CR 92-52 Commercial Rehabilitation Loan Program
\ "\ y 0
v '"
February 20, 1992
OPK\~
city Council Repart: 92-52
COMMERCIAL REHABILITATION LOAN PROGRAM TEMPORARY INCENTIVES
Proposed Action.
Staff recommends the adapt ion af the follawing mation: Move to
confirm HRA Resolution No. 284 adapting the Temporary Incentive to the
Commercial Rehabilitatian Laan Proqram. and other incentives in
cooperation with the praqram. far 1992.
The intent of the changes to. the Cammercial Rehabilitatian Loan
Program are to. encourage the use af the pragram thraughout Phase II of
the Mainstreet Improvement project.
Overview.
A temporary incentive package was established in 1991 to accelerate
the use of the Cammercial Rehabilitatian Laan pragram throughaut Phase
I af the Mainstreet Impravement Praject.
Staff has concluded that further incentives shauld be prapased in an
effart to. foster the use of the City's Cammercial Rehabilitation Laan
pragram in 1992 in canjunctian with the follawing prajects:
o Phase II Mainstreet praject
o passible Alleyscape Impravement Project
- Staff will examine prapasing additional
incentives in canjunctian with the Alleyscape
Improvement praject at the time the Cauncil
elects to praceed with that praject.
The Commercial Rehab program guidelines are prapased to. remain
unchanged with the exceptian af the temporary incentives as outlined
in this report.
One loan in the amaunt of $49,050 was pracessed in 1991. This was a
loan to the Tub & Shower for a rehabilitatian af 1010 Mainstreet.
primary
a
o
Issues to Consider.
What are the basic pragram guidelines af aur present
Commercial Rehabilitatian Laan pragram?
What temporary incentives were adapted for the Commercial
Rehabilitatian Laan pragram in 1991?
What temporary incentives are being prapased for this
pragram for the remainder of 1992?
What is the saurce af funds for this pragram?
What ather actian is necessary to. apprave the prapased
temparary incentives?
o
a
a
Supportinq Information
a Resalution No.. 284
a Resalution No.. 286
~; '-~: -
Paul T~
cammunity Develapment Specialist
CR 92-52
Page 2
Analvsis of Is.sues.
Based an the mation recammended, the HRA has the following issues to
cansider:
o What are the basic program guidelines of our present Commercial
Rehabilitation Loan Program?
Presently, the basic pragram guidelines are as follaws:
a Maximum loan amaunt - $50,000, requires matching amaunt af
funds from the private developer
a Interest rate, fram 3% far exteriar impravements and 6% far
interior improvements
a Term af the laan is fram 12 to 20 years
o What temporary incentives were adopted for the Commercial
Rehabilitation Loan Program in 1991?
The fallowing changes were made as part of the temporary incentive
package far 1991:
1. The City deferred all payment af principal and interest an
new laans far the remainder af 1991. Any laans having a
closing date in 1991 had payments which began an January 1,
1992. This deferment related to. bath interior andexteriar
impravements.
2. The City provided up to. $500 far architectural design
services. This anly applied to. exteriar improvement design
plans.
o What temporary incentives are being proposed for this program for
the remainder of 1992?
The fallowing items are being recommended by staff as a temporary
incentives for the Commercial Rehabilitatian Laan Program for 1992,:
Defer all payments of princi?al and interest on new loans far a
periad af six (6) manths fram the closinq date af thelaan.
o Loan will be deferred six (6) months fram the date af
written appraval of the laan request fram the City.
a Payments wauld be scheduled to begin an the first day of the
month follawing the sixth manth.
The 1991 temporary incentives stated that all paYment af
principal and interest wauld be deferred until January 1,
1992. This pravided mare of an incentive to. thase who. wauld
apply for the laan in the early manths af the year, as
campared to thase who. wauld apply far a loan in the later
part af the year. By stating there will be a deferment of
CR 92-52
Page 3
six (6) months from the date af closing, this provides as
much of an incentive to. an applicant in the manth of
February as it daes to. an applicant in the month of
December.
Legal counsel has infarmed staff that grants are
specifically prahibited under the state statute governing
the Commercial Rehabilitatian Laan Program. since the HRA's
Commercial Rehab Laan pragram is established under the
guidelines af this state statute, attarney steve Bubul has
recommended aur grant incentives be separate from the
Commercial Rehab Laan Pragram.
The fallawing two. incentives will therefare be used in
coaperation with the Cammercial Rehab Laan Pragram, but as a
separate set af temporary incentives designed to encaurage
commercial rehabilitatian. The fallawing are the two grant
incentives which will be o.ffered to. applicants who are
appraved far the city's standard Cammercial Rehabilitatian
Loan:
1. A qrant af up to. $500 far architectural desiqn services.
o Grant would be required to. be used anly for exteriar
improvement design plans.
o Grant will be made upan submissian af an invoice, and
at the time the last Cammercial Rehabilitation payment
is made by the City to. the applicant.
2. A grant equal to. 5% of the City's part ion of the loan. up to.
a maximum of $2.500.
o This grant wauld be required to. be used only for
exteriar facade impravements.
0. This grant wauld be made upan submissio.n af an invaice
and at the time the last Cammercial Rehabilitatian
paYment is made by the City to. the applicant.
o What is the s.ource of funds for this program?
Tax increment is used to. fund the Co.mmercial Rehab Laan.
The architectural grant and exterior facade improvement
grant would be funded thraugh either the Ecanomic
Develapment Fund, ar Tax Increment reserves.
o What other action is necessary to approve the proposed
temporary incentives?
The action to apprave Resalutio.n No. 284 is cantingent upan
appraval af the HRA Resalution No.. 286, which authorizes the
use af grants as incentives to. commercial rehabilitation
CR 92-52
Page 4
within the baundaries af TIF District 1-1 and Redevelopment
praject Area No.. 1. Resalutian No. 286 is attached to this
report.
Alternatives.
The City Council/HRA has the fallawing alternatives to. cansider:
1. Move to. autharize the changes to the Cammercial Rehab Loan
program and the additional incentives as detailed by staff,
for the remainder af 1992, by appraving Resolution No.. 284..
2. Move to. autharize alternative changes to the Commercial
Rehab Laan pragram.
3. Cantinue the item far further infarmatian fram staff.
4. Direct staff to take no. further actian an this item. Under
this action the Cammercial Rehabilitatio.n Loan program wauld
be maintained withaut any temparary incentives.
CITY OF HOPKINS
HOUSING AND REDEVELOPMENT AUTHORITY
Hennepin county, Minnesota
RESOLUTION NO: 284
A RESOLUTION AUTHORIZING TEMPORARY CHANGES TO
THE COMMERCIAL REHABILITATION LOAN PROGRAM
WHEREAS, the City of Hapkins on. June 9, 1982 adapted
Ordinance No. 82-511 establishing and providing
for the administratian of a Commercial
Rehabilitation Loan pragram; and
WHEREAS, the Hopkins Housing & Redevelopment Authority was
authorized to adapt from time to time various
program regulatians; and
WHEREAS, the Hopkins Hausing and Redevelopment Authority
was authorized to manage the program; and
NOW THEREFORE BE IT RESOLVED, the Hapkins Housing &
Redevelapment Autharity hereby approves and adopts
an amended pragram of rehabilitation,
madernization and repair of certain commercial
districts or areas in the City for the year 1992.
The amended program will allow for the deferment
of all principal and interest paYments for all new
laans relating to exterior and interior building
improvements. In caaperatio.n with this program,
the City will pravide up to. $500 in a grant for
architectural design services for exteriar
improvements, and a grant in the amount of 5% of
the loan, up to. $2,500, for fixed exterior
improvements.
Adopted this 2nd day af March, 1992.
Nelson W. Berg, Chairman
ATTEST:
Steve Mielke, Executive Directo.r
Ho.using'and Redevelapment Autho.rity
in and far the
City o.f Ho.pkins, Minneso.ta
Reso.lutian No.. 286
Reso.lutio.n adapting an Amendment to. the Redevelo.pment
Plan far Redevelapment Praject No.. 1 and the Tax
Increment Financing Plan far Tax Increment Financing
District No.. 1-1
BE IT RESOLVED by the Hausing find Redevelapment Autharity in and far the
City af Hapkins, Minnesata (Autho.rity) as fallaws:
Sectian 1 . Recitals.
1.01. The Autharity is administering Redevelapment Praject No.. 1 (Praject)
and Tax Increment Financing District No.. 1-1 (TIF District) in the City af Hapkins,
pursuant to. Minn. Stat. Sectian 469.001 to. 469.047 (HRA Act) and Sectio.n 469.174
to. 469.179 (TIF Ac~
1.02. The Redevelapment Plan far the praject and the Tax Increment
Financing Plan (TIF Plan) far the TIF District are cantained in a dacument titled
"Reo.rganizatio.n and Mo.dificatio.n o.f Redevelapment Prajects and Tax Increment
Financing Districts (Including Tax Increment Financing Plan fo.r Tax Increment
Financing District No.. 2-2)," appraved by the Autharity and the City an No.vember
7, 1989.
1.03. The Autharity has determined a need to. amend the Redevelapment Plan
and the TIF Plan in o.rder to. autharize additianal redevelapment activities in the
Praject area, and has reviewed a dacument titled "Amendment to. Redevelo.pment Plan
far Redevelapment Praject No.. 1 and Tax Increment Plan far Tax Increment financing
District No.. 1--1, Ho.using and Redevelapment Autharity in and for the City 9f
Hapkins, Minne'sata," dated March 2, 1992.
1.04. The amendment to. the Redevelapment Plan daes nat alter the exteriar
baundaries af the Praject area, and daes nat subs tan tially affect the general land use
in the Redevelopment Plan, and therefare the amendment daes nat co.nstitute a
"madification" that requires the no.tice and hearing required far initial appro.val af
a Redevelapment Plan, pursuant to. Sectian 469.029, Subd. 6 af the HRA Act.
1.05. The amendment to. the TIF Plan daes nat alter the baundaries of the TIF
District, increase the estimated tax increment expenditures, ar o.therwise canstitute
a madification that requires the natice and hearing requirement for initial appraval
af a TIF Plan, pursuant to. Sectio.n 469.175, Subd. 4 af the TIF Act.
Sectian 2. Autharity Appraval.
2.01. The Autharity finds that the abjectives af the Autharity. af encauraging
redevelapment within the Praject will be advanced by adaptian af the amendment to.
the Redevelapment Plan and the TIF Plan.
SJB30100
HPllO-22
"
2.02. The amendment to. the Redevelapment Plan and the TIF Plan is appraved
by the Autharity.
Appraved by the Hausing and Redevelapment Autharity in and far the City af
Hapkins this day af , 1992.
Chair
ATTEST:
Secretary
SJIlJOIOO
HPllO-22