02-22-83 agendaHOUSYNG AND REDEVELOPMENT AUTHORITY
Office of Executive Director
HRA Letter No. 7
Agenda_February 22, 1983
Housing and Rede elopment
Authority.CommiSSoners
City of Richffield
.ear Commissioners:
Subject : Cons ideratio,ri of Changes to the Repayment
Agreement and Procedural Guidelines for the
Richfield Home Rehabilitation Program
For the past several months, the city staff has`beenwork-
ing with the Hennepin County Office of 'Planning and Development
(CPD) to develop a new procedural guide and repaymen agreement
for the Richfield Home Rehabilitation Grant Program. As die-
cussed in HRA Letter No. 33, August 16, 1982, and No. 36 of
.September 20, 1982, the intent in seeking chances in procedure
ahd repayment was to develop a program that recovers and recycles
rehabilitation funds for future housing programs. Hence, it is
proposed that the primary rehabilitation assistance program,
which is CDBG funded, become a deferred loan program"rather ahan
a grant "progr'am.
This letter conta-ins a brief summary of the objectives of
the Richfield Home Rehabilitation Grant Program, discusses the
role of Hennepin County OPD in program administration; and describes
the proposed changes for adm-roistering CDBG Year ~II3 (1982-83)
and future funds. The status of the MHFA Deferred Loan P'roaram
and the CDBG Flood Grant Program is also.drscussed. The HRA";rs
being requested to adopt-these"pro"posed changes and ;permit a de-
ferred loan program to ccmmen~e. Hereafter, the title, "Rich-
feld Home Reha3alitatron Grant Program" would drop the word "Grant"
to more occurately reflect the CDBG and MHFA deferred loan and
CDBG.Elood Grant elements.
Objectives of the Rehabilitation Program
T:he przma~-y obj ect,ive `of the Rchf _e ld Home Reh:abll nation`
Program is=to upgrade and~maintain.the existing housing stock
s _ -_
owned~`by"low-income persons. T:he program also is important as it
he ps~ =the city. fulfill its housing performance goals. To date,
_-
approximately '$350,000 in CDBG funds have be"en committed to 168 %
homeowners for home improvements. MHFA grant funds in the amount
of approximately $200,000 were received b_y 51 households before ~~~ ~~z
that program was di continued in 1.981. ~/~~ ``'`
~~
~:
s HRA Letter.NO 7 ,3.- February. 22, 1'983
~~~ uncorrected default.- on a contract for deed.
- - - is
rate would be the "monthLy_ndex of -the Federal`:
Nationa-l Mortgage Association auction yields for
the first preceding. calendar month, rounded off
to the'next highest quarter of one percent per `
annum").
2.
a)
t ___ . e:. death of spouse) -
b
cQCn ~~-~
(i.e. addition of
~
~- ~ spouse or c a ; _
~ ~~ N~N.~~~ en ; o ~a .e ..
c )
-~ ~' ~~
r
he method for determining econ~
` omit status: would be outlined .i~_the guideline as
- a formula tied. to the metropolitan'area average
- _ family income . The goal.-would be to; have a: pro-
- gram.adminstrator_be able to evaluate an heir's
income during the next<30 years and determine
' that it met the..- goals of the original program
(i:e. Tower income `assistance). The formula and
examples follow: -
Percen:tage of Present
$28-,600-Median Unadjusted
Family Farmly Income Grant Recipients
Size (1983) (1983) Income (1983.).
1 31~ ~ 8,866 $ 8,250
2 33~' 9_.,438 9,_000
3 35~ 10_,101 9,SQ0
4:` _ 37~ 10,582 10.,0.0.0_
5 39% 11,15.4 10,:5.0.0-
6 40~ 11.,440 11,000
7 42~ 1'2.01.2 11.500
8 44% 12,584 12,000
The percentage figures. were •determined by taking normal ad-
jus meets- (family size, child care, medical expenses) to our
current maximum adjusted income limits for the program, $7,500,
and.. dividing, that- into. the cur rent median family ..income figures:
for the`~metropolitan area, $28 ;0.0. Use of these percentages in
comb:.nat~on with:.-future.. median . income figures should ..result in
,an income level comparative to that used as an ell ible income
today.
.~
HRA Letter No. 6 -3- February 22, 1983
The 1983 homestead tapes at 6429 Portland Avenue
are $1,632, with non-home stead. taxes $2,124; and the nan-
- homestead taxes at 6425 Portland Avenue are $2,179 for 1983.:_.-
The apprasa s: a ~ a , wou in ~.ca a at
a purchase price of $166;,000 is favorable. If the HRA-`does
n-ot purchase the property now, it may be sold to someone else.
A later acquisition by the HRA could mean a:`higher purchase-
- price and. higher relQcatiori benefits, due to occupancy changes.
1 ..
~.
Respectfully-submitted,
2~\
Karl No.llenberger
__ Executive IIire.ctor
Cc: Finance Coordinator.-
Community Development Director
Housing and Redevelopment Coordinator-
'KN~eJa
,; ' -
HRA RESOLUTION N0.
RESOLUTION AUTHORIZING THE
EXECUTION OF A CONTRACT TO
BORROW MONEY FROM THE L/H/N SPECIAL REVENUE
CAPITAL, FUND FOR
THE PCJRCHASE OF REAL PROPERTY
AT 6425 AND 6429 PORTLAND AVENUE
WHEREAS, the Richfield Housing and Redevelopment Authority
(HRA) desires to borrow money for the purpose of purchasing certain
real property pursuant to and in furtherance of the provisions of
Minnesota Statutes Chapter 462.411, et. seq, said real property being
described as fellows: Tracts A, B, C, and D Registered Land Survey
No. 476, Files of Registrar of Titles, County of Hennepin, Minnesota;
and ,
WHEREAS, the HRA has caused appraisals of the subject property to
be made and has carefully considered such appraisals; and
WHEREAS, funds to provide for the purchase of this property are
available in the L/H/N Special Revenue Capital Fund; and
WHEREAS, the Executive Director commenced negotiations for the
purchase of the real property described above; and
WHEREAS, the negotiations for the above described real property has
resulted in the execution of a purchase agreement by the seller;
NOW, THEREFORE, BE IT RESOLVED by the Richfield Housing and
Redevelopment Authority:
1. That $166,000 is determined to be just compensation for the
subject real property.
2. That the monies for the purchase of this property are to be
provided from the L/H/N Special Revenue Capital Fund .
3. That the Chairman and the Executive Director be, and hereby
are authorized to execute, as agents of the Richfield Housing and
Redevelopment Authority, an agreement (entitled 'Loan Agreement')
a copy of which is hereby given Clerk's File No. and is ordered
placed on file.
4. That the Executive Director be, and hereby is directed to present
said agreement into the records of the HRA of the City of Richfield for
its recording.
. 5. That the Executive Director is authorized and directed to
execute a purchase agreement for the above described property for.
One Hundred Sixty-six Thousand and no/100 dollars ($166,000)
Passed by the Housing and Redevelopment Authority of Richfield,
this day of February, 1983.
Thomas E. Harms, Chairman
V. L. Luettinger, Secretary
coo ReS.
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'>~oo~ Property proposed for acquisition from Anderson estate
~'^'''°° (6425 and 6429 Portland)
HOUSING'AND REDEVELOPMENT AUTHORITY
Off ice of Executive :Director
HRA Letter No. 5 -2- February 22, 1983.
are requested to evaluate buildings in cooperation with the
Metro HRA, so that city code violations can be resolved and
improvement work. prioritized.. The Public Safety Department.
has indicated this responsibility is manageable within their
normal work schedule.
°To date , -the 1Koder'ate Rehab~il itat ion Program marketng~
strategy:and program incentives have not been enough to n~'eres~
"recital-"proper~~owne.rs° "iri""1~ic.~fiel'a`'to~partcipate in the pr o°=
gram: Public notices announcing the program were placed in
local newspapers and workshops. were held at city hall to pro-
vide more information to rental property owners. The HRD staff
provided lists of property owners to the Metro HRA for direct
mailing of program information. At the request of the Richfield
HRA, additional mailings were directed to duplex owners in
certain areas of the city ._ However, all of these efforts were
largely to no avail. ~Some_of the factors that might have lim:t~d
program p~rtic°pat-ion include;:
1. A number" of units. may ::notrequire the 'general repairs.
t"he ~Srogram allows - for instance, most units al-
ready meet`Secton 8 minimum housing standards;
2. A desire:. not :to. Piave to meet.the requirements of ~a<'
Sect.on~`:8 contr"act for 15' years, particularly since
vacancy rates have been so low in recent years that
guaranteed rent payments (one positive Section 8
program aspect) were not much of an incentive;
3. ``The" status of_ they eoanom~,„has not':been;-conducive toy-
prompting._prnperty"owners to .ncur~additional debt-.
This is s gn if icant lately s ince rent increases=-have
slowed and vacancy rates have increased.
Although the Rental Rehabilitation Program does nothing,
to resolve the first and third concern listed above, ;Eh is proms
gram may be more attractive.than_the Moderate Relabilitat-on
~rog~ram because of the.: remoua3:~ o€ the Section 8 commitmen`~:
(Axsummary of the program requirements and eligible improve-
ments is attached to this HRA letter). The Rental Rehabilita-
tion Program provides an incentive to rental property owners
to conserve energy and lower operating costs. The programF
~ti11':assists 'the __law and ~inod~r ~ ~~~Qme_,_tgnan_tm, s ince the
tenant: is -not displaced' and=-be`nefi€s fr.oin the r_epairs~ L:owe;
_. - .-
operatng costs' for_:.conserzatiori mad kee~~~;,~nts from.. incr?
ng eve_n__though an owner is~"carrying -additional debit, again a
benefit town existing tenant.
In addition, the Metro HRA_ has, pointed, aut the follows"g
amity -benefits if owners partic pae
1. ~~t provides a below market- rate finance mechansm.<
for f inane irig energy ; improvetr-ents~ in oth"er t~~,-ri ` "
singes family owner "occup~~ed' housing;
HRA RESOLUTION NO.
RESOLUTION AUTHORIZING THE METROPOLITAN COUNCIL
TO IMPLEMENT THE RENTAL REHABILITATION LOAN PROGRAM
WITHIN THE CITY OF RICHFIELD
WHEREAS, the Housing and Redevelopment Authority in and
for the City of Richfield (H RA) desires to assist lower income
families and individuals to obtain adequate housing in the City
of Richfield at an affordable price and- to accomplish the purpose
of undertaking a program of providing technical assistance and
loans to property owners for the purpose of rehabilitating rental
units for occupancy by low and.moderate-income. families and
individuals; and
WHEREAS, the Metropolitan Council has been duly organized
pursuant to Minnesota Statutes 473.1.23; and has been. designated
a housing and redevelopment authority pursuant to P~innesota
Statutes 473.193, with the powers and duties of a housing and
redevelopment authority under the provisions of the Minnesota
Housing and Redevelopment Authority Act, Minnesota Statutes
462.411 to 462.711, and the acts amendatory thereto; and
WHEREAS, the HRA and the Metropolitan Council desire to
encourage the stabilization,. revitalization, and rehabilitation
of the rental property in the City of Richfield; and
WHEREAS, the HRA has determined that a program to encourage
the rehabilitation of rental units is consistent with the housing
goals of the city and consistent with the city's public interest.
NOW, THEREFORE,,BE IT RESOLVED by the Housing and. Redevelopment
Authority in and for the City of Richfield:
That the Metropolitan Council is hereby authorized to
implement the Rental Rehabilitation Loan Program to
encourage the rehabilitation of affordable private
rental units within the City of Richfield.
Passed by the Housing and Redevelopment Authority this 2 nd
day of February, 1983.
Thomas E. Harms, Chairman
ATTEST:
V.. L.Luettinger, Secretary
Program Requirements
The following are requiremer_ts for owner participation in the
Rental Rehabilitation Loan Program:
a) The property to be rehabilitated must be owned by the applicant
and used for residential purposes
b) Units must be leased to low-.and moderate-income households
c) Owners must certify that tenants will not be displaced during
or after rehabilitation
d) FHA Title Z loan maximum amounts are $7,500 per multi-family
unit not tc exceed $37,500 per structure, and ..$15,000 per
single-family structure
.;.
e) All buildings rehabilitated must be brought into compliance
.with State Ene=gy Conservation Standards
f) Structures less than ZS years old are eligible only for
energy compliance improvements
g) Structures more. than 15 years old are also eligible for
permanent general improvements
Eligible Improvements
a) Energy Conservation .Standards
- Caulking, weatherstripping
- Storm door and window installation
- Fireplace and stave positive shutoffs
- Insulation in accessible attics, walls and rim joists
b) General rehabilitation
- Structural additions., alterations
- Exterior, interior finishing
- Roofing repair' or replacement
- Plumbing installation or replacement
- Heating and ventilating
- Electrical wiring
c) Accessibility improvements
- Ramp construction
- Handrail, grab bar installation
- Other
HRA Letter No. 7 -2- February 22, 1983
{:
Rale of Henne in County
CDBG funding for the rehabilitation program comes through
Hennepin County 'from the Department of Housing and Urban 'Devel-
opmer.t ;HUL). The city council designates a portion to be used.
for housing rehabilitation. Because of its role in monitoring
fund expenditures, it is, necessary that Hennepin County°reyew
anrlapprove our procedural guidelines before implementing a pro-
gram:, TY~re procedural guidelines are moaified routinely each
program year to fit the needs of Richfield r'esdents and other
communities. that participate through the county in similar re-
habiltation programs.
Changes in Rehabilitation Program
The deve opment of a "Rehabilitation "Deferred Loan" Pro-
gram was proposed in Augu t, 19.82 as a means of continuing to'
provide assistance to low income residents,"yet insure that the
city could recover a majority of the funds .for use in the future.
The deferred loan program would require that loan funds received
by the recipient for rehabilitation be repaid to the city at the
time the. property is transferred (i.e.: sold, conveyed, assigned,
leased, etc.). .Repayment is required 'up until the 30th year
anniversary date of the loan, at which time the loan is forgiven.
`No interest :accrues on the loan principal and no monthly install-
ment payments are required. Thus, the previous grant repaymen t
agreement, whichreduced the amount owned on a grant by 25% each
year after the third year until nothing was owed in the seventh
-..year-, is_proposed t9 be changed to a deferred loan program requr:-
:ing repayment of 100% of the loan up until the 30th v.ear of the
loan te:rm_
Forgiveness t~f the loan after the 30th year is a slight de-
parture from what was originally proposed to the HRA and was
the result of joint disc~sson5 between the HRD, OPD and HUD
staff. HUD and OPD felt that re:qurin~ repayment at the end of
the term.. was unsatisfactory as most funded repairs wou~.d have
lost their .useful life; been re-repaired ar replaced; anal with-
qut other resources, a property sage might be forced. However,
it is expected that avast majority of 'the loans will be repaid
before reaching a 30-dear mat~zrity. For those few loans that
do reach full-term, administrative costs to th.e HRA and hard-
ship to the loan recipient resulting from a-lump-sum repayment.;
wi l be lessened by satisfying the lien rather than rewiring
repayment.
In addition t:o the basic concept of developing a deferred
loan program,;: there are a number of ite~ts addre red in the
- procedural gu'idelnes'andrep.aymeht.agreement ghat are changes
'from ho e used previously. These include:
Repayment of the loan being due and,p,ayable within
3'0 days of the date at which the recipient trans-
'fens the property;: Types of property transfers in-
clude voluntary sales, nvoluntarys:ales (such as
death related) , formation oflife .estate, and an
= uncorrected default on a contract for deed. I,f
payment is not made within 30 days, interest
caould accrue at the highest rate allowab e by iaw
(pursuantto Minnesota Statute 47.2J - 1882- this
rate would be the "monthly index of the Federal
National Mortgage. Association auction yields for
the first preceding calendar month, rounded off
to the next highest. quarter of one percent per
annum:").
2. The deferred loan would not be due and payable under
the following circumstances:
a) if the.property...is transferred from one joint-
tenant to another (i.e. death of spouse);
b) if a joint tenancy is created with the recip-
lent and another nvolvir_g no monetary consd-
~~~'~~~~~~~ eration from the third party (i.a. addition- of
~~'~"~ ~~~~ c~ iP~aneherchindtending totresde in the residence,
~- ~'`-~"`~' is determined to .have an economic status .where
repayment of tree loan could only occur by sale
of the estate. The method for determining econ-
omic status would be outlined in the guideline as
a formula tied to the metropolitan area average
family income. T'he goal would. be to have a pro-
gram administrator be able to evaluate an heir's
income during' the-next 30 years and determine
that it met the goals of the original program
(~,<e. lower income assistance) . The formula and
examples follow:
Percentage of Heirs. Presant
$28,600-NlEdan Qualify in-g Unadjusted .
Family, Family Income Income Grant Recipients
Size (1983) (1..983) Income (1980
1 31% $ 8,866 $ 8,250
2 33% 9, 43`8 9, flfl0
3 35% 10,101 9,5013
4; 37% 1'0,582 10,000
5 39% 11,154 10-,500
6 40% 11,440 11,000
~ 42% 12.,01.2- 11 ,500
8 44% 12,-584 12{00-0 .
The percentage figures were determined by taking normal ad-
`justme~ts (family size, child care, medical expenses) to our
current.maxi,mum adjusted income limits for the program, $7,`500,
' -and: dividing that- into the current median family ~ income figures
for the metropolitan area., $2:8,60.0. Use of these percentages in
combination with future median: income figures should result in
an income level comparat.~,Te to that used as Gn' eligible income
today. Lt is proposed that the adjusted zncome remain at $7,500
`f or the deferred 3oari `program.
_ E:
C,
HRA Letter No. 7 -4- February 22, 1983
d) Transfer of title when recipient has paid off=>a
contract for deed.
3. The maximum loan amount should be increased to $8,250.
This is consistant with a change proposed by the
Hennepin County OPD. This is a 10% increase over t e
previous limit of $7,500, and seems adequate to cover
the increase in costs of undertaking rehabilitation
work.
4• The HRA wou d not accept or subrogate its lien po itinn
when a loan was made, a repayment was filed, or during`
the term of the lien, .f the property had mortgages,
pledges or encumberances exceeding 80% of the estimated
market value as determined by the Hennepin County
Assessors Off ice. Our lien would then be adequately
secured to ensure repayment.
All other sections of our guidelines .which t3~e board re-'
``ceived and .adopted September 15 1982 remain unchana2d. The
term "grant" has begin changed to "deferred loan" throughout, ex-
cept as it may apply to the special section of the Flood Grant-
Program.
The MfiFA Home Improvement Grant Program, administered in
! Richfield until 19$1, was replaced with an MHFA Rehabilitation
'' ;Deferred Loan Program.Phase I of this new ro ram
P g provide
lower income participants a no interest or variable intere t-
rate loan, depending on income. T1-~is is currently being admn-
istered by the Hennepin County GPD staff. Richfeld:~iRD staff
will receive training from OFD staff to administer the remaining
Phase I funds and;all_fol-owing phases. To date $5,976 has been
expended to one Richfield homeowner in the program.. A maximum
income ar~d :grant amount for the loan program is $6,flfl0.
The Rich`fie.ld Flood Grant Program utilizes an annual set
aside`of $15,.0.00. in CDBG funds for repairs related to storm'
water flooding of low aid moderate income persons homes. At the
end of each program year, uncommitted f,unds_would be recycled
back to the Rehabilitation Def.erred Loan .Program. The Flood
Gran t:'Program will remain a "g.rant" with a seven-year de.preciat--
ing repayment `and maximum grant amount of ~b,000. Income limits'
will remain at S-ection 8` Timits,. Flood rant
would remain as a - g Program guidelines
pproved by the HRA on September 15; 1981.
It is re'c~mmended~ that thee. ~attach-ed resolut.io be adopted
by the HRA which modifies the CDBG `: r.-ant
deferred loan. - -- - g- program to become a'
program,_changes "Richfield Home P,ehablitation
Grant Program" to become the "Ri.chfeld ,Home Rehabilitation
Program": and..revises.the proc,edura:? gudelinesaccordingly..-
Respectfully submitted,
~ V, .' ~ .
~~
v- ~z..~
marl Nollenberger
Executive Director
HOUSIATG AND REDEVELOPMENT AUTHORITY
Office of Executive Director
HRA Letter No. 6
Agenda February 22, 1983
rousing and Redevelopment
Authority Commissioners
City of Richfield
Dear Commis ioners:
Subject: Consideration of Acquisition of
6428 and 6429 Portland Avenue
In recent years, the City. Council and the Housing and
Redevelopment Authority have contemplated the development of
the Legion Lake/Portland Avenue area to include moderate
density family Woos ing., the expansion of Richfield Lake, and
the provision of additional ,recreational space.
The 1982-HRA revised budget included funds for planning;
studies of thee. area adjacent to Port,Ianc~ Avenue-. Th:e first
phase of those studies; a series of soil borings' taken late
last year h the-.area between the American L-egibn Post and
the city water plant, is almo t complete. Although a written
:report is not yet available, discuss ions, with Soil Exploration
Company of St. Paul, the contractor;, indicate the soils between
Portland avenue and the old lake-shore could support moderate
density hou ing without prohibitive soil correction costs-. A
first stage housing development site of approximately four acres
could be assembled by combin-ing the city owned property to the
north with the .property at 6.425-aid 642.9 Portland Avenue. The
preliminary study of the Legion hake area undertaken by Setter.,
L_eaeh._and Lindstrom, Inc..-for the city council in 19.81. identified
this area as a possible housing site.
Development of this area wo:uhd proceed in a cries of
stages over a period of years. This would be necessary becaua e
of `the pr~.vately own-ed property, the absorption rate for new
housing, and fund avaiiablity In July, '1982, th?e NRA wa ad-
wised that the executor of the Arthur.E. Anderson estate ..was
_,
interested in negotiating th=e sale of the property at` 6425 and
.642`9 Portland Avenue. --
On August_ 24, 1982, the planning commission was re-
quested to review the proposed purchase of this property
forconformance with the. comprehensive plan. The corczpre- .
h~nsz~e plan map indicates this area should be developed
as part of the Legion Larke Park and open space. However,
the comprehensive planhousing policies indicate that:
KRA Letter No. 6 -2- February 22, 1983
1. Rohfield will wcrk towards meeting the ".fair:
shame" low and moderate-.income housing goals. as
outlined by the Metropolitan Council in_the
Metropolitan Housing Guide;
2. Richfield wi11 allow the development of higher
density housing opportunities. along arterial
streets to provide buffers to adjacent uses.
If the site is to be used for other than park. and open space
purposes, such as for housing, it would be necessary to amend the
comprehensive plan map and rezone the property. Publio hearings
would be an integral part of this process. The planning commission
did find that the purchase of this property for park and. open space
would' be in conformance with the comprehensive plan.
fihe negotiated purchase .price of these properties is $166,000.
This is the appraised value as determined by our appraiser, Brad
Bjorklund of Capital Appraisals, Inc. The appraiser for the
estate valued the ~ropert.y at $194,000. The property proposed for
purchase is'foizr lots. as indicated on the attached map. Each lot
has approXmately 9,613 square feet (128.17' x 75'). The two back
lots are n.ot d.evelopabl.e separately because they lack direct access
to a public right-of-way. Th"e.._four lots equal""appro:ximately one
acre . _.
The house at 6425 Portland avenue contain's 1,161 square feet,
and has°three bedrooms. The walkout basement is .partially finished.
The Mouse at 6429 Pc:rtland contain l ,-032 square feet and has two
bedrooms. The walk basement is partia3~ly finished also. BotY~
houses-are in average condition.
Relocation payments would be minimal:. Because the property
is owned by an estate, the "owner" is not e igible for benefits.
T'he tenants are e igible ,for relocation bene.fit~ of~`app'roximately'
54,5;0 each, or X9,000 in total., _ ,
To accomplish the purchase,~it is proposed "that::th.e funds be
anterna.lly a~ sic"aged from the L/H/N "Capital Fund'. Our city attorney
is of the :opinion that the -city is not- authorized to loan money.`
to purchase these properties as they are not within an urban re-
newal area and are occupied hooting.
During the hterim period from purchase to development,,:.there
wall be income generated by re~;tal of_ the two dwellings;. Market
rents for each of the two houses .would approximate $500 per-month
n.et. However, it may not be. possible to ob ain the market rent
as the vacancy rate for rental properties has been increasing re-
Gently. Also, such a rent level would infer that the properties
had been, or would be,~redecorated. Thus, the staff would attemp
to obtain the highest rent possible, which may be below the $500_
per.monthmarket rate..
HRA Letter No. 6
-3- February 22, 1983
The 1983 homestead taxes at 6429 Portland Avenue
are $1,632, with non-homestead taxes $2,124; and the non-
homestead taxes at 6425 Portland. Avenue are $2,179 fox 19$3.
'ti~ow is the appropriate time to acquire this property.::.
Thee appraisals at $166,000 and $194,000 would indicate that
a purchase price of $166,000 is favorable. I~ the HRA does
not purchase the property now, it may be sold to someone else.
A later acquisition by the HRA could mean a higher purchase
price and. higher relocation benefits, due to occupancy changes.
`Tt is recommendedthat the HRA adopt the attached resol-
cation which authorizes the following actions:
1. The execution of the purchase agreement for-
$166,000 by the Executive Director,
2. The execution of a loan agreement providing'
monies for the purchase from the h/H/N_Capital
Fund ..
Respectfully submitted,
c,~.,L
Karl Nollenberger
Executive Director
cc: Finance Coordinator.
Community Development Director
Hous ng and. Redevelopment Coordinator
HRA RESOLUTION N0.
,RESOLUTION AUTHORIZING THE
EXECUTION OF A CONTRACT TO
~~"" BORROW MONEY FROM THE L/H/N SPECIAL REVENUE
CAPITAL FUND FOR
THE PURCHASE OF REAL PROPERTY
AT 6425 AND 6429 PORTLAND AVENUE
WHEREAS, the Richfield Housing and Redevelopment Authority
(HRA) desires to borrow money for the purpose of purchasing certain.
real property pursuant to and in furtherance of the provisions of
Minnesota Statutes Chapter 462.411, et. seq, said real property being
described as follows: Tracts A, B, C, and D Registered Land Survey
No. 476, Files of Registrar of Titles,-County of Hennepin, Minnesota;
and ,
WHEREAS, the HRA has caused appraisals of the subject property to
be made and has carefully considered such appraisals; and
WHEREAS, funds to provide for the purchase of this property are.
available in the L/f/N Special Revenue Capital Fund; and
WHEREAS, the Executive Director commenced negotiations for the
purchase of the real. property described above; and
WHEREAS, the negotiations for the above described real property has
resulted in the execution. of a purchase agreement by the seller;
~- NOW, THEREFORE, BE IT RESOLVED by the Richfield Housing and
Redevelopment Authority:
1. That $166,000 is determined to be just compensation for the
subject real. property..
2'. That the monies for the purchase of this property are to be
pro~idecl from the L/H/N Special Revenue Capital Fund .
3. That the Chairman and the Executive Director be, a.nrl hereby
are authorized to execute, as agents of the Richfield Housing anal
Redevelopment Authority, an agreement (entitled 'Loan Agreement')
a copy of which is hereby given Clerk's File No. and is ordered
placed on f le
4: That the Executive Director be, and hereby is directed to present
said agreement into the records of the HRA of the City of Richfield for
its recording.
. 5. That the Executive Director is authorized and directed to
execute a purchase agreement for the above described property for
One Hundred Sixty-six Thousand and no/100 dollars ($166,000)
Passed by the Housing and Redevelopment Authority of Richfield,
this day of February, 1983.
Thomas E. Harms, Chairman
V. L. Luettinger, Secretary _
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X6425
HOITSING AND REDEVELOPMENT AUTHORITY
Office of Executive Director
HRA Letter NO. s
Agenda February 22; 1983
Hous in.g and Redevelopment
Authority Commissioners
City of Rchf field
Dear Commissioners:
Subject.: Metropolitan Council Rental rehabilitation
Loan Program
Tn 197'9, the Metropolitan Council HRA "(Metro HRA), initiated
a; rehabilitation program for rental housing within communities
showing an interest in ,the program; such as Richfield. In
October, 1'981, the Richfield HRA moreformal.ly demonstrated its
support of Metro HRA administering a re~abii_tation ~ragram by
adopting HRA Resolution No, 180.` This program, called the
Section 8 Moderate Rehabilitation Program, provides improvement.
loans o owners of private rental housing units at an 1T.percent
._.~
~; interest 'rate.. This program a119ws.the owner to .make a eariety
`• of "moderate cost" improvements including electrical, plumbing,
acid heating system updates, .insulation and weatherstripping n-
stallation, and repair/replacement of roofs, as long as tenants
are not di placed. To secure the improvement financing, the
owner agrees to rent the improved units to low .anal moderate in-
come persons~f:or 15 nears-, utilizing the Section 8 rent subsidy
,p x' ogr.am. _
- -_~
Recent y, Metro HRA- created a `compan'ion pror~ra~i that also
~_, ~ . ;.
provide financing at the 11 percent interest rate, and which
planes more'`emphass-on energy conservation improvements, 'im
addition to' general repairs . Tfiis program requires that exist-
ing low. and moderate in~'ome tenants benefit 'from the mprove-
ment without tying tr.e owner to a lo=ng--term Section 8 commit-
ment.. the new program is called the Rental Rehabilitation Loan
Program. Bef-ore the. Metro HRA can administer this additional
program in Richf field, the Richfield .HR1~ must adopt a resolution
apgroving_the program. This letter grov.ides additional .informa-
ton about past experience with the Metro HRA rehab.ilitatori
programs and: further explains the Renta Rehabilitation Program..
In -administering the Moderate Rehabilitation Program, and
if-authori-zed by the HRA, a Rental Rehabilitation Program, the
1~ze~tro HRA has. had a number of responsibilities. These include
program advertising and services to property owners; szcr~ as
property in pection, specification writing, bid analysis., loan
~~ application processing, oan counseling Arid coordination of
repairs:. The city does incur some costs in that city inspectors
_~
HRA Letter No. 5 -2- February 22, 1983
are requested to evaluate buildings in cooperation with the
Metro HRA, so that city code violations can be resolved anal
improvement work. prioritized. The Public Safety Department
has indicated this responsibility is manageable within their
normal work schedule.
To date, the-Moderate Rehabili-tat:ion .Program marketing
strategy and program incentives .have act been enough to interest:
rental property owners in Richfield`to participate in the Fro-
gram. Public notices announcing the program were placed in
local newspapers and workshops were held at city hall to pro-
vide more information to rental property owners. The FiRD staff
provided lists of property owners to the Metro HRA for direct
mailing of program information. At the request of the Richfield
HRA, additional mailings were directed to duplex owners in
certain areas of the city. However, all of these efforts were
largely to no avail. `..Some of the faotors that might have limited
program participation include:
1 . A number of units may not'. require "-the ',general repairs
the program allows - for instance, most units a1-
ready meet Section 8 minimum housing standards;
2 . A des i.re not to have, _to meet the requirements of a
Section 8 contract for 15 years, particularly since
,- vacancy rates have been so low in "recent years that
guaranteed rent payments (one positive Section 8.
program aspect) were not much of an incentive;
3 . The status of tii.e economy has -not been. conduc ve to
.._ -~~
prompting property" owners to incur. additional debt.
This is significant lately since rent" increases--have
slowed and vacancy rates have increased.
Although the Rental Rehabilitation Program does no"thing
to resolve the .first and third concern listed above, th is pro-
__
gr-am may be more attr~otive't.han the Nipderate Rehabilitation
...... .. . .. .. _Nr .~....___M_ _.__ _ __
Program becau e of the removal. -of the Section 8 :commitment`'.
~(~ summary of the program requirements and eligible " improve-
meats is attached to this HRA Letter). The Rental Rehablta-
Lion Program provides an incentive to rental property owners
to conserve energy and lower operating cost .The program
_" . .:
still :assists the low and moderate ~c,ozne,.,tenant, since the
tenantis not displaced and benefits-.from the repairs. Lowe
operatingcosts. for conservation may keep rents -from ncreas=
ing even though an owner is?carryng additional debt, again a
benefit to an existing tenant.
In addition, the Metro HRA has poin ed out the following
-- --:
city benefits ..fYowners__.particpat~e:
1. It provides a below market rate finance mechanism
for financing' energy improvements in other than
single family owner occupied housing;
2. It improves and mahtains our existing housing
stock;
3.. It .increases supply of housing units available to-
low and moderate-income. households;
4. It may increase Policy 39 housing performance
score.
Since the city inspection division routinely inspects the
larger apartment complexes for safety and maintenance, it is
hoped that this additional program would be successful for
owners of smaller complexes, duplexes, and single family rental
homes where low and moderate income tenants already reside.
It is recommended that the HRA adopt the attached resolution
permitting the Metro HRA to imp ement th.e Rental Rehabilitation
__
Loan Program in F~ichfield_
Respectfully submitted,
~<~~' ~
Kari Nollenberger
Executive Director
HRA RESOLUTION N0.
RESOLUTION AUTHORIZING THE METROPOLITAN COUNCIL
TO IMPLEMENT THE RENTAL REHABILITATION LOAN PROGRAM
WITHIN THE CITY OF RICHFIELD
WHEREAS, the Housing and Redevelopment Authority in and
for the City of Richfield (HRA} desires to assist lower income
families and individuals to obtain adequate housing in the City
of Richfield at an affordable price and to accomplish the purpose
of undertal~ng a program of providing technical assistance and
loans to property owners for the purpose of rehabi itating rental
units for occupancy by low,and moderate-income families and
individuals; and
WHEREAS, tYie Metropolitan Council has been du.iy organized
pursuant to Minnesota Statutes 473.1.23; and has been. designated
a housing and rec3.evelopment authority pursuant to Minnesota
Statutes 473.193, with the powers and duties of a housing and
redevelopment authority under the provisions of the ?Minnesota
Housing and Recle~elopment Authority Act, Minnesota Statutes
462.41,1 to 462.71, and the acts amendatory thereto; and
WHE3?EAS, the HRA and the Nletropoiitan Council desire to
encourage the stabilization, revitalization, and rehabilitation
of the rental property in the City of Richfield; and
WHEREAS, the HRA has determined that a program to encourage
the rehabilitation of rental units is consistent with the housing
goals of the city and cflnsisten.t with the city`s public interest.
NOW, THFiREEORE,,BE IT RESOLVED by the Housing and Redevelopment
Authority in and for the City of Richfieldl:
Twat the Metropolitan Council is hereby authorized to
implement the Rental Rehabilitation Loan Program to
encourage the rehabilitation of affordable private
rental units within the City of Richfield.
,Passed by the Housing and Redevelopment Authority this 2' nd
day of ~'ebru.ary, 1983.
Thomas E. Harms, Chairman
ATTEST:
V.. L.Luettinger, Secretary
Program ReQUi.remer_ts
The following are requremer_ts for owner participation in ti"le
Rental. Rehabilitation Loan Program:.
a) The property to be rehabilitated must be owned by the applicant
and used for residential purposes
b) Units gust be leased to Low-.and moderate-intone households
c) Owners must certify that tera.ants will not be displaced during
os after rehaba.Ii.taton ~ ~.
d) FHA Title I I:oats maximum amounts are $7-,500 per multi-family
unit not to emceed $37,SO0 per structure, and..$15,000 per
s~ngZe-family structure
~.:
e) AlI buildings rehabilitated no.st be brought into compliance
with State Energy Conservation Standards
f) Structures less than I5 Fears oId are eligible only for
energy compliance improvements
g) St~etures more than 15 years old are also eligible for
permanent general improvements
Eli ible Zm~rovements
a) Energy Conservation .Standards
- Caui.'~ing , weathers tripe ir~g
Storm door and window installation
Fireplace and stove positive shutoffs
Insulation is accessible attics, waL1s and rim joists
b) General re~iabLitaton
- Structural aaditioris, alterations
- Extarior, interior finishing
-_ Roofing repair' or replacement
- P7~.~mbng ustaLLaton or replacement
- heating and ventilating
Electrical wiring
c} Accessibility improvements
- Ramp construction.
- Handrail, grab bar installation
- Other