3. HRA Discussion.2 -11 -1997 1 :19PM FROM MERIT HVAC 612 474 4243
Berquist's Work Session Notes for 03 Feb - slightly revised
and amended on 12- Feb- -97 since they are going 01-It for general
review. Always remember and never forget - "Democracy is
like a raft -- it won't sink. but we'll always have our feetwet."
HRA - My original•premise re the HRA was to enhance (improve) the
HRA by the consideration of other applicants-
HRA candi,dtats (members) should have a big picture understandinq
of the city.
I have backed into the theory that the necessary involvement to
acquire the "big picture" is probably limited to council members.
In the Handbook for Minnesota Cities. the creation of an HRA.
is predicated on the city council findinu that there exists:
Substandard., slum, or blighted areas which cannot be
developed without governmental a.ssist.a.nce: or
A shortage of decent. safe and sanitary dwelling
accommodations available to people 0" low incorcie and
their famllie•s. at, rentals or prices they can afford-
t would argue that with the redevelopment of the original, Instant
Web / Chan Bowl building, we no longer have areas which meet. the
first_ criteria.
Pro: The HRA has been mandated to operate self suffi.ciently-
pro.jects can be funded with little or no impact on the general
1-)udget .
Con: With no political acc0untab1lit.y, the HRA can implement
programs without knowing or feeling the impact, of public opinion_
Our HRA controls a budget in excess of the general. fund.. We have
Over 250 properties on the tax increment roll,. We are not a
large city with pockets of properties within our TIF districts-
We are not a large city with a minority percentage of our taxable
properties in districts- If we were, the self- sufficiency /
political accountablilitV reasoning would be of greater value to
Itte- Projects within the districts would be a shall portion of
the city activities as a. whole.` That is not us.
Pro: Greater efficiency. Because of the specia.li.zed fun cti.ons,
the HRA can focus on delivery of specific programs I goals-
Con: HRA. runs the risk of operating at cross purposes wi.t-h the
overall goals and / or policies of the city.
P. 2
3
(,given the current status of Chanhassen, we have no small,
special xzed functions or specif l.c. programs pa.rtl cul.a.rly uni.cgie to
the HRA which require or slain benefit from the "greater
efficiency." ici.ency.
2 -11 -1997 1 :20PH FROM MERIT HVAC 612 474 4243
Pro: Flexibility. An HRA can act swiftly to meet. a Problem-
Con! Being an appointed board. the risk of iiciplementing programs
t.o meet a perceived problem could be dune without being aware of
public thinking or community opinion.
Again. Chanhassen is a. growinq community. We are in the
process off b uil d ing thi town eqsmall re
tasks bere
swi..ft action to cc3ujjt.errscand_
Pro: Council becoming the HRA should be better for staff
irisofa.r as commun ication and coordination is cor 1nQ- from one body
+:only. Direction is coming from one body only.
.Pro: Council becoming HRA removes any conflicts that could
occur between se parate bodies reaardinq goals, direction, intents
and purposes. Again, with a growing community, this apProa.ch
rclakes sense.
Last element to restate: Were we St. Louis Part: or Richfield,
we would be rebuilding / updating a a community, This would lend
weight to the debate in favor of an HRA
In Chanhassen. wee are engaged in building a community. By
definition, an HRA "is a public corporation with power to
undertake certain types of housing and redevelopment. or renewal
activities,"
Insofar as we. the city council, are attempt.inq t.o establish an
overall vision for the city by the use of the comprehensive
plans, the establishment of retail. commercial and housing areas,
the maintenance and retention of rural and natural areas and our
strategic planning process, I believe that, we. the city council,
are the best choices as FIRA members.
Notes added after 03 -Feb work session: people on
I really like the involvement - non- coanen.abl.e p o the
c ommissions - including the HRA.
existing HRA members <Soyle, Bonn R Murphy) cont.inuina to serve
as citizen representatives and including council c)n the board as
well.. The even number of commissioners would be a problem
however - but not insurmountable. - Could be 9 - could be 7.
Whatever. But I do like the citizen involvement. . Attain. my
basic premise was board improvement •- not necessarilY ftindamorital.
change - although I am not. opposed to it as long as improvement
occurs.
P. 3
Cons
• More so in the past, but even today, the work of the HRA represents a
significant component of Chanhassen's growth and economic vitality. As
it is presently structured, this significant responsibility is outside of the
direct control of all the elected City officials.
- Many residents are unaware of this division of responsibilities,
and assume that their representatives are actively participating in
all planning which affect's the City's tax obligations.
• Even though the elected City Council members who serve have an
opportunity to ensure that the HRA acts in accordance with the
Council's vision, conscious effort must be made to ensure that such a
vision is in place , and that the vision is clearly and frequently
communicated. Similarly, action of the HRA must be actively and
routinely communicated to the City Council, and must accomodate mid-
course correction, when necessary. These processes may not exist.
• Public awareness and attendance of HRA meetings is very low, and is
at odds with our desire to welcome broad community involvement.
Incorporating HRA business into the regular City Council sessions might
improve public involvement in the process.
Housing & Redevelopment Authority
• 3 members at large
• 2 city council members
Pros
• HRA comes together for a single purpose: " To provide adequate
housing for low and moderate income residents and to clear and
redevelop blighted areas." (State's original mission)
In practice, this has meant using the letter of the tax lax to provide
financial incentives to encourage the systematic development of
Chanhassen's downtown. Without the HRA, the downtown might not
have developed the way it is now.
- they have the ability to become "expert" in the nuances and details
of the laws governing the district
- they've learned how to manage the district in a manner which is
most advantageous to Chanhassen.
• HRA members are able to take a long -term view of the mission of the
district and utilize the resources they have, instead of being subject to
short -range political pressures.
- Is this still a reality today ? ? ? ? ? ? ? ??
• Mechanism is already in place for 40% of the City Council to be on the
HRA. Therefore, the City Council's vision should always be an integral
part of any decision made by the HRA. In addition, a communication
link exists between the CC & HRA, without having to waste the other
60% of our (CC) resources.
- How well informed is the CC of the HRA activities? Proactive or
Reactive?
- Do the CC members on the HRA speak for all the CC?
• By having 3 members at large, more residents are serving in their city
government. A broader cross section of the community is contributing to
the future of Chanhassen.
MEMORANDUM
TO: Nancy Mancino, Mayor
FROM: Todd Gerhardt. Assistant City Manager
DATE: February 3. 1997
SUBJ: Housing & Redevelopment Accomplishments
You have requested information regarding what the HRA has accomplished over the past twenty years.
The HRA was established approximately 20 years ago to assist with the redevelopment of downtown
Chanhassen and the development of Chanhassen Lakes Business Park. Over this time period the HRA
was able to accomplish the following:
Redevelop Downtown Chanhassen:
• S 15 million worth of public improvements (streets. sewer, storm sewer, water, sidewalks,
landscaping, and entry features (clock tower and Chanhassen sign).
• Purchased and resold over 30 properties and relocated 60 tenants.
• Enhanced the future tax base by $5 million.
• Created over 3,000 new jobs.
• Assisted with the development of a 64 unit subsidized apartment complex and a 72 unit senior
housing development.
• Created the Historic Preservation District to preserve the long term maintenance of the downtown.
Currently the fund has $2 million.
• Purchased property to preserve large stands of mature trees (Target, next to Paisley Park and Lake
Susan, and additional green space adjacent to Taco Bell, Perkins, and Boston Market.
• Found a grocery store to locate in Chanhassen.
In accomplishing these goals, the HRA has had to take some risks and deal with some sensitive
negotiations. How would the city council like to deal with 60 Hallas —for example, the acquisition of
Pauly's, Pony Express, Pryzmus, Bloomberg, Bernie Hanson, Loren Anderson, Rettlers, Burdick, etc?
gAadmin \tg\hramancino.doc
01/29/97 AMD 14:14 FAX 612 452 5550
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C K S & F 444 CHANHASSEN
Nancy Mancino requested that
Roger provide the attached
information. 1 c;
Economic
D evelopment
Authorities
Handbook
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01/20;'07 ITED 14:15 FAX 612 452 5550
Fable of Contents
I
C E S & F
444 CHANHASSE`
Adcno •eMgmN . . . . . . . . . . . . . . . . . . . . . • . . . . . . . . . . ■
Pr eface ........ ............................... 2
Introduction ......... . ....... . .. . . .. . . • - - .......
3
DejWfion of Eeono>ntcDevelopn3ent ....................
3
Lace! Economic Development Organizations ..................
5
Formation and Operation of Economic Development Authorities (EDA) ...10
Reasons for Forging an EDA ................ ...... - -10
Procedures for Establishing as EDA .....................
10
QKwers, Duties and Qrganimi onallssues .................17
Power$ of an EDA .... . ..........................
22
Ufilidag an ZDA's Financing, Bonding and Taxing Authority .. - ....
31
L .mitd&n of Powers .............................
35
Combining Housing Redevelopment Authority (HRA) powers into in EDA .37
HRAPowers ..... ....................:.... .•__38
Financing Projects Using BRA Powers ... . .............. .
41
t
Appendix ......... .............................
community Examples ............................. 47
Tables ...... ............................... 52
Sample Resoludans and Bylaws ....................... 56
Glossary....... ............................... by
Bibliography . ............................... . .. -73
[a i.10 3
011`29%97 R'ED 14:15 FAX 612 452 5550 C R S & F 4-r4 CH_ INIUSSE\ I j(104
Combining HRA Powerg into an EDA
As part of the EDA Act the Minnesota Legislature authorized ERA's the ability to exemise all powers
gamed to IIRA. The ptapose of an HRA is to provide adequate housing for low and moderatc income
residents and to clear and redevelop blighmd areas.
Consolidation of HRAIS Into EDAIS
Number Parcont
Have Consolidated HRA with EGA 14 25.0%
Planning to Consolidate 7 25
Not Planning to Consolidrde 3S. 62.5
Swim: MN Setsaa Research Report- Ewmdc WvebPmwt AvlhwXGv, Faar cKA McCommck Obmbar 1990.
Because the list of HM powers is very expansive this chapter will only focas on those powers that
may be used for rc&velopment purposes.
primary Develepnwnt Purposa for EDA
Number Percent
Pdmadly Economic Development 67 63,8%
Pd*rrOy Housing Development 2 1.9
For Both Development Purposes 36 343
5ourw. MN Sonas Research Rune - E=maie omiopmmi Aud►addn. Patr'lr* J. McCormadt ocober 1990.
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01/29%97 WED 14:16 FAX 612 452 5550 C H S & F yiy CHANHASSE\
HRA Powers
When establishing a redevelopment project. the EDA must develop a redevelopment plan outlining
the purpose of the project and methods of financing. 'The plan must also include a copy of the written
option of the cities planning agency or department.
The City Council must approve or disapprove the plan within 30 days after holding a public hearing
to =view all aspects of the project. The council must make the following findings in connection with
its appmval:
1. The land in the projec[ area would not be made available for redevelopment without the financial
aid from the EDA.
2. The redevelopment plans for the redevelopment areas in the city will afford maximum
opportunity, consistent with needs of the City as a whole, for the redevelopment of the areas by
private enterprise.
3. The redevelopmmnt plan conforms to the grmcral comprehensive plan for the development of
the City. ..:
Prior to final approval of the redevelopment plan by the City Council, the EDA may obtain control of
any real ptoperry within the designated project area by entering into an option agteemenr. ne EDA
may not uncond'idonally obligate itself to the purchase of the properry until the plan actives approval
by the council.
Acquid on of Open Land
The redevelopment plan may include any work or undertaking to acquire open or undevelo* land
deu=iined to be blighted by virtue of the following conditions:
1. If the property has unusual and difficult physical characteristics.
2. There is an existence of faulty planning characterized by the subdivision or sale of lots laid out
in disregard of the contours or of irregular form and shape or of inadequate size.
3. A combination of 1 and 2 or other conditions which have prevented development of the land by
private enterprise and have resulted in - a stagnant and unproductive condition of the lands potential
use and value for contributing to the public health, safety and welfare of the city."
Wnnmm SFUWM 469Aa8
MiMrOsOta SmUM 469,026. Sub*Asi m 2
laooS
39
01%29/97 WED 14:16 FAX 612 452 5550 C K S R F 444 CHANHASSEN Z006
Acquisition of Unused or Inappropriately Used sand
A tE&VC1opttleritprojeetMay include any work or undertaking to acquire land or space that is vacant,
unused, under wed or ,inappropriately used. This may include infrequently used rail yards and rail
Swrap fa+cilidos, and ertaesgive or vacated railroad rights -of -way and railroads. It my also include
air righcs over shoots, expressways. waterways, and similar locations; land which is occupied by
functionally obsolete notursidendal buildings, or is used for low udlity purposes, or is coveted by
shaUow water. or is subject to periodic flooding, or consists of unused or under used slips or. dock
areas or other waterfront property.
A project can only occur on land or space which the EDA determines may be developed at a cost
masonably related to the public purpose to be served without major residential clearance activities, 2nd with
full cottsidarat on of the preservation of beneficial aspects of the urban and natural environment. The uses
for the project must be consistent with an emphasis on housing for low and moderate income families.
'These uses include the provision of schools. hospitals, parks and otheressential public facilities, whets
appropriate, and all uses assoclamd with new community development programs or similar large scale
undertakings that are related to inner city needs, including concentrated sources of employme-rit. ME
Sale arndAcquisidon of Real and Personal Property
An EDA may give, sell, transfer, convey or otherwise dispose of real or personal property or any
interest therein and may execute leases, deeds, conveyances, negotiable instruments, purchase
agreements, and other contracts or instruments. or obligation evidencislg or securing a loan made for
the purpose of economic development. job creation, redevelopment, or community revitalization by
a public agency to a businei, for - profit or nonprofit organization or individual, and take action that
is necessary or convenient.
The EDA may also acquire real or personal property or any interest therein by gifts, grant purchase,
exchange, kas e-, transfer, bequest, devise or otherwise and by then exercise of the power of erninent domain,
Because the public use of the EDA for redevelopment purposes is seen to be of a higher public purpose,
The EDA may acquire real property that is devoted for a public purpose whether or not it is held in
trust, notwitthsranding that the prapeT may have been previously acquired by condemnation or is
owned by a public utility Corporation.
Whose $earth 469 .028, snbdid" 3
ui mzffta Steam 469.022. SubdMS;v t 4
-° N4nnesot$ 5taefta It39Ai2, subdki5im 1(5) 4 (eta)
Whimsom StaWb 459.012, SubONWOn t(6)
39
01!29-:97_ WED 14:17 FAX 612 452 5550 C K S & F 344 CILMNIASSEN [a 007
studies
The EDA may carry out studies of the housing and redevelopment needs within the community. Mic
study may include data on population and family groups and their distribution according to income
groups, the amount and quality of available housing and its distribution according to rentals and sales
prices, employment wages, desirable patterns for land use and community growth, and other factors
affecting the local housing and redevelopment needs and the meeting of those needs. Results of all
studies must be made available to the public and to enterprises in the building. housing and supply
industries.
Comprehensive Plants
If the city government does not have a planning agency or the planning agency has not produced
a Comprehensive or general community development plan, the EDA may develop or have
developed a detailed comprehensive plan to use as a guide for undertaking its housing and
=development efforts. **
Inventory of Land and Buildings
The EDA may compile and maintain a catalog of all vacant, open and undeveloped land of land which
contains substandard buildings and improvements. m "
JOinf Powers Agreements �
Any two or more EDA's using ERA powers or together with an MA may join with one another ib
exercise, either jointly or otherwise, any or all of their powers. This joint powers agreement may be
used for the purpose of financing, including the issuance of bonds and giving security, planning,
underlatdng, owning, constructing, operating, or contracting a housing project located within the area
of operation of any one or more of the EDA's or HRA's. The EDA may by resolution authorize any
other housing authority or EDA utilizing HRA powers, to act on its behalf with respect to any or all
powers, as its agent or otherwise_
A city, county or mull- county authority may by resolution authorize another housing authority w
exercise its powers within the authorizing EDA's area of operation at the same time that the authorizing
authority is exercising the same powers.
VWGROen $%kM 460.012, su bdi+d" t(IS)
Mbrosata ft4m 469.012.6ubdMakm t(19)
Mhmwts 64 Wb de9Al2. SubdMSbfn 1(26)
40
01/29/97 ITED 14:18 FAX 612 452 5550 C K S & F 444 CH®NHASSEN 008
A county or city may join with any authority to permit the authority, on behalf of the county. town
within the county, or city, to plan, undertake. administer, and cant' out a leased existing housing
assistance payments program. A city may also join with another authority, unless there is an authority
in the city which has been authorized by resolution to transact business of exercise powers. A county
may join with another authority unless (a) there is a county authority which has been authorized by
resolution to exercise powers. or the county is a member of a multi- county authority, and (b) the
authority has initiated or has in progress an active program or has applied for federal assistance in a
public housing, Section S, orradovelopment program within 12 months after its establishment_ ""
Parking Facilities
s An EDA may operate and maintain public parking facilities in connection with any of its projects.
Financing Projects using HRA Powers
The entire cost of a project. including administrative expenses of the authority allowable to the project
and debt charges and all others costs authorized to be incurred by the authority, is known as the public
redevelopment cost The proceeds for the sale or lease of property in a project is known as the capita
proceeds. The capital proceeds for land sold may pay back only a portion of the public redevelopment
cost The EDA may Finance the projects using one or a combination of the following methods:
Federal Grants - The EDA may accept grams or other financial.-assistance from the federal
government. Before it uses otherfinancial methods, the EDA must use all federal funds for the qualified
projecL
Bond Issue - The EDA may issue bonds for any redevelopment project. The bonds must be secured
by mortgages upon the properly or to be held'by the EDA or by pledge of its revenues, including grants
or contributions.
In 1992 the Legislature passed legislation granting cities the authority to allow HRA's or EDA's with
HM powers to extend their general obligation pledge to suppon housing redevelopment revenue
bonds, provided:
1. The pledged revenues exceed 110% of debt service on the bonds.
Whn mla SMt M 469.003
-- Wnesot$ ShVJID 469.9W
Nnremat Smwe 444,012. Subd lion 3
F&rowta SlaWb 468.012, SubdMzbn 1(15)
41
01!29%47 WED 14:18 FAX 612 452 5550 C K S & F -44 CHANHASSEN [a 009
2. prviceeds must be used only for qualified housing development projects. These include projects
forelderly individuals or individu is with Incomes less than or equal to 90% of the median income
for the M5A or non- inetmpolitan county where the project is located.
3. A public bearing has been conducted by both the city and the EDA at least 15 but not more than
120 days prior to the bond sale.
4. The bonds do not exceed the greater of IJ2% of the taxable market value or $3,000,000.
These bonds are not subject to voter approval. but are subject to Minnesota Statute governing bonded
indebtedne $ s.
The advantages of using this program art numerous because thert is no need for outside credit support.
no ncedfor separate construction funding, lowers the cast of issuance, lowers the coverage testmquired
for revenue bonds, lowers occupant rents, no election is required, and it does not count against the
debt limit of the city.
Revenue Pool - The FDA may provide that all revenues received from its redevelopment areas be
placed in a pool for the payrnent of interest and principal on all bonds issued for any redevelopmnnt
project, and the revenue fmm all such areas must be paid into the pool until all outstanding bonds have
been fully paid. .
Special Benefit Tax Fund - If the EDA issues bonds to finance a redevelopment project, it may, with
the consent of the City Council, notify the county treasurer to set aside in a special fund, for the
retirement of the bonds and interest on them. The amount of the levy may not exceed 0.0131 of the
taxable market value of oral and personal property in the axing district. 7be EDA may levy an
additional levy not to exceed 0.0013% of taxable market value to defray the cost of providing
informational service and relocation assistance families, individuals, businesses and non -profit
organizations that may be displaced by the activities of the project "
Property Tax Exemption
A developer proposing to construct a building within it redevelopment project can apply to the City
Council to obtain a partial tax exemption. The project must be designed and used primarily for housing
purposes, but portions of it may be, planned and used for related businesses, commercial, cultural, or
recreational purposes.
Wrosotz SM%m 469.03, SubdWan 56: Wi emm Stamen 460.012, Sutd1wWon 1(25)
42
01/29/9i WED _14:19 FAX 612 452 5550 C K S & F iii CHANHASSE\
The City Council may exempt the project from all local taxes up to 5010 of the net tax capacity of the
development which represents an increase over the net tax capacity of the property. This may include
both laud and improvements acquired for the development at the time of its original acquisition. if the
City Council approves of the exemption. the development will also be exempt from any or all county
and school district ad valorem property takes for the duration of the municipal exemption. The
exemption can be extended for s maximum of 10 years. Exemp *on from special assessments or from
payment of inspoction, supervision, or auditing fees is showed.
please note that dte City Council must provide an opportunity for County Board and School Board to
make written comment on the proposal.
Bormwing and Acceptance of Funds
?he EDA may borrow money or other property and accept contributions, grants. gifts, services, or
other assistance from the fedeal government, the state government. state public bodies, or from arty
other public or private source.
ReltabiffuE on Loans and Grants
An EDA may develop god administer a housing rehabilitation loan and/or a ,grant program anywhere
within the city limits to persons of low and moderate income, to rehabilitate their property.
Interest Deduction Program
An EDA may develop and administer an interest reduction (buy -down) program to assist the financing
of the construction, rehabilitation. and purchase of housing units which are intended primarily for
occupancy by individuals of low or moderate incotrx and related and subordinate facilities or for
commercial rehabilitation projects. An EDA is allowed to do one or all of the following!
1. it may pay it periodic payments or in one lump sum payment any or all of the interest on loans.
2. Thu EDA may pay any or all of the interest on bonds issued for the purpose of making loans for
a housing rehabilitation program.
• Warow i Saal9t 469A4a, SubdYt as 1.2
Whruzuk StsXM 469AM gubdivi. m 3
• -• kenrazan Sawn 469.012, Subelht *n tt3l
43
01/29/97 WED _14:20 FAX 612 452 5550 C K S & F 444 CH.- \-H.aSSEN [a 011
3. The EDA may pay in periodic payments or in one lump Sum payment any or all of the interest
on laws made by private lenders to purchasers of housing units_
4. It may pay any or all of the irtt=; due on loans made by private lenders to a developer for the
construction or=habilitation of housing units.
5. It may pay ill periodic payments or one lump sum payment any or all of the interest on loans
made by any person to a developer for the construction, rehabilitation. and purchase of
corrun=ial facilities which are related and subordinate to the construction, rehabilitation,
purchase of housing units that receive interest reduction assistance provided that the entire
development is composed primarily of housing units.
6. The RDA may pay in pcdodic payments or in one lump sum any or all of the interest on loans
that am part of a commercial rehabilitation program.
7. The EDA may pay any or all of the interest on bonds issued for commensal rodevclopment
Programs.
The following is a list of restrictions that apply to the operation of an interest reduction program: 00
1. Mom u 'Ming the interest reducdon program. the EDA must determine the availability and
affordabrf"ty of other governmental programs that may be used to develop the project.
2_ The EDA m use da mnine the availability and affordability► of private market financing that may
be usrd to develop the project.
3. 'The EDA must deterrrdne the need for additional affordable mdstgage credit to construct and
enable the ptuchase of housing units within the city.
Q.: The EDA may not authorize the use of funds for the interest reduction program if it determines
that the applicant can obtain financing from private lenders with terms and conditions that are
affordable to comploim the project.
5. The EDA must establish rules and procedures to govern the use of funds for an interest reduction
Pm VMm-
• Wreaoia GUIU18 469.14M
.. Nbf rafiaw Swum dSOAl2, SubdmWon 60
44
01/291 WED 14:20 FAX 612 452 5550 C K S & F CH.MNIUSSEN [a 412
� e
6. in other to lindt possible abuse and/or fraud, the EDA must obtain from the developer, or from
the individual benefiting from the interest reduction program. an agreement that stipulates if the
property is sold or transferred within a predetermined period.of time after funds have been
1, disbursed, the FDA may require one of the following repayment terms:
(SP DP — OP— PTD) P +1p =EDANyment
SP = Salt P rice DP = Down payment OP Other Payments PTD a ]r'aymetu to DeveIoprr
P = principal IP = Interest Payment IRP . Interest Reduction Payment
a. The sale price of the property, less
b, the down payment, any payments of principle. other payments made to construct, acquire,
or improve the property and any outstanding liens or mortgages securing loans, advances,
or goods and services provided for the coristruction acquisition, or improvement of the
property, less
c. the amount, if any, which the authority determines should be allowed for the developer or
other benefited property owner as a return on the developer's or other benefited property
owner's investment in the property, multiplied by
d. a ftacdon, the numerator of which is the interest reduction payments made by the authority
and the denominator of which is the total of the dawn - payment. all principal, and interest
payments including any portion paid by the authority, and other payments made to construe
acquire, or improve the property. In the case of a transfer, other than an arms - length sale,
and appraisal shall be substituted for the sale price.
Tire City of Hastings is one of several communities that have utilized this program. Their program has
several components that are designed to assist businesses to make improvements to convttcrcial
buildings, storefronts and rear entries, as well as signage improvements. The Hastings HRA works
together with the local banks throughout the entire loan process. The business applies to the bank for
the improvement loan and is required to meet the banks loan eligibility criteria as it would for other
Wes of loans. Once the loan is approved by the bank, the HRA must approve the project to ensure
that it follows the cities improvement guidelines.
Minrasn a same 469.012. SubctiWWCM 9
45
011/29:97 WED 14:21 FAX 612 452 5550 C K S & F 444 CHANIUSSEN 013
The followisig is a list of the components.
1. . Yf a bu0ding owner is interested in making major improvements, the Interest Reduction program
will educe the iintex=z due on a rehabilitation Ioan by 6 points. For example, a load with an
interest rate of 11% would be reduced by 6% to a 5% interest rate. The loan amount limn is
5200,000 witb a maximum IRP payment of $7,500. The building owner may use the funds to
finance any improvement except for fixtures that can be moved. An additional design credit of
$500 is available for business owners who utilize the services of an architect to remodel the
storefront. '
2. For exterior improvements to the back of the buildings, for the repair or replacement of porches.
windows and doors, cleaning and painting, the building back and alley improvement component
.will pay 25% of the approved costs. up to a maximum of $500 per 22 feet of building width.
I The third eompouent focuses on signage replacement. The Sign Improvement Program will pay
25% of the approval costs, up to a maximum of $250.
4. For apartment improvement/rehabilitation, 50% of the rehabilitation cost will be lent wirhout
interest, to be repaid upon the sale of the property. This component: is run jointly with the Dakota
County HRA.
Additional components: By working with the State Historic Preservation Office and the National Pule
Service, a 20% tax credit may be authorized. The investment tax credit allows the owner or partners
to deduct 20% of the approve costs from their tax liability.
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TOTRI- P. 12