10-16-06 Special & Regular
CITY OF RICHFIELD, MINNESOTA
MONDA V, OCTOBER 16, 2006
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SPECIAL CONCURRENT HOUSING AND REDEVELOPMENT AUTHORITY/
COUNCIL CITY/PLANNING COMMISSION MEETING
RICHFIELD CITY HALL
COUNCIL CHAMBERS
6700 PORTLAND AVENUE
5:15 P.M.
Call to order
Roll call
1. Discussion regarding alternative concepts for four housing sites (Council Memo No.
165/HRA Memo No. 34)
Adjournment
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REGULAR HOUSING AND REDEVELOPMENT AUTHORITY MEETING
RICHFIELD CITY HALL
COUNCIL CHAMBERS
6700 PORTLAND AVENUE
7:00 P.M.
AGENDA
Call to order
Roll call
1. Approval of minutes of (1) Special Concurrent HRA/City Council/Planning
Commission Meeting of September 14, 2006; (2) Regular HRA Meeting of
September 18, 2006; and (3) Special HRA Meeting of September 25,2006
Notes:
2. HRA approval of agenda
3. Consent Calendar contains several separate items which are acted upon by
the HRA in one motion. Once the Consent Calendar has been approved, the
individual items and recommended actions hav also been approved. No
further HRA action is necessary. However, any HRA.Commissioner may
request that an item be removed from the Consent Calendar and placed on the
regular agenda for HRA discussion and action. All items listed on the
Consent Calendar are recommended for approval.
A. Consideration of approval of disclosure statement from HRA Commissioner David
Gepner regarding Penn Place Townhouses, LLC S.R. No. 76
Notes:
4. Consideration of resolution regarding reallocation of $200,000 in Community Development
Block Grant rehabilitation funds to property acquisitions activities
Staff Report No. 77
Notes:
5. Consideration of additional revisions to HRA loan subordination guidelines
Staff Report No. 78
Notes:
6. Executive Director report
Notes:
7. Claims ,and payroll
Adjournment
Auxiliary aids for individuals with disabilities are available upon request. Requests must
be made at least 96 hours in advance to the City Clerk at 612-861-9738.
'7\.:...:,
AGENDA ITEM # 3A
REpORT # 76
'v
STAFF REpORT
RICI9FIELD
HOUSING AND REDEVELOPMENT
AUTHORITY MEETING
OCTOBER 16, 2006
REpORT PREPARED By:
STEVEN L. DEVICR, EXECUTIVE DIRECTOR
NAME, TITLE
REVIEWED BY EXECUTIVE DIRECTOR:
EVICR, EXECUTIVE DIRECTOR
REpORT PRESENTER:
DEPARTMENT DIRECTOR REVIEW:
ITEM FOR HRA CONSIDERATION:
Consideration of the disclosure statement from HRA Commissioner David Gepner regarding
Penn Place Townhouses, LLC
I. RECOMMENDED ACTION:
By Motion: Accept the disclosure statement from HRA Commissioner
David Gepner regarding Penn Place Townhouses, LLC.; and direct
that the disclosure statement be entered into the minutes.
I II. BACKGROUND I
HRA Commissioner David Gepner has submitted the attached disclosure statement
related to the Penn Place Townhouses, LLC at 69th Street and Penn Avenue.
According to Minnesota Statutes, the disclosure statement is to be entered into the
minutes.
I III. BASIS OF RECOMMENDATION I
I A. POLICY I
. According to Minnesota Statutes, the disclosure statement is to be
entered into the minutes.
1016Gepner
I B. CRITICAL ISSUES
. N/A
I C. FINANCIAL
. N/A
I D. LEGAL I
. According to Minnesota Statutes, the disclosure statement is to be
entered into the minutes.
I IV.
ALTERNATIVERECOMMENDATION(S) I
. Do not accept Mr. Gepner's disclosure statement.
Iv.
ATTACHMENTS
. Disclosure statement.
I VI.
"
PRINCIPAL PARTIES EXPECTED AT MEETING
. None.
3 Pt-\
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lx,\\,x",,, "...EIVED
OCT 0 4 2006
~X~=~_:,:,:o=:o-~'''_._.. .....-.._..:...
DISCLOSURE STATEMENT
TO: Commissioners and Executive Director
FROM: David Gepner, lIRA Commissioner
DATE: September 29,2006
I am submitting this disclosure statement as a result of advice that I sought from the
attorney for the lIRA and received earlier this week.
In accordance with those conversations, I hereby make the following disclosure:
I a~ a principal of Penn Place Townhouses, LLC which is the developer oflands
within the area of operation of the Richfield Housing and Redevelopment
Authority. The development results from a Contract for Private Redevelopment
entered into between Penn Place Townhouses and the lIRA dated as of November
18,2002 three years before my December 2005 appointment to the lIRA. The
Contract has recently been amended and remains in effect. There are no further
matters relating to that development currently pending before the lIRA, or
contemplated. However, the contract is ongoing, and the HRA will continue to be
involved in monitoring contract compliance.
It is requested that this disclosure be shown in the minutes of the October 16, 2006
meeting.
JP ....
David Gepn~
ffiD-16:l755
MU200-79
AGENDA ITEM # 4
REpORT # 77
~
STAFF REpORT
RICHFIELD
HOUSING AND REDEVELOPMENT
AUTHORITY MEETING
OCTOBER 16, 2006
REpORT PREPARED By:
~RUCE NORDQUIST, HOUSING AND
REDEVELOPMENT MANAGER
NAME, TITLE
REpORT PRESENTER:
BRUCE NORDQUIST, HOUSING AND
REDEVELOPMENT 11ANAGER
NAME, TITLE
DEPARTMENT DIRECTOR REVIEW:
REVIEWED BY EXECUTIVE DIRECTOR.
ITEM FOR HRA CONSIDERATION:
Consideration of a resolution regarding programming Federal Community Development Block
Grant funds for property acquisition. '
I. RECOMMENDED ACTION:
By Motion: Approve the resolution reallocating $200,000 in
Community Development Block Grant Rehabilitation Funds to
property acquisition activities. \
I II. BACKGROUND I
In 2008, the partnership of the U.S. Department of Housing and Urban
Development (HUD), Hennepin County, the City of Richfield and the Richfield
Housing and Redevelopment Authority (HRA) will reach 30 years of administering
Federal Community Development Block Grant (CDBG) programs. Two of the
HRA's core programs have beEm available during that time:
. The Deferred Rehabilitation Loan Program; funding repairs of homes
owned by low income families and elderly.
. The New Home Program; the acquisition and clearance of substandard
homes followed by the construction of new homes for first time buyers
with lower incomes.
101606 CDBG
The HRA has recently been approached by willing sellers interested in selling their
substandard homes. To provide sufficient funding, it is proposed that Rehabilitation
Program funds be used for affordable new home development.
Every year during February, the HRA and City consider CDBG funding for housing
purposes. About $200,000 is available annually for housing. The last two years,
due to federal funding cuts, it was determined to prioritize rehabilitation:
. Substandard homes had not been recently offered to the HRA.
. The cost of acquisition had risen such that CDBG funding was insufficient
to fund both acquisition and rehabilitation.
. Staff was directed to identify other sources of funds for acquisition.
However, this fall:
. Approximately four owners have made contact with the HRA and are
considering selling.
. In 2006 the HRA has received approximately $100,000 in repayment of
past Rehabilitation Loans. The funds are automatically added to the
rehabilitation program.
. Rehabilitation needs, approximately 20 clients, are being fully funded and
there are sufficient resources for additional assistance prior to receiving a
new allocation of CDBG funds in 2007.
. Hennepin County and Habitat for Humanity have identified resources that
could be combined with CDBG to cover the cost of acquisition, allowing
two or three of the property offers to be purchased.
The shifting of funds between two program areas, called reprogramming is allowed
by HUD and Hennepin County following consideration at an HRA and City Council
meeting. A public hearing is not required.
I III. BASIS OF RECOMMENDATION I
I A. POLICY I
. The HRA has agreements with the City, Hennepin County, and HUD
to receive CDBG funds for housing program purposes.
. A process established by HUD allows the funds to be shifted from a
rehabilitation program to a property acquisition program upon review
by the HRA, City Council and Hennepin County.
. An opportunity to fund the acquisition of property and develop new
homes for first time buyers is an eligible use of funds if resources are
sufficient to also meet rehabilitation needs.
. In the past, the HRA administered both activities on an annual basis.
lB. CRITICAL ISSUES I
. The City Council and Hennepin County are scheduled to consider the
proposal in November should the HRA respond favorably.
. CDBG resources have been insufficient the last two years to budget to
acquire substandard properties for the New Home Program.
. Reprogramming provides sufficient resources without impacting
present needs.
. The timely expenditure of CDBG funds is an administrative
requirement. With the recent loan repayments now made available,
the funds would be used promptly by reprogramming.
I C. FINANCIAL I
. The HRA budget plans for both Rehabilitation and New Home
Program activities in 2007.
. The additional resources made available by reprogramming for
property acquisition will allow some of that activity to begin in late
2006.
. Rehabilitation needs of present clients and anticipated clients can be
fully met.
I D. LEGAL I
. The contracts and HUD procedures allow reprogramming.
. The process of reprogramming does not require a public hearing.
I IV. ALTERNATNE RECOMMENDATION(S) I
. Do not approve of the reprogramming of funds.
. Transfer more or less funds. However, this would leave the Rehabilitation or
New Home Programs short of the amount of funds needed.
. Delay consideration.
I V. ATTACHMENTS
. Resolution.
I VI. PRINCIPAL PARTIES EXPECTED AT MEETING
. N/A
L-\-\
RESOLUTION NO.
RESOLUTION TO REALLOCATE URBAN HENNEPIN COUNTY COMMUNITY
DEVELOPMENT BLOCK GRANT FUNDS AND REQUEST EXECUTION OF ANY
AGREEMENTS
WHEREAS, the Housing and Redevelopment Authority of the City of Richfield,
Minnesota (HRA), through City of Richfield Agreements with Hennepin County, is a
subrecipient of the Urban Hennepin County Community Development Block Grant
Program; and
WHEREAS, pursuant to the Subrecipient Agreement between the City of Richfield
and Hennepin County, the HRA agrees to assume certain responsibilities for the utilization
of Community Development Block Grant funds; and
WHEREAS, the HRA of Richfield would now like to reallocate Community
Development Block Grant funds previously allocated to the city pursuant to the
Subrecipient Agreement.
BE IT RESOLVED, that the Housing and Redevelopment Authority in and for the
City of Richfield, Minnesota approves the reallocation of Community Development Block
Grant funds by reallocating $200,000 from the Rehabilitation project and allocating
$200,000 to the New Scattered Site project(s); and
BE IT FURTHER RESOLVED, that the HRA requests the Richfield City Council to
authorize and direct the Mayor and its City Manager to execute any required Agreements
on behalf of the HRA, if such agreements are required.
Adopted by the Housing and Redevelopment Authority in and for the City of Richfield,
Minnesota this 16th day of October, 2006.
Suzanne M. Sandahl, Chair
ATTEST:
Donna Drummond, Secretary
AGENDA ITEM # 5
REpORT # 78
~
STAFF REpORT
RICHFIELD
HOUSING AND REDEVELOPMENT
AUTHORITY MEETING
OCTOBER 16, 2006
REpORT PREPARED By:
BRUCE NORDQUIST, HOUSING AND
REDEVELOPMENT~NAGER
NAME, TlTLE
REpORT PRESENTER:
BRUCE NORDQUIST, HOUSING AND
REDEVELOPMENT MANAGER
DEPARTMENT DIRECTOR REVIEW:
NAME, TITLE
REVIEWED BY EXECUTIVE DIRECTOR:
ITEM FOR HRA CONSIDERATION:
Additional revisions to the Housing and Redevelopment Authority loan subordination
guidelines.
l. RECOMMENDED ACTION:
By Motion: Authorize subordinations where the client is refinancing
existing mortgages senior to the Housing and Redevelopment
Authority debt but not increasing the amount of debt.
I II. BACKGROUND I
In August the Housing and Redevelopment Authority (HRA) modified the guidelines
for subordination.
The present guideline is:
. The loan-to-value ratio is 85 percent and below with the following additional
criteria: 1) the overall value of superior debt must not be increased by more than
. 50 percent and 2) the proposed mortgage cannot be a line-of-credit, reverse
mortgagee, interest-only loan, or any loan presenting the borrower with an
interest only option.
The previous guideline was:
101606 HRA Loan
. If the combined loan-to-value ratio is under 100 percent, the subordination
request is approved. If the combined loan-to-value ratio is 100 percent or
above, the request is denied.
Many loans were originated or subordinated with this higher ratio.
Instances have arisen where a client, in seeking to refinance an adjustable rate mortgage
to a fixed rate, has found that they have to immediately payoff their HRA loan to meet the
85 percent loan to value ratio. This loan may have been secured very recently.
It is recommended that the following additional criteria be added to the guideline:
.1) The overall value of superior debt must not be increased by more than 50
percent.
2) The proposed mortgage cannot be a line-of-credit, reverse mortgagee,
interest-only loan, or any loan presenting the borrower with an interest
only option.
3) If the loan to value is under 100 percent and existing mortgages senior to
the HRA debt are being refinanced but the amount of debt is not being
increased, the subordination will be allowed.
I III. BASIS OF RECOMMENDATION I
IA. POllCY I
. The recent policy change did not provide a way to respond to
recipients of loans at higher loan to value ratios seeking reduced
interest rates that would lower housing cost and not increase debt.
I B. CRITICAL ISSUES I
. Holders of adjustable rate mortgages are seeing rapid increases in
interest rates.
. The HRA did not intend to require repayment of loans by lower income
households that are refinancing to reduce housing costs and not
increase debt.
I C.. FINANCIAL I
. The HRA's indebtedness remains secure and financial obligations do
not increase above the amount the HRA originally approved.
I D. LEGAL I
. This is an administrative change that does not require further legal
action.
I IV. ALTERNATIVE RECOMMENDATION(S) I
. Do not approve of the proposed addition to the subordination guideline.
. Modify the guideline further.
I V. ATTACHMENTS
. N/A
I VI. PRINCIPAL PARTIES EXPECTED AT MEETING
. N/A