05-18-92 agenda
CITY OF RICHFIELD
• MONDAY, MAY 18, 1992
HOUSING AND REDEVELOPMENT AUTHORITY
7:00 P.M.
COUNCIL CHAMBERS
AGENDA
CALL TO ORDER
APPROVAL OF MINUTES OF REGULAR HRA MEETING OF APRIL 20, 1992
1. OPPORTUNITY FOR CITIZENS TO ADDRESS THE HRA ON ITEMS NOT ON
THE AGENDA
2. CONSIDERATION OF PROJECT REVIEW AND DISCUSSION RELATED TO V0-
TECH COMPONENT OF NEW HOME PROGRAM
• HRA LETTER NO. 16
3. CONSIDERATION OF RESOLUTION RELATING TO AMENDING VO-TECH
CONSTRUCTION AGREEMENTS FOR 7528 COLFAX, 6803 NICOLLET AND
6318 NICOLLET AVENUES
HRA LETTER NO. 17
4. EXECUTIVE DIRECTOR REPORT
5. CLAIMS AND PAYROLL
ADJOURNMENT
•
+t
. HOUSING AND,REDEVELOPMENT AUTHORITY
HRA Letter No. 17
Agenda May 18, 1992
Issue Statement:
Authorization to modify Vo-Tech contracts for 7528 Colfax, 6803
Nicollet and 6318 Nicollet Avenues by extending the project
completion, payment dates and contract price.
Background:
The HRA authorized contracts with South Hennepin Vocational
Technical College (Vo-Tech) to initiate projects at the
referenced properties. The 7528 Colfax project was authorized in
November 1990, and the Nicollet Avenue projects were authorized
in June 1991.
Each year, the Vo-Tech school initiates three new construction
projects. Two projects are initiated under contract with the
HRA; an on-campus project which is later moved to a Richfield
site and anon-site construction project. The third project is
built on campus and sold to a private party. The 6318 Nicollet
project is an additional remodel project initiated by the HRA to
solve a neighborhood housing problem. Remodeling work occurs
while the regular construction projects proceed.
To coordinate with the curriculum schedule and training
objectives, projects are typically completed over approximately
an 18 month period. The construction projects span two separate
class years of students, requiring a significant amount of on-
campus training to be qualified to build for the HRA. Student
work is split between classroom, on-campus construction projects
and on-site construction projects.
During the past year the Vo-Tech school has undergone three major
changes:
1. A move to a quarter system which coincides with other
community colleges.
2. A move to a course credit system.
3. The discontinuation of the painting and decorating program
which completed the interior and exterior painting and
staining.
The transition to the quarter and course credit system has
somewhat reduced Vo-Tech's program flexibility. Work on projects
must now correlate with a more rigid curriculum schedule. The
projects at 7528 Colfax, 6803 Nicollet and 6318 Nicollet were
initiated prior to these changes and are being impacted. The
anticipated construction schedule for these projects must be
adjusted. It appears Vo-Tech was overly optimistic in
• anticipating being able to complete new construction projects in
14 months and, at the special request of the HRA, take on the
remodeling project at 6318 Nicollet.
• Short term, Vo-Tech has submitted revised construction schedules
to facilitate timely completion of the projects (see Exhibit A).
The added time approximates five months each. Overall, 7528
Colfax will take 21 months. The projects on Nicollet will take
19 months each. Vo-Tech is confident in their ability to meet
the revised schedule. In each instance, exterior work is
receiving attention first.
Long term, Vo-Tech is considering the elimination of the on-
campus 1992-93 project to be sold to a private party. The
elimination of this project during the next year would allow Vo-
Tech more time to concentrate on the existing Richfield projects
and resume a more normal schedule in 1993 and 1994. Exhibit B
indicates the normal Vo-Tech schedule on a quarterly basis.
Contract modifications to increase the contract price for 7528
Colfax, 6803 Nicollet and 6318 Nicollet are also requested.
Staff is very cautious about considering contract price
adjustments. However, the following additional expenses clearly
represent costs incurred beyond the direct control of Vo-Tech:
7528 Colfax Interior & Exterior $3,706
Painting & Staining
6803 Nicollet Concrete forms ($900) $1,020
Underground electric ($120)
6318 Nicollet Underground electric $ 190
The project at 7528 Colfax was initiated prior to the elimination
of the painting and decorating program. The bid reflected all
taping, sanding, staining, varnishing and interior and exterior
painting to be completed by students. Although students were
able to complete a portion of the work prior to the end of the
painting program, it is necessary to hire a subcontractor to
complete the project. The contract bids for 6803 and 6318
Nicollet anticipated the possible elimination of the painting
program. Costs for hiring a subcontractor were included for
these projects.
Vo-Tech often uses a poured concrete foundation rather than
concrete block. This provides a high quality foundation and
varied training experience for students. Special forms, used to
pour concrete foundation walls, are rented by the Vo-Tech for
each project. The HRA purchased the property at 6803 Nicollet
Avenue from US West Communications. The complexity of having to
deal with the US West corporate office in Colorado delayed the
property closing beyond the anticipated project start date.
Consequently, Vo-Tech was required to extend the rental of the
concrete forms by two weeks. The additional cost to Vo-Tech for
• the forms was $1,800. The HRA is requested to pay half; $900.
• Underground electrical service was requested by staff after
project start for both 6803 Nicollet and 6318 Nicollet. When
installing a new electrical service, the cost for underground
service is minimal. Given the location of the utility poles and
the wire path to the homes, underground services were recommended
at both projects.
The present and proposed completion dates, payment dates and
contract prices are identified on the attached summary of
contract modifications, Exhibit C.
Changes in construction schedules and contract prices, although
not typical, have occurred before. Staff is always very
concerned about keeping Vo-Tech projects on schedule. However, a
reasonable amount of flexibility is necessary to facilitate a
working relationship between the HRA and Vo-Tech. Staff will
continue to monitor the projects closely. Staff is also of the
opinion that there is no better alternative to securing such well
built affordable housing.
Recommended Motion:
Adopt the attached resolution authorizing:
1. A change in completion dates for projects at 7528 Colfax
Avenue, 6803 Nicollet Avenue and 6318 Nicollet Avenue to
August 28, 1992, December 23, 1992 and December 23, 1992,
• respectively.
2. A change in payment dates for projects at 7528 Colfax
Avenue, 6803 Nicollet Avenue and 6318 Nicollet Avenue to
September 28, 1992, January 23, 1993 and January 23, 1993,
respectively.
3. A change in the contract price for 7528 Colfax, 6803 Nicollet
and 6318 Nicollet to $65,213, $63,840, and $38,951,
respectively.
Basis of Recommendation:
1. A change in the Vo-Tech curriculum schedule during 1991
altered the construction schedules for the three projects.
2. Vo-Tech has submitted revised construction schedules to
facilitate completion of the projects in a timely manner.
3. The elimination of the painting and decorating program
required the hiring of additional subcontractors at a
higher cost; impacting the cost of 7528 Colfax.
4. Vo-Tech used their best efforts to provide accurate price
estimates.
5. The increased expenses at these projects can be accommodated
from proceeds of sale of the completed dwelling(s).
Alternative Recommendation:
•
Do not authorize contract modifications. Vo-Tech does not have
the capacity to complete the projects within the original
timeframe. The use of a private contractor to complete the
projects would be the alternative. This would significantly
increase total project costs and consume considerable time to
switch from Vo-Tech to a private contractor.
Discussion/Decision Mode:
Contract changes, if acceptable to the HRA, will then be referred
to the school district for final action. Dave Smith, Chair of
the Vo-Tech Building Trades Curriculum will be available at the
HRA meeting to discuss the Vo-Tech projects.
Respect ly submitted,
Jame Prosser
Exec t ve Director
JDP:ds
•
RESOLUTION NO.
49 RESOLUTION RELATING TO AMENDING VO-TECH
CONSTRUCTION AGREEMENTS
7528 COLFAX, 6803 NICOLLET AND 6318 NICOLLET AVENUES
WHEREAS, the Housing and Redevelopment Authority (HRA) in
and for the City of Richfield has entered into contracts with
South Hennepin Technical College (Vo-Tech); and
WHEREAS, projects were authorized for 7528 Colfax Avenue,
6803 Nicollet Avenue and 6318 Nicollet Avenue; and
WHEREAS, the HRA has determined that it is appropriate to
amend the three agreements as they relate to the date of
completion and payment of work; and
WHEREAS, the HRA has determined that it is appropriate to
amend the three contracts to increase the contract price.
NOW, THEREFORE, BE IT RESOLVED by the Housing and
Redevelopment Authority in and for the City of Richfield,
Minnesota as follows:
1. Change the completion dates for projects at 7528 Colfax,
6803 Nicollet, and 6318 Nicollet Avenue to August 28, 1992,
December 23, 1992 and December 23, 1992 respectively.
2. Change the payment dates for projects at 7528 Colfax,
6803 Nicollet and 6318 Nicollet Avenue to September 28, 1992,
January 23, 1993 and January 23, 1993, respectively.
3. Change the contract amount for 7528 Colfax, 6803 Nicollet
and 6318 Nicollet to $65,213, $63,840, and $38,951,
respectively.
Passed by the Housing and Redevelopment Authority in and for
the City of Richfield, this 18th day of May, 1992.
Thomas E. Harms, Chairperson
ATTEST:
Joan Helmberger, Secretary
Exhibit A
• Approximate
Vo-Tech Project Schedule
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7528 Colfax
Interior and exterior finishing May 6 - August 28, 1992
and painting, Concrete work;
steps, deck footing, garage floor
Driveway installation
Finishing work and
project completion
August 28, 1992
6803 Nicollet
Exterior and interior finishing
and painting, Concrete work;
steps, deck footings, basement
floor, window area well
Interior insulation & drywall
Finishing work and
project completion
6318 Nicollet
Replace windows, frame garage,
re-roof house, concrete work;
footings, garage floor, steps
install new cedar siding, paint
exterior, paint exterior, heating
and plumbing work
Finishing work and
project completion
may 1 - July 1, 1992
May 26 - November 2, 1992
December 23, 1992
June 8 - Nov. 1, 1992
December 23, 1992
Exhibit B
Preliminary 1992-93 Vo-Tech Curriculum Schedule
•
As indicated on this schedule, students are available to work on
site in Richfield during specified periods and are required to be
on campus during specified periods.
Fall Quarter
On campus to build house
(secondary project)
Sept. 1 - Oct. 30, 1992
Work on on-site construction
project in Richfield
Quarter Break
Winter Quarter
Work on on-site construction
project in Richfield
Holiday Break
On Campus for classes
and work on secondary project
Richfield on-site
Quarter Break
Spring Quarter
On campus for classes March 15 - April 2, 1992
and work on secondary projects
Easter Break
April 5 - April 9, 1993
Nov. 1 - Nov. 25, 1992
Nov. 26 - Dec. 4, 1992
Dec. 7 - Dec. 23, 1992
Dec. 24 - Jan. 1, 1993
Jan. 4 - Feb. 5, 1993
Feb. 8 - March 5, 1993
March 8 - March 12, 1993
On campus for classes April 12 - April 23, 1993
and work on secondary projects
Richfield on-site April 26 - June 10, 1993
Summer Ouarter
on campus for classes June 14 - June 25, 1993
and work on secondary project
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• HOUSING AND REDEVELOPMENT AUTHORITY
HRA Letter No. 16
Agenda May 18, 1992
Issue Statement:
Project review and discussion related to the,Vo-Tech component of
the New Home Program.
Background:
At the March 16, 1992 HRA meeting, the Commissioners discussed
several aspects of the Vo-Tech projects. The following
information discusses cost-benefit, housing design, handicapped
accessibility, toxicity of building materials, construction
schedules and project marketing.
1. Cost-Benefit Analysis
A comparison of cost per finished square foot was made
between new single-family homes built by private builders
from 1988 to present, and Vo-Tech projects completed in the
same time period. The comparison is based on sales price and
finished square footage and indicates the following:
? Private Contractor average cost/square foot $92
? Vo-Tech average cost/square foot $59
• (Refer to Tables 1 and 2 attached to this letter.)
Although style, layout, interior features and quality of
construction make a house by house comparison difficult, the
substantially lower cost per square foot for Vo-Tech projects
can largely be attributed to:
? No labor cost for carpentry work including
framing, cabinetry, roofing, dry wall and concrete
work. Only material costs are charged.
? No profit is made by the Vo-Tech. A private builder
typically seeks a 12$-15* profit margin and additional
general contracting fees.
A low project cost is critical to making the Vo-Tech projects
successful. To be affordable to the first-time buyer
market, initial sale prices (downpayment and first
mortgage) must be kept between approximately.$75,000 and
$85,000. The initial sales price must cover the HRA's
project costs (the Vo-Tech contract and HRA construction
costs). An increase in project costs would require an
increase in the initial sale price and essentially price
the homes out of the first time buyer market.
• The following summarizes other benefits of working with Vo-
Tech:
? The quality and workmanship of Vo-Tech products is
equal to or better than the private builders product.
Oak trim, built-in linen and storage closets, generous
use of windows, sky lights, two bathrooms, three and
four bedrooms and exterior decks are standard features
in Vo-Tech projects. These features are not commonly
found in first-time buyer or starter homes priced in
the range of $85,000-$100,000, built by private
builders.
? Private builders sense an unacceptable level of risk
when working within a first-time buyer program which
requires narrow income and house price limits. These
types of projects directly impact their holding
expenses and net profit.
? The Vo'-Tech does not face similar constraints. Vo-
Tech benefits from unique field construction
opportunities. Waiting for contract payment during a
lengthy construction period and the HRA's completion
of marketing is an acceptable risk to them.
? The HRA has maintained an exclusive relationship with
• Vo-Tech which ensures their continuous availability for
Richfield projects.
? The HRA risk is minimized when working with Vo-Tech.
Vo-Tech has ample working capital, provides interim
construction financing without cost, is fully and
comprehensively insured, and the quality of work and
performance ability have been proven.
2. Home Design
Many factors are taken into consideration in the design of a
Vo-Tech project: lot size, existing grade, neighborhood
characteristics, project type, (on-campus or on-site
construction), and desired end value. A split entry design
has many benefits and has been the best design choice for
several projects. A split entry design:
? Provides more square footage at less cost than a two
story or rambler design.
? Is easily relocated from the Vo-Tech Campus. The
portion of the structure built on campus is initially
the height of a one-story building. Story and a half
homes and two story homes are substantially more costly
to relocate.
. ? Provides options for unfinished expansion space. This
helps keep the cost and house price down.
? Has a finished height equivalent to a story and a half
house. The height is similar in scale to existing
Richfield neighborhoods. The design, although less
typical for established neighborhoods, is often the
design demanded most by the market place.
? Adapts well to site irregularities such as sloped and
uneven grades. The project at 6321 Morgan is an example
of a design which accommodates a very difficult uneven
grade. The house has been placed on the site without
changing the terrain and affecting established storm
water drainage.
3. Handicapped Accessibility
Developing a handicapped accessible single-family home is an
interesting project. The HRA developed one in 1979 as part
of the New Home Program in cooperation with a private
contractor. At that time, state building codes were also
becoming quite specific about the unique features and special
equipment which should be included. Special hardware, doors,
counters, room dimensions, and location of services are
prescribed. There are several factors to consider:
? Completed projects sold to first-time buyers must meet
certain family size and income limits. Serving a
handicapped household narrows the market further, making
• the project challenging to sell.
? Designing a new program element that serves a
handicapped market would require staff time for program
research and house design.
? Accessible homes require special building design and
materials which are more costly then standard
construction.
? Vo-Tech could provide a less costly product than the
private market. However, the design and material
requirements would add considerable time to implementing
a project.
? The market demand is thought to be small and
specialized.
4. Toxicity of Building Materials
A variety of chemicals may be irritating to certain
individuals in home environments. Formaldehyde is the
product that air quality specialists are concerned about.
Formaldehyde is commonly used in the bonding of building
materials such as fiber board used in cabinetry and wafer-
board used for subflooring. The use of these materials is
preferred over solid wood products because they are less
expensive, more consistent in quality, and less subject to
warping. Since 1985, HUD has imposed regulations limiting
the amount of formaldehyde that can be emitted from building
materials. The level established by these..guidelines is felt
to be safe for the majority of people. Persons who are ultra
sensitive to formaldehyde may still experience some effect at
this level.
Sealing building materials with stain, varnish or melamine
polyester types of finishes eliminates the hazards of
formaldehyde. The Vo-Tech has just begun using melamine
finishes in their cabinetry. Further mitigation of
formaldehyde can be achieved by continued use of melamine
finish and sealing any exposed fiber board surfaces. An
Oxboard brand subflooring product is available which is
manufactured using a minimal amount of formaldehyde; 1/10 of
one part per million as opposed to 1/4 of one part per
million which is common in comparable products. This product
is similar in price to standard subflooring products which
contain higher concentrations of formaldehyde. The Vo-Tech
has been directed to use the Oxboard brand product
exclusively for subflooring in all future projects. The use
of formaldehyde is also common in carpet, carpet padding and
furniture. These materials are selected by the buyers. Cost
effective alternatives are not readily available.
5. Vo-Tech Construction Schedule
Each year, the Vo-Tech school initiates three new
construction projects. Two projects are initiated under
contract with the HRA; an on-campus project which is later
moved to a Richfield site and an on-site construction
project. The third project is built on campus and sold to a
private party. To coordinate with the curriculum schedule
and training objectives, projects are typically completed
over an 18-24 month period.
With the completion of 6321 Morgan, the Vo-Tech is currently
working on four projects for the HRA; 7528 Colfax, 6803
Nicollet, 6501 15th Avenue and 6318 Nicollet. The 6318
Nicollet project is a special remodel project initiated by
the HRA to solve a neighborhood housing problem. Remodeling
work coincides with the other regular new construction
projects. In the 1992-93 school year, Vo-Tech is considering
the elimination of the on-campus project to be sold to a
private party. This would allow Vo-Tech more time to
concentrate on the existing Richfield projects.
6. Marketing
Although not specifically referenced at the March meeting,
marketing is another project element which staff considered
in its analysis. The following factors influence the
marketing of homes:
• A. Qualifying Requirements
The New Home Program is directed at a narrow market.
Eligible buyers must meet all of the following
requirements:
? first-time buyers;
? $3,500 - $5,000 available for down payment;
? approximately $2,500 available for closing costs;
? low fixed monthly debt; and
? meet income and family size limits (80% of the Twin
City metropolitan area median income).
Approx. -Maximum
Family Size Minimum Income
3 $29,000 to $34,200
4 $29,000 to $38,000
5 $29,000 to $41,050
6 $29,000 to $44,100
B. Timing of Mortgage Lock-in
Buyers in this income range are usually purchasing at
their maximum potential. A quarter of a percentage
point on the first mortgage can often be the difference
between qualifying and not qualifying. The standard
"lock-in" period which secures the interest rate is 60
days. An extended lock-in period can be purchased, but
most buyers are not able to afford this. A 60 day lock-
in means that from the time a buyer is prequalified, the
closing must occur within 60 days. Therefore, the house
needs to be nearly 100% completed prior to marketing.
Recommended Motion:
Continue the Vo-Tech component of the New Home Program as
designed.
Basis of Recommendation:
1. Projects developed by Vo-Tech are cost effective and provide
a high level of quality.
2. Homes developed by the Vo-Tech are carefully designed to
provide functional and desirable family living space and an
attractive appearance which blends with the surrounding
homes.
3. Vo-Tech has the capability to construct special projects
such as super insulated homes and handicap accessible homes
if directed to do so.
4. Staff has instructed Vo-Tech to use building materials with
low toxicity levels whenever possible.
5. Staff continues to monitor the Vo-Tech construction schedules
and work with Vo-Tech to assure timely completion of
projects.
6. Staff makes every effort to market homes and locate qualified
buyers as soon as possible following project completion.
Alternative-Recommendation:
Discontinue the Vo-Tech component of the New Home Program.
Discussion/Decision Mode:
Preliminary plans are being developed to initiate two projects in
the 1992-93 school year. By that time, the project on Colfax
will be close to completion. The two projects on Nicollet will
be completed prior to the end of 1992.
submitted,
James D Prosser
Execu a Director
JDP:ds
LJ
0
TABLE 1
Evaluation of Building Costs
Privately Constructed New Homes, 1988 to Present
Cost per
Total Finished* Finished
Builder Address Sales Price Sq. Ft. esq. Ft.
Oksness 6824 13th Avenue $139,000.00 1,104 $125
Oksness. 6828 13th Avenue $126,350.00 1,118 $113
Rich/Merv Cons 7509 Wentworth $126,800.00 1,532 $ 82
Okness 601 East 79th $ 90,000.00 1,164 $ 77
(Tow nhouse)
Oksness 605 East 79th $ 98,000.00 1,164 $ 84
(Townhouse)
Gunderson 6926 James $118,000.00 1,111 $106
Gunderson 6841 Newton $165,000.00 1,948 $ 84
Rogers 1312 Diagonal Blvd $130,000.00 1,222 $115
Marv Anderson 7320 Fifth Avenue $127,780.00 1,660 $ 76
•
Marv Anderson 7223 James Avenue $137,246.00 1,610 $ 85
Marv Anderson 7145 James Avenue $138,295.00. 1,640 $ 84
Marv Anderson 6809 Logan Avenue $289,948.00 2,700 $107
Marv Anderson 6518 15th Avenue $ 85,000.00 816 $104
Marv Anderson 1016 Mildred Dr $103,500.00 1,159 $ 89
Marv Anderson 1020 Mildred Dr $110,000.00 1,472 $ 75
Marv Anderson 6424 James Avenue $115,600.00 1,499 $ 77
RSM 6401 Bloomington $108,488.00 111,104 $ 98
RSM 7129 First Avenue $101,900.00 1,350 75
Average cost per square foot $ 92
*Square footage information represents finished living space only.
(Source of Data: Hennepin County Assessor, Richfield Building
Official)
[Housing]Evaluation-B1dgCos
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