05-29-79 agenda
HOUSING AND REDEVELOPMENT AUTHORITY
Office of Executive Director
HRA Letter No. 24
Agenda May 29, 1979
Housing and Redevelopment
Authority Commissioners
City of Richfield
Commissioners:
Subject: Recommendation Related to Property Management
Procedures
Since the H.R.A. began acquiring properties through the
L/H/N redevelopment project, management of these properties has
been handled by H.R.A. staff. The H.R.A. presently owns and
manages five single family homes. The H.R.A. staff also manages
three city-owned homes. All of these properties are used for
rental purposes.
Management costs for these properties have been higher than
we had originally anticipated, and seem to be somewhat unreason-
able. Part of the high cost of owning and maintaining these
properties is related to an unexpectedly high level of mainten-
ance and repairs on the properties. A corresponding factor con-
t-r~ r,,~ir~ '-^ '-~~ '~ ~ nh ~^s~- ^f t'~e property management has been
the very rapid andvhigh increase in construction costs, that we
have faced every time any repair was necessary on any of the
properties. A final problem contributing to the high cost of
the property management has been the method for completing re-
pair work. We do not currently have an efficient and economical
means of contracting contractors to undertake maintenance or re-
pair work on these properties. Each time work has become nec-
essary on any of the houses, the staff has requested quotations
for each repair item, which has caused delays in the work as
well as extra administrative and maintenance costs.
The staff has recently completed an analysis of our property
management practices, in an effort to identify a means of reduc-
ing our costs. Two alternatives were identified:
1. Raise the rents on the properties: This method would
provide some cost relief, but would create other pro-
blems. We have been using many of the HRA and city-
owned housing units to provide housing through the
HRA's Section 8 Rental Assistance Program. If the
HRA Letter No. 24 -2- i~1ay 29, 1979
rents were to be raised on these properties, they
would no longer be eligible for Section 8 housing.
Furthermore, our annual rental income has proven
to be better when the homes are rented through the
Section 8 assistance, since they are limited to
paying only 25% of their income for rent. The U.S.
Department of Housing and Urban Development pro-
vides the remaining portion of the rent to the
property owner, and also guarantees 800 of the rent
will be paid when the unit is vacant for a certain
period of time. Our vacancy rate has also been con-
siderably lower when the houses are rented through
the Section 8 program. Finally, I believe it is im-
portant to support the Section 8 housing activity
with our own HRA rental units whenever possible. I
do not believe raising the rents is a reasonable
action to reduce our property management costs.
2. Advertise for contractors: To alleviate the need to
solicit new quotations each time a contractor is
needed, it would be possible to advertise for general
and licensed contractors all at once.. From the re-
sponce to that advertisement, a contractor preference
list would be established. Contractors would be rank-
ed according to their hourly rate and qualifying cre-
dentials. When repair work becomes necessary on any
of the properties, the first contractor on the list
would be contacted, and subsequent contractors con-
tacted in order of preference if the first one were
unavailable. I believe establishment of such a con-
tractor preference list would save a considerable
amount of administrative timer reduce vacancy time
in the properties, and result in an altogether more
effective means of accomplishing necessary repairs.
It is the recommendation of the Planning and Redevelop-
ment Director, in which I concur, that the H.R.A. authorize the
staff to advertise for contractors and establish a contractor
preference list for use in H.R.A. property maintenance.
Respectfully submitted,
~}
~ ~ ~L,
o ce ~ Wilde
cting Executive Director
JLW/jef
cc: Planning and Redevelopment Director
Finance Director
HOUSING AND REDEVELOPMENT AUTHORITY
Office of Executive Director
HRA Letter E'o. 23
Agenda May 29, 1979
Housing and Redevelopment
Authority Commissioners
City of Richf field
Commissioners:
Subject: Relocation Claim for Flowertown, Inc.
There is an item on the May 29, 1979 H.R.A. agenda provid-
ing for H.R.A, approval of a relocation payment to Flowertown,
Inc., in the amount of $236,905.80. The H.R.A. acquired the
Flowertown property, located at 66th Street and Lyndale Avenue,
as part of the K-Mart project acquisitions. The 1970 Uniform
Real Estate Acquisition and Relocation Act provides that the
H.R.A. is responsible for relocating businesses that are dis-
placed by its redevelopment projects.
Regulations of the Uniform Real Estate Acquisition and
Relocation Act also require that the H.R.A. pay for certain
physical changes made on the property to which a displaced
business moves. The 1973 Nlinnesota Legislature mandated that
Minnesota local government entities must follow the 1970 Real
Estate Acquisition and Relocation Act and comply with the
regulations promulgated by the Department of Housing and Urban
Development relative to this legislation.
The search for a new location for Flowertown, Inc., con-
sumed about twelve months. Because of the business' size and
location requirements, the only available building which met
their relocation needs was the building located at 7845 Lyndale
Avenue South, in Bloomington. ,Before Flowertown could occupy
that building, it was necessary for them to acquire a building
permit from the City of Bloomington. The City of Bloomington
would not issue this building permit until certain physical
changes, related to building codes and to meet other city re-
quirements, were made to the property. Most of the relocation
claim which has been filed by Flowertown, Inc., reflects the
costs of making the physical changes required by the City of
Bloomington, and to adapt the existing building at 7845 Lyndale
Avenue South to their business needs. The total amount of the
relocation claim filed by Flowertown, Inc., was $262,675.85.
' HRA Letter No. 23 -2- May 29, 1979
The 1970 Relocation Act stated that an eligible relocation
benefit includes modifications to retail facilities when the
changes are required by law or ordinance, or when the changes
are necessary to permit the reinstallation of personal property,
such as air conditioning. However, in 1977 the Department of
H.U.D. guidelines were revised and the requirement that the
H.R.A. pay for physical changes associated with relocation was
deleted.
On April 9, 1979, the H.R.A. authorized the Attorney to
seek an opinion from the Minnesota Attorney General related to
the application of the Relocation Act and subsequent regulations
on the Flowertown claim. The Attorney General was asked if
Minnesota Law (Section 117.52) requires compliance with federal
guidelines as they existed in 1973, when that section was adop-
ted, or as the federal guidelines existed at the time that
Flowertown was displaced (1978). The Attorney General has ad-
vised us that it is necessary to apply the guidelines which were
in effect in 1973 to this relocation claim.
It is recommended that the H.R.A. authorize a relocation
payment to .Flowertown, Inc., in the amount of $236,905.80. The
$25,770.05 reduction in the amount recommended for payment from
the original Flowertown Claim has been disallowed through ap-
plication of the Uniform Relocation Act regulations.
Respectfully submitted,
c~L. Wilde
~ ctinq Executive Director
JLW/jef
cc: Planning and Redevelopment Director
City Attorney
'~ ..
~r.
~•" a`')
WARREN SPANNAUS
ATTORNEY GENERAL
A,.a -,~A
S~ATm G
~~
~~~~ ~:
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`~' N F. 5 ~
STATE OF MLNNESOTA
OFFICE OF THE ATTORNEY GENERAL
ST. PAUL 55155
May 9, 1979
John B. Dean, Esq.
Attorney for Housing and Redevelopment
Authority of Richfield, Minnesota
1100 First National Bank Building
Minneapolis, Mn 55402
Dear Mr . Dean
TELEPHONE
(612) 296 -6196
Attorney General Warren Spannaus has requested that I contact you
in connection with the problem you raise in your letter dated April 10, 1979.
To assist you in arriving at a solution of that problem, the following observa-
tions are offered.
Minn. Stat. § 117.52 .incorporated by reference an existing federal
statute, the Uniform Relocation and Assistance and Real Property Act of 1970,
42 U.S.C.A. § 4601, et seq. (hereinafter the URA of 1970). Laws 1973, ch.
604, the enacting legislation for Minn. Stat. § 117.52, was finally approved
as of May 23, 1973. It should be noted that Laws 1973, ch. 604, § 8, re-
pealed Minn. Stat. § 117.095 (1971-). That earlier statute read in part:
In all acquisitions, whether by eminent domain
or by negotiation, instituted by any acqui..»ing
authority, irrespective of federal financial par-
ticipation in any phase thereof, the acquiring
authority, as a cost of land acquisition, is autho-
rized to provide relocation assistance and any pay-
ments to those individuals and businesses eligible
for such assistance and~pa~~rents by virtue of the
provisions of the Uniform Relocation Assistance and
Real Property Acquisition Policies Act of 1970,
84 Stat. 1894 (1971), any acts amendatory thereof,
any regulations adopted pursuant thereto, or
regulations adopted b,y the state of:`~linresota, or
other acauirin; authority_ pursuant to law.
~rtphasis added mine.)
Ore reading; of that earlier statute is that it incorporated or
attempted to incorporate all future federal legislative and reJulatory amendments
pertaini:~; to the UR,4 of 1970. Another reading would be that it incorporated
AN EQUAL OPPORTUNITY EMPLOYER
i~~
~t_' 3
w
John B. Dean, Esq. 2. May 9, 1979
only those amendments existing at the time of enactment of that statute by
the legislature. The Supreme Court did not have occasion to pass directly
on this statute.
As you noted in your letter, tdallace v. Co.~xnissioner of Taxation,
289 Minn. 220, 184 N.Z1.2d 588 (1971), decided approximately two years prior
to the enactment of Minn. Stat. § 117.52, does bear directly upon such incor-
porating statutes. The Wallace Court held that the legislature may adopt an
existing federal law by incorporating it into a state statute. 289 Minn. at
228,. 184 N.W.2d at 593. In discussing the separate but related issue of
whether or not the legislature may adopt or incorporate future federal Legis-
lation, the Court recognized that various other state courts had held such
statutes invalid and discussed those cases. The T~Tallace Court then held:
The legislature did not, or could not, grant
to Congress the right to make future modifications
or changes in Minnesota law. 289 Minn. at 228,
184 N.W.2d at 593.
Without question under Wallace, the legislature in 1973 could and did
direct that the various acquiring authorities should govern their relocation
activities under the then existing federal rules promulgated to carry out the
URA of 1970. However, the problem that you raise in connection with the
locally funded activities of the Housing and Redevelopment Authority of
Richfield is whether or not Piiinn. Stat. § 117.52 should be read to incor-
porate future changes in the regulations of the United States Department of
Housing and Urban Development (hereinafter HUD) promulgated to help administer
the federal act.
The pertinent language of P~Linn. Stat. § 117.52 is as follows:
In all acquisitions undertaken by any acquiring
authority and in all voluntary rehabilitation carried
out by a person pursuant to•acquisition or as a con-
sequence thereof, in which, due to the lack of federal
financial participation, relocation assistance, services,
payments and benefits under the Uniform Relocation
- Assistance and Real Property Acquisition Policies Act
of 1970, 8~~ Stat. 1884 (1971), 42 United States Code,
Section 4601, et seq., are not available, the acquiring
authority, as a cost of acquisition, shall provide all
relocation assistance, services, pa.,;nnents and benefits
required by the Uniform Relocation Assistance and Real
Property Accluisiticn Policies Act of 1970 and any
re~.~latic:^s adaoted 1ursuant th~vreto b.y the Jnited
tat'°s ,;ter. ~rtm~rly of ,ous~.:~:~ ano u~nc~n oeveletii::ent
(miss added ;Nine. )
.,
John B. Dean, Esq. 3• May 9, 1979
Given existing T~rinnesota case law, to read more into P~Linn. Stat.
§ 117.52 than an incorporation of existing 1973 federal regulations and to
find that the legislature had .attempted to incorporate all future regula-
tion changes of that federal agency is not supportable in rr~ vie~~,r. The
Supreme Court in discussing statutory construction has stated:
Where one construction of a statute will
make it void for conflicting with our constitution
and another will render it valid, the latter, if
not a forced and unreasonable one, will be adopted.
Visina v. Freeman, 252 Minn. 177, 193, 8g N.W.2d 635,
195 ;accord, Hassler v. Engberg, 233 Minn. 487,
48 N.W.2d 343 (1951).
Construing Minn. Stat. § 117.52 to incorporate only those re~~-ulations
of HUD in existence at the time of its enactment in May of 1973 is the more
reasonable interpretation and avoids the constitutional conflict as posed in
Wallace. Moreover, given that Wallace was decided before the enactment of
Minn. Stat. § 117.52 and that the repealed earlier law, Minn. Stat. § 117.095
(1971), riot only incorporated the LIRA of 1970, but also "any acts amendatory
thereof," which latter language is not contained in Minn. Stat. § 117.52, it
can be argued that the legislature was a~~vare of the problem of delegation to
the federal government and was acting to avoid that problem. _
Under this view an acquiring authority, here the Housing and Redevelop-
ment Authority of Richfield, using only local funds would apply those regulations
of HUD in existence and which were incorporated by reference at the tit;~e Minn.
Stat. § 117.52 was enacted (May 23, 1973). It should be noted; however, that if
federal funding is contemplated in a project, the acquiring authority, under
Minn. Stat. § 117.51 (1978), could lawfully apply all current federal regulations
that would be applicable to that project. See also, Minn. Stat. § 462.445,
subd. 1(g) (1978).
It may be commented that there has been a view expressed that would
permit a legislature to incorporate future congressional and federal re~~ulatory
amendments "where the prospective reco~ition constitutes a legislative policy
decision that continuing uniformity is desirable and not likely to t~ustrate
the purpose of the statute." P~Liller v. State, Department of Treasu~rt~ (Rev. Div.)
385 r~icn. 296, 188 N.W.2d 7~5, dissent at ~0~-y 1971. `ft:is vie?v has not been
accepted by the majority of the various state courts which have had opportunity
to do so. See, 16 Arn. Jur. Constitutional La.w, § 245.
I hope the foregoi n; is of assistance to ycu in advisin<; the 'rousing
~ <.
~ ' ~
John B. Dean, Esq.
~-f .
May 9, 1979
and~Redevelopment Authority in its activities.
Very truly yours,
ti+IILLIAP~t A. CALDZ~IFT,T,
Special Assistant Attorney General
WAC : j mr
HOUSING AND REDEVELOPMENT AUTHORITY
Office of Executive Director
HRA Letter No. 22
Agenda May 29, 1979
Housing and Redevelopment
Authority Commissioners
City of Richfield
Commissioners:
Subject: Request for Property Acquisition, 6615 Lake
Shore Drive
Mr. and Mrs. Joseph Velasquez, owners and occupants of a
home located at 6615 Lake Shore Drive, have requested the HRA to
purchase their property. This property was one of four recently
considered for inclusion within the L/H/N project boundaries.
The HRA on March 12, 1979 rejected the boundary change, and the
Valesquez property is not within the L/H/N project boundaries.
On April 19, 1979 city staff met with the owners of the
four residential properties on Lake Shore Drive to discuss the
Velasquez request for the HRA to acquire the property. Two own-
ers of other properties on Lake Shore Drive, Mr. Lynch and Mr.
Davis expressed strong opposition to the acquisition. Another
person spoke very little, and Mr. Velasquez, of course, supported
the proposed acquisition.
The HRA may legally purchase property outside of a redevelop-
ment project area if the property is purchased for a public
purpose. A legally acceptable public purpose for purchasing this
property would be to use it for rental to a low-income family.
The house could be occupied as a five bedroom unit, and would thus
offer the HRA a unique opportunity to meet the housing needs of
a large low-income family.
Funds to acquire this property are available from the city's
permanent improvement Revolving Fund, and from Community
Development Block Grant entitlement funds. The total estimated
acquisition and relocation cost for the property is $103,000 to
$107,000. The initial loan would be in an amount of about
$42,OOO,and would bear interest at the rate of five percent
(5 % ) per annum, or $ 2 , 020 yearly, on the unpaid bal ante. Tile loan wo~:ld
be paid back with interest at the end of a specified period of
time.
HRA Letter No. 22 -2- May 29, 1979
Approximately $65,000 of the acquisition cost would be pro-
vided from C.D. block grant funds. Before the HRA may establish
Just Compensation and authorize the staff to negotiate for ac-
quisition of the property, it is necessary to have the C.D. funds
released by the U.S. Department of HUD. This release process
takes approximately two months, which means that negotiations
could not be initiated until at least late July. It would be nec-
essary at that time for the HRA and the city to execute an agree-
ment for use of the C.D. block grant funds and to finalize the
loan agreement for the monies to be used from the PIR fund.
Attached is a management proforma indicating the anticipated
income and expenses for this property. Our projections indicate
that the property should be self-supporting.
If the HRA would like to pursue purchase of this property,
it would be appropriate to request the city council to seek re-
lease of the C.D. monies from the Department of H.U.D. and to
prepare an agreement providing for the loan of monies from the city's
P.I.R Fund to the HRA for this acquisition.
Respectfully submitted,
J ~e Wilde
A ing Executive Director
JL6V/ j of
cc: Planning and Redevelopment Director
City Attorney
Annual
Housing Management Proforma
6615 Lake Shore Drive
Income
Rental Income (section 8 lease
existing program)
Expenses
Interest at 5 percent $2,020
Taxes 1,136
Insurance 525
Advertising -0-
Maintenance 425
Vacancy Factor 375
Total Expenses $4,481
$4,500
$4,481.
Balance $19
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Inlay 10,1.979
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Dear ~it•y ~ouncl ,v.Em ers, ,
The possible purch:~se of our home is oh tk~e
aTanda ~y.t t':lE: n~°xt c.tv cou,AcA1 one ~t.i.ri~,
J
fldonde•Y, it-gay 14. 'Ne are asking :you to vote for
. tr:F• ;;ity t(? 7U^C:.1~.9~ oar pT'O'_1F}'ty L-Lt t~UlB
Lakeshore prive.
As :1Te st.~t~.d in a letter dated I~:'d.rch 14, when
tyre purc`-used oar ho;n:: in 1977, t:~!e ad,jr~cent tot
t,o ~k" hc~r~c ~r~:s to be used as s. parking lot for
a ho1,;P 1;1:; cs~~e rent center. 'Ne decided, after
bc, f nom, assured by city hall that these plans would
not change, to F;o ahead .and buy the house, since
t' e tsculc_ brave tl•:F ';;onc_ make C~ntE ~' to our' irorit.
I'c;~,: E r~rc ~ , as you ale well aware, tale se plans have
changed, and will probably b~ crian~;ed main
~ n t,,~ rut,.z-.,e.
1
•;~~ ~•; not '>~• u°. to ~e,~r~?.n here surrounded by some
.~*,her t~rpe of usage. ~ ver ,,since the boundary
change 'ryas proposed,',vh! ch ',M•oald have included
~.~,~r '.~-r~~:r,we have been in a c onstant stal~,of
anxiety and cr,nr'usio.l. 5~e are int~rt,sted in
r~c,d~'r;~; r,~„r' ;~t~.~.':~~ to a stable r~leiahborhood
*' ~~; ~ ~' once aYal n to home
and farm l;r.
'fye really' cc;,nnn` Url^,Iid~ .:i~:Q 'ir,:. t~_t? I';=?r.aitllnvT three
hoTr:eowners sho~~l~d have ob,ie~: bons, oi*_1ca they are
sa*isified '.+rit'c1 ~, r..n~ foa~ht to ?;eep, all c'l ty
lot would not rreke ri7y diI'fr"r-''lct~' to th~rr, :~•;r.ce
tF•,-~; v.I_ still be able to kee~ their homes.
I~ .. ~
'die are asking the city (ox~ Ii:'t~; ~o purchase out
property a ~ tl,~ ~., t.i rrt~, ',;r cF:use tix: f~ 1'ee_~ ; * rr~ u~.~:,
hr r : `rE r.E 1 • difficult for ~4J to sel ~ our r.o r~:e,
in ].lgllt of~ the- Ck7H:1 ;e El 'N;'ti C.1 :1J.VE' ^~Cc,t~;2°r" ~ I1C(
..
~~E' ~,t~.. ~~.~~~sc~ ~'-. The attrxcred lettt", '?
1 'or a
I: ,.h~V .~E' ;) ~'t:. ~ (.1.'i'. ~JF-i,`J i.h~~~_,,.~ C :~'~a _. .-~_.. L
f
Please vote in ou;~ favor on I:_'rjy 14. Thank You.
Jo~~eph Ve asquez
rol V~
~~
Q
o•rvnere oP 68.15 Lake ore ~'i ~e
r
,. ~ ; ~ -~
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7100 FRANCE AVE NUF S(~UThI • Ff)INA, MINNESOTA 55435 ~ 920 8f300
May 8, 1979
Mr, and Mrs. Velasquez
6615 S. Lakeshore Drive
Richfield, Minnesota 55423
Dear Mr. & Mrs. Velasquez:
In re the possible sale of your home,.I regret not being
able to pursue this.
Have contacted two Savings & Leans, FHA an.3 a :nortgage
broker all of whom have told me the chance of finding a
buyer who could secure a loan on your property would be nil.
Due to publications of the Lyndale & Hub Nicollet Redevelop-
ment any person would have to be informed of the truth re-
garding the situation and neither you, myself or a multiple
agent could interest a buyer who could secure a Zoan com-
mitment on your property.
I would appreciate listing and selling your home, however
its imminence that more changes will develops in the area in
the very near future. As an agent I would be knocking my
head against a stone wall and wasting your time and mine.
Would like to be able to be of assistance, but I see no
way in which you or I could honestly secure a purchaseKfor
your property at this time. As a Licensed bonded agent I
would expose myself to legal action without revealing the
true situation.
I regret not being able to help you, if the situation
changes in the future, please contact me.
Thank you,
Verrone L. Matson
~.-/
i
Agent, Calhoun Realty
f •;
Ten Twin City Offices - Twelve Out-State Offices - All Points Relocation Service
Since 1908
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Dear I~~Ir. Krier,
We are requesting at the s ti~?e that tine
Richfield Housing ~'nd RE development nuthori ty
purchase our ~oropFrty at 6E1~ L~~.r~eshore Dri-re.
'JJe purchased said prorn:rty in i,'arc"~ of I~77
at ~=r~~.icri tirzc~ we were told that the ad..j~.ce:It
Lots be ttveen our home and ,'Jest 66th Sty^ee t
were to be us ~d as .~. p~.rkiz lot far a garden
center, to be coastr~_z~~ter.:. r~~oress the' ~~.i ~ ey
to our rear. xt that tit90~, after much delibe-ratiolZ,
;va decidad that the a~renitiPa outweighed any
A,ClVerSe of c@'3 ~s t.'1~.L I"'i8.~i OCCLir.
However, there have 'oen some changes since
that tine, leaving us in a consta.ni sta.~e of
c?.flXl~'t~7 c:, i'1Cl ~f~_i1iJ',~-.,'tf?;rl.
First, a boundry change `rras propos°d, ':~r_:ic:1
t~~a'alc have ~.noluctru ~~'.~.s'' ")"_'~:'Jt''4~v'. This 7'19.8
turned do~.~~n by the H~ ~- ~ ta.e I'~rc 1?, l-"'G
riieetir~~;, but a •~rono gal vaas Ppproved to r~: zo.~e
the land arounc. us Y'or commerci~.1 d.n .~IUlLi.-_'~=.~il;;r
usage.
We do not want to rel~ain ~zere su:~~-rcn~ed by
commerci~~.l ;:.sa~:e. ".'e do act v;tsh to ra.is~. ou.r.
family in ~.:8.%' ''-~'T>e o _ c• r_ c.'rr,:E-}~t. In view
of these ehan~es, i t z~roul~i be extremely di._ i icult
_.
"Or vu ~O _: i_ O'a2' '1C%II;P nI: l,~lr' ~~)E-:i Ti;.-.i'.K:( -,
Therefore, ~rre are as~in t.~e ~~ to ~~.cq~a.;re
our prop~'rt;~ i:n~:a~~iiatrl~f. The city has 9.lready
CGnd'aCtcd ~~ ~~ v ~.?~ll'~..i.u.1. ~n ,..:'1tiC1.p~-X10:'1 Of ~l~X
'" ~ u
the bouncry c?~ange,~.~:•hicA_ 'id not oc r.
S~ncerel
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HOUSING AND REDEVELOPMENT AUTHORITY
Office of Executive Director
HRA Letter No. 21
Agenda May 29, 1979
Housing and Redevelopment
Authority Commissioners
City of Richfield
Commissioners
Subject: Presentation by Richfield Development Corporation
At the request of Chairman Law, Mr. Alexander (Sandy) Ritter
will be present at the May 29, 1979 HRA meeting to discuss the
Woodlake School site development. Mr. Ritter is a principal in
the Richfield Development Corporation which purchased the Wood-
lake School site from the Richfield School District in 1977. The
other principals in the corporation are: Myron D. Kunin, President
of Regis Corporation; Peter Fudurich, Financial Vice President
of Regis Corporation; Richard A. Hassel, partner of the law
firm of Wright, West and Diessner.
The city council has approved the PUD plan, preliminary plat
and rezoning for this site. The developer has yet to submit a
final plat or a final development plan.
Respectfully submitted,
i;
~'oyc~ L. Wilde
Acting Executive Director
JLW/jef
cc: Planning and Redevelopment Director
}"
HOUSING AND REDEVELOPMENT AUTHORITY
Office of Executive Director
HRA Letter No. 17
Agenda May 29, 1979
Housing and Redevelopment
Authority Commissioners
City of Richfield
Commissioners:
Subject: Amendment to Agreement with Hennepin County
Vo-Tech Institute
On February 27, 1978, the HRA authorized purchase of the
property at 7444 Bryant Avenue South, and execution of an agree-
ment with the South Hennepin Vo-Tech Institute. The Vo-Tech
agreement provided for moving of a house then located at 6501
Grand Avenue South, to 7444 Bryant, and substantially rehabili-
tating the house at the new location. Since July, 1978, Vo-Tech
students have been working on the site. The house should be fin-
ished and ready for showing and sale next month.
The Vo-Tech contract established the HRA's rehabilitation
cost at $26,000. The HRA's share of the rehabilitation costs
are to be funded by resale profits. Because the property was
purchased with community development block grant funds, the
completed house will be resold under the FHA "235" program guide-
lines to a moderate income family. The maximum sale price for a
four-bedroom house under this program is $52,800.
The Vo-Tech Institute has now advised us that their costs
have been substantially higher than originally anticipated, and
are requesting that the contract amount be increased by $4,828.00.
This adjustment would make the HRA's rehabilitation cost equal to
$32,578. The Vo-Tech's increased cost relates to some unantici-
pated costs discovered in the rehabilitation process, the high
rate of inflation experienced since the agreement was executed,
and some necessary additions such as sodding the yard, and window
changes. It is the opinion of the staff that the additional costs
are reasonable and necessary.
It is recommended that the HRA authorize an amendment to the
agreement with the South Hennepin Vo-Tech Institute to provide an
additional $4,418 for rehabilitation of the property located at
7444 Bryant Avenue South. This would increase the HRA cost from
4 '
< HRA Letter No. 17 -2- May 29, 1979
"` the original $27,750 to $32,168, rather than the requested
$32,578, and provides for deletion of the patio doors from
the HRA's rehabilitation financing. The additional cost will
be funded by Community Development Block Grant monies.
Respectfully submitted,
~'o ce ~ Wilde
Acting Executive Director
JLW/ j of
cc: Planning & Redevelopment Director
Finance Director
BALANCE SHEET
VO-TECH - 7444 BRYANT AVENUE SOUTH
COSTS
6501 Grand Avenue South
Acquisition $ 45,000
Relocation 9,950
Administration 2,747
TOTAL K-MART COSTS $ 57,697
Rehab Costs
Acquisition Lot at 7444 Bryant $ 16,500
Taxes and Specials 1,000
Loss of income
(sale of Grand house to demo) 5,000
Demolition and moving 9,000
Rehab materials (inc. add'1 $4,828) 23,578
Labor costs Vo-Tech 7,600
TOTAL REHAB COSTS $ 62,678
Disposition Costs
Realtor's fee $ 3,700
Points 2,640
TOTAL COSTS $126,715
********************
INCOME
Vo-Tech labor costs ~ $ 7,600
Sale of house (FHA "235") 52,800
Sale of land to Financial
Properties Developers 25,548
CD Block Grant (inc. add'1 $4,828) 8.18
Tax i ncrement bond K-P~1art 32 ,149
TOTAL INCOME $126,715
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HENNEPIN TECHNICAL CENTERS
SOUTH CAMPUS / 9200 FLYING CLOUD DRIVE, EDEN PRAIRIE, MINNESOTA 55344 / (612) 944-2222
May 18, 1979
Ms. Jeannie Karstens
Richfield HRA
6700 Portland Avenue South
Richfield, MN 55423
Dear Jeannie:
This letter will give you a total breakdown of costs for remodeling the house on
Bryant Avenue South. It will also show where the over-runs are, and three options
that have to be decided upon. I will list costs as originally estimated two years
ago, at $26,000, and updated April 18, 1978 to $27,750.
Estimate
_
~_ - Moving -------------------------------------- __~ 6,500.00
$
Removal of House and Excavating -------------- ---- 2,500.00
Concrete Work - Basement, etc. --------------- ---- 1,800.00
Lumber - Including Cabinets ------------------ ---- 6,000.00
Plumbing ------------------------------------- ---- 2,000.00
Electric ------------------------------------- ---- 1,000.00
Heating -------------------------------------- ---- 2,000.00
Concrete Block and Supplies for Basement ----- ---- 2,300.00
Waterproofing -------------------------------- ---- 250.00
Stucco --------------------------------------- ---- 400.00
Stucco Chimney ------------------------------- ----
Interior & Exterior Paint -------------------- ---- 500.00
Carpet - Floor Covering ---------------------- ---- 900.00
Carpet - Living Room, Dining Room, Hall ------ ----
Landscaping - Plantings Only ----------------- ---- 1,000.00
-------------------------
So -----------------
----
Miscellaneous -------------------------------- ---- 600.00
Phone - Gas - Electric - Insurance =---=--- ----
Cut-off Water & Sewer 6501 Grand Ave. ----- ----
Cut-off Water & Sewer 7444 Bryant Ave. ---- ----
Hook-up Gas 7444 Bryant Ave. -------------- ----
Survey Lot 7444 Bryant -------------------- ----
Building Permit --------------------------- ----
Subtotals
n ,..-...,, n,. ~ t
$ 5,000.00
1,600.00
1,809.00
6,745.00
3,290.00
2,380.00
2,300.00
1,900.00
260.00
800.00
Options
600.00
500.00
1,327.00
383.00
250.00
550.00
soo.oc
200.00
200.00
120.00
100.00
144.00
27,750.00 29,725.00
New Front Window --------------------------------- Added 450.00
New Sash - All Windows --------------------------- Added 460.00
Patio Door - Sliding ----------------------------- Added 410.00
GRAND TOTAL $31,045.00
(GRAND TOTAL WITH OPTIONS
1,533.00
$32,578.)
JOINT INDEPENDENT SCHOOL DISTRICT NO 287 ACCREDITED BY THE NORTH CENTRAL AS$OCtAT1ON
~~l'
Karstens May 18, 1979 R
Page 2
The Grand Total of $31,045 is $3,295 over the original estimate. This overage is °'
due in part to some unknown costs, as identified under "miscellaneous", and the
replacing of all sashes and the front window. Construction costs have been
climbing between ten and twenty percent per year. All quotes were .verbal quotes,
as a supplier will not give a quote in writing when the work is projected over a
year away.
I would also like to recommend that all options be accepted.
We did not originally plan on stuccoing the chimney, but we cannot replace the
brick to match that on the chimney. The chimney also has a crack from moving.
Stuccoing would greatly improve the appearance.
The downstairs living room, dining room and hall all have hardwood floors, but have
gaps between boards, and generally need refinishing. It would be advisable to
carpet these areas to put the house in a more desirable condition. This was not in
the original estimate.
With all options, the total cost would be $32,578. This would be a total overage
of $4,828.
The sod was in the original estimate, but dollars could be saved by seeding. I do
recommend sodding, however, to bring it up to the standards of the existing neigh-
borhood.
We will not proceed in areas where options exist, until you have given your approval.
Completion will depend completely, at this point, on the schedule of the sub-
contractors. The school should be completed by June 1, 1979. I anticipate that
it may be June 30, 1979 before the sub-contractors will be completed with their
work.
Sincerel ,
David mit
Departure t Chairman
Building Trades Department
HTC -South Campus
DJS:ln