89-1931 WHITE - CITY CLERK
PINK - FINANCE CO�l/1CII /�(J/��L�/
CANARV - DEPARTMENT G I TY O� SA I NT PAIT L File NO• W - /��/
BLUE - MAVOR
� Co � 'l Resolution 'jg�1
� � .,
Presented By
VReferred T � Committee: Date �� �7—��
Out of Committee By Date
WHEREAS, the Council of the C'ty of Saint Paul has been requested by the
City's Planning and Economic Developmen Department to approve documents entitled
Neighborhood Commercial Rehabilitation oan Program Guidelines for the Housing and
Redevelopment Authority of the City of aint Paul; and
WHEREAS, the Neighborhood Co ercial Rehabilitation Loan Program Guidelines
for the Housing and Redevelopment Autho ity of the City of Saint Paul revise and replace
documents adopted by the City Council o September 22, 1983, entitled Neighborhood
Commercial Rehabilitation Loan Program uidelines for the City of Saint Paul; and
WHEREAS, the HRA Board has ap roved the action on September 27, 1989,
NOW, THEREFORE, BE IT RESOLVE , that the City Council of Saint Paul approves
the documents entitled Neighborhood Co ercial Rehabilitation Loan Program Guidelines
for the Housing and Redevelopment Autho ity of the City of Saint Paul.
COUNCIL MEMBERS Requested by Department of:
Yeas Nays
Dimond
�—�. In Fa r
—s�c�
�n� � B ��'
Scheibel A gai n Y -
Sonnen
—i'��ilse�
2 i � Form Approved by City �k torne
Adopted by Council: Date _/
,7�
Certified Pas e b ouncil Se ary By
gy, t
A o e by � or: _ �E� � � Ap by Mayor for Su i i to Council
� '�,,�jwJ
� �E�i e� � � $7
� . . . � � ��i'-�9�l
DEPARTMENTlOFFICEJCOUNdL �� ' M DA INI71 TED
Planning & Economic Development GREEN SiN N0. �i���
CONTACT PER30N d PHONE OR CRN14 O�Y�►lJI� �DEPARTMENT DIRECTOR �CITY COUNGL
Ma,rshall Turner (228-3302) �'�� N� � �CITM ATfORNEY f �CITY CLERK
MUBT BE ON COUNqL AOENDA BY(DAT� RO NG �BUDOET DIRECTOH r/ �FIN.8 MGT.SERVICEB DIR.
��roa�a+�ssisr [� eP. i0.
TOTAL#�OF 81QNATURE PAGES (CLI�A LOCATIONS FOR SIGNATURE)
ACTION REQUES7ED:
Amend the guidelines of the a) existing eighborhood Commercial Rehabilitation Loan Program
and b) approve the ordinance establishin the program and authorizing the HRA to act as
agent and administer the program, and 'c) approve the guidelines for the Citywide Commercial
Area Rehabilitation Pro ram
r�oO�NDn�s:�PP�W a�Me�(� CO NC COMMITTEE/�SEARCH REPORT OPTIONAL
_PLANNII�COMMI3810N _CIVIL SERVI�COMMISSION ANAI�YST PHONE NO.
_qB COAAMITTEE A HRA
.�3TAFF _ COA�ME
�DIBTRICT C�JRT —
$UPPORTS WHICH COUNqL OBJECTNEI
Nei hborhood & Economic Develo men
INITIATINO PROBLEM.ISSUE,OPPORTUNITY(Who.What.When,Where,Why):
It is becoming increasingly, difficult t finance projects on many of the older commercial
strips because of the existing $30,OOq m ximum in City funds. The guidelines change
increases the maximum in City Funds to $ 00,000. The ordinance is required by the State
Legislation for 1) establishing the p�og am and 2) authorizing HRA to act as agent. The
Citywide Rehabilitation Program (now CDB ) is being established because CDBG-HUD requirements
are getting much more restrictive. The on-CDBG program will allow the City to do Rehab
Loans on a Citywide basis.
ADVANTADE8�F APPROVEO:
1) 2� CDBG Neighborhood Commercial Reh bilitation Loan Progr�will lie able to provide
more complete financing for the more costly Rehab projects.
2) 4� Non-CDBG Citywide Commercial Are Rehabilitation Program will be establishing and
implemented. The City will be ab;le o do more Rehab Loans, including those that have
been determined to be ineligible iund r CDBG requirements.
asnova�rrn�es�n�+ovEO:
NONE RE�II/�
OCTlB�
faTY CLERK
DISADVANTAOE8 IF NOT APPROVED:
The City will not be able to provide �teh b Assistance to many potential pro�ects. As the
HUD-CDBG eligibility requirements bec�ame more restrictive and as the actual method of
determining eligibility becomes incre�.si gly burdensome, fewer and fewer projects are
eligible for rehabilitation. Council Research Center_
ocT �s �ss9
TOTAL AMOUNT OF TRANSACTION = COST/REVENUE BUDOETED(CIRCLE ON� YES NO
FUNDINO SOURCE ACTIVITY NUMBER
FINANCIAI INF�iMA710N:(D(PWN)
,, . . � �.
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NOTE: COMPLETE DIRECTIONS ARE INCLUDED IN THE C3RE SHEET INSTRUCTIONAL
MANUAL AVAILABLE IN THE PURCHASING OFFICE(P E NO. 298-4225).
ROUTING ORDER:
Below are preferred routings fo�the five moat frequent typea of dx merns:
CONTRACTS (assumes authorized COUNCIL R SOLUTION (Amend, Bdgts./
budget exfats) , Accept. Orants)
1. Outside Agency 1. DepaR nt Director
2. Initfatiny DepaRment 2. Budget irector
3. City Attomey 3. City Att mey
4. Mayor 4. Mayor/ istant
5. Flnance&Mgmt Svcs. Director 5. Ciry Co ncil
6. Flnance Ac�uMing 6. Chief untant, Fin&Mgmt Svcs.
ADMINISTRATIVE ORDER (Budget COUNCIL R LUTION (all others)
Revision) and ORDINANCE
1. Activity Manager 1. Initiatin Department Director
2. DepertmeM Accountant 2• City Att ney
3. Department Director 3. MayoN 'stant
4. Budget Director 4. City il
5. City GYerk
6. Chief AccountaM, Fin&Mgmt Svcs.
ADMINISTRATIVE ORQERS (all others)
1. Inftiating Depenment
2. ary Attomey
3. MayoNAssistant
4. City Clerk
TOTAL NUMBER OF SIC3NATURE PAGES
Indicate the#of peges on which signatures are required and i
each of the��a�.
ACTION REQUESTED
Desc�ibe what the project/request eeeks to axompNah in either ch logi-
cal order or order of importance,whichever is most approprfate for
issue. Do not write complete sentences. Begin each item in your list 'h
a verb.
RECOMMENDATIONS
Complete if the issue in question has been presented before any ,public
or private.
SUPPORTS WHICH COUNCIL OBJECTIVE?
Ind,j�te wNiCl�Councii objective(s)your projecUrequest supports by sting
tF'�e key`woid(s)(HOUSING, RECREATION, NEIC3HBORHOODS, E NOMIC DEVELOPMENT,
BUDGEI', SEWER SEPARATION).(SEE COMPLETE LIST IN INSTR CTIONAL MANUAL.)
COUNCIL OOMMITTEE/RESEARCH REPORT-OPTIONAL AS REQ ESTED BY COUNGL
'I�1ITIATIN(i PI908LEM, ISSUE,OPPORTUNITY
Explain the situatlon or conditions that created a need for your proj
w request.
ADVANTAGES IF APPROVED
indicate whether this is aimply an annual budget procedure required y law/
charter or whether there are epeciflc wa s in which the Ciry of Seint eul
and its citizens wfll beneflt from thia pro�ectlactlon.
DISADVANTA(iES IF APPROVED
�.:Wbat.aegati�va.eifac�s,or�najor changes to exiating or past pr migM
this projecUrequest produce if it is passed(e.g.,traffic delays, noise,
tax incr,�di!�se�§sai6nts)?To Whom?When? For how long?
DISADVANTAGES IF NOT APPROVED
What will be the negative consequences if the promised action is not
approved?InabiUty to deliver service?Continued high traffic, noise,
accident rate?Loss of revenue?
FINANGAL IMPACT
Although you must tailor the information you provide here to the iss you
are addressing, in general you must answer two questions: How m is it
goi�to c�t?Who is gang to pay?
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Members:
Bill Wilson, chair
~ ' GITY O SAINT PAUL Tom Dimond
, -' �""""' ` � Kiki Sonnen
,eea7 I111! � ; •
OFFICE O THE CITY COIINCIL
� D e: November 22, 989
WILLIAM L. WILSON COCn ittee Report MARK VOERDING
Councilman Legislative Aide
To: Saint Paui City Council
From : Housing and Econ mic Development Committee .
Bill Wilson, Chair
1. Approval of Minutes
COMMITTEE RECOMMENDED APPRO AL of the OCTOBER 25, 1989, minutes.
2. Appeal of David and Josephi e Berg to a decision of the Heritage
Preservation Commission whi h denied the issuance of a permit to
demolish the structure loca ed at 2�0 West 7th Street
COMMITTEE RECOMMENDED A LAY VER TO DECEMBER 27.
3. Resolution authorizing PED o finalize terms of Skyway Agreement with
the U.S. Postal Service to onstruction and operation of skyway bridge
connecting the Block L/Minn sota Telecenter complex and downtown
Post Office (C.F. 89-1914)
COMMITTEE RECOMMENDED APPRO AL, WITH ANfENDMENT.
4. Resolution approving Citiwi e Commercial Area Rehabilitation Program
Guidelines (C.F. 89-1930)
COMMITTEE RECOMMENDED APPRO AL, WITH AMENDMENT.
5. Resolution approving Neighb rhood Commercial Rehabilitation Loan Program
Guidelines for the HRA (C. . 89-1931) \
COMMITTEE RECOt�IENDED AYPRO AL, WITH AMENDM T.
6. Ordinance establishing the eighborhood Commercial Rehabilitation Loan
Program and authorizing the HRA to act as agent and administer the
Program (C.F. 89-1940)
COMMITTEE RECOMMENDED APPRO AL, WITH AMENDMENT.
7. Resolution establishing the Downtown Development Study Commission
(C.F. 89-1997)
COMMITTEE RECOMMENDED A LAY ER TO DECEMBER 13.
CITY HALL SEVENTH FLOOR SAINT PAUL, MINNESOTA 55102 612/298-4646
4�46
�. � iTY . .� . , i�� , ��1� �! � �) ..j a�{ ✓ �
��'vv V Kf �
,��$° °'� , CITY OF SAINT PAUL
.
� - a DEPAR ENT OF PLANNING AND ECONOMIC DEVELOPMENT
� �iii'i i���i a
DIVISION OF NEIGHBORHOOD DEVELOPMENT
� �
25 West Fourth Street,Saint Paul,Minnesota,55102
�86�
612-228-3200
GEORGE LATIMER
MAYOR
T0: Councilmember Bill, Wi son
' rI,
FROM: Warren Hanson ��:=%�
� y'
DATE: November 29, 1989
RE: 2� Neighborhood Comme cial Rehab Loan Program
In response to questions raised i the Housing and Economic Development
Committee on November 22, 1989 re arding the 2$ Neighborhood Commercial Rehab
Loan Program, staff has made chan es to Part III, B4 (page 9) of the attached
guidelines which would require H approval for any deviation from the
guidelines. This is in response o Councilmember Sonnen's request for HRA
approval on projects using more t an $100,000 of CDBG funds. Also, Part III,
Al (page 4) answers the questions regarding HUD CDBG requirements.
WH:rb
cc: Ken Johnson
Marshall Turner
Craig 0'Brien
Karen Swenson
Jim Hart
Tom Meyer
a:mtbillm.rb
� _ . � . . . �?�-/13�1���
NEIGHBORHOOD COMMERCIAL RE BILITATION LOAN PROGRAM GUIDELINES
FOR THE HOUSING AND REDEVELOPM NT AUTHORITY OF THE CITY OF SAINT PAUL
1989
I. PURPOSE: To provide low-i terest, long-term loans as an incentive for
tenants and owners to upgrad the appearance and energy efficiency of
commercial properties and th commercial area as a whole.
II. LOAN TERMS AND CONDITIONS
A. Housing & Redevelopmen Authority of the City of Saint Paul
(HRA)/bank participati n -- the HRA and a bank will participate in
a loan on a matching sis. (In a $200,000 loan, the HRA's share
and the bank's share ch will be $100,000) .
B. Maximum loan--shall n t exceed the lessor of the cost of
rehabilitation or $20 ,000 for commercial use. Banks may increase
their portion of loan over $100,000. This maximum is on a per
business and/or per b ilding basis which means each building can
incur no more than a 100,000 HRA debt share at any given time
from this program no atter how many businesses occupy that
building.
C. Interest Rate
1. HRA's -- annual rate of 2�.
2. Banks -- allowe to charge up to an annual rate of three
percent above p ime rate of interest at the time of closing.
3. Effective Annu Interest Rate -- shall be approximately
one-half of cu tomary rates offered for direct loans from
private financ'al institutions. (See example below. )
4. Floating inter st is allowed on bank portion of loan
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COMMERCIAL RE ABILITATION LOAN EXAMPLE
1
H� $20,000 at 2�
2
Bank 20 000 at 12�
$40,000 at 7$ ) 10 yrs = $464/month
) for 15 yrs = $359/month
) 20 yrs = $310/month
1
The HRA takes a subor inate position and has a set 2� interest
rate
2
The lending instituti n is allowed to charge up to 3� above the
existing prime intere t rate,
D. Term -- the term allo ed shall be up to 25 years. The bank and/or
HR.A shall make the de ermination for appropriate terms relating to
the applicant's abili to pay.
E. Collateral Required
l. The bank shall h ve the sole responsibility of determining
the applicant's redit risk on projects where the total
project costs ar less than $60,000. On projects over
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$60,000, HRA st ff will make an analysis to determine
appropriate fin cing gap and public financing involvement
along with bank's credit analysis.
2. The bank shall ave senior lien on any collateral required.
3. The HRA will ha e identical collateral, but subordinated to
bank.
4. Bank will file or the HRA any liens required on collateral.
5. HRA staff may r quire that bank secure specific additional
collateral in s me instances.
F. Loan Disbursements -- payments to consultants and/or contractors
shall be made by the ank but not before written approval from the
HRA is provided. Loa disbursements will be limited to three (3)
in total; two (2) par ial payments, plus one (1) final payment
(minimum of 10� of to al loan) when all work is completed and
inspected.
G. Lien Waivers -- the b nk will collect lien waivers and/or other
documentation as deem d necessary by the bank.
H. An Origination/Servic Fee of 1 1/2 $ will be charged on the HRA's
portion of the loan. This amount must be paid at loan closing.
Additional fees for H services may be charged if warranted.
I. Failure to abide by H procedures, laws, and approved plans can
result in calling off loan at HRA's request, and it will be the
Bank's responsibility o honor this request in an efficient,
timely manner.
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III. ELIGIBILITY CRITERIA
A. Applicants
l. The financing s urce of this program is the Community
Development Blo k Grant (CDBG) Program. As such, an
applicant's pro ect must meet at least one of the following
federally defin d eligibility criteria:
a) Pro'ects hich serve a ma'orit of low and moderate
income e le. In order for a business to qualify
under thi criteria, the business will have to provide
a product or service that is used by a majority of low
or modera e income people. In addition, staff will
also have to determine who the customers are and
whether t ey qualify as low or moderate income. In
some inst nces, in order to avoid as much subjective
speculati n as possible, Commercial Rehabilitation
Staff may require the identification of the business
service ea and compare that with the map of eligible
low/mode te census tracts.
b) Pro'ects hich create or retain 'obs for low and
moderate income ersons.
c) Pro'ects hich serve to eliminate slums or bli ht.
The City will only seek to qualify a commercial
rehabili ation project under the slum/blight objective
if it is not possible to make a determination on
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low/moder te income benefit. This would be done in
cases whe e the tenants haven' t been determined and/or
a develop r is the recipient of the rehabilitation
assistanc .
In order or a project to qualify under the
slum/bli t objective, the project would have to be
located i an area that is designated a slum or
blighted rea according to state and/or local law.
d) Other co ercial properties meeting the Department of
Housing d Urban Development's Community Block Grant
Funds (H -CDBG) eligibility standards for commercial
rehabili tion services.
2. The applicant ay be: individual owners, partnerships,
corporations, enant operators or contract for deed
purchasers.
3. An applicant m st have the ability to repay the loan and be
an acceptable edit risk as determined by a bank. HRA
staff also hav the right to request financial information
and determine 'f an applicant is an acceptable credit risk.
4. An applicant's roperty must conform to use under the City's
Zoning Ordinan and use must be permitted under an approved
District Plan 'f applicable.
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5. Upon completion of improvements, the applicant's property
must comply wit all applicable code, permit and license
requirements a must have a current Certificate of
Occupancy,
6. Applicant must ake adequate progress toward closing of loan
(as determined y staff) . Failure to do so can mean
eliminating th"s project as an eligible loan.
B. Improvements
1. Exterior Comme cial Improvement Loan
Under this typ of loan an applicant may improve the
exterior appea ance of the building and property and will
not be require to do any interior improvements if applicant
provides a val d Certificate of Occupancy. Staff approval
of exterior de ign and all improvements is necessary.
(Where applica le, the project must be in compliance with
its respective area's City approved design guidelines) . The
following are ligible expenditures under this loan:
a. All work ust be on front and sides of commercial
building facing public streets.
b. Cleaning, painting and staining of exterior surfaces.
c. Masonry epairs.
d. Repairin or replacing of cornices, entrances, doors,
windows, decorative details and awnings.
e. Sign rem al, repairing or replacement.
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f. Architectu al design services for plans and
specificat ons.
g. Parking lo s, including lighting, surfacing and
landscapin .
h. Building i entification.
i. Other item that are viewed necessary to compliment
exterior.
j . Building p rmits
k. Energy aud"ts.
1. Roofing (e igible if applicant has previously had a
commercial ehabilitation loan, does not extend past
total maxi loan amount, and provides valid
Certificate of Occupancy) .
2. Exterior-Interior Commercial Improvement Loan
Upon upgrading th exterior appearance and the correction of
all health and sa ety code deficiencies (as recorded by the
City Building Dep rtment) an applicant may include other
fixed interior im rovements among his work. In addition to
the eligible expe ditures listed previously under the
exterior commerci 1 improvement loan, the following
additional expend'tures are eligible:
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a. Almost a 1 fixed improvements including the repair
and/or d coration of walls, ceilings, floors,
lighting, windows, doors, entrances, electrical,
plumbing, mechanical, air-conditioning, architectural
change, e ergy improvements, etc.
b. Expansio of a commercial structure will be allowed
if:
(1) Ext rior improvements and health and safety code
def'ciencies will be corrected as part of the
loa .
(2) The expansion or addition will not detract from
the appearance of either existing structure or
the surrounding area.
(3) Tha it meets all zoning, parking, permit,
lic nse requirements, etc.
(4) Mee s specific HUD federal eligibility
req irements for expansion.
c. Professio al fees -- commercial rehabilitation loan
monies ma be used for the purpose of paying
reasonabl engineering architectural and other related
service f es necessary to plan, estimate costs, etc.
3. Commercial Reha ilitation/Small Business Administration
(SBA) "504" Loa s.
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The Commercial ehabilitation Loan may be used as the local
development com any's injection in a Small Business
Administration SBA) "504" Loan. This will leverage other
private and pub ic funds and allow greater project
flexibility. U der this combined loan, commercial
rehabilitation oney is totally released before the SBA
money is releas d.
4. Commercial Reha ilitation/Target Areas ��HRA�nay create '�
----�
special distric for the purpose of targeting various HRA
and City assista ce programs. As part of this targeting
effort, staff ma recommend to HRA relaxing and/or adding to
certain parts of the guidelines to achieve a concentrated
improvement resu t. These districts would last for a
designated timef ame, after which, the original guidelines
would again be i effect.
C. Ineligible Costs
a. Refinancin
b. Non-fixed ' provements
c. Working Cap"tal
d. Inventory
e. Sweat Equit -- payment for the applicant's own labor
and perform nce for construction or improvements.
D. Improvements Completed rior to Loan Closing
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Such improvements are not eligible unless the applicant's
structure requires i ediate attention (hazardous code
deficiencies, etc. ) , nd the following steps are undertaken:
a. Applicant must fill out Commercial Rehabilitation Loan
Applicati n with the HRA.
b. Applicant must submit a written request to the HRA
describi the need.
c. Applicant must receive a written permission from both
the HRA d the bank participating in the loan
allowing start of work before loan closing.
d. Work is p rformed under provisions of the Federal
Davis-Bac n Act.
e. If the a ve conditions have been met, the applicant
may proc d using his own funds or interim financing
from a b k. However, this is done at the applicant's
and/or b k's own risk until the total scope of work
has been approved by staff and the loan has been
closed.
III. CONTRACTING AND CONSTRUCTI
A. Al1 applicants shall provide the HRA with information on the "Loan
Application Form" de ailing applicants interest regarding
rehabilitation of bu'lding, giving permission for code inspection
and any other reques ed supplements necessary to achieve the HRA
approval for this su ject.
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B. A document (Scope of Wo k) is to be submitted to the bank and the
HRA detailing the work o be performed, estimated cost, and any
other documentation ne ssary to achieve the HRA's approval for
this project.
C. Contractors and all Su -contractors providing work under this
program are to be lice sed and must meet the insurance and bonding
requirements of the Ci y of Saint Paul. The contractor and/or
sub-contractor is to b knowledgeable of and/or responsible for
quality and workmanshi , conducting proper business practice, be
financially capable, a d demonstrate that they are an Equal
Opportunity Employer. Contractors and all Sub-contractors must
comply with all regula ions as stated under the Federal
Davis-Bacon Act.
D. The quality and progr s of the work is to be monitored throughout
the term of the contr t by the loan recipient and general
contractor.
E. Payment requests (eit er partial or final) cannot be made to the
contractor until a wr tten request for payment is made and the
loan recipient and th HRA have accepted the eligible improvements
in writing. If the c ntractor requests periodic draws on
completed work, the d aws shall be limited in amounts equal to the
value of materials fu nished and/or services performed at the time
of request. Number o payments will be limited to three (3)
including final payme t. All payments are to be subject to a
final 10� holdback, he holdback may be used to correct
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unsatisfactory work, defray costs to obtain a replacement
contractor and/or to c mplete the project. The contractor is to
furnish the necessary ien waiver for all payments.
F. All work is to be cove ed by the normal required permits and
approvals of affected gencies.
G. All work must be inspe ted by the City Building Department to
insure conformance wit code and must be verified for proper
completion by HRA staf to insure compliance with specifications
prior to final payment The final inspection cannot be scheduled
until all permits take out have been signed off by field
inspectors.
H. All eligible improveme t work performed pursuant to a commercial
rehabilitation loan mu t provide a 12 month warranty from the date
of accepted completion by the loan recipient and the HRA. This
warranty must cover th quality of materials used and workmanship
in performing the work This warranty is the responsibility of
the loan recipient.
I. Work must be performed under provisions of the Federal Davis-Bacon
Act. It shall be the pplicant's responsibility to contractually
bind the contractors, b-contractors and lower tier contractors
to pay on site laborers not less than the Minimum Wage for
Federally Assisted Reh ilitation by including the U.S. Department
of Labor's Wage Decisio in the contract.
a:mtcrguid.rab
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