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11-16-81 agendaHOUSING AND REDEVELOPMENT ALi'I:I%~'I'~`:.' Office of Executive Director F-IRA Letter No. 42 R ~' r Housing and Redevelopment v '9`J Authority Commissioners 4~"~ City of Richf field ~~" ~ Dear Commiss,~orlers :. Agenda November 16, 1981 Subject: Richfield State Agency Developer's Agreement For a number of months the staff for the HRA has been negoti- ating a developer's agreement with the Richfield State Agency for development of the block surrounded by 66th Street, Lyndale Avenue, 67th Street and Grand Avenue. The develolr~.ent o-~ t.~e block has been approved by the planning commission and the city. council on a planned unit development divided into two major phases. Phase I of the development will have improvements exceeding $8 million dollars installed on the project site, adding substantial office space .and retail area. to this southeast quadrant of 66th Street and Lyndale Avenue. 'The Richfield State Agency project has been a major element of the L/H/N redevelopment program and has i~:-~~r_ a~~~L-icipated for, im- provements under existing tax increment schedule of the HRA. Af ter extensive negotiations, _a developer's agreement has been worked out in principle, which is agreeable to both the staff and the principals in the Richf field State Agency. .The major. aspects of the agreement, would be as follows: -the developer would use its best efforts to develop .the property according to the project plans which have been approved by the city council; -the HRA would use its best efforts to obtain and convey to the developer marketable titles to the parcels owned by Kentucky Fried Chicken and Bjorn Hacxen;(tracts 2 & 3) -The HRA would sell to the developer tl~e parcels acquired from Kentucky Fried Chicken for the amount of $150,000, and from Bjorn Hagen in the amount of $90,000; -the developer shall remove all struc~cures located on tracts two and three within 90 days following the date of closing on each tract; -the failure of the HRA to obtain and c1e1_i~~or r.:arketable titles to either tract by September 1, 1982, would be grounds for termination of the agreement; -the developer would deliver to the city, duly authorized and executed easements for property condemned by the city for the Lyndale Avenue improvements. As considera- tion for the easements, the city would pay the .developer $17 , 000 ; the developer would pledge thr~ ~-~.~-`.: ire sale of HRA Letter No. 42, -2- November 18, 1981 the Lyndale Avenue easement as a guarantee that it would. develop the property by construction of the improvements in the project plans; -the city would place the purchase money for the Lyndale _Avenue easements in an interest bearing account which would be paid to the developer if it has completed construction of the improvement by December 31, 1985; -the city would provide utility relocation for utilities on Harriet Avenue either by removal of the utilities or reloca- tior} of the utilities within an easement right-of-way conveyed to the city on Harriet Avenue. -the developer will execute an assessment agreement; an auditor's certification establishing a minimum market value for the land and improvements to be constructed in the project in accordance with the agreement which would provide an increment sufficient to discharge the HRA's writedown and misc.ellaneQUS cost=.amori- tized over a period of 20 years at an interest rate of 12 per- cent per annum with level debt service; -as additional security, the developer shall provide a corpor- ate guarantee in favor of the HRA which shall provide that in the event the tax increment generated by the improvement as determined by the HRA is less than the increment calculated above, then the HRA shall provide written notice to the corpor- ation and the corporate guarantee shall provide an amount which is equal to the difference between the amount provided above and the tax increment .which is .generated by the new construct- ion. -The two tracts conveyed to the Richfield State Agency shall be restricted to and the deed conveying such tracts shall provide use and development as described in the. project plan. The above outline of a developer's agreement provides the basic elements of a program which will allow the Richfield State Agency to move forward rapidly with the development of their parcel. The HRA is in the position of receiving a much larger tax increment from this development than necessary in order to pay for the annual costs incurred by the HRA. I would strongly encourage the HRA to approve a developer's agreement which would contain the above basic points and authorize the executive director and chairman to enter into this developer's agreement. Due to the fact that some elements of the developer's agreement contain commitments on behalf of the city, the city council will need to approve the developer's agreement and be- come a party to it. This will be presented to the city council at their November 23, 1981 city council meeting. Once approval of the. developer's agreement is given by the HRA, authorization to acquire the properties currently owned by Kentucky. Fried Chicken and Bjorn Hagen will be necessary. In addition, it is suggested that the Kentucky Fried Chicken parcel is required to be purchased in a timely fashion in order to facilitate this project. For this reason, it is suggested that the HRA begin the eminent domain procedures on the Kentucky Fried Chicken parcel in the event that negotiations are unsuccessful over the next couple of HRA Letter No. 42 -3- November 18, 1981 months. Since the immediate taking of the property is a time con- suming process. under the acquisition guidelines of the statutes,: • it would behoove the HRA to pass a resolution now establishing the beginning of the process so that efforts can be completed prior to the Richfield State Agency development. It is recommended that the HRA adopt a resolution authorizing the acquisition of both Kentucky Fried Chicken and the Bjorn Hagen properties and additonally authorize .the commencement of quick take proceedings of Kentucky Fried .Chicken. parcel. Respectfully submitted, ~- Karl Nollenberger Executive Director KN/eja cc: Community Development Director Housing and Redevelopment Coordinator w • +~ontrc~l h $y Susan Caba and Roz Laird Des Moines city government: needs a firmer -Hand at the helm and reor- ganizatiob of several departments to eliminate waste and duplicated efforts, according to the Mayor's i~conouiy~t"udy released today. The study of city government oper- ations by a 12-member committee resulted: in 170 recommendations, - among hem a call for City Manager Richard Wilkey to tighten his. control ~~ over city departments. And the committee said sin of the 12 e'sisting. city departments with related netivities should be con- sdlidated, and it suggested eliminat-' 2ng"several'. staff. positions ranging .from, parking meter attendants to' ce et+~ry §upervisors to a depart- melt geed: Al§o;: the committee .urged .the city to consider setting up a regional airport' so non-residents will share in its costs,, raising user fees for: such things-as parking; and overdue book. fines and charging suburban readers for using Des Moines libraries.. At a press. conference to release the report today, Steering Committee Chairman John'Smidt of the Arthur Young & Co: said following the rec- ommendations °could save as much as i2 million in-.the city's budget of over ;130 million. Mayor, ~ Pete Crivaro said at the press conference that-.the ;2 million savings 9vould be: necessary to make up foF _ ,the. estmiated : ~3' .million: in federal`revenue shafting funds the city stands to lose: And, .Crivaro ;said the report contains "some < horror stories"' and that everyone -from the mayor's office on down - is at fault.. 'e committee, which swelled to a task force of some 65 volunteers, was- appointed..by Mayor Crivaro, earlier thtis year to study city government with an eye toward .improving effi- ciency aad.saving tea dollars: _ _ at For two months, the ,task force of Des Moines businessmen. and proles- sionals interviewed and observed city employees, reviewed documents and procedures and identified possible areas. of change. Virtually no one escaped the com- mittee's scrutiny, including City Manager Wilkey, whose style of man- agement, which leaves most day-t~. Economy -- day decisions up to department heads, the committee found inadequate.: "The. departments in city -govern- . went operate auionomously; ith loose control .and coordination from the city manager's office," the report said. "This results in occasional .du- plication. of. effort and inadequate in- terdepartmental communication." "The City . Mar_ager does not hold: regular meetings of the staff and de- partment heads, and frequently delegates responsibility to his assist- ants. This system, without. essential follow-up and evaluation` leads itself- to inadequate management." The committee said Wilkey. should conduct regular staff meetings and set specific performance goals .from department heads. The committee also said: the ;90,000 budgeted for salaries of Wiikey's three- assistants is 10 to 15 percent too high and should be cut as those assistants are replaced: "it kind of reads like a horror story in places,".Crivaro said today. of ,the report. "In some areas, the handling of city services has gotten into a rut ... none of vs recognized this .was going on, and its gotten deeper." Crivara explained that he was shocked to discover in the report. that the city has apparently done a poor job of "preventative. maintenance" of it's ;75 million worth . of equipment and facilities. "Rather ..than spending each pear on preventative- maintenance, when something goes to pot,, there is: a capital expenditure of several million dollars to keep a bgilding.from falling ia,» he said. .Also,: ge. said, `the report found that ', city equipment'' has been abused by __ _ 'employees, that. drivers waste time - waiting. to fuel up u- `tlie morning at_ the-.city garage and that record keeping is inadequate. "There are a number of .those. little items that aggravate me," he said. "1:'m not blaming anyone," but he aid everyone - tram himself `on down -- shares responsibility for correcting the deficiencies.. The major recommendations of the committee are: ® Create a general services depart- meat responsible for city; equipment and buildings: This responsiblity is . now spread .among several depart meats: _ .Thin would result in better use of equipment, and better maintenance of city property. • Merge the. Traffic and Taanspor- tation Department with. the, Public _ .Works Department, to create. one unit responsible for traffic contml, trans- portation planning, streets, sanitation. and sewers. Besides the increased efficiency of one department, the city would see a savings of ;1?4,600 by eliminating sig employees =including one depart- -meat- head who earns, up to ;47,200 annually. • Bring the Plan and. Zoning; De- partment, now under the control of the Plan and Zoning Commission, under the city manager's supervision. • Combine the Planning Depart- . meat-with the offices of Urban Devel- opment and Neighborhood Devel- opment and the Building Department into one unit, perhaps called the De- partment of Community Devel- opment. _ _. __ AIi of these offices are invaived in planning,. developing., and. reviving neighborhoods. The committee thinks a single deparkment would :have a smaller staff with lower administra- tive costs. This is particularly important since Urban Development and Neighborhood Development ac- tivities depend largely on federal. funds, which are shrinking. ® The city's sip prime service areas, designed to help low-income residents, should be combined into three service areas Tfie<'boundaries of these areas should be evaluated, to see that help is being delivered to residents who need it. ++ The. staff of Veterans Memorial ` Auditorium should discard`its~"break- even mentality" and realize' that tine auditorium could be making. a profit. With little extra effort, says the committee, the auditorium.could pull in an additional:;2di;000. Job descrip- Lions for the staff need to be rewritten, and the staff should. be re- organized and reduced. - • Hoasiag inspections should be contracted to outside companies, if feasible, with homeowners paying the cost of inspeeti~ns This 'would eliminate a ~5;a,0000 operating deficit. If that glan ><sa't feasible, housing inspectioa4 should be returned to the building department. (they were transferred to the fire department > after investigations showed inspec- .tars had poor work habits). But strict .standards should be established. and ' ". enforced, with proper supervision, the -.study said. ` e Garbage trucks should .drive ; darectly to the landfill, without j stopping: at the Metr-apolitan Transfer 'Station. This -would save the city approximately 1500,000 a year. • :Ownership of the _ Des Moines Airport should be trans#erred to a regional authority, representing ' several airports. This wotild spread the cost of supporting the. airport among. the cities which are served` by , the fa~fli'ty. ; However, City Manager ®Villcey is . against this suggestion, .saying the" airport is just beginning to break even and the city is beginning to benefit from airport ownership: • IAes Moines sabnrbs should contract. with. the Des Moines Library to allow non-Des Moises residents to use the library. Currently,. those cities. have informal agreements. #or library use.which,..says-the committ~:e,,~teans Des:. Moines .residents are=subsitlizing non-residents use. • An ezternal audit division should . be created:. to review city operations . and report directly to the. mayor and council. That operation is now done. within the. City> Finance. Department, and the. c®mmttee thinks it would be wise to have ~ "a more. independent review of city operations.:. Ia addition to these major recom- . mendations, the committee recom- mends that several positions -some now vacant,: some not - be elimi- nated,.for savings ranging. from $4,000 annually to more than ;20,000 a year. And it recommiends that. ail data:. processing operations be consolidat- ed, for more efficiency. in using, the. city's computer facilities... Also, energy costs - which. ate up ;3.1 million in 1900-81, secluding the. costs of street lighting - could be reduced by between ;100,000 and ;150,000 "without sophisticated programs," suggests tine committee. Tfie city should look into developing an energy-use control system, the committee said. Many city departments operate erithout written •job descriptions, procedures and.. policies, the committee. also. concluded. -The group suggests that these procedures are needed to ensure that employees know what s,:egpected of -them, and to make. training.. new employees easier. . Some of the recom><nended changes could be simply made by department heads involved,. white others would require City Council reversal. of . major policies and - in a few instances -= the Iowa Legislature would have to change some state laws for: the savings to be realised. The following is a list of Economy Committee members: John Smidt (chairman), Arthur Youeg & Co.; Vincent G. ENa (vice chairman), taw f'am of Davis Hockenberg Wine.Brown & Kcehn; Richard 5. Davis. (secretary), Pope-Des Moaresi Taxpayers Assn.;: Simon Casady, United Central.Bank;:Linda Cottin9- ton, Preferred Risk; Daniel; Frommeh, Carriers Insurance; Daryl Henze, Peat; Marwick, Mitchell & Co.; William C. Knapp II, Iowa Realty; C. -Max Miller, Central Life and Iowa Really; Caesar Smith; The Bankers Life; James W. Wilkins, architect; and Harold Thorne, Pioneer Hi-Bred IM:ernational. HOUSING AND REDEVELOPMENT AUTHORITY Off ice of Executive Director HRA Letter No. 41 Agenda November 16, 1981 Housing and Redevelopment Authority Commissioners City of Richfield Dear Commissioners: Subject: Acquisition of Two Properties on the "Godfather Block:" One of the major redevelopment goals for the L/H/N consists of assembling the "Godfather Block" for redevelopment. The 1979 amendment to the Redevelopment Plan suggested mixed-use, multi- family, office and retail space development. The HRA has purchased two properties in this area to date, the Phillips 66 Station, which is now rented to the Knutson Company`s Lake Shore Drive Office, and the .Stanton Realty build- ing, at 738 West 66th Street. At this time, the two adjoining • properties, .Larry's Auto Body Supply, 735 West 65th Street, and Craswell Studio, 732 West 66th Street are for sale. Both owners have been in contact with the city staff regarding the HRA's possible acquisition of their property. With the bond sale for the multi-family site scheduled for December, additional funds will be available for the purchase of property. The staff will begin the purchase process for these two parcels by ordering appraisals in the near future. The HRA is requested to give preliminary approval to the acquisition of these properties. Respectfully submitted, Karl Nollenberger Executive Director KN/eja cc: Community Development Director Housing and Redevelopment Coordinator /~,_ ~ _ - 1 • _ / !~/~ .. / - ~ _ CROSSTOWN HYW. CROSSTOWH HYW ---~ _"~~ _._ - -- - ~ _- _ _ _ I _ __` \ J w ,W l n n n I ~ 6l rA ST. ( t 1 I ~ ~ ' ~ I i' ~ 7 j ~ I ! j I ! i V I 1 1 I I ~ ~ l ~~ I. t ~L c~rAT ~< ~ I ' a' ~ <i I {I ~_ ' i s I J l ~: 4 1 I I~ i `= n > mplf Ifre.fLw.f1 1f®1f.~ I i,~ I I t I I I .; l j t ~ ~~ ar I ,o~ I ' RICH FIELD fI ~ ..~' ~ i i 1 i .I I I I~ I t ~ ' , m ~ I`=C ! 1W- ~ I I i ; I i~ s( imsulneiuna I ~ ! I t ~ I ~ I f6~ ! ;!_ .. 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' 66 T I!(I Of` f ~=~. ~ a , f•... ~ vx I I I uff~u OOUNDARY i ~. i KEYED TO LIST OF PLAT r~~%f; ~ q4f Ind ~~I, of ~ I ~ I A PARCEL NUM1!©ERS Lu~nwnns~ ~ . 3 f1AF ~~~~ ~~ ~, .r I 15 I .. _ ~ I - I oCT. e. m - qy ~~~ ~ ~ vo ~r,u~ Il~iir~usi~ii I I I t _ ~! cr rsl sr. ~ .. i i ~ ^ro r 9f' IIf~1f:I ~' ~ 1~ 1 I ~ i `~ H t f . / I { ;,~~~ - Properties for Sale l __ WOOD ! ~ ( ~ I ~ ~ ~ i Exlaf~r j - H12A Property m • LAKE l I. _ ' I~I ~ i 4{4 r --' lil~1 j I I- i !_,I;. E. ;~ i f I .- ~ PROJECT BOUNDARY ~. ! f ~ I 6^ IA ST. • i HOUSTNG_AND REDEVELOPMENT AUTHORITY Office of Executive Director • HRA Letter No. 40 t ~7 v Housing and Redevelopment ~ ~\ Authority Commissioners ~u City of Richfield ~o? a ~\ o ~. Dear Commissioners: b Agenda November 16, 1981 Subject:. Resolution Authorizing Issuance of Tax " ~ Increment Borids There is an item on the November 16, 1981 HRA agenda pro- viding for HRA consideration of a resolution which would initiate the process to sell tax increment bonds to finance the HRA's costs incurred for the Lake Shore Drive condominium project, the Lyndale Garden Center redevelopment, and other miscellaneous purposes. The resolution which will be distributed on Monday night, will summarize the HRA's expenditures for these purposes which are to be= recouped from .the bond proceeds. The major expenses are those re=' lated to the Lake Shore Drive project, and represent primarily the HRA's land assembly costs. for that project. The other major category of costs to be financed by this bond issue are acquisition and relo- cation expenses for the properties located at 709, 715, and 721 Gra- ham Avenue, and for the garden center development. The resolution would. request the city council to sell tax in- crement bonds in an amount not to exceed $2,500,000 to finance rede- velopment costs for the multi-family and garden center projects, and other related costs. The total amount of the proposed bond sale includes issuance and discount costs, and capitalized interest. Minn- esota law provid2s that city councils must issue tax increment bonds. This requirement is based on the fact that, if.sufficient increment is not present to meet the debt service obligations, the full faith and credit of the city is pledged to meet those commitments. Pro- jectons of-the tax increment which will be generated by the condo- minium and garden center developments, indicate that sufficient in- crement will be generated to meet the annual principal and interest payments on .the band issue. These assumptions are based on a 20- year bond issue, sold at an interest rate of 11.5 percent. The city's financial consultants, Evenson-Dodge, Inc., have indicated that current market conditions are such that it is realistic to assume that interest rate. It is recommended that the HRA adopt the resolution requesting the city council to issue tax increment bonds in an amount not to exceed $2,500,000 and authorize the Executive Director and Chairman to execute the tax increment agreement with the City of Richfield.. Re ecitf~ully submitted, JV a arl Nollenberg Executive Director n t.~ t P • RESOLUTION1 TdO. 185 A RESOLUTION DETERP~IINING THE .NEED FOR FINANCITJG REQUIRING TI3E CITY COUNCIL OF TI3E CITY OF RICHFIELD TO AUTHORIZE THE ISSUATICE OF GETIERAL OBLIGATIOTI DEVELOPP'IETJT BOTdDS TO FIiQAT•dCE PUBLIC REDEVELOPT~Ei1T COSTS IN THE LYNDALE-HUB-NICOLLET REDEVELOP<4EDtT AREA BE IT .RESOLVED by the. Housing and Redevelopment Authority of the City of Richfield, I~Iinnesata, as follows: Section 1. Findings • 1.01. This Authority has. pursuant to T•Zinnesota Statutes., Section 462.411 to 462.716. (the "Housing Act") duly adopted a Redevelopment Plan (the "Plan") for a redevelopment project described as the Lyndale-Hub-ldicollet Redevelopment Project (the "Project Area") and: .commonly referred to as the LHi1 Project. The-Plan and the Project Area-have been duly approved by the .City Council of the City of Richfield (the "City") in accordance with the Housing Act. 1.02. This Authority and the City have entered into a Tax Increment Agreement. (the "Agreement") dated ray 9, 1977 in accordance with the Housing Act and I~linnesota Statutes, Section 273.71 to 273.78, the Tax Increment Financing Act (the Housing. Act and the Tax Increment Financing Act collec- tively referred to as the."Act") for the purpose of authorizing ,the issuance of general obligations of the City, payable from tax increments in the Project Area, to finance Public Redevelopment Costs within the Project Area. The Agreement authorizes the issuance by the City of its general obligations for such costs at the request of this Authority. 1.03. The Plan has been duly modified and amended in accordance with the Act to provide for the acquisition and improvement of certain lands in the Project Area for the purpose of facilitating the construction of a multi-family housing .development and related improvements (collectively "the Project") and to provide for the financing of other related Public Redevelopment costs of the Project Area. This Authority has authorized the execution of development agreements in connection with the acquisition and disposition of land for the Project. ' A 1.04. This Authority has incurred Public r - Redevelopment Costs for the Project and other costs for the. Project Area, and it is found and determined that it is .nece . ssary for the sound financial management of the LHN Project Area that general obligationsof the City be issued to f inance all or a portion of such costs. Section 2. Public Redevelopment Costs 2.01. The Executive Director has submitt ed. to the - - Authority a list of Public Redevelopment Costs of the _. Project Area. which are presently estimated to be as follows: _ Multi-family Site Costs Acquisition $ 816,972 Site Improvements 28,325 Relocation 10'7, 510` Demolition 4,200 .. Project 705 Special Assessments. 78,620 - Disposition Expense 15,000 Administrative Expense 44 938 -, Contingencies (5a) 58,444 _ Property Management Expense 60 816' - _ Legal Costs 12,000 .Other Project Area Costs _ Administrative Costs $ 177,700 ~_ Multi-family and Commercial • - Rehab. 100,376 .Advances from Capital Improve- ment Fund 96,551 Lyndale Garden Center _ ~ Development Costs (1980-81) 273,958 - Financing Costs - Legal and Fiscal 25,000 Capitalized Interest 500,000 -- Bond Discount 48,000 Total. bond issue required ~ $2,450,000 Section 3. Issuance of Bonds 3.O1. This Authority hereby requests the City. to issue , . . _ and sell its general obligations in an aggregate principal .amount not to exceed $2,450,000 to finance all _ or a portion of the Public Redevelopment Costs identified in Section 2. • -2- u, ,._. _.: .. ,, 1 ' o .. .. 3.02. The ~lgreem~nt is hereby-ratified and confirmed in all respects.. 3.03.. This 1luthority renews and reaffirms its • statement. in HRA Resolution i1o. 32 of i~ay 9, 1977 concerning its intent to request additional series of bonds in-the future to finance the Public-Redevelopment Costs in the Project Area and restates its request that all such series of bonds. be on a parity with. each other such series of bonds so issued, and be equally .and ratably secured by the pledge of the Agreement. 3.04. The Executive Director is authorized and directed to transmit a certified copy of the resolution to the City forthwith. Pas"sed by the Housing and Redevelopment Authority of the City of Richfield, Minnesota. this 16th day of November, 1981. ATTEST: Thomas E. Harms Chairman Michae Freeman Secretary • • -3- `.Er Y sl~* Nrt +7.~"9r~'s1cw1YS . ...a«.:r~.-w--..~.::` t~.. . ~as~c..: .o+.-~wesY"CS; x..~T~*wr;~:r~K ~",~ T"'7...~~.,. ~. _... .... .. ->:. ._ .. "~" _-'..... __ x-.:~:~.sut+r;waerT,a.. ~.wv.+°v~,t.--,.-.yx..,,u~c.+~+..a vR:;•-r...-,r~u..=_. ` ~ ~ FREF'ARED R~ENSEN-DODGE, ING. _ 11/16/81 CITY OF RICHFIELLi START BATE: 12/01/81 TAX': PERIOD ESTLMATED COLLECT ENDING - ---------- - FROF'OSED BOND :ISSUE -- ----------•--- PROJECT COVERAGE ~~ YEAR 02/Oi FRINCIF'AL COUPON INTEF;E5T TOTAL F'SI INCREMENT FACTOR 1982 1983 32ti,708.33 328~708~33 (1) 198.3 1984 20,000 11.500 281x750.00 301,750.00 48,731.00 (1) 1984 1985 25,000 11.500 279,450.00 304,450.00 308x957.00 1..015 1985 1986 30,000 11,500 276,575.00 306.575. 0 0 315,000.00 1.027 1986 1,987 45,000 11.SOU 273,125.00 / { 318-125c00 321x000,00 1.009 1987 1988. 55,000 11.500 2b7s950.00 322,950.00 327,000.00 1.013 1988 1989 70,000 11.500 261-625.00 331,625.00 334,000.00 1.007 -1989 1990 80,000 11.500 2:3,575.00 333,575.00 341,000.00 1.022 1990 1991 90,000 11.500 24.4,375.00 334,375..00 347,000.00 1.038 1991 1992 10.5,000 11.500 234025.00 339,025.44 354,000.00 1.044 1992 1993 120,000 11.500 221,950.00 341,950.00 3bi,000.00 1.056 1993 1994 14Ux000 11.500' 208,150.00 348x150.00 369x00.0,04 1.460 1994 1995 170,000 11.500 192,050.04 362,050.04 376,000.00 1.039 1995 1996 185,000 11.500 172,500.00 357x500.00 384,000-00 1.074 1996 1951 210,000 11.500 151,225.00 361,225.00 391:000.00 1.082 1997 1998 235,000 11..500 127.,075,00 36"?,075.04 399x000.-00 1.102 1998 1999 270,000 11.500 100x050.00 370,050.00 A07,000.00 1.100 1999 '000 300x000 11.00 69x000.00. 369,000.00 415,000.00 .1.125 2000 2001 300x000 11.500 34,500.00 33.4,500.00 424x000.00 1.268 TOTAL 2x450x000 3.977,655.33 6,427,658.33. 61222x688.00 N E I R 1 1.5000Y. PROJECT COS TS $1,87.6,000 ISSUANCE CO STS 26,000 HUNK YEARS 34,588.3 AVG. MATURITY 14.1 YRS. DEALER DISC OUNT 48,000 CAPITALIZED INTEREST 500,000 INTEREST DUE 8/LAND 2/1 BOND ISSUE SIZE $2,450,000 PRINCIPAL DUE 2/1 CAPITALIZED .INTEREST: FROM BOND PROCEEDS $500,000 ASSUMES 2% ANNUAL INFLATION IN TAX ,INCREMENT REINVESTM ENT EARNINGS 82,000 (1) GROSS CAPITALIZED INTEREST $582,000 HOUSING AND REDEVELOPMENT AUTHORITY Office of Executive Director HRA Letter No. 39 Agenda November 16, 1981 Housing and Redevelopment Authority Commissioners City of Richfield Dear Commissioners: Subject: Public Hearing on Sale of Properties at 6216 Pillsbury Avenue and 6225 Harriet Avenue The construction of single family .homes at 6216 Pillsbury and 6225 Harriet Avenue is well underway. Completion is sched- uled for November 30, 1981. A public hearing has been scheduled for the November 16, 1981 HRA meeting to consider disposition of the property. The HRA authorized the construction project on September 4, 1981. According to the construction agreement, work must be • completed by November 30, 1981. When the work is inspected and found satisfactory, the contract will be paid with the proceeds from the sale. The selection process to determine purchasers for these properties started in late May, 1981. The selection criteria was similar to the Vo-Tech selection criteria. The applicants were J required to: -have a 5 to 8 member family to best utilize a four .bedroom house; -have an income that does not exceed 80 percent of the median income level of the metropolitan area; -purchase the home for $52,800 with $8,000 down, a $44,000 first mortgage and be subject to second and third liens by the HRA and HUD, respectively; -be a first time home buyer Extensive advertising for qualified purchasers was done in- itially in the Richfield Sun and, in subsequent weeks, in the Minneapolis Star and Minneapolis .Tribune. All Section 8 rental complexes in the metropolitan area were also contacted. Eight applications .were received and preliminarily evaluated. Five applicants were qualified, two exceeded the Section 8 income limits, and another was already a homeowner. One of the qualified five was a Richfield resident. The applicants were then ranked by a lottery held June 10,.1981. Two applicants and two alternates HRA Letter No. 39 -2- November 16, 1981 were selected for the two houses. A five-member Richfield family and a five member family now residing in Hastings were selected as the two applicants. They were submitted to the lender for processing. In late July, the staff was notified by the lender that the Richfield family was not qualified be- cause they did not meetfinancial guidelines: The Hastings family was found preliminarily acceptable. The first alternate, a five-member family from Burnsvi le, was found preliminarily qualified. These two families have executed a purchase agree- ment with the HRA so that they can be evaluated by FHA to de- termine eligibility. The FHA would not evaluate the potential purchasers until they had received an executed purchase agreement.: The purchase agreement does provide that "This agreement is fur- ther subject to~authorization by the HRA, and is void and earnest money released in the event authorization~is not received." The purchase agreement also explains the type of liens the HRA and HUD are considering. Both the HRA and HUD intend to recover program costs of the project. After the $44,000 first lien to the lender, the purchaser is responsible for paying $14,200 to the HRA. This amount is the difference between the $52,800 maximum sales price allowed by the Section 235 program and $67,000 which is the FHA estimated value of the property. The purchaser is also responsible to HUD for approximately $125,000 of mortgage subsidy over a 30-year period, or 50 percent of the equity appreciation in the house, whichever is less. The second and third liens take effect when the property is sold by the HRA. • It is not known. at this time if the applicants are definitely the qualified purchasers, because FHA has not yet completed their evaluation. However, because the lender has found them accept- able, FHA will probably find them acceptable. If they are not qualified, the remaining eligible alternates would be evaluated to ensure sale of the property and payment of the construction contract in a timely manner. If there is a problem with FHA qualifying any of the famil- ies, it would occur because of a change in mortgage interest rates from the time they applied for participation in the selection process and the interest rate today. The interest rate at that time was 4 3/4 percent and is now 8 percent. This increased in- terest rate results. in a monthly house payment increase of about $80 to $100. It is recommended that the HRA adopt the attached resolution authorizing the disposition of the properties at 6215 Pillsbury and 6225 Harriet. Respectfully submitted, ~f,.~ Karl Nollenber'ger Executive Director cc: Community Development Director Housing and Redevelopment Coordinator HRA RESOLUTION NO. RESOLUTION AUTHORIZING SALE OF PROPERTY AT 6216 PILLSBURY AVE. SOUTH AND 6225 HARRIET AVE. SOUTH WHEREAS, the Housing and Redevelopment Authority of Richfield, Minnesota, (hereinafter referred to as the HRA) owns certain real properties located at 6216 Pillsbury and 6225 Harriet Avenues South, said properties legally described, respectively, as follows: The .southerly 45 feet of the easterly 135 feet of Lot 5, flock 4, Betcher'.s Addition to Richfield, and that part of easterly 135 feet of Lot 5, Block 4, Betcher's Addition to Richfield, which lies between two lines run parallel with and distant '45 feet and 50 feet northerly of the south line of said Lot 5; and Lot 9, Block 2, Kendale Addition, beginning at a point on the west line of said Lot 9, distant 30 feet south of the northwest corner thereof; thence run northeasterly to the northeast corner of Lot 4, said Block 2, and there terminating, Hennepin County;-,and WHEREAS, the two properties were acquired by the HRA from the Minnesota Department of Transportation for a public purpose, • that being the development of single family homes for moderate income families; and WHEREAS, the Planning Commission was requested to make certain findings regarding the appropriateness of residential reuse for these properties; and WHEREAS, the two houses are nearing completion and final purchaser qualification is underway; and WHEREAS, as the result of a lottery and in cooperation with the lender, qualified purchasers for 6216 Pillsbury Avenue and 6225 Harriet Avenue have been assigned a position establishing eligibility for purchaser as follows: Mr. & Mrs. .Scott Boston, Mr. & Mrs. Richard Curtiss, Mr. & Mrs. Michael Palmer, Mr. & Mrs. Arnljot Mjelde, Mr. & Mrs. David Baker, and Mr. & Mrs. Frank Zelenak; and WHEREAS, a purchase agreement has been executed with the first ranked family, Mr. & Mrs. Scott Boston, and the second ranked family, Mr. & Mrs. Richard Curtiss, to allow FHA evaluation for an FHA Section 235 mortgage; and WHEREAS, the conditions of sale include the maximum sale price of $52,800, the maximum morgage amount of $44,000, and provisions for second and third mortgages by the HRA and the- Department of Housing and Urban Development (HUD); and WHEREAS, if either the Boston or Curtiss families are found not to be qualified, alternate purchasers will be considered and qualified in the order previously established above;-and WHEREAS, the HRA has completed a public hearing on the proposed disposition of each property.. NQW, THEREFORE BE IT RESOLVED BY THE HOUSING AND REDEVELOP- MENT AUTHORITY OF RICHFIELD, MINNESOTA: 1) that the properties located at 6216 Pillsbury and 6225 Harriet Avenue South can be sold in accordance with the- " conditions of sale. 2) that the Executive Director and staff are authorized to take such steps that may be necessary to effectuate this resolution and any sales agreement. Passed by the Housing and Redevelopment Authority of Richfield this 16th .day of November, 1981. • Thomas E. Harms., Chairman ATTEST: Michael Freeman, Secretary . ^. HOUSING AND REDEVELOPMENT AUTHORITY Office of Executive Director HRA Letter No. 38 Agenda November 16.,1981 Housing 'and Redevelopment Authority Commissioners City of Richfield Dear Commissioners: Subject: Discussion of Policy Relating to Preference for Richfield Residents in Housing Programs The Housing and Redevelopment Authority and the City Council have previously expressed concern regarding the ability of the HRA to give preference to .the housing needs of Richfield residents. The following information discusses the flexibility the HRA has in meeting. these local needs within housing program constraints. Most of the housing programs participated in by the HRA are financed by the Department of Housing and Urban Development (HUD). Because the city participates in programs within a larger metro- . politan area, we also receive financial assistance from the Metro- politan Council. When other than local money is utilized in a project, there. is a responsibility for providing housing opportun- ities to all eligible applicants both within and outside the city. The key to understanding and implementing a suitable residency pre- ference policy is applying preference criteria to eligible applicants after all applicants within and outside of Richfield are given the opportunity. to participate and be eligible for the program benefits. Because we contract through the Metropolitan Council HRA for our Section 8 existing assistance, we cannot apply a preference criteria to participants in this program. Eligible applicants may be from any of the more than 50 participating communities. Projects that rely on Community Development Block Grant fund- ing assistance (through HUD and Hennepin County), may utilize a limited preference system after participant eligibility for the program has been determined. For example, in the proposed sale of the Section 235 Lida houses, resident preference could be used in the following way: -applicants must be accepted from within and outside of Richfield, based on a particular set of criteria, such ' as income, family size, first time home buyer, etc. -on the front end, applicants are also informed that some preference criteria for city residents will also be utilized after eligibility is determined for all. ~" HRA Letter No. 38 -2- a November 16, 1981 -A lottery could be held to select participants. First selected would be the pool of eligible Richfield residents. Second ..selections might be those. working in Richfield. Third selections would be all other eligible applicants. Thus, all eligible participants have had the opportunity to compete for the housing unit, with Richfield residents having re- ceived a preference. Projects utilizing only local money could be restricted, if practical to Richfield residents. For instance, even though Section 235 financing comes .from HUD, there is no mention of re- strictions on residency preference in Section 235 regulations. Although to date, the HRA has not participated in public housing projects, the opportunity exists for residency preference in this program. In part, Section 462.481 of the Minnesota Housing and Redevelopment Act gives preference to "inhabitants of the municipal- ity in which the project is located." Thus, housing preference for Richfield residents could be dealt with through the federal public housing program. HUD believes we can offer a residency preference in certain situations, however, the Metropolitan Council, while it will not prohibit preference, prefers that we don't have a preference pol- icy. It is recommended that the HRA not adopt Richfield residency peeference criteria for its housing programs for the following reasons: -Minnesota Human Rights Act, which prohibits discrimin- ation in housing; -Housing Policy 39 of the Metropolitan Council credits commun- ities that do not institute preference criteria. If the city and•the HRA passed a resolution stating that prefer- ence would not be allowed in housing projects, we would increase our ranking to compete when non-housing federal dollars are distributed in the metropolitan area. -our requests for housing assistance come from within and outside the city, indicating both a local and metropolitan .wide housing need; -those that work in, and wish to move to Richfield, or those wanting to experience and .contribute to Richfield's quality of life would not be able_to compete equally; -such a criteria would discourage previous Richfield resi- dents, or any existing resident's relatives from returning to, or relocating in Richfield. Respectfully submitted, k~ ~l ~k~~.~~-. Karl Nollenberger Executive Director KN/eja