2017-02-28 HRA Agenda PacketPLEASE TURN OFF CELL PHONES & PAGERS IN COUNCIL CHAMBERS.
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MOUND HOUSING & REDEVELOPMENT AUTHORITY
REGULAR MEETING
TUESDAY, FEBRUARY 28,2017 6:55 P.M.
MOUND CITY COUNCIL CHAMBERS
Page
1. Opening the meeting
2. Action approving agenda, with any amendments
3. Action approving minutes: Feb 14, 2017 regular meeting 1-3
4. Action approving claims 4-7
5. Finance Director Catherine Pausche requesting action on a resolution 8-11
authorizing the close out of Fund 680 (HRA - Public Housing), transfer 11
of the remaining reserves to IKM Limited Partnership, LLC, and recording
of remaining financial activity in Fund 285 (Governmental HRA Special
Revenue Fund)
6. Adjourn
February 14, 2017
The Mound Housing and Redevelopment Authority in and for the City of Mound, Minnesota, met in
regular session on Tuesday, February 14, 2017, at 6:55 p.m. in the council chambers of the Centennial
Building.
Members present: Chair Mark Wegscheid, Jennifer Peterson, Jeff Bergquist, Ray Salazar, and Kelli
Gillispie
Members absent: none
Others present: City Manager and Director of Public Works Eric Hoversten, Director of Finance and
Administrative Services Catherine Pausche, City Attorney Troy Gilchrist
Public Present: Steve Rettler, Roxanne Goodwin, Bethany Slicerson, Anna Hedstrom, and Peter
Norton
1. Open meeting
Chair Mark Wegscheid called the meeting to order at 6:56 p.m.
2. Approve agenda
MOTION by Salazar, seconded by Bergquist, to approve the agenda.
All voted in favor. Motion carried.
3. Approve minutes
MOTION by Gillispie, seconded by Bergquist, to approve the minutes of the Jan 24, 2017
regular meeting. Wegscheid, Peterson, Gillispie, and Bergquist voted in favor; Salazar abstained.
Motion carried.
4. Approve claims
MOTION by Salazar, seconded by Gillispie, to approve the claims in the amount of $23,182.96.
All voted in favor. Motion carried.
5. Action on a resolution authorizing acceptance of an Application for Public Financing
Pausche started the discussion by saying the HRA/City Council approved ADMIN -004 Tax Increment
Financing (TIF) Policy in June of 2016 which sets objectives and criteria for granting TIF on a project by
project basis. Pausche said that in addition to providing for affordability in the new assisted living
development, the project also meets other criteria like expanding the tax base, adding new jobs, adding
a mixture of housing options not currently available, remediation of blighted land, and improved storm
water treatment. Pausche emphasized that approving the resolution effectively accepts the application
for further analysis and consideration, but does not imply TIF will ultimately be granted.
Pausche said there have been projects discussed where Staff feels TIF would not be warranted, but
that Staff feels consideration of TIF in this instance is appropriate and that the next step would be to
hire a financial advisor to do the analysis, at the expense of the developer. Pausche said the intent is
to have the HRA Board accept the application in order to avoid time and expense only to have the HRA
reject it outright.
Salazar asked Pausche to explain how TIF works and the terms of the Pay as You Go Note. Pausche
said that Mound has granted TIF related to three downtown redevelopment projects. The first district,
Commerce Place with Wells Fargo and Thrifty White decertified a few years ago. The second district is
the Mound Marketplace and Village by the Bay Development and the third district is the Harbor District.
Pausche said in the case of Mound Marketplace, there was both a bond issued by the City for the
project for which TIF generated is used to repay-1-nd also a subordinate "note" which the City splits any
HRA Minutes — February 14, 2017
excess TIF to pay off the bonds early and make payments on the developer's note. To the extent TIF
fails to materialize before the note's maturity, the City will no longer be liable. Pausche said that in the
Harbor District, the City issued the "Dump Bonds" to pay for the Lost Lake dredge, soil remediation and
other improvements in the Harbor District and that the former developer met the value of the
improvements they were obligated to make prior to the recession. This released the developer of
liability, and when the recession hit and TIF dried up, the City chose to levy for the bonds instead of
defaulting.
Pausche said that with the Pay as You Go Note the developer is requesting, they will only be paid if the
TIF is generated. The City will not be asked to issue bonds that puts us at additional risk as in the case
of the Harbor District. Pausche noted that the TIF policy states the City will issue the minimum amount
and duration of TIF and that the financial advisor will use this directive while analyzing the pro -forma to
make their recommendation.
Roger Fink, Sr. Vice President of Trident Development, LLC, said that Trident Development has done 6
to 8 TIF projects with the most recent in Farmington. Fink said they requested significantly more TIF in
the Farmington project, but that Ehlers, the financial advisor, recommend a lesser amount. Fink said
the requested TIF for Harrison Bay Shores is more in line with the final negotiated amount in
Farmington.
Fink said state statute limits what are eligible costs for TIF to things like site acquisition, earth work and
utilities, or basically the "foundation on down." In addition, statute limits the amount of TIF based on the
frozen base of tax capacity and then the incremental tax capacity created by the improvements. The
actual TIF can vary by community because of the different tax rates for cities, counties and school
districts.
Salazar asked how the 90% was determined and Fink said that a 10% administrative deduction is kept
by the City. Salazar asked the total project cost and Fink said approximately $16M. Salazar asked
how many years has Trident been considering this project in Mound. Fink said they started with the
Mound Harbor District, then looked at the Langdon District before settling on the old Anthony's
property. Salazar said he remembers a discussion with Fink's partner when Salazar served on the
Facilities Committee and storage for public works was also being considered on the Anthony's property
Salazar said he was told at the time the developer would not be asking the City for money.
Salazar asked Fink to sell him on the need for TIF and why less than 10% of the total project cost is so
necessary. Fink said that the project meets the majority of objectives in Mound's TIF policy, including
increased tax values, job creation, affordable housing and a new housing option. Fink said he thought
the project deserves to be considered for TIF because it meets these objectives. In addition, Fink said
as the project costs are developed in relation to the market rents, additional pressure on the bottom line
can put project feasibility into question.
Fink said statute permitting housing TIF districts was created to help offset the difference between
market rate rents and services and amounts received when residents are on a subsidy program, like
the Title 19 Elderly Waiver. Housing TIF ensures at least 20% of the units are reserved for those who
could not otherwise afford it. Discussion ensued as to what the differences are between private pay
housing and services and those on the Elderly Waiver program. Fink noted that many residents spend
down their assets while in assisted living and it has been his partnership's practice not to make them
relocate even if they can't continue to afford it.
Chair Wegscheid stated that it was important that the Board not confuse approval of the application
with the approval of TIF and he applauded Trident's commitment to exploring many opportunities in
Mound and seeing value in our community. Wegscheid acknowledged that it is a business and margins
matter and that the City was pleased to be working with such a financially sound group, demonstrated
by the way they weathered the recession. -2-
HRA Minutes—February 14, 2017
Pausche said that it should be noted that she expects the financial advisor's analysis to recommend
some level of TIF. Salazar said he is frustrated that with all the meetings and dialogue to date that this
request had not been brought forth sooner. Pausche said the land use approvals are separate, and
that all the work on the TIF Policy last June was in anticipation of this application as well as others.
Wegscheid noted that the TIF policy states that meeting the criteria is not a guarantee of award of TIF
and approval or denial of one project is not intended to set precedent for approval or denial of another
project. Wegscheid also noted that this is just accepting the application and not approving TIF. Chair
Wegscheid said he would accept a motion at this time.
Motion by Gillispie, seconded by Peterson. Discussion ensued with Salazar thanking Mr. Fink and
stating he could see the potential benefit of TIF for this project, especially when it comes to the
affordability aspect. All voted in favor. Motion carried.
RESOLUTION NO. 17-03H: RESOLUTION AUTHORIZING ACCEPTANCE OF AN
APPLICATION FOR PUBLIC FINANCING
5. Adiourn
MOTION by Peterson, seconded by Bergquist, to adjourn at 7:45 p.m. All voted in favor.
Motion carried.
Attest: Catherine Pausche, Clerk
-3-
Chair Mark Wegscheid
1
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CITY OF MOUND 02/16/17 9:32 AM
Page 1
Payments
Current Period: Closing 2016
Batch Name 2016HRA-AP5 User Dollar Amt $482.10
Payments Computer Dollar Amt $482.10
$0.00 In Balance
Refer I ASPEN WASTE SYSTEMS, INC.
AP Payment E 680-49800-384 Refuse/Garbage Disposa DECEMBER 2016 WASTE DISPOSAL- IKM $482.10
Invoice S1355625-12011 12/1/2016
Transaction Date 2/16/2017 Due 12/31/2016 Accounts Payable 20200 Total $482.10
Fund Summary
20200 Accounts Payable
680 HRA PUBLIC HOUSING $482.10
Pre -Written Checks
Checks to be Generated by the Computer
Tota I
$0.00
$482,10
$482.10
$482.10
Payments
Current Period: Closing 2016
02/22/17 3:23 PM
Page 1
$3,107.01
Pre -Written Checks $0.00
Checks to be Generated by the Computer $3,107.01
Total $3,107.01
N
Batch Name 2016HRA-AP6 User Dollar
Amt $3,107.01
Payments Computer Dollar
Amt $3,107.01
$0.00 In Balance
Refer 1 HENNEPIN COUNTY TREASURER
AP Payment E 680-49800-438 Licenses and Taxes
2016 RENT -PILOT CONTRACT NO. C-858-
$3,033.15
2020 COMMERCE BLVD- IKM- PROPERTY
SOLD 12-12-16
Invoice 022217 2/21/2017
Transaction Date 2/22/2017 Due 12/31/2016
Accounts Payable 20200 Total
$3,033.15
Refer _ _2 KENNEDY AND GRAVEN
AP Payment G 680-15500 Prepaid Items
BALANCE INDIAN KNOLL MANOR SALE
$73.86
LEGAL SVCS THRU JAN 31 2017
Invoice 135830 2/17/2017
Transaction Date 2/22/2017 Due 12/31/2016
Accounts Payable 20200 Total
$73.86
Fund Summary
20200 Accounts Payable
680 HRA PUBLIC HOUSING
$3,107.01
$3,107.01
Pre -Written Checks $0.00
Checks to be Generated by the Computer $3,107.01
Total $3,107.01
N
CITY OF MOUND 02/22/17 3:19 PIVI
Page 1
Payments
Current Period: February 2017
Batch Name 022317HRAMAN User Dollar Amt $806.00
Payments - Computer Dollar Amt $806.00
$0.00 In Balance
Refer I IKM LIMITED PARTNERSHIP LLC
Cash Payment G 680-20200 Accounts Payable REIMB IKIVI LTD PTR FOR TENANT $806.00
DEPOSITS JAN 2017 #305 $355; #407 $471
Invoice 022317 2/23/2017
Transaction Date 2/22/2017 Due 2/22/2017 Wells Fargo HRA 10120 Total $806.00
Fund Summary
10120 Wells Fargo HRA
680 HRA PUBLIC HOUSING $806.00
Pre -Written Checks $0.00
Checks to be Generated by the Computer $806.00
Tota 1 $806.00
$806.00
-7-
February 23, 2017
To: HRA Board Chair and Commissioners
From: Catherine Pausche, Finance Director/Clerk/Treasurer
Re: Final actions to close out the sale of IKM
A resolution is attached that will authorize the final steps to close out the sale of
Indian Knoll Manor (IKM) to Aeon and its partnership, IKM Limited Partnership,
LLC (IKMLTD). Through the agreement signed by HUD, the HRA and
Aeon/IKMLTD, any remaining reserves shall be transferred to the project to help
fund improvements (see attached Exhibit D from HUD RAD Conversion
Commitment Contract).
We anticipate the claims batch in this agenda packet will be the last and that the
remaining reserves to be transferred to the project will be approximately
$180,000, slightly higher than the estimate used in the Exhibit D Sources and
Uses. A wire transfer in the amount of these remaining funds will be processed
on March 1, 2017, pending approval of the attached resolution, which will close
out the HRA checking account related to IKM. Correspondingly, Fund 680, the
Enterprise Fund for IKM will be closed as the HRA is no longer involved with this
property. The loan activity and any residual expenses, none of which are
anticipated, will be recorded in Fund 285, the Governmental HRA Special Revenue
Fund.
Please let me know if you have any questions related to this matter at (952)472-
0633 or via email at catherinepausche@cityofmound.com.
In
EXHIBIT D
Total Sources ( 13,212,353
In
USES
Budding & Land Acquisition
Other Costs
Payoff Existing Loans
Construction Costs
Relocation Costs
Architecture
Engineering
PCA
Borrower's Legal Counsel
Lender's Legal Counsel
Feasibility Studies
Environmental Reports
Appraisal / Market Study
Accounting
Survey
Other Costs: Marketing, impact
Fees, FFE, Construction Testing,
Soft Cost Contingency, Elevator
Repair Cost.
FHA MIP
FHA Application Fee
FHA Inspection Fee
Financing Fee
Organizational Costs
Title insurance/Exam Fee
Recordation Fee
Closing Escrow Agent Fee
Prepayment Penalty
Payables
Construction Interest
Construction Loan Fees
Cost of Bond Issuance
Other Costs: Hazard, Liability,
Builders Risk Insurance, Taxes
During Construction
Initial Deposit to Replacement
IOD Escrow
Operating Reserve
Tax and Insurance Escrow
Developer Fees
Total Uses
Page 43
2,691,20C
7,630,352
40,000
239,100
172,000
95,000
25,000
25,000
22,000
40,000
15,000
250,356
99,655
12,000
35,000
43,125
94,000
50,000
25,000
223,565
1,115,000
13,211,353
HUD Form 52624
SOURCES
Public Housing Operating Reserves
Pnor Year Public Housing Capital Funds
Replacement Housing Factor
Low Income Housing Tax Credit Equity -
4%
Low Income Housing Tax Credit Equity -
9%
Other: First Mortgage
Other: HOME
Other: Private Funds
Other: Sales Tax Rebate
Other. MHFA PARIF Loan
Other. MHFA
Other: City of Mound
Other: City of Mound Loan
Other: City of Mound ERF Loan
Other:
160,614
7,716,116
410,000
500,000
100
134,541
885,000
115,000
2,500,000
400,000
390,982
Total Sources ( 13,212,353
In
USES
Budding & Land Acquisition
Other Costs
Payoff Existing Loans
Construction Costs
Relocation Costs
Architecture
Engineering
PCA
Borrower's Legal Counsel
Lender's Legal Counsel
Feasibility Studies
Environmental Reports
Appraisal / Market Study
Accounting
Survey
Other Costs: Marketing, impact
Fees, FFE, Construction Testing,
Soft Cost Contingency, Elevator
Repair Cost.
FHA MIP
FHA Application Fee
FHA Inspection Fee
Financing Fee
Organizational Costs
Title insurance/Exam Fee
Recordation Fee
Closing Escrow Agent Fee
Prepayment Penalty
Payables
Construction Interest
Construction Loan Fees
Cost of Bond Issuance
Other Costs: Hazard, Liability,
Builders Risk Insurance, Taxes
During Construction
Initial Deposit to Replacement
IOD Escrow
Operating Reserve
Tax and Insurance Escrow
Developer Fees
Total Uses
Page 43
2,691,20C
7,630,352
40,000
239,100
172,000
95,000
25,000
25,000
22,000
40,000
15,000
250,356
99,655
12,000
35,000
43,125
94,000
50,000
25,000
223,565
1,115,000
13,211,353
HUD Form 52624
aeon
414
To Catherine Pausche, Director of Finance and Administrative Services, City of Mound
From IKM Limited Partnership
Date February 23, 2017
Re Request to Release Existing Indian Knoll Manor Reserves
On behalf of Aeon, the .Managing General Partner of IKM Limited Partnership, please allow this
memorandum to serve as a written request for the release of the existing Indian Knoll Manor
reserves to Commercial Partners Title. Per Exhibit D of the HUD RAD Conversion Commitment
executed by the Mound Housing and Redevelopment Authority on October 13, 2016, the existing
reserves will be utilized as a construction source for the rehabilitation and new construction of
Indian Knoll Manor.
Should you have any questions regarding this request, please contact Blake Hopkins at (612) 746-
0517.
Thank you,
Eric Schnell
Chief Operating Officer, Aeon
Managing General Partner of 11C Limited Partnership
901 No 3" Street, # 150, Minneapolis, MN 55401 612-341-3148 Main 612-341-4208 Fax www.aeommn.org
Ell
MOUND HOUSING AND REDEVELOPMENT AUTHORITY
RESOLUTION NO 17- H
RESOLUTION AUTHORIZING THE CLOSE OUT OF FUND 680 (HRA - PUBLIC
HOUSING), TRANSFER OF THE REMAINING RESERVES TO
IKM LIMITED PARTNERSHIP, LLC, AND RECORDING OF REMAINING FINANCIAL
ACTIVITY IN FUND 285 (GOVERNMENTAL HRA SPECIAL REVENUE FUND)
WHEREAS, the Mound Housing and Redevelopment Authority of Mound, Minnesota
(the "HRA") transferred ownership of its 50 -unit low rent public housing project known as
Indian Knoll Manor (the "Project') in the city of Mound to Aeon, a non-profit developer
and operator of affordable housing and its tax credit limited partnership, IKM Limited
Partnership, LLC, on December 12, 2017; and
WHEREAS, per Resolution No. 16-12H approved on October 25, 2016, the HRA
dissolved its status as a Public Housing Authority (PHA) with regard to HUD programs
effective December 31, 2016; and
WHEREAS, the HRA committed any remaining reserves to be transferred to the project
to help fund improvements to the Project; and
WHEREAS, the HRA has executed a loan agreement with Aeon and its tax credit limited
partnership that will ensure that the agreed upon improvements to the Project will be
made and the Project will remain affordable;
NOW THEREFORE, BE IT RESOLVED, by the Board of the Mound Housing and
Redevelopment Authority to direct Staff to close Enterprise Fund 680 (HRA - Public
Housing), transfer any remaining reserves to the IKM Limited Partnership, LLC, and
close the Wells Fargo checking account related to this fund.
BE IT FURTHER RESOLVED that the Mound Housing and Redevelopment Authority
directs staff to record any financial activity related to the loan agreement or
miscellaneous close out expenses with Aeon and its tax credit limited partnership in the
Governmental HRA Special Revenue Fund (Fund 285).
Adopted this 28th day of February, 2017,
Attest: Catherine Pausche, Clerk
-11-
Chair Mark Wegscheid