041000 EDAOfficial File Copy
CITY OF NEW HOPE
EDA MEETING
City Hall, 4401 Xylon Avenue North
April 10, 2000
President W. Peter Enck
Commissioner Sharon Cassen
Commissioner Don Collier
Commissioner Pat LaVine Norby
Commissioner Mark Thompson
1. Call to Order
2. Roll Call
3. Approval of Regular Meeting Minutes of March 27, 2000
4. Discussion Regarding Request for Financial Assistance for Potential Apartment
Rehabilitation Project at 4110 and 4120 Nevada Avenue North and 7200 41st Avenue
North
5. Adjournment
CITY OF NEW HOPE
4401 XYLON AVENUE NORTH
NEW HOPE, MINNESOTA 55428
Approved EDA Minutes
Regular Meeting
March 27, 2000
City Hall
CALL TO ORDER
ROLL CALL
APPROVE MINUTES
IMP. PROJECT 677
Item 4
MOTION
Item 4
ADJOURNMENT
President Enck called the meeting of the Economic Development Authority to order
at 8:21 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 28, 2000. All
present voted in favor. Motion carried.
President Enck introduced for discussion Item 4, Motion Authorizing Staff to
Negotiate with Property Owner for Potential Acquisition of 8113 Bass Lake Road
by City (Improvement Project No. 677).
Mr. Kirk McDonald, Director of Community Development, stated the appraisal for
the fourplex property at 8113 Bass Lake Road is $171,000, and the owner's asking
price is $185,000. He indicated staff is requesting authorization to meet with the
property owner and potentially negotiate the purchase of the property based on the
appraisal and other factors, such as the terms of the leases, which would have an
impact on relocation benefits.
Motion was made by Commissioner Norby, seconded by Commissioner Collier, to
authorize staff to negotiate with property owner for potential acquisition of
8113 Bass Lake Road by City (Improvement Project No. 677). All present voted
in favor. Motion carried.
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 8:30 p.m.
Valerie Leone
City Clerk
New Hope EDA
Page 1
March 27, 2000
EDA
REQUEST FOR ACTION
Originating Department Approved for Agenda Agenda Section
Community Development ~ April 10, 2000 EDA
Item No.
By: Kirk McDonald By: 4
/
DISCUSSION REGARDING REQUEST FOR ¢:INANCIAL ASSISTANCE FOR POTENTIAL APARTMENT
REHABILITATION PROJECT AT 4110 AND 4120 NEVADA AVENUE NORTH AND 7200 41sT AVENUE NORTH
ACTION REQUESTED
City staff have received the enclosed correspondence from the owner of the three apartment buildings located at 4110 and
4120 Nevada Avenue North and 7200 41st Avenue North, requesting consideration of financial assistance to make
improvements to the buildings utilizing the City's Apartment Rehabilitation Loan Program. Staff requests to discuss this
request with the EDA and get direction on how to proceed.
, POLICY/PAST PRACTICE
In 1993, the EDA established a loan program directed at maintaining multi-family rental housing. The program is directed
at those properties with the greatest need, and basic improvements such as roof/window replacement, heating, siding, and
mechanical repairs carry a higher funding priority, as opposed to amenities. Financing is provided by the EDA in the form
of a Iow interest loan to leverage private funds and a 50/50 match of funds is normally required for eligible projects. One
project has been completed under this program; in 1994-95, the 48 unit (4-12 unit buildings), at New Hope Apartments
were renovated. The EDA has declined to participate on several other requests due to the type of improvements
requested, or due to the condition of the property. The Community Development Department recently made a short
)resentation on this program to the Apartment Managers Coalition in an effort to "get the word out" to New Hope property
owners/managers, and this inquiry is in response to that information.
BACKGROUND
This request is from Scott Cooper, Flag Builders, Inc., who owns the three 12-unit apartment buildings located west of New
Hope Bowl and south of the Mobile station. He indicates that all three buildings need new siding, window trim, soffit and
fascia work. He has also indicated that the roof on the garage building needs replacement. Cooper has indicated that he
has reviewed the guidelines established for the program, and does not see any issues that would complicate the matter.
He estimates the project cost at $100,000.
City records indicate that the buildings were constructed in 1962, and each have an estimated market value of $299,000.
The Building Official and General Inspector have reviewed this request, and are in agreement that the buildings are in
need of some improvements and feel they would be a good property for the City's rehab program, because they are visible
from 42nd Avenue.
MOTION BY SECOND BY
/ ~'-
I: Form s\Req uest ForAction.doc
Request For Action
Page 2
If the EDA is generally supportive of pursuing this request, staff recommends that the EDA authorize staff to meet with the
property owner and discuss the project and rehab program guidelines/requirements in more detail. If the applicant and
City staff are in agreement on general details after an initial meeting, staff would recommend that applicant submit the
appropriate financial information which could be analyzed (by an independent consultant at the applicant's expense) to
determine the ability to repay the loan. Staffwould update the EDA as these activities take place and present all
agreements to the EDA for final approval before the project initiation. Scott Cooper of Flag Builders, Inc., has been
awarded contracts by the City in the past for rehabilitation projects on single family homes.
FUNDING
In the past, the Apartment Rehabilitation Loan Program has been funded with the EDA fund, and the Finance Director has
indicated that there is a sufficient balance in the fund to allow the EDA to participate in this project, if the EDA so desires.
ATTACHMENTS
· Applicant correspondence
· Maps
· Apartment Loan Program Guidelines
Flag Builders, Inc.
March 30, 2000
Mr. Kirk McDonald
City of New Hope
4401 Xylon Ave N
New Hope, MN 55428-4898
S ubj ect:
Apartment Rehab Funds
Dear Kirk,
I appreciate the information you sent me. We have three apartment buildings totaling 36
apartments. The addresses are 4110 & 4120 Nevada Ave N and 7200 - 41st Ave N. All
three buildings need new siding, window trim, soffit and fascia work. Also the roof on
the garage building needs replacement. The siding we put on the building several years
ago turned out to be defective, so it has deteriorated badly.
We are interested in the apartment loan program. In reading over the material, I don't see
any issues that will complicate the matter. I anticipate the project running $90,000 -
$100,000. Please let me know what we need to do next. If you have any questions,
please contact me at my office 540-9404, or my cell number 369-1567. Thank you.
Sincerely
S~cott Cooper
Representative of the Dr. Irving Herman Trust
715 Florida Avenue South * Suite i00 · Golden Valley, Minnesota 55426 * (612)540-9404 · FAX 540-9407
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6'17. S
EDA RESOLUTION NO. g3-13
RESOLUTIOI~ APPROVING MULTI-FAMILY
HOUSING POLICIES
(PROJECT #510)
WHEREAS,
WHEREAS,
WHEREAS,
WHEREAS,
the City of New Hope contains over 3,839 units of rental multiple unit housing; and
many of those units have been constructed during the period from 1960 to 1979; and
many of those units have begun to show signs of aging and obsolescence; and
many private owners are having difficulty obtaining private capital necessary to rehabiiitate and
properly maintain their units; and
WHEREAS,
WHEREAS,
WHEREAS,
WHEREAS,
WHEREAS,
WHEREAS,
many of these rental housing projects have been subjected to the real estate recession that has
involved most of the United States as well as the metropolitan area; and
this housing stock, if maintained, can provide a decent, safe, and desirable source of affordable
housing for the current and future residents of New Hope; and
the City of New Hope Economic Development Authority (EDA) has a desire to provide assistance
where that assistance is clearly needed and warranted; and .~
the purpose of that assistance would be to: stem physical property deterioration, improve public
safety, improve values, enhance neighborhood cohesiveness, and assist in the provision of modern
rental amenities; and
the City of New Hope must target its limited resources, reflecting the reality that it can provide
only limited funding, compared to the funding that might potentially be required to renovate a
significant percentage of the 3,839 multi-family rental units in the City; and
the goal of the EDA's involvement would be to meet public policy needs in the housing and human
services area, rather than to resolve project financial problems and issues that private owners and
lenders may have, and
WHEREAS, the EDA recognizes that financial assistance to real estate projects involve some risk.
NOW THEREFORE BE IT RESOLVED that the following policy shall be used by the EDA to evaluate potential
future requests for assistance by rental unit owners:
The minimum amount of public funding required shall be provided in each case.
Funding priority will be given to basic needs (such as roof replacement, wiring, heating,
etc.) as opposed to provision of amenities (such as washers and dryers in each unit, new
office end lobby furniture, etc.)
No funding will be provided which, directly or indirectly, is used for fees by the owner or
related parties (including construction management fees, developer fees, use of
"c.ontingency funds", fee sharing, etc.)
4.,
o
At least two bona fide bids, from non-related parties, will be required for each item that is
a part of an overall program of rehabilitation funded partially or completely with City funds.
Normally, "in house" contracting and/or related party contracting will be prohibited.
No funds will be provided to bring defaulted mortgages current.
6. No funds will be provided to bring taxes current.
7. Public funds will be used to leverage private funding wherever possible. Normally a 50/50
matching of funds for eligible activities would be required.
8. Wherever possible, loans shall be used as the preferred financing vehicle, rather than grants
or equity investments.
9. In the case in which a project has substantial private financial stress, appropriate
participation by the lender and the equity owner will be a requirement for City investment.
The private investment may take the form of additional equity, debt forgiveness, interest
rate reduction, loan term extension, payment deferrals, management fee reduction, reduced
cash flow distribution, etc.
In no case will tax funds be used to solve financial problems that would otherv~ise be
solved privately in the absence of public participation.
10. Public funds will only be provided in those instances in which the public funds are essential
to the rehabilitation of the project. Public funds will not be provided when the primary
result of that provision would be to merely raise the profitability of a building.
11. Public funds will not be substituted for private funds that could reasonably be raised in the
private market. For example, if a private loan could be obtained, and/or if Iow income tax
credits would be available, EDA funds will not be used to displace these other potential
resources.
12. Each financial assistance agreement will contain an accelerated repayment provision in the
event of property sale, or other significant changes in circumstances.
13. Funds will not be provided that will allow the owner to displace moderate income residents
and attract higher income tenants. Nothing in this statement shall be construed to
preclude the attraction of desirable tenants to a project, and the displacement of
undesirable tenants.
14. Fun~ls would not be provided for projects that would result in lower property tax payments,
unless such projects meet other City objectives.
15. EDA Rehabilitation funds shall not be provided for use in such a way that Relocation
statues and payments are triggered.
16. No funding will be considered for approval without a prior objective financial analysis of the
project, and an independent recommendation as to the amount and type of proposed
fundin, g.. -
Adopted.by the Economic Development Authority in and for the City of New Hope this 13th day of September,
1993.
Attest:/'D~ah~je, Executive Director
~t
,Purpose
City of New Hope
Apartment Loan Program
EDA Resolution NO. 93-13
In September of 1993, the New Hope Economic Development Authority established a
loan program directed at maintaining multi-family rental housing. The program appeals
to the City's over 3,839 multiple rental units and focuses on three fundamental areas.
First, it assists owners in obtaining necessary capital for property rehabilitation and
upkeep. Secondly, it provides safe and descent housing opportunities at affordable
prices for residents now and into the future. Lastly, by targeting public resources in
areas of greatest need the program reverses property deterioration; thereby improving
overall property values and enhancing public safety within the community.
,policy Guidelines
In view of limited public financial resources, the program provides minimal
assistance to the greatest number of projects, with foremost attention to those
properties in the greatest need. Basic need improvements such as: roof
replacement, wiring and heating or other mechanical repairs carry a higher funding
priority.
Loans shall remain the preferred financing vehicle as opposed to grants or equity
investments. A 50/50 matching of funds is a normal requirement for eligible
projects.
No funding is provided which, directly or indirectly, is used for fees by the owner or
related parties (including construction management fees, developer fees, use of
"contingency funds," fee sharing, etc.)
At least two bona fide bids, from non-related parties, are required for each item that
is a part of an overall program of rehabilitation.
No funds are provided to address defaulted mortgages or to bring taxes current.
In cases involving substantial financial stress, appropriate Participation by the
lender and equity owner is required for City investment. Participation may take the
following forms: debt forgiveness, additional equity investment, interest rate
reduction, loan term extension, payment deferrals, management fee reduction,
reduced cash flow distribution, or other good faith efforts on behalf of the leader
and property owner.
Public funds will only be provided in those instances in which they are essential to
rehabilitation of the project. Public funds will not be provided when the primary
result of that provision would be to merely raise the profitability of a building.
8. Public funds will not substitute for private funding that may reasonably be raised in
the private market.
9. Each financial assistance agreement will contain an accelerated repayment
provision in the event of property sale, or other significant changes in
circumstances.
10. Funds will not be provided to allow the owner to displace moderate income
residents and attract higher income tenants. EDA rehabilitation funds may not but
utilized in such a way that relocation statues and payments are triggered.
11. Funds will not be provided for projects that would result in lower property tax
payments, unless such projects meet other City objectives.
12. No funding will be considered for approval without prior objective financial analysis
of the project, along with an independent recommendation as to the amount and
type of proposed funding.
Additional Information
For additional information or clarification on this program contact the following
individuals:
Kirk McDonald
Director of Community Development
City of New Hope
(612) 531-5119
Susan Henry
Community Development Specialist
City of New Hope
(b12) 531-5137
G: planning/housing/aptprg