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07-21-80 agendaHOUSING AND REDEVELOPMENT AUTHORITY Office of Executive Director HRA Letter No. 27 Agenda July 21, 1980 Housing and Redevelopment Authority Commissioners City of Richfield Dear Commissioners: Subject: Selection of Developer for a Five-Unit Scattered Site Single Family Home Project On May 20, 1980, the Housing and Redevelopment Authority authorized the staff to request proposals from interested devel- opers to construct five single family homes on scattered lots throughout the city. The developer is to construct at least one 4-bedroom home, and four 3-bedroom homes. To make the project feasible, the developer must receive Section 8 rent assistance set-aside monies for the five units by application to the Metro- politan Council, no later than August 4, 1980. The developer must also receive long term mortgage financing from the Minnesota Hous- ing Finance Agency (MHFA) or the U.S. Department of Housing and Urban Development (HUD). The developer would own and manage the completed units. Although the project goal is to provide rental family housing to income qualified persons under the Section 8 program, an FHA Section 235 homeownership project would be utilized if Section 8 commitments and backup financing do not materialize. This remains a possibility because of the heavy competition for the limited amounts of money that are available for financing rental housing. The lots to be used in this program are vacant lots or lots with existing substandard houses that are to be purchased by the HRA, utilizing Bonus Community Development Block Grant funds. The HRA applied for these bonus funds in June, 1980, and the monies are scheduled to be awarded by the end of August. Atrough there is no guarantee that the HRA will receive the funds, our application has been received favorably. The lots are being acquired through a Voluntary Acquisition Program that the HRA also approved in June. Houses located on the acquired lots will be demolished, and all cleared lots would be sold to the developer. The sites to be purchased should be identified by the end of July. The staff has advertised for properties that the owners may wish to sell to the HRA. The HRA advertised for developers in the Richfield Sun and the Minneapolis Star and Tribune. A proposal packet was developed that requested information on the developer's qualifications, fin- HRA Letter No. 27 -2- June 21, 1980 ancial aspects of the proposed project, the type of materials to be used in construction, floor plans and elevations of the prop- osed houses, and security to ensure developer participation if selected. Proposal packets were sent to 20 interested developers. Five developers submitted proposals. The limited time available to prepare a proposal was cited as a reason for the lack of greater response. According to the HRA New Ii~me Program guidelines, the New Home Committee is to review the proposals. The New Home Committee con- sisted of Bruce Palmborg, Housing and Redevelopment Specialist; Rick Jopke, City Planner; and dike Eastlinq, City Engineer. Mr. Jopke represented Mr. Kraft, and Mr. Eastling represented Mr. Fondrick. The Community Development Specialist, Bruce Nordquist, provided staff .support to the c ommittee and assisted the developers in preparing their proposals. The committee was responsible for interviewing each developer and determining eligibility and ranking. The criteria utilized evaluated the proposed finished floor area, the suitability of the homes for the community, the total development cost, the project financing feasibility, the developer's qualifications, the construction schedule, purchase price for the lots, and property management potent- ial. The attached table provides information about each proposal. The committee ranked each of the five proposals and ranked them in the following order: 1. Associates II, David Ames, 5029 Morgan Avenue, Mpls. 55419 2. Homedale Builders, Alan Chazin, 5353 Wayzata Blvd. Mpls. 55416 3. Housing Development Associates, Warren S. Carlson, 32 South 10th Avenue, Hopkins, 55343 4. John Oksness and Robert Johnson, Partners, 704 W. 55th Street, Mpls. 55419 5. C & C Homes Incorporated and Halle Builders, Clinton Asche, 18005 20th Avenue North, Plymouth, 55447 David Ames is recommended by the committee as the developer. A description of each of the proposed development projects is as follows: Ames Associates II, David Ames Mr. Ames proposed two, three-bedroom split entries, two three-bedroom ramblers, and one four-bedroom split entry..~~~ split entry design would have single detached garages and the ram- blers would have single attached garages. The alternative designs and the variety of possible exterior finishes. allow suitability for different Richfield neighborhoods. Ames has proposed homes with HRA Letter No. 27 -3- June 21, 1980 the largest finished floor area that is both suitable and flexi- ble for family style living. The homes will have pre-assembled unfinished studwalls that will be placed together at the site, and finished on the exterior and interior by Dippen Construction. While the total development cost is higher than most of the other proposals, the relatively low developer's costs and cost per square foot make the project mast feasible. As compared to the closest competitor, Homedale Builders, a greater percentage (86% rather than 77%) of the total development cost is proposed to go into construction of the Ames homes. Ames, having been responsible for the previous scattered site rental project in Richfield, has demonstrated that the project is financially feasible, that he has the ability to construct and manage single family homes, and that he has the financing experience necessary to get the project approved. Homedale Builders, Alan Chazin Mr .. Chazin proposed three 3-bedroom 1 1/2 story homes with dor- mers, one 2-story, 4-bedroom home, and one rambler style home designed for the handicapped. Each site would have a single detached garage. The homes would be custom built on the sites by subcontractors chosen by Homedale. Sherman Forbes Housing, a division of Homedale, would manage the properties. The 1 1/2 story 3-bedroom design is suitable for Richfield neighborhoods with a variety of exterior finishes, how- ever, the 4-bedroom ,two story plan is not suitable for use in Rich- field. These homes do not offer as Large or flexible family living space for the amount of finished square footage as in the Ames homes. The attractive features of the proposal include the low per unit construction cost, the construction management, and financing exper- ience of the developer, and the Section 8 rental experience. Home- dale, however, does not have previous experience with single family home rental or in submitting their proposed house styles to MHFA for financing approval. Housing Develo ment Associates, Warren Carlson Mr. Carlson proposed four, 3 and 4 bedroom ramblers and one 3-bedroom rambler for the handicapped. All homes would have attached garages. The homes would be custom built by Klingerkutz Construction owned by Housing Development Associates, and managed under contract with Eberhardt Management Company. A rambler design is suitable in Richfield; however, the finished square footage of the homes was found by the committee to be unsuitable for large family living. Having the highest finished area per square foot construction cost ($45.16 sq. ft.) and a preference for not participating in the Section, 235 option made the project unfeasible. In evaluating all the factors of this proposal, the committee considered Housing Development Assoc- iates previous ability to construct and manage townhouse Section 8 family housing and the experience of working with HUD, bIHFA, and the Metropolitan Council, as being their strong points. Housing Devel- opment Associates also offered the most money to the HRA for each lot sold. John Oksness and Robert Johnson, Partners Mr. Oksness proposed building four 4-bedroom split entry homes with attached garages and one 3-bedroom rambler for the handicapped. HRA Letter No. 27 -4- June 21, 1980 `i'he homes would be constructed by an (as yet) undesignated con- tractor. The properties would be owned and managed by both partners. The previous experience of John Oksness to manage single family homes was considered highly by the committee. The split entry design would be more compatible with a variety of exterior finishes. The per unit construction costs ($56,000) made the project unfeas- ible if the Section 235 option was utilized. In addition, the partners had little experience working with HUD, MHFA, and the Metropolitan Council on subsidized projects. The low developers costs (subtracting construction costs from the total development costs) may also indicate inexperience with working with anticipated costs of a subsidized project. C & C Homes Incorporated, Clinton Asche Mr. Asche proposed five 3 and 4-bedroom split entry homes with attached garages. The homes would be prefabricated by Wausau Homes of Wisconsin, erected on the site by Halle Construction, and owned and managed by C & C Homes. The unique method of construction would allow construction completion in 60 days. Their split entry design provided the smallest square footage in comparison with other split entry proposals. A variable exterior finish and alternate styles of construction would have provided better opportunity for neighbor- hood suitability. The committee felt the C & C Home project unfeas- ible because of the lack of experience with HUD, MHFA and the Metro- politan Council on subsidized projects; the preference not to build Section 235 housing; and the proposed interest rate (8%) the devel- oper needed to make the project work. It has been indicated by MHFA that the mortgage interest rate from their agency would be somewhere between 8 1/2% and 9%. All of the five developer projects proposed a purchase price for the lots based on the financial feasibility of their project. The land cost was not considered as important in evaluating the developer as some of the other selection criteria. Approval of the recommendation of the New Home Committee by the HRA at this time will enable Mr. Ames to finalize an application to the Metropolitan Council for Section 8 co~~unitment funds by August 4 1980. .The project remains contingent on the developer obtaining financing, approval of the Bonus Community Development Block Grant funds for property acquisition, and the subsequent purchase of five development sites by the HRA. Mr. Ames will be at the July 21, 1980 HRA meeting to present his proposal and answer any questions the commissioners might have. Once a developer is selected, a developer's agreement will be negotiated. The major elements of the agreement will include the sale of the acquired sites in a specified condition, the require- ments of construction, including project completion, the developer's written proof of financing for the site, and a commitment to use the sites for Section 8 housing for a specified period of time. A $5,000 bond is being used to ensure that Mr. Ames will perform in good faith and execute the agreement when approved by the HRA. HRA Letter -5- July 21, 1980 The sale of the lots will necessitate a public hearing. It is recommended that the HRA approve Mr. Ames as the de- veloper for the scattered site project and authorize him to sub- mit necessary applications for financing the proposed development. Respectfully submitted, Karl Nollenberger Executive Director KN/eja cc: City Council Community Development Director Housing and Redevelopment Specialist (~ !n rt a to d to O~ O O S tD 0 O 3 m O S N O 3 n a m d n 2 n S n -• IL - a v C. 4L ~ D O- C C~ N O 7 0 N N O O d 7- 7 N -l S d S 't 7 C f1 ~ < m fD n N n 7 7 'l r an 7 N to o c ~ ~, p m d a ~ 7 2 m O O o 7 D 7 n a D ~ O 3 to N D to N cn ~ t n N N 3 ~ ~ ~ 3 m 'i 7 fL O O N (D O ,ten m~ .,m ~ n m m ~ n _ C m N V1 d m - !li n O r - n 1 J (D O d m N ~ N ~+ I 1 I ~- _. -.. 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N 7 r~ m 1 1 n (D N -. t0 m ~ m (L S v o ro a~ - to d N m 7 ~--~ -•r* rr m - - N `< 7 rt fL l d `< N O vl - m -t tL •< ~ (D ^ 3 n v - 7 , s -. £ In ~ rr In < 4v 7 m n a -• O -• 3 - 7 m v 7 £ an 3 .+ 7 to ~ m m£~ o- m n a~ m o -.-v S ,-r v m~ 7 h a 4v v .~ -• m ~< rr v tD £ d v rD 7~ 3 vl - rL -~ £~ 7 7 to n v - - ~< ~ :o d 7 2 K z -• J - 7 ~< ~ -O to - Y -' r. to fL to - rr Y s O N N -•O) r - tD n fL o -i N - - n ~, _, : <~ 7 m m c 7 7 < , p In an d m m a~~ d 7 n T_,,* = Iv m a d rv v drt -,.,no 7mdrr o m m 3 rto I o ~ O 'S m 7 N n 0 tC 7 d N m J ~£ 7 -• N -T d ~ O N 3 N n 7 an d ~ -• ~ p rt N •• m VI rr 7 a to m Z 7 N N K O m a ~ to -n N O n N (u O N N 0 7 ~ ~ ~ m n m 7 ~ an = N a -• O O 7 -• C 7 (D 7 7 tD d O m 7 an ~ TN I 1 -• 7 (ll ~ 1 7 ~ HOUSING AND REDEVELOPMENT AUTHORITY Office of Executive Director HRA Letter No. 26 Agenda July 21, 1980 Housing and Redevelopment Authority Commissioners City of Richfield The staff made the property owner an offer to purchase follow- ing the HRA's action. The negotiations for acquisition of this property have been `unique, in that the owner, Mr. Jon Pietig, desires tomove his home to a vacant lot in the south suburban area. The terms of the agreement which has t~ntative•ly been reached with Mr. Pietig would be as follows: There are several considerations in evaluating this purchase and the proposed moving of the structure. It is an unusual home, which was built in about 1920 at 6630 Lyndale Avenue. It was moved The properties which to Graham Avenue have been from the city. However, by the HRA and it would not be necessary property to amortize a loan with rental with the other property acquisitions. for the HRA to lease the income as has been necessary u c1t~V .Li ~--ivaa . -The Pietig's would be eligible for approximately $26,000 in relocation benefits. Eligibility for this level of benefits is not affected by whether the house is moved or remains on site. the HRA has previously purchased adjacent acquired with monies loaned to the HRA ., HRA Letter No. 26 -2- July 21, 1980 Although the properties adjacent to Graham Avenue have been identified for HRA acquisition since 1975, they have only been purchased as they have become available when their owners have desired to sell. Some properties were purchased as early as 1976. With the rapid appreciation of property values in recent years, the "early" purchase of these properties by the HRA has resulted in savings. The HRA has rented the properties in the interim, and tax payments have continued. If a development proposal were not obtained for those properties, the HRA would have the option of reselling the homes for occupancy. The purchase of the property at 6617 Graham Avenue at this time does have a financial impact on the HRA. Attached is a proforma cash flow projection, comparing the HRA's income and expenses for the property with and without the dwelling. The fiscal impact is about the same, with an estimated annual loss of approximately $5,000. If no feasible development proposal is approved for this area, the loss could be more substantial, because the HRA would have the cost of separating such incompatible land uses. An additional consideration would be the loss of investment earnings to the HRA, The $106,000 (acquisition and relocation costs) could earn the HRA approximately $10,000 over one-year's time. If development of the cooperative housing project on this site is achieved, it would be~ necessary for the HRA to purchase the property in about twelve months). However, it is also likely that this praperty will appre- ciate in value, and the investment interest earnings could be off- set by increased costs of acquiring the property in the future. $60,000. However, once the dwelling the value is based upon what someone the building to another site. separated willing to O.J. Janski and Associates appraised the value of the propert for moving at virtually nothing, This is based on an examination of comparable sales and discussions. with movers. Because the structure is very high (over 18 feet) has a considerable roof overhang and an unusual shape, the moving cost is high, which sig- nificantly reduces its value for moving. HRA Letter No. 26 -3- July 21, 1980 It is Respectfully submitted, i -~~ Karl Nollenberger Executive Director KN/eja cc: City Council Community Development Director Housing and Redevelopment Specialist HRA RESOLUTION NO. RESOLUTION AUTHORIZING THE PURCHASE OF REAL PROPERTY AT 6617 GRAHAM AVENUE AND RESALE OF STRUCTURES WHEREAS, the Richfield Housing and Redevelopment Authority (HRA) desires to purchase certain real property pursuant to and in furtherance of the L/H/N Redevelopment Project heretofore adopted by the HRA and the City of Richfield (the "City), said real property being described as follows: Lot 10, Block 1, Fairwood Shores Addition, Hennepin County, Minnesota, (6617 Graham Avenue), and WHEREAS, the HRA has caused appraisals of the subject property to be made and has carefully considered such appraisals, and WHEREAS, the HRA has authorized the commencement of negotiations for the purchase of the real property described above, and WHEREAS, the HRA is authorized by Minnesota Statutes, Section 462.445 to purchase real property, and WHEREAS, land proceed funds to provide for the purchase of the property are available in the Special Revenue Fund, and WHEREAS, fair compensation for the interest of the HRA in the structures is for removal from the site has also been determined, Now, THEREFORE, BE IT RESOLVED by the Richfield Housing and Redevelopment Authority: 1. The Executive Director is dierected to execute a purchase agreement for the above property for Eighty Thousand and no/100 Dollars ($80,000.00). 2. The resale of the structures for One and no/100 Dollar ($1.00) to Mr. Jon Pietig is also authorized. Passed by the Housing and Redevelopment Authority of Richfield this 21st day of July, 1980. ATTEST: Tom E. Harms Chairman Vern Luettinger Secretary . i -~f. A rn EMERSON 4V E. ~_~.-..~_._r-._ ~_.-_ --_. ~ .a ~ - 1~1i~~1 III A~11~11.~11~~1. ~ _-~ ~1~ _ ,.. I 1 r11 X11/11111 -- ' 'y ~ i ° - LYNW0 ? DUPOhf AV[. 00 T^ ~ r - - - _ _.. _ ,-. , _ `. Y~ _ r' ~ J -- - -- - - \ ~ ~_ v r --- ~s _ ~ ~T, r Q \ ~~-.! 'Jf ~` > N ~fl`il BRYANT ~AVE._ 1,. ! S / ~ ~p ~i ~ ~ ~ I 11 ~; J , ~ ~^ ~ ALORICN AVE. I ~~ a m / ..\ ~ .~'1. \, ~.T+ J-~, '1~'$~ - s ~t ~ ~ ~tAauuf~- -,-. i ~I~ s t h ~. f~ •~.N. '.•~i ~ - PJ. ~. r'/.~~1~ GARGIELD AYE.v ~` `~ 1 :~_ =\ ..`w` [i `sib ~ ya,., i ~~~ ,~ ~ - I I~ ~. I `~ ~~ w .'~ '1 N; ~~ HARRIET AVE. ~ ' N~r~- ~ ~~~~*r - - - ' - ~ y ~' - o Zf1f..rF - - i - I r^' ~ . ~I III ~I I '11 -~-~-'~i~~f1~Nf•iif•Ei! L~ I N L_.~~~• ~ ' I ' .__ ~ ~I 'i ;~ _ _ __ I GRA NOTAVE._ 1I I ~ ~ I I I ~ I I ( I ~ ~ ~ r ~ '^ ~ I 9' 1 I ' I I ~ • i ~ ~- , `' PLEASANT AVE. ~^ 3 a J N ~f PILLSBURY AVE. Q 3 m ~Y-r - • I - r-- - -,-,^---- r I ~r i A N '^ i d° 1 ~ I.~-1- ~ ~ ~ I I I I~ ~_ n g ~ ; i~ ~~~ I ii wn m 0 I '~ d ~ F -_~ 7Jp Z ! I I~ WENTWORTH AVE. "C Q N I n O ~ ~~-1-_~T i ~1 I i ', ', i I i I K m~< ~ i~~ i l~ ~ 'i I I ~ j~ I ~, li ~I I~, ~ /YI = ~J~ _ f ~ j ' 6LAISOCLL AVE. ~ I 0 I fA~ i ~ ~-i---,-;-i---, --, ~-,I ;, -~-T~ ~--~-i 'I r I ~ . ~ f 1111.11 FEI~IE~. I--I; ~ i I ~ -.I If'--1 ~"' ~ 1 1, 1 ~ O N: i r 1 I _ N lfl>•AI~ ` 0 ~ _ ~ I ' .1.E ~ _, ._; . cp ID ~T--__T I~aY~A,[_..~11_u~~,._iu~ll l,_O_ .-~-.- - ~ ~. -. -J 1~ '~ b ~ O i ~ 1 ~ L~ ~ '~ y H r -r' T~ ~ -- I I- I I i I ~ I ~ I I n~ AV[. ° `i L~IO9®Q-LE / HlJl3 / NICL~LLET ~ m '~ ~ X~ ~ ~ I C=]MMERCI~4L IMPRCVEMERIT' 'I W ~ ~ ~, RR~CRAM R~c~-,,F~E~o. nnr~ Projected Financial Impact of House Removal Parcel With Parcel Without Dwelling Dwelling Income $400 to $500/month -0- $4,800 to $6,000/year - Expenses Taxes $9581 $257 (.$701 loss)2 Insurance $475 $100 Advertising $25 -0- Maintenance $1,000 $50 Vacancy $450 -0- Administration $300 $50 Total $3,208 Total $457 Balance +$1,592 to +$2,792 Balance -$457 Demolition $8,000 Demolition $4,000 Difference -$6,408 to -$5,208 Tax Loss $701 Total Loss -$5,158 1The 1975 frozen base value of this property produces approximately $810 in revenue for the City in 1980. The remaining $158 is the increment received by the HRA. 2As in #1 above, this tax loss is shared by the City and HRA. HOUSING AND REDEVELOPMENT AUTHORITY Office of Executive Director HRA Letter No. 25 Agenda July 21, 1980 Housing and Redevelopment Authority Commissioners City of Richfield Dear Commissioners: Subject: Goals and Objectives for the HRA improvements which the city council is undertaking within the L/H/N area. That discussion was aided by two reports detailing the activ- ity of the redevelopment projects of the HRA and the public improve- ment activities of the city council. In June the HRA had a more in-depth discussion of all of the redevelopment activities occurring within the L/H/N. In addition, a presentation on the Urban Design Elements was given to the HRA in order to familiarize them with the implementation of the L/H/N guidelines. it to the HRA in September of this year so sideration of it at your September meeting. Capital Improvement Program of the city and that At HRA get and presenting you can begin con- the same time, the is prepared in August and September and October of each year, concerning a five year forecasting of capital improvement projects. At your direction members to this meeting to engage in this discussion. You may want to make the entire session into a round table discussion involving all members as well as citizens present. The city staff will be there to assist in this discussion, but I see this particular item HRA Letter No. 25 -2- July 21, 1980 being one of commission members taking the initiative to direct the city staff. I am looking forward to this discussion and hope that it will be fruitful for all parties involved. Respectfully submitted, ,~ Karl Nollenberger Executive Director KN/eja ' cc: City Council Administrative Services Director Community Development Director HOUSING AND REDEVELOPMENT AUTHORITY Office of Executive Director HRA Letter No. 24 Agenda July 21, 1980 Housing and Redevelopment Authority Commissioners City of Richfield Dear Commissioners: Subject: 1979 HRA Financial Report We have previously transmitted HRA Financial Report. I thought it a more detailed discussion of the f to you a copy of the 1979 wn„]_r3 behoove us t0 ao into at the meeting on July 21 so that all members are well acquainted with the financial dealings of the Authority. This also should help us in looking at the future years operations. At the meeting on July 21, Joyce Wilde, Directar of Admin- istrative Services, will plan on giving an oral presentation of the financial report. This hopefully will provide the opportunity for HRA Commissioners to discuss any aspect of the financial con- dition which they might have questions about. Respectfully submitted, )~ Karl Nollenberger Executive Director KN/eja ' cc: City Council Director Administrative Services Director Community Development HOUSING AND REDEVELOPMENT AUTHORITY Office of Executive Director HRA Letter No. 23 Agenda July 21, 1980 Housing and Redevelopment Authority Commissioners City of Richfield Dear Commissioners: Subject: NAHRO Conference As I indicated to you last month at your HRA meeting, the be meeting in New York City from October 12-15, 1980. Previously I sent out an HRA Memorandum which indicated that money is bud- geted for two people to attend the NAHRO Conference, if two HRA members are interested in such attendance. I thought it would be appropriate for the commissioners to discuss possible attendance at this conference ~.t the July 21, 1980 HRA meeting, and ask any questions that they might have concerning city policy on travel and conferences. Respectfully submitted, n ` O C'~ ~~/ Karl Nollenberger Executive Director KN/eja cc: City Council Director of Community Development