07-17-2017 Complete AgendaR E G U L AR H O U S IN G AN D R E D E V E LO P ME N T AU T H O R IT Y MEET IN G
R IC H F IE L D MU N IC IPAL C EN TER, C O U N C IL C H AMB E R S
JU LY 17, 2017
7:00 P M
C all to Order
Approval of the Minutes
A pproval of the mi nutes of the Regular Housing and Redevelopment A uthority Meeti ng of May 15, 2017.
AG E N D A AP P R O VAL
1.A pproval of the A genda
P U B LIC H EAR IN G S
2.P ublic heari ng and consideration of the approval of a resolution approving the conveyance of certain real property
to Interstate L L C and approving a purchase agreement with respect thereto.
S taff Report No. 26
H R A D IS C U S S IO N IT E MS
3.H R A D iscussion Items
E X E C U T IV E D IR EC TO R R E P O R T
4.E xecutive D i rector's Report
C L AIMS AN D PAYR O LL S
5.C laims and P ayrolls
6.A djournment
Auxiliary aids for individuals with disabilities are available upon request. R equests must be made at least 96
hours in advance to the C ity Clerk at 612-861-9738.
HOUSING AND REDEVELOPMENT
AUTHORITY MEETING MINUTES
Richfield, Minnesota
Regular Meeting
May 15, 2017
CALL TO ORDER
The meeting was called to order by Chair Supple at 7:03 p.m.
ATTENDANCE
HRA Members Present: Mary Supple, Chair; Pat Elliott; Michael Howard; Doris Rubenstein; Sue
Sandahl
HRA Members Absent:
None
Staff Present: Steve Devich, Executive Director
John Stark, Director of Community Development
Karen Barton, Assistant Director of Community Development
Julie Eddington, Attorney to HRA, Kennedy and Graven
Kate Aitchison, Housing Specialist/Acting City Clerk
Item #1
APPROVAL OF THE MINUTES OF THE REGULAR HRA MEETING OF APRIL 17,
2017
M/Elliott, S/Howard to approve the minutes of the regular HRA meeting of April 17, 2017.
Motion carried 5-0.
Item #2
HRA APPROVAL OF THE AGENDA
M/Howard, S/Sandahl, to approve the agenda.
Motion carried 5-0.
Item #3 HRA APPROVAL OF THE CONSENT CALENDAR
Executive Director Devich presented the consent calendar.
A. Consideration of the approval of a resolution approving a Subordination Agreement
related to Richfield Urban Village (Staff Report No. 20).
B. Consideration of the approval of a resolution authorizing the HRA to affirm the monetary
limits on statutory municipality tort liability (Staff Report No. 21).
HRA Meeting -2- May 15, 2017
C. Consideration of the approval of a resolution authorizing the purchase of 6839 Cedar
Avenue (Staff Report No. 22).
M/Elliott, S/Howard, to approve the consent calendar.
Motion carried 5-0.
Item #4 CONSIDERATION OF THE APPROVAL OF A RESOLUTION AUTHORIZING
THE RIGHT OF ENTRY AGREEMENT WITH INLAND DEVELOPMENT LLC.
Assistant Community Development Director Karen Barton presented Staff Report No. 23.
Commissioner Elliott asked for clarification on the need for entry to the property. Assistant
Community Development Director Barton responded that the developer was simply doing their due
diligence.
Commissioner Rubenstein asked about payment for the testing and the disclosure of
results. Assistant Community Development Director Barton responded.
Commissioner Sandahl asked about the existing 11-unit buildings that are part of the
project. Assistant Community Development Director Barton responded that they will go through
extensive rehabilitation and be included in the entire development. .
Chair Supple stated she was happy to see that no residents will be displaced as part of this
project.
M/Sandahl, S/Elliott, to approve the resolution authorizing the Right of entry Agreement with
Inland Development LLC.
Motion carried 5-0.
Item #5 PUBLIC HEARING AND CONSIDERATION OF THE APPROVAL OF A
RESOLUTION APPROVING THE CONVEYANCE OF CERTAIN REAL
PROPERTY TO INTERSTATE LLC AND APPROVING A PURCHASE
AGREEMENT WITH RESPECT HERETO.
Assistant Community Development Director Karen Barton presented Staff Report No. 24.
Commissioner Rubenstein stated that the community had been discussing this topic, and
that neighbors were concerned about noise. She related her experience living near a restaurant
with drive-thru window service.
Community Development Director Stark stated that staff has been working with the
developer to position the speakers away from residential uses, as well as using advanced
technology to minimize the noise disturbance.
Chair Supple asked for clarification on the time of day the businesses will be open and the
impact on parking.
M/Sandahl, S/Elliott to open the Public Hearing
Motion carried 5-0.
HRA Meeting -3- May 15, 2017
Rosalee Hinrich, 6638 16th Avenue, stated that she has not seen any concrete evidence of
the advanced technology or changes made to improve the project. She stated she is worried about
the noise impacts of cars and crowds, as well as the increased traffic that will be on 16th Avenue
throughout the day. She requested that the policy makers drive on 16th Avenue and imagine the
impacts.
Chair Supple asked about the status of a liquor license for the restaurant-tenant.
Community Development Director Stark responded that he assumed they will probably have one.
He stated that there will be two entrances into the development and that a ‘porkchop’ island will
help divert traffic away from 16th Avenue. He also stated that the property has been zoned for
commercial use since 1968.
Christine Wiehle, speaking on behalf of 6638 17th Ave. Ms. Wiehle offered her thoughts
about the traffic impacts on the neighborhood, as well as how the noise from the new development
will be detrimental when added to the noise from the airport. She stated that it seems lik e a lot of
development for the corner when added to the nearby business.
M/Sandahl, S/Elliott to close the public hearing.
Motion carried 5-0.
Commissioner Howard thanked the residents for coming and sharing their thoughts, and
stated that staff will work on continuing the conversation that has begun.
Commissioner Sandahl asked to see a map. Community Development Director Stark
provided a map and explained the layout of the development.
Executive Director Devich talked about the buffer that will be created via landscaping and
berming between the parking lot and residential uses. Community Development Director Stark
added that the developer will work with the adjacent neighbors to meet their needs.
Commissioner Howard commended the cooperation between staff, the developer and the
neighborhood.
Commissioner Rubenstein stated her concerns about traffic and parking, based on her
personal experience.
Executive Director Devich stated that there is adequate parking on the site. Community
Development Director Stark stated that if there are problems, things can be adjusted in the future.
M/Sandahl, S/Elliott to approve a resolution approving the conveyance of certain real
property to Interstate LLC and approving a purchase agreement with respect thereto.
Motion carried 5-0.
Item #6 CONSIDERATION OF THE APPROVAL OF A PETITION REQUESTING
THAT THE CITY COUNCIL CONSIDER THE VACATION OF A PORTION OF
17TH AVE. THE RIGHT-OF-WAY IS ADJACENT TO THE PROPOSED
PLAZA 66 DEVELOPMENT (APPROX 6600, 6608, AND 6614 17 TH AVE).
John Stark presented Staff Report No. 25.
HRA Meeting -4- May 15, 2017
Commissioner Sandahl asked if residents can currently exit their neighborhood easily.
Community Development Director Stark responded that they could.
M/Elliott, S/Howard to approve a petition requesting that the city council consider the
vacation of a portion of 17th Avenue.
Motion carried 5-0.
Item #7
HRA DISCUSSION ITEMS
Chair Supple asked for an update on the grant applications that had been submitted.
Assistant Community Development Director Barton stated that three grants were applied for. One
grant, for $50,000, was awarded for Penn Avenue Façade Improvement grants. The other two
grants were not awarded, likely due to the early stages of the projects. Staff will have the
opportunity to re-apply in the winter of 2018.
Chair Supple asked about the status of the Purchase Agreement for Seasons Park.
Executive Director Devich responded that Aeon is going through their due diligence process. Chair
Supple thanked everyone involved in the deal for helping keep residents from being displaced.
Chair Supple mentioned that the Comprehensive Plan Task Force is looking for input, and
encouraged residents to give their feedback about the community.
Item #8
EXECUTIVE DIRECTOR REPORT
Community Development Director Stark provided an update on the Cedar Point II and
Cedar Point South projects.
He also provided an update to the April 24th work session on affordable housing. Staff has
a plan to continue the dialog with the affordable housing partners about how cities can create
policy around affordable housing. They plan to meet with various stakeholders to gather input and
advice. A follow-up work session will be scheduled for June 19th.
Item #9
CLAIMS AND PAYROLL
M/Elliott, S/Sandahl, that the following claims and payroll be approved:
U.S. BANK 5/17/17
Section 8 Checks: 128711 - 128797 $ 157,933.26
HRA Checks: 33073 - 33109 $ 152,805.05
TOTAL $ 310,738.31
Commissioner Rubenstein asked a question about expenses related to the Lyndale
Gardens project.
Motion carried 5-0.
ADJOURNMENT
The meeting was adjourned by unanimous consent at 7:59 p.m.
HRA Meeting -5- May 15, 2017
Date Approved: July 17, 2017
Mary B. Supple
HRA Chair
Kate Aitchison Steve Devich
Housing Specialist Executive Director
AGENDA SECTION:PUBLIC HEARINGS
AGENDA ITEM #2.
STAFF RE P ORT NO. 26
HOUSING AND REDE V E LOP MENT AUT HORIT Y
ME E T ING
7/17/2017
RE P O RT P RE PA RE D B Y: K aren B arton, C ommunity D evelopment A ssi stant D irector
D E PA RTM E NT D IRE C TOR RE V IE W: J ohn S tark, C ommunity D evelopment D i rector
7/11/2017
O TH E R D E PA RTM E NT RE V IE W: N/A
C ITY M A NA G E R RE V IE W: S teven L . D evich, C ity Manager
7/12/2017
I T E M F O R C O UNC I L C O NS I D E RAT IO N:
Public hearing and consideration of the appr oval of a resolution approving the conveyance of certain
real property to Interstate L L C and approving a purchase agreement with respect thereto.
E X E C UT IV E S UM M ARY:
On May 15, 2017, the Housing and Redevelopment Authority (HRA) approved the sale of certain real
property located at 6608 17th Avenue, along with two adjac ent remnant parcels and vacated right-of-way, to
I nterstate LLC (Developer) for the development of an approximately 10,400 square foot retail building on 66th
Street E between 16th and 17th Avenues. The purc hase agreement was fully exec uted by both parties on
May 25, 2017.
I n an effort to c larify the specific right-of-way to be convey ed to the Developer, the HRA is requested to
approve a revised purc hase agreement that more suc cinctly describes the property to be c onveyed. The
purchase agreement inc ludes pay ment for the vac ated right-of-way.
RE C O M M E ND E D AC T IO N:
Conduct and close the public hearing and by motion: Approve a resolution approving the conveyance
of certain real property to Interstate L L C and approving a purchase agreement with respect thereto.
B AS IS O F RE C O M M E ND AT IO N:
A.H IS TOR IC AL C ON TEXT
There are six properties loc ated within the proposed development area, three of whic h are owned
by the HRA, plus the right-of-way to be vac ated.
The D eveloper has purc hase agreements for the three privately-owned properties.
The HRA-owned property the Developer is proposing to ac quire is as follows:
LOT 001, BL OC K 001, C E D A R S UNRI SE A D D N (Remnant P arc el)
LOT 002, BL OC K 001, C E D A R S UNRI SE A D D N (6608 17th Ave S)
LOT 016, BL OC K 001, C E D A R S UNRI SE A D D N (Remnant P arc el)
Vac ated right-of-way as legally desc ribed in the purc hase agreement.
B.P OL IC IE S (resolutions, ordinances, regulations, statutes, etc):
The 2008 Richfield C omprehensive Plan guides this property for development of community
commerc ial.
The Planning Commission recommended approval of the rezoning and land-use on April 24,
2017.
The C ity Council approved the re-zoning and land-use applications on May 24, 2017.
I n ac cordanc e with Minnesota Statutes, Section 469.029, subdivision 2, the HRA is required to
hold a duly noticed public hearing on the c onveyanc e of the property to the Developer.
The purc hase agreement requires:
the D eveloper to construct an approximately 10,400 square foot retail building on the site;
construction to commence within 6 months of closing; and,
construction to be c omplete within 18 months of c losing.
The HRA has been renting the property located at 6608 17th Ave S . The tenants were given
notice as required by law.
The tenants have been advised of their rights to reloc ation benefits under the Uniform Relocation
Act.
C.C R IT IC AL T IMIN G ISSU E S:
Closing is required to take place on or before August 15, 2017.
Construction must c ommence within 6 months of c losing and be c ompleted within 18 months of
closing.
D.F IN AN C IAL IMPAC T:
The HRA acquired the parc el located at 6608 17th Avenue S in 2004 for $219,000.
The two remnant parcels were acquired as part of the c onstruction of the roundabout in 2004.
The purc hase pric e of the three HRA-owned parc els and vacated right-of-way is $450,000, to be
paid in full at c losing.
The D eveloper has submitted $15,000 in earnest money.
The D eveloper has submitted $5,000 in escrow to reimburse the HRA for administrative c osts
related to the sale of the property.
The tenants may be eligible for reloc ation benefits as required by law, in an amount as y et
undetermined.
E.L E GAL C ON S ID E R AT ION :
The HRA Attorney drafted the purc hase agreement.
The tenants of 6608 17th Avenue South have been notified of their rights under the Uniform
Reloc ation Ac t.
ALT E R N AT IV E R E C O MME N D AT IO N(S):
Do not approve the resolution.
P R IN C IPAL PAR TIE S EXP E C T E D AT ME E T IN G:
Representatives of I nterstate L LC
AT TAC H ME N TS :
D escripti on Type
Resolution Resolution L etter
Revised P urchase A greement C ontract/A greement
Map B ackup Materi al
Error! Bookmark not defined.
HOUSING AND REDEVELOPMENT AUTHORITY
IN AND FOR THE CITY OF RICHFIELD, MINNESOTA
RESOLUTION NO. ______
RESOLUTION APPROVING CONVEYANCE OF CERTAIN REAL PROPERTY TO
INTERSTATE DEVELOPMENT LLC, OR ITS ASSIGNEE, AND APPROVING A REVISED
PURCHASE AGREEMENT WITH RESPECT THERETO
WHEREAS, on May 15, 2017, the Housing and Redevelopment Authority in and for the City of
Richfield, Minnesota (the “Authority”) held a public hearing and approved by resolution a Purchase
Agreement providing for the conveyance of certain real property owned by the Authority to Interstate
Development LLC, a Minnesota limited liability company, or its assignee (the “Developer”), and legally
described in EXHIBIT A attached hereto (the “Development Property”) in the City of Richfield, Minnesota
(the “City”); and
WHEREAS, the Authority and the Developer executed the Purchase Agreement related to the
Development Property on May 25, 2017; and
WHEREAS, a public street is adjacent to the Development Property and the City has proposed to
vacate the street as part of the Developer’s proposed development; and
WHEREAS, the Authority owns the real property that abuts the street to be vacated on both sides of
the street and following the vacation of the street by the City, the vacated street property will be owned by the
Authority; and
WHEREAS, upon completion of the vacation process by the City, the Authority has proposed to
convey the vacated street, as legally described in EXHIBIT B attached hereto (the “Additional Property”), to
the Developer; and
WHEREAS, in order to promote the redevelopment of land that is underused and underutilized in the
City, the Authority is considering conveying the Additional Property with the Development Property to the
Developer for the proposed redevelopment thereof; and
WHEREAS, on the date hereof, the Board of Commissioners of the Authority (the “Board”)
conducted a duly noticed public hearing on the conveyance of the Development Property and the Additional
Property to the Developer, in accordance with Minnesota Statutes, Section 469.029, subdivision 2; and
WHEREAS, there has been presented before this Board a revised Purchase Agreement (the “Revised
Purchase Agreement”) proposed to be entered into between the Authority and the Developer, pursuant to
which the Authority will agree to sell the Development Property and the Additional Property to the
Developer, and the Developer will agree to purchase the Development Property and the Additional Property
from the Authority; and
WHEREAS, the Board has reviewed the Revised Purchase Agreement and finds that the execution
thereof by the Authority and the performance of the Authority’s obligations thereunder are in the best interest
of the City and its residents; and
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:
2
501300v3
1. The Revised Purchase Agreement is hereby in all respects authorized, approved, and
confirmed, and the Chairperson and the Executive Director are hereby authorized and directed to execute the
Revised Purchase Agreement for and on behalf of the Authority in substantially the form now on file with the
Community Development Director but with such modifications as shall be deemed necessary, desirable, or
appropriate, the execution thereof to constitute conclusive evidence of their approval of any and all
modifications therein.
2. The Chairperson and the Executive Director are hereby authorized to execute and deliver to
the Developer a quit claim deed and any and all other documents or certificates deemed necessary to carry
out the intentions of this resolution and the Revised Purchase Agreement.
Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota
this 17th day of July, 2017.
Mary Supple, Chair
ATTEST:
Doris Rubenstein, Secretary
A-1
501300v3 JAE RC125-355
EXHIBIT A
LEGAL DESCRIPTION OF THE DEVELOPMENT PROPERTY
Lot 1, Block 1, Cedar-Sunrise Addition
Tax ID – 2602824410005
Lot 2, Block 1, Cedar-Sunrise Addition
Tax ID – 2602824410006
Lot 16, Block 1, Cedar-Sunrise Addition
Tax ID – 2602824410020
B-1
501300v3 JAE RC125-355
EXHIBIT B
LEGAL DESCRIPTION OF THE ADDITIONAL PROPERTY
That portion of vacated 17th Avenue South accruing to Lots 1 and 2, Block 1, Cedar-Sunrise Addition
That portion of vacated 17th Avenue South accruing to Lots 14, 15, and 16, Block 2, Wexler’s Addition
REVISED PURCHASE AGREEMENT
This Revised Purchase Agreement (“Agreement”) is made this 17th day of July, 2017 by and
between the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota,
a public body corporate and politic under the laws of the State of Minnesota (“Seller”), and
Interstate Development LLC, a Minnesota limited liability company, or its assignee (“Buyer”).
1. PROPERTY. Seller is the owner of certain real estate located in the City of Richfield,
Hennepin County, Minnesota and legally described in Exhibit A and the building and
improvements constructed or located thereon (the “Property”).
2. OFFER/ACCEPTANCE. In consideration of the mutual agreements herein contained,
Buyer offers and agrees to purchase and Seller agrees to sell and hereby grants to Buyer the
exclusive right to purchase the Property.
3. CONTINGENCIES. This Agreement is subject to the following contingencies:
A. Approval of the conveyance of the Property by Seller’s governing body after a
public hearing required by law.
B. Buyer having determined that it is satisfied with the result of and matters
disclosed by Buyer’s investigations, surveys, soil tests, engineering inspections,
hazardous substance, and environmental reviews of the Property.
C. Buyer having obtained all appropriate approvals and permits necessary for
Buyer’s proposed use of the Property, including, but not limited to, plat approval,
conditional use permits, signage permits, building permits, and site plan
approvals.
If the contingencies above are satisfied in a timely manner, then Buyer and Seller shall proceed
to close the transaction as contemplated herein. If, however, any of the contingencies at
subparagraphs A, B or C above are not satisfied or waived by September 30, 2017, this
Agreement shall thereupon be void, Seller shall return the Earnest Money to Buyer, and Buyer
and Seller shall execute and deliver to each other the termination of this Agreement. The
contingency set forth in subparagraph A cannot be waived. The contingency in subparagraph B
can only be waived by the Buyer. The contingency in subparagraph C may only be waived by
the Buyer and the Seller. As a contingent purchase agreement, the termination of this Agreement
is not required pursuant to Minnesota Statutes Section 559.21, et seq.
4. PURCHASE PRICE AND TERMS.
A. PURCHASE PRICE. The Property is approximately [0.053] acres. The total
Purchase Price for the Property is $450,000 (the “Purchase Price”).
B. TERMS.
2
501301v2 JAE RC125-355
(1) EARNEST MONEY. Earnest money in the amount of Fifteen Thousand
Dollars ($15,000) (the “Earnest Money”) is payable to Seller within five
business days after approval of this Agreement by Seller’s governing
body.
(2) BALANCE DUE SELLER. Buyer agrees to pay by certified check or
wire transfer of funds on the Closing Date (as defined in Section 7) any
remaining balance due according to the terms of this Agreement.
(3) DEED/MARKETABLE TITLE. Subject to performance by Buyer, Seller
agrees to execute and deliver a Quit Claim Deed in substantially the form
attached as Exhibit B (the “Deed”) conveying marketable title to the
Property to Buyer, subject only to the following exceptions:
a. Building and zoning laws, ordinances, state and federal
regulations;
b. Reservation of minerals or mineral rights to the State of
Minnesota, if any; and
c. Restrictive covenant providing a right of reverter to the Seller to be
exercised at Seller’s option if the Buyer fails to perform as
provided in Section 12 of this Agreement, as described in the
Deed.
(4) DOCUMENTS TO BE DELIVERED AT CLOSING. In addition to the
Deed, Seller shall deliver to Buyer:
a. Standard form Affidavit of Seller; and
b. Such other documents as may be reasonably required by Buyer’s
title examiner or title insurance company.
5. REAL ESTATE TAXES AND SPECIAL ASSESSMENTS.
A. General real estate taxes applicable to any of the Property due and payable in the
year of closing shall be prorated between Seller and Buyer on a daily basis with
Seller paying those allocable to the period prior to the Closing Date and Buyer
being responsible for those allocable to the Closing Date and thereafter.
B. Seller is not aware of any special assessments currently levied against the
Property.
6. SURVEY AND TITLE MATTERS. Buyer, at its sole expense, shall obtain the title
evidence determined necessary or desirable by Buyer. Buyer shall have 10 days following the
receipt of same to make its objections in writing to Seller. If the title to the Property or any part
3
501301v2 JAE RC125-355
thereof, shall be found to be unmarketable, Seller agrees to cure such defects and render the title
marketable by the Closing Date; provided, that nothing in this Agreement shall require Seller to
exercise its power of eminent domain to make title marketable.
It is further understood and agreed that if the title to the Property or any part thereof is found to
be unmarketable on the Closing Date, Buyer may, at its option: (a) waive the title defects and
proceed to closing; or (b) declare this Agreement null and void, upon which the Earnest Money
shall be refunded and neither Buyer nor Seller shall be liable for damages hereunder. If the title
to the Property is found marketable and Buyer shall default in any of the covenants or
agreements herein provided, then and in that case, Seller may at its option, deem this Agreement
terminated by giving written notice thereof to Buyer, and on such termination, the Earnest
Money shall be retained by Seller as liquidated damages, time being of the essence hereof.
Neither party may enforce this Agreement by specific performance.
7. CLOSING DATE. The closing of the sale of the Property shall take place on a date to
be mutually agreed upon by Seller and Buyer (the “Closing Date”), but no later than _____,
2017. The closing shall take place at the Richfield Municipal Center, or such other location as
mutually agreed upon by the parties.
8. ADMINISTRATIVE COSTS OF SELLER. Buyer agrees and understands that it is
responsible for and will pay to the Seller all out-of-pocket costs incurred by the Seller (including
without limitation reasonable attorney and fiscal consultant fees) in the negotiation and
preparation of this Agreement and other documents and agreements in connection with the
activities contemplated hereunder (collectively, the “Administrative Costs”). Administrative
Costs shall be evidenced by invoices, statements or other reasonable written evidence of the
costs incurred by the Seller.
Upon execution of this Agreement, the Buyer will deliver a deposit to the Seller in the amount of
$5,000 (the “Deposit”) to pay future Administrative Costs. At any time the Deposit drops below
$1,000, the Buyer shall replenish the deposit to the full $5,000 within 30 days after receipt of
written notice thereof from the Seller. The Seller shall provide invoices to the Buyer for all
payments deducted from the Deposit. At any time the Deposit is insufficient to pay invoices
related to the activities contemplated hereunder, the Seller will ask for additional Deposits from
the Buyer. If the additional Deposit is not made within 30 days following the date of such
request, the Seller may elect to either suspend its performance under this Agreement or terminate
this Agreement. Such suspension or termination will be effective on the date it is given in
writing, or on such later date specified in the notification. Any unexpended or unencumbered
portion of the Deposit shall be returned or credited to the Buyer at closing.
9. CLOSING COSTS AND RELATED ITEMS. Seller shall be responsible for payment
of recording fees related to the Deed and state deed tax. Unless otherwise provided herein,
Buyer shall be responsible for the payment of the recording costs related to instruments required
to establish marketable title in Buyer (other than the Deed), the title insurance premium (if any),
and all closing costs and expenses not paid by Seller. Each party shall be responsible for its own
attorneys’ fees and costs.
4
501301v2 JAE RC125-355
10. APPROVALS. Buyer may be in need of plat approval, a conditional use permit or other
approvals for its proposed use of the Property. Buyer shall be responsible for applying to the city
for permits or any other government approvals needed and the costs associated with obtaining
them. Seller agrees that it will cooperate with Buyer in providing any information or
authorization needed in order for Buyer to apply for the governmental approvals. Buyer’s failure
to obtain necessary permits or government approvals shall not be considered Unavoidable Delays
(as defined in Section 12 herein).
11. “AS-IS” SALE. Buyer acknowledges that it has inspected or has had the opportunity to
inspect the Property and agrees to accept the Property “AS IS” with no right of set off or
reduction in the purchase price. Such sale shall be without representation of warranties, express
or implied, either oral or written, made by Seller or any official, employee or agent of Seller with
respect to the physical condition of the Property, including but not limited to, the existence or
absence of petroleum, hazardous substances, pollutants or contaminants in, on, or under, or
affecting the Property or with respect to the compliance of the Property or its operation with any
laws, ordinances, or regulations of any government or other body, except as stated above. Buyer
acknowledges and agrees that Seller has not made and does not make any representations,
warranties, or covenants of any kind or character whatsoever, whether expressed or implied, with
respect to warranty of income potential, operating expenses, uses, habitability, tenant ability, or
suitability for any purpose, merchantability, or fitness of the Property for a particular purpose, all
of which warranties Seller hereby expressly disclaims, except as stated above.
12. RESTRICTIVE COVENANT. Buyer proposes to improve the Property by
constructing a retail building of approximately 10,400 square feet (the “Improvements”). Buyer
must commence construction of the Improvements within six months of the Closing Date and
complete the Improvements within eighteen months of the Closing Date, barring Unavoidable
Delays.
“Unavoidable Delays” means delays beyond the reasonable control of the Buyer as a result thereof
which are the direct result of strikes, other labor troubles, prolonged adverse weather or acts of God,
fire or other casualty to the Improvements, litigation commenced by third parties which, by
injunction or other similar judicial action, directly results in delays, or acts of any federal, state or
local governmental unit (other than the Seller in exercising its rights under this Agreement) which
directly results in delays.
If Buyer fails to commence or complete construction of the Improvements within the time
periods required by this Section, then, pursuant to the Deed, Seller shall have the right to re-enter
and take possession of the Property and to terminate the estate conveyed by the Deed to Buyer,
as described more fully in the Deed.
This Section 12 shall survive the Closing Date.
13. POSSESSION/CONDITION OF PROPERTY. Seller shall deliver possession of the
Property to Buyer on the Closing Date, in materially the same condition as existed on the date of
this Agreement.
5
501301v2 JAE RC125-355
14. DISCLOSURE; INDIVIDUAL SEWAGE TREATMENT SYSTEM. Seller discloses
that there is not an individual sewage treatment system on or serving the Property.
15. WELL DISCLOSURE. Seller certifies that Seller [does not know] of any wells on the
Property.
16. BROKER COMMISSIONS. Seller represents and warrants to Buyer that Seller has not
involved a broker in this transaction or agreed to pay a broker commission to any broker. Buyer
represents and warrants to Seller that Buyer has not involved a broker in this transaction or
agreed to pay a broker commission to any broker. Each party agrees to indemnify, defend and
hold each other harmless for any and all claims for brokerage commissions or finders' fees in
connection with negotiations for purchase of the Property.
17. SURVEYING, ENVIRONMENTAL INSPECTION AND SOIL TESTS. Buyer and
its agents shall have the right to enter upon the Property after the date of this Agreement for the
purpose of surveying and inspecting the Property and conducting such environmental
examination and soil tests as Buyer deems necessary. Buyer agrees to indemnify Seller against
any liens, claims, losses or damage directly attributable by Buyer’s exercise of its right to enter
and work upon the Property. Buyer agrees to provide Seller with a copy of any report or survey
prepared as a result of such surveying, inspection, examination, or testing, upon request by
Seller.
18. NO MERGER OF REPRESENTATIONS, WARRANTIES. All representations and
warranties contained in this Agreement shall not be merged into any instruments or conveyance
delivered at closing, and the parties shall be bound accordingly.
19. ENTIRE AGREEMENT; AMENDMENTS. This Agreement constitutes the entire
agreement between the parties, and no other agreement prior to this Agreement or
contemporaneous herewith shall be effective except as expressly set forth or incorporated herein.
Any purported amendment shall not be effective unless it shall be set forth in writing and
executed by both parties or their respective successors or assigns.
20. BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding upon and inure
to the benefit of the parties and their respective heirs, executors, administrators, successors and
assigns. Buyer shall not assign its rights and interest hereunder without the consent of Seller.
21. 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 deposited in the United States Mail, registered or certified, postage prepaid and addressed as
follows:
If to Seller: Richfield HRA
Executive Director
6700 Portland Avenue South
Richfield, MN 55423
6
501301v2 JAE RC125-355
If to Buyer: Interstate Development LLC
Lonnie Provencher
6390 Carlson Drive
Eden Prairie, MN 55346
22. COUNTERPARTS. This Agreement may be executed in any number of counterparts,
each of which shall constitute one and the same instrument.
23. GOVERNING LAW. The provisions of this Agreement shall be governed by and
construed in accordance with the laws of the State of Minnesota.
24. PARTNERSHIP OR JOINT VENTURE. Nothing in this Agreement shall be
construed or interpreted as creating a partnership or joint venture between Seller and Buyer
relative to the Property.
25. PRIOR AGREEMENTS. Upon execution of this Agreement by the parties, the
Purchase Agreement, dated May 25, 2017 (the “Initial Purchase Agreement”), between the Seller
and Buyer shall terminate. The earnest money paid pursuant to the Initial Purchase Agreement
shall be held by the Authority as the Earnest Money required under Section 4(B)(1) of this
Agreement.
S-1
501301v2 JAE RC125-355
IN WITNESS WHEREOF, the parties have executed this agreement as of the date written
above.
SELLER
HOUSING AND REDEVELOPMENT
AUTHORITY IN AND FOR THE CITY
OF RICHFIELD, MINNESOTA
By:
Its Chair
By:
Its Executive Director
BUYER
INTERSTATE DEVELOPMENT LLC
By:
Its: ________________________________
501301v2 JAE RC125-355 A-1
EXHIBIT A
LEGAL DESCRIPTION
Lot 1, Block 1, Cedar-Sunrise Addition
Tax ID – 2602824410005
Lot 2, Block 1, Cedar-Sunrise Addition
Tax ID – 2602824410006
Lot 16, Block 1, Cedar-Sunrise Addition
Tax ID – 2602824410020
That portion of vacated 17th Avenue South accruing to Lots 1 and 2, Block 1, Cedar-
Sunrise Addition
That portion of vacated 17th Avenue South accruing to Lots 14, 15, and 16, Block 2,
Wexler’s Addition
501301v2 JAE RC125-355 B-1
EXHIBIT B
FORM OF QUIT CLAIM DEED
eCRV number: ___________________
Deed Tax Due: $_______ Date:__________________
QUIT CLAIM DEED
FOR VALUABLE CONSIDERATION, the Housing and Redevelopment Authority in
and for the City of Richfield, Minnesota, a public body corporate and politic under the laws of
the State of Minnesota (the “Grantor”), hereby conveys and quitclaims to Interstate Development
LLC, a Minnesota limited liability company, or its assignee (the “Grantee”), the land described
as follows (hereinafter referred to as the “Property”):
Lot 1, Block 1, Cedar-Sunrise Addition
Lot 2, Block 1, Cedar-Sunrise Addition
Lot 16, Block 1, Cedar-Sunrise Addition
That portion of vacated 17th Avenue South accruing to Lots 1 and 2, Block 1, Cedar-Sunrise
Addition
That portion of vacated 17th Avenue South accruing to Lots 14, 15, and 16, Block 2, Wexler’s
Addition
[Part or all of the land is Registered (Torrens)]
To have and to hold the same, together with all the hereditaments and appurtenances
thereunto belonging subject to the following exceptions:
It is understood and agreed that this Quit Claim Deed is given pursuant to that certain
Purchase Agreement between Grantor and Grantee dated as of the ___ day of __________, 2017
(the “Agreement”), and is subject to the following covenants, conditions, restrictions and
provisions. The capitalized terms not defined herein shall have the meanings given them in the
Agreement.
Section 1. Reverter.
All right, title and interest to and in the Property will revest in the Grantor, at the
Grantor’s option, in the event that:
501301v2 JAE RC125-355 B-2
(i) construction of the Improvements is not commenced within six (6) months of
the date of this Deed; or,
(ii) a Certificate of Occupancy is not issued for the Improvements within eighteen
(18) months of the date of this Deed; or
(iii) if Unavoidable Delay is experienced, after construction is so commenced, a
Certificate of Occupancy is not issued for the Improvements within 18 months
and the Grantor serves notice upon the Grantee that it is exercising its right of
reverter.
Section 2. Termination of Grantor’s Right.
Upon issuance of a Certificate of Occupancy, the Grantor will provide the Grantee with a
recordable instrument releasing the Grantor’s right contained in Section 1.
The Seller certifies that the Seller does not
know of any wells on the described real
property.
A well disclosure certificate accompanies this
document or has been electronically filed.
(If electronically filed, insert WDC number:
__________________).
I am familiar with the property described in
this instrument and I certify that the status
and number of wells on the described real
property have not changed since the last
previously filed well disclosure certificate.
HOUSING AND REDEVELOPMENT
AUTHORITY IN AND FOR THE CITY
OF RICHFIELD, MINNESOTA
By
Its Chair
By
Its Executive Director
501301v2 JAE RC125-355 B-3
STATE OF MINNESOTA )
) ss
COUNTY OF HENNEPIN )
The foregoing was acknowledged before me this ________ day of _____________,
2017, by Mary B. Supple, the Chair of the Housing and Redevelopment Authority in and for the
City of Richfield, Minnesota, a public body corporate and politic under the laws of Minnesota,
on behalf of the public body corporate and politic.
Notary Public
STATE OF MINNESOTA )
) ss
COUNTY OF HENNEPIN )
The foregoing was acknowledged before me this ________ day of _____________,
2017, by Steven L. Devich, the Executive Director of the Housing and Redevelopment Authority
in and for the City of Richfield, Minnesota, a public body corporate and politic under the laws of
Minnesota, on behalf of the public body corporate and politic.
Notary Public
This instrument was drafted by:
Kennedy & Graven, Chartered (JAE)
470 U.S. Bank Plaza
200 South Sixth Street
Minneapolis, MN 55402
(612) 337-9300
Tax Statements should be sent to:
________________________________
________________________________
________________________________
66086609
66146615
66006601
±
Property to be conveyed to Interstate LLC
0 150 300 450 60075FeetRICHFIELD PARKWAY66TH STREET
16TH AVENUE17TH AVENUE18TH AVENUEHRA Owned Parcels
Vacated ROW
S P E C IAL JO IN T C IT Y C O U N C IL AN D H O U S IN G AN D R E D E V E LO PME N T
AU TH O R IT Y W O R K S E S S IO N
R IC H F IE L D MU N IC IPAL C EN TER, B AR T H O L O ME W R O O M
JU LY 17, 2017
7:15 P M
C all to order
1.A ffordable Housing S trategies
A djournment
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.
CITY OF RICHFIELD, MINNESOTA
Office of City Manager
July 13, 2017
Council Memorandum No. 69 HRA Memorandum No. 20
Housing and Redevelopment
The Honorable Mayor Authority Commissioners
and City of Richfield
Members of the City Council
Subject: Affordable Housing Strategies
Council Members and Commissioners:
At the April 25 joint City Council and Housing & Redevelopment Authority Work
Session, a representative of the Housing Justice Center (accompanied by
representatives of CAP-HC and VEAP) presented a number of affordable housing
“strategies and tools” for Richfield policy-makers to consider. Since that time, staff has
had the opportunity to further contemplate and research these strategies. This process
has included discussions with:
The housing consultant for the Minnesota chapter of the Urban Land Institute
(ULI);
six of our peer communities (Bloomington, Edina, Minneapolis, St. Louis Park,
Golden Valley, Hopkins), Hennepin County, and Minnesota Housing;
City legal counsel and HRA legal counsel; and
Further meetings with representatives of the Housing Justice Center, C AP-HC
and VEAP.
Based on this research and examination, staff is providing further analysis of each of
the proposed “strategies and tools” as well as suggesting a few additional strategies for
consideration (attached).
Before implementing strategies, staff suggests that policy-makers better define the
goals that such strategies are meant to accomplish. Currently, Richfield has among the
highest percentage of housing affordable to “low income” households in both Hennepin
County and in the Twin Cities region. According to the most recent information available
from the Metropolitan Council1, Richfield’s status at each affordability threshold is as
follows:
Affordability to households earning 80% or less than the Area Median Income
(AMI): 90% of Richfield’s rental housing meet this criteria. It is staff’s assertion that a
certain amount of “upscale” rental housing is healthy for a community and helps provide
1 Analysis includes only those communities with 1,000 or more rental units
the market demand for the kinds of retail and restaurants that resident’s desire. As
such, staff suggests that the construction of new market rate rental housing could
increase the “upscale” rental housing beyond its current 10% level.
Affordability to households earning 50% or less than the Area Median Income
(AMI): This is the predominant affordability level in Richfield. Currently 63% of
Richfield’s rental housing falls into this category. This ratio places Richfield 8th in the
metro region (out of 51 communities) and 1st in Hennepin County (among 17
communities) for providing housing at this affordability level. The vast majority of this
housing is “naturally occurring affordable housing”, which is affordable by virtue of its
poor condition or the obsolescence of its design or amenities. Much of this housing can
be rehabilitated and improved. There are some buildings, however, that are structurally
substandard to a degree at which renovation would be infeasible and unadvised.
Affordability to households earning 30% or less than the Area Median Income
(AMI): Richfield currently provides a relatively small percentage of housing for this
income level, which is described as “very low income” in affordability terms. Only 10.1%
of Richfield’s rental housing stock meets this level. Two of our peer communities
provide a greater proportion of housing at this affordability level (Golden Valley at
18.5%, Columbia Heights at 13.9%), two are at similar proportions (Roseville at 10.6%
and Edina at 10.1%), and two having a lower proportion (St. Louis Park at 8.5% and
Brooklyn Park at 8.2%).
It is a generally shared belief that housing for “very low income” families (</= 30% AMI)
needs to be formally subsidized and should provide social services on site. Historically,
Richfield residents have opposed housing fitting this description (based on denied
proposals in 2008 and 2012).
Before implementing any particular affordability strategies, staff is recommending that
the City Council and HRA establish policy statements or goals for each of the following:
Development of new subsidized housing with social services for very low income
households;
Preservation of existing naturally occurring affordable housing (NOAH) aimed at
households earning between 30%-80% of the AMI;
A strategy for dealing with affordable housing in buildings that are unsafe and/or
structurally substandard and cannot be feasibly renovated;
Development of new upscale rental housing (for households earning more than
80% of the Area Median Income).
The Rental Housing Inventory and Needs Assessment prepared for the Ci ty and HRA in
2012 provides an analysis of the gaps that exist in the rental housing stock , as a whole,
and can offer a resource when developing these goals.
While we are still in the data gathering phase of the Comprehensive Plan, a great deal
of the feedback thus far has related to affordable housing.
A cursory review of these comments shows that about half of the respondents are
generally supportive of affordable housing and/or are concerned about the inadequacy
of affordable housing while the other half have a negative view of affordable housing
and feel that Richfield has more than enough affordable housing.
Staff’s suggestion is that the formation of policy statements/goals related to affordable
housing should occur as part of the ongoing Comprehe nsive Plan process.
Respectfully submitted,
Steven L. Devich
City Manager
SLD:js
Email: Assistant City Manager
Department Directors
Attachments
1
Analysis of Affordable Housing Preservation
Strategies & Tools
The following strategies and tools are suggested by the Housing Justice Center as options to help the City
preserve its affordable housing stock.
Strategy/Tool: Identification of buildings; Document the problem
Staff Feedback: Since the inception of the City’s Rental Licensing Program in 1989, staff has
maintained a list of the City’s rental housing. Staff has begun identifying
NOAH (naturally occurring affordable housing) buildings and those that are
the most at-risk of becoming less affordable.
Resources Required: Staff time
Places Enacted in MN: Unknown
Staff Recommendation: Staff will continue to compile and improve our listing of rental housing,
paying particular attention to the identification of naturally occurring
affordable housing (NOAH) complexes with 30 or more units.
Strategy/Tool: Advanced notice period required for the sale of affordable housing
Staff Feedback: From both a practical and legal standpoint, the most difficult aspect of this
tool would be enforcement. What punitive actions would be taken to prevent
this requirement from being ignored? Who would be subjected to that
punitive action? The seller may no longer have any presence in Richfield, and
the buyer would not have been empowered to provide such notice.
Attorney Feedback: A requirement that property owners give the City advanced notice before the
sale of a building triggers enforcement concerns. Arguably, a seller could
disregard the requirement with the only potential consequence being a
monetary fine or penalty relating to the ordinance violation. Such a
consequence may not be a significant deterrent. Also, monitoring compliance
would be challenging. A notice requirement could be effective if tied to the
City’s rental licensing requirements and/or made a condition for properties
receiving public funding or assistance. Without a tie to licensing or public
funding, a notice requirement potentially raises questions about interference
with private property rights. The cities of Denver and Portland have
2
ordinances requiring mandatory notice, but the ordinances apply to buildings
that receive public money. And even in those cases, a seller’s noncompliance
with the ordinance doesn’t invalidate the sale. The primary purpose of this
strategy would be to give the City time to approach an alternative buyer
rather than to punish a seller that does not comply with the notice
requirement. The City Attorney is not aware of any court opinions relating to
a mandatory notice period.
Resources Required: Adoption of an ordinance and staff/attorney time for enforcing the
ordinance.
Places Enacted in MN: Nobody has enacted yet. Minneapolis is expected to do so this year. St. Louis
Park and Golden Valley are studying the topic but have not yet reached any
firm conclusion.
Seattle has such an ordinance, but it has been reported that they do not
enforce it.
Staff Recommendation: Require a 90-day notice for the sale of any affordable housing development
that received any assistance from the City of Richfield and/or Richfield
HRA/EDA.
Work with St. Louis Park and Golden Valley to continue researching the
legality and practicalities of requiring such notice on other proper ties.
Strategy/Tool: Help preservation buyers to buy at-risk buildings
Staff Feedback: A first step in this strategy is to develop and nurture relationships with
“preservation buyers.” City staff is committed to continuing to improve these
relationships. A better identification of such “buyers” would be helpful and
that is something that housing advocacy groups could help provide.
While not stated in this recommended strategy, it is implied that the City
would provide financial assistance to the prospective buyer.
Resources Required: Funding to assist in property purchases.
Places Enacted in MN: Several
Staff Recommendation: Staff will continue to meet with potential preservation buyers to make them
aware of potentially available properties and of resources that may be
3
available to assist in rehabilitation.
Given the limited resources available to the City and HRA/EDA and given the
local desire to ensure that affordable housing is maintained as “quality
affordable housing,” staff would recommend that financial assistance be
directed to the rehabilitation of affordable units (addressed further on
another point) rather than the acquisition of NOAH units to be preserved
without improvements.
Strategy/Tool: Right of First Refusal
Staff feedback: As suggested, this would encompass the tenants having a collective Right of
First Refusal rather than the City. It is unclear what role the City would play in
establishing the legal framework to enable this or its role in managing such a
process.
It is unclear how effective such a law would be on the local level and absent
significant financial resources. There is a similar state law that applies to
mobile home parks, giving mobile home owners the right of first refusal to
buy park land. This law proved ineffective in a recent case in St. Anthony
where a mobile home park was sold to a developer instead of Aeon on behalf
of the home owners.
Attorney Feedback: When the HRA or EDA convey land to a developer and the development does
not commence, a right of first refusal provides the HRA or EDA with the ability
to repurchase the property for the price at which it was purchased (plus any
improvements made to the property). If the developer assembles land for a
development and the development does not commence, the HRA or EDA
could obtain a right of first refusal to buy the assembled property before the
developer attempts to sell it. This type of right of first refusal would require
the EDA or HRA to buy the property for fair market value. If the HRA or EDA
provide a subsidy to the development, it is easier to obtain a right of first
refusal from a developer. Without a subsidy, developers are reluctant to
execute rights of first refusal. Developers’ main concern over these
agreements is that potential buyers see these documents on the title work
and don’t want to put an offer on the land because another entity has the
right to step in and buy the property for whatever the potential buyer is
offering or a bidding war may ensue between the potential buyer and the
entity with the right of first refusal.
Resources Required: Funding for attorney research.
4
Places Enacted in MN: None
Staff Recommendation: Staff recommends working with our peer cities and with the League of
Minnesota Cities (and similar organizations) to draft language in State
Statutes giving similar Right of First Refusal powers to apartment tenants that
are currently provided to mobile home tenants.
Strategy/Tool:
Local programs offering rehab financing in return for affordability
commitments
Staff Feedback: Staff has been advocating for federal, state, and county programs of this
nature (and has mentioned it at our Legislative Breakfast meeting) for several
years. Lacking players at a higher level, Richfield can fund a limited program.
Urban Land Institute staff has offered to set up a meeting with Hennepin
County, Minnesota Housing and interested cities to talk further about the
need for resources.
Local funding will have to be diverted from other needs and the funding may
ultimately be insufficient to make an appreciable difference.
Some local funding sources suggested (i.e., CDBG) are best used in the case of
small buildings given the federal rules that apply with eight or more units.
(Note: CDBG is a federal program, which is dependent upon Congress
authorizing funds.) The City received $244,000 in CDBG for 2017. The funds
are currently directed to low income residents through the Deferred Loan
Program, affordable homeownership opportunities, and several public service
agencies. Redirecting the funds to apartment rehab would leave these
programs unfunded.
This strategy also requires willing owners. Financing terms will need to be
attractive enough to incentivize owners to participate.
Resources Required: Staff believes the cost of rehabilitating an apartment unit (with some
associated improvements to the contiguous common area) to be
approximately $15,000 per unit.
Places Enacted in MN: Bloomington - $50,000 put into NOAH fund every year (2% of $2.1 million
HRA levy).
5
Staff Recommendation: Staff has identified $237,000 in the proposed 2018 EDA budget for an
Affordable Rental Housing Rehab Pilot Loan/Grant Fund. This could pay half
the cost to rehabilitate over 30 apartment units next year. If successful, the
program would be continued in 2019.
Strategy/Tool: 4d Property Tax Program
Staff Feedback: The state no longer administers this program or funds this program. While
the statute allows for “local subsidies,” the City would need to find the
resources to fund it (i.e., providing a tax reduction/credit to affordable
apartment owners would mean increasing taxes on others and/or reducing
services). It also may be that the tax credit would primarily serve existing
affordable housing providers and not result in increasing the supply or
preventing an owner from selling to a new owner who would raise rents.
Resources Required: Local funding
Places Enacted in MN: None
Staff Recommendation: Further research is needed on this concept to determine the effectiveness,
costs, and benefits.
Strategy/Tool: Prohibition of Section 8 Discrimination
Staff Feedback: In the Minneapolis case, opposing landlords claimed that they could simply
raise their rents over the Section 8 payment standard which would disqualify
their units according to HUD’s policies. This would have the unintended
consequence of making rental housing less affordable. Or rents may already
be too high to meet payment standards.
Requires landlords to not discriminate. It doesn’t require their participation in
the program. Minneapolis is considering coupling it with a Landlord Incentive
Fund.
An enforcement process would need to be developed and implemented.
Minneapolis will enforce through complaints filed with their Civil Rights
Commission, a structure Richfield doesn’t have.
6
Attorney Feedback: The Minnesota Human Rights Act makes it an unfair discriminatory practice
for an owner to refuse to rent to a person because of “status with regard to
public assistance.” Minn. Stat. § 363A.09, subd. 1(1). “’Status with regard to
public assistance’ means the condition of being a recipient of federal, state,
or local assistance, including medical assistance, or of being a tenant receiving
federal, state, or local subsidies, including rental assistance or rent
supplements.” Minn. Stat. § 363A.09, subd. 47. In 2010, the Minnesota Court
of Appeals held that, consistent with federal regulations, Minnesota law does
not require property owners to participate in Section 8 programs. Edwards v.
Hopkins Plaza Ltd. Partnership, 783 N.W.2d 171 (Minn. Ct. App. 2010) The
Court, therefore, rejected a claim of discrimination by a tenant who was
displaced when his landlord decided to phase out of the Section 8 program.
However, the Court also said that even though Section 8 is voluntary, the
federal rules were not “intended to pre-empt operation of state and local
laws that prohibit discrimination against a Section 8 voucher-holder because
of status as a Section 8 voucher-holder.”
Based on the Minnesota Human Rights Act and the Court’s decision in
Edwards, the City Attorney believes that the City could adopt an ordinance
prohibiting Section 8 discrimination. However, the City could not mandate or
require property owners to participate in Section 8.
The City of Minneapolis passed a Section 8 anti-discrimination ordinance on
March 24, 2017. It will go into effect in May 2018. The ordinance is similar to
the provision in the Minnesota Human Rights Act, but it also allows property
owners to claim an “undue hardship” based on financial considerations and
other factors, which may exempt them from the ordinance requirements.
Opponents of the ordinance have sued the city. The landlords are asking the
court to declare the law invalid and order the city not to enforce it.
Resources Required: Potential legal costs in the event of litigation.
Places Enacted in MN: Minneapolis enacted 3/17; effective date mid-2018.
Staff Recommendation: Staff feels that it would be prudent to mirror Minneapolis’ actions related to
this with a 6-12 month delayed action in order to reduce the legal exposure
and to better react to negative impacts.
7
Strategy/Tool: Just Cause Eviction
Staff Feedback: Staff is concerned about the mechanism for determining whether “just
cause” has been met.
Currently, the state of Minnesota is able to take enforcement action on any
violation of the Fair Housing Act. Beyond that, Richfield staff has no ability,
mechanism/structure or expertise to adjudicate whether a tenant has been
asked to vacate at the end of their lease for a cause that is deemed to be
“just” under the terms of the lease. City staff is simply not equipped to handle
the enforcement of such an ordinance.
It has been suggested that the Minnesota Housing Courts could serve as the
body to determine whether or not a landlord would be in violation of a
Richfield ordinance requiring just cause. Staff suspects, however, that this
court could not enforce a local ordinance.
Attorney Feedback: Cities have broad local authority to regulate rental housing, usually via rental
licensing provisions, to address public health, welfare and safety concerns.
However, there is no explicit authority in Minnesota law giving cities the
ability to require landlords and property owners to include specific terms in a
lease agreement. Under state statute, “[a] tenancy at will may be terminated
by either party by giving notice in writing.” Minn. Stat. § 504B.135. In a legal
opinion provided to HOME Line, it was argued that this statute only addresses
the who and how a tenancy may be terminated, but not the why a tenancy
may be terminated. Therefore, the opinion was that an ordinance requiring
landlords to have cause to evict would not be in conflict with the st atute. This
provides a somewhat narrow interpretation of the statute and leaves some
doubt as to how a court might rule on the issue. The City Attorney is not
aware of Minnesota court opinions relating to just cause eviction.
Under Minnesota law, owners of manufactured home park property may only
“evict” mobile home owners for cause as provided in the statute. (Including
nonpayment of rent, violations of law, etc.) Minn. Stat. § 327C.09. The
Legislature has not enacted a similar provision relating to rental properties.
Other states and cities outside of Minnesota have implemented good cause
eviction rules, many of which have been upheld by courts on constitutional
grounds. Additional research would be needed to understand the applicable
state laws and claims that were being made in those cases.
Resources Required: Staffing for investigating claims and a body for hearing claims and appeals.
8
Places Enacted in MN: None
Staff Recommendation: Given limited staff capacity at this time, we recommend that consideration of
this item be revisited at a later time.
Strategy/Tool:
Incentives to address landlord concerns about renting to certain groups of
tenants
Staff Feedback: Richfield already does this to some degree, and is recommending a number of
further steps to address this concern
Minnesota Housing is developing a pilot program targeted to high -risk
populations and people with barriers to housing beyond affordability. The
City will participate in this program to the greatest extent possible.
Resources Required: $3,000 - $5,000 annually
Places Enacted in MN: Dakota County (church funds), Fargo-Moorhead; Lutheran Social Service,
Minneapolis (out of funds).
Staff Recommendation: In the 2018 Revised Budget, staff would include $3,000 for a Section 8
Security Deposit Assistance Fund and $1,000 for a Section 8 Application Fee
Assistance Fund.
Staff is also recommending an HRA/EDA policy stating that any non-age
restricted multi-family housing development that receives financial assistance
must set aside at least one unit and up to 2% of the units for Section 8
tenants (the average City-wide ratio is .07 Section 8 tenants per unit).
Strategy/Tool: Inclusionary Housing
Staff Feedback: For nearly 20 years, 100% of new publically-assisted, rental housing has
adhered to Richfield’s current informal policy of either providing 20%
affordable housing or contributing 15% of their Tax Increment Financing to
Richfield’s Housing Fund.
Staff will be working on language to formalize our requirements while still
providing some degree of flexibility. From a process standpoint, the update of
9
the City’s Comprehensive Plan would be the ideal venue to make this change.
The HRA could also add the requirement that buildings receiving financial
assistance from the HRA accept Section 8.
Resources Required: Drafting of local ordinances/policies.
Places Enacted in MN: Several
Staff Recommendation: The Zoning Ordinance should be revised to require affordable housing in all
new multi-family developments. An example of such language might state
that any multi-family housing development of 10 units or more must include
at least 20% of the units as affordable to households earning at or below 60%
of the Area Median Income – if such developments are the recipients of Tax
Increment Financing, then 15% of the TIF generated could be given to
Richfield’s Housing and Redevelopment Fund in lieu of providing such units.
Strategy/Tool: Increasing local government leverage through zoning
Staff Feedback: In our meeting with the Housing Justice Center, they were unable to provide
many examples of this strategy but have committed to providing further
information. One example they suggested was zoning a parcel as affordable
and placing restrictions on any rezoning. This is something that would require
further investigation as to its legality or practical application.
Resources Required: TBD
Places Enacted in MN: TBD
Staff Recommendation: Continue a dialog with housing advocacy groups to get more concrete
examples and then further research those examples.
Strategy/Tool: Rental assistance
Staff Feedback: This is one area where Richfield excels. There is no other community in
Minnesota that provides more or better rental assistance relative to its size
10
than Richfield. Our Kids@Home program continues to be revolutionary and
our Section 8 program is administered in a manner that is second-to-none.
Resources Required: EDA Funding.
Places Enacted in MN: Richfield has been the leader on this issue in terms of funding relative to
community size.
Staff Recommendation: Utilizing EDA funding, Staff is proposing to increase Kids@Home funding by
over 35% in 2018. This will allow us to assist an additional 8-12 households.
Strategy/Tool:
Comp Plan: Include strong language and solutions regarding affordable
housing
Staff Feedback:
While we are still in the data gathering phase of the Comprehensive Plan, a
great deal of the feedback thus far has related to affordable housing. A
cursory review of these comments shows that about half of the respondents
are generally supportive of affordable housing and/or are concerned about
the inadequacy of affordable housing while the other half have a negative
view of affordable housing and feel that Richfield has more than enough
affordable housing.
Resources Required: A consultant has been hired to update the Comprehensive Plan.
Places Enacted in MN: All metro communities are required to update their Comprehensive Plans by
2018.
Staff Recommendation: The Comprehensive Plan update is underway and will address affordable
housing.
11
OTHER RECOMMENDED ACTIONS
Strategy/Tool:
Building permit fee deferment/forgiveness: 15% of building fees deferred,
with 1/3 of the deferment forgiven for every year rents are kept affordable
Staff Feedback: This would be more of an incentive for the preservation of existing affordable
housing than a punitive action for removing it. Richfield has always
considered itself a better “carrot” organization than a “stick” organization.
Resources Required: This would reduce some revenues generated in building permits, but staff
feels that it is a reduction that could be mitigated.
Places Enacted in MN: unknown
Staff Recommendation: Write and adopt a policy for a deferment of 15% of building fees for the
rehabilitation of affordable rental housing units, with 1/3 of the deferment
forgiven for every year rents are kept affordable.
1
HOUSING STRATEGIES & TOOLS FOR THE CITY OF RICHFIELD
Tools Description Opportunities Challenges Hennepin County
Cities Considering
Identification of
buildings;
Document the
problem
There should be an organized effort to track
the most significant examples of this trend
as well as identify buildings as soon as they
come on the market (if possible before that).
The City can also do a housing study that will
identify the housing inventory and at-risk
properties.
Richfield is at a great risk given the
high percentage of naturally occurring
affordable housing (NOAH). Identifying
the multi-family housing in Richfield
and documenting the problem gives
the City more knowledge and ability to
craft a strategic, outcome-oriented
approach.
A number of cities have
been doing housing
studies and research on
their housing inventory,
particularly with the
upcoming Comprehensive
Plans.
Notice Period The City must be given advanced notice
prior to the sale of any building.
A Notice Period will give the City more
to approach a preservation buyer to
rehab the property and prevent
displacement. In addition, the City can
give service providers advanced notice
in order to support tenants.
Developers will push back
stating that it is restraining
their ability to get the best
price (i.e. buyers will lower
the price if the market
fluctuates in the 90 day time
period.) Also, there could be
a potential for the price to rise
if there is a bidding war
between a for-profit and a not
for profit developer.
St. Louis Park, Golden
Valley, Minneapolis, St.
Paul, Bloomington
Help preservation
buyers to buy at
risk buildings
Several of our non-profit housing providers
are actively competing in the market for
these properties, but they are
disadvantaged in competing against for-
profit purchasers on price and timing with
the complex financial process. The City can
help notify preservation buyers when they
know properties will be up for sale (e.g.
Seasons Park).
Preservation buyers will keep the rents
affordable while enhancing the
property.
Preservation buyers often
need at least a 90 day notice
prior to the property being
listed on the market in order
to put together a competitive
bid.
Many cities have
relationships with
preservation buyers, and
there is frequent
communication.
2
HOUSING STRATEGIES & TOOLS FOR THE CITY OF RICHFIELD
Right of First
Refusal
When owners offer their buildings for sale,
they would be required to notify tenants
and the designated unit of government.
Tenants or the government unit would then
have a defined period of time to match the
essential terms of the offer (price, timeline,
etc.). If they are able to do so, they have the
right to purchase the building themselves.
Prevents tenant displacement and can
help a preservation buyer be
competitive.
It can be hard to anticipate
where these purchase
opportunities will materialize,
making it difficult to know
where to push for local
ordinances.
Could get complicated
determining what the offer’s
“essential terms” are.
Minnesota has a ROFR for
manufactured home parks.
Local programs
offering rehab
financing in return
for affordability
commitments
Many cities, like Richfield, have a supply of
aging complexes that have deferred
maintenance. Many managers of these
complexes cite the costs of improvements as
a reason to either 1) not make
improvements or 2) increase the rents once
improvements are made. Municipalities
could offer rehab financing (low interest
loans, forgivable grants) with commitments
to maintain affordability over a set period of
time. This could be done with CDBG dollars.
Preserves affordable housing units in
the City as well as makes the property
safe housing for residents.
Administration of the
financing (could be done in
conjunction with a local
nonprofit), funds for the
financing.
Bloomington- using their
HRA levy money to put
$50,000 every year for a
NOAH fund to preserve
developments.
It has been proposed to
Brooklyn Park, in
conjunction with their
Rental Rehab Program.
4d Property Tax
Program
This is essentially a tax credit given to
housing providers who receive a
government subsidy, and in exchange
provide a percentage of their units at
affordable levels (60%/50% AMI) for a set
period of time. This is a program Richfield
had when it was funded at the state level.
That funding has dried up, and it seems that
most people think 4D has gone away.
However, the statute allows for “local
subsidies.”
Increases the number of new
affordable housing units in the City.
Providing the pot of money
for developers to tap into; the
program is voluntary.
Suggested to Brooklyn
Park
3
HOUSING STRATEGIES & TOOLS FOR THE CITY OF RICHFIELD
Prohibition of
Section 8
Discrimination
Changes to business practices in Richfield
resulted in the following properties no
longer accepting Housing Choice Vouchers:
-Christopherson Properties (no new) (2014)
-Concierge Apartments (2015)
-Woodlake Park Apartments (2016)
-New Orleans Court Apartments (2016)
-Winton Housing Apartments (2016)
-Richland Court Apartments (2016)
-Fountainhead Apartments (2016)
-Seasons Park (2017)
This ordinance would say that properties
cannot exclude applicants simply because
they use a rent subsidy.
Voucher holders would not lose
housing every time a building changes
policies and practices.
There would also more housing
options available to voucher holders.
Oftentimes the challenge will
be for the HRA to lessen the
administrative burden on
landlords participating in the
HCV program. However, given
Richfield has its own HRA,
landlords have said their
experiences with the program
are positive and feel the city is
very responsive. Therefore,
the challenge is minimal for
the City.
St. Louis Park,
Minneapolis, Suggested to
Golden Valley,
Bloomington and Eden
Prairie
Just Cause Eviction
Just Cause Eviction protects tenants from
eviction for improper reason as well as
prevents involuntary displacement through
lease non-renewals or notices to vacate. This
would allow landlords to evict a tenant only
for certain reasons, such as failure to pay
rent or for violation of the lease terms. As
we saw at Crossroads, the new screening
criteria was the reason many tenants’ leases
to not be renewed. Just Cause would allow
these renters to continue living there until
they break a condition of their new lease. It
can be tied in with rental licensing.
Prevents involuntary displacement and
protects tenants from eviction without
a proper reason.
St. Louis Park,
Minneapolis, Suggested to
Golden Valley,
Bloomington and Eden
Prairie
Incentives to
address landlord
concerns about
renting to certain
groups of tenants
Risk Mitigation Fund is oftentimes
associated with the Housing Choice Voucher
program. This Fund can be created as a
response to the extremely low vacancy rate
and the disparity between cost of living and
wages. It serves as a damage fund to
supplement costs the security deposit does
not fulfill. It also has been offered as short-
term vacancy reimbursement.
Incentivizes landlords to participate in
voucher programs, providing voucher
holders with more access to housing
options.
Provides insurance to landlords for any
monetary losses from potential
damage to property.
Funding the RMF;
perpetuating stigma that
voucher holders cause more
damage (no evidence to
support this)
Minneapolis HRA, Metro
HRA, Dakota County CDA;
many models across
Minnesota.
4
HOUSING STRATEGIES & TOOLS FOR THE CITY OF RICHFIELD
Inclusionary
Housing
While this is in Richfield’s guidelines to
develop housing with 20% affordability, a
policy would ensure that this happens with
every development. It also can be applied to
rehabbed developments.
Increases the number of new
affordable housing units in the City.
Only applies to new
construction, therefore not
addressing the need to
preserve and maintain NOAH
St. Louis Park, Edina,
Minnetonka, Golden
Valley, Eden Prairie,
Minneapolis and others
are considering
Increasing local
government
leverage through
zoning
Richfield could structure its zoning so as to
prevent an owner engaging in conversion
actions from doing so before obtaining the
city’s zoning related approval.
Provides the City of Richfield with
more leverage to intervene. Minneapolis
Rental assistance
51% of Richfield households are cost
burdened (ACS 2015). Rental assistance
would lessen the burden by supplementing
income, so housing costs are no more than
30% of income.
Residents would be able to afford
housing costs without sacrificing other
basic needs.
It is costly and unsustainable.
As rent increases, rental
assistance is insufficient and
cannot serve as many
households.
Hennepin County & a
number of cities
Comp Plan: Include
strong language
and solutions
regarding
affordable housing
As Richfield completes its Comprehensive
Plan, it is encouraged that the Plan has
detailed solutions with strong language
around the preservation of naturally
occurring affordable housing. This plan will
guide the City’s housing efforts in the next
ten years.
Strong language can positively guide
the City’s housing efforts in the next
ten years.
A number of Hennepin
County cities