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07-09-79 agendaHOUSING AND REDEVELOPMENT AUTHORITY Off ice of Executive Director HRA Letter No. 30 Agenda July 9, 1979 Housing and Redevelopment Authority Commissioners City of Richfield Dear Commissioners: Subject: Authorization to Advertise for Demolition Bids, New Home Program On June 25, 1979 the HRA authorized the staff to execute an agreement with the U.S. Department of Housing and Urban Develop- ment to receive a Bonus Community Development Block Grant in the amount of $162,500. This grant is to be used for the acquisition, relocation, and site clearance of five singles-family, substandard houses. The cleared properties are to be resold to a develope~- for construction of new, low-to-moderate income housing. One of these properties, 7104 2nd Avenue, has already been acquired and scheduled for demolition. The additional four properties will be acquired in July, and it will be necessary for site clearance to begin as soon as the properties are vacated. The homes should all be vacated by the end of October, and the last property will be demolished by the end of the first week in November. The estimated demolition cost for these four properties is $15,000. It is recommended that the HRA authorize the Executive Director to advertise for bids for demolishing the four substandard homes. Respectfully submitted, r(~?} ( Cam` 1~t: C~,,,,~..~.,,~/~ Karl Nollenberger Executive Director KN/ea cc: Planning and Redevelopment Director HOUSING AND REDEVELOPMENT AUTHORITY Office of Executive Director HRA Letter No. 29 Agenda July 9, 1979 Housing and Redevelopment Authority Commissioners City of Richfield Dear Commissioners: Subject: Authorization to Resell House at 7444 Bryant The Suburban Hennepin County Vocational Technical Institute, in cooperation with the HRA, has been rehabilitating a house located at 7444 Bryant Avenue, which is owned by the HRA. The rehabilitation work on this property will be completed by mid-July. The rehabili- tated house is to be sold to a moderate-income large family who qualifies for FHA section 235 mortgage financing. This FHA program offers mortgage rates at less than current market interest rates. It is necessary that the property be sold and qualified for a Section 235 mortgage because Community Development Block Grant funds were used for purchase of this home. The resale price cannot exceed $52,800 if the property is to qualify for Section 235 financing. The indivudals and families which submit proposals to purchase the property will be evaluated according to the HRA's New Home Selection Criteria Guidelines, a copy of which is attached. It is recommended that the HRA adopt the attached resolution, authorizing the staff to advertise the property at 7444 Bryant Avenue for resale in the amount of $52,800. It is also recommended that the HRA authorize the staff to solicit and review proposals from interested and qualified purchasers for this property. Respectfully submitted, Karl Nollenberger Executive Director KN/ea cc: Finance Director Planning and Redevelopment Director ~, - HRA RESOLUTION NO. RESOLUTION AUTHORIZING RESALE OF PROPERTY AT 7444 BRYANT AVENUE SOUTH WHEREAS, on July 14, 1975, the City of Richfield, P~Zinnesota, (the "City") and the Housing and Redevelopment Authority of Richfield, P~innesota, (the "HRA") entered into an agreement to implement the New Home Program in order to provide moderately-priced housing for large families; and WHEREAS, the City has received Community Development Block Grant funds from the United States Department of Housing and Urban Development and allocated part of those funds for housing rehabilita- tion efforts by the HRA; and WHEREAS, on February 27, 1978, the HRA authorized the execution of a contract with Suburban Hennepin County Area Vocational-Technical Schools (the "Vo-Tech") for the substantial rehabilitation of the property located at 7444 Bryant Avenue South and on that same date the HRA a~.~thorized the acquisition of the above-noted property for this purpose; and 6VHEREAS, on July 18, 1979', this property will be inspected by the city and the HRA to determine that the work ,performed by the Vo-Tech is fully completed in conformance with the executed contract and with applicable laws, codes, and ordinances; and WHEREAS, it will then be deemed desirable to resell the property at 7444 Bryant Avenue South; NOW, THEREFORE, BE IT RESOLVED, that the Housing and Redevelop- ment Authority of Richfield, P~innesota, authorize the offering for sale of the property at 7444 Bryant Avenue South to a moderate- income family for a purchase price of $52,800 with any sales agreement to be submitted to the HRA for final approval; and BE IT FURTHER RESOLVED, that upon the completion of the resale, and upon the completion of a satisfactory inspection by the City and the HRA; Suburban Hennepin County Area Vocational Technical Centers be paid $32,578 as General Contractor for the remodeling of the above-noted property and that the remaining proceeds be deposited into the Rehabilitation Program fund. Passed this day of , 1977. ATTEST: Loren L. Law Chairman V. L. Luettinger Secretary Personal Data Sheet Name: Address: Phone: Marital Status Spouse's name: Number of Dependents: Age: Age. Names of Dependents: Circle one Ages: M or F M or F M or F r~ o r F M or F M or F Income: List all sources of income: Your income: company name address gross salary: Spouse's income: company name address gross salary: Other sources of Income; i.e. Social Security, Pensions, etc.: August 14, 1978 ~~ NE64 HOME SELECTION CRITERIA GUIDELINF,S Late in 1975, the Housing and Redevelopment Authority imple- mented the New Home Program, to help eliminate substandard residen- tial_properties in the City, while providing additional housing affordable to moderate income families. The goals of this program, established through the New Home Program Agreement between the HRA and the City of Richfield, are as follows: 1. To eliminate the blighting influence of substandard vacant housing, thus improving residential neighborhoods. 2. To promote the development of new housing on vacant lots. 3. To promote the development of new housing to replace sub- standard vacant housing and to increase the available standard housing stock in the city. The Ivew Home Program has been implemented in two different ways: 1. The HRA would purchase a substandard house at market value and clear the property, and then resell the land for con- struction of a new home. 2. The HRA would purchase a substandard house that could be brought into conformance through repairs and expansion, pay the cost for repair work to be done by the Hennepin County Vocational Technical School, and then resell the newly improved house. Financing to initiate this program was derived from Community Development Block Grant Funds. Federal regulations require that the grant money be used to benefit low or moderate income. people, and to provide housing for large size families. In order to comply with these federal requirements, and the program goals adopted by the HRA, it has been determined that any house repaired or constructer under this program must either be built by a moderate income famil~° or, if to be resold, must sell for no more than the applicable limit set by FHA for the 235 program. All houses resold must have at least three bedrooms. The sale. price, as set by the Federa_1 Housir:c, Administration, is determined by taking the highest income still classified_.as "moderate", calculating the maximum mortgage payment which a family with that income could make, using the federal quide- lines (no more than one quarter of income she~xld be used for housing) and,~finally, determining the amount of•principal which that mort- gage payment could support. This price is called the moderate i cn ome adjusted price. Moderate priced housinct, in this sense, is not related in any way to the average cost of a house in this area, but is rather related to the amount of housing payment a moderate income family can afford. :~ -2- •Previously, the property acquired through this program has been sold by soliciting proposals. .Proposals were submitted by interested buyers and the New Home Revie:v Committee (consisting of the Public Works Director, the Planning and Redevelopment Director, and the Housing and Redevelopment Specialist) re- viewed the proposals and made a recommendation to the HRA. These recommenda- tions were based not only on the highest bidder, but also on which proposal the .committee felt would best meet the program goals. Although this system has prover, adequate, it is the position of the staff that more definite selection criteria should be established to facilitate the acceptance of proposals. Proposed selection criteria guidelines are outlined as follows; .. SELECTION CRITERIA GUIDELINES I, Scope and Puraose The purpose of these guidelines is to set forth the process ar~d criteria for reviewing and approving proposals for the Richfield New Home Program. These procedures will apply to all proposals received for the purchase of lots with substandard homes that are sold for new construction and the homes that have been improved and are being resold by the Housing and Redevelopment Authcrity, both under the Necv Home Program. The New Home Program review committee will be responsible for de- termining the eligibility and priority of each applicant that has submitted a proposal according to these guidelines and cvhich are in accordance ~•ith the general guidelines established by federal regulations. II. Committee Membership Membership on the New Home Committee will ccnsist of: A. Planning and Redevelopment Director B. Public ~'Vor?;s Director C. Housing and Redevelopment Specialist .~ -3- III. Committee Meetincrs The committee shall meet as required, and shall make its recommendation of funding to the Executive Director before the HRA acts on the proposals. N. Prooosal Review Criteria Each applicant submitting a proposal must meet the eligibility guidelines listed below. AlI eligible applicants will be. assigned points according to the priority guidelines, and will receive 'a priority ranking, The proposal with the highest priority ranking will be ~• recommended to the Executive Director and the HRA. A. Eligibility Guidelines Proposals may be submitted byboth individuals and contracting firms. ~_ The prolvsals received from contracting firms will be• divided into two groups; those contractors participating in the subsidized moderate housing programs, and other contractors. High priority will be given to both individual proposals and the proposals received from contractors participating in housing programs. Other contracting firms vain be considered only when there are no eligible proposals from the aforementioned groups. 1. The. dwelling must be built for a family and the family com- position must be such that would warrant use of the bedrooms being provided in the dwelling. An example, of warranted use is as follov,~s; A family consisting of one or two parents and two children may be entitled to either a two or three bedroom house. The number of bedrooms warranted is determined not only by the number of occupants, but also their age and sex. If the two children were a boy and a girl, the family would warrant use of a three bedroom house . However, if the children were two • girls, they would warrant only a two bedroom house: -Under no circumstances should there be more than two occupants per bedroom . 2. Income must not exceed upper limits establ fished by the Depart- ment of housing and Urban Development (HUD) under the 235 Homeownership Program for moderate income families. Higher priority will be given to those applicants with income within the limits established by the Section 8 Housing Assist- ance Program. An addendu-n attached describes the current income limits for the 235 Program. z . .~.. .. 3. Assets must not exceed S25,000, exclusive of the amount . _. ~ to be used toward the down payment of the .proposed home. ,. - . Homes being constructed and sold under the. New Home Program must also meet certain eligibility guidelines; 1. The purchaser of the house, whether purchased duectly from the H1ZA or from a contracting firm, must occupy the dwelling, Proof of occupancy will be approved application for homestead taxes received within one year of purchase. 2. If built and sold by a contracting firm or sold by the HRA, the house must not sell for more than the current moderate income adjusted price, based on the upper limit of the HUD 235 Program. The price is presently $x-;5.9$:- s~,$~~~.~ 3. When constructed by an individual, the individual must occupy the house for at least two years or if he or she sells during that time, the house cannot be resold for more than the moderate income adjusted price at the time of resale. 4. • A minimum amount of finishing must be accomplished before occupancy, which includes completely finished living room/ dining room, kitchen, bathroom and three bedrooms. The builder can a11o~N for additicnal finishing in basement, extra ~ ' . bedroom, garage/drivecvay and landscaping. 5. The proposed structure must be architecturally harmonious with the immediate neighborhood. B. Priority Guidelines Applicants will be assigned the appropriate points for the fo1lo~Nirg categories and the total number of rating points will be used to determine priority. . 1. Income In order to be eligible, applicants must have an income below the limits established for the HUD 235 Program; however, additional points will be assigned as follows; Income Points $ 0 - $ 4,999 ~ 4 $ 5,000 - $ 9,999 3 $10,000 - $14,999 2 $15,000 - $20,550 1 -~, - , -5- " a 2. Family Size Applicants will receive additional points according to family size. • .Size of Family Points Two-three persons 1 Four-Five persons 2 Six or more persons 3 ' A family will receive three additional points if they do not already own a standard dwelling unit. 3. Applicants will receive points for assets as follows: .: ._ Assets Points $ 0 - $ 6, 999 3 $ 7,000 - $14,999 2 ' -• $15, 000 - $25 , 000 1 4. Applicants can also receive additional points based on their _ _ proposed dwelling, when the resale applies toward new con- struction. These points are assigned under three criteria as follows: a. Square Footage of Dwelling Points • Minimum to 999 1 1,000 - 1,399 2 1, 4 0 0 or more 3 ' b. An additional three points will be added if the applicant . proposed to complete more than the minimum requirements for finishing before occupancy. c. An applicant may earn three points for neighborhood suit-, ability, e.g., brick front if the majority of the existing homes have them , -s . Number of Persons in Family 5 6 7 8 or more FHA 235 Adjusted Income Limits Maximum Adjusted Income $19,600 $20,750 $21,900 $23,050