04-20-92 agendaCITY OF RICHFIELD
MONDAY, APRIL 20, 1992
HOUSING AND REDEVELOPMENT AUTHORITY
7:00 P.M.
COUNCIL CHAMBERS
AGENDA
CALL TO ORDER
APPROVAL OF MINUTES OF REGULAR HRA MEETING OF MARCH 16, 1992
1. OPPORTUNITY FOR CITIZENS TO ADDRESS THE HRA ON ITEMS NOT ON
THE AGENDA
2. CONSIDERATION OF AUTHORIZATION TO CONTINUE RICHFIELD-
REDISCOVERED (FORMERLY THE EXPANDED NEW HOME PROGRAM)
HRA LETTER NO. 13
3. CONSIDERATION OF RESOLUTION AUTHORIZING THE PROCESSING OF AN
APPLICATION TO SECURE MORTGAGE REVENUE BOND PROCEEDS FROM THE
MINNESOTA HOUSING FINANCE AGENCY
HRA LETTER NO. 14
4. PUBLIC HEARING AND CONSIDERATION OF RESOLUTION AUTHORIZING
SALE OF HRA OWNED PROPERTY AT 6321 MORGAN AVENUE
HRA'LETTER NO. 15
5. EXECUTIVE DIRECTOR REPORT
6. CLAIMS AND PAYROLL
ADJOURNMENT
HOUSING AND REDEVELOPMENT AUTHORITY
HRA Letter No. 15
Agenda April 20, 1992
Issue Statement:
The public hearing and sale of 6321 Morgan Avenue.
Background:
The new construction project at 6321 Morgan Avenue was authorized
by the HRA in May, 1990, as a cooperative project with Vo-Tech.
The project is nearing completion and a sale is anticipated in
May 1992.
A five member income qualified family presently renting in
Richfield has been selected as purchaser. They meet the
requirements stated in Attachment A. HRA authorization to sell
the property is required prior to final processing. The home is
being sold for $110,000.
The purchasers are making a down payment of $5,000. They have
applied for an FHA mortgage in the amount of $80,000. The
difference between the initial purchase price and the estimated
market value, $25,000, is provided by the HRA as a second
mortgage. Project costs are covered by the down payment and
first mortgage. The second mortgage accomplishes the following:
• 1. Makes the initial purchase price affordable.
2. Prevents a speculative purchase in which the buyer might
benefit from selling the home quickly.
Funds received when the second mortgage is repaid, are returned
to the New Home Program for financing housing activities of the
HRA. The HRA will pay five points for mortgage discounting
(approximately $4,250) and the cost of title insurance
(approximately $200), at closing. The HRA typically pays up to
four points for mortgage discounting. To facilitate the sale, an
additional point ($850.00) would be paid. After closing, the Vo-
Tech contract of $66,307 will be paid. These costs have been
anticipated in the 1991-92 budget and will be paid by the
proceeds of sale.
If during final processing the family is found ineligible by the
lender, the purchase agreement is void and earnest money
released. At this time however, the lender has qualified the
purchaser through the preliminary processing.
Prior to sale, the HRA will have an opportunity to inspect the
work during an "open house". Fixtures and floor coverings are
being installed at this time. The open house is scheduled for May
4, 1992.
10 Recommended Motion:
It is recommended that following the public hearing, the HRA
adopt the attached resolution which authorizes the disposition of
the HRA owned property at 6321 Morgan Avenue.
Basis of Recommendation:
1. A five member family has been identified as purchaser and
meets program requirements.
2. A purchase agreement cannot be processed further by the
lender without HRA authorization of sale.
3. A public hearing notice has been published in the Sun-
Current which,allows the HRA to consider the sale at the
April meeting.
4. The Planning Commission has determined that the sale for
residential purposes is consistent with the Comprehensive
Plan.
Alternative Recommendation:
Do not adopt the resolution. However, this would cause a delay
in the sale of the property, increase HRA holding costs, and be
very disturbing for the identified family.
Discussion/Decision Mode:
• Authorization of the sale is required at the April 20 meeting so
that the buyers can secure mortgage financing for a May 1992
closing.
Respectfully submitted,
Jame . Prosser
Exec t' a Director
JDP:ds
r?
U
ATTACHMENT A
NEW HOME PROGRAM
ELIGIBILITY REQUIREMENTS
FOR
HOME BUYERS
- Have a 3-8 member family (a family is defined as persons
related by blood, marriage or operation of law).
- Be a first time home buyer (or have not owned in 3 years).
- Have the following maximum annual income depending upon
family size:
Family Size Maximum Income
3 $34,200
4 38,000
5 41,050
6 44,100
7 47,100
• 8 50,150
This income is 80% of the metropolitan area median income - an
accepted CDBG program income level.
- Have the ability to make monthly payments on a $85,000
mortgage, pay $5,000 down, and pay buyer required closing
costs.
- Agree to be subject to a lien by the HRA for the difference
between the initial sales price and the actual value.
RESOLUTION NO.
THE HOUSING AND REDEVELOPMENT AUTHORITY
• IN AND FOR THE CITY OF RICHFIELD, MINNESOTA
RESOLUTION AUTHORIZING SALE OF REAL
PROPERTY LOCATED AT
6321 MORGAN AVENUE
WHEREAS, the Housing and Redevelopment Authority (HRA), owns
certain real property located at 6321 Morgan Avenue, legally
described as:
Lot 19 and the N. 20 feet of Lot 18, Block 9, "Ray's
Lynnhurst Addition", Hennepin County
WHEREAS, the HRA acquired the property so that the South
Hennepin Vocational Technical College (Vo-Tech) could construct a
new single family home at 6321 Morgan Avenue, to be sold by the
HRA to a moderate income family; and
WHEREAS, construction work is nearing completion; and
WHEREAS, the Beggs family has been identified as qualified
purchasers for 6321 Morgan Avenue; and
WHEREAS, the conditions of sale include a total sales price
of $110,000, a first mortgage of $80,000 payable to the lender, a
lien of $25,000 payable to the HRA, and a $5,000 downpayment; and
• WHEREAS, the sale of 6321 Morgan Avenue may be authorized by
the HRA following a public hearing which considers the
disposition of the property; and
WHEREAS, that hearing has been held following proper
publication of notice.
NOW, THEREFORE, BE IT RESOLVED by the Housing and
Redevelopment Authority in and for the City of Richfield,
Minnesota that the HRA Chairperson and Executive Director are
authorized to execute the purchase agreement and other required
documents to that the disposition of HRA owned property at 6321
Morgan Avenue occurs as presented herein.
Passed by the Housing and Redevelopment Authority in and for
the City of Richfield, Minnesota this 20th day of April, 1992.
Thomas E. Harms, Chairperson
0 Joan Helmberger, Secretary
ATTEST:
•
HOUSING AND REDEVELOPMENT AUTHORITY
HRA Letter No. 14
Agenda April 20, 1992
Issue Statement:
Authorizing HRA participation in the Minnesota Housing Finance
Agency (MHFA) City Participation First Time Buyer Home Mortgage
Program.
Background:
Richfield, •with support and assistance from MHFA, again has an
opportunity to locally provide reduced interest rate, first time
buyer mortgage money. MHFA issues the housing mortgage revenue
bonds on behalf of those communities requesting participation.
The HRA participated in this program with MHFA in 1991. The 1991
program secured $1.4 million for Richfield from an initial
request of $4.0 million. The amount was reduced because of the
many requests MHFA received for funds. Approximately 11 loans
were reserved for Richfield Rediscovered activities. Another six
loans were available to finance existing sales. As of April 1,
1992, five loans have been reserved for the sale of existing
housing and the Vo-Tech project at 7101 First Avenue. Richfield
Rediscovered homes exceed program sale price limits so that
builder/buyers have sought other financing. In addition,
mortgage interest rates were so favorable during the last nine
months that a 7 7/8$ MHFA mortgage was not the only attractive
mortgage product available. MHFA mortgages received new
attention when interest rates generally increased and MHFA's
mortgages were restructured to 7.45%.
MHFA is soliciting interest from Richfield in a 1992 program
since it is anticipated that present mortgage monies will be
depleted by the end of Spring, 1992. A 1992 Richfield program
would have the following elements:
? Approximately 45-50 mortgages, totaling $4 million in mortgage
volume would be made available in Richfield for new and
existing homes. According to Multiple Listing Service data
from the last 12 months, 248 homes priced below the program
price limit of $85,000 were sold in Richfield.
? The maximum purchase price for an existing home is
$85,000, and $97,840 for new construction.
? Metropolitan Financial Mortgage Corporation, with a branch
office located near Southdale, would be the originating
lender for all mortgages.
Metropolitan Financial Mortgage Corporation:
? has experience originating all of the Richfield HRA's first
time buyer/Vo-Tech projects during the last seven years;
? acted as the originating lender for Richfield in the 1991
mortgage program;
? has considerable experience and is one of the volume leaders
in the originating of MHFA mortgages;
? has indicated a willingness to perform this service for the
Richfield HRA and pay required participation fees to MHFA.
The MHFA program:
? provides mortgages at 1-1/2 to 2$ below market interest rates;
? serves buyers with incomes at or below $38,400, as adjusted
for family size;
? provides marketing materials and program promotion on behalf
of Richfield;
? eliminates bond issuance expenses for Richfield;
? provides, by state appropriation, down payment assistance to
the more modest income purchasers of homes;
? anticipates having mortgage monies available in June.
• To participate, the HRA must contribute a totally refundable
deposit of 1% of.the mortgage amount requested. The required
deposit for Richfield is $40,000. The deposit would be returned
to the HRA probably in May, when bonds are sold. (Participation
in the 1991 program required a deposit at time of application
which was subsequently refunded.)
Staff has prepared and submitted a request to participate in the
MHFA program by the April 15, 1992 deadline. However, HRA
concurrence is needed to validate the application. Requests will
exceed mortgage money available and a reduction in the size of
the request from Richfield may occur by MHFA as it did in 1991.
Staff anticipates the award to approximate $2 million.
Recommended Motion:
Adopt the attached resolution which provides for the processing
of an application which secures a commitment of MHFA mortgage
revenue bond monies for Richfield.
Basis of Recommendation:
1. MHFA has a program available which awards mortgage money
to communities on a competitive basis. Richfield may
receive a mortgage commitment without financial risk.
2. Richfield has a housing market of affordably priced homes
which matches well with MHFA program sales prices.
3. Staff has prepared and submitted the required application
by the April 15, 1992 deadline so that the Richfield request
may be considered if the HRA concurs.
Alternative Recommendation:
Request staff to withdraw the application which was submitted to
MHFA.
Discussion/Decision Mode:
Action to approve the application at the April 20 HRA meeting is
necessary to preserve this funding opportunity.
Respect lly submitted,
James . Prosser
Execu ve Director
JDP:cak
•
•
RESOLUTION NO.
RESOLUTION AUTHORIZING THE PROCESSING OF AN
APPLICATION TO SECURE MORTGAGE REVENUE BOND
PROCEEDS FROM THE MINNESOTA HOUSING FINANCE AGENCY
WHEREAS, Richfield has an affordable single family housing
stock and supports home ownership programs, particularly those
which meet the needs of first time buyers; and
WHEREAS, the Minnesota Housing Finance Agency has a first
time buyer home mortgage program available to Richfield called
the City Participation Program; and
WHEREAS, Richfield has evaluated the program and has
prepared and submitted an application for providing up to
$4,000,000 in mortgage revenue bond monies in Richfield to
finance the purchase of approximately 50 homes; and
WHEREAS, Richfield must identify a lender and has identified
Metropolitan Federal Mortgage Corporation to provide lender
originating services; and
WHEREAS, the Richfield HRA must consider the program and
authorize the processing of the application together with a
refundable deposit of $40,000:
NOW, THEREFORE, BE IT RESOLVED by the Richfield Housing and
Redevelopment Authority:
That the Chair and Executive Director are authorized to
proceed to process an application and take those actions
necessary to participate in the Minnesota Housing Finance Agency
City Participation Program including the deposit of funds.
Passed by the Housing and Redevelopment Authority in and for
the City of Richfield, Minnesota this 20th day of April, 1992.
Thomas E. Harms, Chairperson
r?
ATTEST:
Joan Helmberger, Secretary
?I
HOUSING AND REDEVELOPMENT AUTHORITY
HRA Letter No. 13
Agenda April 20, 1992
Issue Statement:
Authorization to continue Richfield-Rediscovered (formerly the
Expanded New Home Program).
Background:
The first phase of Richfield-Rediscovered has been a success:
? Sixteen substandard properties have been acquired and cleared,
creating 17 building sites.
? Eleven new homes have been completed.
? Five homes are under construction or nearing construction
start. (One site is proposed to be used by Vo-Tech. The
HRA will consider the project in May 1992).
? One lot, at 6415 15th Avenue, is available for sale. There
has been interest but no sale. A builder/buyer team should
be identified shortly.
The program has several objectives:
• ? Create a voluntary market for the purchase and removal of
substandard, poor quality housing.
? Provide sites for new homes by working closely with a
qualified builder/buyer team.
? Provide a continuing program presence which maintains
the interest and market momentum already achieved.
? Provide a financial structure which generates a sufficient
cash flow to pay off principal and provide interest payments if
funds are available.
A survey of purchasers indicates that Richfield-Rediscovered has
met the needs of a variety of buyers. They include young
families and empty nesters, singles, move-up buyers, and first
time buyers. A summary of the responses received is attached.
.The net increase in the number of bedrooms permanently added to
the housing supply is 25. There were relatively few school age
children in the acquired housing units so staff is confident that
this increase in dwelling unit size will clearly result in a net
increase in school age children when all the new units are
occupied. During the past several months, staff has assembled a
list of approximately 60 sellers and 15 buyers that are
interested in participating in a continued program. Sellers,
40 builders, and buyers continue to contact staff to indicate their
program interest in the program.
• In July 1990, the HRA and City Council approved the Expanded New
Home Program. The City Council and HRA authorized $1,000,000 to
be borrowed equally from the water and sewer utilities, and the
LHN, to finance the acquisition and clearance of substandard
housing.
A summary of the program finances indicates:
? To date, expenditures total $1,007,322 (see attached activity
report.)
? Acquisition, sales clearance, environmental evaluation and
appraisal costs averaged $57,704. (Acqusition activities have
halted because of lack of revenues.)
? Cash revenues from land sales completed and anticipated total
$487,148, an average of $128,656.
? A recent Publicorp analysis indicates that the land sales
revenues, when combined with the projected tax increment of
$656,000 over 25 years, will result in revenues of $1,143,000.
Consistent with the original cashflow projections this assumes
an average annual housing valuation appreciation of 2%.
? The combination of land proceeds and tax increment ended up
slightly better than expected so that the average write down
• per property was $29,048 rather than a projected $30,498.
Because of the success of the program, housing valued at
$848,000 has been replaced with housing valued at $2,047,930.
Additional funds are needed to continue the program momentum. To
provide for the redevelopment of approximately eight sites would
require $500,000. Sufficient staff resources are available to
manage this number of projects and the market presence at this
number would be adequate. Funds would continue to be drawn from
the water and sewer utilities and the LHN TIF. Proceeds of sale
and the tax increment would again be utilized to amortize the
debt.
To date, the water and utilities and the LHN TIF funds have a net
total each of $222,183 loans to the program. Repayment of
principal over 25 years would result in principal payments to
each fund in the amount of $8,887 per year. Assuming a 7%
interest rate, the amount of interest that each fund would
receive is $10,178 annually. If tax increment receipts are
sufficient, each fund would recover the full amount loaned plus
interest at 7%. However, if tax increment receipts are not
sufficient, the amount that each fund would not recover would be
$10,178 per year. See supporting schedule for figures.
Recommended Motion:
Authorize staff to take those actions necessary to continue the
Richfield-Rediscovered program including a request of the City
Council to provide $500,000, in equal amounts from the water fund
and the LHN.
Basis of Recommendation:
1. The Richfield-Rediscovered Program has been successful.
2. The City Council, in a March 27 goal setting session,
identified the continuation of Richfield-Rediscovered
as a strategic goal.
3. The program has established a presence in the marketplace and
the momentum should be continued. There is a voluntary
market of sellers approximating 60. The voluntary market of
builders/buyers approximates 15.
4. A source of funding is available.
5. Cash flow analysis and costs indicate that the program will
continue to be self-supporting excluding staff costs which
are covered by the New Home Program.
Alternative Recommendation:
Do not authorize a program at this time.
Discussion/Decision Mode:
Following HRA review, the City Council would consider the
program. With timely support, construction starts late in the
summer could be achieved.
y submitted,
James . Prosser
Execu ve Director
JDP:cak
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Activity Report - April, 1992
$1,000,000
Anticipated Actual Total
EXPENSES
Expenditures through 3131/92 $0 $970,823.00 $970,823.00
Marketing $0 $10,138.00 $10,138.00
6318 Nicollet $0 $26,361 $26,361
(net expense)
• TOTAL Expenses $0 $1,007,322.00 $1,007,322.00 $1,007,322.00
Balance of Original Appropriation ($7,322.00)
REVENUES
Revenues through 3131/92
Sale proceeds $0 $483,648.00 $483,648.00
Participation Fees $0 $3,500.00 $3,500.00
Sub-Total Revenues $0 $487,148.00 $487,148.00 $487,148.00
TIF $656,000.00 $0 $656,000.00 $656,000.00
TOTAL Revenues $656,000.00 $487,148.00 $1,143,148.00 $1,143,148.00
$135,826.00
0
ov?r'46d
Activity Ria-bM - April- 1992
Property Address Purchase Authorization For Sale HRA Sold to Construction Construction Builder
Agreement by HRA to by HRA Public Builder Underway Complete Sells to
with Purchase Hearing (demolition End
Voluntary for through Buyer
Seller Disposition construction) (closed)
Of
Property
James Emma=
7223 James
7320 Fifth
1016 Mildred Dr*
1020 Mildred Dr*
6425 15th
6518 15th
809 Logan
**
6424 James
6313 Morgan
7129 First
6612 Second
6401 Blmtn
6321 Humboldt
640715th
* 9 one large lot was purchased and subdivided into two lots
*double lot, left as one
***second public hearing required as first public hearing was for sale to Marv Anderson Homes
****Vo-Tech/HRA preparing plans for development (project projected to be underway in June, 1992)
*****the existing structure will be rehabilitated by Vo-Tech to be offered for sale during Summer 1992
Current month's activity
HRA OF RICHFIELD
REPAYMENT OF EXPANDED NEW HOME PROGRAM FUNDING
WATER FUND $222,183.33
SEWER FU ND $222,183.33
• LHN TAX INCREMENT $222,183.33
TOTAL $666,550.00
INTEREST RATE: 7.0%
$8,887.33
PAYMENT SCHEDULE PER FUND: PRINCIPAL
REMAINING PAYMENTS
YEAR PRINCIPAL INTEREST TOTAL PRINCIPAL ONLY
-----------
------- ----------- ----------- ----------- -----------
222,183.33 222,183.33
1992 3,512.83 15,552.83 19,065.66 218,670.50 213,296.00
1993 3,758.72 15,306.94 19,065.66 214,911.78 204,408.67
1994 4,021.84 15,043.82 19,065.66 210,889.94 195,521.34
1995 4,303.36 14,762.30 19,065.66 206,586.58 186,634.01
1996 4,604.60 14,461.06 19,065.66 201,981.98 177,746.68
1997 4,926.92 14,138.74 19,065.66 197,055.06 168,859.35
1998 5,271.81 13,793.85 19,065.66 191,783.25 159,972.02
1999 5,640.83 13,424:83 19,065.66 186,142.42 151,084.69
2000 6,035.69 13,029.97 19,065.66 180,106.73 142,197.36
2001 6,458.19 12,607.47 19,065.66 173,648.54 133,310.03
2002 6,910.26 12,155.40 19,065.66 166,738.28 124,422.70
2003 7,393.98 11,671.68 19,065.66 159,344.30 115,535.37
2004 7,911.56 11,154.10 19,065.66 151,432.74 106,648.04
2005 8,465.37 10,600.29 19,065.66 142,967.37 97,760.71
2006 9,057.94 10,007.72 19,065.66 133,909.43 88,873.38
2007 9,692.00 9,373.66 19,065.66 124,217.43 79,986.05
2008 10,370.44 8,695.22 19,065.66 113,846.99 71,098.72
2009 11,096.37 7,969.29 19,065.66 102,750.61 62,211.39
2010 11,873.12 7,192.54 19,065.66 90,877.50 53,324.06
2011 12,704.24 6,361.42 19,065.66 78,173.26 44,436.73
2012 13,593.53 5,472.13 19,065.66 64,579.73 35,549.40
2013 14,545.08 4,520.58 19,065.66 50,034.65 26,662.07
2014 15,563.23 3,502.43 19,065.66 34,471.42 17,774.74
2015 16,652.66 2,413.00 19,065.66 17,818.76 8,887.41
2016 17,818.76 1,247.31 19,066.07 (0.00) 0.00
-----------
222,183.33 -----------
254,458.58 -----------
476,641.91
Average interest per year 10,178.34
0