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08-18-86 agendaLJ -/ HOUSING AND REDEVELOPMENT AUTHORITY Office of Executive Director HRA Letter No. 26 Agenda August 18, 1986 Housing and Redevelopment Authority Commissioners City of Richfield Subject: Rental Agreement, 920 W. 66th Street Commissioners: The unit at 920 W. 66th Street was completed by Vo-Tech in the spring of 1985, and since that time has been rented to the Louris family. The Louris family was selected by the HRA as the purchaser following a public hearing. Although the purchaser has been identified and presently rents the unit, several delays have occurred which prevented proceeding with closing. This letter reviews activities over the past 16 months and requests the HRA to modify the rental agreement with the Louris family until closing occurs. The purchaser has secured an MHFA 8.65 percent mortgage and closing is anticipated for October, 1986.. Closing has been delayed for reasons related to their sales transaction and. finalizing arrangements for the entire development at 66th Street and Rae Drive: -they requested input in the drafting of the townhouse covenants and restriction, which took several months (the HRA approved the documents in July, 1985) -the subdivision, platting, and PUD approvals followed (the HRA approved the platting November, 1985) -the buyer made application in November for the MHFA 9.95 percent mortgage money that had been reserved by the HRA. However, processing was delayed while the lenders appraiser challenged the unit value of $82,000 which was established by FHA and approved by the HRA (the original value was later upheld). -MHFA delayed processing further during the first quarter of 1986 so that they could consider the "buydown" program (second mortgage, monthly payment assistance) for the entire development of which 920 West 66th Street is part. This resulted in the July, 1986 finding that the mortgage insurance industry could not support the development project. -In July, 1986 MHFA withdrew the 9.95 percent mortgage commitment the HRA had secured; leaving no alternative financing until the 8.65 percent mortgage money was provided in July. However, the HRA was not able to ~~ reserve enough funds to include the 920 West 66th Street unit. With assistance from staff, the Louris family reserved this financing on August 1, 1986, requiring a change in lenders, and initiating the qualifying process all over again. During this long interim period, the Louris family has been very patient and is happy to be in the mortgage process again. Approximately $7,500 in rent has been paid for the unit. Because. of the wait, and to help financially as closing approaches, they have requested that an adjustment be made in their rent for the months of September and October (i.e., until closing occurs). During September and October (and longer if closing is delayed) their rent would be reduced to $1 per month. The two month benefit of approximately $840 would be utilized by them to cover a portion of their closing costs so that they can continue to have enough down payment reserves to complete the transaction. Also, it appears that the Louris family may benefit from the same down payment assistance that is being offered to other three bedroom purchasers in the 66th Street/Rae Drive development. The HRA authorized the use of down payment assistance in approving the 66th Street/Rae Drive financing plan on July 15, 1986. This assistance reduces the initial mortgage amount, the purchasers monthly payments, and is secured with the HRA second mortgage. Staff had anticipated the assistance only applying to the sale of the Branton units. The lender, Rothschild Financial, has indicated that the Louris's income has changed somewhat during the past year and the mortgage amount should be reduced to .ensure qualifying. However, since the Louris family has already been identified as a purchaser within the income range the HRA must target, presently rents the unit, and has been. delayed the ownership opportunity; staff is seeking to utilize approximately $1,500 for down payment assistance. This will occur by reducing the initial purchase of $60,000 and the maximum mortgage amount of $55,000 by approximately $1,500 and increasing the second mortgage amount by the same. When the lender has completed income verification, this amount may be adjusted more or less by $500. Recommendation It is recommended that the HRA adopt the attached resolution authorizing modification to the rent payment at 920 W. 66th Street and offering down payment assistance. Res ct ully su mitte , ~~, vich Acting Executive Director /~ HRA RESOLUTION N0. RESOLUTION AUTHORIZING MODIFICATIONS TO THE RENTAL AGREEMENT AND FINANCIAL WHEREAS, the Housing and Redevelopment Authority (HRA) in and for the City of Richfield has considered the status of the rental and .sale of 920 West 66th Street; and WHEREAS, the HRA has determined that it is appropriate to modify the Rental Agreement with the Louris Family and provide financial assistance in completing the sale to this buyer. NOW, THEREFORE, BE IT RESOLVED, by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota: 1. That the Acting Executive Director is authorized to execute amendments to the Rental Agreement with the Louris family, reducing the monthly rents for 920 West 66th Street to $1 starting in September and continuing until closing occurs. 2. That the Chairperson and Acting Executive Director are authorized to effectuate the sale of 920 West 66th Street by reducing the initial sale price of $60,000 to approximately 58,500; reducing the maximum mortgage amount of $55,000 to approximately 53,500; and increasing the second mortgage by the same adjustment. Passed by the Housing and Redevelopment Authority in and for the City of Richfield, this 18th day of August, 1986. Thomas E. Harms, Chairperson ATTEST: Joan Helmberger, Secretary ~-/ HOUSING AND REDEVELOPMENT AUTHORITY Office of Executive Director HRA Letter No. 25 Agenda August 18, 1986 Housing and Redevelopment Authority Commissioners City of Richfield Subject: Public Hearing, Sale of Property at 924 W. 66th Street Commissioners: A notice of public hearing has been 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. As this letter was being prepared and distributed, contact with potential purchasers was still being made. If a purchaser is identified prior to the August 18th meeting, the public hearing could proceed as scheduled. If purchaser selection has not been finalized, a request will be made to continue the public hearing to a special meeting to be scheduled for Monday, August 25, 1986 at 6:30 p.m. A meeting must be .held prior to September 15, 1986, to ensure that favorable financing can still be secured. 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, 18th 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, 1986. -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 a new public hearing identifying a new purchaser. if-~ -the unit was prepared for sale, requiring painting of the unit and carpet replacement. Staff retained the damage deposit and earnest money (totaling approximately $1,400) to cover a portion of the costs. Approximately $6,500 in rent was also received. These monies offset the cleaning and fix up costs of $2,700. -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 staff on 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) 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. Staff is working through a list of approximately 30 families that responded to recent marketing efforts to verify eligibility and provide an opportunity to inspect the unit prior to executing a purchase agreement. It is hoped that a family can be identified and the agreement executed by them prior to the August 18th meeting. The FHA appraised value at the time construction was initiated was determined to be $82,900. The lender appraisal y-.~ 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) will 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 be paid 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 $1,000 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 $SOO 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 an applicant will be identified for the August 18th 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 18th meeting. Re ec fully s b 't ed, ,~~~~. ch 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 County WHEREAS, a moderate income purchaser has been identified for 924 West 66th 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 $52,900 (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 18th day of August, 1986. Thomas E. Harms, Chairperson ATTEST: Joan Helmberger, Secretary / J~ 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 a special meeting on August 25, 1986. NOW, THEREFORE, BE IT RESOLVED by the Housing 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 6:30 PM Monday August 25, 1986. Passed by the Housing and Redevelopment Authority in and for the City of Richfield, this 18th day of August, 1986. Thomas E. Harms, Chairperson ATTEST: Joan Helmberger, Secretary ~/ HOUSING AND REDEVELOPMENT AUTHORITY Office of Executive Director HRA Letter No. 24 Agenda August 18, 1986 Housing and Redevelopment Authority Commissioners City of Richfield Subject: Authorization For Staff To Request Proposals For Relocation Consulting Services Commissioners: The HRA, in implementing economic redevelopment and housing projects, does not have sufficient continuous flow of residential and business relocatees to warrant the hiring of a relocation specialist as a member of the regular staff. Thus, since early 1978, the HRA has employed the services of Federal-State Relocation, St. Paul, MN. Mr. Tom Donahue and Mr. Jack Bagley have represented Federal-State. Staff believes that a stable relationship with a relocation consultant is beneficial for relocatees and staff. However, for organizational efficiency and effectiveness, it is also appropriate to provide an opportunity to evaluate services which could be provided by all vendors from time to time. For the first time in recent memory, there are virtually no active relocation cases in the workload. But soon it will be necessary to provide relocation assistance to the occupants of two dwellings at 2500 and 2516 West 66th Street on which Fraser- Whitbeck will construct a 30 unit apartment building for the developmentally disabled. Also, once the Hampton Inn is under construction in the ILN, it will be necessary to provide relocation assistance to the occupants of 7645 Garfield Avenue and 7644 Harriet Avenue. These two residences are to be acquired once the Hampton Inn is under construction to permit the installation of traffic control measures designed to eliminate the commercial traffic from the residential area. (See the HRA Letter in this packet for a discussion of these measures). Relocation consultant assistance will also be needed to implement the ILN redevelopment plan. It is anticipated that discussions will begin within the coming few weeks in the community on a revised CDR proposal and public improvement program.. If the projects move ahead, relocation activities would be an important part of the program. ~'~ Staff is seeking HRA authorization to solicit proposals from relocation consultants to provide assistance with housing and economic development projects. At such time as a proposal for the ILN area is ready for discussion, the potential relocation workload would also be known. Proposals would be sought at that time and presented to the HRA for their consideration. Recommendation: It is recommended that the HRA authorize staff to request proposals from relocation consultants for relocation assistance related to development projects in the community. Res ctf lly sub 'tted ~il to Devich Acting Executive Director SLD/eja ~~ HOUSING AND REDEVELOPMENT AUTHORITY Office of Executive Director HRA Letter No. 23 Agenda August 18, 1986 Housing and Redevelopment Authority Commissioners City of Richfield Subject: Sale of Portland Avenue Property To The City Commissioners: In the fall of 1985, as part of the discussion of the housing development at Rae Drive and the housing development program in general, the HRA indicated support for the sale of the .property at 6425 and 6429 Portland Avenue to the City. The HRA purchased the property in 1983 to provide a portion of the site for housing development near 64th Street and Portland Avenue. However, following community discussions, it was decided that the entire Legion .Lake area including the four HRA lots would become part of the park. Staff was instructed to recover from the City the costs directly related to acquisition and relocation or approximately $175,000. On August 11th, the City Council approved the purchase of the property for $174,662. The money will be paid to the HRA in early 1987 and deposited in the Capital Fund which provided the monies for the purchase. This fall the houses will be sold for removal from the site. Recommendation: It is recommended that the HRA approve the sale price of $174,662 and the terms of the sale for the property at 6425 and 6429 Portland Avenue to the City. ~s 'c~full subm' ted, . '~~- /~ ~e ~ Devi ,h Acting Executive Director SLD/eja ~~ _~ HOUSING A~~ R~DEVE~~~~ENT AUTHORITY. Office of Executive Director HRA Letter No. 21 Agenda July 21, 1986 Housing and Redevelopment Authority Commissioners City of Richfield Subject: Amendments to Vo-Tech Contract-7245 Humboldt Avenue South Dear Commissioners: On May 20th, 1985, the HRA authorized a contract with South Hennepin Vocational Technical Center (Vo-Tech) to relocate a structure from 1016 W. 66th Street to 7245 Humboldt Avenue South. The project has proceeded on schedule and the HRA has authorized a sale to the Wagner family. This letter requests that prior to completion, .three amendments to the original contract be made because: -costs will exceed the original contract price of $54,102.14 by .approximately $2,000 -the scheduled date of project completion, July 1, 1986, must be extended to August 15, 1986 (approximately 46 days) -a "storage shed", included as part of the original plan and to be utilized for outside storage, will not be provided. Contract Price As has been true with each Vo-Tech project, the HRA pays a "not to exceed" amount based on preliminary bids obtained by the school. Except for additional house moving expense when the project was initiated, the cost estimates have been accurate until now. (A "sworn construction statement" verifies costs and is provided by Vo-Tech and reviewed by staff prior to the HRA paying the actual construction cost or the not-to-exceed amount). One major expense, final grading and landscaping, will exceed the $1,,800 original estimate by approximately $2,000. The original grade of the site and the neighborhood storm water drainage pattern have been a challenge to accommodate by design. The project has been developed to alleviate the concerns of several neighbors about storm water runoff. Once landscaping is completed, there will continue to be storm water drainage problems iri the neighborhood. However, none will be caused by this site. As the attached landscape plan indicates, extensive retaining wall/timbering at the northwest, southeast, and south sides of the house will divert runoff to 73rd Street and Humboldt ~ ~- Avenue and away frs~~ thQ neighborhaad. The retaining wall work, sodding, and planting for 'the approximate 10,000 sq. ft. site and approximately 3,DD0 sq. ft. 35W right-of-way which is adjacent to the site, more than expends the $1,80Q landscape estimate. Additionallq~, to ensure that the northeast corner of the property diverts_run®ff to Humboldt Avenue,. an extensive timber wall terrace will be constructed along 135 feet of the north property line. Vo-Tech has estimated the cost in extra materials to be $2,000. Time Extension The landscape work and interior finishing will require approximately four weeks to complete. The contract completion date of July 1 would have to be modified to August 15, 1986 to accommodate this work. (An "Open House" for the HRA and other policy makers would be .scheduled toward the middle or end of August.) Storage Shed A storage shed was planned for the site. .The shed was recommended since a new homeowner, particularly a first time buyer, cannot finance a garage and therefore, has no place to store bicycles, lawn mowers, and other equipment often used outside. As an alternative (because of the grading plan that was devised), a walkout access from the unfinished basement was possible and has been installed. Storage may occur directly into the basement area at the discretion of the home purchaser. The funds saved by not installing the shed were used to pay for other minor changes in the house as it was built. Recommendation It is recommended that the HRA adopt the attached resolution authorizing: -a change in the contract amount for the 7245 Humboldt project; from $54,102.14 to $56,100. -a construction completion deadline extension; from July 1, 1986 to August 15, 1986. -deleting the storage shed requirement. Respectfully Submitted ev n L. evich Acting Executive Director SLD:sae ~~ iiftA RESOLUTION N0. RESOLi~TT®1~ Fd~R Ai~~N~ING C~MSTRUCTION AGREEMENT WITH V0-TECH AT 72#5 HUMBOLDT WHEREAS, the Housing and Redevelopment Authority (HRA) in and for_the City_of Richfield has entered into a contract_ with South Hennepin Vocational Technical Centers (Vo-Tech) to renovate a house structure at 7245 Humboldt~Avenue South; and WHEREAS, the HRA has determined that it is appropriate to amend the construction agreement as it relates to the contract price, time for completion, and scope of work. NOW, THEREFORE, BE IT RESOLVED by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota: .That the Chairperson and Acting Executive Director are authorized to execute contract amendments which: -change the contract price from $54,102.14 to $56,100; -provide a construction completion deadline of August 15, 1986 rather than July 1, 1986; and -delete :the storage shed requirement from the scope o;f work. Passed by the Housing and Redevelopment Authority in and for the City of Richfield, this 21st day of July, 1986. Thomas E. Harms, Chairperson ATTEST: Joan Helmberger, Secretary