Loading...
121624 EDA AgendaECONOMIC DEVELOPMENT AUTHORITY MEETING RICHFIELD MUNICIPAL CENTER, COUNCIL CHAMBERS DECEMBER 16, 2024 7:15 PM (IMMEDIATELY FOLLOWING THE HRA MEETING) Call to Order Open Forum Please refer to the EDA agenda and minutes web page for additional ways to submit comments. Appr oval of t he M inut es Approval of the minutes of the Regular Economic Development Authority meeting of September 16, 2024. AGENDA APPROVAL 1.Approval of the Agenda 2.Consent Calendar contains several separate items which are acted upon by the EDA in one motion. Once the Consent Calendar has been approved, the individual items and recommended actions have also been approved. No further EDA action on these items is necessary. However, any EDA Commissioner may request that an item be removed from the Consent Calendar and placed on the regular agenda for EDA discussion and action. All items listed on the Consent Calendar are recommended for approval. A.Consideration of an Amendment to the Agreement with the Center for Energy and Environment to authorize 2025 spending for the Apartment Remodeling Program. Staff Report No. 11 B.Consideration of an Economic Development Authority Loan Forgiveness Policy. Staff Report No. 12 3.Consideration of items, if any, removed from Consent Calendar EDA DISCUSSION ITEMS 4.EDA Discussion Items EXECUTIVE DIRECTOR REPORT 5.Executive Director's Report CLAIMS 6.Claims 7.Adjournment Auxiliary aids for individuals with disabilities are available upon request. Requests must be made at least 96 hours in advance to the City Clerk at 612-861-9739. ECONOMIC DEVELOPMENT AUTHORITY MEETING MINUTES Richfield, Minnesota Regular Meeting September 16, 2024 CALL TO ORDER The meeting was called to order by President Vrieze Daniels at 7:35 p.m. in the Council Chambers. EDA Members Present: Erin Vrieze Daniels, President; Sean Hayford Oleary; Mary Supple; Gordon Hanson; and John Young EDA Members Absent: Staff Present: Melissa Poehlman, Executive Director; Jan Youngquist, Economic Development Manager; and Michelle Friedrich, City Clerk OPEN FORUM President Vrieze Daniels gave instructions on how to participate in the open forum. No one spoke. APPROVAL OF THE MINUTES M/Hayford Oleary, S/Supple to approve the regular Economic Development Authority meeting minutes of August 19, 2024. Motion carried: 5-0 ITEM #1 APPROVAL OF THE AGENDA M/Hanson, S/Young to approve the agenda. Motion carried 5-0 EDA Meeting Minutes -2-September 16, 2024 ITEM #2 CONSIDERATION OF A RESOLUTION AUTHORIZING AN APPLICATION TO THE HENNEPIN COUNTY BUSINESS DISTRICT INITIATIVE PROGRAM. Economic Development Manager Youngquist presented the report. M/Hayford Oleary, S/Supple to approve a resolution authorizing submittal of an application for Hennepin County Business District Initiative Program grant funds and authorizing the Executive Director to execute any associated agreements. Motion carried 5-0 ITEM #3 EDA DISCUSSION ITEMS None. ITEM #4 EXECUTIVE DIRECTOR’S REPORT None. ITEM #5 CLAIMS U.S. BANK 9/16/2024 EDA Checks #23553-23568 $10,950.00 TOTAL $10,950.00 ITEM #6 ADJOURNMENT The meeting was adjourned by unanimous consent at 7:43 p.m. Date Approved: December 16, 2024 Erin Vrieze Daniels President LaTonia DuBois Melissa Poehlman Administrative Assistant Executive Director AGENDA SECTION:Consent Calendar AGENDA ITEM #2.A. STAFF REPORT NO. 11 ECONOMIC DEVELOPMENT AUTHORITY MEETING 12/16/2024 Julie Urban, Asst. Community Development DirectorREPORT PREPARED BY: EXECUTIVE DIRE CTOR RE VIEW: Melissa Poehlman, Executive Director ITEM FOR COUNCIL CONSIDERATION: Consideration of an Amendment to the Agreement with the Center for Energy and Environment to authorize 2025 spending for the Apartment Remodeling Program. EXECUTIVE SUM MARY: In 2018, the Economic Development Authority (EDA) created the Apartment Remodeling Program (Program) to encourage investment in the City's rental community. Since its inception, the EDA has issued 14 loans in the amount of $523,000 and leveraged an equal amount in private investment. The EDA approved an Agreement with the Center for Energy and Environment (CEE) on March 18, 2024, and a first Amendment on August 19, 2024, to administer the Program on behalf of the EDA. A second Amendment is needed to authorize the expenditure of $102,250 from the 2025 EDA Budget. Contract amendments are required each year to authorize new budgeted spending. RECO MMENDED AC TION: By motion: Approve an Amendment to the Multi-Family Improvement Program Origination Agreement with the Center for Energy and Environment authorizing up to $102,250 in expenditures for the Apartment Remodeling Program in 2025. BASIS OF RECO MMEND ATION: A.HISTORICAL CONTEXT In March of 2018, the EDA approved the Program to encourage investment in the City's apartment properties. In 2023, the EDA expanded the eligibility to include 1-3 unit rental properties when sufficient funds are available. The Program provides zero interest, deferred loans, with a 15-year term and is focused on properties with rents affordable at 60% of the Area Median Income (AMI) or less (i.e., Naturally Occurring Affordable Housing or NOAH). The City has partnered with CEE on a variety of programs in the past 25 years, including an earlier version of Apartment Remodeling, Home Energy Squad Enhanced, Remodeling Advisor, Fix-Up Fund, and Energy Efficient Business Program. On March 18, 2024, the EDA approved an Agreement with CEE to administer the Program. On August 19, 2024, the EDA approved an Amendment to the Agreement, increasing the funds available for 2024. B.EQUITABLE OR STRATEGIC CONSIDERATIONS OR IMPACTS 12/10/2024 Investing in the City's apartment and rental housing community advances equity for residents with lower incomes and those who are Black, Indigenous, and People of Color (BIPOC); 54% of the City's rental housing community are BIPOC residents. One of the Strategic Plan initiatives is to maintain Richfield as an affordable place to live. Public investment in rental properties can help to maintain affordability. C.POLICIES (resolutions, ordinances, regulations, statutes, exc): The Agreement incorporates the Program guidelines that were adopted by the EDA in 2018 and amended in 2023. D.CRITICAL TIMING ISSUES: The Amendment would be in effect from January 1, 2025, through December 31, 2025. While the Agreement runs through the end of December 31, 2025, the EDA only authorizes funding one year at a time, so an amendment is required to designate funding for 2025. E.FINANCIAL IMPACT: The EDA 2024 Budget allocates $102,250 to the Program. The amount will cover loans and a $750 administration fee for each loan processed. F. LEGAL CONSIDER ATION: The EDA Attorney reviewed the Agreement. ALTERNATIVE RECOMMENDATION(S): Decide not to approve the Agreement with CEE to administer the Apartment Remodeling Program . PRINCIPAL PARTIES EXPECTED AT MEETING: NA ATTACHMENTS: Description Type Amendment Contract/Agreement Guidelines - Exhibit A2 Exhibit 2025 Budget - Exhibit B2 Exhibit Agreement Contract/Agreement AMENDMENT 2 to the LOAN ORIGINATION AGREEMENT Between RICHFIELD ECONOMIC DEVELOPMENT AUTHORITY And CENTER FOR ENERGY AND ENVIRONMENT City of Richfield Home Improvement Loan Program The Agreement made the 18th day of March, 2024 by and between the RICHFIELD ECONOMIC DEVELOPMENT AUTHORITY, with offices at 6700 Portland Ave, Richfield, MN 55423, (the “Authority”), and the CENTER FOR ENERGY AND ENVIRONMENT, with its offices at 212 3rd Avenue North, Suite 560, Minneapolis, Minnesota 55401 (“CEE”) is hereby amended. Exhibit A1 shall be replaced by Exhibit A2 (attached) Exhibit B1 shall be replaced by Exhibit B2 (attached) Section 5. Term and Termination of the agreement shall read: 5.1 Unless earlier terminated as provided in the following paragraphs, this Agreement shall become effective on January 1, 2025 and continue through December 31, 2025. All other sections of the contract shall remain as written in the original and amended agreements. IN WITNESS WHEREOF, the parties hereunder set their hands as of the date written below: CENTER FOR ENERGY AND ENVIRONMENT By __________________________ Date _________________________ CEE #4870 TAX ID 41-1647799 ECONOMIC DEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD By ___________________________ Date __________________________ By___________________________ Date __________________________ Exhibit A2 Page 1 Agreement between Richfield Economic Development Authority and Center for Energy and Environment EXHIBIT A2 PROGRAM GUIDELINES Exhibit A2 Page 2 Agreement between Richfield Economic Development Authority and Center for Energy and Environment RICHFIELD LOAN PROGRAM GUIDELINES The ECONOMIC DEVELOPMENT AUTHORITY is making funds available to rental property owners to assist with property maintenance and improvements of rental properties. Center for Energy and Environment shall serve as the administrator for the Richfield Multi-Family Improvement Loan Program. Multi-Family Improvement Loan Interest Rate: 0% Amortization Type: Deferred Loan Amount: Loan must be matched 1:1 Minimum of $5,000 and Maximum of $50,000 for properties with 4+ units Minimum of $3,000 and Maximum of $25,000 for 1-3 unit properties $5,000 maximum per unit for properties with at least 4 units $10,000 maximum per unit for 1-3 unit properties Additional funds of $1,000/unit up to $10,000 for Energy Improvements identified through a Energy Audit or for accessibility improvements to accommodate tenants with disabilities Loan term: 15 years. The loan is 100% forgiven after 15 years if the Borrower retains ownership, continues to rent the property, and maintains a current rental license. If the borrower sells or transfers the title of a 1-3 unit property to an existing renter with a household income no more than 80% AMI the loan will be 100% forgiven at time of sale or transfer. If the property is sold or no longer holds a current rental license prior to 15 years from the date of the loan the loan is due in full. Eligible Properties: Residential rental properties located within the geographical boundaries of the City of Richfield. Properties must be AT LEAST 30 years old AND have a current rental license. Properties can be owned by a Contract-for-Deed, but the owner of the Contract-for-Deed must sign the mortgage document. If the property is 1-3 units it must have had a rental license for at least 3 years. Properties with 1-3 units are NOT eligible until August 1st of each year. Ineligible Properties: Single-family owner-occupied properties, cooperatives, manufactured homes, or properties used for commercial purposes. Properties held in a Trust. Eligible Borrowers: All borrowers must be legal residents of the United States OR a registered business with the MN Secretary of State. A business must have been in business for at least 2 years. Ineligible Borrowers: A person or business with no ownership of the property. Exhibit A2 Page 3 Agreement between Richfield Economic Development Authority and Center for Energy and Environment Ownership/Occupancy: Owner- occupied (must be at least 2 units) or Absentee-owned. If the property is owner-occupied the loan funds can only be used for the rental unit(s). Loan - to - Value Ratio: 110%. Half of the improvement value may be added to the initial property value. Value can be established by the Property Tax Statement, or an Appraisal dated within the past 12 months. Income Limit: None. Debt - to - Income Ratio: N/A. Credit Requirements: The Borrower must be current on all Mortgages and Property Taxes. Multiple Loans per Property/Borrower: More than one loan per property/borrower is allowed, however, the outstanding balance(s) for this loan CANNOT exceed the maximum loan amount allowed. Eligible Use of Funds: Improvements that correct city code violations or health and safety concerns. Permanent Exterior Improvements including, but not limited to roofing, siding, windows, painting, doors, driveways, parking lots if doing with other eligible improvements, awnings, sidewalks/steps, garage repair, permanent landscaping and tuck pointing. Interior improvements including but not limited to structural work, accessibility improvements, plumbing, electrical, insulation, lawn sprinkler systems, flooring, permanent fixtures (cabinets/counters). Energy Star rated HVAC and Water Heaters, Solar Systems and Insulation. Questionable improvements will be brought to the city for approval. Note: If a property has open work orders from a rental licensing inspection report, the items must either be addressed before a loan application is submitted or as part of the loan rehabilitation plan. Ineligible Use of Funds: Payment for work initiated prior to the loan being approved and closed, unless due to emergency. Recreation or luxury projects (pools, playground equipment, saunas, whirlpools, etc.), furniture, non-permanent appliances (unless part of a full kitchen remodel), and funds for working capital, debt service, homeowner labor or refinancing existing debts are NOT allowed. Bids: Only 1 bid is required. All contractors must be properly licensed or registered and permits must be obtained when required. Sweat Equity / Owner Labor: NOT PERMITTED Post Installation Inspection: Permits must be obtained and signed off by a City inspector where required; when not required, a post installation inspection will be performed by a City representative to ensure the work has been completed before any funds will be released. Loan Security: All loans will be secured with a mortgage in favor of the Richfield Economic Development Authority. Borrower Fees: Borrower will be responsible for a 1% origination fee, title report, document preparation fee, mortgage filing and service fees, credit report fees and any applicable closing fee. Exhibit A2 Page 4 Agreement between Richfield Economic Development Authority and Center for Energy and Environment Work Completion: All work must be completed within 180 days of the loan closing. However, when warranted, CEE may authorize exceptions on a case-by-case basis. General Program Conditions Application Processing: Loans will be distributed on a first come first serve basis as borrowers qualify. 1-3 unit properties are NOT eligible until August 1st of each year. Applicants must provide a completed application package including the following in order to be considered for funding. Completed and signed application form Proof of Identity (drivers license, passport, etc.) Bids or estimates for proposed projects Other miscellaneous documents that may be required. Program Costs: Loan origination will be paid out of the Program Budget. Loan program marketing efforts will be billed directly to the City of Richfield and is a separate expense should the city choose to commission CEE for marketing support. Disbursement Process: Funds are disbursed to the borrower(s) on a reimbursement basis after work is completed and permits are closed/final. Exhibit B2 EXHIBIT B2 TOTAL PROGRAM BUDGET $102,250 RICHFIELD LOAN PROGRAM BUDGET A. Multi-Family Improvement Loan Budget (does include Remodeling Advisor Visits and Loan Origination Fees) : 2025: $102,250 Budget Notes: 1.CEE shall submit monthly invoices for loan program and administrative fees for that period. 2.Services performed by CEE will be funded from the Total Program Budget as stated above and paid in accordance with the following schedule. (1)Annual Administration Fee None (included in Residential Program) (2) Multi-Family Improvement Loan Origination Fee $750 per loan closed 3.Marketing Marketing efforts will be supported by CEE and marketing costs are not included in the administrative budget. Hourly rates are inclusive of all overhead expenses and will be charged only for hours directly related to the labor of all program marketing. CEE will also be reimbursed by City of Richfield for any non-labor, out-of-pocket expenses relating to these services on a dollar-for-dollar basis. CONTRACT between RICHFIELD ECONOMIC DEVELOPMENT AUTHORITY and CENTER FOR ENERGY AND ENVIRONMENT CEE #Page 1 MULTI-FAMILY IMPROVEMENT PROGRAM ORIGINATION AGREEMENT This MULTI-FAMILY IMPROVEMENT PROGRAM ORIGINATION AGREEMENT (“Agreement”), dated this 18th day of March, 2024, is made by and between the Richfield Economic Development Authority, with offices at 6700 Portland Ave, Richfield, MN 55423 (“Authority”), and CENTER FOR ENERGY AND ENVIRONMENT, with offices at 212 3rd Avenue North, Suite 560, Minneapolis, Minnesota 55401 (“CEE”). RECITALS A.The Authority has a need for certain professional services and desires to retain CEE to provide said services, all subject to the terms and conditions contained in this Agreement. B.CEE is qualified to provide the desired professional services and desires to provide said services for the Authority, all subject to the terms and conditions contained in this Agreement. NOW, THEREFORE, in consideration of the foregoing and the mutual promises contained in this Agreement, the parties agree as follows: 1.Services/Scope of Work 1.1 CEE shall in conjunction with the Authority develop and deliver the City of Richfield Multi-Family Improvement Program (hereinafter the “Program”) and more fully described in Exhibit A attached hereto. All activities delivered under the Program shall be coordinated with the Authority’s Executive Director’s designee. 1.2 CEE shall assist the Authority staff in marketing the Program. This will include being on the CEE website and creating an information sheet about the loan program. 1.3 The funding source is exclusively from the Authority. 2.Compensation 2.1 The Authority shall compensate CEE for services provided under this agreement according to the schedule in Exhibit B attached hereto. The Authority shall compensate CEE only for services completed. 2.2 Upon request, CEE will provide additional marketing services. Hourly rates are inclusive of all overhead expenses and will be charged only for hours directly related to marketing. CEE will be reimbursed by the Authority for any non-labor, out-of-pocket expenses, relating to these services on a dollar-for-dollar basis with no mark-up. 2.3 CEE shall invoice the Authority not more than once each month. The Authority shall pay CEE within 30 days of receipt of the invoice. CONTRACT between RICHFIELD ECONOMIC DEVELOPMENT AUTHORITY and CENTER FOR ENERGY AND ENVIRONMENT CEE #Page 2 3.CLIENT’s Obligations 3.1 If requested by CEE, the Authority shall make reasonable efforts to respond promptly to requests from CEE for information and approvals regarding the services to be provided under this Agreement. 3.2 If requested by CEE, the Authority shall make reasonable efforts to obtain information and or permission for access from clients which may be necessary for CEE to provide the services under this Agreement. 3.3 The Authority shall provide sufficient funding to fund eligible Authority funded loans. The Authority shall determine the amount of funds allocated to the Program. 3.4 The Authority shall establish eligibility for the Program and shall provide these criteria in writing to CEE prior to commencement of any mark eting efforts. 3.5 The Authority shall make reasonable efforts to respond promptly to requests from CEE for information and approvals regarding the services to be provided under this Agreement. 4.CEE’s Obligations 4.1 CEE shall use its best efforts to provide services under this Agreement in a professional manner consistent with the care and skill used by reputable members of CEE’s profession. 4.2 CEE, and all of its employees or agents, shall comply with all statutes, ordinances, rules, regulations and other laws applicable to the provision of services under this Agreement. 4.3 CEE shall secure all permits and licenses required for performance of the services under this Agreement. 4.4 CEE shall not engage in discriminatory employment practices against any employee or applicant for employment and shall in all respects comply with all federal, state and local laws, regulations and orders, including without limitation, Chapter 363 of the Minnesota Statutes, as amended from time to time. Failure to comply with the provisions hereof shall be deemed a material default under this Agreement. 5.Term and Termination 5.1 Unless earlier terminated as provided in the following paragraphs, this Agreement shall become effective on 05/01/2024 and continue through 12/31/2025. CONTRACT between RICHFIELD ECONOMIC DEVELOPMENT AUTHORITY and CENTER FOR ENERGY AND ENVIRONMENT CEE #Page 3 5.2 This Agreement may be terminated by either party, for any reason or no re ason, immediately upon written notice to the other party. In the event this Agreement is terminated by CEE prior to the expiration of the term set forth in paragraph 5.1, the Authority shall compensate CEE for all services delivered up the date of termination and CEE shall provide the Authority with such information as the Authority may request regarding the status of the Program. 5.3 Any termination of this Agreement shall not release either party from their respective obligations under sections 7 and 8 of this Agreement. 6.Insurance 6.1 During the term of this Agreement, CEE will obtain and maintain insurance in the amounts listed below: General Liability $2,000,000 Aggregate Limit Automobile Liability $1,500,000 Combined Single Limit Excess Liability $1,000,000 Aggregate Limit Workers Compensation Statutory Limit 7.Liability and Indemnification 7.1 CEE represents that the services to be provided under this Agreement are reasonable in scope and that CEE has the experience and ability to provide the services. 7.2 CEE warrants that any services provided hereunder shall be done in a professional and workmanlike manner. 7.3 CEE shall indemnify, defend and hold harmless Authority and its officers, directors, employees and agents from and against any and all claims, damages, losses, injuries and expenses (including attorneys’ fees and damages for death, personal injury and propert y damage) which Authority may incur as a result of any act or omission by CEE in providing services under this Agreement. 7.4 Authority shall indemnify, defend and hold harmless CEE and its officers, directors, employees and agents from and against any and all claims, damages, losses, injuries and expenses (including attorneys’ fees and damages for death, personal injury and property damage) which CEE may incur as a result of any act or omission by Authority in discharging its duties under this Agreement. 8.Confidentiality Unless otherwise agreed by Authority in writing, CEE shall maintain in confidence and not disclose to any third party any information obtained regarding the Authority and/or any of Authority’s clients for which CEE is providing services; provided, however, that this obligation to maintain confidentiality shall not apply to: a)Information in the public domain at the time of disclosure; CONTRACT between RICHFIELD ECONOMIC DEVELOPMENT AUTHORITY and CENTER FOR ENERGY AND ENVIRONMENT CEE #Page 4 b)Information which becomes part of the public domain after disclosure through no fault of CEE; or c)Information which CEE can demonstrate was known by it prior to the date of this Agreement. Notwithstanding the foregoing, CEE shall be entitled to disclose the documents or client information covered by this paragraph to governmental authorities to the extent CEE reasonably believes it has a legal obligation to make such disclosures and to the extent CEE reasonably deems to be necessary; provided, however, that if CEE believes that any such disclosure is required by law, it shall provide advance notice to the Authority to provide the Authority with a reasonable opportunity to attempt to obtain an injunction or other protective order preventing such disclosure. 9.Relationship of Parties CEE will provide services as an independent contractor under this Agreement. Neither CEE, nor any of its employees or agents, shall be considered employees of the Authority for any purpose, and neither shall CEE be eligible for any compensation or benefits which the Authority may provide to its employees from time to time. CEE shall be solely responsible for all employment and other taxes applicable to providing services hereunder, and the Authority will not withhold any taxes or contributions from the compensation payable to CEE under this Agreement. 10.Notices All notices, requests, demands and other communications required to be given in writing under this Agreement shall be given to the ot her party in person or by mail as provided in this section. If delivered personally, notice shall be deemed to have been duly given on the date of delivery. If delivered by mail, such notice shall be sent via first class U.S. mail, postage prepaid, to the address set forth at the beginning of this Agreement or such other address as a party may otherwise request by written notice, and notice shall be deemed duly given three (3) business days after mai ling. 11.Assignment This Agreement shall be binding upon and inure to the benefit of the parties and their respective heirs, successors and assigns; provided, however, that neither party shall assign or transfer in any manner, this Agreement or any portion hereof without the prior written consent of the other party, and any attempt to assign or transfer without prior written consent shall be void and of no effect. 12.Governing Law This Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota. 13.Miscellaneous CONTRACT between RICHFIELD ECONOMIC DEVELOPMENT AUTHORITY and CENTER FOR ENERGY AND ENVIRONMENT CEE #Page 5 13.1 Headings and captions used in this Agreement are for convenience only and shall not affect the meaning of this Agreement. 13.2 This Agreement contains the entire agreement of the parties and supersedes all prior agreements, discussions and representations, written or oral, concerning the subject matter hereof. 13.3 No waiver by the Authority of any term or condition of this Agreement or any document referred to herein shall, whether by conduct or otherwise, be construed as a waiver or release of any other term or condition of this Agreement. 13.4 This Agreement may only be amended in a written agreement signed by both parties. 13.5 Except as expressly set forth in section 7, the rights and benefits under this Agreement shall inure solely to the benefit of the Authority and CEE, and this Agreement shall not be construed to give any rights, benefits or causes of action to any third party. 13.6 The invalidity or partial invalidity of any provision of this Agreement shall not invalidate the remaining provisions, and the remainder shall be construed as of the invalidated portion shall have never been a part of this Agreement. 13.7 CEE shall comply with the provisions of Minnesota Statutes Chapter 13 (Government Data Practices) that are applicable to the Authority and shall not disseminate any information concerning loan requests of the borrowers without the prior written approval of the Authority. 13.8 This Agreement may be signed in any number of counterparts, each of which shall be deemed an original and one and the same instrument. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. 3/18/24 AGENDA SECTION: Consent Calendar AGENDA ITEM # 2.B. STAFF REPORT NO. 12 ECONOMIC DEVELOPMENT AUTHORITY MEETING 12/16/2024 Celeste McDermott, Housing SpecialistREPORT PREPARED BY: EXECUTIVE DIRE CTOR RE VIEW: Melissa Poehlman, Executive Director ITEM FOR COUNCIL CONSIDERATION: Consideration of an Economic Development Authority Loan Forgiveness Policy. EXECUTIVE SUM MARY: In November 2024, the Housing and Redevelopment Authority (HRA) approved a Loan Forgiveness Policy that covered HRA loans. The Economic Development Authority (EDA) currently has two loan programs, the Transformation Loan Program and the Apartment Remodeling Loan Program. With loan terms extending up to 30 years, there may be instances where homeowners will need to request loan settlement or forgiveness due to financial hardships, such as mortgage foreclosure. Under the current process, requests for loan settlement or forgiveness must be presented at a public EDA meeting. Staff is recommending the approval of a Loan Forgiveness Policy (Policy) that would grant the EDA Executive Director the authority to approve the forgiveness or settlement of EDA loans in cases of financial hardship. This Policy will prevent the need to publicly disclose personal hardships at EDA meetings and will allow staff to handle requests more efficiently, particularly in time-sensitive situations. The EDA may still need to review cases where the nature of the hardship is unclear or requires further clarification before approval. The proposed Policy would enable the EDA Executive Director to forgive or accept a settlement amount from previous loan recipients under the following circumstances: mortgage foreclosure; the total debt secured by the property, including the EDA lien and all superior mortgages, exceeds 100% of the documented market value of the property and the borrower does not have the financial means to pay off the debt; the borrower needs to move due to medical or safety reasons, and does not have the financial means to pay off the EDA mortgage; or the borrower is deceased and the heirs do not have the financial means to pay off the EDA mortgage. In the case of the Apartment Remodeling Program, most but not all loans are held by a business or corporation, and any request for forgiveness from a business would be brought before the EDA. RECO MMENDED AC TION: By motion: Adopt a resolution approving the proposed Economic Development Authority Loan Forgiveness Policy. BASIS OF RECO MMEND ATION: A.HISTORICAL CONTEXT 12/10/2024 In November 2024, a Housing and Redevelopment Authority Loan Forgiveness Policy was approved. The proposed EDA Loan Forgiveness Policy has the same terms with the addition of requiring businesses or corporations to request forgiveness from the EDA. B.EQUITABLE OR STRATEGIC CONSIDERATIONS OR IMPACTS Residents and loan recipients with vulnerable identities, including mental and physical disabilities, are more likely to request loan forgiveness. Showing up to a public, recorded meeting while the case for their loan forgiveness is made is an uncomfortable and possibly traumatic experience. Allowing staff to handle some very clear cases administratively reduces the unnecessary stress of the situation. C.POLICIES (resolutions, ordinances, regulations, statutes, exc): For most EDA loans, the entire loan amount is due and payable if the property is sold or transferred before the end of the loan term. The current practice for loan settlement or forgiveness requires that appeals be brought to an EDA meeting. The Subordination Policy allows for the EDA Executive Director to approve subordination requests under circumstances outlined in the Subordination Policy. The proposed Loan Forgiveness Policy would give the EDA Executive Director similar authority. As with the HRA, staff will include information regarding loan forgiveness as part of the Annual Report to the EDA. D.CRITICAL TIMING ISSUES: In hardship cases, homeowners often need to quickly sell their property due to financial or medical reasons. Waiting for the next available EDA meeting to request loan forgiveness may jeopardize the sale of the property. E.FINANCIAL IMPACT: While loan repayments are used to fund existing programs, EDA loan programs do not rely on repayments as a primary funding source. The Executive Director currently has the authority to approve contracts up to $50,000. Any loan forgiveness approved by the Executive Director would also be under this limit. The proposed fee to process a forgiveness request would be the same as the existing settlement fee of $125. F.LEGAL CONSIDERATION: The Policy has been reviewed by the EDA attorney. ALTERNATIVE RECOMMENDATION(S): 1.Do not approve the proposed Policy. 2.Modify and approve the proposed Policy. PRINCIPAL PARTIES EXPECTED AT MEETING: N/A ATTACHMENTS: Description Type Resolution Resolution Letter Loan Forgiveness Policy, EDA Backup Material 2024 Fee Schedule Backup Material ECONOMIC DEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA RESOLUTION NO. 54 RESOLUTION ADOPTING LOAN FORGIVENESS POLICY WHEREAS, the Economic Development Authority in and for the City of Richfield, Minnesota (the “Authority”) administers several housing programs for property owners and offers deferred loans (“EDA Loan”) which are secured with a note and a mortgage filed against the property; and WHEREAS, each of the loans becomes due upon various occurrences, including the payment in full of a first mortgage, the date the property is sold, transferred or otherwise conveyed, the property is rented, leased, unoccupied or assigned, a default under the first mortgage, the mortgage is satisfied or assigned, or the property owner does not occupy the home for more than one year; and WHEREAS, property owners sometimes face financial hardships and may have insufficient funds to repay their EDA Loan in full; and WHEREAS, Authority staff request the flexibility to respond to property owner requests related to their EDA Loans when each mortgage is due and financial hardship is present; and NOW, THEREFORE, BE IT RESOLVED, by the Board of Commissioners of the Economic Development Authority in and for the City of Richfield, Minnesota as follows: 1.The Executive Director is hereby authorized to review and execute modifications to EDA Loan notes and security agreements, which may include but is not limited to forgiveness, extensions of time to pay the loan, and/or reduction in the repayment amount in cases of financial hardship. Adopted by the Economic Development Authority in and for the City of Richfield, Minnesota this 16th day of December, 2024. Erin Vrieze Daniels, President ATTEST: Melissa Poehlman, Executive Director RICHFIELD ECONOMIC DEVELOPMENT AUTHORITY LOAN FORGIVENESS POLICY EFFECTIVE DECEMBER 2024 Loan Forgiveness Richfield Economic Development Authority (EDA) loan recipients requesting the forgiveness of part or all of the interest of the EDA in real property must submit a Loan Forgiveness Request Form, the required supporting documentation, and a processing fee. Forms are available upon request from EDA staff by emailing HouseSpecialist@richfieldmn.gov or calling 612-861-9778. Requests will not be considered until all documents and the processing fee have been received. Required Documents The following information must be submitted with the Loan Forgiveness Request Form: 1.A typed letter dated and signed by the homeowner or representative, stating the reason for the requested loan forgiveness. 2.A copy of the current appraisal (dated within six months of application) or other evidence of market value of the property that is acceptable to the EDA. 3.A copy of current title work (must indicate all debt against the property). 4.Explanation of any debts to be paid off at the time of sale, along with supporting documentation (if applicable). 5.Estimated closing costs/settlement statement, where applicable. 6.Copy of purchase agreement 7.Settlement Statement (HUD-1) 8.Documentation of all debts owed and proposed settlement amounts 9.Status of any settlement requests to superior mortgage holder 10.Additional documentation may be required. Evaluation Criteria The Richfield EDA Executive Director will consider partial or full forgiveness of the EDA mortgage interest on a case-by-case basis where there is a documented hardship on the part of the borrower. Some examples that could be considered hardships include: 1.Mortgage foreclosure 2.The total debt secured by the property, including the EDA lien and all superior mortgages, exceeds 100% of the documented market value of the property and the borrower does not have the financial means to pay off the debt after the sale of the home. 3.The borrower needs to sell due to medical or safety reasons and does not have the financial means to pay off the EDA mortgage after the sale of the home. 4.The borrower is deceased, and the heirs do not have the financial means to pay off the EDA mortgage after the sale of the home. The Executive Director, at their discretion, may refer a request for forgiveness or settlement to the EDA Board. Any loan in excess of $50,000 and any loan held by a business or corporation will automatically be referred to the EDA Board. Appeal Process If a Loan Forgiveness application is denied by the Executive Director, the applicant may request an appeal in writing. The EDA will consider appeals at their regular monthly meeting. The EDA meets on the third Monday of each month, and all information must be submitted to staff at least 10 days prior to the meeting. Fees The fee for a loan forgiveness request is established by the EDA. An additional fee is required for an appeal to the EDA and is non-refundable. Processing Loan forgiveness requests will be processed by EDA staff, who will submit the request with a recommendation for action, to the Executive Director. The Executive Director has the authority to grant a partial or full loan forgiveness request when, based on his or her discretion, the request is reasonable based on the criteria set forth in this Policy. The Executive Director may request review and final decision by the EDA. Requests for loan forgiveness should be submitted 30 days prior to the date the forgiveness is needed. Exceptions may be made on a case-by-case basis. Satisfactions When a loan made by the EDA is forgiven or settled, a document satisfying the lien will be prepared by the EDA and delivered to the borrower for recording. The borrower is responsible for recording the satisfaction with Hennepin County. Richfield Housing & Redevelopment Authority Economic Development Authority 2024 Housing Program Fees Program/ITEM Fee Subordination $165 Administrative Change/Second Copy $40 Loan Amendment $150 Loan Settlement or Forgiveness Request $125 Mortgage Satisfaction/Release Filing, upon request $100 Apartment Remodeling Loan Application* (EDA) $350 Transformation Loan Application* (EDA) $350 Richfield Rediscovered Lot Sale Application* (HRA) $625 Richfield Rediscovered Credit Application* (HRA) $625 Down Payment Assistance (HRA) $100 *Plus any applicable filing fees Fees may be waived or modified due to financial hardship at the discretion of the HRA Executive Director.