06-02-82 agendaHOUSING AND REDEVELOPMENT AUTHORITY
Off ice of Executive Director
HRA Letter No. 25
Agenda June 2, 1982
Housing and Redevelopment
Authority Commissioners
City of Richf field
Dear Commissioners:
Subject: Acquisition of a Project Site and Structure
for Initiating a Vo-Tech Rehabilitation
Project
South Hennepin Technical Centers (Vo-Tech) has requested
that a cooperative single family housing rehabilitation pro-
ject be initiated with the HRA for the school year 1982-83.
This would be the fif th such cooperative rehabilitation effort
since 1977. The proposed site for the project is 6822 Queen
Avenue, which is a privately owned single family property
occupied by a vacant garage house. The proposed structure to
be rehabilitated is located at 6640 Grand Avenue. This a
Richfield Bank and Trust owned house that is scheduled to be
cleared. The purpose of this memo is to inform the HRA of the
proposed project and to request authorization for the staff to
proceed with negotiations to purchase the site and structure.
Request for authorization to acquire the site and structure
will be brought to the HRA on June 21, 1982 if the negotiations
are successful.
The purpose of the HRA-Vo-Tech projects has been twofold:
-to provide a training opportunity for students;
-to provide an affordable housing opportunity for a
young family
The benefits to the city have included:
-maintenance of the existing housing stock;
-increase in number of four bedroom houses available to
larger families;
-increase in the student resource for Richfield Schools;
-support for the city and the HRA Y:ousing goals for
family housing
-increase in tax revenues from rehabilitated site.
The latest project, located at 6413 22nd Avenue, will be
completed in July, 1982. The HRA selected the purchaser for
g~ Letter No. 25 _2_
this property in March, and the house will be sold utilizing
the FHA Section 235 Program. As you may recall, the sales
requirements include purchase.by a Section 8 income eligible
family and repayment by the purchaser of the difference between
the sales price and actual estimated property value if the house
is resold. The cost of the Vo-Tech rehabilitation contract is
adequately covered in the proceeds of sale.
The 1982-83 proposed project, located at 6822 Queen Avenue,
is a single family residential lot with a vacant garage house
near the alley. The Richfield Planning Commission has found
acquisition of this site for single family housing to be in
conformance with the comprehensive plan. The property owner
responded to the HRA's Voluntary Acquisition Program, meaning
that the owner is willing to sell and waive relocation benefits.
The site meets program requirements because it is:
-substandard as to condition, size and usage;
-obsolete and of faulty design;
-a deteriorating factor which has caused blight.
The present structure is unsuitable for rehabilitation be-
cause of severe structural deficiencies, so that acquisition
of a replacement structure to rehabilitate is proposed.
The structure to be rehabilitated is located at 6640 Grand
Avenue. Richfield Bank and Trust owns the property and intends
to remove the house as part of the plans for expansion. The
bank has indicated their willingness to sell the structure to
the HRA for removal and rehabilitation. Vo-Tech has inspected
the structure and found it suitable for rehabilitation. The
structure is presently tenant-occupied and would be vacated with
a proper 30-day notice. It does not appear at this time that
the tenant will be eligible for relocation benefits. If at all
possible, relocation benefits to the tenant would not be paid.
The estimated costs for the acquisition phase of the project
include:
Acquisition and clearance of 6822 Queen $52,000
Acquisition and clearnace of 6640 Grand 2,500
Tenant relocation, if required 4,000
$58,000
These costs would be covered by CDBG funds. The costs for
acquisition and clearance are included in the approved 1982 bud-
get. Some of the expended CDBG funds might be recovered from
sale proceeds after the Vo-Tech contract is paid, although it
appears unlikely that a majority of CDBG funds will be recovered.
The estimated cost for the rehabilitation phase of the
project include:
HRA Letter No. 25
-rehabilitation
-administration
ment costs
-3-
contract $45,000
and site improve-
3,000
$48,000
These costs would be covered by the proceeds of sale. The
rehabilitation costs will be included in the revised 1982-1983
budgets.
If the project proceeds
would be sold to a moderate
specific mortgage financing
not been determined as yet,
235 program is questionable.
(MHFA) mortgage program is a
evaluate further.
as proposed, the completed house
income family in July, 1983. The
to be utilized by the purchaser has
since the future of the FHA Section
A Minnesota Housing Finance Agency
n alternative which the staff will
To insure that we have a project site, a structure to re-
habilitate, and the continuing interest of the Vo-Tech school
for the next year, it is appropriate to proceed with this project
now. To date, other comparable sites have not been offered at an
estimated lesser cost. The City and the HRA do not own other
sites or structures that could be utilized in the next project.
The Voluntary Acquisition Program requires the HRA to authorize
negotiations based on staff recommendation.
It is recommended that the HRA authorize the negotiations
for the purchase of the property at 6822 Queen Avenue as the
next Vo-Tech rehabilitation project site at the special HRA
meeting on June 2, 1982.
Respectfully submitted,
~,,,Sc. nI ~F~~~ ~-
Karl Nollenberger
Executive Director
cc: Community Development Director
Housing and Redevelopment Coordinator
KN/ej a