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05-15-00 agendaCITY OF RICHFIELD, MINNESOTA HOUSING AND REDEVELOPMENT AUTHORITY • MONDAY, MAY 15, 2000 RICHFIELD CITY HALL 6700 PORTLAND AVENUE COUNCIL CHAMBERS 7 P.M. AGENDA CALL TO ORDER APPROVAL OF MINUTES OF (1) SPECIAL HRA CLOSED EXECUTIVE SESSION OF APRIL 17, 2000 AND (2) REGULAR HRA MEETING OF APRIL 17, 2000 1. OPPORTUNITY FOR CITIZENS TO ADDRESS THE HRA ON ITEMS NOT ON THE AGENDA 2. HRA APPROVAL OF AGENDA 3. CONSENT CALENDAR CONTAINS SEVERAL SEPARATE ITEMS WHICH ARE ACTED UPON BY THE HRA IN ONE MOTION. ONCE THE CONSENT CALENDAR HAS BEEN APPROVED, THE INDIVIDUAL ITEMS AND RECOMMENDED ACTIONS HAVE ALSO BEEN APPROVED. NO FURTHER HRA ACTION IS NECESSARY. HOWEVER, ANY HRA COMMISSIONERS 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 ~nNSFNr coi_EN~aR ARE RECOMMENDED FOR APPROVAL. A. CONSIDERATION OF APPROVAL OF RESOLUTION AUTHORIZING EXECUTION OF CONTRACT WITH HENNEPIN TECHNICAL COLLEGE FOR 2000-2001 NEW HOME PROGRAM PROJECT AT 6812 QUEEN AVENUE IN AMOUNT OF $126,000 S.R. NO.. 32 B. CONSIDERATION OF APPROVAL OF RESOLUTION AUTHORIZING REDUCTION IN LETTER OF CREDIT FOR SHOPS AT LYNDALE, PHASE II S.R. NO. 33 PUBLIC HEARING 4. PUBLIC HEARING AND CONSIDERATION OF RESOLUTION AUTHORIZING SALE OF 6901-12TH AVENUE TO SPENCER DAHL CONSTRUCTION, PETER C. BRANDY AND LISA M. BYSTEDT STAFF REPORT NO. 34 ADMINISTRATIVE REPORTS AND OTHER BUSINESS 5. EXECUTIVE DIRECTOR REPORT 6. 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 Administrative Services Director at 612-861-9702. AGENDA SECTION: public Hearins AGENDA ITEM # 4 REPORT # 34 STAFF REPORT HOUSING AND REDEVELOPMENT AUTHORITY MEETING MAY 15, 2000 REPORT PREPARED BY: REPORT PRESENTER: DEPARTMENT DIRECTOR REVIEW: REVIEWED BY EXECUTIVE DIRECTOR: PAM BOOKHOUT, REHABILITATION SPECIALIST BRUCE PALMBORG, COMMUNITY DEVELOPMENT DIRECTOR ITEM FOR HRA CONSIDERATION: Public hearing and authorization to sell 6901 12th Avenue South to Spencer Dahl Construction, Peter C. Brandt and Lisa M. Bystedt for new construction of a single family home. I. RECOMMENDED ACTION: Conduct and close a public hearing and by motion: Adopt the resolution authorizing the sale of 6901 12th Avenue to Spencer Dahl Construction, Peter C. Brandt and Lisa M. Bystedt. III. BACKGROUND ~ In August 1999, the HRA purchased the property at 6901 12th Avenue from the Department of Housing and Urban Development (HUD). It had been vacant for at least a year, had significant water damage, and was very small. A builder/buyer team has been identified to develop a new home on the site. The new home will be a two story home with just under 2,000 finished square feet. A detached three-car garage will be accessed from 69th Street. Its end value is anticipated to be $200,000. Demolition is complete, and construction is anticipated to start by the first of June. The Contract for Private Development identifies both the builder and the end buyers as "Developer". More and more builders are requesting their end buyers to secure the construction financing as a measure of security (i.e. to protect 0515-6901 twelfth the builder from buyers who may change their mind and back out of the home purchase). Buyers may benefit by getting a better deal on their end financing if they use the same lender. The home built at 7133 Lyndale Avenue, featured in .the Spring Preview Parade of Homes, was sold under similar circumstances. III. BASIS OF RECOMMENDATION A. POLICY • The HRA acquired the site for development under the Richfield Rediscovered program. • The builder has not built under the program previously. Spencer Dahl Construction is licensed and has provided appropriate supplier and customer references. The buyers have qualified for the construction financing and permanent mortgage financing. • The terms of the Contract for Private Development have been negotiated-and are in conformance with program guidelines. B. CRITICAL ISSUES • N/A C. FINANCIAL • The builder/buyers must provide a Letter of Credit or other acceptable. security upon closing to cover the purchase price of the land, $40,000, and performance security in the amount of $35,000. D. LEGAL • Notice of public hearing on sale of the property was published on May 3, 2000 in the Sun-Current. IV. ALTERNATIVE RECOMMENDATION(S~ • Do not proceed with the Contract for Private Development with the recommended builder and direct staff to find another buyer. V. ATTACHMENTS • Resolution • House plans/elevations • Site Plan VI. PRINCIPAL PARTIES EXPECTED AT MEETING • N/A • HRA RESOLUTION NO. RESOLUTION AUTHORIZING THE SALE OF REAL PROPERTY LOCATED AT 6901 12TH AVENUE TO SPENCER DAHL CONSTRUCTION, PETER C. BRANDY AND LISA M. BYSTEDT WHEREAS, the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota (HRA) desires to develop certain real property pursuant to and in furtherance of the Richfield Rediscovered program. adopted by the HRA, said real property being described as 6901 12th Avenue South, and whose legal description is Lot 10, Block 4, Richlands Addition; and WHEREAS, the HRA is authorized to sell real property within its area of operation after a public hearing; and WHEREAS, the purchaser of the described property has been identified as Spencer Dahl Construction, and a Contract for Private Development has been negotiated for a sale price of $40,000 with performance in the same amount; and WHEREAS, a public hearing has been held after proper public notice. NOW, THEREFORE, BE IT RESOLVED by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota: S 1. A public hearing has been held and 6901 12th Avenue is authorized to be sold for $40,000 to Spencer Dahl Construction, Peter C. Brandt and Lisa M. Bystedt; and 2. The Chairperson and Executive Director are authorized to execute a Contract for Private Development and other agreements as required to effectuate the sale to Spencer Dahl Construction, Peter C. Brandt and Lisa M. Bystedt. Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this 15th day of May, 2000. Thomas E. Harms, Chair ATTEST: Michael Sandahl, Secretary • 6901 - 12TH AVENUE- • • RIGHT .ELEVATION FRONT ELEVATION REAR ELEVATION LEfT ELEVATION 0 (~~_~ ~U ~i ~~ ~ I ,[~ i KITCHEN BREAKFAST "C.J ®I B TH ®'® ~ z Q I i ~µ~ FAMILY FP I .>O LIN. ._1 PANTRY REF. I 11 1 II I I I I DINING rvT tr< • LIVING I I MAIN FLOOR SECOND FLOOR _~ • try v, ~ ~ ~ A ~ ~ o m 0 ~~~ N O z~~- -- -- i i s, ~ ~r~u~, w ~~ N~ ~~ i~ IV d0 Q ~ ~ ~ ~ vo ~ - ~ ~ i ~ A f X MlN. ~ ~~r ~ - 60' /z' Miu, i w ;~ w ~- 15~MlN. l 1 ~n -~ AGENDA SECTION: AGENDA ITEM # REPORT # • U STAFF REPORT ~ HOUSING AND REDEVELOPMENT AUTHORITY MEETING MAY 15, 2000 Consent 3B 33 REPORT PREPARED BY: REPORT PRESENTER: DEPARTMENT DIRECTOR REVIEW: REVIEWED BY EXECUTIVE DIRECTOR: ~' KATIA MEDVETSKI, REDEVELOPMENT SPECIALIST NAME, TITLE BRUCE PALMBORG, COMMUNITY DEVELOPMENT DIRECTOR ITEM FOR HRA CONSIDERATION: Consideration of a resolution approving a request by CSM Corporation to reduce the amount of the Letter of Credit for Shops at Lyndale, Phase II. I. RECOMMENDED ACTION: By Motion: Approve a resolution authorizing a reduction in the Letter of Credit for Shops at Lyndale, Phase II. III. BACKGROUND ~ On January 18, 2000, the Housing and Redevelopment Authority (HRA) approved a resolution to reduce CSM Corporation's Letter of Credit for Shops at Lyndale, Phase II by $300,000, bringing the new amount to $1,070,000. Recently, CSM requested that this Letter of Credit be further reduced because of recent condemnation award settlements and payments made by CSM to the Housing and Redevelopment Authority (HRA). After consultation with legal counsel and an analysis of potential risk remaining in the final settlements, it was proposed that a reduction to the $1,070,000 Letter of Credit could be made in the amount of $150,000. The new total for the Letter of Credit would be $920,000. 0515LtrofCr NAME, TITLE III. BASIS OF RECOMMENDATION A. POLICY • The HRA required a Letter of Credit to ensure payments from the CSM Corporation due to condemnation actions necessary for the project. • The HRA has in the past approved requests of CSM to reduce the Letter of Credit for the project when CSM makes payments on the condemnation awards and/or settlements. B. CRITICAL ISSUES • CSM would appreciate timely reduction to the Letter of Credit. C. FINANCIAL • Legal counsel has provided a risk analysis to staff as the outstanding potential claims remaining in the condemnation action for the project and recommended a safe level of Letter of Credit reduction. D. LEGAL • See Financial Section above. IV. ALTERNATIVE RECOMMENDATION~S~ • Do not approve CSM Corporation's request for a reduction in the Letter of Credit. • Delay approval CSM Corporation's request for a reduction in the Letter of Credit. V. ATTACFIMENTS • HRA Resolution VI. PRINCIPAL PARTIES EXPECTED AT MEETING • Murray Kornberg, CSM Corporation L~ . HRA RESOLUTION NO. RESOLUTION AUTHORIZING A $150,000 REDUCTION IN IRREVOCABLE STANDBY LETTER OF CREDIT DATED FEBRUARY 22, 2000 FOR THE ACCOUNT OF CSM INVESTORS, INC. SHOPS AT LYNDALE, PHASE 11 WHEREAS, the Housing and Redevelopment Authority (HRA) entered into an Agreement with CSM Corporation (Developer), a Minnesota business corporation, dated April 11, 1994, pursuant to and in furtherance of the ILN Redevelopment .Project heretofore adopted by the City and the Richfield Housing and Redevelopment Authority; and WHEREAS, the Agreement obligated the Developer to cons#ruct certain improvements to property identified in that Agreement; and + WHEREAS, Section 4.7 of the Agreement required the HRA to furnish the Developer with a Certificate of Completion upon completion of the Phase II construction in accordance with Concept Plans; and WHEREAS, the Developer originally provided the HRA with an Irrevocable Standby Letter of Credit in the amount of X2.0 million dated November 15, 1996 as performance security for payment of assembly costs for the Shops at Lyndale, Phase tl; and i WHEREAS, since then the Developer has made certain site assembly payments and has most recently requested that the Irrevocable Standby Letter of Credit dated February 22, 2000, be reduced in the amount of $150,000; and WHEREAS, staff has found that payments made toward site assembly costs would warrant the reduction in the Irrevocable Standby Letter of Credit dated February 22, 2000. NOW THEREFORE, BE IT RESOLVED by the Housing and Redevelopment Authority that the Executive Director and HRA Chair are directed to take all steps necessary to facilitate a reduction in the Irrevocable Standby Letter of Credit dated February 22, 2000 by $150,000 and obtain a replacement Letter of Credit in the amount of $920,000 from the Developer. Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this 15th day of May, 2000. Thomas E. Harms, Chair ATTEST: Michael Sandahi, Secretary • AGENDA SECTION: Consent AGENDA ITEM # 3A REPORT # ~ ~ r STAFF REPORT HOUSING AND REDEVELOPMENT AUTHORITY MEETING MAY 15, 2000 PAM BOOKHOUT, REPORT PREPARED BY: REHABILITATION SPECIALIST NAME, TITLE REPORT PRESENTER: BRUCE PALMBORG, COMMUNITY DEVELOPMENT DIRECTOR NAME, TITLE DEPARTMENT DIRECTOR REVIEW: SIGNATURE REVIEWED BY EXECUTIVE DIRECTOR: ITEM FOR HRA CONSIDERATION: Authorization to execute a contract with Hennepin Technical College to initiate a 2000-2001 New Home Program project at 6812 Queen Avenue. RECOMMENDED ACTION: By Motion: Adopt the resolution authorizing the execution of the contract with Hennepin Technical College in the amount of $126,000 for the 2000-2001 New Home Program project at 6812 Queen Avenue. • IIL BACKGROUND The HRA purchased the property at 6812 Queen Avenue due to its substandard condition in 1999. Demolition has been completed. Hennepin Technical College (HTC) has requested that the HRA participate in a new construction project for the 2000-2001 school year. Established performance standards between the two organizations ensure that the home will be framed, roofed and sided by the end of December 2000. Interior wall framing, general carpentry, electrical, plumbing and heating will be completed by March 2001. Professional subcontractors to HTC provide the electrical, plumbing, heating and painting portions of the project. Concrete steps and walk, deck, and installation of interior finishes will be completed by June 2001. The home will then be marketed and sold by the HRA next summer. 0515-6812Queen The project at 6812 Queen Avenue, to be stick-built on site, is the only HTC project commitment for the 2000-2001 school year. The college had increased class capacities last year, and therefore initiated two projects for the 1999-2000 school year on a trial basis. Although construction is going well on both sites, the students have had less classroom lab opportunities. One site will ensure adequate time on campus as well as on site. A copy of the house plan is attached. The new house will have approximately 1,620 square fee of finished living area. The detached garage will be accessed from the alley. The amount of the HTC contract for this project will not exceed $126,000. The cost is approximately $6,000 over last year's projects, due to increased subcontractor costs and continued high costs of sheetrock and lumber. However, lumber costs have been estimated high in case of shortage, and the actual project cost should be much less. Sources and uses are as follows: ACTIVITY AMOUNT FUNDING SOURCE Acquisition $70,000 CDBG funds Demolition $4,750 CDBG funds HTC contract $126,000 Proceeds of sale Landscaping $5,000 Proceeds of sale Closing costs $2,500 Proceeds of sale Although the sale price of the home will be determined upon completion, based on current market conditions, staff estimates its value at $170,000. A second mortgage from the HRA and a reduced interest rate on the mortgage obtained by the first-time buyer will make it affordable by a moderate income family. III. BASIS OF RECOMMENDATION • Plans have been developed for 6812 Queen Avenue that meet all setback requirements and program needs of the HRA. • The contract provisions are similar to previous contracts with HTC. A summary of the contract requirements is attached. • HTC has demonstrated a unique ability to provide a desirable product at a more modest cost than other builders, often on sites that are challenging to market. A. POLICY • N/A B. CRITICAL ISSUES • A neighborhood meeting was held in April. C. FINANCIAL • N/A • D. LEGAL • N/A IV. ALTERNATIVE RECOMMENDATION(S~ • Do not authorize execution of the HTC contract. V. ATTACHMENTS • Resolution • Contract requirements (Attachment A) • Building plans (Attachment B) • Site plan (Attachment C) VI. PRINCIPAL PARTIES EXPECTED AT MEETING. N/A • HRA RESOLUTION NO. RESOLUTION AUTHORIZING EXECUTION OF A CONTRACT WITH HENNEPIN TECHNICAL COLLEGE (HTC) FOR DEVELOPMENT OF 681.2 QUEEN AVENUE WHEREAS, the City of Richfield purchased the property at 6812 Queen Avenue by voluntary acquisition,. and conveyed it to the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota (HRA) for the purpose of redevelopment, said real property being described as 6812 Queen Avenue South, and whose legal description is Lot 4, Block 2, Tingdale Bros. Lincoln Hills Third Addition; and WHEREAS, a project has been proposed as a cooperative effort between the HRA and HTC; and WHEREAS, the property at 6812 Queen Avenue would be developed with a new single family home and garage; and WHEREAS, the cost for constructing a new home and garage in accordance with the plans and specifications is expected to cost $126,000; and WHEREAS, following completion of construction, the property will be sold to a moderate income, first-time buying family. NOW, THEREFORE, BE IT RESOLVED. by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota that the Chairperson and Executive Director are authorized to enter into a Construction Agreement with HTC for an amount not to exceed $126,000 for the construction of a new home and garage at 6812 Queen Avenue. Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this 15th day of May 2000. Thomas E. Harms, Chair ATTEST: Michael Sandahl, Secretary • Attachment A • SUMMARY OF CONTRACT REQUIREMENTS FOR THE HTC PROJECT AT 6812 QUEEN AVENUE • Construction of a new home and two car detached garage at 6812 Queen Avenue. • Professional installation of heating, electrical and plumbing systems. • Completion by June 2001. - • Supervision of labor and insurance coverage will be the responsibility of HTC. • Per Minnesota Statute, HTC is responsible for aone-year warranty for defects caused by faulty workmanship or defective materials; a two year warranty on installation of plumbing, electrical, heating and cooling systems; and a ten year warranty on structural defects. • Performance standards have been established specifying HTC's responsibilities concerning timely completion of the home and routine site maintenance during the construction period: / By the end of December, excavate, place footings and foundation, frame, install windows and doors, side and roof. - By end of March, interior wall framing, insulation, gypsum, cabinets and the majority of plumbing, heating and .electrical should be installed. / By the end of June, concrete steps, sidewalk, brick work, and driveway will be competed. • 6812 QUEEN AVENUE: ,+ FRONT ELEVATION • RIGHT ELEVATION ...~t~chrnen~ B1 LEFT ELEVATION • REAR ELEVATION • a s N _~ Q ~_- ~_ ,~ ~, ~i t,.. ~:. ~, w t7 r r :..,. "~ ~ `-. N y ~_! ! sr ~~~' ,; ~' ._ ~~ ;; ~ ~~ I; 37?A D ~+ attachment ,; _ ~~ I G. L~ a z c 'v _m ~o m ATE R~ • I~ I- N • k~ C rn m Z D <~ rn n ~D ~r ,o m o ~ ~ ,, y O ~~ ~ N O • Attachment C --- - - - - - ~-LLFYN ~._ ~ ~ A N A N 1 ~ ~ I M ~ 0 v 3 20~ 6' 14' 24' 6' ~ 1 m° NI i ~. p ;1 i ,~ N °° ~- ~ "rn ~ ~ IA PORC--~ _]L O -- -- so• W cuR~ y, QUEEf~1 AvE.