092010agendapacketCITY OF RICHFIELD, MINNESOTA
MONDAY, SEPTEMBER 20, 2010
REGULAR HOUSING AND REDEVELOPMENT AUTHORITY MEETING
RICHFIELD CITY HALL COUNCIL CHAMBERS
6700 PORTLAND AVENUE
7:00 P.M.
AGENDA
Call to order
Roll call
1. Approval of minutes of Regular HRA Meeting of August 16, 2010
2. HRA approval of agenda
3. Presentation and consideration of Richfield HRA annual tax increment district status
update
Staff Report No. 30
Notes:
4. Consideration of subordination agreement for HRA Transformation Home Loan at
7020 Newton Avenue
Staff Report No. 31
Notes:
5. Consideration of resolution authorizing purchase of real property located at 7220
Russell Avenue through Richfield Rediscovered Program
Staff Report No. 32
Notes:
6. Public hearing regarding Richfield HRA Annual Public Housing Authority Plan for
Section 8 Housing Assistance Program
Staff Report No. 33
Notes:
7. Discussion regarding potential future redevelopment of 2517 West 76th Street
Staff Report No. 34
Notes:
8. Executive Director report
Notes:
9. Claims and payroll
Adjournment
Auxiliary aids for individuals with disabilities are available upon request. Requests must
be made at least 96 hours in advance to the City Clerk at 612-861-9738.
J
HOUSING AND REDEVELOPMENT
AUTHORITY MEETING MINUTES
Richfield, Minnesota
Regular Meeting
August 16, 2010
CALL TO ORDER
The meeting was called to order by Chair Sandahl at 7:03 p.m.
ROLL CALL
HRA Members
Present: Sue Sandahl, Chair; Steven Quam; Joan Helmberger; and David Gepner.
Doris Rubenstein arrived at 7:20 p.m.
Staff Present: John Stark, Acting Executive Director; Myrt Link, Community Development
Accountant; Chris Regis,- Finance Manager; and Nancy Gibbs, City Clerk.
Item #1 APPROVAL OF MINUTES OF REGULAR HRA MEETING OF July 19, 2010
M/Quam, S/Gepner to approve the minutes.
Motion carried 4-0.
Item #2 HRA APPROVAL OF AGENDA
M/Gepner, S/Quam to approve the agenda.
Motion carried 4-0.
Item #3 CONSIDERATION OF RESOLUTION AUTHORIZING PURCHASE OF REAL
PROPERTY LOCATED AT 7537 DUPONT AVENUE THROUGH RICHFIELD
REDISCOVER PROGRAM. S.R. N0.26
Acting Executive Director Stark presented Staff Report No. 26.
After some discussion, all Commissioners agreed this is a good purchase.
M/Gepner, S/Helmberger that the following resolution be adopted and that it be made part of
these minutes:
HRA Meeting -2- August 16„ 2010
HRA RESOLUTION NO 1076
RESOLUTION AUTHORIZING PURCHASE OF REAL PROPERTY LOCATED AT
7537 DUPONT AVENUE
Motion carried 4-0. The resolution appears as HRA Resolution No.1076.
Item #4 CONSIDERATION OF CONTRACT WITH S.R. STEVENS EXCAVATING, INC. FOR
DEMOLITON AT 7326 SHERIDAN AVENUE, 6336 15TH AVENUE, 6609
HUMBOLDT AVENUE, AND 6637 5TH AVENUE AND AUTHORIZING STAFF TO
CONTRACT FOR ANY UNCOVERED ABATEMENT .COSTS. S.R.NO. 27
Acting Executive Director Stark presented Staff Report No. 27.
M/Gepner, S/Helmberger to approve the contract with S.R, Stevens Excavatin _ , Icy nc f
demolition at 7326 Sheridan Avenue 6336 15t Avenue 6609 Humboldt Avenue and 6637 5t
Avenue and authorize staff to contract for any uncovered abatement cost.
Motion carried 4-0.
Item #5 CONSIDERATION OF RESOLUTION AUTHORIZING EXECUTIVE DIRECTOR AND'
HRA CHAIR TO EXECUTE INSTRUMENTS NECESSARY TO PURCHASE UP TO
NINE VACANT AND FORECLOSED HOUSES USING UP TO $1,060.000 FROM
HRA FUND THROUGH DECEMBER 31, 2010. S.R. NO. 28
Acting Executive Director Stark presented Staff Report No. 28.
M/Gepner,S/Helmberger, that the following resolution be adopted and be made part of these
minutes.
HRA RESOLUTION NO 1077
RESOLUTION AUTHORIZING THE HOUSING AND REDEVELOPMENT AUTHRORITY
STAFF TO ACQUIRE CERTAIN FORECLOSED HOMES WITHIN THE CITY
AND TO EXECUTE ALL INSTRUMENTS AND CONTRACTS RELATED THERETO
Motion carried 4-0. The resolution appears as HRA Resolution No. 1077.
Item #6 CONSIDERATION OF RESOLUTIONS APPROVING 2011 PROPOSED HRA
BUDGET AND TAX LEVY AND 2010 HRA BUDGET S.R. No. 29
Acting Executive Director Stark presented a power point presentation of the 2010 revised
and 2011 proposed HRA budget.
Commissioner Quam requested the budget be sent in paper format. Finance Manager Regis
responded that the next budget report would not be a CD but in paper format.
Commissioner Helmberger asked if the levy could change or could we lower the amount
later on.
HRA Meeting -3- August 16„ 2010
Finance Manager Regis responded, we must turn in the levy by September 15 and that levy
cannot increase, however it could decrease.
M/Sandahl,S/Rubenstein, that the following resolutions be adopted and be made part of
these minutes.
HRA RESOLUTION NO. 1078
RESOLUTION APPROVING PROPOSED 2011 HOUSING AND REDEVELOPMENT
AUTHORITY BUDGET AND CERTIFYING THE 2011 TAX LEVY
Motion carried 5-0. The resolution appears as HRA Resolution No. 1078.
HRA RESOLUTION NO. 1079
RESOLUTION AUTHORIZING REVISION OF THE 2010 BUDGET OF THE HOUSING AND
REDEVELOPMENT AUTHORITY OF RICHFIELD
Motion carried 5-0. The resolution appears as HRA Resolution No.1079.
Item #7 EXECUTIVE DIRECTOR REPORT
Acting Executive Director Stark reported that Penn Fest was a tremendous success.
Item #8 CLAIMS AND PAYROLL
M/Quam, S/Sandahl that the following claims and payrolls be approved:
U.S. Bank 08/16/2010
Section 8 Checks: 119295- 119454
HRA Checks: 30961 - 30986
TOTAL
Motion carried 5-0.
ADJOURNMENT
The meeting was adjourned by unanimous consent at 8:00 p.m.
Date Approved:
$ 159,233.50
$ 81,633.07
$240,896.57
Suzanne M. Sandahl
Chair
Nancy Gibbs
City Clerk
John Stark
Acting Executive Director
AGENDA ITEM # 3
REPORT # 3 ~
~- STAFF REPORT
HOUSING AND REDEVELOPMENT
AUTHORITY MEETING
SEPTEMBER 20, 2010
REPORT PREPARED BY:
MYRT LINK, COMMUNITY DEVELOPMENT
ACCOUNTANT
NAME, TITLE
REPORT PRESENTER:
DEPARTMENT DIRECTOR REVIEW:
REVIEWED BY EXECUTNE DIRECTOR:
ITEM FOR HRA CONSIDERATION:
Consideration of a presentation of the Richfield Housing and Redevelopment Authority Tax
Increment District Status Update.
RECOMMENDED ACTION:
By Motion: Accept the attached Richfield Housing and
Redevelopment Authority Annual Tax increment District Status
Uadate.
II. BACKGROUND
The Tax Increment District Status Update (TIF Status Update) is presented to the
Richfield Housing and Redevelopment Authority (HRA) annually for review. This
year, the TIF Status Update shows that the HRA is able to meet all of its Pay-As-
You-Go Note and General Obligation Tax Increment Bond obligations. A
representative of Ehlers & Associates (the HRA's public finance consulting. firm) will
provide further information regarding Richfield's TIF Districts and their current
status.
092010 2010 TIF Status Report
JOHN STARK, COMMUNITY DEVELOPMENT
DIRECTOR
717w~m TimYr
III. BASIS OF RECOMMENDATION
A. POLICY
• The annual TIF Status Update is provided to the HRA to summarize
tax increment financial activity and comment on the status of the
HRA's ability to meet its tax increment obligations.
B. CRITICAL TIMING ISSUES
• The TIF Status Update indicates the HRA is able to meet all of its
current and future tax increment obligations.
• The Urban Village District and Post-1999 Richfield Rediscovered TIF
District both have negative cash balances at the end of 2007.
Projections show that these Districts will have positive cash balances
in the future.
C. FINANCIAL
• See detailed TIF Status Update attached.
D. LEGAL
• N/A
IV. ALTERNATNE RECOMMENDATION(S~
• Reject the conclusions made in the Tax Increment District Status Update.
V. ATTACHMENTS
• Tax Increment District Status Update.
• Map
VI. PRINCIPAL PARTIES EXPECTED AT MEETING
• Rebecca Kurtz, Ehlers & Associates, Inc.
3-/
Richfield Housing
and Redevelopment Authority
Tax Increment District
Status Update
September 20, 201.0
FREERS
LEADERS IN PUBLIC FINANCE
Prepared by Ehlers & Associates
3,a
Tax Increment Financing District Summary
Conclusion
The Richfield Housing and Redevelopment Authority (HRA) will be able to meet all of
its tax increment obligations.
Richfield Redevelopment Project Area
The Richfield Redevelopment Project area currently contains 10 tax increment financing
districts:
• Interchange-Lyndale-Nicollet (ILN)
• Interchange
• Richfield Rediscovered (Pre-1999)
• Urban Village
• Richfield Rediscovered (Post-1999)
• Gramercy
• Interchange West/Lyndale Gateway
• City Bella
• Lyndale Gateway West
• Cedar Corridor
In 2005, the boundaries of the Richfield Redevelopment Project Area were expanded and
set to be the same as the City's boundary in order to expand housing program service
areas and provide a wider area of tax increment spending authority. The HRA has two
types of obligations associated with these districts. The first type of obligation is the Pay
As You Go Revenue Note. All of these Notes pledge to the Note Holder a certain
percentage of the available tax increment from the specific district. Less tax increment
results in lower Pay As You Go payments. To the extent that the increment is not
available to make the payment, the HRA is not required to meet the obligation. Current
projections show that the HRA will be able to meet all of its Pay As You Go Revenue
Note obligations.
The second type of obligation that the HRA has is Tax Increment Bonds. Currently,
there are bonds outstanding in the ILN, Richfield Rediscovered Post-1999, Interchange
West (Best Buy), and Lyndale Gateway West (Kensington Park) districts. Property tax
law changes in 2002 -- with the last phase-in in 2004 -- resulted in much lower increment
receipts than in the past. These changes prompted the HRA to start reserving cash to
cover bond debt service. Also, the law provided the ability for the HRA to share tax
increment (deficit pooling) from all tax increment districts to help pay General Obligation
Tax Increment Bond obligations. In 2004, the HRA undertook modifications to certain
tax increment district plans to address shortfalls in the ILN District increment. By using
deficit pooling, projections show that the HRA will be able to meet all of its General
Obligation Tax Increment Bond obligations.
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®Richfield HRA Tax Increment Financing District Update 2010 Page 2
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Assumptions
All projections are based on the most conservative assumptions. Cash balances are as of
December 31, 2009.
The calculations do not include any interest on invested cash or inflation on property
market values with a few exceptions:
The exceptions to the assumptions follow:
Interchange West uses a 1.725% market value inflation
Urban Village uses a 2% market value inflation
Lyndale Gateway West uses a 1 % inflation rate
Although Lyndale Gateway (Richfield Senior Housing) used a 3% market value inflation
assumption at time of closing, a 0% market value inflation rate is being used in order to
be conservative.
_..i
®Richfield HRA Tax Increment Financing District Update 2010 Page 3
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Interstate-Lyndale-Nicollet (ILN) TIF District Update
The ILN District is a commercial redevelopment project comprised of the Shops at
Lyndale and the Meridian Crossings redevelopments located at I-494 and Lyndale Ave.
First Year of Increment: 1987
Estimated Decertification Date: 2012
Outstanding Obligations:
• $2,039,157 Pay-as-you-go Note for the Shops at Lyndale, Phase I
• $1,368,170 Pay-as-you-go Note for the Shops at Lyndale, Phase II
• $2,908,666 Pay-as-you-go Note for Meridian Crossings, Phase I
• $2,453,702 Pay-as-you-go Note for Meridian Crossings, Phase II
• General Obligation Tax Increment Bonds of 1996, which were refunded with the
$2,460,000 Taxable General Obligation Refunding Bonds, Series 2002B. (These
formerly were the pooled bonds of the LHN and ILN, and they are currently
known as the ILN Bonds)
• $1,630,000 General Obligation Tax Increment Bonds of 2000, which utilizes the
Candlewood Hotel increment to assist the Lyndale Gateway West District
(Kensington Park).
The ILN District has a cash balance of $788,769.
The cash balance will be used to pay the ILN Bonds. The TIF Plan Modification
undertaken in 2004 to address deficit pooling will allow increment from the Interchange
and Richfield Rediscovered pre-1999 TIF District to be pooled to the ILN District, if
needed for debt service on the Bonds. The deficit pooling is reviewed annually. Deficit
pooling was not needed in 2009.
Conclusions:
The HRA will be able to meet all of its debt obligations.
The ILN TIF District will be required to be decertified by December 31, 2012, and the
properties will be placed on the tax roll at full value. In the fall of 2012, and prior to
December 31, 2012, the Council will be requested to adopt a resolution to decertify the
TIF District. The final four Pay-as-you-go Note payments and two Bond payments will
be on February 1, 2013. After those payments, the Funds will be closed. Under current
legislation, excess increment will be returned to Hennepin County and redistributed to the
City, County and School District. The funds returned will be unrestricted.
®Richfield HRA Tax Increment Financing District Update 2010 Page 4
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Interchange TIF District Update
The Interchange District is a commercial redevelopment project comprised of the Dick's
Sporting Goods store located along I-494. In 2004, Galyan's Trading Company became
a wholly owned subsidiary of Dick's Sporting Goods.
First Year of Increment: 1998
Estimated Decertification Date: 2023
Outstanding Obligations:
• $1,747,045 Pay-as-you-go Revenue Note
The Interchange District has a cash balance of $316,178.
The TIF Plan Modification undertaken in 2004 to address deficit pooling will allow
increment from the Interchange and Richfield Rediscovered pre-1999 TIF District to be
pooled to the ILN District, if needed for debt service on the Bonds. Deficit pooling was
not needed in 2009.
Conclusions:
The HRA will be able to meet its debt obligation.
_..~
®Richfield HRA Tax Increment Financing District Update 2010 Page 5
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Pre-1999 Richfield Rediscovered TIF District Update
The Pre-1999 Richfield Rediscovered TIF Districts are redevelopment districts consisting
of owner occupied housing scattered throughout the City. In 1990, the City and HRA
advanced funds in the amount of $762,550 to the Richfield Rediscovered Program to
establish abuy/sell program for the construction of new, contemporary, single-family
housing. All advances have been satisfied.
First Year of Increment: Various dates from 1996 to 2001
Estimated Decertification Date: Various dates from 2018 to 2026
Outstanding Obligations:
• $1,045,000 Taxable General Obligation Tax Increment Refunding Bonds of 200X.
These Bonds were issued for the Post-1999 Richfield Rediscovered TIF District.
Funds from the Pre-1999 Richfield Rediscovered, Gramercy, Urban Village, and
Lyndale Gateway/Interchange West are being pooled to assist with the debt service
payments.
The Pre-1999 Richfield Rediscovered District has a cash balance of $1,133,088.
The TIF Plan Modification undertaken in 2004 to address deficit pooling will allow
increment from the Interchange and Richfield Rediscovered pre-1999 TIF District to be
pooled to the ILN District, if needed for debt service on the Bonds. Deficit pooling was
not needed in 2009.
Conclusions:
The HRA will be able to meet its debt obligation.
Funds are available to defease the $1,045,000 Taxable General Obligation Tax Increment
Refunding Bonds of 200X; and therefore allow the City to decertify all of the Richfield
Rediscovered TIF Districts. Approximately $607,540 would be required to be placed in
escrow until February 2, 2012, at which time the Bonds could be paid in full. At the time
of the deposit, the HRA and City could take action to decertify the TIF Districts, and
have the property placed on the tax rolls. Based on 2010 market values, decertifying the
Districts would increase the City's tax capacity by 153,573, which equates to
approximately $76,523 in City tax dollars. If the Districts are decertified by December
2010, the tax base increase would be recognized in 201 1.
After discussions with HRA staff, we are recommending that the City move forward with
defeasing the Bonds and decertifying the TIF Districts by December 3 1, 2010. It is
anticipated that the Council will consider the resolutions to defease the Bonds and
decertify the TIF Districts at the first meeting in November.
®Richfield HRA Tax Increment Financing District Update 2010 Page 6
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Post-1999 Richfield Rediscovered TIF District Update
The Post-1999 Richfield Rediscovered TIF Districts are redevelopment districts
comprised of owner occupied housing scattered throughout the City, and they are the
second phase of the Richfield Rediscovered Program. In November of 1999, the City sold
General Obligation Tax Increment Bonds to fund the Post-1999 Richfield Rediscovered
Projects. These bonds were refunded with the $1,045,000 Taxable General Obligation
Tax Increment Refunding Bonds, Series 200X, to achieve a lower interest rate, and
therefore, use less tax increment.
First Year of Increment: 2001
Estimated Decertification Date: 2026
Outstanding Obligations:
• $1,045,000 Taxable General Obligation Tax Increment Refunding Bonds of 200X.
The following revenue sources pay the debt on the Bonds:
Annual tax increment from the Post-1999 Richfield Rediscovered Districts
Annual pooled tax increment from the Pre-1999 Richfield Rediscovered,
Gramercy, Urban Village, and Lyndale Gateway/Interchange West Districts
Land sales proceeds
The Post-1999 Richfield Rediscovered District has a cash balance of 011,209).
Conclusions:
The HRA will be able to meet its debt obligation.
Although the cash balance was negative at the end of 2009, projections show that the
District will have a positive cash balance in the future. The negative balance is due to the
timing difference from when obligations are paid and tax increment revenue is collected.
Funds are available to defease the $1,045,000 Taxable General Obligation Tax Increment
Refunding Bonds of 200X; and therefore allow the City to decertify all of the Richfield
Rediscovered TIF Districts. Approximately $607,540 would be required to be placed in
escrow until February 2, 2012, at which time the Bonds could be paid in full. At the time
of the deposit, the HRA and City could take action to decertify the TIF Districts, and
have the property placed on the tax rolls. Based on 2010 market values, decertifying the
Districts would increase the City's tax capacity by 153,573, which equates to
approximately $76,523 in City tax dollars. If the Districts are decertified by December
2010, the tax base increase would be recognized in 201 1.
®Richfield HRA Tax Increment Financing District Update 2010 Page 7
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In addition, a portion of the remaining funds from the Pre-1999 Richfield Rediscovered
Districts could be used to pay the negative balance in the District.
No bond proceeds remain for Program use.
After discussions with HRA staff, we are recommending that the City move forward with
defeasing the Bonds and decertifying the TIF Districts by December 31, 2010. It is
anticipated that the Council will consider the resolutions to defease the Bonds and
decertify the TIF Districts at the first meeting in November.
®Richfiield HRA Tax Increment Financing District Update 2010 Pate 8
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Urban Village TIF District Update
The Urban Village TIF District is a mixed-use redevelopment project that began
generating tax increment in 2000. Tax increment revenue is pledged to the project to
assist with property acquisition and excess site development expenses. Fifteen percent
(15%) of the annual tax increment is contributed to the Housing and Redevelopment
Fund.
First Year of Increment: 2000
Estimated Decertification Date: 2025
Outstanding Obligations:
• $2,500,000 Pay-as-you-go Tax Increment Revenue Note
• $2,388,414 Pay-as-you-go Tax Increment Revenue Note
• $1,045,000 Taxable General Obligation Tax Increment Refunding Bonds of
200X. These Bonds were issued for the Post-1999 Richfield Rediscovered TIF
District. Funds from the Pre-1999 Richfield Rediscovered, Gramercy, Urban
Village, and Lyndale Gateway/Interchange West are being pooled to assist with
the debt service payments.
The TIF Bond has a reset date. The Tax Exempt Bond rate was reset in February 2006
from 5.6% to its current rate of 4.98%. The Taxable Note will be reset February 2011.
The Urban Village District has a cash balance of ($24,927).
Conclusions:
The HRA will be able to meet all of its debt obligations.
Although the cash balance was negative at the end of 2009, projections show that the
District will have a positive cash balance in the future. The negative balance is due to the
timing difference from when obligations are paid and tax increment revenue is collected.
J
®Richfield HRA Tax Increment Financing District Update 2010 Page 9
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Gramercy TIF District Update
The Gramercy TIF District is a redevelopment project that began generating tax
increment in 2002. The district includes the Gramercy Park Senior Housing
Cooperative. Tax increment revenue is pledged to the project to assist with property
acquisition expenses. In 2002, a portion of the Gramercy site area was eliminated from
the TIF District and incorporated into the City Bella project. Fifteen percent (15%) of the
annual tax increment is contributed to the Housing and Redevelopment Fund.
First Year of Increment: 2002
Estimated Decertification Date: 2025
Outstanding Obligations:
$1,977,000 Pay-as-you-go Tax Increment Revenue Note
$1,045,000 Taxable General Obligation Tax Increment Refunding Bonds of
200X. These Bonds were issued for the Post-1999 Richfield Rediscovered TIF
District. Funds from the Pre-1999 Richfield Rediscovered, Gramercy, Urban
Village, and Lyndale Gateway/Interchange West are being pooled to assist with
the debt service payments.
The Gramercy District has a cash balance of $ 62,141.
Conclusions:
The HRA will be able to meet all of its debt obligations.
JI
®Richfield HRA Tax Increment Financing District Update 2010 Page ] 0
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Interchange West /Lyndale Gateway TIF District Update
The Interchange West /Lyndale Gateway TIF District has two components. A portion of
the Lyndale Gateway District was eliminated in 2002 and incorporated into the new
Lyndale Gateway West TIF District for the Cornerstone/Kensington Park Project.
Interchange West Component
The Interchange West component of the Interchange West/Lyndale Gateway District is
comprised of the Best Buy Corporate Headquarters located on the intersection of 1-
494 and Penn Ave. Tax increments are pledged to the Best Buy project to assist with site
assembly activities. A set dollar amount of funds from the Interchange West portion of
the District will be used to fund the Housing and Redevelopment Fund and administrative
costs.
First Year of Increment: 2004
Estimated Decertification Date: 2025
Outstanding Obligations:
$22,190,195 Pay-as-you-go Tax Increment Revenue Note
$8,350,000 Tax Exempt General Obligation Tax Increment Bonds of 2001
$1,045,000 Taxable General Obligation Tax Increment Refunding Bonds of
200X. These Bonds were issued for the Post-1999 Richfield Rediscovered TIF
District. Funds from the Pre-1999 Richfield Rediscovered, Gramercy, Urban
Village, and Lyndale Gateway/Interchange West are being pooled to assist with
the debt service payments.
The Interchange West Component has a cash balance of $2,216,820.
Conclusions:
The HRA will be able to meet all of its debt obligations.
Lyndale Gateway Component
The Lyndale Gateway component is comprised of the Richfield Senior Housing project
(Main Street Village) and the Minnstar Builders, Inc. project (Casteel Place
Townhouses). Tax increment revenue is pledged to the project to assist with site
assembly expenses.
In 2002, the HRA loaned Richfield Senior Housing, Inc. $338,251.76 to assist with an
®Richfield HRA Tax Increment Financing District Update 2010 Page 1 1
/~~~
unexpected condemnation award in acquiring a portion of the redevelopment property.
The loan was paid off by the developer in December, 2004.
For the Minnstar Builders project, Casteel Place Townhomes, the Contract for Private
Redevelopment included a "look back" provision that required a review of the
developer's costs. To the extent that certain costs would go up or down under the
estimate, the associated Pay-as-you-go Revenue Note would be reduced by a like amount.
The "look back" provision analysis was completed in 2002, which called for a reduction
in the Pay-as-you-go Revenue Note from $100,000 to $19,985.23. The cost savings of
this tax increment was then used as additional gap funding for the Cornerstone/
Kensington Park redevelopment project in the Lyndale Gateway West District.
The last increment payment to Minnstar Builders was February 1, 2005.
First Year of Increment: 2000
Estimated Decertification Date: 2025
Outstanding Obligations:
• $3,300,000 Pay-as-you-go Tax Increment Revenue Note to Richfield Senior
Housing
The Lyndale Gateway Component has a cash balance of $715,773.
Conclusions:
The HRA will be able to meet its debt obligation.
®Richfield HRA Tax Increment Financing District Update 2010 Page l2
3,v~
City Bella TLF Districti Update
The City Bella project is a redevelopment district consisting of a housing project with a
retail component located on Lyndale Ave. and 66`" Street. Tax increment revenue is
pledged to the project to assist with property acquisition and site improvement expenses.
After the $450,000 loan from the Development Account is paid in full, 15% of the annual
tax increment is contributed to the Housing and Redevelopment Fund. In 2002, a portion
of the Gramercy TIF District was eliminated and incorporated into the City Bella Project.
The City Bella Project has a $450,000 loan from the Development Account to pay for
land owned by the HRA. This loan will be paid by using the 15% Housing and
Redevelopment Fund.
First Year of Increment: 2006
Estimated Decertification Date: 2030
Outstanding Obligations:
$8,473,470 Pay-as-you-go Tax Increment Revenue Note
The City Bella District has a cash balance of $257,016.
Conclusions:
The HRA will be able to meet its debt obligation.
J
®Richfield HRA Tax Increment Financing District Update 2010 Page 13
Y" 1 `{
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Lyndale Gateway West TIF District Update
The Lyndale Gateway West TIF District is comprised of the Cornerstone (Kensington
Park) mixed-use redevelopment project located on Lyndale Ave. Tax increment revenue
is pledged to the project to assist with site assembly expenses.
A portion of Lyndale Gateway District was eliminated in 2002 and incorporated into the
Lyndale Gateway West TIF District for the Cornerstone Project.
First Year of Increment: 2006
Estimated Decertification Date: 2029
Outstanding Obligations:
$3,470,000 Taxable General Obligation Tax Increment Bonds of 2003
In addition, the $1,630,000 General Obligation Tax Increment Bonds of 2000, which
utilizes the Candlewood Hotel increment, helped provide a $1,100,000 loan from the ILN
District: $600,000 of the loan will be paid back from tax increment and the developer will
pay the balance of $500,000 when the developer refinances the development or in 2012,
which ever occurs first. The interest on the total $1,100,000 will be paid back from tax
increment.
Tax increment from the Minnstar Builders townhouse project in the Lyndale Gateway
District is being used to pay obligations related to the Cornerstone project.
The Lyndale Gateway West District has a cash balance of $106,600.
Conclusions:
The HRA will be able to meet its debt obligation.
Richfield HRA Tax Increir~ent Financing District Update 2010 Page 14
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Cedar Corridor TIF District Update
The Cedar Corridor TIF District is a redevelopment district comprised of the
commercial/retail redevelopment in the Airport Noise Impact Area. This area is located
along Cedar Ave. and 66r~' Street. This District was established in 2006 using Special
Legislation from the Laws of Minnesota 2005, Chapter 152, Article 2, Section 25.
First Year of Increment: 2008
Estimated Decertification Date: 2033
Outstanding Obligations: None at this time
The Cedar Corridor District has a cash balance of $6,204.
Conclusions:
The District currently does not have any financial obligations.
_..~
Richfield HRA Tax Increment Financing District Update 2010 Page I S
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Decertified Tax Increment Financing Districts
The HRA has decertified three TIF Districts:
• Lyndale-Hub-Nicollet (LHN) District (a redevelopment district) was closed as
of December 31, 2002.
Cedar Avenue Business Area (CABA) District (an economic development
district) ended in 1996. All of the accounting transactions to close the District
were completed by December 31, 2000.
• Penn Avenue and Sixty-Sixth Street (PASSS) District (a redevelopment
district) was established in 1989 and terminated in 1996 due to a lack of feasible
redevelopment opportunities.
J
®Richfield HRA Tax Increment Financing District Update 2010 Page 16
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Established /Non-Certified Tax Increment Financing Districts
The HRA has two TIF Districts which have been established, but have not been certified.
These Districts could be certified at the time of development on the site(s):
Housing Tax Increment Financing District 2009-1 (a housing district) on the
Candlewood Outlot, was established to facilitate the development of an
accessible, affordable, 51 unit housing project for very low income (30% AMI)
seniors age 62 or older. The 1.13 acre site is located at 301 77t" Street West, also
known as the vacant Candlewood Outlot. The site was purchased by the HRA in
1998 and since that time has been vacant. This TIF District could be used to
provide assistance for any low- to moderate income housing development, which
meets the income requirements for the TIF assistance.
2010-1 Housing TIF District (a housing district) was established to redevelop
the Woodlake Plaza Shopping Center, which is currently a commercial center.
The District includes 2 parcels currently owned by the developer and 1 parcel
currently owned by the HRA. It is proposed that the Lyndale Commons
development will consist of 90 units of rental housing.
Housing Tax Increment Financing District 2009-2(a housing district) on the 0.94 acre,
south portion of the former City garage site was created to facilitate the development of a
15 unit project for persons with physical disabilities to live independently in the
community. A public hearing was held, but the Council has not adopted the TIF District.
To complete the process, the Council would need to adopt a resolution establishing the
TIF District and certify the District. This TIF District could be used to provide assistance
for any low- to moderate income housing development, which meets the income
requirements for the TIF assistance.
®Richfield HRA Tax Increment Financing District Update 2010 Page 17
J'~~
Housing and Redevelopment Fund
The Housing and Redevelopment Fund. is a revenue source comprised of tax increment
from the Gramercy, Urban Village, Interchange West/Lyndale Gateway, and City Bella
TIF Districts. The purpose of the Housing and Redevelopment Fund is to fund a variety
of housing needs for the community, including but not limited to, new construction of
single-family homes and town homes; single-family home renovation and rehabilitation;
and apartment rehabilitation.
Currently, a portion of the tax increment revenue from the Gramercy, Urban Village and
Lyndale Gateway/Interchange West TIF District are being transferred to the Housing and
Redevelopment Fund. The Housing and Redevelopment Fund is used to support the New
Home Program, Transformation Housing Program (a deferred loan program), and Kids at
Home Program.
J
®Richfield HRA Tax Increment Financing District Update 2010 Page 18
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AGENDA ITEM #
REPORT #
STAFF REPORT
HOUSING AND REDEVELOPMENT
AUTHORITY MEETING
SEPTEMBER 20, 201
4
31
REPORT PREPARED BY:
REPORT PRESENTER:
DEPARTMENT DIRECTOR REVIEW:
REVIEWED BY EXECUTNE DIRECTOR:
MICxELLE J. T. LEWIS, HOUSING
SPECIALIST
NAME, TITLE
ITEM FOR HRA CONSIDERATION:
Consideration of a Subordination Agreement for the Housing and Redevelopment Authority's
Transformation Home Loan at 7020 Newton Avenue.
I. RECOMMENDED ACTION:
By Motion: Approve request for a Subordination Agreement for a
Housing and Redevelopment Authority's Transformation Home Loan
at 7020 Newton Avenue.
II. BACKGROUND
Rich and Jody Phenow requested a Subordination Agreement fora $15,000
Transformation Home Loan approved in April 2006. The Phenows are proposing to
refinance their first mortgage for two reasons. First to replenish the savings they
used to complete their Transformation Home project; second to pay some college
costs for their three children.
The Housing and Redevelopment Authority's (HRA) Transformation Home Loan is
in second position behind the Phenow's primary mortgage of $140,000. The
Phenows are proposing to refinance the superior mortgage to a 15-year, fixed-
interest rate mortgage of $250,000 and in that transaction to remove $185,000 in
cash from the property's equity.
Phenow Subordination Agreement Request Appeal
KAREN BARYON, COMMUNITY
DEVELOPMENT ASSISTANT DIRECTOR
The Phenows do not meet two of the HRA's Subordination and Satisfaction Policy
(effective October 2008) Evaluation Criteria. The Phenow's proposal will increase
the secured first mortgage by 78% (from $140,000 to $250,000) and they are
removing cash equity for purposes other than home improvements. The Phenows
meet all of the other Evaluation Criteria and their proposal leaves more than 20%
equity in the property.
III. BASIS OF RECOMMENDATION
A. POLICY
• According to the HRA's Subordination and Satisfaction Policy
Evaluation Criteria:
4. "Any equity being removed beyond the cost of the loan transaction will
be used to improve the property. A typed letter, dated and signed by
the applicant, must be submitted stating the use of any equity being
removed."
The Phenow's proposal removes equity to replenish savings used to
complete the Transformation Home project and to pay for three college
educations.
5. "The overall value of superior debt must not be increased by more
than 50%. Exceptions may be granted by the HRA in cases where
superior debts are found to be unusually low with sufficient equity
protection."
The overall value of superior debt increases by 74%. The Combined
Loan-to-Value ratio is 78%, leaving 22% of the property's equity
unencumbered.
• The Phenow's request meets all of the other Evaluation Criteria:
o Closing costs do not exceed three percent (2.85%).
o Payment terms are within the financial means of the borrowers. (15
year, fixed-interest rate (4.25%) loan that lowers monthly payment by
$66.30)
o The Combined Loan-to-Value ratio is 78%.
o The HRA has not granted any previous subordination to the loan.
o Property taxes are current.
B. CRITICAL TIMING ISSUES
• The Phenow's mortgage rate and term lock-in expires on September
30, 2010.
C. FINANCIAL
• The amount of debt ahead of the HRA lien is increased with the
refinance scenario, but it leaves more than 20% equity in the property
• The property's appraised value as of July 30, 2010 is $340,000. The
current Hennepin County Tax Assessed Value is $330,000.
• The refinance will lower the Phenow's monthly payments by $66.30.
• The Subordination Agreement fee has been received.
D. LEGAL
• N/A
IV. ALTERNATNE RECOMMENDATION(S~
• Deny the subordination request.
V. ATTACHMENTS
• Photograph of 7020 Newton Avenue
• Letter from Rich and Jody Phenow, homeowners (signed copy on file).
VI. PRINCIPAL PARTIES EXPECTED AT MEETING
• Rich and Jody Phenow
SUBJECT PROPERTY PHOTO ADDENDUM
BOffOWer: RICHARD PHENOW FIIe NO' 2517
PfOpefty Addfe55:7020 NEWTON AVENUES Case No
Clty: RICHFIELD State' MN Zlp' 55423 2945
Lefldef: MARKETPLACE HOME MORTGAGE LLC
FRONT VIEW OF
SUBJECT PROPERTY
Appraised Date: ~~Iy 30.200
Appraised Value: $ 3ao,ooo
REAR VIEW OF
SUBJECT PROPERTY
STREET SCENE
~~1
~~~
City of Richfield HRA September 7, 2010
6700 Portland Avenue
Richfield, MN 55423
Dear HRA Board Members:
We are requesting an appeal to the denial of our loan subordination request. We are
Richfield residents of 21 years having purchased our home before our first child was
born. We have three children who have loved growing up in Richfield. Two of our
sons (one this past June) graduated from Richfield High School, and we have a
daughter who is currently a junior there. We love Richfield and all that it has
offered our family over the years. We love the small town feel amidst the close
proximity to a large metropolitan city. We have appreciated the City of Richfield's
desire to keep our first ring suburb thriving and growing. We truly appreciated the
opportunity to take part in the city's desire to update homes through the
Transformation Loan.
With the help of this loan and through our personal savings, we were able to add on
an addition, make our home more energy efficient with better insulation, siding and
replacing our 1940's windows along with landscaping to make a pleasing view for
our neighbors and community. We can't thank the city enough for the care and
forward thinking put into offering such a loan for Richfield residents.
We are both pastors and our ministry brings with it entertaining for large groups of
people. Our addition has given us wonderful space to host not only our own
ministry gatherings but also Richfield Young Life in the past and many a Richfield
team sports' (cross country running, nordic skiing, tennis, hockey, football)
spaghetti dinners and breakfasts. Our new space also allowed us the opportunity to
host a foreign exchange student from Sweden for the 2007-2008 school year. He
loved his experience in the welcoming community of Richfield. For all of that we are
grateful! Thank you!
With two sons at Bethel University and our daughter two years away from college,
we sat down with a trusted advisor who has helped us look to the future. We are a
family committed to saving, but with the economic downturn some of our college
savings took a hit and the house renovations also depleted a portion of our savings.
As we stated earlier, our choice to upgrade our home's energy efficiency and space
allowed us benefits while our kids were/are still at home and for our ministry lives
in the future. We have covered college expenses in the past and are now currently
but will need some help in the future. When discussing student loan options for the
future with Bethel and with our advisor, it made the most financial sense to take out
a new mortgage now since the interest rates are low (lower than that of student
loans and not knowing where interest rates will go in the future). While our kids
are doing their part to help with college costs, we also want to do the best we can to
not saddle them with too much debt. My parents helped pay for my college
~;~
expenses. It was a true gift to only incur debt for our graduate degrees and not have
college debt on top of that. While our kids won't have that exact luxury, we hope to
do the best for them we can.
We recognize and appreciate the concern of the HRA in the subordination request
and the desire to protect their investment. We are asking you to consider our
appeal for the reasons we have stated above and for the following:
1) Our current mortgage is four years from being paid off (April 2014) so we have
equity built up.
2) Our home has recently been appraised at $340,000. If we took out a new
mortgage for $250,000, there still would be a $90,000 difference to recoup the
$15,000 transformation loan.
3) Our new first mortgage loan-to-value is 74%. The first new mortgage and
existing second mortgage combined loan-to-value is 78%. According to the
mortgage company we are still at a low risk combined with having a superior credit
rating of 778.
4) We have had a stable work history.
5) We paid for our house project out of our savings and desire to replenish the
savings we used.
We love our home, our neighbors and the community of Richfield. We plan on
staying and giving back to our community for years to come.
Thank you for your consideration.
Sincerely,
Revs. Rich and Jody Phenow
AGENDA ITEM # S
REPORT # ~ ~
J
STAFF REPORT
HOUSING AND REDEVELOPMENT
AUTHORITY MEETING
SEPTEMBER 2U, 2UlU
REPORT PREPARED BY:
JULIE URBAN, HOUSING SPECIALIST
NAME, TITLE
KAREN BARYON, COMMUNITY
REPORT PRESENTER: DEVELOPMENT ASSISTANT DIRECTOR
NAME, TITLE
DEPARTMENT DIRECTOR REVIEW:
REVIEWED BY EXECUTIVE DIRECTOR:
ITEM FOR HRA CONSIDERATION:
Consideration of a resolution authorizing the purchase of real property located at 7220 Russell
Avenue through the Richfield Rediscovered Program.
I. RECOMMENDED ACTION:
By Motion: Approve the attached resolution authorizing the purchase
of real property located at 7220 Russell Avenue through the Richfield
Rediscovered Pro ram.
II. BACKGROUND
In 2009 the property at 7220 Russell Avenue was declared unsafe for human
occupancy by the City. The owner informed Inspections staff that she wasn't able
to make the changes necessary to make it habitable and that she was interested in
selling the property. The owner was referred to the Housing and Redevelopment
Authority (HRA) staff for possible purchase by the HRA.
Two appraisals were obtained on the property: one for $54,000 and one for
$75,000. The initial offering price was the average of these appraisals, but a price
of $70,000 was ultimately negotiated with the seller. This amount is consistent with
recent property purchases. A Purchase Agreement was submitted to the owner and
preliminarily accepted. The offer is contingent upon HRA approval. The agreed
09202010 7220 Russell Acquisition
purchase price of $70,000 plus closing costs will be paid through the HRA's
Housing and Redevelopment Fund. This expense is provided for in the 2010
Revised Budget. The 2010 assessed value is $172,000.
The one-story rambler has two bedrooms, 829 square feet and a detached, two-car
garage. The house was built in 1947. The house needs extensive work to make it
habitable. An inspection was conducted on the house, and it was determined that it
meets the substandard test and is a candidate for removal. The lot is 75 feet wide
with 10,050 square feet.
III. BASIS OF RECOMMENDATION
A. POLICY
• The 2008-2018 Richfield Comprehensive Plan states as policy:
• Encourage the creation of "move-up" housing through new
construction and home remodeling.
• The small house is in poor condition, has limited market appeal and will
be demolished to accommodate a home that provides move-up
housing.
• Through the City's Richfield Rediscovered Program, the HRA
purchases and removes substandard and functionally obsolete housing
and replaces it with newer, higher valued homes.
B. CRITICAL TIMING ISSUES
• The Purchase Agreement was submitted contingent upon HRA
approval on September 20, 2010.
• The HRA would close on the property by November 1, 2010.
C. FINANCIAL
• Due to the current housing market, the HRA is able to acquire the
property at a very reasonable price of $70,000 plus closing costs. The
proposed price is within the value range established by two
appraisals.
• Funds are available for the acquisition through the Housing and
Redevelopment Fund.
• Funding for this activity is proposed in the HRA's Revised 2010
Budget.
D. LEGAL
• Legal Counsel has prepared the Purchase Agreement.
IV. ALTERNATIVE
~MMENDATION(S) ~
rize the purchase of the. property.
~ V. ATTACHMENTS ~
• rces~ruuun
• Photo of existing structure
• Purchase Agreement
PRINCII'AL PARTIES EXPECTED AT MEETING ~
5/
HRA RESOLUTION NO.
RESOLUTION AUTHORIZING PURCHASE OF REAL PROPERTY
LOCATED AT 7220 RUSSELL AVENUE
WHEREAS, the Housing and Redevelopment Authority in and for the City of
Richfield, Minnesota ("the HRA") desires to purchase certain real property pursuant to and
in furtherance of the New Home Program, said property being described as:
7220 Russell Avenue
Lot 4, Block 3, Home Acres Addition; and
WHEREAS, the HRA is authorized by Minnesota Statutes Section 469.012 to
acquire real property within its area of operation; and
WHEREAS, Housing and Redevelopment Funds are available for acquisition
purposes.
NOW THEREFORE, BE IT RESOLVED, by the Housing and Redevelopment
Authority in and for the City of Richfield:
The purchase price for the property identified is approved at $70,000,
plus closing .costs, not to exceed $77,000.
2. The Chairperson and Executive Director are authorized to execute a
Purchase Agreement and to take other actions necessary to purchase
the property for the amount set forth in this resolution.
Adopted by the Housing and Redevelopment Authority in and for the City of
Richfield, Minnesota on this 20th day of September, 2010.
Suzanne M. Sandahl, Chair
ATTEST:
Joan Helmberger, Secretary
~~
C~
7220 Russell Avenue
5~~
PURCHASE AGREEMENT
THIS AGREEMENT is made as of this day of _ 2010 by
and between Marian A Nordstrom a single person ("Seller") and the Housing and Redevelopment
Authority in and for the City of Richfield , a public body corporate and politic under the laws of
the State of Minnesota ~~iRA" or `Buyer").
RECITALS
A. Seller is the owner of property located at 7220 Russell Avenue South Richfield,
Minnesota, which is legally described on the attached Exhibit A ("Property").
B. The Property .includes includes all. plants, shrubs and trees, storm windows and/or
inserts, storm doors, screens, awnings, window shades, blinds, curtain-traverse-
drapery rods, attached lighting fixtures with bulbs, plumbing fixtures, water heater,
heating system, humidifier, central air conditioning, electronic air filter, automatic
garage door opener with controls, water softener, cable television outlets and cabling,
and built-ins, including dishwasher, garbage disposal, trash compactor, oven(s), cook
tap stove, microwave oven, hood-fan, intercom and installed carpeting located on the
premises which are the property of Seller. The property also includes the following
personal property: NONE. Seller is responsible for removal of all personal property.
.Seller may remove the following items, provided Seller does not cause any
unnecessary damage to the Property:
AGREEMENT
1. Offer/Acceptance for Sale of Property. The Seller agrees to sell to the HRA the
Property and the HRA agrees to purchase the same, according to the terms of this Agreement.
2. Purchase Price for Property and Terms.
A. PURCHASE PRICE: The total Purchase Frice for the Property is
Seventy-Thousand Dollars and 00/100ths Dollars $70 000).
B. TERMS:
(1): EARNEST MONEY. The sum of One Thousand Four Hundred Dollars
1 400 Earnest Money shall be paid by the Buyer to the Seller.
(2): BALANCE DUE SELLER: Buyer agrees to pay by check or electronic
transfer of funds on the Closing Date any remaining Balance Due
according to the terms of this Purchase Agreement.
315418v1 CBRRC125-4i
S~
(3): DEED/MARKETABLE TITLE: Subject to performance by Buyer, Seller
agrees to execute and deliver a Warranty Deed or Personal
Representative's Deed conveying marketable title to the Property to
Buyer, subject only to the following exceptions:
a. Building and zoning laws, ordinances, state and federal
regulations.
b. Reservation of minerals or mineral rights to the State of
Minnesota, if any.
c. Public utility and drainage easements of record which will not
interfere with Buyer's intended use of the Property.
(4): DOCUMENTS TO BE DELIVERED AT CLOSING BY SELLER. In
addition to the Warranty Deed required at paragraph 2B(3) above, Seller
shall deliver to the Buyer:
a. Standard form Affidavit of Seller.
b. A "bring-down" certificate, certifying that all of the warranties made
by Sellers in this Purchase Agreement remain true as of the date of
closing.
c. Certificate that Seller is not a foreign national.
d. If an environmental investigation by or on behalf of the Buyer
discloses .the existence of petroleum product or other pollutant,
contaminant or other hazardous substance on the Property,
either (i) a closure letter from the Minnesota Pollution Control
Agency (MPCA) or other appropriate regulatory authority that
remediation has been completed to the satisfaction of the MPCA or
other authority; or (ii) Agreement for remediation/indemnification
and security as the HRA may require.
e. Well disclosure certification, if required, or, if there is no well on the
Property, the Warranty Deed given pursuant to paragraph 2B(4)
above must include the following statement: "The Seller certifies
that the Seller does not know of any wells on the described real
property."
f. Any other documents reasonably required by the HRA's title
insurance company or attorney to evidence that title to the
Property is marketable and that Seller has complied with the
terms of this Purchase Agreement.
315418v1 CBR RC125-41
2
y,5
3. Contingencies. Buyer's obligation to buy is contingent upon the following:
a. Buyer's determination of marketable title pursuant to paragraph 4 of
this Agreement.
b. Buyer's determination,. in .its sole discretion, that the results of
the environmental investigation under this Agreement are
satisfactory to Buyer;.
c. The parties acknowledge that the Richfield zoning ordinance
requires that lots in the R district meet certain minimum lot width,
and area requirements. If these standards are not met, one or more
variances will be .necessary prior to construction of a new dwelling
on the property. If the City does not issue all variances necessary
to make the property a buildable lot within the meaning of the
zoning ordinance,. the Buyer at its sole discretion may cancel this
Purchase Agreement; and
d. Approval of this Agreement by the HRA's Board.
Buyer shall have until the Date of Closing to remove the foregoing contingencies. The
contingencies at a. b. and c. are- solely for the benefit of Buyer and may be waived by Buyer. The
contingency at c. may not be waived by either party. If Buyer or its attorney gives written notice to
Seller that the contingencies at a., b. c, and d. are duly satisfied or waived, the Buyer and Seller
shall proceed to close the transaction as contemplated herein.
If one. or more or Buyer's or Seller's contingencies is not satisfied, or is not satisfied on time, and is
not waived, this Purchase Agreement shall thereupon be void at the written option of Buyer, Seller
shall return the Earnest. Money to Buyer, and Buyer and Seller shall execute and deliver to each
other the termination of this Purchase Agreement. As a contingent Purchase Agreement, the
termination of this Agreement is not required pursuant to Minnesota Statutes, Section 559.21, et.
seq.
4. Title Examination/Curing Title Defects. The Seller will provide the Buyer with
the abstract of title for the Property for updating at Buyer's expense. If the abstract is not
available, the HRA shall, at its expense and within a reasonable time a$er Seller's acceptance of
this Agreement, obtain a commitment for title insurance ("Commitment") for the Property.
The HRA shall have ten (10) business days after receipt of the commitment and executed
Purchase Agreement to examine the same and to deliver written objections to title, if any, to
Seller, or HRA's right to do so shall be deemed waived. Seller shall have until the Closing
Date (or such later date as the parties may agree upon) to make title marketable, at the Seller's
cost. In the event that title to the Property cannot be made marketable or is not made marketable
by the Seller by the Closing Date, then, this Agreement may be terminated at the option of the
Buyer.
5. Environmental Investigation. The Seller warrants that the Property has not been
used far production, storage, deposit or disposal of any toxic or hazardous waste or substance,
petroleum product or asbestos product during the period of time the Seller has owned the
Property. The Seller further warrants that the Seller has no knowledge or information of any fact
315418v1 BAR ItC 125-41
3
y,~
which would indicate the Property. was used for production, storage, deposit or disposal of any
toxic or hazardous waste or substance, petroleum product or asbestos product prior to the date
the Seller purchased the Property. Notwithstanding the above, the Seller's warranty regarding
petroleum products does not preclude the presence of heating oil or other similar products used
as a heating fuel for the dwelling but the Seller does warrant that if there was a fuel tank on the
Property used for the storage of heating oil or other similar product, the Seller has no knowledge
of any leak in the tank or contamination caused thereby.
Seller hereby grants to Buyer and Buyer's agents a license to enter and evaluate the Property for
the purpose of conducting an environmental assessment. The Buyer is required to perform an
environmental .assessment prior to committing federal Community Development Block Grant
(CDBG) funds. Further, the Buyer or Buyer's agent shall have the right pursuant to the license to
bring persons and equipment onto the Property, make inspections and perform tests and analyses
as Buyer may deem reasonable to determine the presence of any toxic or hazardous waste,
substance, or petroleum product or asbestos product, and ascertain soil conditions on the
Property. Buyer shall bear the cost of the environmental assessment. If the results of the
environmental assessment are not to the satisfaction of the Buyer, including a release from
environmental conditions related to the commitment and expenditure of CDBG funds, the Buyer
at its sole discretion may cancel this Purchase Agreement. If the Buyer cancels this Purchase
Agreement pursuant to this provision, the Buyer shall restore the Property to its original
condition or nearly so as is reasonably practicable.
6. Real Estate Tazes and Special Assessments. Real estate taxes payable in the
year of closing will bepro-rated between the Buyer and Seller to the date of closing. Seller shall pay
all real estate taxes payable in previous years, the entire unpaid balance of special assessments,
and all installments of special assessments levied and pending, including. special assessmenrts
installments payable after the year of closing. Seller also agrees to pay all assessments related to
service charges furnished to the Property prior to the date of closing (e.g., delinquent water or sewer
bills, removed or diseased trees), including those charges levied, pending, or certified to taxes
payable in the year of closing. If closing occurs prior to the date the amount of real estate taxes
due in the year of closing are available from Hennepin County, the current year's taxes will be
pro-rated based on the amount due in the prior year.
7. Closing Date. The date of closing will be on or before f~OV~VVtb~Cy' ~ ~ ZOtO
2010. Delivery of all papers and the closing shall be made at the offices of HRA, 6700 Portland
Avenue South, Richfield, Minnesota 55423, or at such other location as is mutually agreed
upon by the parties. All deliveries and notices to HRA shall be made to the above address and
marked to the attention of Housing Specialist.
8. Possession/LTtilities/Removal of Property/Escrow.
(a) Possession. The Seller agrees to deliver possession not later than the date of closing.
(b) Utilities. City water and sewer charges, electricity and natural gas charges, fuel oil
and liquid. petroleum gas shall be pro-rated between the parties as of the date of closing. Seller
shall arrange for final readings as of the date of closing.
31541$vl CBRRC125-41
4
5 ~1
(c) Personal Property. The Seller agrees to remove all debris and. all personal property
not included herein from the Property before the possession date. Personal property not so
removed shall be deemed forfeited to and shall. become the property of the Buyer. The Buyer
may inspect the Property immediately prior to closing and deduct from the purchase price
payable at closing an amount reasonably necessary to pay for the cost of removal of any debris
or personal property then remaining on the Property. The provisions of this paragraph shall not
merge with the deed and shall survive closing on the property.
(d) Escrow. Seller agrees that, at closing, the HRA may retain Five Hundred Dollars
($SU0.00) from the purchase price for the Property as an Escrow for payment of personal
property removal, disposal charges and utility charges. The retained amount, less deductions
provided for this in paragraph 8, will be delivered to Seller no later than 60 days following the date
of closing or delivery of possession, whichever is later. Said funds shall be held by Kennedy &
Graven, Chartered, as Escrow Agent, pursuant to the terms of the Escrow Agreement attached
here as Exhibit C.
(e) The HRA's ability to deduct amounts due under this paragraph from the retained escrow is
nat exclusive but is in addition to the HRA's rights at law and equity to collect such amounts from Seller.
The Seller is responsible for the amounts due under this paragraph even if: (i) the HRA. neglects to
deduct the amount from escrow; or (ii) the escrowed amount is insufficient to pay all amounts due under
this paragraph 8.
9. Seller Warranties.
(a) Sewer and water. Seller warrants that the Property is connected to City sewer
and City water.
(b) Mechanics' Liens. Seller warrants that, prior to the closing, Seller shall pay in full
all amounts due for labor, materials, machinery, fixtures or tools furnished within the 120 days
immediately preceding the closing in connection with construction, alteration or repair of any
structure upon or improvement to the Property.
(e) Notices. Seller warrants that it has not received any notice from any
governmental authority as to violation of any law, ordinance or regulation in connection with the
Property.
(d) Tenants. Seller warrants that the Property is not now occupied by tenants and
was not occupied by tenants at the time the Seller first received the Buyer's written offer to
purchase the Property.
(e) Broker Commission. Each party represents to the other that it has not utilized the
services of any real estate broker or agent in connection with this Purchase Agreement or the
transaction contemplated by this Purchase Agreement. Each party agrees to indemnify, defend,
and hold harmless the other party against and in respect of any such obligation and liability
based in any way upon agreements, arrangements, or understandings made or claimed to have been
made by the party with any third person.
31541$vl C13RRC125-41
5
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(f) Structures. The Seller warrants that the buildings, if any, are entirely within the
boundary lines of the Property. The parties acknowledge that the Property is being sold in "as is"
condition relating to the structural, operational, and mechanical systems.
10. Closing Costs/Recording Fees/Deed Taz. The HRA will pay: (a) the closing fees
charged by the title insurance or other closing agent, if any, utilized to close the
transaction contemplated by this Agreement; (b) the premium for title insurance policy, if any,
obtained by the HiZA; and (c) the recording fee for the deed transferring title to the HRA. Seller
will pay all other fees normally paid by sellers, including (a) any transfer taxes and recording fees
required to enable the HRA to record its deed from Seller under this Agreement, and (b) fees and
charges related to the filing of any instrument required to make title marketable. Each party shall
pay its own attorney fees.
11. Inspections. From the date of this Agreement to the Date of Closing, HRA, its
employees and agents, shall be entitled to enter upon the Property to .conduct such surveying,
inspections, investigations, soil borings and testing, and drilling, monitoring, sampling and
testing of groundwater monitoring wells, as the H12A shall elect; provided, that Seller is given at
least 24 hours' notice.
12. Risk of Loss. It there is any loss or damage to the Property between the date
hereof and the date of closing, for any reason including fire, vandalism, flood, earthquake or act
of God, the risk of loss shall be on the Seller. If the Property is destroyed or substantially
damaged before the closing date, -this Purchase Agreement shall become null and void, at the
HRA's option. At the request of the HRA, Seller agrees to sign a cancellation of Purchase
Agreement.
13. Default/Remedies. If the Buyer defaults in any of the covenants herein, the
Seller may terminate this Purchase Agreement, and on such termination all payments made
hereunder shall be retained by the Seller as liquidated damages, time being of the essence. This
provision shall not deprive either party of the right to enforce specific performance of this
Purchase Agreement, provided this Purchase Agreement has not terminated and action to enforce
specific performance is commenced within six months after such right of action arises. In the
event the Buyer defaults in its performance of the terms of this Purchase Agreement and Notice
of Cancellation is served upon the Buyer pursuant to Minn. Stat. Section 559.21, the termination
period shall be thirty (30) days as permitted by Minn. Stat., Section 559.21, Subd. 4.
14. Notice. Any notice, demand, request or other communication which may or shall be
given or served by the parties, shall be deemed to have been given or served on the date.the same is
personally served upon one of the following indicated recipients for notices or is deposited in the
United States Mail, registered or certified, return receipt requested, postage prepaid and
addressed as follows:
31541$v1 C$~tRC125-41
6
5 `~
SELLER: Marian A Nordstrom
9501 Garfield Ave S
Bloomington MN 55420
BUYER: Housing and Redevelopment Authority of the City of Richfield
Attn: Housing Specialist
6700 Portland Avenue South
Richfield, MN 55423
AGENT: Kennedy & Graven, Chartered
ATTN: Corrine Heine and
Catherine B. Rocklitz
470'U.S. Bank Plaza.
200 South Sixth Street
Minneapolis, MN 55402
15. Entire Agreement. This Purchase Agreement, Exhibits, and other amendments
signed by the parties, shall constitute the entire Agreement between Seller and the HRA and
supersedes any other written or oral agreements between the parties relating to the Property.
This Purchase Agreement can be modified only in a writing properly signed on behalf of
Seller and the HRA.
16. Survival. Notwithstanding any other provisions of law or court decision to the
contrary, the provisions of this Purchase Agreement shall survive closing.
IN WITNESS WHEREOF, the undersigned have executed this Agreement on the date and
year above.
Buyer: Dousing and Redevelopment Authority Seller:
in and for the City of Richfield
By I ~f~G~~Gl.Q/1~G ~~~ L:01yG
is Chatr Marian A. Nordstrom
And by:
Its Executive Director
315418v1 C13R ttCt25-41
7
EXHIBIT A
Lesal Description of Property
Lot 4, Block 3, Home Acres Addition, Hennepin County, Minnesota
S,~D
A-1
5 'II
EXHIBIT B
Escrow Agreement
THIS AGREEMENT entered into this day of , 2010, by and
between Marian A. .Nordstrom a sin lg a person ("Seller"), the HOUSING AND
REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, a Minnesota
municipal corporation (`LIRA" or "Buyer"), and KENNEDY & GRAVEN, CHARTERED
("Escrow Agent" or "Agent").
RECITALS
A. Seller and Buyer have entered into a Purchase Agreement dated
2010 ("Agreement") for the sale of property located at 7220 Russell Avenue
South, Richfield, Minnesota and legally described on the attached Exhibit One (the
(~~~'opert3',~)
B. The parties desire to close the sale of the. Property on
AGREEMENT
The parties agree as follows:
1. Delivery of Possession. Seller shall deliver possession of the Property to Buyer on
or in accordance with the Purchase Agreement entered into by the parties. The
Purchase Agreement requires the Seller to pay all utilities and to remove all
personal property from the Property upon closing.
2. Escrow. (a) Upon closing and execution of this Agreement, Seller agrees to
deposit into escrow the sum of $500.00 (the "Escrowed Funds") from the purchase
price, to be held by Agent in anon-interest bearing account.
(b) Within 7 days after requested by Agent, Buyer shall provide to Agent (with
copy to Seller) evidence of expenses incurred for the removal and disposal of
personal property and for payment of utility charges for services provided to the
Property prior to date of possession, if any. Agent shall reimburse Buyer for the
incurred expenses from the Escrowed Funds within 7 days following receipt of
such evidence from Buyer.
(c) Agent shall deliver to Seller the balance of the Escrowed Funds on deposit,
less deductions provided for in paragraph 6(b) above, no later than 30 days
following vacation of the Property by Seller.
(d) The sole duties of Agent shall be those described herein, and Agent shall be
under no obligation to determine whether the other parties hereto are
complying with any requirements of law or the terms and conditions of any other
agreements among said parties. Agent shall have no duty or liability to verify any
amounts deducted from the retained amount and Agent's sole responsibility shall be
B-1
S~~a
to act expressly as set forth in this Escrow Agreement
7. Escrow Agent Liability. The sole duties of Escrow Agent shall be those described
herein, and Escrow Agent shall be under no obligation to determine whether the
other parties .hereto are complying with any requirements of law or the terms and
conditions of any other agreements among said parties. Escrow Agent may
conclusively rely upon and shall be protected in acting on any notice believed by it to
be genuine and to have been signed or presented by the proper party or parties,
consistent with reasonable due diligence on Escrow Agent's part. Escrow Agent
shall have no duty or liability to verify any such notice, and its sole responsibility
shall be to act expressly as set forth in this Escrow Agreement.
Seller and Buyer understand that Agent is legal counsel to the Buyer and each
consents to Agent's serving as Escrow Agent notwithstanding such representation.
In the event Agent determines, in its sole discretion, that it cannot continue t0 serve as
Escrow Agent herein, Agent shall deposit the funds with Old Republic National
Title Insurance Company or such other Escrow Agent acceptable to Seller and
Buyer. Seller consents to Agent's continued representation of Buyer after a deposit is
made, and Buyer agrees to pay all escrow fees charged by the substitute Escrow
Agent.
8. Notices to be sent to the parties to this Agreement shall be sent by mail or
personal delivery to:
SELLER: Marian A. Nordstrom
9501 Garfield Ave S
Bloomington, MN 55420
BUYER: Housing and Redevelopment Authority
in and for the City of Richfield
Attn: Housing Specialist
6700 Portland Avenue South
Richfield, MN 55423
AGENT: Kennedy & Graven, Chartered
ATTN: Corrine Heine and
Catherine B. Rockiitz
470 U.S. Bank Plaza
200 South Sixth Street
Minneapolis, MN 55402
IN WITNESS WHEREOF, the parties have executed this agreement as of the date
written above.
B-1
5--~
SELLER:
ESCROW AGENT:
KENNEDY & GRAVEN, CHARTERED
By:
BUYER:
HOUSING AND REDEVELOPMENT
AUTHORITY IN AND FOR THE
CITY OF RICHFIELD
By:
Its Chair
And by:
Its Executive Director
B-1
5~~~
Ezhibit One
Legal Description of Property
Lot 4, Block 3, Home Acres Addition, Hennepin County, Minnesota
B-1
AGENDA ITEM # E)
REPORT # 3 3
STAFF REPORT
HOUSING AND REDEVELOPMENT
AUTHORITY MEETING
SEPTEMBER 20, 2010
REPORT PREPARED BY:
REPORT PRESENTER:
LYNNETTE CHAMBERS, LEASED HOUSING
SPECIALIST
NAME, TITLE
JOHN STARK, COMMUNITY DEVELOPMENT
DIRECTOR
TITLE
DEPARTMENT DIRECTOR REVIEW:
REVIEWED BY EXECUTNE DIRECTOR:
ITEM FOR HRA CONSIDERATION:
Conduct a public hearing to consider the approval of the Richfield Housing and
Redevelopment Authority's Annual Public Housin Authori Plan.
I. RECOMMENDED ACTION:
Conduct and close the public hearing and by motion: Approve the
Housing and Redevelopment Authority's Annual Public Housing
Authority Plan for the Section 8 Housing Assistance Program and
authorize the Chair and Executive Director to execute program
documents.
II. BACKGROUND
The Quality Housing and Work Responsibility Act of 1998 (QHWRA) was created by
Congress. QHWRA requires the Housing and Redevelopment Authority (HRA), as a
Public Housing Agency (PHA), to have afive-year plan and an annual plan (Plan).
The five-year PHA Plan describes the housing mission of the Agency and the
Agency's long-range goals and objectives for achieving its mission over the
subsequent five years. The annual PHA Plan provides details about the Agency's
immediate operations, program participants, and programs and services and the
Agency's strategy for addressing the needs of the community in the upcoming fiscal
year. Staff has developed a PHA Plan in proper form and content.
092010 PHA Plan for 2011 HRA
The QHWRA also requires the HRA to maintain a "Resident Advisory Board" to make
comments about the PHA Plan. The Resident Advisory Board, comprised of program
tenants that volunteer to provide feedback, where given copies of the PHA Plan and
given an opportunity to comment. They had no additional comments to the PHA Plan.
In addition, per HUD requirements, the PHA Plan was made available to the public 45
days in advance of the Public Hearing for additional comments and/or concerns. No'
one came forward with any comments and/or concerns with regards to the PHA Plan.
III. BASIS OF RECOMMENDATION
• I he HRA must formally adopt the PHA Plan following a public hearing.
• The Department of Housing and Urban Development (HUD) requires the
HRA Chair and Executive Director to execute documents.
• HUD has designated Richfield as a high performer; signaling a high level of
performance.
• The public hearing notice of 45 days has not generated any comments or
concerns.
B. CRITICAL TIMING ISSUES
• Failure to approve the PHA Plan will result in receiving anon-compliance
status with HUD. "Non-compliance" violates the contracts that the HRA has
with HUD and results in a loss of administrative and rent assistance funds.
• The "Resident Advisory Board" had no comments on the PHP Plan.
C. FINANCIAL
• The HRA has four contracts for administrative and rent assistance funds with
HUD.
• Annually, the HRA receives approximately $1,372,656 for rental assistance
payments and $160,416 for administrative payments. A current PHA Plan is a
requirement of these contracts.
D. LEGAL
• The Housing Assistance Program (HAP) contracts that the HRA has with HUD
have been previously reviewed and approved by legal counsel.
• Proper notice was published on July 29, 2010 in the Sun Current of the
availability to review the PHA Plan and of the public hearing to be held
concerning PHA Plan approval. The publication schedule is in compliance with
HUD regulations.
IV. ALTERNATIVE RECOMMENDATION(S~
• Do not approve the PHA Plan at this time. (Thy
with HUD).
~ V . ATTACHMENTS
• Summary Update (Attachment A)
HRA would not be in compliance
V~ 1. PRINCIPAL PARTIES EXPECTED AT MEETING
~-i
Attachment A
Summary Update
Richfield HRA Annual Year Plan, Year 2011
September 20, 2010
The Annual Pubic Housing Agency Plan (PHA Plan) is a 6-page document, known as
HUD Form #50075; this PHA Plan provides a standard way for all PHA Plans and the
Richfield Housing and Redevelopment Authority (HRA) to report that the PHA Plan
complies with all federal regulations.
To summarize:
^ The mission of the HRA is the same as HUD's: to promote adequate and affordable
housing, economic opportunity and a suitable living environment free from
discrimination.
^ The HRA goals are to:
- Secure more rental vouchers when available.
- Acquire and/or build affordable housing.
- Improve program administration (Richfield is already a high performer).
- Increase program participation by landlords.
- Promote client self-sufficiency.
- Ensure equal opportunity and fair housing standards are achieved.
The PHA Plan document ends with:
• a drug-free certification form;
• a certificate that no payments have been made to influence federal transactions;
and
• a three page certification form that the HRA does and will comply with all applicable
federal regulations as listed on the certification and signed by the HRA Chair.
The Annual PHA Plan in its entirety is always available to the HRA and the public. The
PHA Plan is available for review in the Community Development Department.
AGENDA ITEM #
REPORT # ~ 4
STAFF REPORT
HOUSING AND REDEVELOPMENT
AUTHORITY MEETING
SEPTEMBER 20, 2010
REPORT PREPARED BY:
KAREN BARYON, COMMUNITY
DEVELOPMENT ASSISTANT DIRECTOR
NAME,
REPORT PRESENTER:
DEPARTMENT DIRECTOR REVIEW:
REVIEWED BY EXECUTIVE DIRECTOR:
ITEM FOR HRA CONSIDERATION:
Discussion regarding the potential future redevelopment of 2517 West 76th Street.
I. RECOMMENDED ACTION:
By Motion: No action required. Discussion regarding the potential
future redevelopment of 2517 West 76th Street.
II. BACKGROUND
The property located at 2517 West 76th Street is asix-bedroom single-family home
situated on three lots. The home is currently vacant and has been for sale for
several years. The property is abutted by multi-family residential buildings to the
east and south, 76th Street to the north, and Sheridan Avenue to the west. The
property is currently zoned R, single-family residential, but is guided for medium-
density multi-family housing. Due to the location of the home and its large size, it
has been difficult to find a buyer interested in purchasing the home for single-family
occupancy.
Earlier this year, Accessible Space Inc. (ASi), anon-profit developer, entered into
an option agreement with the sellers to purchase the property for redevelopment
with accessible, affordable multi-family housing. Unfortunately ASi was unable to
09202010 2517 W 76th St Discussion
KAREN BARYON, COMMUNITY
DEVELOPMENT ASSISTANT DIRECTOR
secure funding for the proposed project and the house will be placed back on the
open market for sale.
The Richfield Housing and Redevelopment Authority (HRA) receives federal
Community Development Block Grant (CDBG) funds annually for the development
of affordable housing. The HRA currently has approximately $335,000 available in
CDBG funding for the acquisition of property for the future development of
affordable housing. $167,000 of the CDBG funding must be spent or under contract
by December 31, 2010 or the HRA may be required to forfeit the funds.
Staff is proposing utilizing the CDBG funds to acquire the property at 2517 West
76th Street and subsequently contracting with anon-profit developer to redevelop
the property with multi-family housing. CDBG requires that at least 51 % of the units
developed be affordable to households at or below 80% of the area median income
($64,000 for a family of four).
ASi has expressed interest in working with the HRA to redevelop the property with
accessible, affordable multi-family housing. Staff has also discussed the
development of affordable and market-rate townhomes on the site with the Greater
Metropolitan Housing Corporation (GMHC).
III. BASIS OF RECOMMENDATION
1~. POLICY
• The Richfield Comprehensive Plan calls for the City to•"Promote the
development, management, and maintenance of affordable housing in
the City."
B. CRITICAL TIMING ISSUES
• The HRA may be required to forfeit $167,000 in CDBG funds if the
funds are not spent or under contract by December 31, 2010.
C. FINANCIAL
• The HRA currently has approximately $335,000 available in CDBG
funds for the purchase and clearance of property for the future
development of affordable housing.
• The property was recently listed at $300,000.
D. LEGAL
• N/A
TERNATIVE
~ V . ATTACHMENTS
• Photos of property
• Map
VI. PRINCIPAL PARTIES EXPECTED AT MEETI1vCi
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