Program. The house is currently vacant. Because there is significant interest in this lot, staff is seeking to complete #he demolition process as soon as possible. Prior authorization by the HRA will facilitate this process by allowing staff to select a demolition contractor and 051815 Demolition Contract(7309 10th).docx authorizing the Chairperson and Executive Director to execute the contract for an amount not to exceed $12,000.00. III. BASIS OF RECOMMENDATION A. BACKGROUND • The property was acquired by the HRA in May of 2015. It was qualified by a substandard inspection. • The 75-foot property will be marketed for sale through the Richfield Rediscovered program. • The property will be offered for sale once demolition is complete. B. POLICY • The HRA has demonstrated success through its Richfield Rediscovered Program in removing obsolete housing in poor condition and developing new housing that meets the needs of today's households. • Historically, the HRA has demolished existing homes prior to selling the properties. C. CRITICAL TIMING ISSUES • The house is currently vacant. To reduce potential risks, holding costs, and negative impacts to the surrounding neighborhood, the house should be demolished as soon as possible. • There is significant interest in this lot, so staff is seeking to complete the demolition process as soon as possible. • Staff will be seeking a demolition contractor who can complete demolition this summer. • A request for proposals will be sent to the City's list of qualified demolition contractors. • Because demolition is an eligible acquisition expense of the Housing and Redevelopment Fund, it is preferred that the house be demolished in the same year it is acquired. D. Fn�arrclaL • Demolition of 7308 10th Avenue, a similar house in size, was completed for$9,100 in 2014. Staff anticipates a similar bid for 7309 10th Avenue. • There are funds available for the demolition in the Housing and Redevelopment Fund. E. LEGAL • Legal counsel drafted the Contract for Demolition. IV. ALTERNATNE RECOMMENDATION(S� • Do not approve the Contract for Demolition. V. ATTACHMENTS • Contract for Demolition • Photo of 7309 10th Avenue VI. PRINCIl'AL PARTIES EXPECTED AT MEETING • N/A CONTRACT FOR DEMOLITION THIS CONTRACT is made and entered into this �day of , 20� by and between� (the "Contractor") and the Housing and Redevelopment Authority in and for the City of Richfield, State of Minnesota (the "HRA") (collectively, the "Parties"), for the demolition of buildings located at 7309 lOtn Avenue South, Richfield, MN 55423 (the"Property"). RECITALS WHEREAS, the HRA requires the demolition of buildings at the Property (the"Work"). WHEREAS, the HRA has awarded the Work to the Contractor; WHEREAS, the Contractor represents that it has the necessary personnel, experience, competence, and legal right to perform the Work; NOW, THEREFORE, in consideration of the mutual obligations of the Parties hereto, each of them does hereby covenant and agree as follows: Section 1. Definitions "City"means the City of Richfield, Minnesota. "Contract" or "Agreement" means this agreement between the HRA and Contractor for the performance of the Work, together with all exhibits, amendments, or modifications to the Contract. "Final Completion" means all items of the Work, "punch list items" and site work are completed and Contractor is eligible for Final Payment. "HRA" means the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota. "Property"means 7309 lOt"Avenue South, Richfield, MN 55423. "Substantial Completion" means the time at which the HRA determines that the Work has progressed to a point where it is sufficiently complete, leaving only minor "punch list" and close out items and other minor site work required to be completed for full payment of the contract price. 1 "Work" means the entire completed demolition and all other activities to be performed by Contractor on the Property as provided for in this Contract. Section 2. General Requirements 2.1. Rights of the HRA. The HRA and the City reserve the right to reject any or all proposals or parts of proposals, to accept part or all of proposals on the basis of considerations other than lowest cost, and to create a project of lesser or greater expense and reimbursement than described in this Contract. The HRA also reserves the right to cancel the Contract without penalty, if circumstances arise which prevent the HRA from completing the project. In the event of any conflict between the General Conditions and this Contract,this Contract shall control. 2.2. Interest of Members of Citv or HRA. The Contractor agrees that no member of the governing body, officer, employee, or agent of the City or the HRA shall have any interest, financial or otherwise, direct or indirect, in the Contract. 2.3. Equal O�ortunity Statement. Contractor agrees to comply with the provisions of all applicable federal, state, and City statutes, ordinances, and regulations pertaining to civil rights and nondiscrimination including without limitation Minnesota Statutes, Section 181.59 as amended, incorporated herein by reference. 2.4. Transfer of Interest. The Contractor shall not assign any interest in the Contract, and shall not transfer any interest in the same either by assignment or novation, without the prior written approval of the HRA, provided, however, that claims for money due or to income due to the Contractor may be assigned to a bank, trust company, or other financial institution, or to a Trustee in Bankruptcy without such approval. Notice of any such assignment or transfer shall be furnished to the HRA. Notwithstanding the foregoing, Contractor shall be entitled to use subcontractors to perform the Work. 2.5. Independent Contractor. It is expressly understood that the Contractor is an "independent contractor" and not an employee of the City or the HRA. The Contractor shall have control over the manner in which the services are performed under this Agreement. The Contractor shall supply, at its own expense, all materials, supplies, equipment and tools required to accomplish the work contemplated by this Agreement. The Contractor shall not be entitled to any benefits from the City or the HRA, including, without limitation, insurance benefits, sick and vacation leave, workers' compensation benefits, unemployment compensation, disability, severance pay, or retirement benefits. 2.6. Accounting Standards. The Contractor agrees to maintain the necessary source documentation and enforce sufficient internal controls as dictated by normally accepted accounting practices to properly account for expenses incurred under this contract. 2.7. Retention of Records. The Contractor shall retain all records pertinent to expenditures incurred under this Contract for a period of three years after the resolution 2 of all audit findings. Records for non-expendable property acquired with funds under this contract shall be retained for three years after final disposition of such property. 2.8. Government Data. The Contractor agrees to comply with the Minnesota Government Data Practices Act, Minnesota Statutes, Chapter 13, and all other applicable state and federal laws relating to data privacy or confidentiality, as those laws may be amended. The Contractor shall immediately report to the HRA any requests from third parties for information relating to this agreement. All data created, collected, received, stored, used, maintained, or disseminated by the Contractor in performing its obligations is subject to the requirements of the Act, and the Contractor must comply with those requirements as if it were a government entity. The HRA agrees to promptly respond to inquiries from the Contractor concerning data requests. The Contractor agrees to hold the City and the HRA, its officers, department heads and employees harmless from any claims resulting from the Contractor's failure to disclose data maintained by the Contractor and authorized for release by the HRA, and from Contractor's unlawful disclosure or use of data protected under state and federal laws. Section 3. Contract Price 3.1. Upon compliance with all the requirements of this Contract, Contractor shall be paid the Contract Price of� ,pursuant to Section 28 of this Contract. Section 4. Project Schedule 4.1. Contractor shall commence the Work on or after Contract execution and Substantial Completion of the Work shall be achieved no later than (_) days thereafter. If the Work is not substantially completed by , damages of $100.00 will be deducted from the Contract Price for each day the requirements of this contract have not been fulfilled. Section 5. Local Permit Requirements and Related Submittals 5.1. Contractor shall obtain permits required by the City, including a plumbing permit (for water & sanitary sewer disconnects) and a demolition permit. Questions about these permits, permit fees, and the scheduling process for the required inspections should be directed to the Building Inspections Department at Richfield City Hall (612-861-9816). 5.2. No less than 2 days prior to beginning the Work, the Contractor shall provide: - Description of proposed dust and noise control measures for the Property. 5.3. Upon completion of the Work, Contractor shall provide: - Copies of any permits required by government agencies other than the City, such as transport or disposal permits. 3 - Copies of any test results required by government agencies other than the City, including but not limited to testing required as part of the asbestos abatement process. - Copies of all landfill records indicating receipt and acceptance of hazardous wastes by a landfill licensed to accept hazardous wastes. Section 6. Job Conditions - General 6.1. Contractor will disconnect and abandon utilities serving the Property, including water, sanitary sewer, electricity, gas and telecommunications; or arrange for disconnection and abandonment of same. Contractor shall not begin work before field- verifying that disconnection and abandonment has been completed. 6.2. HRA shall ensure that the buildings are vacated and use of the property is discontinued prior to start of work. 6.3. HRA assumes no responsibility for actual condition of structures to be demolished. Conditions existing at time of inspection for bidding purposes will be maintained by HRA to the extent practicable. Contractor may salvage any and all materials and equipment from the Property. Variations within structures may occur due to removal and salvage operations prior to the start of demolition work. 6.4. Contractor shall provide all labor, materials, equipment, employee training, compliance with all regulations, permits, notifications, licenses and agreement necessary to perform the work described in this Contract. 6.5 The Contractor operations shall not at any time encroach on adjacent residential � properties. Where residents occupy the adjacent properties, the Contractor shall stake and mark the boundaries of the property to identify the limits of operations for its employees and subcontractors. 6.6 Where adjacent buildings are occupied, the HRA requires Contractors to advise the inhabitants as to when they will start work activities and of what hazards are involved. Each Contractor shall also furnish the occupants of the adjoining properties a phone number where they can reach the Contractor in case of an emergency or problem. 6.7 As directed by the City Inspector, a silt fence or other appropriate erosion control measures shall be erected around the perimeter of the Property to prevent erosion and unwanted run-off onto adjacent properties, streets, and alleys. Silt fences must conform to standards set by the Minnesota Pollution Control Agency and the City. 6.8. All materials from undertaking the Work shall become the property and responsibility of the Contractor. 4 6.9. Contractor may choose to salvage materials and equipment. Any salvaged items must be removed from the Property in a timely manner as they are salvaged. On site storage or sale of salvaged items is prohibited. 6.10. The use of explosives and on site burning by the Contractor is prohibited. 6.11. Contractor shall provide water, electricity, communications and toilet facilities on site as necessary to complete the work. 6.12. Contractor shall provide and maintain uninterrupted vehicular access to the Property, including temporary demolition facilities, storage and work areas, for not only persons and equipment involved in the project but also emergency vehicles. 6.13. Contractor shall keep fire hydrants and water control valves free from obstruction and accessible for use. 6.14. Contractor shall take all necessary safeguards to prevent damage or injury to neighboring property. 6.15. Prior to closing or rerouting existing traffic lanes or sidewalks in any public street easement or right-of-way adjacent to streets, the Contractor shall obtain written permission from the City Engineer. Expenses related to lane closures, including but not limited to traffic barriers, signs and similar equipment as well as traffic control personnel, shall be the responsibility of the Contractor. 6.16. The Contractor may conduct work on the Property from 7 a.m. to 7 p.m. Monday through Friday and 9 a.m. to 5 p.m. on Saturdays. No work shall be conducted on Sundays or legal holidays. 6.17. The Contractor shall not crush any materials on-site. 6.18. Contractor shall maintain the Property in a safe and neat manner. Adjacent properties, streets and right-of-ways shall be kept free of dirt and debris. 6.19. If Contractor is negligent in carrying out any of the conditions in this Section 6, the HRA reserves the right to perform this work with its own workforce at overtime rates. The costs of such work will be charged to the Contractor. Section 7. [Left Blank] Section 8. [Left Blank] Section 9. Demolition 5 9.1. Contractor shall use water sprinkling, temporary enclosures and other suitable methods to limit dust and dirt rising and scattering in air. Contractor shall comply with any and all governing regulations pertaining to environmental protection. Contractor shall not use water when it may create hazardous or objectionable conditions such as flooding or pollution. 9.2. Contractor shall clean adjacent structures and improvements of dust, dirt and debris caused by demolition operations and return adjacent areas to condition existing prior to start of work. 9.3. Contractor shall demolish buildings, other structures, improvements, and landscaping completely and remove all debris from the Property. Contractor may use such methods as required to complete the work subject to the limitations of governing regulations. 9.4. Contractor shall proceed with demolition in a systematic manner, from top of structures to ground, and will complete demolition work above each floor or tier before disturbing supports on lower levels. 9.5 After the Building has been removed from the Property, Contractor shall remove all foundation walls and the basement floor slab, and shall remove all other at grade masonry, concrete slabs, sidewalks, steps, and driveways from the Property. ALL ASPHALT, MASONRY, AND NON-MASONRY MATERIAL MUST BE TRANSPORTED AWAY FROM THE SITE. 9.6 Immediately upon the removal of the Building from its foundation, Contractor shall furnish and erect on the Property a wood slat snow fence or an approved substitute, either one being in good repair and reasonably acceptable to HRA. The fence shall be at least four feet in height, shall completely enclose the open basement, and shall remain in place until the basement is filled, at which time it shall be removed; 9.7. Contractor shall locate demolition equipment throughout the building and remove materials so as to not impose excessive loads to supporting walls, floor or framing. 9.8. Contractor shall provide and maintain interior and exterior shoring, bracing or other structural support to preserve structural stability and prevent movement, settlement or collapse of the building. 9.9. Contractor shall break up any concrete slabs-on-grade and remove from the Property. 9.10. Contractor shall demolish footings, foundation walls, tunnels and other below- grade structures and remove from the Property. 9.11. After removing all foundation walls and the basement floor slab, as provided above, Contractor shall fill the basement to ground surface level with clean compactable 6 soil. The basement hole MUST BE inspected by the City Inspector prior to filling, and any unauthorized debris removed. The fill must not contain any hazardous substance or disposed building material. 9.12. All sheds and other accessory structures, clothesline and other poles, and landscape structures shall be removed from the Property. 9.13. Contractor may not cut or remove a tree from the Property without prior permission from HRA. If any trees are cut or destroyed by Contractor without prior approval, Contract will pay to HRA damages of $200 per tree. Any such damages shall be deducted from Contractor's payment. Any trees approved by the HRA for removal and cut or felled in the moving process shall be removed immediately, and the tree stumps may remain. 9.14 Contractor shall provide certificate of well abandonment if required. Section 10. Debris Control 10.1. Contractor shall maintain the Property free of extraneous debris. 10.2. Contractor shall prohibit overloading of trucks to prevent spillage on access and haul routes. 10.3. Contractor shall maintain a sweeping and clean-up program to prevent deposition, release and disbursal of soils and debris onto paved surfaces. Section 11. Disposal 11.1. Contractor shall move from the Property all debris, rubbish and other materials resulting from demolition operations. 11.2. Contractor shall transport materials from the Property and legally dispose of them off-site in accordance with governing regulations. Section 12. Earthwork 12.1. Contractor shall rough grade the Property using clean fill after completing all abatement and demolition activities; taper edges of all excavated areas to minimize slope of 2 to 1, keeping soil disturbance to a minimum. Property must be seeded, and erosion control measures must remain in place until turf is established. The Contractor must comply with all requirements of the Richfield Bloomington Watershed District related to the Work. Final payment will not be made until turf is established. 7 Section 13. Excusable Delays 13.1. The following circumstances, and only these circumstances, will, at the HRA's discretion, be considered legitimate cause for a change in the commencement and/or completion dates specified in Section 4 of this Agreement: a. Material delay -- material delays that are beyond the control of the Contractor, which can be shown to have directly caused the overall late completion. b. Adverse weather and emergency conditions -- weather or emergency conditions that directly affect the scheduling of exterior work over a significant portion of the term of this Agreement. c. Strikes -- Contractors who face union work stoppage in the case where � they have to rely on such a work force in order to complete the Work. d. Amendments -- amendments in the original scope of work, which can be reasonably shown to require an extension of the time allowed for completion. e. Other. delays — act or neglect of the HRA, or of an employee of either, or of a separate contractor employed by the HRA, or by changes ordered in the Work or by unavoidable casualties or other causes beyond the Contractor's control. Section 14. Change Order 14.1. The HRA has the right, within the general scope of the Work and without notice to any surety or sureties of the Contractor, if any, to make changes in the Work, either by altering the nature of the same or by adding to or deducting from it. 14.2. This is a lump sum contract. The Contractor must immediately contact the HRA prior to exceeding the Contract Price set out in Section 3.1. In the event an unknown condition is encountered during the Contractor's performance of the Work, the Contractor must notify the HRA's project manager immediately. The appropriate course of action will be determined and, if necessary, a change order will be authorized prior to the start of the work. Change orders for additional payment will not be granted due to the Contractor underestimating quantities of material(s), winter weather conditions or the amount of labor required in order to perform the Work. For change orders related to Hazardous or Regulated Materials, the HRA reserves the right to subcontract the work to another contractor. 14.3. All changes shall, except in the case of emergencies endangering the safety of persons or property, be made by written change order. The parties shall determine the effect of any change order on the Contract Price and project schedule by mutual 8 agreement. The Contractor must promptly comply with any and all written change orders. No such change order shall be deemed to invalidate the remaining terms and conditions contained in this Contract. Section 15. Waiver of Liability 15.1 It is agreed that the Work is undertaken at the sole risk of the Contractor. The Contractor does expressly forever release the HRA and the City from any claims, demands, injuries, damage actions, or causes of action whatsoever, arising out of or connected with the Work. Section 16. Indemnification 16.1. Any and all claims that arise or may arise as a consequence of any act or omission on the part of the Contractor, its agents, servants, or employees while engaged in the performance of the Work shall in no way be the obligation or responsibility of the HRA or the City. To the fullest extent permitted by law, the Contractor agrees to defend, indemnify and hold harmless the City and the HRA, and their employees, officials, volunteers and agents from and against all claims, actions, damages, losses and expenses, including attorney fees, arising out of the Contractor's negligence or the Contractor's performance or failure to perform its obligations under this Agreement. The Contractor's indemnification obligation shall apply to the Contractor's subcontractor(s), or anyone directly or indirectly employed or hired by the Contractor, or anyone for whose acts the Contractor may be liable. The Contractor agrees this indemnity obligation shall survive the completion or termination of this Agreement. Section 17. Insurance 17.1. The Contractor agrees that in order to protect itself, the HRA, and the City under the indemnity provisions set forth in Section 16 of this Agreement, it will at all times during the term of this Agreement, maintain, at a minimum, the following insurance policies: a. Workers Compensation Insurance. The Contractor shall maintain worker's compensation insurance in compliance with all applicable statutes including Chapter 176 of the Minnesota Statutes. Such policy shall include Employer's Liability Coverage and at least such amount(s) as are customarily provided in worker's compensation policies issued in Minnesota. Contractor further agrees to require all subcontractors and independent contractors to maintain worker's compensation insurance in compliance with all applicable statutes and to monitor the compliance of such subcontractors and independent contractors with the applicable statutes. b. Commercial General Liability Insurance. The Contractor shall maintain Occurrence Based Commercial General Liability Insurance ("CGL"), 9 providing coverage on an "occurrence", rather than on a "claims made" basis, which policy shall include coverage for the Completed Operations Hazard, and which shall also include a Broad Form General Liability Endorsement, ISO number GL 0404, or an equivalent form (or forms), so long as such an equivalent form (or forms) affords coverage which is in all material respects at least as broad. Any equivalent form (or forms) of coverage shall be approved by the HRA. The Contractor agrees to maintain total liability policy limits of at least One Million Dollars ($1,500,000), applying to liability for Bodily Injury, Personal Injury, and Property Damage, which total limits may be satisfied by the limits afforded under its Occurrence Based CGL policy as specified above, or by such policy in combination with the limits afforded by an Umbrella Liability Policy (or policies) provided, however, that the coverage afforded under any such Umbrella Liability Policy shall be at least as broad as that afforded by the underlying occurrence based CGL Policy as specified above. c. Automobile Liability Insurance. The Contractor shall maintain automobile liability insurance covering liability for Bodily Injury and Property Damage arising out of the ownership, use, maintenance, or operation of all owned, non-owned, and hired automobiles and other motor vehicles. Such policy shall provide total liability limits for combined Bodily Injury and/or Property Damage in the amount of at least One Million Dollars ($1,500,000) per accident, which total limits may be satisfied by the limits afforded under such policy, or by such policy in combination with the limits afforded by an Umbrella Liability Policy (or policies) provided, however, that the coverage afforded under any such Umbrella Liability Policy shall be at least as broad as that afforded by the underlying automobile liability insurance policy. The HRA and the City shall be named as "additional insured" parties with respect to the insurance policies specified in (b) and (c) above. The Contractor shall not commence work until a Certificate of Insurance evidencing all of the insurance policies required above is approved and a written Notice to Proceed is issued by an authorized representative of the HRA. The HRA shall, at any time during the term of this agreement, have the right to require that the Contractor secure any additional insurance, or additional feature to existing insurance, as the HRA may reasonably require for the protection of its interests or those of the public. It is expressly understood that the HRA does not in any way represent that the minimum insurance coverage set forth in this paragraph is sufficient or adequate to protect the interest or liabilities of the Contractor. Section 18. Bond 18.1. No payrrient or performance bonds for the Work shall be required pursuant to Minn. Stat. § 574.26. 10 Section 19. Lien Waiver 19.1. Neither the Contractor nor any subcontractor or other person or entity furnishing labor, equipment, or materials in connection with the Work shall file any mechanic's lien against the HRA's buildings, structures or land or any part thereof, provided that the HRA makes all payments due to Contractor under this Contract. The Contractor shall protect, defend, indemnify, and hold hartnless the HRA and the City from any and all claims, demands, or actions of whatever nature arising out of work, labor, equipment, or materials furnished by the Contractor or its subcontractors in connection with the Work, provided that the HRA makes all payments due to Contractor under this Contract. Payment of the Contract Price shall not be due until the Contractor has delivered to the HRA lien waivers acceptable to the HRA, which release the HRA from all liens that may arise in connection with the Work. The Contractor shall list on the attached Exhibit A the names of all suppliers and/or subcontractors that will provide materials, services, or labor in connection with the Work. The Contractor will notify the HRA of any changes in this list prior to the commencement of the Work. Section 20. Subcontractors 20.1. Contractor agrees to bind every subcontractor by the terms, conditions, and provisions set forth in the Contract that are applicable to the subcontractor's work, unless otherwise specifically agreed otherwise in writing by the HRA. 20.2. Contractor agrees to pay every subcontractor within 10 days of receipt of payment from the HRA pursuant to Minn. Stat. § 471.425. Section 21. Assignment 21.1. This Contract shall be binding upon the Contractor, its legal representatives, heirs, successors, and assigns. No assignment or attempted assignment of this Contract or any rights hereunder shall be effective unless the written consent of the HRA is first obtained. No such assignment, even if consented to by the HRA, shall relieve the Contractor from liability under this Contract for the performance and completion of the Work in accordance with the Contract. Notwithstanding the foregoing, Contractor shall be entitled to use subcontractors to perform the Work. Section 22. Entire Agreement 22.1. The Contract contains all the terms, conditions, and provisions pertaining to the Work to be completed by the Contractor, there being no other understandings, agreements, or warranties, express or implied. All prior negotiations and dealings regarding the subject matter of the Agreement are superseded by and merged into the Contract. Section 23. Default 11 23.1. The occurrence of any of the following shall constitute default by the Contractor and, if not corrected within 15 days of the HRA providing the Contractor with notice of the default, shall allow the HRA to terminate this Agreement: (1) failure to perform the Work as stated in this Contract; (2) failure to perform or complete the Work by the completion date as set forth in this Contract or as otherwise agreed to by the parties; (3) filing bankruptcy; (4) making a material misrepresentation; (5) disregarding laws, ordinances, rules, regulations or orders of any public authority having jurisdiction; (6) failure to make satisfactory progress toward completion of the Work; or (7) failure to perform any other material provision of this Agreement. The HRA may lawfully terminate this Contract if, after providing the Contractor with 15 days notice of the default, the Contractor does not correct the default. Upon default of this Agreement by the Contractor, the HRA may withhold any payment due the Contractor for purposes of set-off until such time as the exact amount of damages due is determined. Furthermore, the HRA may use any unpaid or retained amounts to correct any defective work or materials and to complete the Work as needed. Such withholding shall not constitute default or failure to perform on the part of the HRA. Section 24. Governing Law 24.1. This Contract shall be construed in accordance with and governed by the laws of the state of Minnesota. Section 25. Amendment 25.1. This Contract may be modified or amended only with the written approval of the HRA and the Contractor. Section 26. Construction 26.1. In the event that any one or more of the provisions of this Contract, or any application thereof, shall be found to be invalid, illegal, or otherwise unenforceable, the validity, legality, and enforceability of the remaining provisions or any application thereof shall not in any way be affected or impaired thereby. Section 27. Authority 27.1. Each of the undersigned parties warrants that it has the full authority to execute this Contract, and each individual signing this Contract on behalf of a corporation hereby warrants that he or she has full authority to sign on behalf of the corporation and that he or she represents and binds such corporation thereby. Section 28. Waiver 28.1. No failure by the HRA to insist upon the strict performance of any covenant, duty, agreement, or condition contained in this Agreement or to exercise any right or remedy 12 consequent upon a breach thereof shall constitute a waiver of any such breach or any other covenant, agreement, term, or condition, nor does it imply that such covenant, agreement,term, or condition may be waived again. Section 29. Nondiscrimination 29.1 In the hiring of employees to perform work under this Contract, the Contractor shall not discriminate against any person by reason of any characteristic protected by state or federal law. Section 30. Notices 30.1 All notices and other communications under this Agreement must be in writing and must be given by registered or certified mail, postage prepaid, or delivered by hand at the addresses set forth below: Notice to HRA: Housing Specialist Housing and Redevelopment Authority 6700 Portland Avenue South Richfield, MN 55423 Notice to Contractor: Working Hours Cell Phone: Non-working Hours Cell Phone: Section 31. Savings Clause 31.1 If any court finds any portion of this Agreement to be contrary to law, invalid, or unenforceable, the remainder of the Contract will remain in full force and effect. Section 32. Payments to Contractor and Completion 32.1. The Contractor shall be paid upon completion of the Work in accordance with the payment schedule of the HRA, if any, and this section. 32.2. Prior to receiving payment for Substantial Completion of the Work, the Contractor shall in writing state that the respective portion of the Work has been substantially completed and is free and clear of all liens as provided in this Contract. Upon Substantial Completion and inspection and verification by the HRA, the payment for that portion of the Work shall be made. Final payment shall be made when Contractor certifies that Final Completion has been achieved and verified by the HRA. 13 IN WITNESS WHEREOF, the parties have caused this Contract to be duly executed in their names and behalves and on or as of the date and year first above written. THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD By Mary B. Supple Its Chair By Steven L. Devich Its Executive Director 14 [CONTRACTOR] By Its By Its THIS 1NSTRUMENT DRAFTED BY: Kennedy & Graven, Chartered (JAE) 470 U.S. Bank Plaza 200 South Sixth Street Minneapolis, MN 55402 (612) 337-9300 15 EXHIBIT A LIST OF SUPPLIERS AND SUBCONTRACTORS 314396v2 MTN RC125-1 E�-1 7309 10t" Avenue South �� ;.t 1 • .� r � ;� �'`' �t 9�.� k��a' "�l@� �� l 't �^�` � A i � l��kh 4�t� � �.t- .�' � 4� �j� � �� . .•� `! '��s '�yF��• ! L �,� � �. 4 �,�Yif'� J{1/rZ•�ti '. ,� �.1 �' .,e�. � ��. . }-� '��r ��'�l i' ... . ... _ � ��.�� .. � . � r � Tel"t _?fc �:• y:.� � ,} `.'--�-- -- � � `�_ .—��, � __��1 _ — .__ �:. � -- r}p9 i �� i .- �� 4_ - �'.'`— _ C.�:� — �i � — — —�,:-�: ----- � I , ,� S =--------� , : —� I ,_ — _ _ — .. '� ..4 ,`. . . �] .+ . I.--- -..- � -ti:: _..� _ —.�...-�—„T '_ _ _ —"— __ _.— __ :1 � , .��Q` ! f -e`pY.M ,� .t' ,' t y s� 4 `�.� , ` �„g`1�� ......•Y ��,.�. :.��: .� � . �i�� . . � ��-:;��;�. ; _. _ .�_ . , �.� �;:�. .� � :; � ��'W . � � .� ��:� i ti..�_ ° c.,_ ��;�,�� • . '!�°,r{1«,r�:-...... __. _ .,t.� • �€ , �� 1 � � �'•' �'�; '' tY.k.ta• � t �f , F' � �.c . . .. A"�i aY �t� � ��`�' . - � ` t � i�.t x', . �e �;��.<d ��' � 2 4 � fi � � .� %'. � _ ;f S �'� 3J. ± d�: t} ��.'- �.j}rW �: �$'�j�i •�� .• . ... ..�. _—... .,i.�" . . . � , . . ' t�a'_�$ T�,�_~ ��"��iM. _ ] 051815 Demolition Contract(7309 10th).docx AGENDA ITEM#: 4 REPORT#: 16 STAFF REPORT �► � f f' HOUSING AND REDEVELOPMENT AUTHORITY MEETING MAy 18, 2015 REPORT PREPARED BY: JULIE URBAN, HOUSING SPECIALIST NAME,TITLE REPORT PRESENTER: ��N BARTON, ASSISTANT COMMUNITY DEVELOPMENT DIRECTOR NAME,TITLE � �.. DEPARTMENT DIlZECTOR REVIEW: - _ .� � ' SIGNATU � ..?'" / REVIEWED BY EXECUTNE DIRECTOR: ITEM FOR HRA CONSIDERATION: Consideration of a request to amend a New Home second mortgage at 924 66th Street West. I. RECOMMENDED ACTION: By Motion: Adopt an amended Promissory Note and mortgage related to the New Home loan provided to Michael Solin of 924 66th Street West requiring the loan to be due and payable upon the earlier of the sale or transfer of the property or ten years from the date of the amendment. II. EXECUTIVE SUMMARY Michael Solin and his late wife, Debra purchased the house at 924 66th Street West with the assistance of a $22,900 second mortgage through the Housing and Redevelopment Authority's (the "HRA") New Home Loan Program. The Promissory Note (the "Note") matures (and is due and payable) upon various occurrences, including upon payment in full of the first mortgage or refinancing. Recently, the lender for Michael and his current wife, Angela (the "Owners"), contacted staff to request a subordination of the loan so that the Owners can refinance their first mortgage. Under the provisions of the Note, the loan would be due and payable at that time. 051815 924 66th St W amended mortgage.docxxxx The intent behind the repayment provision of this mortgage was to ensure that homeowners receiving HRA assistance repay the mortgage upon the sale of the property, so that the HRA can recycle funds and provide assistance to others. The intent is not to create a burden on the homeowner by requiring repayment when refinancing. However, the language in the Note at the time this loan was initiated was not reflective of that intent. Instead of requiring repayment upon refinancing, staff recommends amending the Note and mortgage to make the loan due and payable upon the earlier of the sale and transfer of the property, or ten years from the date of the amendment (May 20, 2025). III. BASIS OF RECOMMENDATION A. BACKGROUND • In 1987, the Solins purchased the home at 924 66th Street West through the HRA's New Home Program. The gap between the purchase price and the mortgage that the Solins could afford was covered with a loan from the HRA in the amount of$22,900, which was evidenced by a Promissory Note and secured by a second mortgage in favor of the HRA. • Instead of listing a specific maturity date, the mortgage refers to the Note for the conditions under which the mortgage matures. The Note lists several conditions, including that the Note is due and payable upon payment in full of the first mortgage or refinancing. • In 1996 and 1998, the Solins refinanced their first mortgage. The HRA was asked and agreed to consent to the refinancing by subordinating the HRA's mortgage to the new first mortgage. The HRA did not require repayment at that time. • Eleven of the twenty active New Home loans contain a provision in the note that the loan is due and payable upon satisfaction of the first mortgage or refinancing. In all of those cases, the HRA has at one time agreed to subordinate its mortgage, thereby waiving the refinancing provision. • In the case of the New Home Program, the terms of the notes and mortgages changed slightly over the years (from 1983 to 2003), but the mortgages have typically been due and payable upon the rnaturity. • Previously, a New Home mortgage was amended in 2008 to be forgiven after 22 years (10 years added to the term). In 2012, the - HRA amended another New Home mortgage to be due and payable after 30 years (10 years added to the term). B. POLICY • The New Home Program requires all second mortgages to be due and payable upon the maturity date or upon various other events of maturity provided in the Note. • The intent behind the repayment provision is to ensure that homeowners receiving HRA assistance repay the mortgage upon the sale of the property, so that the HRA can recycle funds and provide assistance to others. The intent is not to create a burden on the homeowner by requiring repayment when refinancing. C. C�TICAL Trnt�vG IssuEs • The Solins are seeking to refinance their first mortgage and need a subordination from the HRA in order to proceed with the refinance. D. Fn�arrclaL • The HRA's loan to the Solins to finance their house located at 924 66th Street West was originally financed with Community Development Block Grant (CDBG) funding. There is no requirement that CDBG funds be repaid. E. LEGAL • If the HRA chooses to enforce the Note and require the Solins to repay the second mortgage at the time of the refinance, the HRA may need to file civil action. • The HRA Attorney has prepared the amendment. IV. ALTERNATIVE RECOMMENDATION�S� • Amend the Note and Mortgage to be repaid upon sale of property or after 20 years. • Forgive the loan. • Enforce the Note and pursue all legal remedies to seek loan repayment. V. ATTACHMENTS • Request from Michael and Angie Solin, 924 66th Street West • Amendment to Promissory Note and Mortgage VI. PRINCII'AL PARTIES EXPECTED AT MEETING • Angela Solin, 924 66th Street West Hi Julie, This is a request to have the board amend the mortgage to be paid in full iri 10 years from now. We are in the process of a refinance which the HRA loan needs to be an Subordinate of the new loan. If anything else is needed please let me know. Thank you Angels and Michael Solin 924 W 66th Street, Richfield AMENDMENT TO PROMMISSORY NOTE AND MORTGAGE This Amendment to Promissory Note and Mortgage, dated , 2015 (the "Amendment"), amends that certain Mortgage from Michael A Solin and Debra K Solin, husband and wife, as "Mortgagor," to the Housing and Redevelopment Authority in and for the City of Richfield, a public body corporate and politic under the laws of Minnesota, as "Mortgagee," dated March 13, 1987, on real property located in Hennepin County, State of Minnesota and legally described on Exhibit A attached hereto (the "Property") and recorded in the office of the Registrar of Titles Hennepin County Recorder on March 25, 1987, as Document No. 697246 (the "Mortgage"). This document also amends that certain Promissory Note and Security Agreement from the Mortgagor to the Mortgagee, dated March 13, 1987 (the "Promissory Note"). This is n mortgage amendment, as defined in Minnesota Statutes, Section 287.01, Subd. 2, and as such does not secure a new or an increased amount of debt. IT IS HEREBY AGREED, by and between the parties, as follows: 1. The Mortgagee has made a loan to the Mortgagor in the original principal amount of Twenty-two Thousand, Nine Hundred Dollars ($22,900) (the "Loan"), evidenced by the Promissory Note and secured by the Mortgage. The Loan does not accrue interest. 2. The Mortgagee and Mortgagor desire to amend the Promissory Note and the Mortgage so that Mortgagor may pay in full its first mortgage on the Property without being required to repay the Loan in full. 3. The Loan shall be due and payable upon the earlier o£ (i) the sale, transfer or other conveyance (both voluntary and involuntary) of the Property; or (ii) , 2025. All other events of maturity of the Loan set forth in the Promissory Note or the Mortgage shall no longer be applicable to the Loan. 4. This Amendment shall not be deemed a waiver of any other terms or covenants of the Promissory Note or the Mortgage. Any forbearance by the Mortgagee in exercising any right or remedy shall not be a waiver of or preclude the exercise of any right or remedy under the Promissory Note and the Mortgage, as amended by this Agreement. 1 408694v2 JAE RC125-1 5. The Promissory Note and the Mortgage shall otherwise continue in full force and effect, in accordance with their terms. 6. Angela M. Solin hereby consents to and joins in the Promissory Note and Mortgage. (The remainder of this page is intentionally left blank.) 2 408694v2JAE RC125-1 461460v1 CBR RC125-1 IN WITNESS WHEREOF, the parties have caused this Amendment to be executed as of.the day of , 2015. MORTGAGOR: Michael A Solin Angela M Solin STATE OF MINNESOTA ) ) COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this day of , 2015, by Michael A Solin, husband and wife. Notary Public 3 408694v2 JAE RC125-I MORTGAGEE: HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD By: Mary B. Supple Its: Chairperson By: Steven L. Devich Its: Executive Director STATE OF MINNESOTA ) ) COUNTY OF HENNEPIN ) The foregoing was acknowledged before me this day of , 2015, by Mary B. Supple, the Chairperson of the Housing and Redevelopment Authority in and for the City of Richfield, a public body corporate and politic under the laws of Minnesota, on behalf of the corporation, Mortgagee. Notary Public STATE OF MINNESOTA ) ) COUNTY OF HENNEPIN ) The foregoing was acknowledged before me this day of , 2015, by Steven L. Devich, the Executive Director of the Housing and Redevelopment Authority in and for the City of Richfield, a public body corporate and politic under the laws of Minnesota, on behalf of the corporation, Mortgagee. Notary Public This Instrument Drafted By: Kennedy&Graven,Chartered 470 U.S.Bank Plaza 200 South Sixth Street Minneapolis,MN 55402(JAE) 4 408694v2 JAE RC125-1 EXHIBIT A LEGAL DESCRIPTION Lot 1, Block 1, Rae Second Addition,Hennepin County Minnesota 5 408694v2 JAE RC125-1 AGENDA ITEM#: 5 REPOKT#: I� STAFF REPORT �" � ' '' HOUSING AND REDEVELOPMENT AUTHORITY MEETING MAY 18, 2015 REPORT PREPARED BY: MYRT LINK, COMNIUNITY DEVELOPMENT ACCOUNTANT NAME,TITLE REPORT PRESENTER: JOHN STARK, COMMUNITY DEVELOPMENT DIRECTOR NAME,TITLE DEPARTMENT DIRECTOR REVIEW: � . I�`� ��<``. ,f f SI TURE REVIEWED BY EXECUTNE DIRECTOR: � .� � ITEM FOR HRA CONSIDERATION: Authorize the Richfield Housing and Redevelopment Authority to reduce the original tax capacity of the Gramercy Park Cooperative Tax Increment District due to Homestead Market Value Exclusion. I. RECOMMENDED ACTION: By Motion: Approve a resolution authorizing the Richfield Housing and Redevelopment Authority to reduce the original tax capacity of the Gramercy Park Cooperative Tax Increment District due to Homestead Market Value Exclusion. II. EXECUTIVE SUMMARY In 2011 the Legislature adopted the Homestead Market Value Exclusion, which revised the tax calculation for homestead property, and as a result, reduced the taxes that homestead properties pay. This also reduced the tax increment generated by hamestead properties. In 2013, the Legislature adopted a "fix" which would allow cities an option to reduce the base in the Tax Increment Finance (TIF) district and lessen the impact on tax increment districts that contained owner occupied housing, therefore resulting in increased tax increment. 051815 Market Value Homestead Exclusion-Gramercyxxx In order to allow the Housing and Redevelopment Authority (HRA) to reduce the original tax capacity, the City Council was required to pass a resolution authorizing them to do so. The City Council adopted the required resolution on May 12, 2015 with a vote of 5 — 0. The reduction will result in an estimated increase of increment in the amount of $22,561 for the HRA to use for administration and qualified redevelopment activities and an estimated increase of$195,971 to the Note holder for payment of the Pay- As-You-Go Note. III. BASIS OF RECOMMENDATION A. BACKGROUND • The Gramercy Park Cooperative Tax Increment District was established in 1998. Under current projections, it is not anticipated that the principal and interest on the Pay-As-You-Go Note will be paid in full at the time of decertification in 2025. • As a result of Legislative action in 2011, homestead properties pay less tax, which in turn reduces the tax increment generated by these properties. • The receipt of less increment than was anticipated resulted in less money available for administration and debt service payments. • In 2013 the Legislature adopted a "fix" which allows cities to reduce the base tax in an amount proportionate to the market value homestead reduction, which will generate more increment. • Under Pay 2015 values, if the resolution is adopted, the gross tax increment is estimated to increase by $218,532. Future increases will depend on actual market values and tax rates, which change annually. B. PoLICY • The HRA may elect to reduce the original tax capacity of the Gramercy Park Cooperative Tax Increment District only upon approval of the City Council by resolution. • The City Council adopted the required resolution on May 12, 2015. C. C�TICAL TIMnvG ISSUES • The HRA must notify the Hennepin County Auditor prior to July 1, 2015 of the election to reduce the original tax capacity for it to be effective for taxes payable beginning in 2016. D. FINANCIAL • Approval to reduce the original tax capacity of the Gramercy Park Cooperative Tax Increment District would result in more increment for both the HRA and the Developer's Pay-As- You-Go-Note payment. • The impact to all taxing jurisdictions is minimal and brings the amount of tax increment generated more aligned with the amounts anticipated when the district was established. E. LEGAL • The resolution was drafted by HRA legal counsel. IV. ALTERNATNE RECOMMENDATION(S� • Do not authorize the HRA to reduce the original tax capacity for the Gramercy Park Cooperative Tax Increment District. V. ATTACHMENTS • Resolution VI. PRINCIPAL PARTIES EXPECTED AT MEETING • None RESOLUTION NO. RESOLUTION ELECTING TO REDUCE ORIGINAL TAX CAPACITY OF GRAMERCY PARK COOPERATIVE TAX INCREMENT DISTRICT DUE TO HOMESTEAD MARKET VALUE EXCLUSION BE IT RESOLVED by the Board of Commissioners of the Housing and Redevelopment Authority of Richfield, Minnesota(the"HRA")as follows: WHEREAS, the Housing and Redevelopment Authority of Richfield, Minnesota (the "HRA") established and operates the Gramercy Park Cooperative Tax Increment District (the "TIF District"); and WHEREAS, previous changes to state t� law regarding the homestead market value exclusion has adversely affected taat receipts in the TIF District; and WHEREAS, the 2013 Minnesota Legislature amended Minnesota Statutes, Section 469.177 by adding subd. 1 d which permits a redevelopment authority to elect to reduce the original net t� capacity of a qualified district by the amount of the taY capacity attributable to the market value exclusion under Minnesota Statutes, Section 273.13, subd. 35; and WHEREAS,the TIF District meets the definition of a qualifying district within the meaning of Minnesota Statutes, Section 469.177, subd. 1 d; and WHEREAS, the HRA may make such election only upon approval of the City Council by resolution and the City Council approved such election by resolution on May 12,2015. NOW,THEREFORE,BE IT RESOLVED by the Housing and Redevelopment Authority in and for the City of Richfield,Minnesota as follows: 1. The HRA is authorized to elect to reduce the original tax capacity of the Gramercy Park Cooperative Tax Increment District by the amount of the tax capacity attributable to the market value exclusion under Minnesota Statutes, Section 273.13, subd. 35,but not below zero; 2. The HRA is authorized to notify the Hennepin County Auditor of its election prior to July 1, 2015 in order for such election to be effective for taxes payable beginning in 2016; and 3. HRA staff and consultants are authorized and directed to take any and all such other actions as may be necessary or convenient to carry out the intent of this resolution. Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this 18th day of May, 2015. Mary B. Supple, Chair ATTEST: Doris Rubenstein, Secretary AGENDA ITEM#: 6 � REPORT#: 18 STAFF REPOR'1' � p 'f ' HOUSING AND REDEVELOPMENT AUTHORITY MEETING MAy 18, 2015 REPORT PREPARED BY: MYRT LINK, COMMUNITY DEVELOPMENT ACCOUNTANT NAME,TITLE REPORT PRESENTER: JOHN STARK, COMMUNITY DEVELOPMENT D�CTOx NAME,TITLE DEPARTMENT DIIZECTOR REVIEW: � ; S� ua� REVIEWED BY EXECUTNE DIRECTOR: L1a , ITEM FOR HRA CONSIDERATION: Authorize the Richfield Housing and Redevelopment Authority to reduce the original tax capacity of the Lyndale Gateway LLC tax Increment District due to Homestead Market Value Exclusion. I. RECOMMENDED ACTION: By Motion: Approve a resolution authorizing the Richfield Housing and Redevelopment Authority to reduce the original tax capacity of the Lyndale Gateway LLC Tax Increment District due to Homestead Market Value Exclusion. II. EXECUTIVE SUMMARY In 2011 the Legislature adopted the Homestead Market Value Exclusion, which revised the tax calculation for homestead property, and as a result, reduced the taxes that homestead properties pay. This also reduced the tax increment generated by homestead properties. In 2013, the Legislature adopted a "fix°' which would allow cities an option to reduce the base in the Tax Increment Finance (TIF) district and lessen the impact on tax increment districts that contained owner occupied housing, therefore resulting in increased tax increment. 051815 Market Value Homestead Exclusion-Lyndale Gateway LLCxxx In order to allow the Housing and Redevelopment Authority (HRA) to reduce the original tax capacity, the City Council was required to pass a resolution authorizing them to do so. The City Council adopted the required resolution on May 12, 2015 with a vote of 5 — 0. The reduction will result in an estimated increase of increment in the amount of$40,511 for the HRA to use for administration and qualified redevelopment activities and an estimated increase of$351,887 to use for debt service for the Taxable GO Tax Increment Refunding Bonds Series 2012B or repayment of the HRA's Interfund Loan. III. BASIS OF RECOMMENDATION A. BacxGxourr� • The Lyndale Gateway, LLC Tax Increment District was established in 2002 and is required to be decertified in 2029. • As a result of Legislative action in 2011, homestead properties pay less tax, which in turn reduces the tax increment generated by these properties. • The receipt of less increment than was anticipated resulted in less money available for administration and debt service payments. • In 2013 the Legislature adopted a "fix" which allows cities to reduce the base tax in an amount proportionate to the market value homestead reduction, which will generate more increment. • Under Pay 2015 values, if the resolution is adopted, the gross tax increment is estimated to increase by $392,398. Future increases will depend on actual market values and tax rates, which change annually. B. PoLICY • The HRA may elect to reduce the original tax capacity of the Lyndale Gateway LLC Tax Increment District only upon approval of the City Council by resolution. • The City Council adopted the required resolution on May 12, 2015. C. C�TICAL T��IssuEs • The HRA must notify the Hennepin County Auditor prior to July 1, 2015 of the election to reduce the original tax capacity for it to be effective for taxes payable beginning in 2016. D. FrNarrclaL • Approval to reduce the original tax capacity of the Lyndale Gateway LLC Tax Increment District would result in more increment for HRA administration and debt service for the Taxable GO Tax Increment Refunding Bonds, Series 20126 or repayment of the HRA's Interfund Loan. • The impact to all taxing jurisdictions is minimal and brings the amount of tax increment generated more aligned with the amounts anticipated when the district was established E. LEGAL • The resolution was drafted by HRA legal counsel. IV. ALTERNATNE RECOMMENDATION(S� • Do not authorize the HRA to reduce the original tax capacity for the Lyndale Gateway LLC Tax Increment District V. ATTACHMENTS • Resolution VI. PRINCII'AL PARTIES EXPECTED AT MEETING • None RESOLUTION NO. RESOLUTION ELECTING TO REDUCE ORIGINAL TAX CAPACITY OF LYNDALE GATEWAY LLC TAX INCREMENT DISTRICT DUE TO HOMESTEAD MARKET VALUE EXCLUSION BE IT RESOLVED by the Board of Commissioners of the Housing and Redevelopment Authority of Richfield,Minnesota(the"HRA")as follows: WHEREAS, the Housing and Redevelopment Authority of Richfield, Minnesota (the "HRA") established and operates the Lyndale Gateway LLC Tax Increment District(the"TIF District"); and WHEREAS, previous changes to state tax law regarding the homestead market value exclusion has adversely affected tax receipts in the TIF District; and WHEREAS, the 2013 Minnesota Legislature amended Minnesota Statutes, Section 469.177 by adding subd. 1 d which permits a redevelopment authority to elect to reduce the original net tax capacity of a qualified district by the amount of the t� capacity attributable to the market value exclusion under Minnesota Statutes, Section 273.13, subd. 35; and WHEREAS,the TIF District meets the definition of a qualifying district within the meaning of Minnesota Statutes, Section 469.177, subd. ld; and WHEREAS, the HRA may make such election only upon approval of the City Council by resolution and the City Council approved such election by resolution on May 12, 2015. NOW, THEREFORE,BE IT RESOLVED by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota as follows: 1. The HRA is authorized to elect to reduce the original tax capacity of the Lyndale Gateway LLC Tax Increment District by the amount of the t� capacity attributable to the market value exclusion under Minnesota Statutes, Section 273.13, subd. 35,but not below zero; 2. The HRA is authorized to notify the Hennepin County Auditor of its election prior to July 1, 2015 in order for such election to be effective for taxes payable beginning in 2016; and 3. HRA staff and consultants are authorized and directed to take any and all such other actions as may be necessary or convenient to carry out the intent of this resolution. Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this 18th day of May, 2015. Mary B. Supple, Chair ATTEST: Doris Rubenstein, Secretary