03-19-2018 Complete AgendaE C O N O MIC D E V E L O P ME N T AU T H O R IT Y ME E T IN G
R IC H F IE L D MU N IC IPAL C E N TE R, C O U N C IL C H AMB E R S
MAR C H 19, 2018
7:15 PM (I MME D I AT ELY FO L L OWI NG THE HRA ME ETI NG)
C all to Order
Approval of the Minutes
A pproval of the minutes of the regular E conomic D evelopment A uthority meeting of J anuary 16, 2018.
AG E N D A APPR O VAL
1.A pproval of the A genda
O T H E R B U S IN E S S
2.C onsideration of the approval of program guidelines for the A partment Remodeling P rogram.
S taff Report No. 4
E D A D ISC U SSIO N IT E MS
3.E D A D iscussion Items
E X E C U T IV E D IR E C TO R R E P O R T
4.E xecutive D irector's Report
C LAIMS AN D PAYR O L LS
5.C laims and P ayrolls
6.A djournment
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ECONOMIC DEVELOPMENT
AUTHORITY MEETING MINUTES
Richfield, Minnesota
Regular Meeting
January 16, 2018
CALL TO ORDER
The meeting was called to order by President Supple at 7:15 p.m.
HRA Members Mary Supple, Chair; Pat Elliott; Michael Howard; Sue Sandahl and Erin
Vrieze Daniels.
Staff Present: Steve Devich, Executive Director, Julie Urban, Housing Manager and Kate
Aitchison, Housing Specialist.
CONSIDERATION OF THE ELECTION OF OFFICERS FOR THE RICHFIELD ECONOMIC
DEVELOPMENT AUTHORTY (SR No.1)
President Supple opened nominations.
Commissioner Elliott moved that all elections from the Housing and Redevelopment
Authority stand for the Economic Development Authority (Mary Supple as President, Pat Elliott as
Vice President, and Erin Vrieze Daniels as Secretary).
M/Elliott, S/Vrieze Daniels, to move all elections for the 2018 Richfield Housing and
Redevelopment Authority to be the same for the 2018 Richfield Economic Development
Authoirty.
Motion carried 5-0.
APPROVAL OF THE MINUTES OF THE REGULAR EDA MEETING OF NOVEMBER 20, 2017
M/Howard, S/Vrieze Daniels to approve the minutes of the November 20, 2017 Economic
Development Authority regular meeting.
Motion carried 5-0.
Item #1 EDA APPROVAL OF THE AGENDA
M/Sandahl, S/Vrieze Daniels, to approve the agenda.
Motion carried 5-0.
Item #2
CONSIDERATION OF THE CONSENT CALENDAR
Executive Director Devich Presented the Consent Calendar
HRA Meeting Minutes -2- December 18, 2017
A. Consideration of the approval of resolutions designating official depositories for the
Economic Development Authority for 2018, including the approval of collateral. (SR No.
2)
B. Consideration of the approval of designating the Community Development Director as
the Acting Executive Director of the EDA for 2018 in the event the Executive Director is
absent from the City (SR No. 3).
M/Elliot, S/Vrieze Daniels, to approve the consent calendar.
Motion carried 5-0.
Item #2
EDA DISCUSSION ITEMS
Commissioner Howard reported that due to the EDA’s funding of the Kids @ Home
program, additional funds are available. Families can apply to be part of the program
through January 26, 2018. There is room for seven additional households.
Item #5
EXECUTIVE DIRECTOR REPORT
Executive Director Devich stated that he has nothing to report.
ADJOURNMENT
The meeting was adjourned by unanimous consent at 7:20 p.m.
Date Approved: February 20, 2018
Mary B. Supple
EDA President
Kate Aitchison Steven L. Devich
Housing Specialist Executive Director
AGENDA SECTION:OTHER BUSINESS
AGENDA ITEM #2.
S TAFF REPORT NO. 4
E CONOMIC DE V E LOP ME NT AUT HORIT Y
MEET ING
3/19/2018
RE P O RT P RE PA RE D B Y: Julie Urban, Housing Manager
D E PA RTME NT D IRE C TO R RE V IE W: John S tark, C ommunity D evelopment D irector
3/12/2018
O THE R D E PA RTM E NT RE V IE W: N/A
C ITY MA NA G E R RE V IE W: S teven L . D evich, C ity Manager
3/14/2018
I T E M F O R C O UNC IL C O NS ID E RAT I O N:
Consideration of the approval of program guidelines for the Apartment Remodeling Program.
E X E C UT IV E S UM M ARY:
The Economic Development Authority (E D A) has an interest in maintaining and improving the City's
apartment housing stock. To that end, the E D A authorized funding for a Richfield Apartment Remodeling
Program (A RP) in the 2018 E D A Budget. The E D A is being asked to adopt program guidelines to govern the
use of the funds.
The proposed program guidelines include the following components:
Eligible properties are those licensed apartments with four or more units and that are more than 30
years old.
Loans are limited to $50,000 per building and $5,000 per unit.
Loans are in the form of 0% interest, deferred loans with a 15-year term.
1:1 matching funds are required.
Priority would be given to properties that qualify as Naturally Occurring Affordable Housing (i.e., rents
affordable at 60% of the Area Median I ncome) and that do not displace tenants.
Loan recipients are prohibited from discriminating against Section 8 voucher holders.
I n the event of a sale of the property, Borrower's are required to provide the City with 90 days' written
notice, prior to closing on the sale of a property.
RE C O M M E ND E D AC T I O N:
By motion: Adopt program guidelines for the Apartment Remodeling Program and authorize staff to
prepare loan documents in consultation with the E D A Attorney.
B AS IS O F RE C O M M E ND AT I O N:
A.H IS TOR IC AL C ON T E X T
There are just under 5,000 rental apartments in the City. Built primarily in the 1960s, the City's
apartments are aging and in ongoing need of maintenance and improvements.
The Housing and Redevelopment Authority (HRA) has operated an apartment remodeling program
in the past utilizing funds from the Metropolitan Council and Minnesota Housing; however, the
funding ran out in 2010.
B.P OL IC IE S (resolutions, ordinances, regulations, statutes, etc):
I t is the City's policy to support the rehabilitation and upgrading of the existing housing stock.
C.C R IT IC AL T IMIN G IS S U E S:
Approving guidelines at this time will help projects to be completed and funds to be expended
before the end of the budget year.
D.F IN AN C IAL IMPAC T:
$100,000 is available for the program for 2018.
E.L E GAL C ON S ID E R AT ION:
The E D A Attorney has reviewed the program guidelines and will prepare loan documents.
ALTE R N AT IV E R E C O MME N D ATIO N(S):
1. Approve the guidelines for the Apartment Rehabilitation Program with modifications.
2. Decide not to approve the guidelines for the Apartment Rehabilitation Program.
P R IN C IPAL PAR TIE S E X P E C TE D AT ME E TIN G:
N/A
AT TAC H ME N T S:
D escription Type
D raft A partment Remodeling P rogram Guidelines E xhibit
1 ARP Guidelines
March 19, 2018
Richfield Economic Development Authority
Apartment Remodeling Program
Procedural Guidelines
Statement of Purpose
The Richfield Apartment Remodeling Program (ARP) was established by the Richfield Economic
Development Authority (EDA) to encourage investment in the City’s apartment buildings and
improve the City’s rental housing stock. The purpose of ARP is to provide financial incentives to
owners of residential apartment property to make physical improvements to their properties.
NOTE: Procedural Guidelines are a tool for guiding program administration. Procedural Guidelines
do not constitute a contractual agreement or liability on the part of the City or the Economic
Development Authority (EDA).
Program Objectives
• To maintain and improve Richfield’s rental housing stock.
• To offset costs associated with deferred maintenance and updates associated with rental
housing.
• To incentivize owners to invest private resources into apartment buildings.
• To preserve naturally-occurring affordable rental housing.
• To stabilize and improve neighborhoods.
Criteria for Eligibility
1. Residential rental property with four or more units.
2. Only one Loan will be provided per eligible property.
3. The building(s) to be improved must be at least 30 years old.
4. The Property must be located within the City of Richfield municipal boundaries.
5. The Applicant must have a current rental housing license for the Property and be in compliance
with applicable city codes and ordinances.
6. The combined loan-to-value ratio of all loans secured by the property must not exceed 110% of
the property value.
7. The Applicant must be current on mortgage/contract for deed payments and property taxes.
Terms and Conditions of the ARP Loan
1. Funds will be awarded in the form of a fifteen-year, zero-interest, forgivable Loan.
2. If a Borrower sells or transfers title of the property before the maturity date, the Borrower will
be responsible for repaying the Loan in full.
3. If a Borrower retains ownership and continues to rent the Property for the full length of the
loan term, the lien will be forgiven fifteen years from the date of the loan.
4. Minimum loan amount = $5,000
Maximum loan amount per building = $50,000
2 ARP Guidelines
March 19, 2018
Maximum amount per unit = $5,000
The EDA Board may consider requests for loan amounts more than the maximum.
5. Loan funds must be matched on a 1:1 basis by other funds.
6. Funding is available on a limited basis. The EDA is not responsible for unavailability of Loan
funds to Applicants.
7. Funding an application is at the EDA’s discretion.
Application Procedure
The Applicant must:
1. Complete the Application Form (Exhibit A).
2. Submit completed Application Form and all required documentation, including a
rehabilitation plan, at least one bid(s), and digital photos. The EDA reserves the right to
require a second bid.
3. Submit the $300 application fee.
The EDA will:
1. Review applications for completeness and compliance with ARP Guidelines.
2. Review and award Applications on a first-come, first-served basis, based on the date of
receipt and completeness of the application, as determined by the EDA. Priority may be
given to buildings that qualify as Naturally Occurring Affordable Housing (NOAH) and to
projects that don’t displace current tenants.
3. If the Application is determined to be eligible and funds are available, will provide a
Loan commitment letter to the Applicant.
Loan Process
1. Upon receipt of a Commitment letter, the Borrower has 30 days to close on the loan.
2. A lien will be placed against the Property by the EDA for the full Loan amount through a
Mortgage (Exhibits B and C). The Borrower will provide the EDA with an executed mortgage in
recordable form. The Loan recipient must also provide to the EDA an executed Loan
Agreement, Errors and Omissions Acknowledgement Agreement, and Certificate and Request
for Notice: Foreclosure. (See examples in Exhibits B, C, D, and E.) The Borrower will pay the
cost of recording the mortgage.
3. Work must be completed and funds requested within 180 days of the Loan closing date.
4. Loan funds will be paid upon completion of the work. The following items must be received
prior to final disbursement of funds:
1) final invoice from contractor;
2) lien waivers for the full amount of the payment, and
3) a Completion Certificate signed by the city inspector, the Borrower, and Contractor
(Exhibit E).
5. If at any time during the life of the ARP Loan an Event of Default occurs or the Loan matures
prior to the original fifteen year term, the Loan will be required to be repaid in full.
6. A satisfaction of Mortgage (Exhibit G) in recordable form will be provided upon receipt of
repayment of the Loan or at the end of the repayment period. The ARP Loan may also be paid
in full at any time.
3 ARP Guidelines
March 19, 2018
Eligible/Ineligible Improvements
1. Value-added improvements, such as remodeling kitchens and/or bathrooms.
2. Maintenance and repair, such as roof replacement, window/door replacement, or electrical
updates.
3. Furnaces, water heaters, and central air conditioning.
4. Cosmetic improvements, such as painting or flooring replacement/repair.
5. Improvements to common areas, as approved by EDA staff.
6. Energy-efficient-related improvements, such as insulation, caulking, or air sealing.
7. Permanent landscaping, as determined by EDA staff.
8. Swimming pools, hot tubs, and appliances (except for built-in appliances) are not eligible for
loan funds.
9. Improvements begun prior to the day of closing are not eligible for loan funds.
Contractors/Permits
1. All work must be performed by a licensed Contractor(s), when required by city/state
ordinance.
2. All proper permits must be obtained per city code.
3. During the rehabilitation process, required inspections must be arranged by the Applicant or
Contractor. Additional inspections may be requested by EDA staff.
4. Work can be performed on a “sweat equity” basis; however, loan funds cannot be used to
compensate for labor, only for materials. The owner must clearly demonstrate the ability to
complete the work in a quality manner and within the program time requirement. The EDA
reserves the right to deny a loan if it determines that this requirement is not likely to be met.
When required by city ordinance, a building permit must be obtained by the Borrower.
General Conditions
1. Borrowers shall not discriminate against holders of Section 8 vouchers or other forms of rent
assistance.
2. In the event of a sale of the property, Borrowers shall provide the EDA with 90 days’ written
notice, prior to closing on the sale of the property.
General Program Marketing
Program marketing is entirely at the discretion of the EDA. It may include the following:
• Promotional Articles
• Direct Mail or Email contact
• Website announcements
Data Privacy
The EDA is subject to Minnesota Statutes Chapter 13 (the “Minnesota Government Data Practices
Act”). Under the Minnesota Government Data Practices Act, the names and addresses of
applicants for or recipients of assistance under this program and the amount of assistance
4 ARP Guidelines
March 19, 2018
received under this program are public data. All other financial information submitted to the HRA
for purposes of the program application is considered private data.
Hold Harmless
Applicants shall indemnify and hold harmless the EDA and the City, their officers, agents, and
employees from and against all claims, loss, damage, cost, and expense alleged to have resulted
from any remodeling or rehabilitation work completed with the funds provided under ARP.
No EDA officer authorized to take part in administering the ARP Loan Program, in his or her official
capacity, shall have a personal financial interest or benefit financially from the Loan. No member,
official, or employee of the EDA shall be personally liable to the Buyer, or any successor in interest,
for any act or omission of the EDA or for any amount which may become due to the Applicant or
successor or on any EDA obligations.
Definitions
Applicant—Person or persons who apply for ARP funding.
ARP Loan or Loan—Interest-free loan offered by the EDA for rehabilitating a Property. The
maximum loan amount is $50,000 and $5,000 per unit. The Loan is payable upon sale of the
Property or forgiven after 15 years.
Borrower – The person receiving the loan.
City — The City of Richfield.
Combined Loan-to-Value Ratio (CLTV) – The sum of all debt owed against a property divided by the
total value of the property.
Contractor – A professional, appropriately licensed by the Minnesota Department of Labor, hired
by the Applicant to complete all or a portion of the Improvements.
Economic Development Authority (EDA) – The Richfield Economic Development Authority.
Deferred Loan – Payment of the loan is deferred until such time as the loan matures. The loan
requires no payments or interest as long as the terms of the Note and Mortgage are being met.
Event of Default – A default under a Mortgage or Loan Agreement executed by the Buyer for
purposes of an ARP Loan.
Improvements — Each and all of the remodeling or rehabilitation to be constructed on the
Property by the Applicant, as specified in the Rehabilitation Plans approved by the EDA.
Loan Agreement – A contract between a Borrower and the EDA that regulates the mutual
promises made by each party.
5 ARP Guidelines
March 19, 2018
Mortgage and Holder — The Mortgage shall include financing creating an encumbrance or lien
upon the Property or any part thereof, as security for a loan. The Holder includes any insurer or
guarantor (other than the Buyer) of any obligation or condition secured by such mortgage or deed
of trust.
Naturally Occurring Affordable Housing (NOAH) - Residential rental properties that maintain
affordable rents without public subsidies. Properties charge rents that are affordable to a
household earning less than 60 percent of the Area Median Income (AMI), as published annually
by the Department of Housing and Urban Development.
Property – The rental property identified in the ARP application.
Rehabilitation Plans — Collectively, the plans, drawings, and documents related to the
Improvements.
Rental Property — A property from which the owner receives payment from an occupant(s) in
return for occupying the property for at least 12 months prior to applying for an ARP Loan.
Sweat Equity – Improvements made to a property by the property’s owner.
6 ARP Guidelines
March 19, 2018
List of Exhibits