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08212023 EDA 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 AU G U S T 21, 2023 7:15 PM (I MME D I AT ELY FO L L OWI NG THE HRA ME ETI NG) C all to Order Open F orum E ach speaker is to keep their comment period to three minutes to allow sufficient time for others. C omments are to be an opportunity to address the E D A . P lease refer to the E D A agenda and minutes web page for additional ways to submit comments. You may also call 612-861-9764 or email ldubois@richfieldmn.gov with questions. C all into the open forum by dialing 1-415-655-0001 U se webinar access code: 2631 668 3301 and password: 1234. Approval of the Minutes A pproval of the minutes of the Regular E conomic D evelopment A uthority meeting of June 20, 2023. AG E N D A APPR O VAL 1.A pproval of the A genda 2.Consent Calendar contains several separate items which are acted upon by the E D A in one motion. Once the Consent Calendar has been approved, the individual items and recommended actions have also been approved. No further E D A action on these items is necessary. However, any E D A Commissioner may request that an item be removed from the Consent Calendar and placed on the regular agenda for E D A discussion and action. All items listed on the Consent Calendar are recommended for approval. A .C onsideration of a revised fee schedule for housing programs and loan administration. S taff Report No. 8 3.C onsideration of items, if any, removed from C onsent C alendar R E S O L U T IO N S 4.C onsider resolutions approving proposed property tax levy for payable 2024 for certification to Hennepin C ounty. S taff Report No. 9 O T H E R B U S IN E S S 5.C onsideration of the approval of changes to the A partment Remodeling P rogram guidelines, expanding program eligibility to include one to three-unit rental properties. S taff Report No. 10 E D A D ISC U SSIO N IT E MS 6.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 7.E xecutive D irector's Report C LAIMS 8.C laims 9.A djournment Auxiliary aids for individuals with disabilities are available upon request. Requests must be made at least 96 hours in advance to the City Clerk at 612-861-9739. ECONOMIC DEVELOPMENT AUTHORITY MEETING MINUTES Richfield, Minnesota Regular Meeting June 20, 2023 CALL TO ORDER The meeting was called to order by Commissioner Hanson at 7:51 p.m. in the Council Chambers. EDA Members Present: Sean Hayford Oleary; Mary Supple; and Gordon Hanson EDA Members Absent: Erin Vrieze Daniels, President Staff Present: Melissa Poehlman, Executive Director; Julie Urban, Assistant Community Development Director; Jan Youngquist, Economic Development Manager OPEN FORUM Commissioner Hanson provided instructions to call in for the open forum and there were no participants. APPROVAL OF THE MINUTES M/Hanson, S/Supple to approve the regular Economic Development Authority Work Session of April 17, 2023 and the regular Economic Development Authority meeting minutes of April 17, 2023. Motion carried: 3-0 ITEM #1 APPROVAL OF THE AGENDA M/Supple, S/Hanson to approve the agenda. Motion carried: 3-0 ITEM #2 CONSIDERATION OF THE CONSENT CALENDAR EDA Meeting Minutes -2- June 20, 2023 Executive Director Poehlman presented the Consent Calendar: A. Consideration of the approval of revisions to the Transformation Loan Program Guidelines (Staff Report No. 6) B. Amending the kids @ Home Rental Assistance Program guidelines, expanding the service area to include the unincorporated territory of Fort Snelling (Staff Report No. 7) M/Supple, S/Hanson to approve the Consent Calendar. Motion carried: 3-0 ITEM #3 CONSIDERATION OF ITEMS, IF ANY, REMOVED FROM THE CONSENT CALENDAR None. ITEM #4 EDA DISCUSSION ITEMS None. ITEM #5 EXECUTIVE DIRECTOR’S REPORT None. ITEM #6 CLAIMS M/Supple, S/Hanson that the following claims be approved: U.S. BANK 5/11/2023 EDA Checks: 21022-21037 $10,117.75 TOTAL $10,117.75 U.S. BANK 6/20/2023 EDA Checks: 21038-23302 $16,198.94 TOTAL $16,198.94 Motion carried: 3-0 ITEM #7 ADJOURNMENT The meeting was adjourned by unanimous consent at 7:57 p.m. EDA Meeting Minutes -3- June 20, 2023 Date Approved: August 21, 2023 Gordon Hanson Acting President Dustin Leslie Melissa Poehlman Secretary Executive Director AGENDA SECTION:Consent Calendar AGENDA ITEM #2.A. S TAFF REPORT NO. 8 E CONOMIC DE V E LOP ME NT AUT HORIT Y MEET ING 8/21/2023 RE P O RT P RE PA RE D B Y: B rian D uerwachter, Housing S pecialist O THE R D E PA RTM E NT RE V IE W: E X E C UTIV E D IRE C TO R RE V IE W: Melissa P oehlman, E xecutive D irector 8/16/2023 I T E M F O R C O UNC IL C O NS ID E RAT I O N: Consideration of a revised fee schedule for housing programs and loan administration. E X E C UT IV E S UM M ARY: The Housing and Redevelopment Authority (HRA) and Economic Development Authority (E D A) staff administer several housing programs and manage the HRA/E D A’s loan portfolio. Fees are charged to cover the cost of processing housing program applications, subordinations and requests for loan settlements. It is appropriate to review these fees on a regular basis and recommend changes when necessary. T he fees charged should reflect the staff time and costs related to performing the services associated with those fees. The attached fee schedule lists the proposed fees. A slight increase is proposed for each item, reflecting increased administrative costs. A n ew fee is proposed for the First-time Homebuyer Program, although at a reduced rate so as not to be a barrier for low-income households. RE C O M M E ND E D AC T I O N: By Motion: Adopt a revised fee schedule for housing programs and loan administration. 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 Staff costs are incurred in the administration of HRA/E D A programs. I t is appropriate to charge a fee to help cover the cost of administering these programs. The fees should be reviewed on a regular basis, so they best reflect the actual cost of performing the associated services. B.P OL IC IE S (resolutions, ordinances, regulations, statutes, etc): State Statutes require municipal fees and permits be established based on actual staff time and costs incurred in providing the relevant services. I t is also important that fees not be so onerous as to discourage participation in HRA/E D A programs. C.C R IT IC AL T IMIN G IS S U E S: None D.F IN AN C IAL IMPAC T: Staff has reviewed the program fees and is recommending changes to reflect the current actual staff time and costs incurred. The fee for the First-time Homebuyer Program (Program) is proposed at a level less than actual time and costs to maintain broad access to this Program. E.L E GAL C ON S ID E R AT ION: The HRA/E D A is permitted to charge fees to recoup the costs of delivering services. ALTE R N AT IV E R E C O MME N D ATIO N(S): Do not adopt the proposed Fee Schedule. 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 Housing P rogram F ees P roposed B ackup Material Richfield Housing & Redevelopment Authority Economic Development Authority 2023 Housing Program Fees Proposed Program/ITEM Existing Proposed Subordination $135 $165 Administrative Change/Second Copy $30 $40 Loan Amendment $125 $150 Loan Settlement Request $100 $125 Mortgage Satisfaction/Release Filing, upon request $85 $100 Apartment Remodeling Loan Application* (EDA) $300 $350 Transformation Loan Application* (EDA) $300 $350 Richfield Rediscovered Lot Sale Application* (HRA) $550 $625 Richfield Rediscovered Credit Application* (HRA) $550 $625 Down Payment Assistance (HRA) $0 $100 *Plus any applicable filing fees AGENDA SECTION:RESOLUTIONS AGENDA ITEM #4. S TAFF REPORT NO. 9 E CONOMIC DE V E LOP ME NT AUT HORIT Y MEET ING 8/21/2023 RE P O RT P RE PA RE D B Y: K umud Verma, F inance D irector O THE R D E PA RTM E NT RE V IE W: N/A E X E C UTIV E D IRE C TO R RE V IE W: Melissa P oehlman, E xecutive D irector 8/16/2023 I T E M F O R C O UNC IL C O NS ID E RAT I O N: Consider resolutions approving proposed property tax levy for payable 2024 for certification to Hennepin County. E X E C UT IV E S UM M ARY: The bylaws of the Richfield Economic Development Authority (E D A) require that an annual budget be submitted to the E D A Commissioners for approval. Accordingly, the 2024 Proposed Budget and Tax Levy and 2023 Revised Budget are presented for approval. I n addition, Minnesota State Statutes require adoption of a preliminary tax levy from each taxing authority. The proposed tax levy must be certified to the Hennepin County Auditor by September 30, 2023 (or next business day, if September 30 falls on a weekend). Any amendments to the proposed budget, which would increase the property tax levy, must be made prior to September 30, 2023. No increases in the tax levy are permissible after that date, only reductions. Final certification of the E D A tax levy is part of the City’s budget process. The recommended tax levy as proposed represents a 3.50% increase from the previous year ’s levy. RE C O M M E ND E D AC T I O N: By motion: Adopt the attached resolutions approving the 2024 Proposed Economic Development Authority Budget and Tax Levy and 2023 Revised Economic Development Authority Budget. 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 N/A B.P OL IC IE S (resolutions, ordinances, regulations, statutes, etc): Minnesota Statutes require adoption of a preliminary levy from each taxing authority. The budget and accompanying proposed levy for 2024 are ready for consideration. Even though a public hearing for the E D A tax levy is not required by State Statute, this does not preclude the E D A from opening this item up for public discussion if the E D A desires to do so. C.C R IT IC AL T IMIN G IS S U E S: As required by State Statutes, each taxing authority must certify its proposed tax levy for the payable year 2024 to the County Auditor on or before September 30, 2023. D.F IN AN C IAL IMPAC T: The Proposed 2024 E D A levy represents a 3.50% increase from the previous year ’s levy. The levy is approximately $283,244 less than the maximum E D A levy established by law of the .01813% of the City’s total estimated taxable market value. E.L E GAL C ON S ID E R AT ION: N/A ALTE R N AT IV E R E C O MME N D ATIO N(S): The E D A could adopt a preliminary levy greater than the one proposed herein. However, the levy proposed provides the necessary funding to provide for programs that are recommended in the 2024 Proposed/2023 Revised budget. 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 2024 E D A Tax L evy Resolution Resolution L etter 2023 E D A B udget Revision Resolution L etter EDA RESOLUTION NO. RESOLUTION APPROVING PROPOSED 2024 ECONOMIC DEVELOPMENT AUTHORITY BUDGET AND CERTIFYING THE 2024 TAX LEVY BE IT RESOLVED by the Housing and Redevelopment Authority of the City of Richfield, Minnesota as follows: Section 1. The budget for the Economic Development Authority General Fund of Richfield for the year 2024 in the amount of $595,470 is hereby ratified. Section 2. The estimated gross revenue of the Economic Development Authority General Fund of Richfield from all sources, including general ad valorem tax levies as hereinafter set forth for the year 2024, and as the same are more fully detailed in the Executive Director’s official copy of the budget for the year 2024, in the amount of $595,470 is hereby approved. Section 3. There is hereby levied upon all taxable property in the City of Richfield an ad valorem tax in 2023, payable in 2024 for the following purposes: Economic Development Authority $599,364 Section 4. A certified copy of this resolution shall be transmitted to the County Auditor. Adopted by the Economic Development Authority in and for the City of Richfield, Minnesota this 21st day of August 2023. Erin Vrieze Daniels, President ATTEST: Melissa Poehlman, Executive Director EDA RESOLUTION NO. RESOLUTION AUTHORIZING REVISION OF THE 2023 BUDGET OF THE ECONOMIC DEVELOPMENT AUTHORITY OF RICHFIELD WHEREAS, Resolution No. 40 appropriated funds for personal services and other expenses for the Economic Development Authority for the year 2023, and WHEREAS, The Executive Director has requested a revision of the 2023 budget as detailed in the 2024 budget document. NOW, THEREFORE, BE IT RESOLVED by the Economic Development Authority of Richfield, Minnesota as follows: Section 1. That the 2023 appropriation for the Economic Development Authority General Fund is revised as follows: $32,100 increase Section 2. Estimated 2023 gross revenue of the Economic Development Authority General Fund from all sources, as the same is more fully detailed in the Executive Director’s official copy of the 2024 budget document, are hereby revised as follows: $4,480 decrease Section 3. That the Executive Director bring into effect the provisions of this resolution. Adopted by the Economic Development Authority in and for the City of Richfield, Minnesota this 21st day of August, 2023. Erin Vrieze Daniels, President ATTEST: Melissa Poehlman, Executive Director AGENDA SECTION:OTHER BUSINESS AGENDA ITEM #5. S TAFF REPORT NO. 10 E CONOMIC DE V E LOP ME NT AUT HORIT Y MEET ING 8/21/2023 RE P O RT P RE PA RE D B Y: J ulie Urban, A sst. C ommunity D evelopment D irector O THE R D E PA RTM E NT RE V IE W: E X E C UTIV E D IRE C TO R RE V IE W: Melissa P oehlman, E xecutive D irector 8/15/2023 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 changes to the Apartment Remodeling Program guidelines, expanding program eligibility to include one to three-unit rental properties. 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 and incentivizing private investment in the community. To that end, the E D A created a Richfield Apartment Remodeling Program (A RP) in 2018. The A RP targets apartments with four or more units, and $100,000 has been budgeted for the A RP each year. There are approximately 900 single-family and duplex units in the City that provide rental housing and offer an important source of larger-sized units. These units also warrant investment, so in 2022, the E D A approved a pilot program that allowed up to $20,000 of 2022 AR P funds to be used on improvements to these properties. One loan was issued under the pilot program in the amount of $8,600. The pilot program expired at the end of 2022 but continues to receive requests for rehabilitation funding resources, so staff is recommending that the E D A permanently expand the A RP to include investments in single-family and duplex rental properties. Given the limited amount of funds available, staff recommends that apartments continue to be given priority but that eligibility be opened up to include one to three-unit rentals from August to December, if funds remain available. In addition to this expansion, the following changes are being proposed to the guidelines: The maximum loan amount for one to three-unit properties would be $10,000 per unit and $25,000 per building, and a 100% match would be required. A statement under Criteria for Eligibility is added highlighting the priority to provide funds to housing that is affordable at 60% of the Area Median I ncome (A MI ), i.e., Naturally Occurring Affordable Housing (NOA H). Group residential facilities and short-term rentals would not be eligible for assistance. An additional $1,000 per unit (up to a maximum of $10,000) could be added to the loan if the property performs an energy audit and adds energy-efficiency improvements. An additional $1,000 per unit (up to a maximum of $10,000) could be added to the loan if the property makes accessibility related improvements. I f a Borrower sold a one to 3-unit property, before the maturity date, to an existing renter with a household income no more than 80% of the A MI , the loan would be forgiven. Some clarifications are added to the listing of Eligible/I neligible I mprovements, based on feedback from the City's Housing I nspectors. RE C O M M E ND E D AC T I O N: By motion: Adopt an amendment to the Apartment Remodeling Program guidelines expanding the program eligibility to include one to three-unit rental properties. 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 The E D A created an A RP in 2018, and has awarded ten loans and over $373,000 in funds, leveraging more than twice that amount in investment in rental housing. Of the City's 6,000 plus licensed rental housing units, approximately 900 are single family and duplex units. These units provide an important source of larger rental units in the City, as well as the opportunity to provide private open space for families with children. The City's single-family and duplex housing units were primarily built in the 1950s and like the 1960s era apartment buildings, are often in need of maintenance and repair. On J anuary 18, 2022, the E D A approved a pilot program for small rental properties. Four applications were submitted for the pilot program with one loan qualifying. A loan in the amount of $8,600 was made to the single-family property, primarily to address housing code related items. Loans are provided in the form of a fifteen-year, zero-interest, forgivable loan. 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: Several one and two-unit properties continue to express an interest in accessing rehabilitation funding. D.F IN AN C IAL IMPAC T: $100,000 is budgeted for A RP for 2023 and an additional $100,000 is proposed for 2024. The proposed changes add additional incentives for any property making accessibility or energy efficiency improvements. E.L E GAL C ON S ID E R AT ION: The existing loan documents would continue to be used; the documents were prepared by the E D A Attorney. ALTE R N AT IV E R E C O MME N D ATIO N(S): Approve the amended guidelines for the Apartment Rehabilitation Program with modifications. Decide not to approve the amended 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 P roposed Guidelines B ackup Material A partment Remodeling P rogram Guidelines B ackup Material A partment Remodeling P ilot P rogram Guidelines B ackup Material ARP Guidelines August 21, 2023 1 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 rental 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 and other rental housing.  To preserve naturally-occurring affordable rental housing.  To stabilize and improve neighborhoods. Criteria for Eligibility – January – July 1. Residential rental property with four or more units. 2. Only one Loan will be provided per eligible property during the 15-year loan period. 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. 8. Priority will be given to buildings that qualify as Naturally Occurring Affordable Housing (NOAH), charging less than 60% of the area median income (AMI) for rent and to projects that don’t displace current tenants. Criteria for Eligibility – August – December 1. If funds remain in the program by August 1 of each year, an eligible property may also be a one-, two-, or three-unit residential rental property. 2. In the case of an owner-occupied property, only the rental unit is eligible for loan funds. 3. Group residential facilities and short-term rentals are not eligible for rental assistance. ARP Guidelines August 21, 2023 2 4. The Property must have been a licensed rental property for a minimum of three years. 5. All other Criteria for Eligibility (#2-7) also apply to 1-3 unit properties. 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 sells or transfers title of a 1-3 unit property to an existing renter with a household income no more than 80 percent of the area median income (AMI), the loan would also be forgiven. 4. If a Borrower retains ownership and continues to rent the Property and maintains a current rental license for the full length of the loan term, the lien will be forgiven fifteen years from the date of the loan. 5. Apartment building minimum loan amount = $5,000 Apartment building maximum loan amount per building = $50,000 Apartment building maximum loan amount per unit = $5,000 1-3 unit building minimum loan amount = $3,000 1-3 unit building maximum loan amount per building = $25,000 1-3 unit maximum loan amount per unit = $10,000 1-3 unit building maximum total amount of loan funds awarded to a single property owner = $50,000 The EDA Board may consider requests for loan amounts more than the maximum. 6. Additional funds up to $1,000/unit, up to a maximum of $10,000, may be awarded to properties that have had a certified energy audit performed, and the additional funds are needed to complete energy-saving improvements identified in the energy audit. Note: anticipated energy rebates and/or tax credits should be reported as a source of revenue but may not be counted as part of the required match. 7. Additional funds up to $1,000/unit, up to a maximum of $10,000, may be awarded to properties making accessibility improvements to accommodate a tenant(s) with disabilities. Common areas may count as one unit. 8. Loan funds must be matched on a 1:1 basis by other funds. 9. Funding is available on a limited basis. The EDA is not responsible for unavailability of Loan funds to Applicants. 10. 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. ARP Guidelines August 21, 2023 3 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 and Promissory Note (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 Promissory Note, Loan Agreement, Errors and Omissions Acknowledgement Agreement, and Certificate and Request for Notice: Foreclosure. (See examples in Exhibits B, C, D, E, and F.) 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 G). 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 H) 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. 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, andelectrical updates. 3. Maintenance and repair items identified in a rental licensing inspection report. Note: if a property has open work orders from a rental licensing inspection report, they must either be addressed before a loan application is submitted or as part of the loan rehabilitation plan. 4. Safety improvements such as egress window installation, hard-wired smoke and carbon monoxide detectors. 5. Energy Star-Certified furnaces, water heaters, and central air conditioning. 6. Cosmetic improvements, such as painting or flooring replacement/repair. 7. Accessibility-related improvements such as door widening, grab bars, ramps, roll-in showers. 8. Improvements to common areas, as approved by EDA staff. 9. Energy-efficient-related improvements, such as insulation, caulking, or air sealing. 10. Permanent landscaping, as determined by EDA staff. 11. Grading/site work as it relates to preventing water infiltration. 12. Other maintenance, repair, and/or safety-related improvements, as approved by EDA staff. ARP Guidelines August 21, 2023 4 13. Swimming pools, hot tubs, and appliances (except for built-in appliances) are not eligible for loan funds. 14. 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 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, ARP Guidelines August 21, 2023 5 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. 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. ARP Guidelines August 21, 2023 6 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. Short-Term Rental – A dwelling unit, or portion of a dwelling unit, offered for tourist or transient occupancy for a period of less than thirty (30) consecutive days for a fee. Sweat Equity – Improvements made to a property by the property’s owner. ARP Guidelines March 19, 2018 1 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 during the 15-year loan period. 3.The building(s) to be improved must be at least 30 yea rs 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 Maximum amount per unit = $5,000 ARP Guidelines March 19, 2018 2 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 and Promissory Note (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 Promissory Note,Loan Agreement, Errors and Omissions Acknowledgement Agreement, and Certificate and Request for Notice: Foreclosure.(See examples in Exhibits B, C, D, E, and F.)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 G). 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 H) 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. ARP Guidelines March 19, 2018 3 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 floor ing 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 r ent 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 ARP Guidelines March 19, 2018 4 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 financiall y 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. ARP Guidelines March 19, 2018 5 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 o r 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. ARP Guidelines March 19, 2018 6 List of Exhibits Exhibit A –Application Form Exhibit B –Mortgage Exhibit C –Promissory Note Exhibit D -Loan Agreement Exhibit E –Errors and Omissions Acknowledgement Agreement Exhibit G –Certificate and Request for Notice: Foreclosure Exhibit H -Satisfaction of Mortgage ARP Guidelines March 19, 2018 7 EXHIBIT A ARP Guidelines March 19, 2018 8 ARP Guidelines March 19, 2018 9 ARP Guidelines March 19, 2018 10 EXHIBIT B ARP Guidelines March 19, 2018 11 ARP Guidelines March 19, 2018 12 ARP Guidelines March 19, 2018 13 ARP Guidelines March 19, 2018 14 ARP Guidelines March 19, 2018 15 EXHIBIT C ARP Guidelines March 19, 2018 16 ARP Guidelines March 19, 2018 17 ARP Guidelines March 19, 2018 18 EXHIBIT D ARP Guidelines March 19, 2018 19 ARP Guidelines March 19, 2018 20 ARP Guidelines March 19, 2018 21 ARP Guidelines March 19, 2018 22 ARP Guidelines March 19, 2018 23 ARP Guidelines March 19, 2018 24 EXHIBIT E ARP Guidelines March 19, 2018 25 EXHIBIT F ARP Guidelines March 19, 2018 26 EXHIBIT G ARP Guidelines March 19, 2018 27 ARP Guidelines March 19, 2018 28 EXHIBIT H ARP Guidelines March 19, 2018 29 Richfield Economic Development Authority Rehabilitation Loans for 1- to 3-Unit Rental Properties Pilot Program Procedural Guidelines February 2022 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. The EDA created the Pilot Program for 1- to 3-unit rental properties to expand those incentives to owners of smaller rental 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 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 rental housing. • To preserve naturally-occurring affordable rental housing. • To stabilize and improve neighborhoods. Criteria for Eligibility 1. The property must be a one-, two-, or three-unit residential rental property. 2. In the case of an owner-occupied property, only the rental unit is eligible for loan funds. 3. Only one Loan will be provided per eligible property during the 15-year loan period. 4. The building(s) to be improved must be at least 30 years old. 5. The Property must be located within the City of Richfield municipal boundaries and have been a licensed rental property for a minimum of three years. 6. The Applicant must have a current rental housing license in good standing for the Property and be in compliance with applicable city codes and ordinances. A request for loan funds to bring the property into compliance may also be considered. 7. The combined loan-to-value ratio of all loans secured by the property must not exceed 110% of the property value. 8. The Applicant must be current on mortgage/contract for deed payments and property taxes. Terms and Conditions of the Loan 1. Funds will be awarded in the form of a fifteen-year, zero-interest, forgivable Loan. Richfield Economic Development Authority Rehabilitation Loans for 1- to 3-Unit Rental Properties Pilot Program Procedural Guidelines February 2022 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 and maintains a current rental license for the full length of the loan term, the loan will be forgiven fifteen years from the date of the loan. 4. If a Borrower sells or transfers title of the property before the maturity date to an existing renter with a household income no more than 80 percent of the Area Median Income (AMI), the loan will be forgiven. The income qualification rules of the City’s First-time Homebuyer Program will be applied to determine eligibility. 5. Minimum loan amount = $3,000 6. Maximum loan amount/unit = $10,000 7. Additional funds up to $5,000 may be awarded to properties that have had a certified energy audit (e.g., Home Energy Squad) performed and the additional funds are needed to complete energy-saving improvements identified in the energy audit or to make accessibility improvements to accommodate a tenant with disabilities. 8. Maximum total loan funds awarded to a single property owner = $50,000 9. Loan funds must be matched on a 1:1 basis by other funds. 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 and Promissory Note (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 Richfield Economic Development Authority Rehabilitation Loans for 1- to 3-Unit Rental Properties Pilot Program Procedural Guidelines February 2022 an executed Promissory Note, Loan Agreement, Errors and Omissions Acknowledgement Agreement, and Certificate and Request for Notice: Foreclosure. (See examples in Exhibits B, C, D, E, and F.) 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 G). 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 H) 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. Eligible/In-Eligible Improvements 1. Maintenance and repair, such as roof replacement, window/door replacement, electrical updates. 2. Safety improvements, such as egress window installation, hard-wired smoke and carbon monoxide detectors. 3. Energy Star-Certified furnaces, water heaters, and central air conditioning. 4. Other energy-efficiency-related improvements, such as insulation, caulking, or air sealing, consistent with Energy Fit Homes Requirements. 5. Accessibility-related improvements, such as door widening, grab bars, ramps. 6. Grading/site work as it relates to preventing water infiltration. 7. Other maintenance, repair, and/or safety-related improvements as approved 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 Richfield Economic Development Authority Rehabilitation Loans for 1- to 3-Unit Rental Properties Pilot Program Procedural Guidelines February 2022 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 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. Richfield Economic Development Authority Rehabilitation Loans for 1- to 3-Unit Rental Properties Pilot Program Procedural Guidelines February 2022 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. 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. Richfield Economic Development Authority Rehabilitation Loans for 1- to 3-Unit Rental Properties Pilot Program Procedural Guidelines February 2022 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. February 2022 EXHIBIT A February 2022 February 2022 February 2022 EXHIBIT B February 2022 February 2022 February 2022 February 2022 February 2022 Exhibit C February 2022 February 2022 February 2022 February 2022 EXHIBIT D February 2022 February 2022 February 2022 February 2022 February 2022 February 2022 February 2022 EXHIBIT E February 2022 EXHIBIT F February 2022 EXHIBIT G February 2022 February 2022 EXHIBIT H February 2022