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08-16-82 agendaHOUSING AND REDEVELOPMENT AUTHORITY Office of Executive Director HRA Letter No. 34 Agenda August 16, 1982 Housing and Redevelopment Authority Commissioners City of Richfield Dear Commissioners: Subject: Acquisition of Property to Initiate Vo-Tech Rehabilitation Project South Hennepin Technical Center (Vo-Tech) has requested that the HRA again participate with them in a cooperative single family housing rehabilitation project for the school year 1982-83. This would be the fifth such cooperative rehabilitation effort between the two organizations since 1977. As discussed in this letter, the HRA is being requested to take actions to acquire a project site and a structure suitable for rehabilitation. This letter will also describe the project, the proposed contract with Vo-Tech, and explain the anticipated re- sale opportunities for the rehabilitated property. On June 2, 1982, the HRA authorized the staff to negotiate for purchase of the property located at 6822 Queen .Avenue. That land is proposed to be utilized as the next Vo-Tech rehabilitation pro- ject site. The Planning Commission has found the HRA's proposed acquisition of this property to be in conformance with the Compre- hensive Plan. Ir. accordance with negotiation procedures outlined in the HRA's Voluntary Acquisition Program, to be followed when CDBG monies are utilized for an acquisition, the owner, Melvin Nerby, has_ accepted an offer of $41,000 and has agreed to waive relocation be_r~efits.. This purchase price is less than anticipated. (The estim- ated purchase price was $50,000). The now-vacant garage house s,_not suitable for rehabilitation. The estimated cost of clearance is $3,000. Sufficient CDBG funds are set aside to fund this acquisition and clearance project. A structure now located at 6640 Grand Avenue is available for relocation to the Queen Avenue site. The structure is owned by the Richfield State Agency, Inc. and is scheduled to be moved. The cost for the HRA to acquire the structure is $1,500,. Clearance activity related to removing the structure from the Grand Avenue site will be approximately $1,000. The expenses of this acquisition and clearance have also been budgeted in the CDBG program. Once the site at Queen Avenue has been cleared and the Grand Avenue structure relocated (scheduled to occur in late September), rehabilitation will begin. The rehabilitated structure will have HRA Letter No. 34 -2- August 16, 1982 four bedrooms to meet the needs of a larger family. While all de- ta3-ls in the-plans have not yet been completed, the project is ex- pected to place a heavy emphasis on energy conservation in its de- sign and construction, i. e. thicker, tighter walls, more insulation, and fewer openings for heat loss. Significant reductions in energy consumption should be realized. Major elements of the Vo-Tech contract will include: -moving the Grand Avenue structure to the Queen Avenue site; -a maximum cost for all work performed by Vo-Tech, with Vo-Tech advancing money to pay for the work and the HRA paying Vo-Tech after the property is sold, or by August.. 31, 1983; -a work comp~.etion deadline of on or before July 1, 1983_., -supervision of labor and insurance coverage to be the re- sponsibility of Vo-Tech; -approval and acceptance of the completed work by the HRA; -a provision requiring Vo-Tech to be responsible for a one- year warranty for defects caused by faulty workmanship or defective materials, a two-year warranty on installation of plumbing, electrical, heating or cooling systems, and ten year warranty on structural defects. (The warranty is required by state statute). ~'he amount Qf the__contract will be determined when plans have_ been_fnalz.ed. The Vo-Tech board must also approve the contract.- Contracts in the previous cooperative projects have been in the $44~_000__.to__~46,000 range. It is anticipated that this contract would not exceed .$.48,000. The contract would be paid by proceeds from re- sale of the rehabilitated structure by the HRA to an eligible family. The method of selling the completed house has not been deter- mined as yet. Because CDBG funds are being spent on the project, it is required that the house be sold to _a moderate income-family. A 5 to 8 member family, with an income from approximately $23,100 to $27,200, would be eligible to purchase this house. The house will be affordable to a family in this income range if a lower than mar- ket interest rate mortgage is made available. The__FHA.Section 2.35 program that has been used to assist such purchases in the past has been discontinued. The Minnesota Housing Finance Agency (MHFA) has started a housing finance program; however, this program may not be available when the HRA is ready to sell the house. Since the house must be sold to make the contract payment, the staff would recommend that the HRA__consider a market rate sale. If this were done, it ---- - - _. - - - -- - would be necessary to return the monies to the CDBG program fund, since a moderate income family would not be assisted as required by CDBG guidelines. However, decisions regarding resale of_the_.property need not be made until the rehabilitation work is essentially complete. HRA Letter No. 34 -3- August 16, 1982 It is recommended that the HRA_a_dopt the attached resolution, authorizing acquisition of the property located at 6822 Queen Ave- nue, and of the structure located at 6640 Grand Avenue. It is also recommended that the HRA authorize the Chairman and Executive Dir- ector to execute a contract with Vo-Tech for the rehabilitation pro- ject described herein, for an amount not to exceed $48,000. Respectfully submitted, -" o e L. Wilde Acting Executive Director cce Community Development Director Housing and Redevelopment Coordinator JLW/ e j a HRA RESOLUTION NO. RESOLUTION AUTHORIZING THE ACQUISITION OF REAL PROPERTY AT 6822 QUEEN AVE~NE SOUTH., A HOUSE STRUCTURE LOCATED AT 6640 GRAND AVENUE SO., AND EXECUTION OF A CONTRACT WITH VOCATIONAL-TECHNICAL CENTER WHEREAS, the Housing and Redevelopment Authority of Richfield (HRA} does acquire, relocate and rehabilitate structures with the cooperation of the South Hennepin Vocational-Technical Center (Vo-Tech); and WHEREAS, the HRA desires to acquire the real property at 6822 Queen Avenue South, legally described as: Lot 6, Block 2, Tingdale Bros.-Lincoln Hills Third Addition, Hennepin County; and WHEREAS, the owner, Melvin Nerby, has volunteered to sell this property for $41,000 to be used as a site for a Vo-Tech project; and WHEREAS, the HRA desires to acquire a house structure presently located at 6640 Grand Avenue South, legally described as: Lot 4, Block 2, Lyndale Shores on Woodlake, Hennepin County and; WHEREAS, the owner, Richfield State Agency, Inc. has agreed to sell the house structure for $1,500 for relocation and rehabilitation; and WHEREAS, the contract costs for relocation and rehabilitation of the structure will not exceed $48,000; and WHEREAS, a method of financing is to be determined that will con- tinue to provide homes to moderate income families, NOW, THEREFORE, be it resolved by the Housing and Redevelopment Authority of Richfield, Minnesota. 1. That the HRA Chairman and Executive Director are authorized to take necessary actions to purchase the real property at 6822 Queen Avenue South from Melvin Nerby for $41,000. 2. That the HRA Chairman and Executive Director are authorized to take necessary actions to purchase the house structure at 6640 Grand Avenue South from Richfield State Agency, Inc. for $1,500. 3. That the HRA Chairman and Executive Director are authorized to enter yntc a contract with Vo-Tech for an amount not to exceed $48,000, ®2® 4. That the IIRA staff is directed to continue exploring fi° nancing techniques that will enable the completed home to be purchased by a moderate income family. Passed Say the Eiousing and Redevelopment Authority of Richfield, Minnem sots this 16th day of August, I9~2. Thomas E. Harms, C airman ATTESTa Mic ae Freeman, Secretary HOUSING AND REDEVELOPMENT AUTHORITY Office of Executive Director HRA Letter No. 33 Agenda August 16, 1982 Housing and Redevelopment Authority Commissioners City of Richfield Dear Commissioners: Subject: Authorization to Extend the CDBG Year VII Procedural Guideline for Rehabilitation Grants During June, 1982, staff of the Hennepin County Office of Planning and Development {OPD) met with communities that administer a CDBG rehabilitation program as part of the Urban County Entitle- ment CDBG program. A task force comprised of staff members from eight communities, including Richfield, evaluated the existing pro- gram. The goal of this task force was to create program consistency through changes in procedural guidelines. This would primarily mean establishing new income limits, maximum grant amounts and length of repayment agreements. This HRA letter discusses the recommendations of the task force, and how these will affect Richf field's program guidelines for CDBG Years VII and VIII (1981-82 and 1982-83). The staff is requesting authorization to extend the existing program guidelines until program changes are made. The intent of the task force was to establish program guide- lines that would be consistent for all participating communities - both those that administer the program and those that have the county administer the program. The Office of Planning and Devel- opment is responsible for coordinating consistency in the county. This has not been the case for the past several years of the pro- gram, as each community sought to develop income limits, maximum grant amounts and length of repayment that would best meet the needs of their particular population. Richfield has utilized a $7,500 income limit and maximum grant amount, with a seven-year repayment, for the past few years. The county program has called for only a five-year repayment period. While our income limit has been con- sistent with the county's,-most participating communities have used higher income limits. Some even as high as the Section 8 maximum of $15,250 for a single person. With our guidelines, we have served the lowest income Richfield residents and continue to maintain a plentiful application flow. Because of the continuing variations in needs from city to city, it became evident that a goal of program consistency would not allow communities much flex- ibility in utilizing the CDBG rehabilitation grant funds. The task force determined that such flexibility within the county was important. HRA Letter No. 33 -2- August 16, 1982 As a result of the task force meetings, the Office of Planning and Development developed guidelines for income limits and grant amounts. Those guidelines provide for a $12,500 maximum income lim- it, $8,250 maximum grant amount and continuance of the 5-year Re- payment Agreement. If a community desires variations from the county guidelines, such would be reviewed by the Office of Planning and Development. Richfield's staff suggested the following changes: -The first major change involves the repayment period. The use of a five-year repayment period for the county grant program was retained for administration of re- maining Year VII and Year VIII funds. However, Richfield staff believes that it is necessary to re-evaluate the use of CDBG funds as "grants". Dwindling federal and state funds make it imperative that local governments attempt to recycle the limited supply of funding currently available. The Richfield staff suggested that the grant program be changed to a deferred loan program. Applicants would sign a repayment agreement that would require full repayment of the "deferred loan" at such time as their property is sold, transferred or otherwise conveyed. No interest accrues before repayment. As these improved homes are sold through the years, the funds would continue to be recycled. Unless these programs were discontinued by the county or HUD, the money would be returned to Richfield. This is not a new idea, as the majority of the HUD grantees, as well as the City of Minneapolis, are utilizing a loan program rather than a "grant". Changing our current program to a deferred loan program requires only rewriting of the Repayment Agree- ment. The Procedural..Guidelines and forms require only the change of the word "grant" to "deferred loan". -The second suggested change requested that the annual in- come limit within Richfield be maintained at $7,500. We feel that we are best meeting the needs of our lowest income population with this limit since Richfield has a high per- centage of Social Security recipients who fall within this limit. The income limit which Hennepin County has suggested, $12,500, has merit in certain parts of the county, but may not be applicable for Richfield until after our demand for assistance at lower income levels is satisfied. -The third change in our program which will be consistent with that proposed by the Office of Planning and Development, would increase thee-maximum grant amount from $7,500 to $8,250. This is a 10 percent increase over last year, and seems adequate to cover the increase in costs of undertaking rehabilitation work. The Department of HUD and the county require that all un- committed CDGB Rehabilitation funds from Year VII be committed under Year VIII guidelines. The Richfield staff believes that develop- ment and implementation of the "deferred loan" program may take HRA Letter No. 33 -3- August 16, 1982 one to two months. There is approximately $45,000 in Year VII funds left to be committed. Thus, to expend the Year VII balance, Richfield would be required to adopt the .new guidelines established by the county ($12,500 income limit, $8,250 maximum grant amount, and 5-year repayment agreement) for the interim be- tween July 1, 1982 (beginning of Year VIII) and the implementation date of a new program, such as the deferred loan program. In order to avoid an interim program, to continue to process grant applica- tions on our waiting list and to complete expenditure of Year VII funds, Hennepin County has authorized an alternative. If the HRA adopts the attached resolution, we may continue to use existing Year VII guidelines ($7,500 income limit, $7,500 maximum grant amount, and 7-year repayment agreement) and continue to provide grants without interruption. Year VIII funds could be expended, utilizing the "deferred loan" guidelines to be presented to the HRA in September or October, 1982. It is recommended that the HRA adopt the attached resolution authorizing the continued use of Richfield's Year VII Rehabilitation Grant Guidelines for completing the expenditure of Year VII funds. Respectfully submitted, Wi de cti g Executive Director cc: Community Development Director Housing and Redevelopment Director KN/eja HRA Resolution No. AUTHORIZATION TO EXTEND THE CDBG YEAR VII PROCEDURAL GUIDELINES FOR REHABILITATION GRANTS UNTIL A CDBG YEAR VIII PROGRAM IS AUTHORIZED WHEREAS, The Housing and Redevelopment Authority in and for the City of Richfield (H RA) has established the Richfield Home Rehabilitation Grant Program for rehabilitation of single- family, owner-occupied housing in Richfield; and WHEREAS, the HRA in cooperation with the Hennepin County Office of Planning and Development (OPD) has established ad- ministrative guidelines for the disbursement of funds from the Community Development BlocJc Grant (CDBG) Rehabilitation program and OPD suggests changes from time to time as part of its responsibilities; and WHEREAS, OPD recommended changes to the Hennepin County guidelines to complete the expenditures of CDBG year VII funds and start the expenditures of year VIII Elands; and WHEREAS, these changes have been reviewed by the HRA and found to require additional changes that may better serve Richfield residents; and WHEREAS, the Richfield HRA wishes to continue to utilize its existing year VII Procedural Guidelines of the Richfield Home Rehabilitation Grant Program in order to continue to process grant applications on a timely basis, and complete expenditure of year VII Rehabilitation Grant Funds; and WHEREAS, the HRA desires to develop an alternative pro- gram for expending CDBG year VIII funds for rehabilitation activities; and WHEREAS, OPD has requested that the HRA authorize a resolution maintaining our current procedural guidelines until development of an alternative program. NOW, THEREFORE, be it resolved by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota: - That the Richfield Home Rehabilitation Grant Program Procedural Guideline approved September 15, 1981 be extended and utilized for the remaining commitment of CDBG year VII funds, and - That a year VIII program be formulated and presented to the HRA for their revisor. Passed by the Housing and Redevelopment Authority of Richfield, Minnesota this 16th day of August, 1982. Thomas E. Harms, Chairman ATTESTa Michael Freeman, Secretary HOUSING AND REDEVELOPMENT AUTHORITY Office of Executive Director HRA Letter No. 32 Agenda August 16, 1982 Housing and Redevelopment Authority Commissioners City of Richfield Dear Commissioners: Subject: Public Hearing On Disposition of Property, 6633 Lake Shore Drive On July 19, 1982, the HRA authorized purchase of the property located at 6633 Lake Shore Drive. At the same time, the staff was authorized to sell the structures presently on the parcel and to seek the opinion of the Planning Commission regarding conformance of the proposed property purchase and disposition with the Compre- hensive Plan. It is contemplated that the HRA would sell this parcel to the Knutson Construction Company for inclusion with the Lake Shore Drive condominium site. Before the sale can be consumated, the HRA must hold a public hearing on the sale. The hearing is schedu- led for the August 16, 1982 HRA meeting. Following are considera- tions related to the sale of the property: 1. Knutson Construction Company, Inc. (developer) would purchase the property for $8,200 as outlined in the Developer's Agreement, dated October 12, 1981; 2. The developer would also donate $4,000 to the HRA to be used toward the HRA's purchase of the property from the present owners, the Shevchecks, contingent upon the HRA subsequently selling the property to the de- veloper; 3. The HRA would remove the structures from the property prior to conveyance to the developer. The developer would be responsible for removal of foundations, back- filling and grading; 4. The parcel must be sodded and maintained as open space. The construction of structures on the property would not be permitted; 5. The Planning Commission found the proposed sale of this property to Knutson Construction Company for use as open space to be consistent with the Comprehensive Plan in Resolution No. 44, adopted July 27, 1982. HRA Letter No. 32 -2- August 16, 1982 It is recommended that the HRA review the proposed sale of this property and solicit testimony from the public at the August 16, 1982 HRA meeting. It is also recommended that at the close of the public hearing, the HRA adopt the attached resolution, directing the Executive Director to execute the agreement providing for the sale of 6633 Lake Shore Drive to the Knutson Construction Company. - Respectfully submitted, r~ j ~~ . Wilde Acting Executive Director cc: Community Development Director Housing and Redevelopment Coordinator KN/eja HRA RESOLUTION NO. A RESOLUTION RELATING TO THE SALE OF REAL PROPERTY FOR REDEVELOPME?~IT PURPOSES WHEREAS, the Housing and Redevelopment Authority of Richfield, Minnesota (HRA), has adopted and from time to time amended.a , redevelopment plan entitled the Lyndale-Hub-Nicollet Redevelopment Plan, hereinafter the "Plan"; and WHEREAS, the Plan designates certain lands within the redevelopment project area for acquisition and redevelopment; and WHEREAS, in furtherance of the Plan, as well as in furtherance of its general authority to acquire lands and make them available for redevelopment, the HRA has acquired certain land adjacent to the Project Area to help assure the success of the redevelopment project and eliminate potentially incompatiable land uses; and WHEREAS, the Knutson Construction Company, Inc., hereinafter "Developer" has proposed to purchase the land described as Lot 17, Block 3, Fairwood Shores, Hennepin County, and to redevelop the subject property in a manner consistent with the Agreement, regarding 6633 Lake Shore Drive; and WHEREAS, the Planning Commission adopted Reso.lutian Number 44, dated July 27, 1982, and found the proposed sale to be consistent with the Comprehensive Plan; and WHEREAS, pursuant to due notice thereof, a public hearing was held on August 16, 1982, on the proposed sale to the Developer at which hearing, all interested persons had an opportunity to be heard. NOVA THEREFORE, BE IT RESOLVED by the Housing and Redevelopment Authority of Richfield, Minnesota, as followso 1. The sale of the property identified above is consistent with and necessary for the redevelopment provided for in the Plan. 2. The use value of the subject property, within the meaning of Minn. Stat., 1980, Sec. 462.521, is eight thousand two hundred dollars {$8,200.00). 3. The Chairman and Executive Director are authorized and directed to execute on behalf of the HRA, the Agreement for the sale of the subject property to the Developer. Passed by the Housing and Redevelopment Authority of Richfield this 16th day of August, 1982. Thomas E. Harms Chairman ATTESTe Michael Freeman Secretary