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072511completeagenda CITY OF RICHFIELD, MINNESOTA MONDAY, JULY 25, 2011 HOUSING AND REDEVELOPMENT AUTHORITY MEETING RICHFIELD MUNICIPAL CENTER COUNCIL CHAMBERS 6700 PORTLAND AVENUE 5:30 P.M. AGENDA Call to order Roll call 1. Approval of minutes of (1) Regular HRA Meeting of June 20, 2011; (2) Special HRA Meeting of June 27, 2011; (3) Special Concurrent City Council/HRA Worksession of June 28, 2011; and (4) Regular HRA Meeting of July 18, 2011 2. HRA approval of agenda 3. Consideration of agreement with Kimley-Horn Associates for planning and design services associated with redevelopment along 77th Street Staff Report No. 32 Notes: 4. Consideration of revision to guidelines for Richfield Rediscovered Redevelopment Credit Program Staff Report No. 33 Notes: 5. Consideration of resolution supporting submittal of application to Metropolitan Council for Livable Communities Demonstration Account grant for redevelopment activities associated with proposed Lyndale Garden project Staff Report No. 34 Notes: 6. Consideration of resolution modifying redevelopment plan for Richfield Redevelopment Project Area, establishing Lyndale Garden Tax Increment Financing District therein and adopting tax increment financing plan therefore Staff Report No. 35 Notes: 7. Consideration of resolution authorizing interfund loan for advance of certain costs in connection with Lyndale Garden Tax Increment Financing District Staff Report No. 36 Notes: 8. Public hearing regarding resolution granting business subsidy to The Cornerstone Group in amount not to exceed $650,000 and Spending Plan for certain tax increment financing districts located within Richfield Redevelopment Project Area Staff Report No. 37 Notes: 9. HRA discussion items Notes: 10.Executive Director report Notes: 11.Claims and payroll Adjournment Auxiliary aids for individuals with disabilities are available upon request. Requests must be made at least 96 hours in advance to the City Clerk at 612-861-9738. richfield: July 2011 Page 1 of 2 City of Richfield Calendar Calendars Net Navigate: 2010 Jan Feb Mar Apr May Jun Jul Auq Sep Oct Nov Dec 2012 July 2011 •ouday Tuesday Wednesday Thursday Friday 2 7 I Jun 28 29 3() ) I Jul 5:30p Human Services 5:30 PM Special Planning Council Concurrent City 7:OOp Planning Counci/HRA Commission Worksession 6 PM Special City Immediately following Council/HRA/Planning Concurrent Worksession Commission -Special City Council Worksession regarding Worksession Lyndale Garden Center site @ Oak Grove 7 PM Regular City Lutheran Church,7045 Council Meeting Lyndale Avenue 4 City Administrative 11:30a Richfield Tourism 7:OOp Transportation 7:OOp Arts Commission offices closed--Fourth Promotion Board @ Commission @ 6335 Portland Ave of July holiday 6601 Lyndale Ave,Suite CANCELED 106 CANCELED 7:OOp Human Rights Commission CANCELED 11. 12 13 14 15 6:30 PM Planning 11:30 AM Tourism Commission Study Promotion Board @6601 Session Lyndale Ave (rescheduled) 7 PM Special Council Meeting(Possible 5:30 PM Special City quroum)Open house Council Worksession regarding concept for greenway in northeast 7 PM Regular City Richfield along 63rd St. Council Meeting Corridor @ Richfield Public Works Facility, 1901 E.66th St. 18 .19 20 21 22 6:OOp Special City 7:OOp Community 7:OOp Friendship City Council/HRA/Planning Services Commission @ Commission Commission 7000 Nicollet Ave • Worksession regarding Lyndale Garden Center site @ Oak Grove Lutheran Church,7045 Lyndale Avenue 7:OOp Housing and Redevelopment Authority(HRA) 25 26 27 28 29 5:30p Human Services 5:30 PM Special City 7-8 PM Neighborhood SATURDAY,JULY 30 Planning Council Council Worksession Crime Watch Block 9:30 a.m.-10:30 a.m. 5:30p Special HRA Captains Meeting @ Mayor's Hour @ Meeting 7 PM Regular City Richfield Middle School Farmers'Market 7:OOp Planning Council Meeting Auditorium,7461 Oliver Avenue Commission Display: Year Month Week Day Block List Condensed Abs Slide Calendars: Search Add Events: Daily Duration Periodic Administer: This Calendar http://www.my.calendars.net/richfield 7/21/2011 HOUSING AND REDEVELOPMENT RICHFIELD AUTHORITY MEETING MINUTES Richfield, Minnesota Regular Meeting June 20, 2011 CALL TO ORDER The meeting was called to order by Chair Sandahl at 7:00 p.m. ROLL CALL HRA Members Sue Sandahl, Chair; Joan Helmberger, Doris Rubenstein, Debbie Goettel, Present: and Steven Quam Staff Present: Steve Devich, Executive Director; John Stark, Community Development Director; Karen Barton, Community Development Manager; and Nancy Gibbs, City Clerk. Item #1 APPROVAL OF MINUTES OF (1) REGULAR HRA MEETING OF MAY 16, 2011 M/Rubenstein, S/Quam to approve the minutes of the Regular HRA Meeting of May 16, 2011. Motion carried 5-0. Item #2 HRA APPROVAL OF AGENDA Removed items A, B & C from consent agenda and moved to Item 3A. M/Goettel, S/Quam to approve the agenda as amended. Motion carried 5-0. Item #3 CONSENT CALENDAR A. Moved to Item #3A B. Moved to Item #3A C. Moved to Item #3A HRA Meeting -2- June 20,2011 D. Consideration of approval of changes to Subordination and Satisfaction Policy S.R. No. 21 E. Consideration of approval of affirming City Council's call for public hearing on proposed modification to redevelopment plan for Richfield Redevelopment Project Area and proposed establishment of Lyndale Garden Center site Tax Increment Finance District S.R. No. 22 F. Consideration of approval of resolution affirming and ratifying submittal of application to Minnesota Housing Community Fix-Up Fund Program and Community Revitalization Program Fund and authorizing program development creating program to write down interest rate on home improvement loans S.R. No. 23 HRA RESOLUTION NO. 1094 RESOLUTION AFFIRMING AND RATIFYING SUBMITTAL OF AN APPLICATION TO MINNESOTA HOUSING COMMUNITY FIX-UP FUND PROGRAM AND COMMUNITY REVITALIZATION FUND AND AUTHORIZING PROGRAM DEVELOPMENT TO CREATE A PROGRAM TO WRITE DOWN ON THE INTEREST- RATE ON HOME IMPROVEMENT LOANS This resolution appears as HRA Resolution No. 1094. M/Goettel, S/Quam to approve the consent calendar, as amended. Motion carried 5-0. Item #3A A. CONSIDERATION OF APPROVAL OF RESOLUTION TRANSFERRING FUNDS FROM RICHFIELD REDISCOVERED A-1, B-1, A-2, B-2, A-3, B-3, A- 4, B-4, A-5 AND B-5 AND RICHFIELD REDISOVERED II TAX INCREMENT FINANCING DISTRICTS TO DEVELOPMENT ACCOUNT (STAFF REPORT NO. 18) B. CONSIDERATION OF APPROVAL OF AWARD OF CONTRACT TO OTTING HOUSE MOVERS, LLC FOR SALE AND REMOVAL OF HOUSE AND STRUCTURES AT 2517 76TH STREET WEST (STAFF REPORT NO. 19) C. CONSIDERATION OF APPROVAL OF ALLOWING HRA-OWNED PARCEL AT NORTHEAST CORNER OF 6501 LYNDALE AVENUE (FORMER K- MART SITE) (STAFF REPORT NO. 20) A) Community Development Director Stark presented Staff Report No. 18. Chair Sandahl asked staff to explain why the HRA forgave the remaining portion of LHN loan in 1999. Julie Eddington of Kennedy and Graven explained the reasoning behind the allocation of these funds. M/Sandahl, S/Goettel that the following resolution be adopted and that it be made part of these minutes HRA RESOLUTION NO. 1093 RESOLUTION AUTHORIZING TRANSFER OF FUNDS REMAINING IN RICHFIELD REDISCOVERED ACCOUNTS TO DEVELOPMENT FUND Motion carried 5-0. This resolution appears as HRA Resolution No. 1093. III HRA Meeting -3- June 20,2011 B) Assistant Community Development Director Barton presented Staff Report No. 19. M/Sandahl, S/Rubenstein to approve the award of contract to Otting House Movers, LLC for sale and removal of house and structures at 2517 76th Street West. Motion carried 5-0. C) Assistant Community Development Director Barton presented Staff Report No. 20. Commission Member Goettel stated she had concerns regarding doing anything with this parcel at this time. Commission Member Quam agreed. The HRA commissioners agreed to change the motion to remove the word "proposals" and add "the planning process". M/Sandahl, S/Quam to approve allowing HRA-owned parcel at northeast corner of 66th Street and Lyndale Avenue be included in the planning process for redevelopment of 6501 Lyndale Avenue (former K-Mart site). Motion carried 5-0. Item #4 CONSIDERATION OF ACCEPTING 66TH STREET CORRIDOR REVITALIZATION PLAN (STAFF REPORT NO. 24) Assistant Community Development Director Barton presented Staff Report No. 24. Tom Whitlock of Damon Farber and Associates presented an overview of the 66th Street Corridor revitalization plan. M/Sandahl, S/Quam to approve the 66th Street Corridor Revitalization Plan. Motion carried 5-0. Item #5 DISCUSSION OF HOUSING AND REDEVELOPMENT GOALS FOR UPCOMING YEAR (STAFF REPORT NO. 25) Community Development Director Stark presented Staff Report No. 25. The commission members agreed with the goals presented. Chair Sandahl and Commission Member Quam suggested additional incentives for Richfield Rediscovered and other move-up housing programs. Commission Member Goettel suggested a pilot project to encourage environmentally sustainable housing. Commission Member Rubenstein and Commission Member Goettel suggested providing housing information in Spanish at the annual Cinco de Mayo event. Commission Member Goettel and Commission Member Rubenstein also suggested providing Spanish and Somalian language assistance at the remodeling fair. HRA Meeting -4- June 20,2011 Item #6 HRA DISCUSSION ITEMS None. Item #7 EXECUTIVE DIRECTOR REPORT None. Item #8 CLAIMS AND PAYROLL M/Goettel, S/Sandahl that the following claims and payrolls be approved: U.S BANK 06/20/2011 Section 8 Checks: 120593-120733 $ 154,581.60 HRA Checks: 31216-31240 $ 41,789.83 TOTAL $ 196,371.43 Motion carried 5-0. ADJOURNMENT The meeting was adjourned by unanimous consent at 8:45 p.m. Date Approved: July 25, 2011 Suzanne M. Sandahl Chair Nancy Gibbs Steven L. Devich City Clerk Executive Director misAl HOUSING AND REDEVELOPMENT RICHFIELD AUTHORITY MEETING MINUTES Richfield, Minnesota Special Meeting June 27, 2011 Members Present: Sue Sandahl, Chair; Debbie Goettel; Steve Quam; Doris Rubenstein. Not Present: Joan Helmberger. The Housing and Redevelopment Authority attended the Cornerstone Group Workshop II: Development Scenarios—The Block Exercise regarding the proposed redevelopment options for the Lyndale Garden Center site. Date Approved: July 25, 2011 Suzanne M. Sandahl Chair Nancy Gibbs Steven L Devich City Clerk Executive Director •NAMI HOUSING AND REDEVELOPMENT RICHFIELD AUTHORITY MEETING MINUTES Richfield, Minnesota Special Concurrent City Council/Housing and Redevelopment Authority Worksession June 28, 2011 CALL TO ORDER The meeting was called to order by Mayor Goettel at 5:30 p.m. ROLL CALL HRA Members Sue Sandahl, Chair; Debbie Goettel; Doris Rubenstein; Joan Helmberger. Present: HRA Members Steve Quam (excused). Absent: Council Members Debbie Goettel, Mayor; Fred Wroge; Sue Sandahl; Pat Elliott; and Present: Tom Fitzhenry. Staff Present: Steven L. Devich, City Manager; Mike Eastling, Public Works Director; John Stark, Community Development Director; Jim Topitzhofer, Recreation Services Director; Karen Barton, Community Development Manager; Corrine Heine, City Attorney (arrived at 5:55 p.m.); and Cheryl Krumholz, Recording Secretary. Item # I DISCUSSION REGARDING PROPOSED REDEVELOPMENT OF FORMER KMART AT 66TH STREET AND LYNDALE AVENUE Steve Wellington, representative from Wellington Management, discussed their proposed redevelopment of the former Kmart site. The corner public green space should be incorporated into the plan but no commitments have been made by City staff. Discussion included potential higher density; financing, parking requirements structured parking, pedestrian access, traffic flow and proposed tenants; including LA Fitness, Frattalone Hardware and a restaurant. Mr. Wellington said they are attempting to do the proposed project without public subsidy. Council Member/HRA Chair Sandahl stated she was open to incorporating the green space if it allowed an outside eating area and another green space could be located within the project. Special Worksession Minutes -2- June 28, 2011 Mayor/HRA Commissioner Goettel read a written statement from HRA Commissioner Quam expressing his concerns related to the proposed development. Council Member Wroge commended the developer for attempting the project with no financial assistance. Mayor/HRA Commissioner Goettel expressed support for the reorientation of the layout from the original concept. She also suggested higher density and structured parking. Council Member Fitzhenry stated he liked the proposed concept including incorporating the public space with a restaurant. HRA Commissioner Rubenstein also said she liked higher density and structured parking. Community Development Director Stark clarified that the public space is not considered a park but is an HRA-owned parcel used for public space. Mr. Wellington explained the parking requirements are close to being met. Community Development Manager Barton stated there is more parking than what is required. Mr. Wellington explained the financing for more density. Tim Carter, Richfield Chamber of Commerce, discussed the Chamber of Commerce's support of the proposed project. ADJOURNMENT The meeting was adjourned by unanimous consent at 6:05 p.m. Date Approved: July 25, 2011 Suzanne M. Sandahl Chair Cheryl Krumholz Steven L. Devich Recording Secretary Executive Director HOUSING AND REDEVELOPMENT RICHFIELD AUTHORITY MEETING MINUTES Richfield, Minnesota Regular Meeting July 18, 2011 HRA Members Steven Quam, Vice Chair; Doris Rubenstein Present: HRA Members Sue Sandahl; Joan Helmberger, Debbie Goettel Absent: Staff Present: Steve Devich, Executive Director; Karen Barton, Community Development Manager; and Nancy Gibbs, City Clerk. The meeting could not be called to order for lack of a quorum. Date Approved: July 25, 2011 Suzanne M. Sandahl Chair Nancy Gibbs Steven L. Devich City Clerk Executive Director AGENDA ITEM#: 3 REPORT#: 32 STAFF REPORT RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY MEETING JULY 25, 2011 REPORT PREPARED BY: JOHN STARK, COMMUNITY DEVELOPMENT DIRECTOR NAME,TITLE REPORT PRESENTER: KAREN BARTON, ASST. COMMUNITY DEVELOPMENT DIRECTOR 4 , E,TITLE ACTING, DEPARTMENT DIRECTOR RE VIEW: �� I_. ! 7Wi.A Ao.OPMAIMIFI • REVIEWED BY EXECUTIVE DIRECTOR: r EirAvrwit___._ rir..t.42 APPIIP- ITEM FOR HRA CONSIDERATION: Direct staff to enter into an agreement with Kimley-Horn Associates for planning and design services associated with redevelopment along 77th Street. I. RECOMMENDED ACTION: By Motion: Direct staff to enter into an agreement with Kimley-Horn Associates for planning and design services associated with redevelopment along 77th Street. II. BACKGROUND During the past year there have been several redevelopment and/or rehabilitation projects proposed along the 77th Street Corridor from Lyndale Avenue to 2nd Avenue. Staff is also anticipating several additional proposals within the next year. Among these proposed and potential projects are: • 70 unit affordable housing unit at the North City Garage parcel; • 44-unit affordable housing unit at the South City Garage parcel; • Rehabilitation of 7700 Nicollet Avenue; • Reconstruction of Menard's property; • Electric vehicle charging/servicing and coffee shop at the Candlewood Outlot, and; 072511 77th Street Master Plan • Redesign/reconstruction of the Richfield-Bloomington Honda property. It is important to ensure that the site layouts, ingress/egress and architecture of all of these diverse projects compliment one another and the surrounding community. Staff recommends that a full service planning, landscape architecture, architecture and engineering firm assist in developing a coordinated plan for this area. Staff asked two firms, Bonestroo, Inc. and Kimley-Horn & Associates, to provide proposals for such services. Staff did not provide the firms with a formal "scope of services," but, rather, met with each, discussed our needs and let the firms propose a scope of services that they felt met those needs. The attached proposals, therefore, are for a differing scope. Based on the costs and services to be provided, staff is recommending that Kimley- Horn's proposal to conduct a coordinated plan for this area for a cost not to exceed $24,500. III. BASIS OF RECOMMENDATION A. POLICY • In June 2011 the Housing and Redevelopment Authority (HRA) adopted a number of goals for 2001/12; among these was, "Create Integrated Master Plan for the Nicollet to Lyndale Avenues portion of 494 Corridor." B. CRITICAL TIMING ISSUES • Several of the proposed projects could begin construction in the fall, so it is important to have a master plan in place well before that time to help guide the planning/zoning processes for these projects. C. FINANCIAL • The 2011 Adopted Budget has sufficient funds for the proposed services. D. LEGAL • N/A IV. ALTERNATIVE RECOMMENDATION(S) • Direct staff to enter into an agreement with Bonestroo, Inc. • Direct staff to seek additional proposals. V. ATTACHMENTS • Proposal from Bonestroo, Inc. • Proposal from Kimley-Horn and Associates. VI. PRINCIPAL PARTIES EXPECTED AT MEETING • None. 3 -t 2335 Highway 36 W St.Paul,MN 55113 Tel 651-636-4600 Fax 651-636-1311 www.bonestroo.com Bonestroo May 20, 2011 Mr. John Stark Community Development Director City of Richfield 6700 Portland Avenue Richfield, MN 55423-2599 Dear John: I want to thank you and Christine for meeting with our team. We are eager to assist Richfield with the issues along the West 77th Street Corridor between Lyndale Avenue and Nicollet Avenue. We discussed numerous issues and have met internally to start to put together a framework of options to discuss with you further in order to customize the scope to your needs. As you noted in the meeting, some of the corridor issues have an immediate, reactive need, related to the recent developer proposals, but there is also a longer term need to get out in front of these issues so that the City is in a better position to be proactive. We believe there are three main areas of need—market research, planning/urban design and environmental. We have also indicated a very rough estimate of cost ranges we believe might be involved, for your review and comment. This is not yet a proposal, only a summary of ideas and options. We want to make sure we are on the same page as we move forward. Market Research Our understanding of the market research needs is there is an immediate need to respond to the proposals by Ron Clark Construction and Sherman Associates as well as a possible need to consider the impact of these proposals on housing needs city wide. We prepared the following options for further discussion: Option A: Review of Existing Market Studies It is Bonestroo's understanding that Ron Clark Construction and Sherman Associates have begun predevelopment activities for affordable housing projects located in the Study Area and have submitted, or are in the process of submitting, market studies to MHFA as part of the tax-credit • allocation process. In the event that the City of Richfield can obtain those studies, Bonestroo would review each study and provide a professional opinion on whether they appropriately summarize market conditions regarding future development in the Study Area. Particular attention would be paid to the following: o Appropriateness of the defined trade areas o Review of the intended target markets to make sure they are clearly defined and to determine the level of overlap with either project aty of Richfield Page 2 West 77'1 Street May20,2011 © Review of data to determine whether it is out-of-date or missing key information, and, therefore, requires updating e Analysis of demand methodology to make sure it is consistent with data presented in the study and adheres to industry norms and standards Cost Estimate:$1,000-$3,000 Option B: Update or Replicate Housing Market Studies for Purposes of Redevelopment Planning In the event that the aforementioned housing studies require significant updating or cannot be obtained by the City of Richfield for review, Bonestroo will conduct an analysis of the market demand for affordable housing located in the study area. The result of the study would be a determination of the amount of supportable new affordable housing units in the Study Area broken down by number of units, type, target market, and timing. Key steps included in the analysis would include: • Definition of trade area for affordable housing • Analysis of the land use and traffic characteristics of the Study Area and their impact on the demand for housing o Analysis of the demographic factors affecting demand for affordable housing o Profile of competitive properties and their impact on the marketability of any new affordable housing development in the Study Area © Calculation of demand for affordable housing based on size of target market and amount of competition Cost Estimate:$4,000-$6,000 Option C: Comprehensive Multifamily Housing Study for the City of Richfield The City of Richfield may wish to complete a Comprehensive Housing Study of the City's multifamily rental and cooperative properties to evaluate current housing conditions and project future housing needs. A Comprehensive Housing Study will quantify the availability and need for both subsidized and market rate housing, and it will allow local officials to make informed decisions on housing development policies, public resource expenditures, and to prioritize housing programs. The research would develop recommendations to directly address identified housing needs in the multifamily rental and senior housing markets (including cooperatives). The study is designed to create a solid foundation of base information to enable the City to continually re-evaluate trends and conditions as the decade progresses. We would conduct personal interviews with local officials, Realtors/sales agents, property managers, residential developers and social service providers to tap the collective knowledge of those most familiar with the strengths and weaknesses of the current housing market. The final completed study will . include pertinent findings, including summary tables and graphics, various maps developed by our in-house GIS staff, interview summaries, and our recommendations for addressing current and projected housing needs. Cost Estimate:$15,000-$20,000 3 -3 City of Richfield Page 3 West 77'Street May 20,2011 Planning &Urban Design Our understanding of the planning and urban design needs are that there is an immediate need to review the proposals by the two developers as well as a need to step back and determine what the long-term vision should be for this corridor. This long-term analysis has an additional element of complexity because of the significant changes in traffic patterns;that will occur when the upgrades of I-494 reach this area. We've prepared the following options for further discussion: Option A: Review of Development Proposals Bonestroo's planners and urban designers would review each development proposal and offer suggested design modifications, as applicable. Particular attention would be paid to the following: o Site efficiency, particularly as it relates to building massing, pedestrian movements and vehicular access. • Relationship to nearby residential areas, including consideration of connection and buffering needs ® Relationship of the developments to the public realm o Protection of future residents of each development from negative impacts that could result from proximity to non-residential uses and high levels of traffic flow Cost Estimate:$3,000-$6,000 Option B: Mini-Corridor Study The area bordered by West 76th Street on the North, Nicollet Avenue on they East, I-494 on the South and Lyndale Avenue on the West has lost some sense of identity over time. There are a wide range of land uses throughout the area including single and multi-family residential; retail, hospitality, mini-storage and auto oriented repair facilities. Bonestroo will prepare a corridor study which will address the following components: o Future land use plan that takes into account the existing development pattern but also considers the future transportation changes • Develop design standards to improve the compatibility between uses and encourage complimentary development o Buffers and connections along land use edges o Identification of priority or catalyst project areas • Sustainability enhancement • Public realm improvements © Implementation strategy Cost Estimate:$15,000-$25,000 Environmental At our meeting, I believe you had indicated that you would be able to give us some more background on the past environmental work so that we could provide direction as to what we believe will be your future environmental needs in this area. Please work directly with Dave Constant on that issue including forwarding previous reports and other information the city may City of Richfield Page 4 West 77"Street May20,2011 have. Dave is based in our Rochester office, but is in the metro area several times a week and has full-time staff based in:St. Paul. Dave can be reached at 507-529-6045 or Dave.Con sta nt(a Bonestroo.co m. These are our initial thoughts about potential scope for assistance to the City of Richfield. After you've had a chance to review these ideas with your staff, please contact me so that we can discuss the concepts and refine the details in order to provide you with a customized approach that fully meets your expectations. Sincerely, BONE''"00, INC. / , , .../. ' '- .,;' / : ' 'IA V L-■ Phil Carlson Director of Planning CC: Christine Costello, Community Development Specialist 5 • Kimley-Horn and Associates. Inc. • • July 12,2011 Mr.John Stark Community Development Director City of Richfield 6700 Portland Avenue South Richfield,MN 55423 RE: Proposal for Professional Services for: 77th Street Design Guide Dear Mr. Stark: Kirn].ey-Horn and Associates is pleased to provide this Proposal for Professional Services for the Richfield 77th Street Design Guide project. Thank you for extending the invitation to p>opose and for this opportunity to work with you and other staff at the City of Richfield on establishing direction and vision for a segment of 77th Street. • We are confident that we can assist in the city's delivery of a successful project;based on the following: Experience: We have many years of experience working with communities on similar projects,with similar issues and concerns. We have worked with over 30 different communities in the Twin Cities metro,greater Minnesota and the upper Midwest. a Familiarity: Through our on-call consulting contract,you know us and we know you. Specifically, we are familiar with the 77th Street corridor. Our proposed project manager Tom Harrington, provided design services for both phases of the 77th Street Reconstruction project, and the adjacent Lyndale Avenue Improvements. Collaboration: Our approach to design encourages interaction between staff,agencies,and other stakeholders,providing for a more comprehensive exchange of ideas and broader perspectives. This is critical especially during the project initiation and alternatives development phase. For this proposal we have organized the information within the following headings: Project Team;Project Understanding/Work Program; Cost Proposal; and Related Project Experience. PROJECT T E A M (primary team members) Tom Harrington, RLA Role: Project Manager, Urban Design and Landscape Architecture Beth Engum,PE Role: Project Advisor and Roadway Engineering Design Support • Todd.Halunen,RLA Role: Task Manager, Urban Design and Landscape Architecture 3-61. PROJECT UNDERSTANDING / WORK PROGRAM Project Understanding We understand the goal of this project is to create a comprehensive design direction for the improvements both adjacent to and within the 77th Street corridor,from Lyndale Avenue to Nicollet Avenue. The aerial photograph below illustrates the proposed limits of the project. Within this area,a number of land use changes are in process. These include 2 proposed housing developments,an existing automobile sales property reconfiguration,at least 1 new retail development proposal, and a yet-to-be determined use for a city owned parcel. As these development proposals are brought forward to the city for review and approval, we understand the concern of city staff and Council in making decisions without clearly considering the larger context. W i6lh St.....-_.�,. W 761h51 W'76ifn I � t'-'�1'�- W 76N 1 ---q''�-- e, E 761n 5t w-11i 1, r 1 r`iii a.r � "-2 .b' "`-set y :J. E' -Nyy - 7+ r,. ' ri 3.- 4-c r 1c c t� .,sz 7m-.'=6., ...E 4 t.gru��.c� J I b , 't :17 , �4 ➢ - :p, >i,r+4^ r Project Area!, .t - ;4 St -�$7'' ¶ fLL4 t uGa 11w: 1 NA`U'L +e d 4, .may ;,. 0.".a .r,"..F L.4- a .1+- _ A y't ' ;.,. .-rtin s -.rd '- _c - e 5� ft' t. N'al .. I .I.0 trap k t i 4-k;y, m`b.m .m s' .t �J rN nt u. bi+7.,:vtJ —.t . ,,h?W.P'n1.. aF t n!; r,s'"�4- ..t g 1, s ` :J- ..4 ^SF--' 6als6eflF e'S .:.--- .a'� �'-,-r Wuf--- W771.S1 _ ._ `Wi771h 5t - r.— W77t_- p -- -------• M - u K°vrT raytf I Ih.1 t 1 _ �� s 3. ,14 N o aannao:,�p •..: k rer "" C- ap. "'F ;._ J E T �: .__TT��.. l�rr@�g �: n� !' ., I -ti.. �1 f.. 1 1 9 ,s-,,,,,e454--*-, �a•- _`�G' „y' a� �{rd � _�j �� ;t,�A Ian _-F'. �' -y' ss,` :41m I , 99.-� ., 1.: aes.,. - B.„t fn41 ,..5. rS'f� e E_?, . ... , XCtv.'` r-n: ° r...:,„ syfP2 .. r 5 � `i. ^, i.s o W y� .r liiq.. - ��,,aati � '-.�.,y- = `r'-- 'J' Kam'` ti• ..^ :P. Wp t5t �."' _- a >,'ti.s . _1 c ,x .'.,t;f , ` .r--„ ' - - - 6A 't,f-' a- .-- ' , i ; t" L-.._ ,-®irk ,- �+.�r�--"^�'• '" 5 ... -a+,.. 5 ..- Meaning,the city understands the value in creating and then following a plan that informs the review of separate development proposals based on comprehensive design considerations. Comprehensive in that it recognizes the separate projects and their individual contribution to the corridor,while organizing and ordering certain attributes and elements to provide uniformity and continuity. The elements which will require study within this project include: Private Developments (adjacent to the corridor): o Building massing and arrangement o Building materials o Parking configuration and location O Drives and access ° Screening and buffering ° Fronting improvements—signage, fencing,landscape,and other site improvements Public Improvements (within the corridor): o Sidewalks and trails • Street trees and boulevard areas o Noise barriers o Street lighting O Regulatory signage, drainage structures, utilities and other miscellaneous roadway elements Proposal for City of Richfield w'St. Design Guide July 12,2011 3 The project will require collaboration between city staff and developer and/or their design consultants, to work to develop this comprehensive design direction.We understand that some of the development proposals are only in the discussion phase,while others have preliminary development proposals pending. We therefore recognize the need to be accommodating yet deliberate in our efforts to help guide a process that strives to benefit both the city and the developers. • This project will conclude with the delivery of a design guide,a document which illustrates the process and outcomes of this public/private collaboration. It is understood that this document will be limited,with the primary graphic components being a preferred, full project corridor map or site plan. This site plan will illustrate both the private and public improvement elements, as listed above. This design guide will serve as a guide for staff as they review future development proposals. Work Program Based on our understanding of the project as identified above,the following outlines the specific tasks that we propose for the project as Basic Services, to be performed for the fees identified within the Cost Proposal section of this proposal: Task 1: Project Definition 1.1 Data Collection: Acquire relevant project history and background information from City staff,including 77th Street as-built plans,aerial photography files, current proposed development proposals,existing cross- section and right of way dimensions, and other relevant background information. 1.2 Site Inventory: Visit the project site to inventory,photograph and document observations of existing conditions. 1.3 Related Examples: Using precedent photography or by visiting and photographing local comparable .existing projects,prepare a collection of related project examples for review and discussion at the project kick-off and design review meetings. 1.4 Project Kick-off Meeting: Following tasks 1.1 through 1.3 above,attend one (1) project initiation meeting with City staff.The purpose is to clearly define and confirm the scope and limits of the project, review related project examples,define and understand design criteria and confirm any other project parameters prior to design initiation. Deliverables: site plan illustrating the project corridor and development proposals,photographic inventory graphicv precedent project inventoOJ graphic;brief summary document of identified design criteria Task 2: Project Evaluation 2.1 Review Criteria:Evaluate roadway design criteria,city codes and other relevant requirements related to the private development interface with the public roadway, including driveway spacing, sidewalks and trails, building and parking setbacks,buffering, fencing signage, site lighting and street lighting. 2.2 Base Mapping: Using mapping and information provided by the city,create corridor mapping to be used in evaluation and site/corridor planning efforts. 2.3 Plan Evaluations: Considering the design requirements and development proposals provided by the city, prepare a plan illustrating a review of the issues and concerns,opportunities and constraints. These evaluations and the preparation of this plan may occur prior to any business owner meetings. 2.4 Design Review Meeting(s): Attend up to three (3) meetings with city staff and developer and/or their design consultants to understand the individual development proposals,and discuss opportunities for design adjustments which may better serve the private and public needs. Deliverables:summaro'narrative documenting analysis;plan evaluation mapping. Proposal for City of Richfield 77th St. Design Guide July 12,2011 3- 8 Task 3: Planning/Design 3.1 Concept: Based on the outcome of city staff and developer meetings,and the evaluation of development plans in Task 2,prepare a concept plan for the corridor which illustrates solutions for both the private and public elements within and adjacent to the corridor. The elements to be included are identified within the Project Understanding section of this proposal. 3.2 Design Review Meeting(s): Attend up to three (3) meetings with city staff and developer and/or their design consultants to reviewthe concept plan to determine and discuss opportunities which serve both the private development needs acid attempt to achieve a more comprehensive application of treatments and their arrangement within and adjacent to the corridor. 3.3 Concept Design Refinements: Based on feedback from the design review meetings,refine the concept plan as necessary. Deliverables corridor concept plan;refined corridor concept plan. Task 4: Design Guide 4.1 Document Preparation:! Based on the outcome of tasks 1 —3,prepare a document which illustrates the design decisions. This Design Guide is assumed to include required criteria and requirements summary, and a series of plans that illustrate the overall corridor concept and the individual development areas which interface with the 77th Street'corridor. It is assumed that this document may be 8-1/2"x 11"in size,with 11" x 17"plan fold-outs,produced in color with both black&white,and color exhibits. Deliverables: 10 hard copies of a final report—Design Guide Assumptions: 1. City staff will provide all project background information and corridor mapping,and development proposal plan and submittals. 2. All meetings will be held in locations within the City of Richfield,most likely City Hall. 3. We have assumed that the time to complete the project would be between 3 and 4 months. 4. The guidelines will not provide design direction for building style or architectural detailing. C O S T P R O P O S A L _ I Based on our understanding of the project,we propose a fee of$24,500.00 for the services as identified within the Work Program above. This amount includes estimated reimbursables,and is to be billed monthly using our current, standard hourly billing rates by personnel. R E L A T E D P R O J E C T E X P E R I E N C E The following examples illustrate related project experiences of our team members. • II Proposal for Cis of Richfield 77'x'St. Design Guide July 12,2011 3 —a•,z,.,,,,,--,.,...,,,,,A.,-,, x,i M 0 i_ - -' I d E :d,.. =.4.,,,,T. 'fsfuu * Cw..' — . _ , i ., -.. I . � . i •a.�C _ .er re..,. , r ..__. Woodbury Corridor Design Guidelines City of IVoodbuly,MN In 2006,Kimley-Horn and Associates completed a study begun by HNTB for the City of Woodbury that established a framework design of all primary roadway corridors in the City. Since many of the arterials are Washington County roadways,the work involved close coordination with Woodbury and Washington County Public Works departments. The outcome of the project was a Corridor Design Guideline,which included detailed design direction for future reconstruction projects for all the collectors and arterials within the City. z1 4 — � �� . . r .. . . ; _; u ' ,,, st a , > ;s c . ,. w5$: �,.z.. af.:' :,:_ Anoka Main Street City ofAno,ea,MN Kimley-Horn provided traffic,roadway engineering and landscape architecture design services to the City of Anoka for a 1 mile segment of its downtown Main Street from 4th Street to Hwy 10. The study included the development of alternative layouts and cross sections,generated through a deliberate process of public and business owner involvement. The project objectives include safety,access management and development of streetscape solutions which improved the visual quality of the corridor.•4 °c. __--. -- ` If"':;`'KC.`i "FaJ' 'tom-,', "'+ \ ` ` i _ t"+a"r--.'. —. * 5, .� .ice'"-'i'r�'E"' L . .f. ..-_, - i i-.'2. `ii s..��r j�O�' - J'^ f_Z �"tadCi-i ,,.z�+�-'k'' , .e .. "4.:r- 4- L o--- � --- — :.._._ a Foley Boulevard and Coon Rapids i; oulevard ' City of Coon Rapids,MN Kimley-Horn provided preliminary and final design services for the reconstruction of a '/4 mile segment of Foley Boulevard,from Main Street to the entrance of Bunker Hills Golf Course and Regional Park. This City of Coon Rapids roadway reconstruction project included the design of monument and directional signage,decorative pavements,lighting,landscaping and irrigation. Kimley-Horn also provided landscape architecture services for streetscape enhancements of Coon Rapids Boulevard from Coon Creek to Egret Boulevard. The project includes preliminary through final design services for streetscape elements that Proposal for Cii of Richfield 77'x'St. Design Guide July 12,2011 3 — I0 consists of landscaping,irrigation, special pavements and monument sign design,as well as a comprehensive study of the entire corridor to establish a detailed framework for all future improvements. Anoka North Central : usiness :District (NCBD) Public Street Design—Traffic and Civil Engineering,Landscape Architecture and Urban Design City of_Anoka,MN Northwest Quadrant Redevelopment Public Street Design--Traffic and Civil Engineering,Landscape Architecture and Urban Design City of New Brighton,MN Gladstone Neighborhood Redevelopment Public Street Design—Civil Engineering,Landscape Architecture and Urban Design Ciy of Maplewood,MN Central Corridor LRT Public Street and LRT Corridor Design Coordination—Traffic and Civil Engineering,Landscape Architecture and Urban Design Cities of St. Paul and Minneapolis,MN Again, thank you for this opportunity to work with the City of Richfield, and we look forward to a favorable response to this proposal. Sincerely, KIMLEY-HORN AND ASSOCIATES,INC. Thomas R. Harrington,RLA Project Manager Beth A. Engum,PE • Client Manager Proposal for city of Richfield 77th St. Dasign C,fide July 12,2011 AGENDA ITEM#: 4 REPORT#: 33 saggidll STAFF REPORT RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY MEETING JULY 25, 2011 REPORT PREPARED BY: JULIE URBAN/MICHELLE LEWIS, HOUSING SPECIALISTS NAME,TITLE REPORT PRESENTER: KAREN BARTON, COMMUNITY DEVELOPMENT ASSISTANT DIRECTOR ACTING DEPARTMENT DIRECTOR •• REVIEW: k ...t A . .AT REVIEWED BY EXECUTIVE DIRECTOR: k, '_. _ .,..., ITEM FOR HRA CONSIDERATION: Consideration of a revision to the guidelines for the Richfield Rediscovered Redevelopment Credit Program. I. RECOMMENDED ACTION: By Motion: Approve the revision to the guidelines for the Richfield Rediscovered Redevelopment Credit Program. II. BACKGROUND Richfield Rediscovered has been a well-regarded Housing and Redevelopment Authority (HRA) program since 1990. Since its inception, 103 new market-rate homes have been built under the Richfield Rediscovered Program (Program). As market conditions changed and housing prices increased, the Program's operation has changed over the years as follows: 1990-2004: The HRA purchased small, substandard properties, demolished the existing structures, and sold the vacant lots to Builder/Buyer teams for construction of new homes. 2005: A $50,000 credit was offered to Builder/Buyer teams who located substandard properties, demolished existing structures and constructed new homes. 2006: The credit amount was increased to $70,000. 07252011 RR Credit Guidelines Revision.doc 2009-2011: The HRA is purchasing small, substandard properties and has made the vacant lots available for sale to Builder/Buyer teams for construction of new homes. Since 2009, the HRA has purchased eight substandard properties for the Richfield Rediscovered market-rate lot sale program. Subtracting the appraised value from the total cost to purchase and clear the properties, the subsidy per lot has varied between $13,600 and $71,900 with an average subsidy of$47,700. The credit program continues to exist giving Builder/Buyer teams the freedom to locate their own substandard property. Given the fact that housing prices have declined and that the amount of the subsidy offered with the credit is significantly higher than that of the average lot in the lot sale program, it is appropriate to adjust the credit to $50,000. Additional edits to the guidelines are proposed to make the Credit Guidelines consistent with those of the Lot Sale Guidelines. III. BASIS OF RECOMMENDATION A. POLICY • The Richfield Rediscovered Program helps the City to reach the goal identified in the Richfield Comprehensive Plan to ensure sufficient diversity in the housing stock to provide for a range of household sizes, income levels and needs. • The program allows for the removal of substandard and functionally obsolete housing and replaces it with newer, higher valued homes with square footages and design features sought by families today. • The development of new homes through the Program encourages existing property owners to make investments in their properties and in the community. B. CRITICAL TIMING ISSUES • The HRA currently has seven lots available for sale through the Program. Following adoption of the Program guidelines, the lots will be appraised and marketed for sale. C. FINANCIAL • HRA investment (i.e. purchase price, abatement, demolition and holding costs) in the lots purchased to date has ranged from $70,000 to $125,000 per lot. Sale prices between $50,000 and $65,000 are anticipated for the vacant lots, which will reduce the amount of subsidy provided per lot to an average of$47,700. It is appropriate for the subsidy spent per lot through both programs to be similar. • Funding for the Program is available through the Housing and Redevelopment Fund. D. LEGAL • N/A. IV. ALTERNATIVE RECOMMENDATION(S) • Do not approve the revision to the Program Guidelines. • Approve the revision with changes. V. ATTACHMENTS • Proposed Richfield Rediscovered Redevelopment Credit Program Guidelines VI. PRINCIPAL PARTIES EXPECTED AT MEETING • N/A RICHFIELD REDISCOVERED PROCEDURAL GUIDELINES REDEVELOPMENT CREDIT PROGRAM Revised: July 18, 2011 PROGRAM OBJECTIVES 3 DEFINITIONS 3 PROGRAM BASICS 3 APPLICATION REQUIREMENTS 4 SECURING A SITE 5 PROPERTY EVALUATION CONSIDERATIONS AND PROCEDURES 5 HOUSE DESIGN AND SITE DEVELOPMENT REQUIREMENTS 6 NEW HOME STANDARDS 6 SITE STANDARDS 6 CONSTRUCTION REQUIREMENTS 7 GENERAL STANDARDS 7 GREEN COMMUNITY CONCEPTS 8 DISBURSEMENT OF FUNDS 9 SOLICITATION OF NEW DEVELOPMENT PROPOSALS 9 GENERAL PROGRAM MARKETING 10 DATA PRIVACY 10 2 This document has been developed as a guidance tool for program administration. It should not be interpreted as constituting any contractual agreement or liability by the City or Housing and Redevelopment Authority (HRA). Program Objectives • To remove substandard, functionally obsolete housing on scattered sites throughout the city with new, higher-valued housing • To eliminate the blighting influence of substandard housing, thus improving residential neighborhoods. • To alleviate the shortage of housing choices for families. • To facilitate "Market Rate Initiatives" which include: o Larger three-to four-bedroom, owner-occupied homes designed for families These objectives will be achieved through the acquisition of property by private Buyers and the development of newly constructed homes. Definitions Buyer. An individual(s) who will build, own and occupy a new single-family home in Richfield. The Buyer will occupy the property and not offer it for rent. The Buyer may not also function as the Builder on a Richfield Rediscovered project. The Buyer and Builder must be unrelated separate legal entities. A speculative project by a Buyer may be considered if all other program requirements can be met. However, neither the Buyer, the Buyer's Builder or Builder's subcontractors, or the Builder's realty agents may occupy or purchase the property. Buyers, unless licensed in the trade specified, may not put any sweat equity into the construction of the foundation, wall/roof framing, shingling, exterior work, electrical/plumbing/HVAC systems or interior carpentry. Builder. Contractor who has signed contract with the Buyer to build a single-family home on the lot identified in the application. ,Jritract for Private ,_)evelopriieih:. i-v co IUdGL u [ti'vee i LI HRA and the Buyer or Builder tti L e conditions under which the lot will be sold and the proposed house will be developed. reen Community Concepts Plan: A written plan indicating how the proposed development will corporate green building features and concepts. Priority will be given to projects that incorporate green uildinq features. HRA: Housing and Redevelopment Authority in and for the City of Richfield. Seller. Owner of property identified as eligible by the HRA based on condition, size and marketability. Redevelopment Credit: To offset costs of acquisition and demolition, a redevelopment credit of $ is available from the HRA for a Buyer who acquires the property directly from the seller for redevelopment. Program Basics • Program is first-come, first-serve, subject to funding availability. • Buyer purchases property, hires builder to demolish existing structures and constructs a new single-family home in conformance with program requirements. 3 -Lf • A 779,908$50,0 ' Redevelopment Credit is available per completed property. • Projects must be completed within one year of HRA approval of the project. Application Requirements The following must be submitted for application to the program: 1. $525 application fee An application fee, in the form of a certified cashier's check made out to the Richfield HRA, must be paid at the time of application. This fee is non-refundable and is not part of the lot price. 2. Project Information Sheet 3. Purchase agreement The Buyer must present a valid purchase agreement for the lot it proposes to redevelop. The closing must be scheduled after the date of the HRA meeting. 4. Blueprints The layout of all levels, including basement and unfinished space, must be provided. 5. Elevations Elevations of all four sides of the house, including view of garage shall be provided. 6. Site plan The site plan shall indicate the location of the new house, walkways and garage. 7. Landscaping plan A landscaping plan may be hand-drawn by the applicants, but must indicate the location and type of trees, shrubbery, flowers and landscaping materials (e.g. rocks, mulch). The entire grounds shall be landscaped and be aesthetically pleasing in all seasons. Land forms and plant materials shall be used to define the site and blend neatly with adjoining properties. Specific lot line blending requirements may be required, as appropriate, for specific sites. 9 C,reen Community Concepts Plan The plan should indicate what Green Community Concepts will be incorporated into the project. Detail of construction materials to be used on the project. Construction timeline Construction must be completed with one year of the purchase of the property. Signed contract with Builder Financial capability statement a. A statement from a financial institution indicating willingness, with standard contingencies, to provide sufficient construction capital to complete the project. Builder References a. Five previous customers b. Three major suppliers, one being the construction supplier 4 S- c. Building inspectors from two cities where the Builder has constructed new housing within the past three years 13.14. Proof of Builder's Comprehensive General Liability with Property Damage Protection. 1415._ Proof of sufficient worker's compensation insurance coverage by the Builder. 15.16. Written warranty program a. To be provided to the Buyer, which guarantees at a minimum, warranted repairs as required by Minnesota State Statute. Securing a Site Participants identify a property on their own or from a list of Richfield Rediscovered-eligible properties provided by HRA staff. If the property has not already been qualified for the program, it must be evaluated for substandardness or market obsolescence. Upon request of a prospective Buyer, HRA staff may research the property, and arrange for a "Substandard Evaluation" to be conducted. An evaluator will inspect the interior for substandard qualification. The Buyer is responsible for negotiating with the Seller on a purchase price. Once a purchase agreement between the Seller and Buyer has been signed, the Buyer should submit an application form and required supporting documents. Only when HRA staff has received a complete application, can the $ Redevelopment Credit be reserved. The reservation of funds is not an approval by the HRA. All applications must be brought to the HRA at a regularly-scheduled meeting for approval. Property Evaluation Considerations and Procedures Properties with the lowest market values, poorest visibility, and/or a history of code violations, will be considered first for the program. To be eligible for the Richfield Rediscovered program, a house must be structurally substandard and meet at least of one of the criteria in Criteria A and all of Criteria B. Criteria A • Obsolete design for block and area in which it is located. • Deteriorated to the point that it has caused blight to other adjoining properties. • Detrimental to the health or safety of abutting properties. • Less than $140,000 in value, as determined by the City of Richfield Assessing Department. Criteria B • Site can be developed with a new home within city code requirements, including conformance with the Zoning Code and the Comprehensive Plan • Property does not cause negative impact on other redevelopment projects. Redevelopment projects may include: o Established commercial redevelopment areas o Right-of-way improvement projects such as 1-494, I-35W, Crosstown Highway 62, , TH 77 and 66th Street 5 o Negative airport noise zones o Stormwater/flood prevention improvement projects o Other, as determined by the HRA At the request of an interested Buyer, staff will research the property and if it is believed that the property may qualify for the Richfield Rediscovered program, a "Substandard Evaluation" will be arranged. An evaluator will inspect the interior for substandard qualification. If a property meets the substandard test during the independent "Substandard Evaluation", application procedures can continue. If the substandard test cannot be met, the property cannot be considered for the Richfield Rediscovered program. At the discretion of staff, properties over 50 years old may also be required to be evaluated for historical significance through the Minnesota Historical Society. House Design and Site Development Requirements Housing design is a critical element of the program. Siding materials, exterior façade presentation, roof, window, siding and building line variability, finished landscape, interior space function and use are all important issues of design to the HRA. The criteria were created to ensure that the homes built on the identified lots blend in with the surrounding neighborhood and respond to the specific concerns of the HRA. All new houses built under the Richfield Rediscovered Program must meet the requirements of the City's Zoning Code and additional criteria, as listed in this document. The development of all sites shall meet the development criteria listed below, as reviewed and approved by the HRA. To maximize the development of a given lot, the HRA reserves the right to explore all development options without obligating the HRA to support any specific proposal, idea or solicitation. New Home Standards 1. Existing buildings must be demolished. If an existing garage is in good condition, it may be retained upon review by HRA staff and the Building Official. 2. New dwelling must be owner-occupied and single-family. 3. Three finished bedrooms are required. 4. Two finished bathrooms are required. 5. Two-car garage is required. 6. A full basement is required, unless the selected design results in a split-level or a garden-level type of basement. In the case of an "accessible" house, a basement may be omitted if it would otherwise prohibit accessible design elements. Site Standards 1. After construction, the site must be fully landscaped, including plantings around the foundation. The entire grounds shall be landscaped and be aesthetically pleasing in all seasons. Land forms and plant materials shall be used to define the site and blend neatly with adjoining properties. Specific lot line blending requirements may be required, as appropriate, for specific sites. The Rawer should refer toAt a minimum the applicant must men the "Landscaping and Screening Requirements" in the City's Zoning Code under Section 544.03, Subd. 4, General landscaping requirements and Subd. 5, Residential sites. The code is available on the City's website: http://www.ci ,Jii 6 1 To meet set back requirements or to build a large c, the removal ": n ±TO the greatest extent possible, t trees should be preserved. Any trees removed must be replaced (they do not have to be the same species or in the same location) and should be labeled on the required landscape plan. 2. Utility meters shall be screened from street view and locations must be specified on plans. 3. Site drainage should be accommodated on the site so that water is directed away from the new home and the neighboring properties. Neighboring properties must not be disturbed by the creation of drainage swales. Specific storm water management requirements may be required, as appropriate, including the addition of gutters for specific sites. Construction and the finished structure must not have detrimental impact on storm water drainage patterns in the neighborhood. 4. All air conditioning units must be located in the rear yard of the house or as approved by the H RA. rear yard of the house. Construction Requirements 1. Existing trees must be protected during construction. A tree wrap with board reinforcements shall be sued on trees directly adjacent to active grading and construction area. amayea o� destroyed trees must be repiL: 2. The construction site, neighboring properties and adjacent public streets shall be kept free of construction debris at all times. 3. No construction workers, construction equipment or construction material shall encroach upon neighboring properties. 4. The property shall have a new sanitary service line installed to the city sanitary sewer main consisting of schedule 40 PVC or equivalent. If there is an existing 6" sewer stub at the property line, it must be lined with 4" schedule 40 PVC or equivalent to the city's sanitary main, and it must include a "donut" at the end with cement. The line must be televised after installation to ensure the following: 1. There are no obstructions in the line. 2. The PVC liner is not protruding into the city's sanitary sewer main line. General Standards 1. The value of the new home must meet or exceed the minimum value specified in the Contract for Private Redevelopment. 2. All homes in the Richfield Rediscovered Program must be stick-built JI moau al, new construction. 3. Exterior materials (siding, soffit, doors and windows) should be low-maintenance and durable. Brick, aluminum, vinyl and siding are preferred. Natural cedar lap is acceptable if properly stained or painted. Hardboard panels or hardboard lap siding are prohibited. Roof valleys should have metal valleys and not be woven. 7 % 4. Unit height and mass of the new house shall be compatible with the scale of the surrounding homes in the neighborhood. 5. Plans must present a balanced and pleasing distribution of wall, door and window areas from all views. VViriuUws-mat 01 apf.;cai ai t,.; y terra i sne ;ill �r the PIp'/2tinnc 6. The dominance of the garage door must be minimized through placement, architectural detail, door design and utilization and design of windows. Front-loaded garages (where the garage door faces the street), shall not be located closer to the front lot line than the foremost facade of the principal building facing the front property line. Garage sidewalls that face the street result of garage-s—being aligned at an should appear to contain habitable space. This can be accomplished by incorporating windows and other design elements into the garage wall that are in character with the remainder of the dwelling. 7. All building plans must have been prepared in consultation with an architect or qualified draftsperson. All requirements by the Building Inspections Division must be met. 8. All Richfield Rediscovered houses must meet or exceed Minnesota Energy Code requirements. 9. All new homes should be built to provide high quality sound insulation. Recommendations for sound insulation measures may be provided on a site-by-site basis. All construction must conform to current sound attenuation building standards for properties located in 65-69 and 70-74 Ldn zones. 10. If a variance is required to construct the proposed development, the HRA may, at its sole discretion, choose to reject the application. 11. If the HRA accepts an application that needs a variance(s), sale of the property will be contingent upon the applicant obtaining the necessary variance(s). The Applicant is responsible for applying for the variance(s) at its own expense. Green Community Concepts Priority will be given to projects incorporating the green community concepts listed below. Any concepts the applicant would like considered during the application process should be explained in a cover letter submitted with the application. 1. Protect and conserve water and soil. To reduce water consumption, consider the use of water- conserving appliances, fixtures, and landscaping. Steps should be taken to minimize the loss of soil and sediment during construction and occupancy to reduce storm-water sediment and air pollution. 2. Minimize energy consumption. Reduce energy consumption by taking advantage of natural heating, cooling and day lighting, and by using energy-efficient appliances, equipment and lighting. 3. Enhance indoor environmental quality. Use non-toxic materials, ventilation and exhaust systems, and moisture control products and systems. 4. Use environmentally-preferable materials and resources. Use locally-produced, salvaged and/or manufactured materials, products with recycled content or from renewable sources, recyclable or reusable materials, and low-VOC-emitting materials. 8 5. Reduce waste. Reduce and manage wastes generated during the construction process and operation of buildings. When demolition occurs, consider the sorting and recycling of leftover materials and debris. City Review Procedure 1. Applicant reviews proposed project with HRA staff before plans are finalized. 2. HRA Staff will review application to ensure conformance with House Design and Site Development Requirements. 3. HRA staff prepares a report and recommendation for the HRA. 4. A Contract for Private Redevelopment is reviewed and signed by applicants in advance of the HRA meeting. 5. HRA reviews application and takes action at the HRA meeting. 6. If approved, the Contract for Private Redevelopment is executed by the HRA. 7. Upon approval by the HRA, the applicant is responsible for acquiring the necessary building and demolition permits with the City of Richfield Inspections Department. If changes are required, the Buyer must notify HRA staff. Disbursement of Funds Approved projects are eligible for a . - 980-$50.000 Redevelopment Credit. The Credit will be dispersed upon completion of the project (including landscaping) and the issuance of a Certificate of Completion by the Building Official. A lender may require a portion of the Redevelopment Credit be held as an escrow as part of the interim financing of the project, only to be released upon project completion. The Buyers may also request the Redevelopment Credit to be issued in three installments. The first installment of $ would be issued at the time of closing, the second for $ when permits are pulled and the third for $ when the project has been completed and a Certificate of Completion has been issued by the Building Official. A mortgage will be filed and a lien put on the house until the project has been completed. Filing fees are the responsibility of the applicant. The disbursement of funds will be outlined in the Contract for Private Redevelopment, to be executed by the HRA and the Buyer. Solicitation of New Development Proposals The HRA will advertise the Richfield Redevelopment program in publications or newspapers, by direct mail, or other methods as deemed appropriate, to solicit interest. When the HRA has property information, it will provide the address of the property, lot dimensions and contact information of the seller. Interested parties may contact the owners directly. All purchase negotiations and timing issues must be resolved between the parties. I Properties identif by the applicant may also qualify. The HRA will review each one on a case-by-case basis. 9 LI - ►6 A program information package will be available upon request to interested Buyers. The information packet will include the following: • Richfield Rediscovered Procedural Guidelines • Sample Contract for Private Redevelopment • Application Cover Sheet • Project Information Sheet • Lot List General Program Marketing Richfield Rediscovered program marketing is entirely at the discretion of the HRA. It may include the following: Buyer Solicitation. The HRA may market the program to potential Buyers through promotional articles, direct mail, the Internet, or other methods as deemed appropriate. Buyers may be any financially capable individual or family, including first-time buyers, move-up buyers or empty-nesters. Public Promotion. The HRA will periodically provide information about the program through articles in city publications „ ,u, . . or via press releases to promote community awareness. A public open house may be held to provide an opportunity for residents and other interested parties to collectively view the finished homes. The Parade of Homes Fall Showcase and Spring Preview may also accomplish this. 6C. it uL.;y; . Data Privacy All information secured through the program is subject to the Data Privacy Act. 10 AGENDA ITEM#: 5 REPORT#: 34 MAI STAFF REPORT RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY MEETING JULY 25, 2011 KAREN BARTON, COMMUNITY REPORT PREPARED BY: DEVELOPMENT ASSISTANT DIRECTOR NAME,TITLE REPORT PRESENTER: KAREN BARTON, COMMUNITY DEVELOPMENT ASSISTANT DIRECTOR E,TITLE ACTING DEPARTMENT DIRECTOR ' ; REVIEW: �'�. ,,,,....s. REVIEWED BY EXECUTIVE DIRECTOR .., 47,,,,,,......._ ,,,,.. , _II. ITEM FOR ERA CONSIDERATION: Consideration of a resolution supporting the submittal of an application to the Metropolitan Council for a Livable Communities Demonstration Account grant for redevelopment activities associated with the proposed Lyndale Garden project. I. RECOMMENDED ACTION: By Motion: Adopt a resolution supporting the submittal of an application to the Metropolitan Council for a Livable Communities Demonstration Account grant for redevelopment activities associated with the proposed Lyndale Garden project. II. BACKGROUND The Cornerstone Group (Developer) has entered into a purchase agreement for the former Lyndale Garden Center property at 6400 Lyndale Avenue. They are scheduled to close on the property in early September of this year. The Developer is currently working with a local non-profit planning agency, Local Initiatives Support Corporation (LISC), to develop an overall vision for the redevelopment through a series of public planning workshops. 07252011 LCDA Grant App LGC The resulting development is likely to entail mixed-use commercial/retail, multi-family rental housing and public/community space. The Metropolitan Council offers a grant program through their Livable Communities Demonstration Account (LCDA) that provides funding to aid in the planning process for developments such as this one. This funding would allow for a more comprehensive and extensive planning process to be conducted through the multi-phased project. The attached resolution supports the submission of an application to the Met Council's LCDA grant program in the amount of$100,000 for the proposed redevelopment of the former Lyndale Garden Center property. The resolution is required as part of the application. III. BASIS OF RECOMMENDATION A. POLICY • It is appropriate to seek and assist developers with outside funding whenever possible. B. CRITICAL TIMING ISSUES • The resolution must be received by the Met Council no later than August 15, 2011. C. FINANCIAL • A local match is not required to apply for the Met Council LCDA grant. • Grant funding requested is $100,000 D. LEGAL • The program guidelines for the grant require the Housing and Redevelopment Authority (HRA) to pass a resolution in support of the application IV. ALTERNATIVE RECOMMENDATION(S) • Deny authorization and direct staff to withdraw participation with the developer in trying to obtain funding from outside sources. V. ATTACHMENTS • Resolution VI. PRINCIPAL PARTIES EXPECTED AT MEETING • N/A S— I HRA RESOLUTION NO. RESOLUTION IDENTIFYING THE NEED FOR LIVABLE COMMUNITIES DEMONSTRATION ACCOUNT FUNDING AND AUTHORIZING AN APPLICATION FOR GRANT FUNDS WHEREAS, the City of Richfield is a participant in the Livable Communities Act's Housing Incentives Program for 2011 as determined by the Metropolitan Council, and is therefore eligible to apply for Livable Communities Demonstration Account funds; and WHEREAS, the City of Richfield Housing and Redevelopment Authority ("HRA") has identified a proposed project within the City that meets the Demonstration Account's purposes and criteria and is consistent with and promotes the purposes of the Metropolitan Livable Communities Act and the policies of the Metropolitan Council's adopted metropolitan development guide; and WHEREAS, the HRA has the institutional, managerial and financial capability to ensure adequate project administration; and WHEREAS, the HRA certifies that it will comply with all applicable laws and regulations as stated in the grant agreement; and WHEREAS, the HRA agrees to act as legal sponsor for the project contained in the grant application submitted on July 15, 2011; and WHEREAS, the HRA acknowledges Livable Communities Demonstration Account grants are intended to fund projects or project components that can serve as models, examples or prototypes for development or redevelopment projects elsewhere in the region, and therefore represents that the proposed project or key components of the proposed project can be replicated in other metropolitan-area communities; and WHEREAS, only a limited amount of grant funding is available through the Metropolitan Council's Livable Communities Demonstration Account during each funding cycle and the Metropolitan Council has determined it is appropriate to allocate those scarce grant funds only to eligible projects that would not occur without the availability of Demonstration Account grant funding. NOW THEREFORE BE IT RESOLVED, that, after appropriate examination and due consideration, the governing body of the HRA: 1. Finds that it is in the best interests of the City's development goals and priorities for the proposed project to occur at this particular site and at this particular time. 2. Finds that the project component(s) for which Livable Communities Demonstration Account funding is sought: a. Will not occur solely through private or other public investment within the reasonably foreseeable future; and 5-- 9-- b. Will occur within two years after a grant award only if Livable Communities Demonstration Account funding is made available for this project at this time. 3. Represents that the HRA has undertaken reasonable and good faith efforts to procure funding for the project component for which Livable Communities Demonstration Account funding is sought but was not able to find or secure from other sources funding that is necessary for project component completion within two years and states that this representation is based on the following reasons and supporting facts: The Developer has applied for and received a limited amount of funding towards the planning process; however it is not sufficient to fund the more comprehensive planning process this project warrants. Additionally, the HRA, City, and Developer do not have the funds needed for the scope of the project. 4. Authorizes Executive Director to submit on behalf of the HRA an application for Metropolitan Council Livable Communities Demonstration Account grant funds for the project component(s) identified in the application, and to execute such agreements as may be necessary to implement the project on behalf of the HRA. Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this 25th day of July, 2011. Suzanne M. Sandahl, Chair ATTEST: Joan Helmberger, Secretary I AGENDA ITEM#: 6 REPORT#: 35 STAFF REPORT 1 RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY MEETING JULY 25, 2011 REPORT PREPARED BY: KAREN BARTON, COMMUNITY DEVELOPMENT ASSISTANT DIRECTOR NAME,TITLE REPORT PRESENTER: KAREN BARTON, COMMUNITY DEVELOPMENT ASSISTANT DIRECTOR 4 AMC TITLE ACTING DEPARTMENT DIRECTOR igremm REVIEW: �M�� I s,i� Il A. Alp/'0,- 4141.1, SIGNATURE ,, ___ _ _REVIEWED BY EXECUTIVE DIRECTOR: E I. A Ai, , ,,,,„„„ __ . ITEM FOR HRA CONSIDERATION: Consideration of a resolution adopting a modification to the redevelopment plan for the Richfield Redevelopment Project area, establishing the Lyndale Garden Tax Increment Financing District therein and adopting a tax increment financing plan therefore. I. RECOMMENDED ACTION: By Motion: Approve a resolution adopting a modification to the redevelopment plan for the Richfield Redevelopment Project area, establishing the Lyndale Garden Tax Increment Financing District therein and adopting a tax increment financing plan therefore. II. BACKGROUND The Cornerstone Group (Cornerstone) has entered into a purchase agreement for the former Lyndale Garden Center property located at 6400 Lyndale Avenue. They are scheduled to close on the property in early September of this year. Cornerstone is currently working with a local non-profit planning agency, Local Initiatives Support Corporation (LISC), to develop an overall vision for the redevelopment through a series of public planning workshops. 07252011 Res modifying Redevelopment Plan and establishing Lyndale Gardens TIF Dist Cornerstone is requesting financial assistance in the form of Tax Increment Financing (TIF) to facilitate the construction of a mixed-use commercial/retail, multi-family rental housing and public/community space on the former Lyndale Garden Center property. Until the planning process is complete and a more comprehensive development plan is established, the exact financing needs will not be known. Every development scenario that the Developer has analyzed thus far, however, would need public assistance in order to be financially feasible. Given that, the Developer is currently seeking up to 85% of the available TIF. The Lyndale Gardens TIF District (District) would consist of four parcels of land and right-of-way and would be created to facilitate the construction of a mixed- use commercial/retail, multi-family rental housing and public/community space in the City. The TIF Plan is expected to achieve many of the objectives outlined in the Redevelopment Plan for the Richfield Redevelopment Project Area. It is anticipated that the Housing and Redevelopment Authority (HRA) will enter into an agreement with Cornerstone relative to the proposed project. That agreement would contain the specific terms for, and amount of, public assistance that the Developer could receive. In the event Cornerstone is unable to perform, the HRA would have the option to certify the District relative to another proposed project, or could choose not to certify the District. The current Redevelopment Plan (Plan) will require revision to incorporate the Lyndale Garden Redevelopment Project (Project). The Project is located within the Richfield Redevelopment Project Area boundaries; however the Plan must be modified to specifically include the Project. The TIF Plan is attached for your reference and the Redevelopment Plan for the Richfield Redevelopment Area is available on the City's website at http://www.cityofrichfield.org/CD/Redevelopment.htm III. BASIS OF RECOMMENDATION A. POLICY • Within the City, there are areas where public involvement is necessary to facilitate development or redevelopment. The HRA and City have certain statutory powers pursuant to Minnesota Statutes ("M.S.'), Sections 469.001 to 469.047, and M.S. Sections 469.174 to 469.1799 (The "Tax Increment Financing Act" or "TIF Act"), to assist in financing public costs related to this project. 07252011 Res modifying Redevelopment Plan and establishing Lyndale Gardens TIF Dist B. CRITICAL TIMING ISSUES • The HRA adopted a Resolution on June 20, 2011 affirming the City Council's call for a public hearing for the Plan modification and establishment of the TIF District. • A Public Hearing for the Plan modification and establishment of the TIF District is scheduled for the August 9, 2011 regular City Council meeting. • The Planning Commission is scheduled to review the proposed Lyndale Gardens TIF Plan for consistency with the City's Comprehensive Plan at their regular meeting on July 25, 2011. C. FINANCIAL • Tax Increment will be captured and used to fund the project, pay the HRA's administrative costs, and potentially add funding to the HRA's Housing and Redevelopment Fund. • HRA administrative costs are paid for with the Tax Increment; however since administrative costs will be incurred prior to the generation of tax increment, it is recommended the HRA approve an interfund loan to cover said administrative costs in the interim. • Cornerstone is seeking up to 85% of the available TIF. • Without TIF, the project would not come to fruition. D. LEGAL • Legal Counsel has been involved in the process and has provided direction to staff. IV. ALTERNATIVE RECOMMENDATIONS) • Do not adopt the Resolution requesting the City Council to call for a public hearing to modify the Redevelopment Plan and establish the Lyndale Garden TIF District. V. ATTACHMENTS • Resolution • Tax Increment Financing Plan for Lyndale Garden Tax Increment Financing District. VI. PRINCIPAL PARTIES EXPECTED AT MEETING • Representatives from The Cornerstone Group 07252011 Res modifying Redevelopment Plan and establishing Lyndale Gardens TIF Dist 6 - I RESOLUTION NO. RESOLUTION ADOPTING A MODIFICATION TO THE REDEVELOPMENT PLAN FOR THE RICHFIELD REDEVELOPMENT PROJECT AREA, ESTABLISHING THE LYNDALE GARDENS TAX INCREMENT FINANCING DISTRICT THEREIN AND ADOPTING A TAX INCREMENT FINANCING PLAN THEREFORE WHEREAS, it has been proposed by the Board of Commissioners (the "Board") of the Richfield Housing and Redevelopment Authority (the "IIRA") and the City of Richfield (the "City") that the HRA adopt a Modification to the Redevelopment Plan (the "Redevelopment Plan Modification") for the Richfield Redevelopment Project Area (the "Project Area") and establish the Lyndale Gardens Tax Increment Financing District (the "District") and adopt a Tax Increment Financing Plan (the "TIF Plan") therefore(the Redevelopment Plan Modification and the TIF Plan are referred to collectively herein as the "Plans"), all pursuant to and in conformity with applicable law, including Minnesota Statutes, Sections 469.001 to 469.047, and Sections 469.174 to 469.1799, inclusive, as amended (the "Act"), all as reflected in the Plans and presented for the Board's consideration; and WHEREAS, the HRA has investigated the facts relating to the Plans and has caused the Plans to be prepared; and WHEREAS, the HRA has performed all actions required by law to be performed prior to the adoption of the Plans. The HRA has also requested the City Planning Commission to provide for review of and written comment on the Plans and that the Council schedule a public hearing on the Plans upon published notice as required by law. NOW,THEREFORE,BE IT RESOLVED,by the Board as follows: 1. The HRA approves the Redevelopment Plan Modification, and specifically finds that: (a) the land within the Project Area would not be available for redevelopment and affordable housing purpose without the financial aid to be sought under the Redevelopment Plan; (b) the Redevelopment Plan, as modified, will afford maximum opportunity, consistent with the needs of the City as a whole, for the development of the Project Area by private enterprise; and (c) that the Redevelopment Plan, as modified, conforms to the general plan for the development of the City as a whole. 2. The HRA approves the TIF Plan, and specifically finds that such district is a "redevelopment district" under Minnesota Statutes, Section 469.174, Subd. 10a(1), and finds that the Plans conform in all respects to the requirements of the Act and will help fulfill a need to redevelop an area of the State of Minnesota which is blighted and that the adoption of the proposed Plans will preserve and enhance the tax base of the City and the State because the Plans promote redevelopment of substandard areas and provide an impetus for commercial and housing development, and thereby serves a public purpose. 3. The HRA further finds that the Plans will afford maximum opportunity, consistent with the sound needs for the City as a whole, for the development or redevelopment of the Project Area by private enterprise in that the intent is to provide only that public assistance necessary to make the private developments financially feasible. 4. The boundaries of the Project Area are not being expanded. 5. The reasons and facts supporting the findings in this resolution are described in the Plans. The Plans are hereby incorporated into this resolution as if set forth herein, including but not limited to the Report from LHB set forth in Exhibit F and the "But/For" findings set forth in Exhibit G. 6. The HRA elects to calculate fiscal disparities for the District in accordance with Minnesota Statutes, Section 469.177, Subd. 3, clause b, which means the fiscal disparities contribution would be taken from inside the District. 7. Conditioned upon the approval thereof by the City Council following its public hearing thereon, the Plans, as presented to the HRA on this date, are hereby approved, established and adopted and shall be placed on file in the office of the Community Development Director. 8. Upon approval of the Plans by the City Council, the staff, the HRA's advisors and legal counsel are authorized and directed to proceed with the implementation of the Plans and for this purpose to negotiate, draft, prepare and present to this Board for its consideration all further plans, resolutions, documents and contracts necessary for this purpose. Approval of the Plans does not constitute approval of any project or a Development Agreement with any developer. 9. Upon approval of the Plans by the City Council, the Community Development Director is authorized and directed to forward a copy of the Plans to the Minnesota Department of Revenue and the Office of the State Auditor pursuant to Minnesota Statutes 469.175, Subd. 4a. 10. The Community Development Director is authorized and directed to forward a copy of the Plans to the Hennepin County Auditor and request that the Auditor certify the original tax capacity of the District as described in the Plans, all in accordance with Minnesota Statutes 469.177. Approved by the Board on July 25, 2011. Suzanne M. Sandahl, Chair ATTEST: Joan Helmberger, Secretary As of July 11, 2011 Draft for HRA Approval Modification to the Redevelopment Plan for the Richfield Redevelopment Project Area and the Tax Increment Financing Plan for the establishment of the Lyndale Gardens Tax Increment Financing District (a redevelopment district) within the Richfield Redevelopment Project Area Richfield Housing and Redevelopment Authority City of Richfield Hennepin County State of Minnesota Public Hearing:August 9,2011 Adopted: E H L E RS Prepared by: EHLERS&ASSOCIATES, INC. 3060 Centre Pointe Drive, Roseville, Minnesota 55113-1105 651-697-8500 fax: 651-697-8555 www.ehlers-inc.com Table of Contents (for reference purposes only) Section 1 -Modification to the Redevelopment Plan for the Richfield Redevelopment Project Area Foreword 1-4 Section 2-Tax Increment Financing Plan for the Lyndale Gardens Tax Increment Financing District Subsection 2-1. Foreword 2-1 Subsection 2-2. Statutory Authority 2-1 Subsection 2-3. Statement of Objectives 2-1 Subsection 2-4. Redevelopment Plan Overview 2-1 Subsection 2-5. Description of Property in the District and Property To Be Acquired 2-2 Subsection 2-6. Classification of the District 2-2 Subsection 2-7. Duration and First Year of Tax Increment of the District 2-4 Subsection 2-8. Original Tax Capacity, Tax Rate and Estimated Captured Net Tax Capacity Value/Increment and Notification of Prior Planned Improvements 2-4 Subsection 2-9. Sources of Revenue/Bonds to be Issued 2-5 Subsection 2-10. Uses of Funds 2-6 Subsection 2-11. Fiscal Disparities Election 2-6 Subsection 2-12. Business Subsidies 2-7 Subsection 2-13. County Road Costs 2-8 Subsection 2-14. Estimated Impact on Other Taxing Jurisdictions 2-8 Subsection 2-15. Supporting Documentation 2-10 Subsection 2-16. Definition of Tax Increment Revenues 2-10 Subsection 2-17. Modifications to the District 2-11 Subsection 2-18. Administrative Expenses 2-11 Subsection 2-19. Limitation of Increment 2-12 Subsection 2-20. Use of Tax Increment 2-13 Subsection 2-21. Excess Increments 2-13 Subsection 2-22. Requirements for Agreements with the Developer 2-14 Subsection 2-23. Assessment Agreements 2-14 Subsection 2-24. Administration of the District 2-14 Subsection 2-25. Annual Disclosure Requirements 2-14 Subsection 2-26. Reasonable Expectations 2-14 Subsection 2-27. Other Limitations on the Use of Tax Increment 2-15 Subsection 2-28. Summary 2-16 Appendix A Project Description A-1 Appendix B Map of the Richfield Redevelopment Project Area and the District B-1 Appendix C Description of Property to be Included in the District C-1 Appendix D Estimated Cash Flow for the District D-1 Appendix E Minnesota Business Assistance Form E-1 Appendix F Redevelopment Qualifications for the District F-1 Appendix G Findings Including But/For Qualifications G-1 Appendix H Prior Planned Improvements G-2 Section 1 - Modification to the Redevelopment Plan for the Richfield Redevelopment Project Area Foreword The following text represents a Modification to the Redevelopment Plan for the Richfield Redevelopment Project Area. This modification represents a continuation of the goals and objectives set forth in the Redevelopment Plan for the Richfield Redevelopment Project Area. Generally, the substantive changes include the establishment of the Lyndale Gardens Tax Increment Financing District. For further information,a review of the Redevelopment Plan for the Richfield Redevelopment Project Area is recommended. It is available from the Community Development Director at the City of Richfield. Other relevant information is contained in the Tax Increment Financing Plans for the Tax Increment Financing Districts located within the Richfield Redevelopment Project Area. Richfield Housing and Redevelopment Authority Modification to the Redevelopment Plan for the Richfield Redevelopment Project Area 1-1 6-7 Section 2- Tax Increment Financing Plan for the Lyndale Gardens Tax Increment Financing District Subsection 2-1. Foreword The Richfield Housing and Redevelopment Authority(the"HRA"),the City of Richfield(the"City"),staff and consultants have prepared the following information to expedite the establishment of the Lyndale Gardens Tax Increment Financing District(the"District"),a redevelopment tax increment financing district, located in the Richfield Redevelopment Project Area. Subsection 2-2. Statutory Authority Within the City, there exist areas where public involvement is necessary to cause development or redevelopment to occur. To this end,the HRA and City have certain statutory powers pursuant to Minnesota Statutes ("MS.'), Sections 469.001 to 469.047, inclusive, as amended, and M.S., Sections 469.174 to 469.1799, inclusive, as amended(the "Tax Increment Financing Act" or "TIF Act"), to assist in financing public costs related to this project. This section contains the Tax Increment Financing Plan (the "TIF Plan") for the District. Other relevant information is contained in the Modification to the Redevelopment Plan for the Richfield Redevelopment Project Area. Subsection 2-3. Statement of Objectives The District currently consists of four parcel(s)of land and adjacent and internal rights-of-way. The District is being created to facilitate the construction of a mixed-use commercial/retail,multi-family rental housing and public/community space in the City. Please see Appendix A for further District information. The HRA has not entered into an agreement or designated a developer at the time of preparation of this TIF Plan, however, it is anticipated that they will enter into an agreement with the Cornerstone Group. Development is likely to begin in summer 2011. This TIF Plan is expected to achieve many of the objectives outlined in the Redevelopment Plan for the Richfield Redevelopment Project Area. The activities contemplated in the Modification to the Redevelopment Plan and the TIF Plan do not preclude the undertaking of other qualified development or redevelopment activities. These activities are anticipated to occur over the life of the Richfield Redevelopment Project Area and the District. Subsection 2-4. Redevelopment Plan Overview 1. Property to be Acquired- Selected property located within the District may be acquired by the HRA or City and is further described in this TIF Plan. 2. Relocation - Relocation services, to the extent required by law, are available pursuant to M.S., Chapter 117 and other relevant state and federal laws. 3. Upon approval of a developer's plan relating to the project and completion of the necessary legal requirements,the HRA or City may sell to a developer selected properties that it may acquire within the District or may lease land or facilities to a developer. 4. The HRA or City may perform or provide for some or all necessary acquisition,construction, relocation, demolition, and required utilities and public street work within the District. Richfield Housing and Redevelopment Authority Tax Increment Financing Plan for Lyndale Gardens Tax Increment Financing District 2-1 61, -2 Subsection 2-5. Description of Property in the District and Property To Be Acquired The District encompasses all property and adjacent rights-of-way and abutting roadways identified by the parcels listed in Appendix C of this TIF Plan. Please also see the map in Appendix B for further information on the location of the District. The HRA or City may acquire any parcel within the District including interior and adjacent street rights of way. Any properties identified for acquisition will be acquired by the HRA or City only in order to accomplish one or more of the following:storm sewer improvements;provide land for needed public streets, utilities and facilities; carry out land acquisition, site improvements, clearance and/or development to accomplish the uses and objectives set forth in this plan. The HRA or City may acquire property by gift, dedication,condemnation or direct purchase from willing sellers in order to achieve the objectives of this TIF Plan. Such acquisitions will be undertaken only when there is assurance of funding to finance the acquisition and related costs. Subsection 2-6. Classification of the District The HRA and City, in determining the need to create a tax increment financing district in accordance with M.S., Sections 469.174 to 469.1799, as amended, inclusive, find that the District, to be established, is a redevelopment district pursuant to M.S., Section 469.174, Subd. 10(a)(1) as defined below: (a) "Redevelopment district"means a type of tax increment financing district consisting of a project, or portions of a project, within which the authority finds by resolution that one or more of the following conditions, reasonably distributed throughout the district, exists: (1) parcels consisting of 70 percent of the area in the district are occupied by buildings,streets, utilities,paved or gravel parking lots or other similar structures and more than 50 percent of the buildings, not including outbuildings, are structurally substandard to a degree requiring substantial renovation or clearance; (2) The property consists of vacant, unused, underused, inappropriately used, or infrequently used rail yards, rail storage facilities or excessive or vacated railroad rights-of-way; (3) tank facilities,or property whose immediately previous use was for tank facilities,as defined in Section 115C, Subd. 15, if the tank facility: (i) have or had a capacity of more than one million gallons; (ii) are located adjacent to rail facilities; or (iii)have been removed, or are unused, underused, inappropriately used or infrequently used; or (4) a qualifying disaster area, as defined in Subd. 10b. (b) For purposes of this subdivision, "structurally substandard"shall mean containing defects in structural elements or a combination of deficiencies in essential utilities and facilities, light and ventilation,fire protection including adequate egress,layout and condition of interior partitions, or similar factors, which defects or deficiencies are of sufficient total significance to justify substantial renovation or clearance. Richfield Housing and Redevelopment Authority Tax Increment Financing Plan for Lyndale Gardens Tax Increment Financing District 2-2 (c) A building is not structurally substandard if it is in compliance with the building code applicable to new buildings or could be modified to satisfy the building code at a cost of less than 15 percent of the cost of constructing a new structure of the same square footage and type on the site. The municipality may find that a building is not disqualified as structurally substandard under the preceding sentence on the basis of reasonably available evidence, such as the size, type, and age of the building, the average cost of plumbing, electrical, or structural repairs or other similar reliable evidence. The municipality may not make such a determination without an interior inspection of the property, but need not have an independent, expert appraisal prepared of the cost of repair and rehabilitation of the building. An interior inspection of the property is not required, if the municipality finds that(1)the municipality or authority is unable to gain access to the property after using its best efforts to obtain permission from the party that owns or controls the property;and(2)the evidence otherwise supports a reasonable conclusion that the building is structurally substandard. (d) A parcel is deemed to be occupied by a structurally substandard building for purposes of the finding under paragraph (a) or by the improvement described in paragraph (e) if all of the following conditions are met: (1) the parcel was occupied by a substandard building or met the requirements of paragraph (e), as the case may be, within three years of the filing of the request for certification of the parcel as part of the district with the county auditor; (2) the substandard building or the improvements described in paragraph(e)were demolished or removed by the authority or the demolition or removal was financed by the authority or was done by a developer under a development agreement with the authority; (3) the authority found by resolution before the demolition or removal that the parcel was occupied by a structurally substandard building or met the requirement ofparagraph(e)and that after demolition and clearance the authority intended to include the parcel within a district; and (4) upon filing the request for certification of the tax capacity of the parcel as part of a district, the authority notifies the county auditor that the original tax capacity of the parcel must be adjusted as provided by 5C 469.177, subdivision 1,paragraph 0. (e) For purposes of this subdivision, a parcel is not occupied by buildings, streets, utilities,paved or gravel parking lots or other similar structures unless 15 percent of the area of the parcel contains buildings, streets, utilities,paved or gravel parking lots or other similar structures. 0 For districts consisting of two or more noncontiguous areas, each area must qualify as a redevelopment district under paragraph(a) to be included in the district, and the entire area of the district must satisfy paragraph (a). In meeting the statutory criteria the HRA and City rely on the following facts and findings: • The District is a redevelopment district consisting of four parcels. • An inventory shows that parcels consisting of more than 70 percent of the area in the District are occupied by buildings, streets,utilities,paved or gravel parking lots or other similar structures. • An inspection of the buildings located within the District finds that more than 50 percent of the buildings are structurally substandard as defined in the TIF Act. (See Appendix F). Richfield Housing and Redevelopment Authority Tax Increment Financing Plan for Lyndale Gardens Tax Increment Financing District 2-3 6 - /0 Pursuant to M.S., Section 469.176, Subd. 7,the District does not contain any parcel or part of a parcel that qualified under the provisions of M.S., Sections 273.111 or 273.112 or Chapter 473H for taxes payable in any of the five calendar years before the filing of the request for certification of the District. Subsection 2-7. Duration and First Year of Tax Increment of the District Pursuant to M.S., Section 469.175, Subd. 1, and Section 469.176, Subd. 1,the duration and first year of tax increment of the District must be indicated within the TIF Plan. Pursuant to M.S.,Section 469.176,Subd. 1 b., the duration of the District will be 25 years after receipt of the first increment by the HRA or City(a total of 26 years of tax increment). The HRA or City elects to receive the first tax increment in 2014, which is no later than four years following the year of approval of the District. Thus, it is estimated that the District, including any modifications of the TIF Plan for subsequent phases or other changes,would terminate after 2039,or when the TIF Plan is satisfied. The HRA or City reserves the right to decertify the District prior to the legally required date. Subsection 2-8. Original Tax Capacity,Tax Rate and Estimated Captured Net Tax Capacity Value/Increment and Notification of Prior Planned Improvements Pursuant to M.S.,Section 469.174,Subd. 7 and M.S.,Section 469.177,Subd. 1,the Original Net Tax Capacity (ONTC)as certified for the District will be based on the market values placed on the property by the assessor in 2011 for taxes payable 2012. Pursuant to M.S., Section 469.177, Subds. 1 and 2,the County Auditor shall certify in each year(beginning in the payment year 2014)the amount by which the original value has increased or decreased as a result of: 1. Change in tax exempt status of property; 2. Reduction or enlargement of the geographic boundaries of the district; 3. Change due to adjustments,negotiated or court-ordered abatements; 4. Change in the use of the property and classification; 5. Change in state law governing class rates; or 6. Change in previously issued building permits. In any year in which the current Net Tax Capacity(NTC)value of the District declines below the ONTC,no value will be captured and no tax increment will be payable to the HRA or City. The original local tax rate for the District will be the local tax rate for taxes payable 2012, assuming the request for certification is made before June 30,2012. The ONTC and the Original Local Tax Rate for the District appear in the table below. Pursuant to M.S., Section 469.174 Subd. 4 and M.S., Section 469.1 77, Subd. 1, 2, and 4, the estimated Captured Net Tax Capacity(CTC)of the District,within the Richfield Redevelopment Project Area, upon completion of the projects within the District,will annually approximate tax increment revenues as shown in the table below. The HRA and City request 100 percent of the available increase in tax capacity for repayment of its obligations and current expenditures,beginning in the tax year payable 2014. The Project Tax Capacity(PTC) listed is an estimate of values when the projects within the District are completed. • Richfield Housing and Redevelopment Authority Tax Increment Financing Plan for Lyndale Gardens Tax Increment Financing District 2-4 6 - 11 Project Estimated Tax Capacity upon Completion(PTC) $908,678 Original Estimated Net Tax Capacity(ONTC) $62,977 Fiscal Disparities Reduction $110,967 Estimated Captured Tax Capacity(CTC) $734,734 Original Local Tax Rate 1.38568 Pay 2011 Estimated Annual Tax Increment(CTC x Local Tax Rate) $1,018,106 Percent Retained by the HRA 100% Tax capacity includes a 4%inflation factor for the duration of the District. The tax capacity, included in this chart is the estimated tax capacity of the District in year 25. The tax capacity of the District in year one is estimated to be$142,942. Pursuant to M.S., Section 469.177, Subd. 4, the HRA shall, after a due and diligent search, accompany its request for certification to the County Auditor or its notice of the District enlargement pursuant to M.S., Section 469.175, Subd. 4,with a listing of all properties within the District or area of enlargement for which building permits have been issued during the eighteen(18)months immediately preceding approval of the TIF Plan by the municipality pursuant to M.S.,Section 469.175,Subd. 3. The County Auditor shall increase the original net tax capacity of the District by the net tax capacity of improvements for which a building permit was issued. The City has reviewed the area to be included in the District and found that some building permits have been issued in the past 18 months,but none that should increase the original tax capacity. Please see Appendix H for the building permits that were issued. Subsection 2-9. Sources of Revenue/Bonds to be Issued The costs outlined in the Uses of Funds will be financed primarily through the annual collection of tax increments. The HRA or City reserves the right to incur bonds or other indebtedness as a result of the TIF Plan. As presently proposed,the projects within the District will be financed by on or more pay-as-you-go notes. Any refunding amounts will be deemed a budgeted cost without a formal TIF Plan Modification. This provision does not obligate the HRA or City to incur debt. The HRA or City will issue bonds or incur other debt only upon the determination that such action is in the best interest of the City. The total estimated tax increment revenues for the District are shown in the table below: SOURCES OF FUNDS TOTAL Tax Increment $15,600,000 Interest $0 TOTAL $15,600,000 The HRA or City may issue bonds(as defined in the TIF Act)secured in whole or in part with tax increments from the District in a maximum principal amount of$7,266,000. Such bonds may be in the form of pay-as- you-go notes, revenue bonds or notes, general obligation bonds, or interfund loans. This estimate of total bonded indebtedness is a cumulative statement of authority under this TIF Plan as of the date of approval. Richfield Housing and Redevelopment Authority Tax Increment Financing Plan for Lyndale Gardens Tax Increment Financing District 2-5 6 — Ia-- Subsection 2-10. Uses of Funds Currently under consideration for the District is a proposal to facilitate the construction of a mixed-use commercial/retail, multi-family rental housing and public/community space. The HRA and City have determined that it will be necessary to provide assistance to the project(s) for certain District costs, as described below. The HRA has studied the feasibility of the development or redevelopment of property in and around the District. To facilitate the establishment and development or redevelopment of the District, this TIF Plan authorizes the use of tax increment financing to pay for the cost of certain eligible expenses. The estimate of public costs and uses of funds associated with the District is outlined in the following table. USES OF TAX INCREMENT FUNDS TOTAL Land/Building Acquisition $3,000,000 Site Improvements/Preparation $351,000 Public Utilities $0 Public Parking Facilities $15,000 Streets and Sidewalks $0 Costs Outside of District $2,340,000 Administrative Costs (up to 10%) $1,560,000 PROJECT COST TOTAL $7,266,000 Interest $8,334,000 PROJECT AND INTEREST COSTS TOTAL $15,600,000 The total project cost, including financing costs(interest)listed in the table above does not exceed the total projected tax increments for the District as shown in Appendix D. Estimated costs associated with the District are subject to change among categories without a modification to this TIF Plan. The cost of all activities to be considered for tax increment financing will not exceed, without formal modification,the budget above pursuant to the applicable statutory requirements. Pursuant to M.S., Section 469.1763, Subd. 2,no more than 25 percent of the tax increment paid by property within the District will be spent on activities related to development or redevelopment outside of the District but within the boundaries of the Richfield Redevelopment Project Area, (including administrative costs, which are considered to be spent outside of the District) subject to the limitations as described in this TIF Plan. The HRA and the City reserve the right to expend tax increment for activities outside the District within the limitations of M.S., Section 469.1763, Subd. 2. Subsection 2-11. Fiscal Disparities Election Pursuant to M.S.,Section 469.177,Subd. 3,the HRA or City may elect one of two methods to calculate fiscal disparities. If the calculations pursuant to M.S., Section 469.177, Subd. 3, clause b(within the District)are followed,the following method of computation shall apply: (1) The original net tax capacity shall be determined before the application of the fiscal disparity provisions of Chapter 276A or 473F. The current net tax capacity shall exclude any fiscal Richfield Housing and Redevelopment Authority Tax Increment Financing Plan for Lyndale Gardens Tax Increment Financing District 2-6 disparity commercial-industrial net tax capacity increase between the original year and the current year multiplied by the fiscal disparity ratio determined pursuant to M.S., Section 276A.06, subdivision 7 or M.S., Section 473F.08, subdivision 6. Where the original net tax capacity is equal to or greater than the current net tax capacity,there is no captured tax capacity and no tax increment determination. Where the original tax capacity is less than the current tax capacity, the difference between the original net tax capacity and the current net tax capacity is the captured net tax capacity. This amount less any portion thereof which the authority has designated, in its tax increment financing plan, to share with the local taxing districts is the retained captured net tax capacity of the authority. (2) The county auditor shall exclude the retained captured net tax capacity of the authority from the net tax capacity of the local taxing districts in determining local taxing district tax rates. The local tax rates so determined are to be extended against the retained captured net tax capacity of the authority as well as the net tax capacity of the local taxing districts. The tax generated by the extension of the less of(A)the local taxing district tax rates or(B)the original local tax rate to the retained captured net tax capacity of the authority is the tax increment of the authority. The HRA will choose to calculate fiscal disparities by clause b. According to M.S., Section 469.177, Subd. 3: (c) The method of computation of tax increment applied to a district pursuant to paragraph (a) or (b) shall remain the same for the duration of the district, except that the governing body may elect to change its election from the method of computation in paragraph (a) to the method in paragraph (b). Subsection 2-12. Business Subsidies Pursuant to M.S., Section 116.7.993, Subd. 3,the following forms of financial assistance are not considered a business subsidy: (1) A business subsidy of less than$150,000; (2) Assistance that is generally available to all businesses or to a general class of similar businesses, such as a line of business, size, location, or similar general criteria; (3) Public improvements to buildings or lands owned by the state or local government that serve a public purpose and do not principally benefit a single business or defined group of businesses at the time the improvements are made; (4) Redevelopment property polluted by contaminants as defined in M.S.,Section 116.1552, Subd. 3; (5) Assistance provided for the sole purpose of renovating old or decaying building stock or bringing it up to code and assistance provided for designated historic preservation districts,provided that the assistance is equal to or less than 50%of the total cost; (6) Assistance to provide job readiness and training services if the sole purpose of the assistance is to provide those services; (7) Assistance for housing; (8) Assistance for pollution control or abatement, including assistance for a tax increment financing hazardous substance subdistrict as defined under M.S., Section 469.174, Subd. 23; (9) Assistance for energy conservation; (10) Tax reductions resulting from conformity with federal tax law; (11) Workers'compensation and unemployment compensation; (12) Benefits derived from regulation; Richfield Housing and Redevelopment Authority Tax Increment Financing Plan for Lyndale Gardens Tax Increment Financing District 2-7 (13) Indirect benefits derived from assistance to educational institutions; (14) Funds from bonds allocated under chapter 474A, bonds issued to refund outstanding bonds,and bonds issued for the benefit of an organization described in section 501 (c) (3) of the Internal Revenue Code of 1986, as amended through December 31, 1999; (15) Assistance for a collaboration between a Minnesota higher education institution and a business; (16) Assistance for a tax increment financing soils condition district as defined under M.S., Section 469.174, Subd. 19; (17) Redevelopment when the recipient's investment in the purchase of the site and in site preparation is 70 percent or more of the assessor's current year's estimated market value; (18) General changes in tax increment financing law and other general tax law changes of a principally technical nature; (19) Federal assistance until the assistance has been repaid to, and reinvested by, the state or local government agency; (20) Funds from dock and wharf bonds issued by a seaway port authority; (21) Business loans and loan guarantees of$150,000 or less; (22) Federal loan funds provided through the United States Department of Commerce,Economic Development Administration; and (23) Property tax abatements granted under M.S., Section 469.1813 to property that is subject to valuation under Minnesota Rules, chapter 8100. The HRA will comply with M.S., Sections 116.1993 to 116.1995 to the extent the tax increment assistance under this TIF Plan does not fall under any of the above exemptions. Subsection 2-13. County Road Costs Pursuant to M.S., Section 469.175,Subd. la,the county board may require the HRA or City to pay for all or part of the cost of county road improvements if the proposed development to be assisted by tax increment will,in the judgment of the county, substantially increase the use of county roads requiring construction of road improvements or other road costs and if the road improvements are not scheduled within the next five years under a capital improvement plan or within five years under another county plan. If the county elects to use increments to improve county roads,it must notify the HRA or City within forty- five days of receipt of this TIF Plan. In the opinion of the HRA and City and consultants, the proposed development outlined in this TIF Plan will have little or no impact upon county roads,therefore the TIF Plan was not forwarded to the county 45 days prior to the public hearing. The HRA and City are aware that the county could claim that tax increment should be used for county roads,even after the public hearing. Subsection 2-14. Estimated Impact on Other Taxing Jurisdictions The estimated impact on other taxing jurisdictions assumes that the redevelopment contemplated by the TIF Plan would occur without the creation of the District. However,the HRA or City has determined that such development or redevelopment would not occur "but for" tax increment financing and that, therefore, the fiscal impact on other taxing jurisdictions is $0. The estimated fiscal impact of the District would be as follows if the "but for"test was not met: Richfield Housing and Redevelopment Authority Tax Increment Financing Plan for Lyndale Gardens Tax Increment Financing District 2-8 b - 1S IMPACT ON TAX BASE 2010/Pay 2011 Estimated Captured Total Net Tax Capacity(CTC) Percent of CTC Tax Capacity Upon Completion to Entity Total Hennepin County 1,320,682,751 734,734 0.0556% City of Richfield 24,776,100 734,734 2.9655% Richfield ISD No. 280 32,204,673 734,734 2.2815% IMPACT ON TAX RATES Pay 2011 Percent Potential Extension Rates of Total CTC Taxes Hennepin County 0.458400 33.08% 734,734 336,802 City of Richfield 0.567970 40.99% 734,734 417,307 Richfield ISD No.280 0.267590 19.31% 110,967 29,694 Other 0.091720 6.62% 110.967 10,178 Total 1.385680 100.00% 793,980 The estimates listed above display the captured tax capacity when all construction is completed. The tax rate used for calculations is the actual Pay 2011 rate. The total net capacity for the entities listed above are based on actual Pay 2011 figures. The District will be certified under the actual Pay 2012 rates, which were unavailable at the time this TIF Plan was prepared. Pursuant to M.S. Section 469.175 Subd. 2(b): (1) Estimate of total tax increment. It is estimated that the total amount of tax increment that will be generated over the life of the District is$15,600,000; (2) Probable impact of the District on city provided services and ability to issue debt. A minimal impact of the District on police protection is expected. The Police Department does track all calls for service including property-type calls and crimes. With any addition of new residents or businesses,police calls for service will be increased. New developments add an increase in traffic, and additional overall demands to the call load. The City does not expect that the proposed development, in and of itself, will necessitate new capital investment in vehicles or require that the City hire additional officers. The probable impact of the District on fire protection is not expected to be significant. Typically new buildings generate few calls,if any,and are of superior construction. The existing buildings,which will be eliminated by the new development, have public safety concerns that includes a vacant, blighted building with issues such as vandalism. The building will also go from a non-sprinklered building,to a fully-sprinkled building. The impact of the District on public infrastructure is expected to be minimal. The development is not expected to significantly impact any traffic movements in the area.The current infrastructure for sanitary sewer, storm sewer and water will be able to handle the additional volume generated from the proposed development. Based on the development plans,there are no additional costs associated Richfield Housing and Redevelopment Authority Tax Increment Financing Plan for Lyndale Gardens Tax Increment Financing District 2-9 with street maintenance, sweeping,plowing,lighting and sidewalks. The development in the District is not expected to contribute to water(WAC) connection fees. The probable impact of any District general obligation tax increment bonds on the ability to issue debt for general fund purposes is expected to be minimal. It is not anticipated that there will be any general obligation debt issued in relation to this project, therefore there will be no impact on the City's ability to issue future debt or on the City's debt limit. (3) Estimated amount of tax increment attributable to school district levies. It is estimated that the amount of tax increments over the life of the District that would be attributable to school district levies, assuming the school district's share of the total local tax rate for all taxing jurisdictions remained the same, is$3,012,360; (4) Estimated amount of tax increment attributable to county levies. It is estimated that the amount of tax increments over the life of the District that would be attributable to county levies,assuming the county's share of the total local tax rate for all taxing jurisdictions remained the same,is$5,160,480; (5) Additional information requested by the county or school district. The City is not aware of any standard questions in a county or school district written policy regarding tax increment districts and impact on county or school district services. The county or school district must request additional information pursuant to M.S. Section 469.175 Subd. 2(b) within 15 days after receipt of the tax increment financing plan. No requests for additional information from the county or school district regarding the proposed development for the District have been received. Subsection 2-15. Supporting Documentation Pursuant to M.S. Section 469.175, Subd. 1 (a), clause 7 the TIF Plan must contain identification and description of studies and analyses used to make the determination set forth in M.S. Section 469.175, Subd. 3, clause (b)(2) and the findings are required in the resolution approving the District. Following is a list of reports and studies on file at the City that support the HRA and City's findings: • TIF Application, The Cornerstone Group; • Project Proformas,The Cornerstone Group; • Report of Inspection Procedures and Results for Determining Qualifications of a Tax Increment Financing District,LHB Inc.,2011. Subsection 2-16. Definition of Tax Increment Revenues Pursuant to M.S.,Section 469.174,Subd.25,tax increment revenues derived from a tax increment financing district include all of the following potential revenue sources: 1. Taxes paid by the captured net tax capacity,but excluding any excess taxes,as computed under M.S., Section 469.177; 2. The proceeds from the sale or lease of property,tangible or intangible,to the extent the property was purchased by the Authority with tax increments; 3. Principal and interest received on loans or other advances made by the Authority with tax increments; 4. Interest or other investment earnings on or from tax increments; 5. Repayments or return of tax increments made to the Authority under agreements for districts for Richfield Housing and Redevelopment Authority Tax Increment Financing Plan for Lyndale Gardens Tax Increment Financing District 2-10 G - which the request for certification was made after August 1, 1993; and 6. The market value homestead credit paid to the Authority under M.S., Section 273.1384. Subsection 2-17. Modifications to the District In accordance with M.S., Section 469.175, Subd. 4,any: 1. Reduction or enlargement of the geographic area of the District, if the reduction does not meet the requirements ofMS., Section 469.175, Subd. 4(e); 2. Increase in amount of bonded indebtedness to be incurred; 3. A determination to capitalize interest on debt if that determination was not a part of the original TIF Plan; 4. Increase in the portion of the captured net tax capacity to be retained by the HRA or City; 5. Increase in the estimate ofthe cost ofthe District,including administrative expenses,that will be paid or financed with tax increment from the District; or 6. Designation of additional property to be acquired by the HRA or City, shall be approved upon the notice and after the discussion,public hearing and findings required for approval of the original TIF Plan. Pursuant to M.S.Section 469.175 Subd. 40,the geographic area of the District may be reduced,but shall not be enlarged after five years following the date of certification of the original net tax capacity by the county auditor. If a redevelopment district is enlarged,the reasons and supporting facts for the determination that the addition to the district meets the criteria of M.S., Section 469.174, Subd. 10, must be documented in writing and retained. The requirements of this paragraph do not apply if(1) the only modification is elimination of parcel(s)from the District and(2)(A)the current net tax capacity of the parcel(s)eliminated from the District equals or exceeds the net tax capacity of those parcel(s) in the District's original net tax capacity or (B)the HRA agrees that, notwithstanding M.S., Section 469.177, Subd. 1, the original net tax capacity will be reduced by no more than the current net tax capacity of the parcel(s) eliminated from the District. The HRA or City must notify the County Auditor of any modification to the District. Modifications to the District in the form of a budget modification or an expansion of the boundaries will be recorded in the TIF Plan. Subsection 2-18.Administrative Expenses In accordance with M.S., Section 469.174, Subd. 14, administrative expenses means all expenditures of the HRA or City, other than: 1. Amounts paid for the purchase of land; 2. Amounts paid to contractors or others providing materials and services,including architectural and engineering services, directly connected with the physical development of the real property in the District; 3. Relocation benefits paid to or services provided for persons residing or businesses located in the District; or 4. Amounts used to pay principal or interest on, fund a reserve for, or sell at a discount bonds issued pursuant to M.S., Section 469.178; or 5. Amounts used to pay other financial obligations to the extent those obligations were used to finance costs described in clauses(1)to(3). Richfield Housing and Redevelopment Authority Tax Increment Financing Plan for Lyndale Gardens Tax Increment Financing District 2-11 For districts for which the request for certification were made before August 1, 1979,or after June 30, 1982, and before August 1,2001,administrative expenses also include amounts paid for services provided by bond counsel, fiscal consultants, and planning or economic development consultants. Pursuant to M.S., Section 469.176, Subd. 3, tax increment may be used to pay any authorized and documented administrative expenses for the District up to but not to exceed 10 percent of the total estimated tax increment expenditures authorized by the TIF Plan or the total tax increments,as defined by M.S., Section 469.174, Subd. 25, clause (1), from the District,whichever is less. For districts for which certification was requested after July 31,2001,no tax increment may be used to pay any administrative expenses for District costs which exceed ten percent of total estimated tax increment expenditures authorized by the TIF Plan or the total tax increments,as defined in MS.,Section 469.174,Subd. 25, clause (1), from the District,whichever is less. Pursuant to M.S., Section 469.176, Subd. 4h, tax increments may be used to pay for the County's actual administrative expenses incurred in connection with the District and are not subject to the percentage limits of MS.,Section 469.176,Subd. 3. The county may require payment of those expenses by February 15 of the year following the year the expenses were incurred. Pursuant to M.S., Section 469. 177, Subd. 11,the County Treasurer shall deduct an amount(currently .36 percent) of any increment distributed to the HRA or City and the County Treasurer shall pay the amount deducted to the State Commissioner of Management and Budget for deposit in the state general fund to be appropriated to the State Auditor for the cost of financial reporting of tax increment financing information and the cost of examining and auditing authorities' use of tax increment financing. This amount may be adjusted annually by the Commissioner of Revenue. Subsection 2-19. Limitation of Increment The tax increment pledged to the payment of bonds and interest thereon may be discharged and the District may be terminated if sufficient funds have been irrevocably deposited in the debt service fund or other escrow account held in trust for all outstanding bonds to provide for the payment of the bonds at maturity or redemption date. Pursuant to M.S., Section 469.176 Subd. 6: if after four years from the date of certification of the original net tax capacity of the tax increment financing district pursuant to MS.,Section 469.177,no demolition,rehabilitation or renovation of property or other site preparation, including qualified improvement of a street adjacent to a parcel but not installation of utility service including sewer or water systems, has been commenced on a parcel located within a tax increment financing district by the authority or by the owner of the parcel in accordance with the tax increment financing plan, no additional tax increment may be taken from that parcel and the original net tax capacity of that parcel shall be excluded from the original net tax capacity of the tax increment financing district. If the authority or the owner of the parcel subsequently commences demolition,rehabilitation or renovation or other site preparation on that parcel including qualified improvement of a street adjacent to that parcel, in accordance with the tax incrementfinancingplan,the authority shall certify to the county auditor that the activity has commenced and the county auditor shall certify the net tax capacity thereof as most recently certified by the commissioner of revenue and add it to the original net tax capacity of the tax increment financing district. The county auditor must enforce the provisions of this subdivision. The authority must submit to the county auditor evidence that the required Richfield Housing and Redevelopment Authority Tax Increment Financing Plan for Lyndale Gardens Tax Increment Financing District 2-12 activity has taken place for each parcel in the district. The evidence for a parcel must be submitted by February 1 of the fifth year following the year in which the parcel was certified as included in the district. For purposes of this subdivision, qualified improvements of a street are limited to (1) construction or opening of a new street, (2) relocation of a street, and(3)substantial reconstruction or rebuilding of an existing street. The HRA or City or a property owner must improve parcels within the District by approximately July 2015 and report such actions to the County Auditor. Subsection 2-20. Use of Tax Increment The HRA or City hereby determines that it will use 100 percent of the captured net tax capacity of taxable property located in the District for the following purposes: 1. To pay the principal of and interest on bonds issued to finance a project; 2. To finance, or otherwise pay public redevelopment costs of the Richfield Redevelopment Project Area pursuant to M.S., Sections 469.001 to 469.047; 3. To pay for project costs as identified in the budget set forth in the TIF Plan; 4. To finance, or otherwise pay for other purposes as provided in M.S., Section 469.176, Subd. 4; 5. To pay principal and interest on any loans,advances or other payments made to or on behalf of the HRA or City or for the benefit of the Richfield Redevelopment Project Area by a developer; 6. To finance or otherwise pay premiums and other costs for insurance or other security guaranteeing the payment when due of principal of and interest on bonds pursuant to the TIF Plan or pursuant to M.S., Chapter 462C. M.S., Sections 469.152 through 469.165, and/or M.S., Sections 469.178; and 7. To accumulate or maintain a reserve securing the payment when due of the principal and interest on the tax increment bonds or bonds issued pursuant to M.S., Chapter 462C, M.S., Sections 469.152 through 469.165,and/or M.S., Sections 469.178. These revenues shall not be used to circumvent any levy limitations applicable to the City nor for other purposes prohibited by M.S., Section 469.176, Subd. 4. Tax increments generated in the District will be paid by Hennepin County to the HRA for the Tax Increment Fund of said District. The HRA or City will pay to the developer(s) annually an amount not to exceed an amount as specified in a developer's agreement to reimburse the costs of land acquisition, public improvements,demolition and relocation,site preparation,and administration. Remaining increment funds will be used for HRA or City administration (up to 10 percent) and for the costs of public improvement activities outside the District. Subsection 2-21. Excess Increments Excess increments,as defined in M.S., Section 469.176, Subd. 2,shall be used only to do one or more of the following: 1. Prepay any outstanding bonds; 2. Discharge the pledge of tax increment for any outstanding bonds; 3. Pay into an escrow account dedicated to the payment of any outstanding bonds; or 4. Return the excess to the County Auditor for redistribution to the respective taxing jurisdictions in proportion to their local tax rates. The HRA or City must spend or return the excess increments under paragraph(c)within nine months after the end of the year. In addition,the HRA or City may, subject to the limitations set forth herein,choose to Richfield Housing and Redevelopment Authority Tax Increment Financing Plan for Lyndale Gardens Tax Increment Financing District 2-13 6 -a� modify the TIF Plan in order to finance additional public costs in the Richfield Redevelopment Project Area or the District. Subsection 2-22. Requirements for Agreements with the Developer The HRA or City will review any proposal for private development to determine its conformance with the Redevelopment Plan and with applicable municipal ordinances and codes. To facilitate this effort, the following documents may be requested for review and approval: site plan, construction, mechanical, and electrical system drawings,landscaping plan,grading and storm drainage plan,signage system plan,and any other drawings or narrative deemed necessary by the HRA or City to demonstrate the conformance of the development with City plans and ordinances. The HRA or City may also use the Agreements to address other issues related to the development. Pursuant to M.S., Section 469.176, Subd. 5, no more than 25 percent, by acreage, of the property to be acquired in the District as set forth in the TIF Plan shall at any time be owned by the HRA or City as a result of acquisition with the proceeds of bonds issued pursuant to M.S., Section 469.178 to which tax increments from property acquired is pledged,unless prior to acquisition in excess of 25 percent of the acreage,the HRA or City concluded an agreement for the development or redevelopment of the property acquired and which provides recourse for the HRA or City should the development or redevelopment not be completed. Subsection 2-23.Assessment Agreements Pursuant to M.S., Section 469.177, Subd. 8,the HRA or City may enter into a written assessment agreement in recordable form with the developer of property within the District which establishes a minimum market value of the land and completed improvements for the duration of the District. The assessment agreement shall be presented to the County Assessor who shall review the plans and specifications for the improvements to be constructed,review the market value previously assigned to the land upon which the improvements are to be constructed and,so long as the minimum market value contained in the assessment agreement appears, in the judgment of the assessor, to be a reasonable estimate, the County Assessor shall also certify the minimum market value agreement. Subsection 2-24.Administration of the District Administration of the District will be handled by the Community Development Director. Subsection 2-25.Annual Disclosure Requirements Pursuant to M.S., Section 469.175, Subds. 5, 6, and 6b the HRA or City must undertake financial reporting for all tax increment financing districts to the Office of the State Auditor,County Board and County Auditor on or before August 1 of each year. M.S., Section 469.175, Subd. 5 also provides that an annual statement shall be published in a newspaper of general circulation in the City on or before August 15. If the City fails to make a disclosure or submit a report containing the information required by M.S., Section 469.175 Subd. 5 and Subd. 6, the OSA will direct the County Auditor to withhold the distribution of tax increment from the District. Subsection 2-26. Reasonable Expectations As required by the TIF Act,in establishing the District,the determination has been made that the anticipated development would not reasonably be expected to occur solely through private investment within the Richfield Housing and Redevelopment Authority Tax Increment Financing Plan for Lyndale Gardens Tax Increment Financing District 2-14 reasonably foreseeable future and that the increased market value of the site that could reasonably be expected to occur without the use of tax increment financing would be less than the increase in the market value estimated to result from the proposed development after subtracting the present value of the projected tax increments for the maximum duration of the District permitted by the TIF Plan. In making said determination,reliance has been placed upon written representation made by the developer to such effects and upon HRA and City staff awareness of the feasibility of developing the project site(s)within the District. A comparative analysis of estimated market values both with and without establishment of the District and the use oftax increments has been performed as described above. Such analysis is included with the cashflow in Appendix D,and indicates that the increase in estimated market value of the proposed development(less the indicated subtractions) exceeds the estimated market value of the site absent the establishment of the District and the use of tax increments. Subsection 2-27. Other Limitations on the Use of Tax Increment 1. General Limitations. All revenue derived from tax increment shall be used in accordance with the TIF Plan. The revenues shall be used to finance, or otherwise pay public redevelopment costs of the the Richfield Redevelopment Project Area pursuant to M.S., Sections 469.001 to 469.047. Tax increments may not be used to circumvent existing levy limit law. No tax increment may be used for the acquisition, construction,renovation,operation,or maintenance of a building to be used primarily and regularly for conducting the business of a municipality,county,school district,or any other local unit of government or the state or federal government. This provision does not prohibit the use of revenues derived from tax increments for the construction or renovation of a parking structure. 2. Pooling Limitations. At least 75 percent of tax increments from the District must be expended on activities in the District or to pay bonds,to the extent that the proceeds of the bonds were used to finance activities within said district or to pay,or secure payment of,debt service on credit enhanced bonds. Not more than 25 percent of said tax increments may be expended,through a development fund or otherwise, on activities outside of the District except to pay,or secure payment of,debt service on credit enhanced bonds. For purposes of applying this restriction, all administrative expenses must be treated as if they were solely for activities outside of the District. 3. Five Year Limitation on Commitment of Tax Increments. Tax increments derived from the District shall be deemed to have satisfied the 75 percent test set forth in paragraph(2)above only if the five year rule set forth in M.S., Section 469.1763, Subd. 3, has been satisfied; and beginning with the sixth year following certification of the District, 75 percent of said tax increments that remain after expenditures permitted under said five year rule must be used only to pay previously committed expenditures or credit enhanced bonds as more fully set forth in M.S., Section 469.1763, Subd. 5. 4. Redevelopment District. At least 90 percent of the revenues derived from tax increment from a redevelopment district must be used to finance the cost of correcting conditions that allow designation of redevelopment and renewal and renovation districts underM..S.,Section 469.176 Subd.4j. These costs include, but are not limited to, acquiring properties containing structurally substandard buildings or improvements or hazardous substances,pollution,or contaminants,acquiring adjacent parcels necessary to provide a site of sufficient size to permit development, demolition and rehabilitation of structures, clearing of the land,the removal of hazardous substances or remediation necessary for development of the land, and installation of utilities,roads, sidewalks,and parking facilities for the site. The allocated administrative expenses of the HRA or City,including the cost of preparation of the development action response plan,may be included in the qualifying costs. Richfield Housing and Redevelopment Authority Tax Increment Financing Plan for Lyndale Gardens Tax Increment Financing District 2-15 6 -a2- Subsection 2-28. Summary The Richfield Housing and Redevelopment Authority is establishing the District to preserve and enhance the tax base,redevelop substandard areas,and provide employment opportunities in the City. The TIF Plan for the District was prepared by Ehlers & Associates, Inc., 3060 Centre Pointe Drive, Roseville, Minnesota 55113,telephone(651)697-8500. Richfield Housing and Redevelopment Authority Tax Increment Financing Plan for Lyndale Gardens Tax Increment Financing District 2-16 6 -a3 Appendix A Project Description The Lyndale Gardens Tax Increment Financing District is being established to facilitate a multi-phase,mixed use redevelopment on the former Lyndale Garden Center Site. Phase I will include rehabilitation of the garden center building. It is anticipated that the commercial space will contain several uses, including an anchor tenant, office space, retail and a community space. Phase II will include construction of approximately 94 units of rental housing with a mixture of market rate and affordable units. The final phase is anticipated to include the substantial rehabilitation of additional market rate and affordable housing units. It is anticipated that financing for the redevelopment project will be provided through a pay-as-you-go note and an interfund loan from the HRA. 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I 1.010 1011/11111 IIf111011111111 X71 0060 N33110 L. :OH 0111x1111 1111101 11011 1 EH 110111°1 ,1333110 1 1111 p� 11011111:: 1 a 11 111111111'IIIIxH1 111x1111 0111 ■ !I oosz „3SSna NV0Ia3HS 'NNIIIIN111Irf11 I-1 1111`- -11010.... lllll il O llif 1 D 0011/111 0 I X11010 J 1I 11/0101 I 009Z NVOIa31-12 /11111111=11111111 1111111111 111111111 MIN 10111 1111111 TTE']]011110 111un SVWOHl 1immuni 111 f 11 0111111 in'mill 1111111111 1101111111 1m1 11 111 111 aLL11]7 011110 111111 11111111111/ 1'NI\I M0 =1111111 1111111111 IH1111/N 1111 NMI 101111 11011:111111011118t(HI��JJ__I�JJ'''�I OOGZ SVWOHl NOldn IIINNIIIIrib 1111 1111111( J 1111111111 111111111 11111===1111 1111111 11111111 1111111 11 11111 I l l l! 0080 NOldn dELBLIE 11111111111 u1111"'1111wn1111'�11111111 11111111111 11111;,11 •• 111111111111=H��1�l��l�uN 11/x11 011110 LLiJJJ_J 011 1N3ONIn 111 ., 0060 11301111 �r� IIN111 GG 111111101111111 gab 11111111 111 .a1n111 01111 11 110111 ti 11 111111 7 0 i L IIIIiI 1111111 I Naf18HSVM 000€ NanBHSVM 1I,;III' III_ 111111 I 1�r 111111111�mm11O 00011/1111/ `P 01x111011111 11114 4f 1 1111101 I )G 11111®11111 1111/1111 IINx1111 1111 LLL ,=01011111 011. 11 0019 53621361 S3Xa3X 6-d40 Appendix C Description of Property to be Included in the District The District encompasses all property and adjacent rights-of-way and abutting roadways identified by the parcels listed below. Parcel Numbers Address Owner 28-028-24-11-0080 6400 Lyndale Ave. S. Rancho Richfield,LLC 28-028-24-11-0002 6330 Lyndale Ave. S. Roy E.Peterson 27-028-24-23-0064 6430 Lyndale Ave. S. Rancho Richfield,LLC 27-028-24-23-0065 840 65th St. W. 800 Company,LLP Appendix C-1 6 -011 Appendix D Estimated Cash Flow for the District Appendix D-1 O 1-N N N N M y m L a A w o) 4 a pm• 00,70000 N- F 0.0000)0)0)0) C C N O 'C U V .--w NNNN � x a. " j g N E NOON Q Q ' OE N I ',0 0 0 0 0 0 1 *** 0 0 0 u 0)00000 0 000000 0 00 0 C N M M My W 0 (n 0 0 N r N O N 0 O m W oO� O vNN.-O.- ,-,-.- y •`Cr; (7.2�0 E N N .--vo (y° >aaci� y� y 'a< U cc U K U U Q C 0 N 00 0)W - a O 0 -0 0 r N M N C i0 % N)(00 O .C O(v V'r O x UO q o-. F N• - 0 ° w a 9 w c o U o W .g y m `m m °-o� o 0,0x0 N d35d -I E y U = 0x0 ) Q' . Q^y O�~V U U U 0 0 CO - .c 13Z-470 J 2 0 2 S a Z 'o Cy 0- Q m .N O N N N N N N N 0 .c 0, '625▪ c2 E Q NOOd' N ' D-'Opp N R A NNNNNN m a E ff N V 00 y9 N00 m C> TT T T T>. 3 (xO x ‘. 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Please see the Minnesota Department of Employment and Economic Development (DEED) website at http://www.deed.state.mn.us/Community/subsidies/MBAFForm.htm for information and forms. Appendix E-1 Appendix F Redevelopment Qualifications for the District Appendix F-1 6 -33 REPORT OF INSPECTION PROCEDURES AND RESULTS FOR DETERMINING QUALIFICATIONS OF A TAX INCREMENT FINANCING DISTRICT AS A REDEVELOPMENT DISTRICT Lyndale Garden TIF District Richfield,Minnesota LHB Project No. 110189 July 18, 2011_,. > . -... . 11-1,4.,_ .. NI. . F � i ti • , r'NO.r t/ 4.14 GARDEN ~.1 1 HARDWARE 15/ , , f ,1 Al P •Ikpl t!"—• , .-...;;;;;II illitil arum op ±..±1 Rigel 111111.11 in 11 lib�d'1 oif.A 1111 ` r Prepared For The City of Richfield HRA Prepared by LHB LHB, Inc. 250 Third Avenue North, Suite 450 Minneapolis, Minnesota 55401 -3q TABLE OF CONTENTS Page PART 1 Executive Summary 3 Purpose of Evaluation 3 Scope of Work 4 Conclusion 4 PART 2 Minnesota Statute 469.174, Subdivision 10 Requirements 4 PART 3 Procedures Followed 6 PART 4 Findings 6 A. Coverage Test 6 B. Condition of Building Test 8 1. Building Inspection 8 2. Replacement Cost 8 3. Code Deficiencies 8 4. System Condition Deficiencies 9 C. Distribution of Substandard Structures 10 PART 5 Team Credentials 11 APPENDIX A Property Condition Assessment Summary Sheet APPENDIX B Building Code and Condition Deficiencies Reports APPENDIX C Building Replacement Cost Reports Code Deficiency Cost Reports Photographs Page 2 6 -3S PART 1 —EXECUTIVE SUMMARY PURPOSE OF EVALUATION LHB was hired by the City of Richfield HRA to inspect and evaluate the properties within a Tax Increment Financing Redevelopment District ("TIF District") proposed to be established by the HRA. The proposed TIF District is located on and immediately adjacent to the Lyndale Garden Center property, between Richfield Lake and Lyndale Avenue (Diagram 1). The purpose of LHB's work was to determine whether the proposed TIF District meets the statutory requirements for coverage, and whether two buildings on four parcels, located within the proposed TIF District, meet the qualifications required for a Redevelopment District. *IMMO. 2• r RICHFIELD LAKE 3. 4• Diagram 1 — Proposed TIF District Page 3 V r SCOPE OF WORK The proposed TIF District consists of four(4)parcels with two (2) commercial structures. The buildings received an on-site interior and exterior inspection on March 31, 2011. Building code and Condition Deficiency reports are located in Appendix B. CONCLUSION After inspecting and evaluating the properties within the proposed TIF District and applying current statutory criteria for a Redevelopment District under Minnesota Statutes, Section 469.174, Subdivision 10, it is our professional opinion that the proposed TIF District qualifies as a Redevelopment District because: • The proposed TIF District has a coverage calculation of 100 percent which is above the 70 percent requirement. • 100 percent of the buildings are structurally substandard which is above the 50 percent requirement. • The substandard buildings are reasonably distributed throughout the geographic area of the proposed TIF District. The remainder of this report describes our process and findings in detail. PART 2—MINNESOTA STATUTE 469.174, SUBDIVISION 10 REQUIREMENTS The properties were inspected in accordance with the following requirements under Minnesota Statutes, Section 469.174, Subdivision 10(c), which states: Interior Inspection "The municipality may not make such determination [that the building is structurally substandard] without an interior inspection of the property..." Exterior Inspection and Other Means "An interior inspection of the property is not required, if the municipality finds that (1) the municipality or authority is unable to gain access to the property after using its best efforts to obtain permission from the party that owns or controls the property; and (2) the evidence otherwise supports a reasonable conclusion that the building is structurally substandard." Documentation "Written documentation of the findings and reasons why an interior inspection was not conducted must be made and retained under section 469.175, subdivision 3(1)." Page 4 6 -31 Qualification Requirements Minnesota Statutes, Section 469.174, Subdivision 10 (a) (1) requires two tests for occupied parcels: A. Coverage Test ..."parcels consisting of 70 percent of the area of the district are occupied by buildings, streets, utilities, or paved or gravel parking lots" The coverage required by the parcel to be considered occupied is defined under Minnesota Statutes, Section 469.174, Subdivision 10(e), which states: "For purposes of this subdivision, a parcel is not occupied by buildings, streets, utilities, or paved or gravel parking lots unless 15 percent of the area of the parcel contains building, streets, utilities, or paved or gravel parking lots." B. Condition of Buildings Test ..."and more than 50 percent of the buildings, not including outbuildings, are structurally substandard to a degree requiring substantial renovation or clearance;" 1. Structurally substandard is defined under Minnesota Statutes, Section 469.174, Subdivision 10(b), which states: "For purposes of this subdivision, `structurally substandard' shall mean containing defects in structural elements or a combination of deficiencies in essential utilities and facilities, light and ventilation, fire protection including adequate egress, layout and condition of interior partitions, or similar factors, which defects or deficiencies are of sufficient total significance to justify substantial renovation or clearance." a. We do not count energy code deficiencies toward the thresholds required by Minnesota Statutes, Section 469.174, Subdivision 10(b)) defined as "structurally substandard", due to concerns expressed by the State of Minnesota Court of Appeals in the Walser Auto Sales, Inc. vs. City of Richfield case filed November 13, 2001. 2. Buildings are not eligible to be considered structurally substandard unless they meet certain additional criteria, as set forth in Subdivision 10(c)which states: "A building is not structurally substandard if it is in compliance with the building code applicable to new buildings or could be modified to satisfy the building code at a cost of less than 15 percent of the cost of constructing a new structure of the same square footage and type on the site. The municipality may find that a building is not disqualified as structurally substandard under the preceding sentence on the basis of reasonably available evidence, such as the size, type, and age of the building, the average cost of plumbing, electrical, or structural repairs, or other similar reliable evidence." Page 5 "Items of evidence that support such a conclusion [that the building is not disqualified] include recent fire or police inspections, on-site property appraisals or housing inspections, exterior evidence of deterioration, or other similar reliable evidence." LHB counts energy code deficiencies toward the 15 percent code threshold required by Minnesota Statutes, Section 469.174, Subdivision 10(c)) for the following reasons: • The Minnesota energy code is one of ten building code areas highlighted by the Minnesota Department of Labor and Industry website where minimum construction standards are required by law. • The index page of the 2007 Minnesota Building Code lists the Minnesota Energy Code as a "Required Enforcement" area compared to an additional list of"Optional Enforcement" chapters. • The Senior Building Code Representative for the Construction Codes and Licensing Division of the Minnesota Department of Labor and Industry confirmed that the Minnesota Energy Code is being enforced throughout the State of Minnesota. • In a January 2002 report to the Minnesota Legislature, the Management Analysis Division of the Minnesota Department of Administration confirmed that the construction cost of new buildings complying with the Minnesota Energy Code is higher than buildings built prior to the enactment of the code. • Proper TIF analysis requires a comparison between the replacement value of a new building built under current code standards with the repairs that would be necessary to bring the existing building up to current code standards. In order for an equal comparison to be made, all applicable code chapters should be applied to both scenarios. Since current construction estimating software automatically applies the construction cost of complying with the Minnesota Energy Code, energy code deficiencies should also be identified in the existing structures. PART 3—PROCEDURES FOLLOWED LHB was able to schedule interior and exterior inspections for both buildings on March 31, 2011, and made the following findings: PART 4—FINDINGS A. Coverage Test 1. The total square foot area of each parcel in the proposed TIF District was obtained from City records, GIS mapping and site verification. Page 6 2. The total square foot area of buildings and site improvements on the parcels in the proposed TIF District was obtained from City records, GIS mapping and site verification. 3. The percentage of coverage for each parcel in the proposed TIF District was computed to determine if the 15 percent minimum requirement was met. The total square footage of parcels meeting the 15 percent requirement was divided into the total square footage of the entire district to determine if the 70 percent requirement was met. Finding: The proposed TIF District met the coverage test under Minnesota Statutes, Section 469.174, Subdivision 10(e), which resulted in parcels consisting of 100 percent of the area of the proposed TIF District being occupied by buildings, streets, utilities, paved or gravel parking lots, or other similar structures (Diagram 2). This exceeds the 70 percent area coverage requirement for the proposed TIF District under Minnesota Statutes, Section 469.174, Subdivision (a) (1). 2. ,d F "9L RICHFIELD LAKE F /a. 3. Diagram 2—Coverage Diagram Shaded area depicts a parcel more than 15 percent occupied by buildings,streets,utilities, Paved or gravel parking lots or other similar structures Page 7 � — qo B. Condition of Building Test 1. Building Inspection The first step in the evaluation process is the building inspection. After an initial walk-thru, the inspector makes a judgment whether or not a building"appears"to have enough defects or deficiencies of sufficient total significance to justify substantial renovation or clearance. If it does,the inspector documents with notes and photographs code and non-code deficiencies in the building. 2. Replacement Cost The second step in evaluating a building to determine if it is substandard to a degree requiring substantial renovation or clearance is to determine its replacement cost. This is the cost of constructing a new structure of the same square footage and type on site. Replacement costs were researched using R.S. Means Cost Works square foot models for 2011. A replacement cost was calculated by first establishing building use (office, retail, residential, etc.), building construction type (wood, concrete, masonry, etc.), and building size to obtain the appropriate median replacement cost, which factors in the costs of construction in Richfield, Minnesota. Replacement cost includes labor, materials, and the contractor's overhead and profit. Replacement costs do not include architectural fees, legal fees or other "soft" costs not directly related to construction activities. Replacement cost for each building is tabulated in Appendix A. 3. Code Deficiencies The next step in evaluating a building is to determine what code deficiencies exist with respect to such building. Code deficiencies are those conditions for a building which are not in compliance with current building codes applicable to new buildings in the State of Minnesota. Minnesota Statutes, Section 469.174, Subdivision 10(c), specifically provides that a building cannot be considered structurally substandard if its code deficiencies are not at least 15 percent of the replacement cost of the building. As a result, it was necessary to determine the extent of code deficiencies for each building in the proposed TIF District. The evaluation was made by reviewing all available information with respect to such buildings contained in City Building Inspection records and making interior and exterior inspections of the buildings. LHB utilizes the current Minnesota State Building Code as the official code for our evaluations. The Minnesota State Building Code is actually a series of provisional codes written specifically for Minnesota only requirements, adoption of several international codes, and amendments to the adopted international codes. Page 8 After identifying the code deficiencies in each building, we used R.S. Means Cost Works 2011; Unit and Assembly Costs to determine the cost of correcting the identified deficiencies. We were than able to compare the correction costs with the replacement cost of each building to determine if the costs for correcting code deficiencies meet the required 15 percent threshold. Finding: Two (2) out of two (2) buildings (100 percent) in the proposed TIF District contained code deficiencies exceeding the 15 percent threshold required by Minnesota Statutes, Section 469.174, Subdivision 10(c). A complete Building Code and Condition Deficiency report for each building in the proposed TIF District can be found in Appendix B of this report. 4. System Condition Deficiencies If a building meets the minimum code deficiency threshold under Minnesota Statutes, Section 469.174, Subdivision 10(c), then in order for such building to be "structurally substandard" under Minnesota Statutes, Section 469.174, Subdivision 10(b), the building's defects or deficiencies should be of sufficient total significance to justify "substantial renovation or clearance." Based on this definition, LHB re-evaluated each of the buildings that met the code deficiency threshold under Minnesota Statutes, Section 469.174, Subdivision 10(c), to determine if the total deficiencies warranted "substantial renovation or clearance" based on the criteria we outlined above. System condition deficiencies are a measurement of defects or substantial deterioration in site elements, structure, exterior envelope, mechanical and electrical components, fire protection and emergency systems, interior partitions, ceilings, floors and doors. The evaluation of system condition deficiencies was made by reviewing all available information contained in City records, and making interior and exterior inspections of the buildings. LHB only identified system condition deficiencies that were visible upon our inspection of the building or contained in City records. We did not consider the amount of "service life" used up for a particular component unless it was an obvious part of that component's deficiencies. After identifying the system condition deficiencies in each building, we used our professional judgment to determine if the list of defects or deficiencies are of sufficient total significance to justify"substantial renovation or clearance." Finding: In our professional opinion, two (2) out of two (2) buildings (100 percent) in the proposed TIF District are structurally substandard to a degree requiring substantial renovation or clearance, because of defects in structural elements or a combination of deficiencies in essential utilities and facilities, light and ventilation, fire protection Page 9 —` d— including adequate egress, layout and condition of interior partitions, or similar factors which defects or deficiencies are of sufficient total significance to justify substantial renovation or clearance. This exceeds the 50 percent requirement of Subdivision 10a(1). C. Distribution of substandard structures Much of this report has focused on the condition of individual buildings as they relate to requirements identified by Minnesota Statutes, Section 469.174, Subdivision 10. It is also important to look at the distribution of substandard buildings throughout the geographic area of the proposed TIF District(Diagram 3). Finding: The substandard buildings are reasonably distributed throughout the geographic area of the proposed TIF District. rE 2 • • RICHFIELD LAKE 3. .. Diagram 3 —Substandard Buildings Shaded area depicts parcels with substandard buildings Page 10 PART 5 - TEAM CREDENTIALS Michael A. Fischer,ALA LEED AP-Project Principal/TIFAnalyst Michael has twenty-four years of architectural experience as project principal, project manager, project designer and project architect on municipal planning, educational, commercial and governmental projects. He is a Senior Vice President at LHB and currently leads the Minneapolis office. Michael completed a two-year Bush Fellowship at the Massachusetts Institute of Technology in 1999, earning Masters Degrees in City Planning and Real Estate Development. Michael has served on over 35 committees, boards and community task forces, including a term as City Council President and Chair of the Duluth/Superior Metropolitan Planning organization. He is currently Chair of the Planning Commission in Edina, Minnesota. He was one of four architects in the country to receive the National "Young Architects Citation" from the American Institute of Architects in 1997. Ben Trousdale,AIA -Project Manager/Inspector Ben is a project architect in LHB's Minneapolis office with 20 years of experience working on a variety of multi-family housing and commercial projects. He has extensive skills in creating quality construction documents that convey a building's fundamentals and unique design details. His responsibilities include project management, code analysis, and overseeing document production. Ben is a licensed architect in Minnesota and is involved with AIA activities including Search for Shelter charrettes. Lydia Major,MLA,ASLA —GIS/Mapping Lydia brings a passion for design that benefits the client, the community, and the environment. Her experience includes designing and drafting commercial and residential properties at a variety of scales. Lydia integrates her skills with AutoCAD, ArcGIS, and the Adobe Creative Suite to produce plans, color renderings, booklets, and other presentation materials. Communication is a critical component in all projects, and Lydia's uses her education as a writer to create compelling project documents, including proposals, requests for variance, and other public-relations materials. M:\11Proj\110189\400 Design\406 Reports\TIF\Final Report\Lyndale Gardens Redevelopment TIF Final Report 7-18-11.doc APPENDICES APPENDIX A Property Condition Assessment Summary Sheet APPENDIX B Building Code and Condition Deficiencies Reports APPENDIX C Building Replacement Cost Reports Code Deficiency Cost Reports Photographs Page 11 APPENDIX A Property Condition Assessment Summary Sheet 6 -4C !ƒf} , , , ff/ , , , k� . - ) k &� rf„ § E 2ƒ8 } \ / a" „ _ _ , •# . . >+ \ / } ( ) {\ )m \ / < || LL !; « I- gi ` ` � ` c ( O a E w �a; « - e - / O k )L` ^ 2 > 2 . - - - @ % (5 � � a0 co O \ _ co L E- h k - - E k \° \ \ 1 � P - - 0 R -0 C _ � q l ; , a � ) ; « , { } \ � \ \ : : ! ! � ) (0 ) ( ) ) ) \ _ \ ; ; ! — } \ \ \ § \ \ El F E „ / \ APPENDIX B Building Code and Condition Deficiencies Reports 6 -41 LYNDALE GARDEN REDEVELOPMENT TIF DISTRICT CODE/CONDITION DEFICIENCY REPORT July 18,2011 Map No. &Building Name: Map No. 1—Multi-Tenant Office Building Inspection Date(s)& Time(s): March 31,2011, 1:30pm Inspection Type: Interior/Exterior Summary of Deficiencies: It is our professional opinion that this building is Substandard because: - Building Code deficiencies total more than 15%of replacement cost. - Substantial renovation is required to correct Conditions found. Estimated Replacement Cost: S 889,000 Estimated Cost to Correct Building Code Deficiencies: S 316,700 Percentage of Replacement Cost: 36% Description of Condition Deficiencies Minnesota Statutes, Section 469.174, Subdivision 10, states that a building is Structurally Substandard if it contains "defects in structural elements or a combination of deficiencies in essential utilities and facilities, light and ventilation, fire protection including adequate egress, layout and condition of interior partitions, or similar factors, which defects or deficiencies are of sufficient total significance to justify substantial renovation or clearance." A.Defects in Structural Elements 1. Major visible cracking in structural walls and columns. 2. Visible cracks in concrete floor structure(visible from below). B.Combination of Deficiencies 1. Essential Utilities and Facilities a. Upgraded mechanical system required in basement offices. b. Bathrooms not adequate. c. New GFI outlets required in wet spaces. 2. Light and Ventilation a. Basement offices require improved ventilation. b. Basement offices require windows and/or egress windows. c. Lighting should be improved in corridors and stairs. 3. Fire Protection/Adequate Egress a. Stairs from basement are not code compliant. b. One stairway has mechanical equipment intruding into walking space. c. Doors and door hardware are not code compliant. 4. Layout and Condition of Interior Partitions/Materials a. Mildew present in basement spaces. b. All interior finishes(wall,ceiling,floor)require updating. c. Visible cracking on underside of floor(basement ceiling). 5. Exterior Construction a. Fascia, soffit and siding requires sanding and painting. b. Concrete stoops and stairs and sidewalk requires replacement. c. Exterior concrete walls require significant patching and waterproofing. d. Major visible cracking on exterior walls. e. Parking lot surface should be repaired, sloping away from building. Overview of Condition Deficiencies Most of the interior and exterior finishes are in need of upgrading and repair. The site and all entrances require improvements to prevent further water damage. This building definitely requires substantial renovation to correct the existing condition deficiencies. Description of Code Deficiencies This multi-tenant office building was converted from an animal kennel building and has never met ADA requirements, or many other basic code requirements for a multi-tenant office building. 1. Tenant spaces are not accessible. Four in basement, four on upper floor. 2. Three sets of stairs do not meet current codes. 3. 66' Dead-end corridor in basement. 4. No windows or means of egress from basement office spaces. 5. Ventilation not adequate in basement spaces. 6. Roof leaks on north wing allowing water intrusion into building. 7. Doors and hardware are not ADA compliant. 8. Water is penetrating building at base at rear perimeter. 9. Four bathrooms are not accessible or code compliant. M:\1 IProj\1 10189\400 Design\406 Reports\TIF\Building Reports\Office Building.doc LYNDALE GARDEN REDEVELOPMENT TIF DISTRICT CODE/CONDITION DEFICIENCY REPORT July 18,2011 Map No. &Building Name: Map No. 2—Lyndale Garden Center and Hardware Store Inspection Date(s)& Time(s): March 31,2011, 3:00pm Inspection Type: Interior/Exterior Summary of Deficiencies: It is our professional opinion that this building is Substandard because: - Building Code deficiencies total more than 15%of replacement cost. g P - Substantial renovation is required to correct Conditions found. Estimated Replacement Cost: $ 4,687,000 Estimated Cost to Correct Building Code Deficiencies: $ 2,023,826 Percentage of Replacement Cost: 43% Description of Condition Deficiencies Minnesota Statutes, Section 469.174, Subdivision 10, states that a building is Structurally Substandard if it contains "defects in structural elements or a combination of deficiencies in essential utilities and facilities, light and ventilation, fire protection including adequate egress, layout and condition of interior partitions, or similar factors, which defects or deficiencies are of sufficient total significance to justify substantial renovation or clearance." A.Defects in Structural Elements 1. Exterior Walls and Roof are damaged. B.Combination of Deficiencies 1. Essential Utilities and Facilities a. New plumbing fixtures and domestic water distribution required. b. New electrical system required. c. New GFI outlets required in wet spaces. 2. Light and Ventilation a. Several windows and storefront glass are broken. b. New ventilation/furnace system required. 3. Fire Protection/Adequate Egress a. Debris in building would make egress difficult. b. Doors are non-functional. 4. Layout and Condition of Interior Partitions/Materials a. Remove all interior surface materials in order to eliminate mold and mildew. b. Replace all interior surfaces. c. Graffiti painted throughout building. 5. Exterior Construction a. Exterior wood siding severely damaged,needs replacement. b. Replace storefront system and all windows. c. Concrete block walls retaining moisture,require tuck pointing. d. Site requires general cleanup to prevent damage to Richfield Lake. e. Damage at rear loading dock,overhead door and man door. f. Retaining walls near loading dock are damaged and should be replaced. 6 -56 g. Exterior building signage is damaged and should be replaced. h. Building is not accessible from parking lots. Overview of Condition Deficiencies This building has been closed for a long period of time and has been vandalized to the point where it is not safe for occupancy. Almost every system in this building will require complete replacement, making it easy to determine that substantial renovation would be required to correct the condition deficiencies. Description of Code Deficiencies 1. The roof is allowing water intrusion and should be repaired with proper slope. 2. The domestic water system has been damaged due to freezing temperatures in the building. 3. New plumbing fixtures and domestic water distribution required. 4. Replace existing furnace and ventilation distribution system. 5. Mold development has made the building unsafe for occupancy. 6. Remove all interior surfaces in the building to eliminate the mold and mildew. 7. All glass storefronts,windows and doors require replacement to prevent water intrusion and rodents. 8. Electrical distribution system is non-functional and does not meet current code. 9. Building is not accessible from parking. 10. Building lighting is non-functional. 11. Sprinkler system is non-functional. M:\1 IProj\l 10189\400 Design\406 Reports\TIF\Building Reports Tyndale Garden Center.doc � -51 APPENDIX C Building Replacement Cost Reports Code Deficiency Cost Reports Photographs J 6 -5a Square Foot Cost Estimate Report Estimate Name: Untitled Building Type: Office 1 Story with Tiltup Concrete Panel/Steel Roof Deck Location: MINNEAPOLIS,MN Stories Count(L.F.): 1.00 4 - _ if' Stories Height 12.00 w Yy- T ':;%A Floor Area(S.F.): 4,000.00 ' — . " ! w_r r LaborType Open Shop ,w^" 1 l+, •a y VL14. )1"41( l Basement Included: Yes Data Release: Year 2011 Quarter 2 Cost Per Square Foot $222.25 Costs are derived from a building model with basic components.Scope Total Building Cost $889,000 differences and market conditions can cause costs to vary significantly. %of Cost Per Total SF Cost A Substructure 18.4% 35.50 $142,000 A1010 Standard Foundations 7.00 $28,000 Strip footing,concrete,reinforced,load 11.1 KLF,soil bearing capacity 6 KSF,12"deep x 24"wide Spread footings,3000 PSI concrete,load 100K,soil bearing capacity 6 KSF,4'-6"square x 15"deep A1030 Slab on Grade 5.38 $21,500 Slab on grade,4"thick,non industrial,reinforced A2010 Basement Excavation 3.62 $14,500 Excavate and fill,10,000 SF,8'deep,sand,gravel,or common earth,on site storage A2020 Basement Walls 19.50 $78,000 Foundation wall,CIP,12'wall height,pumped,.444 CY/LF,21.59 PLF,12"thick B Shell 33.7% 65.12 $260,500 81010 Floor Construction 22.50 $90,000 Cast-in-place concrete column,12"square,tied,200K load,12'story height,142 lbs/LF,4000PSI Flat slab,concrete,with drop panels,6"slab/2.5"panel,12"column,15'x15'bay,75 PSF superimposed load,153 P: B1020 Roof Construction 9.38 $37,500 Floor,steel joists,beams,1.5"22 ga metal deck,on columns,25'x30'bay,25"deep,40 PSF superimposed load,60 Floor,steel joists,beams,1.5"22 ga metal deck,on columns,25'x30'bay,25"deep,40 PSF superimposed load,60 B2010 Exterior Walls 13.38 $53,500 Tilt-up concrete panels,vertical rib and light sandblast,6"thick,3000 PSI B2020 Exterior Windows 6.12 $24,500 Windows,aluminum,awning,insulated glass,4'-5"x 5'-3" B2030 Exterior Doors 3.00 $12,000 Door,aluminum&glass,with transom,narrow stile,double door,hardware,6'-0"x 10'-0"opening Door,aluminum&glass,with transom,bronze finish,hardware,3'-0"x 10'-0"opening Door,steel 18 gauge,hollow metal,1 door with frame,no label,3'-0"x 7'-0"opening B3010 Roof Coverings 10.38 $41,500 Roofing,single ply membrane,EPDM,45 mils,loosely laid,stone ballast Insulation,rigid,roof deck,extruded polystyrene,25 PSI compressive strength,3"thick,R15 1 6 -53 %of Cost Per Total SF Cost Roof edges,aluminum,duranodic,.050"thick,6"face Flashing,aluminum,no backing sides,.019" Gravel stop,aluminum,extruded,8",duranodic,.050"thick B3020 Roof Openings 0.38 $1,500 Roof hatch,with curb,1"fiberglass insulation,2'-6"x 4'-6",aluminum curb and cover,1501bs C Interiors 14.7% 28.38 $113,500 C1010 Partitions 5.75 $23,000 Metal partition,5/8"water resistant gypsum board face,no base layer,3-5/8"@ 24"OC framing,same opposite face 1/2"fire ratedgypsum board,taped&finished,painted on metal furring C1020 Interior Doors 5.38 $21,500 Door,single leaf,kd steel frame,hollow metal,commercial quality,flush,3'-0"x 7'-0"x 1-3/8" C1030 Fittings 0.50 $2,000 Toilet partitions,cubicles,ceiling hung,plastic laminate C3010 Wall Finishes 1.50 $6,000 Painting,interior on plaster and drywall,walls&ceilings,roller work,primer&2 coats Vinyl wall covering,fabric back,medium weight C3020 Floor Finishes 8.12 $32,500 Carpet,tufted,nylon,roll goods,12'wide,36 oz Carpet,padding,add to above,minimum Vinyl,composition tile,maximum Tile,ceramic natural clay C3030 Ceiling Finishes 7.12 $28,500 Acoustic ceilings,3/4"mineral fiber,12"x 12"tile,concealed 2"bar&channel grid,suspended support D Services 33.3% 64.25 $257,000 D2010 Plumbing Fixtures 6.00 $24,000 Water closet,vitreous china,bowl only with flush valve,wall hung Urinal,vitreous china,wall hung Lavatory w/trim,vanity top,PE on CI,20"x 18" Service sink w/trim,PE on Cl,wall hung w/rim guard,24"x 20" Water cooler,electric,floor mounted,dual height,14.3 GPH D2020 Domestic Water Distribution 1.88 $7,500 Gas fired water heater,commercial,100<F rise,75.5 MBH input,63 GPH Gas fired water heater,commercial,100<F rise,100 MBH input,91 GPH D3050 Terminal&Package Units 20.62 $82,500 Rooftop,multizone,air conditioner,offices,10,000 SF,31.66 ton D4010 Sprinklers 3.38 $13,500 Wet pipe sprinkler systems,steel,light hazard,1 floor,10,000 SF D4020 Standpipes 1.25 $5,000 Wet standpipe risers,class III,steel,black,sch 40,4"diam pipe,1 floor D5010 Electrical Service/Distribution 10.75 $43,000 Service installation,includes breakers,metering,20'conduit&wire,3 phase,4 wire,120/208 V,400 A Feeder installation 600 V,including RGS conduit and XHHW wire,400 A Switchgear installation,incl switchboard,panels&circuit breaker,600 A D5020 Lighting and Branch Wiring 13.00 $52,000 Receptacles incl plate,box,conduit,wire,16.5 per 1000 SF,2.0 W per SF,with transformer Miscellaneous power,1.2 watts Central air conditioning power,4 watts Motor installation,three phase,460 V,15 HP motor size Fluorescent fixtures recess mounted in ceiling,1.6 watt per SF,40 FC,10 fixtures @32watt per 1000 SF D5030 Communications and Security 7.12 $28,500 2 6 -5q %of Cost Per Total SF Cost Telephone wiring for offices&laboratories,8 jacks/MSF Communication and alarm systems,fire detection,addressable,25 detectors,includes outlets,boxes,conduit and w Fire alarm command center,addressable without voice,excl.wire&conduit Internet wiring,8 data/voice outlets per 1000 S.F. D5090 Other Electrical Systems 0.25 $1,000 Generator sets,w/battery,charger,muffler and transfer switch,gas/gasoline operated,3 phase,4 wire,277/480 V,7 E Equipment&Furnishings 0.0% 0.00 $0 E1090 Other Equipment 0.00 $0 F Special Construction 0.0% 0.00 $0 i G Building Sitework 0.0% 0.00 $0 1 Sub Total 100% $193.25 $773,000 Contractor's Overhead&Profit 15.0% $29.00 $116,000 Architectural Fees 0.0% $0.00 $0 User Fees 0.0% $0.00 $0 Total Building Cost $222.25 $889,000 3 6rs5- Lyndale Garden Redevelopment TIF District Cost Worksheet Multi-Tenant Office Building Item Description Cost Unit Quantity Total Replace Roof Membrane Removal of existing membrane $ 2.00 SF 4,000 $ 8,000 Insulation and new membrane $ 8.00 SF 4,000 $ 32,000 Elevator required for basement tenants Demolition $ 7,000.00 Ea 1 $ 7,000 Elevator Installation $ 35,000.00 Ea 1 $ 35,000 Accessible Entrances at upper offices Demolition $ 1,500.00 Ea 4 $ 6,000 New Ramps $ 7,500.00 Ea 4 $ 30,000 New Doors and hardware Demolition $ 100.00 Ea 12 $ 1,200 New Door and Hardware $ 1,500.00 Ea 12 $ 18,000 Reconstruct Basement Stairs Demolition $ 5,000.00 Ea 4 $ 20,000 New Construction $ 20,000.00 Ea 4 $ 80,000 Reconstruct Bathrooms for ADA Demolition $ 3,000.00 Ea 4 $ 12,000 New Construction $ 7,000.00 Ea 4 $ 28,000 Install Egress Windows in Basement Demolition $ 500.00 Ea 4 $ 2,000 Installation of Egress Windows $ 2,500.00 Ea 4 $ 10,000 Remove Dead end Corridor in basement Demolition $ 500.00 Ea 1 $ 500 New Construction $ 5,000.00 Ea 1 $ 5,000 Improve ventilation in office spaces Demolition $ 250.00 Ea 8 $ 2,000 New Construction $ 2,500.00 Ea 8 $ 20,000 Total Costs $ 316,700 6-5G 110189 Lynda le TIF - Office Building _ . —.• . :A II , - - • - __________ .....,.....______ .......... s ----- . 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';'--- ' Vilk.—;',:- • 'I. 42141lik :,'.,,.-4,. -- _.. 1. 0'...g ', ��, �`—__- _ - -- r rr ,. ,.,r+y• 1.•—/ '- CIS .010111011111111111 1.1..4 ,IIMI..r1.1' �eor,a. img_6253 img_6254 2816x2112 (1.62 MB) 2816x2112 (1.9MB) ale Ai.- , "l" ti .1— .� C ( • �� N� —.''"`. -'s --- img_6255 img_6256 2816x2112 (1.47 MB) 2816x2112(1.56 MB) f i a img_6257 2816x2112 (2.07 MB) Co —47 Square Foot Cost Estimate Report Estimate Name: Untitled Building Type: Store,Department,1 Story with Face Brick with Concrete Block Back-up/Steel Frame Location: MINNEAPOLIS,MN Stories Count(L.F.): 1.00 Stories Height 15.00fi 'J i Floor Area(S.F.): 48,968.00 LaborType Open Shop Basement Included: No Data Release: Year 2011 Quarter 2 - Y Cost Per Square Foot $95.72 Costs are derived from a building model with basic components.Scope Total Building Cost $4,687,000 differences and market conditions can cause costs to vary significantly. % of Cost Per Total SF Cost A Substructure 10.1% 8.36 $409,500 A1010 Standard Foundations 1.18 $58,000 Strip footing,concrete,reinforced,load 5.1 KLF,soil bearing capacity 3 KSF,12"deep x 24"wide spread footings,3000 PSI concrete,load 75K,soil bearing capacity 3 KSF,5'-6"square x 13"deep A1030 Slab on Grade 5.40 $264,500 Slab on grade,4"thick,non industrial,reinforced A2010 Basement Excavation 0.30 $14,500 Excavate and fill,100,000 SF,4'deep,sand,gravel,or common earth,on site storage A2020 Basement Walls 1.48 $72,500 Foundation wall,CIP,4'wall height,direct chute,.148 CY/LF,7.2 PLF,12"thick B Shell 32.7% 27.17 $1,330,500 B1010 Floor Construction 0.45 $22,000 Fireproofing,gypsum board,fire rated,1 layer,1/2"thick,14"steel column,2 hour rating,18 PLF B1020 Roof Construction 9.82 $481,000 Floor,steel joists,beams,1.5"22 ga metal deck,on columns,30'x30'bay,28"deep,40 PSF superimposed load,62 Floor,steel joists,beams,1.5"22 ga metal deck,on columns,30'x30'bay,28"deep,40 PSF superimposed load,62 B2010 Exterior Walls 8.72 $427,000 Brick wall,composite double wythe,standard face/CMU back-up,8"thick,perlite core fill B2020 Exterior Windows 1.90 $93,000 Aluminum flush tube frame,for 1/4"glass,1-3/4"x 4-1/2",5'x6'opening,1 intermediate horizontal Glazing panel,plate glass,3/8"thick,tinted B2030 Exterior Doors 0.42 $20,500 Doors,stainless steel&glass,balanced,standard,premium,3'-0"x 7'-0"opening Door,steel 18 gauge,hollow metal,1 door with frame,no label,3'-0"x 7'-0"opening 83010 Roof Coverings 5.73 $280,500 Roofing,asphalt flood coat,gravel,base sheet,3 plies 15#asphalt felt,mopped Insulation,rigid,roof deck,composite with 2"EPS,1"perlite Roof edges,aluminum,duranodic,.050"thick,6"face 1 110189 Lyndale TIF - G._.a... 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I'CIf ,a .,unit 1 IIIIIII II liuutllli IRllquull ll Iii,111111 1 SKIPpialN l I of ;, i img_6251 mg_6250 2816x2112 (1.71 MB) 2816x2112(1.49 MB) , , , I- ; — .. _. ... .s. .-4.1-7- r s , �,. y - _ g`Y=k fb'. , i fix": - 5. ,-- - img_6258 img_6259 2816x2112 (1.79 MB) 2816x2112 (2.13 MB) 6 —f1 110189 Lyndale TIF - Garden Center .1-I,''',, � ; t, /" `� fk ,,,f -;..4 .....4„ i,,,,a,"),,. :40.,,,-; ;11, `, t} img_6260 img_6261 2816x2112(1.82 MB) 2816x2112(1.5 MB) �' �rl a � 91 �P � ` 's `$- : `!1a P,Y fc a, �A ma ` R -.,l �. •- 'MI H .f ';a a � , r .. t '7,....fF`�_ is - WpDEN , - , I hill I I I„ 1` ilium 1 img_6262 2816x2112 (2.03 MB) 6 Appendix G Findings Including But/For Qualifications The reasons and facts supporting the findings for the adoption of the Tax Increment Financing Plan (TIF Plan) for the Lyndale Gardens Tax Increment Financing District (District) as required pursuant to M.S., Section 469.175, Subd. 3 are as follows: 1. Finding that the District is a redevelopment district as defined in M.S., Section 469.174, Subd. 10(a)(1). The District consists of 4 parcels and it is proposed that these parcels be redeveloped for housing and commercial purposes. All parcels within the District are occupied by buildings, streets, utilities, paved or gravel parking lots or other similar structures,and the occupied parcels make up more than 70%of the area of the District.More than 50%of the buildings within the District(2 of 2 buildings), not including outbuildings, are structurally substandard to a degree of requiring substantial renovation or clearance.The substandard buildings are reasonably distributed throughout the District. The Council has specifically relied on a study conducted by LHB, Inc., dated July 18, 2011, and entitled "Report of Inspections and Results for Determining Qualifications of a Tax Increment Financing District as a Redevelopment District (Lyndale Gardens TIF District, Richfield, Minnesota)," which is included in the TIF Plan at Appendix F,to make these determinations. 2. The proposed development, in the opinion of the City, would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future. The anticipated development consists of three phases.The first phase will include the acquisition of property and the substantial rehabilitation of the Lyndale Garden Center in order to make it suitable for commercial use, including possible restaurant,retail, office,and community space. The second phase will include construction of approximately 95 units of rental housing,some of which will be affordable housing. The third phase will include another 80 units of rental housing. The redevelopment project requires acquisition of several parcels of property,demolition of one building, environmental remediation,site improvements,and substantial rehabilitation of the Lyndale Garden Center building.Current estimates of redevelopment costs are more than$30,000,000.The cost and scope of the proposed redevelopment make it unlikely to occur solely through private investment. The developer has submitted a pro forma to the City demonstrating that the costs of acquiring the land for all phases of the redevelopment project,demolition costs,environmental remediation costs, site improvements, and construction of certain public improvements are economically infeasible without the assistance provided in the TIF Plan.The developer has certified to the City that it would not acquire the property and construct the housing and commercial development without the requested assistance.In order to make the redevelopment of this blighted area feasible,and provide affordable housing to persons of moderate income within the City, TIF assistance is required to reduce the price of redevelopment costs. The increased market value of the site that could reasonably be expected to occur without the use of tax increment financing would be less than the increase in market value estimated to result from the proposed development after subtracting the present value of the projected tax increments for the maximum duration of the District permitted by the TIF Plan. The City believes that the comprehensive nature of the proposed commercial and housing development,which requires significant time and expense to acquire parcels necessary for the Appendix G-1 G --13 development and the substantial renovation of a structurally substandard building,would not occur without the requested TIF assistance. Specifically, the proposed combination of housing and commercial development in the District is necessary in order to make the redevelopment of the Lyndale Garden Center economically feasible for the developer. The Lyndale Garden Center is currently vacant and in very poor condition, has been cited for numerous code violations,and has attracted trespassers. The property has remained vacant for many years without any successful proposals to redevelop the site. Providing assistance to the developer for all three phases of the proposed development will ensure that the Lyndale Garden Center is rehabilitated and the site is incorporated into the surrounding development. Therefore,the City reasonably determines that no other development of similar scope is anticipated on this site without substantially similar assistance being provided for the development. To summarize the basis for the City's findings,the City makes the following determinations: a. The City's estimate of the amount by which the market value of the site will increase without the use of tax increment financing is $0 (for the reasons described above), except some unknown amount of appreciation. b. If the proposed development to be assisted with tax increment occurs in the District,the total increase in market value would be approximately$21,765,885.The increase in market value would be due primarily to substantial building rehabilitation and new construction within the District. (See Appendix D of TIF Plan and the table below.) c. The present value of tax increments from the District for the maximum duration of the district permitted by the TIF Plan is estimated to be no more than$6,302,782.(See Appendix D of TIF Plan and the table below.) d. Even if some development other than the proposed development were to occur,the Council finds that no alternative would occur that would produce a market value increase greater than $15,463,103 (the amount in clause b less the amount in clause c) without tax increment assistance. But-For Analysis Current Market Value 4,420,000 New Market Value-Estimate 26,185,885 Difference 21,765,885 Present Value of Tax Increment 6,302,782 Difference 15,463,103 Value Likely to Occur Without TIF is Less Than: 15,463,103 4. Finding that the TIF Plan for the District conforms to the general plan for the development or redevelopment of the municipality as a whole. The Planning Commission reviewed the TIF Plan and found that the TIF Plan conforms to the general development plan of the City. Appendix G-2 6 --it( 5. Finding that the TIFPlan for the District will afford maximum opportunity,consistent with the sound needs of the City as a whole,for the development of the Lyndale Garden Center project by private enterprise. The commercial and housing projects to be developed within the District and assisted with tax increment financing from the District will result in the redevelopment of blighted and underutilized land which currently has obsolete land use and substandard buildings,promotion of the development of affordable housing,promotion of commercial development, and preservation and enhancement of the tax base of the City. Appendix G-3 b-- 7s Appendix H Prior Planned Improvements Appendix G-2 PERMIT City of Richfield Permit Type: Building 6700 Portland Avenue South Permit Number: RI089244 Richfield,MN 55423 RICH F I E L L7 Date Issued: 05/26/2011 612-861-9860 PUBLIC www.cityofrichfield.org SAFETY Site Address: 6400 Lyndale Ave S Lot: Block: Addition: P I D: 28-028-24-11-0080 Use: LYNDALE GARDEN CENTER Description: Sub Type: Commercial Construction Type: Work Type: Demo Building Description: REMOVE SIGN STRUCTURES,FENCE, DEBRIS FROM SITE Occupancy: Census Code: - Zoning: Square Feet: 0 Comments: Fee Summary: Description Amount Revenue Code Demo Commercial $147.25 10505-4152 Valuation: 7,000 Surcharge-Based on Valuation $3.50 70020-2081 Total: $150.75 Contractor: - Applicant - Owner: RJ MARCO CONS'TRUCT'ION RANCHO RICHFIELD LLC 75 W VIKING DRIVE 4518 NORTH LANE LITTLE CANADA MN 55117 DEL MAR CA 92014 (651)484-5635 (858)794-2735 This permit is issued on the express condition that all work shall be done in accordance with ordinances and building codes of the City of Richfield and the State of Minnesota. Applicant/Permitee: Signature Issued By: Signature AGENDA ITEM#: 7 REPORT#: 36 STAFF REPORT RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY MEETING JULY 25, 2011 REPORT PREPARED BY: KAREN BARTON, COMMUNITY DEVELOPMENT ASSISTANT DIRECTOR NAME,TITLE REPORT PRESENTER: KAREN BARTON, COMMUNITY DEVELOPMENT ASSISTANT DIRECTOR AME,TITLE ACTING DEPARTMENT DIRECTOR REVIEW: ��i l►0� A _ AV ■ REVIEWED BY EXECUTIVE DIRECTOR: rill VAPATO Ae,fir___. ..._ r 1 ITEM FOR HRA CONSIDERATION: Consideration of a resolution authorizing an interfund loan for advance of certain costs in connection with the Lyndale Garden Tax Increment Financing District. I. RECOMMENDED ACTION: By Motion: Adopt a resolution authorizing an interfund loan for advance of certain costs in connection with the Lyndale Garden Tax Increment Financing District. II. BACKGROUND On July 18, 2011 and August 9, 2011 the Housing and Redevelopment Authority (HRA) and the City Council, respectively, will be taking action on the proposed creation of the Lyndale Garden Tax Increment Financing (TIF) district. In the event the TIF district is established, the City's Financial Consultant, Ehlers & Associates, recommends the HRA establish an interfund loan to pay for certain qualified costs consisting of, but not necessarily limited to land/building acquisition, site improvements/preparation, public parking facilities, interest and administrative costs that may be incurred prior to the district generating tax increment. When the TIF district begins to generate tax increment, the interfund loan will then be repaid, with interest at 4% per annum. 07252011 Res auth interfund loan for LG TIF It is anticipated the district would begin generating tax increment within three to four years after certification. III. BASIS OF RECOMMENDATION A. POLICY • Under Minnesota Statutes, Section 469.178, Subd. 7, the HRA is authorized to advance or loan money from the HRA's general fund or any other fund from which such advances may be legally authorized, in order to finance the qualified costs. B. CRITICAL TIMING ISSUES • The HRA and the City Council are scheduled to take action on the proposed creation of the Lyndale Garden TIF District on July 18, 2011 and August 9, 2011, respectively. C. FINANCIAL • The interfund loan will allow the HRA to pay certain qualified costs from other tax increment as opposed to drawing on other HRA funds. • A maximum of$200,000 in loan funds can be drawn from the Development Fund. • The HRA shall reimburse itself with 4% interest in bi-annual installments when tax increment begins to generate. D. LEGAL • The HRA's attorney has reviewed the resolution. IV. ALTERNATIVE RECOMMENDATION(S) • Do not approve the resolution. • Approve the resolution with changes. V. ATTACHMENTS • Resolution VI. PRINCIPAL PARTIES EXPECTED AT MEETING • N/A RESOLUTION NO. RESOLUTION AUTHORIZING AN INTERFUND LOAN FOR ADVANCE OF CERTAIN COSTS IN CONNECTION WITH THE LYNDALE GARDEN TAX INCREMENT FINANCING DISTRICT BE IT RESOLVED by the Board of Commissioners (the "Board") of the Richfield Housing and Redevelopment Authority(the "HRA")of the City of Richfield,Minnesota, as follows: WHEREAS, the City Council for the City of Richfield, Minnesota (the "City"), intends to Y Y establish the Lyndale Gardens Tax Increment Financing District(the "TIF District") within the Richfield Yn g ( Redevelopment Project Area (the "Project"), and will adopt a Tax Increment Financing Plan (the "TIF Plan")for the purpose of financing certain improvements within the Project. WHEREAS, the HRA has determined to pay for certain costs identified in the TIF Plan consisting of land/building acquisition, site improvements/preparation, public parking facilities, interest and administrative costs (collectively, the "Qualified Costs"), which costs may be financed on a temporary basis from HRA funds available for such purposes. WHEREAS, under Minnesota Statutes, Section 469.178, Subd. 7, the HRA is authorized to advance or loan money from the HRA's general fund or any other fund from which such advances may be legally authorized, in order to finance the Qualified Costs. WHEREAS, the HRA intends to reimburse itself for the Qualified Costs from tax increments derived from the TIF District in accordance with the terms of this resolution (which terms are referred to collectively as the "Interfund Loan"). NOW THEREFORE BE IT RESOLVED,by the Board as follows: 1. The HRA hereby authorizes the advance of up to $200,000 from the Development fund or so much thereof as may be paid as Qualified Costs. The HRA shall reimburse itself for such advances together with interest at the rate stated below. Interest accrues on the principal amount from the date of each advance. The maximum rate of interest permitted to be charged is limited to the greater of the rates specified under Minnesota Statutes, Section 270C.40 or Section 549.09 as of the date the loan or advance is authorized, unless the written agreement states that the maximum interest rate will fluctuate as the interest rates specified under Minnesota Statutes, Section 270C.40 or Section 549.09 are from time to time adjusted. The interest rate shall be 4% and will not fluctuate. 2. Principal and interest ("Payments") on the Interfund Loan shall be paid semi-annually on each August 1 and February 1 (each a "Payment Date"), commencing on the first Payment Date on which the HRA has Available Tax Increment (defined below), or on any other dates determined by the Community Development Director, through the date of last receipt of tax increment from the TIF District. 3. Payments on this Interfund Loan are payable solely from "Available Tax Increment," which shall mean, on each Payment Date, tax increment available as determined by the Community Development Director, generated in the preceding six (6) months with respect to the property within the TIF District and remitted to the City by Hennepin County, all in accordance with —a Minnesota Statutes, Sections 469.174 to 469.1799, all inclusive, as amended. Payments on this Interfund Loan may be subordinated to any outstanding or future bonds, notes or contracts secured in whole or in part with Available Tax Increment, and are on parity with any other outstanding or future interfund loans secured in whole or in part with Available Tax Increment. 4. The principal sum and all accrued interest payable under this Interfund Loan are pre-payable in whole or in part at any time by the HRA without premium or penalty. No partial prepayment shall affect the amount or timing of any other regular payment otherwise required to be made under this Interfund Loan. 5. This Interfund Loan is evidence of an internal borrowing by the HRA in accordance with Minnesota Statutes, Section 469.178, Subd. 7, and is a limited obligation payable solely from Available Tax Increment pledged to the payment hereof under this resolution. This Interfund Loan and the interest hereon shall not be deemed to constitute a general obligation of the State of Minnesota or any political subdivision thereof, including, without limitation, the HRA. Neither the State of Minnesota, nor any political subdivision thereof shall be obligated to pay the principal of or interest on this Interfund Loan or other costs incident hereto except out of Available Tax Increment, and neither the full faith and credit nor the taxing power of the State of Minnesota or any political subdivision thereof is pledged to the payment of the principal of or interest on this Interfund Loan or other costs incident hereto. The HRA shall have no obligation to pay any principal amount of the Interfund Loan or accrued interest thereon, which may remain unpaid after the final Payment Date. 6. The HRA may amend the terms of this Interfund Loan at any time by resolution of the Board, including a determination to forgive the outstanding principal amount and accrued interest to the extent permissible under law. Approved by the Board on July 25, 2011. Suzanne M. Sandahl, Chair ATTEST: Joan Helmberger, Secretary AGENDA ITEM#: 8 REPORT#: 37 STAFF REPORT RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY MEETING JULY 25, 2011 REPORT PREPARED BY: KAREN BARTON, COMMUNITY DEVELOPMENT ASSISTANT DIRECTOR NAME,TITLE REPORT PRESENTER: KAREN BARTON, COMMUNITY DEVELOPMENT ASST. DIRECTOR NAME,TITLE ACTING DEPARTMENT DIRECTOR REVIEW: r _' +�_1J�%1'�`ir REVIEWED BY EXECUTIVE DIRECTOR: II �� r ail ITEM FOR HRA CONSIDERATION: Consideration of a resolution granting a business subsidy to The Cornerstone Group, in the amount not to exceed $650,000, and approval of a Spending Plan for certain tax increment financing districts located within the Richfield Redevelopment Project Area. I. RECOMMENDED ACTION: By Motion: 1) Conduct a public hearing regarding granting a business subsidy to The Cornerstone Group in an amount not to exceed $650,000; and 2) Adopt a resolution granting a business subsidy to The Cornerstone Group in an amount not to exceed $650,000 and approving a spending plan for certain tax increment financing districts located within the Richfield Redevelopment Project Area. II. BACKGROUND Due to the current economic situation, the Minnesota Legislature has passed legislation allowing for a special financing tool to stimulate development and create jobs. 07252011 Spending Plan Approval The Legislature has recognized that economic development can be promoted by utilizing the tax increment which cities have collected from a Tax Increment Finance (TIF) District that exceed the qualified costs which those districts were intended to fund. Normally, when excess tax increment is collected, a municipality is required to refund any remaining cash balances to Hennepin County. The County then reallocates the funds to the taxing jurisdictions at their local rate, resulting in Richfield receiving approximately 34% of the funds. The 2011 Omnibus Technical Tax Bill adopted by the Legislature, however, allows this money to be provided as "assistance in any form to private development consisting of the construction or substantial rehabilitation of buildings and ancillary facilities, if doing so will create or retain jobs in this state, including construction jobs, and that the construction commences before July 1, 2012 [for commercial projects or January 1, 2012 for market-rate housing projects]." It further states that, "the authority to spend tax increments under this subdivision expires December 31, 2012." Staff has identified two TIF Districts that currently have cash balances for which no other qualified costs have been identified. The first of these is a current cash balance of$200,725 in the Interchange TIF District, which contains only the Dick's Sporting Goods store. The other such district is the Lyndale Gateway TIF District which has a current cash balance of$750,720, which contains Casteel Place townhomes and Mainstreet Village. The primary reason that such a large cash balance exists in this district is because Casteel Place generates a significant amount of TIF, but the development sold so well that the "lookback provision" in the development agreement resulted in the Developer (Ron Clark) receiving very little of that increment. The Cornerstone Group (Cornerstone) is requesting a business subsidy in the amount of$650,000 to facilitate the acquisition and rehabilitation of the former Lyndale Garden Center property for redevelopment into a mixed commercial/retail/housing development. Cornerstone is currently working with a local non-profit planning agency, Local Initiatives Support Corporation (LISC), to develop an overall vision for the redevelopment through a series of public planning workshops. Cornerstone is scheduled to close on the property in early September of this year at a purchase price of$3,100,000. They have secured a loan from Hennepin County in the amount of$850,000 and are seeking additional financing of$2,100,000 through LISC. They have identified a financing gap of$1,000,000 for acquisition, substantial rehabilitation of the existing garden center building, and environmental remediation. They are seeking $650,000 from the Housing and Redevelopment Authority (HRA) to offset this gap. Providing funding to Cornerstone for this purpose as a business subsidy would be an eligible use of the excess cash balances in the Interchange and the Lyndale Gateway TIF Districts. The HRA is required to approve a written Spending Plan and adopt a resolution to access these funds and approve a business subsidy. Subsequently the City Council must hold a public hearing and adopt a resolution approving the spending plan. III. BASIS OF RECOMMENDATION A. POLICY • Minnesota Statutes, Section 469.176, Subd. 4m, (the "temporary TIF Authority Act") authorizes the HRA to spend available tax increment from any existing tax increment financing district to provide assistance in any form to private development consisting of construction or substantial rehabilitation of buildings and ancillary facilities provided: o Such assistance will create or retain jobs in the State of Minnesota, including construction jobs; o Construction commences before July 1, 2012 for private commercial development; o The construction would not have commenced before that date without the assistance; o Tax increments under the spending plan are spent by December 31, 2012; and o The City Council approves a written spending plan after conducting a duly noticed public hearing that specifically authorizes the HRA to take such actions B. CRITICAL TIMING ISSUES • Cornerstone is scheduled to close on the property on September 5, 2011. • The City Council will hold a public hearing regarding the spending plan on August 9, 2011. C. FINANCIAL • A total of$951,445 in excess tax increment has been identified and is eligible for the proposed uses. • Cornerstone is seeking $650,000 to aid in the acquisition and rehabilitation of the Lyndale Garden Center. D. LEGAL • The HRA attorney has been involved in the on-going process and has drafted the attached Resolution and Spending Plan. IV. ALTERNATIVE RECOMMENDATIONS) • Approve a different amount of assistance. • Do not approve the Spending Plan and business subsidy to Cornerstone. V. ATTACHMENTS • Resolution approving the Spending Plan and business subsidy. • Spending Plan VI. PRINCIPAL PARTIES EXPECTED AT MEETING • Representatives from The Cornerstone Group 8 RESOLUTION NO. RESOLUTION APPROVING A SPENDING PLAN FOR CERTAIN TAX INCREMENT FINANCING DISTRICTS LOCATED WITHIN THE RICHFIELD REDEVELOPMENT PROJECT AREA WHEREAS, the Housing and Redevelopment Authority in and for the City of Richfield (the "HRA")and the City of Richfield(the "City")have previously established the Interchange Tax Increment Financing District and the Lyndale Gateway Tax Increment Financing District (collectively, the "TIF Districts") within the Richfield Redevelopment Project Area and adopted tax increment financing plans therefor, pursuant to Minnesota Statutes, Sections 469.001 to 469.047, as amended, and Sections 469.174 to 469.1799, as amended; and WHEREAS, Minnesota Statutes, Section 469.176, Subd. 4m, (the "Temporary TIF Authority Act") authorizes the HRA to spend available tax increment from any existing tax increment financing district, notwithstanding any other law to the contrary, to provide improvements, loans, interest rate subsidies, or assistance in any form to private development consisting of construction or substantial rehabilitation of buildings and ancillary facilities, if the following conditions exist: (1) Such assistance will create or retain jobs in the State of Minnesota, including construction jobs; (2) Construction commences before (a) July 1, 2011, for low- and moderate-income housing developments; (b) January 1, 2012, for market rate housing developments; and (c) July 1, 2012, for all other private developments; (3) The construction would not have commenced before that date without the assistance; (4) Tax increments under the spending plan are spent by December 31, 2012; and (5) The City Council of the City approves a written spending plan after conducting a duly noticed public hearing that specifically authorizes the HRA to take such actions; and WHEREAS,the HRA proposes to adopt a spending plan for the TIF Districts in accordance with the Temporary TIF Authority Act in substantially the form submitted to the Board of the HRA (the "Spending Plan") to utilize existing tax increment revenues from the TIF Districts in order to stimulate construction or rehabilitation of private development in a way that will also create or retain jobs; and WHEREAS, the assistance authorized under the Spending Plan expressly includes, but is not limited to, assistance to The Cornerstone Group, Inc. (the "Developer"), a Minnesota corporation to finance the costs of redeveloping the Lyndale Garden Center, located at 6400 Lyndale Avenue South in the City, which costs shall include the acquisition of the property, the remediation of environmental contaminants and the substantial rehabilitation of the existing building so that it is suitable for commercial use; and WHEREAS, the HRA Board has on this date held a public hearing regarding the business subsidy provided under the Spending Plan, pursuant to Minnesota Statutes, Sections 116J.993 to 1161995 (the "Business Subsidy Act");and g -a WHEREAS, on August 9,2011,the City Council of the City will hold a public hearing regarding the Spending Plan, for which notice was published in a newspaper of general circulation in the City at least once, not less than ten days nor more than 30 days prior to the hearing, and at which hearing all persons will be given the opportunity to be heard; and NOW, THEREFORE, BE IT RESOLVED, by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota as follows: 1. The Spending Plan is hereby approved in substantially the form on file in City Hall. 2. The HRA makes all the findings set forth in the Spending Plan, which are incorporated herein by reference. 3. Following the public hearing and approval of the Spending Plan by the City Council of the City, HRA staff and consultants are hereby authorized to take actions necessary to carry out the terms of the Spending Plan. 4. The HRA hereby approves a business subsidy of up to $650,000 to the Developer as described in the Spending Plan, contingent on the HRA and Developer entering into an agreement regarding the terms and conditions of such business subsidy which is mutually agreeable to both parties. 5. At its meeting on August 15, 2011, the HRA will consider approving an agreement with the Developer providing for assistance to the Developer under the Spending Plan. Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this 25th day of July, 2011. Suzanne M. Sandahl, Chair ATTEST: Joan Helmberger, Secretary RC125-316(JAE) 388011v4 2 8-3 HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD,MINNESOTA SPENDING PLAN FOR INTERCHANGE TAX INCREMENT FINANCING DISTRICT AND LYNDALE GATEWAY TAX INCREMENT FINANCING DISTRICT (TEMPORARY TIF AUTHORITY UNDER MINN. STATS.,SECTION 469.176, SUBD. 4M) ADOPTED BY THE BOARD OF COMMISSIONERS OF THE HRA JULY 25,2011 ADOPTED BY THE CITY COUNCIL OF THE CITY AUGUST 9,2011 - � SPENDING PLAN FOR INTERCHANGE TAX INCREMENT FINANCING DISTRICT AND LYNDALE GATEWAY TAX INCREMENT FINANCING DISTRICT (TEMPORARY TIF AUTHORITY UNDER MINN. STATS.,SECTION 469.176,SUED. 4M) I. PURPOSE The Housing and Redevelopment Authority in and for the City of Richfield, Minnesota (the "HRA") proposes to adopt a spending plan (the "Spending Plan") for certain tax increment financing districts as described in Exhibit A attached hereto (collectively, the "TIF Districts") within the Richfield Redevelopment Project Area in accordance with Minnesota Statutes, Section 469.176, Subd. 4m (the "Temporary TIF Authority Act"). Under the Temporary TIF Authority Act, the HRA is authorized to spend available tax increment from any existing tax increment financing district, notwithstanding any other law to the contrary, to provide improvements, loans, interest rate subsidies, or assistance in any form to private development consisting of construction or substantial rehabilitation of buildings and ancillary facilities, if the following conditions exist: (a) Such assistance will create or retain jobs in the State of Minnesota, including construction jobs; (b) Construction commences before (a) July 1, 2011, for low- and moderate-income housing developments; (b) January 1, 2012, for market rate housing developments; and (c) July 1, 2012, for all other private developments; (c) The construction would not have commenced before that date without the assistance; (d) The City Council approves a written spending plan (after a duly noticed public hearing) that specifically authorizes the HRA to take such actions; and (e) The tax increments authorized under the Spending Plan are spent by December 31, 2012 (or in the case of market rate housing are spent by July 31, 2012, or in the case of low/moderate income housing are spent by December 31, 2011). The HRA has determined to authorize expenditures of tax increment from the TIF Districts under the Temporary TIF Authority Act as further described in this Spending Plan. II. SPENDING PLAN The HRA is authorized as follows: (a) The Authority may use any available tax increments from the TIF Districts received through December 31, 2012 and not otherwise pledged to any outstanding contract or obligation (referred to as "Available Spending Plan Increment") to provide improvements, loans, interest rate subsidies, or assistance in any form to private development occurring anywhere within the City of Richfield, Minnesota(the"City"),that meets the requirements of the Temporary TIF Authority Act described above (subject to the separate time limits for any housing developments). 1 S (b) The assistance authorized under this Spending Plan expressly includes, but is not limited to, assistance to The Cornerstone Group, Inc., a Minnesota corporation (the "Developer"), in the amount of not more than $650,000 to finance the acquisition and redevelopment of the Lyndale Garden Center, located at 6400 Lyndale Avenue South in the City. The redevelopment of the Lyndale Garden Center will include acquisition of the property, the remediation of environmental contaminants and the substantial rehabilitation of the existing building so that it is suitable for commercial use (the "Improvements"). In connection with such assistance,the City expressly finds that: 1. The Improvements will create or retain at least 25 new full-time equivalent construction jobs at the Lyndale Garden Center site(representing jobs that would not otherwise exist elsewhere in Minnesota, or would not be retained in Minnesota), based on estimates provided by the Developer. 2. The Developer will be required to commence construction of the Improvements by no later than July 1, 2012. The Improvements would not be commenced before July 1, 2012 without the assistance under this Spending Plan. The Developer would not have sufficient funds to acquire the property and complete the necessary remediation of environmental contaminants and the substantial rehabilitation of the existing building without the assistance provided pursuant to this Spending Plan. (c) In addition to the assistance for the Improvements described above, the HRA is authorized to spend Available Spending Plan Increment for any other private development in the City for which the HRA finds that the private development will create or retain jobs in the State (including construction jobs); that the private development will commence before the required date (depending on the type of development); and that such construction would not have commenced before the required date without the assistance under this Spending Plan. The HRA must document its findings under this section at the time of approval of assistance to each development. (d) In accordance with the Temporary TIF Authority Act, the HRA may implement this Spending Plan by making an equity or similar investment in a corporation, partnership or limited liability company that the HRA determines is necessary to make construction that meets the requirements of paragraph(c)financially feasible. (e) This Spending Plan authorizes, but does not obligate, the HRA to spend Available Spending Plan Increment. Any obligation to provide assistance under this Spending Plan must be evidenced by a contact approved by the Board of Commissioners of the HRA, entered into with a private party who otherwise meets the requirements of this Spending Plan and the Temporary TIF Authority Act. (f) In accordance with the Temporary TIF Authority Act, the authority to spend Available Spending Plan Increment under this Spending Plan expires on December 31, 2012 (subject to the earlier expiration dates for market rate and low/moderate income housing referenced above). No Available Spending Plan Increment may be spent under this Spending Plan after December 31, 2012 unless such expenditure is otherwise authorized by law without regard to the Temporary TIF Authority Act. (g) The City and the HRA acknowledge that assistance provided pursuant to this Spending Plan will be subject to Minnesota Statutes, Sections 116J.993 to 1167.995 (the "Business Subsidy Act"), unless the assistance provided to a specified recipient is exempt from the Business Subsidy Act under the terms of that statute. 2 S - (o (h) The City and the HRA may amend this Spending Plan at any time in accordance with the procedures for approval of the Spending Plan under the Temporary TIF Authority Act. (i) HRA staff are authorized and directed to maintain a copy of this Spending Plan with the HRA's records for the TIF Districts, and to file a copy of the Spending Plan with the Office of the State Auditor(as requested by the State Auditor in the August, 2010 TIF Division Newsletter). (Remainder of page intentionally left blank.) 3 '8 -7 EXHIBIT A LIST OF TAX INCREMENT FINANCING DISTRICTS The following tax increment financing districts located within the Richfield Redevelopment Project Area are defined as the "Tax Increment Financing Districts" in the Spending Plan to which this Exhibit A is attached: Interchange Tax Increment Financing District Lyndale Gateway Tax Increment Financing District II RC125-316(JAE) 388009v.3 A-1