09-19-83 agendaHOUSING AND REDEVELOPMENT AUTHORTTY
Office of Executive Director
HRA Letter No. 29
Agenda September 19, 1983
Housing and Redevelopment
Authority Commissioners
City of Richf field
Dear Commissioners
Subject: Acquisition of 920 West 66th Street and
Update on Vo-Tech 66th Street Project
Actions taken by the HRA and City Council during August, 1983
support maintaining the residential character of the area bounded
by Rae Drive, 66th Street, and Coach Homes. On August 15, 1983,
the HRA authorized staff to proceed with developing a multi-year
Vo-Tech project at 920 and 1016 West 66th Street. This project,
as proposEd, would result in six units of ownership housing where
two absentee-owned housing units presently exist. On August 22,
1983, the City Council denied the request for rezoning at 910 West
66th Street from a residential to a commercial use.
This. letter requests that the HRA authorize the acquisition of
920 West 66th Street. This property would become the site for the
1983-84 phase of the Vo-Tech development and provide two units of
housing. This letter also updates the commissioners on other de-
tails relating to the-multi-year project.
The property at .920. West 66th Street is presently owned by
Hennepin County, and was acquired by the county during the right-
of-way acquisition process for CP 705. Since the 66th Street im-
provements have been installed, the balance of the lot (approximately
9,975 square feet) and the dwelling are considered excess property
which .the county wishes to dispose of. The cost of acquiring this
property is $52,400.
According to the C P 705 contract between the county and the
city, each paid half of the cost of acquisition. The HRA can ac-
quire the property. by paying the county and the city $26,200 each.
Funds for the cost of acquisition are available from CDBG funds
budgeted for this prupose. The planning commission has determined
that acquisition of 920 West 66th Street for duplex type housing
is in conformance with the comprehensive plan.
Negotiations with the owner of 1016 West 66th Street have
forced staff to consider a staged approach to this multi-year Vo-
Tech project. The original plan envisioned acquisition of both
920 and 1016 at approximately the same (conceptual site plan by
Design Two, Inc. is attached). However, the owner of 1016 West
HRA Letter No. 29 -2- Seprember 19, 1983
does n,ot want to pursue- negotiations further for at least a few.
months. He has taken-this position even though he submitted a
written statement of interest in participating in .the Voluntary
Acquisition Program in 1982 and his continued .interest was con-
firmed verbally in July, 1983. The Voluntary Acquisition Program
permits a purchase only when there is a willing seller and buyer.
In response to this situation, staff has developed a plan identified
as Conceptual Site Plan,-920 West 66th Street, which is attached.
Thsi plan would permit the house at 920 West 66th Street to be
developed as a duplex. with or without the property at 1016 West
66th Street. However, if the adjoining parcel was acquired at a
later date, the original site plan-would still be achieved.
The purchase of 910 West 66th Street may be appropriate in
the .future. It could be resited at a greater distance. from 66th
Street and made suitable for use by a family. However, the HRA
must be cautious in considering possible acquisition. The Volun-
tary Acquisition Program requirements prevent targeting a property
for purchase. The owner must make the initial contact regarding
a possible sale.
By authorizing. the purchase of 920 West 66th Street, the Vo-
Tech project can proceed on schedule. Two .owner-occup~ed dwellings
will be developed. This development is feasible with or without
the purchase of the adjoining property.
It is recommended that the HRA adopt the attached resolution
authorizing the acquisition of 920 West 66th Street. This action
will permit Vo-Tech to formulate plans and cost estimates. At a
subsAquent meeting, the HRA will be presented with the Vo-Tech
contract for this project.
Respectfully submitte ,
1
Thomas A. Morgan; J~.
Acting Executive Director
TAM/eja
RESOLUTION NO.
Resolution Authorizing the Acquisition of
Real Property at 920 West-66th Street
WHEREAS, the Housing and Redevelopment Authority (HRA)
in and for the City of Richfield does acquire, relocate and
rehabilitate structures-with the cooperation of the South
Hennepin Vocational Technical Center (Vo-Tech); and
WHEREAS, the HRA desires to acquire the real property
at 9'20 West 66th Street, legally described as:
Lot 8, Rae Addition, Hennepin County; and
WHEREAS, the HRA may purchase the Hennepin County and
City of Richfield interest in the property for $52,400 with
each sharing.. equally ($26,.200) in the distribution of the
proceeds of sale; and
WHEREAS, the property will be the site for the 1983-84
Vo-Tech project once plans are developed, costs determined,
and a contract entered into between the HRA and Vo-Tech; and
WHEREAS, these actions can occur if, in addition, the
Hennepin County Board of Commissioners and the City of Rich-
field authorize the sale of 920 West 66th Street to the HRA.
NOW, THEREFORE, BE IT RESOLVED by the Housing and
Redevelopment Authority in and for the City of Richfield,
Minnesota
1) that the H RA Chairman and Executive Director are
authorized to take necessary actions to purchase
-the Hennepin County .interest ($26,200) and the
City of Richfield interest ($26,200), a total of
$52,400 for the property located at 920 West
66th Street,
2) that the HRA requests the City Council to authorize
the sale of .the City interest in 920 West 66th
Street for $26,200 to the HRA,-and
3) that HRD staff proceed in a cooperative effort
with Vo-Tech in developing plans and .determining
costs so that a work contract can be considered
in a timely manner.
passed by the Housing and Redevelopment Authority in and for the
City of Richfield this 19th day of September, 1983.
Thomas E. Harms, Chairman
Joan Helmberger, Secretary
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HOUSING AND REDEVELOPMENT AUTHORITY
Office of Executive Director
HRA Letter No. 28
Agenda September 19,1983
Housing and Redevelopment
Authority Commissioners
City of Richfield
Dear Commissioners:
Subject: Establishment of a.Tax Increment Improvement
Project, Cedar Avenue North
A concurrent HRA/City Council meeting. was held on May 16,
1983 to hear and discuss the results of a market study authorized
by the City Council for the Cedar Avenue liquor store site. A
point of discussion during the meeting was the need to consider
the relationship of a larger development area to this site, par-
ticularly with regard to the likelihood of requiring tax increment
financing to make improvements in a larger area.
The City council continued to discuss this matter at their
June 13, 1983 meeting, specifically the potential for establishing
a tax increment project in the area (the area ,is generally bounded
by 63rd Street on north, State Highway 77 on the east; on the
south, a line two parcels south of 67th Street; and 18th Avenue
and Cedar Avenue on-the west except for the commercial property
on the west side of Cedar at 63rd Street and at 65th Street. It
could be known as Cedar Avenue North). In concluding the discussion,
the council adopted a motion directing staff to pursue the formula-
tion of documents for an improvement project for the area. The
council supported the use of the remaining $6,671 for this purpose,
that is, the balance of the appropriation from the Special Revenue
Fund remaining after the market study was paid for. Staff was to
undertake a simple financial analysis during the summer and retain
the services,of a consultant to assist in preparing the needed docu-
mentation to establish a tax increment project if the financial
analysis was satisfactory. The support of the HRA was also to be
sought.
There are two purposes for this letter: to inform the HRA
of the council's action and to seek its support for establishing
a tax increment improvement project; and to indicate the results
of a simple financial analysis illustrating the role development
of the liquor store site could have in improving Cedar Avenue
North.
The Cedar Avenue North area needs certain improvements. In-
dustrial and service-type uses seem appropriate north of 66th Street
HRA Letter No. 28 -2- September 19, 1.983
and acquisition by the HRA in this area would probably be restricted
to residential property and non-residential property-which is blighted.
The vacant land could possibly be utilized to provide expansion
space for existing businesses. The construction of small-scale
commercial development may also be appropriate. Renovation. of build-
ing facades and signs, perhaps in harmony with a design plan, may
also be an appropriate action. Staff has been working with repre-
sentatives of Summit Bank and Richfield Bank & Trust to activate a
local commercial rehabilitation loan program with below market in-
terest rates. Such a program could be used in this area. In the
area south of 66th Street, liquor store site redevelopment would
be the .appropriate action.
To illustrate the significance of liquor store site develop-
ment to leveraging activities north of 66th Street, the following
example is provided. Four adjoining properties at the .southeast
corner of 64th Street and Cedar Avenue were examined as a potential
redevelopment site financed with tax increment (see attached map).
Collectively, they contain approximately 33,874. square feet. (This
site is being used for illustration purposes only.. The new landscape
business which is locating on a portion of this site may., or may
not., be an appropriate use).
Estimated site assembly costs:
Acquisition, relocation, demolition
Administration, legal services, acquis-
ition and disposition expenses
"Subtotal
Capitalized interest
Total
Rounded
HRA costs to be financed through sale of
redevelopment bonds
Tax increment needed to amoritize bonds
at 9 percent for 17 years
Current taxes paid by four properties
$285,972
22,877
$308,849
83,389
$392,238
$400,000
$400,000
46,820
6,595
Total new taxes new development must
generate 53,415
Assuming a commercial development which would br assessed at
43 percent of estimated market value (EMV) and a mill rate of .101,
every dollar of EMV generates $.043 in tax revenue.
$53,415 = $1,242,209 of EMV needed from new development
.043 for feasibility
With 33,874 square feet of land area, a new building valued
at $36.67/square foot covering 100 percent of the site would be
needed for feasibility.. Such a development would not be practical.
HRA Letter No. 28 -3- September 19, 1983
A more practical solution would be to develop a structure
which would cover half the site area or 16,937 square feet and
be valued at $35 per square foot.
16,937 square -feet x $35 square .foot $592,795
Assessed value ratio for commercial prop. 43%
Assessed value $254,902
Mill rate 101,276
Annual-tax revenue generated $ 25,815
Total annual tax revenue needed $ 53,415
Negative annual difference $ 27,600
The nature of the liquor store site development is the~key
to success of an improvement project in this area. In the above
illustration, it would be necessary for-the liquor store develop-
ment to generate $27,600 in "extra" tax-revenue to-help pay for
the 16,937 square foot commercial building. A second possible use
for liquor store site tax. increments could be the local commercial
rehabilitation program discussed earlier. Under new legislation,
it is possible to use tax increment revenues to subsidize the in-
terest rate on the loan program. Thus, in Cedar Avenue North
the-loan grogram would have the potential of a very low interest
rate and may become an important tool in renovation activities.
A Cedar Avenue North tax increment project could be formulated
and implemented-under .the 1979 tax increment law. The 1979 law
treats tax exempt property differently tran the law which controls
the L/H/N. Unger the new law, tax exempt property is not valued
at zero dollars when it is sold to a developer. But rather, the
base value becomes that value assigned to it by the assessor as tax
exempt property (even though tax exempt property does not benerate
revenue, in Minnesota, assessors are required to place an EMV on
the property). The liquor store site has an EMV of $460,000. The
threshold for the value of development on the liquor store site
would be determined by the following:
-the necessity to exceed the $460,000 EMV currently on
the .liquor store site before any increment is generated;
-the amount of funds needed to amortize any bonds sold to
pay for casts incurred by the city and/or HRA in prepar-
ing the liquor store site for sale to a developer;
-the amount needed to subsidize activities north of -66th
Street. In the illustration, $27,600 of tax revenue
would- be needed from the liquor store site to make de-
velopment feasible.
The purpose of this discussion was to indicate the significance
of the liquor store site development in making improvements in other
portions of Cedar Avenue North feasible. The spec if is numbers are
not as important as the concept of inter-relationship. Develop-
ment of the liquor store site within the framework of a tax in-
crement project represents the only opportunity to systematically
improve the entire area identified as Cedar Avenue North.
HRA Letter No. 28 -4- September. 19, 1983
The establishment of a tax. increment improvement. program in
this area would require support from both. the HRA and the City
Council.. The-HRA. is empowered legally to establish and admin-
ister such projects. Meetings-would also be held with property
owners. and tenants in the area.
It is recommended that the HRA indicate its support for the
position taken by the City Council and direct staff to prepare
documentation necessary for the establishment of a project for its
consideration.
Respectfully submitte ,
~-~ ~ ~ ~~
Thomas A. Morgan, Jr.
Acting City Manager
TAM/eja
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STUDY AREA
AND
64TH STREET & CEDAR AVENUE
DEVE]'.30PN~IT STUDY SITE
~ Study Area Bourbdary
°~°a°~°~°~°~ 6401-05 Cedar .Avenue
6409
6417
6421
HO USING AND REDEVELOPMENT AUTHORITY
Office of Executive Director
HRA Letter No. 27
Agenda September 19, 1983
Housing and Redevelopment
Authority Commissioners
City of Richf field
Subject: Commissioner's Attendance at NAHRO Meeting
Dear Commissioners:
The ~?ational Association of Housing and Redevelopment
Officials (NAHRO) is holding its National Convention in San
Diego, California, October 9-12, 1983.
Commissioner Helmberger has expressed a desire to attend
this meeting. It is requested that the HRA approve Commissioner
Helmberger's attendance at this meeting.
Respectfully submitted,
~ Ihr-MSf1 ~' ts.-
Thomas A. Morgan, Jr.
Acting Executive Director
TAM/eja
HOUSING AND REDEVELOPMENT AUTHORITY
Office of Executive Director
HRA Letter No. 26
Agenda September 19,1983
.Housing and Redevelopment
Authority Commissioners
City of Richfield
Dear Commissioners:
Subject: Authorization to Execute a Contract for
Administering Minnesota Housing Finance
Agency Loan Program Funds
The Minnesota Housing Finance Agency (MHFA) has provided
funding for low-income persons to make improvements to their
homes since 1976. This letter provides a brief historical back-
ground on MHFA programs in Richfield, summarizes details of the
loan program, and recommends executing a contract which authorizes
.the HRA to administer the MHFA Rehabilitation Loan Program in
Richfield.
MHFA receives appropriated funds from the State Legislature
and has the authority to sell revenue bonds to finance home im-
provement programs. The Hcme Improvement Loan Program provides
proceeds from bond issues to local banks which in turn administer
a program to moderate income persons. Richfield Bank and Trust
and Summit State Bank participate in this program. In addition,
state-appropriated funds are provided to local agencies which ad-
minister a program for lower income people known as the'.Rehabil-
itation Loan Program. Communities are eligible to administer the
program as a grantee of MHFA if their appropriation from MHFA is
equal to, or greater than, $40,000. The appropiration to Richfield
and other metropolitan area communities is determined by a "fair
share" formula that has been devised by the Metropolitan Council
based on census data and their evaluation of community need. Since
1976, Richfield has not received a share that meets. or exceeds this
minimum. Thus, Richfield has always acted as a subgrantee of
Hennepin County in administering the DZHFA grant program. A con-
tract has been executed in each phase of the program to do so. In
1981, the grant was modified to a deferred loan grogram. Since
1976, MHFA grants or loans have provided approximately $223,310 in
assistance to low-income Richfield homeowners.
The first "year" of the deferred loan program commenced in
early 1981, and concluded in July, 1983. The program operated as
a deferred loan for low-income persons who have an income below
$6,000 or as a "flexible loan" when the lower income person could
afford a monthly payment with a 3% interest charge. Determination
of which type of loan is provided is made by staff after an evalu-
HRA Letter No. 26 -2- September 19, 1983
ation of all household expenses and total income. Staff evaluation
of the new program concluded that Year I of the loan program could
best be administered to Richfield r^sidents by Hennepin County staff
because of the complex program administration and limited time
available for. training. Residents were also assured of receiving
the full $23,000 allocated to Richfield.
The second"year" of the. MHFA Rehabilitation Loan Program is
about to begin.- Richf field will receive a maximum allocation of
$27,778: Staff recommends that Richfield administer. the Year II
of the loan program as subgrantee of Hennepin County for the follow-
ing reasons:
-MHFA has made a number of administrative changes that
have simplified the process and substantially reduced
the staff time required to administer each loan;
-Hennepin County staff have gained confidence in their
administration of the program and ability to work with
a subgrantee (i.e. Richf~Pld);
-Year II funds will be available until July 1, 1985,
allowing ample time to train for and administer the
funds;
-Staff will be able to more closely monitor the types
of improvements being made to Richf field homes;
-The program provides a source of administrative revenue,
allbeit small, as administrative costs will be reimbursed
by Hennepin County.
A contract must be executed by. the HRA to permit Richfield
to participate as a subgrantee of Hennepin County. The following
statements summarize the content of the contract which has been
reviewed by legal counsel:
-The total available funds for rehabilitation loans would
be $27,778.24;
-The HRA may apply ~o the county for up to $2,778 (10° of the
loan fund) to help defray the costs of administering the
program;
-The HRA-will comply with the Procedural Guidelines devel-
oped by MHFA in administering Year II funds;
-The program year will commence November, 1983 and termin-
ate July 1, 1985. All funds must be expended within that
time period or be forfeited;
-The county will provide training and technical assistance
to staff to ensure proper administration of the program;
HRA Letter No. 26 -3- September 19, X983
-The HRA will maintain records of each loan and permit
access by the county or MHFA to review these files.
It is recommended .that the HRA authorize a subgrantee relation-
ship-with Hennepin County. in the administration of .the Year II
MHFA Rehabilitation Loan Program. The attached resolution, if
adopted, authorizes execution of a contract ~.~ith Hennepin County
by the Board Chairman and Acting Executive Director.
Respectfully submitted
Thomas A. Morgan, Jr.~
Acting Executive Director
TAM/ e j a
RESOLUTION NO.
Resolution Authorizing a Contract between the
Richfield HRA and Hennepin County for Adminis-
tration of the Minnesota Housing Finance
Agency (MHFA)Rehablitation Loan Program.
WHEREAS, MHFA has provided funds to local communities since
1976 to finance home improvements for low-income homeowners; and.
WHEREAS, .Hennepin County has received an appropriation from
MHFA to administer the Rehabilitation Loan Program for Hennepin
County communities; and
WHEREAS, Richfield must act. as a subgrantee to Hennepin
County if it wishes to administer its share, $27,778.24; and
WHEREAS the HRA desires to cooperate with the County in the
conduct of this program and to assist eligible individuals and.
families to improve their housing in Richfield; and
WHEREAS, the County .desires to purchase certain necessary
administrative services from the HRA in connection with. carrying
out the program.
NOW, THEREFORE, BE IT RESOLVED by the Housing .and Redevelop-
ment Authority in and for the City of Richfield, .Minnesota:
- that the Richfield HRA desires to participate in
Yr. II of the MHFA Rehabilitation Loan Program as
a subgrantee of .Hennepin County,
- that a contract establishing the sub grantee relation-
ship with Hennepin County is to be executed by the
Board Chairman and Acting Executive Director.
Passed by the Housing and Redevelopment Authority in and for the
City of Richfield this 19th day of September, 1983.
Thomas E. Harms, Chairman
Joan Helmberger, Secretary