05-17-04 agendaCITY OF RICHFIELD, MINNESOTA
MONDAY, MAY 17, 2004
REGULAR HOUSING AND REDEVELOPMENT AUTHORITY MEETING
RICHFIELD CITY HALL
6700 PORTLAND AVENUE
COUNCIL CHAMBERS
7:00 P.M.
AGENDA
Call to order
1. Approval of minutes of (1) Special Concurrent HRA and City Council Worksession of
March 15, 2004; (2) Regular HRA Meeting of March 15, 2004; and (3) Special HRA
Meeting of March 24, 2004
Notes:
2. HRA approval of 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 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 approval of resolution authorizing HRA not to waive monetary limits
on statutory municipality tort liability established by MN Statute 466.04 S.R. No. 19
B. Consideration of approval of resolution authorizing modifications to Richfield
Rehabilitation Deferred Loan Program Guidelines S.R. No. 20
C. Consideration of approval of agreement reducing amount of secured. funds provided
for in Assignment of Deposit Account between HRA and Gramercy Corporation for
City Bella project S.R. No. 21
D. Consideration of approval of contract with Center for Energy and Environment to
administer Richfield Apartment Remodeling Program S.R. No. 22
Notes:
4. Presentation and acceptance of Richfield HRA Annual Tax Increment District status
update
Staff Report No. 23
Notes:
5. Executive Director report
6. 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 Administrative Services Director at 612-861-9702.
AGENDA ITEM # 4
REPORT # 7 Z
STAFF REPORT
HOUSING AND REDEVELOPMENT
AUTHORITY MEETING
MAY 17, 2004
KATIA MEDVETSKI,
REPORT PREPARED BY: REDEVELOPMENT SPECIALIST
NAME, TITLE
REPORT PRESENTER: BRUCE PALMBORG,
COMMUNITY DEVELOPMENT DIRECTOR
NAME, TITLE
DEPARTMENT DIRECTOR REVIEW:
SIGNATURE
REVIEWED BY EXECUTIVE DIRECTOR:
ITEM FOR HRA CONSIDERATION:
Consideration of a presentation of the Richfield Housing and Redevelopment Authority Annual
Tax Increment District Status Update.
RECOMMENDED ACTION:
By Motion: Accept the attached Richfield Housing and
---Redevelopment Authority Annual Tax Increment District Status
Update.
III. BACKGROUND
From its first presentation in 1993, the Housing and Redevelopment Authority's
(HRA) Annual TIF Status Report (Report) has proven to be an important tool for
managing tax increment districts, especially with the growing complexity of financial
structures for redevelopment projects. This year again, the. Report shows that the
HRA is able to meet all of its Pay As You Go Note and General Obligation Tax
Increment Bond obligations. The district-by-district summary makes up the first part
of the Report while the composite total cash flows for the districts, housing fund,
and administration is toward the back of the report. Following is a summary of the
Report.
051704TifStatReport
Report Summary
1) Interstate-Lyndale-Nicollet (ILN) Tax Increment Financing (TIF) District-
With four Pay As You Go TIF Notes (Notes) and two bonds, the district meets all
of its obligations through the year 2006. As stated in last year's report which
remains true this year, beginning in 2007 and going forward, tax increment will
be pooled from the Interchange/Galyans TIF District and Richfield Rediscovered
Pre-1999 TIF Districts to assist the ILN TIF District to continue to meets its future
obligations. Termed "deficit pooling" this form of sharing increment from other
districts is allowed under Minnesota Statutes and was enacted under the 2001
Special Session Laws in response to tax class rate changes which in some
situations resulted in a significant decrease in revenues.
2) Interchange WestlLyndale Gateway TIF District -This district is technically a
scattered site district that has three Notes and one bond. In 2002, the Note for
the Casteel Place townhouse project by Minnstar Builders (Ron Clark,
developer) within Lyndale Gateway was reduced in size due to cost savings by
the developer and a lesser need for tax increment. (This is a direct result of the
"look back" process.) As a result, the last payment to the developer is
scheduled in 2005. Future tax increment receipts from this project are pledged
to the Kensington Park redevelopment project within the Lyndale Gateway West
TIF District. (The Kensington Park cash flow will be included in the 2005 report.)
For the Interchange West portion, the first scheduled payment to Best Buy
begins in August, 2004. Also, Best Buy will now begin contributing to the
Housing Fund. The amount of the contribution is set at approximately $7 million
(present value) over the life of the TIF District (approximately $450,000 for 2004)
whip administration is set at approximately $1 million (present value) and
approximately $64,000 for 2004. In May 2003 in anticipation of the Best Buy
housing fund payments the HRA programmed the funds to a "Kids at Home"
version of the Section 8 program and also Richfield Rediscovered New
Construction and Transformation Home programs.
3) Urban Village TIF District -This district encompasses Wood Lake Centre and
has two Notes. The Noteholder for the tax exempt Note is Wells Fargo Bank
while the Noteholder for the taxable Note is Marshall & Isley Bank. The pending
sale of the property from Marshall & lisley Bank to Lend Lease does not impact
the financial terms of the Note. However, certain approvals regarding
assignments and assumptions of the taxable Note will be needed from the HRA
and Wells Fargo at an appropriate time in the future.
4) Richfield Rediscovered TIF Districts - It is important to note that Richfield
Rediscovered is distinct in two ways with respect to pre-1999 and post-1999
districts and related activity. Pre-1999 program activity includes acquisitions,.
district certifications, and new construction projects prior to the bond issued in
1999. Increment from the pre-1999 districts may be used only for eligible costs
associated with pre-1999 program activity, administration and deficit pooling.
Post-1999 increment may only be used for paying debt service on the bond and
administration.
5) City Bella TIF District -This district is not yet receiving tax increment as the
project remains under construction. The cash flow is included for reference
purposes, as the Note will soon be issued.
6) Total Administration -The projected increment for administration available
from the various districts (not including Lyndale Gateway West) is approximately
$7.8 million over the life of the districts or approximately $4 million in present
.value. Administration can only be used on actual, eligible project costs.
7) Total Housing Fund -The projected increment for the Housing Fund from the
four projects contributing over the life of their respective districts is
approximately $18.4 million or $8.65 million in present value. This figure
includes draw downs on the fund to assist with debt service payments on the
bonds for the Richfield Rediscovered 1999 TIF District.
III. BASIS OF RECOMMENDATION
A. POLICY
• The annual report is provided to the HRA to summarize tax increment
district cash flow activity and comment on the status of the HRA's
ability to meet its financial tax increment projects' obligations.
B. CRITICAL ISSUES
• The Report indicates that the HRA will be able to meet all of its current
and future tax increment projects' obligations.
C. FINANCIAL
• See detailed Report.
D. LEGAL
• To implement the use of pooling, the HRA will need to undertake
modifications to certain tax increment financing plans in 2004.
IV. ALTERNATIVE RECOMMENDATION(S~
• Delay the presentation of the Report.
• Reject the conclusions made in the Report and direct staff on how to further
proceed.
V. ATTACHMENTS
• Annual Tax Increment District Status Update.
VI. PRINCIPAL PARTIES EXPECTED AT MEETING
• Mr. Sid Inman, Ehlers & Associates, Inc.
RICHFIELD HRA
TAX INCREMENT DISTRICT
STATUS UPDATE
Dated: May 2004
E H LE RS
& ASSOCIATES I N C
Prepared by Ehlers/Publicorp, Inc
N:\Minnsota\Richfield\STATUS REPORT-2003\UPDA2003-1.rtf
OVERALL DISTRICT UPDATE
1. CONCLUSION
The HRA will be able to meet all of its tax increment obligations.
2. RICHFIELD REDEVELOPMENT PROJECT AREA
The 2002 tax law changes resulted in a reduction in the tax capacity class rates and a removal of the education
tax rate from the normal property taxes. The last change in 2004 was to apartments class rates. These
changes resulted in a 30% to 40% reduction in the tax increment that the HRA has to pay its obligations.
The HRA has two types of obligations. The first type of obligation is Pay As You Go Revenue Notes. All of
these Notes pledge to the holder a certain percent of the available tax increment from the specific district.
Having less tax increments results in a lower Pay As You Go payment. Current projections show that the
HRA will be able to meet all of its Pay As You Go Revenue Note obligations.
The second type of obligation is General Obligation Tax Increment Bonds. Three years ago when the State
Legislature began considering the above-mentioned law changes, the HRA started reserving cash to prepare
for the changes. Also, the 2002 tax law changes allows the HRA to share tax increment (deficit pooling)
from all tax increment districts to help pay General Obligation Tax Increment Bond obligations. By using
deficit pooling, projections show that the HRA will be able to meet all of its General Obligation Tax
Increment Bond obligations. In order to use deficit pooling the HRA will have to modify its districts. A
proposed modification will be presented to the HRA in the second half of 2004.
3. ASSUMPTIONS
All projections are based on the most conservative assumptions. The calculations do not include any interest
on invested cash or inflation on property market values with a few exceptions. The exceptions to the
assumptions are: Interchange West uses a 1.725% market value inflation and Urban Village uses a 2.0%
market value inflation. Although Lyndale Gateway (Richfield Senior Housing) used a 3% market value
inflation assumption at time of closing, a 0% market value inflation rate is being used in order to be
conservative.
Richfield HRA Tax Increment District Status Update Page 1
n
LYNDALE-HUB-NICOLLET (LHN) DISTRICT UPDATE
1. The LHN District was closed as of 12/31/2002.
Richfield HRA Tax Increment District Status Update Page 2
a~
INTERSTATE-LYNDALE-NICOLLET (ILN)
DISTRICT UPDATE
The ILN District has four Pay As You Go Revenue Notes, the pooled General Obligation Tax
Increment Bonds of 1996 and the Candlewood General Obligation Tax Increment Bonds. In 2000, the
City sold bonds based on the Candlewood Hotel tax increment. The proceeds are being used to assist
the Lyndale Gateway West project. In 1996, the City sold bonds for various HRA projects (pooled
LHN and ILN bonds). Since the LHN District closed in 2002, the ILN District services debt on these
bonds. These bonds were refunded in 2002 to achieve a lower interest rate and, therefore, use less tax
increment. The HRA will be able to meet all of its Pay As You Go Revenue Notes and General
Obligation Tax Increment Bonds obligations.
2. The ILN Tax Increment District has a cash balance of $1,276,420. The cash balance will be used to
pay the ILN bonds.
The Galyans and Richfield Rediscovered (Pre-1999) TIF Districts will pool increment to the ILN TIF
District to support ILN bond obligations. To implement this pooling the HRA will be presented with a
modification to its districts in 2004.
Richfield HRA Tax Increment District Status Update Page 3
CEDAR AVENUE BUSINESS AREA (CABA)
DISTRICT UPDATE
1. CABA was an economic development district that ended in 1996. No more increment will be received from
this District.
2. All accounting transactions to close out the District were completed by December 31, 2000.
Richfield HRA Tax Increment District Status Update Page 4
PENN AVENUE AND SIXTY-SIXTH STREET
(PASSS) DISTRICT UPDATE
The PASSS TIF District was established in 1989.
2. The PASSS TIF District was terminated in 1996 due to a lack of feasible redevelopment opportunities.
Richfield HRA Tax Increment District Status Update Page 5
INTERCHANGE (GALYANS) DISTRICT UPDATE
The Interchange District is comprised of the Galyans Trading Company Store.
2. The Galyans Project began generating full taxes for taxes payable in 2000.
3. Tax increments are pledged to the project to assist with acquisition of property. In 2001, tax increment
payments were assigned to be paid directly to Galyans Trading Company.
4. The Interchange District has a cash balance of $227,449.
5. As noted on page 3, this project will be pooled with the ILN.
Richfield HRA Tax Increment District Status Update Page 6
PRE-1999 RICHFIELD REDISCOVERED DISTRICTS UPDATE
1. Funds in the amount of $762,550 were advanced to the Richfield Rediscovered Program in 1990 from the
City and HRA to establish abuy/sell program for the construction of new, contemporary, single-family
housing. All advances have been satisfied.
2. At the end of 1999, the City sold temporary tax increment bonds to fund the new Richfield Rediscovered
Projects beginning with the year 2000. These bonds were refunded in 2002 to achieve a lower interest rate
and, therefore, use less tax increment.
3. Fifteen percent (15%) of the annual tax increment from the Pre-1999 Districts will be used to pay debt service
on those bonds.
4. As noted on page 3, this project will be pooled with the ILN.
Richfield HRA Tax Increment District Status Update Page 7
POST-1999 RICHFIELD REDISCOVERED
DISTRICTS UPDATE
In November of 1999, the City sold General Obligation Tax Increment Bonds to fund the new Richfield
Rediscovered Projects. These bonds were refunded in 2002 to achieve a lower interest rate and, therefore, use
less tax increment.
2. Fifteen percent (15%) of the annual tax increment from the Pre-1999 Richfield Rediscovered Districts is
being used to pay debt service on these bonds. In addition, all land sale proceeds contribute to pay off the
bonds. The remainder of the debt service will be paid back from the Housing Fund and tax increment from
the Post-1999 Richfield Rediscovered Districts.
Richfield HRA Tax Increment District Status Update Page 8
HOUSING FUND
The Housing Fund is a revenue source comprised of tax increment from the Gramercy, Urban Village
Interchange West/Lyndale Gateway (Best Buy) and City Bella TIF Districts. The purpose of the Housing
Fund is to fund a variety of housing needs for the community, including but not limited to, new construction
of single-family homes, town homes, single-family home renovation and rehabilitation, and aparhnent
rehabilitation.
Richfield HRA Tax Increment District Status Update Page 9
URBAN VILLAGE DISTRICT UPDATE
1. The Urban Village District is a mixed-use redevelopment project.
2. The Urban Village District began generating full tax increment in 2002.
3. Tax increments are pledged to the projects to assist with acquisition of property and excess site development
costs.
4. Fifteen percent (15%) of the annual tax increment from the Urban Village District is being used to fund the
Housing Fund.
~ Richfield HRA Tax Increment District Status Update Page 10
,l
GRAMERCY DISTRICT UPDATE*
1. The Gramercy Park Senior Housing Cooperative project began generating full taxes in 2002.
Tax increments are pledged to the project to assist with acquisition of property.
Fifteen percent (15%) of the annual tax increment from the Gramercy District will be used to fund the
Housing Fund.
* Gramercy District now only encompasses the Gramercy Park Senior Housing Cooperative and VFW club. In
2002, a portion of the Gramercy site area was eliminated and incorporated into the City Bella Project.
Richfield HRA Tax Increment District Status Update Page 11
CITY BELLA DISTRICT UPDATE*
The City Bella project is a housing project with a retail component.
2. Tax increments are pledged to the project to assist with acquisition of property and site improvements.
3. Beginning in 2006, fifteen percent (15%) of the annual tax increment from the City Bella District will
be used to fund the Housing Fund.
4. The City Bella Project has a $450,000 loan from the development account to pay for land owned by
the HRA. This loan will be paid by using the 15% Housing Fund.
*In 2002, a portion of the Gramercy District was eliminated and incorporated into the City Bella Project.
Richfield HRA Tax Increment District Status Update Page 12
INTERCHANGE WEST/LYNDALE GATEWAY DISTRICT
UPDATE*
LYNDALE GATEWAY
1. The Lyndale Gateway component of the Interchange West/Lyndale Gateway District is comprised of the
Richfield Senior Housing project (Main Street Village) and Minnstar Builders, Inc. project (Casteel Place
Townhouses.)
2. The Lyndale Gateway component began generating full tax increment in 2002.
3. The Lyndale Gateway component has two Pay As You Go Revenue Notes. Tax increments are pledged to
the Lyndale Gateway component to assist with site assembly activities.
4. In addition to the Pay As You Go Revenue Note, Richfield Senior Housing, Inc. was given a $338,251.76
loan from the HRA to cover an unexpected condemnation award in acquiring the redevelopment property.
The developer is paying the loan back with biannual payments (calculated on a monthly schedule) that started
in May of 2002 and will end with the last payment in August 2010. The interest rate on the loan is 6.5%
5. The Contract for Private Redevelopment between the HRA and Minnstar Builders, Inc. includes a "look
back" provision that requires a review of the developer's costs. To the extent that certain costs would go
down or come under the estimate, the associated Pay As You Go Revenue Note would be reduced by a like
amount. The analysis for the "look back" provision was completed in 2002. Due to a reduction in estimated
costs, the Pay As You Go Revenue Note was reduced from an original amount of $100,000 to a new amount
of $19,985.23. The cost savings of this tax increment was then used as additional gap funding for the
Cornerstone redevelopment project in the Lyndale Gateway West District.
INTERCHANGE WEST
1. The Interchange West component of the Interchange West/Lyndale Gateway District is comprised of the Best
Buy Corporate Headquarters project.
2. The Best Buy project is anticipated to begin generating full tax increment in 2004.
3. Tax increments are pledged to the Best Buy project to assist with site assembly activities.
4. A set dollar amount of funds from the Interchange West portion of the District will be used to fund the
Housing Fund and administrative costs.
* Part of Lyndale Gateway District was eliminated in 2002 and incorporated into the new Lyndale Gateway West
TIF District for the Cornerstone Project.
Richfield HRA Tax Increment District Status Update Page 13
LYNDALE GATEWAY WEST DISTRICT UPDATE*
The Lyndale Gateway West District is comprised of the Cornerstone mixed-use redevelopment project.
2. The Lyndale Gateway West District is estimated to begin generating full tax increment in 2006.
3. Tax increments are pledged to the project to assist with site assembly activities.
4. .The District will have two general obligation bonds totaling $6,000,000. $3,000,000 of the bonds will be
paid back with tax increment generated by the project and $3,000,000 will be paid back by town home sales.
The District will have a $1,100,0001oan from the ILN District. $600,000 of the loan will be paid back from
tax increment. The developer will pay $500,000 of the loan back. The interest on the total $1,100,000 will
be paid back from tax increment.
6. Tax increment from the Minnstar Builders townhouse. project in the Lyndale Gateway District is being used
to pay obligations related to the Cornerstone project
Note: The cashflow for the Kensington Park project is not included in this report. It will be included in the 2005
Annual TIF Status Report.
* Part of the Lyndale Gateway District was eliminated in 2002 and incorporated into the new Lyndale Gateway
West TIF District for the Cornerstone Project.
Richfield HRA Tax Increment District Status Update Page 14
05/1112004 CITY OF RICHFIELD - 2004
STATUS REPORT
ILN TAX INCREMENT DISTRICT PROJECTIONS (County Project # 1251
PAYMENT Pooling C.S.M. C.S.M. TOLD TOLD Candle Wood Existing Bond Net Tax
Gross Tax Tax Administration Phase I Phase II Phase I Phase II Bond Payments Increment
YEAR Increment Increment 10.00% PAYG PAYG PAYG PAYG 2000 1996/2002 End Of Year
,LANCE 1,276,420
0 1,276,420
2/1 2004 589,470 0 (58,947) (87,538) (76,992) (150,544) (154,230) _(146,901) (255,459)
8/1 2004 589,470 0 (58,947) (87,538) (76,992) (150,544) (154,230) (29,256) (43,359) 923,884
2/1 2005 589,470 0 (58,947) (87,538) (76,992) (150,544) (154,230) (154,256) (278,359)
8/1 2005 589,470 0 (58,947) (87,538) (76,992) (150,544) (154,230) (26,288) (40,539) 546,881
2/1 2006 589,470 0 (58,947) (87,538) (76,992) (150,544) (154,230) (156,288) (290,539)
8/1 2006 589,470 0 (58,947) (87,538) (76,992) (150,544) (154,230) (23,168) (36,789) 162,537
2/1 2007 589,470 0 (58,947) (87,538) (76,992) (150,544) (154,230) (158,168) (296,789)
811 2007 589,470 227,449 0 (87,538) (76,992) (150,544) (154,230) (19,894) (32,369) 64,153
2/1 2008 589,470 100,000 0 (87,538) (76,992) (150,544) (154,230) (164,894) (307,369)
8/1 2008 589,470 0 0 (87,538) (76,992) (150,544) (154,230) (16,341) (27,281) (111,400)
2/1 2009 589,470 0 0 (87,538) (76,992) (150,544) (154,230) (166,341) (312,281)
8/1 2009 589,470 0 0 (87,538) (76,992) (150,544) (154,230) (12,629) (21,439) (383,757)
2/1 2010 589,470 0 0 (87,538) (76,992) (150,544) (154,230) (172,629) (321,439)
8/1 2010 589,470 0 0 (87,538) (76,992) (150,544) (154,230) (8,629) (14,839) (660,959)
2/1 2011 589,470 0 0 (87,538) (76,992) (150,544) (154,230) (173,629) (329,839)
8/1 2011 589,470 0 0 (87,538) 0 (150,544) (154,230) (4,463) (7,673) (859,238)
2/1 2012 589,470 0 0 (87,538) 0 (150,544) (154,230) (179,463) (337,673)
8/1 2012 589,470 0 0 0 0 0 0 0 0 (589,745)
2/1 2013 589,470 0 0 0 0 0 0 0 0 275
11,199,930 327,449 412,629 (1,488,146) (1,154,876 2,559,248) 2,621,910) (1,613,234) 2,954,031) (275
ASSUMPTIONS
No Interest Income
No Market Value Inflation
r
1
Prepared by Ehlers Pro2004-PST_REV.xIs
05/17/2004 CITY OF RICHFIELD - 2004
STATUS REPORT
Inten;han a -Gal ans Coun Pro ect #7277)
ENT Galyans Pooling Net Tax
Gross Tax Administration Tax Increment
YEAR Increment 10.00% PAYG Increment End Of Year
BALANCE 227,449
p 0 227,449
2/1 2004 65,234 (6,523) (58,711) 0 227,449
8/1 2004 65,234 (6,523) (58,711) 0 227,449
2/1 2005 65,234 (6,523) (58,711) 0 227,449
8/1 2005 65,234 (6,523) (58,711) 0 227,449
2/1 2006 65,234 (6,523) (58,711) 0 227,449
8/1 2006 65,234 (6,523) (58,711) 0 227,449
2/1 2007 65,234 (6,523) (58,711) 0 227,449
8/1 2007 65,234 (6,523) (58,711) (227,449) 0
2/1 2008 65,234 (6,523) (58,711) 0 0
8/1 2008 65,234 (6,523) (58,711) 0 0
2/1 2009 65,234 (6,523) (58,711) 0 0
8/1 2009 65,234 (6,523) (58,711) 0 0
2/1 2010 65,234 (6,523) (58,711) 0 0
8/1 2010 65,234 (6,523) (58,711) 0 0
2/1 2011 65,234 (6,523) (58,711) 0 0
8/1 2011 65,234 (6,523) (58,711) 0 0
2/1 2012 65,234 (6,523) (58,711) 0 0
8/1 2012 65,234 (6,523) (58,711) 0 0
2/1 2013 65,234 (6,523) (58,711) 0 0
8/1 2013 65,234 (6,523) (58,711) 0 0
2/1 2014 65,234 (6,523) (58,711) 0 0
8/1 2014 65,234 (6,523) (58,711) 0 0
2/1 2015 65,234 (6,523) (58,711) 0 0
8/1 2015 65,234 (6,523) (58,711) 0 0
2/1 2016 65,234 (6,523) (58,711) 0 0
8/1 2016 65,234 (6,523) (58,711) 0 0
2/1 2017 65,234 (6,523) (58,711) 0 0
8/1 2017 65,234 (6,523) (58,711) 0 0
2/1 2018 65,234 (6,523) (58,711) 0 0
2018 65,234 (6,523) (58,711) 0 0
2019 65,234 (6,523) 58,711 0 0
2,022,254 202,225) 1,820,029) 227,449 0
ASSUMPTIONS
No Interest Income
No Market Value Inflation
2
Prepared by Ehlers Pro2004-PST_REV.xIs
05/11/2004 CITY OF RICHFIELD - 2004
STATUS REPORT
RICHFIELD REDISCOVERED -Pre -1999
'MENT Post 1999 Pooling Net Tax
Gross Tax Administration RR Bond Tax Increment
YEAR Increment 10.00% 15.00% Increment End Of Year
BALANCE 0
0 0 0 0
2/1 2004 55,974 (5,597) (8,396) 0 41,981
8/1 2004 55,974 (5,597) (8,396) 0 83,961
211 2005 55,974 (5,597) (8,396) 0 125,942
8/1 2005 55,974 (5,597) (8,396) 0 167,922
2/1 2006 55,974 (5,597) (8,396) 0 209,903
8/1 2006 55,974 (5,597) (8,396) 0 251,883
2/1 2007 55,974 (5,597) (8,396) 0 293,864
8/1 2007 55,974 (5,597) (8,396) 0 335,844
2/1 2008 55,974 (5,597) (8,396) (100,000) 277,825
8/1 2008 55,974 (5,597) (8,396) 0 319,805
2/1 2009 55,974 (5,597) (8,396) 0 361,786
8/1 2009 55,974 (5,597) (8,396) 0 403,766
2/1 2010 55,974 (5,597) (8,396) 0 445,747
8/1 2010 55,974 (5,597) (8,396) 0 487727
2/1 2011 55,974 (5,597) (8,396) 0 529,708
8/1 2011 55,974 (5,597) (8,396) 0 571,688
2/1 2012 55;974 (5,597) (8,396) 0 613,669
8/1 2012 55,974 (5,597) (8,396) 0 655,649
2/1 2013 55,974 (5,597) (8,396) 0 697,630
8/1 2013 55,974 (5,597) (8,396) 0 739,610
2/1 2014 55,974 (5,597) (8,396) 0 781,591
8/1 2014 55,974 (5,597) (8,396) 0 823,571
2/1 2015 55,974 (5,597) (8,396) 0 865,552
8/1 2015 55,974 (5,597) (8,396) 0 907,532
2/1 2016 55,974 (5,597) (8,396) 0 949,513
8/1 2016 55,974 (5,597) (8,396) 0 991,493
2/1 2017 55,974 (5,597) (8,396) 0 1,033,474
8/1 2017 55,974 (5,597) (8,396) 0 1,075,454
2/1 2018 55,974 (5,597) (8,396) 0 ~ 1,117,435
2018 55,974 (5,597) (8,396) 0 1,159,415
2019 55,974 (5,597) (8,396) 0 1,201,396
/1 2019 55,974 (5,597) (8,396) 0 1,243,376
2/1 2020 55,974 (5,597) (8,396) 0 1,285,357
8/1 2020 55,974 (5,597) (8,396) 0 1,327,337
2/1 2021 55,974 (5,597) (8,396) 0 1,369,318
8/1 2021 55,974 (5,597) (8,396) 0 1,411,298
2/1 2022 55,974 (5,597) (8,396) 0 1,453,279
8/1 2022 55,974 (5,597) (8,396) 0 1,495,259
2/1 2023 55,974 (5,597) (8,396) 0 1,537,240
8/1 2023 55,974 (5,597) (8,396) 0 .1,579,220
2/1 2024 55,974 (5,597) (8,396) 0 1,621,201
8/1 2024 55,974 (5,597) (8,396) 0 1,663,181
2/1 2025 55,974 (5,597) (8,396) 0 1,705,162
8/1 2025 55,974 5,597 (8,396 0 1,747,142
2,462,856 246,286 (369,428) 100,000) 1,747,142
ASSUMPTIONS
No Interest Income
No Market Value Inflation
Prepared by Ehlers Pro2004-PST_REV.xIs
05/11/2004 CITY OF RICHFIELD - 2004
STATUS REPORT
RICHFIELD REDISCOVERED -Post-1999
PAYMENT Debt Housing Net Tax
Gross Tax Administration Payment Pool Increment
YEAR Increment 10.00% End Of Year
ALANCE 0
0
2/1 2004 14,363 (1,436) (66,533) 53,606 0
8/1 2004 14,363 (1,436) (20,858) 7,931 0
2/1 2005 14,363 (1,436) (70,858) 57,931 0
8/1 2005 14,363 (1,436) (20,108) 7,181 0
2/1 2006 14,363 (1,436) (70,108) 57,181 0
8/1 2006 14,363 (1,436) (19,233) 6,306 0
2/1 2007 14,363 (1,436) (74,233) 61,306 0
8/1 2007 14,363 (1,436) (18,270) 5,343 0
2/1 2008 14,363 (1,436) (78,270) 65,343 0
B/1 2008 14,363 (1,436) (17,070) 4,143 0
2/1 2009 14,363 (1,436) (77,070) 64,143 0
8/1 2009 14,363 (1,436) (15,810) 2,883 0
2/1 2010 14,363 (1,436) (80,810) 67,883 0
811 2010 14,363 (1,436) (14,348) 1,421 0
2/1 2011 14,363 (1,436) (84,348) 71,421 0
8/1 2011 14,363 (1,436) (12,685) 0 242
2/1 2012 14,363 (1,436) (87,685) 74,517 0
8/1 2012 14,363 (1,436) (10,810) 0 2,117
2/1 2013 14,363 (1,436) (85,810) 70,767 0
811 2013 14,363 (1,436) (8,935) 0 3,992
2/1 2014 14,363 (1,436) (88,935) 72,017 (0)
8/1 2014 14,363 (1,436) (6,935) 0 5,992
2/1 2015 14,363 (1,436) (91,935) 73,017 0
8/1 2015 14,363 (1,436) (4,810) 0 8,117
2/1 2016 14,363 (1,436) (94,810) 73,767 0
8/1 2016 14,363 (1,436) (2,470) 0 10,457
2/1 2017 14,363 (1,436) (97,470) 74,087 0
8/1 2017 14,363 (1,436) 0 0 12,927
211 2018 14,363 (1,436) 0 0 25,853
8/1 2018 14,363 (1,436) 0 0 38,780
2019 14,363 (1,436) 0 0 51,707
2019 14,363 (1,436) 0 0 64,634
4/1 2020 14,363 (1,436) 0 0 77,560
8/1 2020 14,363 (1,436) 0 0 90,487
2/1 2021 14,363 (1,436) 0 0 103,414
8/1 2021 14,363 (1,436) 0 0 116,340
2/1 2022 14,363 1,436 0 0 129,267
531,431 (53,143) (1,321,213 .972,192 129,267
ASSUMPTIONS
No Interest Income
No Market Value Inflation
4
Prepared by Ehlers Pro2004-PST_REV.xIs
05/11/2004 CITY OF RICHFIELD - 2004
STATUS REPORT
URBAN VILLAGE TAX INCREMENT - Coun Pro ect # 7280
MENT Housing Local Payment Payment Net Tax
Gross Tax Administration Fund March A B Increment
.iT YEAR Increment 10.00% 15.00% 5.00% PAYG PAYG End Of Year
BALANCE 0
0
2/1 2004 218,915 (21,891) (32,837) 10,946 (109,131) (66,001) 0
8/1 2004 218,915 (21,891) (32,837) 10,946 (107,861) (67,271) 0
2/1 2005 225,215 (22,521) (33,782) 11,261 (106,591) (73,581) 0
8/1 2005 225,215 (22,521) (33,782) 11,261 (107,321) (72,851) 0
2/1 2006 231,641 (23,164) (34,746) 11,582 (105,995) (79,318) 0
8/1 2006 231,641 (23,164) (34,746) 11,582 (104,669) (80,644) 1
2/1 2007 238,196 (23,820) (35,729) 11,910 (103,343) (87,214) 0
8/1 2007 238,196 (23,820) (35,729) 11,910 (102,017) (88,540) 0
2/1 2008 244,882 (24,488) (36,732) 12,244 (100,691) (95,215) (0)
8/1 2008 244,882 (24,488) (36,732) 12,244 (99,365) (96,541) (1)
2/1 2009 251,701 (25,170) (37,755) 12,585 (100,039) (101,322) (0)
8/1 2009 251,701 (25,170) (37,755) 12,585 (98,657) (102,704) (0)
2J1 2010 258,657 (25,866) (38,799) 12,933 (97,275) (109,651) (0)
8/1 2010 258,657 (25,866) (38,799) 12,933 (95,893) (111,033) (0)
2/1 2011 265,753 (26,575) (39,863) 13,288 (94,511) (118,091) (0)
8/1 2011 265,753 (26,575) (39,863) 13,288 (93,129) (119,473) (0)
2/1 2012 272,990 (27,299) (40,948) 13,649 (91,747) (126,645) (1)
8/1 2012 272,990 (27,299) (40,948) 13,649 (92,365) (126,027) (1)
2/1 2013 280,371 (28,037) (42,056) 14,019 (90,927) (133,370) (1)
8/1 2013 280,371 (28,037) (42,056) 14,019 (89,489) (134,808) (2)
2/1 2014 287,901 (28,790) (43,185) 14,395 (88,051) (142,269) (1)
8/1 2014 287,901 (28,790) (43,185) 14,395 (86,613) (143,707) (1)
2/1 2015 295,581 (29,558) (44,337) 14,779 (85,175) (151,289) (1)
8/1 2015 295,581 (29,558) (44,337) 14,779 (83,737) (152,727) (0)
2/1 2016 303,414 (30,341) (45,512) 15,171 (84,299) (158,432) (0)
8/1 2016 303,414 (30,341) (45,512) 15,171 (82,805) (159,926) (0)
2/1 2017 311,405 (31,140) (46,711) 15,570 (81,311) (167,812) 0
8/1 2017 311,405 (31,140) (46,711) 15,570 (79,817) (169,306) 0
2/1 2018 319,555 (31,955) (47,933) 15,978 (78,323) (177,320) 1
2018 319,555 (31,955) (47,933) 15,978 (76,830) (178,814) 1
-
- 2019 327,868 (32,787) (49,180) 16,393 (75,336) (186,959) 0
~~ 2019 327,868 (32,787) (49,180) 16,393 (75,842) (186,453) 0
2/1 2020 336,347 (33,635) (50,452) 16,817 (74,292) (194,786) 0
8/1 2020 336,347 (33,635) (50,452) 16,817 (72,742) (196,336) 0
2/1 2021 344,996 (34,500) (51,749) 17,250 (71,192) (204,805) 0
8/1 2021 344,996 (34,500) (51,749) 17,250 (69,642) (206,355) 0
2/1 2022 353,818 (35,382) (53,073) 17,691 (68,092) (214,963) (0)
8/1 2022 353,818 (35,382) (53,073) 17,691 (66,542) (216,513) (0)
2/1 2023 362,816 (36,282) (54,422) 18,141 (66,992) (223,261) (0)
8/1 2023 362,816 (36,282) (54,422) 18,141 (65,386) (224,867) (0)
2/1 2024 371,995 (37,199) (55,799) 18,600 (63,780) (233,816) (0)
8/1 2024 371,995 (37,199) (55,799) 18,600 (62,174) (235,422) (1)
2/1 2025 381,356 (38,136) (57,203) 19,068 (60,568) (244,517) (0)
8/1 2025 381,356 38,136) 57,203 19,068 (58,961) 246,125 (1)
12,970,742 1,297,074) (1,945,611) 648,537 3,769,515) (6,607,080 (1)
ASSUMPTIONS
No Interest Income
Market Value Inflation 2.0%
Prepared by Ehlers Pro2004-PST_REV.xIs
05/11/2004 CITY OF RICHFIELD - 2004
STATUS REPORT
GRAMERCY PARK TAX INCREMENT - Coun Pro ect # 1257
ENT Housing Payment Net Tax
Gross Tax Administration Fund A Increment
~~ YEAR Increment 10.00% 15.00% PAYG End Of Year
BALANCE 0
0
2/1 2004 158,318 (15,832) (23,748) (118,738) 0
8/1 2004 158,318 (15,832) (23,748) (118,738) 0
2/1 2005 158,318 (15,832) (23,748) (118,738) 0
8/1 2005 158,318 (15,832) (23,748) (118,738) 1
2/1 2006 158,318 (15,832) (23,748) (118,738) 1
8/1 2006 158,318 (15,832) (23,748) (118,738) 1
2/1 2007 158,318 (15,832) (23,748) (118,738) 1
8/1 2007 158,318 (15,832) (23,748) (118,738) 1
2/1 2008 158,318 (15,832) (23,748) (118,738) 1
8/1 2008 158,318 (15,832) (23,748) (118,738) 1
2/1 2009 158,318 (15,832) (23,748) (118,738) 1
8/1 2009 158,318 (15,832) (23,748) (118,738) 2
2/1 2010 158,318 (15,832) (23,748) (118,738) 2
8/1 2010 158,318 (15,832) (23,748) (118,738) 2
2/1 2011 158,318 (15,832) (23,748) (118,738) 2
8/1 2011 158,318 (15,832) (23,748) (118,738) 2
2/1 2012 158,318 (15,832) (23,748) (118,738) 2
8/1 2012 158,318 (15,832) (23,748) (118,738) 2
2/1 2013 158,318 (15,832) (23,748) (118,738) 2
8/1 2013 158,318 (15,832) (23,748) (118,738) 3
2/1 2014 158,318 (15,832) (23,748) (118,738) 3
8/1 2014 158,318 (15,832) (23,748) (118,738) 3
2/1 2015 158,318 (15,832) (23,748) (118,738) 3
B/1 2015 158,318 (15,832) (23,748) (118,738) 3
2/1 2016 158,318 (15,832) (23,748) (118,738) 3
8!1 2016 158,318 (15,832) (23,748) (118,738) 3
2/1 2017 158,318 (15,832) (23,748) (118,738) 3
8/1 2017 158,318 (15,832) (23,748) (118,738) 4
2/1 2018 158,318 (15,832) (23,748) (118,738) 4
2018 158,318 (15,832) (23,748) (28,135) 90,607
2019 158,318 (15,832) (23,748) 0 209,345
1 2019 158,318 (15,832) (23,748) 0 328,083
2/1 2020 158,318 (15,832) (23,748) 0 446,821
8/1 2020 158,318 (15,832) (23,748) 0 565,559
2/1 2021 158,318 (15,832) (23,748) 0 684,297
8/1 2021 158,318 (15,832) (23,748) 0 803,036
2/1 2022 158,318 (15,832) (23,748) 0 921,774
8/1 2022 158,318 (15,832) (23,748) 0 1,040,512
2/1 2023 158,318 (15,832) (23,748) 0 1,159,250
8/1 2023 158,318 (15,832) (23,748) 0 1,277,988
2/1 2024 158,318 (15,832) (23,748) 0 1,396,726
8/1 2024 158,318 (15,832) (23,748) 0 1,515,464
2/1 2025 158,318 (15,832) (23,748) 0 1,634,202
8/1 2025 158,318 (15,832) (23,748) 0 1,752,941
2/1 2026 158,318 15,832) (23,748) 0 1,871,679
7,124,288 (712,429) (1,068,643) 3,471,537 1,871,679
ASSUMPTIONS
Nc Interest Income
No Market Value IMlation
6
Prepared by Ehlers Pro2004-PST_REV.xIs
05/77/2004 CITY OF RICHFIELD - 2004
STATUS REPORT
LYNDALE GATEWAY RON CLARK TAX INCREMENT - Coun Pro ect # 1281
ENT Payment Pledge Net Tax
_= Gross Tax Administration A To Increment
YEAR Increment 10.00% PAYG Cornerstone ~ End Of Year
BALANCE 0
0
2/1 2004 33,685 (3,369) (7,579) (22,737) 0
8/1 2004 33,685 (3,369) (3,404) (26,913) 0
2/1 2005 33,685 (3,369) 0 (30,317) 0
8/1 2005 33,685 (3,369) 0 (30,317) 0
2/1 2006 33,685 (3,369) 0 (30,317) 0
8/1 2006 33,685 (3,369) 0 (30,317) 0
2/1 2007 33,685 (3,369) 0 (30,317) 0
8/1 2007 33,685 (3,369) 0 (30,317) 0
2/1 2008 33,685 (3,369) 0 (30,317) 0
8/1 2008 33,685 (3,369) 0 (30,317) 0
2/1 2009 33,685 (3,369) 0 (30,317) 0
8/1 2009 33,685 (3,369) 0 (30,317) 0
2/1 2010 33,685 (3,369) 0 (30,317) 0
8/1 2010 33,685 (3,369) 0 (30,317) 0
2/1 2011 33,685 (3,369) 0 (30,317) 0
8/1 2011 33,685 (3,369) 0 (30,317) 0
2/1 2012 33,685 (3,369) 0 (30,317) 0
8/1 2012 33,685 (3,369) 0 (30,317) 0
2/1 2013 33,685 (3,369) 0 (30,317) 0
8/1 2013 33,685 (3,369) 0 (30,317) 0
2/1 2014 33,685 (3,369) 0 (30,317) 0
8/1 2014 33,685 (3,369) 0 (30,317) 0
2/1 2015 33,685 (3,369) 0 (30,317) 0
8/1 2015 33,685 (3,369) 0 (30,317) 0
2/1 2016 33,685 (3,369) 0 (30,317) 0
8/1 2016 33,685 (3,369) 0 (30,317) 0
2/1 2017 33,685 (3,369) 0 (30,317) 0
8/1 2017 33,685 (3,369) 0 (30,317) 0
2/1 2018 33,685 (3,369) ~ 0 (30,317) 0
2018 33,685 (3,369) 0 (30,317) 0
2019 33,685 (3,369) 0 (30,317) 0
/1 2019 33,685 (3,369) 0 (30,317) 0
2/1 2020 33,685 (3,369) 0 (30,317) 0
8/1 2020 33,685 (3,369) 0 (30,317) 0
2/1 2021 33,685 (3,369) 0 (30,317) 0
8/1 2021 33,685 (3,369) 0 (30,317) 0
2/1 2022 33,685 (3,369) 0 (30,317) 0
8/1 2022 33,685 (3,369) 0 (30,317) 0
2/1 2023 33,685 (3,369) 0 (30,317) 0
8/1 2023 33,685 (3,369) 0 (30,317) 0
2/1 2024 33,685 (3,369) 0 (30,317) 0
8/1 2024 33,685 (3,369) 0 (30,317) 0
2/1 2025 33,685 (3,369) 0 (30,317) 0
8/1 2025 33,685 (3,369) 0 (30,317) 0
2/1 2026 33,685 (3,369) 0 30,317 0
1,515,825 (151;583) (10,983) 0
ASSUMPTIONS
TIF not used for PAYGO-Note is pledged to Lyndale Gateway West District
No Interest Income
No Market Value Inflation
n
7
Prepared by Ehlers Pro2004-PST_REV.xIs
05/1112004 CITY OF RICHFIELD - 2004
STATUS REPORT
LYNDALE GATEWAY TCCH TAX INCREMENT - Coun Pro ect # 7287
ENT Payment Net Tax
Gross Tax Administration A Increment
MT YEAR Increment 10.00% PAYG End Of Year
BALANCE 0
0
2/1 2004 117,684 (11,768) (105,916) 0
8/1 2004 117,684 (11,768) (105,916) 0
2/1 2005 117,684 (11,768) (105,916) 0
8/1 2005 117,684 (11,768) (105,916) 0
2/1 2006 117,684 (11,768) (105,916) 0
8/1 2006 117,684 (11,768) (105,916) 0
2/1 2007 117,684 (11,768) (105,916) 0
8/1 2007 117,684 (11,768) (105,916) 0
2/1 2008 117,684 (11,768) (105,916) 0
8/1 2008 117,684 (11,768) (105,916) 0
2/1 2009 117,684 (11,768) (105,916) 0
8/1 2009 117,684 (11,768) (105,916) 0
2/1 2010 117,684 (11,768) (105,916) 0
8/1 2010 117,684 (11,768) (105,916) 0
2/1 2011 117,684 (11,768) (105,916) 0
8/1 2011 117,654 (1'1,768) (105,9'16) 0
2/1 2012 117,684 (11,768) (105,916) 0
8/1 2012 117,684 (11,768) (105,916) 0
2/1 2013 117,684 (11,768) (105,916) 0
8/1 2013 117,684 (11,768) (105,916) 0
2/1 2014 117,684 (11,768) (105,916) 0
8/1 2014 117,684 (11,768) (105,916) 0
2/1 2015 117,684 (11,768) (105,916) 0
8/1 2015 117,684 (11,768) (105,916) 0
2/1 2016 117,684 (11,768) (105,916) 0
8/1 2016 117,684 (11,768) (105,916) 0
2/1 2017 117,684 (11,768) (105,916) 0
B/1 2017 117,684 (11,768) (105,916) 0
2/1 2018 117,684 (11,768) (105,916) 0
2018 117,684 (11,768) (105,916) 0
2019 117,684 (11,768) (105,916) 0
8/1 2019 117,684 (11,768) (105,916) 0
2/1 2020 117,684 (11,768) (105,916) 0
8/1 2020 117,684 (11,768) (105,916) 0
2/1 2021 117,684 (11,768) (105,916) 0
8/1 2021 117,684 (11,768) (105,916) 0
2/1 2022 117,684 (11,768) (105,916) 0
8/1 2022 117,684 (11,768) (105,916) 0
2/1 2023 117,684 (11,768) (105,916) 0
8/1 2023 117,684 (11,768) (105,916) 0
2/1 2024 117,684 (11,768) (105,916) 0
8/1 2024 117,684 (11,768) (105,916) 0
2/1 2025 117,684 (11,768) (105,916) 0
8/1 2025 117,684 11,768 (105,916) 0
5,178,110 (517,811) 4,660,299 0
ASSUMPTIONS
TIF not used for PAYGO Note is pledged to Lyndale Gateway West District
No Interest Income
No Market Value Inflation
8
Prepared by Ehlers Pro2004-PST_REV.xIs
05/11/2004 CITY OF RICHFIELD - 2004
STATUS REPORT
CITY BELLA TAX INCREMENT - Coun Pro'ect #1285
ENT Housing Payment Net Tax
.-~ Gross Tax Administration Fund A Increment
MT YEAR Increment 10.00% 15.00% PAYG End Of Year
BALANCE 0
8/1 2003 0 0 0 0 0
2/1 2004 0 0 0 0 0
8/1 2004 0 0 0 0 0
2/1 2005 0 0 0 0 0
8/1 2005 0 0 0 0 0
2/1 2006 0 0 0 0 0
8/1 2006 381,719 (38,172) (57,258) (286,289) 0
2/1 2007 381,719 (38,172) (57,258) (286,289) 0
8/1 2007 390,002 (39,000) (58,290) (292,712) 0
2/1 2008 390,002 (39,000) (58,290) (292,712) 0
8/1 2008 398,451 (39,845) (59,552) (299,053) 0
2/1 2009 398,451 (39,845) (59,552) (299,053) 0
8/1 2009 407,069 (40,707) (60,840) (305,521) 0
2/1 2010 407,069 (40,707) (60,840) (305,521) 0
8/1 2010 415,859 (41,586) (62,154) (312,118) 0
2/1 2011 415,859 (41,586) (62,154) (312,118) 0
8/1 2011 424,824 (42,482) (63,494) (318,848) 0
2/1 2012 424,824 (42,482) (63,494) (318,848) 0
8/1 2012 433,970 (43,397) (64,861) (325,712) 0
2/1 2013 433,970 (43,397) (64,861) (325,712) 0
8/1 2013 443,298 (44,330) (66,255) (332,713) 0
2/1 2014 443,298 (44,330) (66,255) (332,713) 0
8/1 2014 452,812 (45,281) (67,677) (339,854) 0
2/1 2015 452,812 (45,281) (67,677) (339,854) 0
8/1 2015 462,517 (46,252) (69,128) (347,138) 0
2/1 2016 462,517 (46,252) (69,128) (347,138) 0
8/1 2016 472,416 (47,242) (70,607) (354,567) 0
2/1 2017 472,416 (47,242) (70,607) (354,567) 0
8/1 2017 482,513 (48,251) (72,116) (362,145) 0
2018 482,513 (48,251) (72,116) (362,145) 0
= 2018 492,812 (49,281) (73,656) (369,875) 0
0 2019 492,812 (49,281) (73,656) (369,875) 0
8/1 2019 503,317 (50,332) (75,226) (377,760) 0
2/1 2020 503,317 (50,332) (75,226) (377,760) 0
8/1 2020 514,032 (51,403) (76,827) (385,802) 0
2/1 2021 514,032 (51,403) (76,827) (385,802) 0
8/1 2021 524,961 (52,496) (78,461) (394,005) 0
2/1 2022 524,961 (52,496) (78,461) (394,005) 0
8/1 2022 536,109 (53,611) (80,127) (402,372) ~ 0
2/1 2023 536,109 (53,611) (80,127) (402,372) 0
8/1 2023 547,480 (54,748) (81,826) (410,906) 0
2/1 2024 547,480 (54,748) (81,826) (410,906) 0
8/1 2024 559,078 (55,908) (83,560) (419,611) 0
2/1 2025 559,078 (55,908) (83,560) (419,611) 0
8/1 2025 570,909 (57,091) (85,328) (428,490) 0
2/1 2026 570,909 (57,091) (85,328) (428,490) 0
8/1 2026 582,976 (58,298) (87,132) (437,547) 0
2/1 2027 582,976 (58,298) (87,132) (437,547) 0
8/1 2027 595,284 (59,528) (88,971) (446,784) 0
2/1 2028 595,284 (59,528) (88,971) (446,784) 0
8/1 2028 607,838 (60,784) (90,847) (456,207) 0
2/1 2029 607,838 (60,784) (90,847) (456,207) 0
8/1 2029 620,644 (62,064) (92,761) (465,818) 0
2/1 2030 620,644 (62,064) (92,761) (465,818 ~ 0
23,641,781 (2,364,178) (3,533,913) (17,743,690 0
ASSUMPTIONS
No Interest Income
No Market Value Inflation
Prepared by Ehlers Pro2004-PST_REV.xis
05/11/2004 CITY OF RICHFIELD - 2004
STATUS REPORT
BEST BUY TAX INCREMENT - Coun Project # 1282
MENT Admin Housing Tax Exempt P.A.Y.G. Net Tax
- E Gross Tax Fund Fund G. O. Bond Note Increment
MT YEAR Increment FIXED FIXED Pa ment A End Of Year
BALANCE 0
0 0 0 0 0 0
2/1 2004 868,271 (32,012) (224,084) (195,322) (416,853) 0
8/1 2004 868,271 (32,012) (224,084) (455,322) (156,853) 0
2/1 2005 886,363 (32,686) (228,801) (190,122) (434,755) 0
8/1 2005 886,363 (32,686) (228,801) (460,122) (164,755) 0
2/1 2006 904,766 (33,371) (233,598) (184,722) (453,075) 0
8/1 2006 904,766 (33,371) (233,598) (469,722) (168,075) 0
Zi 2007 923,487 (34,068) (238,479) (179,022) (471,918) 0
8/1 2007 923,487 (34,068) (238,479) (474,022) (176,918) 0
Z1 2008 942,531 (34,777) (243,443) (173,122) (491,188) 0
8/1 2008 942,531 (34,777) (243,443) (483,122) (181,188) 0
211 2009 961,903 (35,499) (248,493) (166,767) (511,144) 0
8/1 2009 961,903 (35,499) (248,493) (486,767) (191,144) 0
211 2010 981,609 (36,233) (253,631) (160,047) (531,699) 0
8/1 2010 981,609 (36,233) (253,631) (495,047) (196,699) 0
2/1 2011 1,001,656 (36,979) (258,857) (152,844) (552,975) 0
8/i 2011 1,001,656 (36,979) (258,857) (507,844) (197,975) 0
2/1 2012 1,022,048 (37,739) (264,173) (145,034) (575,102) 0
8/1 2012 1,022,048 (37,739) (264,173) (515,034) (205,102) 0
2/1 2013 1,042,792 (38,511) (269,581) (136,709) (597,991) 0
8/1 2013 1,042,792 (38,511) (269,581) (521,709) (212,991) 0
211 2014 1,063,894 (39,297) (275,082) (127,806) (621,709) 0
8/1 2014 1,063,894 (39,297) (275,082) (532,806) (216,709) 0
Z1 2015 1,085,359 (40,097) (280,678) (118,188) (646,398) 0
8/1 2015 1,085,359 (40,097) (280,678) (543,188) (221,398) 0
211 2016 1,107,195 (40,910) (286,370) (108,094) (671,822) 0
8/1 2016 1,107,195 (40,910) (286,370) (558,094) (221,822) 0
211 2017 1,129,408 (41,737) (292,161) (97,125) (698,385) 0
8/1 2017 1,129,408 (41,737) (292,161) (567,125) (228,385) 0
1 2018 1,152,004 (42,579) (298,051) (85,375) (725,999) 0
2018 1,152,004 (42,579) (298,051) (580,375) (230,999) 0
1 2019 1,174,990 (43,435) (304,044) (73,000) (754,512) 0
8/1 2019 1,174,990 (43,435) (304,044) (598,000) (229,512) 0
2/1 2020 1,198,372 (44,305) (310,139) (59,875) (784,053) 0
8/1 2020 1,198,372 (44,305) (310,139) (609,875) (234,053) 0
2/1 2021 1,222,158 (45,191) (316,340) (46,125) (814,502) 0
8/1 2021 1,222,158 (45,191) (316,340) (626,125) (234,502) 0
2/1 2022 1,246,353 (46,092) (322,647) (31,625) (845,989) 0
8/1 2022 1,246,353 (46,092) (322,647) (646,625) (230,989) 0
2/1 2023 1,270,967 (47,009) (329,064) (16,250) (878,644) 0
8/1 2023 1,270,967 (47,009) (329,064) (666,250) (228,644) 0
2/1 2024 1,296,004 (47,941) (335,591) 0 (912,472) 0
8/1 2024 1,296,004 (47,941) (335,591) 0 (912,472) 0
2/1 2025 1,321,474 (48,890) (342,231) 0 (930,353) 0
8/1 2025. 1,321,474 (48,890) (342,231) 0 (930,353) 0
2/1 2026 1,347,383 (49,855) (348,985) 0 (948,543) 0
8/1 2026 1,347,383 (49,855) (348,985) 0 (948,543) 0
50,301,973 (1,858,425) (13,009,042) (13,244,348) 22,190,159 0
Present Value 1,000,000 7,000,036
ASSUMPTIONS:
No Interest Income
Market Value Inflation 1.7250%
10
Prepared by Ehlers Pro2004PST_REV.xIs
05/11/2004 CITY OF RICHFIELD - 2004
STATUS REPORT
TOTAL ADMINISTRATION
MENT RR LYNDALE LYNDALE Net Tax
-
- ILN GALYNS Post 1999 URBAN GRAMERCY GATEWAY GATEWAY CITY BEST Increment
..(T YEAR ~ Pre 1999 VILLAGE RON CLARK TCCH BELLA BUY End Of Year
BALANCE
2/1 2004 58,947 6,523 7,034 21,891 15,832 3,369 11,768 0 32,012 157,376
8/1 2004 58,947 8,523 7,034 21,891 15,832 3,369 11,768 0 32,012 157,376
2/1 2005 58,947 6,523 7,034 22,521 15,832 3,369 11,768 0 32,686 158,680
8/1 2005 58,947 6,523 7,034 22,521 15,832 3,369 11,768 0 32,686 158,680
2/1 2006 58,947 6,523 7,034 23,164 15,832 3,369 11,768 0 33,371 160,008
8/1 2006 58,947 6,523 7,034 23,164 15,832 3,369 11,768 38,172 33,371 198,180
2/1 2007 58,947 6,523 7,034 23,820 15,832 3,369 11,768 38,172 34,068 199,532
8/1 2007 0 6,523 7,034 23,820 15,832 3,369 11,768 39,000 34,068 141,414
2/1 2008 0 6,523 7,034 24,488 15,832 3,369 11,768 39,000 34,777 142,792
8/1 2008 0 6,523 7,034 24,488 15,832 3,369 11,768 39,845 34,777 143,636
2/1 2009 0 6,523 7,034 25,170 15,832 3,369 11,768 39,845 35,499 145,040
8/1 2009 0 6,523 7,034 25,170 15,832 3,369 11,768 40,707 35,499 145,902
2/1 2010 0 6,523 7,034 25,866 15,832 3,369 11,768 40,707 36,233 147,331
8/1 2010 0 6,523 7,034 25,866 15,832 3,369 11,768 41,586 36,233 148,210
2/1 2011 0 6,523 7,034 26,575 15,832 3,369 11,768 41,586 36,979 149,666
8/1 2011 0 6,523 7,034 26,575 15,832 3,369 11,768 42,482 36,978 150,563
2/1 2012 0 6,523 7,034 27,299 15,832 3,369 11,768 42,482 37,739 152,046
8/1 2012 0 6,523 7,034. 27,299 15,832 3,369 11,768 43,397 37,739 152,960
2/1 2013 0 6,523 7,034 28,037 15,832 3,369 11,768 43,397 38,511 154,471
8/1 2013 0 6,523 7,034 28,037 15,832 3,369 11,768 44,330 38,511 155,404
2/1 2014 0 6,523 7,034 28,790 15,832 3,369 11,768 44,330 39,297 156,943
8/1 2014 0 6,523 7,034 28,790 15,832 . 3,369 11,768 45,281 39,297 157,894
2/1 2015 0 6,523 7,034 29,558 15,832 3,369 11,768 45,281 40,097 159,462
8/1 2015 0 6,523 7,034 29,558 15,832 3,369 11,768 46,252 40,097 160,432
2/1 2016 0 6,523 7,034 30,341 15,832 3,369 11,768 46,252 40,910 162,029
8/1 2016 0 6,523 7,034 30,341 15,832 3,369 11,788 47,242 40,910 163,019
2/1 2017 0 6,523 7,034 31,140 15,832 3,389 11,768 47,242 41,737 164,645
8/1 2017 0 6,523 7,034 31,140 15,832 3,369 11,768 48,251 41,737 165,655
2/1 2018 0 6,523 7,034 31,955 15,832 3,369 11,768 48,251 42,579 167,311
1 2018 0 8,523 7,034 31,955 15,832 3,369 11,768 49,281 42,579 168,341
2019 0 6,523 7,034 32,787 15,832 3,369 11,768 49,281 43,435 170,028
2019 0 0 7,034 32,787 15,832 3,369 11,768 50,332 43,435 164,555
2/1 2020 0 0 7,034 33,635 15,832 3,369 11,768 50,332 44,305 166,274
8/1 2020 0 0 7,034 33,635 15,832 3,369 11,768 51,403 44,305 167,346
2/1 2021 0 0 7,034 34,500 15,832 3,369 11,768 51,403 45,191 169,096
8/1 2021 0 0 7,034 34,500 15,832 3,369 11,768 52,496 45,191 170,189
2/1 2022 0 0 7,034 35,382 15,832 3,369 11,768 52,496 46,092 171,973
8/1 2022 0 0 5,597 35,382 15,832 3,369 11,768 53,611 46,092 171,651
211 2023 0 0 5,597 36,282 15,832 3,369 11,768 53,611 47,009 173,468
8/1 2023 0 0 5,597 36,282 15,832 3,369 11,768 54,748 47,009 174,605
2/1 2024 0 0 5,597 37,199 15,832 3,389 11,768 54,748 47,941 176,455
8/1 2024 0 0 5,597 37,199 15,832 3,369 11,768 55,908 47,941 177,615
2/1 2025 0 0 5,597 38,136 15,832 3,369 11,768 55,908 48,890 179,499
811 2025 0 0 5,597 38,136 15,832 3,369 11,768 57,091. 48,890 180,882
2/1 2026 0 0 0 0 15,832 3,369 0 57,091 49,855 126,146
8/1 2028 0 0 0 0 0 0 0 58,298 49,855 108,152
2/1 2027 0 0 0 0 0 0 0 58,298 0 58,298
8/1 2027 0 0 0 0 0 0 0 59,528 0 59,528
2/1 2028 0 0 0 0 0 0 0 59,528 0 59,528
8/1 2028 0 0 0 0 0 0 0 80,784 0 60,784
2/1 2029 0 0 0 0 0 0 0 80,784 0 60,784
8/1 2029 0 0 0 0 0 0 0 82,064 0 62,064
2/1 2030 0 0 0 0 0 0 0 62,064 0 62,064
8/1 2030 0 0 0 0 0 0 0 0 0 0
412,629 202,225 299,429 1,297,074 712,429 151,583 517,811 2,364,178 1,858,425 7,815,783
5.50% 360,819 131,297 170,252 686,787 395,008 84,045 290,248 1,049,773 972,148 4,029,563
No Interest Income
No Market Value Inflation
Prepared by Ehlers Pro2004-PST-PV.xls
05H1/2004 CITY OF RICHFIELD -2004
STATUS REPORT
TOTAL HOUSING
YMENT ILN Post 1999 Net Tax
~ E URBAN GRAMERCY CITY BEST Bonds 1996 RR Bond Increment
YEAR VILLAGE BELLA BUY Pa ment Pa ment End Of Year
BALANCE 0
0 0 0
2/1 2004 32,837 23,748 0 224,084 0 (53,606) 227,063
8/1 2004 32,837 23,748 0 224,084 0 (7,931) 272,738
2/1 2005 33,782 23,748 0 228,801 0 (57,931) 228,400
8/1 2005 33,782 23,748 0 228,801 0 (7,181) 279,150
2/1 2006 34,746 23,748 57,258 233,598 0 (57,181) 292,169
8/1 2006 34,746 23,748 57,258 233,598 0 (6,306) 343,044
2/1 2007 35,729 23,748 58,290 238,479 0 (61,306) 294,940
8/1 2007 35,729 23,748 58,290 238,479 0 (5,343) 350,902
2/1 2008 36,732 23,748 59,552 243,443 0 (65,343) 298,132
8/1 2008 38,732 23,748 59,552 243,443 0 (4,143) 359,332
2/1 2009 37,755 23,748 60,840 248,493 0 (64,143) 306,693
8/1 2009 37,755 23,748 60,840 248,493 0 (2,883) 367,953
2/1 2010 38,789 23,748 62,154 253,631 0 (67,883) 310,448
8/1 2010 38,799 23,748 62,154. 253,631 0 (1,421) 376,910
2/1 2011 39,883 23,748 63,494 258,857 0 (71,421) 314,541
8/1 2011 39,863 23,748 63,494 258,857 0 0 385,961
2/1 2012 40,948 23,748 64,861 264,173 0 (74,517) 319,213
8/1 2012 40,948 23,748 64,861 264,173 0 0 393,730
2/1 2013 42,056 23,748 66,255 269,581 0 (70,767) 330,872
8/1 2013 42,056 23,748 66,255 269,581 0 0 401,639
2/1 2014 43,185 23,748 67,677 275,082 0 (72,017) 337,675
8/1 2014 43,185 23,748 87,677 275,082 0 0 409,692
ZN 2015 44,337 23,748 69,128 280,678 0 (73,017) 344,874
8/1 2015 44,337 23,748 69,128 280,678 0 0 417,890
2/1 2016 45,512 23,748 70,607 286,370 0 (73,767) 352,471
8/1 2018 45,512 23,748 70,607 286,370 0 0 426,237
2/1 2017 46,711 23,748 72,116 292,161 0 (74,087) 360,649
8/1 2017 46,711 23,748 72,116 292,161 0 0 434,735
2/1 2018 47,933 23,748 73,656 298,051 0 0 443,388
/1 2018 47,933 23,748 73,656 298,051 0 0 443,388
_- 2019 49,180 23,748 75,226 304,044 0 0 452,197
2019 48,180 23,748 75,228 304,044 0 0 452,197
2/1 2020 50,452 23,748 76,827 310,139 0 0 461,166
8/1 2020 50,452 23,748 76,827 310,139 0 0 481,166
2/1 2021 51,749 23,748 78,461 316,340 0 0 470,298
8/1 2021 51,749 23,748 78,461 316,340 0 0 470,298
2/1 2022 53,073 23,748 80,127 322,647 0 0 479,595
8/1 2022 53,073 23,748 80,127 322,647 0 0 479,595
2/1 2023 54,422 23,748 81,826 329,064 0 0 489,080
8/1 2023 54,422 23,748 81,826 329,064 0 0 489,060
2/1 2024 55,799 23,748 83,560 335,591 0 0 498,698
8/1 2024 55,799 23,748 83,560 335,591 0 0 498,698
2/1 2025 57,203 23,748 85,328 342,231 0 0 508,510
8/1 2025 57,203 23,748 85,328 342,231 0 0 508,510
2/1 2026 23,748 87,132 348,985 0 0 459,864
8/1 2028 0 0 87,132 348,985 0 0 436,117
2/1 2027 0 0 88,971 0 0 0 88,971
8/1 2027 0 0 88,971 0 0 0 88,971
2/1 2028 0 0 90,847 0 0 0 90,847
8/1 2028 0 0 90,847 0 0 0 90,847
2/1 2029 0 0 92,761 (0) 0 0 92,781
8/1 2029 0 0 92,761 0 0 0 92,761
1,945,611 1,088,843 3,533,913 13,009,042 0 972,192 18,492,256
5.50% 975,774 576,653 1,527,326 6,445,682 8,852,374
No Interest Income
No Market Value Inflation
Prepared by Ehlers Pro2004-PST-PV.xls
AGENDA ITEM # 3D
REPORT # Z 2
STAFF REPORT
~ HOUSING AND REDEVELOPMENT
AUTHORITY MEETING
MAY 17, 2004
PAM BOOKHOUT, REHABILITATION
REPORT PREPARED BY: SPECIALIST
NAME, TITLE
BRUCE PALMBORG, COMMUNITY
REPORT PRESENTER: DEVELOPMENT DIRECTOR
NAME, TITLE
DEPARTMENT DIRECTOR REVIEW:
REVIEWED BY EXECUTIVE DIRECTOR:
ITEM FOR IiRA CONSIDERATION:
Authorization to enter into a contract with Center for Energy and the Environment to administer
the Richfield Apartment Remodeling Program.
I. RECOMMENDED ACTION:
By Motion: Authorize the contract with Center for Energy and the
Environment to administer the Richfield Apartment Remodeling
Program.
III. BACKGROUND ~
The Housing and Redevelopment Authority (HRA) has an ongoing interest in
maintaining and improving apartment buildings. From 1998 through 2000, the HRA
offered an Apartment Remodeling Loan program with funding from the Metropolitan
Council. The program provided incentive loans. and direct grants to apartment
owners to invest in their rental housing stock, updating units and enhancing their
livability. Owners responded well to the incentive approach. Deferred loans
totaling $222,824 improved 159 apartment units and leveraged $720,789 in
additional owner investment. In addition approximately $200,000 of this grant
money leveraged more significant transformations in larger apartment complexes
including playground equipment at Village Green and a new four-plex at Oliver
Avenue and 76th Street with garage.
051704Apartment Remodeling
However, staff was unable to identify any sources of funding to continue the
program. There was some thought that after the legislature passed its property tax
reform in 2001 that more funds might be freed up for rental property owners to
invest in their properties. Instead, rental property values continued to increase,
along with property tax bills which diminished any extra cash flow owners might
have generated to improve their properties.
Special funds with tenant income and rent restrictions were identified in 2002
through the Minnesota Housing Finance Agency (MHFA). In 2003, MHFA
determined the form of agreement and recently staff identified an experienced
contractor that would administer the loans. It is proposed that the HRA can partner
with. Center for Energy and the Environment-(CEE) to administer the program. This
is the same contractor used by the HRA to administer the Metro Council deferred
loans.
CEE's responsibilities would include:
• Receiving and reviewing loan applications.
• Ensuring that work requested also includes any "housing. quality standard"
(HQS) improvements.
• Compiling the application package, including information on rents, tenant
income, bids, and information on owner's additional financing and other required
information; all of which is then sent to MHFA for loan commitment.
• After receiving loan commitment from MHFA, closing on loan with owner.
• Ensuring completion of work.
• Preparing loan closeout package and submitting to MHFA.
The HRA is responsible for:
• Conducting HQS inspections, and submitting report to CEE.
• Verifying tenant income on units to be improved and submitting to CEE.
• Conducting final HQS inspection after completion of improvements.
• Sending out annual form to owners to verify tenant status. If new tenants are
present, income may be verified.
• Marketing the program.
CEE specializes in providing financial products and services for local units of
government, for homeowners, and for rental property owners. They have efficiently
managed the HRA's prior loan program, and are familiar with MHFA forms and
.procedures and are an approved MHFA lender.
III. BASIS OF RECOMMENDATION
A. POLICY
• One of the HRA's priorities is to improve apartment communities..
Primarily built in the 1950's and 1960's, most Richfield apartments are
aging and declining. Improvements will help Richfield rental units
continue to be appealing in a competitive market place.
Many rental property owners are willing to consider improving their
buildings. This program provides a proven incentive loan to leverage
their own cash and equity investments.
B. CRITICAL ISSUES
Anew program effort with funds from MHFA is available to Richfield
now. Initiating the relationship with CEE will allow marketing to begin
and loans to start.
• An Internet search of community apartment remodeling best practices
can conclude that Richfield's program efforts have few counterparts or
alternative options.
C. FINANCIAL
Multiple sources and uses have been blended together to make the
program possible:
MHFA has committed $250,000 for remodeling incentive loans.
The cost to administer by CEE is $14,000 and comes from the HRA's
housing fund.
Metropolitan Council has approximately $100,000 for remodeling
incentive loans remaining.
The cost to administer by CEE is $5,600 and comes from the HRA's
housing fund.
Approximately $10,000 also remains available from the Metropolitan
Council for program marketing and close out reports.
Property owners need to match dollar for dollar with any HRA funds
received, which at a minimum should leverage $350,000.
• HRA staff provides administrative, inspection and marketing services
from existing staff as funded by the Section 8 program and the HRA
General Fund.
D. LEGAL
The attached contract matches in form and content to the one that the
HRA had with CEE when the Metropolitan Council funds were first
administered. The attached scope of service has been modified to
reflect the new funding sources.
IV. ALTERNATIVE RECOMMENDATION(S~
Do not execute the Agreement with CEE and direct staff to find another loan
servicer or returnfunds to MHFA and the Metropolitan Council unspent.
V. ATTACHMENTS
Program Summary with CEE
• Contract
VI. PRINCIPAL PARTIES EXPECTED AT MEETING
Dave King, CEE
APARTMENT REMODELING PROGRAM -GENERAL SUMMARY
MHFA Funded Program Specifics:
^ $5,000 maximum loan per unit; maximum of $50,000 per building (10 units at max/unit
funding) - HRA determined limit.
^ Owner must match loan investment.
^ Tenants must be income eligible at less than or equal to 80% of the median income, as
determined by MHFA ($61,100 - no family size adjustment)
^ Loans are 0% interest, deferred until property sale.
^ Loans due at 15 years.
^ Gross rents (utilities included) must fall within allowable range as set by MHFA: max rent is
the lesser of the fair market rent, or 30% of 50% of the median income. Richfield's fair market
rent payment standards are as follows:
0 Bedroom $578
1 BR $743
2 BR $951
3 BR $1,286
4 BR $1,457
Concerning eligible/ineligible improvements:
O No work may start prior to closing
O Code compliance required for building, health, fire prevention, housing standards
O Improvements must be on "or in connection with" existing structure
O No materials exceeding the quality normally used in the neighborhood may be used
^ HRA staff provides marketing of program, including the City web site, through RAMA and
through CEE.
^ Owners of tri-plex and larger buildings may apply.
^ The $250,000 amount must be spent by February 2008.
Metropolitan Council Funded Program Specifics
The program similar to above, with these differences:
^ MHFA underwriting requirements do not apply.
^ Tenant and rent restrictions do not apply.
^ The per unit loan maximum is $2,500 and the building loan maximum is $30,000.
LOAN ORIGINATION AGREEMENT
This LOAN ORIGINATION AGREEMENT ("Agreement") is made as of the 17th day of May
2004, by and between the HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR
THE CITY OF RICHFIELD, with offices at 6700 Portland Avenue, Richfield, Minnesota 55423
("Authority"), and CENTER FOR ENERGY AND ENVIRONMENT (a Minnesota nonprofit
corporation), with offices at 211 North First Street, Suite 455, Minneapolis, Minnesota 55401
("CEE")
RECITALS
A. The Authority has a need for certain professional services and desires to retain CEE to
provide said services, all subject to the terms and conditions contained in this Agreement.
B. CEE is qualified to provide the desired professional services, all subject to the terms and
conditions in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and-the mutual. promises contained in this
Agreement, the parties agree as follows:
Services/Scope of Work
1.1 CEE shall in conjunction with the Authority develop and deliver the Richfield Apartment
Remodeling Program for the Authority (hereinafter the "Program") for the Authority and
more fully described in Exhibit A attached hereto. All activities delivered under the
Program shall be coordinated with the Authority's designated program manager.
1.2 CEE shall assist the Authority staff in marketing the Program on a time and materials basis.
CEE shall insure that the Authority's sponsorship of the program is a prominent part of any
marketing effort.
1.3 CEE shall originate and close all Program. loans. With respect to loans funded by the
Authority pursuant to the program set forth in Sections 1.4(a), CEE shall follow the
procedure described below:
a. At the time of closing, CEE will require the borrower to execute a loan note and
mortgage.
b. Upon closing the loan, CEE will notify the Authority of the principal amount of the
loan originated.
1.4 CEE shall develop a personalized financial package for each- eligible borrower that
coordinates financing from the Program described in Exhibit A which includes the
following:
(a) Richfield Apartment Remodeling Deferred Loan
2. Compensation
2.1 The Authority shall pay CEE for services provided under this Agreement according to the
following schedule:
Loan Origination $700.00
The Authority shall pay CEE an Origination Fee for each loan closed using the Authority
Funded Program. The Origination Fee shall compensate CEE for assisting borrowers with
loan applications, preparation of loan documents, loan closing and other direct costs of
processing loans. Mortgage filing costs shall be paid by the borrower.. CEE shall provide a
copy of the loan note and mortgage as documentation of the loan closing.
The Authority shall compensate CEE only for services completed.
Upon request, CEE will provide the marketing and program development materials for the
following fees:
CEE Program Manager $65.00/hour
Marketing Coordinator $55.00/hour
Hourly rates are inclusive of all overhead expenses and will be charged only for hours
directly related to program development and marketing. CEE will be reimbursed by the
Authority for any non-labor, out-of pocket expenses, relating to these services on a dollar-
for-dollar basis with no mark-up.
2.2 a)CEE shall invoice the Authority monthly for Loan Origination Fees. The Authority shall
pay CEE within 30 days of receipt of the invoice.
3. The Authority's Obli atg ions
3.1 If requested by CEE, the Authority shall make reasonable efforts to obtain information and/or
permission for access from the Authority's clients which maybe necessary for CEE to
provide the services under this Agreement.
3.2 The Authority shall assist CEE in obtaining names, addresses, phone numbers and building
characteristics of potential Authority Funded Program participants and eligible Authority
Funded Program structures.
3.3 The Authority shall work with CEE on marketing the Program by authorizing the use of City
of Richfield or other city agency logos and letterheads to CEE for use on marketing
literature. All Program marketing materials used by CEE to promote this Program shall be
approved in advance by the Authority.
3.4 The Authority shall provide Authority Funded Program sufficient to finance eligible loans.
The Authority shall determine the amount of funds allocated to the Program.
3.5 The Authority shall establish eligibility for the Authority Funded Program and shall provide
these criteria in writing to CEE prior to commencement of any marketing efforts.
3.6 The Authority shall make reasonable efforts to respond promptly to requests from CEE for
information and approvals. regarding the services to be provided under this Agreement.
4. CEE's Obli atg ions _
4.1 CEE shall use its best efforts to provide services under this Agreement in a professional
manner consistent with the care and skill used by reputable members of CEE's profession.
4.2 CEE, and all of its employees or agents shall comply with all statutes, ordinances, rules,
regulations and other applicable laws to the provision of services under this Agreement.
4.3 CEE shall secure all permits and licenses required for performance of the services under this
Agreement.
4.4 CEE shall not engage in discriminatory employment practices against any employee or
applicant for employment and shall in all respects comply with all federal, state and local
laws, regulations and orders, including, without limitation, Chapter 363 of the Minnesota
Statutes, as amended from time to time. Failure to comply with the provisions hereof shall
be deemed a material default under this Agreement.
5. Term and Termination
5.1 Unless earlier terminated as provided in the following paragraphs, this Agreement shall
become effective on May 17, 2004, and continue through May 31, 2005.
5.2 This Agreement maybe terminated by either party, for any reason or no reason, immediately
upon written notice to the other party. In the event this Agreement is terminated by CEE
prior to the expiration of the term set forth in paragraph S.l, the Authority shall
compensate CEE for all services delivered up to the date of termination and CEE shall
provide the Authority with such information as the Authority may request regarding the
status of the Authority Funded Program.
5.3 Any termination of this Agreement shall not release either party from their respective
obligations under sections 7 and 8 of this Agreement.
6. Insurance
6.1 During the term of this Agreement, CEE shall. obtain and maintain the following insurance
coverage:
(a) Worker's Compensation Insurance at the statutory requirement for the State of
Minnesota
(b) Commercial General Liability Insurance with a $1,000,000 limit each occurrence and a
general aggregate limit of $2,000,000
(c) Business Auto Insurance with a combined single limit of $1,000,000 each accident
6.2 During the term of this Agreement, CEE shall provide the Authority with a certificate or
certificates of insurance relating to the insurance required pursuant to paragraph 6.1.
7. Liability and Indemnification
7.1 CEE represents that the services to be provided under this Agreement are reasonable in scope
and that CEE has the experience and ability to provide the services.
7.2 CEE acknowledges that the Authority cannot control the conditions at any site where the
services maybe provided, and accordingly, the Authority is not liable for any claim,
damage, loss, injury or expense of any type which CEE may suffer as a result of providing
the services under this Agreement.
7.3 CEE warrants that any services provided hereunder shall be done in a professional and
workmanlike manner.
7.4 CEE shall indemnify, defend and hold harmless the Authority and the City and their officers,
directors, employees and agents from and against any and all claims, damages, losses,
injuries and expenses (including attorney's fees and damages for death, personal injury and
property damage) which the Authority or the City may incur as a result of any act or
omission by CEE in providing services under this Agreement.
7.5 The Authority shall indemnify, defend and hold harmless CEE and its officers, directors,
employees and agents from and against any and all claims, damages losses, injuries and
expenses (including attorney's fee and damages for death, personal injury and property
damage) which CEE may incur as a result of any act or omission by the Authority in
discharging its duties under this Agreement.
8. Confidentiality
Unless otherwise agreed by the Authority in writing, CEE shall maintain in confidence. and not
disclose to any third party any information obtained regarding the Authority and/or any of the
Authority's clients for which CEE is providing services; provided, however, that this obligation to
maintain confidentiality shall not apply to:
• Information in the public domain at the time of disclosure;
• Information which becomes part of the public domain after disclosure through no fault of
CEE; or
• Information which CEE can demonstrate was known by it prior to the date of this
Agreement.
9. Relationship of Parties
CEE will provide services as an independent contractor under this Agreement. Neither CEE, nor
any of its employees or agents, shall be considered employees of the Authority for any purpose,
and neither shall CEE be eligible for any compensation or benefits which the Authority may
provide to its employees from time to time. CEE shall be solely responsible for employment and
other taxes applicable to providing services hereunder, and the Authority will not withhold any
taxes applicable to providing services hereunder, and the Authority will not withhold any taxes or
contributions from the compensation payable to CEE under this Agreement. If any governmental
authority (federal, state or other) claims that the Authority owes taxes or contributions which
allegedly should have been withheld or made, then, to the extent permitted by law, CEE shall pay
the Authority the amounts claimed to be due, plus reasonable attorney's fees and any other costs
which the Authority may incur in defending such claim, whether or not a lawsuit is commenced.
All notices, requests, demands and other communications required to be given in writing under
this Agreement shall be given to the other party in person or by mail as provided in this section.
If delivered personally, notice shall be deemed to have been duly given on the date of delivery. If
delivered by mail, such notice shall be sent via first class U.S. mail, postage prepaid, to the.
address set forth at the beginning of this Agreement or such other address as a party may
otherwise request. Written notice shall be deemed duly given three (3) business days after
mailing.
11. Assignment
This Agreement shall be binding upon and inure to the benefit of the parties and their respective
heirs, successors and assigns; provided however, that neither party shall assign or transfer in any
manner, this Agreement or any portion hereof without the prior written consent of the other party,
and any attempt to assign or transfer without prior written consent shall be void and of no effect.
12. Governing Law
This Agreement shall be governed by and construed in accordance with the laws of the State of
Minnesota.
13. Miscellaneous
13.1 Headings and captions used in this Agreement are for convenience only and shall not affect
. the meaning of this Agreement.
13.2 This Agreement contains the entire agreement of the parties and supersedes all prior
agreements, discussions and representations, written or oral, concerning the subject matter
hereof.
13.3 No waiver by the Authority of any term or condition of this Agreement or any document
referred to herein shall, whether by conduct or otherwise, be construed as a waiver or
release of any other term or condition in this Agreement.
13.4 This Agreement may only be amended in a written agreement signed by both parties.
13.5 Except as expressly set forth in Section 7, the rights and benefits under this Agreement shall
inure solely to the benefit of the Authority and CEE, and this Agreement shall not be
construed to give any rights, benefits or causes of action to any third party.
13.6 The invalidity or partial invalidity of any provision of this Agreement shall not invalidate the
remaining provision, and the remainder shall be construed as of the invalidated portion
shall have never been a part of this Agreement.
13.7 CEE shall comply with the provisions of Minnesota Statutes Chapter 13 (Government Data
Practices) that are applicable to the Authority and shall not disseminate any information
concerning loan requests of the borrowers without the prior written approval of the
Authority. '
13.8 This Agreement maybe signed in any number of counterparts, each of which shall be
deemed an original and one and the same .instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written
above.
HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD
Date
Date
By:
Its: Chair
By:
Its: Executive Director
CENTER FOR ENERGY AND ENVIRONMENT
By:
Date Sheldon Strom
Its: Executive Director
.1
Federal Tax Identification Number:
41-1647799
DRAFT - EXHIBIT A 04
Program Overview
The Richfield Housing and Redevelopment Authority (HRA) is making $250,000 available to
create a deferred loan program to assist rental property owners of the City of Richfield make
basic improvements to their properties. This program is designed to supplement existing loan
programs available from NITIFA, CEE, private lenders and other resources. It is not intended to
be the sole source of rehab funds available in the City.
General Program Guidelines
Terms of the Richfield Rediscovered Apartment Remodeling Program
1. Program Intent: The intent of the Program is to facilitate investment in apartment
communities to make them more livable and desirable. The Program provides financial
incentives as well as technical assistance.
2. Loan Pool: $250,000
3. Interest Rate: 0%
4. Income Limit: None on borrower. However, tenants income must not exceed 80% of
median area income, as determined by MHFA (currently $61,100 -there is no family size
adjustment).
5. Rent Limitations: Gross rents (utilities included) must fall within allowable range as set
by 1VITIFA: maximum rent is the lesser of FMR or 30% of 50% of the median- income;
minimum rent is 30% of 30% of the median income.
6. Loan term: 15 years non-declining, or longer to match existing first mortgage. The
borrower must own the property for 15 years from date of closing in order for the deferred
loan to be 100% forgiven. There will be no monthly or periodic payments due on the loan
unless the borrower sells or transfers title of the property prior to the loan being completely
forgiven, at which time the borrower will be responsible for paying the loan in full.
7. Loan Amount•
$1,000 minimum for all properties. .
$5,000 maximum per unit.
$50,000 maximum per property.
Matching requirement:
Property owner must match HRA funds at a one to one (1:1) ratio for all
improvement prof ects.
Richfield Rediscovered Apartment Remodeling Program Page A-1
Center for Energy and Environment 4/07/04
DRAFT -EXHIBIT A-04
Eligible properties: Properties must be located in the City of Richfield. Property must be
at least 30 years old. Properties must contain at least three rental dwelling units.
Properties maybe owner-occupied or absentee owned.
9. Eligible Improvements: Eligible improvements to the property must be permanent,
general improvements that:
• Have not been started prior to the initial closing;
• Bring the property into compliance with all applicable health, fire prevention,
building and housing codes, and standards;
• .Are on or in connection with an existing structure;
• Correct a defect or deficiency affecting directly the safety, habitability, accessibility,
or energy consumption of the property that will, upon completion, make the rental
housing reasonably livable, safe, habitable, energy efficient and lead safe for the
compliance period;
• Do not include materials, fixtures, or landscaping of a type or quality exceeding that
customarily used in similar neighborhood properties.
Ineligible improvements include those that involve new construction, refinancing,
conversion to non-residential properties, or reconfiguration of rental units.
10. Work by Owner: Work can be performed on a "sweat equity" basis. Loan funds cannot
be used to compensate for labor, only for materials. The owner must clearly demonstrate
the ability to complete the work within the program time requirement. When required by
city ordinance, a building permit must be obtained by the borrower.
11. Application Processing: Applications will be addressed on a first-come, first-served basis.
Borrowers must provide a completed application packet per program requirements.
12. Work Completion: Weather permitting, all work must be completed within 9 months of
loan closing.
13. Total Proiect Cost: It is the borrower's responsibility to obtain the amount of funds
necessary to finance the entire cost of the work. In the event the final bill exceeds the
original loan amount, the borrower must obtain the additional funds.
14. Custody of Funds: Loan funds will remain in the custody of MHFA until payment for
completed work.
15. Disbursement Process: Payment to the contractor (or owner in sweat equity situations)
will be made upon completion of work.- An inspection will be performed by the HRA staff
to verify completion of the work.
Richfield Rediscovered Apartment Remodeling Program Page A-2
Center for Energy and Environment 4/07/04
DRAFT -EXHIBIT A-04
The following items must be received prior to fmal disbursement of funds:
• final invoice or proposal from contractor
• fmal inspection verification by HRA staff
• Completion certificate(s) signed by borrower and contractor
• Lien waiver for entire cost of work
• Sworn Construction statement
• Evidence of required city permit(s) and abatement of any identified code violations
16. Loan Security: All loans will be secured with a mortgage in favor of the MHFA.
17. Contractors/Permits: Contractors must be currently licensed when required by city/state
ordinance. Permits must be obtained when required by city ordinance.
18. Loan to Value Ratio: The ratio of all loans secured by the property, including the new
loan, must not exceed 110% of the property value.
19. Underwriting Decision: Applicants must have an acceptable credit history: Property
owners must be current on mortgage/contract for deed payments and property taxes.
20. Housing Quality Standards: The Richfield HRA staff will perform HQS inspections on
' eligible properties participating in the Program. A scope of work will then be created which
will outline project eligibility and minimum standards for potential bidders to use in
preparing their proposals.
21. Loan Costs:. The HRA will pay the loan origination and related fees out of the
Administrative Fund. Borrowers will pay all mortgage filing fees, title fees, and lead
assessment costs.
Richfield Rediscovered Apartment Remodeling Program Page A-3
Center for Energy and Environment 4/07/04
DRAFT EXHIBIT B 04
Richfield Apartment Remodeling Program
Scone of Services
Duties and Responsibilities of Richfield Housing and Redevelopment Authority:
1. Develop program guidelines and supervise implementation.
2. Market program to rental property owners.
3. Perform pre and post HQS inspections and report.
4. Assist CEE with collection of tenant income information as necessary.
5. Monitor tenant status on an annual basis.
6. Manage the program. Monitor and reconcile all reports from CEE.
Duties and Responsibilities of CEE:
1. Assist the HRA to market the program to the rental property owners.
2. Obtain a credit report for all applicants. Verify applicant is current on all mortgage
(contract for deed) payments and property taxes.
3. Verify that applicant's Loan to Value ratio, when combined with the new loan, does not
exceed 110%.
4. Review description of proposed project and verify that it is an eligible improvement
under Program guidelines. Contact the HRA for final determination if an improvement
is in question.
5. Approve or deny application based on program guidelines. CEE's decision shall be
final.
6. Originate and close all loans.
7. File appropriate mortgage documents for all loans as required. Filing fees for mortgage
will be paid by the borrower at time of closing.
8. Origination fees will be paid from the Program's Administrative Budget.
9. Disburse proceeds to contractor upon completion of work and receipt of 1) final invoice
or proposal, 2) final inspection report, 3) lien waiver, 4) completion certificate, 5)
sworn construction statement, (6) evidence of required permit(s).
n
Richfield Rediscovered Apartment Remodeling Program Page B-1
Center for Energy and Environment 4/07/04
DRAFT -EXHIBIT B-04
10. Manage loan fund and provide the HRA with monthly reports which include:
• Beginning Balance of fund
• Any additional funds received from the HRA
• # of applications received for month
• # of Originations
• Total value of Originations and number of units affected
• Names and addresses of loan recipients and number of units improved
• Origination and related fees assessed to Program Budget
• Ending balance of fund
Submit other reports and information as may be required by the HRA.
Richfield Rediscovered Apartment Remodeling Program Page B-2
Center for Energy and Environment 4/07/04
DRAFT -EXHIBIT C-03
Richfield Rediscovered Apartment Remodeling Program Budget
2003 Allocations for Loan Program
2003 Program Capital
Matching Deferred
Total
Administrative Funds
Projected Origination (based on 20 closed loans)
Total
Grand Total
250 000
$250,000
$ 14,000
$14,000
$264,000
The Program Capital identified above in the amount of $250,000 is to be provided by the
Minnesota Housing Finance Agency.
1. Loan funds will be allocated to rental property owners.
2. Administrative services performed by CEE in accordance with the following: The applicable
fees will be paid by the Administrative Budget for this program.
(1) Origination: MHFA Deferred Loans $700.00 per loan closed
3. Servicing of the deferred loans will be the responsibility of the Minnesota Housing Finance
Agency.
4. Mortgage filing fees and related closing costs to be paid by the borrower at time of loan
closing.
n
Richfield Rediscovered Apartment Remodeling Program Page C-1
Center for Energy and Environment 11/21/03
DRAFT - EXHIBIT D 04
^ Program Overview
~~ The Richfield Housing and Redevelopment Authority (HRA) is making $100,000 available to
create a deferred loan program to assist rental property owners of the City of Richfield make
value added improvements to their properties. This program is designed to supplement existing
loan programs available from MHFA, CEE, private lenders and other resources. It is not
intended to be the sole source of rehab funds available to the City.
General Program Guidelines
Terms of the Richfield Rediscovered Apartment Remodeling Program
1. Program Intent: The intent of the Program is to facilitate investment in apartment
communities to make them more livable and desirable. The Program provides financial
incentives as well as technical assistance in design and remodeling.
2. Loan Pool: $100,000
3. Interest Rate: 0%
4. Income Limit: None.
5. Loan term: 15 years. The borrower must own the property for 15 years from date of
closing in order for the deferred loan to be 100% forgiven. If the borrower sells or transfers
title of the property prior to the loan being completely forgiven, the borrower will be
responsible for paying the remaining unforgiven balance.
6. Loan Amount•
$1,000 minimum for all properties.
$2,500 maximum per unit.
$30,000 maximum per property.
Matching requirement:
Property owner must match HRA funds at a one to one (1:1) ratio for all
improvement projects.
7. Eligible properties: Properties must be located in the City of Richfield. Property must be
at least 30 xears old. Properties. must contain at least four rental dwelling units. Properties
maybe owner-occupied or absentee owned.
Richfield Rediscovered Apartment Remodeling Program Page D-1
Center for Energy and Environment 4/07/04
DRAFT -EXHIBIT D-04
8. Eligible Improvements: Eligible improvements are to be those improvements eligible
under the MHFA Rental Rehabilitation Program as stated in the Procedural Manual for that
program. Any outstanding code violations on record through the City Inspections
Department must be addressed when funding other improvements.
9. Work by Owner: Work can be performed on a "sweat equity" basis.. Loan funds cannot
be used to compensate for labor, only for materials. The owner must clearly demonstrate
the ability to complete the work within the program time requirement. When required by
city ordinance, a building permit must be obtained by the borrower.
10. Application Processing: Applications will be addressed on a first-come, first-served basis.
Borrowers must provide a completed application, proof of income, property tax statement
and ultimately 1 bid prior to the time of loan closing. The HRA and/or CEE reserves the
right to require a second bid.
11. Work Completion: Weather permitting, all work must be completed within 9 months of
loan closing.
12. Total Proiect Cost: It is the borrower's responsibility to obtain the amount of funds
necessary to finance the entire cost of the work. In the event the final bill exceeds the
original loan amount, the borrower must obtain the additional funds.
13. Custody of Funds: Loan funds will remain in the custody of CEE until payment for
completed work.
14. Disbursement Process: Payment to the contractor (or owner in sweat equity situations)
will be made upon completion of work. An inspection will be performed by the
Remodeling Advisor and/or CEE to verify the completion of the work.
The following items must be received prior to final disbursement of funds:
• final, original invoice from contractor (or materials fist from supplier)
• final inspection verification by CEE (if necessary)
• Completion certificate(s) signed by borrower and contractor
• Lien waiver for entire cost of work
• Evidence of abatement of code violations and receipt of any required city permit
15. Loan Security: All loans will be secured with a mortgage in favor of the HRA..
Borrowers will pay all filing fees.
16. Contractors/Permits: Contractors must be currently licensed when required by city/state
ordinance. Permits must be obtained when required by city ordinance.
17. Loan - to Value Ratio: The ratio of all loans secured by the property, including the new
loan, must not exceed 110% of the property value.
Richfield Rediscovered Apartment Remodeling Program Page D-2
Center for Energy and Environment 4/07/04
DRAFT -EXHIBIT D-04
O 18. Underwriting Decision• Applicants must have an acceptable credit history: Property
owners must be current on mortgage/contract for deed payments and property taxes.
19. Remodeling Advisor. The Remodeling Advisor will provide technical assistance to any
property owner desiring assistance in evaluating and prioritizing improvements to their
property. Services include assistance with design and collection and evaluation of bids.
20. Loan Costs: The HRA will pay the loan origination fees out of the Administrative Fund.
Servicing costs will be paid from Program Income. Borrowers will pay all filing fees.
Richfield Rediscovered Apartment Remodeling Program
Center for Energy and Environment Page D-3
4/07/04
DRAFT - EXHIBIT E 04
Scope of Services
Duties and Responsibilities of Richfield Housing and Redevelopment Authority
1. Develop program guidelines and supervise implementation.
2. Market program to rental property owners.
3. Provide Remodeling Advisor services.
4. Manage the program. Monitor and reconcile all reports from CEE.
5. Service loans in accordance with industry standards.
Duties and Responsibilities of CEE•
1. Assist the HRA market the program to the rental property owners.
2. Obtain a credit report for all applicants. Verify applicant is current on all mortgage
(contract for deed) payments and property taxes.
3. Verify that applicant's Loan to Value ratio, when combined with the new loan, does not
exceed 110%.
4. Review description of proposed project and verify that it is an eligible improvement
under Program guidelines. Contact the HRA for final determination if an improvement
is in question.
5. Approve or deny application based on program guidelines. CEE's decision shall be
final.
6. Originate and close. all loans.
7. File appropriate mortgage documents for all loans as required. Filing fees for mortgage
will be paid by the borrower at time of closing.
8. Origination fees will be paid from the Program's Administrative Budget.
9. .Disburse proceeds to contractor upon completion of work and receipt of 1) final
proposal or invoice, 2) final inspection report, 3) lien waiver, 4) completion certificate,
5) evidence of required permit(s).
10. Manage loan fund and provide the HRA with monthly reports which include:
• Beginning Balance of fund
• Any additional funds received from the HHRA
• # of applications received for month
• # of Originations
Richfield Rediscovered Apartment Remodeling Program
Center for Energy and Environment Page B-1
4/07/04
DRAFT -EXHIBIT E-04
. Total value of Originations
• Names and addresses of loan recipients
. Origination fees assessed to Program Budget
Ending balance of fund
11. Submit other reports and information as maybe required by the HRA.
Page B-2
Richfield Rediscovered Apartment Remodeling Program 4/07/04
Center for Energy and Environment
DRAFT -EXHIBIT F-04
Richfield Rediscovered Apartment Remodeling Program Budget
2004 Allocations for Loan Program
2004 Program Capital
Matching Deferred 100 000
Total $100,000
Administrative Funds (All "New")
Origination: Loans (based on 81oans) $ S 600
Total $ 5,600
Grand Total $105,600
1. Loan funds-will be allocated to rental property owners.
2. Administrative services performed by CEE in accordance with the following: ,The applicable
fees will be paid by the Administrative Budget for this program.
(1) Origination: HRA Deferred Loans $700.00 per loan closed
3. Servicing of the deferred loans will be the responsibility of the Richfield Housing and
Redevelopment Authority or their servicing agent.
4. Mortgage filing fees 'and related closing costs to be paid by the borrower at time of loan
closing.
Richfield Rediscovered Apartment Remodeling Program Page F-1
Center for Energy and Environment 4/07/04
STAFF REPORT
AGENDA ITEM # 3C
REPORT # 2 I
HOUSING AND REDEVELOPMENT
AUTHORITY MEETING
MAY 17, 2004
REPORT PREPARED BY: BRUCE NORDQUIST, HOUSING AND
REDEVELOPMENT MANAGER
NAMC TircE
REPORT PRESENTER: BRUCE PALMBORG, COMMUNITY
DEVELOPMENT DIRECTOR
NAME, TITLE
DEPARTMENT DIRECTOR REVIEW:
SIGNATURE
REVIEWED BY EXECUTIVE DIRECTOR:
ITEM FOR HRA CONSIDERATION:
Consideration of a reduction in the amount of funds required by an Agreement between the
Housing and Redevelopment Authority and Gramercy Corporation for the City Bella aroiect.
I. RECOMMENDED ACTION:
By Motion: Approve the attached Agreement that reduces-the
amount of secured funds provided for in an Assignment of Deposit
Account between the Housing and Redevelopment Authority and
Gramercy. Corporation.
III. BACKGROUND
In December 2002 the Housing and Redevelopment Authority (HRA) notified
tenants in the Checker Auto and Trestman Music buildings that they may be eligible
for relocation benefits. Gramercy Corporation pledged $155,000 in a deposit
account to secure Gramercy's obligation to the HRA to pay costs related to the
condemnation/relocation process. Some claims have been settled. Some tenants
have yet to submit their claims. Claims are required to be filed within 18 months of
the HRA's notice of eligibility. If no claim is made, the right expires.
051704 City Bella Project
Gramercy Corporation has paid all claims that have been filed. The HRA's
relocation consultant has recommended that the amount on deposit be reduced
from $155,000 to $107,500. Sufficient funds then remain on deposit to cover
outstanding claims.
III. BASIS OF RECOMMENDATION
A. POLICY
• The actions of the HRA and Gramercy Corporation are based on a
Contract for Private Redevelopment, as amended and restated and an
Assignment of Deposit Account Agreement.
• All Contract and Agreement conditions have been met to date.
B. CRITICAL ISSUES
• Gramercy Corporation has requested the HRA to reduce the amount
on deposit. An adjustment is a reasonable request given some claims
have been paid and others remain outstanding.
• The HRA's Relocation Consultant has recommended an adjustment
from $155, 000 down to $107, 500.
C. FINANCIAL
• Sufficient funds remain on deposit to satisfy relocation claims, which
O may be filed.
D. LEGAL
• Legal Counsel prepared the Agreement for reduction.
• Legal Counsel concurs with the Relocation Consultant's
determination.
IV. ALTERNATIVE RECOMMENDATION(S~
• The HRA could choose to not reduce the secured amount. This. would
penalize Gramercy Corporation and prevent withdrawing $47,500 from the
account for claims already paid.
V. ATTACHMENTS
• Reduction of Secured Amount Provided for in Assignment of Deposit
Account and Rights to Payment
VI. PRINCIPAL PARTIES EXPECTED AT MEETING
• N/A
REDUCTION OF SECURED AMOUNT PROVIDED FOR IN
ASSIGNMENT OF DEPOSIT ACCOUNT AND RIGHTS TO PAYMENT
RECITALS:
A. Gramercy Corporation executed an Assignment of Deposit Account
and Rights, to Payment on December 22, 2002, granting to the Housing and
Redevelopment Authority in and for the City of Richfield ("Secured Party") a security
interest in the Deposit Account therein identified ("the Assignment").
B. The Assignment pledged the sum of $155,000.00 deposited in the
subject account to the Secured Party, which sum remains in the account together with
accrued interest.
C. The security interest granted the Secured Party was perfected by
the filing of a UCC Financing Statement in the office of the Minnesota Secretary of State
on December 30, 2002 as Filing No. 20026092799.
D. Due to the fact that the obligations of Gramercy Corporation
secured by the Assignment have been in part paid or the time in which to make claims
has expired, Gramercy Corporation and the Secured Party have agreed that the amount
secured may be reduced as herein provided.
1. Reduction of Amount Secured The amount secured by the Assignment may be and
hereby is reduced to $107,500.00. Funds in the Deposit Account in which a security
interest was granted in excess of that amount. may be withdrawn by Gramercy
Corporation.
2. A_ ssianment Remains in Full Force and Effect Except as herein amended, the
terms and conditions of the Assignment remain the same and remain in full force
and effect.
Gramercy Corporation
By
Roger W. Schnobrich
Its Secretary
Housing and Redevelopment
Authority in and for the City
of Richfield
By
Samantha Orduno
Executive Director
121092281v1 75211
AGENDA ITEM # 3 B
REPORT # 20
STAFF REPORT
~ HOUSING. AND REDEVELOPMENT
AUTHORITY MEETING
MAY 17, 2004
REPORT PREPARED BY: PAM BOOKHOUT, REHABILITATION
SPECIALIST
NAME, TITLE
REPORT PRESENTER: BRUCE PALMBORG, COMMUNITY
DEVELOPMENT DIRECTOR
NAME, TITLE
DEPARTMENT DIRECTOR REVIEW: ~_
SIGNATURE
REVIEWED BY EXECUTIVE DIRECTOR: d
ITEM FOR HRA CONSIDERATION:
Consideration of the attached .resolution regarding modifications to the Richfield Rehabilitation
Deferred Loan Program Guidelines.
I. RECOMMENDED ACTION:
By Motion: Approve the attached resolution authorizing
modifications to the Richfield Rehabilitation Deferred Loan Pro ram
Guidelines.
g
~ II. BACKGROUND
The Housing and Redevelopment Authority (HRA) instituted the Richfield Rehabilitation
Deferred Loan Program (Deferred Loan Program) in 1978 with annual funding from the
City's Community Development Block Grant (CDBG) allocation. The annual allocation,
along with .repayments, serves 12-15 low-income homeowners each year. Approximately
480 homeowners have been served since program inception.
HRA staff administers the Deferred Loan Program according to procedural guidelines
established by Hennepin County. The HRA and other administering entities may vary from
some aspects of the procedural guidelines, if approved by the County.
Hennepin County has recently updated its procedural guidelines, which requires the HRA
to update its guidelines and to submit requests for variation from the County's guidelines, if
051704 Deferred Loan
desired. An attachment highlights changes to the HRA guidelines, but the entire
Procedural Guideline are also attached. The last revision to the program guidelines was in
2001 when the HRA adopted changes relating to Lead Based Paint, according to Federal
law changes.
III. BASIS OF RECOMMENDATION
A. POLICY
• The HRA's Deferred Loan Program is administered according to the
Rehabilitation Deferred Loan Procedural Guidelines, as allowed by the
U.S. Department of Housing Urban Development (HUD) and
Hennepin County.
• The revised Procedural Guidelines reflect the changes recommended
by Hennepin County and HRA staff.
B. CRITICAL ISSUES
• The HRA needs to respond to the recommended procedural guideline
changes to keep the HRA's program consistent with HUD rules and
with Hennepin County's administration as the HUD entitlement body.
• Variances from Hennepin County's procedural guidelines,
recommended by HRA staff, were submitted to Hennepin County, and
approved.
• The overall impact of the changes on applicant homeowners is
negligible.
C. FINANCIAL
• The City of Richfield and the HRA annually receive CDBG funds from
HUD through Hennepin County.
• The Deferred Loan Program remains the only reliable, affordable
financing option for fixed-income seniors and low-income families and
individuals to maintain their homes. The HRA must keep its
guidelines current with requirements from HUD and Hennepin County
to continue the program.
D. LEGAL
• Program agreements are not changed.
IV. ALTERNATIVE RECOMMENDATIONS
• Adopt the guidelines, as provided by Hennepin County without variations,
limiting local discretion and adaptation to local needs.
~ V . ATTACHMENTS ~
• rcesoiution
• Summary of changes to Procedural Guidelines
• Revised Deferred Loan Procedural Guidelines
~ V 1. PRINCIPAL PARTIES EXPECTED AT MEETING
• N/A
HRA RESOLUTION NO.
RESOLUTION AUTHORIZING APPROVAL OF MODIFICATIONS TO THE HOME
REHABILITATION DEFERRED LOAN PROGRAM
WHEREAS, the Housing and Redevelopment Authority in and for the City of
Richfield, Minnesota (HRA) provides a Rehabilitation Deferred Loan program which utilizes
federal Community Development Block Grant (CDBG) funds as allocated by Hennepin
County to assist low income homeowners with rehabilitation their homes; and
WHEREAS, the program's Procedural Guidelines were last approved by the HRA in
2001, and are modified periodically as program requirements and needs dictate; and
WHEREAS, Hennepin County has updated its guidelines, necessitating Richfield to
do the same; and
WHEREAS, the HRA has reviewed the modifications.
NOW, THEREFORE, BE IT RESOLVED, by the Housing and Redevelopment
Authority in and for the City of Richfield, Minnesota that the Richfield Rehabilitation
Deferred Loan Program Procedural Guidelines will be modified according to updated
guidelines received from Hennepin County, and with minor variations to those guidelines
as approved by Hennepin County.
Adopted by the Housing and Redevelopment Authority in-and for the City of
Richfield, Minnesota this 17th day of May 2004.
Thomas E. Harms, Chair
ATTEST:
Kristal Stokes, Secretary
051704 Deferred Loan
MAY 2004
SUMMARY OF CHANGES TO
THE REHABILITATION DEFERRED LOAN GUIDELINES
Income Calculation.
a. Hennepin County recommends that the calculation of an applicant's household income
be done according to IRS standards. Previously income was determined according to
Section 8 standards.
b. Income must include the income of every person living in the house, including students,
renters, etc. No administering entity may vary from this HUD requirement.
c. Applicants to Hennepin County's Deferred Loan may have income at or below 80% of the
area median. Richfield has always varied from this by only allowing applicants whose
income is at or below 50% of the median. At this level, all CDBG funds are expended
and Richfield maintains a waiting fist.
• Asset Calculation. Previously applicants could not have assets exceeding $25,000. It was
rare for an applicant to exceed that limit. For the few people this does impact -notably seniors
--the change now is that there is no asset limit. However, any interest derived from the assets
must be included as income.
Accessibility. Certain improvements may be included for persons who have accessibility
needs. In the past, the HRA has allowed applicants with such needs to borrow an extra $5,000
over and above the loan limit of $25,000. With the new guidelines, staff does not recommend
seeking to keep this variation from Hennepin County's guidelines. The reasons for this include:
HRA loan funds are already stretched to capacity, with limited CDBG funds and with a waiting
list for the loan. In addition, other loan resources are available for applicants with accessibility
needs that would provide more than $5,000. These other resources include Hennepin
County's Deferred Loan, the County's Revolving Loan, and the state's Fix-Up Fund
Accessibility Loan.
• The new guidelines allow for mobile homeowners to apply for loan funds. In the past, this has
been possible only if the mobile homeowner also owned the land beneath the unit. The
guidelines recognize a 10 year. lien for such applicants (rather than the 30 year lien for single
family homeowners), and the Repayment Agreement will be filed with the Department of Motor
Vehicles.
• A provision in the HRA's past guidelines allowed a Contract for Deed vendor who
repossessed a property to make monthly payments rather than a lump sum payment. This
provision has rarely been used, and not used at all in over 12 years. Dropping this from the
guidelines allows for any such situation to be addressed on a case by case basis.
The HRA has had a "Flood Grant" component to the Deferred Loan guidelines. In .large part,
this was developed after the heavy rains that occurred in 1987. Despite the special program,
few loans were provided at the time, and all were in limited amounts. With-the new guidelines,
staff does not recommend seeking to keep this variation from Hennepin County's guidelines.
The reasons for this include: the Engineering Division of Public Works has worked with
individuals and businesses on a case by case basis when water problems have occurred.
Many people have had their needs mef through this service. Also, the Emergency component
of the Deferred Loan program could address issues related to storm water run off.
• Evaluating the presence of lead and its hazards continues to be a mandatory element of the
loan program. The new guidelines allow for the demolition of outbuildings, which have lead in
them; and .recognize that if the applicant household has a child under the age of six is found to
have an elevated blood level, that circumstance is treated as an emergency.
RICHFIELD HRA'S
REHABILITATION DEFERRED LOAN
PROCEDURAL GUIDELINES
May 2004
RICHFIELD REHABILITATION DEFERRED LOAN PROGRAM
TABLE OF CONTENTS
CONTENTS PAGE
Introduction/Administrative Procedures 3
Section I Definitions 4
Section II Conditions Governing Administration 6
A. Amendments, directives 6
B. Federal and State Regulations 6
C. Administrative Subcontracts 7
D. Delivery of Loan Funds 7
E. Approval of Loan Packages 7
F. Certifications 7
G. Expediency of Loan Processing 8
H. Maximum Loan Amount 8
Section III Responsibilities Of The HRA g
A. Outreach and Public Information 8
B. Inspection of Properties g
C. Applicant Selection Criteria g
D. Preparation of Scope of Improvements/Work Proposal 10
E. Preparation of Loan Package 10
O F. Requests for Changes in Loan Amount 10
G. Disbursement of Funds 11
H. Service Fee Charges 11
I. Temporary Relocation Policy 12
Section IV Eligible Properties 12
Section V Improvement Standards (HQS) 13
Section VI Eligible Improvements 16
Section VII Eligible Recipients 21
A. Ownership 21
B. Household Gross Annual Income 21
C. Exclusions From Gross Income 24
D. Deductions From Gross Income 24
E. Asset Determination 25
Section VIII Loan Applications 25
A. Homeowner Application for Loan 25
B. Acknowledgement & Authorization to Release 25
Information
C. Letter to Historical Society 26
D. Income Verification 26
E. Asset Verification 26
F. Mortgage Status Verification 26
G. Zoning Status Verification 27
H. Title Verification 27
~ ~
May 2004
I. Property Inspection Report 28
J. Scope of Improvements/Work Proposal 29
K. Rehabilitation Work Summary 29
L. Contractor Bids 29
M. Work Contract 29
N. Amendment Request/Change Order Request 30
0. Contractor Bills 30
P. Sworn Construction Statement 30
Q. Lien Waivers 30
R. Completion Certificate 30
S. Data on Individual Loans 30
T. Repayment Agreement 31
U. Complaint Record/Memo 33
Section IX Acceptance & Notification Procedures 34
Section X Completion And Disbursement Procedures 35
Section XI Procedures For Accessibility Improvement Loans 36
A. Accessibility Improvements 36
B. Requirements for Participation 37
C. Amount of Loan for Accessibility Improvements 3.7
D. Responsibilities of the HRA 37
E. Standard Procedures 37
Section XII General Conditions Relating To Loans 38
Section XIII Emergency Loan Guidelines 38
Section XIV General Conditions Relating to 3% Interest Loans 40
2
May 2004
I. Property Inspection Report 28
J. Scope of Improvements/Work Proposal 29
K. Rehabilitation Work Summary 29
L. Contractor Bids 29
M. Work Contract 29
N. Amendment Request/Change Order Request 30
O. Contractor Bills 30
P. Sworn Construction Statement 30
Q. Lien Waivers 30
R. Completion Certificate 30
S. Data on Individual Loans 30
T. Repayment Agreement 31
U. Complaint Record/Memo 33
Section IX Acceptance & Notification Procedures 34
Section X Completion And Disbursement Procedures 35
Section XI Procedures For Accessibility Improvement Loans 36
A. Accessibility Improvements 36
B. Requirements for Participation 37
C. Amount of Loan for Accessibility Improvements 37
D. Responsibilities of the HRA 37
E. Standard Procedures 37
Section XII General Conditions Relating To Loans 38
Section XIII Emergency Loan Guidelines 38
,-1 Section XIV General Conditions Relating to 3°~ Interest Loans 40
2
May 2004
COMMUNITY DEVELOPMENT BLOCK GRANT
HOME REHABILITATION DEFERRED LOAN PROGRAM
Introduction
These guidelines, as adopted by the Housing and Redevelopment Authority in and for the City
of Richfield, Minnesota (HRA), set forth the process and criteria for reviewing applications for
the Richfield Home Rehabilitation Program.
The objective of these assistance programs is to upgrade and maintain- the Richfield housing
stock with assistance to low and moderate-income homeowners.
From time to time, the HRA may, by resolution, discontinue or add program components. At
that time, these guidelines will be amended to reflect those changes.
ADMINISTRATIVE PROCEDURES
A. The Housing and Redevelopment Authority Board of Commissioners is responsible for
establishing and adopting the program. Commissioners set forth the intent and objectives
of the program. They are responsible for the appropriation of the operating funds. The
Commissioners will also hear appeals from applicants as presented by the Executive
Director.
B. The HRA Executive Director will review and forward any pertinent information to the HRA
Commissioners. The Executive Director will also receive written appeals and take
appropriate action.
C. The HRA staff will be responsible for taking and processing applications and obtaining all
necessary information to complete them. The staff is responsible for interpreting the
guidelines established and approved by HRA Commissioners. Applications will be
reviewed for eligibility as they are received. Upon review. of each application, staff will
determine the eligibility or ineligibility of each application according to the review
guidelines and criteria. Applicants will be notified in writing of the decision.
D. A summary of the loan cases, and actions taken relating to each case, will be written and
forwarded to the Housing and Redevelopment Authority Commissioners, as requested.
E. An applicant who is denied funding may re-apply after 90 days and be reconsidered on the
basis of new information. The decisions of the HRA staff will be final; however, appeals
may be made in those cases where applicants believe they were not treated equitably.
Appeals shall be in written form and submitted to the HRA staff administrator outlining the
applicant's concerns. An HRA staff review will evaluate the appeals. If a solution by the
staff is not reached, the case will be referred to the HRA Executive Director for review. A
reply in written form to the appeal will be sent to the applicant within fifteen (15) days.
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May 2004
F. When a homeowner is dissatisfied with work done by the contractor, the contractor shall
be informed verbally of the problems by the homeowner. If a satisfactory response is not
obtained, the homeowner shall prepare a written request for the contractor, specifying
which items are to be repaired or improved. The homeowner must send a copy of this
letter to the loan administrator. If subsequent repairs still do not meet the homeowner's
approval, either mediation or arbitration services may be pursued. The loan administrator
and the homeowner will agree upon which service will be selected .based on the cost of
specified improvements and the process most likely to best meet homeowner needs.
In the event the HRA is notified of a problem arising after completion of the loan,
additional loan funds can be made available to the borrower if:
applicable warranties have expired; or
• the contractor is no longer in business or refuses to make corrections; and
if failure to make repairs will cause property damage or create health and safety
concerns; and
the borrower is still income qualified.
Alternately, on a case by case basis for income qualified households, adjustments may be
made to the lien amount based on the cost of correcting the deficiency.
G. CDBG Funds are received from Hennepin County as part of an entitlement grant. The
HRA's program is subject to County review and approval, on behalf of the U.S.
Department of Housing and Urban Development.
The eligibility and priority guidelines follow. Applications will be reviewed and processed
according to the criteria established.
I. DEFINITIONS
A. Accessibility Improvements -include improvements, to one or two unit dwellings, which are
designed to enable a handicapped person to function independently in a residential setting,
such as provisions -for adequate space for maneuvering, access and egress, (both in exterior
and interior spaces), and location of the equipment to facilitate ease of use.
B. Administering Entity -means the person and/or agency processing the loan. In these
Guidelines, the agency is the Richfield Housing and Redevelopment Authority (HRA).
C. Applicant -means an individual or household submitting an application for a loan who has not
yet been approved for funding.
D. Assets -means those resources held by household members that yield a .return that is
regarded as income under the IRS Form 1040 definition of income. Assets yielding income
include taxable interest, dividends, prizes/awards and gambling/lottery/raffle winnings. The
Administering Entity should contact Hennepin County if any questions about income earning
4
May 2004
F. When a homeowner is dissatisfied with work done by the contractor, the contractor shall
Q be informed verbally of the problems by the homeowner. If a satisfactory response is not
obtained, the homeowner shall prepare a written request for the contractor, specifying
which items are to be repaired or improved. The homeowner must send a copy of this
letter to the loan administrator. If subsequent. repairs still do not meet the homeowner's
approval, either mediation or arbitration services may be pursued. The loan administrator
and the homeowner will agree upon which service will be selected based on the cost of
specified improvements and the process most likely to best meet homeowner needs.
In the event the HRA is notified of a problem arising after completion of the loan,
additional loan funds can be made available to the borrower if:
• applicable warranties have expired; or
• the contractor is no longer in business or refuses to make corrections; and
• if failure to make repairs will cause property damage or create health and safety
concerns; and
• the borrower is still income qualified.
Alternately, on a case by case basis for income qualified households, adjustments may be
made to the lien amount based on the cost of correcting the deficiency.
G. CDBG Funds are received from Hennepin County as part of an entitlement grant. The
HRA's program is subject to County review and approval, on behalf of the U.S.
Department of Housing and Urban Development.
The eligibility and priority guidelines follow. Applications will be reviewed and processed
according to the criteria established.
I. DEFINITIONS
A. Accessibility Improvements -include improvements, to one or two unit dwellings, which are
designed to enable a handicapped person to function independently in a residential setting,
such as provisions for adequate space for maneuvering, access and egress, (both in exterior
and interior spaces), and location of the equipment to facilitate ease of use.
B. Administering Entity -means the person and/or agency processing the loan. In these
Guidelines, the agency is the Richfield Housing and Redevelopment Authority (HRA).
C. Applicant -means an individual or household submitting an application for a loan who has not
yet been approved for funding.
D. Assets -means those resources held by household members that yield a return that is
regarded as income under the IRS Form 1040 definition of income. Assets yielding income
include taxable interest, dividends, prizes/awards and gambling/lottery/raffle winnings. The
Administering Entity should contact Hennepin County if any questions about income earning
4
May 2004
assets arise.
E. Borrower -means an individual or household meeting the requirements of Section VII who
receives a loan.
F. Emergency Situation - means a condition requiring immediate and urgent attention which
threatens or imperils the health and/or safety of the applicant household. The written opinion
of a city building or housing inspector detailing a code or safety violation or violations may,
at the discretion of the Administering Entity, be an acceptable definition of an emergency
situation.
G. Handicapped Person - means a person who has a permanent physical condition which
substantially impairs the ability to function independently in a residential setting, or which
substantially limits the ability to become employed or to participate in the community. A
person with a condition such as chronic emphysema, arthritis, heart disease. and other
"invisible" conditions not requiring the use of devices to increase mobility shall not be deemed
a handicapped .person, unless a licensed physician verifies in writing that a particular condition
does substantially limit the ability to function independently in a residential setting or to
become employed or to participate in the community.
H. Hennepin County -means the Housing, Community Works and Transit Division of Hennepin
County Department of Transit and Community Works.
I. Household Gross Income -means the annual income of all residents of the applicant's/
borrower's household, as determined in accordance with Section VII. Household income is
not limited to members of the applicant' s family but includes all residents, such as renters.
J. Housing Rehabilitation Deferred Loan -means the commitment of funds on behalf of recipients
for the purpose of making eligible improvements to eligible properties, as described in Sections
IV, V and VI of these Procedural Guides.
K. Loan Package -consists of all applicable documents listed below and explained in Section VIII.
• Homeowner Application for Loan
• Acknowledgement & Authorization to Release Information Form
(acknowledging homeowner receipt of Individual Data Confidentiality form and
the Lead-Based Paint Poisoning Notification booklet)
• Letter to Historical Society (if required)
• Income Verification
• Asset Verification
• Mortgage Status Verification (if required)
• Title Verification
• Property Inspection Report.
• Lead Assessment Report (if required)
• Scope of Improvements/Work Proposal
• Rehabilitation Work Summary
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May 2004
• Contractor Bids
• Work Contract
• Amendment Request Certificate (if required)
• Contractor Bills/Proof of Payment
• Sworn Construction Statement
• Lien Waivers
• Lead Clearance Report (if required)
• Completion Certificate
• Data on Individual Loans
• Repayment Agreement
• Complaint Record (if needed)
For loans administered in whole or in part by the Hennepin County Office of
Housing, Community Works and Transit, the loan package shall also include:
• Federal Income Tax Returns for the two previous years
• Zoning Status Verification
• Credit Bureau Report
L. Participating Community -means Hennepin County, the Richfield HRA, or any city or town
cooperating as a participant in the Urban Hennepin County Community Development Block
Grant Program with funds made available from that program for use in the Urban Hennepin
County Housing Rehabilitation Deferred Loan Program.
M. Resident - means a person, other than a renter, living in the household for at least nine months
of the year.
N. Three Percent Loan.
11. CONDITIONS GOVERNING ADMINISTRATION
A.Amendments; Directives
These Procedural Guides may be amended or supplemented by Hennepin County by
issuance of revised pages, which. shall be effective as of the date of issue, or such later
date as the amendment shall specify. Administrative memoranda may also be issued which
discuss policy interpretations, clarification of procedures and other administrative matters.
Any Administering Entity wishing to deviate in any way from these Procedural Guides must
first describe in writing the proposed change to, and then be granted written approval by,
Hennepin County.
B. Federal, State and Local Regulations
Nothing in these Procedural Guides shall be construed in such a manner as to conflict with,
alter, or amend any Federal, State and Local regulation.
6
May 2004
• Contractor Bids
O • Work Contract
• Amendment Request Certificate (if required)
• Contractor Bills/Proof of Payment
• Sworn Construction Statement
• Lien Waivers
• Lead Clearance Report (if required)
• Completion Certificate
• Data on Individual Loans
• Repayment Agreement
• Complaint Record (if needed)
For loans administered in whole or in part by the Hennepin County Office of
Housing, Community Works and Transit, the loan package shall also include:
• Federal Income Tax Returns for the two previous years
• Zoning Status Verification
• Credit Bureau Report
L. Participating Community -means Hennepin County, the Richfield HRA, or any city or town
cooperating as a participant in the Urban Hennepin County Community Development Block
Grant Program with funds made available from that program for use in the Urban Hennepin
County Housing Rehabilitation Deferred Loan Program.
M. Resident - means a person, other than a renter, living in the household for at least nine months
of the year.
N. Three Percent Loan.
11. CONDITIONS GOVERNING ADMINISTRATION
A.Amendments; Directives
These Procedural Guides may be amended or supplemented by Hennepin County by
issuance of revised pages, which shall be effective as of the date of issue, or such later
date as the amendment shall specify. Administrative memoranda may also be issued which
discuss policy interpretations, clarification of procedures and other administrative matters.
Any Administering Entity wishing to deviate in any way from these Procedural Guides must
first describe in writing the proposed change to, and then be granted written approval by,
Hennepin County.
B. Federal, State and Local Regulations
Nothing in these Procedural Guides shall be construed in such a manner as to conflict with,
alter, or amend any Federal, State and Local regulation.
6
May 2004
C.Administrative Subcontracts
The Participating Community may enter into agreements with other agencies for the
purpose of obtaining assistance in the performance of certain administrative tasks with
respect to the delivery of loan funds. Regardless of such agreements, the participating
community shall fulfill the following requirements:
1. Responsibility for the performance of any subcontracting agency with
respect to the loan program. Such performance shall include, but is
not limited to, the full adherence to policies and procedures set forth
in these Procedural Guides.
2. Full liability for all warranties and representations made
regardless of who does the actual originating and/or packaging
of grants.
3. Exercise the option to allow Hennepin County to administer the
program on its behalf. In this event, Hennepin County will assess a
fee equal to twelve per cent (12%) of total CDBG funds allocated by
the participating community for housing rehabilitation and will assume
full responsibility for meeting the requirements of C1 and C2 above.
An Administering Entity may recapture only those expenses directly related to the
operation of the rehab deferred loan program. No more than twenty per cent (20%)
of CDBG funds allocated for housing rehabilitation may be used for administrative
costs.
D. Delivery of Loan Funds
The Administering Entity will disburse funds to contractors for completed work, in
compliance with Sections III and X. The Administering Entity will be reimbursed by
Hennepin County for loan amounts as outlined in Section X.
Loans made and delivered by the Administering Entity cannot exceed the amount stated in
Sections II and III unless approved in writing by Hennepin County.
E. Approval of Loan Packages
No work shall commence on any structure prior to the proper completion of a Work
Contract and Proceed to Work Order referring to specific work items under that particular
loan.
F. Certifications
1. The Administering Entity is legally authorized and constituted to administer the
Housing Rehabilitation Deferred Loan Program in the State of Minnesota.
2. No payments, fees or remuneration of any type whatsoever have been solicited or
received from any applicants or borrowers for loan application.
3. The Administering Entity has no knowledge that any improvement. covered by the
loan is in violation of any applicable zoning law or regulation.
7
May 2004
4. Any employee of the Administering Entity who is authorized to sign or countersign
checks, drafts, or to certify vouchers shall be covered by a fidelity and forgery bond
in an amount at least equal to the lesser of 11 /31 of the Administering Entity's total
authorized loan funding; such an employee must be an authorized signatory as
evidenced by a written instrument of the governing body.
5. The Administering Entity shall maintain documentation accounting for all funds
received through the collection of liens as prescribed in the Repayment Agreement.
Such funds must be submitted to Hennepin County since they are identified as
program income. Hennepin County shall return the funds to the relevant project
account.
6. If an Administering Entity disburses loan funds without meeting all of the
certifications contained in Section II, then Hennepin County may, at its option, take
whatever action it deems necessary, including legal action, to recover from the
recipient and/or the Administering Entity, the loan funds so disbursed in violation of
such warranties.
G.Expediency of Loan Processing
Loans shall be processed in a reasonable length of time in an efficient and accurate manner.
Normally, a loan shall be completed, with the repayment agreement filed, within six (6)
months from the date loan processing is begun.
H. Maximum Loan Amount
The maximum loan amount shall be 525,000.
In an attempt to best address both client needs and funding availability, wherever possible,
program funds should be used in conjunction with funds from the Minnesota Housing
Finance Agency (MHFA). If necessary, the combined maximum loan amounts of 525,000
(CDBG) and 515,000 (MHFA) may be used. However, in order to conserve resources,
efforts should be made to limit the CDBG funded portion to 515,000 or less.
III. RESPONSIBILITIES OF THE ADMINISTERING ENTITY
A.Outreach and Public Information
The Administering Entity will be primarily responsible for the promotion of the housing
rehabilitation loan program within its boundaries. The Administering Entity must exercise
care in avoiding any advertising or outreach methods that may be deemed to systematically
exclude potentially eligible applicants. Access to program materials may not be denied to
any person for any reason.
The program should include efforts to reach those persons who traditionally would not have
been expected to apply for housing programs. In order to develop an affirmative marketing
program, the Administering Entity should review its normal outreach methods to ensure that
8
May 2004
4. Any employee of the Administering Entity who is authorized to sign or countersign
checks, drafts, or to certify vouchers shall be covered by a fidelity and forgery bond
in an amount at least equal to the lesser of (1/3) of the Administering Entity's total
authorized loan funding; such an employee must be an authorized signatory as
evidenced by a written instrument of the governing body.
5. The Administering Entity shall maintain documentation accounting for all funds
received through the collection of liens as prescribed in the Repayment Agreement.
Such funds must be submitted to Hennepin County since they are identified as
program income. Hennepin County shall return the funds to the relevant project
account.
6. If an Administering Entity disburses loan funds without meeting all of the
certifications contained in Section II, then Hennepin County may, at its option, take
whatever action it deems necessary, including legal action, to recover from the
recipient and/or the Administering Entity, the loan funds so disbursed in violation of
such warranties.
G.Expediency of Loan Processing
Loans shall be processed in a reasonable length of time in an efficient and accurate manner.
Normally, a loan shall be completed, with the repayment agreement filed, within six (6)
months from the date loan processing is begun.
H. Maximum Loan Amount
The maximum loan amount shall be 525,000.
In an attempt to best address both client needs and funding availability, wherever possible,
program funds should be used in conjunction with funds from the Minnesota Housing
Finance Agency (MHFA). If necessary, the combined maximum loan amounts of 525,000
(CDBG) and 515,000 (MHFA) may be used. However, in order to conserve resources,
efforts should be made to limit the CDBG funded portion to 515,000 or less.
III. RESPONSIBILITIES OF THE ADMINISTERING ENTITY
A.Outreach and Public Information
The Administering Entity will be primarily responsible for the promotion of the housing
rehabilitation loan program within its boundaries. The Administering Entity must exercise
care in avoiding any advertising or outreach methods that may be deemed to systematically
exclude potentially eligible applicants. Access to program materials may not be denied to
any person for any reason.
The program should include efforts to reach those persons who traditionally would not have
been expected to apply for housing programs. In order to develop an affirmative marketing
program, the Administering Entity should review its normal outreach methods to ensure that
8
M8y 2004
the loan program is made available to persons who otherwise might not apply for
assistance.
B.Inspection of Properties
1. The Administering Entity is responsible for carrying out at least two inspections of
each approved property. The first inspection shall be performed immediately
following the establishment of applicant's eligibility. The Property Inspection Report
is a formal record of that first inspection which lists all deficiencies in the dwelling
and is used to establish that sufficient funds are available to render the dwelling
reasonably habitable, safe and energy efficient.
The second mandatory inspection shall take place after the work is finished, to
determine that all work has been completed in a satisfactory manner consistent with
these guides, the Scope of Improvements, the contractor bid and the Work Contract.
For properties built before 1978, a Paint Inspection/Assessment Report (PI/AR) must
be carried-out before any work orders are issued. The PI/AR must be conducted by
a licensed risk assessor who, if necessary, will also prepare work specifications
designed to address any identified lead hazards that are to be included as part of the
funded improvements. If lead hazard reduction activities are funded through this
program, the property must pass a clearance inspection (also conducted by a
properly qualified individual) before any payment for the lead hazard reduction
activities can be authorized. Failure to properly comply with lead hazard reduction
requirements will result in payments/reimbursements being withheld and may result
in sanctions from HUD. Hennepin County should be contacted if an Administering
Entity has any doubts or questions about proper lead hazard protocols.
2. The Administering Entity may conduct interim inspections of the property as is
deemed necessary.
C.Applicant Selection Criteria
A "first come, first served" applicant selection process will govern the administration of the
program except that priority may be given to applicants who require CDBG funding so that
work funded by the Minnesota Housing Finance Agency and/or the Sustainable Resources
Center or Energy Assistance. Program can proceed.
An Administering Entity may, at its discretion, elect to allow preference to applicants
requiring emergency assistance for repairs that directly affect the health and safety of the
occupants of the property. Particular importance should be attached to properties with
identified lead hazards that have resulted in an Elevated Blood Lead Level (more than 20
micrograms per deciliter- 20µg/dl) in a child under the age of six. The Administering Entity
may elect to limit assistance to the correction of the emergency situation (after which the
applicant will be returned, or added to, the waiting list) or the Administering Entity may
elect to access the applicant to all available and necessary loan funds at the time that the
emergency situation is being addressed. The Administering Entity should notify Hennepin
County of its intentions regarding the use of CDBG funds for emergency improvements.
9
May 2004
It is imperative that each application be dated immediately upon receipt. The date of
receipt shall be used as the sole criteria for recording priority ranking of the applicants.
The Administering Entity shall adhere to the following guidelines:
The process must be uniformly applied during the entire funding year.
2. No eligible applicant shall be rejected on the basis of judgements as to personal
character or lifestyle as outlined in Section XII,
3. Where no funds are available for assistance to applicants, the following procedure
shall be used:
a. Explain to the applicant that the funding for the current year has been either
depleted or allocated.
b. Inform the applicant of the other possibilities including the MHFA Rehabilitation
Loan Program, the MHFA Home Improvement Loan Program, and other local,
state and federal programs.
c. Send the applicant a letter indicating that the application has been placed on a
waiting list but that there is no guarantee of future funding. This letter should
outline the other possible avenues of obtaining home improvement funds.
D.Preparation of Scope of Improvements/Work Proposal
The Scope of Improvements is based on the Property Inspection Report and shall list all
eligible improvements for which contractors shall provide bids. The Administering Entity
shall provide the homeowner with copies of the Scope of Improvements as described in
Section VIII of these guides. If lead hazard reduction activities are included in the funded
improvements, these specifications must be prepared by a licensed Lead Project Designer.
E. Preparation of Loan Package
The Administering Entity is responsible for the thorough and accurate completion of all
program documents, as specified in Section VIII of these Procedural Guides. Care must be
taken to maintain current information on the eligibility of the borrower consistent with
Section VII.
The Administering Entity shall assist the borrower with the preparation of the loan package,
upon request, although the solicitation of bids on the borrowers behalf should be done only
at the written request of the borrower. The borrower must be notified that the
Administering Entity does not endorse or recommend any contractor(s) and that the
Administering Entity accepts no responsibility for the performance of the contractor(s)
appointed to carry out the work.
F. Requests for Changes in Loan Amount
At the discretion of the Administering Entity, an expenditure of funds in excess of the
approved loan amount may be approved in the event of justifiable over-runs in the cost of
improvements. The Administering Entity must document increases or decreases in the loan
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May 2004
Q It is imperative that each application be dated immediately upon receipt. The date of
receipt shall be used as the sole criteria for recording priority ranking of the applicants.
The Administering Entity shall adhere to the following guidelines:
1. The process must be uniformly applied during the entire funding year.
2. No eligible applicant shall be rejected on the basis of judgements as to personal
character or lifestyle as outlined in Section XII.
3. Where no funds are available for assistance to applicants, the following procedure
shall be used:
a. Explain to the applicant that the funding for the current year has been either
depleted or allocated.
b. Inform the applicant of the other possibilities including the MHFA Rehabilitation
Loan Program, the MHFA Home Improvement Loan Program, and other local,
state and federal programs.
c. Send the applicant a letter indicating that the application has been placed on a
waiting list but that there is no guarantee of future funding. This letter should
outline the other possible avenues of obtaining home improvement funds.
D. Preparation of Scope of Improvements/Work Proposal
The Scope of Improvements is based on the Property Inspection Report and shall list all
eligible improvements for which contractors shall provide bids. The Administering Entity
shall provide the homeowner with copies of the Scope of Improvements as described in
Section VIII of these guides. If lead hazard reduction activities are included in the funded
improvements, these specifications must be prepared by a licensed Lead Project Designer.
E. Preparation of Loan Package
The Administering Entity is responsible for the thorough and accurate completion of all
program documents, as specified in Section VIII of these Procedural Guides. Care must be
taken to maintain current information on the eligibility of the borrower consistent with
Section VII.
The Administering Entity shall assist the borrower with the preparation of the loan package,
upon request, although the solicitation of bids on the borrowers behalf should be done only
at the written request of the borrower. The borrower must be notified that the
Administering Entity does not endorse or recommend any contractor(s) and that the
Administering Entity accepts no responsibility for the performance of the contractor(s)
appointed to carry out the work.
F. Requests. for Changes in Loan Amount
At the discretion of the Administering Entity, an expenditure of funds in excess of the
approved loan amount may be approved in the event of justifiable over-runs in the cost of
improvements. The Administering Entity must document increases or decreases in the loan
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May 2004
amount according to the following procedures:
1. All requests for increases, .decreases or changes must be submitted on an
Amendment Request Certificate, signed by the borrower and contractor..
2. The Administering Entity shall inspect the property to determine that the increase or
decrease is justified.
3. The Administering Entity will issue authorization for those loan amount increases or
decreases which meet the eligibility criteria set forth in Section VI of these
Procedural Guides. Such authorization will be given by the Administering Entity
signing the Amendment.
4. When a new contractor is chosen, a new Work Contract must be executed by the
borrower and contractor.
5. Should unforeseen circumstances arise while work is in progress which require that
the maximum loan amount stated in Sections II and III be exceeded, the
Administering Entity must provide Hennepin County with written justification of the
need for additional funds. The additional funds used must not exceed twenty-five per
cent (25%) of the maximum loan amount adopted by the Administering Entity.
However, any project requiring the expenditure of deferred loan funds in excess of
525,000 must be approved in advance by Hennepin County to ensure that all
appropriate lead-based paint requirements are being met.
6. Notwithstanding the terms of Section III.F.5. above, an Administering Entity may
elect to exceed the maximum loan amount by more than twenty-five per cent (25%)
before work contracts are signed provided that the participating community provides
Hennepin County with written authorization detailing the revised loan amount and
the unique and specific circumstances requiring the additional loan funds. This
written authorization must include formal acknowledgement that a precedent has
been established which would allow future applicants access to the revised loan
amount if they experience the same unique and specific circumstances.
G.Disbursement of Funds
The Administering Entity shall bear the responsibility of disbursing funds to contractors who
have performed work as described in the Improvement Certificate. No disbursement for any
work completed shall be made until the property- has been inspected and a Completion
Certificate has been signed, according to the procedures set forth in Section X.
H.Service Fee Charges
The HRA shall not charge any applicants an application fee. However, reasonable fees for
HRA services may be charged when extra costs are incurred. Specifically, the fees for
Subordination Agreements will apply. The loan recipient will pay 550.00 for each
Subordination Agreement processed, regardless of successful refinancing. This fee reflects
staff time and administrative preparation.
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May 2004
Temporary Relocation Policy
Relocation assistance will only be provided when it is determined and documented that
relocation is necessary and appropriate. The determining factors for eligibility will be
alleviating hardship or hazards for the family while containing construction costs, and
evaluating recommendations that may be obtained from a designated relocation
consultant.
A prepared statement will be executed documenting the total number of days of
temporary displacement, the total amount of assistance to be provided, and in what
time intervals payment shall occur. The HRA may contract with a professional
relocation consultant, experienced in compliance with the Uniform Relocation Act to
determine the amount and form of assistance for which the homeowner may be eligible.
Relocation funds may come from total loan funds available to the homeowner, and thus
would be included in the lien on the property. If insufficient, funds of the HRA may be
accessed.
IV. ELIGIBLE PROPERTIES
A. The property to be improved must not be in violation of applicable zoning ordinances.
Properties being improved must constitute a permitted use or be subject to a
conditional or special use permit under the applicable zoning ordinances.
B. The property must be located within the jurisdiction of the Administering Entity and
must be used primarily for residential purposes, and must contain no more than two
dwelling units, one of them owner-occupied. Improvements can only be made to the
owner-occupied unit, unless the improvement serves both units. Improvements that
can be made to both sides include re-roofing; painting, re-siding or re-stuccoing;
replacement of doors and windows; upgrading of shared heating or electrical systems
and commonly vented plumbing fixtures.
C. Loan funds must be used to finance only improvements upon or in connection with
existing structures.
D. The property to be improved must be permanent structure. That includes owner-
occupied trailers or mobile homes located on land owned by the applicant. Trailers or
mobile homes located on land not owned by the applicant are eligible for assistance
but are subject to a separate lien process. The lien document (available from Hennepin
County) is filed with the Minnesota Department of Public Safety and places aten-year
lien against the home.
E. No property shall be eligible for a housing rehabilitation loan if it has been improved
through the process of such a loan within the five-year period immediately preceding
the date on which application for such a loan is made, except in extraordinary
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May 2004
I. Temporary Relocation Policy
Relocation assistance will only be provided when it is determined and documented that
relocation is necessary and appropriate. The determining factors for eligibility will be
alleviating hardship or hazards for the family while containing construction costs, and
evaluating recommendations that may be obtained from a designated relocation
consultant.
A prepared statement will be executed documenting the total number of days of
temporary displacement, the total amount of assistance to be provided, and in what
time intervals payment shall occur. The HRA may contract with a professional
relocation consultant, experienced in compliance with the Uniform Relocation Act to
determine the amount and form of assistance for which the homeowner may be eligible.
Relocation funds may come from total loan funds available to the homeowner, and thus
would be included in the lien on the property. If insufficient, funds of the HRA may be
accessed.
IV. ELIGIBLE PROPERTIES
A. The property to be improved must not be in violation of applicable zoning ordinances.
Properties being improved must constitute a permitted use or be subject to a
conditional or special use permit under the applicable zoning ordinances.
B. The property must be located within the jurisdiction of the Administering Entity and
must be used primarily for residential purposes, and must contain no more than two
dwelling units, one of them owner-occupied. Improvements can only be made to the
owner-occupied unit, unless the improvement serves both units. Improvements that
can be made to both sides include re-roofing; painting, re-siding or re-stuccoing;
replacement of doors and windows; upgrading of shared heating or electrical systems
and commonly vented plumbing fixtures.
C. Loan funds must be used to finance only improvements upon or in connection with
existing structures.
D. The property to be improved must be permanent structure. That includes owner-
occupied trailers or mobile homes located on land owned by the applicant. Trailers or
mobile homes located or. !and not owned by the applicant are eligible for assistance
but are subject to a separate lien process. The lien document (available from Hennepin
County) is filed with the Minnesota Department of Public Safety and places aten-year
lien against the home.
E. No property shall be eligible for a housing rehabilitation loan if it has been improved
through the process of such a loan within the five-year period immediately preceding
the date on which application for such a loan is made, except in extraordinary
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May 2004
circumstances relating to damage to the property as a result of events beyond the
control of the applicant or relating to health and safety concerns, as determined by
the Administering Entity or by the building or housing inspector in whose jurisdiction
the property is located. In such circumstances, provided that funding is available, the
borrower, if -still eligible, can receive assistance limited to correcting the damaged or
failed system(s) only. No other eligible work can be carried out until another five year
period has elapsed,. except in the extraordinary circumstances outlined above.
F. Urban Hennepin County CDBG rehab monies can only be used when federal flood
insurance is in effect, where such insurance is available. However, Richfield is not in
a flood zone.
G. To the greatest extent feasible, the Administering Entity should ensure that adequate
equity exists in the property to cover the cost of the rehabilitation work. In order to
account for any difference between the estimated market value (EMV) shown on the
borrowers property tax statement and the real market value, two options are available.
The Administering Entity can either: multiply the EMV by 110% and add 50% of the
maximum loan amount; or, the borrower can request that a local realtor provide a
written market analysis of the post-rehab value of the property. If serious health and
safety issues exist which directly and negatively affect the habitability of the dwelling,
the Administering Entity can elect to waive or amend the equity requirement, provided
that the same waiver/amendment opportunities are presented to all future borrowers
who find themselves affected by the same conditions.
V. IMPROVEMENT STANDARDS
Goals for housing rehabilitation assistance for homeowners have been established in the
Urban Hennepin County Consolidated Plan. For the property to be counted toward meeting
housing rehabilitation goals in the Consolidated Plan, it must be determined to be
substandard and suitable for rehabilitation. Upon completion of rehabilitation, the housing
unit must meet minimum Section 8 existing housing quality standards pursuant to 24 CFR,
as follows:
Dwellings improved under this program shall generally meet the Performance Requirements
and Acceptability Criteria set forth in this section except for such variations as are proposed
by the Administering Entity and approved by HUD. Local climatic or geological conditions
or local codes are examples that may justify such variations.
A. Sanitary Facilities
1. Performance Requirement. The dwelling unit shall include its own sanitary
facilities which are in proper operating condition, can be used in private, and
are adequate for personal cleanliness and the disposal of human waste.
2. Acceptabi/ity Criteria. A flush toilet in a separate, private room, a fixed basin
with hot and cold running water, and a shower or tub with hot and cold running
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May 2004
water shall be present in the dwelling unit, all in proper operating condition.
These facilities shall utilize an approved public or private disposal system.
B. Food Preparation
1. Performance Requirement. The dwelling unit shall contain suitable space and
equipment to store, prepare, and serve foods in a sanitary manner. There shall
be adequate facilities and services for the sanitary disposal of food wastes and
refuse, including facilities for temporary storage where necessary.
2. Acceptabi/ity Criteria. The unit shall contain the following equipment in proper
operating condition: a cooking stove or range and a refrigerator of appropriate
size for the unit and a kitchen sink with hot and cold running water. The sink
shall drain into an approved public or private system. Adequate space for the
storage, preparation and serving of food shall be provided. There shall be
adequate facilities and services for the sanitary disposal of food wastes and
refuse, including facilities for temporary storage where necessary (e.g. garbage
cans).
C. Thermal Environment
1. Performance Requirement. The dwelling unit -shall have and be capable of
maintaining a thermal environment healthy for the human body.
2. Acceptabi/ity Criteria. The dwelling unit shall contain safe heating facilities
which are in proper operating condition and can provide adequate heat to each
room in the dwelling unit to ensure a healthy living environment. Unvented
room heaters which burn oil or kerosene are unacceptable.
E. Illumination and Electricity
1. Performance Requirements. Each room shall have adequate natural or artificial
illumination to permit normal indoor activities and to support the health and
safety of occupants. Sufficient electrical outlets shall be provided to permit
use of essential electrical appliances while assuring safety from fire.
2. Acceptabi/ity Criteria. Living and sleeping rooms shall include at least one
window. A ceiling or wall type light fixture shall be present and working in the
bathroom and kitchen area. At least two electric outlets shall be present and
operable in the living area, kitchen area and each bedroom area.
F. Structure and Materials
1. Performance Requirements. The dwelling unit shall be structurally sound so as
not to pose any threat to the health and safety of the occupants and so as to
protect the occupants from the environment.
2. Acceptabi/ity Criteria. Ceilings, walls and floors shall not have any serious
defects such as severe bulging or leaning, large holes, loose surface materials,
severe buckling or noticeable movement under walking stress, missing parts or
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May 2004
water shall be present in the dwelling unit, all in proper operating condition.
These facilities shall utilize an approved public or private disposal system.
B. Food Preparation
1. Performance Requirement. The dwelling unit shall contain suitable space and
equipment to store, prepare, and serve foods in a sanitary manner. There shall
be adequate facilities and services for the sanitary disposal of food wastes and
refuse, including facilities for temporary storage where necessary.
2. Acceptabi/ity Criteria. The unit shall contain the following equipment in proper
operating condition: a cooking stove or range and a refrigerator of appropriate
size for the unit and a kitchen sink with hot and cold running water. The sink
shall drain into an approved public or private system. Adequate space for the
storage, preparation and serving of food shall be provided. There shall be
adequate facilities and services for the sanitary disposal of food wastes and
refuse, including facilities for temporary storage where necessary (e.g. garbage
cans).
C. Thermal Environment
1. Performance Requirement. The dwelling unit shall have and be capable of
maintaining a thermal environment healthy for the human body.
2. Acceptabi/ity Criteria. The dwelling unit shall contain safe heating facilities
which are in proper operating condition and can provide adequate heat to each
room in the dwelling unit to ensure a healthy living environment. Unvented
room heaters which burn oil or kerosene are unacceptable.
E. Illumination and Electricity
1. Performance Requirements. Each room shall have adequate natural or artificial
illumination to permit normal indoor activities and to support the health and
safety of occupants. Sufficient electrical outlets shall be provided to permit
use of essential electrical appliances while assuring safety from fire.
2. Acceptabi/ity Criteria. Living and sleeping rooms shall include at least one
window. A ceiling or wall type light fixture shall be present and working in the
bathroom and kitchen area. At least two electric outlets shall be present and
operable in the living area, kitchen area and each bedroom area.
F. Structure and Materials
1. Performance Requirements. The dwelling unit shall be structurally sound so as
not to pose any threat to the health and safety of the occupants and so as to
protect the occupants from the environment.
2. Acceptabi/ity Criteria. Ceilings, walls and floors shall not have any serious
defects such as severe bulging or leaning, large holes, loose surface materials,
severe buckling or noticeable movement under walking stress, missing parts or
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May 2004
other serious damage. The roof structure shall be firm and the roof shall be
weather tight. The exterior wall structure and exterior wall surface shall not
have any serious defects such as serious leaning, buckling, sagging, cracks or
holes, loose siding, or other serious damage. The condition and equipment of
interior and exterior stairways, halls, porches, walkways, etc. shall be such as
not to present a danger of tripping or falling. In the case of a mobile home, the
home shall be securely anchored by a tie down device that distributes and
transfers the loads imposed by the unit to appropriate ground anchors so as to
resist wind overturning and sliding.
G. Interior Air Quality
1. Performance Requirement. The dwelling unit .shall be free of pollutants in the
air at levels that threaten the health of the occupants.
2. Acceptabi/ity Criteria. The dwelling unit shall be free from dangerous levels of
air pollution from carbon monoxide, sewer gas, fuel gas, dust and other harmful
air pollutants. Air circulation shall be adequate throughout the unit. Bathroom
areas shall have at least one operable window or other adequate exhaust
ventilation.
H. Water Supply
1. Performance Requirement. The water supply shall be free from contamination.
2. Acceptabi/ity Criteria. The unit shall be served by an approved public or private
sanitary water supply.
I. Lead Based Paint
1. Performance Requirement. The dwelling unit shall be in compliance with HUD
Lead Based Paint regulations, 24 CFR, Part 570, issued pursuant to the Lead
Based Paint Poisoning Prevention Act. 42 U.S.C. 4801.
2. If the property was constructed prior to 1978, the family, upon occupancy,
shall have been furnished the notice required by HUD Lead Based Paint
regulations and procedures regarding the hazards of lead based paint poisoning,
the symptoms and treatment of lead poisoning and the precautions to be taken
against lead poisoning. Documentation of the applicant' s receipt of the notice
must be included in the file.
3. Acceptability Criteria. Same as Performance Requirement.
J. Access
1. Performance Requirement. The dwelling unit shall be usable and capable of
being maintained without unauthorized use of other private properties, and the
building shall provide an alternate means of egress in case of fire.
2. Acceptabi/ity Criteria. The dwelling unit shall be usable and capable of being
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May 2004
maintained without unauthorized use of other private properties. The building
shall provide an alternate means of egress in case of fire (such egress through
windows).
K. Site and Neighborhood
1. Performance Requirement. The site and neighborhood shall be reasonably free
from disturbing noises and reverberations and other hazards to .the health,
safety and general welfare of the occupants.
2. Acceptabi/ity Criteria. The site and neighborhood shall not be subject to serious
adverse environmental conditions, natural or man made, such as dangerous
walks, steps, instability, flooding, poor drainage, septic tank back-ups, sewage
hazards or mud slides, abnormal air pollution, smoke or dust, excessive noise,
vibration- or vehicular traffic, excessive accumulations of trash, vermin or
rodent infestation or fire hazards.
L. Sanitary Conditions
1. Performance Requirement. The unit and its equipment shall be in sanitary
condition.
2. Acceptabi/ity Criteria. The unit and its equipment shall be free of vermin and
rodent infestation.
VI. ELIGIBLE IMPROVEMENTS
A. Each improvement must be a permanent general improvement. Permanent general
improvements shall include such alterations, renovations, or repairs upon or in
connection with existing structures, which correct defects or deficiencies in the
property affecting directly the safety, habitability or energy consumption of the
property. A permanent general improvement must be economically viable in terms
of a determination that after the improvement is made:
1. The structure will have remaining useful life such that the total amount of the
repairs required to bring the house up to Section 8 quality standards may be
amortized over such life in an economically prudent manner.
2. For the term of the repayment agreement, the lien should be collectable. Thus
all existing mortgages, contracts for deed, and other encumbrances, including
the repayment agreement, should not exceed the value of the property as
stated in the. County Property Taxation Office. Any Administering Entity
wishing to waive this requirement must provide Hennepin County with written
justification and must receive written approval from Hennepin County in return.
In communities where Hennepin County acts as the Administering Entity, the
city must formally approve this waiver. Examples where the waiver might be
requested include an emergency situation or circumstances where repairs are
needed to make a vacant property habitable for aloes-income family intending
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May 2004
maintained without unauthorized use of other private properties. The building
shall provide an alternate means of egress in case of fire (such egress through
windows).
K. Site and Neighborhood
1. Performance Requirement. The site and neighborhood shall be reasonably free
from disturbing noises and reverberations and other hazards to the health,
safety and general welfare of the occupants.
2. Acceptabi/ity Criteria. The site and neighborhood shall not be subject to serious
adverse environmental conditions, natural or man made, such as dangerous
walks, steps, instability, flooding, poor drainage, septic tank back-ups, sewage
hazards or mud slides, abnormal air pollution, smoke or dust, excessive noise,
vibration or vehicular traffic, excessive accumulations of trash, vermin or
rodent infestation or fire hazards.
L. Sanitary Conditions
1. Performance Requirement. The unit and its equipment shall be in sanitary
condition.
2. Acceptabi/ity Criteria. The unit and its equipment shall be free of vermin and
rodent infestation.
VI. ELIGIBLE IMPROVEMENTS
~) A. Each improvement must be a permanent general improvement. Permanent general
improvements shall include such alterations, renovations, or repairs upon or in
connection with existing structures, which correct defects or deficiencies in the
property affecting directly the safety, habitability or energy consumption of the
property. A permanent general improvement must be economically viable in terms
of a determination that after the improvement is made:
1. The structure will have remaining useful life such that the total amount of the
repairs required to bring the house up to Section 8 quality standards may be
amortized over such life in an economically prudent manner.
2. For the term of the repayment agreement, the lien should be collectable. Thus
all existing mortgages, contracts for deed, and other encumbrances, including
the repayment agreement, should not exceed the value of the property as
stated in the County Property Taxation Office. Any Administering Entity
wishing to waive this requirement must provide Hennepin County with written
justification and must receive written approval from Hennepin County in return.
In communities where Hennepin County acts as the Administering Entity, the
city must. formally approve this waiver. Examples where the waiver might be
requested include an emergency situation or circumstances where repairs are
needed to make a vacant property habitable for aloes-income family intending
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May 2004
to purchase it.
3. The structure will be reasonably livable, safe and .habitable. Permanent general
improvements shall not include materials, fixtures, or landscaping of a type or
quality exceeding that customarily used in the locality for properties of the
same general type as the property improved.
B. Each improvement must be made in compliance with all applicable health, fire
prevention, building and housing codes and standards. However, no application for
a loan shall be denied solely because the improvements will not bring the property
into full compliance with all such codes and standards.
Further, when work is done on any system within the house, upon completion of the
work, that entire system must meet applicable codes and standards; however, the
entire structure may still contain other systems, on which no work was done, which
are not up to applicable codes and standards.
C. Loan funds may be used for the portion of improvements located on the property
which will bring an individual water supply system or an individual sewage disposal
system (including septic systems) into compliance with local, state or federal
environmental and sanitary standards provided no public utility service is available.
Payment of applicable SAC charges is an eligible loan expense.
^ D. No loan funds shall be used in whole or in part for the purpose of refinancing or
Jl paying off an existing indebtedness. All such funds must be used to finance
improvements begun after the execution of a Work Contract prepared by the loan
administrator and signed by the loan recipient and the contractor.
E. The city may approve special improvements only in the described circumstances
indicated below:
1. Bedroom additions may be allowed in cases of severe overcrowding. For the
purpose of this program, a dwelling will generally be considered "overcrowded"
if there is an average of more than one person per room (excluding bathroom)
in the dwelling, or as otherwise approved by the city.
2. .Bathroom additions may be allowed in cases of inadequate indoor bathroom
facilities only if no other space in the structure is appropriate for such facilities.
3. In cases of applicants with impaired mobility, request for room additions will be
reviewed in compliance with procedures for loans including accessibility
improvements, as outlined in Section XL
F. Demolition of out buildings is allowed only when such clearance is required by the
local building code or when the intent of the demolition is lead hazard control. Loan
funded improvements cannot be limited to demolition only, except in circumstances
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May 2004
determined as exceptional by the loan administrator.
G. Reconstruction of sidewalks and driveways is allowed only on private property and
only if existing conditions represent a clear and imminent safety hazard.
H. All Richfield homes should be connected to City water. No new wells may be dug.
However, CDBG funds may be used to seal wells according to Minnesota
Department of Health rules and standards.
I. Exterior finishing (painting or siding) is allowed only to the extent that there is severe
deterioration of current exterior finishing. Exterior finishing requested solely for
cosmetic purposes will not be approved.
J. Where property is not reasonably energy efficient, loan funds must be used to the
extent necessary to increase such efficiency. Energy saving features shall be
consistent with the energy standards promulgated as part of the State building code,
but such improvements need not bring the housing into compliance with such energy
standards.
K. Smoke detectors must be installed in all dwellings being improved with Deferred Loan
funds unless detectors are already properly installed. At least one detector is required
in each sleeping room, in every hallway leading to a sleeping room and on each level
of the dwelling unit. If a smoke detector is already properly installed, that must be
reported on the inspection report. All properties being improved must contain
adequate smoke detectors following completion of the rehabilitation work.
L. Where the house numbers are not present or are not installed to applicable city codes
and ordinances, they shall be installed properly.
M. The installation, replacement or repair of cook tops, oven ranges and refrigerators is
eligible provided that it is absolutely necessary and consistent with Section V. B. 2.
N. Improvements Pertaining to Lead-Based Paint
1. Applicable to all clients:
a. The use of lead-based paint in any structure rehabilitated with CDBG funds
is prohibited..
b. Inspection and/or test results for all clients will be maintained for a minimum
of three years, although every effort should be made to permanently retain
these records.
c. All clients will receive a copy of "Lead-Based Paint Poisoning Notification."
Upon receipt of this notification, the client will sign and date a form
verifying receipt of this information.
2. Applicable for clients whose house was constructed prior to 1978:
a. The Administering Entity shall either perform paint testing on the .painted
surfaces to be disturbed or replaced during rehabilitation activities, or
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May 2004
determined as exceptional by the loan administrator.
`~' G. Reconstruction of sidewalks and driveways is allowed only on private property and
only if existing conditions represent a clear and imminent safety hazard.
H. All Richfield homes should be connected to City water. No new wells may be dug.
However, CDBG funds may be used to seal wells according to Minnesota
Department of Health rules and standards.
Exterior finishing (painting or siding) is allowed only to the extent that there is severe
deterioration of current exterior finishing. Exterior finishing requested solely for
cosmetic purposes will not be approved.
J. Where property is not reasonably energy efficient, loan funds must be used to the
extent necessary to increase such efficiency. Energy saving features shall be
consistent with the energy standards promulgated as part of the State building code,
but such improvements need not bring the housing into compliance with such energy
standards.
K. Smoke detectors must be installed in all dwellings being improved with Deferred Loan
funds unless detectors are already properly installed. At least one detector is required
in each sleeping room, in every hallway leading to a sleeping room and on each level
of the dwelling unit. If a smoke detector is already properly installed, that must be
reported on the inspection report. All properties being improved must contain
adequate smoke detectors following completion of the rehabilitation work.
Where the house numbers are not present or are not installed to applicable city codes
and ordinances, they shall be installed properly.
M. The installation, replacement or repair of cook tops, oven ranges and refrigerators is
eligible provided that it is absolutely necessary and consistent with Section V. B. 2.
N. Improvements Pertaining to Lead-Based Paint
1. Applicable to all clients:
a. The use of lead-based paint in any structure rehabilitated with CDBG funds
is prohibited.
b. Inspection and/or test results for all clients will be maintained for a minimum
of three years, although every effort should be made to permanently retain
these records.
c. All clients will receive a copy of "Lead-Based Paint Poisoning Notification."
Upon receipt of this notification, the client will sign and date a form
verifying receipt of this information.
2. Applicable for clients whose house was constructed prior to 1978:
a. The Administering Entity shall either perform paint testing on the painted
surfaces to be disturbed or replaced during rehabilitation activities, or
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May 2004
presume that all these painted surfaces are coated with lead-based paint.
b. For properties receiving funding not exceeding 55,000 in federal
rehabilitation assistance, the Administering Entity shall:
• Conduct paint testing or presume the presence of lead-based paint.
If paint testing indicates that the painted surfaces are not coated with
lead-based paint, safe work practices and clearance are not required.
• Implement safe work practices during rehabilitation work in
accordance with Section 35.1350 (of US Department of HUD
Requirements for Notification, Evaluation and Reduction of Lead-
Based Paint Hazards in Federally Owned Residential Property and
Housing receiving Federal Assistance: Final Rule) and repair any paint
that is disturbed.
• After completion of any rehabilitation disturbing painted surfaces,
perform a clearance examination of the work site(s) in accordance
with Section 35.1340 (of US Department of HUD Requirements for
Notification, Evaluation and Reduction of Lead-Based Paint Hazards
in Federally Owned Residential Property and Housing receiving Federal
Assistance: Final Rule.) Clearance is not required if rehabilitation did
not disturb painted surfaces of a total area of 20 square feet (2
square meters) on exterior surfaces; 2 square feet (0.2 square
meters) in any one interior room or space; 10 per cent of the total
surface area on an interior or exterior type of component with a small
surface area (such as window sills, baseboards and trim.)
c. For properties receiving between 55,000 and 525,000 in federal
rehabilitation assistance, the Administering Entity shall:
• Conduct paint testing or presume the presence of lead-based paint.
If paint testing indicates that the painted surfaces are not coated with
lead-based paint, safe work practices and clearance are not required.
• Perform a risk assessment in the property in accordance with Section
35.1320 Ib) (of US ,Department of HUD Requirements for
Notification, Evaluation and Reduction of Lead-Based Paint Hazards
in Federally Owned Residential Property and Housing receiving Federal
Assistance: Final Rule) before rehabilitation begins.
• Perform interim controls in accordance with Section 35.1330 (of US
Department of HUD Requirements for Notification, Evaluation and
Reduction of Lead-Based Paint Hazards in Federally Owned
Residential Property and Housing receiving Federal Assistance: Final
Rule) of all lead-based paint hazards identified pursuant to the two
preceding sub-paragraphs and any lead-based paint created as a result
of the rehabilitation work.
d. For properties receiving more than 525,000 in federal rehabilitation
assistance, the Administering Entity shall:
• Conduct paint testing or presume the presence of lead-based paint.
If paint testing indicates that the painted surfaces are not coated
with lead-based paint, safe work practices and clearance are not
required.
19
May 2004
• Perform a risk assessment in the property in accordance with Section
35.1320 Ib) (of US Department of HUD Requirements for
Notification, Evaluation and Reduction of Lead-Based Paint Hazards
in Federally Owned Residential Property and Housing receiving Federal
Assistance: Final Rule) before rehabilitation begins.
• Abate all lead-based paint hazards identified by the paint-testing or
risk assessment conducted pursuant to the two preceding sub-
paragraphs and any lead-based paint created as a result of the
rehabilitation work,- in accordance with Section 35.1325 (of US
Department of HUD Requirements for Notification, Evaluation and
Reduction of Lead-Based Paint Hazards in Federally Owned
Residential Property and Housing receiving Federal Assistance: Final
Rule), except that interim controls are acceptable on exterior surfaces
that are not disturbed by rehabilitation.
3. Treatment/Abatement of lead-based paint: The work write-up shall include
either a covering or a removal method approved by HUD.
0. The installation, repair or replacement of a central air conditioning unit is eligible
provided that the client has produced a written statement from a physician indicating
that the good health of a permanent occupant of the dwelling is dependent upon such
an installation, repair or replacement. A statement that a permanent occupant will
"benefit" from central air conditioning is not sufficient justification.
P. Work on exterior decks, attached to the house and used as a means of entry is
eligible provided that:
1. The condition of the existing deck is unsafe.
2. The work shall be limited to making the deck safe and structurally sound.
3. Bids are obtained on both:
a. the cost of repairing the deck to make it safe and structurally sound; and
b. replacing the deck with steps or stairway which meet code requirements;
and that the loan funded improvements are limited to the lesser or the
two costs. (If replacement with steps or stairway is the cheaper option
the client can elect to use those funds toward repairing or replacing the
deck itself provided that the balance of the cost is met by the client.)
4. If the deck is made of pine or other untreated or non-water resistant material,
it must be removed and replaced with steps or stairway because it will not
retain its structural integrity throughout the lien period..
If a client refuses to accept the replacement of a deck with steps or stairway
and declines to contribute towards the cost of repair/replacement then, the
maintain eligibility, the client must sign a waiver acknowledging the condition
20
May 2004.
• Perform a risk assessment in the property in accordance with Section
35.1320 (b) (of US Department of HUD Requirements for
Notification, Evaluation and Reduction of Lead-Based Paint Hazards
in Federally Owned Residential Property and Housing receiving Federal
Assistance: Final Rule) before rehabilitation begins.
• Abate all lead-based paint hazards identified by the paint-testing or
risk assessment conducted pursuant to the two preceding sub-
paragraphs and any lead-based paint created as a result of the
rehabilitation work, in accordance with Section 35.1325 (of US
Department of HUD Requirements for Notification, Evaluation and
Reduction of Lead-Based Paint Hazards in Federally Owned
Residential Property and Housing receiving Federal Assistance: Final
Rule), except that interim controls are acceptable on exterior surfaces
that are not disturbed by rehabilitation.
3. Treatment/Abatement of lead-based paint: The work write-up shall include
either a covering or a removal method approved by HUD.
0. The installation, repair or replacement of a central air conditioning unit is eligible
provided that the client has produced a written statement from a physician indicating
that the good health of a permanent occupant of the dwelling is dependent upon such
an installation, repair or replacement. A statement that a permanent occupant will
"benefit" from central air conditioning is not sufficient justification.
P. Work on exterior decks, attached to the house and used as a means of entry is
eligible provided that:
1. The condition of the existing deck is unsafe.
2. The work shall be limited to making the deck safe and structurally sound.
3. Bids are obtained on both:
a. the cost of repairing the deck to make it safe and structurally sound; and
b. replacing the deck with steps or stairway which meet code requirements;
and that the loan funded improvements are limited to the lesser or the
two costs. (If replacement with steps or stairway is the cheaper option
the client can elect to use those funds toward repairing or replacing the
deck itself provided that the balance of the cost is met by the client.)
4. If the deck is made of pine or other untreated or non-water resistant material,
it must be removed and replaced with steps or stairway because it will not
retain its structural integrity throughout the lien period.
If a client refuses to accept the replacement of a deck with steps or stairway
and declines to contribute towards the cost of repair/replacement then, the
maintain eligibility, the client must sign a waiver acknowledging the condition
20
May 2004
of the deck and holding the Administering Entity and Hennepin County
harmless.
VII. ELIGIBLE RECIPIENTS
Applicants must meet all the requirements set forth in these Procedural Guides.
A. Ownership
1. The property to be improved must be the borrowers principal place of residence
(i.e., for nine months in any twelve month period), and the borrower must have
a qualifying interest in the property, although that interest may be aggregated
with the ownership interest of other individuals occupying the property as their
principal place of residence. A qualifying interest shall consist of:
a. A valid life estate. Such life estate must be recorded and must appear
in the records of the County; or
b. A one-third interest in the fee title. Such interest may be subject to a
mortgage; or
c. A one-third interest as a purchase in a contract for deed in the property
to be improved. Such contract for deed must be recorded and must
appear in the records of the County.
2. All individuals having an ownership interest in the property to be improved must
sign the Repayment Agreement, except in the case of a Life Estate where only
one-third of the remainderpersons need sign.
3. Ownership shall be based on the information recorded in the appropriate Courity
Recorder's/Registrar of Titles Office.
4. The borrower must be current on contract for deed payments, mortgage
payments and property taxes on the property to be improved. If any of these
payments are in arrears, .they must be made current before the application can
be approved for funding. If the applicant is delinquent on any of these above
mentioned payments or taxes, the loan may only be given if the applicant is
current on a payment schedule with the appropriate agency.
B. Household Gross Annual Income
HUD requires that, in determining household income for CDBG program purposes, one
of three methods be used (24 CFR Part 570.3.) The three methods are: Section 8
Housing Assistance Payments program; Annual Income as reported under the Census
long-form from the most recently available decennial census; or adjusted gross
income as defined for purposes of reporting under Internal Revenue Service (IRS)
Form 1040 for individual Federal .annual income tax purposes. Although
administering entities are free to use any of these methods (provided that it is used
consistentlyl, Hennepin County is recommending that the IRS methodology be used.
21
May 2004
1. Borrowers must have a household gross annual income at or below 80% of the
Area Median Income for the household size, (also known as Section 8 Very
Low Incomel, Hennepin County will notify the administering entities of
applicable income limits by household size. It will, however, be the
responsibility of the Administering Entity to ensure that the changes in income
limits are implemented properly. Gross annual income is defined as the gross
annual income, from all sources before taxes or withholding, of all individuals
living in the housing unit for at least nine (9) months of the forthcoming twelve-
month period.
The Administering Entity should be aware that non-recurring types of income
should be included as assets rather than as income. Items for inclusion under
this category may include a single gift of cash from a party or parties, cash
sales of property, receipt of one-time survivor benefits, etc. A one-time sale
of stock does not count as income, but rather the proceeds are counted as
assets.
2. Gross annual income includes:
a. Wages, salaries, tips, etc.
b. Taxable interest.
c. Dividends.
d. Taxable refunds, credits or offsets of State and local income taxes.
(There are some exceptions -refer to Form 1040 instructions.)
e. Alimony (or separate maintenance payments) received.
f. Business income (or loss.)
g, Capital gain (or loss.)
h. Other gains (or losses) - i.e. assets used in a trade or business that
were exchanged or sold.
i. Taxable amount of individual retirement account (IRA) distributions.
This includes simplified employee pension (SEP) and savings incentive
match plan for employees (SIMPLE) IRA.
j. Taxable amount of pension and annuity payments.
k. Rental real estate, royalties, partnerships, S corporations, trusts, etc.
Income from rental properties, including rents from the property to be
improved, shall be included in gross income. A copy of the lease, or a
statement, signed and dated by the tenant(s), which shows the monthly
rent paid is adequate verification of rental income. Expenses allowable
for deduction for rental purposes include a proportional share of mortgage
interest payments, utilities, taxes, insurance, and maintenance. In no
event shall such deductions .exceed gross rental income.
L Farm income (or loss.)
m. Unemployment compensation payments.
n. Taxable amount of Social Security benefits.
o. Other income. This includes: prizes and awards; gambling, lottery or
'.raffle winnings; jury duty fees; Alaska Permanent fund dividends;
reimbursements for amounts deducted in previous years; income form
22
May 2004
1. Borrowers must have a household gross annual income at or below 80°~ of the
Area Median Income for the household size, (also known as Section 8 Very
Low Income). Hennepin County will notify the administering entities of
applicable income limits by household size. It will, however, be the
responsibility of the Administering Entity to ensure that the changes in income
limits are implemented properly. Gross annual income is defined as the gross
annual income, from all sources before taxes or withholding, of all individuals
living in the housing unit for at least nine (9) months of the forthcoming twelve-
month period.
The Administering Entity should be aware that non-recurring types of income
should be included as assets rather than as income. Items for inclusion under
this category may include a single gift of cash from a party or parties, cash
sales of property, receipt of one-time survivor benefits, etc. A one-time sale
of stock does not count as income, but rather the proceeds are counted as
assets.
2. Gross annual income includes:
a. Wages, salaries, tips, etc.
b. Taxable interest.
c. Dividends.
d. Taxable refunds, credits or offsets of State and local income taxes.
(There are some exceptions -refer to Form 1040 instructions.)
e. Alimony (or separate maintenance payments) received.
f. Business income (or loss.)
g. Capital gain (or loss.)
h. Other gains (or losses) - i.e. assets used in a trade or business that
.were exchanged or sold.
i. Taxable amount of individual retirement account (IRA) distributions.
This includes simplified employee pension (SEP) and savings incentive
match plan for employees (SIMPLE- IRA.
j. Taxable amount of pension and annuity payments.
k. Rental real estate, royalties, partnerships, S corporations, trusts, etc.
Income from rental properties, including rents from the property to be
improved, shall be included in gross income. A copy of the lease, or a
statement, signed and dated by the tenant(s), which shows the monthly
rent paid is adequate verification of rental income. Expenses allowable
for deduction for rental purposes include a proportional share of mortgage
interest payments, utilities, taxes, insurance, and maintenance. In no
event shall such deductions exceed gross rental income.
I. Farm income (or loss.)
m. Unemployment compensation payments.
n. Taxable amount of Social Security benefits.
o. Other income. This includes: prizes and awards; gambling, lottery or
raffle winnings; jury duty fees; Alaska Permanent fund dividends;
reimbursements for amounts deducted in previous years; income form
22
May 2004
the rental of property if not in the business of renting such property;
and income form an activity not engaged in for profit.)
3. Gross annual income shall be based upon annualized weekly or monthly income
as of the date of verification.
4. In cases where the gross income of the applicant's household is extremely low,
the applicant must produce written verification of the household's monthly
expenditures, clearly itemizing the amount of money and its source on all of,
but not necessarily only, the following applicable items: mortgage; contract for
deed; insurance; loans; income and property taxes; transportation expenses;
charge accounts; health costs; food; utilities; clothing; and entertainment.
These expenses shall determine the household maintenance income.
5. Any income determination resulting in a net LOSS of income must be
considered as SO income. That is, an income loss from one source may not be
subtracted from a separate source of income for the purpose of determining
total household gross annual income.
6. Projected bonus and/or overtime may be determined by the loan administrator
through contacting an employer. The amount may be based on prior years
figures or average amounts awarded to other employees with the same status.
The most recent IRS tax return may also be used for these purposes.
7. Self-employed persons must submit signed copies of IRS tax returns, as sent,
for the previous two years. Applications processed before April 15th of any
given year may use the IRS tax returns from the second and third preceding
years if that for the first preceding year is not available. Applications
processed after April 15th of any given year must use the IRS tax returns from
the first and second preceding years. The Administering Entity will determine
gross annual income by averaging the income from the two submitted returns.
Normal out-of-pocket business expenses such as office rents, telephone, etc.,
are generally deductible items. Property or equipment depreciation and
entertainment are not deductible and must be added back to establish income
for program purposes.
8. Individuals who have been self-employed for less than two years must submit
both a Net Worth Statement and a properly prepared cash basis Profit and Loss
Statement detailing the business income and expenditure. Both Statements
should be prepared and signed by a reputable, third party although the applicant
may prepare one provided that it is endorsed by a reputable third party and that
it includes a declaration that all information contained in the Statement is
accurate and complete and that the applicant is aware that any errors or
evasions may result in prosecution. If the individual can produce a signed IRS
return for one complete year of self-employment and a Profit and Loss
Statement for the subsequent period, that will be acceptable.
23
May 2004
9. The Calculation of Gross Annual Income may NOT be based on a temporary
condition such as unemployment or temporary worker's compensation.
Households receiving unemployment compensation are ineligible for assistance
unless:
a. unemployment recurs on a regular basis and is a consistent element in
gross annual income. In such instances, income from this source shall
be determined as follows. Establish the anticipated annual income if the
individual were to be employed for twelve months at the weekly rate
current at the time of verification; deduct the average number of weeks
the individual received unemployment for the past two years (from the
federal income tax returns); add an amount equal to the average number
of weeks unemployed multiplied by the weekly amount to which the
individual is currently; or
b. the individuals income, when working, was such that it would not have
been an obstacle to eligibility. The individual must be able to demonstrate
at least two years history of employment at such an income (either with
copies of federal income tax returns or by statements from former
employers if the income received was too low to require tax returns to
be filed.) In instance where two years of such employment cannot be
verified, the Administering Entity should consult Hennepin County.
Gross Annual Income may not be based on temporary nonrecurring
unemployment of known duration, such as that due to lay-offs, maternity
leave, sabbatical leave, etc. Rather, income shall be calculated based on the
normal annual Income of the temporarily unemployed person.
Application of those who are unemployed for an unknown period of time shall
not. be considered until the unemployed household member has exhausted all
eligibility for unemployment compensation and the employer indicates a
callback date is unknown. At that time, the household must be able to
demonstrate that it is both income eligible and capable of meeting its monthly
obligations, as outlined in paragraph VII B 4 above. If worker's compensation
is permanent income, it must be verified by the insurance company.
C. Exclusions from Gross Income
1. Child support.
2. Money or property that was inherited, willed or given as a gift.
3. Life insurance proceeds received as a result of someone' s death.
D. Deductions from Gross Income
Once the gross income figure is obtained, applicable deductions must be
subtracted to arrive at the household' s adjusted gross income. The deductions
are:
24
May 2004
9. The Calculation of Gross Annual Income may NOT be based on a temporary
~-~' condition such as unemployment or temporary worker's compensation.
Households receiving unemployment compensation are ineligible for assistance
unless:
a. unemployment recurs on a regular basis and is a consistent element in
gross annual income. In such instances, income from this source shall
be determined as follows. Establish the anticipated annual income if the
individual were to be employed for twelve months at the weekly rate
current at the time of verification; deduct the average number of weeks
the individual received unemployment for the past two years (from the
federal income tax returns); add an amount equal to the average number
of weeks unemployed multiplied by the weekly amount to which the
individual is currently; or
b. the individuals income, when working, was such that it would not have
been an obstacle to eligibility. The individual must be able to demonstrate
at least two years history of employment at such an income (either with
copies of federal income tax returns or by statements from former
employers if the income received was too low to require tax returns to
be filed.) In instance where two years of such employment cannot be
verified, the Administering Entity should consult Hennepin County.
Gross Annual Income may not be based on temporary nonrecurring
unemployment of known duration, such as that due to lay-offs, maternity
leave, sabbatical leave, etc. Rather, income shall be calculated based on the
normal annual Income of the temporarily unemployed person.
Application of those who are. unemployed for an unknown period of time shall
not be considered until the unemployed household member has exhausted all
eligibility for unemployment compensation and the employer indicates a
callback date is unknown. At that time, the household must be able to
demonstrate that it is both income eligible and capable of meeting its monthly
obligations, as outlined in paragraph VII B 4 above. If worker's compensation
is permanent income, it must be verified by the insurance company.
C. Exclusions from Gross Income
1. Child support.
2. Money or property that was inherited, willed or given as a gift.
3. Life insurance proceeds received as a result of someone' s death.
D. Deductions from Gross Income
Once the gross income figure is obtained, applicable deductions must be
subtracted to arrive at the household' s adjusted gross income. The deductions
are:
24
May 2004
1. IRA deduction.
2. Medical savings account deduction.
3. Moving expenses.
4. One half of self-employment tax.
5. Self-employed health insurance deduction.
6. KEOGH and self-employed SEP and SIMPLE plans.
7. Penalty on early withdrawal of savings.
8. Paid alimony.
E. Asset Determination
There is no asset limit as such when using the IRS Form 1040 process. However,
income derived from certain assets must be included as part of annual household
income. These income-earning assets include, taxable interest, dividends, prizes,
awards, and gambling, lottery or raffle winnings. Life insurance proceeds and
inherited money or property are not included in the income calculation. If in
doubt, the Administering Entity should contact Hennepin County to establish if an
asset should be included in the income calculation.
VIII. LOAN APPLICATIONS
In order to assist in the monitoring of individual loans, file folders shall be divided into two
parts. The right hand side of the file folder shall contain, in chronological order, all
correspondence, memos to the file, any photographs, all unused bids, a copy of the filed
Repayment Agreement, and any other relevant documentation including, if necessary, the
Complaint Record. The left-hand side of the file folder shall contain, either front to back
or back to front, the documents, identified as items A through S, in the following order:
A. Homeowner Application for Loan
The application shall be completed in full and signed and dated by the Applicant.
The Homeowner Application for Loan provides:
1. Household information.
2. Income information.
3. Asset information.
4. Property information.
B. Acknowledgement and Authorization to Release Information Form
This form combines the Individual Data Confidentiality form and the Lead Based Paint
Poisoning form. By signing it, the Borrower acknowledges that he or she has
received the Individual Data Confidentiality form, the booklet "Protect Your Family
from Lead in Your Home" and the "Instructions for Completing Your Application"
form.. The Borrower' s signature also authorizes the Administering Entity to collect
date needed in support of the application, including obtaining a credit report.
25
May 2004
C. Letter to the Minnesota Historical Society
If the property to be improved is more than fifty (50) years old, Historical Society
Clearance must be requested from the Minnesota Historical Society. A form letter
to be used in these instances will be provided by Hennepin County.
D. Income Verification
All sources of income listed on the Homeowner Application for Loan must be verified
by the Administering Entity. Evidence of such verification must be included in the
loan package. The following is a list of acceptable forms of income verification
evidence:
1. Written verification from employers or other income providers.
2. Copies of recent checks or check stubs, which must include the year-to-date
earnings.
3. IRS forms o~ in the case of self-employed individuals (See Section VII.)
4. Statements of deposit from bank.
5. Copies of deposit slips indicating the deposits of a particular check.
6. Income derived from rent must be verified by the renter in writing or by
examining copies of checks or rent receipts, or by a copy of the current lease,
or by a copy of the applicant' s most recent federal income tax return.
The date of document used in verifying income must not be more than 180 days
previous to the date of approval. If it is more than 180 days, incomels) must be
reverified before a loan application can be approved
E. Asset Verification
All assets listed on the Homeowner Application for loan must be verified by the
Administering Entity. Evidence of such verification must be included in the loan
package. The following is the only acceptable form of asset verification evidence:
1. Written verification from banks, insurance companies or other asset holders.
2. Copies of bank statements, insurance policies, premium notices and the like.
The date of document used in verifying assets must not be more than 180 days
previous to the date of approval. If it is more than 180 days old, the assets must be
reverified before a loan application can be approved.
F. Mortgage Status Verification
The Administering Entity must ensure that the mortgage(s) and/or contract for
deed(s) on the property to be improved are current. If payments are in arrears, the
26
May 2004
C. Letter to the Minnesota Historical Society
O ~ If the property to be improved is more than fifty (50) years old, Historical Society
Clearance must be requested from the Minnesota Historical Society. A form letter
to be used in these instances will be provided by Hennepin County.
D. Income Verification
All sources of income listed on the Homeowner Application for Loan must be verified
by the Administering Entity. Evidence of such verification must be included in the
loan package. The following is a list of acceptable forms of income verification
evidence:
1. Written verification from employers or other income providers.
2. Copies of recent checks or check stubs, which must include the year-to-date
earnings.
3. IRS forms only in the case of self-employed individuals (See Section VII.)
4. Statements of deposit from bank.
5. Copies of deposit slips indicating the deposits of a particular check.
6. Income derived from rent must be verified by the renter in writing or by
examining copies of checks or rent receipts, or by a copy of the current lease,
or by a copy of the applicant' s most recent federal income tax return.
The date of document used in verifying income must not be more than 180 days
previous to the date of approval. If it is more than 180 days, income(s) must be
reverified before a loan application can be approved
E. Asset Verification
All assets listed on the Homeowner Application for loan must be verified by the
Administering Entity. Evidence of such verification must be included in the loan
package. The following is the only acceptable form of asset verification evidence:
1. Written verification from banks, insurance companies or other asset holders.
2. Copies of bank statements, insurance policies, premium notices and the like.
The date of document used in verifying assets must not be more than 180 days
previous to the date of approval. If it is more than 180 days old, the assets must be
reverified before a loan application can be approved.
F. Mortgage Status Verification
The Administering Entity must ensure that the mortgage(s) and/or contract for
deed(s) on the property to be improved are current. If payments are in arrears, the
26
May 2004
applicant must be given four weeks to make them current. The date of the document
used in verifying the mortgage and/or contract for deed must not be more than 180
days previous to the date of approval. If it is .more than 180 days old, the mortgage
status must be reverified before a loan application can be approved. A copy of the
Borrower' s credit report, provided that it includes information from the Borrower' s
mortgage company, is an acceptable verification. Should the mortgage company
charge a fee for verification of mortgage status, the fee must be paid by the
applicant. Alternatively, the Administering Entity can accept copies (front and back)
of cancelled checks accounting for mortgage payments for the last six months.
H. Zoning Status Verification
The property to be improved must be in compliance with all applicable zoning
requirements. Cities acting as their own administering entities can elect to forego
include formal verification of zoning status for properties located within city limits.
I. Title Verification
1. The Administering Entity must obtain the following information from the County
Recorder or Registrar of Titles regarding each property:
a. The full name(s) and marital status of all owners of record, exactly as
they appear on the title.
b. Whether it is Torrens or Abstract.
c. Confirmation that applicants are either current on their property tax
payments or are current on a Confession of Judgement to repay
delinquent taxes.
d. The relevant document number (plus book and or page, number if
necessary) of the deed establishing the applicant's interest in the
property.
e. A complete and accurate legal description of the property to be
improved.
2. Upon obtaining this information, the Administering Entity must determine that
the applicant individually or in the aggregate has a qualifying interest in the
property consisting of at least:
a. A valid life estate. Such life estate must be recorded and must appear
in the records of the County; or.
b. A one-third interest in the fee title. Such interest may be subject to a
mortgage; or
c. A one-third interest as a purchaser in a contract for deed with respect to
27
May 2004
the structure being improved.
3. In addition, the applicants must occupy the property as the principal place of
residence. To consider a property the principal place of residence, an individual
must:
a. Reside in the property at the time of application (except where
extraordinary circumstances have made the property temporarily
uninhabitable); and
b. Occupy the property for at least nine months of the year.
4. For the purpose of complying with ownership requirements, the borrower may
aggregate his/her interest in such property with the ownership interest of other
individuals occupying the property as their principal place of residence.
Administering entities are strongly encouraged to ensure that no alterations to the
title to properties to be rehabilitated have occurred in the period between initial
verification and execution of the Work Contract.
J. Property Inspection Report
1. Must be included in the loan package and must include the following items:
a. General condition of the structure.
b. Structural soundness.
c. Plumbing systems, including: water supply, waste disposal, fixtures
and piping systems.
d. Heating systems.
e. Electrical systems.
f. Roof.
g. Energy efficiency including: insulation, infiltration, windows, doors
and ventilation.
h. General exterior conditions.
i. General interior conditions.
An explanation should be provided for any deficiency that appears on the
inspection report but does not appear on the Rehabilitation Work Summary for
correction. The inspection report must be signed and dated by the inspector
performing the inspection.
2. Major infractions of the city building codes constituting a health and/or safety
hazard or seriously diminishing the habitability of the residence will be noted
and explained to the applicant. The applicant will be required, as a condition
of funding, to contact the City Building Inspector to establish that repair of
these major infractions is within the scope of available monies. A copy of the
City Building Inspectors written report must be included in the file. If it is
28
May 2004
the structure being improved.
3. In addition, the applicants must occupy the property as the principal place of
residence. To consider a property the principal place of residence, an individual
must:
a. Reside in the property at the time of application (except where
extraordinary circumstances have made the property temporarily
uninhabitable); and
b. Occupy the property for at least nine months of the year.
4. For the purpose of complying with ownership requirements, the borrower may
aggregate his/her interest in such property with the ownership interest of other
individuals occupying the property as their principal place of residence.
Administering entities are strongly encouraged to ensure that no alterations to the
title to properties to be rehabilitated have occurred in the period between initial
verification and execution of the Work Contract.
J. Property Inspection Report
1. Must be included in the loan package and must include the following items:
a.
b. General condition of the structure.
Structural soundness.
c. Plumbing systems, including: water supply, waste disposal, fixtures
and piping systems.
d. Heating systems.
e. Electrical systems.
f. Roof.
g. Energy efficiency including: insulation, infiltration, windows, doors
and ventilation.
h. General exterior conditions.
i. General interior conditions.
An explanation should be provided for any deficiency that appears on the
inspection report but does not appear on the Rehabilitation Work Summary for
correction. The inspection report must be signed and dated by the. inspector
performing the inspection.
2. Major infractions of the city building codes constituting a health and/or safety
hazard or seriously diminishing the habitability of the residence will be noted
and explained to the applicant. The applicant will be required, as a condition
of funding, to contact the City Building Inspector to establish that repair of
these major infractions is within the scope of available monies. A copy of the
City Building Inspectors written report must be included in the file. If it is
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May 2()04
determined that the cost of necessary repairs exceeds the available monies,
then the loan application will be withdrawn.
K. Scope of Improvements and Work Proposal
This listing of all eligible improvements should be kept on file in case the borrower
requires additional copies. At least three copies will be sent to the borrower along
with a mandatory cover letter encouraging the consideration of minority or women-
owned contractors as potential bidders and including information on how to access
such contractors. A copy of this letter must also be included in the file.
The Scope should allow contractors the opportunity to submit alternates or
amendments to work items; however, funding of any such alternate or amendment
is dependent upon the existence of a second bid for the same alternate or
amendment. The Scope must also contain an explanation of the bidding procedures,
contract procedures, contract amendment procedures, completion procedures and
payment procedures.
L. Rehabilitation Work Summary
The Administering Entity in conjunction with the borrower, determines the work to
be done with the funds available. If the borrower disagrees with the Administering
Entity's choice of improvements, items may be waived by the borrower, in writing,
at the discretion of the Administering Entity. The Rehabilitation Work Summary lists;
The improvements as itemized on the Scope of Work, with the cost of each
work item along with the name of the contractor performing the work.
2. The total cost of the work to be performed.
M. Contractor Bids
The borrower should obtain a minimum of two bids for each of the authorized
improvements. All bids must conform to the minimum standards of the technical
specifications. Under certain circumstances, such as extremely adverse working
conditions, uncooperative clients or unusual or uncommon types of improvements,
the Administering Entity may elect to secure only one bid, provided that the file
contains a proper cost estimate (prepared by the Administering Entity) which
demonstrates cost reasonableness. Cities acting as their own Administering Entity
must secure the written agreement of Hennepin County. In instances where
Hennepin County is acting as Administering Entity, the written agreement of the city
providing the rehabilitation funds must be secured.
N. Work Contract
The contractor submitting the lowest acceptable bid must sign a Work Contract
provided by the Administering Entity. A copy of each bid for all work to be
performed by each contractor must be included in the Work Contract as Schedule A.
Work shall be completed within the time frame specified on the Work Contract. The
city may grant an extension under unusual circumstances. This extension must be
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May 2004
in writing with a copy given to the homeowner and contractor.
0. Amendment Request Certificate or Change Order Request
The form outlines all changes in the approved loan amount, either additions or
subtractions by each contractor. It must be signed by the contractor and the
borrower and approved by the Administering Entity. A revised bid must be attached.
Every effort must be made to keep Amendment Requests to a minimum. The use of
excessive Amendment Requests tends to indicate failures in either the Property
Inspection Report and/or the Scope of Improvements and this in the administration
of the program itself. Since housing rehabilitation is not an exact science, it is
appropriate to use the Amendment Request as a means of dealing with unforeseeable
problems.
P. Contractor Bills
Bills must be obtained from each firm or individual contracted to perform work on the
residence (in other words, a general contractor can submit bills on behalf of a sub-
contractor). Bills must be provided for all payments, interim or final.
Q. Sworn Construction Statement
Any firm or individual contracted to perform work on the residence must submit a
Sworn Construction Statement along with the bill before any payment, interim or
partial, can be released. The Sworn Construction Statement must list all
subcontractors and/or suppliers contributing to the work for which the bill is being
submitted and must be signed by the contractor holding the Work Contract. The
contractor' s signature must be notarized. The purpose of this form is to ensure that
the contractor holding the Work Contract is liable for any failure to pay sub-
contractors/suppliers involved in the project.
R. Lien Waivers
Original lien waivers referred to in the Sworn Construction Statement, plus the lien
waiver from the contractor holding the Work Contract, must be included in the file
and must be secured before any payment is released. Copies of all lien waivers may
be passed onto the borrower following close-out of the file.
S. Completion Certificate
This form should be signed by the borrower and the contractor when the loan work
undertaken by the contractor is completed. If the work involves a building permit,
or if code work is involved, then the relevant inspector should sign in the space
provided. If the approval of more than one inspector is required, then copies of the
Inspection Notice(s) should be attached. The Completion Certificate must always be
accompanied by a bill for the work done.
T. Data on Individual Loans
Regardless of the manner in which documents A through S are placed in the file,
when the loan is closed out, this form should be at the front of the file on the left
hand side. The form provides information pertaining to environmental assessment,
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May 2004
in writing with a copy given to the homeowner and contractor.
O. Amendment Request Certificate or Change Order Request
The form outlines all changes in the approved loan amount, either additions or
subtractions by each contractor. It must be signed by the contractor and the
borrower and approved by the Administering Entity. A revised bid must be attached.
Every effort must be made to keep Amendment Requests to a minimum. The use of
excessive Amendment Requests tends to indicate failures in either the Property
Inspection Report and/or the Scope of Improvements and this in the administration
of the program itself. Since housing rehabilitation is not an exact science, it is
appropriate to use the Amendment Request as a means of dealing with unforeseeable
problems.
P. Contractor Bills
Bills must be obtained from each firm or individual contracted to perform work on the
residence (in other words, a general contractor can submit bills on behalf of a sub-
contractor). Bills must be provided for all payments, interim or final.
Q. Sworn Construction Statement
Any firm or individual contracted to perform work on the residence must submit a
Sworn Construction Statement along with the bill before any payment, interim or
partial, can be released. The Sworn Construction Statement must Fist all
subcontractors and/or suppliers contributing to the work for which the bill is being
submitted and must be signed by the contractor holding the Work Contract. The
contractor' s signature must be notarized. The purpose of this form is to ensure that
the contractor holding the Work Contract is liable for any failure to pay sub-
contractors/suppliers involved in the project.
R. Lien Waivers
Original lien waivers referred to in the Sworn Construction Statement, plus the lien
waiver from the contractor holding the Work Contract, must be included in the file
and must be secured before any payment is released. Copies of all lien waivers may
be passed onto the borrower following close-out of the file.
S. Completion Certificate
This form should be signed by the borrower and the contractor when the loan work
undertaken by the contractor is completed. If the work involves a building permit,
or if code work is involved, then the relevant inspector should sign in the space
provided. If the approval of more than one inspector is required, then copies of the
Inspection Notice(s) should be attached. The Completion Certificate must always be
accompanied by a bill for the work done.
T. Data on Individual Loans
Regardless of the manner in which documents A through S are placed in the file,
when the loan is closed out, this form should be at the front of the file on the left
hand side. The form provides information pertaining to environmental assessment,
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May 2004
historical preservation, Section 8 quality housing standards, census tract data and
household size and annual income. It is required that the Flood Zone information (line
7) be properly completed. The Administering Entity must list the Flood Zone
Classification (A, B, or C) and the National Flood Insurance Rate Map Number.
U. Repayment Agreement
The original Repayment Agreement,.or the copy returned by the Registrar of Titles,
must be included in the loan package and should be located on the right-hand side of
the file. As specified in the provisions of the Repayment Agreement, the borrower
shall be required to notify the Administering Entity immediately upon sale, transfer,
conveyance or cessation of residency of the property. A copy of the Repayment
Agreement must be sent to the borrower and to any other signatories requesting a
copy. Administering entities may elect to keep the Repayment Agreements in a
separate file dedicated for that purpose.
1. The Repayment Agreement for borrowers with incomes at or below 50% of
median provides that in the event that the improved property is sold,
transferred, or otherwise conveyed by the borrower within thirty (30) * years
from the date upon which the loan application was approved, or in the event
that such property ceases to be the borrower's principal place of residence
within thirty (30) years from the date upon which the loan package was
approved, then the borrower shall repay the full amount of the loan. The
Repayment Agreement is a lien on the improved property, in favor of the
Administering Entity, as security for the loan amount.
*Administering entities have the option of adopting a different lien period
and/or structure provided that Hennepin County is notified in writing.
2. The Administering Entity must exercise extreme care in the execution of the
Repayment Agreement document to ensure that the lien is valid. Any
inaccuracy or omission may have a negative effect on the validity of the lien.
Prior to the approval of the loan package,- the Administering Entity must ensure
that the Repayment Agreement be properly completed in as much as:
a. The property description must be exactly as it appears in the property
records. If the applicant owns property other than that on which the
structure to be improved is located, only the description of the property
to be improved should be included.
b. The record names (the names exactly as they appear in the property
records) must be used by all whose signatures are required. The
following is a brief discussion of the signatures required under particular
property ownership situations:
Any JOINT TENANCY--signatures of all joint tenants are required.
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May 2004
ii. Property held by ONE SPOUSE--signatures of BOTH spouses are
required.
iii. Property held in LIFE ESTATE--signatures of the applicant (life
estate holder) and signature of sufficient remainderpersons to
comprise one-third interest, or remainderpersons.
iv. Property being purchased on CONTRACT FOR DEED--signatures of
the applicant and all individuals who are aggregating their interest
to meet the ownership requirement; and the fee title holder (and
spouse or others, as applicable) of the property; and the signatures
of any intervening vendees of the contract for deed.
v. Under normal circumstances, contract for deed vendors, separated
spouses or others not in residence and adequate numbers of
remainderpersons MUST execute the Repayment Agreement to
render it legally binding. However, administering entities can elect
to waive this requirement and record a Repayment Agreement only
under the applicant' s interest SOLELY because the funds secured
by the Repayment Agreement are required to address issues
severely affecting the health and safety of the applicants
household or to correct chronic structural problems identified by
the city building official. Cities acting as their own Administering
Entity must secure the written agreement of Hennepin County. In
instances where Hennepin County is acting as Administering
Entity, the written agreement of the city providing the rehabilitation
funds must be secured.
c. All required signatures must be notarized, including the "mark" of a
signatory who is unable to write (such a mark must be witnessed by at
least two persons other than the notary).
i. Additional acknowledgements may be added to the Repayment
Agreement form to accommodate any necessary notarizations.
ii. All dates (except those in the notary's acknowledgements) in the
Repayment Agreement shall be left blank until the loan is approved.
d. In order to best protect its interest in the property to be improved, the
Administering Entity may opt to record the Repayment Agreement, in the
amount of the contracted work, before any work begins. The
Administering Entity shall, in writing, inform the borrower and all selected
contractors that no amendments to the loan amount will be approved
without first obtaining a signed repayment agreement indicating the
altered loan amount. If this early recording of the repayment Agreement
is regarded as being administrative burdensome, the Administering Entity
has the following options:
i. The loan amount in the Repayment Agreement should be left blank
at the time the loan package is approved. This allows the
Administering Entity flexibility with regard to amendment requests
by not requiring a new agreement to be signed should the loan
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May 2004
ii. Property held by ONE SPOUSE--signatures of BOTH spouses are
required.
iii. Property held in LIFE ESTATE--signatures of the applicant (life
estate holder) and signature of sufficient remainderpersons to
comprise one-third interest, or remainderpersons.
iv. Property being purchased on CONTRACT FOR DEED--signatures of
the applicant and all individuals who are aggregating their interest
to meet the ownership requirement; and the fee title holder (and
spouse or others, as applicable) of the property; and the signatures
of any intervening vendees of the contract for deed.
v. Under normal circumstances, contract for deed vendors, separated
spouses or others not in residence and adequate numbers of
remainderpersons MUST execute the Repayment Agreement to
render it legally binding. However, administering entities can elect
to waive this requirement and record a Repayment Agreement only
under the applicant' s interest SOLELY because the funds secured
by the Repayment Agreement are required to address issues
severely affecting the health and safety of the applicants
• household or to correct chronic structural problems identified by
the city building official. Cities acting as their own Administering
Entity must secure the written agreement of Hennepin County. In
instances where Hennepin County is acting as Administering
Entity, the written agreement of the city providing the rehabilitation
funds must be secured.
c. All required signatures must be notarized, including the "mark" of a
signatory who is unable to write (such a mark must be witnessed by at
least two persons other than the notary).
i. Additional acknowledgements may be added to the Repayment
Agreement form to accommodate any necessary notarizations.
ii. All dates (except those in the notary's acknowledgements) in the
Repayment Agreement shall be left blank until the loan is approved.
d. In order to best protect its interest in the property to be improved, the
Administering Entity may opt to record the Repayment Agreement, in the
amount of the contracted work, before any work begins. The
Administering Entity shall, in writing, inform the borrower and all selected
contractors that no amendments to the loan amount will be approved
without first obtaining a signed repayment agreement indicating the
altered loan amount. If this early recording of the repayment Agreement
is regarded as being administrative burdensome, the Administering Entity
has the following options:
i. The loan amount in the Repayment Agreement should be left blank
at the time the loan package is approved. This allows the
Administering Entity flexibility with regard to amendment requests
by not requiring a new agreement to be signed should the loan
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May 2004
amount change upon completion of the work (but it may also allow
the property to be sold before the work is completed, thus
rendering the Repayment Agreement invalid); or
ii. The Administering Entity may accept the document with the
maximum loan amount in place, recognizing that a new document
must be executed to reflect the final loan amount.
e. The Repayment Agreement shall be filed with the proper recording office
in such a manner as to create a valid lien against the property.
3. If any loan funds are used for purposes other than an eligible improvement upon
an eligible property or if the borrower application is found to contain a material
misstatement of fact, the borrower shall be liable for repayment of all or part
of the originally approved loan funds. In addition, any fraudulent use of funds
may subject the recipient to fines and/or imprisonment under the Minnesota
Criminal Code.
4. Mobile homes which are not taxed as real property will be subject to a ten-year
lien period as an acknowledgement that such dwellings are both usually the
home of very low-income borrowers and that they are unlikely to remain
habitable for more than ten years. Borrowers living in mobile homes will be
notified that participation in the program essentially means a commitment to
remain in the mobile home for at least the lien period. The Repayment
Agreement will be filed with the Department of Motor Vehicles and
participation in the program will depend upon the borrower' s ability and
willingness to hand over the title documents to the Administering Entity prior
to work beginning on the mobile home.
V. Complaint Record/Memo
Any complaints brought to the attention of the Administering Entity, pertinent to the
administration/implementation of the program and the response of the Administering
Entity to the complaint, should be properly noted in the file.
IX. ACCEPTANCE PROCEDURES
The Administering Entity objectives are to encourage necessary improvements whereby the
structure will be reasonably livable, safe, habitable and energy efficient.
A. Applications will be processed as follows:
1. Applicants must submit their request for a Rehabilitation Loan on Hennepin
County Loan Application form. It should be submitted to the Administering
Entity.
2. The Administering Entity will review the individual packages using the
qualifications as outlined in Section VI. Loan packages shall contain all of the
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May 2004
necessary documents listed in Section VIII of these Procedural Guides.
The Administering Entity may reject unacceptable packages and hold them until
the necessary information is provided after notification of same to the
applicant. If the necessary information is not provided within a reasonable
time, the application may be withdrawn and the file closed out.
3. The decision of the Administering Entity will be final. However, appeals may
be made in those cases where applicants believe they were not treated
equitably. Appeals shall be in written form submitted to the Administering
Entity outlining the applicant's concerns. The Administering Entity should
review the concerns and respond to them in written form to the applicant
within fifteen (15) days. If, after this review, disagreement is still evident, the
satisfactory resolution is not reached, the complaint will be resolved by
Hennepin County.
B. Notification of Ineligibility
If the applicant, or the applicants dwelling, is determined to be ineligible, the
Administering Entity must notify the applicant of that denial, in writing, within five
(5) days of the denial indicating the reason(sl for denial and outlining the appeal
process as stated above.
C. Loan Approval
a. Upon approval of a `loan package, the Administering Entity must notify the
applicant of that approval.
b. The Repayment Agreement for each approved loan will be held by the
Administering Entity. The Repayment Agreement will have been executed by the
Administering Entity and dated according to the date on which the loan package
was approved.
c. The executed Repayment Agreement acts as the contract between the
Administering Entity and the borrower.
D. Pre-Construction Meeting
In as much as it is feasible to do so, the Administering Entity should strive to hold a
pre-construction meeting with the client and the contractor(s) before the Work
Contract is signed so that the approved work can be discussed in detail. By doing
so it can be ensured that all parties are in complete agreement on the work to be
done and the manner in which it is to be done. While the Administering Entity may
elect to waive the pre-construction meeting when one contractor and limited
improvements are involved, any project involving a general contractor and a number
of tradesmen should include a pre-construction meeting before any work is
authorized.
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May 2004
necessary documents listed in Section VI11 of these Procedural Guides.
The Administering Entity may reject unacceptable packages and hold them until
the necessary information is provided after notification of same to the
applicant. If the necessary information is not provided within a reasonable
time, the application may be withdrawn and the file closed out.
3. The decision of the Administering Entity will be final. However, appeals may
be made in those cases where applicants believe they were not treated
equitably. Appeals shall be in written form submitted to the Administering
Entity outlining the applicant's concerns. The Administering Entity should
review the concerns and respond to them in written form to the applicant
within fifteen (15) days. If, after this review, disagreement is still evident, the
satisfactory resolution is not reached, the complaint will be resolved by
Hennepin County.
B. Notification of Ineligibility
If the applicant, or the applicants dwelling, is determined to be ineligible, the
Administering Entity must notify the applicant of that denial, in writing, within five
(5) days of the denial indicating the reason(s) for denial and outlining the appeal
process as stated above.
C. Loan Approval
a. Upon approval of a loan package, the Administering Entity must notify the
applicant of that approval.
b. The Repayment Agreement for each approved loan will be held by the
Administering Entity. The Repayment Agreement will have been executed by the
Administering Entity and dated according to the date on which the loan package
was approved.
c. The executed Repayment Agreement acts as the contract between the
Administering Entity and the borrower.
D. Pre-Construction Meeting
In as much as it is feasible to do so, the Administering Entity should strive to hold a
pre-construction meeting with the client and the contractor(s) before the Work
Contract is signed so that the approved work can be discussed in detail. By doing
so it can be ensured that all parties are in complete agreement on the work to be
done and the manner in which it is to be done. While the Administering Entity may
elect to waive the pre-construction meeting when one contractor and limited
improvements are involved, any project involving a general contractor and a number
of tradesmen should include a pre-construction meeting before any work is
.authorized.
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May 2004
X. COMPLETION AND DISBURSEMENT PROCEDURES
A. Completion Procedures
No loan will be considered complete until the following steps have been
accomplished:
1. Inspection of the Property. All improvement work, as specified in the
Rehabilitation Work Summary, must be inspected for completeness, conformity
to specification and quality of workmanship. The Administering Entity must
require completion or correction of any item found lacking. Failure of a
contractor to comply with such a request for completion or correction of work
is considered grounds for withholding payment.
2. Completion Certificate. Following the final inspection and successful
completion of work, the Completion Certificate must be signed by the
Borrower, all of the contractors who performed work on the property, by the
Inspector of the property, and the Deferred Loan Administrator. In the event
that the homeowner will not sign the Completion Certificate, payment may be
issued to the contractor provided that the contractor, the Inspector, and the
Deferred Loan Administrator all sign the Completion Certificate indicating that
the work was done properly, and a letter written by the Deferred Loan
Administrator is attached outlining in detail the situation resulting in the
recipient refusing to sign the Completion Certificate and confirming proper
completion of work.
3. Recording of the Repayment A reement. The Administering Entity must insert
the amount of the loan in the Repayment Agreement and check the document
for completeness and accuracy. The Repayment Agreement must then be
recorded by the Administering Entity with the Registrar of Deeds or the
Registrar of Titles.
B. Disbursement Procedures
1. No disbursement of funds shall be made to a contractor until the Administering
Entity is in receipt of:
a. a completion certificate signed by the contractor, inspector and borrower;
and
b. a bill from the contractor for the amount of the work performed; and
c. a properly completed Sworn Construction Statement; and
d. lien .waivers provided by the contractor and/or sub-contractor(s) and/or
supplier's for the amount of the work performed.
Upon receipt of the above items, payment may be made to the contractor using
funds from the general revenue fund of the Administering Entity. Payment will
normally be made within three weeks of receipt by the Administering Entity of
the bill, the signed completion certificate and the lien waivers.
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May 2004
2. To be reimbursed by Hennepin County, the Administering Entity must forward
to the County the completed and signed Warrant Request and copies of the
following:
a. Signed Completion Certificates and all Amendment Requests.
b. Data on Individual Loans (need to submit only one per client).
c. Contractor's Invoice(s) (bill).
d. Proofls) or paymentls) to contractor(s) (Administering Entity check).
e. Summary of Project Disbursement Sheet(s).
The originals must remain in the applicant files with the Administering
Entity.
XI. PROCEDURES FOR ACCESSIBILITY IMPROVEMENT LOANS
A. Accessibility Improvements
1. Accessibility Improvements may include:
a. Structurallmprovements:
Construction installation or modification of ramps, handrails, kick plates
and door widths; repair or replacement of doors; relocation of doorways;
installation of lever-action hardware; construction or expansion of rooms.
b. Exterior Improvements:
Construction of exterior ramps, railing, walkways, landings and porch
extensions; site grading and other site improvements.
c. Bathroom Improvements:
Installation of elevated water closets, grab bars, shower stalls, tub seats,
hand-held showers; accessible sinks, electrical outlets, medicine cabinets
and other accessories. Modification or expansion of bathroom area to
allow afive-foot turning radius.
d. Kitchen Improvements:
Construction, modification or replacement of cupboards or shelves to
provide access to sinks, cook tops, ovens, or storage areas; installation
of accessible electrical outlets and switches, lever-action hardware,
garbage disposals; insulation of hot water pipes; modification or
expansion of kitchen area to allow for afive-foot turning radius in the
workspace; installation of "lazy susans" in cupboards; replacement of
floor covering in order to improve wheeling surface.
e. Other Improvements:
In exceptional circumstances, installation of central air conditioning
and/or stair glides or electric lifts when the need for these improvements
is verified by the handicapped person's doctor in writing.
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May 2004
2. To be reimbursed by Hennepin County, the Administering Entity must forward
to the County the completed and signed Warrant Request and copies of the
following:
a. Signed Completion Certificates and all Amendment Requests.
b. Data on Individual Loans (need to submit only one per client.
c. Contractor's Invoice(s) (bill).
d. Proof(s) or payment(s) to contractor(s) (Administering Entity check).
e. Summary of Project Disbursement Sheet(s).
The originals must remain in the applicant files with the Administering
Entity.
XI. PROCEDURES FOR ACCESSIBILITY IMPROVEMENT LOANS
A. Accessibility Improvements
1. Accessibility Improvements may include:
a. Structurallmprovements:
Construction installation or modification of ramps, handrails, kick plates
and door widths; repair or replacement of doors; relocation of doorways;
installation of lever-action hardware; construction or expansion of rooms.
b. Exterior Improvements:
Construction of exterior ramps, railing, walkways, landings and porch
extensions; site grading and other site improvements.
c. Bathroom Improvements:
Installation of elevated water closets, grab bars, shower stalls, tub seats,
hand-held showers; accessible sinks, electrical outlets, medicine cabinets
and other accessories. Modification or expansion of bathroom area to
allow afive-foot turning radius.
d. Kitchen Improvements:
Construction, modification or replacement of cupboards or shelves to
provide access to sinks, cook tops, ovens, or storage areas; installation
of accessible electrical outlets and switches, lever-action hardware,
garbage disposals; insulation of hot water pipes; modification or
expansion of kitchen area to allow for afive-foot turning radius in the
workspace; installation of "lazy susans" in cupboards; replacement of
floor covering in order to improve wheeling surface.
e. Other Improvements:
In exceptional circumstances, installation of central air conditioning
and/or stair glides or electric lifts when the need for these improvements
is verified by the handicapped person's doctor in writing.
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May 2004
2. Improvements which are not determined by the Administering Entity to be
eligible as accessibility improvements may be funded under the other provisions
of these procedural guides.
6. Requirements for Participation
Loans may be made to handicapped persons for accessibility improvements only if
the conditions of Section VI (except the portion thereof relating to Eligibility of
Improvements) of these procedural guides have been fully satisfied.
C. Amount of Loan for Accessibility Improvements
See Section II H.
D. Responsibilities of the Administering Entity
With respect to loans for accessibility improvements, the Administering Entity shall:
1. Be governed by the general conditions set forth in Section II of these procedural
guides.
2. Assist the handicapped person with the preparation of the Application form,
upon request. Such assistance shall include a personal visit by the
Administering Entity to the home of the handicapped person or to any other
reasonable location which is accessible to the handicapped person should the
offices housing the Administering Entity not be deemed accessible in
accordance with Chapter 751, Laws of Minnesota, 1978.
3. Carry out the duties required of the Administering Entity pursuant to Section
III, of these procedural guides, including the duty to complete the loan package
for accessibility improvements. A complete loan package for accessibility shall
include all required materials.
E. Standard Procedure for Compilin Accessibility Portion of Loan
In addition to all the documents described in Section VIII, a loan package including
handicapped improvements must include the following:
1. Accessibility improvements inventory containing a description of the
accessibility improvements to be made shall be included with the inspection
report.
2. A letter describing:
a. the level and specific type of disability experienced by the handicapped
person signed by a licensed physician; and
b. the specific accessibility improvements requested by the physician.
3. Bids from contractors.
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May 2004
4. Architectural drawings, if needed.
5. Any other materials requested.
XII. GENERAL CONDITIONS RELATING TO LOANS
A. All programs funded through the Hennepin County CDBG program must provide equal
access to employment, programs and services without regard to race, color, creed,
religion, age, sex, handicap, marital status, affectional preference, public assistance,
criminal record, or national origin. Areas not specifically mentioned in this statement
will still be governed by the spirit of this statement. If an applicant or borrower
believes they have been discriminated against, they should contact the Affirmative
Action Programs Department, A-303 Government Center, Minneapolis, Minnesota,
55487, 348-4096.
B. The Administering Entity shall have full responsibility for program implementation
including public information, reviewing and screening applicants, choosing recipients,
and assuring that work will be satisfactorily completed.
C. No loan application fee shall be charged to an applicant.
XIII. EMERGENCY DEFERRED LOAN GUIDELINES
A. The HRA may authorize an Emergency Deferred Loan for providing rehabilitation
funds to eligible applicants in emergency situations. Specific emergency
situations are defined below.
B. The Emergency Deferred Loan application process, within a very short response
time, informally assembles all required information, verifies the information,
receives required signature on forms, and authorizes loan financing." Verbal
verifications and bidding often occur to prevent delay. The Emergency Deferred
Loan package will be completed in a permanent, written form as soon as
possible following loan approval and initiation of work.
C. The following conditions shall apply to an Emergency Deferred Loan:
1. .The applicant, property, and improvements must be determined eligible
as stated in the general Rehabilitation Deferred Loan program.
2. The following forms must be completed and included in the Emergency
Deferred Loan Package when submitted for approval:
a. Homeowner Application for Deferred Loan
b. Property Inspection Report (limited)
38
May 2004
4. Architectural drawings, if needed.
5. Any other materials requested.
XII. GENERAL CONDITIONS RELATING TO LOANS
A. All programs funded through the Hennepin County CDBG program must provide equal
access to employment, programs and services without regard to race, color, creed,
religion, age, sex, handicap, marital status, affectional preference, public assistance,
criminal record, or national origin. Areas not specifically mentioned in this statement
will still be governed by the spirit of this statement. If an applicant or borrower
believes they have been discriminated against, they should contact the Affirmative
Action Programs Department, A-303 Government Center, Minneapolis, Minnesota,
55487, 348-4096.
B. The Administering Entity shall have full responsibility for program implementation
including public information, reviewing and screening applicants, choosing recipients,
and assuring that work will be satisfactorily completed.
C. No loan application fee shall be charged to an applicant.
XIII. EMERGENCY DEFERRED LOAN GUIDELINES
A. The HRA may authorize an Emergency Deferred Loan for providing rehabilitation
funds to eligible applicants in emergency situations. Specific emergency
situations are defined below.
B. The Emergency Deferred Loan application process, within a very short response
time, informally assembles all required information, verifies the information,
receives required signature on forms, and authorizes loan financing. Verbal
verifications and bidding often occur to prevent delay. The Emergency Deferred
Loan package will be completed in a permanent, written form as soon as
possible following loan approval and initiation of work.
C. The following conditions shall apply to an Emergency Deferred Loan:
The applicant, property, and improvements must be determined eligible
as stated in the general Rehabilitation Deferred Loan program.
2. The following forms must be completed and included in the Emergency
Deferred Loan Package when submitted for approval:
a. Homeowner Application for Deferred Loan
b. Property Inspection Report (limited)
38
May 2004
c. Scope of Improvements (limited)
d. Contractor bids (phone quotes acceptable)
e. Asset Verification (phone verification acceptable)
f. Individual Data Confidentiality
g. Title Verification
h. Mortgage Status Verification (phone verification acceptable)
i. Repayment Agreement
j. Emergency Deferred Loan Approval
k. Improvement Certificate
I. Data on Individual Loans
m. Work Contract (may be faxed)
n. Acknowledgment of Data Confidentiality
o. Entry Permit
p. Zoning Verification
3. The HRA verifies that an emergency condition exists, such as:
a. The dwelling unit contains defects or deficiencies which, if left
uncorrected, would render the unit immediately uninhabitable; or
b. Such defects are the direct result of occurrences which include,
but are not limited to, natural causes such as floods, tornadoes,
fire, blizzards, and storm; or mechanical failures such as burst
pipes, furnace breakdowns, or clogged sewer lines; or
c. A child under the age of seven years, living in the home, is found
to have an Elevated Blood Level.
4. The applicant agrees that other improvements found to be necessary to
the unit must be completed on anon-emergency basis by means of a
Deferred Loan or other financing. The HRA will make available funds for
such improvements to the applicant on a first-come, first serve basis.
Additional improvements can be undertaken at the same time as the
emergency improvements if sufficient funds exist to assist all applicants
ahead of the emergency application.
5. The property to be improved will be inspected to ensure that an
Emergency Deferred Loan expenditure is a "permanent general
improvement". The improvement(s) must be economically viable in that
the structure will have a remaining useful life; a lien to the maximum
amount available would be collectable; and the structure is reasonably
livable, safe, and habitable. It is understood that additional repairs of a
non-emergency nature may be needed and that those repairs may not
have been determined in final form.
6. All other conditions required in these Procedural Guides must. be met.
39
May 2004
D. In administering an Emergency Deferred Loan, the HRA is aware that an
applicant that initially agrees to perform additional repairs may, at some time,
not pursue the additional repairs. However, the emergency nature of the repairs
to protect the health and safety of eligible residents warrants "the risk" as it
relates to future performance. Every effort will be taken to ensure that
Emergency Deferred Loan recipients follow through with appropriate repairs on
a first-come, first-serve basis.
XIV. GENERAL CONDITIONS FOR THE THREE PERCENT INTEREST LOAN
A. Improvements
Three Percent Interest Loan improvements may include all improvements as specified
under the regular Deferred Loan Program in Section VI.
B. Eli ibilit
Three Percent Interest Loans may be made to applicants who meet the following
criteria:
1. Applicant may have qualified at the time the application was submitted, but
while on the waiting list, income limits changed or applicant's situation
changed, making them- income ineligible per the Fifty Percent of Area Median
Standard. Applicant's assets must be insufficient to make required
improvements.
2. Applicant has no.other means for making required improvements, such as
inability to make minimum monthly payments or to qualify for an MHFA or other
loan.
3. Applicant must be at risk in some manner, such as being elderly with a fixed
income or being faced with a substantial health or safety issue as determined by
staff inspection.
R:cdadmin/housing/deferred loan/DL prodecural guide 04
40
May 2004
D. In administering an Emergency Deferred Loan, the HRA is aware that an
applicant that initially agrees to perform additional repairs may, at some time,
not pursue the additional repairs. However, the emergency nature of the repairs
to protect the health and safety of eligible residents warrants "the risk" as it
relates to future performance. Every effort will be taken to ensure that
Emergency Deferred Loan recipients follow through with appropriate repairs on
a first-come, first-serve basis.
XIV. GENERAL CONDITIONS FOR THE THREE PERCENT INTEREST LOAN
A. Improvements
Three Percent Interest Loan improvements may include all improvements as specified
under the regular Deferred Loan Program in Section VI.
B. Eli ibilit
Three Percent Interest Loans may be made to applicants who meet the following
criteria:
1. Applicant may have qualified at the time the application was submitted, but
while on the waiting list, income limits changed or applicant's situation
changed, making them income ineligible per the Fifty Percent of Area Median
Standard. Applicant's assets must be insufficient to make required
improvements.
2. Applicant has no other means for making required improvements, such as
inability to make minimum monthly payments or to qualify for an MHFA or other
loan.
3. Applicant must be at risk in some manner, such as being elderly with a fixed
income or being faced with a substantial health or safety issue as determined by
staff inspection.
R:cdadmin/housing/deferred loan/DL prodecural guide 04
40
May 2004
AGENDA ITEM # 3A
REPORT # 19
~~ STAFF REPORT
HOUSING AND REDEVELOPMENT
AUTHORITY MEETING
MAY 17, 2004
REPORT PREPARED BY:
REPORT PRESENTER:
DEPARTMENT DIRECTOR
REVIEW:
REVIEWED BY EXECUTIVE
DIRECTOR:
STEVEN L. DEVICH,
ADMINISTRATIVE SERVICES DIR.
NAME, TITLE
STEVEN L. DEVICH,
AD1I~INISTRATIVE SERVICES DIR.
SIGNATU
d
ITEM FOR HRA CONSIDERATION:
Consideration of the attached resolution authorizing the HRA not to waive the monetary limits
on statutory municipality tort liability.
I. RECOMMENDED ACTION:.
By Motion: Adopt the attached resolution authorizing the HRA not to
waive the monetary limits on municipal tort liability established by
Minnesota Statu#es 466.04.
II. BACKGROUND
The HRA purchases its insurance from the League of Minnesota Cities Insurance
Trust (LMCIT). A requirement of that insurance coverage is that each participating
municipality must annually either affirm or waive its statutory limits of liability. This
action must be taken on or before July 1 of each year.
The current statutory limits of liability for Minnesota cities are $300,000 for an
individual claimant and $1,000,000 per occurrence. Cities can waive those limits by
allowing an individual claimant to recover more than $300,000, up to the $1,000,000
occurrence limit or more if limits are waived and excess liability insurance is
0517 HRA Ins Limits
purchased. They may also waive the per occurrence limit and purchase excess
liability insurance.
~-~ Historically, the Richfield HRA has not waived its limits of liability. This is true of the
City of Richfield also. The majority of cities in Minnesota have not waived their
limits in the past.
III. BASIS OF RECOMMENDATION
A. POLICY
• The State Statute establishing liability limits for cities at the current
$1,000,000 level was established fairly recently and appears to be a
reasonable limit.
• Historically, just over one-half of the municipalities in Minnesota have not
waived the monetary limits on municipality tort liability as was established
by statutes 466.04.
• The HRA could waive its statuary limits in future years if the
Commissioners should decide to do so.
• The City of Richfield has historically not waived its limits of liability.
• i ne r-ir~'s insurance policy with the League of Minnesota Cities
Insurance Trust renews on July 1, 2004. This action must be completed
before that time.
• The HRA does not have to make a decision on purchasing excess liability
coverage at this time. Coverage such as excess liability may be added at
any time.
C. FINANCIAL
• There is a slight premium savings for political entities that affirm the
statutory monetary limits. For the Richfield HRA the savings would be
less than $1,000 for the coverage year.
• The HRA has historically not purchased excess liability coverage because
of the relatively high cost of such coverage. The cost for $1,000,000 of
excess coverage would be between $5,300 and $6,500 per year.
D. LEGAL
• The tort liability limits established by Minnesota statutes have protected
cities historically and no Minnesota court has ever established a monetary
award in excess of the statutory limits against a municipality.
• Each municipal entity must annually decide whether the City would
voluntarily waive the statute for both the single claims each occurrence
limits.
TERNATIVE
• ~t the I-iKA feels that any single claimant should receive more than the
$300,000 limit, the HRA could elect to waive the statutory monetary limits.
• If the HRA feels that the $1,000,000 per occurrence limit is not adequate, the
HRA could purchase excess liability coverage and subsequently waive the
limits of liability up to the amount of excess coverage purchased by the HRA.
~^"~ ~ V . ATTACHMENTS
(~ • Resolutic
VI. PRINCIPAL PARTIES EXPECTED AT MEETING
• None
HRA RESOLUTION NO.
RESOLUTION AFFIRMING MUNICIPAL TORT LIABILITY LIMITS ESTABLISHED BY
MINNESOTA STATUTES 466.04
WHEREAS, Minnesota Statute 466.04 provides for Municipal tort liability limits for
Minnesota cities; and
WHEREAS, the League of Minnesota Cities Insurance Trust has asked that each
city review the tort liability limits and determine if the respective city would choose to waive
it's limits; and
WHEREAS, such decision to affirm or waive the tort liability limits must be filed with
the League of Minnesota Cities Insurance Trust at the insurance renewal date.
NOW, THEREFORE, BE IT RESOLVED that the Executive Director is directed to
report to the League of Minnesota Cities Insurance Trust that the Richfield HRA does not
waive the monetary limits on the municipal tort liability established by Minnesota statutes
466.04.
Approved by the Housing and Redevelopment Authority in and for the City of
Richfield, Minnesota this 17th day of May 2004.
Thomas E. Harms, Chair
ATTEST:
Kristal Stokes, Secretary
m