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04-15-91 agenda,~ Housing and Redevelopment Authority HRA Letter No. 10 Agenda April 15, 1991 Issue Statement: Expanded New Home Program (ENHP) progress report. Background: At the March 18, 1991 Board meeting, Marlin Grant, President of Marv Anderson Homes, Inc., reported on the progress of their projects. Also at the March 18 meeting, staff advised the Board that it would take 45 to 60 days to prepare a solicitation to place any unsold lots back on the. market. The Board directed staff to initiate preparation of the solicitation and for Marv Anderson to provide a progress report on April 15. During the period of time since then, the following has occurred: - Marv Anderson has met with the neighbor adjacent to 7223 James Avenue and came to an agreement concerning grading, landscaping, and air conditioner location concerns. However, the matter has also been referred to mediation because a recent Sun Current article on the matter indicates resolution has not .occurred. - Two properties have been sold to purchasers. Temporary certificates of occupancy have been provided pending completion of grading, landscaping, driveway, exterior steps and sidewalk installation, and permanent connections to gas and electric service. The properties are located at 7223 James Avenue and 7320 5th Avenue. Construction activities sYfould be completed by June 1, 1991. - Two properties, 1016 and 1020 Mildred Drive (63rd and Dupont), are essentially complete, and ready to sell pending identification of buyers. - Two properties are nearing completion: 7145 James Avenue has a buyer; 6425 15th Avenue does not have a buyer. Weekend open houses, arranged through Edina Realty, are being held for the latter property. - Plans are being finalized for the construction of a home on the double lot at 6813 Logan Avenue. Demolition of an existing substandard house is underway. - A closing has been scheduled for April 15, 1991 to sell the HRA owned site at 6424 James Avenue to Marv Anderson. A purchaser has been identified and plans have been developed for a new home. It is anticipated that construction would be completed by September 15, 1991. No sales activity properties: 6401 6538 7129 6612 6407 6415 6321 zas been reported of~ seven remaining Bloomington Bloomington First Avenue Second Avenue 15th Avenue 15th Avenue Humboldt Avenue Pulte, the parent corporation and financier of Marv Anderson activities, has not released acquisition monies which would allow Marv Anderson to purchase the seven above referenced properties. Evidence of buyer sales activity must be demonstrated for this to occur. Recommended Motion: Receive and consider a report from Marv Anderson Homes. it is recommended that the working relationship continue and that a progress report be provided by Marv Anderson on May 20, 1991. Basis of Recommendation: 1. The HRA has requested monthly progress reports from Marv Anderson. ' 2. Sales and construction progress is being made. Alternate Recommendation: Staff continues to prepare for a solicitation of alternative builders. However, the solicitation will not be distributed. until the HRA indicates it to be appropriate. The materials will be ready the week of May 6, 1991. 1. Direct staff as a result of the discussion at the April 15, 1991 meeting to distribute the solicitation beginning the week of May 6, 1991. 2. Make a decision on the solicitation following the receipt of the May 20, 1991 progress report. Discussion/Decision Mode: Marlin Grant, President of Marv Anderson Homes, will report to the Board at the April 15, 1991 meeting. submitted James Prosser Executive Director JDP:ds Housing and Redevelopment Authority HRA Letter No. 9 Agenda April 15, 1991 Issue Statement: Authorization to secure Affordable Housing Program Funds" in support of a rehabilitation project at 6318 Nicollet Avenue.. Background: Staff has been evaluating the redevelopment of the site at 6318 Nicollet Avenue. The HRA acquired this deteriorated single family home in early February,. 1.991. The HRA purchased this property in an attempt to reverse several years of continuing nuisance conditions relating to absentee ownership, transient tenancy, and disrepair. The objective is to provide a desirable home in good repair to a first time home buying, moderate income family. The proposed project presents a method for achieving that objective. A study by the BCL appraisal firm suggests a home valued at approximately $75,000, coupled with owner-occupancy, would be marketable. Preliminary repair estimates and this market data have been incorporated into a rehabilitation plan for the site. A summary of revenue sources and uses and sale summary for the proposal is attached. The .program includes: - The HRA will acquire, oversees rehabilitation, and sell home upon completion. $55,000 of the HRA contribution is recovered as proceeds of sale. Acquisition monies in the amount of 555,000 were provided from Expanded New Home Program Funds. - The South Hennepin Vocational Technical College (Vo-Tech) will perform the rehabilitation in a manner similar to other projects with the HRA. Carpentry and finishing labor are provided without cost. Materials and electrical, plumbing, and heating services are provided at cost. - The Metropolitan Financial Mortgage Corporation in cooperation with the Federal Home Loan Bank of Des Moines, Iowa, may provide a deferred rehabilitation loan in the amount of $20,000 from a newly created "Affordable Housing Program Fund". - The Minnesota Housing Finance Agency could provide a reduced interest rate mortgage pending funding availability upon project completion in 1992. In late March, 1991, staff was notified of the availability of the Federal Home Loan Bank funds on a competitive basis to rehabilitate housing that meets the needs of lower income, first time home buying families. Further analysis by staff determined the appropriateness of attempting to secure these funds in support of rehabilitating 6318 Nicollet. Applications will be rated on many factors. Critical competitive elements include: ability to meet the lowest-income homeownership market possible., HRA sponsorship and local contribution of at least 25g.' Recommended Motion: Adopt the attached resolution which authorizes those actions necessary to effectuate the proposed rehabilitation program for 6318 Nicollet Avenue, as outlined in this letter, and in cooperation with Metropolitan Financial Mortgage Corporation and South Hennepin Vocational Technical College. Basis of Recommendation: 1) The HRA presently owns the vacant property and a .rehabilitation plan has been developed. 2) Sources of funds have been identified in amount and with sufficient local match to objective. The HRA contribution could be Expanded New Home Program. 3) Vo-Tech is presently considering the site 'it will fit into their curriculum 'plans. response is anticipated. 3 sufficient accomplish the taken from the to determine how A favorable 4) Metropolitan Financial Mortgage Corporation has provided applicant qualifying and mortgage origination services for the HRA's Vo-Tech projects for the last six years. As this letter was being prepared, Metropolitan was considering the program. A favorable response is anticipated. 5) Rehabilitation funding is needed soon if a project is to be initiated in a timely manner at 6318 Nicollet. 6) An application for $20,000 of funds has been prepared and is planned to be submitted by Metropolitan by the April 15 deadline to the Federal Home Loan Bank of Des Moines. 7) This proposal the September this property is consistent with 17, 1990 letter in was proposed. 8) This proposal makes it possible $55,000 expended for acquisition rehabilitation for $20,000. the options identified in which the acquisition of for the HRA to recover the and to obtain $40,000 of Alternative Recommendation: Request that Metropolitan withdraw the application and direct staff to consider other redevelopment options at 6318 Nicollet. Discussion/Decision Mode: If the HRA concurs with the program, more detailed plans would be developed with Vo-Tech for the HRA to consider and contract for in June, 1991. Respectfully submitted, Ja e~ D. Prosser Executive Director JDP:cak RESOLUTION AUTHORIZING THE SECURING OF FUNDS AND RELATED ACTIVITIES TO REHABILITATE 6318 NICOLLET AVENUE WHEREAS, the HRA has acquired the property located at 6318 Nicollet Avenue; and WHEREAS, a rehabilitation concept has been developed which will provide a first time home buyer ownership opportunity; and WHEREAS, in support of rehabilitation and in cooperation with the South Hennepin Vocational Technical College, the Richfield HRA and the Metropolitan Financial Mortgage Corporation are each contributing $20,000; and WHEREAS, the Metropolitan Financial Mortgage Corporation has submitted a request to the Federal Home Loan Bank of Des Moines to secure the contribution of $20,000; and WHEREAS, the Richfield HRA has considered the rehabilitation and funding amount. NOW, THEREFORE, BE IT RESOLVED by the Housing and Redevelopment Authority of Richfield, Minnesota: The Chair and Executive Director are authorized to take those actions necessary to effectuate the rehabilitation concept for 6318 Nicollet Avenue, in cooperation with Metropolitan Financial Mortgage Corporation and South Hennepin Vocational Technical College and to provide the HRA portion of the funding from the Expanded New Home Program Fund. Thomas E. Harms, Chair ATTEST: Joan Helmberger, Secretary 6318 NICOLLET AVENUE REHABILITATION PROJECT SUMMARY AMOUNT SOURCE/USE $55,000 HRA/Acquisition $36,000 HRA/Rehabilitation Contract-VoTech Metropolitan/Rehabilitation Contract-VoTech $ 2,000 Metropolitan/Clearance of Substandard Conditions in preparation for rehabilitation S 2,000 HRA/Maintenance, Taxes, Insurance $95,000 Rehabilitation Project Total Sale of Progerty Summary ($75,000 value upon completion) AMOUNT COMMENTS $55,000 - Initial sale price to buyer, proceeds of sale to HRA (reimburse ENHP) $20,000 - Deferred Loan (second non-interest bearing mortgage) by Metropolitan and recovered only if initial buyer sells at a future time to a non-moderate income buyer 520,000 - Provided from the Expanded New Home Program (loss to ENHP) $95,000 Fund by the HRA. ~;~ r~.,a...., Housing and Redevelopment Authority ', HRA Letter No. 8 Agenda April 15, 1991 ' Issue Statement• Authorizing HRA•participation in the Minnesota Housing Finance Agency (MHFA) City Participation First Time Buyer Home Mortgage Program. Back_atround Richfield,•with support and assistance from MHFA, has an opportunity to make available locally, reduced interest rate, first time buyer mortgage money. MHFA issues the housing mortgage revenue bonds on behalf of those requesting participation. Mortgages would finance home sales in Richfield. Staff has evaluated the program and believes a Richfield program would be beneficial given recent sales activity. A review of .six month sale activity in Richfield indicates that: Housing Type Number of Sales Sale Price 2 Bed. 3 Bed. 4 Bed. y 49 97 21 167 (Total) $75,082 $80,993 $97,852 $81,379 (Average Sale Activity) The funding request to MHFA proposes that: - Approximately 40 mortgages, totaling $3,000,000 in mortgage volume be made available in Richfield for two and three bedroom homes that have a sale price at or below $81,000. - Approximately 10 mortgages, totaling $1,000,000 in mortgage volume be made available in Richfield for four bedroom homes that have a sale price at or below $97,840. - 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 six years. - 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 participating fees to MHFA. Richfield Bank and Trust, the other area home mortgage lender that the HRA works with, declined to participate at this time. They place more conventional mortgages than FHA type mortgages. This program works best with FHA mortgages. The MHFA program: - provides mortgages at 1-1/2 to 2~ below market interest rates. - serves buyers with incomes at or below $35,600,. as adjusted for family size. - provides the marketing materials and promotion.. - eliminates bond issuance .expenses for localities. - provides, by state appropriation, down payment assistance to the more modest income purchasers of homes. - anticipates having mortgage monies available in June. To participate, the HRA must contribute a totally refundable deposit of 1$ of the mortgage amount requested. The required deposit for Richfield is $40,000. The deposit would be returned to the HRA in June, 1991, when bonds are sold. Staff has prepared and submitted a request to participate in the MHFA program by the April 15, 1991 deadline, pending concurrence by the HRA. Given that local requests will exceed mortgage money available, a reduction in the size of the request may occur by MHFA. Staff anticipates the award to range from $2 million to $4 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. 2) Richfield has a housing market of affordable priced homes which matches well with MHFA program sale prices. 3) Staff has prepared and submitted the required application by the April 15, 1991 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 15 HRA meeting is necessary to preserve this funding opportunity. Respectfully submitted, James. D~~ Prosser Executive Director JDP:cak 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. Thomas E. Harms, Chair ATTEST.: Joan Helmberger, Secretary