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08-20-84 agendaHOUSING AND REDEVELOPMENT AUTHORITY Office of Executive Director HRA Letter No. 43 ,~ Agenda of August 20, 1984 Housing and Redevelopment Authority Commissioners City of Richfield ' Subject: Remuneration for Billboard Located on Godfather Block Dear Commissioners:. One of the items to be acquired as a part of the Market Plaza project land acquisition process is a billboard which is owned by the Naegele,0utdoor Advertising Company.. Subsequent to a series of negotiations between th8 city's legal staff and the Naegele Outdoor Advertising Company, tenative agreement was reached. on the level. of compensation for the removal of the billboard.- This amount is $25,000. \It is recommended that the HRA authorize the payment of $25,000-to the Naegele Outdoor Advertising Company for the billboard which is located on Lyndale Avenue between 65th Street and 66th Street.. This amount will represent the total compensation for this billboard.. pectf~l JGC/eja dotin G. ~"art~ Executive Dir fitted , HOUSING AND REDEVELOPMENT AUTHORITY Office of Executive Director HRA Letter No. 42 Agenda August 20, 1984 Housing and Redevelopment Authority Commissioners City of Richfield Subject: Relocation of Pet Etc. (Located in the Godfather Block Redevelopment Project Area) Dear Commissioners:. The Assistant City Attorney, John Dean, will make a report to the HRA on the relocation of Pet, Etc. at the August 20, 1984 HRA. meeting. Pet Etc. is located in the Godfather redevelopment project area...` pect ul witted, Qohn G. /Car right Execut' e Di ector JGC/eja HOUSING AND REDEVELOPMENT AUTHORITY Office of Executive Director 'HRA Letter No. 41 Agenda of August 20, 1984 Housing and Redevelopment Authority Commissioners City of Richfield Subject: HRA Approval for Acquiring Scattered Sites At the July 23, 1984, special HRA meeting, staff was authorized to determine the purchase. price of five scattered sites: 7521 Dupont Avenue, 6820 - 12th Avenue, 7245 Humboldt Avenue, 7508 Colfax Avenue, and 7520 .Bryant Avenue. These properties have "garage" or small cottage type structures which exhibit conditions such as deterioration and obsolecence due to age, location on site, and size. The appraised market values have recently been determined by independent appraisal. This letter requests that the HRA authorize negotiations based on the determined values. With the assembly of the Rae Drive/66th Street site, there will be approximately $100,000 available in Year IX (1983-84) and Year X (19$4-85) CDBG funds for property acquisition. It appears-that there are enough funds available to acquire two of the five scattered sites, relocate tenants (approximately $5,000 per property), and clear existing structures (approximately $5,000 per property). The acquisitions would provide sites for one single family Vo- Tech rehabilitation project for the 1984-85 school year and for one single family project for the 1985-86 school year. The acquisitions would also permit the timely expenditure of CDBG funds. The following table summarizes values determined by David Peterson of Capital Appraisals and compares those values to the Hennepin County Assessors' Estimated Market Values used for property tax purposes. Site 7245 Humboldt 7520 Bryantl 6820 - 12th 7521 Dupont2 7508 Colfax Appraised Market Value $45,000 $45,000 $42,000 $38,000 $43,000 Assessor's Estimated Market Value $48,800 $39,800 $38,900 X33,400 $34,100 HRA Letter No. 41 -2- 1Presently on market for $50,900 2Presently on market for $41,000 In ranking the properties ,for acquisition there are many factors to consider. The order above ranks property by condition, poorest to best. Thus, it is not appropriate to rank solely on market value since factors such as lot size, housing condition, tenancy, need to secure variances to redevelop, and need to pay relocation benefits must also be considered. Each structure has different physical characteristics such as size, structural condition, and function and size of rooms within the structure. However, in evaluating "compatibility to neighborhood", "overall liability", and "appeal" and "marketability", these structures have received "fair" to "poor" ratings. The availability of the structures for this fall is an additional consideration,. with tenant occupied properties not being readily available. Also variance to lot size is required when lot size is below a minimum 6.,750 sq. ft. Staff is prepared to negotiate the purchase of two of the five properties with the maximum purchase price not to exceed the appraised market value. Every effort will be made to secure two properties for less than the appraised value indicated. The property at 7245 Humboldt Avenue appears to be in the poorest condition and provides a larger site (approximately 10,000 sq. ft.) that is workable for a Vo-Tech project. Because the site is owner occupied reloction benefits would be waived. However, the $45,000 value indicates it is one of the more expensive properties to acquire. In selecting the second parcel, the choices between parcels are very similar and have more to do with availability (owner occupancy verses tenant occupancy) and lot size (whether a variance to lot size is needed for construction). A readily available property which does not need a variance could be utilized for the 1984-85 Vo-Tech rehabilitation project. The property at 7520 Bryant is next poorest after the Humboldt property in terms of condition. However, since the property is tenant occupied, relocation benefits are required and the property would not be available for site clearance this fall.. The appraised market value of $45,000 would make this an expensive purchase. The $50,900 asking price is not acceptable since it exceeds the appraised valued. Also, because there are possible relocation and clearance costs, two $45,000 acquisitions may exceed $100,000. However, there are available CDBG funds from other projects that could be reallocated for scattered site housing. The lot size, at 6,500 sq. ft. would require a variance for construction. HRA Letter No. 41 -3- The property at 6$.20 - 12th, having a structure with 406 sq.ft. of living space is the smallest building being considered. There is no separate bedroom so that the structure more closely approximates an "efficiency" apartment. Since the property is owner occupied, reolocation benefits would be waived and the property. is readily available. The parcel is larger, totaling 7,735 sq. ft. and- would facilitate relocating a dwel- ling to the site. No variance is required. The property at 7521 Dupont appears to be in average condition for a garage type home. Having tenants, relocation benefits are required and for this reason, the site might not be available in the fall. The asking price is higher than the appraised value. However,. the value of $38,000 makes this the least expensive property to acquire. Because the parcel has 6,_500 sq. ft., a variance to the city lot size requirement would be needed prior to development.. The property at 7508 Colfax. is also in average condition. The property is vacant, readily available, and relocation benefits are not required.. The structure has only a 1/2 bath arrangement on the main Tevel so that when the structure has been occupied, a basement shower has to be used by the occupant. The parcel also has a 6,500 sq. ft. lot size and requires. a variance to the city lot size requirements. As a result of evaluating appraised values, structural conditions, and availability for development, staff would give highest priority to pursuing the acquisition of Humboldt Avenue and Twelfth Avenue sites with Bryant Avenue, being third. However, staff wishes to retain some flexibility in being able to determine the "two properties to be recommended for purchase by the HRA in September pending the outcome of negotiations. The properties are listed below in the order in which negotiations will be pursued with the maximum purchase price indicated. 7245 Humboldt - $45,000 6820 - 12th - $42,000 7520 Bryant - $45,000 7521 Dupont - $38,000 7508 Colfax - $43,000 It is recommended that the HRA authorize negotiations on the properties indentified above. JGC/eja HOUSING AND REDEVELOPMENT AUTHORITY Office of Executive Director HRA Letter No. 40 Agenda of August 20, 1984 Housing and Redevelopment Authority Commissioners City of Richfield Subject: Expiration of MHFA Single Family Bonding Authority Dear Commissioners.: . In January, 1984, the Minnesota Hou-sing Finance Agency (MHFA) awarded the HRA a $4,000,000 allocation of single family housing mortgage revenue bond authority. The HRA competed for this authority based on a program for developing family housing at Legion Lake. The application was ranked first to share in the $27.5 million-made available to communities. Actual requests from communities totaled $56.5 million. State law requires that the HRA notify MHFA prior to September 1, whether it intends to use its authority to issue bonds before the end of 198.4. This letter summarizes the attempts made by staff to utilize the bonding authority and requests the HRA to notify MHFA that it intends to allow the allocation of authority to expire. An expression of appreciation for having been given an opportunity to use the allocation to meet identified Richfield housing needs would also be included. Following the receipt of the January allocation, the projects that could be developed with the $4 million allocation received careful scrutiny by the HRA, City Council, Planning Commission, Community Services Commission, and staff. The issue of possible development of housing at Legion Lake was postponed until a Master Park Plan is prepared and studied. Several alternative projects and sites were considered, primarily centered on the Rae Drive/66th Street area. Recently, staff again evaluated the options for utilizing the $4 million allocation this year. The option holding the most promise would include financing approximately 10 units at Rae Drive/66th Street in combination with providing 30 to 40 mortgages to potential purchasers of the Woodlake Point condominiums within the Market Plaza project. Utilizing the "roll-over" concept, elderly purchasers of condominiums could finance the sale of their existing homes to young families by using part of the below market interest rate bonding authority. However, as was true with the original Legion Lake proposal, the amount of cash contribution needed to support the bond issue is significant (approximately $200,000 HRA Letter No. 40 -2- for the $4 million issue). The amount of non-bond proceeds (the amount of land writedown, tax increment revenue, and developer contribution, at an amount of approximately $1.2 million - 29.82 percent of the issue) was also significant and subject to further evaluation by MHFA. Derrick Land Company determined that they could contribute only $34,000 which would provide for 10 to 12 mortgages as part of a roll-over program. This would facilitate the sale of less than 10~ of the condominium units. Another consideration is related to timing. The elderly persons home cannot be sold until the comdominium units are almost completed. The bond proceeds would thus be held for a longer period of time than recommended. by MHFA.. To utilize the bonding authority for Rae Drive would require a developer contribution this year. A developer has not yet been selected, thus the contribution is not obtainable. Rae Drive alone does not have sufficient units to warrant utilization of a portion- of the bonding authority. It would not be cost effective. Finally, a number of people including MHFA staff, expressed concern about utilizing a portion of the banding authority for a roll-over program.. The concern resulted because of the dramatic difference which would exist between the original proposal for Legion Lake housing and a roll- over program for Woodlake Point.. For these reasons it is appropriate to let the bonding authority expire. ~~ There may be another financing resource that will be available for a rollover program at Market Plaza and the new housing units at Rae Drive/66th Street. The MHFA program called "Local Participation":will be. accepting applications in January, :1985. The HRA could apply for a maximum $2 million share of approximately $20 million that will be available to communities developing smaller housing projects. Since MHFA issues the bonds for the participating cities, the costs of issuance are limited to a 2 to 3 percent (approximately $40,000 for a $2 million) commitment fee. The Market Plaza developer and the Rae Drive/66th Street developer could be required to contribute this commitment fee in exchange for the attractive financing. It is recommended that the HRA adopt the attached resolution which authorizes the Executive Director to notify MHFA that the HRA in-tends to allow the allocation of bonding authority to expire. ~ ~ tfu4~~/~~rbmitted, John G. Cartwright Executi e D1 eetorf JGC/eja cc: Community Development Director Housing and Redevelopment Coordinator HRA RESOLUTION N0. RESOLUTION AUTHORIZING THE ALLOCATION OF SINGLE FAMILY MORTGAGE REVENUE BOND AUTHORITY PROVIDED UNDER MINNESOTA STATUTES CHAPTER 462C TO EXPIRE WHEREAS, Minnesota Statutes, Chapter 462C (Act) authorizes the City to develop and administer programs to issue mortgage revenue bonds to finance the acquisition and construction of single family housing and multi-family housing within its boundaries for occupancy primarily by persons of low and moderate income as defined by the Aet; and WHEREAS, the City Council adopted an ordinance authorizing the Housing and Redevelopment Authority of the City (HRA) to exercise powers granted by the Act on behalf of the City; and WHEREAS, in accordance with prepared, held a public hearing and Program (Plan); and the Act the HRA and City Council on and adopted a Housing Plan WHEREAS, in accordance with the Act, which includes procedures for reviewing plans and programs and allocating a share of mortgage revenue bond authority available within the state, the Minnesota Housing Finance Agency (MHFA) authorized on January 26, 1984 an allocation of $4,000,000 to the City of Richfield and. its HRA; and WHEREAS, it has been determined that the HRA in advance of a September 1 deadline contained within the Act, must notify MHFA that there is no intent to issue mortgage revenue bonds prior to the end of the 1984 calendar year. NOW, THEREFORE, BE IT RESOLVED by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota: -That the $4,000,000 allocation of mortgage revenue bond authority provided to Richfield for 1984 shall be permitted to expire -That the Executive Director is authorized to take those actions necessary to notify the Minnesota Housing Finance Agency prior to September 1, 1984, of this decision. Passed by the Housing and Redevelopment Authority in and for the City of Richfield this 20th day of August, 1984. ATTEST: Thomas E. Harms, Chairman Joan Helmberger, Secretary HOUSING AND REDEVELOPMENT AUTHORITY Office of Executive Director HRA Letter No. 39 Agenda August 20, 1984 Housing and Redevelopment Authority Commissioners City of Richfield. Subject: Proposed Opdal Property Redevelopment Status Report (L/H/N) - Dear Commissioners: At the July, 1984, HRA meeting three prospective developers presented their concepts for the redevelopment of the Opdal property at both Street and ~,yndale Avenue. Dr. Irving Herman and his associate, Mr. Scott Cooper, presented a concept for construction. of a new one story commercial structure. Mr. Jan Susee and Associates discussed a rehabilitation project. Mr. Mark Ahlquist and Mr. Don Hedquist indicated they would like to construct a new two story structure. This letter presents a- status report on this property. Staff reflected on the comments of the HRA and after considering the proposals is of the opinion that the Ahlquist concept is the most desirable. However, it may be the most difficult to "put together". A meeting was held with Mr. Lee Maxfield of Maxfield and Solomonson, Inc. to discuss the marketability of the two story structure. Mr. Maxfield felt the proposal would be marketable. The developers have also worked with-an architect and developed some preliminary cost/value numbers for construction of the building. These numbers indicate a value within the $1.8-$2.2 million range. The financial feasibility of the concept is now being studied, Applying the rules of thumb to the concept suggests that the difference-between feasibility and infeasibility is not great. Thus, a thorough examination of the financial feasibility is now underway. A significant issue related to feasibility is the cost of purchasing the Opdal property. Whether purchased by the HRA or the developer, the current asking price of $650,000 plus taxes appears to be too .high. Because of the need to now clearly identify feasibility, -more time is needed by staff and the developer. HRA Letter No. 39 -2- It is the staffs understanding that the trust officials at the Richfield Bank and Trust Company are advertising the Opdal property for sale. Staff will be available at the HRA meeting to discuss this project further. pectful y t John G. art Executive Dir JGC/eja fight dtor ed, ~ HOUSING AND REDEVELOPMENT AUTHORITY Office of Executive Director HRA Letter No. 38 Agenda of August 20, 1984 Housing arrd Redevelopment Authority Commissioners City of Richfield Subject: Acquisition of 901-03 Rae Drive Dear Commissioners: At the July 16, 1984, HRA meeting,. staff was authorized to negotiate the acquisition of g01-03 Rae Drive from the owner, Elmer Nordstrom. This property, when combined with the already authorized acquisitions at 910, 920 and 1016 West 66th Street, completes the site assembly of the area far developing attached forms of ownership housing. This letter requests the HRA to authorize acquisition for $90,000. The structure, primarily constructed of concrete block with a concrete span type floor on the main level and flat gravel built-up roof, was built in 1952. Although it was not originally two units of housing (and records are unclear), it appears that in the late 1950's or early 1960's a "mother-in- law" type apartment was added in the basement with a connecting interior stairway to the main floor. There is approximately 1,400 square feet of living area on the main level (901), and 800 square feet in the basement level (903). It appears from available records that as owners changed, the basement unit would be rented from time to time. After the present owner, Elmer Nordstrom, purchased the property in 1977, the stairway was removed and the two units of housing were more clearly defined as separate rental units. Mr. Nordstrom is not an owner occupant. The condition of both units is fair, the unit on the main floor being the most desirable. The basement unit closely approximates a "cellar" (i.e. more than half of the space is below grade) type of environment except for the walkout entrance. Without modifications to make this lower unit. more suitable, it would be more appropriate to consider this structure as a one to one and one-half living unit building rather than two decent, safe, and sanitary units. As reported at the July-HRA meeting, staff hired an independent housing evaluation/cost estimator/rehabilitation contractor to evaluate the dwellings and to assist in determining whether rehabilitation-would update the units to minimum building standards and revitalize the dwelling to a salable condition. It was determined that the costs of HRA Letter.-No. 3$ ,-2- upgrading and modernizing, would exceed $50,000, and did not improve the structural-and functional obsolesence. The rehabilitation investment would not improve on the general. appearance, one unit would continue to be a "cellar" type unit, the landscape conditon would not be improved, new construction standards for energy efficiency could not be cost effectively achieved, private indoor access to garage parking is not available to the upper unit,. and there is not semi-private yard space usable by a family for the lower unit. On the basis of this information staff was authorized to proceed with negotiations. It was anticipated that the acquisition price could be negotiated somewhere between the $86,000 value established by an independent appraisal and the $95,000 asking price. (The assessor's estimated value for tax purposes is $77,300.) Since both units are tenant occupied, each household is also eligible for approximately $5,000 relocation benefits. Mr. Nordstrom. has waived his right to relocation benefits as a condition of sale. The acquisition price-that has been negotiated is $90,000. CDBG funds would be utilized to cover the cost of acquisition, tenant relocation and sit e.. clearance. Following acquisition,. the site will be redeveloped for ownership housing in combination with 910 West 66th Street. Before a project: is initiated, the HRA and adjacent neighbors will have--an opportunity to further consider development characteristics such as site density. The Planning Commission has determined. the acquisition and disposition of the property with two units of new housing to be in conformance with the .comprehensive plan. If more than two units are constructed, the Planning Commission must review the proposed higher density. It is requested that the HRA authorize acquisition at the negotiated price of $90,000 by adopting the attached resolution. JGC/eja HRA Resolution No. Resolution Authorizing the Acquisition of 901-03 Rae Drive WHEREAS, the Housing and Redevelopment Authority (HRA) in and for the-City of Richfield does acquire property and relocate, rehabilitate and build structures for residential housing purposes; and WHEREAS,, the HRA desires to acquire the real property at 901 and 903 Rae Drive Street, legally described. as: Lot 6, Rae Addition, Hennepin County; and w WHEREAS, the owner,. Elmer Nordstrom, has offered tb sell this property for $90,000; and WHEREAS, the Planning Commission has found the acquisition of these parcels for residential purposes to be consistent with the Comprehensive Plan; anal WHEREAS, Community Development Brock Grant (CDBG) funds will finance the acquisition of these parcels. NOW, THEREFORE, BE IT RESOLVED by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota that the HRA Chairman and Executive. Director are authorized to take necessary action to purchase the property located at 801 and. 803 Rae Drive Street for $80,000 utilizing CDBG funds. Passed b y the Housing and Redevelopment Authority in and for the City of Richfield this 20th day of August, 198~-. ~ Thomas E. Harms, airman ATTEST: Joan He mberger, Secretary ~ ~,-t4~ ~ ~ ~ ~' ~ -.~ ~\ ., ., fl ~ .. . -- . .. ~ / ~ ~ N • I f= i .. ~_ .•,a, ,,, - , t `_ ,, ~ • y -- . ~~~y~m ,.~-~''~ - ~ n r-~ f~ ~ ~ ~ t ~~ ~_ L 1 ~ s ` ~.. t f ~ ~ ! ~ X11 I ~~/ ~ ~ a •_`7/) i ~ ~f --~ ...1 . ~~ ~ ~ c.~ ~' ~, ~ d ~ a r • ~ ~ p Q ~~ ~ ~ Q Q V ~ ~ ~~~~_.y t, ~ ~ Z ` ~~ ~~ !L ~ ~ ~ J ,. r% ~ ~ ~ o ~ ~ ~ ~ ~ '' i t ~ ~ ~ F 1 ~ > _ C ~~ ~ ti ~ ii ` Y C Y r E ~['~J 1 C _ 1 ~ ~ ~ ~ I V / ~ ~~ / f ~ .~i IV