11-17-08 Agenda• ~ CITY OF RICHFIELD, MINNESOTA
MONDAY, NOVEMBER 17, 2008
REGULAR HOUSING AND REDEVELOPMENT AUTHORITY MEETING
RICHFIELD CITY HALL COUNCIL CHAMBERS
6700 PORTLAND AVENUE
7:00 P.M.
AGENDA
- Call to order
1. Oath of Office to HRA Commissioner Steven Quam
2. Roll call
3. Appointment of interim HRA Vice .Chair
4. Recognition of former HRA Commissioner Martin J. Kirsch
5. _ Approval of minutes of Regular HRA Meeting of October 20, 2008
• 6. HRA approval of agenda
Notes:
7. Consideration of contract with Doboszenski & Sons, Inc. for demolition of 7316
Clinton Avenue
Staff Report No. 49
Notes:
8. Consideration of revised subordination policy for HRA loans
Staff Report No. 50
Notes: _
• 9. Consideration of subordination request for HRA Transformation Homes Incentive
Loan at 7144 Park Avenue
• - Staff Report No. 51 -
Notes:
10. Executive Director report _
11. 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.
• -
r.
•
~- STAFF REPORT
7
49
AGENDA ITEM #
REPORT #
HOUSING AND REDEVELOPMENT
AUTHORITY MEETING
NOVEMBER 17, 2008
REPORT PREPARED BY:
REPORT PRESENTER:
KIRSTEN PARTENHEIMER, HOUSING
SPECIALIST
NAME, TITLE
JOHN STARK, COMMUNITY DEVELOPMENT
DIItECTOR
NAME.
DEPARTMENT DIRECTOR REVIEW:
REVIEWED BY EXECUTIVE DIRECTOR:
ITEM FOR HRA CONSIDERATION:
Consideration of a contract with Doboszenski & Sons, Inc. for the demolition of 7316 Clinton
Avenue.
I. RECOMMENDED ACTION:
By Motion: Approve a contract with Doboszenski & Sons, Inc. for the
demolition of 7316 Clinton Avenue.
II. BACKGROUND
In July 2008 the Housing and Redevelopment Authority (HRA) acquired 7316
Clinton Avenue for a New Home project. The HRA plans to build two new homes,
similar to the project at 7201 Nicollet Avenue, on the double lot.
HRA staff solicited estimates for the demolition of the house and garage from three
companies: Frattalone Companies, Doboszenski & Sons, Inc., and VEIT &
Company, Inc.
• The companies submitted the following estimates:
o Doboszenski & Sons, Inc. - $ 9,450
o VEIT & Company, Inc. - $13,700
o Frattalone Co - $15,750
111708 demo contract 7316 Clinton
Staff recommends the HRA approve a contract with Doboszenski & Sons, Inc.
• III. BASIS OF RECOMMENDATION
A. POLICY
• The HRA has demonstrated success through its New Home program
in removing housing in poor conditions and providing affordable
replacement housing for families.
• Historically, the HRA has often demolished the existing home prior to
selling the property to anon-profit developer.
B. CRITICAL ISSUES
• If the contract is approved, demolition will occur by the, end of
December.
The site will be leveled for safety and aesthetic reasons.
The house is currently vacant and poses an attractive nuisance. In an
effort to ensure the safety of the surrounding neighborhood and to
reduce the risk to the HRA, the house should be demolished as soon
as possible.
C. FINANCIAL
• • The cost of the demolition is $9,450.00.
• 2008 New Home funds wi11 be used for this project.
D. LEGAL
• Legal counsel drafted the Contract for Demolition and approved slight
modifications.
IV. ALTERNATIVE RECOMMENDATION(S~
• Do not approve the Contract for Demolition.
V. ATTACHMENTS
• Contract for Demolition
VI. PRINCIl'AL PARTIES EXPECTED AT MEETING
• N/A
~-i
CONTRACT FOR DEMOLITION OF
7316 CLINTON AVENUE
RICHFIELD, MN 55423
THIS CONTRACT is made and entered into this day of November, 2008, by and
between Doboszenski & Sons, Inc. (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 and abatement of hazardous substances and materials
of the property located at 7316 Clinton Avenue, Richfield, MN 55423
RECITALS
WHEREAS, the HRA requires the demolition of buildings at 7316 Clinton Avenue
including among other items, the abatement of hazardous substances and materials (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
"Asbestos" means any material containing more than one percent asbestos, which is friable,
releasing asbestos fibers into the -air, .above current levels established by the United States
Occupational Safety and Health Administration.
"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.
"Destructive Report" means a hazardous materials abatement inventory .prepared to assist in
establishing the scope of the Work.
"Final Completion" means all items of the Work, "punch list items" and site work are completed
and Contractor is eligible for Final Payment.
"Hazardous Materials" means asbestos, PCBs, petroleum hazardous waste, radioactive material,
or any other hazardous materials or hazardous wastes within the meaning of City, State of
Minnesota, or Federal definitions of hazardous materials or hazardous waste.
"Owner" means the Housing and Redevelopment. Authority in and for the City of Richfield,
Minnesota.
1
/ •_
• "Property" means 7316 'Clinton Avenue, 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.
"Work" means the entire completed demolition,. abatement of hazardous materials, and all other
activities to be performed by Contractor on the Property as provided for in the 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 City 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. EqualEqual Opportunity StatementStatement. Contractor agrees to comply with the provisions of
all applicable federal, state, and City of Richfield 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 ContractorContractor. Nothing contained in this agreement is intended to, or
shall be construed in any manner, as creating or establishing the relationship of
employer/employee between the parties. The Contractor shall at all times remain an
independent contractor with respect to the services to be performed under this agreement.
The HRA shall be exempt from payment of all Unemployment Compensation, FICA,
retirement, life and/or medical insurance and Workers Compensation Insurance as the
• Contractor is an independent contractor.
2
~r 3
2.6. Hold Harmless. The Contractor agrees to defend, indemnify and hold harmless
the HRA and the City ,its officers and employees, from any liabilities, claims, damages,
costs, judgments, and expenses; including attorney's fees, resulting directly or indirectly
from an act or omission of the contractor, its employees, its agents, or employees of
subcontractors, in the performance of the services provided by this contract or by reason
of the failure of the contractor to fully perform, in any respect, all of its obligations under
this Contract.
2.7. 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.
2.8. 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
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.
2.9. Disclosure. 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 $9,450.00, 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 December 17,
2008.
C~
3
~- y
Section 5. Local Permit Requirements and Related Submittals
5.1. Contractor shall obtain permits required by the City of Richfield, 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). Contractor has not been provided a copy of an abatement
hazardous materials inventory ("Destructive Report").
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
of Richfield, such as transport or disposal permits.
- Copies of any test results required by government agencies other than the
City of Richfield, 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. Owner shall ensure that the buildings will be vacated and use of the property will
be discontinued prior to start of work.
6.3. Owner assumes no responsibility for actual condition of structures to be
demolished. Conditions existing at time of inspection for bidding purposes will be
maintained by Owner 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. This is a lump sum contract. Contractor must immediately contact Owner prior to
exceeding the Contract Price set out in Section 3.1. Change orders for additional
payment will not be granted due to the Contractor underestimating quantities of
material(s).
4
"~ c~.--
/ - J
6.5. 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.
6.6. All materials from undertaking the Work shall become the property and
responsibility of the Contractor.
6.7. 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.
6.8. The -use of explosives and on site burning by the Contractor is prohibited.
6.9. Contractor shall provide water, electricity, communications and toilet facilities on
site as necessary to complete the work.
6.10. 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.
6.11. Contractor shall keep fire hydrants and water control valves free from obstruction
and accessible for use:
• 6.12. Contractor shall take all necessary safeguards to prevent damage or injury to
neighboring property.
6.13. 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.
Section 7. Asbestos Abatement
7.1. Contractor shall remove and properly dispose of all friable and category 2 non-
friable asbestos containing materials and complete asbestos abatement on the Property in
accordance with Minnesota Pollution Control Agency regulations and the Destructive
Report identified in Section 5.1 of this Contract.
7.2. Contractor shall decontaminate and encapsulate the work area prior to final
clearance and air monitoring.
7.3. Contractor shall provide final cleanup and removal of all remaining temporary
barriers, equipment and supplies.
5
~-~
7.4. Contractor shall provide all monitoring and analysis of air samples as required by
state and federal regulations.
7.5. Contractor shall complete final. clearance and air monitoring as required by state
and federal regulations.
Section 8. Other Hazardous Materials Abatement
Pursuant to Minnesota Pollution Control Agency regulations (and the Destructive Report),
Contractor shall remove and properly dispose of the following materials and items from the
Property:
8.1. Mercury:
a. Batteries: Smoke detectors, emergency lighting, exit signs, security
systems and alarms.
b. Lighting:. Fluorescent lights and bulbs; high intensity discharge lights
(metal halide, high pressure sodium, mercury vapor and neon); switches
and controls for lighting.
c. Heating, Ventilating and Air Conditioning Systems: controls, devices,
. thermostats, aquastats, pressurestats, firestats, manometers, thermometers.
d. Boilers, Furnaces, Heaters and Tanks: Mercury flame sensors by pilot
lights; manometers, thermometers, gauges, pressure-trol, float and level
controls, space heater and unit ventilator controls.
e. Electrical systems: Load meters and supply relays, phase sputters,
microwave relays and mercury displacement relays.
f. Miscellaneous: All vacuum, pressure, fluid level, temperature and flow
rate control boxes and panels.
g. Any electrical wiring from fixtures or equipment being removed for
abatement shall be capped.
8.2. Poly-Chlorinated Biphenyls (PCBs): Transformers, transistors, capacitors, heat
transfer equipment, light ballasts.
8.3. Chlorofluorocarbons (CFCs) and Hydrochlorofluorocarbons (HCFCs): Fire
extinguishers, air conditioners, walk-in coolers and freezers, water fountains and
dehumidifiers, refrigerators/freezers/chillers, and heat pumps.
6
/ --'~
• 8.4. Miscellaneous:
a. Hazardous waste including general-purpose cleaners, paints and thinners.
b. Oils including used oil and hydraulic oil in door closers.
c. Water heaters.
d. Space heaters.
e. Air compressors and controls.
f. Building unit ventilators.
g. Radiators.
h. Fuse boxes and electrical panels.
i. Roof top exhaust vents with motors.
j. Boiler chemicals.
k. Heating fuel tank, including contents, if any.
Section 9. Demolition
9.1 Owner has not conducted any testing to determine the extent of lead based paint.
Contractor shall conduct demolition in compliance with any state or federal regulations
governing demolition of structures containing lead based paint.
9.2. 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.
9.3. 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.
9.4. 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.
9.5. 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.
9.6. Contractor shall locate demolition equipment throughout the building and remove
materials so as to not impose excessive loads to supporting walls, floor or framing.
9.7. 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.
7
-~ d
• 9.8. Contractor shall break up any concrete slabs-on-grade and remove from the
Property.
9.9. Contractor shall demolish footings, foundation walls, tunnels and other below-
grade structures and remove from the Property.
9.10 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.
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.
8
,.7 _ C.
• 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 Owner, or of an employee of either, or
of a separate contractor employed by the Owner, 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 shall have 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. 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 agreement. The Contractor
shall 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 the
• 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 of Richfield 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 of Richfield. The Contractor shall indemnify, hold harmless, and defend the
HRA and the City of Richfield, its commissioners, council members, officers, employees,
successors, and assigns against any and all liability, loss, cost, damages, expenses, claims,
or actions, including attorney's fees which the HRA and the City of Richfield, its
commissioners, council members, officers, or employees may hereinafter incur or be
required to pay on account of injury to or death of any person or persons or damage to
any property arising .out of or by reason of any act or omission of the Contractor, its
agents, servants, or employees in the execution, performance, or failure to adequately
• perform its obligations under this Agreement, whatever the cause of such injuries or
damage.
9
~- / ~
• Section 17. Insurance
17.1. The Contractor agrees that in order to protect itself, the HRA, and the City of
Richfield 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:
A
b. Commercial General Liability Insurance. The Contractor shall maintain
Occurrence Based Commercial General Liability Insurance ("CGL"),
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 ($1,000,000), 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
($1,000,000) per accident, which total limits may be satisfied by the limits
10
~7 -1
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 of Richfield 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 payment or performance bonds for the Work shall be required pursuant to
Minn. Stat. § 574.26.
• 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 harmless the HRA and the City of Richfield 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.
11
~7 - t 2
• 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. Applicable Law
'23.1. This Contract shall be construed in accordance with and governed by the laws of
the state of Minnesota.
• Section 24. Amendment
24.1. This Contract may be modified or amended only with the written approval of the
HIZA and the Contractor.
Section 25. Construction
25.1. 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 26. Authority
26.1. 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 27. Waiver
27.1. No failure by the H1tA 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
~-~3
. 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 28. Payments. to Contractor and Completion
28.1. The Contractor shall be paid upon completion of the Work in accordance with the
payment schedule of the HRA, if any, and this section.
28.2. Application for Payment. 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.
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
Suzanne M. Sandahl
Its Chair
By
Steven L. Devich
Its Executive Director
13
~-i~
•
CONTRACTOR
By
Its
By
Its
•
THIS INSTRUMENT DRAFTED BY:
Kennedy & Graven, Chartered (MTN)
470 U.S. Bank Plaza
200 South Sixth Street
Minneapolis, MN 55402
(612) 337-9300
314396-v1.DOC
14
`7- 15
• EXHIBIT A
LIST OF SUPPLIERS AND SUBCONTRACTORS
Shamrock Disposal
Neaton Brothers Erosion Control
C
•
A-1
STAFF REPORT
8
50
AGENDA ITEM #
REPORT #
HOUSING AND REDEVELOPMENT
AUTHORITY. MEETING
NOVEMBER 17, 2008
•
REPORT PREPARED BY:
REPORT PRESENTER:
DEPARTMENT DIRECTOR REVIEW:
REVIEWED BY EXECUTIVE DIRECTOR
JOHN STARK, COMMUNITY DEVELOPMENT
DIRECTOR
NAME, TITLE
JOHN. STARK, COMMUNITY DEVELOPMENT
_ ITEM FOR HRA CONSIDERATION:
Consideration of revised Subordination Policy for Housing and Redevelopment Authority
loans.
I. RECOMMENDED ACTION:
By Motion: Approve revised Subordination Policy for Housing and
Redevelopment Authorit loans.
II. BACKGROUND
The Housing and Redevelopment Authority (HRA) provides Richfield residents with
financing for remodeling, repairs, and. second mortgages for purchasing homes.
The HRA places a lien on the property to secure this financing. The HRA's lien is,
in most cases, a junior lien on the property after a first mortgage. The payment. is
deferred to a future time, such as the sale of the home. When homeowners attempt
to refinance their first mortgage or obtain an equity line of credit, the new lender
typically requests a subordination of the HRA's lien to allow the new lender's lien to
be in first position.
The HRA's current subordination policy was approved in August 2007. The major
difference between that policy and those which preceded it was to change the
allowable Loan to Value (LTV) ratio from 85% to 80%. Prior to August 2006, a
subordination request could be approved with LN's as high as 100%.
111708 Subordination Policy Update
DIRECTOR
In the past year, the HRA has considered seven appeals of its Subordination Policy
S (including one at the November 17, 2008 meeting). Five of the appeals were
approved by the HRA. The subordinations that were subject to appeal were denied
by staff for the following reasons:
o LTV of 81.55% -this appeal was approved by the HRA;
o LTV of 90% -this appeal was approved by the HRA;
o LTV of 96% -this appeal was denied by the HRA.
o Use of resulting loan proceeds for both paying off contract for deed, home
improvements and personal debt -this appeal was approved by the HRA
with the exception of using proceeds to pay off personal. debt.
o Use of resulting loan proceeds to consolidate $48,266 in debt .incurred in
making home improvements plus $3,852 for personal use -this appeal was
approved by the HRA.
o Subordination to a revolving line of credit in the amount of $25,000 for
consolidation of personal debt -this appeal was denied by the HRA.
o Subordination to a revolving line of credit in the amount of $50,000 for
consolidation of personal debt -this appeal is currently under consideration
by the HRA.
Due to the timing requirements of loan closings, three of these subordination
appeals required the holding of Special HRA Meetings.
• In an effort to facilitate requests in an efficient and timely manner, staff is proposing
several updates to the. HRA's Subordination & Satisfaction Policy. An update to the
Subordination Policy was presented to the HRA at its October 20, 2008 meeting,
however, that item was denied due to two concerns by the HRA. One of those
concerns was that the suggested policy gave staff too much authority to determine
whether or not to grant a subordination request. The other concern was that the
suggested policy was too lenient in allowing new debt that would be senior to the
HRA's lien to be used to pay-for costs other than those involved in making
improvements to the home.
Staff has amended its recommended policy to address these issues.
The suggested policy (attached) adds a number of criteria which must be met in
order for a subordination request to be approved, including:
• The subordination would not result in the HRA lien being subordinate to a
revolving line of credit.
• The subordination would not result in the HRA lien being junior to more than
two other liens.
• • The subordination would not. result in the HRA Lien being junior to debt that
exceeds the average national 30-year fixed mortgage rate at the time of the
request.
The new policy also rewords one requirement from: "If no more than one
• subordination request has been .approved by the HRA in the past," to, "No
subordination request has been approved by the HRA in the past five years."
Additionally, the suggested policy would also allow a subordination request to be
approved if one, and only one; of the following conditions apply:
The total debt secured by the property, including the HRA lien and all
superior mortgages, does not exceed 85% of the documented market value
of the property.
^ One subordination has been granted within the past five years.
• No more than $5,000 or 10% of the costs of home improvements being
completed with the equity being removed (whichever is less) is being used
for purposes other than completing home improvements.
Under the suggested policy, three of the five appeals approved by the HRA would
have been approved without an appeal, while the remaining four would still be
subject to HRA consideration.
The suggested policy also outlines the process for appealing a staff decision and
establishes a fee for such an appeal (to be considered separately as part of the
• HRA's fee schedule). It is suggested that applicants receiving approval of an
appeal by the HRA be required to enroll in a credit counseling class.
III. BASIS OF RECOMMENDATION
A. POLICY
• All subordination requests not meeting the current HRA policy
guidelines are automatically denied by staff.
• The Policy does not provide for an HRA appeal.
• In August of 2006, the HRA approved subordination guidelines and
reduced the permissible LTV to 85% from 100%. In August 2007, the
HRA reduced the LTV to 80%.
B. CRITICAL ISSUES
• An HRA approved subordination policy will provide staff with guidance
to process most subordination requests.
• If necessary, a subordination request may come before the HRA for
final decision.
• .The current HRA Policy does not include direction on an appeal
process.
• C. FINANCIAL
• A subordination policy protects the HRA's financial interests.
D. LEGAL
• HRA legal counsel has reviewed- the measure requiring homeowners
to enroll in financial counseling in order to receive a Subordination
Agreement.
IV. ALTERNATIVE RECOMMENDATION(S~
• Do not approve policy.
• Approve proposed policy with changes.
V. ATTACHMENTS
• Draft Richfield HRA Subordination and Satisfaction Policy
VI. PRINCIPAL PARTIES EXPECTED AT MEETING
• N/A
•
' s
RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY (HRA)
• SUBORDINATION & SATISFACTION POLICY
EFFECTIVE NOVEMBER 2008
Subordinations
Richfield Housing and Redevelopment Authority (HRA) loan recipients requesting subordination
of the interest of the HRA in real property must submit a Subordination Request Form, required
supporting documentation, and a processing fee. Forms are available on the City of Richfield
website (http://www.ci.richfield.mn.us/) or by calling the Community Development Department at
612-861-9760. Requests will not be considered until all documents and the processing fee have
been received.
Required Documents
The following information must be submitted with the Subordination Request Form:
A typed letter, dated'and signed by the mortgagor, stating the reason for
the requested subordination and the use of any equity being removed as
part of the loan transaction.
2. A copy of the current appraisal (dated within six months of application) or
other evidence of market value of the property that is acceptable to-the
HRA..
• 3. A copy of current title work (must indicate all debt against the property).
4. Explanation of remaining debts or liens with supporting documentation
(i.e. most recent mortgage bill).
5. Estimated closing costs/settlement statement, where applicable.
6. Additional documentation may be required.
Evaluation Criteria
All of the following conditions must be met in order for the HRA staff to approve the further
subordination of an HRA lien:
1. Closing costs are reasonable. Generally this shall mean that the sum of
all discount points, origination fees, and lender ancillary fees generally
shall not exceed 3% of the new first mortgage amount.
2. The total debt secured by the property, including the HRA lien and all
superior mortgages, does not exceed 80% of the documented market
value of the property.
3. Any equity being removed beyond the cost of the loan transaction will be
used to improve the property. A typed letter, dated and signed by the
applicant, must be submitted stating the use of any equity being
removed.
Subordination and Satisfaction Policy
0
Page 2 of 3
• 4. The overall value of superior debt must not be increased by more than
50%. Exceptions may be granted by the HRA. in cases where superior
debts are found to be unusually low with sufficient equity protection.
No subordination request has been approved by the HRA in the past five
years.
6. Property taxes, if not escrowed by the superior mortgage holder, must be
current.
7. The subordination would not result in the HRA lien being subordinate to
a line of credit.
8. .The subordination would not result in the HRA lien being junior to more
than two other liens.
9. The subordination would not result in the HRA Lien being junior to debt
that exceeds the average national 30-year fixed mortgage rate.
In the event that a subordination request that otherwise does not meet the above criteria, the
HRA will subordinate if~no more than one of the following exceptions exist:
1. The total debt secured by the property, including the HRA lien and all
superior mortgages, does. not exceed 85% of the documented market
value of the property.
2. One subordination has been granted within the past five years.
• 3. No more than $5,000 or 10% of the costs of home improvements being
completed with the equity being removed (whichever is less) is being
used for purposes other than completing home improvements.
The.HRA will not subordinate to reverse mortgages. In most cases, interest-only loans or loans
with interest-only options, revolving lines of credits or debt consolidation will not be allowed
unless the HRA determines that an acceptable reason warrahts this type of loan.
The HRA may approve other subordination requests not meeting the conditions above on a case-
by-case basis that are clearly in the best interests of the HRA, where the security of the HRA loan
remains acceptable, and denial of the request will cause or contribute to a documented hardship
on the part of the borrower.
As a condition of approval, the HRA may require the borrower to receive financial counseling.
While many courses are available at no charge, the borrower is responsible for any costs
associated with the counseling. The course must be approved by the HRA.
Fees
The non-refundable fee for a subordination request is established by the HRA. If an appeal is
made, an additional fee will be imposed.
Processing
Subordination requests will be processed by HRA staff, who will submit. the request with a
• recommendation for action to the Housing & Redevelopment Manager. The Manager may
request review and final decision by the HRA. Requests for subordination should be submitted
•
•
Subordination and Satisfaction Policy $ ~ 3
Page 3 of 3
30 days prior to the date the agreement to subordinate is needed
case-by-case basis.
Appeal Process
. ............_...
DP.APT
Exceptions may be made on a
If an application is denied, the applicant may request an appeal in writing. Appeals will be
submitted by staff to the HRA at the next regularly scheduled meeting, provided the request is
made at least 10 days prior to that meeting. The HRA meets on the third Monday of each month.
If the HRA grants an appeal outside the policy guidelines, the homeowners will be required to
attend a financial counseling course. The course must be approved by the HRA and-any costs
associated with the counseling are the responsibility of the homeowners. The homeowners must
provide proof of enrollment in an approved course or counseling before a Subordination
Agreement is executed.
Satisfactions
When a loan made by the HRA is paid in full, a document satisfying the lien will be prepared by
the HRA and delivered to the borrower for recording. The borrower is responsible for the cost of
recording the satisfaction.
AGENDA ITEM # 9
REPORT # S 1
J STAFF REPORT
HOUSING AND REDEVELOPMENT
AUTHORITY MEETING
NOVEMBER 17, 2008
•
REPORT PREPARED BY:
REPORT PRESENTER:
DEPARTMENT DIRECTOR REVIEW:
REVIEWED BY EXECUTIVE DIRECTOR
KIRSTEN PARTENHEIMER, HOUSING
SPECIALIST
NanrE, TircE
ITEM FOR HRA CONSIDERATION:
Consideration of a subordination request for the Housing and Redevelopment Authority's
Transformation Homes Incentive Loan at 7144 Park Avenue in accordance with the revised
subordination polic .
I. RECOMMENDED ACTION:
By Motion: Deny a subordination request for the Housing and
Redevelopment Authority's Transformation Homes Incentive Loan at
7144 Park Avenue.
II. BACKGROUND
In May 1997 Joel and Linda Elsen received a Transformation Homes Incentive Loan
in the amount of $11,415.00 to renovate their home at 7144 Park Avenue.
The Elsens are requesting the Housing and Redevelopment Authority (HRA)
subordinate their lien to allow them to obtain a $50,000 home equity line of .credit
through Richfield/Bloomington Credit Union. In a letter submitted with their
application, the Elsens stated they would use the line of credit to "primarily finance
various home improvement projects", but do not have specific plans for renovations.
Under the HRA's current Subordination and Satisfaction Policy, any equity being
removed beyond the cost of the loan transaction must be used to improve the
111708 Elsen subordination request repeal
JOHN STARK, COMMUNITY DEVELOPMENT
DIRECTOR
property. Since this is a revolving line of, credit and is not specifically for home
improvements, it does not meet the hiRA's policy guidelines and therefore staff is
required to deny the request.
.III. BASIS. OF RECOMMENDATION
A. POLICY
• The current HRA's Subordination Policy requires any equity being
removed beyond the cost of the loan transaction to be used
exclusively to improve the property. The Elsen's subordination
application does not meet this criterion because they plan to remove
some equity to finance a home equity line of credit.
• All other criteria for approval of the. subordination are -met.
• If the subordination is granted, the HRA's lien will move from first to
third position.
B. CRITICAL ISSUES
• Administratively, the Elsen's subordination request was denied. They
are appealing the decision and requesting the HRA make a special
consideration.
C. FINANCIAL
S Payment has been received for the subordination request.
D. LEGAL
• N/A
IV. ALTERNATIVE RECOMMENDATION(S~
• Approve the request and direct staff to prepare a subordination.
V. ATTACHMENTS
• N/A
VI. PRINCIPAL PARTIES EXPECTED AT MEETING
• Joel and Linda Elsen, homeowners
•