Red Wing Housing & Redevelopment Authority

Transcription

1 Red Wing Housing & Redevelopment Authority 428 West Fifth Street, Red Wing, MN Telephone (651) FAX (651) TDD/TTY March 14, 2017 To: Red Wing HRA Board of Commissioner From: Randal Hemmerlin, Executive Director RE: Request for authorization to the Executive Director to sign an Agreement between City, Port Authority and HRA to collaborate and make a Small Cities Program Income Loan to Mike Kiel BACKGROUND Mike Kiel would like to purchase a building in downtown Red Wing. As the owner of the building, he intends to lease the building to a major retailer in the upcoming months. The retailer will have offices and a call center in the building as well as the retail. We anticipate 25 to 30 employees at the business once it is going. Several items of enviromnental investigation and remediation are required on the building. It is these items that Mr. Kiel is requesting funds from the City, Port Authority and HRA to assist in remediation. PROPOSAL The environmental remediation items are eligible Small Cities Program Income funds uses. The anticipated costs are at least $84,000 to fix the items. The City, Port Authority and City are collaborating on the funding, as the EIRA does not have enough money alone to complete the entire project on its own. An agreement on the use of the funds and the loan amount was drafted and presented to the City Council on February 27, The City Council approved the City's portion of the Agreement. The Port Authority was to act on the Agreement on February 7 and the HRA today. The City Council report and the Agreement are attached to this report and give good detail of what we are doing in this project. The City and Port Authority will deposit their allocated funds into the HRA's Small Cities.Program Income fund. The HRA will utilize $25,000 of our Small Cities Program Income funds as well. The total deferred loan will not exceed $84,000 to Mr. Kiel. The entire loan is forgiven after 10 years. CEDA has been engaged to process the loan at a renegotiated rate of 6% of the loan fee and that is being done now. (Their typical rate is 12 %.) The City has agreed to pay CEDA's administration fee and that is a part of the agreement. FUNDING The HRA Small Cities Program Income has the funding for our portion of the loan ($25,000). Our typical loan program would have loans of $50,000 with $25,000 forgiven after ten years. Because of the partnership with the City and Port Authority in providing this incentive and that, we are forgiving only an amount we normally would forgive, we are recommending not to have any amortized HRA loan repayment. Both the City and Port Authority are recommending forgiveness of their portion of the loan after 10 years as well. We are also waiving the HRA's $500 application fee as part of this incentive. The HRA Board of Commissioners will review and approve the final loan once processed by CEDA and Staff as is usual in our Small Cities Program Income loan program. RECOMMENDATION Staff recommends to the HRA Board of Commissioners to authorize the Executive Director to execute the official Agreement between the City or Red Wing, City of Red Wing Port Authority and the Red Wing Housing and Redevelopment Authority to provide Environmental Investigation and Remediation Assistance through the HRA's Small Cities Program Income fund and process the loan accordingly.

2 CITY COUNCIL AGENDA REPORT TO: Red Wing City Council, Mayor, Council Administrator and Stakeholders FROM: Administration - Finance Agenda Item No. 8.M. - Motion to Approve Agreement Between the City, Port and HRA to Provide Environmental Investigation and Remediation Assistance Through the HRA's Small Cities Program Meeting : February 27, 2017 ACTION REQUESTED: Approve the agreement. ATTACHMENTS: Agreement between the City of Red Wing, (City) the City of Red Wing Port Authority (Port) and the Red Wing Housing and Redevelopment Authority (HRA) to provide Environmental Investigation and Remediation Assistance through the HRA's Small Cities Program Income fund. BACKGROUND: The community has a long history and interests in preserving the unique character of its historic downtown. The community has also long supported the revitalization and establishment of businesses in its historic downtown. This item continues historical efforts by supporting environmental investigation and remediation initiatives necessary to facilitate repurposing a vacant downtown property for use as a retail, office and call center space. DISCUSSION: Working in a close and collaborative effort staff seeks to pool the energies and resources of the City, Port and HRA to assist in converting a vacant downtown property to a new and attractive use. Filling the vacant downtown store front is of interest to the community and consistent with prior efforts as such has the potential to promote synergies and grow downtown retail options, job opportunities, and tax base. ONGOING OPERATING & MAINTENANCE COSTS: NA 8.M. Page 1 of 2

3 FUNDING SOURCE(S): This request seeks funding commitments not to exceed $25,840. Such funding is available in the current budget In downtown enhancement funding. ALTERNATIVES: 1. Approve the Agreement as Is, or as modified. 2. Decline the Agreement. 3. Table the Agreement. RECOMMENDATION: Staff recommends approving the agreement In Its current form. 8.M. Page 2 of 2

4 Agreement between the City of Red Wing, (City) the City of Red Wing Port Authority (Port) and the Red Wing Housing and Redevelopment Authority (HRA) to provide Environmental Investigation and Remediation Assistance through the HRA's Small Cities Program Income fund. Preamble The City Port and HRA desire to collaborate in providing environmental investigation and remediation funding (Funding) to Michael Keil, a developer/owner (Owner), for environmental Investigation and remediation of a downtown property to be leased by the Owner for use as a retail store, store offices and a call center. The City, Port and HRA will provide resources to be deposited into the HRA's Small Cities Program Income Fund (Fund) and the HRA will utilize such Fund to source the Funding. Incentive and Amount of Contribution of Funds The Funding will be provided by the HRA through its Small Cities Program Income Fund. The Funding shall be up to $84,000 and structured as a 0% interest, deferred loan to be forgiven after a ten-year compliance term. Compliance terms must be met for the loan to be forgiven and terms will be typical as per the HRA's existing Small Cities Program income loans. The City agrees to contribute up to $20, to the HRA Small Cities Program Income Fund as a local funding match contingent upon City Council approval. The Port agrees to contribute $38, from its Minnesota Investment Finance funds, contingent upon the Department of Employment and Economic Development (DEED) and Port Board approval. The HRA agrees to allocate $25, of Its Small Cities Program income Funds, contingent on HRA Board approval. At the time of the loan disbursement the HRA will receive the necessary City and Port funds and deposit the same Into its Small Cities Program Income Fund. Repayment of the deferred loan will become Small Cities Program income funds and are DEED restricted HRA funds in the Small Cities Program Income fund to be used in that program accordingly. The HRA will waive its typical $500 application fee for a Small Cities Program Income loan. ^ loan Processing and Servicing The Owner will complete a Small Cities Program Income fund application and all necessary documents as required per the HRA's guidelines and procedures. The loan(s) will be subject to Davis Bacon labor standards and State Historic Preservation Office (SHPO) compliance. The HRA will contract with Community and Economic Development Associates (CEDA) to process the loan application to its completion in accordance with the Small Cities Program Income guidelines. The administrative fee for the CEDA will be 6% of the total loan(s). The City agrees to deposit up to $5,040 into the HRA's General Redevelopment account to pay the CEDA fees CEDA will be given instructions to use a Deferred Loan and Mortgage Agreement in lieu of a Promissory Note and Mortgage. This document will be filed on record at the County Courthouse with a cost of $46 recording fee to be collected from the Owner. The HRA and CEDA will perform the necessary due diligence to determine that the Owner has a sound business plan. Personal guarantees may be required of the Owner, as per the HRA's determination. The HRA will contract with Molly Krakowski Consulting Service to complete the Davis Bacon compliance. The HRA will pay for this contract with its own Small Cities Program Income Administrative Fee funds. The HRA will be responsible to service the loan(s) for the compliance period and enforcement of the compliance documents. The HRA will provide information to the City and Port, upon request, to ensure the intent of the Funding is being met.

5 Return of Funds Not Used Any loan funds received by the HRA and not used for Funding shall first be returned to the City and then to the extent available to the Port {contingent on DEED). The CEDA administration fees will not be returned unless CEDA cannot or does not fulfil its contract with the HRA. Expiration of Agreement This Agreement is effective the date of execution below. Time is of the essence and all parties to this Agreement will act In the most expedient manner possible. However, this Agreement expires one year from the date of signing if the Financing Is not completed. This Agreement may be extended If agreed upon by all parties. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed. CITY OF RED WING, MINNESOTA Sean M Dowse, Mayor Kay Kuhlmann, Council Administrator Kathy Seymour Johnson, City Clerk CITY OF RED WING PORT AUTHORITY RED WING HRA, MINNESOTA. Executive Director Red Wing HRA