2021.08.17 EDA Meeting PacketAGENDA
ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF CRYSTAL
REGULAR MEETING
TUESDAY, AUGUST 17, 2021
IMMEDIATELY FOLLOWING THE 7:00 P.M. CITY COUNCIL MEETING
CRYSTAL CITY HALL
COUNCIL CHAMBERS
1. Call to order *
2. Roll call *
3. Approval of minutes from June 15, 2021 Regular Meeting
4. Consider authorizing home improvement program changes effective January 1, 2022
5. Other business *
6. Adjournment *
*Items for which no materials are included in the packet
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Minutes of the
Economic Development Authority of the City of Crystal
Regular Meeting
Council Chambers
June 15, 2021
1. Call to Order
President Parsons called the meeting of the Economic Development Authority of the City
of Crystal (EDA) to order at 9:15 p.m.
2. Roll Call
Upon call of the roll, the following members were present: Jim Adams, Brendan Banks,
John Budziszewski, David Cummings, Nancy LaRoche and Olga Parsons.
The following staff were present: Executive Director Anne Norris, Deputy Executive
Director John Sutter and City Planner Dan Olson.
3. Approval of Minutes
Moved by Commissioner Adams and seconded by Commissioner LaRoche to approve
the minutes from the June 1, 2021 regular meeting. Motion carried.
4. Public hearing and consideration of a resolution authorizing the sale of an EDA lot at
4741 Welcome Ave. N. for construction of a 4-unit residential building (item continued
from June 1, 2021 meeting)
Staff presented the plans from the builder (Gernco Construction) for EDA consideration.
President Parsons resumed the hearing.
Mary Soukup (4736 Xenia Ave. N.) asked questions about the proposed building and
expressed concern about alley traffic.
No other persons appeared. President Parsons closed the hearing.
Moved by Commissioner Banks and seconded by Commissioner Adams to adopt the
resolution authorizing the sale of an EDA lot at 4741 Welcome Ave. N. for construction
of a 4-unit residential building. Motion carried.
5. Public hearing and consideration of a resolution authorizing the sale of an EDA lot at
3556 Major Ave. N. for construction of a single family home
Staff presented the plans from the builder (Great Buy Homes) for EDA consideration.
President Parsons opened the hearing.
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Glenn Hammer representing Great Buy Homes answered questions from the board.
No other persons appeared. President Parsons closed the hearing.
Moved by Commissioner LaRoche and seconded by Commissioner Adams to adopt the
resolution authorizing the sale of an EDA lot at 3556 Major Ave. N. for construction of a
single family home. Motion carried.
6. Consideration of a motion to authorize a drainage and utility easement on the west 10
feet, north 5 feet and east 5 feet of 3556 Major Ave. N.
Staff presented information about the proposed easement.
Moved by Commissioner LaRoche and seconded by Commissioner Banks to authorize a
drainage and utility easement on the west 10 feet, north 5 feet and east 5 feet of 3556
Major Ave. N. Motion carried.
7. Consideration of a resolution supporting Tax Increment Financing for a multi-family
housing project at 5240 West Broadway
Staff presented information about the proposed development project and tax increment
financing request.
Megan Carr from Sand Companies (the developer) was present to answer questions from
the board.
Moved by Commissioner Budziszewski and seconded by Commissioner Cummings to
adopt the resolution supporting Tax Increment Financing not to exceed $795,000 for a
multi-family housing project at 5240 West Broadway. Motion failed 3-4 with Banks,
Budziszewski and Cummings voting aye and Adams, Kiser, LaRoche and Parsons voting
nay.
Moved by Commissioner LaRoche and seconded by Commissioner Banks to adopt the
resolution supporting Tax Increment Financing not to exceed $550,000 for a multi-family
housing project at 5240 West Broadway. Motion passed 4-3 with Banks, Budziszewski,
Cummings and LaRoche voting aye and Adams, Kiser and Parsons voting nay.
8. Other Business
Staff provided an update on Bella’s Shoppe at 36th Ave. N. and Douglas Drive.
9. Adjournment
Moved by Commissioner Budziszewski (LaRoche) to adjourn the meeting. Motion
carried.
The meeting adjourned at 9:57 p.m.
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These minutes of the June 15, 2021 meeting of the Crystal Economic Development Authority
were approved by the Authority on ________________ ____, 20___.
______________________________
Olga Parsons, President
ATTEST:
______________________________
Therese Kiser, Secretary
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__________________________________________________________________________
FROM: John Sutter, Community Development Director
DATE: August 12, 2021
TO: Anne Norris, Executive Director (for August 17 EDA meeting)
SUBJECT: Consider authorizing Home Improvement Program changes effective
January 1, 2022
BACKGROUND
The EDA pays for its two home improvement programs, the Home Improvement Grant and
Community Fix-Up Fund Interest Write-Down, with a combination of funds from Tax Increment
Financing (TIF) District #4 (#2155) and the EDA tax levy. For example, in 2020, program
expenditures were $237,186 (85%) from TIF and $42,208 (15%) from EDA.
TIF funds are used for projects located in the redevelopment project area when the
household income is ≤100% of area median income (AMI) for 1-2 person households and
≤110% of AMI for 3+ person households.
EDA funds are used for projects that are not eligible for TIF funds but are still eligible for the
programs because their household income is ≤110% AMI regardless of household size. For
example:
‐ A 1-2 person household with an income between 100-110% AMI would need funding
from the EDA funds even if they are located within the redevelopment project area.
‐ Any project located outside the redevelopment project area would need funding from
the EDA funds, subject to the overall maximum household income of 110% AMI.
EXPENDITURE TRENDS
Continuing a trend that began in 2020, demand for the EDA’s home improvement grant
program has increased throughout the first half of 2021. Total expenditures for January-June
2021 were $270,213 which is approaching the annual budget of $298,046. While there are
ample fund balances in both the TIF and EDA funds to cover program expenditures in excess
of budget in the near term, the rate of spending is unsustainable as it would exhaust the TIF
fund balance in early 2026.
EDA STAFF REPORT
Home Improvement Program Changes
STAFF RECOMMENDATIONS FOR PROGRAM SUSTAINABILITY
To reduce future program expenditures, I am recommending the following changes for EDA
action on August 17, 2021 to take effect January 1, 2022*:
1. Lower the maximum grant per property per year from $10,000 to $6,000, estimated to
impact 22 out of 142** grant recipients per year and reduce annual expenditures by
$64,376.
2. Reduce the income limits for 1 and 2-person households from 110% of Area Median
Income to 80% AMI for 1-person households and 100% AMI for 2-person households. This
is estimated to exclude 28 out of 142** grant recipients from the program per year and
reduce annual expenditures by $92,722. Income limits would remain at 110% AMI for
households with 3 or more people.
* The changes would not take effect until 2022 because we need time to make
community members aware of the program changes so they can adjust their plans
and timing for application submittal - in other words, we want to give “fair warning”.
** 142 grant recipients per year is an estimate based on the actual grants and recipient
households in the first half of 2021 (71) times two.
Comparison of household income limits:
Household Size Current Limits Proposed Limits effective Jan. 1, 2022
1 $79,640 $54,950
2 $91,080 $82,800
3 $102,410 $102,410
4 $113,740 $113,740
5 $122,870 $122,870
6 $132,000 $132,000
7 $141,130 $141,130
8 $150,150 $150,150
Also, the current contract budget needs to be increased to $462,000 get through the transition
period between now and the end of 2021, as items #1 and #2 above will not reduce
expenditures until 2022.
Finally, I propose to eliminate the Fix-Up Fund interest subsidy. This program has been used
far less than the grant program, and the state Fix-Up Fund’s interest rate is low enough that
the city funds are not needed for the foreseeable future. This presents an opportunity to
eliminate this program and focus on the grant program as our single, but very popular,
program offering.
These changes are shown in the attached redlines of Exhibits A and B to the current contract
with Center for Energy and Environment.
Also attached are three figures illustrating projected program finances as follows:
A. Forecast as of March 2021 based on expenditures through 2020 (the EDA saw these when
it amended the TIF plan in March)
B. Forecast based on expenditures in the first half of 2021 without program changes
C. Forecast based on staff-recommended changes
Please note that the staff-recommended changes will keep the program expenditures roughly
in line with tax increment received until the TIF district expires at the end of 2025. We will still
need to have a conversation about whether to continue the program using the EDA/HRA levy
after the TIF fund balance is exhausted in early 2027. This should occur no later than 2024
when the 2025-2026 biennial budget is discussed, prepared and adopted.
REQUESTED EDA ACTION
Approval of a motion to authorize execution of the attached amendments to Exhibits A and B
of the current home improvement program contract with Center for Energy and Environment.
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Exhibit A - # Page 1
EXHIBIT A
Crystal Program Guidelines
This document includes guidelines for the
City of CrystalHome Improvement Grant Program of the
and the MHFA Interest Subsidy Program
Economic Development Authority of the City of Crystal
Exhibit A - # Page 2
Crystal Grant Program
CRYSTAL PROGRAM GUIDELINES
The Crystal Economic Development Authority (Authority) is making funds available for homeowners to
assist with home maintenance and energy improvements. The Crystal Grant and Interest Subsidy
Programs are designed to supplement existing loan programs available from MHFA, CEE, private lenders
and other housing resources. These programs are not intended to be the sole source of improvement
funds available to the homeowners in the City. Center for Energy and Environment shall serve as the
administrator for the Crystal Grant and Interest Subsidy Programs and will secure the most beneficial
financing based on the borrower’s needs independent of the funding source.
Eligible Project Expenses:
Interior remodeling
Building additions
Finishing basements, attics or similar spaces to convert them into habitable space
Energy efficiency improvements
Exterior building improvements such as roofing, siding, soffits/fascia, windows and doors
Site improvements such as retaining walls, sidewalks, driveways, fences, patios, decks, garages and
the removal of diseased or hazardous trees
Systems such as HVAC, electrical and plumbing
Permanent Landscaping
Ineligible Project Expenses:
Payment for work initiated prior to the grant being approved and closed, unless due to emergency.
Recreation or luxury projects (pools, lawn sprinkler systems, playground equipment, saunas,
whirlpools, etc.)
Furniture, non‐permanent appliances (unless part of a kitchen remodel), funds for working capital,
debt service or refinancing existing debts.
Homeowner labor or other in‐kind contributions to the project.
Minimum Project Size: Eligible Project Expenses must total at least $2,000 to qualify for a grant.
Grant Amount:
20% of Eligible Project Expenses, except as noted below:
Exception: For projects replacing or lining a sanitary sewer service and/or disconnecting stormwater
drainage (sump connections, foundation drains, etc.) from the sanitary sewer, the grant amount is
40% of those particular, itemized project costs. This is intended to augment the city's efforts to
reduce inflow & infiltration into the sanitary sewer system. In many cases this work will be triggered
by, and completed in conjunction with, the city's utility reconstruction projects (typically 1‐4 blocks
per year). However, any income‐qualified, owner‐occupied residential property in the city is eligible.
For applications submitted and fully complete no later than December 31, 2021: No property may receive
grants totaling more than $10,000 in any calendar year.
For applications submitted and fully complete after December 31, 2021: No property may receive grants
totaling more than $6,000 in any calendar year.
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Exhibit A - # Page 3
Eligible Properties: 1‐4 unit owner‐occupied properties located within the geographical boundaries of
the City of Crystal. Properties held in a Trust, Townhomes and Condominiums are eligible, subject to
Association Bylaws. Properties may be held in a Contract for Deed. If the property has more than 1
unit, the non‐owner‐occupied units must be in compliance with the City of Crystal’s rental licensing
requirements.
Ineligible Properties: Dwellings with more than 4 units, cooperatives, manufactured homes, time
shares, properties used for commercial purposes and non‐owner occupied properties.
Eligible Recipients: All recipients must be legal residents of the United States, as evidenced by a social
security number, Including: U.S. Citizens, Permanent Resident Aliens, and Non‐Permanent Resident
Aliens. TAX IDENTIFICATION NUMBERS (ITIN) ARE NOT ACCEPTABLE.
Ineligible Recipients: Including but not limited to: ‐ Businesses, Foreign Nationals, Non‐Occupant Co‐
Borrowers, and Properties held in the name of a trust.
Income Limit:
For applications submitted and fully complete no later than December 31, 2021: The property owner’s
household income shall not exceed 110% of the HUD Regional Median Income based on household size.
Income will be determined by the adjusted gross income on the most recent Federal Tax Return. If a tax
return is not required, income will be determined by the projected gross income for the upcoming 12
months.
For applications submitted and fully complete after December 31, 2021: The property owner’s
household income shall not exceed the following maximum household income thresholds using HUD
Regional Median Income based on household size:
80% of regional median income for 1‐person households
100% of regional median income for 2‐person households
110% of regional median income for households of 3 or more persons
Income will be determined by the adjusted gross income on the most recent Federal Tax Return. If a
tax return is not required, income will be determined by the projected gross income for the upcoming
12 months.
Credit Requirements: 1) All mortgage payments must be current, 2) All real estate taxes must be
current, and 3) No defaulted government loans, tax liens or child support.
Bids: Two estimates are required. Only 1 materials list is required for sweat equity projects. All
contractors must be properly licensed
Sweat Equity / Homeowner Labor: Work may be performed by property owners on a “sweat equity”
basis, but only the purchase of materials and rental of tools or equipment will be considered an Eligible
Project Expense.
Recipient Paid Fees: None
Deadline for Work Completion: All work must be completed within 120 days of the grant closing.
Extensions may be granted by CEE due to weather or similar factors.
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Exhibit A - # Page 4
Interest Rate: 3% fixed
Amortization Type: Amortizing. Closed‐end (Monthly Payments Required)
Loan Amount: Minimum of $2,000 and Maximum of $50,000.
Total Project Cost: The borrower must have sufficient funds necessary to cover the cost of the entire
project (as outlined in the bid(s). Additional funds may come from personal savings, gifts, or other loan
funds.
Loan term: Generally, one year per $1,000 borrowed. This will be somewhat flexible depending on the
size of the loan and the borrower’s ability to repay the loan. The minimum term is 1 year; the maximum
term will be 15 years.
Eligible Properties: 1‐4 unit owner‐occupied properties located within the geographical boundaries of
the City of Crystal. Townhomes and Condominiums are eligible, subject to Association Bylaws.
Properties may be held in a Contract for Deed.
Ineligible Properties: Dwellings with more than 4 units, cooperatives, manufactured homes, time
shares, properties held in the name of a trust and properties used for commercial purposes.
Eligible Borrowers: All borrowers must be legal residents of the United States, as evidenced by a social
security number, Including: U.S. Citizens, Permanent Resident Aliens, and Non‐Permanent Resident
Aliens. TAX IDENTIFICATION NUMBERS (ITIN) ARE NOT ACCEPTABLE.
Ineligible Borrowers: Including but not limited to: ‐ Businesses, Foreign Nationals, Non‐Occupant Co‐
Borrowers, and Properties held in the name of a trust.
Ownership/Occupancy: Owner‐ occupied only.
Loan ‐ to ‐ Value Ratio: The ratio of all loans secured by the property, including the new loan, should
not exceed 110% of the property value. Half of the improvement value may be added to the initial
property value.
Income Limit: The property owner’s household income shall not exceed 110% of the HUD Regional
Median Income based on household size or the MHFA income limit, whichever is less. Income for
eligibility will be determined by the projected income for the next 12 months per MHFA guidelines.
Debt ‐ to ‐ Income Ratio: Applicant must have the ability to repay the loan. An applicant who has a debt
to income ratio in excess of 48% will be ineligible to receive financing.
Crystal Interest Subsidy Program
Exhibit A - # Page 5
Credit Requirements: All borrowers must have a minimum credit score of 620 and: 1) All mortgage
payments must be current and reflect no 30 day late payments history in the past 12 month period
(without reasonable explanation). 2) All real estate taxes must be current. 3) No outstanding
judgements or collections (excluding medical). 4) Bankruptcy must have been discharged for at least 18
months prior to loan closing. 5) The redemption period on prior foreclosures must have occurred at
least 18 months prior to the loan application date. 6) Generally, no more than two 60‐day late
payments on credit report. Any 60 day late requires a documented explanation and reasonable reasons;
medical, unemployment, divorce. 7) No defaulted government loans.
Multiple Loans per Property: More than one loan per property is allowed, however, the outstanding
balance(s) cannot exceed $50,000.
Eligible Use of Funds: Same as the current MHFA guidelines
Ineligible Use of Funds: Payment for work initiated prior to the loan being approved and closed, unless
due to emergency. Recreation or luxury projects (pools, lawn sprinkler systems, playground equipment,
saunas, whirlpools, etc.), furniture, non‐permanent appliances, and funds for working capital, debt
service, homeowner labor or refinancing existing debts are NOT allowed.
Bids: Only one bid/estimate is required. All contractors must be properly licensed
Sweat Equity / Homeowner Labor: Work may be performed by property owners on a “sweat equity”
basis. Loan funds may be used only for the purchase of materials. Loan funds cannot be used to rent
tools/ equipment or compensate for labor.
Loan Security: Determined by MHFA requirements.
Borrower Fees: Borrower will be responsible for a 1% origination Fee (which may be financed),
mortgage filing and service fees, flood certificate, credit report and any other applicable closing fees.
Underwriting Decision: Applicants must have acceptable credit history. CEE will approve or deny loans
based on a credit report, income verification and other criteria as deemed necessary through CEE’s
underwriting guidelines. CEE’s decision shall be final.
Work Completion: All work must be completed within 9 months of the loan closing.
Exhibit A - # Page 6
General Program Conditions
Application Processing: Grants/Loans will be distributed on a first come first serve basis as
recipients/borrowers qualify. Applicants must provide a completed application package including the
following in order to be considered for funding.
Completed and signed application form
Proof of income
Proof of Identity (drivers license, passport, etc.)
Bids or estimates for proposed projects
Other miscellaneous documents that may be required.
Program Costs: Grant/loan origination fees, grants, interest subsidies and post‐installation inspection
fees will be paid out of the Program Budget. Program marketing efforts will be billed directly to the City
of Crystal and is a separate expense should the city choose to commission CEE for marketing support.
Total Project Cost: It is the recipient/borrower’s responsibility to obtain the amount of funds necessary
to finance the entire cost of the work. In the event the final cost exceeds the original amount, the
borrower must obtain the additional funds and provide verification of the additional funds in order to
proceed.
Disbursement Process:
Grant: Payment to the contractor (or owner in sweat equity situations) will be made upon completion
of work. An inspection will be performed by a City Inspector and/or CEE to verify the completion of the
work. The following items must be received prior to final disbursement of funds:
Final invoice or proposal from contractor (or materials list from supplier);
Final inspection verification by a City Inspector (or CEE);
Completion certificate(s) signed by borrower and contractor;
Lien waiver for entire cost of work;
Evidence of city permit (if required)
Interest Subsidy Program: Payment is disbursed to borrower(s) after loan closing
EXHIBIT B
Crystal Program Budget
July 1, 2021 ‐ June 30, 2022
A. Crystal Grant Budget Allocation (includes Grants plus Annual Administration Fee, Post‐
Installation Inspection Fees and Grant Origination Fees): $275,198$462,000
B. MHFA Interest Subsidy Program Budget Allocation: $32,881
TOTAL PROGRAM BUDGET: $308,079$462,000
Budget Notes:
1. CEE shall submit monthly invoices for grants, origination fees, interest subsidy and post‐
installation inspections for that period.
2. Services performed by CEE will initially be funded from the Total Program Budget as
stated above and paid in accordance with the following schedule.
(1) Annual Administration Fee $2,500 (due July 1st of each year the contract is
active)
(2) Origination Fee: Grant 15% per grant closed
(3) MHFA Interest Subsidy varies
(4) Post‐Installation Inspection Fee $100
3. Marketing
Marketing efforts outside of CEE’s website and loan information are not included in the
administrative budget. Hourly rates are inclusive of all overhead expenses and will be
charged only for hours directly related to the labor of all additional program marketing.
CEE will also be reimbursed by City of Crystal for any non‐labor, out‐of‐pocket expenses
relating to these services on a dollar‐for‐dollar basis.
Exhibit B ‐ #
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Figure A Forecast as of March 2021 based on actual expenditures through 2020
Figure B Forecast as of August 2021 based on actual expenditures in the first half of 2021 with no program changes
Figure C Forecast as of August 2021 based on staff-recommended changes to take effect in 2022
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