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08-25-86 agendaHOUSING AND REDEVELOPMENT AUTHORITY Office of Executive Director SPECIAL MEETING-6:30 P.M. MONDAY, AUGUST 25, 1986 _ HRA Letter No. 27 Agenda-August 25, 1986 Housing and Redevelopment Authority Commissioners .City of Richfield Subject: Public Hearing, Sale of Property at 924 W. 66th Street Commissioners: At the regularly scheduled HRA meeting on August 18. a public hearing concerning the above mentioned property was continued to 6:30 p.m. August 25th, 1986. A notice of public hearing was published for the August 18, 1986 HRA meeting to review and authorize the sale of the three- bedroom twin home unit at 924 W. 66th Street. However, a buyer had not yet been qualified and thus the HRA continued the hearing. As this letter was being prepared and distributed, contact with the potential purchasers, the Solin fami y, was still being made. If the Solin family or another purchaser is identified prior to the August 25th meeting, the public hearin g could proceed as scheduled. If purchaser selection has not been finalized,-a request will be made to continue. the public hearing to the next regularly scheduled HRA meeting, Monday, September 15, 1986. The property_at 924 W. 66th Street (see attached site .plan for location within the 66th Street/Rae Development). was developed by the HRA in cooperation with the South Hennepin Vo- Tech School. The project-was completed in the Spring, 1985 and has been incorporated with the eight unit Branton/HRA site development now being completed. Between the time construction was completed and the August, 25th Special HRA meeting, the - following occurred: -a purchaser was identified and a public hearing authorizing the sale, was held by the HRA in July, 1985. -the purchaser was allowed to rent the unit until closing could occur. -closing was delayed to complete drafting and approval of restrictive covenants and town house documents. The HRA approved these in July, 1985. -The HRA approved the subdivision, platting, and PUD plans in cooperation with a developer, Mr. George Branton, November, 1985. -the buyer withdrew .from the purchase in November, 1985`and vacated the dwelling by the end of. January, 1986. (This is .further discussed in HRA Memorandum No. 6, January 29, 1986). Thus the necessity of anew public hearing identifying a new purchaser. -the unit was prepared for sale, requiring painting of the .unit and carpet replacement. Staff retained the damage deposit and earnest money (totaling approximate y $1,400) to c-over a portion of the costs. Approximately $.6,500 in vent was also received.' These ..monies offset the cleaning and fix up costs of $2,7.00. -during March, 1986 the unit was marketed with the other housing units that the HRA had initiated: 7245 Humboldt, 7508 Colfax, and the 2 and 3 bedroom twin home units at 66th Street/Rae Drive. -in June, _1986 MHFA withdrew the 9.95. percent mortgage commitment secured by the HRA leaving no alternative financing until the 8.65 percent mortgage commitment was provided in July. However, the HRA was not able to secure enough funds to include the 924 West 66th Street unit. -MHFA notified staffon August 11, 1986 that there may be 8.65 percent mortgage money available for the 924 West 66th Street unit if a buyer can be identified quickly. To qualify to purchase 924 W. 66th Street the purchaser must meet the following program and income .requirements: -have a 3 to 6 member. family; -be a first time home buyer (or have not owned in three years); -have an income between $24,750 and $30,950, depending. upon family size; -have the ability to pay an initial sales price of $60,000 with-$5,000 required as down payment; and -indicate a willingness to be subject to a second lien by the HRA for the difference-between the initial sales price and actual value (the lien concept is discussed in more detail later in this letter) ,The Solin family, a family of five renting in the Southdale area of Edina, meets these requirements. In order to receive a firm commitment for financing, a purchase agreement must be executed and the sale authorized by the HRA before the family can be determined eligible by the lender and MHFA. FHA financing would have to be secured, with considerable delay possible, if MHFA financing is .not available. The purchase agreement is void and earnest money released in the event the HRA does not authorize the sale or the family is found ineligible for the financing. Other than identifying the family by name and indicating that they meet the requirements mentioned here, data privacy requirements prevent release of any information that might further clarify the identity and qualifications of the family. In identifying the Solin family, staff worked through a list of approximately 30 families that responded to recent marketing efforts. The Solin family is prepared to enter into a purchase agreement pending final arrangements for providing earnest money of approximately $1,800 which is being held in a trust account. If for some reason, during the week of August 18th the Solin family cannot make final arrangements, then staff will identify ,another buyer, enter into a purchase agreement, and provide this. information at the August 25th public hearing. There appears to be more eligible buyers still on the waiting list. The FHA appraised-value at the time construction was initiated was determined to be $82,900. The. lender appraisal during purchaser qualifying.will likely determine a similar value. A summary. of the sales transaction follows: $82,900 Purchase Price (-) 22,900 HRA Second Mortgage (-) 5,000 Purchaser Downpayment $55,.000 Mortgage Amount. The monthly housing payment (Principal, Interest, Taxes, Insurance, Association Fee) wi11_approximate $615. As authorized by the HRA on July 15, 1986, for the Branton townhome units in the development, slightly more downpayment assistance from the purchaser and the HRA {approximately $1,000 secured with the second mortgage) may help with qualifying a moderate income purchaser. The second mortgage amount would accrue no"interest and would not have to bepaid by-the purchaser until they sell at some .future time.. If downpayment assistance were provided, the mortgage amount mentioned here would then be reduced.by .approximately $1,.00'0 and the second mortgage increased by the same amount. At closing, the HRA would also pay up to 3-1/2 points as a loan placement fee (approximately. $2,000)_ and the costs of title insurance. Approximately $550 is saved on the loan placement:-fee if an MHFA mortgage can be secured. These costs have-been anticipated in the 1986 authorized budget. It is .not known at this time if the Solin family or another applicant will be identified for the August 25th meeting (or .whether. the public hearing must be continued). For this reason, two resolutions have been attached which would accommodate either action. The Planning Commission has made a finding that the disposition would be in conformance with the Comprehensive Plan. Recommendation: It is recommended that the HRA adopt the appropriate resolution given the circumstances that present themselves at the August 25th meeting. .Respect-fully submitted, teven L., ev c Acting Executive Director SLD/eja HRA RESOLUTION N0. RESOLUTION AUTHORIZING SALE OF PROPERTY AT 924-WEST .66TH STREET WHEREAS, the Housing and Redevelopment Authority. in and for the City of Richfield, (HRA)-owns certain real property located at 924 West 66th Street, said property legally described as follows: Lot 1, Block 1, Rae 2nd Addition,. Hennepin Gounty WHEREAS, a moderate income purchaser, the family, has been identified for 924 West 6.6th Street and it is likely that the lender and MHFA will find them eligible; and WHEREAS- the conditions of -sale include an initial sales price of $60,000, a $5,000 down payment, a mortgage amount of not. more than $55--000 and provisions for a second mortgage of approximately $22,900 (depending on the total value determined by lender appraisal); and WHEREAS.. there are provisions-for the HRA to make additional down payment assistance available to the purchaser; and WHEREAS. the purchaser will also be subject to any requirements imposed by the lender and MHFA; and WHEREAS. the HRA has completed a public hearing on the proposed disposition of 924 West 66th Street and that disposition is in conformance .with .the Comprehensive Plan. NOW, THEREFORE, BE IT RESOLVED, by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota: 1. that-the property located at 924 West 66th Street can be sold in accordance with the conditions of sale; and 2. that the Acting. Executive Director and. staff are- authorized to take such, steps necessary to effectuate this resolution and any sales agreement.. Passed by the Housing and Redevelopment Authority. in and for the City of Richfield this"25th day of August, 1986. Thomas E. Harms, Chairperson ATTEST: Joan Helmberger, Secretary HRA RESOLUTION N0. RESOLUTION AUTHORIZING CONTINUANCE OF A PUBLIC HEARING CONCERNING THE SALE OF 924 WEST 66TH STREET WHEREAS, the Housing and Redevelopment Authority (HRA) in and for the City of Richfield has considered the status of the sale of 924 West 66th Street during a public hearing;-and WHEREAS, the .HRA has determined that the buyer selection process has not been completed, necessitating a continuation of the public hearing to the regularly scheduled meeting on Monday,.. September 15, 1986. NOW, THEREFORE, BE LT RESOLVED by the Hou-sing and.. Redevelopment. Authority in and for the City of Richfield, Minnesota; -that the public hearing concerning .the sale of 924 west 66th Street will be continued to 7:30 PM Monday September 15, 1986. Passed by the Housing and Redevelopment Authority in and for the City of Richfield, this 25th day of August, 1986...... Thomas E. Harms,. 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