276585 WHITE - CITY CLERK �����
PINK - FINANCE COUtICIl
CANARY - DEPARTMENT G I T Y O F S A I N T PA U L �
BLU6 - MAYOR File N O.
uncil Resolution
Presented By
Referred To Committee: Date
Out of Committee By Date
WHEREAS, the Council of the City of Saint Paul has been requested by the
City's Planning and Economic Development Department to approve a document entitled
Neighborhood Commercial Rehabilitation Loan Program Guidelines for the City of
Saint Paul; and
WHEREAS, this document revises and replaces a document adopted by the
City Council on May 23, 1979, also entitled Neighborhood Commercial Rehabilitation
Loan Program Guidelines for the City of Saint Paul; and
WHEREAS, the Housing and Redevelopment Authority (HRA) has been designated
by the Council of the City of Saint Paul as the Agency to coordinate the granting of
the aforesaid loans for commercial rehabilitation; and
WHEREAS, the HRA Board has approved the action on March 11, 1981,
NOW, TAEREFORE, BE IT RESOLVED, that the City Council of Saint Paul approves
the document entitled Neighborhood Commercial Rehabilitation Loan Program Guidelines
for the City of Saint Paul.
COUNCILMEN
Yeas Nays Requestgd by Department of:
Hunt P nnin o o ' e e
levine [n Favor
Maddox
Showalter Against BY
T�� J m ' J. - us, Director
w�so�
MAR 2 6 1981 Form A d by City torney
Adopted , Council: Date —
Ce ied Pas- y Counc� Secretar� BY �
♦
Ap by :Vlayor: e 2 7 1�1 Ap ro e y Mayor E r m' si to Council
By BY
�t►B��SHE� APR 4 1981
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NEIG:IBORHOOD COrTi'�IERCIAL REHABILITATIQN LOAN PROGRAM GUIDELINES
FOR THE CITY OF SAINT PAUL
March 11, 1981
I. �'URPOSE: To provide low-interest, longer-term Ioans as an incentive
for tenants and owners to upgrade the appearance and energy efficienc} of
commercial properties and the corunercial area as a whole.
II. LOAN TERI�IS AND C0;3DITIONS
A. City/bank participation -- the City and a bank will participate in a
loan on a matching basis. (In a $50,000 Ioan, the City's share and
the bank's share each will be $25,000).
B. Maximum loan -- shall not exceed the lessor of the cost of rehabilitation
or $50,000 for commercial use and $6,000 per residential unit above
commercial, up to eight units. Banks may increase their portion of
loan over $25,000.
C. Interest Rate
1. City's - - annual rate of 2%.
2. Bank's - - allowed to charge up to an annual rate of two percent
above the prime rate of interest at the time of closing.
3. Effective Annual Interest Rate - - shall be approximately one-half
of customary rates offered for direct loans from private financial
institutions. (See example below) .
4. Floating interest is allo�aed on bank portion of Zoan.
COi�Il�1ERCIAL REHABILITATION LOAN EXAMPLE ,
1
City $20,000 at 2%
2
Bank $20,G00 at 12%
$40,OU0 at 7% ) 10 yrs = $464/month
) foz' 15 }�rs. _ $359/month
20 yrs. _ $310/month
EXHIBIT "A"
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The City takes a subordinate position and has a set 2% interest rate
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The lending institution is allowed to charge up to 2% above the
existing prime interest rate.
D. Term - - the term allowed shall be up to 25 years. The .bank shall make
the determination for an appropriate terms relating to th� applicant's
ability to pay.
E. Collateral Required
1. The bank shall have the sole responsibility of determining the
applicant's credit risk.
2. The bank shall have senior lien on any collateral required.
3. The City will have identical collateral, b ut subordinated to
bank.
4. Bank wi.11 file for the City any liens required on collateral.
F. Loan Disbursements -- payments to consultants and/or contractors shall
be made by the bank but not before written approval from the City is
provided. Loan disbursements �aill be limited ta three (3) in total;
two (2) partial payments, plus one final payment (minimum of 10% of
total loan)when all work is completed and inspected.
G. Lien Waivers -- the bank will collect lien waivers and/or other �ioc-
umentation as deemed necessary by the bank.
III. ELIGIBILITY CRITERIA
A. Areas
1. The following Saint Paul neighborhood commercial strips and
areas meet the Department of Housing and Urban Development's
Community Development Block Grant Funds (HUD-CDBG} Year IV
eligibility standards for commercial rehabilitation services :
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a. Easc Seventh 421 I535
b. Arcade Street 661 1200
c. Payne Avenue 495 1200
d. Rice Street 481 1201
e. University Avenue 145 3415
f. Snelling Avenue 140 761
g. Selby Avenue 239 1820
h. West Seventh Street 174 1305
i. South Smith Avenue 57� $�8
j. Concord Street 11 205
k. South Robert Street 429 4�$
1. South Wabasha Street 215 485
2, Other interested commercial rehabilitation applicants must be
located within HUD-CDBG Year IV eligible areas.
B. Applicants .
1, An applicant'.s commercial structure must be located in one of
the areas previously defined.
2. The applicant may be: individual owners, partnerships, corpor-
ations , tenant operators or contract for deed purchasers.
3, An applicant must have the abi.lity to repay the loan and be an
acceptable credit risk as determined by a bank.
q, An applicant's property must conform to use under the City's
Zoning Ordinance and use must be permitted under an approved
District plan iF applicable.
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� "5. IJpon completion of improvements, fihe applicant's property must
comply �aith all applicable code, permit and license requirements
and must have a current certificate .of occupancy.
C. Improvements
1. Exterior Commercial Improvement Loan
Under this type of loan an applicant may improve the exterior
appearance of the building and property and will not be required
to do any interior improvenents if applicant provides a valid �
Certificate of Occupancy. Staff approval of exterior design and
all improvements is necessary. (Where applicable, the project
must be in compliance �aith its respective area's City approved
design guidelines. ) The following are eligible expenditures under
this loan:
a. All work must be on front and sides of commercial
building facing public streets.
b. Cleaning, painting and staining of exterior
surfaces.
c. Mason ry repairs.
d. Repairing or replacing of cornices, entrances,
doors, windo*.�;s, decorative details and awnings.
e. Sign removal, repairing or replacement.
f. Architectural design services for plans and
specifications.
g. Parking lots , includir.g lighting, surfacing and
landscaping.
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h. Building identification.
i. Other items that are viewed necessary to compliment
exterior.
j. Building permits.
k. Energy audits.
1. Roofing (Eligible if applicant has previously had a
commercial rehabilitation 1oan, does not extend past
total maximum loan amount, and provides valid certi-
ficate of occupancy.)
2. Exterior-lntexior Commercial Improvement Loan
Upon upgrading the exterior appearance and the correction of all
health and safety code deficiencies (as recorded by the City
Building Department) an applicant may include other fixed interior
improvements. among his work. In addition to the eligible
expenditures listed previously under the exterior commercial
improvement loan, the following additional expenditures are
eligible:
a. Almost all fixed improvements. includi�o the xepair and/or
decoration of walls, ceilings, floors, liglzting, windows,
doors, entrances, electrical, nlumbin g, tnechanical, air-
conditioning, architectural change, energy �mprovements, etc.
b. Expansion of, a commercial structure wi11 be allowed if;
(1) Exterior inprovements and healCh and safety code
deficiencies will be cor�ected as part of the Zoan.
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(2) The expansion or addition will not detract from the
appearance of either e�isting structure or the surrounding
area.
(3) That it meets all zoning, parking, permit, license
requirements, etc.
c. Professional fees -- commercial rehabilitation loan monies
may be used for the purpose of paying reasonable engineering,
architectural and other related service fees necessary to
plan, estimate costs, etc..
3. Exterior-Interior, Co�nercial-Residential Improvement Loan
Under this program the residential portion of the building may
be included providing all requirements af the exterior-interior
commercial program are met and alI code deficiencies are
corrected in the residential portion as wel.L
4. Co�nercial Rehabilitation/Small Busir.ess Administration "502"
and "503" Loans
Any of the above three listed loans may be used as the local
development co?npany's injection in a �mall Business Administration
"502" and "503" loan. This will leverage other private and public
funds and allow greater project flexibility. tJnder this corsbined
loan, commercial rehabilitation money is totally released before
the SBA money is released.
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D. InPlibible Cos.ts
a. Refinancing existing deb.ts.
b.. Non-fi�ed iznprovements
c. Working capital
d. Inventory
e. S��eat equity -- �ayment �or the appli.cant's own labor afld
performance for construction or improvements.
E. Improvements Completed Pzior to Loan Closing . -
Such improvements. are not eligible unless the applicant's, structure
requires. immediate attention (hazardous code defi.ciencies., etc.),
and the following s.teps are undertaken:
a. Applicant must fill out commercial rehahilitation loan
application with the City.
b. Applicant must submit a written request to the City
describing the need.
c. Applicant must submit a ioritten permission from b.oth tfie
City and a bank.
d. Work is performed under provisions of the Federal Davis-
Bacon Act.
e. If the above conditions have been met, the applicant ma}�
proceed using his own funds or interi.m .financing �rom a
bank. Ho�aever, this is done at the applicant's and/or
bank's own risk until the total scope of work has been
approved by staft and the loan has been clos.ed.
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��'. CONTRACTING A,.'�1D CONSTRUCTION
A. All applicants shall provide the City with information on the "Loan
Application Form" detailing applicants interest regarding rehab-
ilitation of b uilding, giving permission for code inspection and any
other �requested supplements necessary to achieve the City approval
for this subject.
B. A document (Scope of tJork) is to be submitted to the bank and the City
detailing the work to be performed, estimated cost, specif�cally
detailing how the code work (when interior work is part of the proposal)
is to be satisfied and any other documentation necessary to achieve the
City's approval for this project.
C. Contractors and all Sub-Contractors providing work under this program
are to be licensed and must meet the insurance and bonding requirements
of the City. The contractor and/or sub-cor�t�actor is to be kno«Iedgeable
of and/or responsible for quality and workmanship, conducting proper
business practice, be financially capable, and demonstrate that they
are an Equal Opportunity Employer. Contractors an� all sub-contractors
must comply with all regulations as stated under the Federal Davis-Bacon
Act.
D. The quality and progress of the work is to be monitored throughout the
term of the contract by the loan recipient and general contractor.
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E. Payment requests (either partial or final) cannot be made to the
contractor until a written request for payrsent is made and the loan
recipient and the City have accepted the eligible improvements in
writing. If the contractor requests periodic draws on completed work
the draws shall be limited in amounts equal to the value of materials
furnished and/or services performed at the time of request. Number of
payments will be limited to three (3) including final payment. All
payments are to �be subject to a final 10% holdback. The holdback�may �
be used to correct unsatisfactory work, or defray costs to obtain a
replacement contractor and/or to complete the project. The contractor
is to furnish the necessary lien waiver for all payments.
F. All work is to be covered by the normal required permits and approvals
of affected agencies.
G. All work must be znspected by the City Building Department to insure
conformance with code and must be verified for proper comp2etion by
� City staff to insure compliance �vith specifications prior to final
payment. The final inspection cannot be scheduled until all permits
fiaken out have been signed off by field inspectors.
H. Al1 eligible improvement work performed pursuant to a commercial
rzhabilitation loan must provide a 12 month warranty from the date of
accepted completion by the loan recipient and the City. This �aarranty
must cover the quality of materials used and workmanship in performing
the work. This �varranty is the responsibility of the loan recipient.
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REt�ORT TO THE CO�Ai�/11SSI0iVcRS DATE March 4, 1981
R c G A R�I�l G REVISIQNS TO THE NEIGHBORHOOD CO:�IERCIAL REHEIBILITATION
LOAN PROGRAI�1 ;
Staff is requesting an authorization to amend a document passed by the Board on
riay 23, 1979 called "Neighborhood Commercial Rehabilitation Loan Program Guidelines
for the City of Saint Paul". The major chanoes are the following:
1. Maximum loan amount increased from $40,000 to $50,000 for coimnezcial
rehabilitation use.
2. rlaximum loan amount increased from $5,000 per r.esidential Uriit to
$6,000 per unit.
3. The te.rm of the Ioan allowed has been increased _from 20 years up to
25 years. �
4. Eligible areas have been added and expanded in accordanc< <oith the
. , Dep�rtment of Housing and Urban Development's eligibi7_i.r_y standards.
5. Energy improvements have been specifically stated as an eligible
expense.
Stafi believes these neca guideline changes ��rill rid the program of prohlem arens
and provide the City with an effective tool to maximize its neighborhood �
con.-��rcial. revitalization ef.forts on the City`s older commercial strips.
Econon,ic Development Division-Alan Emory, Director
Marshall Turner, Project Tlana�er
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' ` RESOLUTION NU. `�'�' ��`��
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RESOLUTION RECONIh1ENDING A:'tEi�D�IE�FT OF GUIDELINES
��'OR CITY OF SAINT YAUL CO�L�fERCIAL REHABILITATIOv
` PROGRAM �
RESOLVED by the Board of Commissioners of the Housina and
Redevelopment Authority of the City of Saint Paul, rtinnesota
that it is hereby recommended to the Council of the City of Saint
Paul that the restatement of the Concept and Guidelines for the
City of Saint Paul Commercial Rehabilitation Program, contained
in a document dated March 11, 1981 and entitled "Neighborhood
Comr.tercial Loan Program Guidelines For The City of Saint Paul”,
and considered at this meeting, and the substantive changes con-
taiaed therein be favorably considered and adopted.
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OM O1: 12/1975
� . Rev. : 9/8/76 "
' EXPLANATION OF ADMINISTRATIVE ORDERS, �����
RESOLUTIONS, AND ORDINANCES
,.
Date: March 13, 1981 ���� �� � � �, �
�%,�;�'13-1981
T0: MAYOR GEORGE LATIMER ��������
FR: MARSHALL TURNER--ECONOMIC DEVELOPMENT
RE: Revisions in the Neighborhood Commercial Rehabilitation Loan Program
ACTION REQUESTED: Signature on Resolution for City Council Action
Return to Ma.rshall Turner, Economic Development �
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PURPOSE AND RATIONALE FOR TIiTS ACTION: Revisions already approved by
HRA Board. City Council has delegated loan authority to HRA Board.
Legally, City Council must also approve changes.
ATTACHMENTS:
1. New Commercial Rehab Loan Guidelines
2. Listing of Changes to Guidelines
3. HRA Board Resolution approved March 11, 1981