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HomeMy WebLinkAboutEDA AGN 12-20-06 Special 590 40th Avenue N.E., Columbia Heights, MN 55421-3878 (763) 706-3600 TOO (763) 706-3692 Visit Our Websile at: IVww.ci.coJumbia~heights.mn.us EOA COMMISSIONERS DOll Murzyn Jr. Patricia Jindra Bruce Kclzcnbcrg Gary L. Peterson Bruce Nawrocki Bobby Williams Tmnmera Diehm CITY OF COLUMBIA HEIGHTS \'.?J O~fI\ ECONOMIC DEVELOPMENT AUTHORITY It'.' 0..-- ____~PECIAL MEETING vo.Y .3;OO-p])J,,:;MGNlTAY, DECEMBER 20, 2006 CITY HALL, CONFERENCE ROOM 1 AGENDA 1. CALL TO ORDER/ROLL CALL 2. PLEDGE OF ALLEGIANCE. 3. DISCUSSION ITEMS A. Adopt Resolution 2006-14,2007 CDBG Application Motion: Move to Adopt Resolution 2006-14, a Resolution authorizing application for the 2007 Community Development Block Grant program for demolition of the Beecroft and p.uerta Del Sol buildings at 3710 and 3800 Central Avenue NE and funding for the City Comprehensive Plan. B. Adopt Resolution 2006-13, Special Legislation Motion: Move to Adopt Resolution 2006-13, a Resolution of the Columbia Heights Economic Development Authority (EDA) authorizing staff to pursue special legislation that would establish a substantial and long term funding source by extending the term of the A3/C7 Downtown Tax Increment District for an additional twenty-five years, and use the funds to provide Home Rehabilitation Grants and Loans, to acquire and demolish blighted or vacant residential properties, and remediate contamination. 4. ADJOURNMENT Walter R. Fehst, Executive Director The EDA does not discriminate on the basis of disability in the admission or access to, or treatment or employment in, its accommodation will be provided to allow individuals with disabilities to participate in all EDA services, programs, and activities. Auxiliary aids for handicapped persons are available upon request when the request is made at least 96 hours in advance. Please call the Deputy City Clerk at (763) 706-3611 to make arrangements (TDD 706-3692) for deaf or hearing impaired only. H:\EDAAgenda2006\Deeember Special Mtg THE CITY OF COLUMBIA HEIGHTS DOES NOT DISCRIMINATE ON THE BASIS OF DISABILITY IN EMPLOYMENT OR THE PROVISION OF SERVICES EQUAL OPPORTUNITY EMPLOYER COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY (EDA) Meeting of: December 20, 2006 AGENDA SECTION: Business Items ORIGINATING EXECUTIVE NO: 3-A DEPARTMENT: EDA DIRECTOR APPROVAL ITEM: Adopt Resolution 2006-14, Authorizing BY: Randy Schumacher BY: Application for 2007 Community DATE: December 15, 2006 Development Block Grant Funding BACKGROUND: The CDBG program is the federal governments primary program for promoting community revitalization throughout the country and provides annual grants on a formula basis to Anoka County. The objective of the US Department of Housing and Urban Development-administered program is to develop viable urban communities that provide decent, safe, and sanitary housing, a suitable living environment and expanded economic opportunities primarily for persons of low and moderate incomes. In January 2002, the City Council identified the area at the corner of 3yth Avenue and Central as a redevelopment priority. The properties included the old Bridgeman's (now Puerta Del Sol), the Beecroft building, two non-conforming single-family homes, and the Chutney Restaurant. To date the EDA has acquired the Beecroft building and the two single-family homes, which were removed in 2003. All costs for acquisition and demolition were paid for with CDBG funds. Staff has been meeting with the owner of Puerta Del Sol to determine future use of the property. Mr. Samaha is extremely interested in moving ahead with a redevelopment project. The Don Murnane Wig Salon, currently located in the Beecroft building will be closing its business soon leaving the building vacant. Demolition for these structures is estimated at $55,000. In addition, one of the Community Development goals for 2007 is updating the City Comprehensive Plan. In past funding cycles Anoka County has funded planning applications for similar cases. Staff is recommending $25,000 be requested to supplement the Comprehensive Planning process. Staff recommends the EDA authorize submission of an application for Community Development Block Grant funds in the amount of $80,000 for demolition of the Beecroft building, the Puerta Del Sol building and Comprehensive plan activities. If the redevelopment project does not come to fruition, the EDA would be able to reallocate these funds to other qualifying projects. The application is due to Anoka County by January 8, 2007. Anoka County will notify approved projects in April 2007, with disbursement after July 1, 2007. RECOMMENDATION: Staff recommends submitting the 2007 Community Development Block Grant Program Application for demolition of the Beecroft and Puerta Del Sol building at 3710 and 3800 Central Avenue NE and funding for the City Comprehensive Plan. RECOMMENDED MOTION: Move to Adopt Resolution 2006-14, a Resolution authorizing Application for the 2007 Community Development Block Grant program for demolition of the Beecroft and Puerta Del Sol buildings at 3710 and 3800 Central Avenue NE and funding for the City Comprehensive Plan. EDA ACTION: RESOLUTION 2006-14 A RESOLUTION OF THE ECONOMIC DEVELOl'MENT AUTHORITY OF THE CITY OF COLUMBIA HEIGHTS, MINNESOTA AUTHORIZING APPLICATION FOR 2007 ANOKA COUNTY COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) FUNDING FOR THE PURPOSE OF DEMOLITION OF THE BEECROFT AND PUERTA DEL SOL BUILDINGS LOCATED AT 3710 AND 3800 CENTRAL AVENUE NE, AND FOR CITY COMPREHENSIVE PLANNING IN THE AMOUNT Ol? $80,000; AND "FURTHERMORE, TO SUBMIT SAID AI'PLICATION TO ANOKA COUNTY WHEREAS, the City identified the area including the former Bridgeman's Restaurant (now Puerta Del Sol), the Beecroft building, two non-conforming single-family homes, and the Chutney Restaurant as a redevelopment priority in January 2002; and WHEREAS, the use of CDBG grants for Comprehensive Planning and for Beecroft and Puerta Del Sol buildings is consistent with the program's national objective of aiding in the prevention or elimination of slums or blight; and NOW, THEREFORE BE IT RESOLVED that the Columbia Heights EDA acts as the legal sponsor for the 2007 Community Development Block Grant Program to be submitted on Jrumruy 8, 2007; ruld BE IT FURTHER RESOLVED that the Cohunbia Heights EDA has the legal authority to apply for financial assistance, and the institutional, mru1agerial, and financial capability to ensure adequate project administration; and BE IT FURTHER RESOLVED that the Columbia Heights EDA has not violated any federal, state, or local laws pertaining to fraud, bribery, graft, kickbacks, collusion, conflict of interest or unlawii.ll or corrupt practice; and BE IT FURTHER RESOLVED that Walter R. Fehst is hereby authorized to execute such agreements as are necessruy to implement the project( s) on behalf of the applicant; ruld NOW, THEREFORE BE IT RESOLVED that the Columbia Heights Economic Development Authority board has authorized staff to submit an application for $80,000 for City Comprehensive Planning and for demolition of the Beecroft and PueltaDel Sol buildings located at 3710 and 3800 Central Ave NE. I certify that the above resolution was adopted by the Columbia Heights Economic Development Authority. PASSED THIS OFFERED BY: SECONDED BY: ROLL CALL: DAY OF ,2006 Don Murzyn Jr.-President Walter R. Fehst- Executive Director Meetina 0 : December 20, 20 AGENDA SECTION: Business Item ORIGINATING DEPARTMENT: CITY MANAGER'S NO: 3-B Community Development APPROVAL ITEM: Adopt Resolution 2006-13, BY: Robert Streetar BY: Authorizing staff to pursue DATE: December 14, 2006 Special Legislation COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY f 06 BACKGROUND: Staff recommends the EDA consider extending or establishing the term of the A3/C7 downtown tax increment financing district for an additional twenty-five years for the purpose of creating a substantial and long-term funding source to: . Provide Columbia Heights homeowners with rehabilitation grants and low interest loans; and . To acquire blighted or vacant residential properties; and . To clean contaminated property on Central Avenue Residential Property Assessment Residential property value is the largest part of the City's tax base. In 2006, over 1.1 billion dollars or 90% of all property value is residential. Of 8,151 housing units 5,740 or 70% are owner-occupied. Residential property that is in good repair helps to sustain a strong and stable tax base allowing the City to fund basic services such as public safety, public works, parks and recreation, at a reasonable cost to its citizens. In addition, well-maintained residential property makes neighborhoods more livable and attractive, as well as helps residents preserve a their large investment in their home. But a significant number of residential properties suffer from deferred maintenance or are at risk of deferred maintenance. According to the 1992 Comprehensive Plan resident survey, forty- three percent of respondents indicated the condition of housing in their neighborhood was a problem. Sixty-four percent indicated the City should provide more assistance renovating deteriorating housing. Ninety-six percent indicated the City should require owners to properly maintain their houses or apartments. According to a 1996 housing quality windshield survey conducted by the City, 625 owner- occupied homes were rated in poor condition and 3,913 were rated in fair condition. Poorly rated homes exhibited a need for upgrades and maintenance. They had deteriorated to the extent they had become an eyesore and were negatively affecting the neighborhood. The condition of many of the homes went beyond the need for basic exterior improvements, such as painting, siding, and roofing, but could potentially be candidates for demolition and replacement. These homes also exhibited zoning and nuisance violations including accumulations of junk, overgrown landscape, dilapidated accessory buildings, substandard lot areas, inadequate setbacks. These homes were considerably lower in value and older than other homes in the area. Fairly rated homes were primarily older with evidence of exterior wear and tear. Needed improvements included repair or replacement of roofs; repair or replacement of broken or cracked foundations, steps and sidewalks work; replacement of chipped or cracked siding; painting of siding, door frames, and window frames; replacement of leaking windows; and general property maintenance. Completing these improvements would upgrade the property and would keep the home from incurring greater maintenance needs in the future. Although most of these repairs would be considered minor, many homeowners do not have the financial means to make the necessary repairs. The results of these surveys are further corroborated by the fact that between January 1,2002 and November 27,2006, the Fire Department recorded 1,487 residential property complaints. Approximately 50% of the complaints were related to owner-occupied properties. Older and lower valued properties have a higher frequency of deferred maintenance. The average estimated market value in 2006 for an owner-occupied residential property is $168,931. This is 109th lowest of 111 metro area cities. The large majority of lower value properties are west of Central Avenue and between 3ih Avenue to the south and 45th Avenue to the north. The median year built for a residential structure in Columbia Heights is 1960. This compares to a median year of 1971 for the metropolitan area, and 1969 for the State. Columbia Heights residential properties are about 10 years older than the median age. The Heritage Heights Neighborhood has been a challenge for the last 15 years. Many of the properties suffer from significant deferred maintenance. One week ago an 8-unit rental building was abandoned and boarded further contributing to the decline of this neighborhood. The challenge of residential deferred maintenance is exacerbated by the fact that Columbia Heights homeowners have a limited ability to pay for significant home maintenance. The median household income for a Columbia Heights household of $40,562 this is 75% of the metropolitan area median of $54,332. Approximately 572 or 10% of all owner-occupied households suffer from a moderate housing cost burden. Housing cost burden is defined as housing cost greater than 35% of gross household income. Housing costs include the mortgage, insurance, utilities, homeownership fees and taxes. In addition, 231 senior homeowners participate in the senior citizens utility credit program. This program provides a credit of about $81 annually against utility costs. The householder qualifies if they are 65 years of age or older, and have an annual income of $25, 1 00 or less. It is logical to assume that if the homeowner cannot afford to pay $81 per year, they are most likely not spending money on home maintenance. Current residential rehabilitation and acquisition resources, while providing some assistance, would not provide the substantial and long-term stimulus needed to achieve an impact. Current federal, state and city resources include the following: Federal Sources: Sources of residential rehabilitation and acquisition funding are the Community Development Block Grant program (CDBG), and the Home Investment Partnership Program (HOME). The CDBG program's purpose is to benefit low and moderate-income persons, prevent or eliminate blight, and address needs that threaten the health and welfare of the Community. The HOME program's purpose is to promote decent, safe and affordable housing. CDBG and HOME funds are distributed annually on a competitive basis among 21 Anoka County communities. . The Single-Family Residential Rehabilitation Program Anoka County Community Action Programs (ACCAP) and the Center administer this program throughout the county for Energy and the Environment (CEE). Funds are available to low and moderate-income households as a zero percent deferred loan that is due on sale or title transfer. The maximum loan amount is $24,999. The value of a qualifying property may not exceed $201,400. Since 1994, 16 Columbia Heights households have participated in this program. In 2006, $130,000 of rehabilitation funds is available throughout the county or about $6,200 per Anoka County community. . Residential Acquisition Acquisition funds available annually on a competitive basis. The maximum amount is $300,000. The City has received funds for acquisition and demolition in the past, specifically for the NEI and Burger King property. CDBG funding has declined $466,105 or 23% in the last 5 years. HOME funding has increased moderately over the last five years, but has decreased 69,681 or 20% in the last three years. Together CDBG and HOME funding has decreased'$413, 190 or 19% over the last five years. In 2006 HOME and CDBG provides approximately $69,000 per Anoka County Community. According to Anoka Count officials the Federal Government is expected to further reduce CDBG funding by 15% for 2007. CDBG & HOME Fundinq 2001 - 2006 2001 2002 CDBG $1,931,000 $1,864,000 HOME $633,960 $636,390 $2,564,960 $2,500,390 2003 $1,763,000 $736.446 $2,499,446 2004 $1,733,000 $742,801 $2475,801 2005 $1,644,361 $709,250 $2,353,611 2006 $1,484,985 $666,785 $2,151,770 Chanqe ($466,015)/23% $30,395/4.8% ($348,620)/13.9% Given the decline in federal funding and the fact that there is no guarantee the City would be awarded funds annually for rehabilitation or acquisition, CDBG and HOME are not a substantial nor long-term sources of funding. State and Reqional Resources Sources: State and regional rehabilitation and acquisition funding is provided through the Rehabilitation Loan Program, the Fix-up fund and the Single-Family Combined Program. The Greater Metropolitan Housing Corporation administers these programs. . The Rehabilitation Loan Program This program is a 0% interest, 30-year loan for financing up to $15,000 for home repairs such as roofing, plumbing and electrical improvements. The loan is deferred but due upon sale, title transfer or after 30 years. Eligible homeowners must have incomes at 30% or less of area median based upon household size. Eligible properties include single-family homes, duplexes and manufactured housing taxed as real or personal property. In addition, homeowners with a disability and/or lead abatement issues can qualify for a maximum loan of $20,000. Since 2002, 41 Columbia Heights households have participated in this program. . The Fix-up Fund This program is a 7.25% interest loan with a maximum loan of $35,000 and a maximum term of 20 years. Qualifying properties include owner-occupied single-family homes, duplexes, triplexes and fourplexes. The maximum income to qualify for the loan is $90,000, and most home improvements qualify except for luxury items, such as swimming pools. Since 2002, 18 Columbia Heights households have participated in this program. . Single Family Combined Program In 2003, the EDA entered in to an agreement with the Greater Metropolitan Housing Corporation to acquire and demolish up to 13 homes, and replacing them with new single- family homes. The cost of the program was $290,000. This funding paid for the gap between the acquisition, demolition and construction costs and the sale price. The EDA contributed $50,000, with a $145,000 from the Minnesota Housing Finance Agency, and $95,000 from the Metropolitan Council. The result was 8 new single-family homes. . The This Old House Program This program was enacted in 1993 by the Legislature. This program allowed homestead property owners to exclude all or a portion of the value of qualifying improvements made to older homes. The program was designed to provide owners of homes older than 45 years with an incentive to renovate their property and consequently preserving and revitalizing older neighborhoods. But the Legislature terminated the program for new applicants in 2003. Participation in the program in 2004 included over 56,000 properties in 86 of the 87 Minnesota County a testimony to its effectiveness and need. Columbia Heiqhts Economic Development Authority (EDA) Sources: Since 2002 EDA has funded the following housing rehabilitation and acquisition activities: . Home Rehabilitation Incentive Program, This program provides a cash rebate to homeowners who complete home improvement projects. The rebate amount is calculated as a percentage of eligible rehabilitation costs. Homeowners with incomes at or below 115% of the area median income, or $88,206, are eligible to receive a 10%, 12% or 15% rebate depending on income. The maximum rebate amount is $3,000 per household. The EDA has funded this program since 2002 with very successful results. Since 2002 the EDA has invested $80,000 resulting in 62 rebates that stimulated $694,621 of private investment. The Greater Metropolitan Housing Corporation administers this program. In summary, significant portions of Columbia Heights housing is older and of lower value compared to the metropolitan area and the State, and these factors contribute to the amount of residential deferred maintenance. In addition, a number of households have difficulty paying for maintenance due to their lower incomes. Current resources, while marginally helpful, are not sufficient enough to provide a substantial and long-term impact. The consequence of doing nothing is a further decline of the tax base and neighborhood livability. THE PLAN Housinq Goals The Comprehensive Plan establishes the following housing related goals and strategies: 1. Promote and preserve the single-family housing stock as the community's strongest asset by: a. Acquiring and demolishing the most seriously deteriorated single-family homes and working with the private sector to develop appropriate replacement housing, and; b. Supporting the upgrading and maintenance of older houses throughout the community. 2. Provide a variety of life cycle housing opportunities within the community by: a. Undertaking efforts to maintain and improve the existing single family housing stock in the community, and; b. Proactively redeveloping vacant and deteriorating residential structures. In addition, at the August 2004 the Council affirmed these goals by adopting the following goals: 1. Improve the City's housing stock 2. To attract new residents and to retain existing residents and homeowners for the purpose of promoting household growth and stabilizing the tax base. Therefore, staff recommends pursuing special legislation that would extend or establish the downtown A3/C7 tax increment-financing district for an additional 25 years. Extending the district would generate approximately $640,000 annually or $16,000,000 over 25 years, to be used for residential rehabilitation and acquisition activities. Some of the activities that could be funded include: . Home Rehabilitation Incentive Program, This program provides a cash rebate to homeowners who complete home improvement projects. The rebate amount is calculated as a percentage of eligible rehabilitation costs. Homeowners with incomes at or below 115% of the area median income, or $88,206, are eligible to receive a 10%, 12% or 15% rebate depending on income. The maximum rebate amount is $3,000 per household. The EDA has funded this program since 2002 with very successful results. . Scattered Site Acquisition Resources could be used to acquire and demolish blighted properties throughout the City and then sell the lots to a builder to construct single-family owner-occupied housing. The EDA could also focus these resources on redeveloping the Heritage Heights neighborhood. In summary, a strong tax base, and livable neighborhoods are the meat and potatoes of a City. The City is faced with a residential housing stock that is old, of lower value and subject to a lot of deferred maintenance. This is further exacerbated by the lower incomes of some households that cannot afford the cost of maintaining their property. The EDA has the opportunity to stimulate revitalize neighborhoods by using the tax increment funds to help stimulate hosing investment and remove blight. This will eventually maintain the tax base and preserve attractiveness and viability of the City's neighborhoods. RECOMMENDATION: Staff recommends the EDA consider extending or establishing the term of the A3/C7 downtown tax increment financing district for an additional twenty-five years for the purpose of creating a substantial and long-term funding source to: . Provide Columbia Heights homeowners with rehabilitation grants and low interest loans; and . To acquire blighted or vacant residential properties; and . To clean contaminated property on Central Avenue RECOMMENDED MOTION: Move to Adopt Resolution 2006-13, a Resolution of the Columbia Heights Economic Development Authority (EDA), authorizing staff to pursue special legislation that would establish a substantial and long term funding source by extending the term of the A3/C7 Downtown TIF district for an additional twenty-five years, and use the funds to provide Home Rehabilitation Grants and loans, to acquire and demolish blighted or vacant residential properties, and remediate contamination. Attachments EDA ACTION: h:\EDA Consent2006\EDA Res.2006M13 special legislation EDA RESOLUTION 2006 - 13 RESOLUTION OF THE COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY (EDA) AUTHORIZING STAFF TO PURSUE SPECIAL LEGISLATION THAT WOULD ESTABLISH A SUBSTANTIAL AND LONG-TERM FUNDING SOURCE BY EXTENDING OR ESTABLISHING THE TERM OF THE A3/C? DOWNTOWN TAX INCREMENT FINANCING DISTRICT FOR AN ADDITIONAL TWENTY-FIVE YEARS, AND USE THE FUNDS TO PROVIDE HOME REHABILITATION GRANTS AND LOANS, TO ACQUIRE AND DEMOLISH BLIGHTED OR VACANT RESIDENTIAL PROPERTIES, AND REMEDIATE CONTAMINATED PROPERTY. WHEREAS, Residential property that is in good repair helps to sustain a strong and stable tax base allowing a City to fund basic services at a reasonable cost to its citizens; and WHEREAS, Columbia Heights has a significant number of older and lower value homes that suffer from or are at risk of deferred maintenance; and WHEREAS, A significant percentage of Columbia Heights households have difficulty paying to cure the deferred maintenance; and WHEREAS, Federal and State resources for rehabilitation and acquisition of blighted property would not provide a substantial or long-term source of funding; and WHEREAS, There exists. a 4-acre contaminated site in the central busioess district that the City desires to redevelopment but can not due to the cost of remediation; NOW, THEREFORE BE IT RESOLVED by the Board of Commissioners of the Columbia Heights Economic Development Authority as follows: 1. Staff is authorized to pursue special legislation that would provide funding for home rehabilitation loans and grants, acquisition and demolition blighted or vacant residential structures, and contamination remediation, including without limitation legislation to spend tax increment generated from parcels now located in TIF District Nos. A7 and C3, either through extension of those districts or through establishment of one or more new tax increment financing districts with special rules. 2. Staff is authorized to use the services of government relations consultants, EDA legal counsel and EDA financial advisors, and any other services reasonably necessary to secure favorable action by the legislature. Passed this day of ,2006. Offered by: Seconded by: Roll Call: Don Murzyn, Jr. -President Walter R. Fehst, Executive Director