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112601 EDAOfficial File Copy CITY OF NEW HOPE EDA MEETING City Hall, 4401 Xylon Avenue North November.. 26, 2001 President W. Peter Enck Commissioner Sharon Cassen Commissioner Don Collier Commissioner Mary Gwin-Lenth Commissioner Pat LaVine Norby 1. Call to Order 2. Roll Call 3. Approval of Regular Meeting Minutes of August 27, 2001 4. Discussion Regarding Redevelopment/Rehabilitation Project at 7610 Bass Lake Road (Improvement Project No. 707) 5. Motion Approving Minor Revision to Section 8 Administrative Services Contract Between the Metropolitan Council and City of New Hope 6. Adjournment CITY OF NEW HOPE 4401 XYLON AVENUE NORTH NEW HOPE, MINNESOTA 55428 Approved EDA Minutes Regular Meeting AuguSt 27, 2001 City Hall CALL TO ORDER ROLL CALL APPROVE MINUTES OPPORTUNITY PARTNERS Item 4 New Hope EDA Page 1 President Enck called the meeting of the Economic Development Authority to order at 7:16 p.m. Present: W. Peter Enck, President Sharon Cassen, Commissioner Don Collier, Commissioner Mary Gwin-Lenth, Commissioner Pat LaVine Norby, Commissioner Motion was made by Commissioner Gwin-Lenth, seconded by Commissioner Collier, to approve the Regular Meeting Minutes of July 23, 2001. All present voted in favor. Motion carried. President Enck introduced for discussion Item 4, Discussion Regarding PILOT Agreement with Opportunity Parmers. Mr. Dan Donahue, City Manager, explained that Opportunity Parmers is a Minnesota nonprofit operation that owns and operates 17 group homes in Hennepin County for mentally and physically disabled persons. One of the homes is located in the City of New Hope at 2705 Ensign Avenue North. The company originally purchased the group homes with conventional bank financing and secured the various homes with mortgages. Opportunity Partners has requested that the Hennepin County Housing and Redevelopment Authority (HRA) issue its tax exempt revenue bonds and loan the proceeds of such bonds to the borrower so that the outstanding mortgage loans may be consolidated into a single loan and to refinance the debt on a tax exempt basis. Minnesota Statutes state that the Hennepin County HRA may exercise powers of a housing and redevelopment authority within the territorial boundaries of the County. The statutes also provide that before the County HRA may participate in a project that lies within a territory governed by a separate municipal HRA, the Heunepin County HRA must notify and obtain the consent of the municipal HRA to its activities within such territory. The New Hope Economic Development Authority, which has the powers of a housing and redevelopment authority, was requested to approve a resolution supporting this action. Mr. Donahue stated at its July 23 EDA Meeting, the EDA adopted a resolution consenting to £mancing of a project by Hennepin County HRA subject to the inclusion of a PILOT agreement. He stated Opportunity Partners desires to negotiate the PILOT payment. Staff estimates that the amount of city taxes payable for 2002 is approximately $700. Opportunity Parmers has proposed an amount of $385 for the police and fire portion of the city tax base. President Enck expressed the need to create a standard policy for these type of request made by tax-exempt properties. He pointed out that city services such as street maintenance, park and recreation, police, and fu:e services are provided to all properties, and the city relies on payment of property taxes to fund city services. August 27, 2001 MOTION Item 4 New Hope EDA Page 2 Commissioner Gwin-Lenth expressed concern regarding setting a precedent. President Enck noted the EDA's action should not set a precedent. The EDA acknowledged the need for group home operations and the valuable service they provide to the community. It was also noted that non-profit organizations must be responsible and pay their fair share of city taxes. Mr. Jon Thompsonl President of Opportunity Parmers, was recognized. President Enck commented on the August 15 letter from Jon Thompson that indicated for the six months ending June 30, there was a room and board loss of $782. Mr. Thompson clarified that this was an overall loss, not a loss at the New Hope facility. President Enck noted the New Hope home has not yet incurred any vacancies. He questioned the means to maintain properties if there are substantial vacancies resulting in great fmancial loss. Mr. Thompson stated Oppommity Partners has entered negotiations with Hennepin County for potential changes in other homes which are incurring fairly large losses. He noted if they are successful, it will assist in a financial allocation across all 14 homes in Hennepin County. He also pointed out that the refmancing will result in an improved cash flow. Mr. Thompson stated if they cannot raise money to make up the financial shortfall, it is possible that they would need to close a home. He pointed out that they have not closed homes previously, but it has been done by other providers. He also noted that they would try to achieve other operating efficiencies. Mr. Thompson stated the first option to change the interest rate on the bond comes up in seven years, and they have the option to pay off a percentage of homes each year. He stated it could be possible that parents could purchase a home for their child/children. Mr. Thompson explained the program rates and budget calculations. He also pointed out that any past increases made by the legislature have restrictions on their usage. He stated fundraising accounts for a large portion of revenue. Commissioner Collier questioned the building depreciation calculations outlined in the financial report. Mr. Thompson stated the depreciation category is for the principal (mortgage payment) and property maintenance. Discussion ensued regarding the other participating cities. Mr. Thompson stated the cities of Plymouth, Richfield, Bloomington have approved the tax exempt bond issue without a PILOT payment. He noted Crystal may be requiring a PILOT similar to New Hope and Elk River has requested a one-time fee to cover legal expenses. Commissioner Norby reported of her intent to abstain fi.om the vote as one Opportunity Parmers property in Elk River was named after father. Commissioner Collier pointed out that this financing vehicle will allow Opportunity Parmers to achieve a better interest rate. He noted the situation will likely change as conditions change (interest rates); and a re-negotiation would be beneficial so that Opportunity Partners could update the EDA on several factors concerning the property. Motion was made by Commissioner Cassen, seconded by Commissioner Collier, to establish a PILOT for the life of the bonds and set the payment at $500/year for the first seven years. Prior to expiration of the seventh year, Opportunity August 27, 2001 ADJOURNMENT Partners must address the New Hope EDA to re-negotiate the PILOT. Voting in favor: Enck, Cassen, Collier, Gwin-Lenth; Abstained: Norby; Absent: None. Motion carried. Mr. Thompson agreed to the conditions. He questioned whether the EDA would release the PILOT in less than seven years if substantial legislative changes take place or if the property is removed fi.om the bond issue. It was noted that the PILOT agreement would cease if the bonds are paid off early or if the 2705 Ensign property is removed fi.om the financing package. Commissioner Collier advised Mr. Thompson that if circumstances drastically change during the seven-year period, Opportunity Partners can re-address the EDA to request an amendment to the agreement. Mr. Steve Sondrall, City Attorney, indicated he will draft an agreement to incorporate the EDA's intent. The EDA thanked Mr. Thompson for his patience during the negotiations. Motion was made by Commissioner Collier, seconded by Commissioner Cassen, to adjourn the meeting. All present voted in favor. Motion carried. The New Hope EDA adjourned at 8:05 p.m. Respectfully submitted, Valerie Leone City Clerk New Hope EDA Page 3 August 27, 2001 EDA REQUEST FOR ACTION Originating Department Approved for Agenda Agenda Section Community Development ~ 11-26-01 EDA Item No. By: Kirk McDonald, Director of / / Community Development // 4 / DISCUSSION REGARDING REDEVELOPMENT/REHABILITATION PROJECT AT 7610 BASS LAKE ROAD (?ROJ~.CT NO. 707) ACTION REQUESTED Staff requests to update the Council on a proposal for the redevelopment/rehabilitation of the l 1-unit apartment complex at 7610 Bass Lake Road in conjunction with Project for Pride in Living (PPL), the Northwest Community Revitalization Corporation (NCRC) and several other funding agencies. Representatives from PPL and NCRC will be in attendance to answer questions. The project was last discussed at a Council work session on September 17, and at that time the majority of the Council supported EDA funding for the project and directed staff to request input from the Livable Communities Task Force on the project. The purpose of this update is to discuss project modifications and the current status of the project. Staff encourages the Council to strongly consider continued participation in this project, as this property has been identified as one of the top priorities for rehabilitation in the Comprehensive Plan, the site is located within the Livable Communities Grant study area, funding has been committed from other agencies to this project and the City has a successful record in working with PPL on other similar projects. POLICY/PAST PRACTICE City goal #2 is to pursue the maintenance and redevelopment of commercial and residential properties within the City. The City Council has been addressing the residential portion of this goal through the City's many housing activities, including partnering with different agencies and organizations on housing projects. In the past, the City has participated in similar collaborations, most recently with the Bass Lake Court Townhomes project. As the Council is aware, projects of this size require a variety of funding partners and usually require the expertise of an experienced development agency, such as PPL. This property has been identified in the Comprehensive Plan for redevelopment or rehabilitation and it is also identified in the Livable Communities Grant study area. BACKGROUND In 1999, the Northwest Community Revitalization Corporation, (NCRC) Community Housing Development Corporation (CHDO) and PPL approached the City and inquired about multiple-family properties in need of rehabilitation for a potential collaborative proiect. Staff had identified the 7610 Bass Lake Road property as a Request for Action Page 2 11-26-01 high priority. Also, the City's previous attempts to coordinate an apartment rehabilitation project with the owners have been unsuccessful. At the June 25 EDA meeting, the EDA requested that staff investigate additional financing options for the project. At the September 17 Council work session, staff and representatives from PPL and NCRC presented additional financial and rehabilitation options to the Council. At the work session, the majority of the Council voted to approve the rehabilitation project contingent on decreasing the City's contribution to $218,000 with the addition of a fourth MHOP unit and obtaining Livable Community Task Force input on the project. Also, the Council elected to contribute $5,000 for playground equipment on the site. PPL ensured the Council that an additional $5,000 could be raised to match the City's contribution for playground equipment. $78,000 of the City's contribution would be from CDBG funds, the remaining $145,000 would be a no interest loan to the project with EDA funds with payment deferred for 30 years. At the end of the 30 years, the City could collect payment on the $145,000 or opt to continue to defer payment as long as the property continued as affordable housing, thus insuring affordability in perpetuity. This is the mechanism that was used on the Bass Lake Court Townhome project. On October 2, staff presented this rehabilitation proposal to the Livable Communities Task Force. Staff prepared an information packet for the Task Force, gave a short presentation on the project and requested that the Task Force review the proposal and provide written input on the project at the following meeting. The overwhelming input and direction from the Task Force was to proceed with the project. Attached, please find a summary of comments received from the October 25 Livable Communities Task Force meeting. Now that the amounts and sources of city financing have been determined and input has been received from the Livable Communities Task Force, staff requests to discuss other remaining issues and the next project steps with the EDA. Potential Eminent Domain: PPL and NCRC have recently informed the City that one of the owners of 7610 Bass Lake Road are now unwilling to sell the property. Due to the importance of the project, positive community input and secured financing partners, staff is requesting that the Council consider condemnation procedures on the property. George Garnett, Executive Director of the NCRC has submitted a letter regarding this condemnation request, which states that the City's financial commitment to the project would not increase due to condemnation. Also, Mr. Garnett's letter states that relocation costs are currently adequately funded in the project budget and would not be impacted by condemnation. Also, the City Attorney has provided correspondence indicating that there is legal basis to show blight and public purpose for this action. If the EDA is willing to consider condemnation of this property, staff will prepare a resolution in support of condemnation and bring the resolution back to the EDA at a future meeting for consideration. · Development Agreement: If the EDA is supportive of condemnation, staff will begin to prepare a development agreement and other necessary agreements for this project. PROJECT DESCRIPTION The following project description has been provided by PPL: PROPOSAL The project consists of the renovation of the 11-unit apartment building at 7610 Bass Lake Road in New Hope. The building contains six 2-bedroom apartments and five 1-bedroom apartments. DEVELOPERS The development partners are Project for Pride in Living (PPL) and Northwest Community Revitalization Corporation (NCRC). Request for Action Page 3 11-26-01 PPL is a nonprofit community development corporation, which has 27 years of experience rehabilitating and building new housing. PPL has built over 900 units and owns and manages over 500 units in the Metro Area, including 34 in New Hope. PPL's property management division maintains PPL's long-term commitment to the community, providing professional services and access to support for residents who need it. PPL also developed and now manages over 50,000 square fe~t of commercial space and operates four businesses, which provides job training for hard-to-employ adults. NCRC is a regionally focused nonprofit community development corporation providing affordable housing for Iow- and moderate-income residents of the northwest metro area. For the past five years, NCRC has been developing and providing financing for the redevelopment of over 30 units of scattered site housing. The corporation represents a unique collaboration of six cities including Brooklyn Center, Brooklyn Park, Crystal, Maple Grove, New Hope and Robbinsdale. WHAT IS PROPOSED? The plans entail the exterior and interior renovation of the existing apartment building. The building exterior will be completely renovated, including painting, the repair or replacement of the soffits and fascia, the provision of a new roof, gutters and downspouts as necessary, spot tuckpointing and brick repair, and the repair or replacement of the windows. The landscaping will be improved, the drive expanded and resurfaced, the walkways repaired, and garages added for each unit. The interior work will include updating the existing units in their present configuration. New cabinets, counters and appliances will be provided in the kitchens. The plumbing and electrical will be updated. A new water heater will be provided and the existing boiler will be inspected and replaced, if necessary. The walls will be repaired and painted and new carpet will be installed throughout. The monthly rent for the units will vary from $555 to $710 depending on unit size. At a minimum, nine of the units would be rented to families earning less than 50% of the area median (e.g. $37,000 for a family of four). Three of the units would have rents subsidized for lower income families. Two of those three units would be reserved for residents on the Minneapolis Public Housing waiting list and the other one (and any of the two not filled by people on the first list) would be used for New Hope residents. PPL currently has an on-site management office at our other property less than two blocks from the proposed site. A full-time site manager lives and is employed there. All prospective tenants will be carefully screened: each must have a good rental history, adequate income to afford the rent, and no criminal background. FINANCING The total cost of this development is approximately $1.32 million. The financing is proposed to be a combination of a traditional bank mortgage, investments from the City of New Hope and Hennepin County HOME and AHIF funds. The three affordable units are paid for by the Metropolitan Housing Opportunities Program (MHOP), which was created to increase the supply of rental housing outside of the central cities. The attached Development Proforma shows a $223,000.00 contribution from the New Hope EDA including approximately $78,000 from CDBG and a $5,000 contribution from New Hope that has been added to the project for playground equipment, which PPL intends to match with $5,000 from an unidentified source. TIMELINE Acquire properties, design new units and rehab work, secure financing Neighborhood, City and Planning Commission review Finish purchase of all property Start rehabilitation and construction Complete construction February 2000 - February 2002 February 2000 - March 2002 February 2002 May 2002 January 2003 Request for Action Page 4 11-26-01 - CURRENT RENTERS The work is intended to be performed without substantial displacement of the existing residents. If existing residents have incomes above 50% of median, they will receive assistance in finding a new place to live and help with the moving expenses. Tenants wishing to remain in the rehabbed units would be welcome to do so provided they meet PPL's screening requirements~ ADVANTAGES TO THE COMMUNITY This development will provide reinvestment in the area's aging housing stock by an owner committed to maintenance and a long-term relationship with the community. The improved appearance and stability of the new and rehabbed units will add to the surrounding area's value and livability. These units will provide an opportunity for young families or single parents to stay in this community or become part of it. This development represents the next step in PPL and NCRC's continued commitment to the strength and stability of New Hope. A preliminary site plan and proposed scope of work is attached. SITE CONTROL Currently the owners are unwilling to sell. PPL has been attempting to purchase the property for many months. After initial offers, the owners, Engelking and Norbert, received a $520,000 offer to purchase this property. Despite the fact that they had verbally agreed to PPL's previous offer of $450,000, they felt entitled to a higher sales price. PPL agreed to increase their offer to $470,000. The owners agreed to this provided that closing could occur by January 31, 2002, that PPL would cooperate in a 1031 exchange, and that the City would agree to a friendly condemnation. PPL agreed to its part of these conditions contingent on receiving acceptable financing, which has happened, but now the owners have declined the sale. FACTORS IN PER UNIT DEVELOPMENT COST Please see the following per unit development cost factors: High Acquisition Costs: The acquisition of property in a fully developed area such as New Hope is high almost regardless of the condition of the property. An MHFA study done in 2000 shows the development costs in urban areas to be as much as 80 to 100% higher than costs in an undeveloped area. This tendency is exacerbated by Iow vacancy rates in the last several years which have increased the values of existing rental properties. The acquisition costs for this project will be around $43,000 per unit. High Construction Costs: Recent increases in construction costs (20 to 40% in the last few years) have been the single largest factor in the higher cost of development. Renovation prices have been particularly affected due in part to more stringent environmental regulations. Quantity and Quality of Renovation: PPL would completely rehab the existing building to a high standard of quality. All of the deferred maintenance items would be treated and the units would be completely updated. It is unlikely that a private owner would make this level of investment in the building, since, for the foreseeable future, it can be rented in its present state. As mentioned before, PPL is completely willing to discuss the proposed scope of renovation provided we will have sufficient reserves or other means of future reinvestment in the building. The construction and acquisition costs account for over 80% of the project costs. High Initial Investment to Insure Long-term Affordability: By making a larger than normal initial investment, the property has a much lower debt load and is therefore able to maintain a Iow rent structure. · Project Size and Complexity: Despite being relatively small (only 11 units), this project retains all of the complexity of a larger project with none of the economies of scale. Request for Action Page 5 11-26-01 DEVELOPER FEE The developer's role includes the following: Acquisition of the property: Identifying and researching a potential property, negotiating with the current owner(s), assembling the site, preparation of purchase agreements and other legal documents, investigating environmental issues and their mitigation, closing on the property. To date, this process has taken over a year and a half on this project and has involved a substantial amount of PPL's time, consultant's time, and legal expenses. Structuring the project financing: Preparing and updating the project budget, identifying potential sources of funding, preparing funding applications, coordinating the requirements of the various funders, preparing documents for closing, providing for project's ultimate financial and legal structure, closing on finances, monitoring the project finances during construction, closing out the construction financing, transitioning to permanent financing, coordinating the cost certification, project income, and taxes. To date, PPL has set up and updated the budget, making major changes when the Crystal project was separated. PPL has also completed five separate funding applications. (The cost of preparation for an application by a consultant is $5,000 to 8,000. The application fees alone were almost $2,000.) Assuming that the applications PPL currently has are approved, then about 25% of this portion of the project is finished. General project management: Selecting, hiring, and coordinating the work of the architectural and engineering consultants, obtaining necessary regulatory and governmental approvals, providing for the legal and insurance requirements of the project, soliciting and incorporating neighborhood or citizen input into the project, managing the property during construction including coordination of work with residents, scheduling and coordinating all activities and consultants. The bulk of this work occurs following the set up of the project's financing. PPL has, to date, inspected the property several times, provided for schematic design of garage location, consulted with environmental engineer, and had several discussions about the project with the City. Marketing: As units become available, advertising the property in accordance with fair housing standards, selecting and screening rental applicants, insuring that income and other requirements are met, coordinating tenant referrals with the MPHA/Met Council. Standard market rates for unit leasing without the additional compliance work required by the funding institutions would be a minimum of a month's rent, a total of about $7,000 on this project. Construction management: Selecting, hiring, and coordinating the work of the General Contractor, monitoring the progress of the work, authorizing and coordinating pay requests, deciding on alterations to the work, choosing materials and finishes, monitoring the project contingency, preparing the punch list, coordinating inspections of various funding entities, and finalizing unit turn over. The architect will also be involved in this process in essentially a parallel capacity. His/her fee for that involvement will be $7,500 for this project. Assumption of project risks: Bearing costs associated with a project not proceeding (as in the case of the Crystal project on 56th), covering costs discovered during the planning and construction phases over and above the contingency (e.g. soil corrections on the Bass Lake project), covering the cost of unforeseen or estimated items (such as condemnation and relocation costs of the gas station on the Bass Lake project), allowing for typical real estate ownership risks such as vacancy, unit damage by tenants, and the like, and, lastly, covering costs associated with project delays due to weather, nonperformance by members of the project team, etc. As PPL has mentioned before, a private developer would probably charge in the range of 15 to 20% of the total project costs. PPL's fees would total about 9%, with 10% of that being recycled back into the NCRC. Request for Action Page 6 11-26-01 FINANCING OPTIONS FOR THE CITY The Council supported the addition of a fourth MHOP unit decreasing the City's contribution by $120,000, from $338,000.00 to $218,000 as a deferred loan. Please see the following financing option decided upon by the Council at the September 17 work session: Deferred loan of approximately $223,000. As originally proposed, this would be a no interest loan to the project with payment deferred for 30 years. $78,000 of the City's contribution would be from CDBG funds, the remaining $145,000 would be a no interest loan to the project with payment deferred for 30 years. At the end of the 30 years, the City could collect payment or opt to continue to defer payment as long as the property continued as affordable housing, thus insuring affordability in perpetuity. This is the mechanism that was used on the Bass Lake project. · Increased funding from other sources. The number of MHOP units has been increased from three to four. This has increased MPHA's share of the project by approximately $120,000. FUNDING This property is currently not located in an area where TIF funds can be expended, therefore, EDA funds would need to be used for the New Hope portion of the project in conjunction with $77,992 in CDBG funds that are programmed for multiple family rehabilitation. Another option would be to add this property to the area where TIF funds can be expended. ATTACHMENTS · NCRC Condemnation Request Letter · Livable Communties Task Force Input · Location Map · City Attorney Correspondence · Project Modification Letter, Dated 8/19/01 · Project Description · Development Proforma · Scope of Work · Site Plan · Agency Description · Livable Communities Maps · Comprehensive Plan Goals · February 28, 2000, EDA Minutes · June 25, 2001, EDA Minutes · September 17, Council Work Session Minutes · Hennepin County2001 Valuation November 16m, 2001 Mr. Dan Donahuc City Mana/er City of New Hope 4401 X¥Ion Ave. N New Hope. MN. $$428 Re: 7610 Bass Lake Rd Dear Mr. Donahue, I am writing this letter to update you on the current status of this project, and to solicit your support in the use ofthe City's powers of eminent dom~iu to facilitate this project. As you know we have made substantial progress on this project over the last two years. Since the City of New Hope identified this property as a top priority for revitalization, we have worked diligently to' obtain fumding and negotiate an acceptable acquisition price with the current owners. As you are aware, the current owners have shown no interest in working with the city on improving their property, despite generous financ'mg terms offered by the city. Together, we have put together a v/able financing approach wh/ch includes a $223,000 from the City of New Hope, $350,000 of Hennepin County HOME funds, and four MHOP units mounting to a $469,000 investment. The City's commitment is generous, and will not increase as a part of this project. Our project includes the implementation of a playground at your request. The project has' included aslgnlficant' financial commitment to relocation, which is adequate to meet the projects needs. Unfortunately, despite verbal commitments from the owners, we now find ourselves unable to complete an acceptable purchase agreement. Wc am therefore requesting that thc City Council approve the use of eminent domain. Wc have consulted with your City attorney, and he is confident there is a legal basis to show bli/ht and a clear public purpose for this action. It is also clear that this action in no way affects our obligations and costs for relocation, since those requirements are tied to the financing. As I have already noted, this cost is funded in our current budget. If we arc unable to proceed with acquisition at this time, the likely outcome is the loss of finm~cing and the collapse of the project. New Hope will have to continue to struggle with a blighting influence in the center of an important strategic redevelopment area for thc city. NorfJn~l. C, mnm~nity R~vltallr.~fim (~rlmmthm R 0. P,~ ~818~ Cr?~d M~.."~8 "R. ob.ilding neighborhoods one ho.st: al. a timn.' Please feel free to contact me at (612) 940-2785 if you require additional infommfon, Executive Director Northwest Cornmul~Jty Revitalization Corporation 2 Comments re.qardin.q 7610 Bass Lake Road From October 25th Livable Communities Meetinq · Be careful with the visual effects of garages. · No due to cost and current planning. Would like to fit this in to the other development. N.H. budget and school referendum will increase taxes. There is a willing buyer that doesn't require taxpayer funds. · I think it was a good idea, go for it. · If it stays on tax roll, go for it. Nice looking building. · As long as the property pays taxes and keeps it up, will be fine. · Move forward. · I honestly didn't have time to drive by. My recollection of it is that it is old enough I would scratch it and use it for redevelopment. · Property needs improved landscaping, total makeover, and parking lot needs work, add garages to the back of lot. · I approve of proceeding ahead with PPL development. · Approve the upgrade plan. · Replace it. · Move forward, a good collaborative opportunity for the City. · Let PPL proceed, · Renovate it; rent needs to be higher to get better families. · Good project as planned. · Replace it. · Good property for PPL to redo. · It needs some upgrading. · I think it is worth investing into, garages done right would make sense. · It needs to be upgraded, seems to be rundown. · Metro/State/County revenue still is tax money we strive like hell to create. ~ - CATHOLIC / ?~..~ CHURCH = I=1~ N P ~ 255T~ ~ i 5427 ~2 '~ 7~ ~ ST ~H~L - 5444 54:57 543~ ~ 54~B 5429 5426 5427 5~14 541~ 541~ 54.13 B3,,30 ~,317 ~324 53131 11/20/01 11:57 FAX 7534955193 JF.,NSEN & SON'DP, ALL, PA * NEW ROPE CH ~002 o~ cou~s;. JENSEN & SONDRALL, P.A. ,;4 tto/'/f~ At L4~34~ ~Z5 EDINB.ROOK ~ilOSSDI'G, STE. 201 Bj~OOra.vlq P~K, ~OTA 55443-1968 TEI. EPHONE ('763) 424-8811 · TELEFAX (763) 493~193 Nowmber 20, 2001 Kirk McDonald Community Development Dir~or City of New Hope 440I Xylon Avenue North Nw, v Hope, MN 55428 7610 Bass Lake Road Project Our File: 99.11166 This letmr will confirm the outcome of our Nov~nb=r 9~ m~ting with the representatives of PPL and George Garn~t rq~xiing the proposed project for 7610 Bass Lake Rea& We were advised by PPL their negotinfions with the property owner to acquire the property had staliccL Basically, thc propea~y owner indicated they no lon~er wished to sell the property. A~ a result, we discussed the possibility of the City's intervention on behalf of PPL to acquire the property by F. mlnent Domain. Since Rte rehab of this property is suppor~d by the Livable Communities Tnsk Force, the property is in an extremely blighU~i condition and the PPL project would create 4 additional MHOP units withi~ the City, it is my opinion we could justify a public purpose for the taking m support a condemnntion action to ac~aire tkis ~ working in pnrmership with PPL. However, this would require payment of relegation benofits to any tenants displaced by the oondemuafion- Therefore, I would strongly recommend we employ a relocation specialist for an opinion on the costs associated with relocation before we begin any condemnation action to acquire the property. Also, I do not recommend a 'Quick-Take" procedure if the City does decide to participate with PPL on this project. If we decide to go forward on this project, our next stop would bo to adopt a re. solution anthori=inS condemnation/f acquisition by direr negotiation is not successful. We should also prepare a d~v~lopment agreeanent with PPL indicating our re.v~otive responsibilities and cost shnrin& oblisations. This would be similar to the agreement we entered with PPL on the Spur station condemnation and ultimate housing development. Contact mo if you have any other questions about this matter. Very 1:rely yours, S~n A. Sondmll, City Attorney, City of New Hope j~ & 80nm. t,r~ P.A. PROJI~CT FOR PRIDE IN LIVING, INC. Housing and Development 1925 Chicago Avenue South Minneapolis, MN 55404-1904 Telephone (612) 874-8512 FAX (612) 872-8995 August 19. 2001 Ken Doresky City of New Hope 4401 Xvlon Ave. N. New Hope, Minnesota 55428 Dear Ken: At our meeting on July 17th, yOU asked me to research and expand upon a few items that had not been fully explored in our project discussions to date. In particular, the CiLv was interested in 1) the current state of site control, 2) the factors determining the high unit cost for the project, 3) a breakdown of the costs related to the developer fee, and 4) the exploration of several financing options. Site Control: The currem owners, Engelking and Norbert, have recently received a $520,000 offer to purchase this property. They faxed this offer to me. Despite the fact that they had verbally agreed to our previous offer of $450,000, the~' felt entitled to a higher sales price. We agreed to increase our offer to $470,000. They agreed to this provided that we could close by January 31, 2002, that we would cooperate in a 1031 exchange, and that the City would agree to a friendly condemnation. (Of course, I told them that I couldn't speak for the City, but that I felt that the City might be favorably disposed to condemnation, per your and my conversation.) For our part, we agreed to these conditions contingent on receiving acceptable financing, so if things don't come together from a funding perspective, PPL will not be obligated to purchase the property and it could be sold to this other investor. Our attorney is currently putting together an amendment to the contract which reflects these changes. Since the current owners are motivated, we feel that we can get everything signed within a week or two at most. Factors in Per Unit Development Cost: High Acquisition Costs: The acquisition of property in a fully developed area such as New Hope is high almost regardless of the condition of the property. An MHFA study done in 2000 shows the.development Costs in urban areas to be as .much as 80 to 100% higher than costs in an undeveloped area. This tendency is exacerbated by low vacancy rates in the last several years which have increased the values of existing rental properties. The acquisition costs for this project will be around $43,000 per unit. Give me a fish and I eat for a day; teach me to fish and I eat for a lifetime. High Construction Costs: Recent increases in construction costs (20 to 40% in the last few years} have been the single largest factor in the higher cost of development. Renovation prices have. been particularly affcctcd due in part to more stringent environmental regulations. Quantity and Quality of Renovation: PPL would completely rehab the existing building to a high standard of quality. All of the deferred maintenance items would be treated and the units would be completely updated. It is unlikely that a private owner would make this level of investment in the building, since, for the foreseeable future, it can be rented in its present state. As mentioned before. PPL is completely willing to discuss the proposed scope of renovation provided we will have sufficient reserves or other means of future reinvestment in the building. The construction and acquisition costs account for over 80% of the project costs. High Initial Investment to Insure Long-term Affordability: By making a larger than normal initial investment, the property has a much lower debt load and is .therefore able to maintain a low rent structure. o Project Size and Complexity: Despite being relatively small (only 11 units), this project retains all of the complexity of a larger project with none of the economies of scale. Developer Fee: The developer's role includes the following: 1. Acquisition of the property: Identifying and researching a potential property, negotiating with the current owner(s), assembling the site, preparation of purchase agreements and other legal documents, investigating environmental issues and their mitigation, closing on the property. To date, this process has taken over a year and a half on this project and has involved a substantial amount of PPL's time, our consultant's time, and legal expenses. 2. Structuring the project financing: Preparing and updating the project budget, identifying potential sources of funding, preparing funding applications, coordinating the requirements of the various funders, preparing documents for closing, providing for project's ultimate financial and legal structure, closing on finances, monitoring the project finances during construction, closing out the construction financing, transitioning to permanent financing, coordinating the cost certification, project income, and taxes. To date, PPL has set up and updated the budget, making major changes when the Crystal project was separated. We have also completed five separate funding applications. (The cost of preparation for an application by a consultant is $5,000 to 8,000. The application fees alone were almost $2,000.) Assuming that the applications we currently have in are approved, we are about 25% finished with this portion of the project. 3. General project management: Selecting, hiring, and coordinating the work of the architectural and engineering consultants, obtaining necessary regulatory and o governmental approvals, providing for the legal and insurance requirements of the project, soliciting and incorporating neighborhood or citizen input into the project. mana~in~ the property, during construction includin,, coordination of work v,'ith reside';~ts~. scheduling and coordinating all activities and consultants. The bulk of this work occurs following the set up of the project's financing. PPL has. to date. inspected the property several times, provided for schematic design of garage location, consulted with our environmental engineer, and had several discussions about the project with the City. Marketing: As urfits become available, advertising the property in accordance. with fair housing standards, selecting and screening rental applicants, insurimz that income and other requirements are met, coordinating tenant referrals with the MPHA/Met Council. Standard market rates for unit leasing without the additional compliance work required by our funding institutions would be a minimum of a month's rent, a total of fi.bout $7,000 on this project. Construction management: Selecting, hiring, and coordinating the work of the General Contractor, monitoring the progress of the work, authorizing and coordinating pay requests, deciding on alterations to the work, choosing materials and finishes, monitoring the project contingency, preparing the punch list, coordinating inspections of various funding entities, and finalizing unit turn over. The architect will also be involved in this process in essentially a parallel capacity. His/her fee for that involvement will be $7,500 for this project. Assumption of project risks: Bearing costs associated with a project not proceeding (as in the case of the Crystal project on 56th), covering costs discovered during the planning and construction phases over and above the contingency (e.g. soil corrections on the Bass Lake project), covering the cost of unforeseen or estimated items (such as condemnation and relocation costs of the gas station on the Bass Lake project), allowing for typical real estate ownership risks such as vacancy, unit damage by tenants, and the like, and, lastly, covering costs associated with project delays due to weather, nonperformance by members of the project team, etc. As I mentioned to you before, a private developer would probably charge in the range of 15 to 20% of the total project costs. Our fees would total about 9%, with 10% of that being recycled back into the NCRC. Financing Options for the City: 1. Deferred loan of approximately'S338,000. As originally proposed, this would be a no interest loan to the project with payment deferred for 30 years. At the end of the 30 years, the City could collect payment or opt to continue to defer payment as long as the property continued as affordable housing, thus insuring affordability in perpetuity. This is the mechanism which was used on the Bass Lake project. 2. Loan of approximately $450,000. This project will produce an income stream of approximately $10,000 per year. This income was projected to retire a standard bank loan in the neighborhood of $100,000. However, the income could be used to repay a loan from the City instead. In order to recapture the entire $450,000, the loan would need to be for 45 years at no interest. Increase funding fi'om other sources. If additional funding fi'om AHIF. for 'example, were available, the City's pgrtion could be icsscned. Another similar option would be to increase the number of MHOP units fi'om three to four. This would increase MPHA's share of the project by approximately $120.000. Decrease the scope of the work for the project. This could easily be done by eliminating the garages fora savings of approximately $115.000. Additionally. we could look at deferring some of the planned renovation. This could onh' be done with the consent of the other funders and with the understanding {hat those items will need to be funded in the future either through reserves or some other mechanism. I hope that this has provided the information which we felt was missing at our last meeting: I look forward to meeting with you on Wednesday to further discuss these items and decide on the next steps. Please feel free to call me with comments or questions. Development Manager PROPOSAL: PROJECT DESCRIPTION This project consists in the renovation of the eleven-unit apartment building on 7610 Bass Lake Road in New Hope. The building contains six, two-bedroom aparuaents and five, one-bedroom apa~u,ents. DEVELOPERS: The development panners are Project for Pride in Living (PPL) and the Northwest Community Revitalization Corporation (NCRC). PPL is a nonprofit community development corporation which has 27 years of experience rehabilitating and building new housing. PPL has built over 900 units and owns and manages over 500 units in the Metro Area, including 34 in New Hope. PPL's property management division maintains PPL's long-term commitment ~o the community, providing professional services and access m support for residents who need it. PPL also developed and now manages over 50,000 square feet of commercial space and operates four businesses which provide job training for hard-to- employ adults. NCRC is regionally focused nonprofit community development corporation providing affordable housing for low and moderate income residents of the northwest metro area. For the past five years, NCRC has been developing and providing financing for the redevelopment of over 30 units of scattered site housing. The corporation represents a unique collaboration of the six cities of Brooldyn Center, Brooklyn Park, Crystal, Maple Grove, New Hope, and Robbinsdale. WHAT IS PROPOSED? The plans entail the exterior and interior renovation of the existing apartment building. The building exterior will bc completely renovated, including painting, the repair or replacement of the soffits and fascia, thc provision of a new roof, gutters, and downspouts as necessary, spot tuckpointmg and brick repair, and the repair or replacement of the windows. The landscaping will be improved, the drive expanded and rcsurfac~ the walkways repaired, and garages added for each unit. The interior work will include updating Be existing' imitS-in-th~i~ present cont~,mlration. New cabinets, counters and appliances will be provided in the kitchens. The plumbing and electrical will be updated. A new water heater will be provided and the existing boiler will be inspected and replaced if necessary. The walls will be repaired and painted and new carpet will be installed throughout. The monthly rent for the units will vary from $55:5 to $710 depending on unit size. At a minimum, nine of the units would be rented to families earning less than 50% of the area median (e.g. $37,000 for a family of four). Three of the units would have rents subsidized for lower income families. Two of those three units would be reserved for residents on the Minneapolis Public Housing waiting list and the other one (and any of the two not filled by people on the first list) would be used for Neb' Hope residents. PPL currently has an on-site management off, ce at our other property less than two blocks from the proposed site. A full time site manager lives and is employed there. All prospective tenants will be carefully screened: each must have a good rental history, adequate income to afford the rent, and no criminal back~ound. FINANCING: The total cost of this development is approximately $1.26 million. The financing is proposed to be a combination of a traditional bank mortgage, investments fi'om the City of New Hope, and Hennepin County HOME and AHIF funds. The three affordable units are paid for by the Metropolitan Housing Oppommities Program, which was created to increase the supply of rental housing outside of the central cities. TIMELINE: Acquire properties, design new units and rehab work, secure financing ......... Feb. 2000 - Aug. 2001 Neighborhood, City, and Planning Commission review ................ Feb. 2000 - Sept. 2001 Finish purchase of all property ................. Oct. 2001 Start rehabilitation and const~mction ..............Oct. 2001 Complete construction ...................... June. 2002 The work is intended to be performed without Substantial displacement olr the existing residents. If,existing residents have incomes above $0% of median, they will receive assistance in finding a new place to live and help with the moving expenses. Tenants wishing to remain in the rehabbed units would be welcome to do so provided they meet P?L's screening requirements. ADVANTAGES TO THE COMMUNITY: This development will provide reinvestment in the area's aging housing stock by an owner committed to maintenance and a long-term relationship with the community. The improved appearance and stability of the new and rehabbed units will add to the surrounding area's value and livability. These units will provide an oppormmty for young families or single parents to stay in this community or become part of it. This development represents the next step in PPL and NCRC's continued commitment to the strength and stability of New Hope. BASS LAKE PROJECT Development Proforma USES · ,- Per Unit Acquisition 1.00 11 Unit Apartment Building 470,000 42,727 I Subtotal 470,000 42,727 Construction 2.00 Demo and Lead Mitigation 25,000 2,273 2.01 Rehab 11 Units 350,000 31,818 2.02 New Garages 120,000 10,909 2.03 Site Improvements 55,000 5,000 2.04 Pla}ground Equipment 10,000 909 2.05 Contingency 50,000 4,545 Subtotal 610,000 55,455 Soft Costs 3.01 Architectural 30,000 2,727 3.02 Environmental 3,000 273 3.03 Legal 15,000 1,364 3.04 Cost Certification 3,000 273 3.05 Survey and Plat 3,000 273 3.06 Utilities and Insurance 2,000 182 3.07 Taxes 10,000 909 3.08 Closing Costs 3,000 273 3.09 Interim Holding Costs 7,000 636 3.10 Relocation 35,000 3,182 3.11 IMarketing and Lease Up 1,000 91 3.12 Construction Interest 5,000 455 3.13 Loan Origination Fee 1,300 118 3.14 Developer Fee 95,000 8,636 3.15 CHDO Fee/Processing Agent 15,000 1,364 3.16 Reserves - MHOP 15,000 1,364 Subtotal 243,300 22,118 4.00 Total Development Cost 1,323,300 120,300 SOURCES 5.00'1 st Mortgage 126,300' 11,482 5.01 New Hope EDA 223,000 20,273 5.02 Hennepin Co. HOME 350,000 31,818 5.03 Hennepin Co. AHIF 150,000 13,636 5.04 MHOP 469,000 42,636 5.05 Playground Donations 5,000 455 Total Sources 1,323,300 120,300 Prepared by: PPL, November 16, 2001 7610 Bass Lake Road. Proposed Scope of Work 19-Jun*01 Exterior Work Roof, downspouls, gullets Windows and doors Tuckpoinling, soffit and fascia, painting Parking lot overlay and concrele repair 11 new garages Landscaping and grading Sublolal Esl. Cost 35,000 26,000 14,000 20,000 110,000 15,000 Inlerior Work Update electrical Boiler, water healer, zone valves, etc. Plumbing repair and lixlures Balh updales, medicine cabinets Wall repair and painting Carpet and foyer repair New cabinets and counlertops New appliances Smoke alarm updale, misc. Sublolal 10% Coniingency Contractor OH&P 24,000 20,000 15,000 11,000 25,000 20,000 40,000 15,000 10,000 220,000 180,000 40,000 50,000 TOTAL 490.000 PPL HO~ II~'VL -7 ~1o I" = "ZO" O" ~=~-0~ = ~=~0 Project for Pride in Living, Inc. ._ .. .-~ ~,~in; a~ ~n~~ adding ~ ~' "~" ~' PPL directly ~jrves over 2,000 and indirectlY assists thousands more in Minneapolis and Saint Paul through 14 pro- grams relating to jobs and training, housing, neighborhood development, and seff-sufrk cienoy. - -- "=:- m L/v/ag ~PL) was formed in l ~ut of a d~ of ~c zouna~ ~ y ~. , ' 1~ ~ iu ~ly y~ PPL s~cC ~ ~0 ~i~ m so~ y~nn~Us by ~ov~ Siacc fl ~o~ ~ hombre's ~ist~cc. Of ~C n~ Of ~C CO~~ It S~CS. rr ~ly dcli~ ~i~ w mcct ~c c~t n~ o: ~p~ ~t ~ helps build long-t~ skills va~u~ n~ ~r a l~mc of s~f-~ci~cy. ~ ~d pmp~ b~c s~ of hope in ~c cc ~d mb~c o~fi~ whose c conc~ ~d cb~gcs. Give me a fish and i eat for a day;, teach me to fish and I eat for a lifetime. does the NCRC do! W~ mt has tl~ NCitC don~ W so dm NCRC NC ~ serves fL-st time bomobuyers with incomas u low u in fb mid S20,000 per year J~, ~ do~ N~'..~tC l'_'"d its nc~vlfias? H pw do ! fat men Inforumtion about NCRC ami b programs? 529-0'/77 or 940-27B$. '1 Policy Plan Ed Accomplish transitions between distinctly d/ffering types of land uses in an orderly fashion which does not create a negative (economic, social or physical) impact on acl.ioining developments. Infill development of compatible land uses shall be strongly encouraged. Where practical, conflicting and non-complementary uses shall be ellminatec~ through removal and relocation. RESIDENTIAL GOALS ~oal 1: Provi~ a variety of housing types, styles and choices to meet the needs of New Hope's changing demographics. Policies: Through infili development and redevelopment efforts, increase life cycle housing opportunities not currently available within the City ('i.e., high value housing, townhomes). Promote medium ciensity attached housing to address the needs of an expanding empty nester or independently living elderly population. Continue the City's efforts to provide special needs housing for people with various types of disabilities. Goal 2: Policies: Maintain and enhance the strong character of New Hope's single family residential neighbomoocs. C° Promote private reinvestment in the City's single family housing stock. Examine City deveioprnent regulations to provide greater development flexibility for single family homeowners. Prevent the in,'Tusion of incompatible land uses into Iow density single family neighborhoocts. 12 Comprehensive Plan Update Developrne~i Pr~er~~ ~oi~cv ~an Aggressively enforce the City's housing maintenance regulations Provide community education and information to local property owners on home maintenance, repair, and assistance opportunities. Pursue We redevelopment of substandard single family homes when it fs Judged not economically feasible to correct the deficiencies. Encourage neighborliness through block clubs, block parties or ne~ghDornooc~ associations. Goal 3: Promote multiple family housing alternatives as an attractive life cycle housing option. .....-~' Policies: Redevelop substandard multiple family properties that display deteriorated building conditions, no site amenities, poor site design, or incompatible land use patterns wl3en it is judged not economically feasible to correct the deficiencies. Adhere to the highest community design and construction standards for new construction and redevelopment projects. Accompany medium and high density development with adequate accessory amenities such as garages, parking, open space, landscaping, and recreational facilities to insure a safe, functional, and desirable living environment. Consider mixed land uses as an alternative land use option in planning and redevelopment of obsolete commercial or industrial sites. Encourage neighborliness through block clubs, block parties or neighbomood associations. ~f New Hollo 13 ~evelopment Pm~wor~ Approved EDA Minutes Regular Meeting CALL TO ORDER ROLL CALL APPROVE ]VHNUTES ELDORADO COURTS APTS. Item 4 MOTION Item 4 7610 BASS LAKE ROAD Item $ New Hope EDA l~age 1 CITY OF NEW HOPE · 101 XYLON AVENUE NORTH NEW HOPE, MINNESOTA 5S428 Februa~' 28. 2000 City Hall President Enck called the meeting of the Economic Development Authority to order at 7:51 p.m. Present: W. Peter Enck, President Sharon Cassen, Commissioner Don Collier, Commissioner Pat LaVine Norby, Commissioner Mark Thompson, Commissioner Motion was made by Commissioner Collier, seconded by Commissioner Thompson, to approve the Regular Meeting Minutes of February 14, 2000. Voting in favor:. Cassen, Collier, Norby. Thompson; Abstained: Enck. Motion earned. President Enck introduced for discussion Item 4, Motion Authorizing Staff to Obtain Appraisal of Eldorado Courts Apartments at 7701/7721/7741/7761 62"' Avenue North. Mr. Kirk McDonald, Director of Community Development, indicated thc property is for sale and staff would like the FDA's authority to obtain an appraisal of the four- unit complex by BCL Appraisals for a cost ofS3,200. Mr. McDonald repotted that the estimated ma,'ket value of the property for rexes payable in 2000 is $140,000 per property or a total of $560,000. The realtor has indicated the current asking price is $880,000. Mr. McDonald stated the Eldorado Aparnnents are located in an area designated in the City's Comprehensive Plan for future redevelopment. The EDA expressed support for possible redevelopment. Motion was made by Commissioner Cassen, seconded by Commissioner Norby, to authorize staff to obtain an appraisnl of Eldorado Courts Apartments at 7701/'/'/21/"/741/'/761 62"~ Avenue North. Ali present voted in favor. Motion carried. President Enck introduced for discussion Item 5, Discussion Regarding Concept Redevelopment/Rehabilitation Project at 7610 Bass Lake Road. Mr. Kirk McDonald, Director of Community Development, introduced Barb McCormick and Chris Wilson of PPL and George Garnett, Executive Director of Northwest Community Revitalization Corporation. Mr. McDonald explained that staff would like to determine whether the EDA has an interest in pursuing the redevelopment/rehabilitation of the 1 i-unit apartment complex at 7610 Bass Lake Road in eonjunction with Project for Pride in Living February 28, 2000 ADJO~MENT (PPL), the Northwest Community Revitalization Corporation OVCRC) and a variety of funding agencies. The collaborative pro.~c~ consists of nvo separate sites: one '~ 7610 Bass Lake Road in New Hope and the second at $I l {-$211 $6'~ Avenue North in Crystal The projects in both cities would be submitted to funding agencies for consideration uuder a single funding request. lvir. Chris Wilson explained the proposed project stating the existing l l-unit apartment building would have exterior improvements, am'active landscaping, an expanded and resurfaced drive, and consl~'uclion of garages. Interior work will include nm' cabinets and counters, new carpeting, updated electrical, and wall repair and painting. The market rate rents would range from $600 to $1,000 depending on unit size. He explained the rental criteria. Thc total cost of the development is approximately $4.6 million. President Enck questioned PPL's intentions to utilize the on-site manager from the nearby PPL site for these additional units. Mr. Wilson indicated a manager can normally handle 80 units. He pointed out the existing New Hope site has 34 and the proposed project would add 24 units for a total of $$ units. Discussion ensued regarding support services offered by PPL. President Enck questioned whether they would offer a patenting class. Resources such as area churches and the Thorson Resource Center were identified. Ms. McCormick indicated she would review PPL's self sufficiency management programs already planned as well as the funding allocations. Mr. Wilson noted that the project would be a partnership with PPL and the Northwest Community Revitalization Corporation (also known as the Community Housing Development Corporation/CHDO). The ownership structure has not been determined ycL Mt. George Gamett responded to the EDA's questions concerning funding. He stated the financial request from New Hope would be $350,000. Mr. McDonald r~ninded the EDA that at this time staff is seeking 'concept' approval only. The EDA expressed support for the project, but directed staff to determine the City's financial commitments for such a project as well as available funding sources before additional effort is expended. Motion was made by Commissioner Collier, seconded by Commissioner Thompson, to adjourn the meeting. All present voted in favor. Motion carried. The New Hope P-DA adjourned at 8: I'/p.m. Respectfully submitted, Valerie Leone City Clerk New Hope F. DA Page 2 February 28, 2000 CITY OF NEW HOPE ,~01 XYLON AVENU~ NORTH NEW HOPE, MINNESOTA 55428 Approved EDA Minutes Regular Meeting June 25. 2001 City Hall CALL TO ORDER ROLL CALL APPROVE MINUTES DISCUSSION/7610 BASS LAKE ROAD Item 4 New Hope EDA Page I President Enck called the meeting of the Economic Development Authority to order at 8:31 p.rrr Present: W. Peter Enck, President Sharon Cassen, Commissioner Don Collier, Couus,issioner Mary Gwin-Lenth, Commissioner Pat LaVine Norby, Co~sioner Motion was made by Commissioner Collier, seconded by Commissioner Cassen, to approve the Regular Meeting Minutes of December 11, 2000. Voting ia favor: Collier, Cassen, Norby, and voting against: None, Abstained: EnCk, Gwm-Lenth, Absent: None. Motion carried. President Enck introduced for discussion Item 4, Discussion Regarding Redevelopment/Rehabilitation Project at 7610 Bass Lake Road. Mr. Kirk McDonald, Director of Community Development, updated the EDA regarding the proposal for the redevelopment/rehabilitation of the 11-unit apartment complex at 7610 Bass Lake Road ia conjunction with Project for Pride ia Living (PPL), the Northwest Commumty Revitalization Corporation (NCRC) and several other funding agencies. He noted this project was last discussed with the EDA in February 2000, and at that time the EDA was generally favorable towards the project. The purpose of this update is to discuss some minor modifications to the original proposal and determine if the EDA would commit funding to the project with final approvals to be made at meetings in the near future. Mr. McDonald stated in the past, the City has participated ia similar collaborations, most recently with the Bass Lake Court Townhomes Project. As the EDA is aware, projects of this size require a variety of funding panners and usually require the expertise of an expenenced development agency, such as PPL. Housing redevelopment has been designated as a high priority of the City Council and this property is identified in the Comprehensive Plan for redevelopment or rehabilitation and it is also identified in the Livable Communities Grant study area. In 1999, the Northwest Community Revitalization Corporation (also known as the Community Housing Development Corporation/CHDO) and PPL approached the City and inquired about multiple family properties in need of rehabilitation for a potential collaborative project. Staff had previously identified the 7610 Bass Lake Road property as a high priority. Previous attempts to coordinate a rehabilitation project with the owners have not been successful and a portion of this project would involve acquisition and rehabilitation of the property. In February 2000, when the project was discussed with the EDA, a collaborative project with the City of Crystal was also part of the project, with one site in New Hope and one site in Crystal, (both on Bass Lake Road). The proposal was submitted to the Minnesota Housing Finance Agency for funding, but the two-city proposal was declined, due to the fact that the MI-IFA did not favor the Crystal project site. The project was modified to include the New Hope site only and June 25, 2001 resubmiued for funding, however, due to s~ong competition from other prO~ects, the project was again not funded by the lVIHFA. Despite the fact that fundmg from the MHFA has been dec'ed, HennePin County and others still have funding co.--'fitted to the project, and PPL and the CHDO desire to proceed with the project in collaboration with the City. The development partners are Project for Pride in Living (PPLI and the Northwest Community Revitalization Corporation (NCRC). The proposed project consists of the renovation of the ll-unit apartment building at 7610 Bass Lake Road in Neb' Hope. The building conams six, two-bedroom apatmaents and five, one-bedroom apartments. The plans entail the exterior and interior renovation of the existing apa~u,~ent building. The building exterior will be completely renovated, including painting, the repair or replacement of the soffits and fascia, the provision of a neb' roof, guners, and downspouts as necessary, spot mckpointmg and brick repair, and the repair or replacement of the windows. He landscaping will be improved, the drive expanded and resurface& the walkways repaired, and garages added for each unit. The interior work will include updating the existing units in their present configuration. New cabinets, counters and appliances will be provided in the kitchens. The plumbing and electrical will be updated. A new water heater will be provided and the existing boiler will be inspected and replaced, if necessary. The walls will be repaired and painted and new carpet will be installed throughout. The monthly rent for the units will vary from $555 to $710 depending on unit size. At a minimum, nine of the units would be rented to families earning less than 50% of the area median (e.g. $3'/,000 for a family of four). Three of the units would have rents subsidized for lower income families. Two of those three units would be reserved for residents on the Minneapolis Public Housing waiting list and the other one (and any of the two not filled by people on the fn'st list) would be used for New Hope residents. PPL currently has an on-site management office at another property less than two blocks from the proposed site. A full-time site manager lives and is employed there. All prospective tenants will be carefully screened: each must have a good renal history, adequate income to afford the rent, and no criminal background. He stated the total cost of this development is approximately $1.26 million. The fmancing is proposed to be a combination of a traditional bank mortgage, investments from the City of New Hope, and Hennepin County HOME and AHIF funds. The three affordable units are paid for by the Metropolitan Housing Opportunities Program, which was created to increase the supply of rental housing outside of the central cities. The Development Proforma shows a $338,000 con~ibution from the New Hope EDA. The work is intended to be performed without substantial displacement of the existing residents. If existing residents have incomes above 50% of median, they will receive assistance m finding a new place to live and help with the moving expenses. Tenants wishing to remain in the rehabbed units would be welcome to do so provided they meet PPL's screening requirements. This development will provide reinvestment in the area's aging housing stock by an owner corramned to mamtenance and a long-term relationship with the commUmty. The improved appearance and stability of the new and rehabbed units will add to the surrounding area's value and livability. These umts will provide an opportunity for young families or single parents to stay in this community or become part of it. This development represents the next step in PPL and NCRC's continued commitment to the strength and stability of New Hope. New Hope EDA Page 2 June 25, 2001 This property is currently not located in an area where TIF funds can be expended. therefore, the FDA funds would need to be used for the New Hope pomon of the project in conjunction with $77,992 m CDBG funds that are programmed for multiple family rehabilitation. Another option would be to add this proper~ to the area where T~ funds can be expended. Mr. Chris Wilson, Development Manager with PPL; and (~eorge Gamete, Executive D/rector of N-WCRC, were recognized. They explained that the work is considered maintenance rather than reconfiguration so the property does not have to be upgraded to be handicapped accessible housing. The EDA discussed tax /mplications and the construction costs. Commissioner Collier suggested reviewing cost comparisons of similar rehab projects. President Enck commented on the unknown financial position of the City at the present tune, and suggested postponing discussions until July. The consensus of the EDA was to continue discussions at the July 30, 2001, Work Session. Motion was made by Couul~sioner Collier, seconded by Commissioner Norby, to adjourn the meeting. All present voted m favor. Motion carried. The New Hope EDA adjourned at 9:00 p.r~ Valerie Leone City Clerk New Hope EDA Page 3 .lune 2.5, 2001 City Council Work Session CALL TO ORDER ROLLCALL SOUND WALLS Item 11.1 7610 BASS LAKE RD (IMP. PROJECT 707) Item 11.2 CITY OF NEW HOPE 4401 XYLON A~E NORTH NEW HOPE, MINNESOTA 55428 September 17, 2001 6:00 p.m., City Hall The New Hope City Council met in work session pursuant to due call and notice thereof. Mayor Enck called the meeting to order at 6:30 p.m. Present: W. Peter Enck, Mayor Don Collier, Councilmember Mary Gwin-Lenth, Councilmember Pat LaVine Norby, Councilmember Sharon Cassen, Councilmember StaffPresent: Jerry Beck, Communications Coordinator Dan Donahue, City Manager Ken Doresky, Community Development Specialist Guy Johnson, Director of Public Works Kirk McDonald, Director of Community Development Daryl Sulander, Director of Finance Vince VanderTop, Assistant City Engineer Mayor Enck introduced for discussion Item I1.1, Presentation by MnDOT Representative Regarding Construction of Proposed Sound Wall at Highway 169. Mr. Vince VanderTop introduced the representatives from Minnesota Department of Transportation: Wayne Norris, Preliminary Design Engineer, and Peter Wasko, Transportation SpecialistfNoise Abatement/Air Quality. They presented the plan as developed to date for the sound walls to be placed between 30th and 36th Avenues along the east side of Highway 169. Mr. Norris commented regarding a couple of design options. He stated a public meeting will be held to discuss the proposed plan and design options with neighboring property owners. There is no cost to the City for the sound wall; however, there are implications for the city storm sewer currently located in the MnDOT right-of-way. Mr. Vince VanderTop presented approximate costs and issues relating to the storm sewer. He stated if the sound wall plan is approved, it will be necessary to consider changes to the storm sewer. The City Council voted to proceed to schedule a neighborhood meeting in the near future. It was noted that the fmal decision on the sound wall project would be made by the City Council. The City Council inquired of plans to construct sound walls along Highway 169 from 36th to 62"a Avenue. Representatives from MnDOT indicated the existing plan is based upon analysis and previous sound studies. The Council was informed that much of the New Hope area has a much lower priority and there are no plans in the foreseeable future to construct sound walls for the following segments: 364 to 42nd Avenue, 42"a to 49th Avenue, 49th Avenue to Bass Lake Road, and Bass Lake Road to 62na Avenue. Mayor Enck introduced for discussion Item 11.2, Discussion Regarding Redevelopment/Rehabilitation Project at 7610 Bass Lake Road. City Council Work Session Page I September 17, 2001 LIQUOR LICENSE ORDINANCE Item 11.3 ENTERPRISE FACILITATION PROGRAM (PROJECT NO. 625) Item 11.4 SEWER AND WATER FEES Item 11.5 City Council Work Session Page 2 Mr. Chris Wilson, Development Manager with Project for Pride in Living, and George Garnet, Executive Director of the CO-OP Northwest Revitalization Corporation, were recognized. The project was last discussed with the EDA on.June 25 at which time the EDA requested that staff coordinate with PPL to decrease the funding request and address project budget items. Mr. Wilson reviewed funding options as outlined in the September 17 Request for Action. The City Council was supportive of participation, but did not decide on funding options. Discussion ensued regarding the need for playground equipment. The City Council asked the developers to develop the plans with an inclusion of approximately $5,000 designated for playground equipment. The City Council directed staff to share the project proposal at the next Livable Communities Task Force Meeting. It was noted that input from the Task Force is necessary before any decisions are made Mayor Enck introduced for discussion Item 11.3, Discussion Regarding Amendment to Section 10.412 of the New Hope City Code to Allow Additional Off-Sale Liquor License. The City Council discussed the topic at length and decided that policies should be developed to guide the Council in decision-making issues when determining whether or not to grant on-sale and off-sale liquor licenses. It was noted that criteria could be established relating to benefits to the city (increased employment, increased market value, increased commercial activities). The Council directed staff to draft sample policies and ordinances for presentation at a future date. Mayor Enck introduced for discussion Item 11.4, Discussion Regarding Continuation of the Joint City Enterprise Facilitation Program. The Council discussed whether to continue with the joint-city enterprise facilitation program that has existed since 1998. Mr. Kirk McDonald, Director of Community Development, led a discussion regarding the pros and cons of the program. He reported that the program's facilitator, Mary Beth Moze, submitted her resignation effective October 5, 2001. Mr. McDonald advised that he has conferred with representatives from the City of Crystal, and is recommending discontinuing the program. The City Council concurred with staffs recommendation to discontinue the program. Mayor Enck introduced for discussion Item 11.5, Sewer and Water Fees (discounts, minimum charges). Mayor Enck noted this issue is being discussed at the request of Mr. Sam Bemick who appeared at the September 10 Council Meeting inquiring about the minimum billing fees for utilities. Mr. Daryl Sulander, Finance Director, pointed out that services provided by the city's utility system remain connected to and available upon demand even though a customer may choose not to use the services during certain periods. He explained that the water and sewer utility rates are designed around a minimum charge and a volume charge to equitably pay for the service. He stated the minimum fee covers approximately 85% of the costs for administration, billing, and debt service for new meters. The main revenue portion is derived by volume charges. He commented that September 17, 2001 Property Information Search by street Address Result page Page I of 2 Search By: Property ID t Addition Name HOUSE or BUILDING #: 17610 STREET NAME: (at least first 3 characters) IBass Lake Road UNIT # (if applicable) I Search I O,.r I r~'~ records per page Hennepin County, MN Property Information Search Result (The property information database is updated at the beginning q£ each month.) Parcel Data for Taxes Payable 2001 Property ID: 05-118-21 32 0004 v,ew .*~a= J Property Address: 7610 BASS LAKE RD Municipality Name: NEW HOPE School Dist: 281 Watershed: 0 Sewer Dist: 02 Construction Year: 1960 Parcel Size: 133.5 X 171.9 Owner Name: R J ENGELKING & E B NORWOOD Taxpayer Name & Address: ROBERT J ENGELKING 7405 HYDE PARK DR EDINA MN 55439 Pa),n,ent OCtlOn5 J Most Current Sales Information Sales prices are reported as listed on the Certificate of Real Estate Value and are not warranted to represent arms-length transactions. NO SALE INFORMATION ON FILE FOR THIS PROPERTY. Tax Parcel Description Lot: 035 Addition Name: Block: AUDITOR'S SUBD. NO. 226 Metes & Bounds: THAT PART OF E 1&3 LYING S OF N 1138 67&100 FT THEREOF Value and Tax Summary for Taxes Payable 2001 Values Established by Assessor as of January 2, 2000 Estimated Market Value: Limited Market Value: Taxable Market Value: Total Improvement Amount: Total Nat Tax: Total Special Assessments: Solid Waste Fee: Total Tax: 342,000 342,OOO 342,000 6,169.20 63.50 6,232.70 htlp ://204.73.55.30/pins/AddrSrehRcs.stm 7/13/01 Property Information Search by Street Address Result page Page 2 of 2 Property Information Detail for Taxes Payable 2001 Values Established by Assessor as of January 2, 2000 Values: 1 2 Land Market. Building Market Machinery Market Total Market: Land Limited Building Limited Total Limited: Qualifying Improvements Classifications: 1 Property Type Homestead Status Relative Homestead Agricultural Exempt Status 40,000 10,000 233,600 58,400 273,600 68,400 40,000 10,000 233,600 58,400 273,600 68,400 HOUSING-LOW INCOME NON-HOMESTEAD 2 APARTMENT NON-HOMESTEAD Records 1 - 1 of total I 1578 Questions or problems with this database search should be directed to Don .KoDel~co.henneoin .mn .us Hennepin County is providing this information as a public service. Please send comments on our Web Site to Henn.Net~.c0.hennepin.mn.us or use our Feedback Form Home , Servl=es , Taxpayer Ser~c=es, .Assessor;s Search Copyright © 1998 Hennepin County h ttp ://204.73.55.30/pins/AddrSrchRcs.sUn 7/13/0 ] EDA i Ilk ) REQUEST FOR ACTION Originating Department Approved for Agenda Agenda Section Community Development ~ 11-26-01 EDA Item No. By: Kirk McDonald By: 5 / MOTION APPROVING MINOR REVIS~N TO SECTION 8 ADMINISTRATIVE SERVICES CONTRACT BETWEEN THE METROPOLITAN COUNCIL AND CITY OF NEW HOPE REQUESTED ACTION Staff is requesting that the EDA approve a motion approving a minor revision to the Section 8 Administrative Services Contract between the Metropolitan Council and the City of New Hope. When the number of client contracts was at a lower level in the mid-1990s, the New Hope Section 8 Representative took on the additional workload of administering contracts for other neighboring cities to bring in additional revenue for the New Hope program. Client contracts are now at a very high level and staff is requesting a minor revision in the Administrative Services Contract for New Hope to stop performing administrative services for the 41 contracts in Edina and shift the workload back to Metro HRA staff. This revision will help to alleviate the workload of the Section 8 Representative and shift a small portion of the revenue back to Metro HRA, but will still provide adequate financial resources to support the New Hope Section 8 Program. Metro HRA requires a 90-day notification requirement for contract changes and a formal contract amendment would be prepared for EDA consideration in the future if this motion is approved. POLICY/PAST PRACTICE In the past, the EDA has approved modifications to the Metro HRA Section 8 Administrative Services Contract depending on the workload and number of client cases being serviced. BACKGROUND City staff is requesting that the Economic Development Authority approve a revision to the Section 8 Services Contract with the Metropolitan Council that would allow New Hope to cease performing the administration services for the Section 8 Program clients in the City of Edina due to the increased number of contracts that New Hope is currently administering. In the past, amendments or revisions to the Section 8 Administrative Services Contract with the Metropolitan Council have been formally considered and approved by the EDA. (cont.) TO: /~~~ / /- Request for Action Page 2 11-26-01 The City of New Hope has contracted with the Metropolitan Council for the past 20+ years to administer the Section 8 Housing Assistance Payments Program on a local level. The City employs a full-time Section 8 Housing Representative to administer the program an~l reimbursements from the Met Council/HUD cover all costs of the program and position. The contract is revised periodically when the reimbursement rate changes or when services and/or clients are added or deleted. In the past, New Hope has generally administered between 250-300 client contracts and the Metro HRA feels that this is the general range for the maximum number of clients per Section 8 Representative. 1996 Contract Amendment In 1994 and 1995, the number of Section 8 contracts administered for New Hope residents had decreased to approximately 240 contracts, due in part to newly adopted portability requirements. The City receives less revenue to cover the costs of the program/position with a reduced number of contracts and it has always been the position of the City that the program would be self-supportive or that the cost to administer the program would be covered by revenues received from Metro HRA. In 1994, when contract discussions were taking place, city staff indicated to Metro HRA representatives that the City would have an interest in taking on additional contracts from neighboring cities to increase program revenue. It was determined that additional outside contracts from neighboring cities would involve only administrative services, with Section 6 clients coming to the New Hope City Hall for income verifications, etc. The City would provide no inspection services for clients residing outside of New Hope, as that was determined to be Metro HRA's responsibility. The Metro HRA indicated that it would take the City's interest in assuming the administrative work for additional contracts into consideration. In December 1995, due to several staff position vacancies at the Metro HRA in St. Paul, Metro HRA contacted the City to see if the City was still interested in assuming administrative responsibility for additional contracts. City staff responded in the affirmative and at the January 22, 1996, New Hope EDA meeting, the EDA approved an amendment to the Metro HRA contract stating that the City of New Hope would administer the Section 8 contracts from the following cities: City Number of Contracts Edina 20 contracts Golden Valley 16 contracts Maple Grove 1.~5 contracts Total 51 contracts The additional revenue to the New Hope program with these additional contracts was approximately $12,000 per year and helped to ensure that the program was self-supporting. 1997 Contract Amendment In the spring of 1997, the City of Osseo lost the individual that administered the 23 Section 8 contracts for that city. Metro HRA contacted New Hope to inquire if the City was interested in assuming additional contracts under the same terms and conditions as the 1996 contract amendment. The City responded that we could take on the additional contracts at that time and on May 27, 1997, the EDA approved an amendment to the contract adding the services for the additional clients. Current Status of Contracts - 2001 Due to a recent marketing campaign by the Metro HRA on the Section 8 Program, the program is now at 100% utilization. The new Hope Section 8 Representative is now administering approximately 420 contracts, as follows: Request for Action Page 3 11-26-01 City Number of Contracts 21 contracts Golden Valley Edina 41 contracts Maple Grove 67 contracts Osseo 21 contracts Subtotal 150 contracts New Hope 270 contracts Total 420 contracts The Metro HRA is in the process of re-assigning caseloads among its staff and is aware of the heavy workload in New Hope. There have been preliminary discussions at the staff level between the City and Metro HRA regarding shifting the 41 Edina contracts back to Metro HRA and Metro HRA is agreeable to taking back the contracts. In staff's opinion, it would make the most sense to eliminate the contracts from the City that is most geographically distant from New Hope. The return of the Edina contracts to Metro HRA will decrease revenues for the program, however, revenues will still exceed expenses. The current New Hope 2002 HRA budget lists expenses in the amount of $102,609 and revenues of $123,845. With the shift of 41 contracts back to Metro HRA, revenues will decrease by approximately $11,000, but will still exceed $112,500. Due to the increased utilization of the Section 8 Program on a metro-wide basis and the impact on the workload of the New Hope Section 8 Representative, staff requests that the EDA give favorable consideration to this request and approve a reduction in the administration of outside contracts. Staff requests authorization to give the Metro HRA a 90-day notice on the 41 Edina contracts. FUNDING The impact of this contract revision is explained above and would be minimal, as revenues would still exceed expenses in 2002 and future years. ATTACH M ENTS · Memo from Section 8 Rep · Program Utilization · Excerpts 2002 HRA Budget · January 2000 Contract Amendment Memorandum To: Kirk From: Marlene Date: 10-1-01 Subject: Edina Contracts Metro HRA is in the process of re-assigning caseloads and I feel this might be a good time to notify them if we would like to give back the Edina contracts. I believe our contract states that we must give them a 90-day notice of intent. Currently I have approximately 420 contracts. 40 of those are Edina. When I started Metro HRA felt that the maximum number of clients per representative should be not more than 250. I have checked with other communities with similar caseloads and they all 'have~on--'~'~ulltime plus a part time person. The internal reps at Metro HRA all have fulltime support staff. I am looking forward to have the support of our new department clerk but I don't f~-that will be adequate given the current caseload. The increased caseloads here in New Hope result'in more telephone calls, meetings, and obviously work. It is not unusual for 2-3 days to go by when I can't get to the mail. The increased diversity of the clients also contributes to additional time spent with clients either in person or on the phone. Edina is not in our geographic area and therefore, it is more difficult to give clients the needed information regarding housing in that area. I am running shot of file space and returning the Edina contracts would also help with that issue. Page 1 of 1 Kirk Mcdonald - Administration of Section 8 Program in Edina From: To: Date: Subject: "Kathy Kline" <kathy.kline@metc.state.mn.us> "Beth Reetz" <beth.reetz~__~metc.state.mn.us>, "Lori Lindberg" <Lori. Lindberg~xnetc.state.rrm.us>, "Mary Ahem" <mary.ahem~jnetc.state.mn.us>, "Susan Putz" <susan.putz~tmetc.state.mn.us> 10/3/01 8:57 AM Administration of Section 8 Program in Edma At present, Section 8 program administration in Edina is being handled by Marlene Isaacson who, as you know, is one of our community reps. This is a change that actually took place a number of years back when we were looking to "outsource" some of our communities and New Hope was looking to take on more Section 8 work to boost their revenue so at the time it was a good change. If you have looked at the most recent contracts by rep report, you may have noticed that Marlene is presently carrying a caseload of 424. Marlene has informed me that she has made a recommendation to New Hope management that they exercise their 90-day notice right and return Edina Section 8 program administration to Metro which they can do under the contract. This is obviously not a done deal yet and may not be approved at their end but wanted to give you all a heads up that this may be coming. By the way, we presently have 41 Section 8 contracts in Edina and we already do the HQS inspections for that city. Let me know if you have questions or need anything further at this time. I will keep you posted as I hear anything further. file://C:\WlNDOWS\TEMP\GW} 00002.HTM 10/3/01 We shot fo the moon and landed amongst the stars! Metro HRA 100% Utilization Celebration October 2001 "Success usually comes to those who are too busy to be looking for it"-Henry David Thoreau "No pessimist ever discovered the secret of the stars, or sailed to an uncharted land, or opened a new doorway for the human spirit"- Helen Keller "Success is to be measured not so much by the position that one has reached in life as the obstacles which he has overcome"- Booker T. Washington "Th~ dictionary is the only place where succe.~s com~_s before work"- A,-thur Brisbane Just a little more than 16 months ago, this te-~m set out to reach full utilization of Section 8 program funds. The market was tight with less...than a 2% vacancy rate; the program's reputation needed rebuilding after countless regulation changes; and only one in seven people selected from the waiting list were successful in locating a unit within the jurisdiction. But despite the obstacles, the team embarked to assist the full number of families possible, to build a strong program, and to reach for the stars. At this time of national sorrow stemming from the violent acts of September 11, 2001, we are all touched by the lists of names of the thousands who lost their lives on that day. The lists of names help us to personalize each life, to grasp the enormity of the numbers, and to try to grasp the devastating effects of their passing on their families, friends, communities and the nation. It is difficult, at this time, to appreciate the value of any kind of celebration. We feel some guilt for feeling happiness or pleasure. And yet, we are asked by our leaders to push forward to regain normalcy, to enjoy our lives, our families, our work. For this reason, we have put together a list of our own. A list of names of those assisted during the last 16 months that help to personalize each family, to comprehend the greatness of the number, and to serve as a testimony to the value that stable housing has on those that we serve. Your dedication to the work, ~*o your clients, and to your communities has resulted in 2,393 new families becoming participants of the Section.~ 8 program during this time. Please take time to look at the list and appreciate the greatness of this work. Appreciate also that this volume of work signifies $6,761,988 additional assistance dollars per year being put into our region, bringing the total for 2002 estimated at just under $34 Million. The list, however, is evidence of only some of the work and effort that has gone into the last months. As you all know, a lot of work goes unseen, but certainly not unappreciated. It is not as easy to compile lists of names for some of the other tasks and processes, but the following represents other labors put forth to reach our goal: · requests for applications · applications mailed · applications processed · calls · wait list selections processed · appointments scheduled · copies made · questions answered · appointments conducted · data entered · calls · verifications mailed · verifications returned, opened, sorted · questions answered · calulations completed · data entered · calls . · briefings scheduled · copies made · briefings conducted · questions answered · files terminated · files re-filed · RTA's processed · calls · inspections requested · files recalculated · contracts prepared · leases requested · calls · rents negotiated · files ported out · files ported in · files recalculated · inspections scheduled · calls · inspections rescheduled · Questions answered · Files recalculated · Inspections conducted · calls · re-inspections conducted And of course the work doesn't end here, but rather it only begins, and continues and continues. Like with dieting, meeting goal is only part of the battle, maintenance over time can be the greater challenge. So our team marches on, together, to overcome future challenges! "Life affords no higher pleasure than that of surmounting difficulties, passing from one step of success to another, forming new wishes and seeing them gratified" --Samuel Johnson You are our stars...the Metro HRA Ali-Stars! Thank you! BUDGET FORM I FUND NUMBER: 11 DEPARTMENT: HRA Administration EXPENDITURE CODE: 92 PROGRAM DESCRIPTION AND RESPONSE TO BUDGET DIRECTIVE: The HRA Administration program provides the support services for the Section 8 Rental Assistance Program. The Metropolitan Council contracts for services with the City of New Hope for administrative support to manage the Section 8 program. This includes processing applications, income verifications, inspections, lease-up information and referral. The City is currently reimbursed $24.85 per month/per each New Hope certificate/voucher, which will result in an estimated income of $82,843 when the hard-to-house reimbursement is added. In January 1996 and 1997, the City Council approved amendments to the contract with the Metropolitan Council and agreed to provide administrative support services for Section 8 clients in nearby communities (Golden Valley, Edina, Maple Grove, and Osseo). The amendment calls for New Hope to provide administrative services to approximately 150 out-of-city Section 8 clients, which will result in additional revenue of $41,002. Revenues have increased due to an administrative reimbursement increase received from the Metropolitan Council in January 2000. Total revenues are anticipated to be $123,845 in 2002, which exceeds the $102,609 budgetc:'td for expenses. The Housing Representative is currently very busy managing a total of 430 contracts and some thought has been given to reducing the workload by returning the 41 Edina clients to Metro HRA. CITY Of NFW HOPE g2-HRA ad?ini?:ation BUDGET CITY OF NEW HOPE ANNUAL OPERATING BUDGET NEW IFAS JDEdwards OBJECT OBJECT NO. NO. OBJECT 4101 6101 SALARIES, REGULAR 4102 6102 SALARIES, OVERTIME 4111 6111 VAC/HOL/ILIJPERS LV/COMP ACCRL 4122 6122 PERA EXPENSE-CITY PORTION 4124 6124 FICA EXPENSE-CITY PORTION 4132 6132 HEALTH INSURANCE 4151 6151 WORKMAN'S COMP EXPENSE TOTAL PERSONAL 4201 6210 GENERAL OFFICE SUPPLIES TOTAL SUPPLIES 4301 7010 INDEPT. AUDITING SERVICES TOTAL PROFESSIONAL SERV. 4323 7160 POSTAGE TOTAL COMMUNICATION 4331 7270 MILEAGE TOTAL TRANSPORTATION 4361 7350 GEN. LIABILITY INSURANCE TOTAL INSURANCE 4412 7500 BUILDING/FACILITIES RENTAL 4413 , 7525 OFFICE EQUIPMENT RENTAL 4414 7540 DATA PROC. EQUIP. RENTAL TOTAL RENTAL 4433 7610 DUES AND SUBSCRIPTIONS 4437 7630 TRAINING TOTAL TRAINING & SUBSCRIP. TOTAL OPERATING BUDGET 20O2 HRA ADMINISTRATION DEPT. 1999 2O00 ACTUAL ACTUAL FUND NO. 11 EXP. CODE 92 2001 2O02 2002 BUDGETED REQUESTED PROPOSED 45,337 43,858 54.03,5 57.451 59.888 1,155 1.288 5,810 5.599 9.536 10.138 10.569 2,612 2.572 3.293 3.738 3,897 3.601 3.456 4,863 5.171 5.390 7,343 7,462 9,684 9,938 10,543 286 200 279 364 374 $66,144 $64,435 480 513 $81.690 $86,800 $90.661 550 800 800 $480 $513 $550 $800 $800 550 550 550 550 550 $556 $550 $550 $550 $550 2,635 2.877 3,000 3,300 3.300 $2,635 $2,877 $3.000 $3.300 $3.300 221 308 300 3OO 3O0 $221 $308 $300 $300 $300 500 411 421 389 389 $500 $411 $421 $389 $389 1,519 1.519 1,558 1.656 1.575 1,548 1,805 1.800 2.000 1,530 1 °004 1 $3.067 $3,324 $3.358 $4,662 $4.109 410 325 500 5(X) 500 1,308 882 2.000 2.000 2.000 $1.718 $1,207 $2,500 $2.500 $2,500 $75,315 $73.625 $92,369 $99.301 $102.609 BUDGET FORM II HRA Atlministration DEPARTMENT: 92 ESTIMATE OF REVENUE AND SOURCES 2001 2002 DESCRIPTION AMOUNT AMOUNT 260 New Hope Vouchers/Cer~ficates x $24.85 $ 65.502 77.532 Reimbursement per unit for 12 months 20 New Hope Portability Vouchers/Certificates at $19.88 2,560 4.771 Reimbursement per unit for 12 months °150 Outside Vouchers/Certificates x $24.85 25.619 41.002 Reimbursement (admin. only) per unit for 11 months Outside Portability Vouchers/Certificates 2.134 (Merged with outside vouchers) Hard-to-House Reimbursement Averages 540 540 1 unit per month x $45 x 12 months · Outside clients am from the following cities: Golden Valley 21 Edina 41 Maple Grove 67 Total 150 TOTAL $ 96,355 $ 123,845 Contract No. C-99-66 SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM CONTRACT FOR ADMINISTRATIVE SERVICES CITY OF NEW HOPE THIS ADMINISTRATIVE SERVICES CONTRACT is made and entered into by the Metropolitan Council ("Council") and the City of New Hope ("Contractor"). WHEREAS, the Council is authorized by Minnesota Statutes section 473.195 to function as a housing and redevelopment authority throughout the seven-county metropolitan area and exercises its statutory authority through its Housing and Redevelopment Authority unit; and WHEREAS, the Council has entered into one or more Annual Contributions Contracts ("ACC") with the U.S. Department of Housing and Urban Development ("HUD") and has federal contract authority to operate a federal Section 8 housing assistance payments program ("Section 8 program") within the seven-county "metropolitan area" as defined by Minnesota Statutes section 473.121; and WHEREAS, the City of New Hope is a public body, corporate and politic, duly organized under the laws of Minnesota and is authorized perform the administrative services contemplated by this contract; and WHEREAS, the City of New Hope performs certain Section 8 program administrative services within the City of New Hope and other jurisdictions on behalf of the Council under a Section 8 program administrative services contract ("Contract No. C-94-56"). NOW THEREFORE, in consideration of the mutual promises and covenants contained in this contract, the City of New Hope and the Council agree as follows: I. DEFINITIONS 1.01 Definition of Terms. For the purposes of this contract, the terms defined in this section have the meanings given them in this section, except as otherwise provided or indicated by the context. (a) (b) "Metropolitan Council" or "Council" means the Metropolitan Council established by Minnesota Statutes section 473.123. When expressly stated or otherwise indicated by the context of this contract, the term "Council" means the Metropolitan Council acting through its Housing and Redevelopment Authority unit ("Metro HRA"). "Contractor" means the City of New Hope acting though its governing body and its duly authorized or designated employees, staff or agents. Page 1 of 16 Pages (c) "Preservation assistance" means a special allocation of Section 8 assistance made available by HUD to provide rental subsidy payments on behalf of eligible residents of properties for which federally-insured mortgages are prepaid. (d) "Section 8 program" means an existing housing assistance payments program under section 8 of the United States Housing ACt of 1937, title 42, United States Code, section 1437f, as amended, including the HUD Housing Choice Voucher Program. II. SERVICES AND PROGRAM RESPONSIBILITIES 2.01 Basic Administrative Services. The Council agrees to purchase and the Contractor agrees to perform within the jurisdiction(s) identified in Exhibit A the following "basic" Section 8 program administrative services. (a) Initial Lease-Up. The Contractor will perform the following lease-up activities: (1) Assist Section 8 voucher holders locate suitable dwelling units eligible for use in the Section 8 program. (2) Obtain applicant and participant files and review the files for accuracy and completeness after receipt of Request for Lease Approval forms. (3) Inspect and, as necessary, reinspect rental units identified on Request for Lease Approval forms. (4) Complete rent reasonableness determinations and, when appropriate, help negotiate contract rents consistent with rent reasonableness determinations. (5) Complete computation worksheet to determine rent portions. (6) Verify rental property ownership. (7) Complete and obtain necessary lease documents for each applicant or participant family which shall include a lease, a required lease/tenancy addendum and any other required lease related forms, a housing assistance payments ("HAP") contract and a W-9 form, and review the documents for conformance with Section 8 program requirements. (8) Certify accuracy and completeness of all application and lease-up documents and submit completed files to the Council for final review and payment processing. (9) Perform other tasks and lease-up activities that may be reasonably needed to facilitate timely lease-ups. All initial lease-up activities shall be performed using forms and documents provided by the Council, which may be amended or modified fi.om time to time by the Council. Upon completion of the initial lease-up activities, the Contractor will submit all original Page 2 of 16 Pages documents to the Council for file management and payment processing purposes. The Contractor will maintain at its offices a duplicate set of program files and records. Ongoing Program Administration. The Contractor will perform all Section 8 administrative services associated with: annual and interim recertifications; rent, unit, income and lease changes; mutual termlhations; evictions; and portability transfers. In addition to perforating the lease-up activities listed in paragraph 2.01(a), the Contractor will perform the following ongoing program administration activities: (1) (2) (3) (4) (5) Initiate contacts with participant families for annual recertification. Verify family composition, income, assets, medical expenses, child care expenses and citizenship as appropriate and determine eligibility for ongoing program participation. Issue Section 8 vouchers and provide participants with program information. Complete portability process if needed. Complete rent reasonableness determinations based upon rent reasonableness information and forms supplied by the Council. (6) Initiate investigation of potential fraud or program violations and make recommendations to Metro HRA for further action. (7) (8) (9) (10) Promptly notify appropriate Metro HRA staff of any changes in participant status or problems including, but not limited to, participant evictions, mutual lease terminations, abandonment of dwelling units, lack of proper eligibility documentation, changes in household composition and income, changes in property ownership, noncompliance with HAP contract provisions and noncompliance with federal housing quality standards ("HQS') requirements. Maintain at its offices a duplicate set of Section 8 program files and records for each Section 8 family while the family is provided services under this contract. Files and records for each family will be retained by Metro HRA for three (3) years beyond the date when services no longer are provided to that family. The Contractor will provide prior written notice to the Council before the Contractor disposes of any duplicate files and records of families no longer provided services under this contract and will dispose of any duplicate files and records in accordance with the Minnesota Government Data Practices Act. Conduct affi afive marketing activities such as contacting and working with rental property owners, community groups, and rental property management groups to encourage participation in and understanding of the Section 8 program. Perform other work tasks that reasonably may be required to facilitate effective ongoing program administration. Page 3 of 16 Pages (c) All ongoing program administrative services shall be performed using forms and documents provided by the Council, which may be mended or modified from time to time by the Council. Upon completion of the ongoing program administrative services, the Contractor will submit all original documents to the Council for file .management and payment processing purposes. The Contractor will maintain at its offices a duplicate set of program files and records. Inspection and Reinspection. The Contractor will inspect and reinspeet dwelling units for use in the Section 8 program. Inspections and of dwelling units shall include a thorough and complete on-site inspection and certification of the dwelling unit sufficient to ensure conformance with federal HQS as set forth in title 24, Code of Federal Regulations, section 982.401, as amended, or as required by locally established requirements which have been approved by HUD. Such inspections and reinspections shall be made at the following times: prior to initial lease by an applicant or participant family; at least annually thereafter; at other times during the term of the lease as needed to determine if the unit meets HQS as required by title 24, Code of Federal Regulations, section 982.405, as amended; and as required by locally established requirements which have been approved by HUD. For the purposes of dwelling unit inspections, "annual" inspection means an inspection that occurs no later than twelve (12) months afier the previous inspection. The HQS inspections shall be performed in a timely manner and inspection forms shall be completed and submitted in a timely manner so the interests of Section 8 families, rental properly owners, and the Council are not compromised. In addition to conducting initial, annual and other HQS inspections, the Conu'actor will perform the-following additional inspection and reinspection activities: (1) Conduct damage inspections as required by the Council's policies and procedures. The Contractor will conduct all damage inspections within twenty-four (24) hours after a request, or as soon thereafter as is reasonably possible, so the interests of Section 8 families, rental property owners, and the Council are not compromised. Damage inspections shall be conducted only on rental units covered by a HAP contract containing a damage claims provision. (2) Conduct special inspections as requested by program participants or landlords, and as requested or required by the Council. (3) Complete assessment of rental unit and property conditions as required for rent reasonableness determinations. (4) Perform other work tasks that reasonably may be required to facilitate required inspections and reinspeetions. Reports of all inspections and reinspections shall be made by the Contractor on inspection forms provided by the Council. The Contractor will fully and accurately complete all inspection forms and will provide timely notification of inspection results to landlords and program participants. The Contractor will promptly notify the Council of any required subsidy payment abatements resulting from a landlord's or a family's failure to remedy within specified timelines any "failed" items identified during inspections or reinspections. Page 4 of 16 Pages 2.02 Enhanced Administrative Services. At the Contractor's option but subject to Council approval, the Contractor may perform within the jurisdiction(s) identified in Exhibit A the "enhanced" Section $ program administrative services described in paragraphs 2.02(a) or 2.02Co). (a) Additional Administrative Services. In addition to performing the "basic" Section 8 program administrative services described in paragraph 2.01, the Contractor may elect to perform the following "enhanced" Section 8 program administrative services: (1) Verify income and other eligibility information for Section 8 applicants living within the jurisdiction(s) identified in Exhibit A who have been selected by the Council from the Council's Section 8 waiting list for Participation in the Section 8 program. (2) Determine applicant eligibility for Section 8 program assistance. (3) Conduct Section 8 program briefing sessions for applicant families selected and determined eligible for participation in the Council's Section 8 program, and issue Section 8 vouchers to eligible families. (4) Receive paperwork for incoming Section 8 applicants and participants who have exercised their portability option to move into a jurisdiction for which the Contractor provides Section 8 administrative services under this contract. The Contractor will review the paperwork for completeness and accuracy and conduct Section 8 program briefing sessions for families exercising their-portability option. The Contractor also will perform and complete all required activities described in paragraph 2.01. (b) Preservation Assistance Administration. If HUD makes Section 8 preservation assistance available to persons residing in rental properties located in jurisdictions for which the Contractor provides Section 8 administrative services under this contract, the Contractor may provide preservation assistance services. These preservation assistance services shall include, but are not limited to, the following: (I) Perform initial review of resident profile information to determine preliminary resident eligibility for preservation assistance. (2) Prepare and distribute initial information to project residents. (3) Conduct resident meetings at which preservation assistance information is provided and the process for receiving preservation assistance is explained. (4) Schedule and conduct additional group and individual resident meetings as needed. (5) Determine resident eligibility for Section 8 preservation assistance by verifying household income, assets and eligible expenses. (6) Schedule and conduct client briefings and issue Section 8 vouchers to eligible families. Page 5 of 16 Pages (7) Complete lease-up procedures and conduct unit inspections for residents who lease rental units using preservation assistance within the Contractor's area of service. (c) Eligibility to Perform Enhanced Services. The Contractor may perform the "enhanced" Section 8 program administrative services described in paragraphs 2.02(a) or 2.02Co) by providing the Council with written notiC'~ informing the Council about the Contractor's intention to provide "enhanced" administrative services. Following receipt of the written notice, the Council will determine the Contractor's capacity to perform the requested "enhanced" administrative services and will determine with the Contractor a date upon which the Contractor will begin providing "enhanced" Section 8 program administrative services. The Council will provide written notice authorizing the Contractor to undertake and perform the "enhanced" Section 8 administrative services described in paragraphs 2.02(a) and 2.02(1>). All "enhanced" administrative services shall be performed using forms and documents provided by the Council, which may be amended or modified from time to time by the Council. Upon completion of "enhanced" administrative services, the Contractor will submit all original documents to the Council for file management and payment processing purposes. The Contractor will maintain at its offices a duplicate set of program files and records. 2.03 Program Requirements and Training. The Contractor agrees to comply with the following administrative and training requirements during the performance of this contract. (a) Personnel The Contractor will designate to the Council the person or persons who will conduct or perform the Contractor activities described in this contract. (b) Training. The Contractor will develop and maintain a thorough understanding of the Section 8 program regulations and the requirements and procedures set forth in manuals and other materials provided by the Council. The Contractor agrees to send a representative to all required Section 8 program training sessions and staff meetings conducted by the Council. The Council will notify the Contractor of a required training session or required meeting at least ten (10) business days prior to the training session or meeting. (c) Resources and Staffing. The Contractor shall provide adequate staff time and office or program space to perform the Section 8 program administrative services contemplated by this contract and shall make staff and office or program space available to Section 8 applicants and participants during scheduled business hours approved by Metro HRA staff. Staff and office or program space provided by the Contractor shall comply with all applicable state and federal accessibility standards and requirements. The Contractor shall provide adequate signs and other directional materials to inform applicants and prospective applicants about the place and manner of making application. The Contractor shall keep available for distribution adequate brochures and other information or materials as may be prepared by the Council and shall supplement the brochures with local informational materials as appropriate or needed. The manner of furnishing these services shall be agreed upon by the Contractor and the Council. The Contractor and the Council shall from time to time confer about the details of the furnishing of these services. The Contractor agrees to Page 6 of 16 Pages comply with reasonable demands made by the Council concerning these program requirements. 2.04 Notice of Actions and Claims. The Contractor will immediately notify Metro I-IRA staff by telephone about any summons or other legal or judicial notices, including conciliation court summons or notices, involving claims or disput'e's related to the administration of the Council's Section 8 program within the jurisdiction(s) identified in Exhibit A. The Contractor will confirm its telephone notification by written notice within three (3) business days after the telephone notification. The Contractor also will notify the Council about and refer to Metro HRA staff within one (1) business day any contacts related to the administration of this conUact or the Section 8 families served by the Contractor under this contract that are received from legal aid representatives, legislators or legislative staff, and television, radio or newspaper media staff. :l.05 Council Program Obligations. Unless otherwise performed by the Contractor under paragraphs 2.01 or 2.02, the Contractor and the Council understand and agree the Contractor shall not be required to perform the following Section 8 program services and activities which are the primary responsibility of the Council. (a) Areawide Marketing. The Council will coordinate all areawide affirmative marketing activities, such as preparing brochures and advertising, and contacting and working with area community groups, rental property owners and rental property management groups. (b) Waiting List Administration. The Council will develop and maintain a Section 8 applicant waiting list and will select applicants for participation in the Section 8 program. (c) Records and Overall Program Management. The Council will: create, update and maintain computer records of all active and nonactive Section 8 applicants and participants; collect all areawide data and prepare all housing assistance program reports for HUD; provide overall financial program management, including budgeting, requisitions and monitoring; provide necessary equal employment oppommity and affirmative action documents as required by the Consolidated ACC between the Council and HUD. (d) HAP Contract Payments. The Council will execute housing assistance payments contracts with rental property owners and will authorize and make housing assistance payments to owners, both at month-end and on a weekly basis. (e) Informal Hearings. The Council will conduct informal hearings to review denial, reduction or termination of Section 8 program assistance. The Council also will conduct informal hearings to review and determine rental properly owner and Section 8 participant claim matters. The Council will keep the Contractor apprised of the status and results of all informal hearings. (f) Program Training. The Council will provide necessary program training for Contractor staff including, but not limited to, HQS inspection training. The Council will perform HQS inspection monitoring activities. Page 7 of 16 Pages (g) Program Materials. The Council will prepare and provide administrative policies, operating brochures, forms, manuals and other Section 8 program materials. (h) Application and Lease-up Processes. The Council will coordinate initial application processes and will serve as the clearinghouse for and maintain logs of all incoming and outgoing portability lease-ups. " 2.06 Area of Operation. The Council is authorized by Minnesota Statutes section 473.195 to plan and administer a Section 8 program within the seven-county metropolitan area, including the jurisdiction(s) identified in Exhibit A of this contract. The Section 8 program administrative services contemplated by this contract shall be provided by the Contractor for Section 8 program applicants and participants residing in or moving into the jurisdiction(s) identified in Exhibit A. III. COMPENSATION AND FEE REIMBURSEMENT 3.01 Maximum Payment and Fees. The Council agrees to pay the Contractor on a monthly basis the reimbursable costs incurred by the Contractor in fumishing the Section 8 administrative services specified in this contract which are reimbursable to the Council by HUD. (a) Ongoing Administrative Fee. The Council will pay to the Contractor an ongoing administrative fee on a per-unit-per-month basis. The per-unit-per-month flat fee reimbursement amount will be adjusted (increased or decreased) whenever the Section 8 program administrative fees received by the Council from HUD change. Effective upon written notice from the Council, the per-unit-per-month flat fee reimbursement amount will be adjusted (increased or decreased) whenever and by the same factor as the Council's ongoing administrative fee is adjusted (increased or decreased) by HUD. The ongoing administrative fee payable to the Contractor shall be fifty percent (50%) of the per-unit-per- month administrative fee received by the Council from HUD. For the purposes of this paragraph, the "per-unit-per-month administrative fee received by the Council from HUD" means the administrative fee received by the Council from HUD for the units in the Council's Section 8 programs in excess of the first 600 units (example: the "Column B" administrative fee depicted in the matrix at page 12,713 of the March 12, 1999 Federal Register). Notwithstanding any other provision of this contract, the Contractor and the Council agree that this administrative fee amount is payable for Section 8 administrative services performed by the Contractor on and after June 1, 1999. The Council will make a one-time lump-sum payment to the Contractor to effectuate the retroactive application of this provision. The lump sum payment will represent the difference between: the payments already made to the Contractor for services rendered under the terms of the previous contract from June 1, 1999 to the date upon which this contract is executed; and the per- unit-per-month flat fee reimbursement amount stated in this paragraph 3.01(a). Payments will be based on records described in paragraph 3.02(b). Ongoing administrative fees are subject to portability adjustments under paragraph 3.01 (d). (b) Enhanced Services Administrative Fees. If the Contractor provides the additional "enhanced" administrative services described in paragraph 2.02(a), the Council will pay the Contractor a one-time preliminary fee of fifty dollars ($50.00) per selected applicant family and fifty dollars ($50.00) per newly ported-in family to offset administrative expenses Page 8 of 16 Pages (c) (d) incurred by the Contractor in performing the "enhanced" services described in paragraph 2.02(a). This one-time preliminary fee for enhanced administrative services is in addition to any ongoing administrative fees payable under paragraphs 3.01(a) and 3.01(d), any payments or fees for the performance of preservation assistance administration described in paragraph 2.02(b), and any hard-to-house fees under paragraph 3.01(c). If the Contractor provides preservation assistance services ~tescribed in paragraph 2.02(b), the Council will pay the Contractor a one-time preliminary fee of $100 for each family determined eligible for preservation assistance by HUD. The $100 one-time preliminary fee is intended to offset administrative expenses incurred by the Contractor in providing preservation assistance services to eligible families of eligible projects within the Contractor's area of jurisdiction, regardless of the number of families ultimately determined eligible for such Section 8 preservation assistance. This one-time preliminary fee for preservation assistance services is in addition to any ongoing administrative fees payable under paragraphs 3.01(a) and 3.01(d), any payments or fees for the performance of additional "enhanced" administrative services described in paragraph 2.02(a), and any hard-to-house fees under paragraph 3.01 (c). Hard-to-House Fee. Provided hard-to-house fees are reimbursed to the Council by HUD, the Council shall pay to the Contractor on a monthly basis forty-five dollars ($45.00), or such other increased or decreased fee amount established by law or by HUD, for each hard- to-house family actually housed in a different unit than the family's pm-program dwelling unit, as well as each time a hard-to-house assisted family moves to another dwelling unit with continued Section 8 assistance. A hard-to-house family is a family with three or more minors. A hard-m-house family is actually housed if both a lease and a housing assistance payments contract are executed. The hard-to-house fee is not payable to the Contractor if a hard-to-house family does not move, or if the hard-to-house family does move but moves without continued Section 8 assistance. This hard-to-house fee is in addition to any ongoing administrative fees payable under paragraphs 3.01 (a) and 3.01 (d), any payments or fees for the performance of additional "enhanced" administrative services described in paragraph 2.02(a), and any payments or fees for the performance of preservation assistance administration described in paragraph 2.02Co). Portability Adjustment. In accordance with the portability provisions of the federal laws governing the Section 8 program, the Council receives fi.om each "Initial PHA" eighty (80) pement of the Initial PHA's ongoing administrative fee for each unit month a participant family resides in the Council's Section 8 operating jurisdiction under the federal portability provisions. Accordingly, the Contractor and the Council agree that, for each unit month a Section 8 family receiving Section 8 assistance under the federal portability provisions resides in the jurisdiction(s) identified in Exhibit A, the Contractor will receive fi.om the Council fifty percent (50%) of the ongoing administrative fee the Council receives fi.om the Initial PHA. 3.02 Method of Payment. Payments to the Contractor by the Council shall be made according to the following provisions: (a) Quarterly Invoices and Reports. The Contractor shall prepare and submit quarterly invoice/reports on forms or in a format approved by Metro HRA staff. The invoice/reports Page 9 of 16 Pages shall describe actual administrative services performed during the quarter and itemize the Contractor's reimbursable costs of performing those services during the quarter. Co) Monthly Payments. Notwithstanding the quarterly invoices and reports, the Council will pay the Contractor the applicable fees under paragraph 3.01 on a monthly basis. Ongoing administrative fee and hard-to-house'fee ~'eimbursement payments to the Contractor will be based on the number of units, as indicated in Metro HRA's monthly utilization and hard-to- house reports, which are administered by the Contractor within the jurisdiction(s) identified in Exhibit A. One-time preliminary fees described in paragraph 3.01CO) will be paid to the Contractor based on records kept by the Council. The Contractor will notify the Council of any fee payment or utilization issues. The Council will provide the Contractor a written response to fee payment issues raised by the Contractor. 3.03 Administrative Fee Reserve (formerly Operating Reserve). During the term of this contract, all funds received by the Contractor from the Council pursuant to this contract must be expended for Section 8 program administrative costs or held for furore affordable housing related activities. The Contractor must maintain an administrative fee reserve account that must be credited with the amount by which the total of administrative fees earned and interest earned on the administrative fee reserve account exceeds the Contractor's actual administrative expenses during the calendar year. The Contractor may accumulate in its local administrative fee reserve account up to $10,000.00 per year for future Section 8 administrative expenses or for other affordable housing related activities. IV. RECORDS, FILES, AND AUDITS 4.01 Records. The Contractor agrees to maintain accurate, complete and separate accounts and records of all expenditures of funds for which reimbursement is claimed under this contract and of all moneys received pursuant to this contract. Such accounts and records shall be kept and maintained during the term of this contract and for a period of three (3) years following the termination of this contract. 4.02 Audit and Inspection. The accounts and records maintained pursuant to this contract shall be audited in the same manner as the other accounts and records of the Contractor and may be audited or inspected on the Contractor's premises or otherwise by individuals or organizations designated and authorized by the Council at any time following reasonable notification during the term of this contract and for a period of three (3) years following the termination of this contract. The Contractor further agrees that HUD and the Comptroller General of the United States, or their duly authorized representatives, shall have full and free access to all Contractor offices and facilities, and to all the books, documents, papers and records of the Contractor that are pertinent to the performance of this contract or pertinent to the operation and management of the Section 8 program, including the right to audit, and to make excerpts and transcripts from the books and records. 4.03 Data Privacy. The Contractor agrees to abide by the Minnesota Government Data Practices Act and other applicable state and federal law governing private or confidential data on individuals. The use or disclosure of information concerning a Section 8 program applicant or participant in violation of the Minnesota Government Data Practices Act or any other applicable state or federal Page 10 of 16 Pages law or rule of confidentiality is prohibited, except on the written informed consent of the applicant or participant, or as otherwise allowed or provided by state or federal law. Data on a family that are collected or created because of the family's status as a Section 8 applicant or participant is classified as private "benefit" data under Minnesota Statutes section 13.31. V. CONTI~CT TERM 5.01 Period of Performance. This contract is effective on the date this contract is finally executed by the Council and shall continue until the earlier of the following: termination of Section 8 program funding by HUD; termination of this contract by either party pursuant to paragraph 5.02 of this contract; or June 1, 2004. As provided in paragraph 3.01, the ongoing administrative fee described in paragraph 3.01(a) shall be payable retroactive to June 1, 1999. 5.02 Termination of Contract. The Council and the Contractor both shall have the right to terminate this contract at any time and for any reason by submitting written notice of termination to the other party at least ninety (90) days prior to the specified effective date of the termination. In addition, the Council shall have the right to terminate this contract on fourteen (14) calendar days' written notice if the Contractor's performance is not timely or is substantially unsatisfactory, or if the Contractor has violated any of the material terms, conditions or agreements contained in this contract. In either event, on the termination of this contract all finished and unfinished documents, work papers, products and records prepared by the Contractor under this contract shall become the property of the Council. On the termination of this contract, the Contractor will be paid for administrative services satisfactorily performed up to the date of the contract termination according to the terms stated in article III of this contract. VI. CONTRACT PERFORMANCE AND MODIFICATION 6.01 Assignment. The Contractor shall perform with its own organization the total work provided for under this contract and shall not assign, subcontract or transfer any of the contract work without the prior written consent of Metro HRA staff. 6.02 Prompt Payment of Subcontractors. If the Contractor receives prior written consent from the Council pursuant to paragraph 6.01 of this contract and assigns, subcontracts or transfers any of the work provided for under this contract, the Contractor agrees to pay any subcontractor within ten (10) days of the Contractor's receipt of payment fi-om the Council for undisputed services provided by the subcontractor(s). The Contractor further agrees to pay interest of one and one-half (1 Va) percent per month or any part of a month to the subcontractor(s) on any undisputed amount not paid on time to the subcontractor(s). The Contractor agrees the minimum monthly interest penalty payment for an unpaid balance of one hundred dollars ($100.00) or more is ten dollars ($10.00). For an unpaid balance of less than one hundred dollars ($100.00), the Contractor agrees to pay the actual penalty due to the subcontractor(s). 6.03 Amendments. The terms of this contract may be changed or modified by mutual agreement of the parties. Such amendments, changes, or modifications shall be effective only on the execution &written amendment(s) signed by the Council and the Contractor. Page 11 of 16 Pages VII. LIABILITY 7.01 Indemnification. To the extent permitted by law, the Contractor agrees to indemnify, defend and save and hold the Council, its agents and employees harmless fi-om any and all claims or causes of action arising from the performance of this contract by the Contractor or the Contractor's employees and agents. This clause shall not be construed to bar any legal remedies the Contractor may have for the Council's failure to perform its obligations under this contract. Nothing in this clause shall be cons~'ued as a waiver on the part of either the Contractor or the Council of any immunities or limits on liability provided by Minnesota Statutes chapter 466, or other applicable state or federal law. 7.02 Insurance. The Council assumes no liability with respect to bodily injury, illness, accident, theft or any other damages or losses concerning persons or property arising out of the use or maintenance of Contractor's premises, equipment or vehicles. The Contractor is responsible for providing adequate insurance coverage to protect against legal liability arising out of the Contractor's activities under this contract. Upon request from Metro HRA staff, the Contractor shall provide copies of insurance instruments or certifications fi-om the insurance issuing agency which show the insurance coverage, the designated beneficiary, the parties covered and the coverage amounts. 7.03 Independent Contractor Status. The Contractor acknowledges that the Contractor and the Contractor's agents and employees are independent contractors under the terms and conditions of this contract. The Contractor is responsible for the employment, discharge, compensation, benefit coverage and supervision of all Contractor personnel, employees and agents. The Contractor expressly acknowledges that the Contractor and the Contractor's personnel, employees and agents shall not assert any claims against the Council for reemployment, workers' compensation or other employee benefits of any type related to the performance of this contract. VIII. EQUAL EMPLOYMENT; NONDISCRIMINATION 8.01 Equal Employment Opportunity. The Contractor agrees to provide equal employment opportunities. (a) Nondiscrimination and ~4.ffirmative Action. The Contractor shall not discriminate against any employee or applicant for employment because of race, color, creed, religion, national origin, sex, marital status, status with regard to public assistance, disability, sexual orientation or age. The Contractor shall take affirmative action to ensure that applicants are employed, and that employees are treated during employment, without regard to race, color, creed, religion, national origin, sex, marital status, status with regard to public assistance, disability, sexual orientation and age. Such action includes, but is not limited to, the following: employment, upgrading, demotion, or transfer; recruitment or recruitment advertising; layoff or termination; rates of pay or other forms of compensation; and selection for training, including apprenticeship. (b) Notice Posting. The Contractor agrees to post in conspicuous places, available to employees and applicants for employment, notices setting forth the nondiscrimination provisions of paragraph 8.01(a) of this contract. The Contractor will in all solicitations or Page 12 of 16 Pages advertisements for employees placed by or on behalf of the Contractor state that all qualified applicants will receive consideration for employment without regard to race, color, creed, religion, national origin, sex, marital status, status with regard to public assistance, disability, sexual orientation and age. (c) Subcontracts. The Contractor agrees to ifi~orporate the provisions of paragraph 8.01 in any subcontracts for project work. 8.02 Equal Opportunity Compliance Reviews. The Contractor shall cooperate with the Council and HUD in conducting compliance reviews and complaint investigations pursuant to applicable federal and state civil rights statutes, executive orders, and related rules and regulations. 8.03 Nondiscrimination in Housing. The Contractor agrees to comply with federal and state laws prohibiting discrimination in housing. (a) Federal Laws. The Contractor shall comply with the nondiscrimination requirements of Title VI of the Civil Rights Act of 1964 prohibiting discrimination based on race, color, or national origin and Executive Order 11063 with respect to those provisions prohibiting discrimination based on religion or sex, and with implementing HUD regulations. The Contractor shall comply with Title VIII of the Civil Rights Act of 1968 which prohibits discrimination in the sale, rental or financing of housing on the basis of race, color, religion, sex, handicap, familial status, or national origin and with any implementing regulations. The Contractor shall comply with Section 504 of the Rehabilitation Act of 1973, as amended, which prohibits discrimination against handicapped persons who would otherwise qualify to participate in Section 8 programs and, where applicable, the Age Discrimination Act of 1975, as amended, which prohibits discrimination on the basis of age. Unwed parents, families with children bom out of wedlock, and recipients of public assistance shall not be excluded fi.om participation in or be denied the benefit of the Section 8 programs because of such status. (b) State Laws. The Contractor shall comply with all applicable provisions of the Minnesota Human Rights Act. IX. GENERAL PROVISIONS 9.01 Conflict of Interest. The Contractor agrees to abide by federal and state conflict of interest laws pertaining to the performance of this contract. (a) Federal Conflict Provisions. (1) In accordance with title 24, Code of Federal Regulations, section 982.161(a), neither the Council nor any of its contractors or subcontractors may enter into any contract, subcontract or arrangement in connection with the Section 8 tenant- based programs in which any of the following classes of persons has any interest, direct or indirect, during tenure or for one year thereafter: (i) Any present or former member or officer of the Council, except a "participant commissioner"; Page 13 of 16 Pages (ii) Any employee of the Council, or any contractor, subcontractor or agent of the Council, who formulates policy or who influences decisions with respect to the Section 8 programs; (iii) Any public official, member of a governing body, or state or local legislator, who exercises functions or' i'esponsibilities with respect to the Section 8 programs; or (iv) Any member of the Congress of the United States. (2) Any member of the classes described in paragraph 9.01(a)(1) must disclose their interest or prospective interest to the Council and HUD. (3) The conflict of interest prohibitions under paragraph 9.01(a)(1) may be waived by the HUD field office for good cause. (b) State Conflict Provisions. The members, officers and employees of the Contractor will comply with all applicable state statutory and regulatory conflict of interest laws, including Minnesota Statutes sections 10A.07 and 469.009, as amended. 9.02 Federal Certification Regarding Lobbying. Pursuant to title 24, Code of Federal Regulations, part 87, the Contractor certifies, to the best of its knowledge and belief, that: (a) Use of Federal Funds. No federal appropriated funds have been paid or will be paid, by or on behalf of the Contractor, to any person for influencing or attempting to influence an officer or employee of an agency, a member of Congress, an officer or employee of Congress, or an employee of a member of Congress in connection with the awarding of any federal contract, the making of any federal grant, the making of any federal loan, the entering into of any cooperative agreement, and the extension, continuation, renewal, amendment, or modification of any federal contract, grant, loan, or cooperative agreement. (b) Disclosure. If any funds other than federal appropriated funds have been paid or will be paid to any person for influencing or attempting to influence an officer or employee of any agency, a member of Congress, an officer or employee of Congress, or an employee of a member of Congress in connection with this contract or its funding, the Contractor shall complete and submit Standard Form-LLL, "Disclosure Form to Report Lobbying," in accordance with its instructions. (c) Certification. This certification is a material representation of fact upon which reliance was placed when this transaction was made or entered into. This certification is a prerequisite for making or entering into this transaction imposed by title 31, United States Code, section 1352. Any person who fails to file the required certification shall be subject to a civil penalty of not less than $10,000 and not more than $100,000 for each such failure. 9.03 Federal Regulations; HUD and Metro HRA Policies. The Contractor agrees to perform the Section 8 program administrative services contemplated under this contract in compliance with: parts 887 and 982 and other applicable provisions of title 24, Code of Federal Regulations, and Page 14 of 16 Pages other applicable provisions of the federal regulations governing the Section 8 program; applicable provisions of the HUD Handbook; the Administrative Plan for the Metropolitan Council Housing and Redevelopment Authority, as amended or revised; cun'ent procedures, letters and forms provided by the Council in policy/procedural memoranda; HUD's Housing Inspection Manual for the Section 8 Existing Housing Program; and all ~.ther applicable procedures and policies as may be provided to the Contractor. 9.04 Prohibition of Service Charges. The Contractor shall not charge any fee to any Section 8 program applicant or participant or charge any fee to any rental property owner for any Section 8 program administrative services provided under this contract. 9.05 Prior Contracts. The Contractor and the Council agree this contract supersedes and replaces Contract No. C-94-56, and any amendments to Contract No. C-94-56, and any other prior Section 8 program administrative services contracts entered into between the Council and the Contractor. Contract No. C-94-56 is terminated upon final execution of this contract. 9.06 Warranty of Legal Capacity. The individual signing this contract on behalf of the Contractor represents and warrants on the Contractor's behalf that the individual is duly authorized to execute this contract on the Contractor's behalf, and that this contract constitutes the Contractor's valid, binding, and enforceable agreements. IN WITNESS WHEREOF, the Contractor and executed by their duly authorized representatives. Approved as to form: Associate Caea/eral Counsel the Council have caused this contract to be METROPOLITAI~ COUNCIL jame.~. S_o'~nn, R~nal Administrator o7 i. By: Its: Pr,~sident (EDA) Date: January 10, 2000 Its: Executive Director (EDA) Date: January 11, 2000 C~ METRO HRA (12/99) Page 1.5 of 16 Pages EXHIBIT A CITY OF NEW HOPE The Contractor shall perform the Section $ program contract services within the City of New Hope, Minnesota and within the following jurisdictions located in Hennepin County, Minnesota: Edina Golden Valley Maple Grove Osseo The Council will perform Section 8 inspection and reinspection services for dwelling units located within the cities of Edina, Golden Valley, Maple Grove and Osseo. Page 16 of 16 Pages