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03-16-92 agendaCITY OF RICHFIELD MONDAY, MARCH 16, 1992 HOUSING AND REDEVELOPMENT AUTHORITY. - 7:00 P.M. COUNCIL CHAMBERS AGENDA CALL TO ORDER APPROVAL OF MINUTES OF REGULAR HRA MEETING OF FEBRUARY 18, 1992 1. OPPORTUNITY FOR CITIZENS TO ADDRESS THE HRA ON ITEMS NOT ON THE AGENDA 2. CONSIDERATION OF REPORT ON PROGRESS AND STATUS OF RICHFIELD RE-DESIGN AND REMODELING HRA LETTER NO. 9 3. CONSIDERATION OF PROPOSAL FOR PURCHASE OF CLOVERLEAF SITE HRA LETTER N0. 10 4. CONSIDERATION OF RESOLUTION AUTHORIZING PURCHASE OF 6501 15TH AVENUE FROM THE CITY AND EXECUTING CONTRACT WITH SOUTH HENNEPIN VOCATIONAL TECHNICAL COLLEGE TO INITIATE 1992-93 NEW HOME PROJECT HRA LETTER N0. 11 5. CONSIDERATION OF RESOLUTION AUTHORIZING GLENN WISSER TO BECOME OWNER OF PROPERTY AT 6313 MORGAN AVENUE IN ACCORDANCE WITH DEVELOPMENT AGREEMENT HRA LETTER N0. 12 6. EXECUTIVE DIRECTOR REPORT 7. CLAIMS AND PAYROLL ADJOURNMENT HOUSING AND REDEVELOPMENT AUTHORITY HRA Letter No. 12 Agenda March 16, 1992 Issue Statement: Authorization to enter into a development agreement with Glenn Wisser for the development of 6313 Morgan Avenue. Background• The property at 6313 Morgan Avenue i.s part of the Richfield Rediscovered program. The HRA authorized a development agreement with Marv Anderson Homes, Inc. on November 19, 1990. The HRA sold the site to Marv Anderson on February 28, 1991, receiving $25,200 in land proceeds. Over the lengthy period of time that followed, staff unsuccessfully attempted to secure performance by Marv Anderson. Marv Anderson, not wanting to build on speculation, and not having a buyer, did not move ahead. During the summer of 1991 it became clear that Marv Anderson did not intend to perform. The development agreement had a letter of credit requirement of $28,742, to be provided at the time a building permit was secured. With no building permit application, no letter of credit was received as performance security. .(Letters of credit are now required at closing.). In recent months, Marv Anderson has attempted to satisfy the development agreement by locating another developer and proposing • an assignment. Since the program requirements were changed in mid-1991, staff has sought a new development agreement with a new developer rather than an assignment. As a result, the following development agreement proposal is being brought to the HRA: • Glenn Wisser, an architectural draftsperson, would act as general contractor and build a home which he would occupy upon completion. • Mr. Wisser is responsible for purchasing the property at 6313 Morgan Avenue from Marv Anderson Homes, Inc. • At the closing between Marv Anderson and Mr. Wiser, Wisser will provide a letter of credit for $28,742 to the HRA as performance security. • Upon receipt of the letter of credit by the HRA, Marv Anderson can be released from its development obligation. • Richfield Rediscovered program revisions, which-were made in 1991 would allow the following type of development: - Two bedrooms with expansion space; - attached or detached two car garage; and - a minimum $90,000 home, total lot and structure value. Mr. Wiser has agreed to satisfy these requirements. • Because Mr. Wiser has. specialized construction knowledge but is not a professional builder, an assessment agreement is being required which ensures that property taxes will be paid on at least a $90,000 valued property. In addition, Mr. Wisser is providing a list of subcontractors that he will supervise. Staff is presently verifying if subcontractors are licensed in the State of Minnesota. • The development agreement, except for the provisions .mentioned above, is .the same used for all Richfield Rediscovered builders and requires: - August 1, 1992 completion date; and - construction financing and insurance requirements that other Richfield Rediscovered builders have provided. Because there is no sale of land by the HRA, a public hearing is not required to consider this development agreement. Recommended Motion: It is recommended that the HRA authorize the development of 6313 Morgan Avenue by Glenn Wisser in accordance with a development agreement. Upon securing a letter of credit in. proper form from Mr. Wiser, the HRA authorizes the release of Marv Anderson Homes, Inc. from development responsibilities at this location. Basis of Recommendation: 1. An opportunity has been presented to develop 6313 Morgan with a single family home. 2. 6313 Morgan is a 40' lot which makes it more challenging to develop and perhaps less desirable to many Richfield Rediscovered buyers. 3. A developer has been identified, proposing a custom designed home to be built in a timely manner. 4. The development agreement ensures that adequate security during and upon the completion of construction will be provided. 5. A method to ensure development agreement performance has been obtained by securing Glenn Wisser's performance security prior to the release of Marv Anderson. 6. Previous cash flow analysis for tax increment anticipated a $90,000 value for this property. Alternative Recommendation: 1. Attempt to secure development performance from Marv Anderson, Homes, Inc. This is unlikely to occur. 2. Re-purchase the lot from Marv Anderson Homes, Inc. and seek another developer. However, the HRA then assumes possession and development responsibility again. 3. Take no action at this time. However, Marv Anderson may argue that the HRA is preventing performance. Development that occurs outside of a development agreement may not be as acceptable to the HRA. Discussion/Decision Mode: Approval by the HRA will make it possible for construction to be initiated this spring. A copy of the preliminary plan will be available at the HRA meeting. y submitted, s,YD . Prosser tive Director JDP:ds RESOLUTION NO. THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD RESOLUTION AUTHORIZING GLENN WISSER TO BECOME OWNER OF PROPERTY AT 6313 MORGAN AVENUE 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 Expanded New Home Program Redevelopment Project (Project) heretofore adopted by the City of Richfield (City) and the HRA, said real property being described as follows: Lot 21, Block 9, "Ray's Lynnhurst", and located at 6313 Morgan Avenue; and WHEREAS, the HRA authorized a development agreement with Marv Anderson Homes, Inc., on November 19, 1990; and WHEREAS, the HRA sold the site to Marv Anderson Homes on February 28, 1991, receiving 525,200 in land proceeds; and WHEREAS, Marv Anderson Homes being unable to perform on the • development agreement, has identified a willing developer, Glenn Wisser, who is interested in entering into a development agreement with the HRA; and WHEREAS, the development agreement between the HRA and Glenn Wisser requires: 1. A letter of credit in the amount of 528,742 as performance security; 2. An assessment agreement which ensures property taxes will be paid on at least a 590,000 valued property; 3. A construction completion date of August 1, 1992; and 4. Evidence of construction financing and insurance requirements. NOW, THEREFORE, BE IT RESOLVED by the Richfield Housing and Redevelopment Authority, that the Chairperson and Executive Director are authorized to: 1. Execute the Development Agreement and other agreements as required to effectuate the development of 6313 Morgan Avenue by Glenn Wisser; and 2. Release Marv Anderson Homes, Inc. from development responsibilities at 6313 Morgan Avenue, upon securing a letter of credit in proper form from Glenn Wisser. Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this 16th day of March, 1992. Thomas E. Harms, Chairperson ATTEST: Joan Helmberger, Secretary LJ HOUSING AND REDEVELOPMENT AUTHORITY HRA Letter No. 11 Agenda March 16, 1992 Issue Statement. Authorization to acquire 6501 15th Avenue from the City and to execute a contract with South Hennepin Vocational Technical College (Vo-Tech) to initiate a 1992-93 New Home project. Background• Vo-Tech has requested that the HRA participate in a new construction project for the school year 1992-93. The two organizations have participated together in 16 projects since 1977. The projects provide rehabilitation and new construction training opportunities for the Vo-Tech students and affordable housing for the community. This will be the fifth new construction project wherein a structure is being built at the Vo-Tech campus, would be moved to the site, and placed on a permanent foundation. The Vo-Tech initiated construction on campus in September 1991 and requested the City to identify a lot. This is an appropriate lot for the structure. On November 18, 1991, the HRA authorized staff to .acquire the property at 6501 15th Avenue South through the Voluntary Acquisition Program. New HUD rules require that the City purchase the property and subsequently transfer the property to the HRA. The City Council approved the purchase of the property on March 9, 1992. The sale from the City to the HRA requires a purchase agreement, and City Council public hearing and passage of a transitory ordinance. Acquisition from the seller by the City can occur at any time. Formal transfer of the property to the HRA is anticipated to occur in late May, 1992, when the transitory ordinance becomes effective. (An ordinance of this type becomes effective 30 days after publication.) It is desirable to initiate site work to coincide with the Vo-Tech curriculum schedule. After the public hearing and second reading, April 13, site preparation work would be initiated. A license agreement would be part of the purchase agreement between the City and HRA and would permit the work to proceed. This allows the HRA to proceed with site preparation without causing a project delay for Vo-Tech. Site preparation work will include demolition of the existing structure, environmental evaluation and survey work. Staff, in cooperation with Vo-Tech architectural drafting faculty, has developed project plans to meet all setback requirements, compliment the design of neighboring homes and incorporate interior features desirable in today's market. The new house will have approximately 1,523 square feet of finished living area. It will feature a split entry design with a living room, dining area, kitchen, four finished bedrooms, two full bathrooms, and a deck area. Space in the lower level is provided for a laundry area and future family room. The amount of the Vo-Tech contract for this project is not to exceed 564,936. This cost is consistent with previous projects given design and square footage variabilities. mThe Vo-Tech project at 6040 Humboldt Avenue is most similar to the-one proposed. The estimated project costs and funding-source follows: Activity Funding Source Acquisition, site: $ 50,000 CDBG Demolition, site: S 4,500 CDBG Vo-Tech Contract: S 64,936 Proceeds of Sale Landscaping: S 4,000 .Proceeds of Sale Legal (Sale): $ 600 Proceeds of Sale .Closing Costs: S 2,500 Proceeds of Sale Total Cost $126,536 Private contractors will complete the electrical, plumbing and heating portions of the work. A copy of the floor plans and building elevations also accompany this letter. The home will be sold to a first time home buying family of three to six members, having a maximum moderate income (as determined by Section 8 income limits) of between 534,200 and $44,100 as determined by family size. A minimum income of approximately • 527,000 is anticipated. The completed value of the home is estimated to approximate $85,000. The initial sale price should approximate 579,000 . A 56,000 second lien is anticipated. A reduced interest rate mortgage would be secured from the Minnesota Housing Finance Agency in spring 1993, if available. FHA financing is an acceptable alternative pending mortgage interest rates at the time. Recommended Motion: It is recommended that the HRA adopt the attached resolution which authorizes staff to purchase 6501 15th Avenue from the City for 51.00 and to execute a Vo-Tech contract in the amount of $64,936. The HRA/Vo-Tech contract is contingent on the City Council purchase and subsequent sale to the HRA of 6501 15th Avenue. Basis for Recommendation: 1. The City Council has approved the purchase and scheduled a public hearing for the sale of the property to the HRA. 2. Plans have been developed to meet site requirements and program needs of the HRA. 3. The Inspection Division has had an opportunity to review the plans for the project. 4. Site development is consistent with the Comprehensive Plan. • 5. Adjoining neighbors have had an opportunity to review the project with staff. Alternative Recommendation: Do not authorize execution of the Vo-Tech contract. Discussion/Decision Mode: The change in HUD rules have already delayed and complicated what had been a relatively simple process. The City needs to achieve closure on this transaction soon or Vo-Tech will sell the house to another buyer. Richfield will lose an affordable housing opportunity and there would likely be a negative impact on our relationship with Vo-Tech. submitted, James .~ Prosser Execut'v Director JDP : j s RESOLUTION N0. THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA RESOLUTION RELATING TO VO-TECH AGREEMENT FOR 6501 15TH AVENUE WHEREAS, on November 18, 1991, the HRA authorized the purchase of 6501 15th Avenue, legally described as: Lot 24, Block 5, Nokomis Gardens Rearrangement of Blocks 1, 2, 3, 4, and 5, Girard Parkview Addn. from the owner Barry Burda for 550,000; and WHEREAS, HUD CDBG funds have been authorized for this acquisition; and WHEREAS, a change in HUD rules has required that the City, rather than the HRA, initially purchase the property with a subsequent sale to the HRA; and .WHEREAS, the City authorized purchase of the property on March 9, 1992; and • WHEREAS, the City and HRA must enter into a purchase agreement in the amount of 51.00 for the City to sell the property to the HRA; and WHEREAS, a project has been proposed as a cooperative effort between the HRA and South Hennepin Vocational Technical College (Vo-Tech); and WHEREAS, the property at 6501 15th Avenue would be developed with a new single family home; and WHEREAS, the construction Agreement price for the new construction project will not exceed $64,936; and WHEREAS, following completion of the new construction work, the property will be sold to a first time home buying, moderate income family. WHEREAS, Vo-Tech contract authorization by the HRA is contingent on the property being purchased by the City and transferred to the HRA. 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: (1) Enter into a purchase agreement to acquire 6501 15th Avenue from the City; (2) Enter into a construction agreement with Vo-Tech for an amount not to exceed $64,936, for the new construction project at 6501 15th Avenue South. Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this 16th day of March, 1992. Thomas E. Harms, Chairperson ATTEST: Joan Helmberger, Secretary i • SUMMARY OF CONTRACT REQUIREMENT FOR VO-TECH PROJECT AT ` 6501 15TH AVENUE - The construction of a split-entry structure at 6501 15th Avenue.- - The installation of heating, electrical and plumbing systems. - Interior finishing; floor covering, mill work, painting and staining. - Completion by July, 1993. - Supervision of labor and insurance coverage to be the responsibility of Vo-Tech. - Vo-Tech is responsible for a one-year warranty for defects caused by faulty workmanship or defective materials, a two- year warranty on installation of plumbing, electrical, heating and cooling systems and a ten-year warranty on structural defects. - A provision specifying the Vo-Tech's responsibilities concerning timely completion of the exterior facade, and routine site maintenance during the construction period. U ~wy~~A • IMp1n. a1~~.~~~ ,. ..rtrr~~ '. '~ :...DECK ' . ..' ~: _.. . _ .,~ DINING ROOM MASTER BEDROOM 9 v LIVING ROOM BEDROOM FOYER ~~ C7 MAiN ~fvE~ I.t)'~NER ~,Ey~L Z r ~o 0 W W i c~ ~. a KOUSZPTG APiD REDEVELOPMENT AVTHORITY HRA Letter No. 10 Agenda March 16 , 1992 Issue Statement: Consideration of a proposal for the purchase of the Cloverleaf site. Background: The HRA directed staff to explore options for the purchase of the Cloverleaf site. The Resolution Trust Corporation (RTC) has been attempting to sell the property for several years. There has been substantial market pressure on this property over the last several years. The property was purchased by CDR in July 1985 for 54,165,000. Property values were being driven up by demand along I494. The Assessor, in recognition of this upward pressure, valued the property at 55,387,000. The CDR Partnership lost the property to Midwest Federal whose assets were taken over by RTC. An over building of office space and lack of financing for construction has resulted in drying up the market and reducing property values. .The RTC has challenged the valuation set for the last two years. An August 1991 advertisement listed the property for sale at 52,100,000. A proposal-was authorized by the HRA and submitted to RTC for 51,700,000 with 5250,000 down and the balance over 20 years at . 6.5 percent. The time element was recently rejected by RTC and in place thereof, a cash proposal in the amount of $1,100,000 has been tentatively negotiated by a representative of RTC and the HRA. Recommended Motion: Authorize the Chair and Executive Director to submit a proposed purchase agreement to RTC as outlined. Basis of Recommendation: 1. The property is vacant and for sale. 2. A cash price of $1,100,000 is within a recent independent appraisal of the property. 3. A cash sale is financially feasible as determined by an analysis of the ILN district by Publicorp. 4. A Phase I Environmental Analysis was carried out by GME Consultants, Inc. and noted no environmental problems which would preclude the purchase. It was noted that there is a small "wetland regulated by the U.S. Army Corps of Engineers... located within the depression area on-site". 5. The sale must be completed and title transferred by June 30, 1992 in order to obtain the tax exemption for the taxes payable next year.. This is covered in the Agreement. 6. Development of this area represents the greatest opportunity the City will have in the foreseeable future to diversify the tax base which is now so dependent on residential uses. 7. The opportunity to maximize diversification is threatened by potential users who would utilize a large amount of land and generate very little property tax revenue. 8. This purchase would not impair the ability of the HRA to finance redevelopment between Emerson and Lyndale Avenues. In fact, it will likely enhance development opportunities for this area. Alternative Recommendation: 1. Alter the proposed terms of purchase. 2. Delay action. 3. Reject any consideration of purchase. Discussion/Decision Mode: Timely consideration will help assure the sale by RTC to HRA and forestall undesirable development of the site. r1 U JDP:ds Respect lly submitted, Ja s D. Prosser Ex tive Director HOUSING AND REDEVELOPMENT AUTHORITY HRA Letter No. 9 Agenda March`16, 1992 Issue Statement• Report on the progress and status of Richfield Re-Design and Remodeling. Sackaround• The success of the Richfield Rediscovered, Vo-Tech home and CDBG rehabilitation programs has resulted in an initiative to broaden the scope of the renovation/rehabilitation services available for all Richfield homeowners. Because funds and staff time are in short supply, it was decided to look to outside sources. A delegation of City representatives visited local lenders to solicit financial support. Mayor Kirsch, Chairperson Harms, Bill Schatzlein and staff visited Firstar, Norwest and Richfield Bank and Trust. Mr. Schatzlein was included because of his expertise as a housing and redevelopment strategist in the Twin Cities. The lenders' response was very positive; Firstar contributed $2,000 and Norwest pledged $10,000 in quarterly installments, although Richfield Bank and Trust declined to participate. The Richfield-Bloomington Credit Union is still evaluating a . contribution and the TCF Foundation contributed $2,500. Bill Schatzlein has been working with staff to develop a redesign-remodeling program. His efforts include: - Assistance in staging a successful remodeling fair. - Staffing a booth promoting rehabilitation and remodeling at the fair. - The formulation and implementation of a remodeling workshop curriculum in April and May. - The formation of RTAC (Remodeling Technical Advisory Committee) which is a group of technical people who work in the remodeling and renovation area who will help teach the workshops and provide a "sounding board" for other rehabilitation and renovation ideas. With regard to future activities, a task to be completed is the defining of the concept of a remodeling center which would be located in the community and provide continuous support to home owners seeking information related to rehabilitation and renovation. • Recommended Motion: Listen to the report presented by Mr. Schatzlein and offer any ideas or reactions and review the attached information. Basis of Recommendation: The meeting would be an appropriate. forum in which to express ideas. Alternative Recommendation: Terminate the activities of Mr. Schatzlein related to redesign and remodeling. Discussion/Decision Mode: Work will continue to complete these activities in a timely manner. Respectful submitted,. James D rosser Executi Director U JDP:ds CITY OF RICHFIELD Richfield. Remodeling Ideas and .Advice Program objectives To maintain the high .level of homownership in Richfield by attracting new families to the community. and to encourage existing residents to remain in their homes. To Create public awareness of the benefiits of living in this community, and an awareness of the benefits of remodeling an existing home to meet the specific housing needs of todays families. Ta create an awareness that remodeling is a practical alternative to meeting a families housing needs. To encourage families to make a major investment in their home and with that decision agree to remain in the community for a long period ofi time. To Frovide families with remodeling design ideas fcr various rooms in .the home as well as exterior improvements. To show examples of homes in the community that have been remodeled. • To Provide homeowners, and prospective .owners, with practical advice to help them through the remodeling process. This advice may include: A. Remodeling constriction cost estimates, and other related costs, B. The need to hire an architect, and contractor, and how to work with these professionals. C. Provide information regarding remodeling loan programs that are available, banks that are offering remodeling loans, who to contact at the bank, and what information the bank will want from the homecwner, D. City requirements. and approvals. Provide information regarding zoning matters. building codes, city plan approvals, and permits required. E. Provide information about what the homeowner can expect during the construction process. This may include bidding the work and signing contracts with subcontractors. Remodeling Fair - as you know the Remodeling Fair was held on February 1, 1992. At the Remodeling Fair we announced the program "Richfield Remodeling Ideas and Advice", to be offered as part of the Richfield Community Education Program. • ...Approximately 3500 people attended the Remodeling Fair. Februar 1992 the Remodelin Technical Advisor Committee was formed, The In y 9 Y Advisory Committee includes architects. remodeling contractors, interior decorators, landscape designers. city staff., local lenders, and the program coordinator. The Advisory Committee is preparing the information to be presented at the eight community education workshops. Members of the Advisory Committee will servie as instructors for the community education workshops. Richfield Remodeling Community Education Program. The workshops will begin on Wednesday April 8, 1992 6:30 to 8:30 p.m. at the Community Education Center, 70 th and Elliot Avenue. The workshops will continue for eight consecutive Wednesday evenings and provide information on many different remodeling topics including: design ideas, working with an architect and contractor in planning a project, construction cost estimating, city approvals. home imjprovemeni loans and mortgages, and construction. Richfield residents will be able io attend one or ail of these workshops. 'Ne anticipate that 50 to 75 residents will attend one or more of these workshops. This series cf workshops ~vill be offered again during the Fall Community Education term which begins in October. Vve expect that the number of people participating in the workshops will increase as we promote the program through word of mouth and other means. • There is a significant amount of remodeling that takes place in Richfield each year. Through the "Richfield Remodeling Ideas and Advice" program we expect to increase the amount of .remodeling. The other important benefits to this program. that may be difficult to measure, include {1 } a continued high level of homeownership due io a high level of confidence in the Richfield neighborhoods. {2) retention of families that may have moved to find housing that better serves their needs, {3) the attraction of new families into the community due to the availability of remodeled homes. {4} the retention of proper<y values, and tax base for the City of Richfield. These benefits are shared by everyone living, working. and doing business in the Richfield community. • RICHFIELD HOME RE-DESIGN AND REMODELING PROGRAM DEVELOPMENT WORK PROGRAM VYork task ~ Resp. person Describe typical Richfield rambler, and one Program Dir. staff and a half story home -obtain floar plans Re-design and remodeling ideas- before Program Dir. and after pictures, cb~awings- focus on kitchen, bath. family room. 2nd floor space, decks. landscape Identify remodeling examples in the community Program Dir. ~ staff Contact homeowners for information and 2004 comm. member- possible home tour house Work with remodeling contractors. Prepare guidelines fa- remodeling projects to be used as examples in the program Program Dir. @ staff Prepare pictures and slides of interesting Program Dir. Richfield remodeling projects Develop topics and format for eight community Program Dir. education workshops to begin in April 1992. Remodeling Fair- Announce Community Program Dir. Education Program Workshops Establish Remodeling Technical Program Dir., staff Advisory Committee to prepare inf. for workshops and lead workshops Date due Nov. 15, '91 Dec. 2, '91 Dec. 16.'91 Dec. 27:'91 Jan. 10.'92 Jan 17.'92 Feb. 1.'92 Feb. 15.'92 Page 2. Workshops begin - 8 wed. evenings March 5, 19, 1992 Prepare final report and recommendations Progam Dir. April 2,'92 C.ammunity Education Remodeling ,Program Dir.Tech Adv. co. April e, '92 Committee meetings to organize workshops. Prepare guide to city approval process. Prepare summary of remodeling loan progams, general req., where to go. Working with an architect, remodeling contractor. landscape designer, interior decorator, city staff. Remodeling Technical Advisory Progam Dir: staff Community Education Remodeling Workshops completed Remodeling Center established to provide ideas and advice on a regular basis May27, '92 June 1, '92 I~ LJ