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09-16-96 agendaCITY OF RICHFIELD, MINNESOTA MONDAY, SEPTEMBER 16, 1996 REGULAR HOUSING AND REDEVELOPMENT AUTHORITY MEETING COUNCIL CHAMBERS 7:00 P.M. CALL TO ORDER AGENDA APPROVAL OF MINUTES OF REGULAR HRA MEETING OF AUGUST 19,1996 1. OPPORTUNITY FOR CITIZENS TO ADDRESS THE HRA ON ITEMS NOT ON THE AGENDA 2. CONSIDERATION OF RESOLUTION REGARDING APPROVAL OF MODIFICATION TO RICHFIELD REDEVELOPMENT PROJECT AREA REDEVELOPMENT PLAN; ESTABLISHMENT OF INTERCHANGE TAX INCREMENT FINANCING DISTRICT; AND ADOPTION OF INTERCHANGE TAX INCREMENT FINANCING PLAN HRA LETTER NO. 56 3. PRESENTATION OF STUDY RESULTS REGARDING SHARED BUILDING PROPOSAL FOR RICHFIELD AMERICAN LEGION POST AND RICHFIELD VFW POST BY CONNOISSEUR RESTAURANT MANAGEMENT, INC. HRA LETTER NO. 57 4. CONSIDERATION OF MODIFICATION OF TRANSFORMATION HOMES PROGRAM CONCEPT HRA LETTER NO. 58 5. PUBLIC HEARING AND CONSIDERATION OF RESOLUTION REGARDING SALE OF 7216 FIRST AVENUE UNDER NEW HOME PROGRAM i HRA LETTER. NO. 59 • 6. PUBLIC HEARING AND CONSIDERATION OF RESOLUTION AUTHORIZING PURCHASE OF 7421 EMERSON AVENUE UNDER RICHFIELD REDISCOVERED PROGRAM HRA LETTER NO. 60 7. CONSIDERATION OF RESOLUTION ADOPTING PRIVATE ACTIVITY TAX EXEMPT FINANCING GUIDELINES HRA LETTER NO. 61 8. CONSIDERATION OF FIRST TIME ADVANTAGE LOAN PROGRAM, INITIATED AS RESULT OF MINNESOTA HOUSING FINANCE AGENCY GRANT HRA LETTER NO. 62 9. EXECUTIVE DIRECTOR REPORT 10. 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 861-9702. • HOUSING AND REDEVELOPMENT AUTHORITY . HRA Letter No. 62 Agenda September 16, 1996 Issue Statement: Consideration of First Time Advantage Loan Program, initiated as a result of an MHFA grant. Background: Richfield is often viewed as a great place for first-time buyers. However, many homes need updating, repairs, or other improvements to meet the buyer's needs.. Staff applied for a grant from the Minnesota Housing Finance Agency (MHFA) and has developed a loan program for first time buyers. The First Time Advantage Loan Program ("Advantage Loan") would provide an incentive to first-time buyers to purchase in Richfield; increase the livability and function of small or outdated homes; and increase the, range of housing options available to those who want to live in Richfield. In order for a project to be eligible for an Advantage Loan, certain conditions must be met: 1. Buyers must meet criteria based on Option A or Option B. • Option A. HRA Origination ~ Loan is provided post-closing ~ Buyer's income is at or below 80% of median income (see Attachment A). . ~ Maximum purchase price is $95,000. ~ Loan maximum (at 10% of purchase price) is $9,500 • Option B. Lender Origination ~ Loan is provided at closing and combined with first mortgage. ~ Buyer's income is at or below 115% of median income (see Attachment A). ~ Maximum end value of home is $110,000. ~ Loan maximum (at 10% of purchase price) is $11,000. 2. The Richfield Remodeling Advisor must visit the property and prepare an action plan to ensure viability of project. 3. The buyer shall provide estimates from two or more remo~elers for the work to be done. 4. The remodeler selected by the buyer shall be evaluated by the HRA to meet certain minimum standards. 5. The estimated value of the home prior to the improvements must be greater than or equal to $60,000. The Advantage Loan will be calculated based on ten percent of the property's appraised value. Therefore, no loan will exceed $11,000. If the HRA originates the loan, the full amount will be held and disbursed by the HRA. If the lender originates the loan in combination with the purchase mortgage at closing, the full amount will be held in an escrow account by the lender. In either case, minimum staff time is required. The loan will be a lien against the property, payable in full upon sale or conveyance of the property, or forgiven after 30 years. Funds for the loan will come from a grant from the Minnesota Housing Finance Agency (MHFA). The initial grant is for $50,000. If the average loan is $8,000, approximately six first-time buyers would be serviced and six properties repaired, updated and occupied. Recommended Motion: Authorize implementation of the First Time Advantage Loan Program, as funded by MHFA. Basis of Recommendation: 1. The First Time Advantage Program is homebuyer driven. The HRA and. remodeling contractors are facilitators. The program supports homebuyers' desire to invest and improve in Richfield. 2. To provide first-time buyers with an incentive to buy a Richfield home and remodel it to meet their needs, additional assistance is required. First-time buyers often do not have the extra cash to remodel, and may look for a newer home elsewhere. The Advantage Loan allows for the remodeling either immediately or within the first year of purchase. 3. Remodel and Design Advisor services are available for homebuyers under this program, as for all who buy and remodel in Richfield. 4. Staff involvement will be limited, regardless of whether the loan is HRA or lender originated. If HRA originated, funds will be administered as under the. Deferred Loan Program: proper documentation, including a completion certificate, sworn construction statement and lien waivers will be required prior to payment. If lender originated, a promissory note and mortgage document will be prepared and provided to the lender prior to closing, similar to the Transformation Homes Program. 5. Program guidelines have been prepared. The funding source is a $50,000 grant from MHFA. Grant funds may be applied for again next year, as demand warrants. Alternative Recommendation: Do not authorize the First Time Advantage Program and forfeit MHFA grant funds. Discussion/Decision Mode: Grant funds were awarded based on this program structure. Funds are currently available. Respectfully submitted, James D. rosser . Executive Director JDP:ds ATTACHMENT A First Time Advantage Program Requirements for Eligibility • Must be a first time home buyer or have owned home less than one year. Must have the following maximum annual income depending upon option chosen: Option A Maximum Option B Maximum Family Size (80% of median) (115% of median) 3 $37,450 $56,510 4 $41,600 $62,790 5 $44, 950 $67, 810 6 $48,250 $72,840 (Metropolitan area median income, as determined by federal standards.) • Must agree to be subject to a lien by the HRA for the amount of the remodeling loan, not to exceed $9,500 if originated post-closing (Option A), and not to exceed $11,000 if originated at closing (Option B). • CITY OF RICHFIELD, MINNESOTA • HRA Letter No.6i Agenda September 16, 1996 Issue Statement: Consideration of resolution adopting Private Activity Tax Exempt Financing Guidelines. Background: Under the Minnesota Municipal Industrial Development Act, Minnesota Statutes,. Section 469.152 to 469.165 (the "IDR Act"), the City of Richfield has authority to issue industrial, commercial, and health care revenue bonds or notes to attract or promote economically sound industry and commerce to the City. Under Minnesota Statutes, Chapter 462C (the "Housing Act"), the City is authorized to issue housing revenue bonds to finance multiple family residential housing projects for low and moderate income persons. and elderly persons. These projects must be embodied in a Housing Program, as defined in the Housing Act. Such financing for certain private activities may be of benefit to the City, and as such the City should consider requests for tax exempt financing subject to the provisions of law and any municipal guidelines in place. However, City approval of tax exempt financing is a privilege which may be extended to eligible applicants rather than a right. Tax exempt financing should be used on a selective basis to encourage certain types of development that offer a benefit to the City as a whole, including significant employment and housing opportunities. In instances where an applicant approaches a City for approval of private activity tax exempt financing, it is the applicant's obligation to demonstrate the benefit of such project to the City, both in writing and at a public hearing. The applicant should also understand that although approval may be granted by the City for the issuance of financing for a similar project or a similar debt structure, that would not be the basis upon which approval would be granted. Instead, each applicant for private activity tax exempt financing must be judged on the merits of the project as it relates to the public purposes of the Housing Act or the IDR Act and the benefits to the City at the time of the request for financing. In terms of benefits to the applicant, providing tax exempt financing may be a significant benefit to any particular activity being financed. In addition, the consideration by the City for -tax exempt financing involves a significant amount of administrative activity. Thus, in consideration of the benefit to the applicant of a tax exempt financing tool, the potential benefit to the community of an appropriate activity, and the administrative costs associated with processing such an application, it would be appropriate for the City to establish a set of consistent guidelines to be used for each such application for tax exempt financing approval. Contained within such a guideline process would be appropriate application of materials, administrative procedures, and a fee structure paid to the City from the ultimate proceeds of any approved financing. Such guidelines and fee provisions are relatively common in the Twin City metropolitan area, especially in communities where significant numbers of requests for tax exempt financing approval occur. Attached to the HRA letter is • a proposed set of Private Activity Tax Exempt Financing Guidelines which outline a process that may be approved by the HRA for such applications in the City of Richfield. The Guidelines provide for a sliding fee structure up to a maximum fee of $35,000 per issuance. If the HRA wishes to adopt the Guidelines as attached; a resolution accomplishing that purpose has been provided. The City has received a number of requests for private activity tax exempt financing in the past. The most recent request was from the owner of the Market Towers project. Staff believes that the City will be receiving more requests for private activity financing in the future, and as such, it is important that the City have in place a systematic process of guidelines and fee structures to deal with those requests before staff receives them. This item has been referred to the HRA for consideration by the City Council. Recommended Motion: Approve the attached resolution adopting Private Activity Tax Exempt Financing Guidelines. Basis for Recommendation: 1. The City Council has requested input from the HRA before adopting these guidelines. 2. The City of Richfield has statutory authority under the IDR Act and Housing Act to issue tax exempt financing for projects that would benefit the community. 3. Such approvals do not present a financial obligation for the City of Richfield. 4. Requests for private activity tax exempt financing are a benefit to the applicant as well as an administrative cost for the City of Richfield. 5. A number of other cities in the metropolitan area have adopted guidelines to deal with requests for such tax exempt financing approval, including a similar fee structure. Alternative Recommendation: 1. The HRA could decide not to adopt the uniform guidelines in dealing with these requests and deal with them as requests are submitted. 2. The HRA could decide to modify the proposed guidelines, including either increasing or decreasing the maximum. fee. Discussion/Decision Mode: This item has been included on the September 16 HRA meeting so that the City of Richfield may put in place a set of guidelines dealing with requests for tax exempt financing as soon as possible. Consideration of this matter on September 16 would allow the City to have set guidelines and fee structures in place before such requests are received. Respectful) submitted, . James D. osser City Manager JDP:ds HRA RESOLUTION NO. RESOLUTION ADOPTING PRIVATE ACTIVITY TAX EXEMPT FINANCING GUIDELINES WHEREAS, the City of Richfield has the authority to issue bonds and notes to assist in the financing of various private development activities with the City; and WHEREAS, providing of such financing assistance can be of a significant benefit to the activity financed; and should also be a valuable tool to the City in encouraging and fastening certain types of development; and WHEREAS, the public objectives can best be accomplished through the administration of consistent guidelines; and WHEREAS, the HRA has reviewed guidelines for private activity financing as proposed by the City staff and is fully informed as to its content. NOW, THEREFORE, BE IT RESOLVED by the HRA of the City of Richfield that the document entitled Private Activity Tax Exempt Financing Guidelines, a copy of which is attached as Exhibit A, is hereby approved and adopted. Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this 16th day of September, 1996. Thomas E. Harms, Chair ATTEST: Vern Luettinger, Secretary C] • CITY OF RICHFIELD, MINNESOTA PRIVATE ACTIVITY TAX EXEMPT FINANCING GUIDELINES i City Council Resolution No. 1996 City of Richfield 6700 Portland Avenue Richfield, MN 55423-2598 i B1YID106156 RC125-130 TAX EXEMPT FYNANCING GUIDELINES Table of Contents Page Part I General 1 Part II Guidelines 2 Part III Miscellaneous Matters 6 Part IV Application for Tax-Exempt Financing (Commercial, Industrial or Health Care) 8 Part V Application for Tax-Exempt Financing (Multi-Family Housing) 11 Part VI Addendum to Application for Tax-Exempt Financing 14 Part VII Indemnification Letter of Agreement 18 • • BMB106156 RC125-130 PRIVATE ACTIVITY TAX EXEMPT FINANCING GUIDELINES PART I GENERAL Under the Minnesota Municipal Industrial Development Act, Minnesota Statutes, Sections 469.152 to 469.165 (the "IDR Act"), the City of Richfield has authority to issue industrial, commercial, and health care revenue bonds or notes to attract or promote economically sound industry and commerce to the City. Under Minnesota Statutes, Chapter 462C (the "Housing Act"), the City is authorized to issue housing revenue bonds to finance multi- family residential housing projects for low and moderate. income persons and elderly. persons. Projects must be embodied in a Housing Program, as defined in the Housing Act. The Council is aware that such financing for certain private activities may be of benefit to the City and will consider requests for tax exempt financing subject to these Guidelines. The Council. considers tax exempt financing to be a privilege, not a right. It is the judgment of the Council that. tax exempt financing is to be used on a selective basis to encourage certain development that offers a benefit to the City as a whole, including significant: employment and housing opportunities. It is the applicant's responsibility to demonstrate the benefit to the City, both in writing and at the public hearing. The applicant should understand that. although approval may have been .granted by the City for the issuance of financing for a similar project or a similar debt structure, that is not a basis upon which approval will be granted. Each application will be judged on the merits of the project as it relates to the public purposes of the Housing Act or the IDR Act and the benefit to the City at the time the request for financing is being considered. If tax exempt financing is to be issued by the Richfield Housing and Redevelopment Authority, the Authority will conform to these guidelines. BMB106156 RC125-130 PART II GUIDELINES 1. The Council will consider tax exempt financing for commercial, industrial and health care projects under the IDR Act and housing projects under the Housing Act. An applicant for tax exempt financing pursuant to the IDR Act must submit to the City the application set forth in Part IV of these Guidelines . An applicant for tax exempt financing pursuant to the Housing Act must submit to the City the application set forth in Part V of these Guidelines. 2. Projects must be compatible with the overall development plans and objectives of the City and comply with the zoning and land use regulations of the City. 3. An application will not be considered by the Council until tentative City Code findings and requirements have been made with respect to zoning, building plans, platting, streets, and utility services. The application must be accompanied by the addendum set forth in Part VI of these Guidelines and must provide information as to the project's need for municipal services including, but not limited to, street improvements, water and sewer services, and police and fire protection. A report based on a review of the project by the Community Development Department must be presented to the Council prior to consideration of a resolution giving preliminary approval to the project. 4. The project must be a positive benefit to -the City. The project must be of a nature that the City wishes to attract, or an existing business-which the City wishes to have expand within the City, considering employment opportunities, incentive for further development, impact on City .services, and support for the industrial, commercial or health care operations currently located in the City. A housing project must provide significant housing opportunities for low and moderate income persons or the elderly. 5. The Council will, if requested, grant an applicant a pre- application review. The purpose of the pre-application review is to inform potential applicants of the possibility of certain rejection. The fact that the project is not rejected at the pre-application stage is not to be construed as approval of the. project nor as an indication that the project will be approved upon formal request to the Council. Requests for tax exempt financing may be rejected by the City whether or not the project was submitted to a pre-application review and regardless of the outcome or recommendation of that pre- application review. A request for pre-application review must be in writing, addressed to the City Manager, and set forth the name of the DJR40101 BU155-37 2 project, the type of improvement intended and the name, address and telephone number of the person who will be representing the potential applicant at the pre-application review, together with such additional information as the applicant desires to submit. 6. The applicant must select a qualified financial adviser or an underwriter to assist the applicant in preparing all necessary application documents and materials. The financial adviser will submit a letter that establishes. the financial feasibility of the project. Applications may, in the alternative, include a signed letter from a responsible financial institution indicating that the project is economically feasible and viable and stating that bonds can be successfully sold for the project or that an individual or institution intends to purchase all of the bonds. The applicant must receive approval from the appropriate state agencies, secure financing and commence construction within one year of the date of the resolution giving preliminary approval to .the project or the housing program. Upon application, the Council may approve an extension of the preliminary approval. The City will appoint bond counsel for the bond issue, which will normally be the City's regularly retained bond counsel. 7. Pursuant to the IDR Act and the Housing Act, consideration of an application for tax exempt financing must be done at a public hearing held by the Council. Modifications to the project after the public hearing and preliminary approval must be consistent with the scope of the project as proposed at the time of preliminary approval. 8. The City is to be reimbursed and held harmless for and from any out-of-pocket expenses related to the tax exempt financing including, but not limited to, legal fees, financial analyst fees, bond counsel .fees, and the City staff's expenses in connection with the application. Anon-refundable filing fee in the amount of $5000 to insure reimbursement of the above expenses must be included with the submission of the application... The applicant must execute a letter to the City undertaking to pay all such expenses even if they exceed the deposit. A form of the required letter is set forth as Part VII of these Guidelines. 9. Prior to closing and delivery of the bonds for the project, the applicant must .pay, or commit to pay as the case may be, administrative fees determined as follows: (i) Industrial, commercial and health care projects: • DJK40101 HU155-37 3 to the City, a one-time fee equal to 1/2~ of the first five million dollars of bonds plus 1/4~ on the remaining balance, with a maximum fee of $35,000.00. (ii) Housing projects A one time fee will be paid by the applicant to the Richfield Housing and Redevelopment Authority at the time of the bond sale closing in the amount of 1~ of the bonds, not to exceed $35,000.00: 10. The City Manager must annually submit to the Council a summary report of all project applications made in that year and financings completed for the year. The .report must include: a. Total number of applications processed; b. Total number and dollar volume of proposed projects; c. Total amount of bonds issued; d. Amount of tax base provided; e. Number of jobs created; and f. Number of new housing units constructed and occupied. i 11. Applications for financing must be made on the forms attached to these Guidelines. In addition, the applicant must furnish a description of the project, a plot plan, elevation of proposed buildings, landscape, lighting, and site preparation, together with a brief description of applicant and the proposed financing in such form as required at the time of application. 13. The Council may, in its sole discretion, impose conditions exceeding those required under the City building code in respect to exterior building materials, landscaping, signage lighting, and such other aspects as the Council may consider appropriate on a case-by-case basis. 14. The .Council may, in its sole discretion, withdraw its preliminary approval of a project any time if in its judgment the purposes of the Act will not be served by going forward with the project and its financing. • DJK40101 BU155-37 4 PART III MISCELLANEOUS MATTERS 1. Ratings. The City will give its most favorable consideration to proposed tax exempt bond issues that have the same rating as the City's obligations by Moody's Investment Service or Standard & Poor's Corporation. Issues carrying lower ratings or non-rated issues may be sold only to institutional or other investors on a private placement basis and must be in denominations of at least $100,000. The Council may depart from this guideline when in its judgment the project is of a level of merit and public purpose to justify the departure; and in case of such a departure the Council must state its reasons therefor in the resolution awarding the sale of the bonds. 2. Refundings. The Council will normally approve the refunding of a tax-exempt issue but only upon a showing by the applicant of {i) substantial debt service savings, (ii) the removal of bond covenants significantly impairing the financial feasibility of the project, or (iii) both (i) and (ii). In the case of refundings of bonds for which the administrative fees listed in paragraph 9 of Part II have been and are being paid, no new administrative fees are required; but the non- refundable application fee must be paid together with all City expenses in excess of that fee. In the case of refundings of bonds where no administrative fee has been paid, the administrative fees listed in paragraph 9 of Part II must be paid. The application form is to be appropriately modified. 3. Subsequent Proceedings. Where changes to the underlying documents or credit facilities of outstanding bond issues are to be made and require Council action, no administrative fee is charged but a non-refundable fee of $2,500 must be deposited with the City to cover administrative costs. No formal application form is required. 4. Issue by Another Political Subdivision. The City will consider requests for tax exempt financing of projects in the City by other political subdivisions. In these cases the non- refundable application fee must be paid and all procedures through the approval of the preliminary resolution followed. No administrative fee is charged. 5. City Contact. Initial contacts about tax-exempt financing are made by contacting: DJIC40101 HU155-37 5 Assistant City Manager City of Richfield 6700 Portland Avenue Richfield, MN 55423-2598 (61.2) 861-9702 All subsequent correspondence is to be similarly addressed with a copy to bond counsel: Kennedy & Graven Chartered Attorneys at Law 470 Pillsbury Center Minneapolis, MN 55402 Attention: David J. Kennedy or other bond counsel appointed by the City.. 6. Deadlines. The Council conducts all tax exempt financing matters at regularly scheduled Council meetings held on the first and third Monday of each month. Documents for Council consideration must be at the City office on the Tuesday proceeding the Council meeting at which the matter is to be considered. No exceptions to this requirement will be made. In the case of a publicly offered bond issue the documents, when submitted, may specify a maximum price and maximum effective interest rate if prices and rates have not .yet been established. C DJR40101 BU155-37 6 • • PART IV APPLICATION FOR TAX-.EXEMPT FINANCING (Commercial, Industrial or Health Care.) 1. APPLICANT a. Business Name - b. Business Address - c. Business Form (corporation, partnership, sole proprietorship, etc..) - d. Authorized Representative - e. Principal contact person and telephone number - 2. PURPOSE OF REQUESTED FINANCING: a. New Facility (describe) - b. Expansion (describe) - c. Refunding (attach explanatory letter) 3. GIVE BRIEF DESCRIPTION OF NATURE OF BUSINESS, PRINCIPAL PRODUCTS, ETC.: 4. ESTIMATED PROJECT COSTS: (Not required for refunding) Land $ Building Equipment Architectural, Engineering Costs of Issuance Capitalized Interest, including discount Other Total Financing Requested DJK40101 HU155-37 7 5. AMOUNT OF FINANCING REQUESTED: $ ( $ of project costs) 6. TYPE OF FINANCING PROPOSED: Bonds Tax Exempt Mortgage Expected Term of Financing Years Security: Mortgage Letter of Credit Guaranty (third party) Guaranty (personal) Unsecured .Other (specify) 7. BUSINESS PROFILE: (Not required for refunding) a. Is the business located in the City of Richfield now? b. Number of employees in City: 1) Before this project - 2) After this project - c. Approximate annual sales - d. Length of time in business - Length of time in business in-City - e. Do you have plants in other locations? If so, where? 8. NAMES OF: a. Corporate Counsel (name and contact person) - b. Underwriter - c. Underwriter's Counsel - 9. WHAT IS YOUR TARGET DATE FOR: a. Construction start - b. - Construction completion DJK40101 8 BU155-37 10. Attachments (Items b., c., d., e., f. and h. prepared by Bond Counsel): a. Project description materials - b. Draft resolution calling for public hearing - c. Draft comprehensive statement of Mayor - d. Notice of public hearing - e. Draft preliminary resolution - f. Draft application to Department of Trade and Economic Development with necessary attachments - g. Financial feasibility letter - h. Preliminary bond counsel opinion - i. Initial filing fee ($5,000) - j. Planning Commission recommendation and background material - k. Indemnification Letter of Agreement The applicant further states that it has been furnished a copy of the City of Richfield's Private Activity Tax Exempt Financing Guidelines and is aware of its content and agrees to be bound by its terms and the terms of the indemnification letter. Applicant BY DATE For Further Information Contact: Assistant City Manager City of Richfield 6700 Portland Avenue Richfield, MN 55423-2598 (612) 861-9702. • DJR40101 HU155-37 9 • PART V APPLICATION FOR TAX-EXEMPT FINANCING (Multi-Family Housing) APPLICANT: CONTACT PERSON:. ADDRESS: TITLE: PHONE NUMBER ( ) PROJECT LOCATION:- PROJECT NAME: DATE OF APPLICATION: PROJECT INFORMATION RENT UNITS Efficiency $ One Bedroom $ Two Bedroom $ Three Bedroom $ Parking (included. in rent/ not included in rent) $ Laundry $ Utilities included in monthly rent: OPERATING EXPENSES ~ of Gross (Annual) TOTAL PROJECT COST: $ DEVELOPER EQUITY: $ DEBT SERVICE: $ *HARD COSTS: $ LAND VALUE: $ SOFT COSTS: $ *(Hard Costs are all project costs the IRS has determined to be eligible items for depreciation.) DJIC40101 HU155-37 1 • ANTICIPATED INTEREST RATES: HRB: If the project was convention- ally financed, what interest rate would you expect to pay? SALES ASSUMPTION: How many years do you plan to hold the property before you sell? years. At what percent do you feel the value of the project will appreciate? EQUIPMENT: AMORTIZATION SCHEDULE: 30-Year Amortization Schedule? Yes No (Circle One) Other: DEPRECIATION METHOD: Years: Type: Amount of Total Basis: $_ $ of project cost is for equipment (e.g., washers/dryers) ANTICIPATED INCREASES:. ANTICIPATED VACANCY RATE: Revenuer ~ per year First Year: ~ Expenses: ~ per year After First Year: ~ CONSTRUCTION SCHEDULE Anticipated construction commencement date: Anticipated construction completion date: ADDITIONAL INFORMATION: I certify that the information provided above is correct and. .contains no misrepresentations or falsifications, omissions or concealments of material facts and that the information given is true and complete to the best of my knowledge. Signature Date Title DJK40101 1 1 BU155-37 The following items must be attached to the application: APPENDIX A A brief description of the organizational structure of Applicant, including parent subsidiary and affiliate organizations (if applicant is other than an individual). APPENDIX B Statement of Applicant's business. history, including any multi- family rental projects. APPENDIX C The name, address, and telephone number of: 1. The Applicant's legal counsel 2. The Applicant's accountant 3. The architect of the proposed Project 4. The engineer of the proposed Project 5. The general cont ractor of the proposed Project APPENDIX D 1. Present ownership of the proposed Project site and Applicant's 2. interest therein. Present zoning of the Project site and a description of what city. land use approvals are needed for this project. 3. The projected number of new employees to be added to the Applicant's permanent work force because of the Project. 4. Other financing. attempted or available to the Project including 5 any interim financing. Statement regarding whether or not this project has all . required city approvals. If the project does not have all of .the required approvals., list the approvals still needed and a tentative time schedule. APPENDIX E Indemnification Letter of Agreement. APPENDIX F Proforma Analysis of the Project DJIC40101 12 BU155-37 • PART VI ADDENDUM TO APPLICATION FOR TAX-EXEMPT FINANCING (Not required for refundings) CITY OF RICHFIELD Checklist of Required Submissions for Project Review 1. The following information, where applicable, must be submitted for review by the Development Review Committee at least three weeks prior to the Planning Commission meeting at which it is to be considered. a. A copy of the application b. A copy of the proposed plat (at scale of 1" - 100') c. Legal description (lot, section, township, village, county) d. Name of proposed subdivision, if applicable. • e. Graphic scale f. North arrow g. Date h. Property owners name and address i. Covenants, liens, and encumbrances j. Name and address of licensed professional engineer, surveyor, and/or land planner involved in the preparation of the sketch plat or proposed plan. k. Location of property lines 1. Existing easements m. Burial grounds n. Railroad rights-of-way o. Water courses p. Existing wooded areas • DJR40101 1 3 BU155-37 • q. Trees, eight inches or more in diameter measured four feet above ground level r. Location, width and names of all existing or platted streets or other public ways within or immediately adjacent to tract s. Names of adjoining property owners from- the latest County, City, or Township assessment roles within 300 feet of any perimeter. boundary of the subdivision t. Location, sizes, elevations, and slopes of existing sewers.,. water mains, culverts, and. other underground structures within the. tract and immediately adjacent thereto u. Existing permanent buildings v. Utility poles on or immediately adjacent to the site and utility right-of-way w. Approximate topography, at the same scale as the sketch plan x. The approximate location and widths of proposed streets y. Preliminary proposals for connection with existing water • supply and sanitary sewer systems, preliminary provisions for collecting and .discharging surface water drainage z. The approximate location, dimensions, and areas of all proposed or existing lots aa. The approximate location, dimensions, and areas of all parcels of land proposed to be set aside for park or playground use or other public use or for the use of property owners in the proposed subdivision bb. The location of temporary stakes to enable the Planning Commission to find and appraise features of the sketch plat in the field cc. Whenever the sketch plan covers only a part of an applicant's contiguous holdings, the applicant shall submit, at a scale of not more that 200'=1", a sketch in pen or pencil of the proposed subdivision area, together. with its proposed street systems and an indication of the probable future street and drainage system for the remaining portion of the tract. dd. A vicinity map showing streets and other general development of the surrounding area at a scale of 1"=10.0'. The sketch plat must show all school district n~caolol 14 BU155-37 lines and zoning district lines with the zones properly designated. 2. Required submissions for building permit review: Certificate of Survey a. Parcel number as recorded at the .County b. All land divisions to be recorded at County prior to obtaining building permit c. Parcel square footage d. A location map showing this parcel's. location within the plat Site Plan a. Existing topography at a scale of not less than 1"=100' with two foot contour intervals b. All required building and parking setbacks should be illustrated on the plan c. Building locations and square footages a d. Existing vegetation and other natural features including water bodies or water courses, rock outcrops, etc. Landscape Plan a. The location of all areas to be sodded or seeded b. The location and size of plantings, indicate both common and botanical names c. Planting details which clearly illustrate the manner in which each different material will be planted Lighting Plan a. Type of fixture, type of lighting (high pressure sodium, metal halide, etc.), and intensity of proposed lighting system b. Location and height of all fixtures c. The' petitioner should also supply an Isolux diagram (available from lighting distributor} to illustrate at least the intensity of light at the property lines. However, on major projects it is advisable for the petitioner to supply the plan showing the photometric contours of varying light intensity throughout the site. DJR40101 1 5 BU155-37 Signage a. The location, size, and design of all signs including a description of all materials to be used in the construction of said signs. Any proposed use of color, or use of lighting should be clearly described and illustrated. b. In the case of major developments the City encourages the development of sgnage programs to govern the use of signs thrdughout the project. For additional information regarding such programs, please contact the Planning Department. Parking a. Number of spaces provided, floor area, and occupant load b. Concrete curb area and design c. Bituminous area and design d. Parking lot striping e. Location of handicapped parking Buildings Plans a. Floor layouts b. Building elevations (front, sides, and rear, including detailed explanation and illustration of all exterior building materials) c. Rooftop unit screening (architecturally designed and compatible with building) Trash Handling Requirements of Zoning Ordinance (inside or screened) DJR40101 1 6 BU155-37 PART VII INDEMNIFICATION LETTER OF AGREEMENT The Mayor of the City of Richfield and Members of the City Council 6700 Portland Avenue Richfield, MN 5542.3-2598 RE: Application of for Tax Exempt Revenue Bond Financing by the City of Richfield Dear Mayor and Members of the City Council: This letter of agreement is given by ~ a under the laws of ("Applicant"), as required by the City of Richfield in connection with its consideration of an application for tax exempt revenue bond financing for the project described in the application. Applicant hereby covenants, warrants and agrees as follows: 1. Applicant agrees to pay or reimburse the City for any and all . costs and expenses which the City may incur in connection with its consideration of the project and the granting of tax exempt revenue bond. financing therefor, whether or not the project is preliminarily approved by the City, whether or not the project is approved by the State of Minnesota, whether or not revenue bond financing is finally approved by the City, whether or not the bonds are issued and sold, and whether or not the. project is carried to completion. 2. Applicant agrees to indemnify and hold the City, its officers, employees and agents harmless against any and all losses, claims, damages, expenses or liabilities, including attorneys fees incurred in their defense, to which the City, its officers, employees and agents may become subject in connection with the City's consideration, issuance or sale of the bonds for Applicant's project and the carrying out of the transactions contemplated by this agreement and any resolutions adopted, or agreements executed by the City in connection with the issuance of its bonds for this project. 3. Applicant hereby releases the City, its officers, agents and employees from any claims, causes of action, losses, damages, or liabilities which it may have against the City, its officers, agents,- and employees or which it may incur in connection with: the City's consideration of the application for industrial development revenue bond financing for Applicant's .project; the failure of the -City, in its discretion, to issue tax-exempt revenue bonds for Applicant's nsxaoioi 1 7 BU155-37 project; the issuance and sale of the bonds; the construction of the project; or any other matter or thing of any type or nature whatsoever which may. arise in connection with the foregoing. 4. Applicant is aware of the City's application and administrative fee structure for tax exempt financing and agrees and covenants that all such fees will be paid in the amount and at the times required. Dated: (Applicant) By Its nJxaoioi 1 8 BII155-37 • HOUSING AND REDEVELOPMENT AUTHORITY HRA Letter No. 60 Agenda September 16, 1996 Issue Statement: Adoption of a resolution authorizing the purchase of 7421 Emerson Avenue under the Richfield Rediscovered Program. Background: The property at 7421 Emerson Avenue has been selected for purchase under the Richfield Rediscovered Program. An appraisal has been conducted on the property. The negotiated purchase price and appraised value are the same, at $59,000. The property has been determined to meet program requirements for acquisition. The house has approximately 800 .square feet of living space with no basement, one bedroom, and a detached single garage that is in poor condition. Remodeling potential is limited due to layout and location on the site. Roof life is limited. The-house is now vacant. The site will be initially offered to New Ford Town and Rich Acres residents when several sites are available. Recommended Motion: Adopt the resolution authorizing: 1. The purchase of the property at 7421 Emerson Avenue under the Richfield Rediscovered Program for $59,000. 2. The Executive Director and HRA Chairperson to execute a purchase agreement and other documents to effectuate the purchase. Basis'of Recommendation: 1. The property meets program requirements for acquisition. 2. Funding for Richfield Rediscovered acquisitions is available. 3. The owner has voluntarily indicated an interest in selling the property to the HRA. 4. Purchase has been negotiated at the appraised value. Alternative Recommendation: Do not authorize acquisition. Discussion/Decision Mode: An agreement to purchase is ready to be prepared in final form. Respec ly submitted, James .Prosser Executive Director JDP:ds HRA RESOLUTION NO. • RESOLUTION AUTHORIZING PURCHASE OF REAL PROPERTY LOCATED AT 7421 EMERSON AVENUE FOR THE RICHFIELD REDISCOVERED PROGRAM WHEREAS, the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota (HRA) desires to purchase certain real property pursuant to and in furtherance of the Richfield Rediscovered Redevelopment Project (Project) heretofore adopted by the City of Richfield (City) and the HRA, said real property being described as follows: Lot 18, Block 14, Irwin Shores Addition WHEREAS, the HRA is authorized by Minnesota Statutes Section 469.012 to acquire real property within its area of operation; and WHEREAS., the property meets all program requirements for acquisition; and WHEREAS, the HRA has caused an appraisal of the subject property to be made by a qualified professional real estate appraiser and has negotiated a purchase price with . the owner based on stated values; and WHEREAS, funds have been provided by the HRA and are available for acquisition. NOW, THEREFORE, BE IT RESOLVED by the Richfield Housing and Redevelopment Authority: 1. The approved purchase price for 7421 Emerson Avenue is $59,000. 2. The Chairperson and Executive Director are authorized to execute a Purchase Agreement and other documents to effectuate purchase for the amount set forth in this resolution. Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this 16th day of September, 1996. Thomas E. Harms,. Chair ATTEST: Vern Luettinger, Secretary HOUSING AND REDEVELOPMENT AUTHORITY HRA Letter No. 59 Agenda September 16, 1996 Issue Statement: Public hearing and consideration of resolution regarding the sale of 7216 First Avenue under the New Home Program. Background: The construction project at 7216 First Avenue was authorized by the HRA as a cooperative project with Hennepin Technical College (HTC). The project is completed and sale is anticipated by October 1996. The selected purchaser is a four member, income-qualified family seeking to live in Richfield. Presently, the family is renting a duplex in Minneapolis. The purchasers meet the requirements stated in Attachment A. Public hearing and HRA authorization of the sale by resolution is required prior to closing. The purchasers are making a down payment of $4,000. They have applied for a conventional mortgage in the amount of $86,000. The difference between the estimated market value of $115,000 and the initial purchase price of $90,000 ($25,000) is provided by the HRA as a second mortgage. Project costs are covered by the • buyer's down payment and first mortgage. The second mortgage accomplishes the following: 1. Makes the initial purchase price affordable. 2. Prevents a speculative purchase in which the buyer might benefit from selling the home quickly. The HRA will pay one-and-a-half points for mortgage discounting (approximately $1,300) and the cost of title insurance (approximately $200) at closing. After closing, the Hennepin Technical College (HTC) contract of $77,909 will be paid. These costs have been anticipated in the budget and will be paid from the proceeds of sale. The buyer has been qualified by the lender. Recommended Motion: It is recommended that following the public hearing, the HRA adopt the resolution which authorizes the disposition of the HRA owned property at 7216 First Avenue. Basis of Recommendation: 1. A qualified family has been identified as a purchaser for 7216 First Avenue and meets program requirements. • 2. Purchase agreements cannot be processed further by the lender without HRA authorization of sale. 3. A public hearing notice has been published in the Sun-Current which allows the HRA to consider the sales at the September meeting. 4. Sale for residential purposes is consistent with the City's Comprehensive Plan. 5. The house at 7216 First Avenue is completely finished. The HRA had an opportunity to inspect the completed work during an open. house that was held July 15, 1996. Alternative Recommendation: Do not adopt the resolution. However, this would cause a delay in the sale of the property and would increase HRA holding costs. Discussion/Decision Mode: Authorization of the sale is required at the September 16 meeting so that the buyers of 7216 First Avenue can finalize mortgage financing for a prompt closing. Respectfully submitted, James osser Executive Director JDP:ds HRA RESOLUTION NO. RESOLUTION AUTHORIZING SALE OF REAL PROPERTY LOCATED AT 7216 FIRST AVENUE WHEREAS, the Housing and Redevelopment Authority (HRA) owns certain real property located at 7216 First Avenue, ,legally described as Lot 5, Block 3, Wooddale Second Addition; and WHEREAS, the HRA acquired the property so that Hennepin Technical College (HTC) could construct a new single family home at 7216 First Avenue, to be sold by the HRA to a moderate income family; and WHEREAS, the Dalluge family has been identified as qualified purchasers for 7216 First Avenue; and WHEREAS, the conditions of sale include a total sales price of $115,000; a first mortgage of $86,000 payable to the lender; a lien of $25,000 payable to the HRA and $4,000 downpayment; and WHEREAS, the sale of 7216 First Avenue may be authorized by the HRA • following a public hearing which considers the disposition of the property; and WHEREAS, that hearing has been held following proper publication of notice. NOW, THEREFORE, BE IT RESOLVED by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota that the HRA Chairperson and Executive Director are authorized to execute the purchase agreement and other required documents so that the disposition of HRA owned property at 7216 First Avenue occurs as presented herein. Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this 16th day of September, 1996. Thomas E. Harms, Chair ATTEST: Vern Luettinger, Secretary ATTACHMENT A 7216 FIRST AVENUE New Home Program Eligibility Requirements for Home Buyers • Have a three to six member family (a family is defined as persons related by blood, marriage or operation of law). Be a first time home buyer (or have not having owned in three years). • Have the following maximum annual income depending upon family size: Family Size Maximum Income 3 $37,450 4 $41,600 5 $44, 950 g $48,250 This income is 80% of the metropolitan area median income-an accepted CDBG program income level. • Have the ability to make monthly payments on an $86,000 mortgage, pay $4,000 down, and pay closing costs required of the buyer. • Agree to be subject to a lien by the HRA for the difference between the initial sales price and the actual value. I~1 HOUSING AND REDEVELOPMENT AUTHORITY HRA Letter No. 5s Agenda September 16, 1996 Issue Statement: Consideration of modification of the Transformation Homes Program concept. Background: The HRA's Transformation Homes Program provides deferred loans to homeowners that implement remodeling costs in excess of $50,000. The program began in 1994 after a successful demonstration project with Quam, Sumnicht and Associates (QSA) at 6500 James Avenue. The HRA's deferred loan equals 15 percent of the remodeling contract, has zero interest, requires no monthly payment, and has a 30 year term. Two years have passed, 15 homes have been remodeled, the average remodeling contract has been $67,000, and the average appraised property value upon completion has been $150,000. A loan by loan summary is attached. Compared to the successful Richfield Rediscovered New Construction Program, a similar number of participants and end values are observed through remodeling. Staff continues to explore ways to expand the volume and markets for transformation. Three policy and program revisions are proposed: 1. Provide 15 percent deferred loans for remodelma contracts above $100.000. The present program provides 15 percent deferred loans for $50,000 to $100,000 contracts. The $100,000 ceiling was originally designed to ensure sufficient funds were budgeted to accommodate requests. Sufficient funds are budgeted. Larger remodeling projects do not require an excessive amount of additional deferred loan monies: $120,000 = $18,000 loan; $140,000 = $21,000 loan. 2. Provide 10~ercent deferred loans for remodeling contracts between $30.000 and. 50 000. Norwest Bank Richfield partners with the HRA in providing the permanent mortgage financing for homeowners initiating value added remodeling. Norwest recommends additional incentive for this size of remodeling: $30,000 = $3,000 loan; $45,000 = $4,500 loan. 3. Consider a s~ecial.grant that facilitates purchase/remodel nroiects that result in property values in excess of $200.000. Significant purchase/remodel protects are encouraged but the financial risks are great. With the properly sized financial support structured as a grant rather than a loan, major remodeling might be stimulated. Property tax benefits similar to Richfield Rediscovered might be achieved. A direct deferred loan repayment to the HRA does not occur. However, the indirect benefit to the property tax jurisdictions still occurs. QSA will be at the September 16 HRA meeting to answer more detailed questions about the third proposed program revision as a demonstration concept. Steve Quam and Dave Sumnicht seek to remodel homes to an end property value in excess of $200,000. To accomplish this, they need awrite-down equal to the per property write- down provided by Richfield Rediscovered, typically $25,000 to $30,000. QSA wishes to duplicate, through remodeling, the property tax increases that the HRA creates when purchasing substandard properties, removing the substandard houses, artd selling the vacant lots. The attached comparison provides greater detail. Recommended Motion: Authorize the following changes to the Transformation Program: 1. Provide 15 percent deferred loans to homeowners above a $100,000 remodeling contract. 2. Provide a 10 percent deferred loan for remodeling contracts of $30,000 to $50,000. 3. Provide a grant equal to 10 percent of the purchase/remodel cost when a property value at project completion will exceed $200,000. Basis of Recommendation: . 1. The Transformation Program is successful. 2. Program modifications will encourage more transformation. 3. Three remodeling contracts near or above $100,000 have occurred in the past year. Sufficient resources are available to support larger remodeling initiatives. 4. The HRA's lender partner Norwest recommends that incentive loans for remodeling in the $30,000 to $50,000 range will stimulate more remodeling. 5. Few purchase/remodel projects with end property values in excess of $200,000 have occurred. The financial risk to the building and buyer is great. Two Richfield Rediscovered homes have exceeded the $200,000 property value. The market for remodeling to this value has not been sufficiently tested. 6. QSA indicates that the market exists if the transformation assistance is in the form of a grant. The payback requirement of a deferred loan makes a project financially infeasible feasible. The long term property tax benefits to the City are similar to those provided by Richfield Rediscovered. 7. Preliminary analysis indicates that it may not be possible to create a tax increment project that provides a direct financial return to the HRA for a grant contribution. Staff will continue to explore this and other options for securing some return on the grant. 8. Funds are available; transformation is funded from proceeds of sale of Richfield Rediscovered vacant lots. Alternative Recommendation: 1. Authorize some of the proposed changes. 2. Make no changes to the Transformation Program. 3. Modify the program further. Discussion/Decision Mode: QSA has a remodeling opportunity that is time sensitive and requires an HRA response in September. The other changes are supportive to a major Transformation Program marketing initiative which is proposed for early 1997. Respectf Ily submitted, James .Prosser Executive Director • JDP:ds • ~, BSOCititi'.S~ ttC. • • September 9,1996 Mr. Tom Harms, Chair, and Members of the Richfield HRA City of Richfield 6700 Portland Ave. So. Richfield, MN 55423 Dear Chairman Harms and Members of the HRA: QSA, Inc., requests an opportunity to present a proposal for the expansion of Richfield's Transformation Homes program. As you know QSA built and promoted the transformation home at 6500 James Ave. So., which helped the HRA kick off the transformation concept. Since then, at least one bank has developed a special financing loan for transformation homes and the HRA has created a transformation home loan that encourages home reconstruction. Nevertheless, there have been only a limited number of homes "transformed" in Richfield, and then, only by homeowners already living in their homes. No one has greater interest than QSA in creating a program by which home developers can also cooperate in promoting Richfield Transformation Homes. After several years of considering (and trying to initiate) new ways to let home developers make a business of home transformations (by bringing new buyers to the process), we believe it is time to raise again, the suggestion that the HRA create awrite-down program similar to the one used for Richfield Rediscovered homes. The timing of this request is driven by our discovery of a potential prototype home that is uniquely available to us for this type of program. This potential transformation home, which has potential for a transformation valued over $200,000 is to go on the open market in the near future. With appropriate incentives that would benefit both the city's tax base and home developers, QSA, Inc. would seriously invest our time and effort with a goal of initiating a number of home transformations in the coming year. Yours truly, Steve Quam President 6421 James Avenue South Richfield, Minnesota 55423 Telephone 612.861.2026 e-mail gsa@bmn.net • TRANSFORMATION PROGRAM CONCEPT COMPARISON Program Element Richfield Rediscovered QSA Transformation Concept Cost of Acquisition Cost of Demolition Cost of Remodeling Total Project Cost: $55,000 (average) $ 5,000 (average) Not Applicable $60, 000 $120,000 (single example) Limited demolition based on remodeling plan $120,000 to $130,000 (single example) $240,000 - $250,000 Return on Investment $30,000 (proceeds of sale) $30,000 (TI over 25 years) $220,000 (sale price to QSA) $24,000-$25,000 (proposed grant - no return) Property Value at Completion $145,000 $220,000 (projected) (1996 average on 7 homes completed) Homestead Tax at Acquisition $ 800 (average) $ 2,400 (estimated) Homestead Tax at $ 3,100 (estimated on the $ 5,200 (estimated) Project Completion 1996 average above) Increased homestead taxes to $ 2,300 (collected as Tax $ 2,800 (not collected, an all taxing jurisdictions as a Increment) indirect benefit as a result of project result of remodeling) *Numbers are rounded to the nearest $1,000 and provided for discussion purposes. 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(CRM). Background: In December 1995 the HRA retained the services of CRM to determine the feasibility of the American Legion and VFW sharing a single building. The introductory report was presented to the HRA in March 1996. Attached is a copy of the final report. Pages three through six contain the executive summary. The study concludes that a shared building would be viable if it were designed to contemporary standards and operated on the basis of a sound business plan. Recommended Motion: Discuss the presentation made by Mr. Jim Domoracki, President of CRM, regarding the final report for the shared building for the American Legion and VFW. Basis of Recommendation: 1. The HRA retained the services of CRM to determine the feasibility of a shared facility. 2. It would be appropriate to hear a verbal presentation of the report and ask questions regarding the conclusion. 3. The working group of American Legion and VFW officials concur with virtually all of its findings. Alternative Recommendation: 1. Refuse to hear the report. 2. Delay presentation of the report. Discussion/Decision Mode: While the study has been completed, Mr. Domoracki is a valuable part of the effort to provide this shared facility. His services as a consultant on this effort will be utilized as the project proceeds. Re ully submitted, Ja , D. Prosser Ex ive Director JDP:ds • RICHFIELD AMERICAN LEGION & RICHFIELD VFW NEW FACILITY REPORT Prepared By Connoisseur Restaurant Management, Inc. July 16,1996 • Table of Contents Scope of Report .................................. 2 Executive Summary ............................ 3 Sources of Information ........................ 7 ~ Membership Status .............................. 8 Existing Financial Support ................ 10 Member Survey ................................. 13 Membership Survey .......................... 15 Survey Analysis ................................ 18 Member Interviews ........................... 29 New Facility Club and Post Features 34 New Facility Component Data.......... 37 Summary ........................................... 40 • ` .RICHFIELD 1 SCOPE OF REPORT Connoisseur Restaurant Management, Inc. (CRM) has been retained by the City of Richfield to prepare a report addressing the issue of combining the Club facilities of the Richfield American Legion Post and the Richfield VFW Post. This report is limited in its scope and concentrates on addressing the issues related to the financial viability of this proposed mutual development. This report will concentrate on the analysis of information gathered from a representative number of American Legion and VFW members, the theoretical costs to construct the proposed facility and the potential viability of the new Club facilities. The information utilized in the generation of this report included the input of various officers and directors of the Richfield American Legion and VFW Posts. A survey of 1000 randomly selected American Legion and VFW members was conducted by mail to solicit the preferences of the general Club membership. Personal interviews were also conducted of 50 randomly selected members at the existing American Legion and VFW Clubs. These personal interviews were conducted to supply information from members who are actively using the existing Club facilities. CRM also conducted interviews with architects, equipment suppliers and interior designers in an effort to ascertain the theoretical cost factors involved with the construction, equipping and operation of a new, combined facility. Through our research and with the intelligence gathered from the sources mentioned above CRM will propose a suggested size, cost, and variety of function for the new combined American Legion and VFW Post Club facilities. RICHFIELD • EXECUTIVE SUMMARY • This report concentrates on the American Legion and VFW member preferences regarding the development and operation of a combined veterans club facility. • Contained within the body of this report will be suggestions regarding the possible size, function and cost to develop and construct the new facility. • In an effort to gain input from the existing. American Legion and VFW members regarding the utilization of a new facility, CRM conducted a survey through. the mail. • CRM mailed a survey to 1000 randomly selected American Legion and VFW members currently listed as active on the membership rosters. • CRM surveyed 500 members from each organization. • 235 members completed and returned the survey. • 23.5% return is a very high participation percentage and indicates a high degree ofinterest in the subject matter by the rank and file members. • The key issues addressed in the body of the survey included: 1 Frequency of Club usage by present membership. 2 Components of existing Club facilities most recognized or appreciated by membership. 3 Components of existing Club facilities least appreciated or are the largest areas of concern for the membership. 4 What components of the Club facility should be incorporated into the design and operation of a new facility, should one be built. 5 When not utilizing their Club what retail facilities are the members presently supporting. 6 Establish what percentage of the rank and file membership would be in favor of either remodeling their existing Club facilities, building a new Club facility or building a new Club facility in conjunction with their neighboring Richfield • Veterans Club. RICHFIELD 3 • 30% of the survey respondents were in favor of remodeling the existing Club facilities. 30% were not in favor of remodeling their existing Club facilities. 40% of the responding participants .expressed no opinion in either way regarding a proposed remodeling project. 30% of the responding participants were in favor of building a new building independent. of any other organization. 30% of the respondents were not in favor of building a new facility independent of any other organization. 40% of the respondents had no opinion. • 75% of the respondents were in favor of the construction of a new facility for a combined American Legion and VFW Club. 15% of the survey respondents were not in favor of building a mutual Club facility. 10% of the survey respondents had no opinion regarding the construction of a American Legion/VFW Post and Club facility. • CRM also conducted 50 personal interviews of American Legion and VFW members at the Club locations. • The interviews were structured to address basically the same questions contained in the mailed survey. • Generally speaking the members interviewed at the Club had a more favorable opinion of the existing Club facilities than did the member:> questioned through the mail survey. The area of greatest difference in responses between the interviews and the mailed surveys were in regard to the questions related to remodeling or rebuilding a new Club facility. • Only 22% of members interviewed were in favor of remodeling the existing Club facilities with 78% being opposed. • 43% of respondents were in favor of building a new separate Club facility with 57% being opposed.. 68% of the interviewed members were in favor of building a new joint Club facility between the American Legion and Richfield VFW, with only 32% being opposed. We believe this percentage in favor of building a new joint Club facility as stated by members actively utilizing the existing Clubs is indicative of the strong opinions the rank and file membership have in favor of the proposal. • If a joint facility were to be developed we would recommend the RICHFIELD 4 facility include. the,following components: • Dining rooms, including open dinning and small private dining and/or meeting rooms • Banquet rooms, one large room dividable into four smaller rooms • Bar area including bar seating and table seating • Kitchen, including prep and production areas • Public space and rest rooms, two sets • Game room, including electronic games and billiard tables • Storage areas for bar, kitchen and banquet • Offices, property management and general staff • Post offices, separate VFW and American Legion offices • Miscellaneous areas, to include storage rooms for VFW and American Legion Posts, equipment maintenance and mechanical rooms. • Total square footage for combined facility would be estimated at 24,000 sq. ft. • Development, construction, equipment, and mill work expenses are estimated at $4,961.,000-but can vary with design. • Development cost does not include the cost of land. Land value estimates were not available at the time of this report. • Approximate land area required is 3.0 to 3.5 acres. • The location of the joint facility would need to be in the general Richfield area in order to accommodate the expectations of all parties involved. • The time necessary to design, bid, construct and open the new facility is estimated at 15 months from the point of authorization. RICHFIELD 5 The sales potential for the new facility in the first year is conservatively estimated at $3 million in annual food and beverage revenues and $5 million in annual .gaming revenues. We believe by year four the food and beverage revenues for the new facility can increase to $5 million in annual sales and $7 million in gaming revenues. • The above referenced sales estimates are highly subjective and greatly influenced by the strategic decisions made by the Club's directors regarding its operation and the quality of the management personnel supervising the operation. • In order, for the new facility to realize the forecasted sales levels it will be necessary for management to have a high degree of experience in developing and operating high volume food and beverage facilities. • Based on the information we have received from the officers, directors and members of the Richfield American Legion and VFW Clubs we believe there is sufficient support within these organizations to enable a shared facility to become financially viable. • Based on the information gathered from the surveys mailed to the members and the personal interviews conducted of Club members, we believe there is a very strong interest on the part of the rank and file memberships of both the Richfield American Legion and VFW Posts to justify the development of a new shared facility for use by these two organizations. RICHFIELD • SOURCES OF INFORMATION The information contained in this report is a reflection of the data supplied Managers, Directors to Connoisseur Restaurant Management, Inc. by the managers, directors, and Members select committee members, and a representative sampling of the rank and file members who belong to the Richfield American Legion and VFW Clubs. Additional information was provided by the City of Richfield and its Community Development Department. The statements made in this report reflect the data gathered from all of the entities involved. Through the course of our research,. personnel from CRM have attended more than ten executive meetings attended by various Meetings, surveys officers and directors of the Richfield American Legion and VFW Clubs and interviews as well as officials of the City of Richfield. In addition CRM conducted. a survey through the mail of 500. members from each, the American Legion and VFW Clubs, as well as 50 personal interviews of Club members. It is with the input of these entities and individuals that the intelligence contained in this report was created. Both, the American Legion and VFW Clubs are experiencing many similar Report information effects to their business operations and we do not attempt to separate the . generally applies to both veterans Clubs two Clubs or their present conditions in the contents of this report. We suggest to the readers of this report that they consider what is contained herein to be applicable to both or either club. • RICHFIELD MEMBERSHIP STATUS According to the officers of the Richfield American Legion and VFW Posts, the membership rosters of both organizations have been declining 5 years or more of consistently for at least the last five years and probably longer. The declining membership directors of both organizations are aware of this membership decline and the factors contributing to it. These officers believe the decline in membership will continue into the future unless something is done to entice new members to join the organizations. There are multiple reasons causing the continual membership decline. As .the existing membership continues to age natural attrition begins to thin Inability to attract new the number of members who were participants in the second World War members and Korean wars. Geographic changes among this group also have affected the number of active members as more senior citizens relocate to warmer climates. The inability of both Clubs to entice veterans of the Vietnam war era into joining the Clubs has hampered their ability to fill the open member spaces with newer and younger participants. The fact that our nation has generally been at peace with the world militarily for the last 25 years has kept the number of people participating in military services at a relatively low number. The elimination of market Many factors for advantages that these Clubs enjoyed such as the segregated liquor licenses membership decline have diminished the Clubs uniqueness and market ability. Finally, the inability of the clubs to stay current with their retail competitors has created more buying opportunities for the members outside of their Clubs. All of these factors have contributed to some degree to this position of continual membership decline. This continual decline creates a persistent problem of financial viability for the American Legion and VFW Club operations. Generally speaking, the Poor prognosis for market base that generates support for the operational functions of the clubs if membership Clubs is limited to their membership. As the membership rosters decline, continues to decline the number of people available to lend financial support to the Clubs decline as well. Like any other industry or business, if the market support for the Clubs continues to erode it will only be a matter of time before the financial prognosis for the Clubs becomes terminal. According to the financial data available to us, the two Clubs have posted operating losses a total of 8 times within the last five years. One Club has Years of financial 5 consecutive years of negative operating results while the other Club has decline 3 years of negative performance. Without something of substance to positively influence the number of members belonging to the Clubs or their degree of financial support we do not believe either Club will be RICHFIELD 8 financially viable within five years.. Should anything of importance negatively impact the Club operations such as a change in the gaming laws Clubs must find new affecting their pull tab sales or the loss of the contract restaurant operator members or face in the case of the American Legion Club, then we believe the Clubs would financial insolvency reach a point of insolvency much quicker than our five year projection. It is our opinion that in order for either Veterans Club to maintain financial viability in the future it is imperative to find a way to increase the number of incoming new members as well as increase the degree of support from existing members. • RICHFIELD 9 EXISTING FINANCIAL SUPPORT In our opinion the existing financial support the Richfield American Legion and VFW Clubs are experiencing is inadequate to fund the long Years of financial term operation of the Clubs and Posts. As stated earlier in the report the losses combined Clubs have posted annual losses in eight of the last ten operating years. One Club reported operating losses in all five of the last five years while the other Club reported losses in three of the last five years. Both Clubs have utilized the fullest extent of the opportunities provided them by the gaming laws of the state of Minnesota to maximize the effects Gaming activities provided by their pull tab operations. The gaming operations have been contribute to continued responsible to a large degree for allowing the Clubs to continue to operation fi,tnction for as long as they have. Without the partial revenue available from the gaming operations we do not believe either Club would be able to continue to function in its present format. As the revenues of other VFW Posts and American Legion Clubs declined, many of them modified their operations in an effort to lower Modified club operation their expenses. Several of these Clubs have completely discounted their food operations and limited their operation to their bar and pull tab functions only. This reduction of service continues to erode the membership base of many of these Posts and Clubs. As the financial support for the Richfield American Legion and VFW Clubs continues to decline we believe these Clubs will be facing similar decisions in the near future. If the Richfield American Legion and VFW Clubs continue to use a strategy of cost reductions and limiting their offerings to the membership as the means for balancing their operating costs we don't believe the Clubs will ever be able to entice new members to their facilities or increase their current business levels. In 1995 the two Clubs jointly reported a roster of 8,588 members. From Members eat away from the information .gathered in our survey we were able to estimate a dining home 4.6 times per frequency of 4.6 visits per week to restaurants by the average member. week Stated another way the average member appears to dine away from home an average of 4.6 times per week. If that number is accurate, that would indicate that more than 39,500 meal are eaten away from home per week by the existing Club members. We estimate that approximately 1,600 of these 39,000 meals are eaten at the Richfield American Legion or VFW Clubs. That represents a scant 4% of the market available to support the two Veterans Clubs. It also RICHFIELD 10 means that 96%`of the times the members decide to eat a meat away from home they decide to eat that meal somewhere other than the American Legion or VFW dining rooms. It is understood that not all of the 8,588 recognized members of the two Veterans Clubs live within the Twin Cities metropolitan area. Neither of Not all members live the clubs could give us any information regarding what percentage of their within trade zone membership lives within the geographic support zone around the Clubs .and what percentage lives outside that zone. Because of that lack of information we were not able to refine our dining frequency estimates. The actual dining frequency is probably somewhat higher than 4% of the membership base. There is also a very obvious difference in member support between the two Clubs. The Richfield VFW, which manages its own food and .beverage operation, does a substantially higher volume of business than Club usage by members does the American Legion, which leases its restaurant space to an not equal between-clubs independent operator. The American Legion restaurant is considerably larger than the VFW facility yet it does less than half the food volume of the VFW Club.. This indicates a trong member preference for the quality of the product and presentations offered by the VFW Club over that of -the tenant operator in the American Legion Club. It is also indicative of how the degree of support .for either. of the Clubs can be affected by the quality of the product and operation. The volume of existing business has also been heavily influenced by the Low price points 'menu pricing strategies that have evolved over the years. Both of the Clubs offer moderately priced menus when compared to their general restaurant competitors. These depressed price points have contributed greatly. to both Clubs inability to generate revenues sufficient to finance improvements to their Clubs. We identified through our survey results that the members do appreciate buying opportunities and good dollar value but they do not place price as Low price points are not the most important criteria for selecting a dining location. In both the the most important issue mailed surveys and the personal interviews the members placed the quality of the product and the overall dining experience as more important than price when selecting the location for their next away from home meal. The low price points, inadequate revenues, and weak physical appearance of the Clubs have all contributed to the insufficient financial support both of the Clubs are presently experiencing. Unless the directors of the Clubs address the strategic decisions that have been made over time and reverse their operating philosophies we believe the existing volumes of business will continue to decline annually. RICHFIELD 11 MEMBER SURVEY On approximately May 1, 199.6, CRM mailed a survey form to 1000 randomly selected members of the Richfield American Legion and VFW 1,000 surveys mailed Clubs. 500 members were selected from each Club. Survey participants were limited to those members using Minnesota zip codes as their primary address. Any members using addresses outside Iviinnesota were eliminated from the rotation. A copy of the survey is included in this report for review by the reader. Of the 1000 copies of the survey that were mailed, 23 5 were returned to CRM completed. 220 of those completed were returned by the completion deadline and were included in the tabulation of results. 235 surveys returned Another 15 surveys were returned between two and four weeks after the deadline and the information contained in those 15 copies was not included because the time frame for tabulating the. results had already passed. Another 41 copies were returned to CRM unopened because the member was no longer a resident at that address and left no forwarding address. The Post Office keeps forwarding addresses on file for a period of 6 months only. As stated in the above paragraph, 23 5 of the 1000 surveys were completed and returned to CRM. This represents 23.5% of all surveys mailed. A 23% return ratio for this type of survey is a very strong response and indicates a high degree of interest on the part of the Club members regarding the future of the two Clubs. Several of the surveys returned to CRM were not completed in their entirety. Some respondents only partially answered certain questions with in the survey while other respondents skipped certain questions all together. These omissions were taken into consideration whenever possible in the analysis of the survey results. The purpose of the survey was to gain the input of the rank and file members of the two Veterans Clubs on a variety of different subjects. why members. do or Included in the survey were questions designed to address the issues of don't utilize their clubs how and why the membership utilizes or doesn't utilize the existing Club facilities. Other questions address the personal preferences of the members regarding what they would like to see in their Club operation and provide greater opportunity for them to support their Club. Some general demographic information was included in the survey General member. regarding age, income level, number of years they have been Club statistics members and how often they visit the American Legion or VFW Clubs. RICHFIELD 12 We also requested input from the members concerning how often they Where are members consume meals away from home and the restaurants they prefer to dining support when doing so. General information. about price points for select restaurant items and. information regarding why they choose the restaurants they do was also included in the survey. Finally, the survey addressed the very important issue of the future of the Richfield American Legion and VFW Clubs. The survey participants were asked for their preferences regarding the possible remodeling of their existing Club facilities, .the construction of a new independent Club facility or the construction of a new joint venture Club facility between the American Legion and VFW Clubs. Our analysis of this information can be found in this report immediately following the survey sample. • • RICHFIELD 13 EXAMPLE OF SURVEY DISTRIBUTED The following is a copy of the survey that was mailed to 1000 combined Richfield American Legion and VFW Club members randomly selected from the membership rosters. MEMBERSHIP SURVEY The following is a survey conducted on a random member representation from the Richfield American Legion and VFW Clubs. When completing the survey please follow the directions for each question as closely as possible. If you do not understand a question or are unsure of how to answer the question simply proceed to the next question. Please complete the "optional" section of the questionnaire if you are comfortable in doing so. The personal information requested in the optional section will help us better understand the demographics of those responding. If you omit the personal information, your responses will still be counted in the results analysis. Thank you for your help. Please begin by answering the following questions. What services are presently offered by your Club? Place a check mazk by all that apply. Private meeting rooms Restaurant open for breakfast daily Private or public meeting rooms Daily lunch restaurant Full service bar Private or public banquet rooms Daily dinner restaurant What characteristics or attributes do you like best about your Club? When choosing a location for lunch or dinner which of the following characteristics aze most important to you? On the line next to each item place a number from 1 to 10 signifying how important that item is. 10 is the highest rating, 1 is the lowest. Each item that is important should receive a high rating. You may assign 8,9 or 10 rating to several items. 1. The food is deliciously prepared 2. The portions aze generous for the price 3. The food is prepazed in a healthy way 4. The food is of the highest quality 5. The location is close to my home or work 6. The food presentation is appealing 7. The service personnel are helpful and knowledgeable 8. The atmosphere is attractive and comfortable 9. The over all value of the dining experience compazed to cost RICHFIELD 14 Who generally decides where you will go when you dine out? Choose one. Self and Spouse Decide alone Spouse alone What characteristics of your Club do you like most? Rate these items on a 1 to 10 basis with 10 being the most important. 1. The cost of the meal or visit 2. The quality of the service personnel 3. The atmosphere-.and comfort of the Club 4. The quality of the food What helps you decide where to go? Choose in order of importance 1 for the most important, 2 for 2nd most important, and so on. Previous experience at that location- Recommendation by fiiend/word or mouth Invited out as guests of others Coupon books "Special" discount price promotion Cost of dining experience Value of dining experience How many times per week do you dine away from home? Breakfast Lunch Dinner Other, list 5. The value received for money spent 6. The taste and presentation of the food How often do you visit your American Legion or VFW Club per month? Choose one. Never Once a month Two to three times Once a week or more What do you find most disappointing about your Club? Check all that apply. Prices are too high Inconvenient to get there Surroundings are not attractive Service is inferior Food quality is poor Experience not worth the price Don't offer what I want to buy Property not very clean Other Name your favorite restaurant for each category and estimate what you believe the cost for one meal including beverage was on your last visit. Name Cost Breakfast Lunch Dinner RICHFIELD 15 What one characteristic stands out most in your mind about each restaurant you chose? Breakfast Lunch Dinner If the American Legion or VFW Clubs were to remodel or in anyway change their facility or offerings, what would you most like to see them change? Choose the items most important to you by placing the number 1 by the most important item, number 2 by the next most important item.. Choose .only the items of concern to you. It is not necessary to identify each item. Improve the surroundings and atmosphere, make the Club feel better Create new menus with more desirable foods Generate less expensive selections on the menus Hire friendlier, more helpful service personnel Improve the quality of the food ff a new menu were introduced, what prices should be charged for the following items? Luncheon special of the day including entree, potato, vegetable and bread A hamburger and french fry combination A cup of soup of the day An 8 ounce tenderloin steak dinner with potato, salad and breads A fresh fish dinner with potato, salad and breads A half chicken dinner with potato, salad and breads A New York Strip steak dinner with potato, salad and breads Would you be in favor of your Club remodeling or building a new independent facility or building with another Club to increase membership base and insure future viability? Remodeling New Building Joint Facility In favor In favor In favor Not in favor Not in favor Not in favor OPTIONAL INFORMATION Please supply the following information if you would like. This information is optional and will be held in co~dence. Your name. You may omit your name but supply the other information. How long have you been a member of the Post or Club? Your age. Spouce's age. Are you retired? If still employed, how many hours per week Total annual income, including pensions. Less than S20 thousand S21 thousand to S35 thousand Over S35 thousand Is your residence: Within three miles of your Club? Within ten miles of your Club? More than ten miles from your Club? Thank you very much for your assistance in completing this survey. Your information will help those people managing and directing your Club's activities plan for a more successful future for the Club and its members. RICHFIELD 16 • SURVEY ANALYSIS 1. What services are presently ofi'ered by your Club? This question listed seven separate functions that are. presently offered by the Veterans Clubs for use by their members. The purpose of this question was to ascertain how many of the Club members actually know what opportunities are available to them by their Club. A partial reason for lack of support for certain Club functions could be because not enough members are aware that the function is available for them. The responses to the first question were as follows: 76% of the survey respondents believed that the Club has private meeting rooms available for use by its members. 46% of respondents believe that the Clubs restaurants were open for breakfast daily. 73% of the survey participants believe that there are private or public meeting rooms open for members and nonmembers participation. 84% believed that the Clubs are open for lunch on a daily basis. 89% believe the Clubs have full service bars available. 85% believe that there are public or private banquet rooms available for members and nonmembers. 78% believe that the restaurants are open on a daily basis for dinner. z W V W d so ss so ~s ~o 65 60 55 SO 10 35 unra ^AN[i i~Nw18~ W1,[ lOVC WIX RIYA78 w~ ~ iomnNC ~ ~nNc Wtili FAlir Ydli The general awareness of the Club offerings was very strong overall. In our opinion any lack of support being demonstrated by the Club members is not a reflection of the fact that they are not aware of what is being offered to them. RICHFIELD 17 Many of the respondents were able to articulate the exceptions that existed to some of these questions. For example, in response to the question "Is your restaurant open for breakfast on a daily basis," many of Members are aware of the surveys indicated a knowledge by the members that the restaurants aze what opportunities are o en for breakfast onl on weekends or for selects ecial occasion. Other available to them p y p respondents were able to articulate that the restaurants were not open every day for lunch or every day for. dinner, but were awaze that the restaurants were open most of those dining periods. Again, it is our opinion that any lack of support on part of the members is not a reflection of their ignorance concerning the functions and facilities being offered to them for their support. 2. What characteristics or attributes do you like best about your Club? Unlike many of the other questions in the survey which supplied answers very low response when for the respondents to pick from, this question required them to think for asked to articulate themselves what attributes about their Club do they like best. The response to this question was very disappointing. The respondents appeazed to have quite a bit of difficulty .articulating on their own what they enjoyed about their Club. The responses we did receive are as follows: Friendly, helpful, courteous staff and reasonable prices were the two items most frequently mentioned by the members with 29 mentions a piece. A comfortable atmosphere was the next most frequently item with 22 responses. Convenience of location followed next with 19. Activities (dances and music), 18 responses. Great place to meet friends, 9 responses. Other responses, 4. 3. When choosing a location for lunch or dinner which of the following are most important to you? This question was designed to ask the Club members how they value certain preferences in their decision making processes for selecting a location for lunch or dinner. The respondents were asked to rate the importance of each item on the list on a 1 to 10 basis. 10 meaning this RICHFIELD 18 item is very important-in their. selection process, and a 1 meaning it's almost never considered at all. The ranking of the responses from most important to least important are as follows: 1. Food is deliciously prepared, 1,636 points. 2. The overall value of the dining experience compared to cost, 1,535 points. 3. The atmosphere is attractive and comfortable, 1,528 points. 4. The service personnel are helpful and friendly, 1,508 points. 5. The food is of the highest quality, 1,507 points. 6. Food presentation is appealing, 1,459 points. 7. The portions are generous for the price, 1,420 points. 8. The food is prepared in a healthy manner, 1,373 points. 9. The location is close to work or home was last with 1,140 points. CLOSE LOCATION f#JILTNY FOOD GENEROUS PORTIONS APPEALMq F000 WON FOOD OUALIT' • HELPFUL PERSOWJEL ATTRACTIVE ATMOSPFERE DELICIOUS FOOD DIIiIWf; E%PERIENCE The top three items utilized by Club members when selecting a location for lunch or dinner are the quality of the food, its value and the comfort of the surroundings. It is our opinion that only one of the two Veterans Quality, value and Clubs presently produces food products that could be classified as comfort deliciously prepared or of high quality. Both of the Clubs offer reasonable value for the dining experience because of the low price points that have existed on their menus for years. Neither Club however, offers what we consider to be attractive or comfortable atmospheres in either of their dining rooms. Compared to their retail competitors both dining rooms are dated and lack the basic fundamentals for a comfortable dining experience. This may be part of the reason why the Clubs are presently experiencing the weak support levels they are. These items must be given full consideration in the design and operation of any future Club construction or modification. The top three items that the Club members responding to the surveys selected are also the top RICHFIELD 19 1100 1160 1200 1260 1300 1350 1400 1450 1500 1550 1600 1650 three items the restaurant industry utilizes as the foundation for its success. The stronger these three dining attributes can be developed the better chance the Clubs or any restaurant retailer will have for success. Previous experience # 1 criteria in dining selection 4. Who generally decides where you. will go when you dine out? The response to this question was generally in line with what we expected. 86% of the respondents claim that the decision is made jointly between the member and spouse. Only 14% stated that they decide alone and only 1 person out of the 220 respondents claimed that their spouse alone makes the decisions on where to dine out. The purpose of this question was to identify whether there were any unusual anomalies associated with the Club members that are not recognized in the general restaurant industry. There are not. 5. What helps you decide where to go when choosing a dining location? The responses are listed in descending order. Previous experience at that location, 145 points. 2. Value of the dining experience, 58 points. 3. Cost of the dining experience, 34 points. 4. "Special" discount promotion, 19 points. 5. Coupon books, 16 points. 6. Invited out as guests of others, 15 points. 7. Recommendation by fi-iend/word of mouth, 13 points. VALUE GUEST ~~~„~„~ ENDATION :NCE The overwhelming reason the respondents gave for selecting a dining location was their previous experience at that location. As mentioned previously in this report, the existing Club facilities fare rather poorly in two of the three most important dining criteria, quality of atmosphere and to some extent, the quality of product. All most 50% of the decision making process for selecting a dining location by a Club member is RICHFIELD 20 DISCOUNTS COUPONS predicated on their. previous experience at that location. Those combined statistics probably are indicative of why the Clubs are not able to solicit new membership. applications or greater support from the existing members. It will also be imperative for the directors and managers of any new Club facility to remember how important customer satisfaction is in attaining and maintaining a customer base. Food operations should not be leased out if Club directors have little or no control over product quality and only the best of management candidates should be recruited and hired to oversee future restaurant operations. 6. How many times per week do you dine away from home? The average survey respondent claims to eat. breakfast away from home an average of 1.1 times per week. 4.G meals per week The same respondents claim to eat lunch an average of 1.8 times per week eaten away from home away from home. Similarly, the respondents claim to eat dinner an average of 1.7 times per week away from home. On a combined basis the res ondents claim to consume an avers a of 4.6 P 8 meals per week away from home. The 4.6 meals per week eaten away from home is similar to but slightly below the national average for away from home dining. If the 4.6 figure is accurate and we multiply it by the 8,588 members currently listed on the 39,000 meals per week Clubs rosters, that indicates that there is a weekly market potential in excess of 39,000 meals being eaten away from home by the members. According to the customer counts estimates provided by Club management, approximately 1,600 meals are consumed at the two veterans Clubs in an average week. The current usage at the Clubs only represents 4% of the total market potential. We believe the dining frequency reported by the surveyed members is reasonably accurate when we compare it to national averages reported by the restaurant industry. We conclude the number of times the Club members consume meals away Dining frequency is not from home is not an issue. Their dining frequency is ample to provide a at issue sufficient customer base for the existing and any future Club facilities that may be constructed. The challenge for Club management is to address how they can achieve a stronger representation from these members when they choose to dine out. If a new facility is to be constructed it will be necessary for directors and management to design a facility that will be RICHFIELD 21 capable of capturing a higher percentage of the existing member market. 7. What characteristics of your Club do you like most? The characteristics of the American Legion or the VFW Clubs that the members appreciate the most are in the following declining order: 1. Quality of the food, 1,470 points. 2. Taste and presentation of the food, 1,456 points. 3. Value received for the money spent, 1,442 points. 4. Cost of the meal or visit, 1,361 points. 5. Quality of the service personnel, 1,342 points. 6. Atmosphere or comfort of the Club, 1,332 points. The numerical values assigned to each of the responses were very close in total number. The highest ranking answer received 1,470 points with the lowest ranking receiving 1,332 points. 1500 1450 1400 1350 1300 1250 ^ FOOD QUALITY ®FOOD PRESENTATION ~~' ^ VALUE COST ®PERSONNEL ®ATMOSPHERE The respondents did not differentiate sufficiently between their selections. Frequently, a respondent would place the number 6 next to two or three Survey responses not items and place the number 5 next to the remaining two or three items. clear By responding in this manner, the survey participants make it more difficult to get a clear reading on which characteristics of their Club they appreciate the most. Be that as it may, their answers did follow the same pattern demonstrated elsewhere in the survey. The quality of the food continues to be the number one characteristic that draws people to the Clubs and they feel. is the most important. Conversely, the atmosphere and comfort of the Club have been consistently at or near the bottom of the point totals. This seems to underscore the impression that the members find the physical surroundings of the Clubs to be below standards and to be least RICHFIELD 22 appreciated. 8. How often do you visit your Ctub per month? ' The following is a listing of how the members responded to the above question. 213 out of the 220. responses utilized in the survey analysis Members believe they Provided an answer to the above question. use their club more Never, 29 responses or 13..6% than they do Once a month, 72 responses or 33.8% Two to three times per month, 68 responses or 3.1.9% Once a week or more, 44 responses or 20.6% A substantial amount of conjecture and analysis can be applied against the responses to question number 8. The number of times the members utilize the Club as reported by the respondents of the survey does not match the number of visits made per month for actual Club usage. From our discussions with Club management we have ascertained the total number of meals served for lunch and dinner by the two Clubs to be approximately 7,000 per month. If we were to take the percentages associated with the responses to question number 8 and multiply them times the member population of 8,588 we would have a monthly membership. usage number in excess of 16,800 visits. That number is 2.4 times the number of visits actually made to the Clubs' dining rooms per month. Estimated visits are One of the explanations for this discrepancy could be that the members high believe .they utilize their Clubs far more frequently than they. actually do. It is not uncommon for someone to believe they are frequenting their Club four or more times per month when in actuality the visit total might be once or twice. CRM recognizes that this question could have been asked in a more detailed manner. We probably should have asked the respondents how often they visited their Clubs for the purposes of dining as opposed to just a visit. The term visit can encompass several activities that do not include utilization of the dining rooms. Committee meetings, frequenting the bar only, and monthly social gatherings or dances could also be included in the members totals when estimating Club usage. We do know however that 7,000 visits per month to the dining rooms of the two Clubs is a fairly accurate figure. Some energy could be expensed at a later date to ascertain how many Club members actually come to the Club to use the lounge or other facilities and do not see fit to patronize the dining rooms. If this situation actually exists, it is another potential indication of how poorly some Club members regard the food service of RICHFIELD 23 the Veteran Clubs. 9. What do you find most disappointing about your Club? In general the respondents were very reserved in their criticism of their Club. Of the 220 surveys that were returned only 289 total negative responses were checked off on the surveys. That's an average of 1.3 responses per survey. The main reason the number of responses was so low is that many of the people filling out the surveys. skipped this question completely. The comment section which was at the end of the question was also left blank on many of the surveys. The respondents did not take the opportunity to comment positively or negatively in response to this question. The responses that were included in the survey results are listed below in descending order with the most disappointing characteristic being listed first. Poor surroundings #1 negative answer 1. Surroundings are not attractive, 61 negative comments. 2. Service is inferior, 43 negative comments. 3. Inconvenient to get there, 36 negative responses. 4. Don't offer what I want to buy, 36 responses. 5. Experience not worth the price, 32 responses. 6. Property not very clean, 31 responses. 7. Food quality is poor, 29 responses. ^ HIGH PRICES ^ POOR FOOD QUALITY ®DONT OFFER WHAT 1 WANT ^ DIRTY PROPERTY EXPERIENCE NOT WORTH, THE PRICE ^ INCONVENIENT ^ INFERIOR SERVICE ^ UNATTRACTNE SURROUNDINGS 10 20 30 40 50 60 70 NUMBER OF NEGATNE RESPONSES 8. Prices are too high, 23 responses. Answers are consistent .Those who did respond to this question kept their answers consistent with with other questions those. questions earlier in the survey. The items that received the most negative marks were. the same ones that received the least favorable comments when the same question was reversed earlier in the survey. RICHFIELD 24 The attractiveness of.the surroundings continues to be the characteristic most disappointing in the eyes of the members. Conversely the quality of the food continues to score .well compared to the other items. 10. & 11. Name your favorite restaurant for each category, breakfast, lunch and dinner and estimate what you believe the cost of what one meal including beverage was on your last visit. What one characteristic stands out most in your mind about each restaurant you chose? These two questions combined to address three key issues in the minds of the respondents. When they are not dining at the American Legion or VFW Clubs, what restaurants are they frequenting? When they are at these restaurants, how much do they spend per visit? What is the most important characteristic that they like about each of these restaurants? All of these questions assist. us in understanding why the Club members select the restaurant choices that they do. What type of restaurants There is not a way for us to quantify the responses we received on the do members prefer surveys. The first question regarding what restaurants in each of the three meal categories the members support is meant to give us some idea. about. what type of restaurants the members prefer to frequent. The restaurant industry enjoys a diverse array of offerings to the Recognizing different consuming public and most of these concepts have certain attributes about restaurant attributes them which separate them from the rest of the competitors in the industry. Some restaurants place their ability to attract customers primarily on the quality of their products. Other restaurant concepts use price points as their main attraction. Still others might use speed and convenience as their reason why customers choose their restaurants over all of the others. Obviously there is a fair amount of overlap among some of these concept presentations. Some restaurants will try to be convenient and cheap. Another will try to offer quality and price value. Whatever the concept or marketing position taken by the restaurant company, they work hard to differentiate themselves from others in the industry. Not all consumers are adept enough to understand the positioning Members are aware of statements being made by the restaurant companies.. Based on the concept differences responses contained in the survey and the descriptions of the restaurant concepts, we believe that the membership group that was surveyed are very aware of the differences between these restaurant concepts and choose their restaurant locations very carefi~lly according to these • marketing statements. RICHFIELD 25 When listing the characteristics that stand out for each restaurant that they support, the members were very articulate in matching their preferences to the concept position of the restaurants. Those restaurants that market themselves based on price points were identified by the members as price point restaurants. Those restaurants that were mentioned who market themselves based on quality or diversity of products were recognized by the members as the restaurants they selected when looking for quality or diversity. Members aze perceptive What we learned about the members from these questions is that they are to market positions perceptive enough to know how a restaurant is trying to appeal to its customer base and that they are capable of appreciating and. responding to that effort. There is a definite and definable science to why the Club members choose the restaurants they do for their various away from home dining functions. 12. What would you like to see changed in your Club? The answers to this question are listed in declining order with the item the members would like most to see changed listed first. 1. Improve the surroundings and atmosphere, make the Club feel better 2. Improve the quality of the food. 3. Higher friendlier, more helpful personnel. 4. Create new menus with more desirable foods. 5. Generate less expensive selections on the menus. In total there were four questions in the survey that basically asked the Consistency in same question but coming from a different direction. What is it about the responses Club that you like the best as a member and what characteristics about the Club do you like the least. The purpose for asking a similar question in four different manners is to test the consistency of the responses. In all four cases the members were consistent in identifying the quality of the surroundings and atmosphere as their least appreciated characteristic that they would also like to see the greatest degree of attention for change. Atmosphere #1 azea for Although the members are basically satisfied with the food quality, they improvement still listed it as an area thay believed could be improved. Finally, price points seem to be of less concern to the members compared to the other issues. We would like to point out to the reader at this time that these responses again are coming from a random sampling of the general membership population. These responses were not segregated as they would be if you were asking members that are currently utilizing the Club. RICHFIELD 26 Over the years the Clubs have developed a profile of offering products of Those who use the moderate quality at reasonable to low prices. Over time the members Clubs accept the present whose preference is for stronger quality products and have a willingness value of their dining to pay for the quality have probably minimized their Club usage and have experience gravitated to other venues whose offerings are a better match for their preferences. What remains as the Clubs' customer base are those people who prefer the type, quality and price of product being offered by the two Veterans. Clubs. We stress this point because we understand many of those reading this report have vivid memories of members voicing their complaints when menu prices were increased by 25 cents in order to keep pace with inflation. Although those members may be vocal and memorable, they may not represent the preferences of the average member. To use an analogy, if your entire menu centered around serving eggs, biscuits and beans eventually all of your customers will be people who absolutely love eggs, biscuits and beans. Those who don't are gone. Management can be confused into thinking the only way to survive in business is to serve eggs, biscuits and beans. 13. If a new menu were introduced what prices should be charged for the following items? • Accuracy of menu price The purpose of this question was to test the degree of recognition that the estimates members have for standard pricing of common restaurant menu items. In order for any retail facility to be successful the products offered by the retailer have to be somewhat in line with the price expectations of the buyers. The degree with which the members view the price points on existing and future menus will have a lot to do with the potential success of a facility. Two-thirds completed the question Approximately two-thirds of the respondents to the survey attempted to estimate the price points of the seven items listed in the question. The remaining one-third were incomplete or omitted all together. CRM tabulated all of the responses to create an aggregate number and divided that number by the responses to obtain an average price per item. Lunch price estimates There was a noticeable difference in price accuracy between the lunch were accurate, dinner menu items and the dinner menu items. The price estimates supplied by estimates were low the respondents was very close to actual for the three luncheon related items. The price estimates supplied for the dinner related items were substantially farther from accurate. The average estimate for the lunch items was within 10 % of what these items would actually cost. The dinner items were approximately 25% below the price points normally • associated with those dinner entrees. >uci~ln z~ We believe the respondents are much more active as lunch customers than they are at dinner. This increased dining frequency would enable the members to be more familiar with lunch menus and their prices compazed to dinner. 14. Would you be in favor of your Club remodeling or rebuilding a new independent facility or building with another Club to increase membership base and insure future viability? 30% in favor of This question requests three separate responses to different parts of the remodeling question. The first part of the question addressed the possibility of remodeling the existing Club facilities. 30% of the respondents were in favor of considering remodeling the existing facilities while 30% were opposed. The remaining 40% did not register an opinion either way. 30% in favor of new The next question asked for their opinion on building a new facility. separate facility Again 30% ofthe respondents were in favor of considering the construction of a new independent facility while 30% were opposed. Once more, 40% of the respondents did not have an opinion either way. The potential for remodeling the existing facilities or building a new independent facility were equal in the eyes of the surveyed members. 75% in favor of new The possibility of developing a new facility jointly with another Veterans joint facility Club elicited by far the strongest response. 75% of the surveyed members were in favor of pursuing a joint development. Only 15% of the respondents were opposed. Only 10% of the surveyed members did not voice an opinion either way. Unlike the first two questions where the responses were evenly divided in favor of and opposed to those projects, 5 respondents out of 6 that voiced an opinion, were in favor of the joint development. That calculates to 83% of respondents with an opinion being in favor of pursuing a joint development. JOINT FACILITY NOT IN FAVOR RICHFIELD 28 MEMBER INTERVIEWS Between the weeks from May 20th through June 7, 1996, CRM conducted 50 personal interviews of American Legion and VFW Club so personal interviews members at the Club locations. All of the individuals interviewed were . active Club members utilizing the Club for dining purposes at the time of the interviews. The questions that were asked of the members at the interviews werevery similar in nature to those contained in the mailed survey. The inquiries were primarily regarding the members preferences for existing Club Questions similar to characteristics and what improvements would be of most interest in the ~~ event of future modification. As expected the responses from the members interviewed were somewhat different from the responses taken from the surveys. The interviewed Responses differed members had a greater degree of awareness for when the facility was somewhat from survey open and what types. of services were offered by the Clubs compared to the survey responses. In most cases, the awareness was approximately 10% greater than the surveyed members. • When asked what characteristics or attributes do you like best about your Club, the rankings of the responses were more indicative of a group that felt the existing operation was comfortable for them. The most notable More comfortable with differences between the two groups related to the questions regarding existing facilities food quality and price points. The interviewed members placed the food quality as their number one favorite characteristic of the Club compared to the surveyed members who placed food quality number four. Price however, was not as important to the interviewed member who placed it number five out of six compared to the surveyed member who placed price as the number one attribute that they liked best about the Club. The interviewed members indicated that price points were not the main reason why they frequented the American Legion and VFW Clubs. When we asked the members to rate the order of importance of selected criteria for choosing a lunch or dinner location, their responses were very similar to the mail-in respondents' answers. The most important consideration was food quality for both groups. Most of the responses to this question regarding location, service personnel and food presentations were very similar in degree of importance. One area where there was a very strong difference between the two groups was the need for atmosphere or ambiance in satisfying their desires. The interviewed members placed atmosphere absolute last on their list of important items compared to the surveyed members who placed it third out of nine areas. RICHFIELD 29 Clearly, the members who are .utilizing the Club have a lower concern for the quality of the Clubs' atmosphere compared to their surveyed counterparts. When asked who generally decided where you will go when you dine out, the responses to this question differed greatly from those contained in the survey. 46% of the respondents. stated that they and their spouse together Difference in who selected where they would dine out compared to 86% in the survey. 40% decides of the interviewed members claimed that they decide alone where they will dine out compared to only 14% in the survey. 14% of the interviewed members claimed their spouse decided alone where they would be dining for their next adventure out compared to 1 person from the survey respondents. SPOUSE ALONE DECIDE ALONE DECIDE TOGETHER There are a few main influences that we believe contribute to the shift in .the responses to this question. Most of the interviews were conducted during lunch hours when many people dine alone or in business groups instead of couples. Also, during the interview process we came to recognize many of the people we conversed with no longer had a spouse and therefore by default would be making their dinning decisions alone. We also realized that there are a fair number of groups of widowed Theoretical reasons members who choose to use the Club for their lunch dining commitments. for the difference On several occasions we met with tables full of women who no longer had a spouse. Also on a few occasions we met with male members who had never been married. We believe some of these idiosyncrasy combined to create the shift in responses to the question regarding who decides where to dine out. When asked what helps you decide where to go when choosing a restaurant location, the overwhelming response stated the previous experience at that location as the number one reason. 82% of the interviewed members selected that reason as dominate in their decision RICHFIELD 30 • making practices: -This follows the same pattern established by the Price discounting or surveyed members but to a much stronger degree. Only half of the coupons place last surveyed members listed their. previous experience as their number one reason Similar to their surveyed counterparts the interviewed members gave little credit for price discounting or coupon books as being a motivating factor. We next revisited the question regarding which characteristics the members liked most about the Club. Again the. quality of the food and the value for the money spent-were the number one and number three characteristics the interviewed members like the best. The interviewed Interviewed members members maintained their position on the Club atmosphere and comfort have little trouble with club atmosphere when answering this question as well. They again indicated their comfort with the Club surroundings by placing the atmosphere of the Club as~ the second reason why they choose to support the Club facilities.. This is directly opposite of how the surveyed members responded. It appears that the members who use the Club find the atmosphere and.surroundings of the Club acceptable. It is equally clear that the surveyed members do .not. This may be a strong indication of why the Clubs are having the degree of difficulty they are in soliciting a thicker degree of support from more of their membership. • The next question involved the frequency with which the interviewed members utilized the Club facility. There is a difference in this question 56% use their club from the. survey form where 14% of the respondents who said they never weekly use the Club at all. Obviously, since all of these members were being interviewed inside the Clubs none of them would be able to answer "never" to the usage question. Avery strong 56% of the interviewed members claimed they used the Club once a week or more compared to only 20% of the surveyed members. The other responses were much closer together in percentage. WEEKLY MEMBER USAGE SURVEYED INTERVIEWED 0 10 20 30 40 50 60 PERCENT This also lends some support to the impression that Club management has Fewer members using regarding Club utilization. In our interviews with the Club managers both the club more stated that there is a sizable pocket of members who utilize the Club consistently. It appears a relatively small percentage of Club members are responsible for a very high degree of financial support. This is not good. RICHFIELD 31 for the future of the Clubs. The more business that is concentrated in a smaller number of members, the more susceptible that business will become as time goes by. Under this scenario, each remaining member who utilizes the Club becomes an ever increasing percentage of the total Club volume. Conversely, as these members stop supporting the Club through attrition or relocation the financial impact to the Club will be greater. This next question also sheds a tremendous amount of light on the thinking differences of the surveyed members and the interviewed members. When asked what they find most disappointing about their Club, there were almost no negative answers. In the 50 interviews only 7 times as many 11 negative comments could be elicited from the interviewees. That negatives by survey means only 1 person in 5 or 20% of those interviewed could come up compared to interviews with anything negative to say about their Club. In the survey the negative responses were slightly greater than 1.3 comments per survey or 7 times as many negative comments as those stated by the interviewees. Again, this phenomenon seems to underscore the difference between those Club members who utilize the Club compared to those who don't. The using members are reasonably happy with what they have, the non-using member is not. If the Clubs ever intend on increasing their member participation this phenomenon must be addressed. The final question in the survey related to the proposal for remodeling or rebuilding the Club facilities. Each interviewed member was asked the same three questions regarding this subject as were the surveyed 22% in favor of members. When asked if they would be in favor of remodeling the remodeling existing Club facilities, 22% of the interviewed members responded yes compared to 30% of surveyed members. 78% of interviewed members responded they would not be in favor to remodeling compared to 30% who held the same view. None of the members surveyed claimed to have "no opinion" on this subject compared to 40% of the surveyed members who did not state a preference, one way or another. When questioned about building a new independent facility for either the VFW or American Legion Clubs the interviewed members indicated 43% would be in favor of building a new independent Club compared to only 43% in favor of new 30% of surveyed members. 57% of interviewed members stated that they separate facility were not in favor of considering the construction of a new independent facility compared to 30% of surveyed members. Again no member stated they did not have an opinion compared to 40% of the surveyed members who did not state a preference either way. Finally, addressing the question of building a joint facility between the American Legion and VFW Clubs the responses were again tilted heavily RICHFIELD 32 in favor of the proposal. 68% of the .interviewed Club members said .they. 68% in favor of new would support a proposal for building a joint facility compared to 75% of joint facility the members surveyed. 32% of the interviewed members stated they were opposed to the proposal compared to 15% of the members surveyed. None of the interviewed members stated that. they had "no opinion" compared to 10% of the surveyed members who did not state a preference either way. MEMBERS IN FAVOR OF... 80 70 Heavy preference in s0 favor of developing a so joint veterans facility ~ 30 20 10 0 ^ SURVEYED We believe it is necessary to point out at this juncture that even though Members favor a the_interviewed members are substantially more comfortable with the • shared facility by2 to 1 existing Clubs and surroundings than are the surveyed members these members also. by a rate of better than two to one are still heavily in favor of pursuing the development of a shared facility between the American Legion and VFW Clubs. In our interviews with these 50 individuals and many of the guests who were sitting at their tables, it became clear that the members are aware that the future of the Clubs are in jeopardy. They recognize the fact that the membership roles are declining and that there is a strong difficulty factor in place for soliciting new member opportunities. Their preference is definitely for the survival for the Posts and Clubs. They appear more than willing to share a joint Club facility with their bother and sister Veterans from the other Club. Their overwhelming concern is for the long term welfare of the Veterans' organizations. • RICHFIELD 33 REMODELING INDEPENDENT JOINT FACILITY FACILITY NEW FACILITY CLUB AND POST FEATURES If a decision is made to develop a shared American Legion and VFW Veterans' facility the component and make-up design of the facility will be very important in determining its long-term success. Each of the Veterans organizations contain two separate entities. Both the Richfield American Legion and VFW organizations are comprised of a Post and a Club.. Both of these separate components need to be taken into consideration if the new facility is to be designed and operated successfully. The feasibility of this new facility is predicated upon combining the Completely separated fitnctions of only the Clubs while leaving the individual Posts as separate Posts sharing one Club entities. In order to accomplish this, accommodations have to be included into the design of the facility that will address both issues. The new facility will need to accommodate the requirements of one unified Club and two completely segregated Veterans Posts. The Club facility is the revenue engine designed to provide an income New Club to provide steam to underwrite the activities and operating expenses of both the income to both the American Legion and VFW Posts. In order to accommodate the needs of American Legion and VFVV both Posts and a combined Club facility we are recommending the readers of this report consider the inclusion of the following components in the design and construction of the new building. Illustrated below is a list of physical recommendations developed by CRM Recommended and Tushie Montgomery Associates, Inc., who have been functioning as components architectual advisors during the information gathering activities related to this report. It is our combined recommendation that the developers and promoters of a new Veterans facility review these suggestions along with their associated costs for consideration as part of the new building. Area: ~ Person to Proposed Restaurant/Bar Accommodate Square Feet Dinning Room Open Dining Private Dining Private Dining 120 seats 2 rooms @ 40ea = 80 2 rooms @ 20 ea. = 40 17 S.F. Per Person 4,080 Square Feet Banquet Rooms One large room dividable into four rooms - 300 person, 150 person, 75 person and 75 person 600 seats 10 S.F. Per Person 6,000 Square Feet RICHFIELD 34 Area: Person to Proposed Accommodate Square Feet Bar Area 1,500 Square Feet Bar Searing 30 seats Baz Table Seating 40 seats Kitchen Prep Area To Accommodate 840 seats 1,800 Square Feet Restaurant Public Space Entrance and Waiting Area N/A 1;000 Square Feet Bathrooms 2 Sets 800 Square Feet Billiazds Room N/A 780 Square Feet 2 Billiazds Tables 3 Darts Stations 4 Pinball Machines Storage Areas N/A Bar 400 Square Feet Kitchen 600 Square Feet Banquet 400 Squaze Feet. Offices Restaurant Manager 12' x 12' 144 Square Feet General Office Staff 20' x 40' 800 Square Feet 4 Total Workstations Subtotal N/A 18,304 Squaze Feet 15% for wails & Circulation N/A 2,746 Square Feet Restaurant Total N/A 21,050 Square Feet Post Offices VFW Office 14' x 18' 252 Square Feet Legion Office 14' x 18' 252 Square Feet Miscellaneous Areas VFW Storage Room 20' x 20' 400 Square Feet Legion Storage Room 20' x 20' 400 Square Feet Exterior Maintenance Equip 10' x 20' 200 Square Feet Mechanical Room 20' x 50' 1,000 Square Feet 15% for walls & circulation N/A 376 Square Feet Subtotal N/A 2,880 Square Feet Entire Facility Total N/A 23,930 Square Feet • RICHFIELD 35 Generalized Facility Cost: Land Cost ...........:....................................................................................... Unknown Site development cost($12/SF of building area) .............................:...........288,000.00 Building area .........................................................................................2,603,700.00 Kitchen equipment ....................................................................................420,000.00 Furniture & fixtures for dining/banquet/public areas .................................330,000.00 Millwork for three (3) bars, wait stations, hostess stations, etc ...................110,000.00 Bar equipment ........................................................................................... 80,000.00 Point of sale equipment .............................................................................. 80,000.00 Building appointments ............................................................................... 40,000.00 Subtotal .................................................................................................3,851,700.00 Additional Costs to Include: Soft costs for developments fees, architectural and engineering costs, soil testing, attorney and accountant costs, SAC, WAC and city fees. Budget 12% ..........:.....................................462,200.00 15%time contingency ........................................................................647,100.00 Total .................................................................................................... $4, 961,000.00 (not including land costs) Approximate site area required: 2.5 - 3 acres RICHFIELD 36 • NEW FACILITY COMPONENT DATA It is our opinion that the financial success of the new shared facility will be driven by the success of its banquet and meeting rooms. We are 4 banquet rooms recommending a banquet facility large enough to accommodate up to 600 guests at maximum. This banquet area should be designed in a manner to allow the main room to be divided into four smaller rooms ranging in size from 300 persons to 75 persons. This flexibility of design and the overall maximum size would allow the facility to accommodate 99% of the party inquiries it will receive. In the main dining area we are recommending the construction of four private dining rooms. Two of the rooms should be designed to 4 smaller private rooms accommodate. up to 40 individuals and the other two rooms to accommodate a maximum of 20 each. -These four smaller private dining rooms would be serviced by the main kitchen and dining room support staff and be part of the daily operational functions of the new Club. The banquet facilities would be utilized by prior arrangement only... There are several reasons why we recommend .the new shared facility be designed towards banquet and private dining functions. First of all, we designed for banquet recognize: a dramatic need for these type of facilities in the general and meeting business Richfield area. There are very limited options for individuals or organizations to consider if they would like to hold a private function in the City of Richfield. According to the sources interviewed in the research activities for this report, there is a general consensus that a substantial demand exists in the Richfield market place for banquet and private meeting facilities. Another factor contributing to the importance of the banquet and private meeting facilities is the ability of the facility management to aggressively aggressive sales market for business and support. It is a common practice in the banquet programs and private meeting segment of the food service industry to actively recruit for new business by developing sales call programs, direct mail materials, attending trade shows, and forming strategic business alliances with other industries and organizations that utilize banquet facilities for the mutual development of new business. There are many more aggressive marketing opportunities available for the banquet and private dining industry to utilize than there are for the general restaurant industry. . The banquet and private dining components of the new Veterans Club can also realize an expanding market separate from that of the general Post and. Club membership. The membership roster of the Clubs can decline, while at the same time the market for the banquet and private meeting _ RICHFIELD 37 room facilities can be increasing. Because of that, the new facility will not be as heavily dependent on the health and growth of the membership rosters as the existing facilities are. The open dining capabilities of the new facility are limited to 120 seats. This size of open dining room is suggested based on the level of support 12o seat open dining the existing dining rooms are receiving and the number of competitive ~~ options available to the Club members. Initially the open dining area of the Club may be considered too small for the amount of demand the new facility will generate but we believe once the uniqueness the new facility has settled the recommended size of 120 seats will be adequate to handle the demand. The bar area is suggested to accommodate a maximum of 75 seats. This bar area is designed to accommodate service requirements of the open Bar and lounge for 75 dining area and lounge only. The banquet rooms would have additional g1e~ bar capacity separate from this lounge recommendation. At this time the lounge area does not include any accommodations for entertainment. If entertainment were to be considered as part of the new facility additional space requirements would have to be allocated for stage, dance floor and additional seating. It would also be possible to design two separate bar or lounge areas, one for each of the two Posts. This would be recommended.: only if there was a definite need for segregating bar facilities between the two Posts. The other areas incorporated into the proposed component design include a kitchen space adequate to support the open and private dining rooms as well as the banquet facilities, a game room to accommodate billiard tables, dart stations and pinball machines, storage areas for the bar, kitchen and banquet facilities, office space sufficient in size to accommodate four work stations and space for an enlarged gaming area. In addition to the Club facilities we are also recommending separate Post facilities for both the American Legion and VFW. We believe the Separate offices for minimum requirements should include enough space for at least two each Post private offices for each Post or one larger multi purpose office for each. With the combined Club facility it will no longer be necessary for the Posts to have separate meeting rooms since the smaller private dining rooms can be reserved. for Post meeting functions.. Telephone reception and message taking functions can also be orchestrated through the shared Club facility as well. In addition to the offices for the Posts, we also recommend individual private storage rooms be set aside to facilitate secure storage for Post records and special artifacts used at specific Post functions. Additional RICHFIELD 38 space requirements for rest rooms, entrances, hallways and passageways have also been included in our space estimates. The total square footage requirements for all of the components listed above is estimated at 23,930 feet. The total cost for construction, 23,930 sq. feet equipment, site development and other related expenses. is estimated. at conswcted for $4,961,000. This estimate does not include land cost. At the time of this 54,961,000 :report, site selection had not been attempted far the new facility. Therefore, land costs could not be included in the budget estimates. This budget estimate calculates out to $207 per .square foot in construction and development costs. We consider that number to be reasonable for the size and scope of project described in this report. • • RICHFIELD 39 SUMMARY Throughout our research for this report we were presented with demonstrations of how aware the members of the Richfield American Legion and VFW Posts and Clubs are regarding the precarious future of their organizations. The overwhelming majority of the membership recognizes the problems the Clubs are facing concerning their future economic viability. Most of the membership we communicated with recognized where the Clubs future seems to be heading and many of them fully understood all of the reasons why. Equally iimpressive was the overall membership's resolve for continuing to see viable Post and Club operations going into the future. The openness of attitude displayed by the members, their willingness to examine a broader range of options and their recognition of the fact that the future brings change all combine to demonstrate how dedicated many of the members are about paving the way for a viable future for the Veterans organizations. One of the main factors for establishing a theory of probability regarding the success or failure of a new, shared club facility rests upon our interpretation of the members willingness to support a new facility. Predicated upon the information contained in the surveys conducted as part of this report and the interviews that were undertaken, we believe the membership is prepared to extend the level of financial support necessary in terms of Club usage to make the new facility financially viable. We also believe, based on the information supplied by officers and directors of the Clubs as well as select officials of the City of Richfield, along with our own analysis and observations, that there is sufficient demand in the immediate market place to provide additional financial support through the utilization of banquet and meeting rooms to further contribute to the financial success of the new facility. The eventual success or lack thereof for a new shared facility will rest to a great extent on the strategic and financial decisions that are made by the directors of the new facility. Although we believe there is sufficient support in the market place to allow. the new facility to be financially viable, it will ultimately be the decisions and policies dictated by the officers and directors that will establish to what degree the property will succeed. This concludes our report. RICHFIELD 40 HOUSING AND REDEVELOPMENT AUTHORITY • HRA Letter No. 56 Agenda September 16, 1996 Issue Statement: Consideration of resolution regarding approval of Modification to the Richfield Redevelopment Project Area Redevelopment Plan (Redevelopment Plan); Establishment of the Interchange Tax Increment Financing District; and Adoption of the Interchange Tax Increment Financing Plan (Tax Increment Plan). Background: The Limited, Inc. (Developer) is proposing new commercial redevelopment on the former Naegele site at the northwest quadrant of interstate highways I-35W and I-494. Phase I of the project proposes the construction of a 100,000 square foot Galyan's Trading Company store, a retailer of sporting goods and wearing apparel. Phase II would incorporate another 25,000 square foot retail use. The Galyan's store will be similar in character to the one initially proposed in Phase II of CSM's Shops at Lyndale with an internal rock climbing wall, waterfall, and interactive sport features both inside the store and on-site, outside the store. The Developer is actively negotiating purchase of the subject property and is requesting public assistance to help offset the costs of asbestos abatement, land acquisition, demolition, etc. A "pay-as-you-go" tax increment project is being proposed with a 25 year duration (assistance is provided to the developer only if the taxes are paid on the development). The basis for making payments would be a note (similar to CSM and Meridian Crossings) in the approximate amount of $3.3 million. The first payment would be made in 1999 and the last payment would be in 2024 based on a construction start of 1996. The estimated value of the development is $9.6 million. With the current value of the property at $3.9 million the projected gross annual increment would begin at an estimated $250,000 and increase due to a projected increase of 3% per year in the market value. The note will be a part of the developer's agreement which will. be presented to the HRA at a later meeting. One of the recent legislative changes in TIF is that of a 5% local match. There must be a contribution by the local community of an amount of funds equivalent to 5% of the tax increment. Sources of potential contributions may include public improvements and consultant expenditures for example. See Cash Flow Exhibit B, page B-1, near the end of the attached Redevelopment and TIF plans. In addition to Exhibit B contained in the attached plan document, there are several other points addressed by the plans. Behind the title page is the Table of Contents and page II-1 contains a statement of the objectives. Recommended Motion: • Adopt the resolution which: • approves a modification to the Richfield Redevelopment Project Area Redevelopment Plan; • establishes the Interchange Tax Increment Financing District; and • approves the Interchange Tax Increment Financing Plan; all subject to a finding by the • Planning Commission as to its conformance with the Comprehensive Plan; and • requests the City Council to hold a public hearing and approve the modified Redevelopment Plan and new Tax Increment Plan. Basis of Recommendation: 1. The Naegele building appears to be an attractive and therefore, desirable structure from the exterior especially from the freeway system. However, a review of the building permit files and an on-site inspection by Dennis Neudecker, Building Official, reveals lack of maintenance and significant code violations in virtually every area of the structure. For real estate tax purposes the structure of some 60,000 square feet is valued at $48,000. 2. While the current Comprehensive Plan identifies the site as "Freeway Strip,".the revised Comprehensive Plan identifies commercial or office use for the site of approximately nine acres. The office market is not strong enough to generate demand for the site for the foreseeable future. A retail use especially a `signature' retail use would be appropriate at this location and in today's market. 3. "Pay-as-you-go" tax increment provides an opportunity to make the redevelopment of this site financially feasible with relatively low risk. 4. The HRA would provide assistance to support the development without taking title to the real estate which reduces the risk to the HRA even further. 5. The Redevelopment and Tax Increment plans meet the requirements of state law and established procedures within Richfield. Alternative Recommendation: 1. Do not approve the modification, establishment of the new tax increment district, and related plans. 2. Delay approval of the modification and establishment of the new tax increment district, and related plans. Discussion/Decision Mode: Approval on September 16, 1996, would permit Planning Commission review on September 17, 1996, City Council consideration on October 28, 1996, and implementation shortly thereafter. Galyan's needs to open for business in 1997. Respectfully submitted, James D. osser • Executive Director JDP:ds HRA RESOLUTION NO. RESOLUTION APPROVING THE .MODIFIED REDEVELOPMENT PLAN FOR THE RICHFIELD REDEVELOPMENT PROJECT AREA AND ADOPTING THE TAX INCREMENT FINANCING PLAN fOR THE INTERCHANGE TAX INCREMENT FINANCING DISTRICT; REQUESTING THE RICHFIELD CITY COUNCIL TO CONDUCT A PUBLIC HEARING THEREON; AND RECOMMENDING APPROVAL OF THE PLANS BE IT RESOLVED by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota as follows: Section 1. Recitals. 1.01. The Housing and Redevelopment Authority in and for the City of Richfield, Minnesota (HRA) adopted a redevelopment plan (the "Redevelopment Plan") for the area of the City generally known as the Richfield Redevelopment Area on May 17, 1993. 1.02. The City Council of the City of Richfield (City) held a public hearing on the • Redevelopment Plan for the Richfield Redevelopment Project Area and approved the Plan on June 14, 1993. 1.03. A proposal to create a new redevelopment Tax Increment Financing District, to be heretofore known as the Interchange Tax Increment Financing District, has necessitated modification of the Redevelopment Plan for the Richfield Redevelopment Project Area and the adoption of a Tax Increment Financing Plan (the "TIF Plan") for the Interchange Tax Increment Financing District. 1.04. Except for the modification stated herein, the HRA reaffirms its findings and conclusions as approved in the original Plan dated May 17, 1993. 1.05. The HRA has caused to be prepared modifications to the Redevelopment Plan and the TIF Plan for the Interchange Tax Increment Financing District, both of which are contained in a document entitled, "Modifications to the Redevelopment Plan For Richfield Redevelopment Project Area and the Adoption of the Tax Increment Financing Plan For the Establishment of the Interchange Tax Increment Financing District," dated September 16, 1996, and on file with the HRA. Section 2. HRA Approval. 2.01. The HRA finds that the objectives of the HRA in encouraging development and • redevelopment within the Richfield Project Area will be advanced by adoption of the modified Redevelopment Plan and adoption of the TIF Plan for the Interchange Tax Increment Financing District. 2.02. The modified Redevelopment Plan and the TIF Plan are hereby approved and • adopted by the HRA, subject to review by the Richfield Planning Commission. Section 3. Further Proceeding. 3.01. The Executive Director of the HRA is hereby authorized and directed to transmit copies of the modified Redevelopment Plan and the TIF Plan to the School Board of Independent School District No. 280, Intermediate School District No. 287, and the Board of Commissioners of Hennepin Count for review and comment and to notify said public bodies of the public hearing to be held on the Plans by the City. 3.02. The HRA requests that the Richfield Planning Commission review the modified Redevelopment Plan and the TIF Plan and comment regarding the consistency of the Plans with the City's comprehensive plan. 3.03. The HRA requests the City to hold the public hearing on the modified Redevelopment Plan and the TIF Plan required by Minn. Stat. Section 469.028 and Minn. tat. Section 469.175, Subd. 3, as soon hereafter as is practicable and recommends that the modified Redevelopment Plan and, the TIF Plan be approved by the City. 3.04. The HRA also intends to request that the City from time to time consider various other actions necessary to the implementation of the Redevelopment Plan and the TIF Plan • and pledges its cooperation with the City in achieving the objectives of the Plan. Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this 16th day of September, 1996. Thomas E. Harms, Chair ATTEST: Vern Luettinger, Secretary • • Draft as of September 9, 1996 Draft for HRA Meeting Modifications to the Redevelopment Plan For Richfield Redevelopment Project Area and the Adoption of the Tax Increment Financing Plan For the Establishment of the Interchange Tax Increment Financing District (A Redevelopment District) Housing and Redevelopment Authority in and for the City of Richfield Hennepin County City of Richfield, Minnesota HRA Adoption: September 16, 1996 City Council Public Hearing: October 28, 1996 City Council Adoption: • Prepared by: PUBLICORP, INC. in association with EHLERS AND ASSOCIATES, INC. 2950 Norwest Center'' 90 South Seventh Street Minneapolis, MN 5540?-4100 (612) 339-8291 TABLE OF CONTENTS (for reference purposes only) SECTION I. -MODIFIED REDEVELOPMENT PLAN FOR THE RICHFIELD REDEVELOPMENT PROJECT AREA ........................Page I-I F. BOUNDARY OF THE RICHFIELD REDEVELOPMENT PROJECT AREA .....Page I-1 J. DEVELOPMENT ACTNITY IN RICHFIELD PROJECT AREA ...............Page I-I SECTION II -TAX INCREMENT FINANCING PLAN FOR THE INTERCHANGE TAX INCREMENT FINANCING DISTRICT .......... Page II-I A. STATUTORY AUTHORTTY .......................................... Page II-I B. STATEMENT OF OBJECTNES ....... .............................. Page II-I C. REDEVELOPMENT PLAN OVERVIEW ................. ............. Page II-2 D. DESCRIPTION OF PROPERTY IIV .................................... Page II-2 E. CLASSIFICATION OF THE TAX INCREMENT FIlVANCING DISTRICT ..... Page II-2 F. PROPERTY TO BE ACQUIRED ...... . ................................ .Page II-3 G. ESTIMATE OF COSTS .............................................. Page II-3 H. SOURCES OF REVENUEBONDED INDEBTEDNESS .................... Page II-4 I. ORIGINAL TAX CAPACITY ......................................... Page II-4 J. AMOUNT OF CAPTURED TAX CAPACITY ............................ Page II-5 K. DURATION OF THE DISTRICT ....................................... Page II-5 L. ESTIMATED IMPACT ON OTHER TAXING JURISDICTIONS ............. Page II-5 M. MODIFICATIONS OF THE TAX INCREMENT FINANCING DISTRICT ...... Page II-6 N. LIMITATION ON ADMINISTRATNE EXPENSES ........................ Page II-7 O. LIMITATION OF INCREMENT .............:.......................... Page II-7 P. USE OF TAX INCREMENT .................. ....................... Page II-8 Q. NOTIFICATION OF PRIOR PLANNED IMPROVEMENTS .... ~ ............ Page II-9 R. EXCESS TAX INCREMENTS .............................. .......... Page II-9 S. REQUIREMENT FOR AGREEMENTS WITH THE DEVELOPER ............ Page II-9 T. ASSESSMENT AGREEMENTS ...................................... Page II-10 U. ADMINISTRATION OF DISTRICT AND MAINTENANCE OF THE TAX IlVCREMENT ACCOUNT ....................................... Page II-10 V. FINANCIAL REPORTING REQUIREMENTS ........................... Page II-10 W. MUNICIPAL APPROVAL AND PUBLIC PURPOSE ...................... Page II-12 X. .COUNTY ROAD COSTS ............................................ Page`II-13 Y. FISCAL DISPARITIES ELECTION .................................... Page II-13 Z. OTHER LIMITATIONS ON THE USE OF TAX INCREMENT .............. Page II-14 AA. STATE TAX INCREMENT FINANCING AID ............................. Page II-IS AB. ECONOMIC DEVELOPMENT AND JOB CREATION .................... Page II-16 AC. SUMMARY ....................................................... Page II-16 EXHIBIT A -Boundary Maps of the Richfield Redevelopment Project Area :~~d The Interchange Tax Increment Financing District ............................. . ....... A-I EXHIBIT B - Cashflow Analysis and Base Value Analysis .............................. B-I EXHIBIT C -Redevelopment Qualifications ......................................... C-I EXHIBIT D -Minnesota Business Assistance Form .................................... D-I SECTION L MODIFIED REDEVELOPMENT PLAN FOR THE RICHFIELD REDEVELOPMENT PROJECT AREA F. BOUNDARY OF THE RICHFIELD REDEVELOPMENT PROJECT AREA The Richfield Redevelopment Project Area is hereby modified, and the revised boundaries of the Richfield Redevelopment Project Area are as follows: Starting at the intersection of the Richfield west city line and 66th Street, following east on 66th Street to Queen Avenue, thence north. to 65th Street, thence west to the rear lot lines of the properties on the east side of Russell Avenue, thence north on said rear property lines to the north city line, thence east to Lyndale Avenue, thence south to 63rd Street, thence east to Harriet Avenue, thence south to 64'h Street, thence continuing south on the property line between Lots 4 and 5, Block 6, Lyndale Oaks Subdivision to the south line of said subdivision, which is also the north line of Hauser's Second Addition. Thence continuing east on said line and as extended to Pillsbury .Avenue, thence north on Pillsbury Avenue to the south line of Block 6, Rearrangement of Nicollet Homes Second Addition, thence east on said line to the rear lot line of the lots in Block 8 of said addition, between Blaisdell and Nicollet Avenues, thence north on said line to 64th Street, thence east on 64th Street to the rear lot line of the lots in Block 8, Town's Edge Subdivision, thence south to 65th Street, following the east edge of First Federal Richfield Addition. Thence continuing east on 65th Street to First Avenue, thence south to 66th Street, thence east to 11th Avenue, thence north to the north city line, thence east to Bloomington Avenue, thence south to 63rd Street, thence east to 16th Avenue, thence south to the south border of Taft Park, thence east to 18th Avenue, thence south to the intersection of the northerly lot line of Lot 10, Block 1, Wexler's Addition and 18th Avenue South, thence in a line along said northerly lot line as extended to the west right-of-way line of Cedar Avenue, thence north to a point 55 feet south of the centerline of 66th Street, thence east to a point 110 feet east of the centerline of Cedar Avenue, thence south to the easterly extension of the south line of Lot 1, Block 4, Wexler's Addition, thence west along said line to the west line of said lot, thence north to the south right-of--way line of vacated 67th Street. Thence west to 18th Avenue, thence south to Diagonal Boulevard, thence east along the centerline of said boulevard, extended to T.H. 77, thence south to the south city line, thence west to Knox Avenue, thence north to the north line of Registered Land Survey #1037, thence east to Interstate 35W, thence north to 73rd Street, thence west to Penn Avenue, thence south to 74th Street, thence west to Sheridain Avenue, thence south to 76th Street, thence east to Penn Avenue, thence south to the north Frontage Road of Interstate I-494, thence west to Thomas Avenue, thence north to 77th Street, thence east to the west right of way line of Sheridan Avenue, thence north to 76th street, thence west to the ~~ est city line, thence north to the point of beginning at 66th Street. A map outlining the boundary of the Project Area is found on the following page. DEVELOPMENT ACTNITY IN RICHFIELD PROJECT AREA Current plans for the project call for the redevelopment of the Nae4le Building at the northwest corner of Interstate Highway 35W and Interstate Highway 494 in the City of Richfield (Interchange TIF District). The redevelopment plans currently call for a 2-story retail building. The financing of the $18,300,000 project will consist, in part, of Tax Increment Financing. The estimated public costs for the Interchange TIF District are outlined in the Tax Increment Financing Plan for the Interchange TIF District. 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Nr9Y0w !C~r--Q I II '~~~ ~ IQO NOLM3N a NOLM3M ~' I ~ JI^ Y3A110 ~~~'''~~G~~~-^''~^^^I~J~`~~^~~C~I ~~ I Y3A1,0 '3Ar NN31 ~_ ~7^~~'~"~'^I~ ~ ~~ ~' . II 'r '~~~^! ~I IL~~ '~~ ~ II 37MNw3. N 33110 ~ ~ I~ ~ i „3sfnY I j'~tI ~b ~~~~: I~ 113StnY NrOlY3Nf C ~~C ~~ ~1 •• Mr01Y3Nf 1M3]NIA C ~l 1 `~`_-~~til ~rI I' ~7J~~ I r---~`_w~ ~ ~ 1N3]MIA NYfl{NfrM ,~~.~' - ~~~ x._11 ~ ~I -- ~~ ~! NYn{NSrM 3Ar f3xY3x •1- ~-~ ~+++-~ 3M S3xY3x • ^N N N N N N M N M N N N M M N N N N Np S _ I p Y r e r r e rey V ~ w ': w w w r•. ~ w w w N N g tD ,! W L d a d w C 0 O MO W L a V as 'o a i SECTION II TAX INCREMENT FINANCING PLAN FOR THE INTERCHANGE TAX INCREMENT FINANCING DISTRICT A. STATUTORY AUTHORITY Within the City of Richfield (the "City") there exist areas where public involvement is necessary to cause development or redevelopment to occur. To this end, the City Council established the Richfield Housing and Redevelopment Authority (the "Authority"). The City faces various existing land use problems that require corrective action by the City or Authority before development by private enterprise becomes financially feasible or desirable. The Authority and City are authorized to establish a tax increment district pursuant to Minnesota Statutes, Section 469.174 to 469.179, inclusive, as amended, and Section 469.001 to 469.047, inclusive, as amended, to assist in financing public costs related to this project. Tax increments are derived only from the increased amount of taxes which are paid on a parcel of property after the construction of a new structure on the parcel. Tax increment districts encompass the parcel from which tax increments are paid for a period of time. Below is the Tax Increment Financing Plan (the "Plan") for the Interchange Tax Increment Financing District ("the Interchange TIF District"). Other relevant information is contained in the Redevelopment Plan for the Richfield Redevelopment Project Area, originally adopted on June 14, 1993 and subsequently modified. A modification of the Redevelopment Plan is contemplated in the Tax Increment Plan. The Authority or the City reserves the right to approve all or a portion of the property proposed to be included in the Interchange TIF District on the date of the first public hearing, October 28, 1996. B. STATEMENT OF OBJECTIVES The Interchange TIF District consists of 1 parcel of land and adjacent and internal rights-of-way. The current plans for the new development on the site include the construction of a 2-story retail building on the site of the Naegle Building at the northwest corner of Interstate Highway 35W and Interstate Highway 494 in the City of Richfield. The Interchange TIF District is expected to achieve many of the objectives set forth in the Redevelopment Plan in regard to `land use. These objectives include: 1. To provide increased employment opportunities. 2. Secure the increase of property subject to taxation by the City, county, school district, and other taxing jurisdictions in order to better enable such entities to pay for. public improvements and governmental services and programs required to be provided by them; 3. To provide maximum opportunity, consistent with the needs of he City for development by private enterprise. 4. Provide a retail service level required by the residents of the conununity. 5. To achieve a balanced variety of commercial businesses and services appropriate to the market area. Tax Increment Financing Plan for the Interchange Tax Increment Financing District Page II-1 See Exhibit C for the data on the qualifications of the redevelopment tax increment financing district. C. REDEVELOPMENT PLAN OVERVIEW 1. Property to be Acquired -The City does not contemplate ownership at this time. 2. Relocation -Complete relocation services are available pursuant to Minnesota Statutes, Chapter 117 and other relevant state and federal laws. 3. The City or the Authority may perform or provide for some or all necessary relocation, demolition, and required utilities and public streets work within the Interchange TIF District. 4. The Interchange TIF District contains property that is appropriately zoned for the anticipated use of the project. All development in the area conforms to applicable state and local codes and ordinances. D. DESCRIPTION OF PROPERTY IN THE INTERCHANGE TIF District The Interchange TIF District encompasses the parcel and all adjacent and interior right-of-ways as identified below: 33-028-24-34-0012 The City or the Authority reserves a right to approve all or a portion of the area of the parcel listed as designation for the Interchange TIF District. See the map in Exhibit A for further information on the location of the Interchange TIF District. E. CLASSIFICATION OF THE TAX INCREMENT FINANCING DISTRICT The City and the Authority, in determining the need to create a tax increment financing district in accordance with Minnesota Statutes, Section 469.174 to 469.179, as amended, inclusive, find that the Interchange TIF District to be established is a redevelopment district pursuant to Minnesota Statutes, Section 469.174, Subdivision 10 as defined below: (a) "Redevelopment district" means a type of tax increment financing district consisting ~~f a project, or portions of a project, within which the authority finds by resolution that o,m ~t the following conditions, reasonably distributed throughout the district, exists: (1) parcels consisting of 70 percent of the area in the district are occupied by buildin,~~s, streets, utilities, or other improvements and more than SO percent of the hu'Ildin,~s. not including outbuildings, are structurally substandard to a degree requiri,t~ substantial renovation or clearance; or (2) The property consists of vacant, unused, underused, inappr~hriarcl~~ used, or infrequently used railyards, rail storage facilities or excessive ~r s accred railroad rights-of--way. (b) For purposes of this subdivision, "structurally substandard" slulll mean containing defects in structural elements or a combination of deficiencies ita esseiuiul utilities and facilities, light and ventilation,. fre protection including adequate egress, layout and condition of interior Tax Increment Financing Plan for the Interchange Tax Increment Financing District Page II-2 partitions, or similar factors, which defects or deficiencies are of sufficient total significance to justify sctbstantial renovation or clearance. A building is not structurally substandard if it is in compliance with the building code applicable to new buildings or eottld be modified to satisfy the building code at a cost of less than I S percent of the cost of constructing a new structure of the same square footage and type on the site. The municipality may find that a building is not disqualified as structurally substandard under the preceding sentence on the basis of reasonably available evidence, such as the size, type, and age of the building, the average cost of plumbing, electrical, or structural repairs or other similar reliable evidence. If the evidence supports a reasonable conclusion that the building is not disqualifeed as structurally substandard, the municipality may make such a determination without an interior inspection or an independent, expert appraisal of the cost of repair and rehabilitation of the building... (c) For purposes of this subdivision, a parcel is not occupied by buildings, streets, utilities or other improvements until IS percent of the area.of the parcel contains improvements. The 1 parcel has been investigated by City and Authority staff and the Interchange T1F District has been found to meet all requirements of a redevelopment district. Please see the redevelopment qualification findings in Appendix C. 1. The Interchange TIF District consists of 1 parcel. 2. An inventory of theparcel shows that at least 15 percent of the parcel is occupied as defined in the Act. 3. An inspection of the buildings located within the Interchange TIF District finds that at least 50 percent of the buildings are structurally substandard as defined in the Act: See specific findings in Appendix C. F. PROPERTY TO BE ACOUIl2ED The Authority may acquire any parcel within the Interchange TIF District, including interior and adjacent street rights of way. 1. Any properties identified for acquisition will be acquired by the City only in order to accomplish one or more of the following: storm sewer improvements; provide land for needed public streets, utiliries;and facilities; carry out land acquisition, site improvements, clearance and/or development to accomplish the uses and objectives set forth in this plan. 2. The following are conditions under which properties not designated to be acquired may be;acquired: The City may acquire property by gift, dedication, condemnation or direct purchase trom willing sellers in order to achieve the objectives of this tax increment financing plan. Such acquisitions will be undertaken only when there is assurance of funding to finance the acquisition and related costs. G. ESTIMATE OF COSTS The estimate of public costs associated with the Interchange TIF District are outlined in the following line item budget: • Tax Increment Financing Plan for the Interchange Tax Increment Financing District Page I[3 Estimate of Public Costs Qualified Costs Land Acquisition, Site Work, Public Improvements, Asbestos Abatement, Demolition and Removal $6,300,000 Administration. (10%) 700.000 Total Estimated Public Costs: Interest payments on tax increment bonds and obligations are also considered to be public costs in addition to the above referenced estimate of public costs. Interest payments will be determined at the time of issuance of the bonds and obligations and are dependent on interest rates in effect at such time.. In addition, administration costs to cover city staff and overhead and various consulting fees in an amount not to exceed 10% of total tax increment will be funded with tax increments from the Interchange TIF District in addition to above mentioned costs. Any funds to be expended outside the boundaries of the Interchange TIF District, but within the boundaries of Richfield Redevelopment Project Area, will be less than 25 percent of total tax increment generated by the Interchange TIF District, including administrative costs. Subject to that limitation, and the limitations as described in Section P, the tax increment from the Interchange TIF District may be used to pay for public costs within the Richfield Redevelopment Project Area. H. SOURCES OF REVENUEBONDED INDEBTEDNESS Public improvements costs, acquisition, relocation, and site preparation costs and other costs outlined in the Uses of Funds will be financed primarily through the annual collection of tax increments. The HRA or City reserve the right to use other sources of revenue legally applicable to the Redevelopment Plan and the Tax Increment Financing Plan, including, but not limited to, special assessments, general property taxes, state aid for road maintenance and construction, proceeds from the sale of land, other contributions from the Developer and investment income, to pay for the Estimated Public Costs. The HRA or City reserve the right to incur bonded indebtedness as a result of the Tax Increment Financing Plan. Additional indebtedness may be required to finance other authorized activities. This provision does not obligate the HRA or City to incur debt. The HRA or City will issue bonds only upon> the determination that such action is in the best interest of the HRA or City. The HRA may also finance the activities to be undertaken pursuant to the Tax Increment Financing Plan through loans from filn~ls of the HRA or to reimburse the Developer on a "pay-as-you-go" basis for eligible activities paid for by the Deg eloper. The total principal amount of bonded indebtedness related to the use of tax increment fin~Incin~ will not exceed $4,500,000 including pay-as-you-go obligations without an amendment to the Tax Increment Financing Plan pursuant to applicable statutory requirements. I. ORIGINAL TAX CAPACITY Pursuant to Minnesota Statutes Section 469.174, Subdivision 7 and Section -169.177, Subdivision 1, the Original Net Tax Capacity (OTC) for the Interchange TIF District is based on the value placed on the property by the assessor in 1996 for taxes payable 1997. The tax capacity as certified is estimated to be $180,100 for taxes payable in 1997. Tax Increment Financing Plan for the Interchange Tax Increment Financing District Page II-4 The original local tax rate for the Interchange TIF District will be the tax rate for taxes payable in 1997 of 140.707 °Io. Each year, the Hennepin County Department of Property Tax and Public Records will measure the amount of increase or decrease in the total tax capacity of the Interchange TIF District to calculate the tax increment payable to the .City and the Authority. In any year in which there is an increase in total tax capacity in the tax increment financing district above the annual percentage of annual increase, a tax increment will be payable. In any year in which the total tax capacity in the Interchange TIF District declines below the original tax capacity, no additional valuation will be captured and no tax increment will be payable. The County Auditor shall certify in each year after the date the OTC was certified, the amount the OTC has increased or decreased as a result of: 1. change in tax exempt status of property; 2. reduction or enlargement of the geographic boundaries of the district; 3. change due to stipulations, adjustments, negotiated orcourt-ordered abatements; 4. change in the use of the property and classification; or 5. change in state law governing class rates. AMOUNT OF CAPTURED TAX CAPACITY Pursuant to Minnesota Statutes, Section 469..174 Subdivision 4 and Minnesota Statutes, Section 469.177, Subdivision 2, the estimated Captured Net Tax Capacity (CTC) of the Interchange TIF District, upon completion of all phases of the project, will annually approximate 175,248. The City requests 100 percent of the available increase in tax capacity for repayment of debt and current expenditures. The original tax capacity and project tax capacity are estimated at current market values and class rates to be the total amount when all development is in place and uses of the property have changed. Estimated Project Tax Capacity 355,348 less Original Tax Capacity 180.100 Estimated Captured Tax Capacity 175,248 The Authority elects the calculation of tax increment under Section 469.177, subd. 3(a), which means that fiscal disparities contribution will be made from inside the District. K. DURATION OF THE DISTRICT Pursuant to Minnesota Statutes, Section 469.175, Subdivision 1, the duration of the Interchal3.ge TIF District must be indicated within the Plan. The duration of the Interchange TIF District will be 25 years from payment of the first tax increment expected in 1999. Thus, it is estimated that the Interchange TIF District, including any modifications of the Plan for subsequent phases or other changes, would terminate at the end of the year 2023. The City and the Authority reserve the right to decertify the Interchange TIF District prior to the legally required date. ~~ L. ESTIMATED IMPACT ON OTHER TAXING JURISDICTIONS The estimated impact on other taxing jurisdictions assumes construction would have occurred without the creation of the Interchange TIF District. If the construction is a result of tax increment financing, the impact is $0 to other entities. Notwithstanding the fact that the fiscal impact on the other taxing jurisdictions is $0 Tax Increment Financing Plan for the Interchange Tax Increment Financing District Page II-5 due to the fact that the construction would not have occurred without the assistance of the city, the following estimated impact of the Interchange TIF District would be as follows if the "but for" test was not met: IMPACT ON TAX BASE TAXING JURISDICTION ENTITY'S 1995/96 TOTAL NET TAX CAPACITY CAPTURED TAX CAPACITY (CTC) PERCENT OF CTC TO ENTITY TOTAL Hennepin County 1,006,485,910 175,248 0.02% ISD No. 280 31,537,789 175,248 0.56% City of Richfield- 22,075,804 175,248 0.79% Other N/A N/A IMPACT ON TAX RATES ENTITY 1995/96 TAX RATE PERCENT OF TOTAL CTC POTENTIAL TAXES Hennepin County .37270 26.49% 175,248 65,315 ISD No. 280 .69076 49.09% 175,248 121,054 City of Richfield .26336 18.72% 175,248 46,153 Other .08025 5.70% 175,248 14,064 TOTAL 1.40707 100.00% 246,586 The estimates listed above display captured tax capacity when all construction is completed, The tax rates and tax capacities are the payable 1996 figures for all jurisdictions. The Interchange TIF District will be certified under rates for tax year payable 1997. In addition, the impacts on School District No. 280 do not include the effect of state aids for education upon school district funding. M. MODIFICATIONS OF THE TAX INCREMENT FINANCING DISTRICT In accordance with Minnesota Statutes, Section 469.175, Subdivision 4, any reduction ur enlsr`zment of the geographic area of the project or tax increment financing district, increase in amount of bonded indebtedness to be incurred, including a determination to capitalize interest on debt if that determination was not a part of the original plan, or to increase or decrease the amount of interest on "the debt to be capitalized, increase in the portion of the captured tax capacity to be retained by the City or Authority, increase in total estimated tax increment expenditures or designation of additional property to be acquired by the City or Authority shall be approved upon the notice and after the discussion, public hearing and flndin~s required for approval of the original plan. The geographic area of a tax increment financing district may be reduced, but shall not be Tax Increment Financing Plan for the Interchange Tax Increment Financing District Page II-6 enlarged after five years following the date of certification-of the original tax capacity by the county auditor or by approximately November, 2001. Modifications to the Interchange TIF District, in the form of a budget modification or an expansion of the boundaries, will be recorded in this Plan. N. LIMITATION ON ADMINISTRATNE EXPENSES In accordance with Minnesota Statutes, Section 469.174, Subdivision 14 and Minnesota Statutes, Section 469.176, Subdivision 3, administrative expenses means all expenditures of an .authority other than amounts paid for the purchase of land or amounts paid to contractors or others providing materials and services, including architectural and engineering services, directly connected with the physical development of the real property in the. district, relocation benefits paid to or services. provided for persons residing or businesses located in the district or amounts used to pay interest on, fund a reserve for, or sell at a discount bonds issued pursuant to Section 469.178. Administrative expenses include amounts paid for services provided by bond counsel, fiscal consultants, and planning or economic development consultants. No tax increment shall be used to pay any administrative expenses for a project which exceed ten percent of the total tax increment expenditures authorized by the tax, increment financing plan or the total tax increment expenditures for the project, whichever is less. Pursuant to Minnesota Statutes, Section 469.176, Subdivision 4h, tax increments may be used to pay for the county's actual administrative expenses incurred in connection with the Interchange TIF District. The county may require payment of those expenses by February 15 of the year following the year the expenses were incurred. Pursuant to Minnesota Statutes, Section 469. 177, Subdivision 11, the county treasurer shall deduct an amount equal to 0.1 percent of any increment distributed to an authority or municipality and the county treasurer shall pay the amount deducted to the state treasurer for deposit in the state general fund. O. LIMITATION OF INCREMENT Pursuant to Section 469.176, Subd. 1, of the Tax Increment Financing Act, no tax increment shall be paid to the City for the Tax Increment Financing District after three (3) years from the date of certification of the Original Net Tax Capacity value of the taxable property in the Tax Increment Financing District by the County Auditor unless within the three (3) years period: (a) bonds have been issued pursuant to Section 469.178, or in aid of a project pursuant to any other law, except revenue bonds issued pursuant to Section 469.1..5? to 469.165, or (b) the City has acquired property within the Tax Increment Financing District. or (c) the City has constructed or caused to be constructed public impro~ ements ~rithin the Tax Increment Financing District. The bonds must be issued, or the City must acquire property or construct. or cause public improvements to be constructed by approximately November 1999. The tax increment pledged to the payment of bonds and interest thereon may be discharged and the Tax Increment Financing District may be terminated if sufficient funds have been in;evocably deposited in the debt Tax Increment Financing Plan for the Interchange Tax Increment Financing District Page II-7 service fund or other escrow account held in trust for all outstanding bonds to provide for the payment of the bonds at maturity or redemption date. Pursuant to Minnesota Statutes, Section 469.176, Subdivision 6: if, after foter years from the date of certification of the original tax capacity of the tax increment financing district ptersteant to Minnesota Statues, Section 469.177, no demolition, rehabilitation or renovation of property or other site preparation, incltding gtalified improvement of a street adjacent to a parcel bttt not installation of utility service including sewer or water systems, has been commenced on a parcel located within a tax increment financing district by the authority or by the owner of the parcel in accordance with the tax increment financing plan, no additional tax increment may be taken from that parcel and the original tax capacity of that parcel shall be excluded from the. original tax capacity of the tax increment financing district. If the authority or the owner of the parcel stebsegteently commences demolition, rehabilitation or renovation or other site preparation on that parcel incltding improvement of a street adjacent to that parcel,. in accordance with the tax increment financing plan, the authority shall certify to the county auditor in the annteal disclosure report that the activity has commenced. The cotcnty ateditor shall certify the tax capacity thereof as most recently certif ed by the commissioner of revenue and add it to the original tax capacity of the tax increment financing district. The county ateditor must enforce the provisions of this stebdivision... For ptrposes of this stebdivision, qualified improvements are limited to (1) constrtection or opening of a new street, (2) relocation of a street, and (3) substantial reconstruction or rebuilding of an existing street. The City or a property owner must improve parcel within the Interchange TIF District by approximately November 2000. P. USE OF TAX INCREMENT The Authority hereby determines that it will use 100 percent of the captured net tax capacity of taxable property located in The Interchange TIF District for the following purposes: 1. to pay the principal of and interest on bonds used to finance a project; 2. to finance, or otherwise pay the capital and administration costs of the Redevelopment Project pursuant to the. HRA Act; 3. to pay for project costs as identified in the budget; 4. to finance, or otherwise pay for other purposes as provided in Section 469.176, Suhd. 4, of the Tax Increment Act; 5. To pay principal and interest on any loans, advances or other payments made to the authority or for the benefit of the Redevelopment Project by the Developer; 6. To finance or otherwise pay premiums and other costs for insurance, credit`enhancement, or other security guaranteeing the payment when due of principal and interest on the Tax Increment Bonds or bonds issued pursuant to the Tax Increment Financing Pian or pursuant to Minnesota Statutes, Chapter 462C and Minnesota Statutes, Sections 469.152 to 469.165, or both; and 7. To accumulate or maintain a reserve securing the payment when due of the principal and interest on the tax increment bonds or bonds issued pursuant to Minnesota Statutes, Chapter 462C and Minnesota Statutes, Sections 469.152to 469.1.65, or both. These revenues shall not be used to circumvent any levy limitations applicable to the Authority nor for other purposes prohibited by Section 469.176, subd. 4, of the TIF .pct. Tax Increment Financing Plan for the Interchange Tax Increment Financing District Page II-8 • Tax increments generated in the Interchange TIF District will be paid by Hennepin County to the Authority for the tax increment fund of said District. The Authority will pay to the developers annually an amount not to exceed an amount as specified in a developer's agreement to reimburse the costs of land acquisition, public improvements, demolition and relocation, site preparation, and administration. Remaining increment funds will be used for City administration (10%) and the costs of public improvement activities outside The Interchange TIF District. Q. NOTIFICATION OF PRIOR PLANNED IMPROVEMENTS The Authority shall, after due and diligent search, accompany its request for certification to the County Auditor or its notice of Tax Increment Financing District enlargement with a listing of all properties within the Tax Increment Financing District or area of enlargement for which building permits have been issued during the eighteen (18) months immediately preceding approval of the tax increment financing plan by the municipality pursuant to Section 469.175, Subd. 3, of the Tax Increment Financing Act. The County Auditor shall increase the original value of the Tax Increment Financing District by the value of improvements for which a building permit was issued. Pursuant to Minnesota Statutes, Section 469.177, Subdivision 4, the Authority has reviewed the area to be included in the Interchange TIF District and found no parcel for which building permits have been issued during the 18 months immediately preceding approval of the Plan by the City. If the building permit had been issued within the 18 month period preceding approval of the plan by the City, the county auditor shall increase the original tax capacity of the district by the valuation of the improvements for which the building permit was issued. • R. EXCESS TAX INCREMENTS Pursuant to Minnesota Statutes, Section 469.176, Subdivision 2, in any year in which the tax increment exceeds the amount necessary to pay the costs authorized by the tax increment plan, including the amount necessary to cancel any tax levy as provided in Minnesota Statutes, Section 475.61, Subdivision 3, the authority shall use the excess amount to do any of the following: 1. prepay the outstanding bonds; 2. discharge the pledge of tax increment therefore; 3. pay into an escrow account dedicated to the payment of such bond; or 4. return the excess to the County Auditor for redistribution to the respective taxing jurisdictions in proportion to their tax capacity rate. The Authority may also modify this Plan to authorize additional costs. S. R_9UIREMENT FOR AGREEMENTS WITH THE DEVELOPER The City or Authority will review any Developer's proposal to determine its conforn~ance with the Redevelopment Plan and with applicable municipal ordinances and codes. To facilitate this effort, the following documents may be requested for review and approval: site plan, cunstnrction, mechanical, and electrical system drawings, landscaping plan, grading and storm drainage plan, signage system plan, and any other drawings or narrative deemed necessary by the City or Authority to denwnstrate the conformance of the development with city plans and ordinances. Land acquired by the Gity or authority may be subject to a Contract for Sale upon disposition to the Developer. The general requireluents to be imposed upon the • developer by the Contract for Sale are: Tax Increment Financing Plan for the Interchange Tax Increrren[ Financing District Page II-9 To redevelop the land purchased in accordance with this development plan. 2. To commence and complete the building of improvements on the land within a reasonable period of time as determined by the City or Authority. 3. Not to resell the land before improvements are made without the prior consent of the City or Authority. 4. Not to discriminate on the basis of race, color,. sex, creed or national origin on the sale, lease, transfer or occupancy of the land purchased from the City or Authority. The requirements to be imposed .upon the Developer and the City's or Authority's exact participation in the project will be negotiated as part of the Development Agreement between the City or the Authority and the Developer. T. ASSESSMENT AGREEMENTS Pursuant to Minnesota Statutes, Section 469.177, Subdivision 8, the City or Authority may enter into an agreement in recordable form with the owner of property within the tax increment financing district which establishes a minimum market value of the land and improvements for the duration of the tax increment district. The assessment agreement shall be presented to the county assessor who shall review the plans and specifications for the improvements constructed, review the market value assigned to the land upon which the improvements have been or will be constructed and, so long as the minimum market value contained in the assessment agreement appear, in the judgment of the assessor, to be a reasonable estimate, the assessor may certify the minimum market value agreement. U. ADMINISTRATION OF DISTRICT AND MAINTENANCE OF THE TAX INCREMENT ACCOUNT Administration of the Interchange TlF District will be handled by the Executive Director of the Authority. V. FINANCIAL REPORTING REQUIREMENTS Pursuant to Minnesota Statutes, Section 469.175; Subdivisions 5, 6, and 6(a); a Authority must file an annual disclosure report for all tax increment financing districts with the State Auditor, the County Board, School. Board, and County Auditor. Pursuant to Section 469.175, Subd. 5, of the Tax Increment Financing Act, the Authority must file an annual disclosure report for the Tax Increment Financing District. The report shall be filed with the County Board, County Auditor, School Board, and the State Auditor on or before July 1 of each year. The reporC to be filed by the Authority shall include the following information: 1. the amount and source of revenue in the tax increment account;.. 2. the amount and purpose of expenditures from the account; 3. the amount of any pledge of revenues, including principaLand interest, on any outstanding bond indebtedness; 4. .the original net tax capacity of the Tax Increment Financinb District; 5. the captured net tax capacity retained by the Authority; Tax Increment Financing Plan for the In[erchange Tax Increment Financing District Page II-10 • 6. the captured. net tax capacity hared with- other taxing districts; 7. the tax increment received; and 8. any additional information necessary to .demonstrate compliance with the tax increment financing plan. Section 469.175, Subd. 5, of the Tax Increment Financing Act also provides that an annual statement showing the tax increment received an expended in that year, the original value, captured net tax capacity, amount. of outstanding bonded indebtedness, the amount of the district's increment paid to other governmental bodies, the amount paid for administrative costs, the sum of increments paid, directly or indirectly, for activities and improvements located outside of the district, and any additional information the Authority deems necessary shall be published in a newspaper of general circulation in the City. Pursuant to Minnesota Statutes, Section 469.175, Subd. 6, of the Tax Increment Financing Act, the Authority must annually submit to the State Auditor, on or before July 1, a financial report which shall: 1. provide for full disclosure of the sources and uses of the public funds in the district; 2. permit comparison and reconciliation with the Authority's accounts and financial reports; '3. permit auditing of the funds expended on behalf of the tax increment district or that is funded in part or whole through the use of a development account funded with tax increment from other tax increment districts or with public money; and 4. be consistent with generally accepted accounting principles. The financial report must also include the following: 1. the original net xax capacity of the district; 2. the captured net tax capacity of the district, including the amount of any captured net tax capacity shared with other taxing. districts; 3. for the reporting period and for the duration of the district, the amount budgeted under the tax increment financing plan, and the actual. amount expended for, at lest, the following categories: a. acquisition of land and buildings through condemnation or purchase; b, site improvements or preparation costs; c. installation of public utilities, parking facilities, streets, roads, sidewalks, or other similar public improvements; d. administrative costs, including the allocated cost of the city: e. public park facilities, facilities for social, recreational, or conference purposes, or other similar public improvements; and 4. forproperties sold to developers, the total costs of the property to the authority and the price paid the developers; 5. the amount of increments rebated or paid to developers or property otivners for privately .financed improvements or other qualifying costs, other than those r~rted under clause (3), that were issued on behalf of private entities for facilities located in the Interchange TIF District. Pursuant to Minnesota Statutes, Section 469.175, subdivision 6a, theAuthority must also annually report to the State Auditor before or on July 1 of each year the following amounts for the entire City: Tax Increment Financing Plan for the Interchange Tax Increment Financing District Page II-I 1 the total principal amount of nondefeased bonds that are outstanding at the end of the previous calendar year; and the total annual amount of principal and interest payments that are due for the current calendar year on (I) general obligation tax increment financing bonds and (ii) other tax increment financing bonds. and for each tax increment financing district within the City: 1. the type of tax increment financing district; 2. date on which the district is required to be decertified; 3. amount of any payments and the value of in-kind benefits, such as physical improvements and the used of building space, that are financed with revenues derived from increments and are provided to another governmental unit (other than the municipality) during the preceding calendar year; 4. the tax increment revenues for taxes payable in the current calendar year; 5. whether the tax increment financing plan or other governing document permits increment revenues to be expended outside of the tax increment financing district; 6. any additional information that the State Auditor may require. Copies of this report must also be provided to the county and school district boards. W. MUNICIPAL APPROVAL AND PUBLIC PURPOSE Pursuant to Minnesota Statutes, Section 469.175, Subdivision 3, before or at the time of approval of the tax increment financing plan, the municipality shall make the following findings and shall set forth in writing the reasons and supporting facts for each determination. Finding that the Interchange Tax Increment Financing District is a redevelopment district as defcned in Minnesota Statttes, Section 469.175, Stcbd. 10. The Interchange TIF District consists of 1 parcel of property. The District qualifies as a redevelopment district as defined in Minnesota Statutes, Section 469.174, subd. 10. 2. Finding that the proposed development, in the opinion of the City Council and the Accthorit_y, w.o<<lc! .not occur solely through private investment within the reasonably foreseeable future and that-tne increased market value of the site that coteld reasonably be expected to occur without the use of tax increment fnancing wotdd be less than the increase in the market value estimated to result from the proposed development after subtracting the present value of the projected tax increments. for the maximtem duration of the district permitted by the plan. Due to the high cost of redevelopment on the parcel currently occupied by a ubstandard building and the cost of financing the proposed improvements, this project is feasible'bnly through assistance, in part, from tax increment financing. A comparative analysis of estimated market values .both with and without establishment of the Interchange Tax Increment Financing District and the use.of tax increments has been performed as described above. Such analysis is contained in Appendix B of the Tax Increment Financing Plan for Tax Increment Financing Plan for the Interchange Tax Increment Financing District Page II-12 . the Interchange Tax Increment Financing. District and indicates that the increase in estimated market value of the proposed development (less the indicated subtractions) exceeds the estimated market value of the site absent the establishment of the Interchange Tax Increment Financing District and the use of tax increments (See. Appendix B). Finding that the Tax Increment Financing Plan conforms to the general plan for the development or redevelopment of the municipality as a whole. The site is appropriately zoned. The Tax Increment Financing Plan has been reviewed by the Planning Commission and been found to confirm to the general development plan of the City. 4. Finding that the Tax Increment Financing Plan for the Interchange Tax'Increment Financing District will afford maximum opporttcnity, consistent .with the sound needs of the City as a whole, for the development of Richfield Redevelopment Project Area by private enterprise. The establishment of the Interchange Tax Increment Financing District will result in increased employment for the City and will eliminate a blighting influence. X. COUNTY ROAD COSTS Pursuant to Minnesota Statutes, Section 469.175, Subdivision la, the county board may require the authority to pay for all or part of the cost of county road improvements if the proposed development to be assisted by tax increment will, in the judgement of the county, substantially increase the use of county roads requiring construction of road improvements or other road costs and if the road improvements are not scheduled within the next five years under a capital improvement plan or other county plan. The improvements outlined in the Plan serve as notice to the county that the development of the commercial retail facility will be assisted with tax increment. In the opinion of the City, the Authority, and consultants, the proposed development will have little or no impact upon county roads. If the county elects to use increments to improve county roads, it must notify the City within thirty days of receipt of this plan. Y. FISCAL DISPARITIES ELECTION Pursuant to Minnesota Statutes, Section 469.177, Subdivision 3, the governing body may elect one of two methods to calculate fiscal disparities. It the calculations pursuant to Minnesota Statutes, Section 469.177, subdivision 3, clause a, are followed the following method of computation shall apply: (1) The original tax capacity and the current tax capacity shall be determined before the application... of the fiscal disparity provisions of Chapter 473F. Where the original tax capacity is equal to or greater than the current tax capacity, there is no captured tax capacit}~ and no tax increment determination. Where the original tax capacity is less than the current tax capacity, the difference between the original tax capacity and the current tax capacity is the captured tax capacity. This amount less any portion thereof which the authority has designated, in its tax increment financing plan, to share with the local! taxing districts is th~~ retained captured tax capacity of the authority. (2) The county auditor shall exclude the retained captured tax capacity of nc~~ authority frum the taxable value of the local taxing districts in determining local taxing district tax capacity rates: The tax capacity rates so determined are to be extended against the retained captured tax capacity of the authority as well as the taxable value of the local taxing districts. The tax generated by the extension `of the lesser of (A) the local taxing Tax Increment Financing Plan for the Interchange Tax Increment Financing District Page I[-13 district tax capacity rates or (B) the original tax capacity rate to the retained captured tax capacity of the authority is the tax increment of the authority. If the calculations pursuant to Minnesota Statutes, Section 469.177, subdivision 3, clause b, are followed, the following method of computation shall apply: (I) The original tax capacit}> shall be determined before the application of the fiscal disparity provisions of chapter 473F. The current tax capacity shall exclude any fiscal disparity commercial-industrial tax capacity increase between the original year and the current year multiplied by the fiscal disparit}> ratio determined pursuant to Section 473F.08, subdivision 6. Where the original tax capacity is equal to or greater than the current tax capacit}~, there is no captured tax capacity and no tax increment determination. Where the original tax capacity is less than the current tax capacity, the difference between the original tax capacity and the cctrrent tax capacity is the captured tax capacity. This amount less arty portion thereof which the authority has designated, in its tax increment financing plan, to share with the local taxing districts is the retained captured tax capacity of the authority. (2) The cottnt}~ auditor shall exclude the retained captured tax capacity of the authority from the taxable value of the local taxing districts in determining local taxing district tax capacity rates. The tax capacity rates so determined are to be extended against the retained captured tax capacity of the authority as well as the taxable value of the local taxing districts. The tax generated by the extension of the less of (A) the local taxing district tax capacit}~ rates or (B) the original tax capacity rate to the retained captured tax capacity of the authority is the tax increment of the authority. The Authority shall submit to the County Auditor at the time of the request for certification which method of computation of fiscal disparities the authority elected. The City of Richfield will choose to calculate fiscal disparities by clause a. According to Minnesota Statutes, Section 469.177, Subdivision 3: (c) The method of computation of tax increment applied to a district pursuant to paragraph (a) or (b) shall remain the same for the duration of the district, except that the governing body may elect to change its election. from the method of computation in paragraph (a) to the method in paragraph (b). Z. OTHER LIMITATIONS ON THE USE OF TAX INCREMENT 1. General Limitations. All revenue derived from tax increment shall be used in accordance with theaax increment financing plan. The revenues shall be used to finance or otherwise pay public capital and administration costs pursuant to Minnesota Statues, Section 469.124 through 469.134.- These revenues shall not be used to circumvent existing levy limit law. No revenues derived from tax increment shall be used for the construction, renovation, operation or maintenance of a building to be used primarily arid regularly for conducting the business of a municipality, county, school district, or any other local unit of government or the state or federal government; this provision shall not prohibit the use of revenues derived from tax increments for the construction or renovation of a parking structure, a commons area used as a public park or a facility used for social, recreational or conference purposes and not primarily for conducting the business of the municipality. 2. Pooling Limitations. At least 75 percent of tax increments from the Interchange T1F District must be expended on activities in the Interchange TIF District or to pay,bonds"to the extent that the proceeds of the bonds were used to finance activities within said district or o pay, or secure payment of, debt service on credit enhanced bonds. Not more than 25 percent of said tax increments may be expended, Tax Increment Financing Plan for the Interchange Tax Increment Financing District Page II-14 through a development fund or otherwise, on activities outside of the Interchange TIF District except . to pay, or secure payment of, debt service on credit enhanced bonds. For purposes of applying this restriction, all administrative expenses must be treated as if they were solely for activities outside of the Interchange TIF District. 3. Five Year Limitation. on Commitment of Tax Increments. Tax Increments derived from the Interchange TIF District shall be deemed to have satisfied the 75 percent test set forth in paragraph (2) above only if the five year rule set forth in Minnesota Statutes, Section 469.1763, subdivision 3, has been satisfied; and beginning with the sixth year following certification of the Interchange TIF District, 75 percent of said tax increments that remain after expenditures permitted under said five year rule must be used only to pay previously commitment expenditures or credit enhanced bonds as more fully set forth in Minnesota Statutes, Section 469.1763, subdivision 4. 4. Redevelopment District. At least 90 percent of the revenues derived from. tax increment from a redevelopment district must be used to finance the cost of correcting conditions that allow designation of redevelopment and renewal and renovation districts under Section 469.174. These costs include acquiring properties containing structurally substandard buildings or improvements, acquiring adjacent parcels necessary to provide a site of sufficient size to permit development, demolition of structures, clearing of the land, and installation of utilities, roads, sidewalks, and parking facilities for the site. The allocated administrative expenses of the authority may be included in the qualifying costs. AA. STATE TAX INCREMENT FINANCING AID Pursuant to Minnesota Statues, Section 273.1399, for tax increment financing districts for which certification was requested after April 30, 1990, a municipality incurs a reduction in state tax increment financing aid (RISTIFA) applied to the municipality's Local Government Aids (LGA) first and, Homestead and Agricultural Aid (HACA) second, in an amount .equal to a formula based upon the equalized qualifying captured tax capacity (QCTC) of the tax increment financing district. Pursuant to Minnesota Statutes, Section 273.1399, Subdivision 6, for tax increment financing district certified after June 30, 1994, the Authority may choose an option to the LGA-HACA penalty. A tax increment financing district is exempt if the Authority elects at the time of approving the tax increment financing plan to make a qualifying local contribution. To qualify for the exemption in each year, the Authority must make a qualifying local contribution to the project of a certain percentage. The local contribution for `a redevelopment district is 5 percent. The maximum local contribution for all districts in the Authority is''limited to two percent of the City's net tax capacity. The amount of the local contribution must be made out of unrestricted money of the authority or municipality, such as the general fund, a property tax levy, or a federal or a state grand-in-aid which may be spent for general government purposes. The local contribution may not be made, directly or indirectly, with tax increments or developer payments. The local contribution must be used to pay project costs and cannot be used for general government purposes. The Authority elects to make the annual 5% local contribution to the project to exempt itself from the LGA- HACA penalty. Tax Increment Financing Plan for the Interchange Tax Increment Financing District Page II-15 AB. ECONOMIC DEVELOPMENT AND JOB CREATION To the extent applicable, the Authority agrees to comply with Minnesota Statutes, Section 116J.991, which states that a business receiving state or local government assistance for economic development or job growth purposes, including tax increment financing, must create a net increase in jobs and meet wage level goals in Minnesota within two years of receiving assistance (See Appendix D). AC. SUMMARY The HRA of the City of Richfield is establishing the Interchange Tax Increment Financing District to preserve and enhance the tax base, redevelopment substandard areas, and increase employment of the City. The Tax Increment Financing Plan for the Interchange Tax Increment Financing District was' prepared by Ehlers and Associates, Inc., 2950 Norwest Center, 90 South Seventh Street, Minneapolis, Minnesota 55402-4100, telephone (612) 339-8291. Tax Increment Financing Plan for the Interchange Tax Increment Financing District Page II-16 EXHIBIT A Boundary Maps of the Richfield Redevelopment Project Area and The Interchange Tax Increment Financing District A- I The Interchange Tax Increment Financing District w Q V F- W a O O f.L ~{.. V f.L N N r/ iz NsloNru rY zz tr Iz YI OZ YI °I A10'il3lON0'1 '3Ar rr03] Y7.1 r111 YI,1 ; M N N w ~ n • N V } LL O r ~ v ==2 _ ` c v U d N. W F H `N f N F ~ ~ _ N M N O N N N M N t ~ ~ ~ ~ y=j w ''~ • ~ ~ ~ e• S N ~ N ~ '. N ~ ~ ~\ MOll3l,NOl ~'i.-IL_..iL._. 3Ar rra3] ~OOOO "'°' !'~ Y l u 1~ 'Ci~OU ~ Y1,1 1~~~C~~Ci0 NO1,N11"OQ7. Y/ SI 0QI~~~~~~1~: OQ~~ YI CI Y, Z, DOOCiCOC~u~:~DO~C~ ~r^~~~jjL~J~ ~ 1llf~~~L~1L~J~~ YI it YI 11 i .~ .~ u~~ 1 I^~~o~~ ii YI 11 YI OI 1 ~,C II '' ^^ _ 101,13 ii Q N ICU1f' I/~ ~J~~L~'.'~^i~~ ri 101,3 M.]IN] I u i ~uul.~Cr!~Ol.._~~~ ~~~ O91]IN] ,n.wn,o] ,i ~ J COQCOOC~CO~ i~ snalrmo] CC'OC! OOCO~ !~; ~ CN.,Irlt0 ~ i CO~C~COQC~C~ ,i; ,rrd o r1nn r C! :~IC..~G~iCO~C~C- I~, aNr,X.o ~ '3Ar ONr,lYOd ~ '~' 1 ~I L~~~) ('^~.1 I . '3Ar OMr'LLrOd (~ Y11; ~ C~C ~~' 9 YI. (~~ -_r ;CCU LT~~ X00 ~ C. "' :a r/c rY2 (~ jC~~7 II~I~~_ , t..-;~.q~O(~jCIC-~,i ,YZ ~ 1.1 --~' ~I~ Cc= =tC~C'~C~O ;N3e31s m° '3Ar 13110]IN ~~~~~`-`~-~~ ~~~~~--+~~; L~ •3Ar 1311001N 1130sIrlY 1 i `-~ I "~~ ~~.~ ~~~~~-={{--~~; 1130str18 L ~;I~C ^OO IOC~OCL~; Nl°0M1N3iM a N1rOM1N31M I I I lrn°s1,ld 11 ~C C.~ ~ ~"©~~~~~^`-~-' AilnYSl,id ~ LNtsr3ld ~s! ' ~ ~ r„~•~~,"t~.-.-.-.~. 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"'~ ~~~^~~~ ~l~J a II ~ n ~~~ ~ 0131lrM i/ '3Ar 31rON11 ~ V ~ ~~-~~ _~f~ '3A• 3lrOMil M]I Y01• Ii; I~ ` 1 ~ ~~QC~C~~t1.~^J~ N]Ir01t /~N 1NrArs I' i ~ ~ ,~~J ~ LL 1Nt/rY i.f. xrllo] \~ i : U~ o ~a~~~~ xrelo] ~ `: 1_r' 1NOdn0 - I o < QO~~ 1MOdn0 NOSr3n3 \~ 1 ~~ 3 r ~~~ 1N0113r! _ `~~-- _ ___~.~___ ~ ~L~IL.c~lO N0Sr3n3 Q~ ~i 1110R3iW ~ Orrr19 r~-!;~-- ~-~ ~~. d ~~~~ i~ Orrrlo IOIOYIInN '~~~~(~~jj ` `~~`~~~(~a~pp~r~-~~--_~_ ~ ~ lOl0Y1YnN 7NIAr1 0~~~`JCf~~~~-Ji3~ _- _='- ~~~C _'t:~:0~1,~'C_.J ~ ~I) ~~ti~ ,Merl ~ 53nrr ' L I~JO~~L~~L ~J~~ ':: XONMr. )fOM71 I tttYYY I - Nr,OI ~-1 Nr,OI Nr,rorl ~E~ODC~~OCCC ~ ~(~~+j Nr,row N01M3N I`-~~~~I~i J^~~~ ~j I~l~l p N01M7N, r3ello ~~0L_:~~l~~f~1~i._ ~L~C'.r~~ J ~~ f~I '3Ar NN3d ~` (~~'~~--+^~fL~-!~~~ ~~ (1~ ~ r3A110 N33n0 ~I 'r ~~~~~^1 II It_J ~I,A ~ ~ N33MNN3d 1,3ssnr ,'(I~, `'~= ~ ~ 1135snr Nr01r3Nf ' ` ~:~ C-- l~r~~~..I a IU SrwONI ; i-~;~J .ol ~-~~OJ. Il_ _ lu SrwONI Noldn ! ~ = ~~-~ r ~^ D ~ Noldn 1N )]NIA ~,~ ~'l ~ ~-~~`--~! i' I~ II I~~'_. ~• LN7]NIA NYOYMSq - ~~~ _~~:_JI ~{ ~ I~ NYMNSrM __ ~I~_ ~3er s3xr3x 1~~--~~++~-• .++~-. ~~ I ~3er s3xr3x >. • 3 N N N N M N ~1 M N N N N N M N y~ y~ q y~ w s2 S 6 ! ! ~ r _ 2 . _ .: N g N N O 41 L~-~ ., H W ~ 2 i 0 C .~ c M~~1 L V `~ r d Z V d C t W Q~ a- r wL, AWA ~i~i d dr1 a dr 0 EXHIBIT B Cashflow Analysis and Base Value Analysis for The Interchange Tax Increment Financing District • The Interchange Tax [ncrement Financing District B-1 09/1 N96 Ciry of Ridtfield - Naegle Project T.I.F. CASH FLOW ASSUMPTIONS - O~Yo Inflation & Fiscal Disparities at Current Rate IMlation Rare: o.oooa96 Pay-As-You-Go Inrereat Rare: Tax EzOertsion Rare: Fmicai Disparties Rere: e.soo96 1.407070 15.8922% LAND I BUILDING I TOTAL I TAX I Tax PROJECT INFORMATION Tvt~e of Tax Increment District: New Redevelopment District Type of Total Taxes Per Total Taxes Tax Tax Market Date Date Use Sg. Ft Sq. Ft Capacity Rate Value Assessable Payable Retail - I 100,000 5.00 500,000 355,348 4.60% 7,724,964 1998 1999 Retail-II 25,000 5.00 125,000 88,837 4.60% 1,931,241 1999 2000 ToffiI 125,000 625,000 444,185 9,6562(15 TAX INCREMENT CASH FLOW PERIOD BEGINNING Yrs. Mth. Yr. Base Tax c' Project Tax Captured Tex Semi-Annuat Gross Tax Increment Admin. at 10.00% Finical Disparties 15.8922% Future Value Net Tax Increment Present Value Net Tax Increment Local Match 5.0096 PERIOD ENDING Yrs. Mlh. Yr. 0.0 OB-Ot 1996 180,100 180,100 0 0 0 0 0 0 0 0.0 02-01 1997 0.0 02-01 1997 180,100 180,100 0 0 0 0 0 0 0 0.0 08-01 1997 0.0 08-01 1997 180,100 180,100 0 0 0 0 0 0 0 0.0 02-01 1998 0.0 02-01 1998 180,100 180,100 0 0 0 0 0 0 0 0.0 08.01 1998 0.0 08-01 1998 180,100 180,100 0 0 0 0 0 0 0 0.0 02-OT 1999 0.0 02-01 1999 180,100 355,348 175,248 123,293 (12,329) (19,594) 91,370 71,178 6,165 0.5 08.01 1999 0.5 08-01 1999 180,100 355,348 175,248 123,293 (12,329) (19,594) 182,740 139,455 6,185 1.0 02-01 2000 t.0 02-01 2000 180,100 444,185 264,085 185,793 (18,579) (29,527) 320,427 238,148 9,290 1.5 08-01 2000 1.5 0&01 2000 - 180,100 444,185 264,085 185,793 (18,579) (29,527) 458,115 332,817 9,290 2.0 02-01 2001 2.0 02-0t 2001 180,100 444,185 264,085 185,793 (18,579) (29,527) 595,802 423,627 9,290 2.5 08-01 2001 2.5 08-01 2001 180,100 444,185 264,085 165,793 (18,579) (29,527) 733,489 510,735 9,290 3.0 02-01 2002 3.0 02-0i 2002 180,100 444,185 264,085 185,783 (18,579) (29,527) 871,177 594,291 9,290 3.5 OB-01 2002 3.5 OB-01 2002 180,100 444,185 284,085 185,793 (18,579) (29,527) 7,008,864 674,442 9,290 4.0 02-Ot 2003 4.0 02-01 2003 180,100 444,185 264,085 185,793 (18,579) (29,527) 1,146,552 751,325 9,290 4.5 08.01 2003 4.5 08-01 2003 180,100 444,185 264,085 185,793 (18,579) (29,527) 1,284,239 825,073 9,290 5.0 02-Ot 2004 5.0 02-01 2004 180,100 444,185 264,085 185,793 (18,579) (29,527) 1,421,926 895,815 9,290 5.5 08.01 2004 5.5 08-0t 2004 180,100 444,185 264,085 185,793 (18,579) (29,527) 1,559,614 963,673 9,290 8.0 02-01 2005 6.0 02-Ot 2005 180,100 444,185 264,085 185,793 (18,579) (29,527) 1,897,301 1,026,765 9,290 6.5 08.01 2005 6.5 0&01 2005 180,100 444,185 264,085 185,793 (18,579) (29,527). 1,834,968 1,091,203 9,290 7.0 02-Ot 2006 7.0 02-Ot 2006 180,100 444,185 264,065 . 185,793 (18,579) (29,527) 1,872,876 1,151,095 9,290 7.5 08.07 2006. 7.5 08-01 2006 180,100 444,185 264,085 185,793 (18,579) (29,527) 2,110,363 1,208,548 9;290 8.0 02-01 2007 8.0 02-01 2007 180,100 444,185 264,085 185,793 (18,579) (29,527) 2,248,050 1,263,655 9,290 8.5 OB-01 2007 8.5 08-07 2007 180,100 444,185 284,065 185,793 (18,579) (29,527) 2,385,738 1,316,517 9,290 9.0 02-01 2008 9.0 02-Ot 2008 180,100 444,185 264,085 185,793 (18,579) (29,527) 2,523,425 1,367,224 9,290 9.5 OB-01 2008 9.5 08-01 2008 180,[00 444,165 264,065 185,793 (18,579) (29,527) 2,661,112 1,415,864 9,290 10.0 02-01 2009 10.0 02-01 2009 180,100 444,185 264,085 185,793 (16,579) (29,527) 2,798,800 1,482,521 9,290 10.5 08-01 2009 10.5 0&01 2009 180,100 444,185 264,085 185,793 (18,579) (29,527) 2,938,487 1,507,278 9,290 11.0 02-01 2010 11.0 02-Ot 2010 160,100 444,185 264,085 185,793 (18,579) (29.527) 3,074,175 1,550,206 9,290 11.5 08.01 2010 11.5 08-07 2010 180,100 444,185 264,085 185,793 (18,579) (29,527) 3,211,862 1,591,388 9,290 12.0 02-01 2011 12.0 02-01 2011 180,100 444,185 264,085 185,793 (18,579) (29,527) 3,349,549 1,630,888 9,290 12.5 OB-01 2011 72.5 08-0t 2011 180,100 444,165 284,085 185,793 (18,579) (29,527) 3,487,237 1,668,779 9,290 13.0 02-01 2012 13.0 02-01 2012 180,100 444,185 264,085 185,793 (18,579) (29,527) 3,624,924 1,705,125 9,290 13.5 08-01 2012 73.5 OB-01 2072 180,100 444,185 264,085 185,793 (18,579) (29.527) 3,762,811 1,739,989 9,290 14.0 02-01 2013 114.0 02-0i 2013 [80,100 444,185 264,085 185,793 (18,579) (29,527) 3,900,299 1,773,433 9,290 14.5 08-01 2013 ~ 14.5 OB-Ot 2013 180,100 444,185 264,085 185,793 (18,579) (29,527) 4,037,986 1,805,512 9,290 15.0 02-Ot 2014 75.0 02-0t 2014 180,100 444,185 264,085 185,793 (18,579) (29,527) 4,175,673 1,836,284 9,290 15.5 08-01 2014 15.5 OB-Ot 2014 180,100 444,185 264,085 185,793 (18,579) (29,527) 4,313,361 1,865,802 9,290 16.0 02-01 2015 j 16.0 02-0t 2015 180,100 444,185 264,085 185,793 (18,579) (29,527) 4,451,048 1,894,118 9,290 16.5 08.01 2015 16.5 OB-0t 2015 160,100 444,185 284,085 185,793 (18,579) (29,527) 4,588,736 1,921,278 9,290 17.0 02-01 2016 17.0 02.01 2076 180,100 444,185 264,085 185,793 (18,579) (29,527) 4,726,423 1,947,329 9,290 17.5 08-01 2016 117.5 OB•Ot 2016 I. 180,[00 444,185 264,085 185,793 (18,579) (29,527) 4,864,110 1,972,319 9,290 18.0 02-01 2017 16.0 02.01 2017 180,[00 444,185 264,065 185,793 (18,579) (29,527) 5,001,798 1,996,291 9,290 18.5 0&01 2017 i 18.5 08-01 2077 180,100 444,185 264,085 185,793 (16,579) (29,527) 5,139,485 2,019,285 9,290 19.0 02-01 2018 19.0 02-01 2018 180,100 444,185 264,085 185,793 (18,579) (29,527) 5,277,172 2,041,342 9,290 19.5 08.01 2018 19.5 OB-01 2078 180,100 444,185 264,085 185,793 (18,579) (29,527) 5,414,860 2,062,500 9,290 20.0 02-01 2019 20.0 02.01 Y079 j 180,100 444,165 264,085 185,793 (18,579) (29,527) 5,552,547 2,082,795 9,290 20.5 08.01 2019 20.5 08.01 2019 j 180,100 444,185 264,085 185,793 (18,579) (29,527) 5,690,234 2,102,263 9,290 21.0 02.01 2020 27.0 02.07 2020 180,100 444,185 264,085 185,793 (18,579) (29,527) 5,827,922 2,120,938 9,290 21.5 08.01 2020 21.5 OB-0t 2020 ~ 180,100 444,165 264,085 185,793 (18,579) (29,527) 5,965,609 2,138,851 9,290 22.0 02-Ot 2021 22.0 02-0t 2021 180,[00 444,185 264,085 185,793 (18,579) (29,527) 8,103,297 2,156,033 9,290 22.5 08-01 2021 22.5 08.01 2027 180,100 444,165 264,085 185,793 (18,579) (29,527) 6,240,984 2,172,515 9,290 23.0 02-01 2022 123.0 OZ-01 2022 I 780,100 444,185 264,085 185,793 (18,579) (29,527) 6,378,671 2,188,326 9,290 23.5 0&01 '2022 23.5 OB-01 2022 180,100 444,185 264,0&5 185,793 (18,579) (29,527) 6,516,359 2,203,491 9,290 24.0 02-01 2023 2a.0 02.01 2023 180,100 444,[85 264,085 185,793 (18,579) (29,527) 6,654,046 2,218,039 9,290 24.5 08-01 2023 124.5 OB-Ot 2023 180,100 444,185 264,085 185,793 18,579 29,52 6,791733 2,231,993 9,290 25.0 02-01 2024 Totals 9,164,687 916, 1,458,46 6,791,733 458,233 (Present Values 3,011,820 (301,182) (478,844) 2,231,9931 I But For Analysis Cunent Market Value -Est 3,950,000 New Market Value - Fit. 9,656,205 Difference 5,706,205 Present Value Of Tax Increment 3,011,820 Difference 2,694,386 Value Likely re Occur Without TIF 0 Difference 2,694,306 Pegg 1 RI100-27 Prepared by Ehlers/Publicorp Inc. NEG-t 09/10V96 - City of Richfreld - Naegle Project Page 7 • PROJECT INFORMATION Type of Tax Increment District: New Redevelopment District Type of Total Tatces Per Total Taxes Tax Tax Market Date Data Use Sq Ft Sg Ft Capacay Rate Value Assessable Payable Retail - I 100,000 5.00 500,000 355,348 4.80% 7,724,984 1998 1999 Retail -11 25 000 500 125 000 88 837 4.80% 1 931 241 1999 2000 Total 125,000 825 000 444185 9656,205 TAX INCREMENT CASH FLOW PERIOD BEGINNING Yrs. Mth. Yr. Base Tax project Tax CapWred Tex a Semi-Annual Gross Tax Increment .Admin. at 10.00% Fisicsl Disparties 15.8922% Future Value Net Tax Intxement Present Value Net Tax Increment Local Match 5.00% PERIOD ENDING Yrs. Mtl1. Yr. 0.0 08-01 1996 180,100 180,100 0 0 0 0 0 0 0 0.0 02-07 1997 D.0 02-01 1997 180,100 180,100 0 0 0 0 0 0 0 0.0 08-01 1997 0.0 08-01 1997 180,100 180,100 0 0 0 0 0 0 0 0.0 02-01 1998 0.0 02-01 1998 180,100 180,100 0 0 0 0 0 0 0 0.0 08-01 1998 0.0 08.01 1998 180,100 180,100 0 0 0 0 0 0 0 0.0 02-01 1999 0.0 02-Ot 7999 180,100 355,348 175,248 123,293 (12,329) (79,594) 91,370 71,178 6,165 0.5 08.01 1999 0.5 OB-01 1999 180,100 355,348 175,248 123,293 (12,329) (19,594) 182,740 139,455 6,165 1.0 02-01 2000 7.0 02-07 2000 180,100 454,846 274,746 193,293 (19,329) (30,719) 925,985 .242,132 9,685 1.5 OB-01 2000 1.5 08-01 2000 180,100 454,846 274,746 193,293 (19,329) (30,719) 489,231 340,622 9,665 2.0 02-01 2001 2.0 02-07 2001 180,100 468,491 288,391 202,893 (20,289) (32,244) 819,591 439,790 10,145 2.5 08-01 2001 2.5 08-01 2007 180,100 488,491 288,391 202,893 (20,289) (32,244) 769.950 534,915 10,145 3.0 02-01 2002 3.0 02-01 2002 180,100 482,546 302,448 212,781 (21,278) (93,818) 927,638 830,808 10,839 3.5 OB-0i 2002 3.5 08-01 2002 180,100 482,548 302,446 212,781 (21,278) (33,816) 1,085,326 722,402 10,639 4.0 02-01 2003 4.0 02-Ot 2003 180,100 497,022 316,922 222,986 (22,297) (35,434) 1,250,561 814,867 11,148 4.5 OB-01 2003 4.5 OB-0i 2003 180,100 497,022 316,922 222,986 (22,297) (35,434) 1,415,796 903,171 11,148 5.0 02-Ot 2004 5.0 02-0t 2004 180,100 511,933 331,833 233,456 (23,346) (37,101) 1,588,805 992,061 11,673 5.5 OB-01 2004 15.5 08.07 2004 160,100 511,933 331,833 233,456 (23,346) (37,101) 1,761,814 1,077,327 11,673 6.0 02-01 2005 16.0 02-01 2005 180,100 527,291 347,191 244,261 (24,426) (38,818) 1,942,831 1,162,902 12,213 6.5~ OB-01 2005 .5 0&Oi 2005 180,100 527,291 347,191 244,261 (24,426) (38,818) 2,123,847 1,244,989 12,213 7.0 02-01 2006 .0 02-Ot 2006 160,100 543,110 383,010 255,390 (25,539) (40,587) 2,313,111 1,327,317 12,770 7.5 08-01 2006 .5 0&01 2006 780,100 543,110 363,010 255,390 (25,539) (40,587) 2,502,375 1,406,289 12,770 8.0 02-01 2007 8.0 02-01 2007 180,100 559,403 379,303. 266,853 (26,885) (42,409) 2,700,134 1,485,441 13,343 8.5 08-01 2007 8.5 0&01 2007 180,700 . 559,403 379,303 266,853 (26,685) (42,409) 2,897,893 1,561,366 13,343 9.0 02-0i 2008 9.0 02-07 2000 180,100 576,185 396,085 278,660 (27,866) (44,285) 3,104,402 1,637,418 13,933 9.5 08.01 2006 9.5 08-01 20013 180,100 576,185 396,085 278,660 (27,866) (44,285) 3,310,910 1,710,370 13,933 10.0 02-01 2009 10.0 02-01 2009 180,100 593,471 413,371 290,821 - (29,082) (46218) 3,526,431 1,783,402 14,541 10.5 OB-Ot 2009 10.5 0&01 2009 180,100 593,471 413,371 290,821 (29,082) (46,218) 3,741,952 1,853,458 14,541 11.0 02.01 2010 11.0 02-01 2070 180,100 611,275 431,175 303,347 .(30,335) (48.208) 3,968,756 1,923,549 15,167 11.5 OB-01 2010 71.5 08-07 2010 180,100 671,275 431,175 303,347 (30,335) (48,208) 4,191,559 1,990,784 15,167 12.0 02-01 2011 12.0 02.01 2011 180,100 629,813 449,513 316,248 (31,825) (50259) 4,425,924 2,058,022 15,812 12.5 OB-01 2011 12.5 08-07 2011 180,100 829,613 449,513 316,248 (31,825) (50259) 4,660,288 2,122,518 15,812 13.0 02-01 2012 ~ 13.0 02-Oi 2012 180,100 648,501 468,401 329,537 (32,954) (52,371) 4,904,501 2,188,984 16,477 13.5 08-01 2012 ~ 13.5 08-01 2012 180,100 648,501 468,401 329,537 (32,954) (52,371) 5,148,713 2,248,823 16,477 14.0 02-01 2013 j 14.0 OZ-01 2013 180,100 667,957 487,857 343,224 (34,322) (54,546) 5,403,089 2,310,804 17,161 14.5 08.01 2013 14.5 08-01 2013 180,100 667,957 487,857 343,224 (34,322) (54.548) 5,657,425 2,369,868 17,761 15.0 02-01 2014 15.0 02-Ot 2014 180,100 887,995 507,895 357,322 (35,732) (56,788) 5,922,228 2,429,048 17,886 15.5 08-01 2014 15.5 0&01 2014 180,100 687,995 507,895 357,322 (35,732) (56,788) 6,187,032 2,485,816 17,886 16.0 02-01 2015 116.0 02-01 2015 180,100 708,635 526,535 371,843 (37,184) (59,094) 6,462,597 2,542,484 18,592 16.5 08-01 2015 16.5 0&01 2075 180,100 708,635 526,535 371,843 (37,184) (59,094) 6,738,161 2,586,841 18,592 17.0 02-01 2016 17.0 02-Ot 2016 i 180,100 729,894 549,794 386,799 (38,680) (81,471) 7,024,810 2,651,079 19,340 17.5 OB-01 2016 17.5 .08.01 2016 ~ 180,100 729,894 549,794 388,799 (38,880) (61,471) 7,311,458 2,703,107 19,340 18.0 02-0i 2017 18.0 02-01 2017 j 180,700 .751,797 571,691 402,205 (40.220) (63,919) 7,609,523 2,755,001 20,110 18.5 08-01 2017 '. 18.5 0&Ot 2017 I 180,100 751,791 571,891 402,205 (40,220) (63,919) 7,907,588 2,804,779 20,110 19.0 02-01 2018 119.0 02-Ot 2018 I 180,100 774,345 594,245 418,072 (41,807) (88,441) 8,217,412 2,854,412 20,904 19.5 OB-01 2018 79.5 0&01 2018 180,100 774,345 594,245 418,072 (41,807) (88,441) 8,527,236 2,902,021 20,904 20.0 02-01 2019 20.0 02-Ot 2019 I 180,100 797,575 1317,475 434,415 (43,442) (69,038) 8,849,172 2,949,475 21,721 20.5 08.01 2019 ~ 20.5 OB-Ot 2019 i 180,100 797,575 617,475 434,415 (43,442) (69,038) 9,171,107 2,994,994 21,721 21.0 02-01 2020 21.0 02-01 2020 i 180,100 621,502 641,402 451,249 (45,125) (71,713) 9,505,518 3,040,349 22,562 21.5 OB-0t 2020 21.5 08-01 2020 180,100 821,502 641,402 451,249 (45,125) (71,713) 9,839,929 3,083,856 22,562 22.0 02-01 2021 22.0 02-Ot 2027 i 180,100 846,147 666,047 468,588 (46,859) (74,489) 10,187,189 3,127,192 23,429 22.5 OB-01 2021 22.5 08-01 2021 ~ 180,100 846,147 666,047 488,588 (46,859) (74,489) 10,534,448 3,168,761 23,429 23.0 02-01 2022 i 23.0 02-Oi 2022 180,100- 871,532 691,432 486,446 (48,645) , (77.307) 10,894,943 3210,156 24,322 23.5 08-01 2022 123.5 OB-Oi 2022 180,700 871,532 691,432 486,446 (48,645) (77,307) 11255,438 3,249,863 24,322 24.0 02-01 2023 24.0 _ 02-01 2023 180,100 897,678 717,578 504,841 (50,484) (80230) 11,629,565 3289,392 25,242 24.5 08-01 2023 24.5 OB-07 2023 780,100 897,678 717,578 504,841 50,484 80230 12,003,691 3327,309 25242 25.0 02-01 2024 Totals 16,197,808 1,619,761 2,574,158 1 0031 809,880 Present Values 4,489,823 448,962 13,532 3,327,309 But For Analysla Current Market Value -Est 3,950,000 New Market Value -Est 9856 Difference 5,708205 Present Value O(Tax Increment 4,489,823 Difference 1,216,3133 Value Likely m Occur Without TIF 0 Difference 1 216,363 RI100-27 Prepared by Ehlers/Publicorp tna NEG-1 T.I.F. CASH FLOW ASSUMPTIONS - ago Inflation & Fiscal Disparities at Current Rate Inflation Rata: 3.0000% Pay-AsXou-Go Interest Rant: 8.500% Tax ExDertsion Rate: 1.407070 c ~..-i na..-w:~ a-ee• 15.8922% EXHIBIT C Redevelopment Qualifications for The Interchange Tax Increment Financing District Please refer to a report entitled "Inspection of Naegele Outdoor Advertising" written by the City of Richfield Public Safety Office and on file with the HRA of the City of Richfield and a report entitled "Phase I Environmental Assessment, Former Naegle Building," also on file with the HRA of the City of Richfield. The Interchange Tax Increment Financing District C- I EXHIBIT D Minnesota Business Assistance Form (Minnesota Department of Trade and Economic Development) • The Interchange Tax Increment Financing District D-1 MwNt"soTA DzrPARTMENr OF TRADE AND ECONOMIC DEVELOPMEM 500 Metro Square 121 7th Place East Saint Paul, Minnesota 55101-2146 USA To all Minnesota government agencies: a~~onomfcpe~•. i .eC `PG ~ ~ ~~ ~ ~ . ~ F.. ~ ~ . ,,. . o ~. • JJ ~•• ~'•..... Minnesota Laws 1995 Chapter 224, Section 58 (authored by Representative Karen Clark and Senator John Hettinger) requires a business receiving state or local govennment assistance as of July 1, 1995 to create a net increase in jobs in Minnesota within two years of receiving assistance and meet wage level and job creation goals established by the funding agency. Businesses not meeting these conditions must repay the assistance at the terms negotiated by the business and the government agency administering the assistance. Each government agency is mandated to annually report wage and job goals and actual progress towazd those goals for each business receiving assistance to the Minnesota Department of Trade and Economic Development (DYED). The law does not stipulate what those goals should be, but does require goals to be established by the . government agency for each individual project. "Business assistance" refers to any business activity within a tax increment financing district and any business grant or business loan using state or local dollars in excess of $25,000. While not defused in the legislation, our assumption is that this would include grants, loans, interest subsidies, tax increment financing (I~, or any public monies directly benefiting a business and given for economic development or job growth purposes. In order to simplify data collection, please use the Minnesota Business Assisia.ZCe Form (reverse side). The form should'be completed by each government entity administering the assistance foe each business receiving assistance. All financial assistance provided to business after July 1, 1995 must be reported These forms must be submitted to "- DYED by March 1 of each year for the previous calcnaar year. Wage Ievcl and job creation goals must be documented until project goals are achieved Sincerely, Ja Yak Commissioner nesota Laws 1995 Chapter 224, Section 58 (M.S.116J.991): A business that receives state or local Qovemment assistance for economic development or rob erowth purposes must create a net increase in robs in Minnesota within two nears of rcceivinQ the assistance. The ¢overnment a¢encv yrovidina the assistance must establish wage level and rob creation Qoals to be met by the business receiving the assistance. A business that fails to meet the Qoals must reyay the assistance to the ~ovemmertt aQency. Each government aQencv must report the wade and rob Foals and the results for each proiect in achievin¢ those goals to the department of trade and economic development The department shall compile and publish the results of the reverts for the previous calendaz Year by June 1 of each near. The reports of the agencies to the department and the compilation revert of the department shall be made available to the public. For the purposes of this suction. "assistance" means a Qrant or loan in excess of $2S 000 or tax increment financing. (612) 297-1291 t~)657-3858 ''• y° 'i'I'Y/rDD (612) 282.6142 • ~..... -oE•~ade ~Q!.~ ~. ~ . i•~ c~ i 0 i p ~~ i ': o off.' -~ }~~b ~ ~~~~~~~~ .Minnesota Business Assistance Form* Minnesota Department of Trade and Economic Development Please type or print in dark ink. r 1. Funding government agency name 2. Agency street address 3. City 4. Zip Code 5. Phone number {area code) 6. Faz number (area code) 7. Contact name 8. Type of government agency _ City -County -Regional -State _ Other (Please indicate) ~~~ .' 9.: tame of T1F district (if applicable) 10. Name of business receiving assistance 11. Date business received assistance 12. Job creation goals for business rxeiving assistance 13. Hourly wage level goals for business receiving assistance 14. Actual jobs created since business received assistance 15. Acwal average hourly wage paid to employees hirzd since business received assistance 16. Last dart actual wage and job creation levels documented * Please complete one form for each business project your agency assisted with ,525,000 or more in public funds. Please send completed form annually by March 1 to: Minnesota Business Assistance Form Minnesota Department of Trade and Economic Development 500 Metro Square 121 East 7th Place St. Paul, Minnesota 55101 or fax report to: (612) 296-1290 For information, call: (612) 297-1291 or1-800-657-3858