12-05-88 agendaHOUSING AND REDEVELOPMENT AUTHORITY
HRA Letter No. 43
Agenda December 5, 1988
Issue Statement:
Public hearing and authorization to sell the HRA owned, Vo-Tech
developed, property at 6514 Irving Avenue and 6632 Fifth Avenue.
Background-
The rehabilitation project at 6514 Irving Avenue and the new
construction project at 6632 Fifth Avenue were authorized by the
HRA in August, 1987. Both are nearing completion as cooperative
projects with South Hennepin Vocational Technical School (Vo-
Tech).
The Miller family has been qualified to purchase the Irving
Avenue property, and awaits HRA authorization for final
processing. An early January closing is anticipated. A buyer
.for 6632 Fifth Avenue was identified. However, after.
reconsideration for personal reasons, they decided not to
purchase. Marketing for the house on Fifth Avenue will be
faciliated now that it has been moved and placed on the permanent
foundation. The purchasing families must meet the requirements
specified in Attachment A.
Authorizing the sale of Irving Avenue is required so that the
buyer can secure favorable financing terms before their
commitment expires. The Millers are:
-Making a downpayment of $5000.
-Securing a 9-1/2 percent FHA mortgage in the amount of
$64,000 from the lender.
-Requesting an HRA 2nd lien in the amount of $23,800 to
cover the difference between the initial purchase price
($69,000) and the estimated market value of $92,800.
The second lien concept, used several times by the HRA, helps
keep the initial purchase price down. New housing is provided at
an initial cost significantly below what average homes sell for
in Richfield. ($77,200 in 1987 based on Mpls. Board of
Realtors). The purchaser further benefits because of low initial
maintenance costs, and low energy costs. Funds received when a
second lien is repaid are returned to the New Home Program for
financing housing activities of the HRA.
At closing, the HRA will pay up to
discounting (approximately $2560)
(approximately $200). These costs
1988 authorized budget and will be
If the family is found ineligible,
and earnest money released.
four points for mortgage
end the cost of title insurance
have been anticipated in the
paid by the proceeds of sale.
the purchase agreement is void
The Vo-Tech contract of $61,057.00 would be paid from the
proceeds of sale. Prior to sale, if timing permits, the HRA
will have an opportunity to inspect the work during an "open
house".
Recommended Motion:
Adopt the resolution which authorizes the disposition of the HRA
owned property at 6514 Irving Avenue and grant a continuance of
the hearing regarding the disposition of 6632 Fifth Avenue until
the January 17, 1989 HRA meeting.
Basis of Recommendation:
Regarding 6514 Irving Avenue Property:
1. A purchaser, the Miller family, has been identified.
2. A purchase agreement cannot be processed by the lender prior
to HRA authorization of sale.
3. A purchase agreement is necessary to obtain a firm financing
commitment.
4. The home is nearing completion.
Regarding 6632 Fifth Avenue Property:
1. A purchaser has not been identified.
2. A buyer could be identified anytime. A continuance
of the hearing allows the sale to be considered at
the next HRA meeting without having to publish a notice.
Alternative Recommendation:
1. Do not adopt the resolution authorizing the disposition of
property at 6514 Irving Avenue. This would cause a delay
in the sale of the property, and increase HRA holding costs.
In addition, the buyers may seek a reimbursement for
personal expenses utilized to secure favorable financing.
2. Do not grant a continuance on the home for the disposition
of property at 6632 Fifth Avenue.
Decision Mode:
It is important that actions be taken now so that a purchase
agreement can be executed by the HRA and financing can be
finalized to sell the properptty at 6514 Irving Avenue.
Respectfully submitted,
Jame Prosser
Executive Director
ATTACHMENT A
-Have a three-six 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 $29,150
4 $32,400
5 $34,450
6 $36,450
This income is 80~ of the metropolitan area median
income - an accepted Section 8 and CDBG program
income level.
-Have the ability to pay an initial sales price (for the
Irving Avenue property) of $69,000, $5000 down, and closing
costs.
-Have the ability to pay an initial sales price (for
the Fifth Avenue property) of $67,000, $5,000 down, and
closing costs.
-Indicate a willingness to be subject to a second lien
by the HRA for the difference between the initial sales
price and the actual value.
HRA RESOLUTION NO.
RESOLUTION AUTHORIZING SALE OF PROPERTY AT
6514 IRVING AVENUE
CONTINUANCE OF HEARING REGARDING THE DISPOSITION OF
6632 FIFTH AVENUE
WHEREAS, the Housing and Redevelopment Authority (HRA), owns
certain real property located at 6514 Irving Avenue and 6632
Fifth Avenue, legally described respectively as:
Lot 4, Block 13
Fairwood Park 1st Addition, Hennepin County
and
Lot 9, Block 2
McCutchan's Portland Avenue Park, Hennepin County
WHEREAS, the HRA acquired the properties So that the South
Hennepin Vocational Technical Center (Vo-Tech) could rehabilitate
a single family structure at 6514 Irving Avenue and construct a
new single family home at 6632 Fifth Avenue, to be sold by the
HRA to moderate income families; and
WHEREAS, construction work at both properties is nearing
completion; and
WHEREAS, the James and Julie Miller family has been
identified as qualified purchasers for 6514 Irving Avenue; and
WHEREAS, the conditions of sale for 6514 Irving Avenue
include a total sales price of $92,800, a first mortgage of
$64,000 payable to the lender, a second lien of $23,800 payable
to the HRA, and a $5000 downpayment; and
WHEREAS, the sale of 6514 Irving Avenue must be authorized
by the HRA following public hearing on the proposed disposition
of the property; and
WHEREAS, no purchaser has been identified for 6632 Fifth
Avenue, but purchaser identification could occur at anytime.
NOW, THEREFORE BE IT RESOLVED by the Housing and
Redevelopment Authority in and for the City of Richfield,
Minnesota:
1. The HRA Chairperson and Executive Director are authorized to
execute the purchase agreement for the disposition of HRA
owned property at 6514 Irving Avenue.
2. The hearing regarding the disposition of HRA owned property
at 6632 Fifth Avenue is continued until the January 17,
1989 HRA meeting.
Passed by the Housing and Redevelopment Authority in and for
the City of Richfield, Minnesota this 5th day of December, 1988.
ATTEST:
'l~riomas E. Harms, Chairman
Joan Helmberger, Secretary