04-15-2019 Special Concurrent CC and HRA Work Session AgendaS P E C IAL C O N C U R R E N T C IT Y C O U N C IL AN D H O U S IN G AN D R E D E V E LO P ME N T
AU TH O R IT Y W O R K S E S S IO N
R IC H F IE L D MU N IC IPAL C EN TER, B AR T H O L O ME W R O O M
AP R IL 15, 2019
5:45 P M
C all to order
1.D iscuss E merson L ane housing proposals
A djournment
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CITY OF RICHFIELD, MINNESOTA
Office of City Manager
April 11, 2019
Council Memorandum No. 20 HRA Memorandum No. 3
The Honorable Mayor Housing and Redevelopment
and Authority Commissioners
Members of the City Council City of Richfield
Subject: Development of Emerson Lane Site
Council Members and Commissioners:
On November 13, 2018, staff presented an overview of the HRA-owned site located at
6812 Emerson Lane and the proposal for five single-family homes submitted by Endres
Custom Homes. No specific determination or direction was chosen at the work session;
however, the builder continues to be interested in developing the property . At the
upcoming HRA and Council work session on April 15, staff will revisit the site and the
proposed development.
Site Background
The 1.3 acre property is located between Interstate 35W and Emerson Avenue, just
north of Wood Lake Nature Center (Attachment A). The property was purchased by the
HRA in 2005 and is zoned and guided for single family residential .
The property was purchased in 2005 for the purpose of building new single-family
homes under the Richfield Rediscovered (RR) program. When staff began marketing
the property to builders, the housing market had begun its downturn, and interest was
scarce.
Over the past few years, the HRA has fielded the following inquiries for the property:
Summer 2014 – A neighbor expressed interest in subdividing the property and
building three single family homes. No formal application was submitted.
Spring 2017– An individual proposed building three slab-on-grade homes. No
formal application was submitted.
Spring 2018 – A neighbor expressed an interest in building one single family
home. No formal application was submitted.
Spring 2018 – A neighbor expressed an interest in purchasing the lot from the
HRA for $10,000.
Spring 2018 – Dustin Endres of Endres Custom Homes made inquiries about
the lot and began researching the City requirements to build five homes.
Fall 2018 – Neighbors sent a letter to the HRA expressing their opposition to
housing development and desire for it to be recognized as part of Wood Lake
Nature Center.
Staff have also discussed the site with the Minnesota Department of Transportation
(MnDOT), Public Works, and Recreation Services; however, none have expressed a
need or interest in the property . In the case of Recreation Services, the only possibility
for the site would be either a dog park or an archery range; however, costs of
development are prohibitive.
Proposed Housing Development
The current proposal by Endres Custom Homes is for five single-family homes
(Attachment B):
The homes would be based on the same split-level model with varying rooflines,
siding patterns and exterior colors. Each home would have four bedrooms, three
bathrooms, and an attached two-car garage. The estimated sale price would be
$345,000.
The homes would receive sound-attenuation upgrades to mitigate the noise of
nearby Interstate Highway 35W.
Two buyers have expressed interest in buying homes here, and the builder feels
confident that other buyers would respond once listed on the M ultiple Listing
Service (MLS).
A public road with turnaround would be constructed to provide access for
emergency vehicles.
The cost to prepare the property for development of five homes is estimated at
$300,000. This includes the cost of site preparation, road construction and utilit y
installation. These costs are beyond the normal costs undertaken at other RR lots
because utility mains would need to be constructed, and the public road would need to
be extended. The HRA would likely not receive any sale proceeds under this scenario
because they would be used to offset the high cost to develop the property.
Alternative Housing Scenarios
At the work session on November 13 policymakers considered the development of
fewer than five homes on the property . The feasibility of those alternatives is as follows:
The construction of three or four homes would also require a public road and
utility mains to be constructed, costing $300,000. With fewer homes to absorb
these costs, significant up-front investment from the HRA would be required for a
viable development. An estimated $60,000 - $120,000 in additional cash would
be needed to make three to four homes feasible. Staff does not view this as a
wise use of scarce HRA resources so is not recommending this scenario.
Reducing the development to two homes on the site allows for the construction
of a private, shared driveway instead of a public road. This lowers development
costs but also adds the additional cost and burden of installing a nd maintaining
shared utilities and the driveway. A small amount of sale proceeds may be
realized, depending on the final cost of the shared utilities.
The construction of one home would include the installation of a private driveway
and single-user utility lines, both of which would be significantly longer than a
typical development and therefore more costly . Sales proceeds and an additional
$10,000 would likely be required to cover development costs.
Since 2005, the HRA has spent over $335,000 for the acquisition, demolition and
maintenance of this property. Under no scenario does the HRA recoup these acquisition
and holding costs, except through property taxes over the long-term. (Attachment C)
Policies
The following policies provide guidance in considering the development of the property:
1. The main objectives of the Richfield Rediscovered Program include:
a. To remove substandard, functionally obsolete housing on scattered sites
throughout the City and replace with new, higher-valued housing;
b. To eliminate the blighting influence of substandard housing, thus
improving residential neighborhoods;
c. To alleviate the shortage of housing choices for families; and
d. To facilitate the construction of larger three - to four-bedroom, owner-
occupied homes designed for families.
There is high demand for new single family homes in Richfield, with nearly 200
individuals on the notification list for the program.
2. The Comprehensive Plan is the policy document that describes the
community’s vision for the future of Richfield. The Housing Goals and supporting
policies included in the document support the goals of the Richfield Rediscovered
program: the desire to provide a full range of housing choices and the creation of
“move up” housing.
3. The Inclusionary Housing Policy states that “With regards to “scattered-site
single family housing development,” at least 20% of the units newly constructed
or rehabilitated and converted to long-term affordability in any three-year period
must meet the proscribed affordability requirements.”
a. With the addition of five market-rate homes built at 6812 Emerson Lane,
the percentage of affordable new homes constructed would be 24% for
the 2018-2020 time period.
Land Use/Zoning Considerations
The property at 6812 Emerson Lane is designated for Low Density Residential in the
Comprehensive Plan and is zoned for single-family residential housing. In this zoning
district, single-family dwelling units are permitted uses, up to seven units per acre.
If the development of five homes on the property proceeds for approvals, the plat of the
property would come before the Richfield City Council for approval. Some of the
proposed lots may be non-conforming in width (i.e., less than 50 feet).
Neighborhood Input
The neighbors have expressed their concerns over the proposal for five homes. The
attached letter to the HRA commissioners, dated October 2, 2018, states their
opposition to any development of the property (Attachment D). A number of neighbors
also attended the November 13, 2018, work session and voiced their concerns
regarding the impact of development on property values, increased traffic on Emerson
Avenue, house height and design, and impact of added households on a property that
has been vacant si nce 2005.
Postcard notifications for this work session were mailed to the neighborhood on April 3.
If a housing development proceeds for the site, an open house will be scheduled for the
neighborhood to get more information about the builder, house plans and construction
schedule.
Timing
Mr. Endres, of Endres Custom Homes, initially contacted staff in the spring of 2018. He
has buyers interested in building new homes in Richfield, who are awaiting a decision
about this property for future construction.
Emerson Lane is scheduled for mill and overlay to be completed in 2020, so any utility
improvements necessary for development should be completed before hand to avoid
damaging the newly refurbished road.
Questions to Consider
The proposal raises the following questions for policymakers to consider:
1. Is housing the appropriate use for this HRA-owned site?
2. If housing is appropriate, what number of homes do you support for the property?
Next Steps
If policymakers support development of five housing units on the property, staff
will encourage Endres Custom Homes to submit a formal proposal and request
for development of the property. A development agreement would be brought to
the HRA, and a plat application to the Council.
If support is for one or two units, staff will encourage Endres to submit an
application for the lot(s). If he is not interested, the lots will be marketed for sale
through the Richfield Rediscovered Program.
If policymakers determine that housing is not the appropriate use for the site,
consideration of the appropriate use will be referred to the Planning Commission.
Respectfully submitted,
Katie Rodriguez
City Manager
KR:ka
Email: Department Directors
ATTACHMENT A
6812 Emerson Lane, Aerial Photo of the site
ATTACHMENT B
Site plan and house design for proposal submitted for 5 homes on Emerson Lane
Proposed House Plan and Photo of Constructed Homes submitted by Endres Custom
Homes.
Perspective
from West
Perspective
from East
Same house
design/plan, built in
2018 on 16th Avenue
double-lot
ATTACHMENT C
Summary of Development Costs - 6812 Emerson Lane
1 Home 2 Homes 3 Homes 4 Homes 5 Homes
Development Costs* $ (70,700) $ (95,000) $ (300,000) $ (300,000) $ (300,000)
Lot Value
Estimated at $60k/lot $ 60,000 $ 120,000 $ 180,000 $ 240,000 $ 300,000
TOTAL HRA (Cost)/Gain $ (10,700) $ 25,000 $ (120,000) $ (60,000) $ -
CITY TAX GAIN
Estimated at $2,050/house in
annual tax to City and HRA $ 2,050 $ 4,100 $ 6,150 $ 8,200 $ 10,250
RETURN ON
INVESTMENT (YEARS) 169.2 75.9 74.2 48.3 32.8
*Acquisition and holding costs of $335,000 not included.
ATTACHMENT D
Letter sent to HRA Commissioners from Emerson Lane neighbors, dated October 2,
2018