05-08-07 Special
CITY OF RICHFIELD, MINNESOTA
TUESDAY, MAY 8,2007
SPECIAL HOUSING AND REDEVELOPMENT AUTHORITY MEETING
RICHFIELD CITY HALL
EXECUTIVE CONFERENCE ROOM
6700 PORTLAND AVENUE
8:00 A.M.
AGENDA
Call to order
Roll call
HRA approval of agenda
1. Consideration of former owner's request to rent and purchase 7422 Fourth Avenue
from the HRA
Staff Report No. 16
Notes:
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.
AGENDA ITEM # 1
REpORT # 16
....
STAFF REpORT
RICHFIELD
I
HOUSING AND REDEVELOPMENT
AUTHORITY MEETING
MAY 8, 2007
REpORT PREPARED By:
BRUCE P ALMBORG, COMMUNITY
DEVELOPMENT DIRECTOR
NAME, TITLE
REpORT PRESENTER:
BRUCE P ALMBORG, COMMUNITY
DEVELOPMENT DIRECTOR
DEPARTMENT DIRECTOR REVIEW:
NAME, TITLE
REVIEWED By EXECUTIVE DIRECT
ITEM FOR HRA CONSIDERATION:
Consideration of a request for the rental and sale of 7422 4th Avenue to the former owner.
1. RECOMMENDED ACTION:
By Motion: Discuss the proposal from the former owner to rent and
purchase 7422 4th Avenue from the Housing and Redevelopment
Authority and direct staff to implement the decision.
I II. BACKGROUND I
The Housing and Redevelopment Authority (HRA) became owner of 7422 4th
Avenue on February 27,2007 as a result of redeeming it from the foreclosure
process. The HRA authorized the action because of its $12,500 lien. The former
owner, Ms. Heidi Stertz has expressed a strong desire to be provided the
opportunity to purchase the property so it may continue to be her residence.
The Certificate of Tittle indicates the first formal notice related to foreclosure was
initiated June 2006 by U.S. Bank. The Sheriff's sale was held on August 17,2006.
A six-month period followed during which the owner could pay the outstanding debt.
The six-month period ended February 17, 2007. The owner did not file a Notice of
Intention to Redeem. The HRA redeemed the property by paying approximately
$121,400.
05080774212 4th Ave
An Unlawful Detainer (UD) was filed to have the former owner vacate the property.
At the hearing on April 4, 2007 a mediated settlement was approved by the Housing
Court. The vacate date was to be May 2,2007. It has been extended to May 9,.
2007 (the ordering of a writ to have the property vacated by the Sheriff is triggered
by a request to the Sheriff to issue the writ).
I III. BASIS OF RECOMMENDATION I
I A. POLICY I
. The HRA adopted a Foreclosure Policy in September 2006. The
possibility that a former owner would request to purchase the property
from the HRA was not anticipated by the policy. (The HRA may wish
to direct staff to prepare a policy or it may wish to handle each case
on its own.)
I B. CRITICAL ISSUES I
. There were several reasons for the HRA to pursue the redemption of
property against which it carried a lien; to protect its existing
investment, to provide funds for housing programs (dollar spread
between costs and sale price), to help maintain owner-occupancy and
affordability including first-time home buyer opportunities.
. The first formal step in the foreclosure process on 7422 4th Avenue
was initiated in June 2006. This step was the result of lack of
mortgage payments.
. In the past, the former owner suffered a work related injury and has
been unemployable for some time.
. As of the writing of this staff report on Wednesday, May 2, a proposal
for renting and purchasing the property has been received from Mr.
Joe Ryan, attorney. It is attached.
. Should there be a sale at a future date an HRA public hearing would
be required.
I C. FINANCIAL I
. It was suggested by staff to the former owner's representatives that
they submit a proposal which includes at least three elements if
relevant to their needs, and also to make the strongest proposal
possible:
If rental
. The rental element should reflect a rent within the market rate range
provided by a real estate appraiser to staff of $1 ,100-$1 ,300 per
month. Also, a performance guarantee would be desirable. The
attached proposal is for rent within that range and rent payment is
guaranteed.
If purchase .
. The proposed purchase price should fall within the range of $130,000 to
$190,000. The strongest position would be to present an executed
Purchase Agreement with an earnest money payment. It would be very
desirable to accompany such a proposal with a letter from an attorney or
other appropriate. professional person with knowledge of the situation
commenting on the prospect of the availability of funding to the former
owner to permit a closing (the $130,000 is the estimate of the cost to the
HRA of the transaction to date, cost to redeem the property and related
fees. The $190,000 is the Assessor's Estimated Market Value for 2007.)
. The aforementioned proposal from Mr. Ryan does address terms of
purchase. However, an assessment of the ability of the former owner to
secure financing is not addressed. That was outside the scope of Mr.
Ryan's responsibility.
. The former owner may present such a letter to the HRA at the meeting on
May 8,2007.
I D. LEGAL I
. The property is owned by the HRA Legal counsel opined that the
HRA when making a decision should consider program objectives.
I IV. ALTERNATIVE RECOMMENDATION(S)
. Delay a decision until a future time.
. Impose additional standards.
I V. ATTACHMENTS
. Proposal letter from Mr. Joe Ryan.
I VI. PRINCIPAL PARTIES EXPECTED AT MEETING I
. The former owner, Ms. Heidi Stertz, family members
. Mr. Joe Ryan, attorney
Joseph D. Ryan
Attorney at Law
2905 West Service Road
Eagan, Minnesota 55121
(612) 683-4730
May 1, 2007
City of Richfield
Housing and Redevelopment Agency
6700 Portland Ave. South
Richfield, MN 55423
Re: Heidi Stertz
Pursuant to discussions with Mr. Bruce Palmborg, I will be attending a special session of the
HRA to be held at 8:00 a.m., Tuesday, May 8, 2007. Heidi Stertz and her parents will also be
attending this meeting.
At this meeting, I intend to make the following proposal to the Agency in furtherance of Heidi's
efforts to remain in her residence on a long term basis:
1. Heidi will remain in the property as a tenant for a period of four (4) months. Mr. David
Ihle (a friend of Heidi's father) will pay the Agency a lump sum of $4,800, which
represents four (4) months rent at $1,200 per month. I anticipate presenting this check
to the Agency during this meeting.
2. During her four (4) months of renting, Heidi shall have the option of purchasing the
property from the Agency for the sum of $130,000. If she elects to exercise her option,
Heidi must do so by presenting the Agency with a written purchase agreement within
the four (4) month period in a form acceptable to the Agency.
If Heidi fails to so exercise her option, she must vacate the premises within fifteen (15) days
notice from the Agency to do so.
I would like to express my appreciation to Mr. Palmborg and involved staff members, for their
consideration in an effort to resolve this most unfortunate circumstance.
Sincerel ,
~'RY~ ~
cc: Heidi Stertz
Roger Stertz
David IWe