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05-17-82 agendaHOUSIPIG APdD REDEVELOPMENT AUTHORITY Office of Executive Director HRA Letter No. 24 Agenda T~~ay 1 7 , 1 9 82 Housing and Redevelopment Authority Commissioners City of Richfield Dear Commissioners: \l Subject; Selection of a Non-Profit Organization to Develop Housing for The Elderly At Lincoln Hills School As indicated at the April 19, 1982 HRA meeting, the staff has been evaluating Lincoln Hills School for development as housing for the elderly. The evaluation indicates that Lincoln Hills could provide an excellent opportunity for affordable rental housing for low and moderate income elderly; however, a number of actions must occur in the next few weeks. The first action for the HRA at this time, is to select a non-profit organization to assist in tie development of that housing. This letter discusses the concept of the proposed project, the back- ground of non-profit organizations that could be of assistance, and recommends the selection of a specific non-profit organiza- tion. Since March, 1982, the staff has been evaluating the util- ization of Lincoln Hills School for use as housing for the elder- ly. Two initial considerations were whether the school could be rehabilitated at a cost-effective rate, and the availability of permanent financing for a rehabilitation project. Preliminary evaluation has indicated that approximately 70 housing units could be constructed within the existing building. These units could be provided at a square foot cost which is less than that for new construction. The Department of Housing and Urban De- velopment's (HUD) Section 202 direct loan program for elderly housing seems the most feasible financing program. Section 202 provides permanent financing for acquisition, development, and construction costs, depending on the cost of rehabilitation and projected income generated by the project. Each Section 202 project funded is eligible to have 100 percent of the units committed to Section 8 rental assistance program for 20 years. Application for Section 202 financing and a Section 8 commitment are accepted only from private non-profit corporations. The deadline for submitting an application this year is June 30, 1982. Thus, selection of a non-profit sponsoring organization must be cornpleted now. Anon-profit organization could create HRA Letter No. 24 -2- P•1ay 17, 1932 a local non-profit corporation with local sponsors, acquire the site, rehabilitate the building and own and manage the cor~lpleted rental porject. The HRA would act as the facilitator, particularly in the acquisition and development phase of the project. Since the HRA will probably have to provide a sub- sidy to enable the non-profit to obtain title to the property, it is appropriate that the HRA select a non-profit organization to work on this project. (Typically, a 202 project cannot afford to pay anything for the purchase of the property. Thus, if the School Board places a high sale value on the property, it would probably be necessary for the HRA to provide a subsidy). Two non-profit organizations have indicated interest in assisting with the development and management of a-.Lincoln Hills housing project for the elderly: The Community Development Cor- poration (CDC) for the Archdiocese of St. Paul and Minneapolis; and the Ebenezer Society, Center for Aging and Human Development. CDC is a non-profit organization established by the Arch- diocese of St. Paul and Minneapolis to help and meet the housing needs of low and moderate income families, elderly and handi- capped people. CDC is committed to community involvement in the development of housing. In the management of housing, the occu- pants serve on committees responsible for various aspects of on-going programs. CDC provides professional staff through its management organization. CDC has several housing developments in the area and nearby small communities. Currently under con- struction is a 74 unit family housing project in the Selby-Date area of St. Paul, and 100 units of Section 202 housing in Edina. The 202 project is sponsored by the Edina Community Lutheran Church. The CDC would request the local churches to set up a board. The board, assisted by CDC, would select an architect, approve a design and select a contractor. The formal application would be prepared by CDC staff. Following completion of the project, the board and CDC would be responsible for management. The Ebenezer Society was organized under the auspices of the American Lutheran Church. It is concerned primarily with providing housing and other services to the elderly. Their most recent local project is an 80 unit Section 202, and a 120 unit cooperative in Golden Valley. The building at 7500 York was developed under their direction. Both organizations are qualified in developing and managing housing. Both organizations indicated that if their application for 202 housing was not funded, they would not seek reimbursement for costs from the HRA or the local churches. Again, both or- ganizations indicated a willingness to develop housing for the elderly, utilizing alternative financing if 202 monies were not provided. The difference is in their approach to project develop- HRA Letter No. 24 -3- May 17, 1982 ment. The CDC requires local church sponsors and resident in- volvement from the beginning via the non-profit corporation. The Ebenezer Center has determined that if they are to secure funding within the time constraints of the current Section 202 process, the center, rather than a local non-profit corporation, should sponsor and initiate the project. Thus, local involve- ment would come later in working with Ebenezer, and the commun- ity involvement process would be greatly diminished. The CDC has indicated there is time to organize the local churches, create a local--non-profit corporation, acquire an option to the school, select an architect and contractor, develop detailed layout plans for rehabilitation of the building, deter- mine the exact rehabilitation costs of the project, and submit an application by the June 30, 1982 deadline. It would be a waste of the agencies resources for both organizations to pursue this project so a clear choice between the two is~.necessary. The School Board intends to act on Lincoln Hills School at its meeting of i~iay 18, 1982. The specific role of the HRA will become clear after that meeting. It is recommended that the Community Development Corporation for the Archdiocese of St. Paul and Minneapolis, be selected as the non-profit organization to assist in the development of Lincoln Hills School as housing for the elderly. Res ectfully submitted, JV D Karl Nollenberger Executive Director cc: Community Development Director Housing and Redevelopraent Coordinator KN/eja r' HOL'SI`'G AidD REDEVELOPMF:~T AliTHORITY . Office of executive Director HRA Letter No . 23 Agenda :~iay 17 , 19 8 2 Housing and Redevelopment Authority Commissioners City of Richfield Dear Commissioners: Subject: L'stablishment of Just Compensation and Authorization to Initiate minent Domain, Hagen Furs, 6601 Lyndale Avenue South As a part of the Developer's Agreement with Richfield State Agency, the HRA on November 16, 1981, adopted resolution number 182, which approved modification No. 3 to the L/H/N plan. This modification identified the Kentucky Fried Chicken facility at 67th Street and Lyndale Avenue, and the Bjorn Hagen Fur Shop at 66th Street and Lyndale Avenue, for acquisition by the HRA. Prior to approval of this modification, the Planning Commission on September 8, 1981, made a finding that the acquisitions were in conformance with the comprehensive plan. The staff, Mr. Hagen and his representatives have been ' negotiating for several months. To date, no agreement has been reached, and it appears that there is a strong potential that the negotiations permitting voluntary HRA acquisition of this property will fail. Because the HRA is committed to sell this property to the Richfield State Agency, and because voluntary negotiations have not resulted in agreement, it is recommended that the HRA authorize initiation of eminent domain Droceedings acainst this property at this time. It is also necessary for the HRA to establish just compensation. for the property. O.J. Janski has appraised the property at $65,000. The parcel contains about 3,775 square feet of land, ar.d about 1,185 square feet of first floor building space. In Addition to Hagen Furs, Richfield Coins and Jewelry occupies a portion of the property as a leasee. Off-street parking is available for approxiametly five motor vehicles, depending on how the vehicles are ~ositior.ed in the oar'.~cina area. Resolutions which authorize the staff to i;;itiate eminent domain proceedings against the Hagen property, and establishing ;~~st compensation at $65,000, will be available at the ~~ay 17 BRA meeting. It is recommended t;.at the resolutions be adopted. Respectfully submitted, ~• t ! ; ~ ..arl ollenberger ?xecutive Director _._ ,~S~h /~ .. r RESOLUTION NO. RESOLUTION ESTABLISHING JUST COMPENSATION WHEREAS, the Housing and Redevelopment Authority in and for. the City of Richfield has authorized the acquisition by eminent domain of the tract of land described in Exhibit A which is attached hereto and made a part hereof as if fully set out at this point; and WHEREAS, the Housing and Redevelopment Authority has caused an appraisal of the property described in Exhibit A to be made appraising the market value of the real estate; and WHEREAS, the Housing and Redevelopment Authority finds such appraisal to be made in a competent manner and in accordance with applicable law; NOW, THEREFORE, BE IT RESOLVED by the Hous'_ng and Redevelop- ment Authority in and for the City of Richfield that the fair market value and just compensation for the lands described in Exhibit A, based upon the approved appraisal of value is $65,000.00. Passed by the Housing and Redevelopment Authority in and for the City of Richfield this day of 1982. Thomas Harms, Chairman ATTEST: Michael 0. Freeman, Secretary Exhibit A PROPERTY DESCRIPTION That part of Lot 1, Block 3, J. W, Hauser's Addition, Hennepin County, Minnesota, described as follows: Beginning at the Northwest corner of said Lot 1; thence East along the North line to the Northeast corner thereof; thence South along the East line of said lot a dis- tance of 54.95 feet; thence West to a point in the Westerly line of said lot which point is Southwesterly from the point of beginning a distance of 58.6 feet; thence Northeasterly along said Westerly line to the paint of beginning, excepting therefrom all that part of the above-described property lying Easterly of the following described line: Beginning at a point on the North line of the above- described property, said point being 65.54 feet West of the Northeast corner thereof, as measured along the North line thereof; thence running Southerly to a point in the South line of the above described property said paint being 65.07 feet West of the South- east corner of said property, as measured along the South line thereof, subject to and together with a right of a joint party wall the center line of which is the East boundary line of lands herein conveyed and the West line of lands herein excepted and cost of repairing and maintaining said common wall is to be borne equally by owners of lands herein conveyed and owners of land herein excepted. RESOLUTION N0. RESOLUTION AUTHORIZING THE ACQUISITION OF CERTAIN REAL PROPERTY BY EMINENT DOMAIN PROCEEDINGS WHEREAS, the Housing and Redevelopment Authority in and for the City of Richfield did on the 15th day of October, 1975, adopt and has subsequently amended the Lyndale-Hub-Nicollet Commercial Improvement Program at which times it was determined that proper- ties within the project area were deteriorated and deteriorating within the meaning of Minnesota Statutes 1981, Section 462.421, Subdivision 11; and WHEREAS, the Lyndale-Hub-Nicollet Commercial Improvement Program has been determined to be necessary to eliminate and to prevent the spread of such deterioration; and WHEREAS, the property described in Exhibit A of this Resolu- tion which is attached hereto and made a part hereof as though fully set out at this point, is within the project area and has been designated for acquisition; and WHEREAS, the Housing and Redevelopment Authority in and for the City of Richfield finds it necessary, proper and expedient in the interest of the public health, safety, convenience and general welfare of the citizens of the City of Richfield to acquire, for the public purposes of redevelopment; and WHEREAS, the acquisition of the subject property is consis- tent with and necessary to the implementation of the Lyndale-Hub- Nicollet Commercial Improvement Program and to the elimination of, or prevention of, the spread of deterioration within the project area; and WHEREAS, efforts to obtain the property through negotiation have been unsuccessful; NOW, THEREFORE, BE IT RESOLVED by the Housing and Redevelop- ment Authority in and for the City of Richfield as follows: 1. The commencement of eminent domain proceedings for the purpose of acquiring fee simple absolute title to the property described in Exhibit A is hereby authorized. Such acquisition shall be for the purpose of redevelopment. 2. The Executive Director and Commission Chairman are authorized to take whatever action they shall deem necessary and consistent with this Resolution for the purpose of acquiring title to the property described in Exhibit A. Passed by the Housing and Redevelopment Authority in and for the City of Richfield this day of , 1982. Thomas Harms, Chairman ATTEST: Michael 0. Freeman, Secretary Exhibit A PROPERTY DESCRIPTION That part of Lot 1, Block 3, J. W. Hawser's Addition, Hennepin County, Minnesota, described as follows: Beginning at the Northwest corner of said Lot 1; thence East along the North line to the Northeast corner thereof; thence South along the East line of said lot a dis- tance of 54.95 feet; thence West to a point in the Westerly line of said lot which point is Southwesterly from the point of beginning a distance of 58.6 feet; thence Northeasterly along said Westerly line to the point of beginning, excepting therefrom alI that part of the above-described property lying Easterly of the following described line: Beginning at a point on the North line of the above- described property, said point being 65.54 feet West of the Northeast corner thereof, as measured along the North line thereof; thence running Southerly to a point in the South line of the above described property said point being 65.07 feet West of the South- east corner of said property, as measured along the South line thereof, subject to and together with a right of a joint party wall the center line of which is the East boundary line of lands herein conveyed and the West line of lands herein excepted and cost of repairing and maintaining said common wall is to be borne equally by owners of lands herein conveyed and owners of land herein excepted. HOUSING AND REDEVELOPMENT AUTHORITY Office of Executive Director HRA Letter No. 22 Agenda May 17, 1982 Housing and Redevelopment Authority Commissioners City of Richfield Dear Commissioners: Subject: Commercial Rehabilitation Loan Program The staff is exploring the establishment of a new propgram to assist businesses in our community. Information is being presented to the HRA without a request for action at this time. During the last legislative session, the Senate and House passed a bill identified as H.F. 1365, the Commercial Rehab- ilitation Loan Program. This legislation authorized communities to establish a rehabilitation loan program for small and medium sized commercial buildings. An HRA may administer the program if the city council adopts certain enabling legislation. Revenue bonds sold by the city would finance the program. The purpose of the program is to provide below market interest rate financial assistance to owners of small and medium sized commercial buildings who are unable to afford rehabilitation loans at a market interest rate. Although the formal guidelines have not yet been established, some of the ideas being discussed include the following. Build- ings proposed for improvements must not be identified for public acquisition and must be in conformance with the city's zoning ordinance and Comprehensive Plan, upon completion of rehabilitation. Eligible improvements could include: 1. Repairs necessary to bring the building into compliance with applicable state and city codes; 2. Facade treatments; 3. Improvements to increase the energy efficiency of the building when undertaken as part of other rehab- ilitation activities. Ineligible improvements would probably include: 1. Expenditures for the acquisition, installation, or repair of furnishings or trade fixtures; HRA Letter No. 22 -2- May 17, 1982 2. Building additions; 3. The refinancing of existing debt; 4. Expenditures for labor if work is performed by the property owner. The maximum term of the loan would be 20 years, and the principal amount cannot exceed $200,000 per building or 80 percent of the estimated market value, less any outstanding mortgage on the building. The interest rate would be two percent to three percent below market rate. This program is separate from the SBA 503 program discussed by the HRA in March. (The 503 program provides monies for expansion, purchase of real property, new construction and purchase of machinery and equipment. The source of 503 funds is 10 percent from the borrower, 40 percent from SBA and 50 percent from a private lender.) The staff discussed this rehabilitation program in a general way at the Richfield Chamber of Commerce Small Business Day on Friday, May 7. The staff will also discuss the program with lenders in the community in order to enlist their support. Finally, the staff will develop a proposed ordinance, for city council consideration, to authorize the HRA to undertake this program. We will keep you advised of the status of our efforts to further investigate the feasibility of implementing this program, which offers another opportunity for the HRA and the city to assist the businesses within our community. Respectfully submitted, lV ~ Karl Nollenberge City Manager KN/skh cc: Community. Development Director Housing and Redevelopment Coordinator City Attorney HOUSING AND REDEVELOPMENT AUTHORITY Office of Executive Director HRA Letter No. 21 Agenda May 17, 1982 Housing and Redevelopment Authority Commissioners City of Richfield Dear Commissioners: Subject: Resolution of Collateral Agreement With Summit State Bank and Certain Savings and Loan Associations Attached to this letter is a resolution pledging additional collateral by the Summit State Bank, a depository of funds of the Housing and Redevelopment Authority. On April 19, 1982, the HRA approved a resolution releasing $200,000 collateral in U.S. Treasury notes. It is now necessary to increase the collateral to $600,000 as funds have been deposited and invested from the recent bond sale. Also attached to this letter is a resolution designating certain savings and loan associations as official depositories in which the Housing and Redevelopment Authority will be able to invest funds not exceeding the Federal Savings and Loan Insurance Corporation coverage of $100,000. It is recommended that the HRA adopt the attached resolution with the understanding that the HRA would not invest in any of these depositories beyond the level of the pledged collateral or insurance coverage. Respectfully submitted, ~~ ~e~?~ Karl Nollenberger Executive Director KN/skh RESOLUTION N0. RESOLUTION PLEDGING ADDITIONAL COLLATERAL FOR THE SUMMIT STATE BANK, A DEPOSITORY OF FUNDS OF THE HOUSING AND REDEVELOPMENT AUTHORITY WHEREAS, on February 16, X982, Resolution No. 189 designated the Summit State Bank a depository of funds of the Housing and Redevelopment Authority of Richfield; and deposited for safe- keeping at the Marquette National Bank of Minneapolis the amount of $353,600; and WHEREAS, on March 22, 1982, $200,000 in U.S. Treasury Notes due December 31, 1982 were released from safekeeping; and WHEREAS, on May 10, 1982, $400,000 of U.S. Treasury Notes was deposited as additional collateral for safekeeping at the Marquette National Bank of Minneapolis, $20Q,000 due December 12, 1982 and $200,000 due May 15, 1988; THEREFORE, BE IT RESOLVED, that collateral in the full amount of $600,000 deposited for safekeeping at the Marquette National Bank of Minneapolis is hereby approved. Passed by the Housing and Redevelopment Authority of Richfield this 17th day of May, 1982. Thomas E. Harms Chairman ATTEST: Michael Freeman Secretary RESOLUTION NO. A RESOLUTION DESIGNATING CERTAIN SAVINGS AND LOAN ASSOCIATIONS AND BANKS AS DEPOSITORIES FOR THE INVESTMENT OF HOUSING AND REDEVELOPMENT AUTHORITY FUNDS IN 1982 WHEREAS, pursuant to Minnesota Statutes, Section 475.66 and 118.17, municipal funds may be deposited in any Savings and Laon Association which has its deposits insured by the federal Savings and Loan Insurance Corporation, and WHEREAS, the amount of said deposits may not exceed the Federal Savings and Loan Insurance Corporation insurance covering such deposits which insurance amount is presently $100,000, and WHEREAS, the deposit of Housing and Redevelopment Authority funds in Savings and Loan Associations and Banks would provide greater flexibility in the Housing and Redevelopment Authority's investment program and maximize interest income thereon. NOW, THEREFORE, BE IT RESOLVED by the Housing and Redevelopment Authority of Richfield as follows: 1. It is hereby found and determined that it is in the best interests of the proper management of Housing and Redevelopment Authority funds that certain Savings and Loan Associations and Banks be designated as additional depositories for Housing and Redevelopment Authority funds for 1982. 2. The following Savings and Loan Associations and Banks are hereby designated as additional depositories for Housing and Redevelopment Authority funds: First Federal Savings of Minneapolis 6445 Nicollet Avenue South Richfield, Minnesota 55423 Minnesota Federal Savings 98 West 66th Street Richfield, Minnesota 55423 Midwest Federal Savings and Loan Association 3100 West 66th Street Edina, Minnesota 55435 Twin City Federal Savings and Loan 3330 West 66th Street Edina, Minnesota 55435 3. It is further found and determined that the purpose of such depository designation is to facilitate the proper and advantageous investment of Housing and Redevelopment Authority funds and that such designation is not exclusive nor does it preclude the deposit of any Housing and Redevelopment Authority funds in other officially designated depositories of the Housing and Redevelopment Authority. 4. The Executive Director is hereby authorized to deposit Housing and Redevelopment Authority funds in any or all of the depositories herein designated up to the amount of X100,000, or such other amount as may be subsequently permitted by law, such deposits to be in the form of demand accounts for Public Unit Savings Certificates purchased by the Housing and Redevelopment Authority of Richfield, payable to the Housing and Redevelopment Authroity of Richfield on the signatures of the Executive Director. Passed by the Housing and Redevelopment Authority of Richfield this 17th day of May, 1982. Thomas E. Harms Chairman ATTEST: Michael Freeman Secretary U •?ay 1 3 , 1 982 ~_ L U 0 .~ M d' ._ ^ -~-~ L 4 Q. O O CO I~Ir . Lowell Larson Superintendent of Scr.ools 7001 Harriet Avenue Richfield, ~g~T 55423 Dear Lowell: The Richfield Housing and Redevelopment Authority (HRA) requests that the School Board consider the sale of Lincoln Hills School to the HRA, or other interested agency, to be used for housing purposes. Lincoln Hills School provides a unique opportunity for the HRA to increase Richfield.'s supply of affordable housing for the elderly. This type of housing at Lincoln Hills would also provide opportunities for younger families to locate in Richfield, when the elderly move from their homes to places such as the Lincoln Hills hous- ing development. Richfield has developed into a community with an ever growing population of elderly citizens. The population of elderly (62 years and older) has more than doubled from 1970 to 1980, while the total population of all other age groups has declined by 20 percent. I~iany of the elderly ir. Richfield are owners of single family homes. Often, those mortgage-free homes provide the only affordable housing available to the elderly. However, maintenance and general repairs become, in some instances, unaffordable. But lack of affordable alternatives force the elderly to remain in their single family homes. The Richfield HRA is proposing to supply approximately 70 affordable elderly housing units on the property occupied by the Lincoln Hills School building. The existing structure would be rehabilitated. The remain- ing recreational area would most likely not be required as part of the rehabilitation project, and its present use as a baseball diamond could be continued °~~ith the city becoming the owner of this land also. The Lincoln Hills opportunity is important because there are no other comparable sites presently available, and rehabilitation costs would be substantially less telephone: 869-7521 (612) an equal opportunity employer ~ ~ '~r. Lowell Larson Pane T:•:o ..ay 13, 1932 than the cost of near construction. If negotiations on site control can be initiated and completed quickly, an application for a federally funded program, Section 202, could be submitted. Section 202 would provide beloca market interest rate mortgage financing and a Section ~ rental subsidy, for each unit, for at least 20 years. Linder the Section S pro- gram, the elderly renter would be required to pay only 25-30% of their adjusted monthly income for rent. Application for funding with Section 202 requires that a "non- profit" sponsor prepare an application package and submit it to the Department of Housing and Urban Development (HUD) for approval. For Lincoln Hills, the selected non-profit sponsor would include local churches. A non-profit sponsor experienced in housing development would assume a "lead" position with the local churches. Our staff has been in contact with such non-profit organizations in the past month to evaluate the Lincoln Hills structure and its adaptability to housing for the elderly. It appears that Lincoln Hills provides a basis for a very workable and innovative rental complex for housing for the elderly. Hoca- ever, there is concern about whether Lincoln Hills can be acquired and rehabilitated within the Section 202 cost restrictions. Pay- ment for the site would possibly include subsidy by the HRA or the city. The Federal Department of Housing and Urban Development has an application deadline for Section 202 funding of June 30, 1932. Development of an application package requires selecting a non- profit organization and/or organizing local churches, creating a local non-profit corporation, obtaining site control, selecting an architect to develop plans and selecting a contractor for the project. Thus, School Board action to make the school site avail- able for this development is needed now. It is very desirable that negotiations between the HRA and the School Board bec_;in ir,ulediately. Positive action to this request by the School Board :•rould help provide a unique opportunity for Lincoln Hills to continue as a co:~s,~.ur,ity resource by helping to meet the housing needs of the citize-zs of our community. If you have any questions concerning this matter, please feel Free to contact me. Sincerely yours, ::arl ?:ollencerc~r City _:a.^.aaer cc: Cc.:.<<u::ity ~evelopr::er_t Director