03-16-98 agenda
CITY OF RICHFIELD
MONDAY, MARCH 16, 1998
REGULAR HOUSING AND REDEVELOPMENT AUTHORITY MEETING
IMMEDIATELY FOLLOWS SPECIAL COUNCIL STUDY SESSION
COUNCIL CHAMBERS
CALL TO ORDER
AGENDA
APPROVAL OF MINUTES OF REGULAR HRA MEETING OF FEBRUARY 17, 1998
1. OPPORTUNITY FOR CITIZENS TO ADDRESS THE HRA ON ITEMS NOT ON
THE AGENDA
2. PUBLIC HEARING AND CONSIDERATION OF RESOLUTION AUTHORIZING
SALE OF 6820 PORTLAND AVENUE TO TWIN CITIES HABITAT FOR
HUMANITY FOR SINGLE FAMILY HOME DEVELOPMENT
HRA LETTER NO. 16
3. PUBLIC HEARING AND CONSIDERATION OF RESOLUTION AUTHORIZING
- SALE OF 250 WEST 78TH STREET TO CANDLEWOOD HOTEL CO.
9 HRA LETTER NO. 17
4. PUBLIC HEARING AND CONSIDERATION OF RESOLUTION AUTHORIZING
PURCHASE OF 300 WEST 78TH STREET FROM CITY OF RICHFIELD
HRA LETTER NO. 18
5. DISCUSSION AND REVIEW OF REMODELING ADVISOR SERVICES AND
RECOMMENDATION TO INCREASE COMPENSATION
HRA LETTER NO. 19
6. CONSIDERATION OF RESOLUTION AUTHORIZING PURCHASE OF 6241-
14TH AVENUE WITH CDBG FUNDS FOR NEW HOME PROGRAM, 6224
BLOOMINGTON AVENUE AND 7204 FIRST AVENUE UNDER RICHFIELD
REDISCOVERED PROGRAM
HRA LETTER NO. 20
7. EXECUTIVE DIRECTOR REPORT
8. CLAIMS AND PAYROLL
0 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 861-9702.
HOUSING AND REDEVELOPMENT AUTHORITY
HRA Letter No. 20
Agenda March 16, 1998
Issue Statement:
Adoption of a resolution authorizing the purchase of 6241-14th Avenue with CDBG
funds for the New Home Program, 6224 Bloomington Avenue and 7204 First Avenue
under the Richfield Rediscovered Program.
Background:
The property at 6241-14th Avenue is a small 1-1/2 story home that has several health,
safety and maintenance problems. The seller, an elderly woman, has had severe
health problems for years and has been unable to maintain the property. Other
problems include interior water damage, uneven floors, and exterior deterioration. The
property was appraised at $56,000. The owner has moved into an assisted living
facility and the property is now vacant.
The property at 6224 Bloomington Avenue is a 784 square foot house. The detached
garage has numerous leaks and code violations and, due to its unsoundness, requires
demolition. The house similarly has numerous structural and systemic problems,
including unsafe basement stairs, damaged bathroom fixtures, illegal electrical wiring
and plumbing and a partial, unusable basement. The U.S. Department of Housing and
Urban Development is selling the property for $35,100, approximately the price of the
land.
The property at 7204 First Avenue is a small, 700 square foot house with a crawl space
beneath it. All of the windows need replacement due to energy inefficiency and
inoperability. The furnace needs replacement and all interior finishes need updating.
Proper access to the crawl space would need to be constructed. The U.S. Department
of Housing and Urban Development is selling the property for $53,100, a significant
reduction from the property's estimated market value.
Recommended Motion:
Adopt the resolution authorizing:
1. The purchase of the property at 6241-14th Avenue for $56,000.
2. The purchase of the property at 6224 Bloomington Avenue for $35,100.
3. The purchase of the property at 7204 First Avenue for $53,100.
4. The HRA Chairperson and Executive Director to execute purchase agreements and
other documents to effectuate the purchases.
Basis of Recommendation:
1. The properties meet program requirements for acquisition.
2. Acquisition funding for the New Home and Richfield Rediscovered programs is
available.
Executive Director
JDP:cak
3. The owners have voluntarily expressed interest in selling the properties to the
HRA, and the properties are vacant.
4. The purchase of 6241-14th Avenue was negotiated relative to appraised value.
The purchase prices of 6224 Bloomington Avenue and 7204 First Avenue,
established by HUD, significantly reduce their estimated market value.
Alternative Recommendation:
Do not authorize acquisition.
Discussion/Decision Mode:
The purchase agreements are ready to be prepared in final form.
Respectf submitted,
James . Prosser
0 HRA RESOLUTION NO.
RESOLUTION AUTHORIZING PURCHASE OF REAL PROPERTY
LOCATED AT 6241-14TH, AVENUE FOR THE NEW HOME PROGRAM, AND 6224
BLOOMINGTON AND 7204 FIRST AVENUES
FOR THE RICHFIELD REDISCOVERED PROGRAM
WHEREAS, the Housing and Redevelopment Authority in and for the City of
Richfield, Minnesota (HRA) desires to purchase certain real property pursuant to and in
furtherance of the Richfield Rediscovered Redevelopment Project (Project) heretofore
adopted by the City of Richfield (City) and the HRA, said real property being described
as attached; and
WHEREAS, the HRA is authorized by Minnesota Statutes Section 469.012 to
acquire real property within its area of operation; and
WHEREAS, the properties meet all program requirements for acquisition; and
WHEREAS, the HRA has caused an appraisal of 6241-14th Avenue to be made
by a qualified, independent professional real estate appraiser and has a negotiated
purchase price with the owner based on stated values; and
WHEREAS, the U.S. Department of HUD, seller of 6224 Bloomington Avenue,
and 7204 First Avenue is selling the properties at a cost significantly reduced from their
estimated market values; and
0 WHEREAS, funds have been provided by the HRA and are available for
acquisition.
NOW, THEREFORE, BE IT RESOLVED, by the Richfield Housing and
Redevelopment Authority:
1. The purchase price for 6241-14th Avenue is approved at $56,000.
2. The purchase price for 6224 Bloomington Avenue is approved at $35,100.
3. The purchase price for 7204 First Avenue is approved at $53,100.
4. The Chairperson and Executive Director are authorized to execute a
Purchase Agreement or other documents to allow purchase for the
amounts set forth in this resolution.
Adopted by the Housing and Redevelopment Authority in and for the City of
Richfield, Minnesota this 16th day of March, 1998.
Thomas E. Harms, Chair
ATTEST:
Michael Sandahl, Secretary
HOUSING AND REDEVELOPMENT AUTHORITY
HRA Letter No. 19
Agenda March 16, 1998
Issue Statement:
Review of Remodeling Advisor services and a recommendation to increase
'compensation.
Background:
The HRA authorized Remodeling Advisor services in October 1993. The Remodeling
Advisor, Dave Schaffer, began by providing consultative advice for. homeowner's
remodeling needs. Mr. Schaffer continues in this capacity as he provides information,
makes home visits, provides lender contacts and encourages homeowners in their
remodeling plans. The HRA received an update on remodeling and loan activities at
the February meeting.
Besides performing services for single family homeowners, the Remodeling Advisor's
services have been extended to apartment owners. Along with property tax incentives
and design assistance, the Remodeling Advisor's role as technical advisor is central to
the Apartment Remodeling Program. In addition to these major roles, the Remodeling
Advisor fills other important program niches. For example, in February the HRA
authorized staff to apply for Hennepin County HOME funds in cooperation with
Cornerstone for two single family homes. The Remodeling Advisor's services in
identifying the rehabilitation needs of those properties and identifying contractors will be
significant.
The Remodeling Advisor's hourly rate, established in 1993, was increased two years
ago. It is proposed that the hourly compensation rate be raised in 1998 from $35 per
hour to $40 per hour. The 1998 budget can accommodate this increase.
Recommended Motion:
Increase compensation for advisor services to $40 per hour.
Basis of Recommendation:
1. To enhance the quality of the housing stock and minimize obsolescence and
deterioration, it is necessary to actively encourage homeowners to remodel.
2. The Remodeling Advisor is the foundation of all the remodeling program efforts for
single-family, multi-family and special projects.
3. The contractor, Dave Schaffer, has performed very satisfactorily.
4. The 1998 budget provides sufficient resources for the compensation adjustment.
0
0 5. The hourly rate will be consistent with the rate provided to independent contractors
by other communities who perform similar work.
Alternative Recommendation:
1. Delay action.
2. Direct staff to modify the proposal.
Discussion/Decision Mode:
The increase would take effect April 1, 1998.
Respectfully submitted,
Ja fsD. Prosser
Executive Director
JDP:cak
0
Exhibit A
October 6, 1993
Dave Schaffer shall perform the following services as they apply to the Richfield
Rediscovered Remodeling Program.
1. Work with staff in start-up, marketing, and ongoing monitoring of program.
2. Be available to attend open house functions, the Remodeling Fair and other
promotional events.
3. Meet with various businesses and community groups as requested to promote
and implement program.
4. Generate community interest through random calls, neighborhood canvassing
and door-to-door marketing.
5. Assist with an Informational Services to keep homeowners fully informed.
6. Meet initially with homeowners at their home to assist with the following:
a. Property evaluation survey documented on written survey form.
b. Identify and discuss needs, wants and design considerations.
c. Prepare an Action Plan outlining initial scope of work with general cost
estimates.
d. Explain program procedures and lending information including loan
requirements.
7. Follow-up contact after initial homeowner visit to monitor progress.
8. Be available to assist homeowner through the various program stages leading to
a signed construction agreement. This may include additional design and
technical assistance, contractor selection and the securing of a loan.
9. Submit monthly reports, written and oral, to HRA documenting measurable
objectives which include:
a. Number of homeowner calls made and received.
b. Number of homeowner site visits.
c. Number of follow-up calls made and results.
d. Number of referrals to lenders and results.
e. Record of marketing results.
10 f. Action plan cost estimate.
HOUSING AND REDEVELOPMENT AUTHORITY
HRA Letter No. 18
Agenda March 16, 1998
Issue Statement:
Public hearing and consideration of resolution authorizing the purchase of real property
at 300 West 78th Street from the City of Richfield.
Background:
Candlewood Hotel Co. will be purchasing the southern two-thirds of the former Lampert
Lumber property at 300 West 78th Street from the City. They will also.be purchasing
the southern two-thirds of the adjacent Canadian Pacific Railroad (CP) property from
the HRA. These two parcels will be combined to create the development site for the
new Candlewood Hotel. The northern one-third of the former Lampert property will be
purchased by the HRA and combined with the northern one-third of the adjacent CP
railroad property to create a commercial development site. This new site is currently
being marketed to the restaurant industry. The new property configuration and the
rationale for it are described in the attached January 30, 1998 HRA Memorandum. The
current site plan is also attached, along with a graphic representing the progression of
site configurations.
The sale price for the property is $477,345 or $13.25 per square foot. Bond proceeds
from the 1996 General Obligation Taxable Tax Increment Bonds will be used to
temporarily fund this purchase expenditure. This amount will be repaid to the bond
issue project fund immediately upon the sale of the property.
Recommended Motion:
Adopt a resolution which authorizes the purchase of real property at 300 West 78th
Street from the City of Richfield.
Basis of Recommendation:
1. The purchase of the subject property and the subsequent joining of that property
with the adjacent CP railroad property will result in the creation of a marketable
commercial development site.
2. The anticipated sale of this new commercial development site will not include any
land write downs and should result in a sale price sufficient to at least cover all HRA
expenses related to the purchase.
3. Bond proceeds from the 1996 General Obligation Tax Increment Bonds will be
used only as an interim source of financing to purchase the property and will be
reimbursed upon sale of the property.
4. Legal counsel has reviewed the purchase and temporary funding of the acquisition
expenditure.
5. City Council approved the sale of the property in an ordinance which was given a
Do not adopt the resolution authorizing purchase.
Discussion/Decision Mode:
Adoption of the resolution by the HRA will enable the due diligence period to begin. At
the appropriate time the HRA would hold a public hearing on the sale of the property.
Respectfully submitted,
Jame D. Prosser
Executive Director
JDP:cak
public Alternative hearing and second Recommendation: reading on November 24, 1997.
0
0 HRA RESOLUTION NO.
RESOLUTION AUTHORIZING PURCHASE OF REAL PROPERTY LOCATED AT
300 WEST 78TH STREET IN THE
ILN REDEVELOPMENT PROJECT AREA
WHEREAS, the Housing and Redevelopment Authority in and for the City of
Richfield, Minnesota (HRA) desires to purchase certain real property and furtherance of
the Interstate Lyndale Nicollet redevelopment project (the "Project") is for adopted by
the City of Richfield (the "City") and the HRA. Said real property is described as
follows:
Property Address:
300 West 78th Street
Legal Description:
That part of the West 305 feet of the East 330 feet of the Southeast
Quarter of the Southwest Quarter of the Southwest Quarter of Section 34,
Township 28, Range 24, which lies northerly of a line described as
beginning at a point in the west line of said East 330 feet distant 162.50
feet south of the northwest corner thereof, thence easterly, parallel with
the north line of said Southeast Quarter of the Southwest Quarter of the
Southwest Quarter, a distance of 151.09 feet; thence southerly at a right
angle 18 feet; thence easterly at a right angle 101.56 feet to a point in the
east line of said West 305 feet distant 222.80 feet south of the north line
of said Southeast Quarter of the Southwest Quarter of the Southwest
Quarter and said line there terminating, excepting the north 30 feet
thereof, according to the United States Government survey thereof,
Hennepin County Minnesota, except:
The South 192.80 feet of the North 22.80 feet of the West 66 feet of the
East 91 feet of the Southeast Quarter of the Southwest Quarter of the
Southwest Quarter of Section 34, Township 28, Range 24, according to
the United States Government survey thereof, Hennepin County,
Minnesota.; and
WHEREAS, the HRA is authorized by MN Statute, Section 469.012 to acquire
real property within its area of operation; and
WHEREAS, the proposed purchase is consistent with the project; and
WHEREAS, the purchase price is $477,345 and available bond proceeds from
the 1996 General Obligation Taxable Tax Increment Bonds will be used to temporarily
fund this expenditure and will be repaid from land sale proceeds immediately upon the
sale of the property.
NOW, THEREFORE, BE IT RESOLVED by the Housing and Redevelopment
Authority in and for the City of Richfield, Minnesota;
1. The purchase price is approved at $477,345.
2. The Chairperson and Executive Director are authorized to execute any and
all documents necessary to effectuate the purchase set forth in this
resolution.
Adopted by the Housing and Redevelopment Authority in and for the City of
Richfield, Minnesota this 16th day of March, 1998.
Thomas E. Harms, Chair
0
ATTEST:
Michael Sandahl, Secretary
CITY OF RICHFIELD, MINNESOTA
Office of City Manager
January 30, 1998
Council Memorandum No. 21 HRA Memorandum No. 1
The Honorable Mayor Housing and Redevelopment
and Authority Commissioners
Members of the City Council City of Richfield
Subject: Candlewood Hotel Company
Council Members and HRA Commissioners:
In November 1997 the City Council authorized staff to negotiate a purchase agreement
with Candlewood Hotel Co. for the purchase of the former Lampert Lumber property at
a price of $13.25/sq. ft. ($1,596,881). Since then staff and legal counsel have been
finalizing the agreement. One reason Candlewood was selected was their willingness
to design their site plan in such a way as to accommodate a restaurant if the adjacent
strip of excess railroad right-of-way became available.
In December 1997 the HRA authorized staff to negotiate a purchase agreement with
the Canadian Pacific Rail Road for the right-of-way at a price of approximately $9.00/sq.
ft. ($297,954). The agreement is essentially complete, but not executed. It includes a
provision allowing the HRA to cancel it within 45 days of execution for any reason.
Initially it was understood that Candlewood would subsequently purchase the railroad
right-of-way from the HRA and then market that property along with part of their site to a
restaurant developer. Recently Candlewood has expressed reservations about the
arrangement. They have indicated that their primary concern is getting the hotel built.
They are hotel builders not land developers. They still support having a restaurant next
to the hotel, but they would like to keep the agreement as simple as possible.
Staff believes that this is a good restaurant site and that the uses are complimentary
and desirable. The railroad parcel by itself has very limited development potential
because of its narrow width. It needs to be combined with part of the Lampert site to be
effectively utilized. To that end staff is pursuing the following course:
• The City sells Candlewood only the land area it actually needs for the hotel. This
_ would result in a sale price of approximately $1,380,000 rather than $1,596,881.
• The HRA executes the purchase agreement with the railroad.
• The HRA purchases the remaining Lampert property from the City for $13.25/sq. ft.
thus meeting the City's expected total price for the site.
• The HRA then seeks restaurant developers for the combined parcels.
Based on discussions with the development and real estate community, this is a good,
but not great restaurant site. Those same sources- indicate the site should sell for $11
to $13/sq. ft. The sale price would therefore range from $542,000 to $640,000. The
HRA's total investment would be $512,273 or $10.40/sq. ft.
The upside of this arrangement is that the City would be "made whole" and the railroad
property would be appropriately developed. The downside is the risk that a restaurant
user, willing to pay at least $10.40/sq. ft., may not be found. To address that concern
staff will be contacting the brokers who presented offers for the Lampert site and
requesting that they bring the City offers from various restaurants. By requesting
proposals from all of them, not just selecting one broker, a competitive environment is
created. This strategy proved quite successful in finding a buyer for the Lampert site.
However, it does not guarantee that a similar situation can be created again.
Again, the purchase agreement with the railroad may be canceled by the HRA within 45
days of execution for any reason. Therefore the agreement would be executed in early
February. If an acceptable restaurant developer cannot be found within the 45 day time
the options would be:
1. Seek additional time from the railroad.
2. Cancel the purchase agreement.
3. Sell Candlewood only as much land as they need and keep the property regardless
of current market conditions on the assumption that an appropriate user will emerge.
The risk here is that the HRA would have a $512,000 investment in land without an
identified user.
If you have any concerns, please contact me about this matter.
Respectfully submitted,
Jam . Prosser
City Manager
JDP:cak
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MAR-10-1998 11=34
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78th STREET
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1 SITE PLA OPTION SOUR INTERSTATE HWY 494
CUYYOA* IFNIM TOTAL P.03
•
Progression of Property Transactions and Reconfigurations
_F1 2.
FORMER
LAMPERT
PROPERTY
CP RAIL ROAD
PROPERTY
HRA buys 33,281 sq. ft from
CP Rail Road for $295,800
3.
CITY REMNANT
k REMNANT
1 CANDLEWOOD SITE
HRi
HRA buys the City remnant for
$13.25 per sq. ft., or $477,345. HRA
and City remnants are combined to
create restaurant site.
i
I
CANDLEWOOD SITE
Candlewood buys south 1/3 of
Lampert property from City and
south 1/3 of CP property from HRA
for $13.25 per sq. ft., or $1,391,780.
($1,119,413 to City, $272,367 to HRA)
4.
1 RESTAURANT SITE
1 CANDLEWOOD SITE
HRA markets restaurant site. (Total HRA
investment is $500,778, or $10.27 per sq. ft.
blended.)
HOUSING AND REDEVELOPMENT AUTHORITY
NRA Letter No. 17
Agenda March 16, 1998
Issue Statement:
Public hearing and consideration of a resolution authorizing the sale of property to
Candlewood Hotel Co.
Background:
In December, 1997 the HRA adopted a resolution authorizing the purchase of 250 West
78th Street, a narrow strip of excess railroad right of way, from the Canadian Pacific
(CP) railroad. A purchase agreement has been finalized but has not been executed.
The purchase price is $295,800.
As part of its development of the adjacent city owned, former Lampert Lumber property,
Candlewood Hotel Co. will subsequently purchase approximately two-thirds of the CP
railroad property from the HRA. The HRA will retain the remainder of the CP property
which will then be combined with that portion of the former Lampert property which is
not being purchased by Candlewood. The new parcel is currently being marketed to
the restaurant industry. The new property configuration and the rationale for it are
described in the attached January 30, 1998 HRA Memorandum. The current site plan
is also attached, along with a graphic representing the progression of site
configurations.
Recommended Motion:
Adopt the resolution which authorizes the sale of real property at 250 West 78th Street
to Candlewood Hotel Co. following the public hearing.
Basis of Recommendation:
1. In December 1997, the HRA authorized the purchase of the property from the CP
railroad for the purpose of subsequent resale of part or all of the property to
Candlewood Hotel Co.
2. The CP railroad parcel, by itself, has severely limited development potential due to
its narrow width.
3. The HRA will purchase 33,281 square feet of land from the CP railroad for $9.00
per square foot ($295,800) and will then sell approximately 20,556 square feet of
that property to Candlewood Hotel Co. for $13.25 per square foot ($272,367).
4. The remaining one-third of the CP railroad property will be combined with the
remnant from the adjacent former Lampert property creating a new commercial
development site. Proceeds from the sale of this new site should cover the HRH's
cost of acquiring the two properties.
Alternative Recommendation:
Do not adopt the resolution.
Discussion/Decision Mode:
Under the terms of the agreement between the City and Candlewood Hotel Co. the City
is entitled to deliver at closing an executed and binding deed from the HRA conveying
the CP railroad property directly to Candlewood.
Respectfully submitted,
Jamefve rosser
Execuirec tor
JDP:cak
HRA RESOLUTION NO.
RESOLUTION AUTHORIZING THE SALE OF REAL PROPERTY AT
250 WEST 78TH STREET
WHEREAS, the Housing and Redevelopment Authority in and for the City of
Richfield (HRA) has acquired property at 250 W. 78th Street legally described as that
part of section 34, Township 28, Range 24 described as follows:
Beginning at a point 120 feet Northerly, as measured at right angles, of a
point upon the South line of Section 34, Township 28 North, Range 24
which is 91 feet Westerly of the Southeast corner of the Southwest
Quarter of the Southwest Quarter (SW 1/4 SW 1/4) of said Section 34;
thence North 540 feet; thence East 66 feet to a point on the Westerly
railroad right of way line; thence South along said Westerly right of way
line a distance of 540 feet, more or less, to a point 120 feet Northerly of
the South line of said Section 34; thence West to the point of beginning
(sometimes referred to as the Soo Line parcel located between 77th and
78th Streets and the railroad track and the former Lampert Lumber site);
and
WHEREAS, the HRA has identified Candlewood Hotel Co. as a buyer of part of
the property; and
WHEREAS, the portion of the property to be purchased by Candlewood Hotel
Co. is described as follows:
That part of the West 66 feet of the East 91 feet of the Southeast
Quarter of the Southwest Quarter of Section 34. Township 28, Range
24, which lies south of the North 222.80 feet thereof, except part taken
for Interstate Highway Number 494, according to the United States
Government survey thereof, Hennepin County, Minnesota; and
WHEREAS, Candlewood Hotel Co. has agreed to purchase the property from
the HRA for $272,367; and
WHEREAS, the HRA is authorized to sell real property within its area of
operation after a public hearing; and
WHEREAS, the public hearing has been held after proper notice; and
WHEREAS, the Planning Commission of the City of Richfield is required to
determine that the disposition of the property for project purposes is consistent with the
Comprehensive Plan.
NOW, THEREFORE, BE IT RESOLVED by the Housing and Redevelopment
Authority in and for the City of Richfield, Minnesota as follows:
1. A public hearing has been held on the sale of real property described above
2. The sale of property to Candlewood Hotel Co. for $272,367 is hereby
approved, contingent upon the Richfield Planning Commission adopting a
resolution finding the sale of the property to be consistent with the
Comprehensive Plan.
3. The Chairperson and Executive Director are authorized to execute any and
all agreements required to effectuate this resolution.
Adopted by the Housing and Redevelopment Authority in and for the City of
Richfield, Minnesota this 16th day of March, 1998.
Thomas E. Harms, Chair
ATTEST:
•
Michael Sandahl, Secretary
0
CITY OF RICHFIELD, MINNESOTA
Office of City Manager
January 30, 1998
Council Memorandum No. 21 HRA Memorandum No. 1
The Honorable Mayor Housing and Redevelopment
and Authority Commissioners
Members of the City Council City of Richfield
Subject: Candlewood Hotel Company
Council Members and HRA Commissioners:
In November 1997 the City Council authorized staff to negotiate a purchase agreement
with Candlewood Hotel Co. for the purchase of the former Lampert Lumber property at
a price of $13.25/sq. ft. ($1,596,881). Since then staff and legal counsel have been
finalizing the agreement. One reason Candlewood was selected was their willingness
to design their site plan in such a way as to accommodate a restaurant if the adjacent
strip of excess railroad right-of-way became available.
In December 1997 the HRA authorized staff to negotiate a purchase agreement with
the Canadian Pacific Rail Road for the right-of-way at a price of approximately $9.00/sq.
ft. ($297,954). The agreement is essentially complete, but not executed. It includes a
provision allowing the HRA to cancel it within 45 days of execution for any reason.
Initially it was understood that Candlewood would subsequently purchase the railroad
right-of-way from the HRA and then market that property along with part of their site to a
restaurant developer. Recently Candlewood has expressed reservations about the
arrangement. They have indicated that their primary concern is getting the hotel built.
They are hotel builders not land developers. They still support having a restaurant next
to the hotel, but they would like to keep the agreement as simple as possible.
Staff believes that this is a good restaurant site and that the uses are complimentary
and desirable. The railroad parcel by itself has very limited development potential
because of its narrow width. It needs to be combined with part of the Lampert site to be
effectively utilized. To that end staff is pursuing the following course:
• The City sells Candlewood only the land area it actually needs for the hotel. This
would result in a sale price of approximately $1,380,000 rather than $1,596,881.
• The HRA executes the purchase agreement with the railroad.
• The HRA purchases the remaining Lampert property from the City for $13.25/sq. ft.
10 thus meeting the City's expected total price for the site.
The HRA then seeks restaurant developers for the combined parcels.
Based on discussions with the development and real estate community, this is a good,
but not great restaurant site. Those same sources indicate the site should sell for $11
to $13/sq. ft. The sale price would therefore range from $542,000 to $640,000. The
HRH's total investment would be $512,273 or $10.40/sq. ft.
The upside of this arrangement is that the City would be "made whole" and the railroad
property would be appropriately developed. The downside is the risk that a restaurant
user, willing to pay at least $10.40/sq. ft., may not be found. To address that concern
staff will be contacting the brokers who presented offers for the Lampert site and
requesting that they bring the City offers from various restaurants. By requesting
proposals from all of them, not just selecting one broker, a competitive environment is
created. This strategy proved quite successful in finding a buyer for the Lampert site.
However, it does not guarantee that a similar situation can be created again.
Again, the purchase agreement with the railroad may be canceled by the HRA within 45
days of execution for any reason. Therefore the agreement would be executed in early
February. If an acceptable restaurant developer cannot be found within the 45 day time
the options would be:
1. Seek additional time from the railroad.
2. Cancel the purchase agreement.
3. Sell Candlewood only as much land as they need and keep the property regardless
of current market conditions on the assumption that an appropriate user will emerge.
The risk here is that the HRA would have a $512,000 investment in land without an
identified user.
If you have any concerns, please contact me about this matter.
Respectfully submitted,
ley)
Jam . Prosser
City Manager
JDP:cak
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MAR-10-1998 1134 TUSHIE MONTGOMERY
612 830 8215 P.03i03
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75th STRgET
r15lTE_ PLAN -OPTION FOUR
LIA INTERSTATE NWY 494
CU yye TOTAL P.03
•
1.
Progression of Property Transactions and Reconfigurations
2. T
FORMER
LAMPERT
PROPERTY
CP RAIL ROAD
PROPERTY
HRA buys 33,281 sq. ft from
CP Rail Road for $295,800
3.
I CITY REMNANT
k REMNANT
1 CANDLEWOOD SITE
HRH
40 HRA buys the City remnant for
$13.25 per sq. ft., or $477,345. HRA
and City remnants are combined to
create restaurant site.
61-
1
CANDLEWOOD SITE
Candlewood buys south 1/3 of
Lampert property from City and
south 1/3 of CP property from HRA
for $13.25 per sq. ft., or $1,391,780.
($1,119,413 to City, $272,367 to HRA)
4.
RESTAURANT SITE
1 CANDLEWOOD SITE 1
HRA markets restaurant site. (Total HRA
investment is $500,778, or $10.27 per sq. ft.
blended.)
HOUSING AND REDEVELOPMENT AUTHORITY
HRA Letter No. 16
Agenda March 16, 1998
Issue Statement:
Public hearing and consideration of a resolution authorizing the sale of 6820 Portland
Avenue to Twin Cities Habitat for Humanity (Habitat) for single family home
development.
Background:
In November 1997, the HRA purchased the substandard property at 6820 Portland
Avenue. It is proposed that the HRA sell the property to Habitat for new single family
home construction. The development agreement is similar to those used for the past
five Habitat developments. The following items are those which differ from a typical
HRA development agreement but are typical for Habitat projects:
• It is anticipated that the 1,008 square feet, three bedroom home will have a property
value upon completion of approximately $95,000. A copy of the proposed plan is
attached.
• The sale price of the property from the HRA to Habitat is $1. The development
agreement will be recorded and requires Habitat to pay $20,000 for the site if they
fail to perform. A Certificate of Completion would release this lien.
• Habitat will require their buyer to execute a $20,000 second mortgage to the HRA to
secure the land value.
• The HRA will assume responsibility for demolition of the existing house. The double
car garage is structurally sound and will be re-roofed and re-sided to match the new
home.
• Habitat will be provided ten months to complete the project rather than the five
months builders typically receive.
A Habitat representative is anticipated to be at the March HRA meeting to answer any
questions the HRA may have.
Hope Presbyterian Church of Richfield will be one of the groups volunteering labor for
the project. A neighborhood meeting was held on February 19, 1998. The neighbors
were supportive of the development.
Recommended Motion:
Following a public hearing, adopt the resolution authorizing the sale of 6820 Portland
Avenue to Twin Cities Habitat for Humanity and the execution of appropriate
documents by the HRA Chair and Executive Director.
Basis of Recommendation:
1. The builder has evidenced experience, capability and financial security.
2. The HRA acquired 6820 Portland Avenue under the Richfield Rediscovered
Program. The tax increment generated by this property will be used to help fund
Richfield Rediscovered.
3. The terms of the development agreement have been negotiated and are in
conformance with program guidelines as noted.
4. Notice of a public hearing on sale of the property was published March 4 in the
Sun-Current.
Alternative Recommendation:
Do not proceed with the development agreement with Habitat and direct staff to find
other buyers.
Discussion/Decision Mode:
Closing would occur in April with construction starting soon afterward. The site
clearance work is being coordinated with the new home excavation.
Respectfully submitted,
Jam Prosser
Exe ive Director
JDP:cak
0 HRA RESOLUTION NO.
RESOLUTION AUTHORIZING SALE OF REAL PROPERTY LOCATED AT
6820 PORTLAND AVENUE TO TWIN CITIES HABITAT FOR HUMANITY IN
ACCORDANCE WITH A DEVELOPMENT AGREEMENT
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 follows:
Address
6820 Portland Avenue
Legal Description:
The East 1/2 of the following described tract. That part of the Northeast 1/4 of
the Southeast 1/4 of the Southeast 1/4 of Section 27, Township 28 North, Range
24-West of the 4th Principal Meridian described as follows: Beginning at a point
on the East line of said tract 278.15 feet South of the Northeast corner thereof;
thence West parallel to the North line of said Northeast 1/4 a distance of 330.92
feet; thence South parallel to the East line of said Northeast 1/4 a distance of
49.58 feet; thence East to a point in said East line a distance of 49.63 feet South
10 of the point of beginning; thence North along said East line a distance of 49.63
feet to the point of beginning except the Easterly 33 feet thereof.
WHEREAS, the HRA is authorized to sell real property within its area of
operation after public hearing; and
WHEREAS, a developer, Twin Cities Habitat for Humanity, has been identified
as the purchaser of the described property and in accordance with a development
agreement; 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:
1. A public hearing has been held and 6820 Portland Avenue is authorized to be sold
for $1.00 to Twin Cities Habitat for Humanity in accordance with a development
agreement with the HRA.
2. That the HRA accept a $20,000 second mortgage lien executed by the buyer from
Habitat.
3. The Chairperson and Executive Director are authorized to execute a Contract for
Private Development and other agreements as required to effectuate the sale to
Twin Cities Habitat for Humanity.
Adopted by the Housing and Redevelopment Authority in and for the City of
Richfield, Minnesota this 16th day of March, 1998.
Thomas E. Harms, Chair
ATTEST:
Michael Sandahl, Secretary
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