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042114CompleteAgenda CITY OF RICHFIELD, MINNESOTA MONDAY, APRIL 21, 2014 RICHFIELD MUNICIPAL CENTER 6700 PORTLAND AVENUE ******************************************************************************************************* REGULAR HOUSING AND REDEVELOPMENT AUTHORITY MEETING COUNCIL CHAMBERS 7:00 P.M. AGENDA Call to order 1. Approval of the minutes of the (1) Special Concurrent HRA/City Council/Planning Commission Worksession of March 17, 2014 and (2) Regular HRA Meeting of March 17, 2014 2. HRA approval of the 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 have also been approved. No further HRA action on these items 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 the approval of the adjustment of payment standard for the Section 8 Rent Assistance program S.R. No. 15 B. Consideration of the approval of a resolution authorizing the Executive Director and HRA Chair to execute instruments necessary to purchase three to four vacant and foreclosed houses using up to $300,000 from the Housing and Redevelopment Fund through December 31, 2014 S.R. No. 16 C. Consideration of the approval of the use of funds budgeted for the Home Energy Squad Enhanced Program to write down the cost of home energy visits for qualified low-income households S.R. No. 17 D. Consideration of the approval of a resolution authorizing the purchase of real property located at 7029 Nicollet Avenue South through the Richfield Rediscovered Program S.R. No. 18 Notes: ___________________________________________________________________ _________________________________________________________________________ _________________________________________________________________________ 4. Consideration of granting authorization to the HRA Executive Director to execute documents releasing the Minimum Assessment Agreement for eligible housing units in the Kensington Park Development Staff Report No. 19 Notes: ___________________________________________________________________ _________________________________________________________________________ _________________________________________________________________________ 5. Consideration of program guidelines for the Rental-to-Homeownership Program Staff Report No. 20 Notes: ___________________________________________________________________ _________________________________________________________________________ _________________________________________________________________________ 6. Consideration of authorization to designate five lots purchased under the New Home Program as Richfield Rediscovered Program lots Staff Report No. 21 Notes: ___________________________________________________________________ _________________________________________________________________________ _________________________________________________________________________ 7. Consideration of adoption of a Senior Housing Policy to assist in guiding future senior housing development in the City of Richfield Staff Report No. 22 Notes: ___________________________________________________________________ _________________________________________________________________________ _________________________________________________________________________ 8. HRA discussion items Notes: ___________________________________________________________________ _________________________________________________________________________ _________________________________________________________________________ 9. Executive Director Report Notes: ___________________________________________________________________ _________________________________________________________________________ _________________________________________________________________________ 10. 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. HOUSING AND REDEVELOPMENT AUTHORITY MEETING MINUTES gC�‘ceed Richfield, Minnesota e Special HRA/City Council/Planning Commission Worksession March 17, 2014 CALL TO ORDER The meeting was called to order by Chair Sandahl at 6:00 p.m. in the Bartholomew Room. ROLL CALL HRA Members Sue Sandahl, Chair, Doris Rubenstein; Mary Supple; Debbie Goettel and Present: David Gepner (arrived 6:30). Council Members Debbie Goettel, Mayor; Pat Elliott; Sue Sandahl; and Edwina Garcia. Present: Council Members Tom Fitzhenry. Absent: Planning Commission Rick Jabs, Chair; Daniel Kitzenberger; Susan Rosenberg; and Charles Members Present: Standfuss. Planning Commission Josh Root; Gordon Vizecky; and Tom Rublein. Members Absent: Staff Present: Steven L. Devich, City Manager/Executive Director; John Stark, Community Development Director; Karen Barton, Assistant Community Development Director; and Theresa Schyma, Deputy City Clerk. Item #1 PRESENTATION AND DISCUSSION OF THE SENIOR HOUSING DEMAND ASSESSMENT (HRA MEMO NO. 14/COUNCIL MEMO NO. 31) Community Development Director Stark introduced the presenter and explained that there is a correction to Council Memo No. 31/HRA Memo No. 14 in that there are currently eight memory care units in Richfield. Mary Bujold, Maxfield Research, Inc., presented the Senior Housing Demand Assessment. Ms. Bujold stated that there is an unmet demand for rental independent living units, assisted living units and memory care units. Furthermore, the assessment concludes that there is a substantial unmet demand for affordable senior housing. However, she also cautioned that developing affordable senior housing is extremely challenging due to high costs and limited funding sources. Special Worksession Minutes -2- March 17, 2014 Community Development Director Stark stated that during the past several years, developers have continued to express an interest in building senior housing developments in Richfield. This study was conducted to help give direction to interested developers on what Richfield's vision is regarding future housing developments. Ms. Bujold identified that diversity in housing stock is good for a community. After considerable discussion, HRA Chair Sandahl stated the worksession needed to conclude due to the start of the Regular HRA Meeting at 7 p.m. Based on the discussion tonight and the meeting next month of the Richfield Housing Visioning Task Force, staff will make recommendations as to the next steps on the assessment. ADJOURNMENT The meeting was adjourned by unanimous consent at 6:59 p.m. Date Approved: April 21, 2014. Suzanne M. Sandahl Chair Theresa Schyma Steven L. Devich Deputy City Clerk Executive Director HOUSING AND REDEVELOPMENT AUTHORITY MEETING MINUTES GC wed Richfield, Minnesota Regular Meeting March 17, 2014 CALL TO ORDER The meeting was called to order by Chair Sandahl at 7:04 p.m. ROLL CALL HRA Members Sue Sandahl, HRA Chair; Doris Rubenstein; David Gepner; Mary Present: Supple and Debbie Goettel. Staff Present: Steven L. Devich, Executive Director; John Stark, Community Development Director; Karen Barton, Assistant Community Development Director; and Theresa Schyma, Deputy City Clerk. Item #1 APPROVAL OF MINUTES OF THE (1) REGULAR HRA MEETING OF JANUARY 22, 2014 AND (2) REGULAR HRA MEETING OF FEBRUARY 18, 2014. M/Gepner, S/Rubenstein to approve the minutes. Motion carried 5-0. Item #2 HRA APPROVAL OF AGENDA M/Sandahl, S/Supple to approve the agenda. Motion carried 5-0. Item #3 PUBLIC HEARING REGARDING A RESOLUTION AUTHORIZING THE SALE OF 7312 AND 7316 CLINTON AVENUE TO THE GREATER METROPOLITAN HOUSING CORPORATION FOR THE CONSTRUCTION OF TWO SINGLE-FAMILY HOMES THROUGH THE NEW HOME PROGRAM S.R. NO. 14 Assistant Community Development Director Barton presented HRA Staff Report No. 14. Commissioner Rubenstein asked how much was paid for by Community Development Block Grants (CDBG.) HRA Meeting -2- March 17,2014 Assistant Community Development Director Barton responded that the lots were purchased for$150,000 and CDBG paid $35,000 of that price. Commissioner Goettel asked if the handicapped accessible home would stay affordable if the resident moved. Assistant Community Development Director Barton responded that yes, the house would go into perpetuity. Tom Alagna, speaking on behalf of his father who lives at 7320 Clinton Avenue, had questions regarding the HRA subsidization, who profits if the house is sold for a major gain, and the construction timetable and disruption of services for neighbors. Assistant Community Development Director Barton responded that the HRA will be subsidizing the lots to make them affordable. If the resident decides to sell the house, typically there is a soft second mortgage to pay back the difference and anything gained in value would be shared. Also, notices will be sent out to all surrounding neighbors with contact information. M/Sandahl, S/Goettel to close the public hearing,. Motion carried 5-0. Chair Sandahl requested clarification as to the determination of real estate taxes. Assistant Community Development Director Barton responded that real estate taxes are based on the value of the home. M/Goettel, S/Rubenstein that the following resolution be approved: HRA RESOLUTION NO. 1179 RESOLUTION AUTHORIZING SALE OF REAL PROPERTY LOCATED AT 7312 AND 7316 CLINTON AVENUE TO THE GREATER METROPOLITAN HOUSING COPRPORATION IN ACCORDANCE WITH A CONTRACT FOR DEVELOPMENT Motion carried 5-0. This resolution appears as HRA Resolution No. 1179. Item #4 HRA DISCUSSION ITEMS Commissioner Goettel stated that the Special HRA/City Council/Planning Commission worksession on senior housing was very enlightening and she would like to see a similar study for market rate housing. Item #5 EXECUTIVE DIRECTOR REPORT None. Item #6 CLAIMS AND PAYROLL M/Sandahl, S/Rubenstein that the following claims and payrolls be approved: HRA Meeting -3- March 17,2014 U.S. BANK 03/17/14 Section 8 Checks: 124603 - 124715 $ 163,490.40 HRA Checks: 31945 - 31958 $ 35,955.84 TOTAL $ 199,446.24 Motion carried 5-0. ADJOURNMENT The meeting was adjourned by unanimous consent at 7:19 p.m. Date Approved: April 21, 2014 Suzanne M. Sandahl HRA Chair Theresa Schyma Steven L. Devich Deputy City Clerk Executive Director AGENDA ITEM#: 3A REPORT#: 15 =Ail STAFF REPORT RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY MEETING APRIL 21, 2014 REPORT PREPARED BY: LYNNETTE CHAMBERS, MULTIFAMILY HOUSING COORDINATOR NAME,TITLE REPORT PRESENTER: KAREN BARTON,ASSISTANT COMMUNITY DEVELOPMENT DIRECTOR NAME,TITLE DEPARTMENT DIRECTOR REVIEW: (2:1 A640 ilit1/4' .0","/...-_,,..,,rf REVIEWED BY EXECUTIVE DIRECTOR: 0-ill AS,/ di / ITEM FOR HRA CONSIDERATION: Consideration regarding a proposed adjustment of payment standard for the Section 8 Rent Assistance program. I. RECOMMENDED ACTION: By Motion: Approve the attached adjustment of payment standard for the Section 8 Rent Assistance program. II. BACKGROUND The Section 8 program is administered in accordance with the Housing and Redevelopment Authority's (HRA) Administrative Plan. According to the plan and the Department of Housing and Urban Redevelopment (HUD) regulation, the voucher program provides financial assistance based on unit bedroom size. Clients pay a minimum of 30 percent of their income towards rent. On an annual basis HUD establishes a Fair Market Rent (FMR). The allowable FMR is expressed as a specific percentile point within the rent distribution of standard-quality rental housing units. Individual HRA's are allowed to select a payment standard within 90% to 110% of HUD's FMR. The selection of the payment standard should assure that a sufficient supply of rental housing is available to program participants. The Richfield HRA conducts a rental survey on an annual basis to help in determining an appropriate 04212014 Section 8 Payment Standards payment standard. Currently, the survey results indicate that the Richfield HRA should adopt a payment standard that is 100% of the FMR established by HUD. The new payment standards are effective June 1, 2014. The attached table (Attachment A) clarifies the changes being proposed. The last adjustment made by the HRA was in February 1, 2013. III. BASIS OF RECOMMENDATION A. POLICY • The HRA must approve increases in the payment standard for the Section 8 program. • Section 8 participants will be able to choose from a larger selection of affordable housing units and may receive some immediate rent relief on a case by case basis. • HUD provides sufficient federal assistance to cover these adjustments in the payment standards and has approved the increase. • Without an increase in the payment standard many Section 8 participants will be unable to find housing and keep up with changing rents. • Potential changes in Federal law impact the financial resources available to the program if the HRA does not remain current with the FMR. B. CRITICAL TIMING ISSUES • N/A C. FINANCIAL • An increase in the payment standard will decrease the rent burden for Section 8 participants. • HUD provides sufficient funding to cover the increase. D. LEGAL • The contract between the HRA and HUD provides for FMR adjustments in accordance with federal regulations. IV. ALTERNATIVE RECOMMENDATION(S) • Do not change the payment standard at this time; however, HUD guidelines suggest an adjustment is needed. V. ATTACHMENTS • Attachment A, proposed modifications to voucher program. VI. PRINCIPAL PARTIES EXPECTED AT MEETING • N/A Attachment A Current Payment Standard O BDR 1 BDR 2 BDR 3 BDR 4 BDR BDR 608 756 946 1332 1573 1714 Payment Standard Proposed - Effective June 1, 2014 O BDR 1 BDR 2 BDR 3 BDR 4 BDR 5 BDR 608 760 975 1340 1580 1720 AGENDA ITEM#: 3B REPORT#: 16 STAFF REPORT eee"' HOUSING AND REDEVELOPMENT AUTHORITY MEETING APRIL 21, 2014 REPORT PREPARED BY: JULIE URBAN/KATE AITCHISON,HOUSING SPECIALISTS NAME,TITLE REPORT PRESENTER: KAREN BARTON, ASSISTANT COMMUNITY DEVELOPMENT DIRECTOR 111116■__ NAME,TITLE DEPARTMENT DIRECTOR REVIEW: ��� I ArD Al i REVIEWED BY EXECUTIVE DIRECTOR: FA I / i / ITEM FOR HRA CONSIDERATION: Consideration of a resolution authorizing the Executive Director and Housing and Redevelopment Authority Chair to execute instruments to purchase vacant and foreclosed properties using the Housing and Redevelopment Fund. I. RECOMMENDED ACTION: By Motion: Approve a resolution authorizing the Executive Director and Housing and Redevelopment Authority Chair to execute instruments necessary to purchase three to four vacant and foreclosed houses using up to $300,000 from the Housing and Redevelopment Fund through December 31, 2014. II. EXECUTIVE SUMMARY Annually, the Housing and Redevelopment Authority (HRA) budgets funds to purchase properties to further the Richfield Rediscovered Program by removing small, substandard, obsolete, or dilapidated homes and then replacing them with new homes. The current housing market offers various opportunities for the HRA to purchase properties at reasonable prices for this program. The market of vacant and foreclosed properties is competitive, and flexibility to respond quickly is important. Lenders and other non-profits enforce strict timelines and require a response to purchase within days. 04212014 Foreclosure Purchase Authorityxxx Staff is proposing to extend the authorization through 2014 to allow the Executive Director and HRA Chair the authority to acquire foreclosed properties meeting the following parameters, without obtaining prior HRA approval for each property: • The property is foreclosed or vacant; • The property is blighted (as defined and required by the regulations governing the Housing and Redevelopment Fund); • Prior to acquisition, staff establish an appropriate sale price based on recent sales activity and/or assessed value and housing condition; and • Expenditures for all properties do not exceed a total of$300,000. Staff will continue to report back to the HRA each month with a status of acquisition activity. III. BASIS OF RECOMMENDATION A. BACKGROUND • The HRA authorized the Executive Director and HRA Chair to execute instruments necessary to purchase vacant and foreclosed houses in 2010, 2011, 2012, and 2013. B. POLICY • It is in the best interest of the City to ensure neighborhood stability and reduce blight. • Through the City's Richfield Rediscovered program, the HRA purchases and removes substandard and functionally obsolete housing and replaces it with newer, higher valued homes. • The 2008-2018 Richfield Comprehensive Plan states as policy: o Encourage the creation of"move-up" housing through new construction and home remodeling. o Promote the development of a balanced housing stock that is available to a range of income levels. C. CRITICAL TIMING ISSUES • Richfield has suffered a significant number of foreclosures since 2008. While the inventory has decreased significantly, there continues to be opportunities to purchase foreclosed properties. • Neighborhoods in which there are one or more foreclosed and vacant homes have detrimental impacts on the surrounding property values. • In addition to being in poor condition, some foreclosed properties have function, layout, size and other issues that make them candidates for the Richfield Rediscovered program. • The Richfield Rediscovered program funds can be used to purchase vacant and foreclosed properties to accomplish HRA goals throughout the City of Richfield. • Authorization to utilize these two HRA programs would be limited to purchasing vacant and foreclosed properties only. If other purchasing opportunities arise, staff would seek an approved Purchase Agreement by the HRA before moving forward with purchasing activities. D. FINANCIAL • The 2014 budget designates $300,000 for acquisition activities under the Richfield Rediscovered program. • Funding for this program is allocated through the HRA Housing and Redevelopment Fund. • Total acquisition expenditures will not exceed the budgeted amount of $300,000. E. LEGAL • Legal counsel prepared the resolution. IV. ALTERNATIVE RECOMMENDATION(S) • Do not extend the authorization for the Executive Director and HRA Chair to execute agreements to purchase foreclosed homes. V. ATTACHMENTS • Resolution VI. PRINCIPAL PARTIES EXPECTED AT MEETING • N/A • RESOLUTION NO. RESOLUTION AUTHORIZING THE HOUSING AND REDEVELOPMENT AUTHORITY STAFF TO ACQUIRE CERTAIN FORECLOSED HOMES WITHIN THE CITY AND TO EXECUTE ALL INSTRUMENTS AND CONTRACTS RELATED THERETO WHEREAS, pursuant to Minnesota Statutes, Sections 469.001 to 469.047 (the "HRA Act") the City Council of the City of Richfield, Minnesota (the "City") has created the City of Richfield Housing and Redevelopment Authority (the "HRA") and provided it with the powers and duties of the HRA Act; and WHEREAS, the HRA Act authorizes the HRA to acquire, improve, own, hold, sell, lease, exchange, transfer, assign, pledge or dispose of any real or personal property; and WHEREAS, the HRA has undertaken a multi-faceted response to the impact of the foreclosure crisis on the community involving the use of the Housing and Redevelopment Fund to acquire and demolish substandard, vacant, foreclosed single family homes; and WHEREAS, in order to expand the effectiveness of the Program the HRA wishes to directly purchase certain foreclosed properties to demolish and hold the lots for future development; and WHEREAS, it is the desire of the HRA Board of Commissioners to establish certain parameters for such acquisitions and to authorize its Executive Director and HRA Chair to proceed therewith without specific Board approval of each transaction. NOW, THEREFORE, BE IT RESOLVED by the City of Richfield Housing and Redevelopment Authority: 1. That the Executive Director and HRA Chair, with the assistance of HRA legal counsel, is hereby authorized to enter into purchase agreements and acquire in the name of the Authority up to four (4) single family, vacant, foreclosed homes (the "Properties") on the conditions that: (a) The Properties are each acquired with the Housing and Redevelopment Fund; (b) Each Property is a foreclosed property acquired from a lender or a lender's designee; (c) The Properties have been vacant for at least 90 days prior to entering into a Purchase Agreement; (d) The Property is determined to be blighted as required by Housing and Redevelopment Fund regulations; (e) Prior to each acquisition staff establish an appropriate sale price based on reasonable conditions; (f) The total expenditures on all properties does not exceed $300,000; and (g) Prior to the acquisition of each property staff conducts appropriate due diligence to protect the HRA's interest. 2. That the Executive Director and HRA Chair are authorized to execute such documents as shall be required in order to carry out the delegation provided in paragraph 1 hereof. 3. That the Executive Director shall report the acquisition of any Property pursuant to this Resolution at the next regular HRA meeting. 4. That disposition of acquired Properties shall be only by action of this Board. 5. That the authority granted hereby shall expire on December 31, 2014. Adopted by the Richfield Housing and Redevelopment Authority of the City of Richfield, Minnesota this 21st day of April, 2014. Suzanne M. Sandahl, Chair ATTEST: Doris Rubenstein, Secretary AGENDA ITEM#: 3C REPORT#: 17 STAFF REPORT ee eed HOUSING AND REDEVELOPMENT AUTHORITY MEETING APRIL 21, 2014 REPORT PREPARED BY: JULIE URBAN/KATE AITCHISON,HOUSING SPECIALISTS NAME,TITLE REPORT PRESENTER: KAREN BARTON, ASSISTANT COMMUNITY DEVELOPMENT DIRECTOR bilasiti,a.....NAME,TITLE DEPARTMENT DIRECTOR REVIEW: ,/r/y ir SP ., REVIEWED BY EXECUTIVE DIRECTOR: gAi , . , , ,_. , , , ....... . _ ITEM FOR HRA CONSIDERATION: Consideration of the use of funds budgeted for the Home Energy Squad Enhanced Program to write down the cost of home energy visits for qualified low-income households. I. RECOMMENDED ACTION: By Motion: Approve the use of funds budgeted for the Home Energy Squad Enhanced Program to write down the cost of home energy visits for qualified low-income households. II. EXECUTIVE SUMMARY The Housing and Redevelopment Authority (HRA) partners with the Center for Energy and Environment (CEE), Centerpoint Energy, and Xcel Energy to offer low- cost energy visits to Richfield residents. The program reduces energy use and environmental impact and saves homeowners money by making it as easy as possible for them to make energy-efficient improvements to their homes. The HRA pays $70 toward the visit, homeowners pay $50, and the utility companies cover the remaining cost. In order to ensure that the program is accessible to all Richfield households, staff is recommending that CEE offer the visit at zero-cost to households earning less than 80 percent of the area median income and experiencing financial hardship. 04212014 Home Energy Squad Write-Down.docx One of the benefits of the audit program is reduced utility costs, which makes housing costs more affordable. It is appropriate to ensure that all households have access to this opportunity regardless of household income. The reduced energy costs can have a significant impact on households with limited financial resources. III. BASIS OF RECOMMENDATION A. BACKGROUND • On January 23, 2013, the HRA approved a consulting contract with CEE to offer the Home Energy Squad Enhanced Program to Richfield residents for $50 a visit. • The Home Energy Squad Enhanced Program provides homeowners with the opportunity to save both money and energy. The Program includes the following components: o home energy visits, o direct installation of energy-saving products (e.g. programmable thermostats, weather stripping, low-flow showerheads, faucet aerators), o optional workshops, o identification of major efficiency upgrades, o follow-up assistance to homeowners to complete and finance major efficiency upgrades; and o training and quality assurance for insulation and air sealing contractors. • CEE currently offers the program at zero-cost in other participating cities to households earning less than 80 percent of the Twin Cities Area Median Income ($63,900 for a family of four) and for whom the cost of the visit is a financial hardship. • The federal Low Income Home Energy Assistance Program (LIHEAP) can offer some weatherization services to households earning less than 50 percent of the AMI. CEE refers clients to this program when appropriate. • In 2013, 243 households participated in the program and saved an average of$110 per household in energy costs. • Other metro communities offering Home Energy Squad programs also write down the cost of the home visit for residents experiencing financial hardship. • In an effort to make the program accessible to all Richfield residents, the HRA and CEE are working with the Neighborhood Development Alliance to promote the program to Spanish-speaking residents. B. POLICY • The program furthers the following goals of the City's Comprehensive Plan: o Support the rehabilitation and upgrading of the existing housing stock. • o Support ongoing maintenance and upkeep of residential properties. o Promote the maintenance of affordable housing in the City. • Ensuring that homeowners can afford utility costs and make upgrades to their homes provides stabilizes and strengthens neighborhoods. • The HRA goals call for the development of a pilot program to encourage energy efficiency in home improvements. C. CRITICAL TIMING ISSUES • CEE can begin offering zero-cost visits following HRA approval. D. FINANCIAL • The HRA pays $70 toward each energy visit and homeowners pay $50 per visit. There is $20,000 budgeted for the Home Energy Squad Enhanced program for 2014, which provides for 285 visits. • If the HRA pays $120 for visits to income-qualified households, CEE can provide between 166 and 285 visits in Richfield. • One of the benefits of the audit program is reduced utility costs, which makes housing costs more affordable. It is appropriate to ensure that all households have access to this opportunity regardless of household income. The reduced energy costs can have a significant impact on households with limited financial resources. E. LEGAL • The Center for Energy and Environment requires a letter of request from the HRA in order to begin offering the program at no cost. IV. ALTERNATIVE RECOMMENDATION(S) • Do not approve the use of funds to write down the cost of the program. V. ATTACHMENTS • N/A VI. PRINCIPAL PARTIES EXPECTED AT MEETING • N/A AGENDA TTEM#: 3D REPORT#; 18 STAFF REPORT e6414ece HOUSING AND REDEVELOPMENT AUTHORITY MEETING APRIL 21, 2014 REPORT PREPARED BY: JULIE URBAN/KATE AITCHISON,HOUSING SPECIALIST NAME,TITLE REPORT PRESENTER: KAREN BARTON, ASSISTANT COMMUNITY DEVELOPMENT DIRECTOR AILNAME,TITLE DEPARTMENT DIRECTOR REVIEW: El le' Oi �EI? REVIEWED BY EXECUTIVE DIRECTOR: / , / ITEM FOR BRA CONSIDERATION: Consideration of a resolution authorizing the purchase of real property located at 7029 Nicollet Avenue South through the Richfield Rediscovered Program. I. RECOMMENDED ACTION: By Motion: Approve the resolution authorizing the purchase of real property located at 7029 Nicollet Avenue South through the Richfield Rediscovered Program. II. EXECUTIVE SUMMARY The owner of 7029 Nicollet Avenue has expressed an interest in selling the property to the Housing and Redevelopment Authority (HRA). The 624 square-foot house and detached 1-car garage was recently appraised at $70,000. The house was evaluated and determined to meet the substandard criteria. The owner is seeking to sell the house as-is. The HRA would acquire the property for the appraised value of$70,000. Subsequently, the house and garage will be demolished and the vacant lot marketed for sale through the Richfield Rediscovered Program. 04212014 Acquisition of 7029 Nicollet.docx III. BASIS OF RECOMMENDATION A. BACKGROUND • The one-and-a-quarter story house was built in 1928, has one bedroom and one bath for a total of 624 square feet, and a single-car detached garage. The house was moved to its current location in 1935. • An independent evaluation was conducted and concluded that the house is structurally and functionally substandard, containing many code and structural deficiencies that would be difficult to correct. • The property recently appraised at $70,000. • The owner is seeking to sell the property as-is and leave the sealing of any wells on the property to the HRA. B. POLICY • The 2008-2018 Richfield Comprehensive Plan states as policy: o Encourage the creation of"move-up" housing through new construction and home remodeling. o Promote the development of a balanced housing stock that is available to a range of income levels. • Through the City's Richfield Rediscovered Program, the HRA purchases and removes substandard and functionally obsolete housing and replaces it with newer, higher valued homes. C. CRITICAL TIMING ISSUES • The Purchase Agreement was submitted contingent upon HRA approval. • If the HRA approves the purchase, closing will occur on April 22, 2014. D. FINANCIAL • The price of$70,000 is reasonable. • Funding for this acquisition and demolition through the Richfield Rediscovered Program is in the HRA's 2014 Budget. E. LEGAL • Legal Council has prepared the Purchase Agreement. IV. ALTERNATIVE RECOMMENDATION(S) • Do not authorize the purchase of the property. V. ATTACHMENTS • Resolution • Photo of existing structure • Purchase Agreement VI. PRINCIPAL PARTIES EXPECTED AT MEETING • N/A HRA RESOLUTION NO. RESOLUTION AUTHORIZING PURCHASE OF REAL PROPERTY LOCATED AT 7029 NICOLLET AVENUE SOUTH WHEREAS, the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota ("the HRA") desires to purchase certain real property pursuant to and in furtherance of the Richfield Rediscovered Program, said property being described as: 7029 Nicollet Avenue South Legal: The north 62 feet of the south 210 feet of the east 148 8/10 feet of the West 181 8/10 feet of the northwest 1/4 of the northwest 1/4 of the northeast 1/4, except alley, Hennepin County, Minnesota WHEREAS, the HRA is authorized by Minnesota Statutes Section 469.012 to acquire real property within its area of operation; and v WHEREAS, Housing and Redevelopment Fund money is available for acquisition purposes. NOW THEREFORE, BE IT RESOLVED, by the Housing and Redevelopment Authority in and for the City of Richfield: 1. The purchase price for the property identified is approved at $70,000, plus closing costs, not to exceed $73,000. 2. The Chairperson and Executive Director are authorized to execute a Purchase Agreement and to take other actions necessary to purchase the property for the amount set forth in this resolution. Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota on this 21st day of April, 2014. Suzanne M. Sandahl, Chair ATTEST: Doris Rubenstein, Secretary 7029 Nicollet Ave S 1 11//' Aro- N ,Slf li, f,,,,, , .ir ., ,,_ „. i ii A , , 0:-, ip- . . III ffet,---pf,:capil i \ 4`` � � 4 4, r " 1010 1 • v.4. f 4. ti{ .4..i s J F '.''.',,:.,;.-.1,;'-:;;... t`a *-c--,,,' a . I - PURCHASE AGREEMENT THIS PURCHASE AGREEMENT (the "Agreement") is made as of this day of --4 1 , 20 j-/, by and between Ronald J. Pylka and Dolores Catherine Pylka, husband and wife("Seller") and the Housing and Redevelopment Authority in and for the City of Richfield, a public body corporate and politic under the laws of the State of Minnesota ("Buyer"). RECITALS Seller is the owner of property located at 7029 Nicollet Avenue South,Richfield, Minnesota, which is legally described on the attached Exhibit A ("Property"). The Property includes includes all plants, shrubs and trees, storm windows and/or inserts, storm doors, screens, awnings, window shades, blinds, curtain-traverse-drapery rods, attached lighting fixtures with bulbs, plumbing fixtures, water heater, heating system, humidifier, central air conditioning, electronic air filter, automatic garage door opener with controls, water softener, cable television outlets and cabling, and built-ins, including dishwasher, garbage disposal, trash compactor, oven(s), cook top stove, microwave oven, hood-fan, intercom and installed carpeting located on the premises which are the property of Seller. The property also includes the following personal property: NONE. Seller is responsible for removal of all personal property. Seller may remove the following items, provided Seller does not cause any unnecessary damage to the Property: AGREEMENT 1. Offer/Acceptance for Sale of Property. The Seller agrees to sell to Buyer the Property and Buyer agrees to purchase the same, according to the terms of this Agreement. 2. Purchase Price for Property and Terms. A. PURCHASE PRICE: The total purchase price for the Property is seventy thousand and 00/100ths Dollars ($70,000.00) (the "Purchase Price"). B. TERMS: (1): EARNEST MONEY. The sum of zero Dollars ($0.00) (the "Earnest Money") shall be paid by Buyer to Seller. (2): BALANCE DUE SELLER. Buyer agrees to pay by check or electronic transfer of funds on the date of closing on the Property (the "Closing Date") any remaining balance of the Purchase Price due to Seller according to the terms of this Agreement. 1 315418v3 CBR RC125-41 • (3): DEED/MARKETABLE TITLE. Subject to performance by Buyer, Seller agrees to execute and deliver a Warranty Deed or Personal Representative's Deed conveying marketable title to the Property to Buyer, subject only to the following exceptions: a. Building and zoning laws, ordinances, state and federal regulations. b. Reservation of minerals or mineral rights to the State of Minnesota, if any. c. Public utility and drainage easements of record which will not interfere with Buyer's intended use of the Property. (4): DOCUMENTS TO BE DELIVERED AT CLOSING BY SELLER. In addition to the Warranty Deed required at paragraph 2B(3) above, Seller shall deliver to Buyer: a. Standard form Affidavit of Seller. b. A "bring-down" certificate, certifying that all of the warranties made by Seller in this Agreement remain true as of the Closing Date. c. Certificate that Seller is not a foreign national. d. If an environmental investigation by or on behalf of Buyer discloses the existence of petroleum product or other pollutant, contaminant or other hazardous substance on the Property, either (i) a closure letter from the Minnesota Pollution Control Agency (MPCA) or other appropriate regulatory authority that remediation has been completed to the satisfaction of the MPCA or other authority; or (ii) Agreement for remediation/indemnification and security as Buyer may require. e. Well disclosure certification, if required, or, if there is no well on the Property, the Warranty Deed given pursuant to paragraph 2B(3) above must include the following statement: "The Seller certifies that Seller does not know of any wells on the described real property." If Seller is unaware of the location of a well and there is a building permit issued for the Property prior to installation of a City water system, Buyer agrees to have a licensed well contractor examine the Property for purposes of locating a well and assumes responsibility for sealing the well at Buyer's expense. 2 315418v3 CBR RC125-41 f. Any other documents reasonably required by Buyer's title insurance company or attorney to evidence that title to the Property is marketable and that Seller has complied with the terms of this Agreement. 3. Contingencies. Buyer's obligation to buy is contingent upon the following: a. Buyer's determination of marketable title pursuant to paragraph 4 of this Agreement; b. Buyer's determination, in its sole discretion, that the results of any environmental investigation of the Property conducted pursuant to this Agreement are satisfactory to Buyer; c. The parties acknowledge that the Richfield zoning ordinance requires that lots in the R district meet certain minimum lot width, and area requirements. If these standards are not met, one or more variances will be necessary prior to construction of a new dwelling on the property. If the City of Richfield does not issue all variances necessary to make the property a buildable lot within the meaning of the zoning ordinance, Buyer at its sole discretion may cancel this Agreement; and d. Approval of this Agreement by Buyer's Board. Buyer shall have until the Closing Date to remove the foregoing contingencies. The contingencies at a., b., and c. are solely for the benefit of Buyer and may be waived by Buyer. The contingency at d. may not be waived by either party. If Buyer or its attorney gives written notice to Seller that the contingencies at a., b., c., and d. are duly satisfied or waived, Buyer and Seller shall proceed to close the transaction as contemplated herein. If one or more of Buyer's or Seller's contingencies is not satisfied, or is not satisfied on time, and is not waived, this Agreement shall thereupon be void at the written option of Buyer and Seller shall return the Earnest Money, if any, to Buyer, and Buyer and Seller shall execute and deliver to each other a termination of this Agreement. As a contingent Agreement, the termination of this Agreement is not required pursuant to Minnesota Statutes, Section 559.21, et. seq. 4. Title Examination/Curing Title Defects. As soon as reasonably possible after execution of this Agreement by both parties, (a) Seller shall surrender any abstract of title and a copy of any owner's title insurance policy for the property, if in Seller's possession or control, to Buyer or to Buyer's designated title service provider; and (b) Buyer shall obtain the title evidence determined necessary or desirable by Buyer. The Buyer shall have 20 days from the date it receives such title evidence to raise any 3 315418v3 CBR RC125-41 objections to title it may have. Objections not made within such time will be deemed waived. The Seller shall have 90 days from the date of such objection to affect a cure; provided,however, that Seller shall have no obligation to cure any objections, and may inform Buyer of such. The Buyer may then elect to close notwithstanding the uncured objections or declare this Agreement null and void, and the parties will thereby be released from any further obligation hereunder. 5. Environmental Investigation. The Seller warrants that the Property has not been used for production, storage, deposit or disposal of any toxic or hazardous waste or substance, petroleum product or asbestos product during the period of time Seller has owned the Property. The Seller further warrants that Seller has no knowledge or information of any fact which would indicate the Property was used for production, storage, deposit or disposal of any toxic or hazardous waste or substance, petroleum product or asbestos product prior to the date Seller purchased the Property. Notwithstanding the above, Seller's warranty regarding petroleum products does not preclude the presence of heating oil or other similar products used as a heating fuel for the dwelling but Seller does warrant that if there was a fuel tank on the Property used for the storage of heating oil or other similar product, Seller has no knowledge of any leak in the tank or contamination caused thereby. Seller hereby grants to Buyer and Buyer's agents a license to enter and evaluate the Property for the purpose of conducting an environmental assessment. The Buyer is required to perform an environmental assessment prior to committing federal Community Development Block Grant (CDBG) funds. Further, Buyer or Buyer's agent shall have the right pursuant to the license to bring persons and equipment onto the Property, make inspections and perform tests and analyses as Buyer may deem reasonable to determine the presence of any toxic or hazardous waste, substance, or petroleum product or asbestos product, and ascertain soil conditions on the Property. Buyer shall bear the cost of the environmental assessment. If the results of the environmental assessment are not to the satisfaction of Buyer, including a release from environmental conditions related to the commitment and expenditure of CDBG funds, Buyer at its sole discretion may cancel this Agreement. If Buyer cancels this Agreement pursuant to this provision, Buyer shall restore the Property to its original condition or nearly so as is reasonably practicable. 6. Real Estate Taxes and Special Assessments. Real estate taxes payable in the year of closing will be pro-rated between Buyer and Seller to the Closing Date. Seller shall pay all real estate taxes payable in previous years, the entire unpaid balance of special assessments, and all installments of special assessments levied and pending, including special assessments installments payable after the year of closing. Seller also agrees to pay all assessments related to service charges furnished to the Property prior to the Closing Date (e.g., delinquent water or sewer bills, removed or diseased trees), including those charges levied, pending, or certified to taxes payable in the year of closing. If closing occurs prior to the date the amount of real estate taxes due in the year of closing are available from Hennepin County, the current year's taxes will be pro-rated based on the amount due in the prior year. 7. Closing Date. The Closing Date will be on or before May 1, 2014. Delivery of all papers and the closing shall be made at the offices of Buyer, 6700 Portland Avenue South, Richfield, Minnesota 55423, or at such other location as is mutually agreed upon by the 4 315418v3 CBR RC125-41 parties. All deliveries and notices to Buyer shall be made to the above address and marked to the attention of Housing Specialist. 8. Possession/Utilities/Removal of Property/Escrow. (a) Possession. The Seller agrees to deliver possession not later than the Closing Date. (b) Utilities. City water and sewer charges, electricity and natural gas charges, fuel oil and liquid petroleum gas shall be pro-rated between the parties as of the Closing Date. Seller shall arrange for final readings as of the Closing Date. (c) Personal Property. The Seller agrees to remove all debris and all personal property not included herein from the Property before the possession date. Personal property not so removed shall be deemed forfeited to and shall become the property of Buyer. The Buyer may inspect the Property immediately prior to closing and deduct from the purchase price payable at closing an amount reasonably necessary to pay for the cost of removal of any debris or personal property then remaining on the Property. The provisions of this paragraph shall not merge with the deed and shall survive closing on the property. (d) Escrow. Seller agrees that, at closing, Buyer may retain Five Hundred Dollars ($500.00) from the purchase price for the Property as an Escrow for payment of personal property removal, disposal charges and utility charges. The retained amount, less deductions provided for this in paragraph 8, will be delivered to Seller no later than 60 days following the Closing Date or delivery of possession, whichever is later. Said funds shall be held by Kennedy & Graven, Chartered, as Escrow Agent, pursuant to the terms of the Escrow Agreement attached here as Exhibit C. (e) Amounts Due. The Buyer's ability to deduct amounts due under this paragraph from the retained escrow is not exclusive but is in addition to Buyer's rights at law and equity to collect such amounts from Seller.The Seller is responsible for the amounts due under this paragraph even if: (i)Buyer neglects to deduct the amount from escrow; or (ii) the escrowed amount is insufficient to pay all amounts due under this paragraph 8. 9. Seller Warranties. (a) Sewer and Water. Seller warrants that the Property is connected to City sewer and City water. (b) Mechanics' Liens. Seller warrants that, prior to the closing, Seller shall pay in full all amounts due for labor, materials, machinery, fixtures or tools furnished within the 120 days immediately preceding the closing in connection with construction, alteration or repair of any structure upon or improvement to the Property. (c) Notices. Seller warrants that it has not received any notice from any governmental authority as to violation of any law, ordinance or regulation in connection with the 5 315418v3 CBR RC125-41 Property. b occupied(d) Tenants. Seller warrants that the Property is not now occu p by tenants and was not occupied by tenants at the time Seller first received Buyer's written offer to purchase the Property. (e) Broker Commission. Each party represents to the other that it has not utilized the services of any real estate broker or agent in connection with this Agreement or the transaction contemplated by this Agreement. Each party agrees to indemnify, defend, and hold harmless the other party against and in respect of any such obligation and liability based in any way upon agreements, arrangements, or understandings made or claimed to have been made by the party with any third person. (f) Structures. The Seller warrants that the buildings, if any, are entirely within the boundary lines of the Property. The parties acknowledge that the Property is being sold in "as is" condition relating to the structural, operational, and mechanical systems. 10. Closing Costs/Recording Fees/Deed Tax. The Buyer will pay: (a)the closing fees charged by the title insurance or other closing agent, if any, utilized to close the transaction contemplated by this Agreement; (b) fees for title evidence obtained by Buyer; and (c) the recording fee for the deed transferring title to Buyer. Seller will pay all other fees normally paid by sellers, including (a) any transfer taxes, recording fees and Well Disclosure fees required to enable Buyer to record its deed from Seller under this Agreement, and (b) fees and charges related to the filing of any instrument required to make title marketable. Each party shall pay its own attorney fees. 11. Inspections. From the date of this Agreement to the Closing Date, Buyer, its employees and agents, shall be entitled to enter upon the Property to conduct such surveying, inspections, investigations, soil borings and testing, and drilling, monitoring, sampling and testing of groundwater monitoring wells, as Buyer shall elect; provided,that Seller is given at least 24 hours' notice. 12. Risk of Loss. It there is any loss or damage to the Property between the date hereof and the Closing Date, for any reason including fire, vandalism, flood, earthquake or act of God, the risk of loss shall be on Seller. If the Property is destroyed or substantially damaged before the closing date, this Agreement shall become null and void, at Buyer's option. At the request of Buyer, Seller agrees to sign a cancellation of Agreement. 13. Default/Remedies. If Buyer defaults in any of the covenants herein, Seller may terminate this Agreement, and on such termination all payments made hereunder shall be retained by Seller as liquidated damages, time being of the essence. This provision shall not deprive either party of the right to enforce specific performance of this Agreement, provided this Agreement has not terminated and action to enforce specific performance is commenced within six months after such right of action arises. In the event Buyer defaults in its performance of the terms of this Agreement and Notice of Cancellation is served upon Buyer pursuant to Minn. Stat. Section 559.21, the termination period shall be thirty (30) days as permitted by Minn. Stat., 6 315418v3 CBR RC 125-41 Section 559.21, Subd. 4. 14. Notice. Any notice, demand, request or other communication which may or shall be given or served by the parties, shall be deemed to have been given or served on the date the same is personally served upon one of the following indicated recipients for notices or is deposited in the United States Mail, registered or certified, return receipt requested, postage prepaid and addressed as follows: SELLER: Ronald Pylka 3210 Lakeview Lane Big Lake, MN 55309 BUYER: Housing and Redevelopment Authority of the City of Richfield Attn: Housing Specialist 6700 Portland Avenue South Richfield, MN 55423 AGENT: Kennedy & Graven, Chartered ATTN: Julie Eddington and Catherine B. Rocklitz 470 U.S. Bank Plaza 200 South Sixth Street Minneapolis,MN 55402 15. Entire Agreement. This Agreement, Exhibits, and other amendments signed by the parties, shall constitute the entire Agreement between Seller and Buyer and supersedes any other written or oral agreements between the parties relating to the Property. This Agreement can be modified only in a writing properly signed on behalf of Seller and Buyer. 16. Survival. Notwithstanding any other provisions of law or court decision to the contrary,the provisions of this Agreement shall survive closing. 7 315418v3 CBR RC 125-41 IN WITNESS WHEREOF,the undersigned have executed this Agreement on the date and year above. Buyer: Seller: Housing and Redevelopment Authority of the City of Richfield fcrY1..di,/, 44. By A j7is&L__�Its Chair =�� And by: Its Executive Director 8 315418v3 CBR RC 125-41 Exhibit One Legal Description of Property B-4 315418v3 CBR RC125-41 EXHIBIT A Legal Description of Property North 62 Feet of South 210 Feet of East 148 8/10 Feet of West 181 8/10 Feet of Northwest 1/4 of Northwest 1/4 of Northeast 1/4 Except Alley, unplatted 34 028 24, according to the duly filed and recorded plat thereof,together with all hereditaments and appurtenances belonging thereto. Subject to any easements restrictions and reservations of record, if any. A-1 315418v3 CBR RC125-41 EXHIBIT B Escrow Agreement THIS AGREEMENT entered into this day of , 20 , by and between ("Seller"), the HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, a Minnesota municipal corporation ("Buyer"), and KENNEDY & GRAVEN, CHARTERED ("Escrow Agent" or"Agent"). RECITALS A. Seller and Buyer have entered into a Purchase Agreement dated 20 ("Purchase Agreement") for the sale of property located at , Richfield, Minnesota and legally described on the attached Exhibit One(the("Property"). B. The parties desire to close the sale of the Property on AGREEMENT The parties agree as follows: 1. Delivery of Possession. Seller shall deliver possession of the Property to Buyer in accordance with the Purchase Agreement entered into by the parties. The Purchase Agreement requires Seller to pay all utilities and to remove all personal property from the Property upon closing. 2. Escrow. (a) Upon closing and execution of this Agreement, Seller agrees to deposit into escrow the sum of$500.00 (the "Escrowed Funds") from the purchase price,to be held by Agent in a non-interest bearing account. (b) Within 7 days after requested by Agent, Buyer shall provide to Agent (with copy to Seller) evidence of expenses incurred for the removal and disposal of personal property and for payment of utility charges for services provided to the Property prior to date of possession, if any. Agent shall reimburse Buyer for the incurred expenses from the Escrowed Funds within 7 days following receipt of such evidence from Buyer. (c) Agent shall deliver to Seller the balance of the Escrowed Funds on deposit, less deductions provided for in paragraph 2(b) above, no later than 30 days following vacation of the Property by Seller. (d) The sole duties of Agent shall be those described herein, and Agent shall be under no obligation to determine whether the other parties hereto are complying with any requirements of law or the terms and conditions of any other B-1 315418v3 CBR RC125-41 agreements among said parties. Agent shall have no duty or liability to verify any amounts deducted from the retained amount and Agent's sole responsibility shall be to act expressly as set forth in this Escrow Agreement. 3. Escrow Agent Liability. The sole duties of Escrow Agent shall be those described herein, and Escrow Agent shall be under no obligation to determine whether the other parties hereto are complying with any requirements of law or the terms and conditions of any other agreements among said parties. Escrow Agent may conclusively rely upon and shall be protected in acting on any notice believed by it to be genuine and to have been signed or presented by the proper party or parties, consistent with reasonable due diligence on Escrow Agent's part. Escrow Agent shall have no duty or liability to verify any such notice, and its sole responsibility shall be to act expressly as set forth in this Escrow Agreement. Seller and Buyer understand that Agent is legal counsel to Buyer and each consents to Agent's serving as Escrow Agent notwithstanding such representation. In the event Agent determines, in its sole discretion, that it cannot continue to serve as Escrow Agent herein, Agent shall deposit the funds with Old Republic National Title Insurance Company or such other Escrow Agent acceptable to Seller and Buyer. Seller consents to Agent's continued representation of Buyer after a deposit is made, and Buyer agrees to pay all escrow fees charged by the substitute Escrow Agent. 4. Notices to be sent to the parties to this Agreement shall be sent by mail or personal delivery to: SELLER: BUYER: Housing and Redevelopment Authority in and for the City off Richfield Attn: Richfield City Hall 6700 Portland Avenue South Richfield, MN 55423 AGENT: Kennedy&Graven, Chartered ATTN: Julie Eddington and Catherine B. Rocklitz 470 U.S. Bank Plaza 200 South Sixth Street Minneapolis, MN 55402 IN WITNESS WHEREOF, the parties have executed this agreement as of the date written above. B-2 315418v3 CBR RC125-41 SELLER: BUYER: HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD By: Its Chair And by: Its Executive Director ESCROW AGENT: KENNEDY &GRAVEN, CHARTERED By: B-3 315418v3 CBR RC 125-41 AGENDA ITEM#: 4 REPORT#: 19 STAFF REPORT 646/4e HOUSING AND REDEVELOPMENT AUTHORITY MEETING APRIL 21, 2014 REPORT PREPARED BY: JOHN STARK, COMMUNITY DEVELOPMENT DIRECTOR NAME,TITLE REPORT PRESENTER: JOHN STARK, COMMUNITY DEVELOPMENT DIRECTOR NAME,TITLE DEPARTMENT DIRECTOR REVIEW: :. SIGNA( ' REVIEWED BY EXECUTIVE DIRECTOR: B ITEM FOR HRA CONSIDERATION: Consideration of granting authorization to the Housing and Redevelopment Authority Executive Director to execute documents releasing the Minimum Assessment Agreement for eligible housing units in the Kensington Park Development. I. RECOMMENDED ACTION: By Motion: Grant authorization to the Housing and Redevelopment Authority Executive Director to execute documents releasing the Minimum Assessment Agreement for eligible housing units in the Kensington Park Development. II. EXECUTIVE SUMMARY The Contract for Private Redevelopment associated with the Kensington Park development required the adoption of an Assessment Agreement for the 108 housing units that are included in the development. That Assessment Agreement was approved by the Richfield Housing and Redevelopment Authority (HRA) in September 2003. The intent of the Assessment Agreement is that it would only affect the property as long as it was owned by the person(s) who had originally purchased the property 04212014 Kensington Assessment Agreementsxxx from the developer and that it would "terminate with respect to each such housing unit upon the sale of such unit to a bona fide good faith purchaser." A subsequent purchaser has contacted HRA staff to ask that the Assessment Agreement affecting their housing unit be released. It is anticipated that other such requests will be made in the future. Staff is recommending that the HRA grant blanket authorization to the Executive Director to execute all documents pertinent to the release of these Assessment Agreements in the future, rather than addressing them one-by-one as independent HRA actions. HRA Attorney Julie Eddington has provided a memorandum (attached) that recommends this action as well as a sample Release of Minimum Assessment Agreement (attached). Ms. Eddington has also concluded that it is the homeowner's responsibility to request and record the Release. As each Release becomes effective, the taxes and related tax increment for that unit will likely decrease. It will be difficult to quantify the effect of these Releases on the tax increment, however, because we do not know how the Hennepin County Assessor's office will value the properties and we do not know the number and timing of when other property owners may request such a release. III. BASIS OF RECOMMENDATION A. BACKGROUND • In accordance with the Contract for Private Redevelopment pertaining to the Kensington Park project, an Assessment Agreement was approved by the HRA in September 2003. • That Assessment Agreement affected each individual condominium and townhome unit contained in the development. • The Assessment Agreement related to each specific unit was intended to terminate upon the sale of the unit by the original purchaser. B. POLICY • HRA Legal Counsel has determined that, upon request by each qualified homeowner, the HRA is required to release the Assessment Agreement for that unit as specified in the Assessment Agreement. C. CRITICAL TIMING ISSUES • A qualified homeowner has requested that the HRA Release the Assessment Agreement as it pertains to their property. • HRA action would be required at the April or May HRA meeting in order to have the Release recorded in time to be reflected in the homeowner's taxes payable 2016. D. FINANCIAL • Any Releases of Assessment Agreements will likely result in a decreased property tax for owners of housing units in Kensington Park. • Such decreases in property taxes would result in decreases in available tax increment. • It will be difficult to quantify the impacts on the TIF District without knowing when, and how many homeowners will request a Release or knowing how the Hennepin County Assessor will revalue the properties. E. LEGAL • HRA Legal Counsel is recommending this action (see attached Memo) and have drafted a sample Release of Minimum Assessment Agreement. IV. ALTERNATIVE RECOMMENDATION(S) • Continue this item until the May HRA meeting in order to gather more information. • Approve the Release of Minimum Assessment Agreement as it pertains to the current requestor only and continue to address such request on a one- by-one basis at future HRA meetings. V. ATTACHMENTS • Memorandum from HRA Attorney Julie Eddington. • Sample Release of Minimum Assessment Agreement. VI. PRINCIPAL PARTIES EXPECTED AT MEETING • None. �� kkr 470 U.S.Bank Plaza 200 South Sixth Street y3 �' Minneapolis MN 55402 (612)337-9300 telephone � (612)337-9310 fax http://www.kennedy-graven.com CHARTERED MEMORANDUM TO: John Stark, Community Development Director Richfield Housing and Redevelopment Authority FROM: Julie Eddington DATE: April 15, 2014 RE: Release of Minimum Assessment Agreement—Kensington Park On September 25, 2003, the Housing and Redevelopment Authority in and for the City of Richfield (HRA) and Lyndale Gateway, LLC entered into an Assessment Agreement (Agreement) which provided minimum assessed values for all of the 108 residential units to be included in the Kensington Park development. Section 2 of the Agreement provides the following: The minimum market values herein established for each housing unit shall be of no further force and effect and this Agreement shall terminate with respect to each such housing unit upon the sale of such unit to a bona fide good faith purchaser. This Agreement shall terminate on the earlier of the date that the last housing unit has been sold to a bona fide good faith purchaser, or February 1, 2030. An owner of a unit within the Kensington Park development has requested that the Agreement be released with respect to his unit. Attached please find a form of release for such purpose. There will be similar requests from owners of other units in the building. I recommend that you request approval of the release from the HRA Board and request that the Board grant authority to the HRA's Executive Director to execute all future releases as they are requested. Please contact me at your convenience with any questions regarding the foregoing. KENNEDY&GRAVEN, CHARTERED Julie Eddington 442540v1 JAE RC125-240 RELEASE OF MINIMUM ASSESSMENT AGREEMENT WHEREAS, the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota, a Minnesota public body, corporate and politic (the "Authority"), executed an Assessment Agreement with Lyndale Gateway, LLC, a Minnesota limited liability company (the "Residential Redeveloper"), dated September 25, 2003 (the "Assessment Agreement"), filed on November 5, 2003, as Document No. 8215344, in the Office of the County Recorder of Hennepin County, Minnesota, upon certain real property legally described on the attached EXHIBIT A (the "Property"); and WHEREAS, , as owner of unit located in Kensington Park has requested a release of the Assessment Agreement with respect to unit ; and WHEREAS, pursuant to Section 2 of the Assessment Agreement, such Assessment Agreement shall terminate with respect to each such housing unit upon the sale of such unit to a bona fide good faith purchaser; and NOW, THEREFORE, this is to certify that, pursuant to the terms of the Assessment Agreement, the Assessment Agreement is hereby released absolutely and forever insofar as it applies to the unit described on the attached EXHIBIT A and the Registrar of Titles in and for the County of Hennepin, State of Minnesota is hereby authorized to accept the filing of this instrument, to be a conclusive determination of the termination of the Assessment Agreement as to such unit. (The remainder of this page is intentionally left blank.) 442364v2 JAE RC125-240 IN WITNESS WHEREOF,this Agreement was executed as of April_, 2014. HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD By Its Chairperson By Its Executive Director STATE OF MINNESOTA ) ) ss.: COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this day of , 2014, by Suzanne M. Sandahl,the Chairperson of the Housing and Redevelopment Authority in and for the City of Richfield, a public body corporate and politic under the laws of Minnesota, on behalf of the HRA. Notary Public STATE OF MINNESOTA ) ) ss.: COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this day of , 2014, by Steven L. Devich, the Executive Director of the Housing and Redevelopment Authority in and for the City of Richfield, a public body corporate and politic under the laws of Minnesota, on behalf of the BRA. Notary Public 442364v2 JAE RC125-240 EXHIBIT A to RELEASE OF MINIMUM ASSESSMENT AGREEMENT Unit No. , Common Interest Community No. 1416 Kensington Park, Hennepin County, Minnesota 442364v2 JAE RC125-240 AGENDA ITEM#: 5 REPORT#: 20 l STAFF REPORT #gec414e ed HOUSING AND REDEVELOPMENT AUTHORITY MEETING APRIL 21, 2014 REPORT PREPARED BY: JULIE URBAN,HOUSING SPECIALIST NAME,TITLE REPORT PRESENTER: KAREN BARTON, ASSISTANT COMMUNITY DEVELOPMENT DIRECTOR NAME,TITLE DEPARTMENT DIRECTOR REVIEW: AeiArittiftk REVIEWED BY EXECUTIVE DIRECTOR: P e ITEM FOR HRA CONSIDERATION: Consideration of program guidelines for the Rental-to-Homeownership Program. I. RECOMMENDED ACTION: By Motion: Approve program guidelines for the Rental-to- Homeownership Program. II. EXECUTIVE SUMMARY In an effort to stabilize and improve residential neighborhoods, the Housing and Redevelopment Authority (HRA) approved $30,000 for the 2014 budget year to develop a pilot program that would offer incentives to aid in returning single-family rental properties to owner-occupancy. Staff is recommending approval of the attached program guidelines for the Rental- to-Homeownership Program (RHP). The program would offer a $2,000 incentive grant to sellers to offset a portion of the costs associated with the sale of their property, and either a $7,000 purchase-assistance loan or a $10,000 rehabilitation assistance loan to buyers. The loan term would be for a period of 10 years, with zero interest and no monthly payments, contingent upon the buyer owning and occupying the home continuously during that time. 04212014 Rental to Homeownership Program Guidelines.docx The funding for this pilot program provides for three properties (two purchase assistance and one rehabilitation assistance) to be returned to owner-occupancy. III. BASIS OF RECOMMENDATION A. BACKGROUND • The number of single-family home rental licenses has grown from 76 in 2000 to 673 in 2013. • Concentrations of single-family rental properties can have a detrimental impact on surrounding property values and neighborhood cohesiveness. • A survey was sent to rental family property owners. Forty-four owners responded to the survey request as follows: o Forty-two of the respondents indicated an interest in selling their property. o 58 percent rent their property because of low market values. o 18 percent indicated that the cost of updating the property prevented them from selling. o Over half indicated that incentives for buyers might motivate them to sell their property. • Respondents were sent a follow-up survey asking them to comment specifically on the proposed program guidelines. Thirty-one of the original 44 responded as follows: o 61 percent would be motivated to sell if this program were available. An additional 25 percent answered that they might be motivated to sell. o Two of the reasons given for not selling were that the current cash flow is positive and the incentives were still not enough to cover the cost of selling. • The proposed program would offer incentives to both sellers and buyers to return single-family rental properties to owner-occupancy. The RHP would include the following components: o $2,000 grant to sellers to be used toward closing costs. o Either a $7,000 purchase assistance loan or a $10,000 rehabilitation loan to buyers. o The loan term would be for 10 years at zero-interest as long as the buyer continues to own and occupy the home. o 10 percent equity requirement for buyer (not including the RHP loan). o Buyers attending a homebuyer education class would be reimbursed up to $50 for the cost of the class. o Sellers would need to have a current rental license and be in good-standing with the City for a minimum of 12 months prior to application to the program. o Sellers must maintain their rental license and remain in good-standing with the City during marketing and up to sale of the property. o There is no income restriction associated with the program. B. POLICY • It is the HRA's policy to ensure the housing stock is maintained to facilitate stable neighborhoods and a solid tax-base. • It is the HRA's policy to provide homeownership opportunities to households of a variety of income levels. C. CRITICAL TIMING ISSUES • Upon approval of the program guidelines, the program will be marketed to rental property owners and realtors serving Richfield. • Funds would need to be expended during the 2014 budget year. D. FINANCIAL • $30,000 has been budgeted by the HRA in 2014 for a pilot rental conversion program. • Funding source is the HRA General Fund. • Funds will be distributed in the form of a grant to sellers and a deferred loan to buyers, forgivable after ten years. E. LEGAL • The HRA Attorney has reviewed the program guidelines and documents. IV. ALTERNATIVE RECOMMENDATION(S) • Approve the Rental-to-Homeownership Program with changes. • Do not approve the Rental-to-Homeownership Program guidelines. V. ATTACHMENTS • Rental-to-Homeownership Program Procedural Guidelines. VI. PRINCIPAL PARTIES EXPECTED AT MEETING • N/A Richfield Housing and Redevelopment Authority Rental-to-Homeownership Program Procedural Guidelines Statement of Purpose The purpose of the Richfield Rental-to-Homeownership Program (RHP) is to provide incentives to prospective homebuyers to buy in Richfield and return single-family rental properties to owner- occupancy. The incentives are available in the form of a grant to sellers and a deferred loan for either purchase assistance or property rehabilitation to buyers. RHP was established by the HRA to encourage home ownership and assist in maintaining and improving the housing stock and maintaining the vitality of neighborhoods in the City of Richfield. NOTE: Procedural Guidelines are a tool for guiding program administration. Procedural Guidelines do not constitute a contractual agreement or liability on the part of the City or the Housing and Redevelopment Authority (HRA). Program Obiectives • To encourage homeownership • To stabilize and improve residential neighborhoods. • To off-set costs associated with deferred maintenance and updates associated with rental housing. • To maintain and improve Richfield housing stock. • To encourage owners of single-family rental property to convert properties to owner-occupied housing. Program Goal Program Objectives will be achieved by providing Purchase Assistance or Rehabilitation funds to encourage prospective homebuyers to purchase rental homes and convert to owner-occupied homes in Richfield. Grants will also be provided to rental property owners to offset the cost of selling rental properties. Homebuyers will also have access to remodeling services available in the City of Richfield. Data Privacy All information secured through the program is subject to the Minnesota Government Data Privacy Act. Questions regarding the release of information should be directed to the program administrator. Hold Harmless Applicants shall indemnify and hold harmless the HRA and the City,their officers, agents, and employees from and against all claims, loss, damage, cost, and expense alleged to have resulted from any remodeling or rehabilitation work completed with the funds provided under RHP or provided by businesses or individuals the homeowner finds through the City's remodeling services. 1JPage RHP Procedural Guidelines April 2014 No HRA officer authorized to take part in administering the RHP Loan Program, in his or her official capacity, shall have a personal financial interest or benefit financially from the Loan. No member, official, or employee of the HRA shall be personally liable to the Buyer, or any successor in interest, for any act or omission of the HRA or for any amount which may become due to the Buyer or successor or on any HRA obligations. Application Procedure The Seller and Buyer must: 1. Complete the Application Form (Exhibit A) 2. Submit all required documentation, including digital photos. 3. Submit application fee. Applications will be reviewed and awarded on a first-come, first-served basis, based on the date of receipt and completeness of the application, as determined by the HRA. Criteria for Eligibility 1. A complete Application is required for an Applicant to be considered for an RHP Loan. A completed Application Form and all supporting documents are necessary for a complete application. Incomplete applications will be returned to the Applicant if not completed within 30 days. 2. The Seller and Buyer have entered into a binding purchase agreement to purchase the Property. A Loan commitment letter will not be issued until a purchase agreement is submitted. 3. The Buyer must provide evidence of title control at or before the closing with the HRA. If the Buyer cannot provide such evidence,the Loan commitment will be cancelled. To be considered for another RHP Loan, the Buyer would need to reapply. 4. The Buyer is purchasing the Property for the purpose of occupancy. The RHP Loan is offered for the purpose of encouraging home ownership, not speculation. a. The Buyer recognizes the importance of the Development to the general welfare of Richfield and the substantial financing and other public aids that have been made available by the HRA for the purpose of making the Development possible, the qualification and identity of the Buyer are of particular concern to the HRA. b. The Buyer recognizes that it is because of such qualifications and identity that the HRA is entering into the RHP Loan, and, in so doing, is further willing to rely on the representations and undertakings of the Buyer for the faithful performance of all undertakings and covenants agreed by the Buyer to be performed. 5. Evidence of funds to purchase the Property is required. Any financing for the purchase of the Property must be in the form of a fixed interest rate loan. A minimum of 10% equity in the Property will be required. Equity can be in the following forms: Buyer down-payment;the difference between appraised market value and combined amount of all liens against the property, not including the RHP Loan. 6. Evidence of sufficient financing for Improvements (identified in the Rehabilitation Plan) is required for Rehabilitation Loans. 7. Applicants' household incomes are not restricted. 8. Only one Loan per eligible household. 21Page RHP Procedural Guidelines April 2014 9. The Property must be located within the City of Richfield municipal boundaries. 10. The Seller must have a current rental housing license for the Property, be in compliance with applicable city codes and ordinances, and have rented the Property for at least 12 months prior to application for an RHP Loan. 11. The property must be a single or two-family residential property. Condominiums are not eligible. Terms and Conditions of the RHP Loan and Closing Cost Incentive Grant 1. Funding is limited to the purchase of Rental Properties. Funding is available on a limited basis. It is awarded on a first-come, first-served basis with priority given to complete applications. The HRA is not responsible for unavailability of Loan funds to Applicants. 2. Upon receipt of complete application, the HRA will review applications for compliance with RHP Guidelines. a. If eligible, the HRA will provide a Loan commitment letter to the Seller and/or Buyer. b. If ineligible,the HRA will provide a denial letter to the Seller and Buyer. 3. Funds will be awarded to the Seller in the form of a grant (in an amount not to exceed $2,000) provided at the time of closing given evidence of sufficient closing costs. The amount of the grant will not exceed the amount of Seller-paid closing costs as indicated on the closing settlement statement. 4. Funds will be awarded to the Buyer in the form of a forgivable, deferred loan for either purchase assistance (in an amount not to exceed $7,000) or property rehabilitation (in an amount not to exceed $10,000). 5. Buyers are encouraged but not required to attend a Home Stretch Workshop prior to closing on the property. Homebuyers submitting a receipt for participation in an approved Home Stretch Workshop will be reimbursed by the HRA for the cost of the Workshop, up to a maximum of$50. 6. In cases of both the Purchase Assistance Loan and the Rehabilitation Loan, funds will be awarded to the Buyer in the form of a ten-year, zero-interest, forgivable Loan while the Property is owned and occupied by the Buyer. The lien created by the RHP Loan will be forgiven ten (10) years from the date of the Promissory Note and the Mortgage (Exhibit B). 7. In cases of the Purchase Assistance Loan, the HRA Loan closing will occur in conjunction with the transfer of property closing. The HRA will provide the full amount of the Loan (in an amount not to exceed $7,000), payable to the Buyer and the Title Company conducting the closing. 8. In cases of the Rehabilitation Loan,the RHP Loan closing must take place within five days of the transfer of Property to the Buyer, unless otherwise authorized by the HRA. The Rehabilitation Incentive Loan will be disbursed in a maximum amount of$10,000 in two payments. a. 50%following notification and verification of issuance of building permits i. If a building permit is not required, the first payment will be paid not later than five days after submission of receipts showing expenditures of at least half of the RHP Loan amount or more. Receipts submitted must be associated with Improvements identified in the Rehabilitation Plan. b. 50%on issuance of Completion Certificate (Exhibit D), showing full completion of all Improvements. c. Typically payments to the Buyer are made through the HRA. On a case-by-case basis, funds may be escrowed and disbursed by a title company, upon satisfactory verification of work completed. 9. In cases of the Closing Cost Incentive Grant, payment will be made in conjunction with the 31Page RHP Procedural Guidelines April 2014 transfer of Property to a Buyer. The HRA will provide the full amount of the grant (in an amount not to exceed $2,000), payable to the Seller. 10. In cases of the Rehabilitation Loan where application is not made until after the transfer of property, the Seller is ineligible for a Closing Cost Incentive Grant. 11. The Loan recipient must be the Buyer. The Buyer will provide the HRA with an executed mortgage in recordable form. The Buyer will pay the cost of recording the mortgage. The Loan recipient must also provide to the HRA an executed Promissory Note, Errors and Omissions Acknowledgement Agreement, and Certificate and Request for Notice: Foreclosure. See examples in Exhibits B, C, D, and E. a. These documents must be executed prior to any Loan disbursement. b. A lien will be placed against the Property by the HRA for the full Loan amount through the Mortgage (Exhibits B and C). The Mortgage is subject to mortgage registration tax and the Buyer is responsible for payment of the tax. c. The Note may not be assigned or pledged. 12. If at any time during the life of the RHP Loan an Event of Default occurs or the Loan matures prior to the original ten year term,the Loan will be required to be repaid in full. Payment of the RHP Loan will be made in full within 30 days upon the sale, conveyance, assignment, lease or transfer of the property. Events of Default include the following: a. The Buyer does not own and occupy the Property as the Buyer's primary residence. b. The Buyer does not obtain homestead tax classification for the Property within 60 days of the purchase of the Property. c. The Property ceases to be classified as homestead at any time during the ten-year term of the Loan. d. The Property is rented, leased, unoccupied or assigned for a period longer than six consecutive months. e. The Property is voluntarily or involuntarily sold,transferred or otherwise conveyed. 1. There exists any other event, which would cause the Property to be occupied by another, other than the Buyer,for a period of more than six months. g. There exists any Event of Default under the terms of this or any other mortgage secured by the Property and the Buyer has not entered into a work-out agreement with the Mortgagee(s). 13. If an Event of Default occurs, the HRA may take one or more of the following remedies. The remedies shall be cumulative and concurrent and may be pursued singly, successively, or together. By any act of omission or commission,the HRA shall not be deemed to have waived any of its rights or remedies. One waiver of an Event of Default or other breach, by either party, is not to be considered waiver of any future Event of Default or other breach. a. Suspend HRA action, i.e., making partial payment or authorizing Certificate of Completion b. Cancel or rescind HRA Loan c. Accelerate payment under the Promissory Note d. Foreclose on the Mortgage e. Take other legal action to enforce the Buyer's performance and observance of the Loan requirements 14. If the HRA delivers any notice or demand with respect to an Event of Default by the Buyer,the HRA shall forward a copy of such notice or demand to each Holder of any Mortgage as identified in the evidence of financing for the purchase of the Property. 4lPage RHP Procedural Guidelines April 2014 15. The RHP Purchase Assistance Loan is disbursed at closing as a junior lien to the first mortgage. 16. A satisfaction of Mortgage (Exhibit G) in recordable form will be provided upon receipt of repayment of the Loan or at the end of the repayment period. The RHP Loan may also be paid in full at any time. 17. Rehabilitation funded through a RHP Loan must be identified in the Rehabilitation Plan. Improvements must be completed within 180 days of closing on the RHP Loan. a. In such case that proposed work was not completed within the 180 day period from the date of the RHP Loan closing, the HRA will verify status of the rehabilitation completed. b. In such case that additional rehabilitation is required to achieve basic health and safety standards, the HRA may allow an extension and/or require a licensed contractor to complete the rehabilitation. When minimum health and safety standards are met the HRA may adjust the Mortgage amount to reflect funds disbursed to the Loan Recipient. The Buyer will be required to pay all costs of recording Mortgage amendment documents. c. In such case the rehabilitation was never initiated,the Mortgage will be due and all funds disbursed must be repaid. 18. When a licensed contractor is hired using RHP Rehabilitation Loan funds the following conditions apply: a. A Remodeler Form (Exhibit H) must be submitted with the Rehabilitation Plan. b. Lien Waivers for the full amount of the payment must be provided at the time of final disbursement. c. A Completion Certificate (Exhibit E) form must be completed by the Applicant,the Remodeler, City of Richfield Building Inspections, and the HRA to verify that all parties acknowledge the work as complete. i. If the HRA cannot execute the Completion Certificate because the work is not complete, within five days the HRA will provide, in writing, the requirements for the Buyer to receive the Certification of Completion. Eligible Improvements 1. Value-added improvements, such as adding a bathroom or adding a garage; built-in appliances are also eligible. 2. Maintenance and repair, such as roof replacement, window/door replacement, or electrical update. 3. Furnaces, water heaters, and central air conditioning. 4. Cosmetic improvements, such as painting or floor replacement/repair. 5. Point-of-Sale inspection repairs (requires invoices and copy of inspection results) 6. Permanent landscaping, as determined by the HRA. 7. All rehabilitation must be in compliance with city codes and meet Housing Quality Standards. 8. Swimming pools, greenhouses, and appliances (except for built-in appliances) are not eligible for rehabilitation funds. Remodeler Criteria and Responsibility The Remodeler must meet a minimum set of standards and perform certain requirements in order to qualify for the program. 5lPage RHP Procedural Guidelines April 2014 1. Provide adequate builder's risk, comprehensive general liability and worker's compensation insurance coverage. 2. Provide a written warranty policy to the Applicant and HRA. 3. Provide the following references: a. Five (5) satisfied customers; b. Three (3) major suppliers or subcontractors; c. Names of building officials from two cities where the Remodeler has worked in the last three (3)years. 4. Each Remodeler must complete a Remodeler Form (Exhibit H). The Remodeler must perform work in accordance with the specifications and contract provided to the Applicant. Any guarantees and/or warranties on the materials, supplies, or quality of work must be provided to the Applicant in writing. Lien Waivers must be provided at time of payment. All proper permits must be obtained per city code. During the rehabilitation process, required inspections must be arranged by the Buyer or Remodeler. NOTE: The City has a Point of Sale Inspection Ordinance that requires all residential properties pass a housing code inspection before sale, or repairs are to be completed after sale and secured by an escrow deposit made with the City Building Inspections Division. The HRA is not responsible for ensuring compliance with this ordinance. Housing Design and Site Development Criteria House design is of critical concern for the HRA. In the case of any exterior rehabilitation,the house building lines, window placement, and orientation to street, must present a balanced and pleasing view from all sides. Garage door dominance in design must be minimized. Blank walls without windows, doors, siding and roof line variations are strongly discouraged. The following requirements apply to all Rehabilitation Loan projects: 1. Newly constructed garages must be two-car, attached or detached. At a minimum, sufficient space must be available to allow for a future 20 x 20 feet garage without variances from city code. 2. If exterior work is envisioned, exterior materials should be low maintenance. Masonite siding materials are not acceptable. 3. Any building plans must be prepared in consultation with an architect or a designer with a minimum two-year technical degree. Plans will be reviewed by HRA staff as a condition of the Rehabilitation Loan approval. 4. All landscaping and sod disturbed by the rehabilitation project must be repaired in a professional manner. 5. Adjoining properties must not be disturbed by the rehabilitation process. 6. Storm water drainage patterns in the neighborhood and on adjoining properties must improve or not be negatively impacted by the improved property. Where roofs direct storm water toward minimum side yards, gutters or other water distribution methods may be required as a condition of the Rehabilitation Loan. 6 lPage RHP Procedural Guidelines April 2014 Plan Review and Construction of Improvements If new construction is included in the Rehabilitation Plan,the HRA must receive a set of the building plans, including building elevations, site drainage patterns, and a copy of the land survey including easements. HRA staff will review Rehabilitation Plans to ensure conformance with the Housing Design and Site Development Criteria. HRA Loan administrators are not authorized to review the building plans to conform to the Building Code. 1. If any element of the Rehabilitation Plan is in conflict with the above criteria,the Applicant will be notified. 2. Revised Rehabilitation Plans must be submitted for final approval. All Rehabilitation Plans need to be prepared by a qualified draftsperson or architect, or other person acceptable to the HRA. 3. All plan reviews will be completed by the HRA in a timely manner, within approximately one week. Each Rehabilitation Plan submitted will be processed individually. 4. After review and any modifications, Rehabilitation Plans may be submitted to the City's building official. The HRA may refer a set of Rehabilitation Plans to the county assessor to make a preliminary determination of value if there is concern about the extent of the value-added as a result of the proposed rehabilitation. 5. The Buyer shall construct the Improvements on the Property in conformance to the Rehabilitation Plan. If the initial Rehabilitation Plan needs to be modified, the Buyer must contact the HRA staff to discuss such modifications. 6. All Improvements must be constructed in conformance with all local, state, and federal laws and regulations. General Program Marketing Program marketing is entirely at the discretion of the HRA. It may include the following: • Promotional Articles • Direct Mail or Email contact • Website announcements End Buyers may be any financially eligible family. The HRA is a Fair Housing agency. Definitions Applicant—Person or persons who apply for RHP funding. Buyer or Homebuyer—Person or persons who purchase and occupy the former Rental Property. City—The City of Richfield. Closing—The date on which Buyer becomes the title owner of the Property through a purchase transaction of the Property. Closing Cost Incentive Grant—Grant offered by the HRA to the Seller to be used toward the cost of selling Rental Property to a Homebuyer. Eligible closing costs include realtor fees, reasonable attorney fees, real estate taxes, and final water bills. 7lPage RHP Procedural Guidelines April 2014 Combined Loan to Value Ratio (CLTV)—The ratio of all loans secured by the Property in relation to the Property's appraised value, not including the RHP Loan. Deferred Loan— Payment of the loan is deferred until such time as the loan matures.The loan requires no payments or interest as long as the terms of the Note and Mortgage are being met. Development—The Property and the Improvements to be constructed according to the Rehabilitation Plans approved by the HRA. Event of Default—A default under a Mortgage or Promissory Note executed by the Buyer for purposes of an RHP Loan. Housing Quality Standards—Standards established by the U.S. Department of Housing and Urban Development that set the minimum criteria for the health and safety of housing occupants. Housing Design and Site Development Criteria—All rehabilitation work done to the exterior of the house and/or property must comply with the housing design and site development criteria established by the HRA. Compliance is to be determined by HRA staff. HRA—The Housing and Redevelopment Authority in and for the City of Richfield. Improvements—Each and all of the remodeling or rehabilitation to be constructed on the Property by the Buyer, as specified in the Rehabilitation Plans approved by the HRA. Lender—The primary lender working with the Applicant. Loan Recipient—Buyer who is approved to receive an RHP Loan. Mortgage and Holder—The Mortgage shall include financing creating an encumbrance or lien upon the Property or any part thereof, as security for a loan. The Holder includes any insurer or guarantor (other than the Buyer) of any obligation or condition secured by such mortgage or deed of trust. Property—The Rental Property identified in the RHP application. Purchase Assistance Loan or RHP Purchase Assistance Loan—Interest-free loan offered by the HRA for purchasing and occupying a Rental Property. The maximum loan amount is $7,000. The Purchase Assistance Loan is payable upon sale of the house or forgiven after 10 years. RHP Loan or Loan—Interest-free loan offered by the HRA for purchasing and occupying a Rental Property or rehabilitating or remodeling and occupying a Rental Property. The RHP Loan can be structured as a Purchase Assistance or a Rehabilitation Loan. Rehabilitation Loan or RHP Rehabilitation Loan — Interest-free loan offered by the HRA for rehabilitating or remodeling and occupying a Rental Property. The maximum loan amount is$10,000. The Rehabilitation Loan is payable upon sale of the house or forgiven after 10 years. 81Page RHP Procedural Guidelines April 2014 Rehabilitation Plans—Collectively, the plans, drawings, and documents related to the Improvements. Remodeler—A professional hired by the Buyer to complete all or a portion of the Improvements. Rental Property—A property from which the owner receives payment from an occupant(s) in return for occupying the property for at least 12 months prior to applying for an RHP Loan. Seller—Person(s) or entity who own(s)the Rental Property and offer(s) it for sale to another. Unavoidable Delays—Delays which are the direct result of strikes, labor troubles,fire or other casualty to the Improvements, litigation commenced by third parties which results in delays or acts of any federal, state or local government, except those contemplated by this Agreement, which are beyond the control of the Buyer. 9 lPage RHP Procedural Guidelines April 2014 List of Exhibits Application Form Exhibit A Purchase Assistance Mortgage and Promissory Exhibit B Note Rehabilitation Loan Mortgage and Promissory Exhibit C Note Completion Certificate Exhibit D Errors and Omissions Form; Certificate and Exhibit E request for notice-foreclosure Satisfaction Form Exhibit G Remodeler Form Exhibit H 101Page RHP Procedural Guidelines April 2014 Exhibit A RICHFIELD RENTAL-TO-HOMEOWNERSHIP PROGRAM PURCHASE-ASSISTANCE LOAN APPLICATION COVER SHEET APPLICANT CONTACT INFORMATION Buyer Applicant(s) Legal Name(s) and Marital Status Applicant(s) current address Applicant(s) phone number Applicant(s) email address Amount of Loan Requested Seller Applicant(s) Legal Name(s) and Marital Status Applicant(s) current address Applicant(s) phone number Applicant(s) email address Amount of Grant Requested PROPERTY AND LENDER INFORMATION Proposed Property Address Proposed Closing Date Lending Institution Lender Contact Name Lender Phone number Lender Email address Lender Mailing address CITY REVIEW PROCEDURE 1. Submit completed application for formal review. 2. HRA notifies applicant of approval or denial within 10-15 business days. 3. Loan funds are disbursed to the buyer and seller at the time of closing. A mortgage is filed on the property to secure the loan. 4. Grant Funds are disbursed to the seller at the time of closing. APPLICATION REQUIREMENTS: A completed application packet must be received before formal review will begin. No applications will be approved after closing on a property. $150 Application Fee Picture of the Property(digital format) Purchase Agreement Financing commitment for property acquisition Appraisal Copy of Point-of-Sale Inspection escrow agreement(if needed) Title Commitment Settlement Statement At closing, Mortgage and Promissory Note APPLICANT(S)SIGNATURES) Signature Date Signature Date =AM Exhibit A RICHFIELD RENTAL-TO-HOMEOWNERSHIP PROGRAM REHABILITATION LOAN - APPLICATION COVER SHEET APPLICANT CONTACT INFORMATION Applicant(s) Legal Name(s)and Marital Status Applicant(s) current address Applicant(s) phone number Applicant(s)email address Amount of Loan Requested Seller Applicant(s) Legal Name(s)and Marital Status Applicant(s) current address Applicant(s) phone number Applicant(s)email address Amount of Grant Requested PROPERTY AND LENDER INFORMATION Proposed Property Address Proposed Closing Date Lending Institution Lender contact person Lender phone number Lender email address Mailing address CITY REVIEW PROCEDURE 1. Submit completed application for formal review. 2. HRA notifies applicant of approval or denial within 10-15 business days. 3. Funds are disbursed as follows: 50% when permits are granted; 50% upon project completion (submit paid invoices and Completion Certificate). APPLICATION REQUIREMENTS: A completed application packet must be received before formal review will begin. No applications will be approved after closing. $150 Application Fee Picture of the Property(digital format) Purchase Agreement Financing commitment for property acquisition Appraisal Copy of Point-of-Sale Inspection and escrow agreement(if needed) Title Commitment Settlement Statement Rehabilitation Plan (use form in Attachment A) Financing commitment for property rehabilitation, if more than loan amount requested At closing, Mortgage and Promissory Note APPLICANT(S)SIGNATURE(S) Signature Date Signature Date Attachment A REHABILITATION PLAN PROPERTY ADDRESS: DATE: COST ITEM-DESCRIPTION CONTRACTOR ESTIMATE Replace Roof A-1 Roofing $ 6,500 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. TOTAL $ SOURCE OF FUNDS AMOUNT 1. Richfield HRA $ 15,000 2. 3. 4. TOTAL $ If applicable, attach plans prepared by a qualified draftsperson or architect. Exhibit B (Top 3 inches reserved for recording data) MORTGAGE by Individual(s) MORTGAGE REGISTRY TAX DUE: $[...] DATE: [monthlday/year] ❑ CHECK IF APPLICABLE:NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN,ENFORCEMENT OF THIS MORTGAGE IN MINNESOTA IS LIMITED TO A DEBT AMOUNT OF$[...]UNDER CHAPTER 287 OF MINNESOTA STATUTES. THIS MORTGAGE("Mortgage")is given by[insert name and marital status of each Borrower],as mortgagor("Borrower"),to [insert name of Lender]as mortgagee("Lender"). In consideration of the receipt of[insert amount of Indebtedness]Dollars ($[...])(the"Indebtedness")from Lender, Borrower hereby mortgages,with power of sale,the real property in [...]County, Minnesota,legally described as follows: [ •] Check here if all or part of the described real property is Registered(Torrens) ❑ together with all hereditaments and appurtenances belonging thereto(the"Property"),subject to the following exceptions: (a) Covenants,conditions, restrictions(without effective forfeiture provisions)and declarations of record,if any; (b) Reservations of minerals or mineral rights by the State of Minnesota,if any; (c) Utility and drainage easements which do not interfere with present improvements; (d) Applicable laws,ordinances,and regulations; (e) The lien of real estate taxes and installments of special assessments not yet due and payable;and (f) The following liens or encumbrances, if any: [insert encumbrances] Borrower covenants with Lender as follows: 1. Repayment of Indebtedness. If Borrower(a)pays the Indebtedness to Lender according to the terms of the promissory note or other instrument of even date herewith that evidences the Indebtedness and all renewals,extensions,and modifications thereto(the"Note"),final payment of which is due on [insert maturity date];(b)pays interest on the Indebtedness as provided in the Note;(c)repays to Lender,at the times and with interest as specified,all sums advanced in protecting the lien of this Mortgage,if any;and(d)keeps and performs all the covenants and agreements contained herein,then Borrower's obligations under this Mortgage will be satisfied,and Lender will deliver an executed satisfaction of this Mortgage to Borrower. It is Borrower's responsibility to record any satisfaction of this Mortgage at Borrower's expense. 2. Statutory Covenants. Borrower makes and includes in this Mortgage the following covenants and provisions set forth in Minn.Stat.507.15,and the relevant statutory covenant equivalents contained therein are hereby incorporated by reference: (a) To warrant the title to the Property; (b) To pay the Indebtedness as herein provided; (c) To pay all taxes; (d) That the Property shall be kept in repair and no waste shall be committed; (e) To pay principal and interest on prior mortgages(if any). 3. Additional Covenants and Agreements of Borrower. Borrower makes the following additional covenants and agreements with Lender: (a) Borrower shall keep all buildings,improvements,and fixtures now or later located on all or any part of the Property(collectively,the"Improvements")insured against loss by fire,lightning,and such other perils as are included in a standard all-risk endorsement,and against loss or damage by all other risks and hazards covered by a standard extended coverage insurance policy,including,without limitation,vandalism,malicious mischief,burglary,theft,and if applicable,steam boiler explosion.Such insurance shall be in an amount no less than the full replacement cost of the Improvements,without deduction for physical depreciation. If any of the Improvements are located in a federally designated flood prone area,and if flood insurance is available for that area,Borrower shall procure and maintain flood insurance in amounts reasonably satisfactory to Lender. Borrower shall procure and maintain liability insurance against claims for bodily injury,death,and property damage occurring on or about the Property in amounts reasonably satisfactory to Lender and naming Lender as an additional insured,all for the protection of the Lender. (b) Each insurance policy required pursuant to Paragraph 3(a)must contain provisions in favor of Lender affording all right and privileges customarily provided under the so-called standard mortgagee clause. Each policy must be issued by an insurance company or companies licensed to do business in Minnesota and acceptable to Lender.Each policy must provide for not less than ten(10)days written notice to Lender before cancellation,non-renewal,termination,or change in coverage. Borrower will deliver to Lender a duplicate original or certificate of such insurance policies and of all renewals and modifications of such policies. (c) If the Property is damaged by fire or other casualty, Borrower must promptly give notice of such damage to Lender and the insurance company. In such event,the insurance proceeds paid on account of such damage will be applied to payment of the amounts owed by Borrower pursuant to the Note,even if such amounts are not otherwise then due, unless Borrower is permitted to make an election as described in the next paragraph.Such amounts first will be applied to unpaid accrued interest and next to the principal to be paid as provided in the Note in the inverse order of their maturity. Such payment(s)will not postpone the due date of the installments to be paid pursuant to the Note or change the amount of such installments.The balance of insurance proceeds,if any,will be the property of Borrower. (d) Notwithstanding the provisions of Paragraph 3(c),and unless otherwise agreed by Borrower and Lender in writing,if(i)Borrower is not in default under this Mortgage(or after Borrower has cured any such default);(ii)the mortgagees under any prior mortgages do not require otherwise;and(iii)such damage does not exceed ten percent(10%) of the then assessed market value of the Improvements,then Borrower may elect to have that portion of such insurance proceeds necessary to repair,replace,or restore the damaged Property(the"Repairs")deposited in escrow with a bank or title insurance company qualified to do business in Minnesota,or such other party as may be mutually agreeable to Lender and Borrower.The election may only be made by written notice to Lender within sixty(60)days after the damage occurs; and the election will only be permitted if the plans,specifications,and contracts for the Repairs are approved by Lender, which approval shall not be unreasonably withheld,conditioned,or delayed. If such a permitted election is made by Borrower, Lender and Borrower shall jointly deposit the insurance proceeds into escrow when paid. If such insurance proceeds are insufficient for the Repairs, Borrower shall, before the commencement of the Repairs,deposit into such escrow sufficient additional money to insure the full payment for the Repairs.Even if the insurance proceeds are unavailable or are insufficient to pay the cost of the Repairs, Borrower shall at all times be responsible to pay the full cost of the Repairs.All escrowed funds shall be disbursed in accordance with sound,generally accepted,construction disbursement procedures.The costs incurred or to be incurred on account of such escrow shall be deposited by Borrower into such escrow before the commencement of the Repairs. Borrower shall complete the Repairs as soon as reasonably possible and in a good and workmanlike manner,and in any event the Repairs shall be completed by Borrower within one (1)year after the damage occurs. If,following the completion of and payment for the Repairs,there remains any undisbursed escrow funds,such funds shall be applied to payment of the amounts owed by Borrower under the Note in accordance with Paragraph 3(c). (e) If all or any part of the Property is taken in condemnation proceedings instituted under power of eminent domain or is conveyed in lieu thereof under threat of condemnation,the money paid pursuant to such condemnation or conveyance in lieu thereof must be applied to payment of the amounts due by Borrower to Lender under the Note as set forth in Paragraph 3(c),even if such amounts are not then due to be paid. (f) Borrower will diligently complete all Improvements, if any,that may now or hereafter be under construction on the Property. (g) Borrower will pay all dues,fees,or assessments,if any,which are due and payable by Borrower to any homeowners or similar association as a result of the Property's inclusion therein. (h) Borrower will pay any other expenses and attorneys'fees incurred by Lender pursuant to the Note or as reasonably required for the protection of the lien of this Mortgage. 4. Payment by Lender. If Borrower fails to pay any amounts to be paid hereunder to Lender or any third parties,or to insure the Improvements,and deliver the policies as required herein, Lender may make such payments or secure such insurance. The sums so paid shall be additional Indebtedness,bear interest from the date of such payment at the same rate set forth in the Note,be an additional lien upon the Property,and be immediately due and payable upon written demand.This Mortgage secures the repayment of such advances. 5. Default. In case of default(i)in the payment of sums to be paid under the Note or this Mortgage,when the same becomes due,(ii)in any of the covenants set forth in this Mortgage,(iii)under the terms of the Note,or(iv)under any addendum attached to this Mortgage,Lender may declare the unpaid balance of the Note and the interest accrued thereon,together with all sums advanced hereunder,immediately due and payable without notice,and Borrower hereby authorizes and empowers Lender to foreclose this Mortgage by judicial proceedings or to sell the Property at public auction and convey the same in fee simple in accordance with Minn.Stat.Ch.580,and out of the monies arising from such sale,to retain all sums secured hereby,with interest and all legal costs and charges of such foreclosure and the maximum attorneys'fees permitted by law,which costs,charges,and fees Borrower agrees to pay. - 6. Residential Mortgages. Notwithstanding the provisions of Paragraph 5,if the Indebtedness is a"conventional loan"as defined in Minn. Stat.47.20,subd.2(3),Borrower and Lender further covenant and agree as follows: (a) Lender shall furnish to Borrower a conformed copy of the Note and this Mortgage at the time of execution or within a reasonable time after recordation hereof. (b) Upon default by Borrower of any covenant or agreement under the terms of this Mortgage, Lender shall give notice to Borrower prior to foreclosure as provided in Paragraph 6(c)and such notice shall specify:(i)the nature of the default;(ii)the action required to cure the default;(iii)a date,not less than thirty(30)days from the date the notice is mailed to Borrower, by which the default must be cured;(iv)that failure to cure the default on or before the date specified in the notice may result in acceleration of the sums secured by this Mortgage and sale of the Property; (v)that Borrower has the right to reinstate this Mortgage after acceleration;and(vi)that Borrower has the right to bring a court action to assert the non-existence of the default or any other defense of Borrower to acceleration and sale. (c) In addition to any notice required under applicable law to be given in another manner,(i)any notice to Borrower provided for in this Mortgage shall be addressed to Borrower and given by mailing the notice via certified mail to the Property address(or to such other address as Borrower may designate by written notice to Lender as provided herein), and(ii)any notice to Lender shall be given by mailing the notice via certified mail to the following address(or to such other address as Lender may designate by written notice to Borrower as provided herein): [insert Lender's address]. 7. Governing Law;Severability. This Mortgage shall be governed by the laws of Minnesota. In the event that any provision or clause of this Mortgage or the Note conflicts with applicable law,such conflict shall not affect other provisions of this Mortgage or the Note which can be given effect without the conflicting provision. 8. Additional Terms. Check this box ❑ if Minnesota Uniform Conveyancing Blank 20.2.1 or any other addendum (either one or more)containing additional terms and conditions is attached to this Mortgage.If the foregoing box is not checked,then this Mortgage shall not contain any such additional terms and conditions.The number of additional attached pages is[insert number of pages in addendum].Terms of this Mortgage will run with the Property and bind the parties hereto and their successors in interest. Borrower [printed name of Borrower] [printed name of Borrower] State of Minnesota,County of[...] This instrument was acknowledged before me on[month/day/year],by[insert name and marital status of each Borrower]. (Stamp) (signature of notarial officer) Title(and Rank): My commission expires: (month/day/year) THIS INSTRUMENT WAS DRAFTED BY: [insert name and address] Note: Failure to record or file this mortgage may give other parties priority over this mortgage. ATTACHMENT A RENTAL-TO-HOMEOWNERSHIP PROGRAM PURCHASE ASSISTANCE LOAN PROMISSORY NOTE 1) FOR VALUE RECEIVED, the undersigned ("Borrower") agrees to pay to the Housing and Redevelopment Authority in and for the City of Richfield, a body corporate and politic under the laws of the State of Minnesota, ("Noteholder"), the sum of (the "Original Note Amount"), without interest, on the Maturity Date as hereinafter defined. 2) The Borrower acknowledges that the Original Note Amount is $ loaned to the Borrower by the Noteholder, shall bear no interest for the property located at Richfield, Minnesota, which property is legally described as follows: (the "Subject Property"). 3) The Maturity Date shall be the first date prior to the (ten years from the date of this Note)upon which any of the following events shall occur: a) The Borrower does not own and occupy the Property as Borrower's primary residence; b) The Borrower does not obtain homestead classification for the Property within 60 days after the purchase of the Property; c) The Property ceases to be classified as homestead, at any time during the ten year period commencing the date of this note; d) the Property is voluntarily or involuntarily sold,transferred or otherwise conveyed; e) the Property is rented, leased, unoccupied or assigned for a period exceeding six consecutive months; f) there exists any default under the terms of this or any mortgage secured by the Property and the Borrower has not entered into a work-out agreement; g) there exists any other event which would cause the Property to be occupied by other than the Borrower. If there has been no event prior to (ten years after the date of this Note) which causes the occurrence of the Maturity Date, then the Borrower shall thereafter be relieved of the obligation to repay the Original Note Amount, and the lien hereby created shall be terminated. Upon payment of this Note as provided herein, the Noteholder will, within 30 days of written demand by the Borrower, execute a release and satisfaction or partial release and partial satisfaction of this Note. 4) To secure payment of this Note, the Borrower will execute a mortgage deed (the"Mortgage"). All of the agreements, conditions, covenants,provisions, and stipulations and remedies contained in the Mortgage are hereby made a part of this Note to the same extent and with the same force and effect as if they were fully set forth herein. It is agreed that time is of the essence of this Note. If a default by the Borrower, then the Noteholder may at its right and option, exercise any rights it may have under law or at equity under the Note and under the Mortgage. 5) In the event that the Borrower has knowledge of or is notified directly or indirectly that a default has occurred or will occur under this Note or the Mortgage, the Borrower shall immediately notify the Noteholder in writing of such proceedings. 6) Presentment,protest and notice of dishonor are hereby waived by the Borrower. The Borrower shall pay all costs incurred by the Noteholder hereof in the collection of this Note, including reasonable attorney's fee. If the Noteholder requires the Borrower to pay in full and the Borrower refuses to do so within the required period of time, the Borrower will be responsible for all costs incurred by the Noteholder in enforcing this Note, including reasonable attorney's fees. 7) It is intended that this Note is made with reference to and shall be construed as a Minnesota contract and shall be governed by the laws of the state of Minnesota without regard to conflict of laws provisions. Any disputes, controversies, or claims arising out of this Note shall be heard in the state or federal courts of Minnesota, and all parties to this Note waive any objection to the jurisdiction of these courts, whether based on convenience or otherwise. 8) If there is more than one Borrower under this Note, each person shall be considered a Borrower within the meaning of this Note and each shall be jointly and severally responsible for payment under the Note. 9) IT IS HEREBY CERTIFIED AND RECITED that all conditions, acts, and things required to exist,happen, and be performed precedent to or in the issuance of this Note do exist, have happened, and have been performed in regular and due form as required by law. Dated: BORROWER(S) STATE OF MINNESOTA ) ) SS COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this day of 20_by and Notary Public This document drafted by: The Housing and Redevelopment Authority in and for the City of Richfield 6700 Portland Avenue South Richfield,MN 55423 (612)861-9760 Exhibit C (Top 3 inches reserved for recording data) MORTGAGE by Individual(s) MORTGAGE REGISTRY TAX DUE: $[...] DATE: [monthldaylyear] ❑ CHECK IF APPLICABLE:NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN,ENFORCEMENT OF THIS MORTGAGE IN MINNESOTA IS LIMITED TO A DEBT AMOUNT OF$[...]UNDER CHAPTER 287 OF MINNESOTA STATUTES. THIS MORTGAGE("Mortgage")is given by[insert name and marital status of each Borrower],as mortgagor('Borrower"),to [insert name of Lender]as mortgagee("Lender"). In consideration of the receipt of[insert amount of Indebtedness]Dollars ($[...])(the"Indebtedness")from Lender, Borrower hereby mortgages,with power of sale,the real property in[...]County, Minnesota,legally described as follows: [ •I Check here if all or part of the described real property is Registered(Torrens) ❑ together with all hereditaments and appurtenances belonging thereto(the"Property"),subject to the following exceptions: (a) Covenants,conditions,restrictions(without effective forfeiture provisions)and declarations of record, if any; (b) Reservations of minerals or mineral rights by the State of Minnesota,if any; (c) Utility and drainage easements which do not interfere with present improvements; (d) Applicable laws,ordinances,and regulations; (e) The lien of real estate taxes and installments of special assessments not yet due and payable;and (f) The following liens or encumbrances, if any:[insert encumbrances] Borrower covenants with Lender as follows: 1. Repayment of Indebtedness. If Borrower(a)pays the Indebtedness to Lender according to the terms of the promissory note or other instrument of even date herewith that evidences the Indebtedness and all renewals,extensions,and modifications thereto(the"Note"),final payment of which is due on [insert maturity date];(b)pays interest on the Indebtedness as provided in the Note;(c)repays to Lender,at the times and with interest as specified,all sums advanced in protecting the lien of this Mortgage,if any;and(d)keeps and performs all the covenants and agreements contained herein,then Borrower's obligations under this Mortgage will be satisfied,and Lender will deliver an executed satisfaction of this Mortgage to Borrower. It is Borrower's responsibility to record any satisfaction of this Mortgage at Borrower's expense. 2. Statutory Covenants. Borrower makes and includes in this Mortgage the following covenants and provisions set forth in Minn.Stat.507.15,and the relevant statutory covenant equivalents contained therein are hereby incorporated by reference: (a) To warrant the title to the Property; (b) To pay the Indebtedness as herein provided; (c) To pay all taxes; (d) That the Property shall be kept in repair and no waste shall be committed; (e) To pay principal and interest on prior mortgages(if any). 3. Additional Covenants and Agreements of Borrower. Borrower makes the following additional covenants and agreements with Lender: (a) Borrower shall keep all buildings, improvements,and fixtures now or later located on all or any part of the Property(collectively,the"Improvements")insured against loss by fire,lightning,and such other perils as are included in a standard all-risk endorsement,and against loss or damage by all other risks and hazards covered by a standard extended coverage insurance policy,including,without limitation,vandalism, malicious mischief,burglary,theft,and if applicable,steam boiler explosion.Such insurance shall be in an amount no less than the full replacement cost of the Improvements,without deduction for physical depreciation. If any of the Improvements are located in a federally designated flood prone area,and if flood insurance is available for that area, Borrower shall procure and maintain flood insurance in amounts reasonably satisfactory to Lender.Borrower shall procure and maintain liability insurance against claims for bodily injury,death,and property damage occurring on or about the Property in amounts reasonably satisfactory to Lender and naming Lender as an additional insured,all for the protection of the Lender. (b) Each insurance policy required pursuant to Paragraph 3(a)must contain provisions in favor of Lender affording all right and privileges customarily provided under the so-called standard mortgagee clause.Each policy must be issued by an insurance company or companies licensed to do business in Minnesota and acceptable to Lender. Each policy must provide for not less than ten(10)days written notice to Lender before cancellation, non-renewal,termination,or change in coverage. Borrower will deliver to Lender a duplicate original or certificate of such insurance policies and of all renewals and modifications of such policies. (c) If the Property is damaged by fire or other casualty, Borrower must promptly give notice of such damage to Lender and the insurance company. In such event,the insurance proceeds paid on account of such damage will be applied to payment of the amounts owed by Borrower pursuant to the Note,even if such amounts are not otherwise then due, unless Borrower is permitted to make an election as described in the next paragraph.Such amounts first will be applied to unpaid accrued interest and next to the principal to be paid as provided in the Note in the inverse order of their maturity. Such payment(s)will not postpone the due date of the installments to be paid pursuant to the Note or change the amount of such installments.The balance of insurance proceeds,if any,will be the property of Borrower. (d) Notwithstanding the provisions of Paragraph 3(c),and unless otherwise agreed by Borrower and Lender in writing,if(i)Borrower is not in default under this Mortgage(or after Borrower has cured any such default); (ii)the mortgagees under any prior mortgages do not require otherwise;and(iii)such damage does not exceed ten percent(10%) of the then assessed market value of the Improvements,then Borrower may elect to have that portion of such insurance proceeds necessary to repair,replace,or restore the damaged Property(the"Repairs")deposited in escrow with a bank or title insurance company qualified to do business in Minnesota,or such other party as may be mutually agreeable to Lender and Borrower.The election may only be made by written notice to Lender within sixty(60)days after the damage occurs; and the election will only be permitted if the plans,specifications,and contracts for the Repairs are approved by Lender, which approval shall not be unreasonably withheld,conditioned,or delayed. If such a permitted election is made by Borrower, Lender and Borrower shall jointly deposit the insurance proceeds into escrow when paid. If such insurance proceeds are insufficient for the Repairs,Borrower shall,before the commencement of the Repairs,deposit into such escrow sufficient additional money to insure the full payment for the Repairs. Even if the insurance proceeds are unavailable or are insufficient to pay the cost of the Repairs, Borrower shall at all times be responsible to pay the full cost of the Repairs.All escrowed funds shall be disbursed in accordance with sound,generally accepted,construction disbursement procedures.The costs incurred or to be incurred on account of such escrow shall be deposited by Borrower into such escrow before the commencement of the Repairs. Borrower shall complete the Repairs as soon as reasonably possible and in a good and workmanlike manner,and in any event the Repairs shall be completed by Borrower within one (1)year after the damage occurs. If,following the completion of and payment for the Repairs,there remains any undisbursed escrow funds,such funds shall be applied to payment of the amounts owed by Borrower under the Note in accordance with Paragraph 3(c). (e) If all or any part of the Property is taken in condemnation proceedings instituted under power of eminent domain or is conveyed in lieu thereof under threat of condemnation,the money paid pursuant to such condemnation or conveyance in lieu thereof must be applied to payment of the amounts due by Borrower to Lender under the Note as set forth in Paragraph 3(c),even if such amounts are not then due to be paid. (f) Borrower will diligently complete all Improvements,if any,that may now or hereafter be under construction on the Property. (g) Borrower will pay all dues,fees,or assessments,if any,which are due and payable by Borrower to any homeowners or similar association as a result of the Property's inclusion therein. (h) Borrower will pay any other expenses and attorneys'fees incurred by Lender pursuant to the Note or as reasonably required for the protection of the lien of this Mortgage. 4. Payment by Lender. If Borrower fails to pay any amounts to be paid hereunder to Lender or any third parties,or to insure the Improvements,and deliver the policies as required herein, Lender may make such payments or secure such insurance. The sums so paid shall be additional Indebtedness,bear interest from the date of such payment at the same rate set forth in the Note,be an additional lien upon the Property,and be immediately due and payable upon written demand.This Mortgage secures the repayment of such advances. 5. Default. In case of default(i)in the payment of sums to be paid under the Note or this Mortgage,when the same becomes due,(ii)in any of the covenants set forth in this Mortgage,(iii)under the terms of the Note,or(iv)under any addendum attached to this Mortgage,Lender may declare the unpaid balance of the Note and the interest accrued thereon,together with all sums advanced hereunder,immediately due and payable without notice,and Borrower hereby authorizes and empowers Lender to foreclose this Mortgage by judicial proceedings or to sell the Property at public auction and convey the same in fee simple in accordance with Minn. Stat.Ch.580,and out of the monies arising from such sale,to retain all sums secured hereby,with interest and all legal costs and charges of such foreclosure and the maximum attorneys'fees permitted by law,which costs,charges,and fees Borrower agrees to pay. 6. Residential Mortgages. Notwithstanding the provisions of Paragraph 5,if the Indebtedness is a"conventional loan"as defined in Minn.Stat.47.20,subd.2(3), Borrower and Lender further covenant and agree as follows: (a) Lender shall furnish to Borrower a conformed copy of the Note and this Mortgage at the time of execution or within a reasonable time after recordation hereof. (b) Upon default by Borrower of any covenant or agreement under the terms of this Mortgage, Lender shall give notice to Borrower prior to foreclosure as provided in Paragraph 6(c)and such notice shall specify:(i)the nature of the default;(ii)the action required to cure the default;(iii)a date, not less than thirty(30)days from the date the notice is mailed to Borrower,by which the default must be cured;(iv)that failure to cure the default on or before the date specified in the notice may result in acceleration of the sums secured by this Mortgage and sale of the Property; (v)that Borrower has the right to reinstate this Mortgage after acceleration;and(vi)that Borrower has the right to bring a court action to assert the non-existence of the default or any other defense of Borrower to acceleration and sale. (c) In addition to any notice required under applicable law to be given in another manner,(i)any notice to Borrower provided for in this Mortgage shall be addressed to Borrower and given by mailing the notice via certified mail to the Property address(or to such other address as Borrower may designate by written notice to Lender as provided herein), and(ii)any notice to Lender shall be given by mailing the notice via certified mail to the following address(or to such other address as Lender may designate by written notice to Borrower as provided herein): [insert Lender's address]. 7. Governing Law;Severability. This Mortgage shall be governed by the laws of Minnesota. In the event that any provision or clause of this Mortgage or the Note conflicts with applicable law,such conflict shall not affect other provisions of this Mortgage or the Note which can be given effect without the conflicting provision. 8. Additional Terms. Check this box ❑ if Minnesota Uniform Conveyancing Blank 20.2.1 or any other addendum (either one or more)containing additional terms and conditions is attached to this Mortgage.If the foregoing box is not checked,then this Mortgage shall not contain any such additional terms and conditions.The number of additional attached pages is[insert number of pages in addendum].Terms of this Mortgage will run with the Property and bind the parties hereto and their successors in interest. Borrower [printed name of Borrower] [printed name of Borrower] State of Minnesota,County of[...] This instrument was acknowledged before me on [monthldaylyear],by[insert name and marital status of each Borrower]. (Stamp) (signature of notarial officer) Title(and Rank): My commission expires: (month/day/year) THIS INSTRUMENT WAS DRAFTED BY: [insert name and address] Note: Failure to record or file this mortgage may give other parties priority over this mortgage. ATTACHMENT A RENTAL-TO-HOMEOWNERSHIP PROGRAM REHABILITATION LOAN PROMISSORY NOTE 1. FOR VALUE RECEIVED, the undersigned ("Borrower") agrees to pay to the Housing and Redevelopment Authority in and for the City of Richfield, a body corporate and politic under the laws of the State of Minnesota, ("Noteholder"), the sum of (the "Original Note Amount"), without interest, on the Maturity Date as hereinafter defined. 2. The Borrower acknowledges that the Original Note Amount is $ loaned to the Borrower by the Noteholder and shall bear no interest, for the property located at Richfield, Minnesota, which property is legally described as follows: (the "Subject Property"). 3. The Maturity Date shall be the first date prior to (ten years from the date of this Note), upon which any of the following events shall occur: a. The Borrower does not own and occupy the property as Borrower's primary residence; b. The Borrower does not obtain homestead classification for the Property within 60 days after the purchase of the Property; c. The Property ceases to be classified as homestead, at any time during the ten year period commencing with the date of this note; d. the Property is voluntarily or involuntarily sold, transferred or otherwise conveyed; e. the Property is rented, leased, unoccupied or assigned for a period exceeding six consecutive months; f. there exists any default under the terms of this or any other mortgage secured by the Property and the Borrower has not entered into a work-out agreement; g. there exists any other event which would cause the Subject Property to be occupied by other than the Borrower. If there has been no event prior to (ten years after the date of this Note)_which causes the occurrence of the Maturity Date, then the Borrower shall thereafter be relieved of the obligation to repay the Original Note Amount, and the lien hereby created shall be terminated. Upon payment of this Note as provided herein, the Noteholder will, within 30 days of written demand by the Borrower, execute a release and satisfaction or partial release and partial satisfaction of this Note. 4. To secure payment of this Note,the Borrower will execute a mortgage deed (the "Mortgage"). All of the agreements, conditions, covenants,provisions, and stipulations and remedies contained in the Mortgage are hereby made a part of this Note to the same extent and with the same force and effect as if they were fully set forth herein. It is agreed that time is of the essence of this Note. If a default by the Borrower occurs under the Agreement, then the Noteholder may at its right and option, exercise any rights it may have under law or at equity under the Note and under the Mortgage. 5. In the event that the Borrower has knowledge of or is notified directly or indirectly that a default has occurred or will occur under this Note or the Mortgage,the Borrower shall immediately notify the Noteholder in writing of such proceedings. 6. Presentment, protest and notice of dishonor are hereby waived by the Borrower. The Borrower shall pay all costs incurred by the Noteholder hereof in the collection of this Note, including reasonable attorney's fee. If the Noteholder requires the Borrower to pay in full and the Borrower refuses to do so within the required period of time,the Borrower will be responsible for all costs incurred by the Noteholder in enforcing this Note, including reasonable attorney's fees. 7. It is intended that this Note is made with reference to and shall be construed as a Minnesota contract and shall be governed by the laws of the state of Minnesota without regard to conflict of laws provisions. Any disputes, controversies, or claims arising out of this Note shall be heard in the state or federal courts of Minnesota, and all parties to this Note waive any objection to the jurisdiction of these courts, whether based on convenience or otherwise. 8. If there is more than one Borrower under this Note, each person shall be considered a Borrower within the meaning of this Note and each shall be jointly and severally responsible for payment under the Note. 9. IT IS HEREBY CERTIFIED AND RECITED that all conditions, acts, and things required to exist, happen, and be performed precedent to or in the issuance of this Note do exist, have happened, and have been performed in regular and due form as required by law. Dated: BORROWER(S) STATE OF MINNESOTA ) ) SS COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this day of 20_by and Notary Public This document drafted by: The Housing and Redevelopment Authority in and for the City of Richfield 6700 Portland Avenue South Richfield,MN 55423 (612)861-9760 Exhibit D Richfield Housing and Redevelopment Authority COMPLETION CERTIFICATE Note: This form must be signed by all parties before release of final payment under the Richfield Rental-to- Homeownership Program. Homeowner Property Address CONTRACTOR: The undersigned Contractor hereby certifies that the improvements specified by the Work Contract pertaining to the above Homeowner have been completed in their entirety and in accordance with the agreement between the undersigned and the Homeowner, and that all work performed by the undersigned is subject to and in conformity with the Contractor's Warranty set forth in said Work Contract. The Contractor affirms that all required permits were obtained from the Richfield Inspections Division. Name of Firm Amount of Contract Completed Signature of Authorized Representative INSPECTOR: The undersigned Inspector hereby certifies that the Contractor listed above has completed the work and/or delivered all materials per applicable codes for the housing rehabilitation improvements noted on the back side of this form, or attached to this form. No other improvements are part of this sign-off request. Signature of Inspector Date Inspected HOMEOWNER: The undersigned Homeowner hereby certifies that the Contractor listed above has completed the work and/or delivered all materials for the housing rehabilitation improvements, in full compliance with the terms of the Work Contract between the undersigned and said Contractor. The undersigned hereby authorizes the HRA to disburse the funds directly to the Contractor. Signature of Homeowner Date RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY: The undersigned Administering Entity hereby certifies that the above-referenced Homeowner is in conformity with eligibility requirements as set forth in the Transformation Loan Program Procedural Guidelines. Authorized Signature/Title Date IMPROVEMENTS COMPLETED AS PART OF THIS CERTIFICATE Property Address: Exhibit E ERRORS, OMISSIONS AND ACKNOWLEDGMENT AGREEMENT (the "Mortgagor") acknowledges that the Housing and Redevelopment Authority in and for the City of Richfield ("HRA" or "Mortgagee") is handling all or part of the closing of the mortgage from the HRA to Mortgagor encumbering property at , Richfield, MN 55423. The Mortgagor acknowledges that the HRA CLOSING AGENT HAS NOT EXPRESSED AN OPINION REGARDING THE LEGAL EFFECT OF THE CLOSING DOCUMENTS OR OF THE CLOSING ITSELF. Mortgagor agrees to re-execute any of the closing documents, execute any further documents which are necessary to complete closing of the mortgage contemplated by the agreement between the parties, and cooperate in correcting any clerical errors or miscalculations of any figures in said closing. Dated: MORTGAGOR: MORTGAGEE: Housing and Redevelopment Authority in and By: for the City of Richfield By: Its: By: Exhibit E • (Top 3 inches reserved for recording data) CERTIFICATE AND REQUEST FOR NOTICE by Business Entity 1. The name and mailing address of the person holding a lien or having a redeemable interest in real property requesting notice is: Housing and Redevelopment Authority in and for the City of Richfield, a public body corporate and politic under the laws of Minnesota("Requesting Party"). 2. The redeemable interest or lien of the Requesting Party was created by the following instrument: [insert name of document/instrument] dated [month/day/year] and recorded on [month/day/year], as Document Number [...] (or in Book [...] of[...] Page [...]), in the Office of the ❑ County Recorder ❑ Registrar of Titles of Hennepin County, Minnesota. 3. The Requesting Party has a redeemable interest in or lien upon real property in Hennepin County, Minnesota, described as follows: [insert legal description...] Check here if all or part of the described real property is Registered(Torrens) ❑ 4. The Requesting Party requests notice of any mortgage foreclosure by advertisement as provided in Minn. Stat. 580.032, subd. 1. Exhibit E 5. The Requesting Party requests notice of any post-foreclosure sale reduction of the mortgagor's redemption period for any superior lien as provided in Minn. Stat. 582.032, subd. 3. HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD By: Steven L. Devich Its: Executive Director State of Minnesota, County of Hennepin This instrument was acknowledged before me on [month/day/year], by Steven L. Devich, the executive director of Housing and Redevelopment Authority in and for the City of Richfield, a public body corporate and politic under the laws of Minnesota, on behalf of the authority. (Stamp) (signature of notarial officer) Notary Public My commission expires: (month/day/year) THIS INSTRUMENT WAS DRAFTED BY: Housing and Redevelopment Authority in and for the City of Richfield 6700 Portland Avenue South Richfield, MN 55423 612-861-9760 Exhibit G Date: Satisfaction Of Mortgage THAT CERTAIN MORTGAGE owned by the undersigned, dated , executed by , Mortgagor to Housing and Redevelopment Authority in and for the City of Richfield, as Mortgagee, and filed for record as Document Number in the Office of the County Recorder (or Registrar of Titles) of Hennepin County, Minnesota, is with the indebtedness thereby secured, fully paid and satisfied. Housing and Redevelopment Authority in and for the City of Richfield By Its Chairperson By Its Executive Director Exhibit G STATE OF MINNESOTA } ss.: COUNTY OF HENNEPIN ) The following instrument was acknowledged before me this day of 20 , by ,the Executive Director, of the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota, a public body corporate and politic under the laws of Minnesota, on behalf of the HRA. NOTARIAL STAMP OR SEAL SIGNATURE OF PERSON TAKING ACKNOWLEDGMENT STATE OF MINNESOTA } ss.: COUNTY OF HENNEPIN ) The following instrument was acknowledged before me this day of 20 , by , the Chairperson, of the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota, a public body corporate and politic under the laws of Minnesota, on behalf of the HRA. NOTARIAL STAMP OR SEAL SIGNATURE OF PERSON TAKING ACKNOWLEDGMENT This Instrument Drafted By: The Housing and Redevelopment Authority in and for the City of Richfield 6700 Portland Avenue South Richfield,MN 55423 (612)861-9760 Exhibit H RENTAL-TO-HOMEOWNERSHIP PROGRAM REHABILITATION LOAN REMODELER FORM Business Name: Phone No.: Business Address (street/city/zip): Contact Person: 1. How many years has your company been in business? 2. In the past three years, what has been the average number of homes your company has remodeled per year? 3. In the past three years, what has been the average remodeling contract price by your company? 4. Please indicate if you comply with statutory warranties. Yes No Attach a copy of your company warranty policy. 5. You agree that you have the ability, at all times during the term of the remodeling contract, to have and keep in force the following minimum insurance coverages: COVERAGE LIMITS Workers Compensation Statutory Employer's Liability $300,000 BI & PD Comprehensive General Liability Included Independent Contractors Contingent Included Products/Completed Operations Included Contractual Liability Included Personal Iniury Liability Included "XCU" Liability (if applicable) Included Broad Form Property Damage Included Comprehensive Automobile Liability $300,000 BI & PD for owned,hired and non-owned 6. You meet Minnesota state licensing requirements. Yes No - OVER- Exhibit H 7. Please list municipalities in which you have secured remodeling permits within the past 3-5 years and indicate the name of the City staff person (building official or other) with whom you had the most contact. 8. Provide names, addresses and telephone numbers from five customers that may be contacted as references. 1. 2. 3. 4. 5. 9. Provide names, addresses and telephone numbers of three major suppliers or subcontractors that may be contacted as references. 1. 2. 3. 10. Please identify: 1. Construction Lender 2. Design Professional I have reviewed the general program summary and to the best of my knowledge can meet the specified requirements. The information contained on this form may be provided to lenders, homeowners, and others interested in participating in the Richfield remodeling programs. By: Its: Date: AGENDA ITEM#: 6 REPORT#: 21 STAFF REPORT HOUSING AND REDEVELOPMENT AUTHORITY MEETING APRIL 21, 2014 REPORT PREPARED BY: JOHN STARK, COMMUNITY DEVELOPMENT DIRECTOR NAME,TITLE REPORT PRESENTER: JOHN STARK, COMMUNITY DEVELOPMENT DIRECTOR NAME,TITLE DEPARTMENT DIRECTOR REVIEW: ® �! . .0 REVIEWED BY EXECUTIVE DIRECTOR: ;WNW lidrAf/441L64111 ITEM FOR HRA CONSIDERATION: Consideration of authorization to designate five lots purchased under the New Home Program as Richfield Rediscovered Program lots. I. RECOMMENDED ACTION: By Motion: Authorize staff to designate five lots purchased under the New Home Program as Richfield Rediscovered Program lots. II. EXECUTIVE SUMMARY At the January 22, 2014 Housing and Redevelopment Authority (HRA) meeting, the HRA asked staff to determine whether lots that were purchased by the HRA for the construction of new affordable homes as part of the New Home Program could be redesignated for inclusion in the Richfield Rediscovered Program for the construction of market-rate housing. It is clear that any properties purchased with federal Community Development Block Grant (CDBG) funds must be sold to households meeting income requirements. For the remainder of properties, staff has concluded that, although the acquisition of homes for the New Home Program were specifically included in the budgetary approval for that Program and approval of the acquisition of those properties was for the stated intent of affordable housing, the HRA may authorize the sale of those properties as part of the Richfield Rediscovered Program. 042114 Designate New Home Lots to RR.doxc Five such lots which were purchased for the intent of inclusion in the New Home Program would be eligible to be marketed for sale under the Richfield Rediscovered Program: 6637 5th Avenue, 6345 Bloomington Avenue, 7225 1st Avenue, and 6416 16th Avenue (double lot). Four additional lots purchased through the New Home Program utilizing federal CDBG funds, will be retained for the future development of affordable housing. III. BASIS OF RECOMMENDATION A. BACKGROUND • Information relating to the five lots purchased through the New Home Program using the Housing and Redevelopment Fund is as follows: Address Year of Purchase Lot/property Acquisition Price features 6637 5th Avenue 2010 $105,000 Proximity to transit; shared driveway 6345 Bloomington 2011 $79,900 Proximity to transit Avenue and shopping; location on collector street 7225 1st Avenue 2012 $52,500 Adjacent lot developed as RR 6416 16th Avenue 2013 $92,500 Proximity to shopping (double lot) and transit; location across from future Cedar Point II multi- family redevelopment • Four additional lots were purchased under the New Home Program using federal CDBG funds, which require the properties to be developed as affordable to households earning no more than 80 percent of the area median income ($63,900 for a family of four). Those lots include 7312 and 7316 Clinton Avenue, 2517 76th Street West, and 6310 Irving Avenue. • Lots may be re-designated to the New Home Program in the future should they prove to fail to sell for Richfield Rediscovered homes. B. POLICY • The Richfield Rediscovered Program implements the goal of the Comprehensive Plan to maintain and enhance Richfield's image as a community with strong, desirable and livable neighborhoods. The Program carries out the policies that support this goal, including: o Encourage the creation of"move-up" housing through new construction. o Maintain an appropriate mix of housing types in each neighborhood based on available amenities, transportation resources and adjacent land uses. • The New Home Program implements the goal of the Comprehensive Plan to ensure sufficient diversity in the housing stock to provide for a range of household sizes, income levels and needs. The Program carries out the policies that support this goal, including: o Promote the development of a balanced housing stock that is available to a range of income levels. o Promote the development, management and maintenance of affordable housing in the City through assistance programs, alternative funding sources, and the creation of partnerships whose mission is to promote low to moderate income housing. C. CRITICAL TIMING ISSUES • N/A D. FINANCIAL • Five lots were purchased with funds from the Housing and Redevelopment Fund that were designated in the HRA Budget for the New Home Program. • The Housing and Redevelopment Fund is funded with tax increment from redevelopment tax increment districts. Properties purchased with the funds must qualify as substandard, and the funds must be used to correct/abate the substandard condition. Reuse of the property is not restricted to affordable housing. • Four New Home Program lots were purchased using federal CDBG funds. If the properties are not developed with affordable housing, the funds must be repaid. E. LEGAL • N/A IV. ALTERNATIVE RECOMMENDATION(S) • Decide not to designate the lots at this time. • Decide to only designate certain lots at this time. V. ATTACHMENTS • Map of lots to be redesignated. VI. PRINCIPAL PARTIES EXPECTED AT MEETING None 0 Z CV 0 U L 13 m e \�� Y8 e s n �' n n :. co 86030 /—® T- ■ ■■.■11111111/1111■■ .Ilil..n■...7111 m or -tl030 -T---/ J `r Illllltlllll (IJ_p1W LLL1l�..., , 0091 4191 `7 (fS�). 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ITEM FOR HRA CONSIDERATION: Consideration of adoption of a Senior Housing Policy to assist in guiding future senior housing development in the City of Richfield. I. RECOMMENDED ACTION: By Motion: Adopt the Senior Housing Policy to assist in guiding future senior housing development in the City of Richfield. II. EXECUTIVE SUMMARY In February 2013 the Richfield Housing and Redevelopment Authority (HRA) appointed fifteen people to a Housing Visioning Task Force to work with a consultant from Stantec to create a Housing Vision for the City of Richfield. The Housing Visioning Task Force met for a period of several months and subsequently presented a Housing Vision to the HRA and City Council for acceptance in June of 2013. Subsequently, a subset of the original Housing Visioning Task Force volunteered to continue meeting to develop a comprehensive housing policy for the HRA and City Council to assist in guiding future housing development in the City of Richfield. The Task Force divided the development of the policy up into several segments serving different populations and addressing different housing needs. Those 04212014 Senior Housing Policyxxx segments consist of Senior Housing, Affordable Housing, and Market-rate Housing which includes Move-up/Luxury housing. The Task Force has been meeting over the past several months discussing all facets of senior housing in and for the City of Richfield. As a result of these meetings, the Task Force has formulated the following suggested Senior Housing Policy Statement to be used by the HRA when evaluating future senior housing development proposals: When considering proposals for senior housing, the HRA shall evaluate proposals based on the following criteria: • The inclusion of lower-density senior housing (i.e., attached and detached townhomes); • If the proposed project includes high-density senior housing, does it provide a continuum of care within the project, including independent living, assisted living and memory care accommodations, when feasible; • Consideration should be given to the location of the proposed project: how it does or does not lend itself to providing a geographic balance of senior housing throughout the City, and to avoid concentrations of senior housing; • Further concentration of senior housing should be avoided in the Lakes at Lyndale area (66th Street and Lyndale Avenue); • Senior housing proposals in the Cedar Point II Housing area should be considered; • Can the senior housing project readily convert to serve other populations in the future (i.e., market rate units), as the market dictates; • Feasibility of the project based on a market survey conducted on behalf of the HRA; and • Feedback obtained through one or more "town hall" meetings held jointly by the HRA and the developer to garner input from residents regarding the proposed development, ideally held in locations near the proposed development; and • Work with existing senior developments to continue to update, upgrade and meet needs. It is also recommended that this policy be reviewed and updated every five to ten years, prior to the update of the City of Richfield's Comprehensive Plan. It is also recommended that an independent senior-housing market study be conducted at the time of the review and update of the policy. III. BASIS OF RECOMMENDATION A. BACKGROUND • In February 2013 the HRA appointed fifteen people to a Housing Visioning Task Force to work with a consultant from Stantec to create a Housing Vision for the City of Richfield. The Housing Visioning Task Force met for a period of several months and subsequently presented a Housing Vision to the HRA and City Council for acceptance in June of 2013. • A subset of the original Housing Visioning Task Force volunteered to continue meeting to develop a housing policy for the HRA and City Council to assist in guiding future housing development in the City of Richfield. • The Housing Visioning Task Force met over a period of several months in early 2014 and developed a list of recommendations to be included in the formal senior housing policy to be adopted by the HRA. B. POLICY • The HRA has expressed a desire to formulate a housing policy to help guide future housing development in the City of Richfield. • The 2008 City of Richfield Comprehensive Plan outlines the following senior housing related policies: o Maintain a housing supply that meets changing needs while sustaining the integrity of existing neighborhoods. o Promote the development of a balanced housing stock that is available to a range of income levels. o Encourage improvements to the housing stock to better serve families and seniors. C. CRITICAL TIMING ISSUES • N/A D. FINANCIAL • N/A E. LEGAL • N/A IV. ALTERNATIVE RECOMMENDATIONS) • Adopt the Senior Housing Policy statement with revisions. • Do not adopt the Senior Housing Policy statement. V. ATTACHMENTS • Senior Housing Policy Statement • Senior Housing Policy recommendations of the Housing Visioning Task Force • Housing Visioning Task Force Vision Statement VI. PRINCIPAL PARTIES EXPECTED AT MEETING • N/A SENIOR HOUSING POLICY STATEMENT When considering proposals for senior housing, the Housing and Redevelopment Authority shall evaluate proposals based on the following criteria: • The inclusion of lower-density senior housing (i.e., attached and detached townhomes); • If the proposed project includes high-density senior housing, does it provide a continuum of care within the project, including independent living, assisted living and memory care accommodations, when feasible; • Consideration should be given to the location of the proposed project: how it does or does not lend itself to providing a geographic balance of senior housing throughout the city, and to avoid concentrations of senior housing; • Further concentration of senior housing should be avoided in the Lakes at Lyndale area (66th and Lyndale); • Senior housing proposals in the Cedar Point II Housing area should be considered; • Can the senior housing project readily convert to serve other populations in the future (i.e., market rate units), as the market dictates; • Feasibility of the project based on a market survey conducted on behalf of the HRA; and • Feedback obtained through one or more "town hall" meetings held jointly by the HRA and the developer to garner input from residents regarding the proposed development, ideally held in locations near the proposed development. • Work with existing senior developments to continue to update, upgrade and meet needs. POLICY RECOMMENDATIONS From 4/1/14 Housing Visioning Working Group Meeting Members present: Catherine Ragozinno, Heidi Gaibor, Menekeh Giddings, Michelle Dowell Staff present: Karen Barton, Kate Aitchison The Housing Visioning Working Group made the following recommendations to be included in the formal senior housing policy to be adopted by the Housing and Redevelopment Authority and the City Council: • We have a lot of high-density senior housing (high rises), but we need more lower- density senior housing (i.e., attached and detached townhomes). • When considering future high-density senior housing developments, projects should provide a 'continuum of care', including independent living, assisted living and memory care accommodations when feasible. • When future senior housing developments are proposed, consideration should be given to provide a geographic balance throughout the city, and to avoid further concentrations of senior housing in the Lakes at Lyndale area (66th and Lyndale). • When future senior housing developments are proposed,the City, along with the developer, should hold one or more "Town Hall" meetings to gather input from residents regarding the proposed development. These meetings should be held in locations near the proposed development and provide project details. • Consideration should be given to senior housing projects that can readily convert to serve other populations (i.e., market rate units) in the future, as the market dictates. • When considering a proposed senior housing development,the City should have a market study done to verify feasibility. • It is recommended that Senior Housing be strongly considered for the Cedar Point II Housing site. Richfield Housing Vision Statement Richfield is a sustainable community that is known for its strong, vibrant and eclectic, amenity-rich neighborhoods supported by a full range and balance of housing types that match the choices of its diverse residents at every stage of their lives. THE MEANING OF WORDS IN THE VISION STATEMENT Richfield is—means that this is an aspirational statement. The Task Force members are describing the housing and community they want for their future. a sustainable community—"community"was a theme repeated by the Task Force members throughout the process. Housing was acknowledged to be very important, but housing was viewed as a means to achieving a strong community. "Sustainable"is added to encompass environmental, economic and social considerations. that is known for its strong,vibrant and eclectic,amenity rich neighborhoods-like community,strong neighborhoods were identified over and over again by the members throughout the process. The word "vibrant"means that these neighborhoods are prospering economically and socially. "Eclectic"was used to acknowledge that Richfield can have varied and unique neighborhoods, each building on distinct attributes and opportunities. "Amenity-rich"means environmental amenities like green space, trees, trails and other natural features, as well as community gathering places, coffee shops and similar cultural offerings. supported by a full range and balance of housing types—the concept of housing supporting the neighborhoods is reinforced with these words."Full range"of housing types means that there is a wide variety of housing options available for people to choose from when considering moving to or staying in Richfield.A "balance of housing types"means the avoidance of concentrations of any housing types. that match the choices of its diverse residents at every stage of their lives.—"match the choices of diverse residents"means that the City has what residents want, not just what they have to adapt to. The Task Force supports a broad definition of diversity. These varied housing offerings mean that residents can stay in the community their whole lives and find housing that meets their needs and their preferences. June 2013