08-16-93 agendaCITY OF RICHFIELD
HOUSING AND REDEVELOPMENT AUTHORITY
MONDAY, AUGUST 16, 1993
7:00 P.M.
COUNCIL CHAMBERS
AGENDA
CALL TO ORDER
APPROVAL OF MINUTES OF (1) HRA MEETING OF JULY 19, 1993; AND (2)
SPECIAL HRA MEETING OF AUGUST 2, 1993
1. OPPORTUNITY FOR CITIZENS TO ADDRESS THE HRA ON ITEMS NOT ON
THE AGENDA
2. PUBLIC HEARING AND CONSIDERATION OF RESOLUTION AUTHORIZING
SALE OF SINGLE FAMILY HOME DEVELOPMENT AT 6500 JAMES AVENUE
TO QUAM, SUMNICHT AND ASSOCIATES, INC. IN ACCORDANCE WITH
DEVELOPMENT AGREEMENT
HRA LETTER NO. 31
3. PUBLIC HEARING AND CONSIDERATION OF RESOLUTION AUTHORIZING
SALE OF NEW HOME PROGRAM PROPERTY AT 6310 15TH AVENUE TO
TWIN CITIES HABITAT FOR HUMANITY IN ACCORDANCE WITH
DEVELOPMENT AGREEMENT
HRA LETTER NO. 32
4. DISCUSSION OF PRELIMINARY STAFF RECOMMENDATION REGARDING
SELECTION OF ORGANIZATION TO FORMULATE AND IMPLEMENT
COMMUNITY APARTMENT PROGRAM
HRA LETTER NO. 33
5. CONSIDERATION OF AUTHORIZATION TO PURCHASE 7245 HUMBOLDT
AVENUE AND INITIATE NEW HOME PROGRAM HOUSING PROJECT
HRA LETTER NO. 34
6. CONSIDERATION OF SETTING SPECIAL MEETING FOR 1993
REVISED /1994 PROPOSED BUDGET AND SETTING PRELIMINARY TAX
LEVY
HRA LETTER NO. 35
7. EXECUTIVE DIRECTOR REPORT
8. CLAIMS AND PAYROLL
ADJOURNMENT
AUXILIARY AIDS FOR INDIVIDUALS WITH DISABILITIES ARE AVAILABLE
UPON REQUEST. REQUESTS MUST BE MADE AT LEAST 96 HOURS IN
ADVANCE TO THE ADMINISTRATIVE SERVICES DIRECTOR AT 861 -9702.
CITY OF RICHFIELD, MINNESOTA
HRA Letter No. 35
Agenda August 16, 1993
Issue Statement:
Setting special meeting for 1993 Revised /1994 Proposed budget and
setting preliminary tax levy.
Background:
City staff is now in the process of preparing the draft 1993
Revised /1994 Proposed budget. Included in that draft document is
the proposed preliminary property tax levy for the Richfield HRA.
The Truth in Taxation statute requires that a preliminary levy be
adopted by the local units of government and certified to the
County Auditor on or before September 15 of each year.
In order to review the draft budget document with the City
Council prior to the September 15 deadline, it is necessary to
establish at least one special HRA meeting. For the current
year, staff is proposing that such special meeting be set for the
following date:
7:00 p.m. Monday, August 30, 1993
The above suggested meeting should provide adequate time to
review the budget document and proposed tax levy. The adoption
of the preliminary levy should take place at the special meeting
listed above. The Truth in Taxation process does not establish a
public hearing for a final HRA levy.
Recommended Motion:
Set the date of August 30, 1993 as a special HRA meeting to
review and consider the 1993 Revised /1994 Proposed budget and
1994 preliminary tax levy prior to certification to the County on
September 15, 1993.
Basis for Recommendation:
1. It is necessary to review and consider the 1993 Revised /1994
Proposed budget and 1994 preliminary tax levy prior to
certification to the County on September 15, 1993.
2. Draft budget documents will be available to HRA Members on
August 13. This will allow some time for HRA Members to
review the draft budget before the scheduled meeting.
Alternative Recommendation:
1. The HRA could forego scheduling a special meeting to adopt a
preliminary levy and take such action at the regular HRA
meeting of August 16, 1993.
2. The HRA could select another date to schedule a special
meeting to consider the matter.
Discussion /Decision Mode:
Because of .the strict timeframe associated with the Truth in
Taxation process, this issue should be considered at the August
16, 1993 meeting so that a date for a special meeting may be
established if the HRA wishes to use that process.
Respect ully submitted,
Jame . Prosser
Execu ive Director
JDP:ds
HOUSING AND REDEVELOPMENT AUTHORITY
HRA Letter No. 34
Agenda August 16, 1993
Issue Statement:
Authorization to purchase 7245 Humboldt Avenue and initiate a New
Home Program housing project.
Background:
The property at 7245 Humboldt has been foreclosed. The HRA did
not recover its $25,000 second mortgage. The first mortgage
lender has become the owner. Through the FHA mortgage insurance
process, HUD has now become the owner. HUD is presently
inquiring of the HRA as to their interest in purchasing.
An appraisal of $94,000 has been given to HUD by an independent
appraiser. HUD plans to sell at this appraisal amount. HUD
might offer the property to the HRA for a ten percent discount of
$84,600. Alternately, HRD staff has proposed the following to
HUD:
$67,000 Purchase price from HUD;
$ 9,000 Cosmetic repairs (new floor coverings, painting
throughout, minor wall, interior trim, door, cabinet
and electrical repair.);
$ 5,640 Six percent realtor commission; and
$12,360 Second mortgage by HRA. <to first.time buyer.
$94,000 Proceeds of sale /second mortgage total.
The purchase price of $67,000 is estimated based on HUD's
anticipated costs to date. Negotiations are underway and HUD is
somewhat resistant to this deep discount. The repair estimate is
based on a walk through inspection by HRD and comparable work
with Vo -Tech. The $5,640 realtor commission is required because
all of HUD's staff time is committed to other projects. It is
also felt that because staff will do some buyer referral,
(approximately one percent of a typical seven percent realtor
commission), a six percent commission is appropriate. The second
mortgage represents the balance which could be provided by the
HRA to a qualified buyer.
It is proposed that:
s
the Development Fund be used as an interim source of cash
(similar to the transformation housing program process);
the first time buying family have an income less than the
median metropolitan area income of $49,600, as adjusted for
family size;
the property be purchased in approximately 60 days with
repairs completed in the 30 days that follow the purchase;
e the Executive Director be authorized to enter into a listing
agreement to sell the property in a timely manner;
♦ the HRA would act as the general contractor to arrange all
repairs;
♦ the second mortgage should be adjusted upward or downward
after ensuring no net cash loss by the HRA except for the
minimal staff time needed to facilitate the project.
The project remains speculative and has some risk for the HRA
given suggestions by realtors and investors that this property,
being in the I -35W take zone, may not be marketable.
Recommended Motion:
Authorize purchase of 7245 Humboldt Avenue and implementation of
a New Home Program project as outlined herein.
Basis of Recommendation:
1. The HRA has been offered the property by HUD. The purchase
price is presently being negotiated but must be determined by
August 17, 1993.
2. An interim funding source has been identified and a program
response prepared.
3. A sale price to a buyer must be determined. The HUD
appraised value of $94,000 is one price. The 1993 Hennepin
County value of $100,000 for property tax purposes is another
price. With improvements to the interior, a price somewhere
between these two is possible. The sale price and final lien
amount may be adjusted somewhat before a buyer is identified.
4. A second mortgage is appropriate for the following reasons:
e A lien recovers value lost through foreclosure.
♦ A reduction in the initial sale price makes the purchase
more affordable to a first time buyer.
e By assisting a first time buyer, one of the purposes of the
New Home Program is realized.
e If the house proves to be difficult to sell because of
I -35W expansion, the initial sale price will be less to a
buyer yet the proceeds of sale from right -of -way
expansions would return a fair market value closer to the
HUD appraised amount.
5. The project appears financially feasible if HUD agrees to the
HRA purchase price and the proposed deep discount from the
independent appraised value HUD received.
6. Having the property in good repair and occupied soon is in
the best interest of the neighborhood and City and will
prevent deterioration.
Alternative Recommendation:
1. Do nothing; HUD will market the property to the highest
bidder and the house would eventually be owned privately for
rental or owner occupancy. The HRA assumes no risk as to the
marketability of the site by allowing HUD to proceed.
2. Pay more to HUD for the property thereby reducing the second
mortgage amount. A' purchase price in excess of $79,360
probably causes the HRA to incur additional expenses rather
than recover value for its involvement in the project.
DiscussionZDecision Mode:
The HRA must notify HUD of its decision by August 17, 1993. An
ideal project completion date would be November 30, 1993.
Respectfully submitted,
James Prosser
Executi a Director
JDP:cak
HOUSING AND REDEVELOPMENT AUTHORITY
HRA Letter No. 33
Agenda August 16,1993
Issue Statement:
Discussion of preliminary staff recommendation regarding
selection of an organization to formulate and implement a
community apartment program.
Background:
It was clear during discussions by the HRA of the establishment
of a development account, a high priority was to be the
establishment of a community apartment program. Accordingly,
staff compiled a list of potential organizations which may be
qualified to provide the assistance to formulate and implement
such a program.
The organizations /individuals invited to submit a proposal
included the following:
e Project for Pride in Living (PPL)
s Westminister Corporation
♦ Gavzy & Gavzy
♦ Christine Lowe, independent person
♦ Brighton Development Corp.
s Perennial Properties
s Rusten- Minneapolis
♦ Affordable Suburban Housing
♦ Stuart Corp.
♦ Thompson Associates
♦ Lynn Wetherbee & Associates
Five proposals were received. Two organizations did not respond
(Brighton Development and Perennial Properties). Some of the
other organizations combined resources to respond.
Proposals were received from the following:
♦ Affordable Suburban Housing /PPL
♦ Rusten - Minneapolis / Westminister Corp.
e Stuart Corp.
e Gavzy & Gavzy /Ellen Hart- Shegos /Thompson Associates
s Lynn Wetherbee & Associates /Christine Lowe
The proposals were reviewed by Jim Prosser, City Manager; Jack
Erskine, Public Safety Director; Betsy Christensen, Environmental
Health; Byron Wallace, Community Development Director; Bruce
Palmborg, Housing and Redevelopment Coordinator; and Mike Welsh,
Community Programs Coordinator for the Bloomington- Richfield
Family Center (funded by Richfield and Bloomington Public School
Community Education Offices).
The proposals of Gavzy & Gavzy (1) and Affordable Suburban
Housing /PPL (2) responded most favorably to the previously
identified outcomes: more knowledgeable owners and managers,
provide social service linkages to property owners, managers and
residents; strengthen the financial position of the buildings
without direct financial assistance from the City /HRA; and better
integrate apartment residents into the community.
The above identified staff will be interviewing representatives
of the two top ranked organizations on Friday, August 13.
Recommended Motion:
Consider the staff report results of interviews and and provide
direction in the next step to be taken.
Basis of Recommendation:
1. Staff has responded to the directive of the HRA to identify
an organization capable of formulating and implementing a
community apartment program.
2. Funds in the amount of $50,000 from the development account
have been identified for the first year of such a program.
3. It is appropriate to initiate such a strategy now to permit a
proactive response rather than a reactive response to
emerging conditions.
Alternative Recommendation:
Decide not to pursue the formulation and implementation of a
community apartment program.
Discussion /Decision Mode:
Staff and potential assisting
resources should be allocated
JDP:cak
organizations need to know if
to this activity.
Respec ully submitted,
James Prosser
Executive Director
HOUSING AND REDEVELOPMENT AUTHORITY
HRA Letter No. 32
Agenda August 16, 1993
Issue Statement:
Public hearing and authorization of the sale of the New Home
Program property at 6310 -15th Avenue to Twin Cities Habitat for
Humanity (Habitat).
Background:
In April 1993, the HRA authorized the acquisition of property at
6310 -15th Avenue. The property was acquired by the City on
August 5, 1993 with CDBG funds. The sale from the City to the
HRA is presently in process. It was conceptually proposed in
April that the HRA sell the property to Habitat as the builder,
in accordance with a development agreement. The development
agreement has been prepared and is similar in form and content to
the one used for the Habitat development at 6225 -14th Avenue.
The following items are the points of departure from a typical
HRA development agreement:
♦ A minimum value is not required. It is anticipated that the
1008 square feet, three bedroom home will have a property
value upon completion of approximately $80,000. A copy of
the proposed plan is attached.
♦ The sale price of the property from the HRA to Habitat is $1.
The development agreement will be recorded and requires
Habitat to pay $20,000 for the site if they fail to perform.
A Certificate of Completion would release this lien.
♦ Habitat will require buyer to execute a'$20,000 second
mortgage to the HRA to secure the land value.
♦ The HRA will assume responsibility for demolition of the
existing improvements.
♦ Habitat will make every effort to repurchase the home from
the future buyer, should they need to sell, by satisfying the
buyer's accumulated equity interest. The home would then be
resold to another qualifying low income family.
♦ A storage shed which complements the house will be provided.
♦ Habitat will be provided 12 months to complete the project
rather than the 5 months builders typically receive.
Habitat Construction Manager Ryan Karis is anticipated to be at
the August HRA meeting to answer any questions the HRA may have.
To date, several churches have volunteered labor including Berea
Lutheran and Mount Calvary Lutheran of Richfield.
Recommended Motion:
Following a public hearing, adopt the attached resolution which
authorizes the Chair and Executive Director to execute agreements
and sell 6310 -15th Avenue to Habitat for the development of a new
single family home.
Basis of Recommendation:
1. Habitat has proven to be an experienced, capable, financially
secure builder.
2. The HRA has authorized acquisition of 6310 -1.5th Avenue for
the New Home Program.
3. The terms of the development agreement have been negotiated
and are in conformance with program guidelines as noted.
4. Notice of public hearing was published in the Sun Current on
August 4, 1993 for a August 16, 1993 public hearing.
Alternative Recommendation:
Do not proceed with a development agreement with Habitat and
direct staff to find other buyers.
Discussion /Decision Mode:
Closing would occur in late August with construction starting
shortly thereafter. The site clearance work should be completed
by August 16, 1993.
Respectfully submitted,
James . Prosser
Execu ve Director
JDP:ds
RESOLUTION NO.
RESOLUTION AUTHORIZING THE SALE OF REAL
PROPERTY LOCATED AT 6310 -15TH AVENUE
TO TWIN CITIES HABITAT FOR HUMANITY IN ACCORDANCE WITH
A DEVELOPMENT AGREEMENT
WHEREAS, the Housing and Redevelopment Authority in and for
the City of Richfield, Minnesota (HRA) desires to develop certain
real property pursuant to and in furtherance of the New Home
Program adopted by the HRA, said real property being described as
follows:
6310 15th Avenue, Lot 3, Block 2, Nokomis Gardens
Rearrangement of_Blocks 1, 2, 3, 4, and 5, Girard Parkview.
WHEREAS, the HRA is authorized to sell real property within
its area of operation after public hearing; and
WHEREAS, a builder, Twin Cities Habitat for Humanity, has
been identified as the purchaser of the described property, in
accordance with a development agreement; and
WHEREAS, a public hearing has been held after proper public
notice.
NOW, THEREFORE, BE IT RESOLVED by the Richfield Housing and
Redevelopment Authority:
1. A public hearing has been held and 6310 -15th Avenue is
authorized to be sold to Twin Cities Habitat for Humanity in
accordance with a development agreement with the HRA.
2. The sale price to Habitat for 6310 -15th Avenue is $1.
3. That the HRA accept a $20,000 second mortgage lien executed
by the buyer from Habitat.
4. That the Chairperson and Executive Director are authorized to
execute the Development Agreement and other agreements as
required to effectuate the sale to Twin Cities Habitat for
Humanity.
Adopted by the Housing and Redevelopment Authority in and for
the City of Richfield, Minnesota this 16th day of August, 1993.
Thomas E. Harms, Chair
ATTEST:
Larry Wozniczka, Secretary
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HOUSING AND REDEVELOPMENT AUTHORITY
HRA Letter No. 31
Agenda August 16, 1993
Issue Statement:
Public hearing and authorization for the sale of a single family
home development at 6500 James Avenue.
Background:
In May 1993, the HRA authorized the acquisition of property at
6500 James Avenue to initiate a new substantial remodeling
concept called "transformation housing ". The HRA supported the
development team of Quam, Sumnicht, and Associates (QSA) to
evaluate a value added redevelopment project at the referenced
site. A concept was developed, a buyer was identified, and a
plan prepared. A buyer has signed a purchase agreement with QSA.
The sale price of the property from the HRA to QSA will be
$45,700. The remodeled home will be valued at approximately
$135,000.
The development agreement form remains essentially unchanged from
those previously issued for Richfield Rediscovered and requires
the following of QSA:
♦ Pay the HRA $45,700 for the site upon completion of the
project.
♦ Present a letter of credit for $45,700 as performance
security during the interim.
♦ Provide a minimum value for land and improvements of
$120,000.
♦ Complete the project in 150 days (January 31, 1994).
♦ Remodel the home in accordance with the attached plans.
The HRA purchased the property from HUD for $43,200 on August 5,
1993. The difference between the HRA's acquisition cost and the
sale price to QSA, $2,500, covers costs related to the project:
the balance of property taxes for 1993, legal expenses related to
providing clear title, miscellaneous fees and charges related to
a closing with QSA, and some staff time.
Recommended Motion:
Following the public hearing, adopt the attached resolution which
authorizes the Chair and Executive Director to execute agreements
which sell 6500 James to Quam, Sumnicht, and Associates, Inc. for
development.
Basis of Recommendation:
1. Quam, Sumnicht, and Associates is a development entity formed
to implement new housing concepts such as "transformation
housing ".
2. The HRA has acquired the site at 6500 James Avenue.
3. A development agreement has been negotiated and is in
conformance with program design guidelines used for the
Richfield Rediscovered program.
4. Notice of a August 16, 1993 public hearing was published in
the Sun- Current on August 4, 1993.
Alternative Recommendation:
Do not proceed with a development agreement with QSA and direct
staff to consider other development options for the site.
Discussion /Decision Mode:
A closing with QSA is anticipated in late August 1993.
Resp lly submitted,
Jame Prosser
Exec t ve Director
JDP:cak
RESOLUTION NO.
RESOLUTION AUTHORIZING THE SALE OF REAL
PROPERTY LOCATED AT 6500 JAMES AVENUE
TO QUAM, SUMNICHT AND ASSOCIATES INC. IN ACCORDANCE WITH
,A DEVELOPMENT AGREEMENT
WHEREAS, the Housing and Redevelopment Authority in and for
the City of Richfield, Minnesota (HRA) desires to develop certain
real property pursuant to and in furtherance of the
Transformation housing element of the Development Fund as adopted
by the HRA, said real property being described as follows:
6500 James Avenue, Lot 1, Block 12, Fairwood Park First
Addition, Hennepin County.
WHEREAS, the HRA is authorized to sell real property within
its area.of operation after public hearing; and
WHEREAS, a developer, Quam, Sumnicht, and Associates has
been identified as the purchaser of the described property, in
accordance with a development agreement; and
WHEREAS, the public hearing has been held after proper
public notice.
NOW, THEREFORE, BE IT RESOLVED by the Richfield Housing and
Redevelopment Authority:
1. A public hearing has been held and 6500 James Avenue is
authorized to be sold to Quam, Sumnicht, and Associates in
accordance with a development agreement with the HRA.
2. The purchase price for 6500 James Avenue is $45,700.
3. That the Chairperson and Executive Director are authorized to
execute the Development Agreement and other agreements as
required to effectuate the sale to Quam, Sumnicht and
Associates.
Adopted by the Housing and Redevelopment Authority in and for
the City of Richfield, Minnesota this 16th day of August, 1993.
Thomas E. Harms, Chair
ATTEST:
Larry Wozniczka, Secretary
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