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parking lots unless 15 percent of the area of the parcel contains building, streets, utilities, <br />or paved or gravel parking lots." <br />B. Condition of Buildings Test <br />..."and more than 50 percent of the buildings, not including outbuildings, are structurally <br />substandard to a degree requiring substantial renovation or clearance;" <br />1. Structurally substandard is defined under Minnesota Statutes, Section 469.174, <br />Subdivision 10(b), which states: "For purposes of this subdivision, `structurally <br />substandard' shall mean containing defects in structural elements or a combination of <br />deficiencies in essential utilities and facilities, light and ventilation, fire protection <br />including adequate egress, layout and condition of interior partitions, or similar <br />factors, which defects or deficiencies are of sufficient total significance to justify <br />substantial renovation or clearance." <br />Definition of Substantial Renovation <br />Because "Substantial renovation" can mean different things to different people, LHB <br />has attempted to clarify exactly what we consider to be "substantial renovation" as it <br />relates to Minnesota Statutes, Section 469.174, Subdivision 10(a) (1). <br />a. First we researched national standards as to how much building owners should <br />budget for annual maintenance and repair on their buildings as a percentage of <br />replacement cost of the building. <br />1. According to the University of California "Facilities Renewal Budget <br />Model" report of 1999, building owners should budget between two and <br />three percent of current replacement value of their buildings for maintenance <br />and repair work. This does not include routine janitorial work and routine <br />items such as changing light bulbs and filters. <br />2. According to the Building Research Board of the National Research Council, <br />one and one-half to three percent of a building's replacement value should be <br />budgeted for maintenance and repair. <br />b. Based on this information, LHB utilized two and one-half percent as the desired <br />amount of maintenance and repair that should be budgeted annually to keep a <br />building in good working condition. We recognize through experience that only <br />a small percentage of sophisticated building owners actually budget for and <br />spend this amount of money every year on maintenance and repair. This is <br />because most business owners are driven by other budgetary issues and tend to <br />neglect the building maintenance and repair line items in their annual budgets. <br />c. By establishing how much a building owner should be budgeting per year for <br />maintenance and repairs, LHB is of the opinion that we could more easily <br />establish an amount that would be considered "substantial" in comparison. If an <br />owner is budgeting 2.5 percent of the building's replacement cost annually, most <br />Page 5 <br />