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09-15-80 agenda HOUSING AND REDEVELOPDIENT AUTHORITY Office of Executive Director HRA LETTER NO. 33 Agenda September 15, 1980 Housing and Redevelopment Authority Commissioners City of Richfield Dear Commissioners: Subject: Proposed 1981 Budget The proposed 1981 HRA budget document is attached for your reviewal. This document will be discussed at the September 15, 1980 HRA meeting. Respectfully submitted, • J ., ~ %~J Karl Nollenberger Executive Director KN/jf cc: HRA Specialist Council Members HOUSING AND REDEVELOPMENT AUTHORITY Office of Executive Director HRA Letter No. 32 Agenda September 15, 1980 Housing and Redevelopment Authority Commissioners City of Richfield Dear Commissioners: Subject: Modifications to Rehabilitation Grant Program Guidelines Attached to this HRA letter is a modified procedural guide- line for administration of rehabilitation grants by the HRA. The modifications were prompted by a joint evaluation of our rehabil- itation program by Hennepin County and the U.S. Department of Housing and Urban Development (HUD). The staff will use the guideline for assisting applicants in obtaining rehabilitation grants. Although it is suggested that the name be changed from "The Richfield Housing Fund" to "The Home Rehabilitation Grant • Program", the objective of the program remains: upgrading and maintaining the existing housing stock. This program is important because it assists Richfield residents in making housing repairs, and because it assists the city in achieving our housing perform- ance goals. The guidelines define eligible properties, eligible improvements, and eligible recipients, and also includes grant acceptance procedures, and work completion and disbursement pro- cedures. A section is also included that allows funding for hand- icapped accessibility improvements. The program has procedural guidelines for administering three types of grants: a CDBG grant (Community Development Block Grant Funds); an M~3FA grant (Minn- esota Housing Finance Agency Funds), and a Flood Grant (CDBG re- habilitation funds set aside for a special purpose). During the past five years, the rehabilitation program has had many changes, whereby inefficient procedures and programs have been modified. Throughout this time, however, the funding source for the program has remained constant. Hennepin County provides Community Development Block Grant (CDBG) monies to the city; a portion has been designated by the city council to be used for housing rehabilitation. The Minnesota Housing Finance Agency (N1Hr'A) also provides money. This money goes to the county and is then allocated to "planning areas" (groups of cities within the county). Richfield can draw on a specified maximum amount that has been allocated to our planning area for housing rehabilitation. In total, since 1975, 113 CDBG grants, totaling $240,273, have been made, and 42 MHFA grants, totaling $187,178 have been made. `i!-_~re nave been four CDBG Flood -damage related grants, totaling $11F053. HRA Letter No. 32 -2- September 15, 19II0 MHFA procedures for disbursing money are established by state legislative action. No flexibility in their requirements has been allowed. Hennepin County procedures are approved by the county commissioners and, at least for the present, are designed to have some program flexibility which recognizes the unique- ness of each community. When changes have occurred in our own procedural guide, it has usually been the result of changes in administrative procedure at MHFA or the county. To administer our funds properly, our guide- line has in the past been modified, approved by the HRA commission- ers, then subject to review by the MHFA and Hennepin County. This, of course, will continue to occur. In the last year, however, Hennepin County developed a detailed procedural guideline with in- put from the affected communities. The County Board then adopted the guideline to help develop some consistency among cities through- out the county. Consistency was required by the Department of Hous- ing and Urban Development (HUD).. The attached guidelines are being utilized by other Hennepin County participating communities, but have been modified slightly by the Richfield HRA staff to fit the needs of Richfield residents.. These modifications were reviewed by Hennepin County staff and are acceptable to them. P~'IHFA proced- ures for this funding year, when they become available, will be inserted into the new HRA guideline to be used as the guide for administering r1HFA grants . • The new flood grant procedures have been modified to reflect CDBG grant procedures. The CDBG rehabilitation grant and the flood grant programs are separate, but the administrative proced- ures are similar. A summary of the major suggested changes in the guidelines, with explanations, are provided below: -The maximum grant should be raised amount and maximum eligible income Because of the increase longer enough to make all The $5,000 limit has been gram year, 1977. in repair costs, $5,000 is no repairs necessary to a home. unchanged since the first pro- General increases in income, especially social security, have eliminated many potential applicants with incomes slightly over the $5,000. While the county suggested raising the income limit to $7,500, the HRA staff believe there is_sufficient demand for grants at a $6,000 maximum income. MHFA will also be raising their income and grant amounts to a maximum of $6,000 for this program year. The rehab- ilitation grant program can be more efficiently administered when all grant types leave similar income and maximum grant amounts. j~hen needed repairs exceed $6,000, it will be possible to combine CDBG and MHFA grants to provide a max- imum total of $12,000 to ensure that repairs can be made. HRA Letter No. 32 -3- September 15, 1980 Although grants -that exceed $6,000 happen infrequently, . combining grants may be necessary to ensure that the re- quired Section 8 minimum housing standard has been met when repairs are completed. With all grants, the homeowner has a seven-year repayment agreement filed as a lien against the property. -The grants should be administered on a first come, first Served basis. The simplest method for administering the grants is to prioritize applicants according to their date of applica- tion. Processing applications for funding as they are re- ceived allows residents the quickest possible service. ~~e' Previously, when points were given to rank applicants, ~ those requiring energy improvements, for instance, might receive priority over someone with an,energy efficient house, ~ but with other serious problems. An applicant needing help \, might not be funded in an equitable manner if the point system remained. -The Incentive Grant Program should be discontinued. • The original intent of the Incentive Grant was to provide an "incentive" to moderate income residents to apply for MHFA low interest home improvement loans. Receiving loan money for code and energy work resulted in a grant to do additional code and energy work or to assist in paying off the loan. Often, however, a homeowner got a loan and then heard about and applied for a grant, thus defeating the pur- pose of the program. HUD requires CDBG rehabilitation money to be awarded to those applicants that have a maximum income that does not exceed Section 8 limits. MHFA loan applicants often exceed Section 8 income limits and would not be eligible to par- ticipate in the program. Fifty grants have been awarded to date. -The grant review process as presently established should be J~ _9 ~~ • __ mod if ied: The Government Data Practices Act requires that data re- lated to grant applicants be kept private. In addition, HUD, MHFA, and Hennepin County are concerned that each grant case be evaluated in an objective manner. Presently, an interdepartmental grant review committee has evaluated the grant applications. Situations have arisen where this type of committee organization has been unable to provide the confidential and objective evaluation required by present law and administrative procedures. It is proposed that HRA staff members evaluate the grants. The HRA Commissioners would continue to receive reports on the grants approved. The staff evaluation compares bids from contractors for repairs and evaluates whether the bid is competitive, assists the applicant in choosing appropri- ~~ HRA Letter No. 32 ate bids, verifies that bility requirements, and guidelines are being met -4- September 15, 1980 the applicants meet all eligi- ensures that the procedural for each grant case. -An additional grant that would br combined with the CDBG grant should be used for handica ped accessibility im r~ove- ment. The Hennepin County procedural guidelines allow a maximum $2,500 to improve a house for handicapped accessibility (i. e. ramps, larger doorways, more functional kitchen or bath- room space, etc.). This could be awarded in addition to the $6,000 maximum grant amount allowed.. The HRA's old guideline has no provision for assisting with handicapped accessibility beyond the established grant maximum. -The flood grant procedures should be modified to read as attached. The "Flood Grant" is a new title changed from the old "Emergency Grant." This has been done because the CDBG and MHFA grant programs have provisions for "emergency grants". To avoid confusion, the "Flood Grant" most clearly describes the purpose of providing grant funds to applicants that have damage related to storm water run-off. • In the past, an annual set aside of $25,000 in CDBG funds has been used for the flood grants. It is proposed that a lesser flood grant set aside of $15,000 be used in the future. The $10,000 diffenrece would be used in the regular CDBG re- habilitation grant program, which has a larger applicant de- mand. To date, in the two years the flood grants have been available, only four grants, totaling approximately $11,000 have been awarded. The $15,000 would be available through- out the entire program year. If not utilized for flood grants, at the end of the year, this funding would be alloca- ted for rehabilitation grants. "The Richfield Home Rehabilitation Grant Program" contains the following parts: -An introductory administrative guide that explains the general operation of the three rehabilitation programs; -A CDBG Rehabilitation Grant program guideline that has been modified from CDBG rehabilitation procedures to better meet Richfield's needs while also meeting county requirements; -An MHFA Rehabilitation Grant program guideline estab- lished by r1HFA; and -A Flood Grant Rehabilitation Grant program that has been written to meet a Richfield need, but also satisfies CDBG procedural requirements. ~` lahen compared to the old Richfield Housing Fund Guidelines, each HRA Letter No. 32 -5- September 15, 1980 .. of the changes suggested is designed Richfield residents and provide some ministrative agencies that deal with program year, minor mod if ications to Hennepin County and MHFA. Only thos Richfield program will be brought to to improve our service to consistency with other ad- these programs. During the the guidelines will come from e that directly affect the the HRA for review. It is recommended that the HRA adopt the attached resolution, modifying the rehabilitation grant program. Respectfully submitted, Karl Nollenberger Executive Director KN/eja cc: Community Development Director Housing and Redevelopment Specialist • HRA RESOLUTION N0. APPROVING THE PROCEDURAL GUIDELINES FOR THE RICHFIELD HOf1E REHABILITATIOPJ GRA~lT PROGRA,~1 WHEREAS, the Housing and Redevelopment Authority of Richfield (HRA) has established the "Richfield Housing Fund" for rehabilitation of single family owner-occupied housing in Richfield, and; WHEREAS, the Richfield Housing Fund consists of several rehabilitation programs including the Community Development Block Grant (CDBG) grant program, the Incentive Grant Program, the P~innesota Housing Finance Agency (P1HFA) grant program, and the Emergency Grant Program, .and; t-1HEREAS, the HRA has established administrative guidelines for the disbursement of funds from the various rehabilitation programs, and; tJHEREAS, Hennepin County has established procedural guidelines for administering CDBG funds, and; t•JHEREAS, MHFA has established procedural guidelines for administering MHFA funds, and; t•lHEREAS, by combining these three guidelines, a more efficient and consistent rehabilitation program can be administered to serve Richfield residents, and; • t~1HEREAS, the HRA has acted,-from time to time, to change the guideline ~•ahen changes are needed, and; ` tJHEREAS, the HRA has identified several necessary changes in the guide- lines and desires to change both the guidelines and the allocation of funds; NOW, THEREFORE, BE IT P,ESOLVED that the HRA: Authorizes the Executive Director to change the "Richfield Housing Fund" to the "Richfield Home Rehabilitation Grant Program" and amends the previous Housing Fund guidelines to become the Rehabilitation Grant Program guidelines as presented. Passed by the Housing and Redevelopment Authority of Richfield, i1innesota this 15th day of September, 19B0. Thomas E. Harms, Chairman ATTEST: Vern Luettinrer, Secretary HOUSING AND REDEVELOPMENT AUTHORITY Office of Executive Director HRA Letter No. 31 Agenda September 15, 1980 Housing and Redevelopment . Authority Commissioners City of Richfield Dear Commissioners: Subject: Authorization to Purchase Property 738 West 66th Street (Stanton Realty) ,,,~ On March 24, 1980, the HRA established just compensation and authorized the staff to negotiate for the purchase of the property located at 738 West 66th Street. Just compensation was set at $85,000, based on an appraisal from O.J. Janski and Associates, and a review appraisal. Negotiations for purchase of this property have ensued for several months. During this time, N1r. Stanton obtained his own appraisal of the property, which placed its value at $105,300. The city assessor was asked to value the property. He indicated the value at $90,000. Our review appraiser evaluated all the appraisal reports and indicated the property should be valued at $92,000. The property is currently vacant, and the HRA would not be liable for payment of any relocation benefits. Thus, a payment of $95,000 is justified, when evaluated against the additional appraisal data. This value is approximately three percent higher than the $92,000 figure established by the city's appraiser. With ownership of this property, and that of Phillips Petro- leum which the staff is now negotiating to purchase, the HRA would control a strategic 25 percent of the Godfather Block. The HRA's previous action authorizing this purchase author- ized purchase of this property with a loan from the city's Per- manent Improvement Revolving Fund. The loan would be for a period of three years at five percent interest. The city council has authorized this loan. The holding costs to the HRA for purchase of this property are estimated to be approximately $9,012 annually or $750 per month; ($4,750 in interest, $3,262 in taxes and insurance, and $1,000 for maintenance). In 1981, the annual cost will increase by $533, or $44 per month, because of the CP 705 special assess- i-tients attributed to this property. HRA Letter No. 31 -2- September 15, 1980 The Knutson Companies is in need of an office from which they would conduct activities related to the development of the Lake Shore Drive Cooperative. They have examined the Stanton Realty property and feel it is suitable for their needs. They have agreed to pay $750 per month for rental of the prop- erty during 1980,. and $799 per month in 1981. The rental period would be for 12 months, with an option to renew for an additional time period if agreeable to the HRA. Knutson would like to occupy the property before the end of September, 1980. It is recommended that the HRA adopt the attached resolution, authorizing the purchase of 738 West 66th Street for $95,000. Respectfully submitted, KN/eja Karl Nollenberger Executive Director cc: Community Development Director HRA Attorney Housing and Redevelopment Specialist .. • fiRA Resolution No. RESOLUTION AUTHORIZING THE BORROWING OF MONEY FROM THE CITY OF RICHFIELD AND THE PURCHASE OF REAL PROPERTY AT 738 WEST 66th STREET 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 L/H/N Redevelop- ment Project heretofore adopted by the City of Richfield (the "City") and the HRA, said real property being described as follows: That part of Lot 1, Section 27, Township 28, Range 24: Beginning Southwest corner of Government Lot l; thence i East along the South line of said Government Lot 1 a distance of 64.8 feet; thence North parallel with the West line of said Government Lot 1 and its extension ,1 North, to the Southerly line of Registered Land Survey No. 1318 files of the Registrar of Titles, County of Hennepin; thence Southwesterly along the Southerly line of said Registered Land Survey No. 1318 to the West line of said Government Lot l; thence South along said ~~~est line to the point of beginning, Hennepin County, T~iinnesota, ~.nd -~ WHEREAS, the HRA has caused appraisals o.f_ the subject property to be made and has carefully considered such appraisals, and WHEREAS, the HRA is authorized by Minnesota Statutes, Section 462.445 to purchase real property and to borrow money from the City therefore, and WHEREAS, the City is authorized by r~Tinnesota Statutes Section 462.581 to make loans to the HP.A in aid of projects, WHEREAS, the Housing and Redevelopment Authority has instructed the Executive Director and Attorney to commence 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. The Executive Director is directed to execute the purchase agreement to purchase the above described property for Ninety-Five Thousand and no/100 dollars ($95,000.00). 2. The Executive Director is directed to loan $95,000 from the City per the Loan Agreement approved by the Housing and Redevelop° ment Authority and City Council on March 24, 1980.