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Home My WebLink About2023-02-16 HRA Regular Meeting PacketAg enda E dina H ousing and R edevelopm ent Author ity City of E dina, Minnesota City Hall Council Chambers Thursday, February 16, 2023 7:30 AM Watch the m eeting on cable TV or at EdinaMN.gov/LiveMeeting s or Facebook.com /EdinaMN. To Participate in Comm unity Comm ent Call 786-496-5601 E nter Conference PIN 2044747# Press *1 on your telephone keypad when you would like to get in the queue to speak. An operator will introduce you when it is your turn. I.Call to Ord er II.Roll Call III.Pledge of Allegia n ce IV.Ap p roval of Meetin g Agen d a V.Com m unity Com m en t Du ring "Com m unity Com m en t," th e Edin a Housing and Redevelop m ent Au thority (HRA) will in vite resid ents to sh are new issues or con cern s tha t h aven't been con sid ered in th e p ast 30 da y s b y th e HRA or w h ich a ren't slated for fu ture consideration . Individ u als m u st lim it their com m ents to three m inutes. Th e Ch air m a y lim it the num ber of sp ea kers on th e sa m e issue in th e interest of tim e a n d topic. Gen era lly sp ea king, item s tha t are elsewhere on tod ay's a genda m a y not b e addressed d u ring Com m unity Com m en t. In d ividua ls sh ould not expect th e Ch air or Com m issioners to resp ond to th eir com m en ts toda y . Instead the Com m issioners m ight refer the m atter to sta. for consideration a t a fu ture m eeting. VI.Ad option of Con sen t Agenda All a genda item s listed on the consent a genda a re con sid ered rou tin e and will be en acted by one m otion. There will be no sepa rate d iscussion of such item s unless requested to be rem oved from the Con sen t Agenda by a Com m ission er of the HRA. In su ch ca ses the item w ill b e rem oved from th e Consent Agen d a and con sid ered im m ediately follow ing the a d option of th e Consent Agen d a. (Fa vorable rollcall vote of m a jority of Com m issioners p resent to approve.) A.Dra ft Min u tes of the Special Meetin g Decem b er 6, 2022 B.Dra ft Min u tes of the Regu la r Meetin g Decem b er 8, 2022 C.Dra ft Min u tes of the Special Meetin g Decem b er 20, 2022 D.Dra ft Min u tes of the Regu la r Meetin g Feb ru ary 2, 2023 E.E d ina Hou sin g Fou n d ation Appointm ents VII.Reports/Recom m enda tions: (Favora b le vote of m ajority of Com m ission ers p resent to approve excep t where n oted) A.7200-7250 France - Recom m ended Term s for Tax Increm en t Fina n cin g B.Resolution 2023-03: Req u estin g th at City Council Ca ll for Pu b lic Hea ring regardin g th e 72n d a n d Fra n ce 2 Ta x In crem ent Fin ancing District (a Red evelopm en t District) C.Sin gle Fa m ily Preservation Progra m Tw in Cities Habita t for Hu m anity Partn ersh ip VIII.Executive Director's Com m ents IX.HRA Com m issioners' Com m en ts X.Ad jou rn m ent Th e E d ina Housing a n d Redevelop m ent Au thority wa n ts all pa rticip ants to be com fortable b ein g pa rt of th e p u b lic p rocess. If y ou n ee d a ssista n ce in the w a y of h ea ring am pli=ca tion, a n in terp reter, large-p rint docum en ts or som ethin g else, p lease ca ll 952-927-8861 72 hou rs in advance of the m eeting. Date: F ebruary 16, 2023 Agenda Item #: VI.A. To:C hair & C ommis s ioners of the Edina HR A Item Type: Minutes F rom:Liz O ls on, Administrative S upport S pecialist Item Activity: Subject:Draft Minutes of the S pec ial Meeting December 6, 2022 Action Edina Housing and Redevelopment Authority Established 1974 C ITY O F E D IN A HO US I NG & R EDEVELO P MENT AUT HO R I T Y 4801 West 50th Street Edina, MN 55424 www.edinamn.gov A C TI O N R EQ U ES TED: Approve the draft minutes of the special H R A meeting December 6, 2022. I N TR O D U C TI O N: AT TAC HME N T S: Description Draft Minutes of the Special Meeting December 6, 2022 Page 1 MINUTES OF THE SPECIAL MEETING OF THE EDINA HOUSING AND REDEVELOPMENT AUTHORITY DECEMBER 6, 2022 IMMEDIATELY FOLLOWING THE CITY COUNCIL MEETING I. CALL TO ORDER Chair Hovland called the meeting to order at 11:51 p.m. then explained the processes created for public comment. II. ROLLCALL Answering rollcall were Commissioners Anderson, Jackson, Pierce, Staunton, and Chair Hovland. Absent: None. III. MEETING AGENDA APPROVED - AS PRESENTED Motion by Commissioner Jackson, seconded by Commissioner Pierce, approving the meeting agenda as presented. Roll call: Ayes: Anderson, Jackson, Pierce, Staunton, and Hovland Motion carried. IV. COMMUNITY COMMENT No one appeared. V. PUBLIC HEARINGS V.A. RESOLUTION NO. 2022-11, SETTING 2023 TAX LEVY AND ADOPTING THE 2023 OPERATING BUDGET – ADOPTED Executive Director Neal said the Commission was asked to hold the public hearing on setting the 2023 tax levy and adopting the 2023 operating budget. He said the public hearing would remain open until December 12, 2022 at noon and that approval of Resolution No. 2022-11 Setting 2023 Tax Levy and Adopting 2023 Operating Budget would be required at the December 20, 2022 HRA meeting. He explained the HRA was a separate taxing authority formed by the City Council in 1974 with the purpose to levy to pay a portion of the administrative expenses and other economic initiatives necessary to operate the HRA including the City's renewed efforts to create affordable housing. Historically those expenses had been paid using TIF funds. Continuing with the plan to reduce the reliance on TIF funds, the levy proposed for 2023 was a 3% increase from $237,300 in 2022 to $244,400 and was the same as the preliminary amount approved by the HRA on September 15. The Commission asked questions and provided feedback. Chair Hovland opened the public hearing at 11:55 p.m. Public Testimony No one appeared. Commissioner Jackson moved to close the public hearing at noon on December 12, 2022, and continue action until December 20, 2022 to adopt Resolution No. 2022-11 adopting the budget and setting the tax levy payable in 2023 as presented. Seconded by Commissioner Pierce. Roll call: Ayes: Anderson, Jackson, Pierce, Staunton, and Hovland Motion carried. Minutes/HRA/December 6, 2022 Page 2 VI. EXECUTIVE DIRECTOR’S COMMENTS – Received VII. HRA COMMISSIONER COMMENTS – Received VIII. ADJOURNMENT Motion made by Commissioner Pierce, seconded by Commissioner Jackson, to adjourn the meeting at 11:59 p.m. Roll call: Ayes: Anderson, Jackson, Pierce, Staunton, and Hovland Motion carried. Respectfully submitted, Scott Neal, Executive Director Date: F ebruary 16, 2023 Agenda Item #: VI.B. To:C hair & C ommis s ioners of the Edina HR A Item Type: Minutes F rom:Liz O ls on, Administrative S upport S pecialist Item Activity: Subject:Draft Minutes of the R egular Meeting Dec ember 8, 2022 Ac tion Edina Housing and Redevelopment Authority Established 1974 C ITY O F E D IN A HO US I NG & R EDEVELO P MENT AUT HO R I T Y 4801 West 50th Street Edina, MN 55424 www.edinamn.gov A C TI O N R EQ U ES TED: Approve the draft minutes of the regular H R A meeting D ecember 8, 2022. I N TR O D U C TI O N: AT TAC HME N T S: Description 2022-12-08 DRAFT HRA Regular Minutes Page 1 MINUTES OF THE REGULAR MEETING OF THE EDINA HOUSING AND REDEVELOPMENT AUTHORITY DECEMBER 8, 2022 7:30 A.M. I. CALL TO ORDER Vice Chair Anderson called the meeting to order at 7:34 a.m. then explained the processes created for public comment. II. ROLLCALL Answering rollcall were Commissioners Jackson, Pierce, Staunton, and Vice Chair Anderson. Absent: Chair Hovland. III. PLEDGE OF ALLEGIANCE IV. MEETING AGENDA APPROVED - AS PRESENTED Motion by Commissioner Pierce, seconded by Commissioner Jackson, approving the meeting agenda as presented. Roll call: Ayes: Anderson, Jackson, Pierce, and Staunton Motion carried. V. COMMUNITY COMMENT No one appeared. VI. CONSENT AGENDA ADOPTED - AS PRESENTED Member Jackson made a motion, seconded by Member Staunton, approving the consent agenda as presented: V.A. Approve Draft Minutes of the Regular Meeting of November 17, 2022 V.B. Approve 2023 Calendar of Meeting and Religious Observance Dates V.C. Approve Entering into a Master Services Agreement with The Financial Services Consulting Group V.D. Request for Purchase, Change Order #1 Eden Avenue Landscaping, awarding the bid to the recommended low bidder, Peterson Companies, to change substantial completion date to June 1, 2023 V.E. Request for Purchase, Change Order #1 Eden Avenue Improvements, awarding the bid to the recommended low bidder, S.M. Hentges and Sons, to change substantial completion date to June 1, 2023 V.F. Request for Purchase, Change Order #1 Grandview Pedestrian Bridge, awarding the bid to the recommended low bidder, Pember Companies, to change substantial completion date to July 28, 2023 Rollcall: Ayes: Anderson, Jackson, Pierce, and Staunton Motion carried. VII. REPORTS AND RECOMMENDATIONS VII.A. REDEVELOPMENT AGREEMENT FOR MULTIFAMILY HOUSING AT 4620 WEST 77TH STREET – APPROVED Affordable Housing Development Manager Hawkinson said this item pertained to the use of public financing to partially fund private redevelopment at 4620 West 77th Street. She shared comments made by the Federal Reserve Bank of Minneapolis regarding the increasing cost of housing and its impact to the Twin Cities economy then requested the Commission consider approval of the Minutes/HRA/December 8, 2022 Page 2 redevelopment agreement for up to $9,351,000 in gap finance for 4620 West 77th Street. She said the source of the loan would be Pentagon Park pooled TIF funds and SPARC. She reviewed the current conditions of the site adjacent to the Fred Richards Park and the project that would include 276 new housing units with 28 units affordable at 50% AMI and an additional 110 units not to exceed 120% AMI. She shared more about the project that would include a public road, pedestrian and bike baths to Fred Richards Park, then outlined the proposed funding, loan terms, public benefit of the project, and proposed agreement in detail. The HRA asked questions and provided feedback. Motion by Commissioner Pierce, seconded by Commissioner Jackson, to approve the Redevelopment Agreement for Multifamily Housing at 4620 West 77th Street as presented. Roll call: Ayes: Anderson, Jackson, Pierce, and Staunton Motion carried. VII.B. AMENDMENTS TO NEW MULTIFAMILY AFFORDABLE HOUSING POLICY – APPROVED Ms. Hawkinson stated that based on the ever-changing housing market and after reviewing recent housing proposals, staff proposed three changes to the New Multi-Family Affordable Housing Policy: increase the Buy-in from $125,000 per unit to $175,000 per unit; require the inclusion of affordable units if the top half of the density range is requested; and require cooperation with the City designated compliance officer. She said the policy was initially approved in 2015 with changes that had occurred over time which included rents and incomes adjusted annually, then reviewed the proposed changes in detail. Executive Director Neal shared background regarding being the first city in Minnesota to require a buy-in amount and how over time developers were receptive to the amount and that $175,000 was appropriate. The HRA asked questions and provided feedback. Motion by Commissioner Jackson, seconded by Commissioner Pierce, to approve the proposed amendments to the new Multifamily Affordable Housing Policy as presented. Roll call: Ayes: Anderson, Jackson, Pierce, and Staunton Motion carried. VIII. EXECUTIVE DIRECTOR’S COMMENTS – Received IX. HRA COMMISSIONER COMMENTS – Received X. ADJOURNMENT Motion made by Commissioner Jackson, seconded by Commissioner Pierce, to adjourn the meeting at 8:34 a.m. Roll call: Ayes: Anderson, Jackson, Pierce, and Staunton Motion carried. Respectfully submitted, Scott Neal, Executive Director Date: F ebruary 16, 2023 Agenda Item #: VI.C . To:C hair & C ommis s ioners of the Edina HR A Item Type: Minutes F rom:Liz O ls on, Administrative S upport S pecialist Item Activity: Subject:Draft Minutes of the S pec ial Meeting December 20, 2022 Action Edina Housing and Redevelopment Authority Established 1974 C ITY O F E D IN A HO US I NG & R EDEVELO P MENT AUT HO R I T Y 4801 West 50th Street Edina, MN 55424 www.edinamn.gov A C TI O N R EQ U ES TED: Approve the draft minutes of the special H R A meeting December 20, 2022. I N TR O D U C TI O N: AT TAC HME N T S: Description Draft Minutes of the Special Meeting December 20, 2022 Page 1 MINUTES OF THE SPECIAL MEETING OF THE EDINA HOUSING AND REDEVELOPMENT AUTHORITY DECEMBER 20, 2022 IMMEDIATELY FOLLOWING THE REGULAR MEETING I. CALL TO ORDER Chair Hovland called the meeting to order at 8:55 p.m. then explained the processes created for public comment. II. ROLLCALL Answering rollcall were Chair Hovland, Commissioners Anderson, Jackson, Pierce, and Staunton. Absent: None. III. MEETING AGENDA APPROVED – AS PRESENTED Motion by Commissioner Jackson, seconded by Commissioner Pierce, approving the meeting agenda as presented. Roll call: Ayes: Anderson, Jackson, Pierce, Staunton, and Hovland Motion carried. IV. COMMUNITY COMMENT No one appeared. V. CONSENT AGENDA ADOPTED – AS PRESENTED Motion by Commissioner Jackson, seconded by Commissioner Staunton, approving the consent agenda as presented: V.A. Approve Tax Increment Financing Policy Rollcall: Ayes: Anderson, Jackson, Pierce, Staunton, and Hovland Motion carried. VI. REPORTS AND RECOMMENDATIONS VI.A. RESOLUTION NO. 2022-11, SETTING 2023 TAX LEVY AND ADOPTING 2023 OPERATING BUDGET – ADOPTED Executive Director Neal said the HRA was a separate taxing authority formed by the City Council in 1974. The purpose of the levy was to pay a portion of the administrative expenses and other economic initiatives that were necessary to operate the HRA including the City's renewed efforts to create affordable housing. Historically those expenses had been paid using TIF funds. He said continuing with the plan to reduce the reliance on TIF funds, the levy proposed for 2023 was an increase from $237,300 in 2022 to $244,400, which was the same as the preliminary amount approved by the HRA on September 15. He noted a public hearing on December 6 with no comments and that staff recommended approval. Commissioner Jackson introduced and moved adoption of Resolution 2022-11, adopting the budget and setting the tax levy payable in 2023. Commissioner Staunton seconded the motion Roll call: Ayes: Anderson, Jackson, Pierce, Staunton, and Hovland Motion carried. VII. EXECUTIVE DIRECTOR’S COMMENTS – Received Minutes/HRA/December 20, 2022 Page 2 VIII. HRA COMMISSIONER COMMENTS – Received IX. ADJOURNMENT Motion by Commissioner Jackson, seconded by Commissioner Anderson, to adjourn the meeting at 9:05 p.m. Roll call: Ayes: Anderson, Jackson, Pierce, Staunton, and Hovland Motion carried. Respectfully submitted, Scott Neal, Executive Director Date: F ebruary 16, 2023 Agenda Item #: VI.D. To:C hair & C ommis s ioners of the Edina HR A Item Type: Minutes F rom:Liz O ls on, Administrative S upport S pecialist Item Activity: Subject:Draft Minutes of the R egular Meeting F ebruary 2, 2023 Action Edina Housing and Redevelopment Authority Established 1974 C ITY O F E D IN A HO US I NG & R EDEVELO P MENT AUT HO R I T Y 4801 West 50th Street Edina, MN 55424 www.edinamn.gov A C TI O N R EQ U ES TED: Approve the draft minutes of the regular H R A meeting February 2, 2023. I N TR O D U C TI O N: AT TAC HME N T S: Description 02-02-2023 DRAFT HRA MINUTES Page 1 MINUTES OF THE REGULAR MEETING OF THE EDINA HOUSING AND REDEVELOPMENT AUTHORITY FEBRUARY 2, 2023 7:30 A.M. I. CALL TO ORDER Vice Chair Jackson called the meeting to order at 7:30 a.m. then explained the processes created for public comment. II. ROLLCALL Answering rollcall were Vice Chair Jackson, Commissioners Agnew and Risser. Absent: Chair Hovland, Member Pierce. III. PLEDGE OF ALLEGIANCE IV. MEETING AGENDA APPROVED – AS PRESENTED Motion by Commissioner Risser, seconded by Commissioner Agnew, approving the meeting agenda as presented. Roll call: Ayes: Agnew, Jackson, and Risser Motion carried. V. COMMUNITY COMMENT Hope Melton, 4825 Valley View Road, thanked the HRA on behalf of Edina Neighbors for Affordable Housing for their support of affordable housing in Edina. She said affordable housing was essential to every aspect of healthy human development including school performance for youth, economic competitiveness for the City and achieving equity and diversity goals. She thanked Affordable Housing Development Manager Hawkinson for her courage, creativity and hard work as it was essential to achieving Edina’s affordable housing goals then stated we would not have the outstanding track record in affordable housing if not supported by the vast majority of residents and businesses. V.A. EXECUTIVE DIRECTOR’S RESPONSE TO COMMUNITY COMMENTS There were no comments received. VI. CONSENT AGENDA ADOPTED – AS AMENDED Member Agnew made a motion, seconded by Member Risser, approving the consent agenda as amended, postponing approval of Items V.A., Draft Minutes of the Special Meeting December 6, 2022, V.B., Draft Minutes of the Regular Meeting December 8, 2022, and V.C. Draft Minutes of the Special Meeting December 20, 2022, to the February 16, 2023, meeting: V.A. Draft Minutes of the Special Meeting December 6, 2022 V.B. Draft Minutes of the Regular Meeting December 8, 2022 V.C. Draft Minutes of the Special Meeting December 20, 2022 V.D. Draft Minutes of the Regular Meeting January 5, 2023 Rollcall: Ayes: Agnew, Jackson, and Risser Motion carried. VII. REPORTS AND RECOMMENDATIONS VII.A. LOAN FORGIVENESS OF PREVIOUSLY AWARDED FUNDS TO HOMES WITHIN REACH – APPROVED Minutes/HRA/February 2, 2023 Page 2 Affordable Housing Development Manager Hawkinson stated in 2020 the HRA awarded Homes Within Reach $1,300,000 for the acquisition and rehabilitation of single-family homes that would be placed into a land trust with the house sold to an income eligible homebuyer. She reviewed the guiding principles for this action then shared graphs outlining the demonstration of need compared to 1985. She said while property valuations should increase there was also the need to address and preserve some homes within the City then shared about the West Hennepin Affordable Housing Land Trust that had been in existence for 21 years, 16 of which had activity in Edina resulting in 225 families benefitting from the land trust model. She outlined the program that preserved homeownership opportunities for low to moderate income households, retained community and homeowner wealth, enhanced residential stability, preserved long-term housing affordability, and served households with incomes less than $82,720 (AMI). She shared budget information in detail and said the program was augmented with an additional $2,000,000 in 2021. Ms. Hawkinson said of the $3,300,000 awarded, $960,000 was to be returned to the City once the houses were sold. She shared program impacts since 2020 that resulted in six homes owned and occupied by families with young children for approximately $200,000 each then outlined the public benefits and requested the $960,000 be forgiven and used to acquire and rehabilitate four additional homes for further home ownership. The Board asked questions and provided feedback. Brenda Lano-Wolke, ED Homes within Reach, outlined their process that included ensuring homes purchased were structurally sound then improved for health, safety, and energy efficiency, and minimal cosmetic improvement with the goal when purchased that within 5-7 years homeowners should have enough funds built into reserves to assist with future repairs/maintenance. Motion by Commissioner Agnew, seconded by Commissioner Risser, approving the forgiveness of previously awarded funds to West Hennepin Affordable Housing Land Trust dba Homes within Reach. Roll call: Ayes: Agnew, Jackson, and Risser Motion carried. VII.B. PRESENTATION BY DORSEY WHITNEY – RECEIVED Economic Development Manager Neuendorf said the HRA retained the Dorsey & Whitney law firm to provide specialized legal support for redevelopment projects that included public financing. Dorsey & Whitney attorney Jay Lindgren provided his background and a brief overview of his supporting role on HRA projects that included assisting the City for 20 years and being an Edina resident for 30 years. He spoke about ways to address gaps that appear in projects that the City could choose to help fill by partnering to complete projects then outlined reasons for potential gaps such as gray field uses at former shopping malls and the tools to address such as tax increment financing (TIF) and tax abatement. He spoke about other grant programs available to cities then reviewed other tools such as redevelopment TIF district, renovation and renewal district, forgivable loans, and others. Mr. Lindgren outlined typical steps for projects that included developers’ site control and projects generally responsive to market conditions and community goals then outlined the application process and control mechanisms in place, stating all risk was with the developer and funds delivered only when a project is complete. He shared an example of a successful TIF project through the transformation of Market Street at 50th France that included a $10 million increment that resulted in a $100 million project. The Board asked questions and provided feedback. VIII. EXECUTIVE DIRECTOR’S COMMENTS – RECEIVED Minutes/HRA/February 2, 2023 Page 3 VIII.A. REQUEST FOR TIF ASSISTANCE – 7200-7250 FRANCE AVENUE Mr. Neuendorf said the developer had requested the City consider the use of TIF to support infrastructure improvements on this vacant commercial site. He outlined the project that included two separate buildings connected by roadway and landscaping elements that would be available for public use with the first phase of office building granted preliminary zoning approvals in fall 2022. He shared further about the project and said staff was in discussions with the developer to better understand their financial needs with a report anticipated to be presented to the HRA in late February or early March. VIII.B. BY-LAW REVIEW Mr. Neuendorf said by-laws of the Housing and Redevelopment Authority were reviewed on an annual basis and that staff recommended no amendments to the by-laws at this time. VII.C. FORECAST OF 2023 HRA ACTIVITIES – RECEIVED Mr. Neuendorf provided a forecast of possible projects that could require involvement of the Housing and Redevelopment Authority. IX. HRA COMMISSIONER COMMENTS – RECEIVED X. ADJOURNMENT Motion made by Commissioner Agnew, seconded by Commissioner Risser, to adjourn the meeting at 8:36 a.m. Roll call: Ayes: Agnew, Jackson, and Risser Motion carried. Respectfully submitted, Scott Neal, Executive Director Date: F ebruary 16, 2023 Agenda Item #: VI.E. To:C hair & C ommis s ioners of the Edina HR A Item Type: R eport / R ecommendation F rom:MJ Lamon, C ommunity Engagement Manager Item Activity: Subject:Edina Housing F oundation Appointments Ac tion Edina Housing and Redevelopment Authority Established 1974 C ITY O F E D IN A HO US I NG & R EDEVELO P MENT AUT HO R I T Y 4801 West 50th Street Edina, MN 55424 www.edinamn.gov A C TI O N R EQ U ES TED: Appoint Bernadette H ornig, Mary Kay M cN ee, and Ann Swenson to the Edina H ousing F oundation with a term ending 3/1/24. I N TR O D U C TI O N: T he E dina Housing Foundation consists of five members. P er the Foundations by-laws, members shall be appointed each year. Two members are appointed by City Council and three are appointed by H R A. T he H R A is being asked to appoint B ernadette Hornig, M ary K ay McNee, and Ann S wenson. Date: F ebruary 16, 2023 Agenda Item #: VI I.A. To:C hair & C ommis s ioners of the Edina HR A Item Type: R eport / R ecommendation F rom:Bill Neuendorf, Economic Development Manager Item Activity: Subject:7200-7250 F rance - R ec ommended Terms for Tax Increment F inancing Ac tion Edina Housing and Redevelopment Authority Established 1974 C ITY O F E D IN A HO US I NG & R EDEVELO P MENT AUT HO R I T Y 4801 West 50th Street Edina, MN 55424 www.edinamn.gov A C TI O N R EQ U ES TED: Authorize staff to prepare a full T I F R edevelopment Agreement and 72nd and F rance 2 Redevelopment T I F P lan based on the Term S heet for future consideration. I N TR O D U C TI O N: T his item pertains to the use of Tax I ncrement Financing to promote comprehensive redevelopment at the vacant commercial site located at 7200 and 7250 F rance Avenue. T he developer has secured entitlements for the site and approvals for P hase 1 office. T he developer anticipates pursuing P hase 2 approvals later in 2023. After reviewing the developer's request for Tax Increment F inancing, staff has reached the conclusion that without a limited degree of public financing, the redevelopment plan will not be able to secure private financing. Without the use of T I F, the project returns do not meet industry norms and the project does not appear to be financially viable. With the assistance of financial and legal advisors at Ehlers Associates and Dorsey and W hitney, staff has negotiated terms by which T I F can be used to promote job-creating commercial development that is constructed in a manner consistent with the G reater Southdale P lan and associated design experience guidelines. T he proposed two-phase project will yield many benefits to the general public and substantially complies with Edina's T I F policy. S taff recommends that the Term Sheet be approved and seeks authorization to prepare a complete T I F P lan and complete T I F R edevelopment Agreement for future consideration. AT TAC HME N T S: Description 7200-50 France Term Sheet 7200-50 France Term Sheet s taff Pres entation 7200-7250 France Redevelopment City/HRA draft 2.9.23 Proposed TIF Term Sheet Page 1 4887-6096-1616\1 7200/7250 France Redevelopment Proposed Term Sheet – Tax Increment Financing CITY/HRA DRAFT 2.9.23 1) Purpose and Scope a. This Term Sheet identifies basic business points that establish the framework of the potential use of tax increment financing (“TIF”) to support the private redevelopment of underutilized property (as shown on the attached site plan, the “Project”) within the City of Edina (the “City”) and to provide certain public benefits. This document is intended to serve as the general framework for a definitive redevelopment agreement (“Redevelopment Agreement”) to be executed by Developer, the City and the Edina Housing and Redevelopment Authority (the “HRA”). b. This document is intended for discussion purposes with the Board of the HRA. Based on the response and direction provided by the HRA Board, the City staff is prepared to engage third-party legal and finance professionals to assist with preparation and creation of the TIF districts, the drafting and negotiation of the Redevelopment Agreement(s), and related assistance for the Project. c. City and HRA Out of Pocket Costs Developer has completed the City’s TIF Policy Form and agreed to pay for the City’s staff and out-of-pocket costs in evaluating this request for Tax Increment Financing. The City has engaged Dorsey & Whitney and Ehlers Associates (collectively, “Third Party Consultants”) to provide assistance in preparing the necessary studies and evaluations. Developer has submitted $35,000 in advance to be held in escrow by the City. Developer shall provide additional funds as necessary. These funds will be used to pay the Third Party Consultants. Any excess / un-used funds will be returned to Developer. City agrees to provide copies of expenses paid from the escrowed funds upon request by Developer. 2) Developer a. The Developer for the project is 7250 France Group, LLC (“Developer”), an affiliate of Orion Investments.. The 7250 France site is owned by Developer. The 7200 France site is owned by another affiliated party, France Property Partners LLC. Developer is responsible for development of both sites and will assume all development responsibilities under the Redevelopment Agreement. 3) Project Description a. Location – The Project site is located at the northeast corner of the France Avenue and Gallagher Drive intersection with the historic associated addresses of 7200 France Avenue and 7250 France Avenue. The total Project site is approximately 5 acres in area and will be constructed on the two (2) legally subdivided existing parcels as shown on the attached Project Site Plan and legally described on the attached. 7200/7250 France Redevelopment City/HRA draft 2.9.23 Proposed TIF Term Sheet Page 2 4887-6096-1616\1 b. Existing Conditions – The previous two multi-tenant office buildings, parking ramp on the Project site have been demolished. For purposes of tax increment financing, the prior structures were previously examined and a determination made that those structures would qualify the Project area as a Redevelopment District in accordance with the TIF Act. Prior to demolition, the HRA adopted Resolution No. 2022-08, consistent with the TIF Act, determining that the prior findings could serve as the future basis for determining whether a Redevelopment District can be qualified. c. Project – The overall Project is described in the planning documents submitted to the City and approved through Ordinance 2022-13 and Resolution No. 2023-11, dated February 7, 2023 (“Approved Plans”). The Project is generally depicted on the attached site plan. The Project will be developed and constructed in two phases, with Phase 1 being a 5-story above grade mixed-use professional office/retail building with 2 stories of below grade parking together with all site work and improvements. Additional entitlements (including Site Plan Approval and related agreements) are required for the second phase located at 7200 France Ave. Phase II will be a building for either a high-end luxury hotel with approximately 150 rooms with retail space for possible restaurant, fitness and rooftop patio or a multi-family residential building with approximately 150 residential units and ground floor retail, with residential units leased at market and affordable rates in accordance with City policy and subject to the Approved Plans. d. Phased Minimum Improvements – The following portions of the Project (referred to herein collectively as the “Minimum Improvements”) may be eligible for TIF assistance in accordance with this Term Sheet and the Redevelopment Agreement(s). Any TIF assistance is conditioned on Developer’s completion of the portion of the following Minimum Improvements by Phase as specified elsewhere in this Term Sheet. Phase I and Phase II are depicted on the Project map attached hereto: i. “Phase I Minimum Improvements:” 1. Five-story building with approximately 138,000 rentable square footage professional office building with two levels of underground parking located on the 7250 France parcel (“Phase I Building”) 2. Site Improvements with public benefit related to the Project and required in the Approved Plans and the Redevelopment Agreement, including the following consistent with the Approved Plans (“Public Benefit Improvements”): a. Storm water management improvements b. Bike/pedestrian path & walkway extending from Gallaher Drive to 72nd Street c. North-South pubic access road extending from Gallaher Drive to 72nd Street d. Public plaza area with public art 7200/7250 France Redevelopment City/HRA draft 2.9.23 Proposed TIF Term Sheet Page 3 4887-6096-1616\1 e. Perimeter and internal public sidewalks & associated landscaping and streetscaping 3. Phase II building pad site preparation (excluding the temporary surface which is allowed under the Approved Plans) ii. “Phase II Minimum Improvements:” 1. Consistent with the Approved Plans, construction of either: a. A luxury/high end hotel with approximately 150 rooms with retail space for possible restaurant, fitness and rooftop patio.; or b. A multi-family residential building at least three stories above grade but no larger than the Phase I building with approximately 150 residential units and ground floor retail, with residential units leased at both market and affordable rates in accordance with City policy and subject to Approved Plans. e. Public Benefits – This Project addresses several of the goals identified in the City’s Southdale Experience Guidelines, Climate Action Plan/Sustainability Policy and Tax Increment Financing Policy including: i. Remove obsolete buildings and parking structure from a prominent corner. ii. Create new professional office jobs bringing people into the Greater Southdale commercial area during the day-time hours on a daily basis that are likely to patronize nearby businesses. iii. Construct a mixed-use development with smaller blocks and mass consistent with the Southdale Experience Guidelines. iv. Improve the sidewalk and streetscape along France Avenue, Gallagher Drive and 72nd Street to create attractive and welcoming public realm spaces framed by “street rooms”. v. Construct underground parking to eliminate most surface parking stalls, with none visible from France Avenue after completion of the Phase II Minimum Improvements. vi. Improve pedestrian and bicycle access throughout the site. vii. Improve vehicle access through the Project area by construction of a public access north-south road on the west side of the Project connecting Gallagher Drive and 72nd Street that is parallel to France Avenue. viii. Provide storm water facilities to accommodate both on-site and off-site storm water collection providing significant benefit to multiple properties outside of the Project.6 7200/7250 France Redevelopment City/HRA draft 2.9.23 Proposed TIF Term Sheet Page 4 4887-6096-1616\1 ix. Provide an outdoor public plaza for use by the community, as more particularly described below. x. Provide public art, as more particularly described below. xi. Provide for a possible future transit easement along France Avenue. xii. Comply with City sustainability policies, including (but not limited to) EV chargers and LEED certification. 4) Minimum Improvements Timeline a. This timeline identifies the general time frame envisioned for the Minimum Improvements. Deadlines will be included in the Redevelopment Agreement(s), subject to extension for force majeure events including, without limitation, reasonable delays due to unavailability of or delays in procuring materials or labor. Failure to meet the ‘no later than’ deadlines will be considered a default under the Redevelopment Agreement, subject to notice and cure rights of the Developer set forth in the Redevelopment Agreement(s). Completion will be evidenced by the HRA issuing a “Certificate of Completion” to Developer for the applicable Phase.* Phase I – 7250 Building & Site Improvements Description of Work Commencement Date Completion Date Anticipated No Later Than Anticipated No Later Than Site Remediation 06/01/2023 12/1/2023 08/01/2023 02/01/2024 Specified Site Preparation 06/01/2023 12/1/2023 08/01/2023 02/01/2024 Foundation 08/01/2023 02/01/2024 10/01/2023 04/01/2024 Building Shell Construction 02/01/2024 08/01/2024 02/01/2025 12/31/2025 Public Benefit Improvements Construction 06/01/2023 12/01/2023 02/01/2025 12/31/2026 Certificate of Occupancy* NA NA 02/01/2025 12/31/2025 Phase II – 7200 Building Description of Work Commencement Date Completion Date Anticipated No Later Than Anticipated No Later Than Phase II City Approvals 10/11/2023 04/11/2024 12/31/2023 12/31/2024 Building Pad (& removal of any temporary parking) 6/1/2024 12/31/2025 Building Shell Construction * 8-1-2024 03/1/2026 Certificate of Occupancy* NA NA 10/04/2024 05/1/2027 7200/7250 France Redevelopment City/HRA draft 2.9.23 Proposed TIF Term Sheet Page 5 4887-6096-1616\1 *While the final certificate of occupancy for each Phase is preferred, temporary certificates of occupancy will be acceptable provided that they meet the criteria for TIF Note issuance specified below. 5) Minimum Improvements Budget a. The Phase 1 Minimum Improvements are currently estimated to cost approximately $86.6 million, including land assembly, soft costs and hard costs. b. The Phase 2 Minimum Improvements are currently estimated to cost approximately $65 million. c. All hard and soft costs, including professional fees, will be comparable with industry standards for similar projects. d. The Developer Fee will not exceed 5% for each phase. e. Preliminary estimates of sources and uses for the Minimum Improvements are attached. f. Developer must provide access to the HRA to a complete (line item) Phase 1 Minimum Improvements budget prior to the preparation of the Redevelopment Agreement. Developer must provide access to the HRA to a complete (line item) Phase 2 Minimum Improvements budget reflecting actual costs prior to the commencement of Phase 2. Developer must provide an updated budget upon the completion of each Phase and at other times upon request by the HRA. To the extent allowed under the Minnesota Government Data Practices Act, “trade secret” information will not be publicly available. g. Developer shall provide to the HRA a complete accounting of the use of all contingency funds. Anticipated uses to be identified simultaneously with delivery of the “Go Ahead Letter” (as described below). An updated accounting of actual contingency uses will be provided to the HRA prior to issuance of a Certificate of Completion for each Phase. 6) Minimum Improvements Financing a. A firm commitment from equity partner(s) are pending. Information will be provided to the HRA when available (and in any event prior to execution of the Redevelopment Agreement) and a financing Go Ahead Letter for Phase 1 Minimum Improvements will be provided as will be required under the Redevelopment Agreement. b. Firm commitments for construction loans are pending for Phase 1 Minimum Improvements. Information will be provided to the HRA when available, and in any event prior to the issuance of the Go Ahead Letter for Phase 1 Minimum Improvements. c. Prior to delivery of information regarding firm financing commitment or delivery of a Go Ahead Letter, Developer will provide additional financing updates as requested by the HRA, whether by oral or written request, within two business days of the request. d. Developer shall arrange financing separately for Phase I and Phase II. The Developer shall use its best judgement to establish project financing using a combination of debt and equity partners that delivers the entire Project when appropriate market conditions exist. e. Developer to make good faith efforts to identify grant financing opportunities. 7200/7250 France Redevelopment City/HRA draft 2.9.23 Proposed TIF Term Sheet Page 6 4887-6096-1616\1 f. TIF assistance for the Phase 1 Minimum Improvements only is being considered as described in this Term Sheet. g. TIF assistance is not intended to be used for or to encourage the Developer to make speculative investments with undue risk. 7) TIF Assistance a. Generally i. TIF assistance is conditioned upon the Minimum Improvements as a whole demonstrating satisfaction of the “but for” TIF test. Developer will provide all required information necessary to demonstrate that the Minimum Improvements satisfies the “but for” test in Minnesota Statutes. ii. Any TIF assistance issued will be in accordance with the City’s Tax Increment Financing Policy, as reflected in the definitive Redevelopment Agreement. iii. Creation of any TIF district and any TIF assistance provided shall comply with all applicable Minnesota Statutes. b. TIF District i. For the Minimum Improvements, the City and HRA will consider the creation of a new Redevelopment TIF district (the “TIF District”) covering the entire Project area. ii. The TIF District may be expanded or modified at the discretion of the City and HRA to achieve additional community goals provided that any TIF Note awarded to the Minimum Improvements can be satisfied per the terms of the applicable Redevelopment Agreement. c. Reimbursable Costs i. Based on the initial pro forma for the Phase 1 Minimum Improvements, the following approximate costs associated with the Phase 1 Minimum Improvements are intended to be reimbursable from TIF. Total Project Costs Eligible for Potential Reimbursement for Phase I Minimum Improvements Approx. Cost 1 Reimbursement for demolition of two obsolete structures, including remediation of environmental contamination $1,250,000 2 Site improvements required under Approved Plans including site preparation, extraordinary soil conditions, utilities, and dewatering, excluding costs of Items #3, 4, 5, 6, 7 and 8 (construction costs) $2,691,842 3 Internal north/south road connecting Gallagher to 72nd Street (construction costs) subject to permanent public access easement $751,560 4 Bike/pedestrian path & walkway along north/south internal road and along edge of stormwater area (construction costs) subject to permanent public access easement $116,304 7200/7250 France Redevelopment City/HRA draft 2.9.23 Proposed TIF Term Sheet Page 7 4887-6096-1616\1 Total Project Costs Eligible for Potential Reimbursement for Phase I Minimum Improvements Approx. Cost 5 Public Plaza between the Phase 1 and Phase 2 buildings aka Danila Plaza (construction costs) $1,230,536 6 Public art – minimum of two large-scale sculptures located at the eastern and western ends of the Public Plaza $100,000 7 France Avenue streetscape and landscape (excluding cost of basic sidewalk along edge of property) subject to permanent public access easement $289,463 8 Storm water holding area in northwest portion of site (construction costs) subject to private and/or public easements $343,978 9 Portion of land cost (50%) for internal north/south road connecting Gallagher to 72nd Street (Item #3) and bike/pedestrian path and walkway (Item #4) along north/south internal road and along edge of stormwater area subject to permanent public access easement $542,179 10 Portion of land cost (25%) for public plaza (Danila Plaza) between Phase 1 and Phase 2 buildings (Item #5) and streetscape area along France Avenue (Item #7) subject to permanent public access easement (excluding the area covered by the basic sidewalk along the edge of the property $388,542 11 Construction costs for upgrade from LEED certified to LEED Silver $2,740,000 12 Professional costs to prepare TIF Plan and TIF agreements $300,000 13 Professional design and engineering costs of Items #2, 3, 4, 5, 7 & 8 (estimated at 10% of hard costs) $1,074,440 Total = $11,818,844 Total Project Costs Eligible for Potential Reimbursement for Phase II Minimum Improvements Approx. Cost 1 None None d. TIF Notes i. Two separate TIF notes will be issued (subject to statutory procedural requirements) to the Developer – one upon the completion of Phase 1 Minimum Improvements, and a second upon the completion of the Phase 2 Minimum Improvements, all as further set forth herein. The aggregate principal amount for the Phase 1 TIF Note and the Phase 2 TIF Note shall be up to all of the eligible costs incurred for the Phase 1 Improvements, which amount shall not exceed the principal amount of $7,550,000. The principal amount for the Phase 1 TIF Note shall be limited by the increment provided by 7200/7250 France Redevelopment City/HRA draft 2.9.23 Proposed TIF Term Sheet Page 8 4887-6096-1616\1 the Phase 1 Minimum Improvements. The principal amount for the Phase 2 TIF Note shall be the lesser of the remaining amount of the reimbursable costs incurred for the Phase 1 Improvements or the increment provided by the Phase 2 Improvements. The Phase I TIF Note will be approximately 80 percent of the total principal amount and the Phase II TIF Note will be for the remaining principal amount. The final principal amount of each TIF Note will be based on the estimated valuations of the Minimum Improvements and will be adjusted, confirmed and specified in the Redevelopment Agreement. The Phase II TIF Note will only be issued if the temporary surface parking allowed under the Approved Plans is removed and the Phase II building pad site preparation completed no later than December 31, 2025. If such criteria is not satisfied, the HRA is under no obligation to issue the Phase II TIF Note. The TIF Notes will be limited obligations of the HRA issued solely to aid in financing certain capital costs incurred to redevelop property within the TIF District and in conformity with the laws of the State of Minnesota, including the TIF Act. The TIF Notes shall not be assignable or transferable without the signed consent of the HRA, which will not be reasonably withheld as long as the Developer certifies that no market for the TIF Notes is intended to be developed and it is not being assigned or transferred with a view for resale or granting participation in the TIF Notes. Further the assignee or transferee must certify acknowledgement of the limits and terms imposed on the TIF Note payments by the Redevelopment Agreement. Notwithstanding the foregoing, the Developer may assign and pledge a TIF Note to secure a mortgage permissible for the Project, and may transfer to any entity under common control with the Developer or any entity which the majority equity interest is owned by the parties that have a majority equity interest in the Developer. ii. The Phase 1 TIF Note will be issued only when the HRA is satisfied that the following have occurred: 1. City issuance of a temporary certificate of occupancy for the Phase I Building shell; 2. City issuance of final certificates of occupancy for at least 25 percent of the Phase I building; 3. Developer has completed all required infrastructure under the City’s site improvement agreement with the Developer (and as approved by City Engineer); 4. Developer has provided the HRA with access sufficient for HRA staff to confirm the actual Project costs and returns and confirm satisfaction of the “but for” test. 5. Developer has executed and delivered all public easements and the acceptance of all public improvements (by City or County engineers, as appropriate) required by the City Approvals and the Redevelopment Agreement(s). 6. Developer has delivered to the HRA a final report and certificate detailing and certifying as to the Developer’s activities and final outcomes of 7200/7250 France Redevelopment City/HRA draft 2.9.23 Proposed TIF Term Sheet Page 9 4887-6096-1616\1 Developer’s efforts to achieve the Equity and Inclusion goals under the Redevelopment Agreement(s) for the Phase. 7. Developer has satisfied all terms and conditions of the Redevelopment Agreement(s) and is not in default under the Redevelopment Agreement(s), the City approvals, or any other agreement pertaining to the Project beyond any applicable notice and cure periods. 8. Developer has met all other requirements of the City’s corresponding site improvement agreement for the Project, including no waiver or reduction of required park dedication fees. iii. The Phase II TIF Note will be issued only when Developer demonstrates that Phase 2 Minimum Improvements have been sufficient to allow: 1. City issuance of a temporary certificate of occupancy for the Phase 2 Building shell; 2. Developer has delivered to the HRA a final report and certificate detailing and certifying as to the Developer’s activities and final outcomes of Developer’s efforts to achieve the Equity and Inclusion goals under the Redevelopment Agreement(s) for the Phase. 3. Developer has satisfied all terms and conditions of the Redevelopment Agreement(s) and is not in default under the Redevelopment Agreement(s), the City approvals, or any other agreement pertaining to the Project beyond any applicable notice and cure periods. 4. Developer has met all other requirements of the City’s corresponding site improvement agreement for the Project, including no waiver or reduction of required park dedication fees. iv. To maintain compliance with the TIF Act and Edina Policy, the TIF assistance is conditioned upon the Project as a whole demonstrating satisfaction of the HRA’s “but for” test. The Redevelopment Agreement will include provisions for the Developer to submit an updated pro forma upon completion of each Phase so the HRA can ensure the pledged TIF assistance does not cause the Project to exceed levels of private return mutually agreed upon as adequate and necessary to deliver the Project at the time of underwriting (the “Market Return”). Should the applicable pro forma demonstrate an anticipated return in excess of the Market Return, then the HRA shall reduce the amount of pledged TIF assistance as necessary to achieve the Market Return. v. In addition, the Redevelopment Agreement will include a detailed “look back” requirement that, upon the earlier of any sale by the Developer of any portion of the Project or the tenth anniversary following completion of the Phase I Minimum Improvements, and prior to the receipt of the full principal amount of the TIF Notes, the Developer shall supply the HRA with required financial information to 7200/7250 France Redevelopment City/HRA draft 2.9.23 Proposed TIF Term Sheet Page 10 4887-6096-1616\1 determine whether an excess return has been achieved for the Project. Any such excess will result in a reduction or elimination of any remaining principal balance of the TIF Notes at the HRA’s discretion and as specified in the Redevelopment Agreement. vi. The TIF Notes shall bear interest at the lesser of 6.50 percent or the demonstrated rate of debt financing obtained at the time of completion on the applicable Phase of the Minimum Improvements. vii. Payments on the TIF notes will be made over the period of the TIF District using standard procedures: two annual payments based on actual incremental property taxes generated from the site, paid and received by the City. viii. Any estimate of TIF cash flow projected by the City or HRA is hypothetical and there are no guarantees that such TIF proceeds will be available. 8) Other Terms and Conditions a. Public Plaza i. Developer will provide the Public Plaza as part of the Phase I Minimum Improvements. ii. The plaza will consist of an approximately 15,000 square foot outdoor space with landscaping, hardscaping, public art, security cameras, and other pedestrian amenities consistent with the City approvals. Plaza will include: 1. Public art; and 2. Security cameras and other public safety precautions in strategic locations. iii. Developer will grant a permanent, public easement for access and use of the plaza by the public, subject to reasonable, nondiscriminatory limitations, rules and regulations governing its use adopted by Developer and subject to the approval of the City Manager or its designee. iv. Developer will be responsible for all maintenance of the plaza. v. The Public Plaza will be subject to the terms and conditions of the recorded Easement and Restriction Agreement governing the Project. b. Public Art i. The first phase of the Project shall include at least 2-3 permanent sculptures or similar art installations in west and east ends of the Public Plaza or the France Avenue frontage. Additional decorative artwork is anticipated to be included in the building facades, as generally depicted in the Approved Plans. Additional artwork in encouraged in the public realm areas, but is not required. 7200/7250 France Redevelopment City/HRA draft 2.9.23 Proposed TIF Term Sheet Page 11 4887-6096-1616\1 ii. Developer shall engage a professional art consultant to establish and implement a vision for public art and interpretation, subject to a public engagement process approved by the City within 30 days after identification of the art consultant. Within such 30 day period, the City Manager may also designate up to three people to provide input and guidance to the art consultant. Developer will reasonably consider the recommendations of the consultant and the public engagement process in its final selection of art for the Project. Costs associated with the art consultant will be paid by Developer and will be an eligible TIF expense. iii. The public art (sculptures) shall have a value of no less than $100,000.00 paid in artist commissions (including artist creative, materials, labor, and installation charges, but excluding fees paid to a professional art consultant, costs related to the public engagement process and improvement costs). iv. Developer will allow additional public art pieces to be installed in public easement areas in the future, but Developer shall not be responsible for the costs of those additional art pieces. v. Developer will be responsible for all maintenance of the Developer-installed public art in a first-class manner. c. Environmental sustainability i. The Phase I Building and the Phase II Building must each be designed and certified at least LEED Silver or equivalent standard that complies with the City’s Sustainability Polity and TIF Policy d. Diversity, Equity and Inclusion – Developer shall use good faith efforts as defined by Minnesota Department of Human Rights to include businesses that are majority owned by under-represented groups including minorities, women, veterans and people with disabilities in the development and construction of both phases of the Project. Developer shall also cause its general contractor to use, good faith efforts to employ under- represented people on the construction site. The definition of “good faith efforts” will be specified in the Redevelopment Agreement to include details on (1) posting of opportunities, (2) recruiting efforts, (3) selection, hiring and termination procedures, (4) employee files and record keeping, and (5) reporting mechanisms. The Developer or its contractor has will prepare an “DEI Plan” for this Project through which the Developer is committed to ensuring the community participates in the Project’s construction through meaningful employment opportunities. The contractor’s current DEI Plan attached to this term sheet and will be further specified in and be an exhibit to the Redevelopment Agreement. Compliance with the DEI Plan will be certified in the Go-Ahead Letter. The Developer will commit to use good faith efforts to cause its contractor to try to achieve the workforce and minority/women owned business goals to maximize participation opportunities for the local workforce, including women and minorities. These goals will be specified in the Redevelopment Agreement. 7200/7250 France Redevelopment City/HRA draft 2.9.23 Proposed TIF Term Sheet Page 12 4887-6096-1616\1 These goals are expressed as a percentage of the total craft hours on the project. Minorities includes African American (not of Hispanic origin), Hispanics, Asians, Pacific Islanders, Native Americans and Alaskan Natives. Because this is a two Phase project, the Phase II goals may be reasonably revised as approved by the City Manager. e. Other Easements. i. In addition to other easements specified herein, Developer has or will grant a permanent, public easement for access and use of the perimeter and internal roadways, sidewalks, streetscape areas, and seating areas by the public, subject to reasonable, nondiscriminatory limitations, rules and regulations governing its use adopted by Developer and subject to the approval of the City Manager or its designee. Developer will be responsible for maintenance within all easement areas. ii. Developer agrees to grant specific easements, if necessary, within public easement areas for future mass transit stops along portions of France Ave and/or Gallagher Drive at no cost to City or transit operator (land only – cost to build is not Developer’s responsibility), subject to the responsible transit agency being responsible for maintenance of the surface improvements in these future easement areas. Public transit may include regional operators such as Metro Transit or local operators like City of Edina. iii. Developer will provide HRA with evidence that all necessary private easements and operating agreements required for the Project (specifically including the storm water ponding area) are in place. f. Grants – Developer must make good faith effort to pursue grants for the Project as selected by Developer and the City. The City/HRA agrees to sponsor grant applications that provide financial support for the Projects. Costs of preparing the grant applications shall be borne by Developer. City staff shall have the final authority to review and submit the grant applications. Any grants received for the Project will be included in the Project pro forma for determining the Project’s return on cost and the Initial Lookback and future lookback/clawback and determining satisfaction of the “but for” TIF test. g. Conservation easement – Developer may pursue a conservation easement on the northwesterly portion of the property. Developer will keep the City/HRA informed on this activity and any such conservation easement will be detailed in the Redevelopment Agreement. All income derived from the Conservation Easement shall be included the financial accounting for the Project. 9) City Administrative Costs – The City to retain standard 10% of TIF proceeds per Minnesota statute. 10) Fiscal Disparities – The City’s ‘fiscal disparity’ obligation for the redevelopment site will be paid for from property taxes generated from the Project. This will be included in the calculation of available TIF to pay off the TIF notes. 7200/7250 France Redevelopment City/HRA draft 2.9.23 Proposed TIF Term Sheet Page 13 4887-6096-1616\1 11) City and HRA Approval of Significant Changes – Changes to the Project that impact scope or design are subject to City review using the typical City procedure. 12) Performance Bonds – Bonds or other security will be required for work in public rights of way and for the elements with a public easement. 13) Default and Cure – Standard default provisions will apply. Each default will have a notice and cure period, subject to extension for force majeure delays. 14) No Certain Actions to Reduce Taxes – Developer agrees not to (i) seek administrative or judicial review of applicability of tax statutes, (ii) seek administrative or judicial review of constitutionality of tax statutes, (iii) seek tax deferral or abatement through term of redevelopment agreement. Developer is allowed to contest valuation, provided, however, that during any such contest of valuation the HRA will be allowed to withhold pending payments under the TIF Notes until after the valuation is determined and any corresponding adjustments to payments under the TIF Notes can be determined. 15) Compliance with Law – Developer shall comply with and cause its related parties, and pursuant to applicable third-party contracts, cause each of their respective contractors and subcontractors to comply with all applicable Law (including, without limitation, labor and wage laws). 16) Recording – The Redevelopment Agreement (or a memorandum thereof) will be recorded by the Developer against all parcels within the project area, with consent of all property owners. Developer will be responsible for arranging termination of any prior agreements with the City/HRA that currently burden the Project property and recording a termination document against the Project property. 17) Anticipated Redevelopment Agreement Exhibits: Exhibit A Legal Description of the Project Area Exhibit B Project Site Plan Exhibit D TIF Pro Forma Exhibit E Form of Go-Ahead Letter Exhibit F Form of Certificate of Completion with Completion Checklist Exhibit G Memorandum of Redevelopment Agreement Exhibit H Form of TIF Note Exhibit I Sample IRR Calculations and Project TIF Adjustment Calculation Exhibit L DEI Plan Exhibit M Form of Equity and Inclusion Report Exhibit N Required Easements 7200-7250 France Redevelopment City/HRA draft 2.9.23 Proposed TIF Term Sheet Page 14 4887-6096-1616\1 Project Legal Description 7250 France Avenue South Property: Lot 44, Block I, Oscar Roberts 1st Addition, Hennepin County. PID# 3102824140015 7200 France Avenue South Property: The East 1045 of the South Half of the Northeast ¼ of Section 31, Township 28, Range 24, according to the government survey thereof, except that part embraced within the plat of Oscar Roberts First Addition, Hennepin County, Minnesota 325 Feet of the East 520 Feet of the Southeast 1/4 of the Northeast 1/4 Except Road. PID# 3102824140001 70th and France Redevelopment City/HRA draft 2.9.23 Proposed TIF Term Sheet Page 15 4887-6096-1616\1 Project Site Plan 70th and France Redevelopment City/HRA draft 2.9.23 Proposed TIF Term Sheet Page 16 4887-6096-1616\1 70th and France Redevelopment City/HRA draft 2.9.23 Proposed TIF Term Sheet Page 17 4887-6096-1616\1 Phase I Sources and Uses 7200-7250 France Redevelopment City/HRA draft 2.9.23 Proposed TIF Term Sheet Page 18 4887-6096-1616\1 Phase I Pro Forma 70th and France Redevelopment City/HRA draft 2.9.23 Proposed TIF Term Sheet Page 19 4887-6096-1616\1 Public Easement Areas 70th and France Redevelopment City/HRA draft 2.9.23 Proposed TIF Term Sheet Page 20 4887-6096-1616\1 DEI Plan 70th and France Redevelopment City/HRA draft 2.9.23 Proposed TIF Term Sheet Page 21 4887-6096-1616\1 TABLE OF CONTENTS Description of Organization .........................................................................................................2 Definitions Used in this AAP and Job Groups .............................................................................3 Equal Employment Opportunity (EEO) Policy .............................................................................5 Assignment of Responsibility for Affirmative Action Program ...................................................... 6 Dissemination of Affirmative Action Policy and Plan ................................................................... 7 Internal Audit and Reporting Systems ......................................................................................... 8 Workforce Analysis .....................................................................................................................9 Goals and Timetables .................................................................................................................9 Problem Area Identification .........................................................................................................9 Action-Oriented Programs ........................................................................................................ 10 Anti-Harassment Policy ............................................................................................................. 14 Problem Resolution Policy ........................................................................................................ 16 Appendices Appendix A Workforce Analysis 70th and France Redevelopment City/HRA draft 2.9.23 Proposed TIF Term Sheet Page 22 4887-6096-1616\1 DESCRIPTION OF ORGANIZATION AP Midwest, LLC, dba Adolfson & Peterson Construction (AP) is a family-owned union contractor that is consistently ranked among the top construction managers and general contractors in the nation. With a mission of building trust, communities and people, AP focuses on public and private projects that enhance communities where we live and work. Founded in 1946, AP is known within the building industry for outperforming our competition with innovative and collaborative approaches. AP has built long standing relationships with our clients and communities by serving the aquatics and recreation, healthcare, higher education, hospitality, industrial, K-12 education, multi-family, municipal, office and senior living market segments. AP Midwest, LLC is located at 5500 Wayzata Blvd, Suite 600 Minneapolis, MN 55416. DEFINITIONS USED IN THIS AAP Individual with a Disability: any person who has a physical, sensory, or mental impairment which “materially” (Minnesota) or “substantially” (federal) limits one or more major life activities, or has a record of or is regarded as having such an impairment. "Individual with a Disability" does not include an alcohol or drug abuser whose current use of alcohol or drugs renders that individual a direct threat to property or the safety of others. American Indian or Alaska Native - a person having origins in any of the original peoples of North and South America (including Central America), and who maintains tribal affiliation or community attachment. Asian - A person having origins in any of the original peoples of the Far East, Southeast Asia, or the Indian subcontinent including, for example, Cambodia, China, India, Japan, Korea, Malaysia, Pakistan, the Philippine Islands, Thailand, and Vietnam. Black or African American - A person having origins in any of the black racial groups of Africa. Hispanic or Latino - A person of Cuban, Mexican, Puerto Rican, South or Central American, or other Spanish culture or origin, regardless of race. Native Hawaiian or Other Pacific Islander - A person having origins in any of the original peoples of Hawaii, Guam, Samoa, or other Pacific Islands. White - A person having origins in any of the original peoples of Europe, the Middle East, or North Africa. Minority – Any person who identifies as being American Indian or Alaska Native, Asian, Black or African American, Hispanic or Latino, Native Hawaiian or Other Pacific Islander, or in any combination of these identifiers, or someone who identifies as White and as any of the other identifiers. Job Groups: Although companies are not limited to using these broad job groups as the only means of analyzing their workforce, we use the following as guidelines: 70th and France Redevelopment City/HRA draft 2.9.23 Proposed TIF Term Sheet Page 23 4887-6096-1616\1 Managers and Administrators: Administrative personnel set broad policies, exercise overall responsibility for execution of these policies, and direct individual departments or special phases of an organization's operations. This category includes: officials, executives, middle management, plant managers, department managers, and superintendents, salaried supervisors who are members of management, purchasing agents, and buyers. Unless specifically listed under officials and managers or craft (skilled), first line supervisors, who engage in the same activities as the employees they supervise, should not be reported under this category. Professionals and Technicians: Professionals are considered to be persons working in occupations requiring either college graduation or comparable work experience. Technicians are those whose work requires a combination of basic scientific knowledge and manual skills such as can be attained through two-year technical or community college degrees or equivalent on-the-job training. Sales Workers: Occupations engaged wholly or primarily in direct selling. This includes: advertising agents and sales agents, insurance agents and brokers, real estate agents and brokers, sales agents and sales clerks, grocery clerks, cashiers/checkers. Office and Clerical: All clerical work regardless of the level of difficulty in which activities are predominantly non-manual (though some manual work not directly involved with altering or transporting the products is included). This includes: bookkeepers, collectors, messengers, and office helpers, office machine operators, shipping and receiving clerks, stenographers, typists, secretaries, and telephone operators. Skilled Crafts: Manual workers of a relatively high skill level who have a thorough and comprehensive knowledge of the process involved in their work. They exercise considerable independent judgment and usually receive an extensive period of training. This includes: building trades, hourly paid foremen and lead-workers who are not members of management, mechanics and repairmen, skilled machinery occupations, electricians. Exclude learners and helpers of craft workers (apprentices). Operatives: (Semi-skilled): Workers who operate machines or processing equipment or perform other factory-type duties of an intermediate skill level which can be mastered in a few weeks and requires only limited training. This includes: apprentices, operatives, attendants, delivery and route drivers, truck and tractor drivers, dressmakers, weavers, welders. Include craft apprentices in such fields as auto mechanics, printing, metalwork, carpentry, plumbing and other building trades. **Laborers: (Unskilled): Workers in manual occupations which generally require no special training. They perform elementary duties which may be learned in a few days and which require the application of little or no independent judgment. This includes: garage laborers, car washers, gardeners, and lumber workers, laborers performing lifting, digging, mixing and loading. **Service Workers: Workers in both protective and no protective service occupations. This includes: attendants, clean-up workers, janitors, guards, police, fire fighters, waiters and waitresses. **AP does not currently employ individuals under these job groups. 70th and France Redevelopment City/HRA draft 2.9.23 Proposed TIF Term Sheet Page 24 4887-6096-1616\1 Underutilization: The Minnesota Department of Human Rights defines underutilization in a job group if the number of women or people of color in a job group are less than what is expected based on the availability percentage data adopted for the analysis. The Department uses the “WHOLE-PERSON RULE” in determining underutilization. Declaration of underutilization does not indicate discrimination has occurred in a company; rather, it is an opportunity to enable a company to apply good faith efforts to ensure equal employment opportunities continually occur in the business. 70th and France Redevelopment City/HRA draft 2.9.23 Proposed TIF Term Sheet Page 25 4887-6096-1616\1 Equal Employment Opportunity (EEO) Policy This is to affirm AP’s policy and commitment of providing equal employment opportunities to all employees and applicants for employment in accordance with all applicable laws, directives and regulations of federal, state, and local governing bodies or agencies. AP will not discriminate against or harass any employee or applicant for employment because of race, color, creed, religion, national origin, sex, sexual orientation, disability, age, marital status, familial status, membership or activity in a local human rights commission, or status with regard to public assistance. AP will take affirmative steps to ensure that all of our company’s employment practices are free of discrimination. Such employment practices include, but are not limited to, the following: hiring, promotion, demotion, transfer, recruitment or recruitment advertising, selection, layoff, disciplinary action, termination, rates of pay or other forms of compensation, and selection for training and development, including apprenticeships. We will provide reasonable accommodation to applicants and employees with disabilities whenever possible. AP is committed to the pursuit and achievement of the goals of Equal Employment Opportunity and the Affirmative Action Program. AP will evaluate the performance of its management and supervisory personnel on the basis of their involvement in achieving these Affirmative Action objectives as well as other established criteria. In addition, all employees are expected to perform their job responsibilities in a manner that supports equal employment opportunities. I have appointed Molly Weiss, Chief Human Resources Officer to lead the company’s Equal Employment Opportunity (“EEO”) program. This person’s responsibilities include monitoring all EEO activities and reporting the effectiveness of the company’s Affirmative Action Plan as required by law. I will receive and review reports on the progress of the program. Any employee or applicant may inspect our Affirmative Action Plan and information related to our EEO program during normal business hours. Please contact Molly Weiss at 952-417-8355 or via email m weiss@a-p.com for further information. Any employee or applicant for employment who believes they have been treated in a way that is inconsistent with this policy should contact either Molly Weiss, Chief Human Resources Officer at 5500 Wayzata Blvd, Suite 600 Minneapolis, MN 55416, m weiss@a-p.com or any other management representative, including me. Anonymous reports can be made to w ww.a-p.ethicspoint.com or by calling 866-858-9095. The company will take immediate action to investigate and address allegations of discrimination or harassment confidentially and promptly. September 30, 2022 Brad Hendrickson – Regional President Date 70th and France Redevelopment City/HRA draft 2.9.23 Proposed TIF Term Sheet Page 26 4887-6096-1616\1 ASSIGNMENT OF RESPONSIBILITY FOR AFFIRMATIVE ACTION PROGRAM Molly Weiss, Chief Human Resources Officer is designated as the company’s EEO manager and is tasked with managing and monitoring all employment activity to ensure that our EEO/AA policies are being carried out. Molly has been given the necessary staffing and support from senior management to fulfill the duties of the position. These duties include, but are not limited to, the following: 1. Develop an EEO policy statement and Affirmative Action Plan (AAP) that are consistent with AP’s EEO policies and establish our affirmative action goals and objectives. 2. Develop and implement internal and external strategies for disseminating the company’s AAP and EEO policies. 3. Conduct and/or coordinate EEO/AAP training and orientation. 4. Ensure that our managers and supervisors understand it is their responsibility to take action to prevent the harassment of employees and applicants for employment. 5. Ensure that all minority, female, and disabled employees are provided equal opportunity as it relates to organization-sponsored training programs, recreational/social activities, benefit plans, pay and other working conditions. 6. Implement and maintain EEO audit, reporting, and record-keeping systems in order to measure the effectiveness of our AAP and to determine whether our goals and objectives have been attained. 7. Coordinate the implementation of necessary affirmative action to meet compliance requirements and goals. 8. Serve as liaison between our organization and relevant governmental enforcement agencies. 9. Assist with the coordination of the recruitment and employment of women, people of color, and individuals with disabilities, and coordinate the recruitment and utilization of businesses owned by women, people of color, and individuals with disabilities. 10. Coordinate employee and company support of community action programs that may lead to the full employment of women, people of color, and individuals with disabilities. 11. Keep management informed of the latest developments in the area of EEO. 70th and France Redevelopment City/HRA draft 2.9.23 Proposed TIF Term Sheet Page 27 4887-6096-1616\1 DISSEMINATION OF AFFIRMATIVE ACTION POLICY AND PLAN A. Internal Dissemination 1. Our EEO policy statement is included in our Team Member Reference Guide. 2. We will publicize our EEO policy in any newsletters, magazines, annual reports, or other media the company utilizes. 3. Schedule special meetings for all employees to discuss the policy and explain individual employee responsibilities. 4. We will discuss the policy thoroughly during both employee orientation and management training programs. 5. If applicable, we will advise and/or meet with union officials to provide notice of our EEO policy and ask for their cooperation in implementing the policy. 6. If applicable, we will include non-discrimination clauses in all of our union agreements and review all contractual provisions to ensure they are non-discriminatory. 7. We will publish articles in any company publications covering our EEO programs, progress reports, and the accomplishments of disabled and female employees and employees of color. 8. Our EEO policy statement and non-discrimination posters will be permanently posted and conspicuously displayed in areas and technology sites available to employees and applicants for employment. 9. When employees are featured in product or consumer advertising, reference guides, or similar publications, we will include images of male and female employees, employees of color, and disabled employees. 10. Communicate, at least annually, to all employees the existence of our AAP and make available the elements of its program as well as enable prospective employees to know and have access to all of our program’s benefits. 11. All personnel involved in the recruitment, screening, selection, promotion, disciplinary, and related processes are carefully selected and trained to ensure that the goals and commitments in the company’s AAP are implemented. B. External Dissemination 1. We will notify all recruiting sources of the company’s EEO policy, stipulating that these sources actively recruit and refer women and people of color for all positions listed. 70th and France Redevelopment City/HRA draft 2.9.23 Proposed TIF Term Sheet Page 28 4887-6096-1616\1 2. We will hold formal briefing sessions with representatives from recruiting sources. As an integral part of these briefings, we will include: facility tours (where possible); clear and concise explanations of current and future job openings; position descriptions; worker specifications; explanations of the company’s selection process; and, recruiting literature. We will make formal arrangements regarding applicant referrals, and follow-up with referral sources regarding the disposition of applicants. 3. Any disabled employees who wish to participate in career days, youth motivation programs, and related community activities will be given opportunity to do so. 4. Any recruiting efforts at schools will include specific outreach to disabled students. 5. We will make an effort to participate in work study programs with rehabilitation facilities and schools that specialize in the training or educating disabled individuals. 6. We will use available resources to continue or establish on-the-job training programs. 7. We will incorporate the equal opportunity clause into all purchase orders, leases, and contracts. 8. We will send written notification of the company’s EEO policy to all sub-contractors, vendors, and suppliers, and request cooperative action from them. 9. We will notify community agencies, community leaders, secondary schools, colleges, and organizations that promote women, people of color, and disabled individuals regarding the company’s EEO policy. 10. When employees are featured in consumer or help wanted advertising, we will include images of male and female employees, employees of color, and disabled employees. 11. We will communicate the existence of our EEO policy to prospective employees and provide sufficient information to enable prospective employees access to the policy’s benefits. INTERNAL AUDIT AND REPORTING SYSTEMS Our designated EEO manager, Molly Weiss, has responsibility for implementing and monitoring our affirmative action programs. Department heads, managers, and supervisors are responsible for providing information and/or statistical data as necessary to measure our good faith efforts to implement our programs. In addition, they are also responsible for submitting formal reports on a scheduled basis regarding the degree to which corporate or unit goals are attained and timetables are met. At least annually, internal audit reports will be prepared in table format and dated. Data collected for these reports will include applicant flow, new hires, promotions, transfers, and terminat ions (voluntary and involuntary) by job group. Figures for each personnel process must show a breakdown by sex, 10 | P a g e 70th and France Redevelopment City/HRA draft 2.9.23 Proposed TIF Term Sheet Page 29 4887-6096-1616\1 minority classification, and disability status. Reports will be disseminated to appropriate levels of management, and any problem areas will be addressed as promptly as possible. We will preserve all audit data and other applicable documentation and information available as required by law to the Minnesota Department of Human Rights and other government agencies. Once a year, we will submit to the Minnesota Department of Human Rights, on or before, the anniversary date of our Workforce Certificate of Compliance, our Annual Compliance Report as required under Minnesota Administrative Rule 5000.3580 for the company’s regular workforce. WORKFORCE ANALYSIS Availability/Utilization/Underutilization Analysis See attached Appendix for our Workforce Analysis. GOALS AND TIMETABLES We will make a good faith effort to achieve the availability percentages for people of color or women in any and all job group(s) where we have identified underutilization. We will continue good faith efforts to recruit and retain individuals with disabilities in all levels of our workforce. 1. AP will make good faith efforts to reach the availability percentages for minorities or women in any job group where underutilization is identified. 2. AP’s progress towards utilization will be consistent with the number of open positions within the company. 3. AP will continue our efforts to recruit and retain individuals with disabilities in our workforce. 4. AP will make a good faith effort to meet construction goals as described by government agencies, whether we are prime or a subcontractor. We continue to work toward greater representation in all job groups designed to strengthen our business. 130 | P a g e 70th and France Redevelopment City/HRA draft 2.9.23 Proposed TIF Term Sheet Page 30 4887-6096-1616\1 PROBLEM AREA IDENTIFICATION AP Midwest, LLC periodically conducts an in-depth analysis of its total employment process to determine whether and where impediments to equal employment opportunity may exist. We evaluated: 1. Workforce composition by job group: When we have identified underutilization in our availability/utilization/underutilization analysis (AUUA), we have set goals to remedy that underutilization. 2. Personnel activity: We will routinely conduct adverse impact analyses using the “Eighty Percent Test” or other statistical methods to analyze our personnel activities, including applicant flow, hires, promotions, terminations and other personnel actions, to determine if there are selection disparities between men and women, people of color, nonminority (and within specific racial groups, if appropriate), or disabled and nondisabled applicants or employees. For tests that are used as a part of our selection process, we confirm these tests are job-related and are validated. We have taken corrective action to remove any barriers to hiring or retaining women, people of color, or individuals with disabilities. 3. Compensation system: We will routinely review our compensation system, including rates of pay and bonuses, to determine whether there is any gender, race, ethnicity, or disability-based disparities. If any disparities are identified, we take prompt action to resolve the disparity. In offering employment to individuals with disabilities, we will not reduce the amount of compensation offered because of any disability income, pension, or other benefit the applicant or employee receives from another source. 4. Personnel procedures: We will routinely review all of our personnel procedures and processes, including selection, recruitment, referral, transfers and promotions, seniority provisions, apprenticeship programs and company-sponsored training programs and other company activities to determine if all employees or applicants are fairly considered. 5. Any other areas that might impact the success of our Affirmative Action Program: We continually analyze any other areas that may impact our success, such as accessibility of our facility to the available workforce, the attitude of our current workforce towards EEO, proper posting of our EEO policy and required governmental posters, proper notification of our subcontractors or vendors, and retention of records in accordance with applicable law. We take prompt action to remedy any problems in these areas through training of staff or other methods. ACTION-ORIENTED PROGRAMS Selection Process We will evaluate our selection process using an adverse impact analysis to determine if our requirements screen out a disproportionate number of people of color, women, or individuals with disabilities. All personnel involved in the recruitment, screening, selection, promotion, disciplinary, and related processes will be carefully selected and trained to ensure that there is a commitment to the affirmative action program and its implementation. 131 | P a g e 70th and France Redevelopment City/HRA draft 2.9.23 Proposed TIF Term Sheet Page 31 4887-6096-1616\1 Schedule for Review of Job Requirements: We will annually review all physical and mental job requirements to ensure that these requirements do not tend to screen out qualified individuals with disabilities. We will determine whether these requirements are job-related and are consistent with business necessity and the safe performance of the job, and we will remove any physical or mental requirements that do not meet these criteria. Any job descriptions or requirements changed after review will be distributed to all relevant employees, particularly those involved in the selection process and supervision of employees. Pre-Employment Medical Examination: If we require medical examinations or inquiries as a part of our selection process, all exams or inquiries will be conducted after a conditional offer of employment. Only job-related medical examinations and inquiries will be conducted, and the results of these examinations or inquiries will not be used to screen out qualified individuals with disabilities. Information obtained in response to such inquiries or examinations will be kept confidential except that (a) supervisors and managers may be informed regarding restrictions on the work or duties of individuals with disabilities and regarding accommodations, (b) first aid and safety personnel may be informed, where and to the extent appropriate, if the condition might require emergency treatment, and (c) officials, employees, representatives, or agents of the Minnesota Department of Human Rights or local human rights agencies investigating compliance with the act or local human rights ordinances will be informed if they request such information. Accommodations to Physical and Mental Limitations of Employees We will make reasonable accommodations to the physical and mental limitations of an employee or applicant unless such an accommodation would impose an undue hardship on the conduct of the business. Recruitment of Employees 1. All solicitation or advertisements for employees will state that applicants will receive consideration for employment regardless of their race, color, creed, religion, national origin, sex, sexual orientation, disability, age, marital status, or status with regard to public assistance. When needed, to help address underutilization, help wanted advertising will also be placed in news media oriented towards women or people of color. Copies of advertisements for employees will be kept on file for review by enforcement agencies. 2. When we place recruitment advertisements, we will not indicate a preference, limitation, or specification based on sex, age, national origin, or other protected characteristic, unless that characteristic is a bona fide occupational qualification for a particular job. We will not allow any employment agency with which we work to express any such limitation on our behalf, and we will require that these agencies share our commitment to EEO. 3. All positions for which we post or advertise externally will be listed with State of Minnesota Workforce Centers, America’s Job Bank, or similar governmental agencies. 132 | P a g e 70th and France Redevelopment City/HRA draft 2.9.23 Proposed TIF Term Sheet Page 32 4887-6096-1616\1 4. We will request the Minnesota Department of Employment and Economic Development to refer qualified individual with disabilities for employment consideration under our affirmative action programs. 5. As necessary to ensure that potential candidates are aware of job openings, we will contact community organizations focused on the employment of women, people of color, and individuals with disabilities (including state vocational rehabilitation agencies or facilities, sheltered workshops, college placement offices, education agencies, or labor organizations). 6. We will keep documentation of all contacts made and responses received, in connection with paragraphs 4 and 5 above, whether formal or informal. We will make every effort to give these agencies a reasonable amount of time to locate and refer applicants 7. We will carry out active recruiting programs at relevant technical schools and colleges, where applicable. 8. We will encourage existing people of color, female and disabled employees to recruit additional candidates for employment opportunities. 9. C onsideration of people of color and women not currently in the workforce: We will take additional steps to encourage the employment of women, people of color and individuals with disabilities who are not currently in the workforce, such as providing part-time employment, internships, or summer employment programs. Training Programs Education is an ongoing process at AP Midwest, LLC and a variety of training programs are available. Company guidelines for continued emphasis on training programs include and are not limited to:  People of color, female and employees with disabilities will be afforded full opportunity and will be encouraged to participate in all organization sponsored educational and training programs.  We will provide access to apprenticeship training programs when such programs are necessary to ensure equal opportunity for protected class employees.  On-the-job training programs as well as other training and educational programs to which we give support or sponsorship, will be regularly reviewed to insure that minority and female employees are given equal opportunity to participate.  We will seek the inclusion of qualified people of color, female and disabled employees in any apprenticeship program in which we participate. Promotion Process Our promotion process has been developed and documented and only legitimate qualifications are considered in our promotion decisions. We will conduct adverse impact analyses to ensure that 133 | P a g e 70th and France Redevelopment City/HRA draft 2.9.23 Proposed TIF Term Sheet Page 33 4887-6096-1616\1 women, people of color, and employees with disabilities are promoted at rates substantially similar to men, non-people of color, and individuals without disabilities. Termination Process We use progressive discipline before terminating employees, where appropriate. All employees are made aware of our discipline process. We will conduct adverse impact analyses to ensure that women, people of color, and employees with disabilities do not leave our company at rates substantially dissimilar to those of men, non-people of color, and employees without disabilities. Religion and National Origin Discrimination and Accommodation for Religious Observance and Practice As a part of our commitment to Equal Employment Opportunity for all, we have made a specific effort to ensure that national origin and religion are not factors in recruitment, selection, promotion, transfer, termination, or participation in training. The following activities are undertaken to ensure religion and national origin are not used as a basis for employment decisions: 1. Recruitment resources are informed of our commitment to provide equal employment opportunity without regard to national origin or religion. 2. Our employees are informed of our policy and their duty to provide equal opportunity without regard to national origin or religion. 3. Employment practices exist and are reviewed to ensure that we implement equal employment opportunity without regard to national origin or religion. 4. The religious observances and practices of our employees are accommodated, except where the requested accommodation would cause undue hardship on the conduct of our business. 5. We do not discriminate against any qualified applicant or employee because of race, color, creed, disability, age, sex, sexual orientation, marital status, or status with regard to public assistance in implementing the policy concerning non-discrimination based on national origin or religion. Sex Discrimination Guidelines We incorporate the following commitments into this AAP to ensure that all laws related to the prohibition of discrimination based on sex are followed: 1. Employment opportunities and conditions of employment are not related to the identification of sex of any applicant or employee. Salaries are not related to or based upon identification of sex. 2. Women are encouraged to attend all training or development programs to facilitate their opportunities for promotion, and to apply for all positions for which they are qualified. 134 | P a g e 70th and France Redevelopment City/HRA draft 2.9.23 Proposed TIF Term Sheet Page 34 4887-6096-1616\1 3. We do not deny employment to those who identify as women, men or gender neutral with young children and do not penalize, in conditions of employment, women, men or gender neutral who require time away from work for parental leave. 4. Appropriate physical facilities are provided to male, female and gender-neutral. Prevention of Harassment and Discrimination Our company has developed policies prohibiting the harassment of or discrimination against any employee because of any characteristic protected under civil rights laws. Senior management will distribute these policies routinely to current employees and incorporate these policies as a part of new employee orientation. Employees are made aware of contact persons to report any violation of these policies. ANTI-HARASSMENT POLICY As a part of our commitment to equal opportunity, AP Midwest LLC, has adopted an anti-harassment policy. Any employee who engages in harassment on the basis of race, color, creed, religion, national origin, sex, sexual orientation, marital status, status with regard to public assistance, membership or activity in a local human rights commission, disability, age, or other legally protected characteristics; any employee who permits employees under his/her supervision to engage in such harassment; or any employee who retaliates or permits retaliation against an employee who reports such harassment is guilty of misconduct and shall be subject to remedial action which may include the imposition of discipline or termination of employment. Examples of harassment may include derogatory comments regarding a person’s race, color, religion, or other protected characteristics, sexually explicit or other offensive images (whether printed or displayed on a computer), and jokes that are based on stereotypes of particular races, sexual orientations, ages, religions, or other protected characteristics. Sexual Harassment is against the law. It is the policy of AP to abide by the applicable federal, state, and local laws that prohibit sexual harassment and to maintain an employment environment free of sexual harassment. Sexual harassment of any employee, client, or business partner will not be tolerated. Sexual harassment may include unwelcome sexual advances, requests for sexual favors, sexually motivated physical contact or other verbal or physical conduct or communication of a sexual nature when: (a) submission to that conduct or communication is made a term or condition, either explicitly or implicitly, of obtaining employment; (b) submission to or rejection of that conduct or communication is used as a factor in decisions affecting that individual’s employment; or (c) that conduct or communication has the purpose or effect of substantially interfering with an individual’s employment. Here are some examples of conduct that may constitute sexual harassment:  Use of offensive or demeaning terms that have a sexual connotation. 135 | P a g e 70th and France Redevelopment City/HRA draft 2.9.23 Proposed TIF Term Sheet Page 35 4887-6096-1616\1  Objectionable physical closeness, behavior, actions, or contact.  Unwelcome suggestions regarding, or invitations to, social engagements or non-work related social events.  Any indication, express or implied, that an employee’s job security, job assignment, conditions of employment, or opportunities for advancement may depend on the granting of sexual or other personal favors.  Any action relating to an employee’s job status which is in fact affected by consideration of the granting or refusal of social or sexual favors.  Deliberate or careless creation of an atmosphere of sexual harassment or intimidation.  Deliberate or careless jokes or remarks of a sexual nature to or in the presence of any employee.  Showing or sending materials that have a sexual content or are of a sexual nature (such as cartoons, articles, pictures, etc.), either by e-mail, interoffice mail, Internet or otherwise. Although the intent of the person engaging in the conduct may be harmless or even friendly, it is the perception of the conduct by the recipient that is relevant to whether the conduct is harassment. Given the difficulty of judging whether the conduct is welcome or unwelcome in particular situations, the company prohibits all employees from engaging in any conduct of a sexual nature or amounting to harassment based on any protected category in the work setting. This policy applies to everyone in the organization as well as senior management. No retaliation or intimidation directed towards anyone who makes a complaint will be tolerated. If you believe you have been a victim of harassment, take the following steps:  Discuss the matter with your supervisor or manager.  If, for any reason, you would prefer not to speak to your supervisor (for example, if you believe your supervisor to be the source of or a party to the harassment), you may talk to any other member of management or the Chief Human Resources Officer. The company will investigate and attempt to resolve your complaint promptly. If, for any reason, you believe this has not occurred within a reasonable period of time, refer the matter to a member of senior management up to and including the CEO of AP, Jeffrey J. Hansen. PROBLEM RESOLUTION POLICY In any organization, dissatisfaction may arise because an employee does not know, understand, or agree with certain policy interpretations or management decisions. Such dissatisfactions are commonly referred to as grievances. An employee who feels aggrieved is urged to take the matter up immediately with his/her supervisor. Your supervisor is required to investigate your grievance and provide you a response or decision within a reasonable period of time. This investigation may consist of, but is not limited to, gathering information from other employees involved, reviewing company policy, and any other action necessary to understand the matter completely. If you are not satisfied with the response/decision from your immediate supervisor, you are encouraged to report your claim to the next level of management or to Molly Weiss at 952-417-8355. 7200-7250 France Redevelopment City/HRA draft 2.9.23 Proposed TIF Term Sheet Page 36 4887-6096-1616\1 REPORTING CLAIMS We encourage employees to report a claim when concerned about policy violations, discriminatory treatment or any type of unethical or illegal treatment or when they have witnessed such treatment to others. Employees should report complaints promptly to their immediate supervisor, their supervisor’s manager, or to Molly Weiss at 952-417-8355. Once an employee discloses information to management and/or Human Resources stating a complaint regarding but not limited to, sexual harassment, discriminatory harassment or a concern of retaliation he/she will be considered to have filed an internal complaint and will proceed to the investigation process. INVESTIGATION PROCESS All complaints and/or allegations will be promptly investigated. Once a complaint is received by a member of management they need to immediately notify Molly Weiss at 952-417-8355 that a complaint has been received and to discuss an investigative plan that may include some or all of the following: Ensure Confidentiality-AP will protect the confidentiality of employee claims to the best of its ability. At the same time, AP must conduct a prompt and an effective investigation. Therefore, it may not be possible to keep all information gathered in the initial complaint, such as interviews and records, completely confidential. To conduct an effective investigation, some information will be revealed to the accused and potential witnesses, but information will be shared only on a "need to know" basis. Provide Interim Protection-In some cases, separating the alleged victim from the accused may be necessary to guard against continued harassment or retaliation. Actions may include a schedule change, temporary or permanent transfer or (paid) leave of absence, etc. Investigation Plan- HR will inform all parties involved of the need for an investigation and explain the investigation process which may include an outline of the issue, a witness list, sources for information and evidence, and planned interview questions targeted to elicit crucial information and details while conducting interviews. If required due to the nature of the investigation, HR may utilize an outside investigator to ensure an unbiased review. Make a Decision-Once the interviews are conducted, all information will be reviewed and evaluated for a formal decision of next steps. Based on the findings of the investigation appropriate corrective and disciplinary action will be taken. AP will notify both the employee that raised the complaint and the accused of the outcome while reminding all parties to preserve confidentiality as appropriate. Document and Close-A summary of the fact-finding information will be written and submitted to appropriate levels of upper management on a need to know basis. The CITY ofEDINA 7200-7250 France Avenue Recommended Terms for Tax Increment Financing Report to: Edina Housing & Redevelopment Authority February 16, 2023 Accompanies HRA Resolution 2023-03 www.EdinaMN.gov The CITY ofEDINA gap 2 Request for TIF Financial Participation -Summary Developer requested $9 million over 25 years to make phased redevelopment project of this scale and quality financially viable. This request has been analyzed and evaluated: •Site potentially qualifies as Redevelopment TIF District •Budget gap of approx $7.55 million confirmed -Gap related to multiple elements that yield public benefits and address community goals identified in Comp. Plan -Gap can be resolved through Tax Increment Financing TIF The CITY ofEDINA 3 •Boundaries •Budget •Term •Qualifications •Demonstrate ‘but-for’ •Comply with Statute •Comply with Comprehensive Plan •Comply with policy Create “District” •Private developments •Public improvements •Comply with policy •Confirm the ‘but for’ Consider Funding for Specific Projects •4-year knock down •5-year construction •Annual reporting •De-certification Monitoring & Compliance Background -Procedure for Tax Increment Financing The CITY ofEDINA Photo Source: Minnesota Historic Society The large white areas in this 1951 aerial photo show how much of the Greater Southdale Area was mined for gravel and sand. 1)Glacier Sand and Gravel 2)Oscar Roberts Company 3)Hedberg and Sons Source: Edina Historical Society as published in Winter 2016 About Town magazine 1 2 3 Background Gravel Pits of Edina Xerxes AvSouthdale Mall 70th St 66th St 76th St Galleria Tar getFrance AvPentagon Park 4 The CITY ofEDINA Photo Source: Minnesota Historic Society The Oscar Roberts Company 7200 France Ave Built 1967-69 Demolished 2022 Background Gravel Pits of Edina The Prestige Office Building 7250 France Ave Built 1972-74 Demolished 2022 5 The CITY ofEDINA 6Photo Source: Minnesota Historic Society 7200 France Ave. -Class “C” office space -Aging and outdated -Property sold several times in recent years as developers struggled to find a solution to reposition the property to modern uses -Demolished Fall 2022 Background -Substandard Conditions 7250 France Ave. -Class “C” medical office space -Not permitted to be occupied due to structural instability of parking structure -Demolished Fall 2022 7200 7250 The CITY ofEDINA 7Photo Source: Minnesota Historic Society 7250 France Ave. Source: Stantec Consulting; Existing conditions report dated Feb. 6, 2019 Background -Substandard Conditions The CITY ofEDINA 8Photo Source: Minnesota Historic Society Background -Previous Attempts to Redevelop 2016 Dead 2014 2018 2016 2020 –21 Concepts only 2019 2017-18 The CITY ofEDINADevelopment Team 9 Ted Carlson, Founder, CIO Drew Stafford, Director Property Ownership includes: •Orion Investments •Berg Group •Blake Bonjean •Adolfson and Peterson The CITY ofEDINA 10 PUD Zoning and Phase 1 (7250) Site Approval February 7, 2023 Phase 2 (7200 site) entitlements anticipated 2023-2024 Approved Site Plan North 7200 7250 The CITY ofEDINA 11 Phase 1 All site work and 7250 office -Demolition: 2022 -Site prep: 2023 –2024 -Construction 2023-2025 -Occupancy: 2025 Phase 2 -Entitlements by 2024 -Remove temp. parking by 2025 -Construction anticipated 2024-2027 -Occupancy anticipated 2027 Phase 2 7200 Pad Phased Development 7250 The CITY ofEDINAPhase 1 Conditions 12 •Demolition and site prep •New site work •Streetscape and landscape •Public realm areas •Stormwater area •7250 office building •7200 Pad for Phase 2 Phase 2 7200 pad The CITY ofEDINAPhases 1 & 2 Conditions 13 •All Phase 1 elements remain •7200 Hotel or Multi- Family or similar Ph 2 massing concept The CITY ofEDINA 14 51% of 4.9 acre site is subject to permanent easements -Public sidewalks -Public plaza -Public roadway, sidewalks and trail -Stormwater Public Realm Areas 7200 (Ph 2)7250 (Ph 1) The CITY ofEDINAPublic Realm Areas 15 France Ave frontage looking south Public plaza looking east Gallagher frontage looking northNorth-south public drive and sidewalk looking north The CITY ofEDINA 16 •Redevelop with modern facilities that create jobs and add vitality to Greater Southdale •Create north-south road and bike/pedestrian trail between Gallagher and 72nd St as alternate to France Avenue •-secured with permanent public easement •-privately constructed •-privately maintained Public Benefits -Improved north/south roadway and sidewalk access The CITY ofEDINAPublic Benefits -Improved stormwater management 17 •Create dedicated stormwater management area for shared use of commercial and surrounding residential parcels •-approx. 44,000 sq ft •-secured with permanent easements •-privately constructed •-privately maintained •Landscaped with native plantings to create natural area with low environmental impact The CITY ofEDINA •Streetscape, lighting, sidewalks, landscaping along France, Gallagher & 72nd •Permanent public easements (16,000 sq ft) •Privately constructed and privately maintained •City will continue to remove snow on France Ave sidewalk •Allow future Metro Transit bus stops Public Benefits –Street rooms and public realm spaces 18 The CITY ofEDINAPublic Benefits –Public Plaza w/ Public Art (8a and 8b) •15,000 sq ft public plaza •Two public art sculptures at eastern and western ends •Secured by public easement •Privately owned and maintained •Art selected with community input •$100,000+ budget •Additional art elements incorporated into building as shown in plans •Agreeable to host future rotating public art displays (funded by others) 19 The CITY ofEDINAPublic Benefits -Sustainability Features (8c) 20 •Compliance with Edina’s new Sustainability Policy •-upgrade to LEED Silver or equivalent •-Electric Vehicle chargers •-Solar ready rooftops •Stormwater management for multiple properties The CITY ofEDINA 21 Public Benefits -Advancing Diversity and Equity Goals (8d) •Goals to be identified for each Phase •-Portion of work awarded to qualified MBE and WBE companies •-Portion of total job hours filled by BIPOC •-Portion of total job hours filled by women •Good faith efforts required for each Phase •-Developer and contractors must make active efforts to achieve goals, monitor progress and report results •-Penalty only if no effort made Image Source: Commercial Construction and Renovation The CITY ofEDINA •Economic development financing tool used throughout the U.S. •Governed by Minnesota Statute •Enabled by City Council •“Tax Increment” Financing -uses growth in property tax base to fund private investment and public infrastructure 22 What is TIF? Growth of Property Tax Base “Incremental Taxes” remain in TIF District Original + Market Value Taxes available to all agencies Original + Incremental Taxes available to all agencies Year 1 Year 25 Year 40+ $10.95M $68.5 M The CITY ofEDINA 23 Staff Evaluation –Tax Base Growth Current conditions (2023) Estimate after redevelopment (2026) Estimated Growth Estimated Market Value $10.95 M $68.5 M 6x Annual Property Taxes Paid $354,542 $2,134,406 6x •This degree of growth would not happen if the site was rebuilt as lower scale commercial structures •Redevelopment projects of this scale and caliber deliver a tremendous boost to the property tax base •Without TIF, the proposed project does not appear to be viable The CITY ofEDINA 24 Staff Evaluation –Sources and Uses Phase I –Site Work and 7250 office building Uses of Funds Amount Acquisition & demolition $ 6.1 M 7 % Hard Costs / Construction $ 58.7 M 68 % Site work $ 4.7 M 5 % Permits & Fees $ 0.9 M 1 % Professional Services $ 3.8 M 4 % Financing Costs $ 4.6 M 5 % Developer Fee $ 4.3 M 5 % Cash Reserves $ 3.7 M 4 % Total $ 86.6 M Source of Funds Amount First mortgage $ 60.6 M 70% Other $ 0 Equity $ 26.0 M 30% Total $ 86.6 M The CITY ofEDINA 25 Staff Evaluation –Operating Pro Forma Phase I (site prep & office)Annual Revenue Upon Stabilization Office rent (tier 1) Office rent (tier 2) Parking income Vacancy Loss (5%) CAM on Vacancy (5%) Effective Gross Income = $3;014,440 $2,278,544 $ 468,000 -$ 298,049 -$ 86,058 $5,481,876 Management Costs -$ 5,000 Net Operating Income (NOI) + TIF Note Payment NOI (with TIF Assistance) = $5,476,876 + $667,000 $6,143,876 Total Development Cost = $86,627,740 Project Returns Without TIF With TIF Cash on Cost (NOI/TDC) 6.32% below market 7.09% acceptable Cash on Cash (cash flow/equity) 2.17% below market 4.74% acceptable The CITY ofEDINA 26 Recommended Terms -Private Investment with limited public reimbursement 1.Developer bears all financial risk 2.Developer secures debt and equity 1.-Phase I = $86.6 million 2.-Phase II = $65 million (estimated) 3.Developer to pursue grants, if eligible 4.Deadlines to begin and to complete (4a) 1.-Phase I begins in summer 2023 2.-Phase II start date by 2025 The CITY ofEDINA 27 Recommended Terms -Public Financing Participation (7a -7d) 1.Create a 25-year Redevelopment TIF District 2.Pledge adequate TIF support to secure debt & equity and deliver public benefits without over-subsidizing 3.City & HRA bear NO financial risk 1.-Notes payable AFTER completion of each phase and collection of taxes 2.-Payable only from 90% incremental property taxes collected from site -Balance available to City for administrative costs and pooling Least Risk to City Most Risk to City The CITY ofEDINARecommended Terms -Pay Go TIF Notes (7d) •City & HRA to pledge up to $7.55 million via two Pay-Go TIF Notes 1.-Phase 1 Note: Approx 80% ($6 M) approx. 7.0% of TDC 2.-Phase 2 Note: Balance ($1.55 M) approx. 1.8% of TDC •Issued after each Phase completed and documented •Notes may be adjusted and down-sized based on “return on cost” after actual costs incurred •Interest bearing up to 6.50% (to match debt) •Subject to typical lookbacks upon completion, upon sale and prior to termination of District with ability to reduce or terminate payments or other appropriate clawback provisions to prevent over subsidizing project Pay Go TIF Note 28 The CITY ofEDINA 29 Recommended Terms -TIF Reimbursable Expenses (7c) Phase 1 Costs Eligible for Potential Reimbursement Approx. Cost 1)Demolition, remediation $ 1,250,000 2)Site improvements including site prep, soils, utilities, dewatering $ 2,691,842 3-4)North/south road w/ sidewalk & trail between Gallagher & 72nd $ 867,864 5)Public plaza $ 1,230,536 6)Public art (2 sculptures)$ 100,000 7)France Avenue streetscaping $ 289,463 8)Stormwater management $ 343,978 9)50% of land cost for north/south road and sidewalk $ 542,179 10)25% of land cost for public plaza and public realm $ 388,542 11)Construction costs for LEED upgrades $ 2,740,000 12)Professional costs to prepare TIF agreements $ 300,000 13)Professional design and engineering of public elements $ 1,074,440 Total = $11,818,844 No Phase 2 costs are eligible Total is significantly less than identified in MN Statute The CITY ofEDINA 30 Staff Recommendation 1)Terminate existing Housing TIF District 2)Create new 25-year Redevelopment TIF District 3)Approve Term Sheet to include two interest-bearing TIF Notes approximately $7.55 million based on completion of phases and delivery of public benefits Staff seeks authorization to: 1)Schedule public hearings and prepare documentation to create new TIF District 2)Prepare complete legal agreement based on these terms for final consideration The CITY ofEDINA 31 Questions / Discussion Date: F ebruary 16, 2023 Agenda Item #: VI I.B. To:C hair & C ommis s ioners of the Edina HR A Item Type: R eport / R ecommendation F rom:Bill Neuendorf, Economic Development Manager Item Activity: Subject:R es olution 2023-03: R eques ting that C ity C ounc il C all for P ublic Hearing regarding the 72nd and F ranc e 2 Tax Inc rement F inanc ing District (a R edevelopment Dis tric t) Ac tion Edina Housing and Redevelopment Authority Established 1974 C ITY O F E D IN A HO US I NG & R EDEVELO P MENT AUT HO R I T Y 4801 West 50th Street Edina, MN 55424 www.edinamn.gov A C TI O N R EQ U ES TED: Approve R esolution 2023-03 requesting that the C ity C ouncil call for a public hearing regarding the 72nd and F rance 2 Tax Increment F inancing D istrict (a R edevelopment District). I N TR O D U C TI O N: T his item pertains to the potential use of Tax I ncrement Financing to support comprehensive redevelopment of vacant commercial property at 7200-7250 France Avenue. M innesota statutes establish a series of steps when a municipality considers the use of T I F. T he first key step is the preparation of a T I F P lan and convening of a P ublic H earing. I n addition to the formal public hearing, E dina traditionally solicits addition input via the B etter Together E dina website and direct outreach to the S chool D istrict and County. T his resolution documents that the H R A recommends that the City Council schedule a future P ublic H earing so that full consideration may be given. S taff recommends approval of this resolution. AT TAC HME N T S: Description HRA Resolution 2023-03 RESOLUTION NO. 2023-03 REQUESTING THE CITY COUNCIL OF THE CITY OF EDINA CALL FOR A PUBLIC HEARING ON THE PROPOSED ESTABLISHMENT OF THE 72nd AND FRANCE 2 TAX INCREMENT FINANCING DISTRICT (A REDEVELOPMENT DISTRICT) WHEREAS, the Board of Commissioners (the “Board”) of the Edina Housing and Redevelopment Authority (the “HRA”) and City Council ("Council") of the City of Edina, Minnesota ("City") previously established the Southeast Edina Redevelopment Project Area pursuant to Minnesota Statutes, Sections 469.001 through 469.047, inclusive, as amended, in an effort to encourage the development and redevelopment of certain designated areas within the City; and WHEREAS, the HRA has established the 72nd & France District, a “housing” tax increment financing (“TIF”) district (the “Housing TIF District”) located at 7200 to 7250 France Avenue in the City, consisting of PID Numbers 31 - 028-24-14-0001 and 31-028-24-14-0015 (the “Parcels”) on which two multi-tenant office buildings, a structured-parking ramp, and one paved surface parking lot were located; and WHEREAS, the proposed 2019 housing development associated with the Housing TIF District failed to occur, the buildings were not demolished or removed, and the HRA has no obligations regarding incremental property taxes collected from the Housing TIF District; and WHEREAS, under Minnesota Statutes, Section 469.174, Subd. 10(d), the HRA is authorized to deem parcels as occupied by structurally substandard buildings located on certain designated property despite prior demolition or removal of the buildings and may in the future include the designated property in a redevelopment tax increment financing district as defined in Minnesota Statutes, Section 469.174, Subd. 10; and WHEREAS, the HRA adopted findings through passage of Resolution 2022-08 as to the condition of buildings on the Parcels in the expectation the buildings would be demolished and removed prior to the creation of a future redevelopment TIF district and the cost of such demolition and removal would be financed, in part, under an agreement with the HRA; and WHEREAS, the HRA is the administrative authority for the Housing TIF District and desires to cause the decertification of the Housing TIF District in order to establish a new redevelopment TIF district designated to assist in financing a new mixed-use redevelopment proposal for the Parcels; and WHEREAS, the HRA is proposing the modification to the Redevelopment Plan for the Southeast Edina Redevelopment Project Area (“Redevelopment Plan Modification”) to include the establishment of the 72nd and France 2 TIF District (the “Redevelopment TIF District”) and adoption of a Tax Increment Financing Plan therefor (the Redevelopment Plan Modification and Tax Increment Financing Plan are referred to collectively herein as the "Plans"), all pursuant to and in accordance with Minnesota Statutes, Sections 469.174 through 469.1794 and Sections 469.001 to 469.047, inclusive, as amended. HRA Resolution 2023-03 Page 2 NOW, THEREFORE BE IT RESOLVED by the Board of the HRA as follows: 1. The HRA hereby requests that the City Council call for a public hearing on or about April 4, 2023, to consider the proposed Plans and cause notice of said public hearing to be given as required by law. 2. HRA staff is authorized to take such action as is necessary to cause the decertification of the Housing TIF District prior to the public hearing. 3. The HRA directs the Executive Director to transmit copies of the Plans to the Planning Commission of the City and requests the Planning Commission's written opinion indicating whether the proposed Plans are in accordance with the Comprehensive Plan of the City, prior to the date of the public hearing. 3. The Executive Director of the HRA is hereby directed to submit a copy of the Plans to the Council for its approval. 4. The HRA affirms the transmission of the Plans to Hennepin County and Independent School District No. 273 in which the Southeast Edina Redevelopment Project Area is located no later than March 3, 2023. 5. Staff and consultants are authorized and directed to take all steps necessary to prepare the Plans and related documents and to undertake other actions necessary to bring the Plans before the Council. Approved by the Board on February 16, 2023. ATTEST: _______________________________ James B. Hovland, Chair _______________________________ James Pierce, Secretary HRA Resolution 2023-03 Page 3 STATE OF MINNESOTA) COUNTY OF HENNEPIN) SS CITY OF EDINA ) CERTIFICATE OF EXECUTIVE DIRECTOR I, the undersigned duly appointed and acting Executive Director for the Edina Housing and Redevelopment Authority do hereby c ertify that the attached and foregoing Resolution is a true and correct copy of the Resolution duly adopted by the Edina Housing an d Redevelopment Authority at its Regular Meeting of February 16, 2023, and as recorded in the Minutes of said Regular Meeting. WITNESS my hand and seal of said City this ______________ day of ___________________, 20___. Executive Director Date: F ebruary 16, 2023 Agenda Item #: VI I.C . To:C hair & C ommis s ioners of the Edina HR A Item Type: R eport / R ecommendation F rom:S tephanie Hawkinson, Affordable Housing Development Manager Item Activity: Subject:S ingle F amily P reservation P rogram Twin C ities Habitat for Humanity P artnership Ac tion Edina Housing and Redevelopment Authority Established 1974 C ITY O F E D IN A HO US I NG & R EDEVELO P MENT AUT HO R I T Y 4801 West 50th Street Edina, MN 55424 www.edinamn.gov A C TI O N R EQ U ES TED: Approve a $3.0 million line of credit to Twin Cities H abitat for H umanity and authorize attorney to prepare legal documents for execution. I N TR O D U C TI O N: S taff is seeking approval for a $3.0 M illion R evolving Line of C redit (“L O C ”), of which $1.8 M illion would be forgiven and $1.2 M illion due back to the C ity, and authorization to draft a partnership agreement with Twin C ities Habitat for Humanity (“T C H F H”) to expand the H ousing P reservation P rogram. S imilar to the H R A’s partnership with H omes Within Reach (“H W R ”), T C H F H would access the L O C to buy a house, renovate it, and sell to an income eligible homebuyer. T he land would be conveyed to H W R to place into the land trust and a 99-year ground lease would be executed with the homeowner to assure long-term affordability. O nce the land is secured into the land trust, a portion of the L O C that attributed to the land is forgiven. T he sale proceeds from the sale of the house would be returned to the H R A. AT TAC HME N T S: Description Staff Report DRAFT Partners hip Agreement Pres entation February 16, 2023 Chair and Commissioners of the Edina Housing and Redevelopment Authority Stephanie Hawkinson, Affordable Housing Development Manager Single Family Preservation Program Twin Cities Habitat for Humanity Partnership Information / Background: Staff is seeking approval for a $3.0 Million Revolving Line of Credit (“LOC”), of which $1.8 Million would be forgiven and $1.2 Million due back to the City, and authorization to draft a partnership agreement with Twin Cities Habitat for Humanity (“TCHFH”) to expand the Housing Preservation Program. Similar to the HRA’s partnership with Homes Within Reach (“HWR”), TCHFH would access the LOC to buy a house, renovate it, and sell to an income eligible homebuyer. The land would be conveyed to HWR to place into the land trust and a 99-year ground lease would be executed with the homeowner to assure long-term affordability. Once the land is secured into the land trust, a portion of the LOC that attributed to the land is forgiven. The sale proceeds from the sale of the house would be returned to the HRA. The $3.0 Million would aid in the acquisition, renovation, and sale of six homes. In today’s market, Edina is confronted with the fact that entry-level properties are overpriced for most work-force households who work or live in the City. Increased home values have taken place because of a reduction in supply and increase in demand, while wages have not kept pace with increases in housing costs. In 2020 and 2021 the HRA supported a Line of Credit for HWR whereby the HWR acquires houses valued up to $425,000, rehabilitates them, and sells to income eligible homeowners with the land held by HWR to keep the house affordable for 99-years. HWR not only offers value and benefits to the families it has assisted in becoming homeowners; the program also expands homeownership opportunities and retains community wealth by making maximum use of existing properties with younger households. It also provides a mechanism to invest in affordable homeownership, which enhances residential stability and the preservation of housing affordability by recycling funds from owner to owner. Although there was a program in place with financing, there was no activity until the City mailed a “Not for a Teardown” postcard to every household with an assessed value of up to $425,000. The postcard elicited 50 interested sellers coming forward. To date, HWR has acquired nine of these houses and resold to seven end-buyers (one of these homes was bought and rehabilitated using CDBG and partner agency funds). Some of the 50 houses they declined to buy because they did not meet program goals: too small, required STAFF REPORT Page 2 too much rehab; did not have a garage; too expensive, etc. Nonetheless many were not acquired as HWR has limited capacity to oversee the rehabilitation of multiple homes in Edina as they work in many cities. To address the capacity issue, a partnership with LISC was approved on June 30, 2022, but after several months the National LISC office decided that the local office could not move forward. Thus the $1.2 Million that was awarded for that pilot program is now available. The need to preserve modest house for home ownership continues. Therefore a partnership with another non-profit corporation is needed. Partnership with Twin Cities Habitat for Humanity A new partnership with Twin Cities Habitat for Humanity complements Edina’s existing work with HWR. TCHFH is the local branch of national organization that has been operating in the Twin Cities area for 38- years. Their mission is to “bring people together to create, preserve, and promote affordable homeownership and advance racial equity in housing” with a vision for “an equitable Twin Cities region where all families have access to the transformational power of homeownership.” They have a long track record of creating and preserving affordable housing, with an annual rate of building 35 new single family/duplex homes and rehabilitating an additional 20 to 35 homes. TCHFH’s work also aligns with our efforts to address homeownership disparities. They engage in multiple efforts to reach households who have historically not participated in their programs nor in homeownership in general. In addition to creating homeownership opportunities, TCHFH continues to engage with the homeowners to help them be successful. TCHFH will seek out homes available for purchase, starting with homeowners who have reached out to staff expressing their interest in selling for preservation and long term affordability. Once bought, TCHFH will serve as the general contractor for rehabilitation of the home. This is to address deferred maintenance and major mechanical issues so the buyer will not have to face large repair expense within the first five to seven years. Once the homes are fully rehabilitated, TCHFH will sell to an income eligible buyer. At the time of the sale of the house, the land will be conveyed to HWR, who will enter into a 99-year ground lease with the homeowners. The Need for Government Involvement The current trends in single family housing construction have moved the cost of homeownership out of reach for many young adults whose earnings will not allow for luxury starter homes. This is due primarily to three key drivers in the construction and real estate industry: 1. Increasing population and demand is driving a steep rise in land costs. 2. Material and construction costs have increased steadily, especially during the pandemic. 3. Construction and mortgage interest rates have increased. 4. Developer’s investment and business model requires 30% to 50% profit margins, which can only be achieved by building bigger because home values are based primarily on price per square foot. STAFF REPORT Page 3 This is a perfect storm which has resulted in nearly all new construction homes averaging well over 3,000+ SF. In October 2021, the average size of homes sold in Edina is 2,980 SF, resulting in a 12-month rolling average sale price of $730,447. The private market cannot afford, nor does it have the incentive to develop smaller, more affordable, starter homes. Edina Revolving Line of Credit Program Agreement Highlights: 1. Loan Deal Points:  $3,000,000 will be made available  0.0% interest.  3-year Term.  At least 6 houses to be acquired, rehabilitated, and placed into a Land Trust.  Approximately $1,200,000 will be returned to the City with $1,800,000 forgiven to remain with the properties. 2. Roles and Responsibilities:  Habitat will select property, prepare a Sources and Uses of funds and submit a draw request.  City Staff will review and approve or deny draw requests.  TCHFH will buy the property and oversee rehabilitation work.  TCHFH will determine homebuyer eligibility and oversee sale of home.  HWR will place land into a Land Trust.  TCHFH will return sales proceeds of the house to the HRA.  TCHFH and HWR will indemnify and hold harmless the HRA. Budget Sources: $1,800,000 Affordable Housing Trust Fund - Forgiven $1,200,000 Southdale 2 TIF Pooled – Repaid Sources and Uses Example: (1 house) Uses Construction Sources: Acquisition $395,000 HRA AHTF - LOC $500,000 Rehab $75,000 Soft Costs $30,000 Permanent Sources: $500,000 Sales Proceeds $200,000 HRA Forgivable Loan $300,000 $500,000 STAFF REPORT Page 4 Affordable Housing Trust Fund Estimated Balance Requests Beginning Balance* $ 8,460,000 Market Street (2019) ($750,000) 4d Pilot Program (2018) ($160,000) 4d Pilot Program (2019) ($50,000) 425 Jefferson ($152,717) Home Rehabilitation Program (Pilot 2021) ($250,000) Home Rehabilitation Program (Aug. 2021) ($750,000) Home Rehabilitation Program (2022) ($500,000) LISC Single Family Partnership Program $0 First Generation Grant ($150,000) Single Family Ownership Program (2020) ($840,000) Single Family Ownership Program (2021) ($1,500,000) Single Family Ownership Program (2023) ($960,000) Housing Preservation Program - TCHFH (2023) ($1,800,000) Ending Balance $ 597,283 Compliance with City Approved Plans A partnership between the Edina HRA, TCHFH, and HWR is supported by multiple goals within both the Housing Chapter of the Comprehensive Plan and the Housing Strategy Task Force report. 2040 Comprehensive Plan Goal 1: Accommodate all planned residential growth in the city based on planned infrastructure investments and other community goals and assets. 3. Recognize that successfully reaching affordable housing goals assists the city in achieving related community goals, including: a. Accommodating housing for families with children in Edina schools. Goal 2: Encourage the development and maintenance of a range of housing options affordable to residents at all income levels and life stages. 1. Encourage the production of additional affordable housing units and retention of existing affordable housing units to meet the city’s housing needs and its Metropolitan Council affordable housing need allocation of 1,804 units. 9. Promote owner-occupied units over rental units when providing affordable housing Goal 3: Continue to support high quality design of residences and residential neighborhoods in a way that furthers sustainability, character, and livability, and maintains long term investment. 4. Maintain some of Edina’s lower square footage housing stock in order to attract new residents and retain existing residents, including providing affordable options. Housing Strategy Task Force Report A. Promote Affordable and Attainable Housing STAFF REPORT Page 5 3) Attract new residents and retain existing residents by preserving and expanding housing options for moderate- and low-income households. D. Encourage Preservation and Promotion of Diverse Housing Stock 1) Assist neighborhoods in retaining starter housing stock that can accommodate young families. 3) Maintain some of Edina’s single-family, lower square footage housing stock. Staff Recommendation Staff recommends approving a $3.0 million line of credit of which approximately $1.8 Million will be forgiven to extend the housing preservation program with Twin Cities Habitat for Humanity and authorization to engage an attorney to draft the program agreements. 1 EDINA HOUSING & REDEVELOPMENT AUTHORITY EDINA HOME PRESERVATION LINE OF CREDIT PROGRAM DRAFT AGREEMENT This Edina home Preservation Line of Credit Program Agreement (the “Agreement”) is entered into on this ____ day of ___________, 2023, by, between and among the HOUSING AND REDEVELOPMENT AUTHORITY OF EDINA, MINNESOTA, a body politic and corporate under the laws of the State of Minnesota (hereinafter referred to as the “HRA”) and TWIN CITIES HABITAT FOR HUMANITY, a Minnesota non-profit company (hereinafter referred to as “TCHFH”) and WEST HENNEPIN AFFORDABLE HOUSING LAND TRUST, DBA HOMES WITHIN REACH, a Minnesota non-profit corporation, hereinafter referred to as “HWR”). RECITALS WHEREAS, the HRA was established for the purpose of undertaking urban redevelopment projects and assisting with the development of affordable housing; WHEREAS, TCHFH is a non-profit organization with the mission to bring people together to create, preserve, and promote affordable homeownership and advance racial equity in housing; WHEREAS, HWR, a Community Land Trust, is a non-profit organization which aim to provide long-term affordable housing opportunities for lower-income families which creates younger households, retains community wealth, and enhances residential stability; WHEREAS, HRA, in wanting to build on positive results from previous partnership with HWR, and in wanting to expand affordable homeownership opportunities in the City of Edina, has approved a line of credit program (“Program”) with TCHFH to purchase, rehabilitate, and sell six (6) homes in the community; and WHEREAS, the HRA has approved the Revolving Loan Program Summary (the “Program Guidelines”), which are attached hereto as EXHIBIT A and fully incorporated into this Agreement, providing, in part, a summary and background of the Program, Program eligibility requirements, Program terms, a list of Program-eligible improvements, and other Program specific policies and procedures; and WHEREAS, TCHFH has a template Home Improvement Contract which is attached hereto as EXHIBIT B. NOW, THEREFORE, in consideration of the mutual promises and covenants herein, the parties do hereby agree as follows: 1. LINE OF CREDIT. The Program will provide a line of credit to TCHFH to acquire, rehabilitate, and sell affordable homes to qualified applicants. The line of credit shall be Three Million and no/100 dollars ($3,000,000). It is understood that the withdrawal of funds will be greater than the funds being returned to the HRA. These funds are to be dispensed as stated herein, for the purposes stated herein. 2 1.1 Each draw will be interest-free. 1.2 The maximum of the Line of Credit is $3,000,000 1.3 The authorized agent of the HRA may approve each draw without HRA approval. 2. PROGRAM OPERATIONS. The following three phases detail the operation of the program, fund distribution, and repayment procedures. This section will take precedence over Exhibit A if any dispute or difference exists. The HRA shall create a payment request form within five (5) business days of this completed Agreement. TCHFH must only utilize the Program’s funds in accordance with established practices of TCHFH as submitted in Exhibit A, attached hereto. 2.1. Purchase. For each individual project of the approved plan for six (6) homes, TCHFH will select a property located in the City of Edina and TCHFH will extend an offer to purchase the property. If the offer is accepted, TCHFH will submit a payment request form to the HRA for a distribution of funds from the Program to cover 100% of the purchase price and estimated closing fees. This payment request form must also include the property’s address, legal description, estimated value based upon the most recent Hennepin County tax assessment of appraisal, and approximate scope of rehabilitation work needed. After the payment request form is emailed to the HRA, an authorized agent of the HRA will determine whether the request will be approved or denied within one business day of the receipt of the submission and notify TCHFH by email. If approved, the HRA will transfer funds to TCHFH’s bank account at least three business days prior to the closing date. TCHFH shall instruct the title company in charge of the closing to immediately record all relevant documents against the title to the property on the closing date. TCHFH will send the HRA final documentation regarding the purchase of the house. 2.2. Rehabilitation. TCHFH will be the General Contractor, or hire an external General Contractor, and fulfill a Home Improvement Contract attached as Exhibit B. This contract establishes the plans and specifications of improvements, repairs, or alterations of each purchased home. TCHFH will request funds from the Program via the payment request form for rehabilitation and project costs. Project costs will be estimated in the Preliminary Sources of Uses submitted prior to acquisition of each property. This request must include the completed Home Improvement Contract, and the Scope of Work with associated cost estimates. After the written payment request form is delivered to the HRA, an authorized agent of the HRA will transfer the funds into TCHFH’s bank account within one business day of the receipt of the submission. TCHFH shall then commence and complete rehabilitation in accordance with the Home Improvement Contract. TCHFH must conduct a final inspection and appraisal of the property once the rehabilitation is completed. TCHFH must submit all necessary permits, approvals, written changes to the Home Improvement Contract, and lien waivers to Edina’s HRA. 2.3. Sale. During or after the rehabilitation of each home, TCHFH will select a qualified applicant, as described below in Section 3, as the purchaser of the home. TCHFH shall inform the HRA of the sale price, sale date, and the buyer’s profile. A critical aspect of keeping these homes affordable is the Ground Lease, which will be transferred by TCHFH to HWR during the sale of the house structure to the buyer. HWR must execute a Ground Lease with the buyer as a part of the home sale process. Five (5) working days after each home sale, 3 TCHFH must deliver 50% of the proceeds of that sale (not including the land cost component) to the HRA, to be returned to the Program. After approximately 60-90 days from the sale of the home, when all project costs are paid, any remaining balance is sent to the HRA to be returned to the Program. TCHFH will make repayments to the Program after the home is sold to a qualified applicant. The HRA will receive the sale price of the house minus the value of the land, rehabilitation costs, and project costs after the sale. TCHFH shall instruct the title company in charge of the closing to immediately record all relevant documents against the title to the property on the closing date. TCHFH will send the HRA final documentation regarding the sale of the house. 3. APPLICANT QUALIFICATIONS. In order for an applicant to be qualified to participate in the Program through TCHFH, the applicant (and co-applicant): A. must be 21 years of age or older; B. must be a citizen of the United States or a legal resident; C. may not have other liquid assets, excluding retirement accounts, totaling in excess of $25,000.00 net of liabilities or the amount consistent with Section 8 guidelines, whichever is greater; D. must have a total gross income that is at or below 80% of area median income (“AMI”); and E. must not be above a 45% debt ratio. F. must be a first-time homeowner; excludes homeownership which terminated at least 3 years prior to application, and excludes individuals who were removed from a home title due to divorce. 4. AGREEMENT TERM AND TERMINATION. This Agreement is effective upon execution of the Agreement by the HRA. The Agreement expires on the Termination Date, which will be three (3) years from the date the Agreement became effective. 4.1. The Agreement may extend if TCHFH is in the rehabilitation or sale phase of the Program at the time of the Termination Date. The Agreement will then terminate after TCHFH makes the final repayment to HRA after the closing sale. 4.2. If TCHFH materially fails to comply with any terms of this Agreement, fails to maintain its non-profit corporate status with the IRS or State of Minnesota, or fails to administer the work in a manner to endanger the performance of this Agreement, the HRA may immediately terminate this Agreement in its entirety. 4.3. If TCHFH is not in default, either TCHFH or the HRA may terminate this Agreement for any reason upon thirty (30) days written notice to the other party. 5. TITLE. The borrower warrants that all work performed pursuant to this Agreement shall be in compliance with existing laws, ordinances, pertinent regulations, standards, and specifications. This Agreement does not act as a substitute for any permits or approvals that are otherwise required by TCHFH in order to complete any of the terms of this Agreement. 6. MISCELLANEOUS. 4 6.1. Authorized Representatives. The HRA’s Authorized Representative is: Edina Housing and Redevelopment Authority Executive Director 4801 West 50th Street Edina, Minnesota 55424-1330 HWR’s Authorized Representative is: West Hennepin Affordable Housing Land Trust dba Homes Within Reach Executive Director 5101 Thimsen Ave #202 Minnetonka, MN 55345 TCHFH’s Authorized Representative is: Twin Cities Habitat for Humanity Land Acquisition Project Manager 1954 University Ave W St. Paul, MN 55104 6.2. Assignment. TCHFH may neither assign nor transfer any rights or obligations under this Agreement without the prior consent of the HRA and a fully executed Assignment Agreement, executed and approved by the same parties who executed and approved this Agreement, or their successors in office. 6.3. Amendments. Any amendment to this Agreement must be in writing and will not be effective until it has been executed and approved by the same parties who executed and approved the original Agreement, or their successors in office. 6.4. Waiver. If the HRA fails to enforce any provision of this Agreement, that failure does not result in a waiver of the right to enforce the same or another provision of the Agreement in the future. 6.5. Liability and Indemnification. TCHFH will indemnify, save, and hold the HRA, its agents, and employees, harmless from any claims or causes of action, including attorney’s fees incurred by the HRA arising from the performance of this Agreement by TCHFH or TCHFH’s agents or employees. This clause will not be construed to bar any legal remedies TCHFH may have for the HRA’s failure to fulfill its obligations under this Agreement. TCHFH shall maintain such books and records as will satisfactorily demonstrate to Federal, State, and the HRA’s Auditors that TCHFH has used the funds in accordance with this Agreement. 5 6.6. Insurance. TCHFH agrees that it will, at all times during the term of this Agreement, have and keep in force a general liability insurance policy with coverage in the amount of at least $1,000,000 per occurrence. A copy of TCHFH’s insurance declaration page, Rider or Endorsement, as applicable, which evidences the existence of this insurance coverage naming the HRA as an additional insured must be provided to the HRA before work under this Agreement is begun. 6.7. Audits. TCHFH’s books, records, documents, and accounting procedures and practices relevant to this Agreement are subject to examination by the HRA, as appropriate, for a minimum of six (6) years from the end of this Agreement. 6.8. Government Data Practices. TCHFH and the HRA must comply with the Minnesota Government Data Practices Act, Minn. Stat. Ch. 13, as it applies to all data provided by TCHFH under this Agreement, and as it applies to all data created, collected, received, stored, used, maintained, or disseminated by TCHFH under this Agreement. The civil remedies of Minn. Stat. §13.08 apply to the release of the date referred to in this clause by either TCHFH or the HRA. If TCHFH receives a request to release the data referred to in this clause, TCHFH must immediately notify the HRA. The HRA will give TCHFH instructions concerning the release of the data to the requesting party before the data is released. 6.9. Governing Law, Jurisdiction, and Venue. Minnesota law, without regard to its choice-of-law provisions, governs this Agreement. Venue for all legal proceedings out of this Agreement , or its breach, must be in the appropriate state or federal court with competent jurisdiction in Hennepin County, Minnesota. 6.10. Severability. If any provision or application of this Agreement is held unlawful or unenforceable in any respect, such illegality or unenforceability shall not affect other provisions or applications that can be given effect, and this Agreement shall be construed as if the unlawful or unenforceable provision or application had never been contained herein or prescribed hereby. 6.11. Authorized Signatories. The parties each represent and warrant to the other that (1) the persons signing this Agreement are authorized signatories for the entities represented, and (2) no further approvals, actions or ratifications are needed for the full enforceability of this Agreement against it; each party indemnifies and holds the other harmless against any breach of the foregoing representation and warranty. 6.12. Entire Agreement. This Agreement, together with the Grant Application, constitutes the complete and exclusive statement of all mutual understandings between the parties with respect to this Agreement, superseding all prior or contemporaneous proposals, communications, and understandings, whether oral or written, concerning the grant funds. 6.13. Headings. The headings appearing at the beginning of the sections contained in this Agreement have been inserted for identification and reference purposes only and shall not be used in the construction and interpretation of this Agreement. 6.14. Survivability. All covenants, indemnities, guarantees, releases, representations and warranties by any party, and any undischarged obligations of the EDA, the City and Recipient arising prior to the expiration of this Agreement (whether by completion or earlier termination), shall survive such expiration. 6 Dated: ____________________, 2023 HOUSING AND REDEVELOPMENT AUTHORITY OF EDINA, MINNESOTA BY: ______________________________ (Name and title) BY: ______________________________ (Name and title) Dated: ____________________, 2023 TWIN CITIES HABITAT FOR HUMANITY BY: ________________________________ (Name and title) BY: _________________________________ (Name and title) Dated: ____________________, 2023 WEST HENNEPIN AFFORDABLE HOUSING LAND TRUST BY: ___________________________________ (Name and Title) BY: ___________________________________ (Name and Title) Housing and Redevelopment Authority Twin Cities Habitat for Humanity Stephanie Hawkinson Affordable Housing Development Manager February 16, 2023 Guiding Documents EdinaMN.gov 2 Council’s Equity Statement: “Our commitment to diversity, equity and inclusion will be a continuous process of learning and adapting to the multiple needs of all in the community, while consistently applying an equity lens in all decisions and interactions.” Context: Teardowns EdinaMN.gov 3 Year Rebuild Permits Avg Value Before Avg Value After 2008 35 $512,000 $1,332,000 2009 21 $446,000 $1,130,000 2010 34 $408,000 $992,000 2011 57 $393,000 $1,133,000 2012 99 $403,000 $1,147,000 2013 104 $347,000 $1,063,000 2014 115 $369,000 $1,070,000 2015 109 $450,887 $1,195,284 2016 91 $407,342 $1,257,996 2017 88 $486,949 $1,336,778 2018 68 $450,883 $1,380,480 *2019 67 $434,382 $1,339,408 **2020 77 $446,483 $1,292,057 *** Not all homes were completed when data was compiled Context: Existing Program •From 2008 until June 2022, 1053 moderately prices houses have been torn down and replaced with houses priced well over $1 Million. •“Not for a Tear Down” postcard prompted 53 interested sellers. •Homes Within Reach has 3 staff members and contract with two contractors who work in 14 communities –capacity is limited. •The need for affordable housing is increasing. EdinaMN.gov 4 Housing Attainability EdinaMN.gov 5 $- $100,000.00 $200,000.00 $300,000.00 $400,000.00 $500,000.00 $600,000.00 $700,000.00 2000 2021 Change in Home Ownership Accessibility: median home value vs. attainable home values Median House Value Elementary/Secondary Teacher Public Administration Liesure and Hospitality *Based on 30-year Mortgage at 5% Current Housing Preservation Program •HRA partnering with Homes Within Reach. •Thus far 10 houses acquired; 7 sold to end-buyers; 3 being rehabbed. •Estimate acquiring 4-5 more homes. EdinaMN.gov 6 Solution •Enhance program to preserve homes. •Engage additional organizations. •Create new partnerships to bring in new contractors to prepare turn-key ready homes to Homes Within Reach. Obstacle •Loss of modest homes. •Lack of incentive of experienced developers and contractors to work on modest homes. •Shortage of developers and contractors for modest homes •Limited capacity of Homes Within Reach and their contractors. Increase Capacity to Address Need EdinaMN.gov 7 Program Outline Goals •Preserves homeownership opportunities for low-to- moderate income households •Retains community and homeowner wealth •Enhances residential stability •Preserves long-term housing affordability •Serves households with incomes 60%-80% AMI (< $82,720) EdinaMN.gov 8 Mission:Bring people together to create, preserve, and promote affordable homeownership and advance racial equity in housing. Vision An equitable Twin Cities region where all families have access to the transformational power of homeownership. “Twin Cities Habitat for Humanity is committed to building the quality of life, health, and economic prosperity of the seven-county metro region by producing, preserving, and advocating for affordable homeownership –because homes and families are the foundation of successful communities.” Who is TC Habitat for Humanity? EdinaMN.gov 9 Homes Within Reach •Preapproves house criteria •Preapproves scope of work •Places land into Land Trust for long term ownership of land Twin Cities Habitat for Humanity •Buy House from a private seller. •Create rehabilitation scope of work •Rehabilitates House •Sells to income eligible buyer Program Partners EdinaMN.gov 10 Land Trust Model EdinaMN.gov 11 For qualified applicants, HWR provides safe, healthy and hazard-free entry-level homes in well-established neighborhoods that offer a variety of educational, recreational, shopping and medical services. Housing Preservation Flow Chart Home Seeker Submits Application TCHFH seeks house using their own and Homes Within Reach criteria TCHFH purchases and rehabs home using HRA funds TCHFH conveys house to income eligible buyer TCHFH conveys land to HWR who places it into Land Trust TCHFH repays HRA sales proceeds from house sale EdinaMN.gov 12 Uses Acquisition $2,370,000 Rehabilitation $ 450,000 Project Expenses $ 180,000 TOTAL $3,000,000 Interim Sources Affordable Housing Trust Fund $1,800,000 Southdale II TIF Pooled Funds $1,200,000 Permanents Sources Affordable Housing Trust Fund $1,800,000* Home Buyers $1,200,000 TOTAL $3,000,000 * $597,283 Remaining Balance in AHTF Budget Implications (6 homes) EdinaMN.gov 13 The amortization of the proposed project of a net contribution of 300,000 for a 99- year period is $3,030 per year. •$3,000,000 will be made available as a line of credit to help finance acquisition and rehabilitation. •Participation Agreement with TCHFH. •Approximately $1,800,000 will be forgiven when land placed in land trust. •0.0%interest. •3-year Term . •6 houses to be acquired,rehabilitated,and placed into a Land Trust. Loan Deal Points EdinaMN.gov 14 Policy Considerations Policy Objectives •Affordability Period •Per Unit Funding Gap •Income Served •Housing Stability •Other 15 Multifamily Rental •20-40 years •~$30,000-$65,000 (~$750-$1,625/year) •<30%-60% AMI •Yes Single Family Ownership •99-years •~$200,000 -$300,000 (~2,020-$3,030/year) •50%-125% AMI •Yes •Generational Wealth •Housing for larger households Public Benefits EdinaMN.gov 16 Complies with multiple Comprehensive Plan Goals: -Retain existing affordable housing units to meet the city’s housing needs and its Metropolitan Council affordable housing need allocation of 1,804 units. -Accommodate housing for families with children in Edina schools. -Promote owner-occupied units over rental units when providing affordable housing -Maintain some of Edina’s lower square footage housing stock in order to attract new residents and retain existing residents, including providing affordable options. Complies with Housing Strategy Task Force Goals: -Attract new residents and retain existing residents by preserving and expanding housing options for moderate-and low-income households. -Assist neighborhoods in retaining starter housing stock that can accommodate young families. -Maintain some of Edina’s single-family,lower square footage housing stock. EdinaMN.gov 17 Questions?