HomeMy WebLinkAbout2010/10/11 - ADMIN - Agenda Packets - City Council - Study SessionAGENDA
OCTOBER 11, 2010
6:30 p.m. CITY COUNCIL STUDY SESSION – Council Chambers
Discussion Items
1. 6:30 p.m. Future Study Session Agenda Planning – October 25, 2010
2. 6:35 p.m. Highway 100 Project Update
3. 7:05 p.m. Municipal Service Center (MSC) Renovation Project Update
4. 7:35 p.m. Update on PPL/Louisiana Court Financial Plan
5. 8:05 p.m. City Council Governance Model and Norms
6. 9:05 p.m. Communications/Meeting Check-in (Verbal)
9:10 p.m. Adjourn
Written Reports
7. Update on Tax Forfeited Property Purchase - 2944 Brunswick Avenue South
8. Hennepin County Environmental Response Fund (ERF) Grant Application for 2005
Louisiana Ave. South
Auxiliary aids for individuals with disabilities are available upon request.
To make arrangements, please call the Administration Department at
952/924-2525 (TDD 952/924-2518) at least 96 hours in advance of
Meeting Date: October 11, 2010
Agenda Item #: 1
Regular Meeting Public Hearing Action Item Consent Item Resolution Ordinance
Presentation Other:
EDA Meeting Action Item Resolution Other:
Study Session Discussion Item Written Report Other:
TITLE:
Future Study Session Agenda Planning – October 25, 2010.
RECOMMENDED ACTION:
Council and the City Manager to set the agenda for the regularly scheduled Study Session on
October 25, 2010
POLICY CONSIDERATION:
Does the Council agree with the agenda as proposed?
BACKGROUND:
At each study session, approximately five minutes are set aside to discuss the next study session
agenda. For this purpose, attached please find the tentative agenda and proposed discussion items
for the regularly scheduled study session on October 25, 2010.
FINANCIAL OR BUDGET CONSIDERATION:
None.
VISION CONSIDERATION:
None.
Attachment: Future Study Session Agenda Planning for October 25, 2010
Prepared by: Debbie Fischer, Office Assistant
Approved by: Tom Harmening, City Manager
Study Session Meeting of October 11, 2010 (Item No. 1) Page 2
Subject: Future Study Session Agenda Planning
Study Session, Monday, October 25, 2010 – 6:30 p.m.
Tentative Discussion Items
1. Future Study Session Agenda Planning – Administrative Services (5 minutes)
2. 2011 Budget – Spec Rev & Enterprise Funds, Capital Imp Plan & Long Range Financial
Management Plan – Finance (90 minutes)
Discussion on the 2011 Budget to include the Special Revenue and Enterprise Funds. In
addition, the Capital Improvement Plan (CIP) for 2011 – 2015 will be reviewed and the
Long Range Financial Management Plan for the relevant funds in the City.
3. 7015 Walker St. Purchase Agreement – Community Development (30 minutes)
Discuss details of the proposed purchase agreement.
4. Auditor Discussion – Finance (15 minutes)
Discussion on continuing the relationship with current auditor and possibly signing a new
contract for three years with them. Or, if Council chooses, the option of requesting RFP to
solicit other bids/quotes.
5. Update CAP (Construction Assistance Program) – Community Development (30 minutes)
Staff to provide update on applications to the Construction Assistance Program and present
a preliminary application from Hardcoat Inc.
6. Communications – Administrative Services (5 minutes)
Time for communications between staff and Council will be set aside on every study session
agenda for the purposes of information sharing.
Reports:
September 2010 Monthly Financial Report
Third Quarter Investment Report (July – September 2010)
Park Nicollet Redevelopment Contract
End of Meeting: 9:25 p.m.
Meeting Date: October 11, 2010
Agenda Item #: 2
Regular Meeting Public Hearing Action Item Consent Item Resolution Ordinance
Presentation Other:
EDA Meeting Action Item Resolution Other:
Study Session Discussion Item Written Report Other:
TITLE:
Highway 100 Project Update.
RECOMMENDED ACTION:
The purpose of this report and study session presentation is to update the City Council on the status
of this Mn/DOT proposed project.
POLICY CONSIDERATION:
There are no specific policy questions at this time. Council is asked to provide staff with any
feedback it might have.
BACKGROUND:
History - City and Mn/DOT staff last discussed this proposed project with Council at the
November 23, 2009 Study Session. At that time Mn/DOT staff stated this project was to be
“rescoped” which raised a variety of questions and concerns. Staff was asked to participate in the
forthcoming Mn/DOT project development process and keep Council informed as appropriate.
Council also requested staff to make interim surface improvements (pavement smoothing) to Utica
Ave from W27th Street south in 2010 (since completed by the City).
On March 19, 2010 a host of elected and appointed officials representing St. Louis Park, along with
TwinWest Chamber representatives, met with Mn/DOT Commissioner Tom Sorel to express our
feelings about the Hwy 100 project and our concerns for the rescoping process. During that
meeting we shared with MnDOT criteria and design considerations that we felt needed to be
addressed as part of a rescoping process.
On June 14 staff provided Council a written update on the project rescoping process which had just
recently started. Mn/DOT intent was to start over with the development of this project; and, most
Mn/DOT project members were new to the project. Meetings had been held in April and May to
discuss project area problems, project goals, and possible concepts (sketch planning). No documents
or concepts were available in June to share with Council as the process had just started.
Current - Since June Mn/DOT, City, and County staff have jointly worked together to develop five
(5) concepts for Mn/DOT consideration and evaluation (attached - Hwy 100 Concepts - Sept
2010). In addition, Mn/DOT has developed a project summary (attached - Hwy 100 Project
Summary - Sept 2010) describing the project and project goals (attached - Hwy 100 Project Goals
and Criteria - Sept 2010).
During the study session staff will briefly explain the concepts.
Study Session Meeting of October 11, 2010 (Item No. 2) Page 2
Subject: Highway 100 Project Update
Next Steps - Mn/DOT has developed the following tentative schedule for this project:
o Develop Concepts and Basic Project Information September 2010
o Public Open House November or December 2010
o Mn/DOT Selection of a Preferred Alternative January 2011
o Mn/DOT Staff Approved Geometric Layout June 2011
o Public Open House June 2011
o Municipal Consent Approval Process July - December 2011
o Final Geometric Layout January 2012
o Develop Construction Plans and Specifications January 2012 - September 2015
o Open Bids November 2015
o Construction 2016 thru 2018
Mn/DOT is required to obtain Municipal Consent when projects either change access or capacity or if
permanent R/W is required. Mn/DOT anticipates beginning the Municipal Consent Approval Process
during the second half of 2011. That process and schedule is expected to consist of the following:
o Council Work Session June 2011
o Municipal Consent Request July 2011
o City Schedules Public Hearing July 2011
o Mn/DOT Open House August 2011
o Public Hearing August or September 2011
o Council Work Session October 2011
o Council Approval/Denial of Final Geometric Layout December 2011
(deadline of 90 days after public hearing)
FINANCIAL OR BUDGET CONSIDERATION:
Mn/DOT will develop the estimated cost of the project later on during the project development
process and will then refine it as construction plans are developed up to the bid opening date. The
estimated cost at this time is unknown; however, it is safe to say Mn/DOT expects the project cost
to be considerably less than the proposed layout previously developed for this project. It is too early
in the process to even guess at what the City costs might be for this project. City costs for the
previously proposed project were estimated to range from $3 million to $7 million depending on
options provided to the City.
VISION CONSIDERATION:
The following Strategic Direction and focus area was identified by Council in 2007:
St. Louis Park is committed to being a connected and engaged community.
Focus will be on:
• Promoting regional transportation issues and related dedicated funding sources affecting St.
Louis Park including but not limited to Hwy 100 and SWLRT.
Attachments: Hwy 100 Concepts - Sept 2010
Hwy 100 Project Summary - Sept 2010
Hwy 100 Project Goals and Criteria - Sept 2010
Prepared by: Mike Rardin, Public Works Director
Approved by: Tom Harmening, City Manager
Concept A (Base)
As of 9/27/10 with St. Louis Park Comments
Page 1 of 5
SP 2733-34
TH 100
KEY
Freeway System
Local Road System
Ramp Removed
New Bridge Desirable
New Bridge
Raised Median
Study Session Meeting of October 11, 2010 (Item No. 2)
Subject: Highway 100 Project Update
Page 3
KEY
Freeway System
Local Road System
Ramp Removed
New Bridge
Raised Median
Concept B
As of 9/27/10 with St. Louis Park Comments
Page 2 of 5
SP 2733-34
TH 100
Study Session Meeting of October 11, 2010 (Item No. 2)
Subject: Highway 100 Project Update
Page 4
KEY
Freeway System
Local Road System
Ramp Removed
New Bridge
Raised Median
Concept C
As of 9/27/10 with St. Louis Park Comments
Page 3 of 5
SP 2733-34
TH 100
Study Session Meeting of October 11, 2010 (Item No. 2)
Subject: Highway 100 Project Update
Page 5
KEY
Freeway System
Local Road System
Ramp Removed
New Bridge
Raised Median
Concept D
As of 9/27/10 with St. Louis Park Comments
Page 4 of 5
SP 2733-34
TH 100
Study Session Meeting of October 11, 2010 (Item No. 2)
Subject: Highway 100 Project Update
Page 6
KEY
Freeway System
Local Road System
Ramp Removed
New Bridge
Raised Median
Concept E
As of 9/27/10 with St. Louis Park Comments
Page 5 of 5
SP 2733-34
TH 100
Study Session Meeting of October 11, 2010 (Item No. 2)
Subject: Highway 100 Project Update
Page 7
For More
Information
Contact:
Ramankutty Kannankutty
West Area Engineer
Water’s Edge
(651)234-7720
Ramankutty.kannankutty
@state.mn.us
John Griffith
West Area Manager
Water’s Edge
(651)234-7728
John.griffith@state.mn.us
September 2010
Highway 100 from County
Road 5 to Highway 7
Hennepin County
St. Louis Park
Bridge Replacement,
safety and mobility
improvements to TH 100.
Estimated Costs
TBD
Previous Costs were
estimated to be $140
million (2014)
Proposed Letting:
11/20/2015
Construction season:
2016-18
For a schedule of Public
Meetings, contact the Area
Manager
MnDOT Metro District Project Summary
Major Reconstruction
BACKGROUND:
This segment is the last sub-standard section on Highway 100 south of Interstate
394 and is one of the most congested freeways in the Metro area. Originally built
in the mid-1930’s, it is part of the first beltway around the Twin Cities. Some
moderate improvements were completed in 2007 in advance of the Crosstown/I-
35W reconstruction. In 2008 the State Legislature passed the Chapter 152
legislation that identified among other bridges, the Highway 7 and Minnetonka
Boulevard bridges as structurally deficient and in need of replacement. In addition
to the 2 bridges being identified, the Metropolitan Council’s 2009 Transportation
Policy Plan recommended this project for reassessment for potential scope
reduction and cost savings. A proposed project in this area is currently scheduled
to be let in 2015, with construction occurring from 2016 until 2018.
The 2009 traffic volume on this segment ranges from 111,000+ AADT near 36th
Street to 127,000+ AADT near 27th Street. The volume to capacity ratio is 1:3 and
it operates at a Level of Service F. This section of roadway experiences as much
as 4 hours of congestion during the morning and afternoon peak periods
combined.
The Highway 100 and County Road 5 (Minnetonka Blvd) interchange ranked 76th
of 374 metro area interchanges with regard to crash cost. Fifty one percent of
crashes at this location were rear ends which is indicative of congested conditions.
There were 422 crashes on the stretch of roadway from 36th Street to Cedar Lake
Road in the years 2007 – 2009. Of these, 55% were rear ends and 22% were
sideswipes. This indicates both a congestion problem and substandard
acceleration/merge areas.
The project purpose is to address basic infrastructure deficiencies, improve
interchange safety at Highway 7 and County Road 5, and improve the traffic
operations of TH 100 by increasing safety and mobility, through improvements
such as modifying ramp acceleration/merging spacing and maintaining 6 through
lanes of traffic within the project limits.
Currently five proposed design alternatives are being considered. The base
concepts included in all alternatives involve replacing the bridges at Highway 7
and County Road 5, adding auxiliary lanes on Highway 100 between Highway 7
and County Road 5, adding a parallel acceleration lane for the loop from Highway
7 to southbound Highway 100 and maintaining 6 through lanes of traffic within the
project limits.
PROJECT DOCUMENTS & APPROVALS SCHEDULE:
Five alternatives are being considered for a preferred option.
Study Session Meeting of October 11, 2010 (Item No. 2)
Subject: Highway 100 Project Update
Page 8
9/30/2010
SLP 4
Goals and Criteria for TH 100 Project Website
SP 2734-33
St. Louis Park
Transportation Goals
1. Provide adequate system-to-system connections (access) to TH 100 to accommodate heavy traffic movements at TH
7/CSAH 25 and CSAH 5 to prevent regional traf fic diversion to local streets.
2. Address congestion issues at TH 7/CSAH 25 and CSAH 5
3. Address safety issues at TH 7/CSAH 25 and CSAH 5
4. Provide for local north – south traffic from Excelsior Blvd to Cedar Lake Road.
5. Maintain the existing (or equivalent) local-to-system connections (access) to TH 100.
6. Reduce long traffic queues and intersection delays on local streets to reasonable lengths and times.
7. Improve overall safety on local roads.
8. Need for compatibility with and access to current and planned Pedestrian / Bicycle / Transit Accommodations systems.
Other Infrastructure Goals
1. W. 36th Street Interchange Reconstruction
2. Freight Rail Bridge Replacement
Environmental Goals
1. Address past identified environmental and aesthetic concerns (noise, air quality, storm water, aesthetics/public
art)
Hennepin County
Transportation Goals
1. Address traffic circulations and safety issues on county road systems and traffic patterns at CSAH 5 AT TH 100
interchange with left turn lanes and traffic sign als at both ends of bridge.
2. Address capacity and safety problems at TH 7/ CSAH 25 at TH 100
3. Coordinate with Cedar Lake LRT Regional Trail/ Southwest LRT system development
Infrastructure Goals
1. Replace structurally deficient CSAH 5 bridge to meet 2006 legislative mandates
Study Session Meeting of October 11, 2010 (Item No. 2)
Subject: Highway 100 Project Update
Page 9
9/30/2010
SLP 4
MnDOT
Transportation Goals
1. Improve mobility on TH 100 for regional traffic
2. Improve safety on mainline, ramps
3. Improve acceleration/merging space for ramps
4. Improve efficiency and recognize the importance of interchange spacing
5. Improve safety on cross streets
Infrastructure Goals
1. Improve substandard mainline and shoulder widths
2. Replace structurally deficient TH 7 and CSAH 5 bridges to meet 2006 legislative mandates
Study Session Meeting of October 11, 2010 (Item No. 2)
Subject: Highway 100 Project Update
Page 10
Meeting Date: October 11, 2010
Agenda Item #: 3
Regular Meeting Public Hearing Action Item Consent Item Resolution Ordinance
Presentation Other:
EDA Meeting Action Item Resolution Other:
Study Session Discussion Item Written Report Other:
TITLE:
Municipal Service Center (MSC) Renovation Project Update.
RECOMMENDED ACTION:
No action required at this time. This report and the presentation at the study session are intended
to update the Council on the financial details of the project.
POLICY CONSIDERATION:
Does the City Council have any questions or concerns about the financial report for this project
and/or the project closeout activities noted in this staff report, including the approval of a final
change order?
BACKGROUND:
Based on the bid awarded for the MSC project, the final budget was set at $9.5 million. At that time
staff was requested to pursue value engineering options with the architect and contractor to reduce
costs in the project where possible.
The overall $9.5 million budget included:
• Construction Costs
• Design and Engineering Costs
• Off-site Rental of Land and Trailer Storage
• Office Design and Equipment
• $400,000 Contingency
Value engineering efforts resulted in a reduction of $335,427 to the construction amount and were
included in Change Order #1. These were fortunately accomplished without seriously reducing the
overall effectiveness of the building. Negotiations with the architect also resulted in a revised
contract providing the city a savings of $100,000.
Pursuing these cost reductions became especially important as the project excavation began and soil
problems developed. Two rounds of soil borings during the design phase did not identify the poor
structural condition of soil in some locations or environmental contamination in other areas.
Borings were taken for both soil structure and evidence of contamination. Unfortunately the small
and localized sample area of borings did not occur in the problem locations.
A Hennepin County Emergency Environmental Response Fund grant of $18,292 was received
during November 2009 to provide some assistance in soil remediation and this revenue source was
included in the project budget. A subsequent application for the regular Environmental Response
Study Session Meeting of October 11, 2010 (Item No. 3) Page 2
Subject: Municipal Service Center (MSC) Renovation Project Update
Fund program resulted in a grant amount of up to $534,000 being awarded March 2010 to
reimburse the city for costs associated with removal of stockpiled contaminated soil from the site.
This work was completed under a separate construction bid and the grant funds and reimbursable
expenditures remain under separate accounting from the project budget.
DISCUSSION:
Attachment A is a summary of the Municipal Service Center Expansion Project Budget identifying
both incurred costs and projected expenditures for project completion. A remaining positive
balance of approximately $199,000 is anticipated (this balance takes into account the payment of the
change order noted below). This amount does not include an approximate $64,000 reimbursement
to the city’s General Fund for the staff time Brian Hoffman and John Altepeter spent on the project
over the last two years. If the City were to reimburse the General Fund for this amount, the project
balance would be approximately $135,000.
A summary of the Hennepin County Grant Financial Status is provided on Attachment B. The
county has authorized the city to use the remaining unused balance for site restoration of the soil
stockpile area and completing the environmental exploration of the site, which will bring closure of
the MPCA file on this project. Any cost incurred by the city for any remaining environmental work
will be reimbursed up to the grant maximum.
Remaining project costs include Change Order #6, which is being finalized by the contractor,
architect, and staff, and scheduled to be presented to Council for action on October 18th.
Attachment C is a memo from Oertel Architects listing the items in this change order. The items
noted in the attached change order summary, which were necessary to complete the project, fall into
three primary areas – unexpected costs related to the remodeling portion of the project, finalization
of the office space build out, and soils issues.
There are four outstanding areas the general contractor has identified for payment in addition to
those items in Change Order #6. Payment for these items is not deemed acceptable to the city staff
and attorney at this time. These items are:
• GCPR#95 - $10,068 – Hydro-mulching of stockpiled soils as requested by the
Watershed District for erosion control. The work was performed on a time and material
basis and the city will pay a reasonable amount for this service. However, the requested
cost is much higher then justified.
• GCPR#98 - $4,624 – Airing of contaminated material. Contractor is requesting a
change order for work not specifically authorized. Initial contractor request was made
months after work reportedly occurred work without supporting documentation.
• GCPR#102 - $65,038 – Contractor is claiming lost revenue for not selling sand they
expected to mine from the site. Specification provided no assurance of soil material
composition or value, work was not included in original bid or previous change orders.
• GCPR#134 - $7,261 – Moving site trash. Waiting for contractor to provide
documentation. This was not included in the original bid or previous change order.
Study Session Meeting of October 11, 2010 (Item No. 3) Page 3
Subject: Municipal Service Center (MSC) Renovation Project Update
The outstanding change order requests are being claimed through the general contractor as work
completed by the excavation sub-contractor. The city has been notified by Carroll Excavation (sub-
contractor) of there intent to file against the general contractors payment bond.
Staff is working with the City Attorney, architect, and contractor to resolve these items and finalize
the project after the few remaining construction items are completed.
MSC Lighting Improvements
Retrofitting the existing MSC bay lighting from Metal Halide to energy efficient fluorescent fixtures
was originally considered during the design phase. Bid as an alternate, the city did not accept this
work to contain costs and considered the possibility of receiving energy improvement grant funding
of some type.
The current lighting is of poor quality, requires about 10 minutes to turn on (due to warm up of
bulbs) and is now noticeably darker in comparison to the new bay lights. This was very evident on
the MSC Council tour. Replacing all the fixtures with the same fluorescent fixture used in the new
bay and connecting the lights to the management system with occupancy sensors would be a
beneficial improvement. Initial quotes received from an electrician indicate about $50,000 is needed
to complete the work. This would be separate from the general contractor and not a change order.
This work would occur after the general contractor is out of the building.
If the City Council wished to have this work completed, staff would recommend that the remaining
MSC project budget be used. Grant funds that have been received for energy improvements have or
will be expended on other projects.
FINANCIAL OR BUDGET CONSIDERATION:
The project is nearing completion and projected to remain within the overall budget established after
the construction bids were received. With Council support, the expenditure of approximately
$50,000 of the remaining project balance will be used to retrofit the existing MSC bay lighting.
VISION CONSIDERATION:
Being a leader in environmental stewardship, the city has made an investment to dramatically
improve the water quality discharging to the creek, corrected site contamination, and made
improvements to the energy efficiency of the building. Reuse of the existing building materials
through the relocation of the salt storage building, construction recycling, natural lighting, and
energy efficient construction has resulted in the MSC meeting the criteria as a LEED certifiable
building.
Attachments: A - Project Budget Summary
B - Hennepin County Grant Financial Status
C - Proposed Change Order #6
Prepared by: Brian Hoffman, Director of Inspections
Approved by: Tom Harmening, City Manager
Study Session Meeting of October 11, 2010 (Item No. 3)
Subject: Municipal Service Center (MSC) Renovation Project Update
Page 4
Study Session Meeting of October 11, 2010 (Item No. 3)
Subject: Municipal Service Center (MSC) Renovation Project Update
Page 5
Study Session Meeting of October 11, 2010 (Item No. 3)
Subject: Municipal Service Center (MSC) Renovation Project Update
Page 6
Study Session Meeting of October 11, 2010 (Item No. 3)
Subject: Municipal Service Center (MSC) Renovation Project Update
Page 7
Meeting Date: October 11, 2010
Agenda Item #: 4
Regular Meeting Public Hearing Action Item Consent Item Resolution Ordinance
Presentation Other:
EDA Meeting Action Item Resolution Other:
Study Session Discussion Item Written Report Other:
TITLE:
Update on PPL/Louisiana Court Financial Plan.
RECOMMENDED ACTION:
No formal action at this time. This report is intended to update the Council on the status of the
Louisiana Court (LC) refinancing plan and provide an opportunity for the Council to ask questions
and make comments prior to the start of the formal refinancing approval process and the preparation
of documents.
POLICY CONSIDERATION:
This report is a follow-up to the discussion held with the Council at the July 12 Study Session
regarding the financial and operational status of PPL’s LC development. If the City Council finds
the proposed plan consistent with the direction provided July 12th, staff will initiate the formal
refinancing approval process over the upcoming weeks.
BACKGROUND:
At the July 12 Study Session, the Council reviewed the financial and operational status of the LC
development (report attached) and discussed the financial restructuring plan proposed by PPL. At
that meeting the Council provided staff with the following policy direction:
Refinancing: The Council is willing to refinance the development and has agreed to extend
the term to 30 years.
Debt Reserve Equity Contribution: The Council agreed to contribute any “excess” debt
reserve to the development as an equity contribution. The City will continue to retain an
amount equal to one year’s debt payment in reserve. The remaining amount will be
contributed to the development as an equity contribution. Based on the current refinancing
plan proposed by PPL, this would result in a contribution of approximately $200,000. It
should be noted that the reserve was originally funded through a Livable Communities grant
from Met Council and will require their approval to utilize the funds as proposed.
Equity Contribution/Capital Improvements: The Council agreed to contribute an
additional $500,000 to the project either as an equity contribution to further lower the
overall debt on the project or to assist with the financing of capital improvements – and/or
any combination of the two.
Shallow Rent Subsidy Program: The Council agreed to consider funding a shallow rent
subsidy program and asked for more details about the duration of the program and how the
subsidy would be phased out.
Study Session Meeting of October 11, 2010 (Item No. 4) Page 2
Subject: Update on PPL/Louisiana Court Financial Plan
The Council asked that staff return with a proposed plan that would structure the City’s financial
contribution in a way that best meets the financial and operational needs of the development.
LATEST PROPOSED FINANCIAL PLAN:
Since the July 12th study session staff has worked with PPL and the other funders to prepare a
refinancing plan that is consistent with the direction provided by the City Council. The new plan is
summarized in the attached Sources and Uses table. It reflects updated cost estimates for any
shortfall in operating expenses prior to the new financing coming on-line early next year, the City’s
contributions and the grants from the other housing agencies. One of the housing agency grants,
the $550,000 grant from the Minnesota Housing Finance Agency (MHFA), has not been officially
awarded yet. Every indication is that PPL will be successful in securing this grant and the MHFA
funds are included in the refinancing plan. The MHFA acts on PPL’s grant request at the end of
October.
The City’s $500,000 contribution will be used to both reduce the size of the new bond issue and
increase the investment in capital improvements at LC. The new overall refinancing plan results in
approximately a $1.9 million reduction in the debt carried by LC; and, at least $230,000 in capital
improvements to the property. The City’s contribution will be used as needed to support the debt
reduction and capital improvement amounts as noted in the refinancing plan without designating a
specific funding split between the two components of the plan at his time. The Park Center TIF
funds are the proposed funding resource for the $500,000 contribution. These funds are restricted
for use for affordable housing related initiatives.
Additional funds for building improvements may be available if operating shortfalls incurred prior to
the issuance of the refinancing bonds is less than projected at this time. The shortfall projection is
considered a cautious estimate.
The long term strength of LC is improved by the combination of debt reduction and capital
improvements incorporated in this refinancing plan. The debt service is dramatically reduced and it
takes advantage of currently lower interest rates. It is hopeful that the refinancing can occur by the
early part of 2011.
Staff is recommending that Council endorse the overall refinancing plan as provided in this report.
Shallow Rent Subsidy Program.
During the July 12 Study Session the Council asked for more information on how a shallow rent
subsidy program would work. The proposed rent subsidy program would provide a $200 monthly
rent subsidy for up to 20 units at Louisiana Court. Details for the program are attached. Eligible
participants would be current and future applicants on the Housing Authority’s Section 8 Voucher
Program waiting list who meet the Section 8 Voucher Program eligibility criteria. The HA currently
has over 590 applicants on the waiting list. Due to federal funding constraints, the Housing
Authority has not issued a new Section 8 Voucher to an applicant off the general waiting list in
almost two years. Creating a shallow rent subsidy program would be a cost effective way to provide
affordable housing for up to 20 families in need while taking advantage of an available housing
resource in the community. On October 1, the vacancy rate at LC was at 14% (18 units).
(Program details are attached)
Study Session Meeting of October 11, 2010 (Item No. 4) Page 3
Subject: Update on PPL/Louisiana Court Financial Plan
Annual Rent Subsidy
$200 per unit
Add’l Market Rent
Leveraged(approx.)
10 units $24,000 $60,000
20 Units $48,000 $120,000
*There would be an additional administrative cost of approx. $4000 - $5000.
Program Duration. The program would be structured to expire after 3 years; and have annual
reviews of its effectiveness. The program has the potential to create and retain affordable housing
opportunities while leveraging additional rent revenues for the development. Park Center TIF funds
will be the source for funding the program.
Program Transition. In order to facilitate the transition from the Shallow Rent Subsidy Program
back to paying market rent at the end of the three year pilot, each participant will meet with staff
from PPL’s Center for Working Families for a financial information session and for introduction to
the services and programs available through PPL. Based on information gathered at these two
sessions, the Service Coordinator will assist the family in completing an achievement plan based on
their strengths and needs to insure program participants successfully move off the subsidy program.
Should a participant’s name come to the top of the Section 8 Voucher Rental Assistance waiting list
while their residing at LC, they will be transitioned from the Shallow Subsidy Program to the
Voucher Program.
Funding Source. The Park Center TIF funds are the proposed funding resource for the Shallow
Subsidy Program.
VISION CONSIDERATION:
Continued support of the project is consistent with the City’s visioning strategy and housing goals
including the City’s commitment to providing a well maintained and diverse housing stock,
strengthening neighborhoods, promoting property maintenance to foster quality housing and
community aesthetic and to promote and facilitate a mix of housing types, prices and rents that
maintains a balance of affordable housing for low and moderate income households.
NEXT STEPS:
Based on the direction received from the Council, staff will continue to work with PPL and the
other funding partners to finalize the financial restructuring plan for LC. Staff will continue to
consult with Ehlers & Associates and Kennedy & Graven and begin moving forward with the steps
necessary to reissue the bonds, draft loan documents to facilitate the City’s financial contribution,
seek Met Council’s permission to utilize the excess debt reserve funds as an additional equity
contribution to the project and finalize the Shallow Subsidy Programs administrative policies. Staff
will update the Council as new developments occur.
Attachment: July 12 Study Session Report
PPL Proposed Refinancing Plan
Shallow Rent Subsidy Program Description
Prepared by: Michele Schnitker, Housing Supervisor
Kevin Locke, Community Development Director
Approved by: Tom Harmening, City Manager
Meeting Date: July 12, 2010
Agenda Item #
Regular Meeting Public Hearing Action Item Consent Item Resolution Ordinance
Presentation Other:
EDA Meeting Action Item Resolution Other:
Study Session Discussion Item Written Report Other:
TITLE:
Project for Pride in Living’s (PPL) Louisiana Court (LC) Development.
RECOMMENDED ACTION:
No formal action at this time. As a follow-up to the study session discussion of June 14, this report
provides background information to assist with the Council’s decision on whether to proceed with a
number of initiatives staff is recommending the Council consider taking to improve the financial
stability of LC. Proposed initiatives include refinancing the bonds for the project, establishment of a
pilot shallow rent subsidy program for 10 to 20 units at LC, and the contribution of a portion of the
existing debt service reserve fund (excess reserve dollars after a refinancing is completed) as an equity
contribution to assist in lowering the debt on the project and support the planned rehab activities as
outlined in the proposed refinancing plan submitted by PPL. The report also provides information
on the Park Center TIF District related to the status of the fund and potential uses, including
additional financial contributions to LC.
POLICY CONSIDERATION:
From a policy perspective, the City Council is being asked to consider whether or not it supports the
following actions regarding the PPL/LC project.
• To refinance the bonds issued for the LC project in order to take advantage of reduced
interest rates now available;
• To contribute excess debt service reserve funds to buy down the debt on the project;
• To establish a pilot shallow rent subsidy program at LC that would provide rental assistance
to current applicants on the Section 8 waiting list, and put current vacant apartment units to
use and improve LC’s cash flow;
• To provide for an additional equity contribution to the project and/or to provide funding to
assist with project rehab needs;
• To utilize Park Center TIF District Funds for the rent subsidy program, equity contribution
and/or project rehab needs.
BACKGROUND:
The City issued General Obligation bonds to finance the purchase and renovation of LC in 2000.
This was done as part of a concerted effort by the City, working with PPL, to transform LC in to a
quality affordable housing asset for the community, For the most part, the initial goals of the project
have been reached but the transformation of LC has continued to be a challenge financially. In 2005
and 2006, additional funding was provided from the original funders of the project to address
needed capital improvements, replenish financial reserves and provide a limited number of rent
Study Session Meeting of October 11, 2010 (Item No.4)
Subject: Update on PPL/Louisiana Court Financial Plan
Page 4
subsidies for targeted tenant populations. The City provided a $400,000 deferred loan and
additional funding commitments were secured from Hennepin County, Minnesota Housing
Finance Agency (MHFA) and Enterprise (Limited Partner). In 2005, the Tax Credit Limited
Partnership for the development was transferred from US Bank to Enterprise and the management
of the complex was transferred from PPL to an independent property management company.
Enterprise has proven to be a responsive and active Limited Partner providing the project with
approximately $500,000 in gap funding for operational costs over the past 5 years. In addition,
Enterprise has approximately $1,000,000 set aside for further assistance with future operational costs
and/or to use as an equity contribution in restructuring the future debt on the development.
Although it was hoped that the 2006 stabilization initiatives would address the long term financial
viability of the development, the project has continued to struggle financially. A secondary goal of
the 2006 stabilization effort was to stabilize the project until 2010 when the project’s financing
could be restructured and the overall debt on the project could be reduced. Current economic
conditions offer an opportunity to strengthen LC financially by refinancing at a lower interest rate.
In accordance with the terms of the General Obligation Bonds sold by the City to assist in financing
the acquisition and rehab of the development in 2000, 2010 is the first opportunity to refinance the
Bonds and lower the debt on the project.
In addition to refinancing, PPL has proposed a debt restructuring plan that includes funding
contributions from the County, MN Housing, the Limited Partner and the Family Housing Fund
to lower the overall debt on the project and to assist in funding a limited amount of rehab. Both of
these initiatives would further strengthen the financial position of the development and reduce the
City’s risk and exposure going forward.
At the June 14 Study Session, the Council reviewed the financial and operational status of the
development and discussed the financial restructuring plan proposed by PPL. Staff endorsed the
Plan recommending that the City refinance the bonds, contribute a portion of the debt service
reserve and create a shallow rent subsidy program that would be targeted for use at Louisiana Court.
The Park Center TIF funds are the proposed funding resource for the Shallow Rent Subsidy
Program. These funds are restricted for use for affordable housing related initiatives.
There was general agreement amongst the Council to refinance the current debt for a period equal to
that remaining on the current bond term (20years). The Council also indicated a willingness to
contribute the excess debt service reserve funds as an equity contribution. The Council indicated an
interest in pursuing the idea of the Shallow Rent Subsidy Program but requested further information
on program description and administration. In addition, the Council expressed an interest in
providing additional funding to the project either as an equity contribution and/or funds to assist in
financing rehab and capital improvements. Council directed staff to provide some financial
contribution options to consider for LC as well as information on other initiatives for which Park
Center funds could be utilized.
Study Session Meeting of October 11, 2010 (Item No.4)
Subject: Update on PPL/Louisiana Court Financial Plan
Page 5
CITY FINANCIAL CONSIDERATIONS:
Since 2006, the LC’s cash flow has continued to be less than anticipated. Decreased net revenues
have made it impossible for PPL to meet the required 120% debt service ratio. The primary reason
for the decreased revenue has been a greater number of vacancies than budgeted and higher than
expected operating expenses combined with too much debt on the project. Despite the financial
challenges, PPL has remained current on all debt service payments with the exception of deferring
required scheduled reserve deposits. The current outstanding balance on the General Obligation
Bonds is approximately $3.77 million. Staff is recommending that the Council consider taking the
following initiatives to further strengthen the financial position of the development and reduce the
City’s risk and exposure going forward.
Debt Reduction and Refinancing
Refinancing: Although it is generally agreed that the project needs a combination of debt
reduction and capital improvements, limited funding prevents both issues being addressed to the
extent needed. PPL’s current financial restructuring plan (see attachment) focuses on lowering
the debt service on the project through equity contributions from the funding partners and a
request to the City to refinance the bonds to take advantage of lower interest rates. Funding
contributions are being requested from MN Housing, Hennepin County, the City (excess debt
service reserve), the Family Housing Fund and the Limited Partner, Enterprise. Lacking
additional funding resources, the prioritization of debt reduction over capital improvements
appears to be the best plan at this time. Lowering the debt on the project would improve the
development’s financial status significantly, although, this action alone does not appear to be
enough to remedy the developments financial deficit for the long-term. The combination of
grants, refinancing and assistance should make it possible for Louisiana Court to cash flow for
the next 10 yrs, but at a narrow margin and with not much funding for capital improvements.
The combination of lowered interest rate and reduced debt will greatly improve the
development’s financial stability and enhance the property’s ability to do improvements and to
secure grants for improvements in the future. PPL is projecting that annual debt service
payments will decrease annually from $325,000 to $140,000.
The refinancing model that staff is presenting to Council assumes a 20 year term which is the
remainder left on the current bonds. Enterprise has asked that the City consider extending the
term on the new bond issuance to 25 or 30 years. Extending the term of the bond is another
way that the City could lower the annual debt payment on the project without investing any
additional funding in the project. A longer debt service would mean that instead of PPL owning
the project outright in 20 years, they would still have an outstanding debt on the project for an
additional 5 to 10 years. If the Council is interested in exploring a longer term, staff would
suggest we ensure that there is an opportunity for the City to require a transfer of the ownership
if the project does not meet operational expectations. Extending the term would compound
the annual decrease in debt payments that would result from an additional equity contribution
to the project to further lower the overall debt.
Refinancing will trigger the required payoff of the $400,000 deferred loan between PPL and the
City. Staff recommends that the payoff be subordinated at this time with the balance of the loan
remaining in place.
Study Session Meeting of October 11, 2010 (Item No.4)
Subject: Update on PPL/Louisiana Court Financial Plan
Page 6
From the City’s position as the first mortgagee, reissuance of the bonds at a lower interest rate
and contribution of the excess debt service reserve funds is a low cost way for the City to assist
Louisiana Court with the current financial situation. Refinancing at a lower debt amount will
further reduce the City’s risk as the first mortgage holder, offering further protection of the
City’s investment. Firm funding commitments have been received from Hennepin County and
the Family Housing Fund. MN Housing’s grant application deadline is mid June with funding
awards scheduled to be announced in October. Enterprise, the Limited Partner, will make a
decision regarding their use of the approximately $1,000,000 after the City and MN Housing
decide how to proceed. Unless bonds rates start to increase, refinancing will occur in the fall
following the funding decision by MN Housing.
Debt Service Reserve Contribution:
Refinancing at a lower total debt reduces the amount of debt service reserve required and makes
it possible for the City to contribute a portion of the existing debt service reserve as an equity
contribution. Currently, the balance in the debt service reserve, $325,000, is equal to one year
of bond payments. Following the refinancing, the annual debt service payment will decrease to
approximately $140,000. The City will continue to retain a reserve equal to one year of debt
service payments, freeing up approximately $185,000 to be used as an equity contribution to the
project. Permission to use these excess funds as an equity contribution will require authorization
from Metropolitan Council since the debt reserve fund was originally capitalized with Livable
Community Grant funds.
Equity/Rehab Financial Contribution:
As previously mentioned, the project would benefit from a combination of debt reduction and
capital improvements but limited funding prevents both issues being addressed to the extent
desired. Debt reduction over capital investment appears to be the best plan at this time but
additional investment in capital improvements will be needed over the next 10 years to address
ongoing maintenance/rehab needs and to implement upgrades required to maintain and improve
marketability.
Although, implementation of PPL’s plan will greatly improve the financial stability of the
project, it is the City’s objective that the development be successful, financially self sufficient and
able to meet future operational, rehab and capital improvement financial commitments. To
further support this objective and enhance the likelihood of this being accomplished, the City
could consider an additional financial contribution to the project to further reduce the debt
and/or to fund rehab and capital improvements focused on operational expenses and increasing
marketability of the development.
Under the current Plan proposed by PPL, the combination of grants, refinancing and assistance
should make it possible for LC to cash flow for the next 10 years, but at a narrow margin and
with not much funding for capital improvements. With an additional contribution from the
City, the annual debt service would be further reduced and cash flow would improve. Improved
cash flow would provide PPL with the financial means to address ongoing maintenance and
rehab needs. An additional financial contribution to address identified rehab needs and
upgrades in the units could improve the marketability of the development. This in turn would
lower the vacancy, increase rent revenues, improve cash flow and further improve the financial
status of the development.
Study Session Meeting of October 11, 2010 (Item No.4)
Subject: Update on PPL/Louisiana Court Financial Plan
Page 7
If the City Council were interested in this approach, staff proposes the City consider an
additional $200,000 – 500,000 in equity contribution. From a practical standpoint, it should be
noted that once the bonds are refinanced the call date on the bonds will be reset and it will be for
another 10 years before the next opportunity to refinance. For this reason, the staff would
propose that an equity contribution to further reduce the debt service be a priority. Each
$100,000 reduction in debt translates into an annual debt service reduction of approximately
$6,800.
Providing an additional $350,000 equity contribution would result in a lower annual debt
service payment similar to that which would be accomplished by extending the term of the
bonds for an additional 30 years versus the 20 years being proposed. The City’s contribution to
debt reduction could be provided by expansion of the City’s existing deferred loan from
$400,000 to $750,000.
PPL’s plan proposes $124,509 for capital improvements. Funding will be used primarily to
upgrade kitchens and bathrooms, replace fuse boxes with circuit breakers and replace doors and
millwork as funds allow.
In an effort to address marketability and lower vacancy, PPL is in the process of upgrading 6 of
the units that are currently vacant. Although the cost to rehab the units varies, depending on
each unit’s particular needs and previous rehab, PPL estimates the average cost to thoroughly
update a unit at approximately $12,000. If the City Council was interested, staff recommends
that the Council consider providing funding to assist in the effort to rehab vacant units to
improve marketability. As of June 1, the development had 23 vacant units. A financial
contribution of $120,000 would rehab approximately 10 units. Funds in the refinancing plan
designated for capital improvements will rehab several additional units. As vacancy decreases
and cash flow improves, PPL will continue to update and rehab units as turnovers occur. At
least one of the funders has also indicated a potential to access future funds to continue this
effort to upgrade units. If funding allows, efforts will also be made to improve occupied units to
enhance retention of existing residents.
Staff is proposing that Park Center TIF funds be the resource for funding the equity
contribution and/or to fund additional rehab at the development. The funding could be
provided in the form of a grant or a deferred loan.
Equity Contribution Estimated Annual Debt Service Savings
0 $140,000 0
$100,000 $133,200 $6,800
$200,000 $126,400 $13,600
$300,000 $119,600 $20,400
$400,000 $112,800 $27,200
$500,000 $106,000 $34,000
Study Session Meeting of October 11, 2010 (Item No.4)
Subject: Update on PPL/Louisiana Court Financial Plan
Page 8
Revenue Enhancement/Affordable Housing Shallow Rent Subsidy
Several other initiatives could be used to further stabilize the project. They have the potential to
create and retain affordable housing opportunities while leveraging additional rent revenues for
the development.
Staff is recommending that the City develop, fund and implement a shallow rent subsidy
program that would provide a $200 monthly rent subsidy for 10 to 20 units at Louisiana Court.
Eligible participants would be current and future applicants on the Housing Authority’s Section
8 Voucher Program waiting list. The HA currently has over 580 applicants on the waiting list.
Due to federal funding constraints, the Housing Authority has not issued a new Section 8
Voucher to an applicant off the general waiting list in almost two years. Creating a shallow rent
subsidy program would be a cost effective way to provide affordable housing to 10 to 20 families
in need while taking advantage of an available housing resource in the community. In June, the
vacancy rate at LC was at 18% (23 units). (Program details are attached)
Annual Rent Subsidy
$200 per unit
Add’l Market Rent
Leveraged(approx.)
10 units $24,000 $60,000
20 Units $48,000 $120,000
*There would be an additional administrative cost of approx.
$4000 to $5000.
Funding for the program would be provided by the Park Center TIF district funds. Staff is
proposing that the program be operated as a 3 year pilot at LC with the potential to expand in
the future, after careful evaluation, to other developments throughout the City. The Program
outline is attached.
Staff is also exploring the possibility of converting the twelve Hollman Public Housing units at
Louisiana Court to Project Based Section 8 Rental Assistance. Authorization from HUD to
convert the units requires a very lengthy application process so this is not an immediate solution
to the revenue shortfall but a conversion could result in approximately $55,000 in additional
rent revenue.
PARK CENTER TIF:
The Park Center TIF district was created in 1997 and will expire on December 31, 2023. As of
December 31, 2010, the fund balance in the district was $771,361. The estimated annual tax
increment generated from the district is approximately $120,000. The district has the potential to
generate an additional $1,560,000. Total TIF generated from the district will be approximately
$2,331,000. The increment may be used to pay eligible costs for “housing projects” anywhere
within the City limits intended for occupancy by low and moderate income families. Attached is a
memo from Stacie Kvilvang, Financial Consultant, with a detailed description of eligible uses of the
increment.
Each year the City’s budget includes funding for a variety of housing related programs focused on
promoting housing preservation, expansion and homeownership. The majority of these programs
are income restricted and would be eligible for funding from the Park Center TIF District. Last year
the City expended approximately $310,000, not including loans and staff salaries, for housing
related programs. The primary source of funding for these programs is the Housing Rehab Fund.
Study Session Meeting of October 11, 2010 (Item No.4)
Subject: Update on PPL/Louisiana Court Financial Plan
Page 9
The Park Center TIF funds could be utilized to assist in financing some of these program activities
reducing the need to use Housing Rehab funds. The current fund balance in the Housing Rehab
fund is $468,000 and annual fund revenues are approximately $500,000. Revenues coming into the
Housing Rehab Fund are derived from the 1/8 of 1% fee the City charges on private activity revenue
bonds the City has issued over time. It should be noted that there are other expenses unrelated to the
housing programs charged to the Housing Rehab Fund annually.
It also should be noted that the Park Center TIF funds can be used this year and next for the City’s
Construction Assistance Program. This is a special short term economic stimulus program
authorized by the state as a means to create jobs now.
FUTURE:
The viability of LC as a vital community asset and attractive affordable housing option for the
residents of St. Louis Park is dependent on its long term financial strength.
When the City partnered to redevelop LC ten years ago, the City took the unusual step of issuing
General Obligation Bonds to assist in financing the acquisition and rehab of the development. The
City supported the project concept and determined that rehabbing and retaining this development
as an affordable housing resource was a worthwhile endeavor. At the same time, the Council didn’t
envision that the City would need to provide ongoing subsidy to sustain the development.
The Plan proposed by PPL should make it possible for LC to cash flow for the next 10 years.
However, considering the on-going challenges of making LC work financially and the inability of
this project to generate funds for PPL, it seems that at some point it might be better for both PPL
and the City (as mortgage holder) if PPL were to be out from under the burden of responsibility for
the real estate and focus instead on the mission of helping residents.
Staff is proposing that any re-issuance of G. O. Bonds should also include a requirement to adhere
to certain performance standards that insure LC is well maintained and well managed during the life
of the bonds and, that the City have the right to initiate a transfer of the property to a new owner
should the City determine a change in ownership is in the best interest of the community.
Performance standards will include a requirement to meet all financial requirements as noted in the
bond documents including, meeting a minimum debt service coverage ratio, making required reserve
contributions, meeting minimum occupancy rate thresholds, City staff will work with Ehlers and
Associates and Kennedy and Graven to make certain that “performance conditions” will be included
as part of the refinancing agreement to ensure that there is an opportunity to explore an ownership
transfer in the future if warranted.
The owner of LC needs to be able to take full financial responsibility for the development, whether
that means being able to operate LC continually at a loss in service of a greater mission; or, selling
LC to a non profit housing developer whose primary mission is affordable housing; or, returning the
development to private ownership as modest priced market rate housing.
Study Session Meeting of October 11, 2010 (Item No.4)
Subject: Update on PPL/Louisiana Court Financial Plan
Page 10
VISION CONSIDERATION:
Continued support of the project is consistent with the City’s visioning strategy and housing goals
including the City’s commitment to providing a well maintained and diverse housing stock,
strengthening neighborhoods, promoting property maintenance to foster quality housing and
community aesthetic and to promote and facilitate a mix of housing types, prices and rents that
maintains a balance of affordable housing for low and moderate income households.
NEXT STEPS:
Based on the direction received from the Council, staff will continue to work with PPL and the
other funding partners on the financial restructuring plan for LC. Staff will continue to consult with
Ehlers & Associates and Kennedy & Graven to determine steps needed to reissue the bonds and to
ensure that steps are taken to safeguard the City’s interest. Staff will keep the Council updated as
new developments occur.
Attachment: PPL Proposed Refinancing Plan: 20 Year Term
PPL Proposed Refinancing Plan: 30 Year Term
Ehlers TIF Use Memo
Shallow Rent Subsidy Program Outline
Prepared by: Michele Schnitker, Housing Supervisor
Kevin Locke, Community Development Director
Approved by: Tom Harmening, City Manager
Study Session Meeting of October 11, 2010 (Item No.4)
Subject: Update on PPL/Louisiana Court Financial Plan
Page 11
Study Session Meeting of October 11, 2010 (Item No.4)
Subject: Update on PPL/Louisiana Court Financial Plan
Page 12
Study Session Meeting of October 11, 2010 (Item No.4)
Subject: Update on PPL/Louisiana Court Financial Plan
Page 13
Study Session Meeting of October 11, 2010 (Item No.4) Subject: Update on PPL/Louisiana Court Financial Plan Page 14
Shallow Rent Subsidy Program: Outline
Eligibility:
Households who have an active application on St. Louis Park HA’s Section 8 Voucher waiting list.
Participants need to meet Section 8 Voucher participant program eligibility requirements.
Participation in the Shallow Subsidy Program will not impact the applicant’s placement on the
Section 8 Voucher waiting list.
Tenant Selection Process:
HA responsibility: All applicants on the Section 8 Waiting List will have an opportunity to
place their name on the Shallow Subsidy Program waiting list regardless of where they live
now. Applicants on the list will be placed in order of their Section 8 application date and
preferences. Final eligibility will be determined when an applicant comes to the top of the
waiting list. The rent subsidy will be offered to interested eligible applicants in the order of
placement on the waiting list based on the unit size available. Eligible applicants must meet
the HA’s Section 8 occupancy standards for family size and composition as outlined in the
HA’s Administrative Plan. Eligible applicants will be forwarded to PPL for further non-
income screening.
PPL responsibility: PPL will be responsible for screening applicants in accordance with their
occupancy policies. Participants must meet PPL’s tenant screening criteria, including
criminal background checks.
Rent Subsidy:
The HA will determine rental eligibility based on the policies and procedures applied to the Section
8 Voucher program. The HA will calculate 30% of the tenants gross adjusted monthly income.
The participant will receive a Shallow Rent Subsidy equal to the difference between the rent and
30% of the tenant’s gross adjusted income up to a maximum of $200 per month. Resident income
recertification will be completed annually by the Section 8 Manager in accordance with Housing
Choice Voucher program. The updated rent calculation will be completed to ensure that tenant
income is within program guidelines. Resident rent portion increases will require a thirty-day notice
of increase. Resident portion decreases will become effective the first of the month following
completion of the recertification.
Interim adjustments will be calculated when there is an income source change or an income increase
that would change the subsidy amount. Income decreases have no minimum threshold. Annual
certification will be completed on the household anniversary date.
Program Duration:
Staff is proposing that the program be operated as a 3 year program at Louisiana Court (LC). A
careful evaluation of the program at Louisiana Court would be done annually and the program
would only be continued with Council approval. If the program proves successful at Louisiana
Court, the City Council could consider using the program elsewhere too
Study Session Meeting of October 11, 2010 (Item No.4)
Subject: Update on PPL/Louisiana Court Financial Plan
Page 15
Transition Plan:
In order to facilitate their transition from the Shallow Rent Subsidy Program and resume paying
market rent at the end of the three year pilot, each participant will meet with staff from PPL’s
Center for Working Families for a financial information session and for introduction to the services
and programs available through PPL. Based on information gathered at these two source sessions,
the Service Coordinator will assist the family in completing an achievement plan based on their
strengths and needs.
Unit Inspection Procedures:
Move-In / Move-Out Inspections: An independent, HQS inspection will be completed prior to
move-in. The cost will be borne by Shallow Rent Subsidy rental assistance fund. Furthermore, the
Property Manager will conduct a unit inspection with each resident at time of move-in and will
complete Apartment Inspection Form to record inspection results in accordance with their project
policies.
Termination Process:
Termination of residency for reasons other than nonpayment of rent will only occur if the resident is
unable or unwilling to comply with the lease agreement, house rules and regulations despite repeated
and consistent interaction with PPL’s Service Coordinator and/or Property Manager.
In the event that a resident violates the terms of the lease and the Property Manager deems that
termination of residency is necessary as a result, a standard Notice to Vacate will be sent to the
resident which will specify the date on which the resident is expected to vacate. In the event that the
resident fails to vacate the premises by the specified date, the Property Manager may file for
Unlawful Detainer with Hennepin County and seek to have the resident evicted.
Funding Source:
Park Center TIF
Study Session Meeting of October 11, 2010 (Item No.4)
Subject: Update on PPL/Louisiana Court Financial Plan
Page 16
Meeting Date: October 11, 2010
Agenda Item #: 5
Regular Meeting Public Hearing Action Item Consent Item Resolution Ordinance
Presentation Other:
EDA Meeting Action Item Resolution Other:
Study Session Discussion Item Written Report Other:
TITLE:
City Council Governance Model and Norms.
RECOMMENDED ACTION:
Not Applicable.
POLICY CONSIDERATION:
To be determined.
BACKGROUND:
This item has been placed on the Study Session Agenda to allow for a discussion on the City
Council’s working relationship, governance model and norms.
FINANCIAL OR BUDGET CONSIDERATION:
Not Applicable.
VISION CONSIDERATION:
Not Applicable.
Attachments: None
Prepared and Approved by: Tom Harmening, City Manager
Meeting Date: October 11, 2010
Agenda Item #: 6
Regular Meeting Public Hearing Action Item Consent Item Resolution Ordinance
Presentation Other:
EDA Meeting Action Item Resolution Other:
Study Session Discussion Item Written Report Other:
TITLE:
Communications/Meeting Check-In (Verbal).
RECOMMENDED ACTION:
Not Applicable.
POLICY CONSIDERATION:
Not Applicable.
BACKGROUND:
At every Study Session, verbal communications will take place between staff and Council for the
purpose of information sharing.
FINANCIAL OR BUDGET CONSIDERATION:
Not Applicable.
VISION CONSIDERATION:
Not Applicable.
Attachments: None
Prepared and Approved by: Tom Harmening, City Manager
Meeting Date: October 11, 2010
Agenda Item # 7
Regular Meeting Public Hearing Action Item Consent Item Resolution Ordinance
Presentation Other:
EDA Meeting Action Item Resolution Other:
Study Session Discussion Item Written Report Other:
TITLE:
Update on Tax Forfeited Property Purchase - 2944 Brunswick Avenue South.
RECOMMENDED ACTION:
No action is required at this meeting. This report is being provided to update the City Council on
the status of this previously approved purchase. Please let staff know of any questions or concerns
that you might have.
POLICY CONSIDERATION:
The proposed purchase is consistent with the City’s Strategic Direction and housing goal to provide
more affordable single family home ownership opportunities in the City.
BACKGROUND:
The City Council approved the purchase of the tax forfeited parcel at 2944 Brunswick at the
September 7, 2010 meeting. The purpose of the purchase was to sell the vacant home to West
Hennepin Affordable Housing Land Trust – Homes Within Reach (HWR) for development of an
affordable housing opportunity.
HWR has requested the City consider an adjustment to the original acquisition plan. HWR would
like the City to purchase 2944 Brunswick Ave S and then sell it to Greater Metropolitan Housing
Corporation (GMHC) instead of selling directly to HWR. GMCH will rehab the home over the
winter. HWR would then purchase the home from GMHC in the spring and proceed with selling
to a qualified low-income family. This approach will ease HWR’s cash-flow constraints by
decreasing their holding costs during the rehab period. This change will require the City Council to
adopt a new resolution to take into consideration this change.
This modification will produce the same outcome as the original plan – an additional affordable
ownership opportunity. It would also better meet cash-flow needs for HWR, and allow this project
to proceed without delay. GMHC’s mission is to preserve, improve and increase affordable housing
for low and moderate income individuals and families, assist communities with housing
revitalization as well as create and carryout demonstration projects. GMHC has been active in singe
family home rehab since the early 1970s, and HWR has successfully used them as a developer on
other single family home rehabs.
An amendment to the resolution approving the purchase and resale of the property will presented to
the City Council at its October 18 meeting.
Study Session Meeting of October 11, 2010 (Item No. 7) Page 2
Subject: Update on Tax Forfeited Property Purchase - 2944 Brunswick Avenue South
FINANCIAL OR BUDGET CONSIDERATION:
This proposed amendment does not alter the City’s financial contribution to this project. This
proposal is consistent with budgeted funds: Housing Rehab Fund (HRF) has budgeted $50,000 to
assist HWR with acquisition of two properties in 2010; and has established a $100,000 line of credit
for HWR; and an additional $20,000 of 2010 CDBG funds has been allocated for HWR.
The total cost to the City will be $45,000 less what the City receives from the County sale. The
City’s net cost is projected to be between $11,000 -$28,000.
VISION CONSIDERATION:
Acquisition and rehab of a tax forfeited, vacant, substandard home for an affordable ownership
opportunity is consistent with the City Council’s Strategic Direction to provide a well maintained
and diverse housing stock and the related Focus Area to work towards affordable single family home
ownership throughout the City.
Attachments: Proposed Amended Resolution
September 7, 2010 City Council Report
Prepared by: Kathy Larsen, Housing Programs Coordinator
Approved by: Tom Harmening, City Manager
Study Session Meeting of October 11, 2010 (Item No. 7) Page 3
Subject: Update on Tax Forfeited Property Purchase - 2944 Brunswick Avenue South
PROPOSED AMENDMENT TO RESOLUTION NO. 10-092
RESOLUTION APPROVING DESIGNATION OF NONCONSERVATION
LAND SHOWN ON CLASSIFICATION LIST “1528 C/NC”
BY BOARD OF COUNTY COMMISSIONERS OF HENNEPIN COUNTY
2944 BRUNSWICK AVENUE SOUTH
WHEREAS, the City Council of St. Louis Park has received from the County Auditor of
Hennepin County a list of lands in said City which became the property of the State of Minnesota
for nonpayment of taxes and said list has been designated as Classification List “1528 C/NC”; and
WHEREAS, the parcel of land described in said list has heretofore been classified by the
Board of County Commissioners of Hennepin County as nonconservation land;
WHEREAS, as City requests acquisition of said property for redevelopment of an affordable
single family owner occupied home contingent upon sale to Greater Metropolitan Housing
Corporation, who will complete renovations and sell to West Hennepin Affordable Housing Land
Trust – Homes Within Reach Program;
WHEREAS, Hennepin County has provided a purchase cost of $87,915 which includes
$85,000 for the property, $2,550.00 for assurance fee, $25.00 for State Deed Preparation, $51.00
for recording fees and $289.00 for the State Deed Tax;
NOW THEREFORE BE IT RESOLVED by the City Council, pursuant to Minnesota
Statutes 1949, Section 282.01, Subd. 1, that the Board’s classification of land as nonconservation
described in said list is approved, and the City is requesting acquisition of said property:
Include Adjacent ½ of Alley Vac Lot 012, Block 020
“Park Manor Hennepin County Minn”
PID 09 117 21 33 0176
2944 Brunswick Avenue South
St. Louis Park, MN 55416
and, staff is authorized to prepare and execute such documents as are necessary to sell the property to
Greater Metropolitan Housing Corporation West Hennepin Affordable Housing Land Trust –
Homes Within Reach for $87,915.
Reviewed for Administration: Adopted by the City Council September 7, 2010
City Manager Mayor
Attest:
City Clerk
Study Session Meeting of October 11, 2010 (Item No. 7) Page 4
Subject: Update on Tax Forfeited Property Purchase - 2944 Brunswick Avenue South
Meeting Date: September 7, 2010
Agenda Item #
Regular Meeting Public Hearing Action Item Consent Item Resolution Ordinance
Presentation Other:
EDA Meeting Action Item Resolution Other:
Study Session Discussion Item Written Report Other:
TITLE:
Tax Forfeited Property Purchase from Hennepin County at 2944 Brunswick Avenue South.
RECOMMENDED ACTION:
Motion to adopt resolution approving designation of nonconservation land shown on Classification
List “1528 C/NC” by Board of County Commissioners of Hennepin County for the property at
2944 Brunswick Ave South and approving acquisition of property for $87,915.00.
POLICY CONSIDERATION:
Does the City Council wish to approve the purchase of this tax forfeited single family home to
facilitate the rehabilitation of the home and make it available for owner occupied affordable housing
purposes?
The purchase and rehabilitation of this substandard single family home in partnership with West
Hennepin Affordable Housing Land Trust/Homes Within Reach (HWR) meets the City’s Strategic
Direction and housing goal to provide more affordable single family home ownership opportunities
in the city.
BACKGROUND:
County Tax Forfeit Process:
On July 1, 2010, Hennepin County notified the City that the property at 2944 Brunswick Ave was
tax forfeited for nonpayment of taxes. The property is a vacant home in substandard condition.
The owner of this property has been notified by Hennepin County of the forfeiture, and has not
remedied nonpayment of taxes.
Whenever property goes tax forfeit in Hennepin County, the County advises the city where the
property is located. Cities have the option of requesting a tax deed for the property for a public
purpose, requesting a nonpublic sale to the city, or authorizing the County to sell the property at
auction. The County also requests the city confirm by resolution the classification of the property as
Non-Conservation (i.e. not a wetland, lake, etc.).
If the city desires to acquire the property, Hennepin County requires a resolution approving
designation of tax forfeit land as non-conservation and requesting its purchase in order for it to be
sold for development. Cities have period of time in which to respond; the deadline for responding
on the 2944 Brunswick Ave property is September 10, 2010.
Study Session Meeting of October 11, 2010 (Item No. 7) Page 5
Subject: Update on Tax Forfeited Property Purchase - 2944 Brunswick Avenue South
Approval of the resolution does not commit the City to purchase the property, as there is a
contingency statement that the City’s acquisition is contingent upon the City’s sale of the property
to HWR.
Property Information
This home has been vacant since early 2009, during which time the exterior and lawn have been
maintained. It is a one and one half story, with two plus bedrooms, one bath and a tuck under
garage. It has a relatively new retaining wall, furnace and A/C. The front steps are deteriorated, and
there is water damage in the basement due to a burst water pipe. The estimate market value in 2009
was $205,100
Potential for Redevelopment as Single Family Affordable Home Ownership:
City staff has researched and reviewed this property along with County and HWR staff.
The proposed scope of improvements would include interior rehab, minor modification to the floor
plan and gutting the basement, along with new windows, siding, front steps and miscellaneous work.
The estimated rehab cost is $75,000.
Staff recommends this home as a candidate for purchase and sale to HWR. The total cost of
acquisition at $87,915 and rehab at an estimated $75,000, will be just over $160,000. The
estimated 2009 land value is $64,700, so HWR will be able to sell this home to a qualifying low
income family for approximately $100,000.
The City has successfully partnered with HWR to develop seven affordable owner occupied homes.
HWR is a program of West Hennepin Housing Land Trust that purchases homes and sells them to
low income homeowners. Buyers pay for the cost of the building only and lease the land for 99
years. The land trust model ensures long-term affordability of the homes. In addition to affordable
mortgages, HWR provides extensive and ongoing financial counseling and homeownership training
for their homebuyers.
Purchase Price to the City
The County’s sale price to the City is $87,915; the County’s appraisal of August 26, 2010, states a
value of $85,000; and there is an additional $2,915 in assurance and transfer fees. Only
Study Session Meeting of October 11, 2010 (Item No. 7) Page 6
Subject: Update on Tax Forfeited Property Purchase - 2944 Brunswick Avenue South
municipalities are authorized to purchase tax forfeit properties in this manner, so the City would
purchase the parcel from the County and sell to HWR for the same amount.
Using allocated and budgeted CDBG and Housing Rehab Funds the City would contribute
$45,000 to this project, which includes $10,000 that has been budgeted for purchasing vacant,
bank, or publicly owned properties. HWR will fund the remaining acquisition and all the rehab
costs. See table below.
Sources and Use – Purchase and Rehab of 2944 Brunswick
Source Use Amount
2010 Allocated CDBG Funds Acquisition $10,000
2010 CDBG Funds – vacant, publicly owned Acquisition $10,000
Budgeted City Housing Rehab Funds Acquisition $25,000
HWR Acquisition $42,915
HWR Rehab $75,000
TOTAL $162,915
The City would also provide a line of credit of up to $50,000 to assist HWR with holding costs
until they sell the home, at which time the City would be reimbursed. A beneficial aspect of
purchasing this property is that the County is required to share the proceeds from the land sale, less
their administrative costs, so the City should yield between $17,000 - $34,000 re-payment from the
County in 2011 for this sale.
Next Steps:
Upon passage of this resolution, the City will purchase the property from the County and enter into
a purchase agreement with HWR to purchase the property. Over the next several months HWR
will rehab the home and work with a qualifying family to purchase the home.
FINANCIAL OR BUDGET CONSIDERATION:
This proposal is consistent with budgeted funds: Housing Rehab Fund (HRF) has budgeted $50,000
to assist HWR with acquisition of two properties in 2010; and has established a $100,000 line of
credit for HWR; and an additional $20,000 of 2010 CDBG funds has been allocated for HWR.
The total cost to the City will be $45,000 less what the City receives from the County sale. The
City’s net cost is projected to be between $11,000 -$28,000.
VISION CONSIDERATION:
Acquisition and rehab of a tax forfeited vacant substandard home for an affordable ownership
opportunity is consistent with the City Councils Strategic Direction to provide a well maintained
and diverse housing stock and the related Focus Area to work towards affordable single family
homeownership throughout the City.
Attachments: Resolution
Prepared by: Kathy Larsen, Housing Programs Coordinator
Approved by: Tom Harmening, City Manager
Meeting Date: October 11, 2010
Agenda Item # 8
Regular Meeting Public Hearing Action Item Consent Item Resolution Ordinance
Presentation Other:
EDA Meeting Action Item Resolution Other:
Study Session Discussion Item Written Report Other:
TITLE:
Hennepin County Environmental Response Fund (ERF) Grant Application for 2005 Louisiana Ave.
South.
RECOMMENDED ACTION:
No action is required at this meeting. This report is being provided to inform the City Council of
proposed steps to facilitate, if necessary, the construction of a single family home on property sold by
the City. A resolution supporting an ERF application to Hennepin County to assist with clean up of
this single family vacant parcel may be presented at the October 18, 2010 Council meeting.
POLICY CONSIDERATION:
Does the City support a grant application for clean-up funds (if needed) for development of a single
family home on this vacant excess land parcel?
BACKGROUND:
The City sold the 2005 Louisiana Ave S excess vacant parcel to Shawn Smith on March 31, 2010 for
$20,000. The parcel was sold “as is” with disclosure of known soil conditions including evidence of
construction debris. The bullet points below describe the current status:
• Since March, the owner submitted all required permit applications and had begun site
excavation in May 2010.
• Upon seeing the extent of the construction debris, the owner halted the project and has spent
the summer exploring options for how to proceed.
• In September 2010, the owner requested and received County assistance to conduct Phase I
and Phase II environmental assessments to determine if the site is contaminated.
• The Phase II environmental assessment results should be known by late October.
• If the Phase II assessment reveals contaminates that meet criteria for County Environmental
Response Funds (ERF), an application could be submitted by the land owner/City by
November 1, 2010.
• The County awards Environmental Response Funds (ERF) to developers and cities to assist
with cleaning-up polluted sites. ERF applications are due annually on May 1 and November
1.
• The ERF application requires a resolution from the City supporting the request for assistance
for the land owner.
Timing is an issue. Since the Phase II environmental assessment results won’t be known until late
October, and the application is due November 1, staff is recommending that a resolution supporting
the grant application be approved contingent upon findings that necessitate ERF clean-up.
Study Session Meeting of October 11, 2010 (Item No. 8) Page 2
Subject: Hennepin County Environmental Response Fund (ERF) grant application for 2005 Louisiana Ave. S.
In the event the site is eligible for ERF assistance, the City would assist the owner in completing the
ERF application to be submitted on November 1. Pending a grant award, the owner would then
proceed with building the single family home in spring 2011. The County has indicated they would
be supportive of the application if clean-up is required.
In the event the site is not contaminated, the owner will bear the costs of excavation and removal of
construction debris.
FINANCIAL OR BUDGET CONSIDERATION:
There is no cost to the City for the ERF application and clean-up.
VISION CONSIDERATION:
Construction of single family homes for families is consistent with the City’s Vision, Strategic
Directions and Housing Goals.
Attachment: Draft City Resolution Supporting ERF Application
Prepared by: Kathy Larsen, Housing Programs Coordinator
Approved by: Tom Harmening, City Manager
Study Session Meeting of October 11, 2010 (Item No. 8) Page 3
Subject: Hennepin County Environmental Response Fund (ERF) grant application for 2005 Louisiana Ave. S.
RESOLUTION NO. 10-____
RESOLUTION SUPPORTING ENVIRONMENTAL FINANCIAL GRANT
APPLICIATON TO HENNEPIN COUNTY
BE IT RESOLVED that pending Phase II Environmental Assessment findings requiring
pollution clean-up, the City of St. Louis Park supports the environmental financial grant application
submitted to the Hennepin County Department of Environmental Services on November 1, 2010
by the City and Mr. Shawn Smith for the 2005 Louisiana Avenue South site.
Reviewed for Administration: Adopted by the City Council September 7, 2010
City Manager Mayor
Attest:
City Clerk