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07-20-09 Agenda PacketCITY OF RICHFIELD, MINNESOTA MONDAY, JULY 20, 2009 REGULAR HOUSING AND. REDEVELOPMENT AUTHORITY MEETING RICHFIELD CITY HALL COUNCIL CHAMBERS 6700 PORTLAND AVENUE 7:00 P.M. AGENDA Call to order Roll call 1. Approval of minutes of Regular HRA Meeting of June 15, 2009 Notes: 2. HRA approval of agenda 3. Consideration of resolution authorizing purchase of real property at 7338 Queen Avenue through Richfield Rediscovered Program, contingent upon finding of consistency with Comprehensive Plan by Planning Commission Staff Report No. 26 Notes: 4. Consideration of resolution approving subordination agreement related to Oaks on Pleasant development Staff Report No. 27 Notes: 5. Consideration of authorizing staff to administratively approve Foreclosure Purchase Incentive Program loans that meet all program guidelines Staff Report No. 28 Notes: 6. Executive Director report 7. Claims and payroll Adjournment Auxiliary aids for individuals with disabilities are available upon request. Requests must be made at least 96 hours in advance to the City Clerk at 612-861-9738. richfield: July 2009 Navigate: 2008 Page 1 of 1 i 'c fie r Calendars Net Jan. Feb Mar Apr Mai Jeri Jul Aug Sep Oct Noy. Dec 2010 July 2009 ~1t}~. ~ TH43dKY }'.}, 4~~Y~~1b~T Tit LL1 Jdbi Y~ F~~4$a ~ 29 :Ix~ 3{} 1 .tul 2 3 7 PM Transportation 7 PM Arts Commission City Administrative Commission @ Arts Center Offices Closed -- Fourth CANCELED of July Haliday Observed {~ '7 8 9 10 2:30 PM Special City 5:30 PM Special Closed 6:30 PM Special City Council Worksession, City Council Meeting Council/CHAT III @ Think Mutual Bank, Executive Conference Meeting @ Maintenance Rochester MN Room Facility CANCELED 7 PM Human Rights 6:30 PM Property 7 PM Community Commission Excellence Task Force Services Commission @ Community Center (rescheduled from July 21) 13 }.4 15 16 l.7 7 PM Planning 5:30 PM Special City 4:30 PM FOWL Board Commission Study Council Worksession Meeting @ WLNC Session CANCELED 7 PM City Council 7 PM Friendship City Regular Meeting (tv) Commission 0 21 22 23 2~ 5:30 PM Special City 5:30 PM Hearing 6:30 PM Property 6:30 PM Special City Council Worksession Examiner in Heredia Excellence Task Force Council/CHAT III SATURDAY, JULY 25 Room Meeting @ Maintenance 9:30-10:30 AM Mayor's 7 PM HRA Regular Facility CANCELED Hour at Farmers Market Meeting (tv) 7 PM Community Services Commission - RESCHEDULEDto Thursday, July 9 27 2~ 9 30 31 7 PM Planning 5:30 PM Special City Commission Regular Council Worksession Meeting (tv) 7 PM City Council Regular Meeting (tv) Disptay: Year Month Week ~ Block List C;ontlensetl ads ~uae t,aEenaars: ~~d~~~~ Add Events: Daily. .D_uration Periodic Administer: This Calendar. All meetings held at City Hall (6700 Portland Avenue) unless indicated otherwise Calendars Net free online interactive web calendars http://www,my.calendars.net/richfield 7/16/2009 J HOUSING AND REDEVELOPMENT AUTHORITY MEETING MINUTES Richfield, Minnesota Regular Meeting June 15, 2009 CALL TO ORDER The meeting was called to order by Chair Sandahl at 7:02 p.m. ROLL CALL HRA Members Present: Sue Sandahl, Chair; David Gepner; Joan Helmberger; Doris Rubenstein; and Steven Quam. Staff Present: Steven L. Devich; Executive Director; Karen Barton, Assistant Community Development Director; and Nancy Gibbs, City Clerk. Item #1 HRA APPROVAL OF MINUTES Commissioner Rubenstein requested a spelling correction to the Regular HRA Meeting Minutes of May 18, 2009. M/Gepner, S/Rubenstein to approve the minutes of (1) Regular HRA Meeting of May 18, 2009 as amended. Motion carried 5-0. Item #2 HRA APPROVAL OF AGENDA Chair Sandahl amended the agenda to add Agenda Item #2A. M/Rubenstein, S/Quam to approve the agenda as amended. HRA Meeting -2- June 15, 2009 Motion carried 5-0. Item #2A -Summary report regarding the Urban Land Institute. Mayor Goettel presented a summary report regarding the Urban Land Institute. Commissioner Quam asked if the HRA could receive information regarding the Urban Land Institute. Executive Director Devich stated he would check on having the HRA Commissioners added to the a-mail list and report back to the HRA. Item #3 CONSENT CALENDAR A. Consideration of approval of resolution authorizing HRA not to waive monetary limits on municipal tort liability established by MN Statute 466.04 S.R. No. 23 HRA RESOLUTION NO. 1049 RESOLUTION AFFIRMING MUNICIPAL TORT LIABILITY LIMITS ESTABLISHED BY MINNESOTA STATUTES 466.04 This resolution appears as HRA Resolution No. 1049. M/Helmberger, S/Sandahl to approve the Consent Calendar. Motion carried 5-0. Item #4 CONSIDERATION OF FORECLOSURE PURCHASE INCENTIVE PROGRAM REHABILITATION ASSISTANCE LOAN AGREEMENT BETWEEN HRA AND JEAN BOLIN AND BENJAMIN WESTERMAN FOR PURCHASE OF 7239 QUEEN AVENUE S.R. NO. 24 Assistant Community Development Director Barton presented Staff Report No. 24. Jean Bolin, 2817 West 44th Street, Minneapolis, thanked the HRA for approving the loan. M/Rubenstein, S/Helmberger to approve Foreclosure Purchase Incentive Program Rehabilitation Assistance Loan Agreement between HRA and Jean Bolin and Benjamin Westerman for purchase of 7239 Queen Avenue. Motion carried 5-0. Item #5 CONSIDERATION OF REVISIONS TO TRANSFORMATION HOME LOAN PROGRAM TO INCREASE LOAN AMOUNT TO MAXIMUM OF $25,000 S.R. NO. 25 HRA Meeting -3- June 15, 2009 Assistant Community Development Director Barton presented Staff Report No. 25. Chair Sandahl stated she had spoken to City of Bloomington Community Development Director Larry Lee regarding how their city administers their Transformation Home Loan Program. Chair Sandahl explained that the City of Bloomington program collects 5% interest for five years, on a revolving fund from the Community Development Block Grant (CDBG) Fund, after the property is sold funds are recycled back to the City. Commissioner Quam stated he thought this idea was worth exploring. Chair Sandahl directed staff to take a look at the way the .City of Bloomington was administering their program and bring report back to the HRA. M/Quam, S/Gepner to approve revisions to Transformation Home Loan Program to increase loan amount to maximum of $25,000. Motion carried 5-0. Item #6 EXECUTIVE DIRECTOR REPORT Executive Director Devich commented on an article in the Star Tribune. The article talked about a home in Richfield that had been remodeled with funds from the HRA's Transformation Home Loan Program. The article stated the house was a 900 square foot home and is now a 3,000 square foot home. This shows what can be done with monies from these types of programs. Item #7 CLAIMS AND PAYROLL Commissioner Helmberger stated she appreciates receiving the claims and payroll via e- mail prior to the meeting. M/Rubenstein, S/Quam that the following claims and payrolls be approved: U.S. Bank 06-15-2009 Section 8 Checks: 117039 - 117178 $ 164,837.18 HRA Checks: 30576 - 30597 $ 44,174.87 TOTAL $ 209,012.05 Motion carried 5-0. ADJOURNMENT HRA Meeting -4- June 15, 2009 The meeting was adjourned by unanimous consent at 7:33 p.m. Date Approved: Suzanne M. Sandahl Chair Nancy Gibbs City Clerk Steven L. Devich Executive Director AGENDA ITEM # 3 REPORT # 2 STAFF REPORT HOUSING AND REDEVELOPMENT AUTHORITY MEETING JULY 20, 2009 REPORT PREPARED BY: MICHELLE LEWIS, HOUSING SPECIALIST NAME, TITLE REPORT PRESENTER: KAREN BARYON, COMMUNITY DEVELOPMENT ASSISTANT DIRECTOR NAME, TITLE DEPARTMENT DIRECTOR REVIEW: REVIEWED BY EXECUTIVE DIRECTOR: I '~ ITEM FOR HRA CONSIDERATION: Consideration of a resolution authorizing the purchase of real property located at 7338 Queen Avenue through the Richfield Rediscovered Program, contingent upon a finding of consistency with the Comprehensive Plan by the Plannin Commission. I. RECOMMENDED ACTION: By Motion: Approve the attached resolution authorizing the purchase of real property located at 7338 Queen Avenue through the Richfield Rediscovered Program, contingent upon a finding of consistency with the Comprehensive Plan by the Planning Commission. II. BACKGROUND 7338 Queen Avenue is a vacant property owned by Wayne and Candace Bean .and Charlana Carlton. The owners inherited the property. Initially they planned to remodel the house but realized that it had significant structural deficiencies after interior demolition. The owners contacted city staff to inquire about selling the property to the City. Built in 1949 the house at 7338 Queen Avenue is a 1,104-square foot slab-on-grade rambler with significant structural deficiencies. It is situated on a 10,016 square foot lot with mature trees. If approved, the Housing and Redevelopment Authority (HRA) would purchase the property, demolish the existing- structure and prepare the lot for a new home to be built at a future date under the Richfield Rediscovered Program. The agreed purchase price of the property is $90,000 plus closing costs, for a total not to exceed $100,000, and will be paid through the HRA's Housing Fund. This expense is provided for in the 2009 Budget. $5,000 will be used as the down- payment and the remainder will be paid at closing. The Planning Commission must find the acquisition and disposition of the property to be consistent with the Comprehensive Plan prior to purchase. The Planning Commission is scheduled to consider this finding at their July 27, 2009 meeting. III. BASIS OF RECOMMENDATION A. POLICY • A stated policy of the Richfield Comprehensive Plan is to "Encourage the creation of `move-up' housing through new construction and home remodeling." Acquiring this property would allow the replacement of a functionally obsolete and deteriorated property with a newly Constructed home that offers features desirable to households with larger families. • The HRA has demonstrated success through its Richfield Rediscovered Program in removing substandard, obsolete housing and facilitate the development of move-up replacement housing for families. • The purchase requires the Planning Commission to consider a finding of consistency with the Comprehensive Plan. The Planning Commission will be asked to consider the finding at their July 27, 2009 meeting. B. CRITICAL ISSUES • The house is currently vacant and the owners initiated a voluntary sale with the HRA. • Purchase of this property by the HRA will result in the replacement of asub-standard, functionally obsolete house with a "move-up" house that offers desirable features in today's market. C. FINANCIAL • Due to the current housing market, the HRA is able to acquire the property at a very reasonable price. The current assessed value is $192,000 with a land value of $86,000. • Funding for this activity has been budgeted for in the HRA's 2009 Budget. D. LEGAL • Legal Counsel drafted the Purchase Agreement and verified that the title is clear to proceed. IV. ALTERNATNE RECOMMENDATION~S~ • Do not authorize the purchase of the property. V. ATTACHMENTS • Resolution • Purchase Agreement • Photo of existing structure VI. PRINCIPAL PARTIES EXPECTED AT MEETING • N/A -1_ HRA RESOLUTION NO. RESOLUTION AUTHORIZING PURCHASE OF REAL. PROPERTY LOCATED AT 7338 QUEEN AVENUE 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: 7338 Queen Avenue: Described as: Lot 7, Block 2, Penn Lake Terrace First Addition, Hennepin County, Minnesota; and WHEREAS, the. HRA is authorized by Minnesota Statutes Section 469.012 to acquire real property within its area of operation; and WHEREAS, Housing Funds are available for acquisition purposes. NOW THEREFORE, BE IT RESOLVED, by the City of Richfield Housing and Redevelopment Authority: 1. The purchase price for the property identified is approved at $90,000, plus closing costs not to exceed a total of $100,000. 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 20th day of July, 2009. Suzanne M. Sandahl, Chair ATTEST: Joan Helmberger, Secretary 3-a PURCHASE AGREEMENT THIS AGREEMENT is made as of this $~day of u. 2009, by and between Wayne L. Bean and Candace Jane Bean, husband and wife Charalana M. Carlton, a single person ("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 ("HRA" or "Buyer"). RECITALS A. Seller is the owner of property located at 7338 Queen Avenue South, Richfield, Minnesota, which is legally described as Lot 7, Block 2, Penn Lake Terrace First Addition, Hennepin County, Minnesota ("Property"). AGREEMENT 1. Offer/Acceptance for Sale of Property. The Seller agrees to sell to the HRA the Property and the HRA agrees to purchase the same, according to the terms of this Agreement. 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: 2. Purchase Price for Property and Terms. A. PURCHASE PRICE: The total Purchase Price for the Property is Ninety Thousand and 00/100ths Dollars ($90,000.00). B. TERMS: (1): EARNEST MONEY. The sum of Five Thousand and 00/100ths Dollars ($5,000.00) Earnest Money shall be paid by the Buyer to the Seller. (2); BALANCE DUE SELLER: Buyer agrees to pay by check or electronic transfer of funds on the Closing Date any remaining Balance Due according to the terms of this Purchase Agreement. (3): DEED/MARKETABLE TITLE: Subject to performance by Buyer, Seller agrees to execute and deliver a Warranty Deed conveying marketable 353515v3 CBR RC125-293 3-3 title to the Property to Buyer, subject only to the following exceptions: a. Bul-ding 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 the Buyer: a. Standard form Affidavit of Seller. b. A "bring-down" certificate, certifying that all of the warranties made by Sellers in this Purchase Agreement remain true as of the date of closing. c. Certificate that Seller is not a foreign national. d. If an environmental investigation by or on behalf of the 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 the HRA 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(4) above must include the following statement: "The Seller certifies that the Seller does not know of any wells on the described real property." f. Any other documents reasonably required by the HRA'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 Purchase Agreement. 353515v3 CBR RC125-293 2 3-`~ 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 the environmental investigation under 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 zoning authority does not issue all variances necessary to make the property a buildable lot within the meaning of the zoning ordinance, the Buyer at its sole discretion may cancel this Purchase Agreement; and d. Approval of this Agreement by the HRA's Board. Buyer shall have until the Date of Closing 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, the Buyer and Seller shall proceed to close the transaction as contemplated herein. If one or more or Buyer's or Seller's contingencies is not satisfied, or is not satisfied on time, and is not waived, this Purchase Agreement shall thereupon be void at the written option of Buyer, Seller shall return the Earnest Money to Buyer, and Buyer and Seller shall execute and deliver to each other the termination of this Purchase Agreement. As a contingent Purchase Agreement, the termination of this Agreement is not required pursuant to Minnesota Statutes, Section 559.21, et. seq. 4. Title Examination/Curing Title Defects. The Seller will provide the Buyer with the abstract of title for the Property. If the abstract is not available, the HRA shall, at its expense and within a .reasonable time after Seller's acceptance of this Agreement, obtain a commitment for title insurance ("Commitment") for the Property. The HRA shall have ten (10) business days after receipt of the commitment and executed Purchase Agreement to examine the same and to deliver written objections to title, if any, to Seller, or HRA's right to do so shall be deemed waived. Seller shall have until the Closing Date (or such later date as the parties may agree upon) to make title marketable, at the Seller's cost. In the event that title to the Property cannot be made marketable or is not made marketable by the Seller by the Closing Date, then, this Agreement may be terminated at the option of the Buyer. 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 the Seller has owned the Property. The Seller further warrants that the 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 353515v3 CBR RC125-293 .~ 3 5° the Seller purchased the Property. Notwithstanding the above, the 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 the Seller does warrant that if there was a fuel tank on the Property used for the storage of heating oil or other similar product, the 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, the 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 the Buyer, including a release from environmental conditions related to the commitment and expenditure of CDBG funds, the Buyer at its sole discretion may cancel this Purchase Agreement. If the Buyer cancels this Purchase Agreement pursuant to this provision, the 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 the Buyer and Seller to the date of closing. 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 payable after the year of closing. Seller also agrees to pay all assessments related to service charges furnished to the Property prior to the date of closing (e.g., delinquent water or sewer bills), 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 date of closing will be on or before August 15, 2009. Delivery of all papers and the closing shall be made at the offices of HRA, 6700 Portland Avenue South, Richfield, Minnesota 55423, or at such other location as is mutually agreed upon by the parties. All deliveries and notices to HRA shall be made to the above address and marked to the attention of Michelle Lewis. 8. Possession/Utilities/Removal of Property/Escrow. (a) Possession. The Seller agrees to deliver possession not later than the date of closing. (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 date of closing. Seller shall arrange for final readings as of the date of closing. (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 353515v3 CBR RC I25-293 4 '~ l0 so removed shall be deemed forfeited to and shall become the property of the 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, the HRA 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 date of closing or delivery of possession, whichever is later. Said funds shall be held by Kennedy & Crraven, Chartered, as Escrow Agent, pursuant to the terms of the Escrow Agreement attached here as Exhibit B. (e) The HRA's ability to deduct amounts due under this paragraph from the retained escrow is not exclusive but is in addition to the HRA'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) the HRA 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 Property. (d) Tenants. Seller warrants that the Property is not now occupied by tenants and was not occupied by tenants at the time the Seller first received the Buyer's written offer to purchase the Property. (e) Broker Commission. Each parry represents to the other that it has not utilized the services of any real estate broker or agent in connection with this Purchase Agreement or the transaction contemplated by this Purchase 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 Seller also warrants that the premises are connected to city sewer and city water. The parties acknowledge that the Property is being sold in "as is" 353S15v3 CBR RC125-293 5 3-~ condition relating to the structural, operational, and mechanical systems. 10. Closing Costs/Recording Fees/Deed Tax. The HRA 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) the premium for title insurance policy, if any, obtained by the HRA; and (c) any transfer taxes and recording fees required to enable the HRA to record its deed from Seller under this Agreement. Seller will pay all other fees normally paid by sellers, including 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 Date of Closing, HRA, 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 the HRA 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 date of closing, for any reason including fire, vandalism, flood, earthquake or act of God, the risk of loss shall be on the Seller. If the Property is destroyed or substantially damaged before the closing date, this Purchase Agreement shall become null and void, at the HRA's option. At the request of the HRA, Seller. agrees to sign a cancellation of Purchase Agreement. 13. Default/Remedies. If the Buyer defaults in any of the covenants herein, the Seller may terminate this Purchase Agreement, .and on such termination all payments made hereunder shall be retained by the 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 Purchase Agreement, provided this Purchase Agreement has not terminated and action to enforce specific performance is commenced within six months after such right of action arises. In the event the Buyer defaults in its performance of the terms of this Purchase Agreement and Notice of Cancellation is served upon the Buyer pursuant to Minn. Stat. Section 559.21, the termination period shall be thirty (30) days as permitted by Minn. Stat., 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: Wayne L. Bean C~v~~w.ssert Ci~j31~ 353515v3 CBR RC125-293 6 3-8 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: Corrine A. Heine and Catherine B. Rocklitz 470 U.S. Bank Plaza 200 South Sixth Street Minneapolis, MN 55402 15. Entire Agreement. This Purchase Agreement, Exhibits, and other amendments signed by the parties, shall constitute the entire Agreement between Seller and the HRA and supersedes any other written or oral agreements between the parties relating to the Property. This Purchase Agreement can be modified only in a writing properly signed on behalf of Seller and the HRA. 16. Survival. Notwithstanding any other provisions of law or court decision to the contrary, the provisions of this Purchase Agreement shall survive closing. IN WITNESS WHEREOF, the undersigned have executed this Agreement on the date and year above. Buyer: Housing and Redevelopment Authority of the City of Richfield By: Its Chair And by: Its Executive Director Seller: Wayn .Bean Candace Jan ean Charalana M. Carlton 353515v3 CBR RC125-293 7 C~ 7338 Queen Avenue South AGENDA ITEM # LF REPORT # 2] STAFF REPORT HOUSING AND REDEVELOPMENT AUTHORITY MEETING JULY 20, 2009 REPORT PREPARED BY: JOHN STARK, COMMUNITY DEVELOPMENT DIRECTOR NAME, TITLE REPORT PRESENTER: STEVE DEVICH, EXECUTNE DIRECTOR NAME, TITLE DEPARTMENT DIRECTOR REVIEW: SIGNA REVIEWED BY EXECUTIVE DIRECTOR: t ITEM FOR HRA CONSIDERATION: Consideration of a Subordination Agreement for the Oaks on Pleasant development. I. RECOMMENDED ACTION: By Motion: Approve a Subordination Agreement pertaining to the Oaks on Pleasant development. II. BACKGROUND The Richfield Housing and Redevelopment Authority (HRA) participated in the redevelopment of the Urban Village Development. As such, the HRA entered into an Amended and Restated Contract for Private Redevelopment related to the project on May 21, 2001. That Agreement requires formal HRA approval prior to subordinating the HRA's financial interest in the property. One component of the Urban Village development is the Oaks on Pleasant senior housing development. The owners of the Oaks on Pleasant (Richfield State Agency) and an LLC with an interest in the development (The Oaks LLC), are seeking to refinance their development and are seeking HRA approval of such a subordination. Legal counsel of Richfield State Agency and The Oaks LLC have drafted the attached Subordination Agreement for HRA consideration. It should be noted that the HRA's legal counsel has not yet completed their review of this 07202009 Oaks Subordination document -but will do so prior to the July 20, 2009 HRA meeting. If that review results in suggested changes from the HRA's legal counsel, an updated draft will be provided at, or prior to, the HRA meeting. The HRA's sole financial interest in the property consists of two Tax Increment Financing Pay-As-You-Go Notes on the property. These notes. were recorded on the title. Essentially, the subordination would allow for an additional item to be placed senior to the TIF PAYG Notes in the title commitment. Staff cannot identify any financial risks that would be created by allowing the developer's new financing to be placed ahead of the HRA's interest in the property. In addition to seeking the HRA's approval for the subordination, the attached document also states that, "The HRA further represents and warrants to the Lender that neither the Redeveloper nor the Borrower are in default under the terms of that certain Agreement Regarding Affordable Units dated October 17, 2001 by and between the HRA and the Redeveloper as of the date of this Agreement." That agreement requires ten percent (10%) of the units to be affordable to tenants whose family income does not exceed. seventy percent (70%) of the area median income. This requirement is in place fora 25-year period. The agreement also states that the developer shall provide a report (termed a Certification of Continuing Program Compliance) four times per year. In actuality, the developer provided these reports for some time, but claims that they were told by HRA staff that they no longer needed to provide the reports. Current HRA staff has been unable to determine the validity of this claim. In any event, staff has not been proactively seeking the reports for at least two years. In conversations between staff, HRA legal counsel and the developer, it has been concluded that the reporting requirements may be more frequent than is necessary. As a result of these discussions, it is possible that the developer will be seeking a modification to the Contract for Private Redevelopment to require affordability reporting only at the request of the HRA or its staff and no more than annually. Staff has requested that the developer furnish an affidavit establishing that they are currently in compliance with the affordability provisions of the Affordable Housing Agreement. With that submission, staff is satisfied that the developer is not currently in default of the actual provision of affordable units as required in the Agreement Regarding Affordable Units. Any modifications to the Agreement should be made in advance of the September reporting period. III. BASIS OF RECOMMENDATION A. POLICY • The developer of the Oaks on Pleasant and the HRA entered into an Amended and Restated Contract for Private Redevelopment on May 21, 2001. That Contract requires HRA approval of any subordination of its interests in the property. The property owner is seeking to refinance the property and as such is seeking HRA approval of a Subordination Agreement. The property is also subject to an Agreement Regarding Affordable Units; to the best of staff's knowledge, the developer is providing the required degree of affordable housing units. B. CRITICAL ISSUES • The developer has locked in a favorable interest rate that will expire soon without HRA approval of the Subordination Agreement. C. FINANCIAL ° • HRA staff can find no financial risk in approving the Subordination Agreement. D. ..LEGAL • Legal staff has been involved in discussions regarding this subordination and will complete their review of the Subordination Agreement prior to the HRA meeting. IV. ALTERNATIVE RECOMMENDATION(S~ • Do not approve the Subordination Agreement. • Continue consideration of the Subordination Agreement to seek additional information. Approve a modified version of the Subordination Agreement. V. ATTACHMENTS • Draft Subordination Agreement • Draft Resolution Approving Subordination Agreement VI. PRINCIPAL PARTIES EXPECTED AT MEETING • Jan Sussee, a representative of the developer. • HRA Legal Counsel John Dean. ~~f RESOLUTION NO. RESOLUTION APPROVING A SUBORDINATION AGREEMENT RELATED TO THE URBAN VILLAGE PROJECT WHEREAS, the Housing and Redevelopment Authority in and for the City of Richfield ("Authority") and the City of Richfield ("City") have heretofore approved the establishment of the Urban Village Tax Increment Financing District (the "TIF District") within the Richfield Redevelopment Project ("Project") and have adopted a tax increment fiinancing plan for the purpose of financing certain improvements within the Project in an effort to encourage the development of certain designated areas within the City; and WHEREAS, the Authority and Richfield State Agency entered into that Amended and Restated Contract for Private Development dated May 21, 2001,and amended by that First Amendment to Amended and Restated. Contract for Private Redevelopment dated 2001; and WHEREAS, as a condition of providing refinancing on the loan for a portion of the development known as Oaks on Pleasant, Amerisphere Multifamily Finance, L.L.C, a Nebraska limited liability company, (the "Lender") has requested that the Authority approve a Subordination Agreement by and among the Authority, the Lender, the Noteholder, the Borrower and the Redeveloper (as such parties are shown in the proposed Subordination Agreement); and WHEREAS, the Authority has reviewed the Subordination Agreement and finds that the execution of the same and the Authority's performance of its obligations thereunder are in the best interest of the City and its residents. NOW, THEREFORE, be it resolved by the Board of Commissioners of the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota as follows: 1. The Subordination Agreement as presented to the Authority are hereby in all respects approved, subject to modifications that do not alter the substance of the transaction and that are approved by the Chairperson and Executive Director; provided that execution of such documents by such officials shall be conclusive evidence of approval. 2. The Chairperson and Executive Director are hereby authorized to execute the Subordination Agreement (or any certificates of consent related thereto) on behalf of the Authority and to carry out on behalf of the Authority the Authority's obligations thereunder. 3. Execution and delivery of the Subordination Agreement are contingent on the Authority having received reimbursement from the Redeveloper of the Authority's legal costs in connection with this matter, in an amount not to exceed $2,500. Approved by the Board of Directors of the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this 20th day of July, 2009. Attest: Suzanne M. Sandahl, Chair Joan Helmberger, Secretary SJB100310 MN140-59 u-a DRAFT This Document Prepared By: Jon I. Opert, Esq. Krooth & Altman LLP 1850 M Street, NW, Suite 400 Washington, DC 20036 SUBORDINATION AGREEMENT THIS SUBORDINATION AGREEMENT (this "Agreement") is entered into as of this day of July, 2009 by and between (i) AMERISPHERE MULTIFAMILY FINANCE, L.L.C., a Nebraska limited liability company, its transferees, successors or assigns (the "Lender"), (ii) THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, a Minnesota public body corporate and politic (the "HRA"), (iii) MARSHALL & ILSLEY CORPORATION, a Wisconsin Corporation (the "Noteholder"), (iv) THE OAKS, L.L.C., a Minnesota limited liability company (the "Borrower"), and (v) RICHFIELD STATE AGENCY, INC., a Minnesota corporation (the "Redeveloper"). Recitals A. The Lender contemplates making a loan (the "First Mortgage Loan") to the Borrower in the approximate principal amount of $7,600,000.00. The First Mortgage Loan will be secured by a first mortgage lien (the "First Mortgage") on a multifamily housing project located in Richfield, Minnesota (the "Property"). The Property is more fully described in Exhibit A attached hereto. The First Mortgage Loan is contemplated to be closed on or around June 1, 2010 and the Borrower's obligation to repay the First Mortgage Loan shall be evidenced by a Multifamily Note dated as of June _, 2010 (the "First Mortgage Note"). The First Mortgage, the First Mortgage Note and all other loan documents executed in connection with the First Mortgage Loan are hereafter referred to as the "First Mortgage Loan Documents". The Lender intends to sell, transfer and deliver the First Mortgage Note and assign the First Mortgage and First Mortgage Loan Documents to Fannie Mae. B. The Borrower, as owner of the Property, is subject to an Amended and Restated Contract for Private Redevelopment, dated May 21, 2001, filed of record on November 30, 2001, as Document No. 7593401 (A) and January 26, 2005 as Document No. 4070502(T) in the Hennepin County, Minnesota Abstract records by and between the Redeveloper and the HRA (the "Contract"). The Redeveloper sold the Property to the Borrower per that certain Deed dated May 1, 1999 recorded on November 19, 1999 as Document No. 3226891 (T). Under this Contract, the HRA provided a tax increment financing plan to facilitate redevelopment. Fannie Mae Subordination Agreement -- Form 4503 10/98 (Page 1) (modified) `1~3 oeAFr C. The Borrower desires to lock an interest rate for the First Mortgage Loan in July, 2009 and in connection therewith, the Lender requires full execution of this Agreement. Upon full execution, the Lender agrees to hold in escrow pending the closing date for the First Mortgage Loan, at which time such fully executed Agreement shall be recorded. If for whatever reason, the First Mortgage Loan does not close, the fully executed Agreement shall be returned to the HRA. NOW, THEREFORE, in order to induce the Lender to make the First Mortgage Loan, and in consideration thereof, the parties agree as follows: 1. Definitions. In addition to the terms defined in the Recitals to this Agreement, for purposes of this Agreement the following terms have the respective meanings set forth below: "Borrower" means the Person named as such in the first paragraph of this Agreement and any other Person (other than the Lender) who acquires title to the Property after the date of this Agreement. "Business Day" means any day other than Saturday, Sunday or a day on which the Lender is not open for business. "Default Notice" means a copy of the written notice from the HRA to the Borrower stating that a default has occurred under the Contract. Each Default Notice shall specify the default upon which such Default Notice is based. "First Mortgage Loan Default" means the occurrence of a default by the Borrower in performing or observing any of the terms, covenants or conditions in the First Mortgage Loan Documents to be performed or observed by it, which continues beyond any applicable period provided in the First Mortgage Loan Documents for curing the default. "Person" means an individual, estate, trust, partnership, corporation, limited liability company, limited liability partnership, governmental department or agency or any other entity which has the legal capacity to own property. "Lender" means the Person named as such in the first paragraph on page 1 of this Agreement. When Fannie Mae or any other Person becomes the legal holder of the First Mortgage Note, Fannie Mae or such other Person shall automatically become the Lender. Fannie Mae Subordination Agreement - Form 4503 10/98 (Page 2) (modified) ~~~ ~ ~-`~ 2. Representations and Warranties. (a) The HRA and Noteholder represent and warrant that the First Mortgage Loan is an authorized mortgage under the Contract. (b) The Noteholder represents and warrants to the Lender that it is the holder of that certain Tax Exempt Note referenced in the Contract and is defined in the Contract as the Tax Exempt Noteholder. (c) The HRA and Noteholder represent and warrant to the Lender that the Maturity Date under the Contract is (d) The HRA, Borrower and Redeveloper represent and warrant to the Lender that the Property, including any improvements thereon and current uses thereof, is in compliance with all the provisions and requirements of the Contract. (e) The HRA, Borrower and Redeveloper represent and warrant to the Lender that the Contract is in full force and effect and has not been amended, modified, supplemented or superseded in any way. (f) The HRA represents and warrants to the Lender that neither the Redeveloper nor the Borrower are in default under the Contract as of the date of this Agreement. (g) The HRA further represents and warrants that there are no defenses, offsets, claims or counterclaims against Borrower or Redeveloper pursuant to the Contract, nor are there any outstanding obligations or money owed by Borrower or the Redeveloper relating to the Property under the Contract, aside from the annual real estate tax payments. (h) The HRA further represents and warrants that the Borrower's only monetary obligation under the Contract relating to the Property is the timely payment of annual real estate taxes. (i) The Noteholder represents and warrants that the Borrower has no monetary obligations under the Tax Exempt Note referenced in the Contract. (j) The HRA further represents and warrants to the Lender that neither the Redeveloper nor the Borrower are in default under the terms of that certain Agreement Regarding Affordable Units dated October 17, 2001 by and between the HRA and the Redeveloper as of the date of this Agreement. Fannie Mae Subordination Agreement -- Form 4503 10/98 (Page 3) (modified) u-s DRAFT (k) The HRA, Noteholder, Redeveloper and Borrower represent and warrant that no other party that is not already a party to this Agreement must provide consent to this Agreement for this Agreement to be effective. 3. Permission to Subordinate Rights. In furtherance of Article VIII Section 8.3 of the Contract and the Lender's request, the HRA, with the approval of Noteholder, agrees to subordinate all of its rights, including but not limited to any rights of payment, under the Contract to (i) the lien and prior payment in full of the indebtedness evidenced by the First Mortgage Loan, (ii) the liens, terms, covenants and conditions of the First Mortgage Loan Documents, including but not limited to all provisions governing condemnation and insurance proceeds, and (iii) all advances made or which may hereafter be made pursuant to the First Mortgage Loan Documents (including but not limited to, all sums advanced for the purposes of (1) protecting or further securing the lien of the First Mortgage Loan, curing defaults by the Borrower under the First Mortgage Loan Documents or for any other purpose expressly permitted by the First Mortgage Loan Documents, or (2) constructing, renovating, repairing, furnishing, fixturing or equipping the Property). Further, the HRA consents to any agreement or arrangement in which the Lender waives, postpones, extends, reduces or modifies any provisions of the First Mortgage Loan Documents, including any provision requiring the payment of money. The HRA, with the approval of Noteholder, further agrees that the subordination memorialized hereunder shall extend to any new mortgage debt which is for the purpose of refinancing all or any part of the First Mortgage Loan (including reasonable and necessary costs associated with the closing and/or the refinancing); and that all the terms and covenants of this Agreement shall inure to the benefit of any holder of any such refinanced debt, whether Fannie Mae, Lender or any other lender, and that all references to the First Mortgage Loan, the First Mortgage Note, the First Mortgage, the First Mortgage Loan Documents and Lender shall mean, respectively, the refinance loan, the refinance note, the mortgage securing the refinance note, all documents evidencing securing or otherwise pertaining to the refinance note and the holder of the refinance note. 4. Waiver of Consent and Extension of Agreement. In furtherance of Section 9.2 of the Contract and the Lender's request, the HRA and the Noteholder hereby waive any right of consent and agree that no consent is needed for a transfer in connection with a foreclosure or deed in lieu of foreclosure and a subsequent transfer of the property to a third party purchaser. HRA and Noteholder further agree that its agreement to subordinate hereunder shall extend to any new mortgage debt obtained by a third party purchaser who purchased subsequent to a foreclosure or deed in lieu of foreclosure and that all the terms and covenants of this Agreement shall inure to the benefit of any holder of any such debt and that all references to the First Fannie Mae Subordination Agreement -- Form 4503 10/98 (Page 4) (modified) y-b D;? AST Mortgage Loan, the First Mortgage Note, the First Mortgage, the First Mortgage Loan Documents and Lender shall mean, respectively, the new mortgage loan, the new note, the mortgage securing the new note, all documents evidencing securing or otherwise pertaining to the new note and the holder of the new note. 5. Default Under the Contract. (a) Notice of Default and Cure Rights. The HRA shall deliver to the Lender a Default Notice within five Business Days in each case where the HRA has given a Default Notice to the Borrower. The Lender shall have the right, but not the obligation, to cure any default under the Contract within 60 days following the date of such notice. All amounts paid by the Lender in accordance with the First Mortgage Loan Documents to cure a default under the Contract shall be deemed to have been advanced by the Lender pursuant to, and shall be secured by the lien of, the First Mortgage. (b) HI2A's Exercise of Remedies. Pursuant to Section 10.2(b) of the Contract, if a default under the Contract occurs and is continuing, the HRA agrees that it shall have no right or power to exercise any remedy under the Contract or at law or in equity that could or might defeat, render invalid or limit in any way (i) the lien of the First Mortgage Loan or (ii) any rights or interests provided in the Contract for the protection of the Lender. The HRA further agrees that in the event of a default by Borrower under the Contract, it will not exercise any remedies it may have under the Contract without first obtaining the Lender's prior written consent. All parties to this Agreement acknowledge and agree that a default by Borrower under the Contract may be considered by Lender as an "Event of Default" as defined in the First Mortgage Loan Documents and the Lender shall have the right to exercise all rights or remedies under the First Mortgage Loan Documents in the same manner as in the case of any other First Mortgage Loan Default. 6. Default by the HRA. If the HRA defaults in performing or observing any of the terms, covenants or conditions to be performed or observed by it under this Agreement, the Lender shall have the right to all available legal and equitable relief. 7. Notices. Each notice, request, demand, consent, approval or other communication (hereinafter in this Section referred to collectively as "notices" and referred to singly as a "notice") which the Lender, the HRA or the Noteholder is required or permitted to give to the other party pursuant to this Agreement shall be in writing and shall be deemed to have been duly and sufficiently given i£ (a) personally delivered with proof of delivery thereof (any notice so delivered shall be deemed to Fannie Mae Subordination Agreement - Form 4503 10/98 (Page 5) (modified) `C'~ D?fl FT have been received at the time so delivered); or (b) sent by Federal Express (or other similar national overnight courier) designating early morning delivery (any notice so delivered shall be deemed to have been received on the next Business Day following receipt by the courier); or (c) sent by United States registered or certified mail, return receipt requested, postage prepaid, at a post office regularly maintained by the United States Postal Service (any notice so sent shall be deemed to have been received two days after mailing in the United States), addressed to the respective parties as follows: LENDER: AmeriSphere Multifamily Finance, L.L.C. One Pacific Place, Suite 130, 1125 South 103rd Street, Omaha, Nebraska 68124 With a copy to: Fannie Mae Attention: Multifamily Operations -Asset Management Drawer AM 3900 Wisconsin Avenue, N.W. Washington, DC 20016 HRA: The Housing and Redevelopment Authority in and for the City of Richfield 6700 Portland Avenue Richfield, Minnesota 55423 Attention: Executive Director NOTEHOLDER: Marshall & Ilsley Corporation 770 North Water Street Milwaukee, WI 53202 Attention: Dan Byrne Any party may, by notice given pursuant to this Section, change the person or persons and/or address or addresses, or designate an additional person or persons or an additional address or addresses for its notices, but notice of a change of address shall only be effective upon receipt. Fannie Mae Subordination Agreement -- Form 4503 10/98 (Page 6) (modified) 4-~ DF€iFT 8. General (a) Amendment. This Agreement shall not be amended except by written instrument signed by all parties hereto. (b) Governing Law. This Agreement shall be governed by the laws of the State of Minnesota. (c) Severable Provisions. If any provision of this Agreement shall be invalid or unenforceable to any extent, then the other provisions of this Agreement, shall not be affected thereby and shall be enforced to the greatest extent permitted by law. (d) Term. The term of this Agreement shall commence on the date hereof and shall continue until the Maturity Date under •the Contract. (e) Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be considered an original for all purposes; provided, however, that all such counterparts shall together constitute one and the same instrument. [REST OF PAGE LEFT INTENTIONALLY BLANK] Fannie Mae Subordination Agreement -- Form 4503 10/98 (Page 7) (modified) ~~ D~~FT IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first written above. LENDER: AMERISPHERE MULTIFAMILY FINANCE, L.L.C. a Nebraska limited liability company By: Justin W D Kennedy Senior Vice President ACKNOWLEDGMENT STATE OF COUNTY OF This instrument was acknowledged before me on 2009 by Justin W D Kennedy as Senior Vice President of AmeriSphere Multifamily Finance, L.L.C. a Nebraska limited liability company. Notary Public Printed Name: My Commission Expires: Fannie Mae Subordination Agreement -- Form 4503 10/98 (Page 8) (modified) -I D ~- THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD By: Name: Title: ACKNOWLEDGMENT STATE OF MINNESOTA COUNTY OF HENNEPIN This instrument was acknowledged before me c [Name] as Redevelopment Authority in and for the City of Richfield, and politic, on behalf of said corporation. Notary Public Printed Name: My Commission Expires: i 2009 by [Title] of The Housing and a Minnesota public body corporate Fannie Mae Subordination Agreement - Form 4503 10/98 (Page 9) (modified) ~~- I l ~. ~. ~~ '~ NOTEHOLDER: MARSHALL & ILSLEY CORPORATION By: Name: Title: ACKNOWLEDGMENT STATE OF COUNTY OF This instrument was acknowledged before me on 2009 by [Name] as [Title] of Marshall and Ilsley Corporation, a Wisconsin corporation, on behalf of said corporation. Notary Public Printed Name: My Commis"lion Expires: Fannie Mae Subordination Agreement -- Form 4503 10/98 (Page 10) (modified) ~-i~ BORROWER: ~ ~~,~ F `'~ ~ ' ~ ~, ~ ~ ~y ~. THE OAKS, L.L.C. a Minnesota limited liability company By: Name: Title: ACKNOWLEDGMENT STATE OF COUNTY OF This instrument was acknowledged before me on 2009 by [Name] as [Title] of The Oaks, L:L.C., a Minnesota limited liability company, on behalf of said limited liability company. Notary Public Printed Name: My Commission Expires: Fannie Mae Subordination Agreement -- Form 4503 10/98 (Page 11) (modified) -I 3 REDEVELOPER: ~~,~~ :e~ ., RICHFIELD STATE AGENCY, INC. a Minnesota corporation By: Name: Title: STATE OF COUNTY OF ACKNOWLEDGMENT This instrument was acknowledged before me on 2009 by [Name] as [Title] of Richfield State Agency, Inc., a Minnesota corporation, on behalf of said corporation. Printed Name: My Commission Expires: Notary Public Fannie Mae Subordination Agreement - Form 4503 10/98 (Page 12) (modified) y-i `~ 4 ~~ ~~~ EXHIBIT A LEGAL DESCRIPTION LoC L, ~Itack 3 and CiutlaC L7, Richfield Elrban 1+"illage, Hennepin County, Minnesota The follo~rring ~ortians are registered Tclrren5 property de5crlt~ed as follows: flutlot 6, Richfield Urt7arr Village, except thaC part thereof lying easterly of the centerline 4f vacated Grand Avenue South and its southerly extension. (Tarrens Gertif~cate Na. 1146725} AN Ly Those parts of Lot 1, 8ltitk 3, Rithi:aeltf Urbana Village; ernbrace~i within the ft~llkawing descritsed five parcels: 1. Lots 5, 9 and 10, Block 1, Lyndale Shores tin Wood bake. Z, That part of the NorC;~ 25 feet of vacated 67th Street dedicated in the plat of Lyndale Shores an 4uood Lake lying beCaveen the extensions across it of the West line of Lot 5, Block A, said plat, and the East line of said plat. 3. That part crf Pleasant Avenue dedicated in Che plat of Lyndale Shores on Woad Leke lying ti®tweera tile. extensions across It of the Mort~h and South lines of L4C 5, Block 1, Lyndale Shares an Wood i.ake. ~. The East H2~lf of vacated Grand Avenue S€suth lying between the extensions across it of the tJorth line- of Lot 1(D, Black 11 Lyndale Shares on Wood Lake and the South line of Lot 4, Block .1, said plat. 5. Lot €Ir Block 1, J.PJ. Hauser'S Addition. {TOrrens Certificate No. 1t]38937) Together tivitl~ ea;~ernents far use of a parking ramp and far access a9 established and set forth in Easements and L3eClaraton of Covenants and RQSCric'.tlons dated 3anuary 3; 2044, f{led of record September 22, 2t1t7L1 as Document X90. 3317547 (T~ and September 25, 20t}t}, as DocumenE rlo. 735445 i;Ay. Fannie Mae Subordination Agreement - Form 4503 10/98 (Page 13) (modified) AGENDA ITEM # rj REPORT # Z$ STAFF REPORT HOUSING AND REDEVELOPMENT AUTHORITY MEETING JULY 20, 2009 REPORT PREPARED BY: KAREN BARYON, COMMUNITY DEVELOPMENT ASSISTANT DIRECTOR NauE, TITLE REPORT PRESENTER: DEPARTMENT DIRECTOR REVIEW: REVIEWED BY EXECUTNE DIRECTOR: ITEM FOR HRA CONSIDERATION: Consideration of authorization for administrative approval of Foreclosure Purchase Incentive Program loans that meet all program guidelines. I. RECOMMENDED ACTION: By Motion: Authorize staff to administratively approve Foreclosure Purchase Incentive Program loans that meet all program guidelines. II. BACKGROUND In an effort to return foreclosed and vacant homes to owner-occupancy and reduce the associated blighting effects, the Housing and Redevelopment Authority (HRA) allocated $150,000 for the Foreclosure Purchase Incentive Program (FPIP) for 2009. The purpose of the program is to encourage the return of foreclosed and vacant single-family homes to owner-occupancy as quickly as possible. Prospective buyers who homestead the property are eligible for either a $10,000 down-payment assistance loan or a $15,000 rehabilitation assistance loan. Both loans are deferred and will be forgiven after five years of owner-occupancy. On March 16, 2009 the HRA approved guidelines for the program. Currently, staff is required to bring each FPIP application to the HRA for approval prior to closing. Due to short closing timelines on most purchase agreements, 07202009 FPIP Administrative Approval KAREN BARYON, COMMUNITY DEVELOPMENT ASSISTANT DIRECTOR typically 30 days, and the fact that the HRA meets once per month, it is often difficult to obtain the HRA approval prior to the closing. To streamline this process and facilitate the issuance of FPIP loans, staff is requesting the HRA authorize staff to administratively approve FPIP loans that meet all of the program guidelines as adopted by the HRA. III. BASIS OF RECOMMENDATION A. POLICY The stated goals of the FPIP loan program are to: o Eliminate the blighting influence of foreclosed, vacant housing, thus stabilizing and improving residential neighborhoods; and to o Off-sets. costs associated with deferred maintenance and property damage associated with foreclosure and vacancy. B. CRITICAL ISSUES • Foreclosed homes affect the stabilization of neighborhoods and property values. • Due to timing issues between HRA meetings and closing dates, some FPIP loans have not been successfully awarded. C. FINANCIAL N/A D. LEGAL • The City Attorney has stated that the HRA may grant staff this authority. IV. ALTERNATIVE RECOMMENDATION~S~ • Do not grant staff the authority to administratively approve FPIP loans meeting program guidelines. V. ATTACHMENTS FPIP Guidelines VI. PRINCIPAL PARTIES EXPECTED AT MEETING N/A ~~ FORECLOSURE PURCHASE INCENTIVE PROGRAM PROCEDURAL GUIDELINES Apri122, 2009 -~ Table of Contents Statement of Purpose Program Objective Program Outcomes Definitions Eligibility Terms and Conditions Data Privacy General Program Marketing 2 2 2 ~3 Foreclosure Purchase Incentive Program Procedural Guidelines Statement of Purpose The purpose of the Foreclosure Purchase Incentive Program (FPIP) is to return foreclosed, vacant properties to owner-occupied properties as quickly as possible. Program Objectives • To eliminate the blighting influence of foreclosed, vacant housing, thus stabilizing and improving residential neighborhoods. • To off-set costs associated with deferred maintenance and property damage associated with foreclosure and vacancy. This will be achieved through the provision of adown-payment assistance or rehab incentive to encourage prospective homebuyers to purchase foreclosed, vacant homes in the city. Program Outcomes • Return ten to fifteen foreclosed, vacant houses in the city to owner-occupied homes. • Stabilize neighborhoods impacted by foreclosed, vacant houses. • Maintain and increase property values in neighborhoods impacted by foreclosed, vacant houses. Definitions Buyer -The buyer of the subject property. HRA -The Housing and Redevelopment Authority in and for the City of Richfield. Property -The subject house and lot. Foreclosed Property - A house and lot that has been through, a mortgage foreclosure process with the most recent owner of record, and is currently owned by a lending agency/bank. Eligibility 1. Funding is limited to the purchase of foreclosed properties, with priority given to foreclosed AND vacant properties. 2. Applicants must apply to and be deemed ineligible for the Neighborhood Stabilization Program (NSP) funding prior to applying for FPIP funds. 3. If Buyer will be obtaining mortgage financing for the purchase of the Property, a minimum of 20% equity* in the Property, based on a recent appraisal, will be required. 4. Applicant's household incomes are not restricted. ~- `~ 5. Loan recipient must be the Buyer and reside in and homestead the property during the life of the loan. 6. The house and property to be purchased must be located within the City of Richfield municipal boundaries. 7. Applicants must complete a City of Richfield HRA FPIP Application and submit it at least 30 days prior to closing. 8. Applicants who may be eligible to receive down-payment assistance through available State or Federal Programs must apply for those funds prior to applying for City HRA FPIP funds. 9. Applicants who receive down-payment assistance through State or Federal programs will not be eligible for FPIP funds. 10. Eligible properties must meet minimum health and safety requirements. Loans will not be issued for uninhabitable properties. Determination of habitability will be at the discretion of the HRA based on City of Richfield Point of Sale Inspection report and physical inspection conducted by HRA staff or HRA contracted inspector. Terms and Conditions 1. Maximum loan amount is $10,000 per eligible household for down-payment assistance and $15,000 per eligible household for rehab assistance. 2. Rehab assistance loans will only be issued in conjunction with the purchase of a foreclosed house. 3. Only one loan per eligible household. 4. Funds can be used city-wide within the City of Richfield boundaries. 5. Funds can be used for down-payment assistance OR for rehab/improvement projects associated with the property. 6. Buyers will be required to sign an Agreement (Agreement) with the City of Richfield Housing and Redevelopment Authority consenting to all loan requirements prior to loan disbursement. 7. Funds for down-payment assistance will be disbursed at closing. 8. Funds for construction/rehab projects will be disbursed in three installments as detailed in the Agreement. 9. Alien will be placed against the property by the HRA for the full loan amount. 10. Funds will be awarded in the form of a five-year, zero-interest, forgivable loan. 11. Buyer must reside in and homestead the property during the life of the loan. If at anytime during the life of the loan the property is vacant for a period of six consecutive months or longer, or the property is no longer homesteaded, the loan will be required to be repaid in full. . 12. If the house is sold or the title transferred during the loan period, the loan will be required to be repaid in full. 13. Any mortgage or financing for the property must be in the form of a fixed interest rate. 14. If Buyer will be obtaining mortgage financing for the purchase of the Property, a minimum of 20% equity* in the Property, based on a recent appraisal, will be required. 15. The HRA reserves the right to refuse loan issuance to properties deemed to be un- inhabitable. 16. The HRA may conduct an inspection of the property to verify rehab work has been completed in compliance with documentation submitted for the loan. 17. Loan funds are available on a limited basis. ~~~ *Equity can be in the form of Buyer down-payment and/or difference between appraised market value and amount of all liens against the property Data Privacy All information secured through the program is subject to the Minnesota Data Privacy Act. General Program Marketing Program marketing is entirely at the discretion of the HRA. It may include the following: Buyer Solicitation. The HRA may market the program to Buyers through promotional articles, direct mail, the Internet, or other methods as deemed appropriate. End Buyers may be any financially eligible family. The HRA is a Fair Housing agency.