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041524 HRA AgendaREGULAR HOUSING AND REDEVELOPMENT AUTHORITY MEETING RICHFIELD MUNICIPAL CENTER, COUNCIL CHAMBERS APRIL 15, 2024 7:00 PM Call to Order Open Forum Each speaker is to keep their comment period to three minutes to allow sufficient time for others. Comments are to be an opportunity to address the HRA. Please refer to the HRA agenda and minutes web page for additional ways to submit comments. Call into the open forum by dialing 1-415-655-0001 Use webinar access code: 2634 049 3312 and password: 1234. Appr oval of t he M inut es Approval of the minutes of the Regular Housing and Redevelopment Authority meeting of March 18, 2024. AGENDA APPROVAL 1.Approval of the Agenda 2.Consent Calendar contains several separate items which are acted upon by the HRA in one motion. Once the Consent Calendar has been approved, the individual items and recommended actions have also been approved. No further HRA action on these items is necessary. However, any HRA Commissioner may request that an item be removed from the Consent Calendar and placed on the regular agenda for HRA discussion and action. All items listed on the Consent Calendar are recommended for approval. A.Consideration of a resolution authorizing the execution of a Developer Agreement with the West Hennepin Affordable Land Housing Trust, dba Homes Within Reach, for the acquisition, rehabilitation and sale of houses under the New Home Program. Staff Report No. 6 3.Consideration of items, if any, removed from Consent Calendar RESOLUTIONS 4.Consideration of the adoption of a resolution authorizing the purchase of real property located at 6525 Penn Avenue South. Staff Report No. 7 5.Consider a Preliminary Donation Agreement with Olin 1, LLC to explore the donation of the property at 1620 - 1640 78th Street East to the Housing and Redevelopment Authority. Staff Report No. 8 HRA DISCUSSION ITEMS 6.HRA Discussion Items E X E C U T IV E D IR E C TO R R E P O R T 7.E xecutive D irector's Report C LAIMS 8.C laims 9.A djournment 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 612-861-9739. HOUSING AND REDEVELOPMENT AUTHORITY MEETING MINUTES Richfield, Minnesota Regular Meeting March 18, 2024 CALL TO ORDER Chair Vrieze Daniels called the meeting to order at 7:00 p.m. in the Council Chambers. HRA Members Present: Erin Vrieze Daniels, Chair; Gordon Hanson; Sean Hayford Oleary; and Mary Supple HRA Members Absent:John Young Staff Present: Julie Urban, Assistant Community Development Director; Jan Youngquist, Economic Development Manager; and LaTonia DuBois, Administrative Assistant. OATH OF OFFICE Assistant Community Development Director Urban administered the Oath of Office to Commissioner Hanson. ELECTION OF OFFICERS M/Supple, S/Hayford Oleary to elect Erin Vrieze Daniels as Chairperson. Motion carried 4-0 M/Supple, S/Hayford Oleary to elect Gordon Hanson as Vice Chair Motion carried 4-0 M/Supple, S/Vrieze Daniels to elect Sean Hayford Oleary as Secretary Motion carried 4-0 HRA Meeting Minutes -2-March 18, 2024 OPEN FORUM Chair Vrieze Daniels gave instructions on how to participate in the open forum. No one spoke. APPROVAL OF THE MINUTES M/Hanson, S/Supple to approve the minutes of the regular Housing and Redevelopment Authority meeting of February 20, 2024. Motion carried: 4-0 ITEM #1 APPROVAL OF THE AGENDA M/Hayford Oleary, S/Hanson to approve the agenda. Motion carried: 4-0 ITEM #2 APPROVAL OF THE CONSENT CALENDAR Assistant Community Development Director Urban presented the Consent Calendar. A.Consider resolutions designating official depositories for the Housing and Redevelopment Authority for 2024, including the approval of collateral (Staff Report No. 4). M/Supple, S/Hayford Oleary to approve the consent calendar. Motion carried: 4-0 ITEM #3 CONSIDERATION OF ITEMS, IF ANY, REMOVED FROM THE CONSENT CALENDAR None. ITEM #4 DESIGNATION OF COMMUNITY DEVELOPMENT DIRECTOR MELISSA POEHLMAN AS THE EXECUTIVE DIRECTOR OF THE HOUSING AND REDEVELOPMENT AUTHORITY (STAFF REPORT NO. 5). Assistant Community Development Director Urban presented the report. HRA Meeting Minutes -3-March 18, 2024 M/Hayford Oleary, S/Supple to designate Community Development Director Melissa Poehlman as the Executive Director of the Housing and Redevelopment Authority for five years or until she leaves the post of CD Director. Motion carried 4-0 ITEM #5 2023 HRA AND EDA YEAR IN REVIEW Assistant Community Development Director Urban and Economic Development Manager Youngquist presented the 2023 HRA and EDA Year in Review. Commissioner Supple thanked staff and inquired about posting the presentation to the City website, Assistant Community Development Director Urban confirmed the presentation would be available to view on the website the next day. Commissioner Hayford Oleary spoke about loan programs running out of funds early in the year and inquired about budgeting funds for the next year. Chair Vrieze Daniels thanked the staff and inquired about the Bumper to Bumper site. Urban provided an update and spoke of the potential for a future work session. ITEM #6 HRA DISCUSSION ITEMS Commissioner Supple inquired about the Affordable Housing Trust Fund report and asked if it could be presented to the commission. Assistant Community Development Director Urban stated that it would be shared via email and is available on the website. ITEM #7 EXECUTIVE DIRECTOR’S REPORT Assistant Community Development Director Urban informed the commission about an upcoming work session in April to discuss the Local Affordable Housing Aid money and announced the hiring of a new Housing Specialist. ITEM #8 CLAIMS M/Hanson, S/Supple that the following claims be approved: HRA Meeting Minutes -4-March 18, 2024 U.S. BANK 3/18/204 HRA Checks: #37020 - 37028 $22,746.42 Section 8 Checks: #135606 - 135686 $216,736.39 TOTAL $239,482.81 Motion carried: 4-0 ITEM #8 ADJOURNMENT The meeting was adjourned by unanimous consent at 7:43 p.m. Date Approved: April 15, 2024 Erin Vrieze Daniels HRA Chair LaTonia DuBois Julie Urban Administrative Assistant Assistant Community Development Director AGENDA SECTION: Consent Calendar AGENDA ITEM # 2.A. STAFF REPORT NO. 6 HOUSING AND REDEVELOPMENT AUTHORITY MEETING 4/15/2024 Celeste McDermott, Housing SpecialistREPORT PREPARED BY: OTHER EXECUTIVE DIRECTOR REVIEW: Melissa Poehlman, Executive Director 4/8/2024 ITEM FOR COUNCIL CONSIDERATION: Consideration of a resolution authorizing the execution of a Developer Agreement with the West Hennepin Affordable Land Housing Trust, dba Homes Within Reach, for the acquisition, rehabilitation and sale of houses under the New Home Program. EXECUTIVE SUMMARY: The Housing and Redevelopment Authority's (HRA) New Home Program (Program) provides affordable homeownership opportunities in the community through new construction, acquisition and rehabilitation, and down payment assistance. As part of the Program, the HRA works with the West Hennepin Affordable Land Housing Trust (WHAHLT), dba Homes Within Reach, to purchase and rehabilitate homes to be sold to income-qualifying households. WHALHT is a Community Land Trust that allows moderate-income buyers to achieve affordable homeownership by holding ownership of the land, and reducing the burden of down payment and large mortgage payments on the homeowner. The model ensures ongoing affordability throughout the lifetime of the property and with multiple owners. WHAHLT is seeking to continue providing affordable housing in Richfield through this model. The proposed Developer Agreement (Agreement) between the HRA and WHAHLT details the terms of this continued partnership through 2024. Under the terms of the Agreement, the HRA would provide up to $240,000 to WHAHLT for the purchase and rehabilitation of up to three single-family homes. WHAHLT would then resell the homes to households earning no more than 80% of the Area Median Income (AMI). Funding for this work will come from the Affordable Housing Trust Fund (AHTF). RECOMMENDED ACTION: By motion: Approve a resolution authorizing the execution of a Developer Agreement with the West Hennepin Affordable Land Housing Trust, dba Homes Within Reach, for the acquisition, rehabilitation and sale of up to three houses under the New Home Program. BASIS OF RECOMMENDATION: A.HISTORICAL CONTEXT Under the Program, the HRA has worked with several developers over the years to either build new homes or purchase and rehabilitate existing homes. These homes are then sold to households earning no more than 80% of the AMI. Since 2002, WHAHLT has successfully purchased, rehabilitated and sold 12 homes and constructed three new homes in Richfield. Funding for the work of the Program has varied by year, with most recent projects funded with local Community Development Block Grant funds and the AHTF, as well as pooled Tax Increment Financing. B.EQUITABLE OR STRATEGIC CONSIDERATIONS OR IMPACTS The Program furthers equity goals by providing a path to affordable home ownership for low-income households. The Program supports the 2023-2027 Strategic Plan outcome of maintaining Richfield as an affordable place to live. C.POLICIES (resolutions, ordinances, regulations, statutes, exc): The objectives of the Program are to: Eliminate the blighting influence of substandard housing, thus improving residential neighborhoods;Maintain and improve the existing housing stock while preserving housing affordability; Develop quality housing with long-term affordability, to the greatest extent possible; and Coordinate with developers to provide affordable housing for families. Purchasing and rehabilitating homes to provide affordable housing carries out the policies of the City’s Comprehensive Plan, including: support the rehabilitation and upgrading of the existing housing stock; promote the development, management and maintenance of affordable housing in the City through assistance programs, alternative funding sources, and the creation of partnerships whose mission is to promote low to moderate income housing. D.CRITICAL TIMING ISSUES: WHAHLT has identified one property in Richfield that they would like to develop under the Program. The Agreement must be approved before they can include the property in the Program and request reimbursement. The Agreement provides for HRA staff to approve the acquisition of the specific property and to review income documentation prior to the final sale. E.FINANCIAL IMPACT: The 2024 budget includes $200,000 for acquisition and rehabilitation through the Program for WHAHLT to purchase and rehab two homes ($100,000 per property). WHAHLT has informed staff that they have increased capacity to potentially purchase and rehabilitate one additional home this year and can do so for less per property, so staff is recommending increasing the budget to $240,000 in order to fund three homes ($80,000 per property). There is sufficient funding in the Trust Fund to accommodate the increase, and it will be reflected in the 2024 Revised Budget. HRA funds can be used for the acquisition of the property or applied to rehabilitation. Maximum reimbursement under this Agreement is $240,000 ($80,000 per property). F.LEGAL CONSIDERATION: The Agreement was prepared by HRA legal counsel. ALTERNATIVE RECOMMENDATION(S): Do not approve a resolution authorizing execution of a Developer Agreement with the West Hennepin Affordable Land Housing Trust, dba Homes Within Reach. PRINCIPAL PARTIES EXPECTED AT MEETING: N/A ATTACHMENTS: Description Type Resolution Resolution Letter Developer Agreement Resolution Letter HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA RESOLUTION NO. 1478 RESOLUTION APPROVING DEVELOPER AGREEMENT WITH WEST HENNEPIN AFFORDABLE HOUSING LAND TRUST DBA HOMES WITHIN REACH WHEREAS, the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota (the “Authority”) intends to provide $240,000 from Affordable Housing Trust Fund ("AHTF funds") to the West Hennepin Affordable Housing Land Trust dba Homes Within Reach, a Minnesota nonprofit corporation (“WHAHLT”), for the purposes of acquiring and rehabilitating homes in the City of Richfield, Minnesota; and WHEREAS, the Authority has proposed that WHAHLT use the AHTF funds to purchase, rehabilitate, and resell one or more properties to households earning at or below 80% of the area median income; and WHEREAS, there has been presented before the Board of Commissioners of the Authority a Developer Agreement (“Developer Agreement”) to be executed by the Authority and WHAHLT, which sets for the terms of the AHTF funds to be provided to WHAHLT and the agreement by WHAHLT to purchase, rehabilitate, and resell the properties; and NOW, THEREFORE, BE IT RESOLVED, by the Board of Commissioners of the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota as follows: 1. The Developer Agreement is hereby in all respects authorized, approved, and confirmed, and the Chair and the Executive Director are hereby authorized and directed to execute the Developer Agreement for and on behalf of the Authority in substantially the form now on file with the Executive Director but with such modifications as shall be deemed necessary, desirable, or appropriate, the execution thereof to constitute conclusive evidence of their approval of any and all modifications therein. 2. The Chair and the Executive Director are hereby authorized to execute and deliver any and all documents deemed necessary to carry out the intentions of this resolution and the Developer Agreement. 3.This resolution shall be in full force and effect as of the date hereof. Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this 15th day of April, 2024. Erin Vrieze Daniels, Chair Sean Hayford Oleary, Secretary 1 DEVELOPER AGREEMENT (West Hennepin Affordable Housing Land Trust dba Homes Within Reach) THIS DEVELOPER AGREEMENT (the “Agreement”), made and entered into as of this 15th of April, 2024 (“Effective Date”), by and between the Housing and Redevelopment Authority in and for the City of Richfield (“Authority” or “HRA”), a body corporate and politic under the laws of the State of Minnesota, having its principal office at 6700 Portland Avenue, Richfield, Minnesota (“HRA”) and the West Hennepin Affordable Housing Land Trust (dba Homes Within Reach), a nonprofit corporation under the laws of Minnesota, having its principal office at 5100 Thimsen Ave, Suite 120, Minnetonka, MN 55345. (“Developer” or “WHAHLT”). RECITALS A.The HRA intends to provide WHAHLT with up to $240,000 in Community Development Block Grant funds (“CDBG Funds”) or Affordable Housing Trust Fund funds (“AHTF Funds”) for the purposes of acquiring and rehabilitating up to three homes in the City of Richfield (the “City”) to be resold to people earning at or below 80% of the area median income. B.The HRA desires WHAHLT to purchase, rehabilitate, and resell up to three properties eligible to be purchased, rehabilitated and resold with CDBG Funds or AHTF Funds (the “Eligible Properties”) and WHAHLT has agreed to do so pursuant to the terms and conditions of this Agreement. C.The City and the HRA have previously established a New Home Program pursuant to the authority granted in Minnesota Statutes, Sections 469.001 through 469.047. D.WHAHLT will utilize the Community Land Trust model to purchase, rehabilitate, and resell the property(ies) to an income-qualified buyer(s), and will retain ownership of the land to ensure long-term affordability. E.The grant of the CDBG Funds or AHTF Funds to WHAHLT is for the purpose of providing affordable housing within the City and to assist in carrying out the objectives of the New Home Program, which are in the best interests of the City, and the hea lth, safety and welfare of its residents and in accord with the public purposes and provisions of the applicable state and local laws and requirements. F.In performing its obligations under this Agreement, WHAHLT must adhere to the restrictions for the use of CDBG Funds or AHTF Funds set forth in this Agreement. AGREEMENT 1.Scope of Work. A.Developer. The HRA hereby designates WHAHLT as a Developer to purchase, rehabilitate, and resell Eligible Properties in accordance with the terms and conditions of this Agreement. 2 B.Memorandum of Understanding. WHAHLT shall purchase, rehabilitate and resell Eligible Properties based on the Memorandum of Understanding of the parties set forth in EXHIBIT A. C.Criteria. WHAHLT will identify Eligible Properties that WHAHLT would like to acquire under this Agreement. Prior to the acquisition of an Eligible Property, WHAHLT shall provide the HRA with a Developer Pro Forma in the form set forth in EXHIBIT B. D.Compliance with Required Programs. To the extent required by federal, state, and local law and regulation, WHAHLT agrees to comply with the program requirements of: (i)Equal opportunity and discrimination provisions of all applicable State and Federal laws, rules, and regulations; (ii)Section 504 of the Rehabilitation Act of 1973, as amended; (iii)Fair housing requirements of section 104(b) and section 109 of Title I of the Housing and Community Development Act of 1974, as amended, including Title VI of the Civil Rights Act of 1964, the Fair Housing Act, and other applicable fair housing laws; (iv)All Lead Laws and Rules, including Minn. Stat. Sections 144.9501 through 144.9512, Minnesota Rules 4761.2000 through 4761.2700, and Federal Regulations including Residential Lead-Based Paint Disclosure Program (Section 1018 of Title X) and the Renovation, Repair, and Painting Rule (TSCA 406(B)). (v)The Hennepin County Affirmative Action Policy. WHAHLT further agrees to provide HRA with a timely certification that the requirements listed in this Section have been met. E.Resale of Property. After WHAHLT completes the rehabilitation of an Eligible Property, WHAHLT will market said Eligible Property and execute a purchase agreement with an end buyer earning at or below 80% of the area median income. F.Reports. WHAHLT shall provide HRA with a report of its activities on an as- needed basis, including but not limited to reports related to the income of the end buyer of each Eligible Property. 2.Term. This Agreement is effective as of the Effective Date and until December 31, 2024. 3.Acquisition, Relocation and Displacement. WHAHLT shall be responsible for carrying out all acquisitions of real property necessary for implementation of this Agreement. WHAHLT shall conduct all such acquisitions in its name and shall hold title to all real property purchased and shall be responsible for preparation of all notices, appraisals, and documentation required in conducting acquisition under the regulations of the Uniform Relocation Assistance and Real 3 Property Acquisition Act of 1970, as required under 49 CFR Part 24. WHAHLT shall als o be responsible for providing all relocation notices, counseling, and services required by said regulations. In addition, WHAHLT shall comply with the acquisition and relocation requirements of the Minn. Stat. Sections 117.50 through 117.56 (the “Minnesota Relocation Act”). 4.Labor Standards, Employment and Contracting. WHAHLT shall notify the HRA prior to initiating any rehabilitation activities, including advertising for contractual services, which will include costs likely to be subject to the provisions of Federal Labor Standards and Equal Employment Opportunity and related implementing regulations. 5.Documentation. WHAHLT must maintain the following records and reports relating to Eligible Properties acquired pursuant to this Agreement: income documentation for buyer of property financed with CDBG Funds or AHTF Funds, appraisals, environmental reports, purchase agreements, settlement statements, and deed document number/filing information per property. WHAHLT shall submit copies of the foregoing documentation to HRA with respect to any Eligible Property acquired pursuant to this Agreement prior to closing with the buyer. The HRA will issue a clear to close once documentation has been submitted. 6.Suspension and Termination. If WHAHLT materially fails to comply with any term of this Agreement after written notice and an opportunity to cure, this Agreement may be terminated. The time period for said opportunity to cure will be dependent upon the relevant time period requirements of the applicable law, regulation, program, or otherwise. 7.Notice. All communications, notices, and demands of any kind which either party may be required or may desire to give to or serve upon the other shall be made in writing, and such notice shall be deemed sufficiently given if and when it is addressed to then other party as provided below and either (a) delivered personally, (b) deposited in the United States mail, registered or certified, with postage prepaid, (c) deposited with an overnight delivery service for next day delivery, or (d) telecopied: To HRA: Richfield Housing and Redevelopment Authority Attention: Melissa Poehlman, Executive Director 6700 Portland Avenue Richfield, Minnesota 55423-2599 Fax: (612) 861-8974 To WHAHLT: West Hennepin Affordable Housing Land Trust Attention: Brenda Lano, Executive Director 5100 Thimsen Avenue Suite 120 Minnetonka, MN 55345-4117 8.Data Practices. WHAHLT agrees to abide by the provisions of the Minnesota Government Data Practices Act and all other applicable State and Federal laws, rules, and regulations relating to data privacy and confidentiality, and as any of the same may be amended. 4 9.Access to Records. HRA shall have the authority to review any and all procedures and all materials, notices, and documents prepared by WHAHLT in implementation of this Agreement. 10.Indemnification. WHAHLT agrees to hold harmless, indemnify and defend HRA, its elected officials, officers, agents, and employees against any and all claims, losses, or damages, including attorneys’ fees, arising from, allegedly arising from, or related to, the provision of services under this Agreement by WHAHLT, its employees, agents, officers, or volunteer workers. 11.Independent Contractor. Nothing in this Agreement is intended, nor may be construed, to create the relationship of partners or employer/employee between the parties. WHAHLT, its officers, agents, employees, and volunteers are, and will remain for all purposes and services under this Agreement, independent contractors. 12.Entire Agreement. The entire agreement of the parties is contained in this document. This Agreement supersedes all previous written and oral agreements and negotiations between the parties relating to the subject matter of this Agreement except as provided in paragraph 17 of this Agreement. 13.Severability. The invalidity, illegality or enforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, all of which shall remain in full force and effect. 14.Assignment of Agreement. The parties shall not assign this Agreement without the express written consent of the other party. 15.Modification. No provision, term or clause of this Agreement shall be revised, modified, amended or waived except by an instrument in writing signed by both parties. 16.Counterparts. This Agreement may be executed in any number of counterparts and each such counterpart shall be deemed to be an original, all of which, when taken together, shall constitute one agreement. 17.Headings. The titles to the sections and headings of various paragraphs of this Agreement are placed for convenience of reference only and in case of conflict, the text of this Agreement, rather than such titles or headings shall control. 18.Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of each of the parties hereto. 19.Invalidity. If for any reason any portion or paragraph of this Agreement shall be declared void and unenforceable by any court of law or equity, it shall only affect such particular portion or paragraph of this Agreement, and the balance of this Agreement shall remain in full force and effect and shall be binding upon the parties hereto. 20.Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of Minnesota. 5 21.Electronic Signatures. This Agreement may be executed with electronic signatures. (Signature page follows) S-1 IN WITNESS WHEREOF, the Authority has caused this Agreement to be duly executed in its name and behalf and WHAHLT has caused this Agreement to be duly executed in its name and behalf as of the date first above written. HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA By ________________________________ Its Chairperson By ________________________________ Its Executive Director WEST HENNEPIN AFFORDABLE HOUSING LAND TRUST By ________________________________ Its Executive Director A-1 EXHIBIT A PROCEDURES Memorandum of Understanding Properties, In General: WHAHLT will identify, purchase, and rehabilitate up to three Eligible Properties for subsequent resale to households earning at or below 80% of the Area Median Income. The HRA agrees to cover $80,000 of the Development Gap for Eligible Properties. Development Gap means the estimated total development costs less the sales price of the improved property up to a maximum gap amount as shown on “Exhibit B” or other developer pro forma approved by the HRA. Identification of Eligible Property: WHAHLT will identify Eligible Properties. WHAHLT will provide the HRA with the identity of the Eligible Property so that the HRA may decide whether the HRA will use CDBG or AHTF funds to acquire said Eligible Property. Purchase of Eligible Property: WHAHLT will identify one or more Eligible Properties and only purchase an Eligible Property after receipt of the HRA’s express written consent. HRA may express its written consent via email to WHAHLT at blano@homeswithinreach.org. WHAHLT shall be responsible for the timely completion of all CDBG or AHTF required documentation. Rehabilitation of Eligible Property: After WHAHLT has purchased an Eligible Property, WHAHLT will submit a rehabilitation plan to the HRA and the HRA will agree in writing to the plan, prior to WHAHLT beginning its rehabilitation efforts at that Eligible Property. Subsequent Resale of Certain Eligible Property to End Buyer: After WHAHLT completes the rehabilitation of an Eligible Property, WHAHLT will market said Eligible Property and execute a purchase agreement with an end buyer whose household income is at or below 80% of Area Median Income. WHAHLT will maintain long-term affordability by retaining ownership of the land through its land trust. Reimbursement of Acquisition/Rehabilitation Costs (or Payment of the Development Gap): WHAHLT will use its own funds to purchase an eligible property. Following the acquisition of the property, WHAHLT may request that the HRA provide payment up to $65,000 of the estimated Development Gap. The remaining $15,000 will be paid upon sale of the Eligible Property and submittal of all required documentation to the HRA. The maximum amount of reimbursement available under this Agreement is $80,000 per Eligible Property up to a total of $240,000. B-1 EXHIBIT B DEVELOPER PRO FORMA Sources & Uses - Preliminary Name of Property: Date: Sources: Comments Homebuyer Mortgage $ 20__ AHIF $Project Costs 20__ Richfield Tax Increment $Land & Project Costs 20__ HOME $Land 20__ MH Impact $Project Costs 20__ Bond Proceeds $Land 20__ Met Council $Rehab Total $ Uses: Acquisition Costs $ Closing Costs $ Inspection/other $ Acquisition costs $ Adm Fee $ Project Fee & HOME Fee Holding/Closing Costs/ LC/ Taxes $ Special Assessments of $_______ Rehab Costs $ Total $ AGENDA SECTION: RESOLUTIONS AGENDA ITEM # 4. STAFF REPORT NO. 7 HOUSING AND REDEVELOPMENT AUTHORITY MEETING 4/15/2024 Julie Urban, Asst. Community Development DirectorREPORT PREPARED BY: OTHER EXECUTIVE DIRE CTOR RE VIEW: Melissa Poehlman, Executive Director 4/9/2024 ITEM FOR COUNCIL CONSIDERATION: Consideration of the adoption of a resolution authorizing the purchase of real property located at 6525 Penn Avenue South. EXECUTIVE SUMMARY: The Housing and Redevelopment Authority (HRA) purchased the property at 6501 Penn Avenue South in 2018 and has been seeking opportunities to assemble adjacent parcels in order to facilitate a higher quality, more impactful redevelopment project along the Penn Corridor. In 2023, the adjacent property at 6525 Penn Avenue South became a tax forfeited property. Hennepin County recently established a purchase cost of $209,333.77 for the property and is offering the HRA the first opportunity to acquire it. The purchase price is valid until May 18th. The property has been vacant and in disrepair since 2020. The poor condition of the building and the site have made it a blight on the Penn Corridor, and a significant investment would be needed to make the current building and parking area useable. It is also a small, interior lot with challenging access and topography that make any redevelopment of the property on its own challenging. HRA acquisition of the property will create a larger, more useable parcel for redevelopment and allow for a significant investment in the Corridor. RECOMMENDED ACTION: By motion: Adopt a resolution authorizing the purchase of real property located at 6525 Penn Avenue South for $209,333.77, contingent upon a Finding of Consistency with the Comprehensive Plan by the Planning Commission. BASIS OF RECOMMENDATION: A.HISTORICAL CONTEXT The HRA purchased the property at 6501 Penn Avenue South in 2018. In 2020, a developer proposed a housing development on 6501 Penn Avenue South and an adjacent residential property. That project did not receive financing, and the developer has since sold the residential property to a private individual. Multiple unsuccessful attempts were made to reach out to the owner of 6525 Penn Avenue South to discuss future plans. In 2023, the property became a tax forfeiture. An affordable housing developer presented a housing concept at an HRA work session on April 15. That concept would incorporate 6501 and 6525 Penn Avenue South. Typically, the County, City and School District receive a share of the proceeds from the sale of tax forfeited property. In this case, there is some uncertainty about how the sales proceeds will be dispersed. Due to a recent Supreme Court case (Tyler v. Hennepin County), all proceeds from the sale of tax forfeited property are being held in a fund until the Legislature approves a new process for distributing any revenues collected. The Supreme Court decision requires states to provide an opportunity for former owners to request payment for any excess proceeds. In the case of 6525 Penn Avenue South, the property was determined to be abandoned, so the transaction is unlikely to be impacted by the changes; however, it's possible the City may only receive payment for the 2023 special assessment filed after the property was tax forfeited, depending on the outcome of the new Legislation. This could be the case regardless of whether or not the HRA purchases the property. B.EQUITABLE OR STRATEGIC CONSIDERATIONS OR IMPACTS The City's Strategic Plan seeks to maintain the City's housing affordability, and facilitating the construction of more housing units through the purchase of strategic properties can facilitate this goal. The City's Inclusionary Housing Policy will require that affordable and accessible units be constructed as part of any housing redevelopment on the site, expanding housing opportunities for more people. C.POLICIES (resolutions, ordinances, regulations, statutes, exc): State Statute requires that the acquisition and disposition of property by the HRA requires a Finding of Consistency with the Comprehensive Plan. The property is guided for Mixed Use in the Comprehensive Plan, so the Finding of Consistency is likely but needs to be determined by the Planning Commission. The HRA has a history of purchasing properties along the City's commercial corridors that would be a challenge to reuse and/or that offer a strategic advantage in redevelopment of a larger area. If the HRA chooses not to purchase the property, the County will make the property available through public auction. D.CRITICAL TIMING ISSUES: The County's cost sheet was issued on March 20, 2024, and the price of $209,333.77 is valid for 60 days, giving the HRA until May 18, 2024, to purchase the property at this price. The Planning Commission is scheduled to consider a Finding of Consistency on April 22, 2024. An affordable housing developer is interested in developing housing on 6501 and 6525 Penn Avenue South. They will be seeking the HRA's preliminary support in order to apply for financing through Low Income Housing Tax Credits (LIHTC) by July 13, 2024. E.FINANCIAL IMPACT: The value of the property has been set at $200,000. With fees and taxes and a special assessment placed on the property after tax forfeiture, the total purchase price will be $209,333.77. $2,494.46 of the purchase price is a special assessment filed against the property in 2023 for unpaid City bills (after the tax forfeiture was completed). Funds are available in the Housing and Redevelopment Fund for the purchase. F.LEGAL CONSIDERATION: The HRA Attorney is reviewing the tax forfeiture process to ensure the appropriate procedures were followed and will obtain a title commitment to ensure that the property has a marketable title for future resale. ALTERNATIVE RECOMMENDATION(S): Decide not to purchase the real property located at 6525 Penn Avenue South. PRINCIPAL PARTIES EXPECTED AT MEETING: N/A ATTACHMENTS: Description Type Resolution Resolution Letter Aerial Photo Backup Material Photos of the property Backup Material 04152024 6525 Penn Acquisition.docx HRA RESOLUTION NO. 1479 RESOLUTION AUTHORIZING PURCHASE OF REAL PROPERTY LOCATED AT 6525 PENN AVENUE SOUTH 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 redevelopment and the City’s Comprehensive Plan, said property being described as: The WEST 1/8 OF THAT PART OF THE NORTH 3/4 OF THE SOUTHWEST 1/4 OF THE NORTHWEST 1/4 LYING SOUTH OF THE NORTH 876.8 FEETT THEREOF EXCEPT HIGHWAY WHEREAS, the HRA is authorized by Minnesota Statutes Section 469.012, subd. 1g to acquire real property within its area of operation; and WHEREAS, the property is tax forfeited and Minnesota Statutes Section 282 provides the process for tax forfeiture and subsequent re-sale of that property, allowing purchase of tax forfeited property by a governmental subdivision; and WHEREAS, HRA funds are available for acquisition purposes. NOW THEREFORE, BE IT RESOLVED, by the Housing and Redevelopment Authority in and for the City of Richfield: 1.The purchase price for the property identified is approved at $209,333.77. 2.The Chairperson and Executive Director are authorized to take any 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 15th day of April, 2024. _______________________ Erin Vrieze Daniels, Chair ATTEST: _______________________ Sean Hayford Oleary, Secretary 6501 and 6525 Penn Avenue South AGENDA SECTION:RESOLUTIONS AGENDA ITEM #5. STAFF REPORT NO. 8 HOUSING AND REDEVELOPMENT AUTHORITY MEETING 4/15/2024 Jan Youngquist, Economic Development ManagerREPORT PREPARED BY: EXECUTIVE DIRE CTOR RE VIEW: Melissa Poehlman, Executive Director 4/11/2024 ITEM FOR COUNCIL CONSIDERATION: Consider a Preliminary Donation Agreement with Olin 1, LLC to explore the donation of the property at 1620 and 1640 - 78th Street East to the Housing and Redevelopment Authority. EXECUTIVE SUMMARY: Housing and Redevelopment Authority (HRA) staff and the representatives of the former Metro Sales property have developed and maintained an excellent working relationship over the years and together have been exploring redevelopment opportunities for the properties located at 1600 and 1710 - 78th Street East. These properties consist of three tax lots; two are owned by the HRA and one is owned by the Karen A. Mathwig Trust (Trust), which was established by the late Jerry Mathwig, former owner of Metro Sales. The HRA owns the property at 1710 - 78th Street East and accepted the generous donation of the property at 1600 - 78th Street East from the Trust in 2021. The Trust owns the property in between these two lots, which consists of one tax lot that has two buildings on it, with the addresses of 1620 and 1640 - 78th Street East. The buildings are vacant and were the former location of Metro Sales, which has since consolidated its operations to its Burnsville location. The Trust has been supportive of the City and HRA's vision to holistically redevelop the area and has been collaborative with HRA staff to explore redevelopment options. However, the current economic climate has made capital projects challenging and development has slowed. Meanwhile, the Trust continues to have carrying costs for its buildings at 1620 and 1640 - 78th Street East. With the uncertainty of when redevelopment may occur, the Trust has generously offered to donate the property at 1620 and 1640 - 78th Street East (owned under Olin 1, LLC) to the HRA rather than sell it on the private market. Before accepting the donation, the HRA Attorney has recommended that due diligence work be done. This would include reviewing title work, inspecting the property, and conducting an environmental site assessment to determine the site's suitability and feasibility for redevelopment. The attached Preliminary Donation Agreement (Agreement) establishes the terms under which this work could occur and the timeline for the donation/acceptance of the property. If, after this due diligence, the HRA concludes that it would like to accept the property, the HRA would agree to pay property taxes after closing until tax exemption is approved (estimated $60,000). The appraised market value of the property is $4,220,000. RECOMMENDED ACTION: By motion: Approve the attached Preliminary Donation Agreement with Olin 1, LLC to explore the acceptance of property at 1620 and 1640 - 78th Street East. BASIS OF RECO MMEND ATION: A.HISTORICAL CONTEXT The property at 1710 - 78th Street East was purchased by the City in 2000 for the construction of the 77th Street underpass. The City transferred ownership of this property to the HRA in August 2022. In December 2021, the HRA accepted the donation of the property at 1600 - 78th Street East from the Trust. In 2022, the City and HRA undertook a visioning process for the properties owned by the HRA and the Trust. An Request For Interest (RFI) was published in January 2023 with the hope of attracting a private party with whom to partner on redevelopment. The HRA did not receive any applications of interest, but had several conversations with prospective developers. At a work session in March 2023, the HRA indicated that it was not interested in purchasing the Trust's property, but would like to continue to work with the Trust in redevelopment of the site. The Minnesota Cycling Center (MNCC) contacted HRA staff in June 2023 to express interest in the site for development of a multi-purpose velodrome facility. The City Council, HRA and Planning Commission held a joint work session on August 8, 2023 to discuss the velodrome proposal. Policymakers expressed support for the project in concept and directed staff to continue conversations with MNCC and the Trust to pursue development of the project. On September 18, 2023, the HRA adopted a resolution supporting a proposed velodrome project with MNCC for the sites owned by the HRA and the Trust. The resolution indicates that the HRA supports the project in concept and will work with MN CC and the Trust to explore options for redevelopment of the properties. The resolution does not obligate the HRA to approve any specific development proposal. MNCC is seeking financial support for the project from the State Legislature. B.EQUITABLE OR STRATEGIC CONSIDERATIONS OR IMPACTS The Strategic Plan calls for increased diversification of the tax base through commercial development. This property, in combination with the adjacent HRA properties, create a rare 3.7 acre commercial redevelopment site along the Interstate 494 corridor. If the HRA accepts the donation of the property for redevelopment, future development proposals will be evaluated for equity impacts. C.POLICIES (resolutions, ordinances, regulations, statutes, exc): Minnesota Statute 465.03 allows a city to accept a grant of real or personal property and requires that acceptance be by resolution of the governing body, adopted by a two-thirds majority of its members. The 2040 Comprehensive Plan guides the property for Regional Commercial development, which is defined as "uses located along regional corridors that provide visibility and accessibility." These commercial uses are intended to be larger in scale and attract users throughout the Twin Cities metropolitan area. The property is zoned Mixed Use-Regional, which supports destination oriented commercial and office uses at a high density/intensity of development. D.CRITICAL TIMING ISSUES: The HRA would need to close on the property by June 30, 2024 in order to qualify for an exemption for property taxes payable in 2025. E.FINANCIAL IMPACT: The appraised value of the property is $4,220,000. If the HRA accepted the donation, it would be responsible for paying the second half 2024 property taxes, which total $59,568.26. The property is located in the 77th Street Maintenance District as part of the Interstate-Lyndale-Nicollet Project Area and is subject to annual special assessments for street maintenance and associated City services. The special assessments for 2024 are $1,238.22 and are incorporated into the property tax payment. F.LEGAL CONSIDERATION: HRA Attorney Julie Eddington has been consulted and drafted the attached Agreement. Approval of the Agreement does not obligate the HRA to accept the donation. ALTERNATIVE RECOMMENDATION(S): Do not approve the attached Agreement; declining the offer of the property donation. PRINCIPAL PARTIES EXPECTED AT MEETING: None ATTACHMENTS: Description Type Resolution Resolution Letter Preliminary Donation Agreement Contract/Agreement Location Map Backup Material RC125-383-944450.v1 HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA RESOLUTION NO. 1480 RESOLUTION APPROVING THE EXECUTION AND DELIVERY OF A PRELIMINARY DONATION AGREEMENT WITH OLIN 1 LLC WHEREAS, Olin 1 LLC, a Minnesota limited liability company (the “Owner”), is the fee simple owner of property located at 1620 and 1640 - 78th Street East, Richfield, Minnesota (the “Property”); and WHEREAS, the Owner has proposed to donate the Property, including the two buildings on the Property, to the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota (the “Authority”); and WHEREAS, the Authority desires to accept the donation of the Property for future redevelopment; and WHEREAS, prior to accepting the donation of the Property, the Authority has requested the opportunity to do due diligence on the Property, including reviewing title work, entering and inspecting the Property, and performing environmental testing to determine its suitability and feasibility for redevelopment; and WHEREAS, the Board of Commissioners of the Authority (the “Board”) has been presented with a form of a Preliminary Donation Agreement (the “Agreement”) between the Authority and the Owner, which sets forth the terms under which the Authority may conduct due diligence on the Property; and NOW, THEREFORE, BE IT RESOLVED, by the Board of Commissioners of the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota as follows: 1. The Agreement presented to the Authority and on file with the Executive Director is hereby in all respects approved, subject to modifications that do not alter the substance of the transaction and that are approved by the Chair and Executive Director; provided that execution of such document by such officials shall be conclusive evidence of approval. 2. The Chair and Executive Director are hereby authorized to execute the Agreement on behalf of the Authority and to carry out the Authority’s obligations thereunder. Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this 15th day of April, 2024. Erin Vrieze Daniels, Chair ATTEST: Sean Hayford Oleary, Secretary PRELIMINARY DONATION AGREEMENT THIS PRELIMINARY DONATION AGREEMENT (the “Agreement”) is made and entered into this 15th day of April, 2024 (the “Effective Date”), between the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota, a Minnesota public body corporate and politic (the “HRA”), and Olin 1 LLC, a Minnesota limited liability company (the “Owner”). RECITALS: WHEREAS, the Owner is the fee simple owner of property located at 1620 and 1640 - 78th Street East, Richfield, Minnesota, which is legally described in EXHIBIT A attached hereto (the “Property”); and WHEREAS, the Owner has proposed to donate the Property, including the two office buildings on the Property, to the HRA; and WHEREAS, the HRA desires to accept the donation of the Property for future redevelopment; and WHEREAS, prior to accepting the donation of the Property, the HRA has requested the opportunity to do due diligence on the Property, including reviewing title work, entering and inspecting the Property, and performing environmental testing to determine its suitability and feasibility for redevelopment; and WHEREAS, the parties are entering into this Agreement to set forth the terms of the HRA’s entry to, inspection of, and testing of the Property; AGREEMENT NOW, THEREFORE, in consideration of the premises and mutual obligations of the parties contained herein, each of them does hereby represent, covenant and agree with the other as follows: 1.Right of Entry. (a)The Owner grants to the HRA, its employees, agents, and other representatives, upon the terms set forth below, the permission and right to enter and access the Property as necessary for surveying the Property, appraising the property, conducting non-invasive environmental tests, and preparing other studies to determine the suitability and feasibility for redevelopment; provided, however, that no invasive testing shall be performed without the prior written consent of the Owner, which may be withheld in the Owner’s sole discretion. Testing costs shall be the responsibility of the HRA. (b)Prior to entering the Property, the HRA shall give the Owner at least five days’ notice. (c)In connection with any invasive testing the HRA performs (pursuant to the Owner’s written consent under subsection (a) above), if the HRA removes a sample or portion of the Property for investigation, monitoring, or testing or obtains any data or issues any report, the HRA shall give the Owner a copy of any such data or report. (d)The HRA agrees to indemnify, defend, and hold harmless the Owner, and its agents, officials and employees from any and all claims, losses, damages, liabilities, causes of action, judgments, 2 costs, or expenses because of personal injury, death, or property damage caused by HRA’s use of the Property. The HRA agrees to indemnify, defend, and hold harmless the Owner from and against any and all claims, losses, damages, liabilities, causes of action, judgments, costs, or expenses because of personal injury, death, or property damage caused by the HRA or its officials, employees, agents, contractors, or assigns’ entry into the Property during the term of this Agreement. The HRA shall maintain commercial general liability insurance covering its obligations under this Section in the amount of at least $2,000,000. The HRA’s contractors and consultants entering the Property shall be required to carry such insurance. The liability insurance required under this Section shall be primary and non-contributory and shall name the Owner as an additional insured. The HRA shall provide the Owner with certificates of insurance evidencing coverage upon the Owner’s request. This subsection (d) shall survive the expiration or termination of this Agreement. (e) By May 6, 2024 (the “Due Diligence Deadline”), the HRA shall notify the Owner of its completion and review of the tests and studies and whether it desires to proceed with accepting the Property from the Owner. The Due Diligence Deadline may be extended by the Owner in its sole discretion. 2. Donation of Property. If the HRA determines to proceed with accepting the Property, the Owner shall convey the Property to the HRA by limited warranty deed in a form reasonably acceptable to the Executive Director of the HRA and counsel to the HRA. The conveyance of the Property to the HRA, which shall include the recording of the deed with the office of the Hennepin County recorder, shall occur prior to June 15, 2024. 3. Acknowledgments. If the HRA accepts the Property, the HRA accepts the Property in its as-is, where-as, with all faults condition, and expressly acknowledges that (a) it has inspected the Property to its full and complete satisfaction with the full cooperation of the Owner; and (b) it has not relied, and does not rely, upon any warranties, representations, or statements concerning the Property made by the Owner or anyone representing the Owner. This Section shall survive the expiration or termination of this Agreement and the conveyance of the Property to the HRA. Consistent with the foregoing, the HRA, for itself and its agents, affiliates, successors, and assigns, hereby releases and forever discharges the Owner, its agents, affiliates, subsidiaries, successors, and assigns (collectively, the “Releasees”) from any and all rights, claims, and demands at law or in equity, whether known or unknown at the time of this Agreement, which the HRA has or may have in the future, arising out of the physical, environmental, or legal condition of the Property, including, without limitation all claims for indemnification or contribution arising under the Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C. Section 9601, et seq.) or any similar federal, state, or local statute, rule, or regulation. The provisions of this Section shall survive the conveyance of the Property or termination of this Agreement indefinitely and shall not be merged into the closing documents. 4. Redevelopment of Property. If the Owner donates the Property to the HRA, the HRA shall proceed with demolition of the office building on the Property and hold the property for future redevelopment. 5. Payment of Transaction Costs. If the Owner donates the Property to the HRA prior to June 15, 2024, the HRA shall pay the property taxes (including special assessments) due and payable after the closing date. The HRA shall be responsible for the costs of its due diligence in connection with the Property, deed tax (if any), the cost of recording the deed, the cost (if any) of any escrow agent who facilitates closing, and the cost any title policy that the HRA chooses to obtain. The parties shall pay their respective attorneys’ fees in connection with negotiating this Agreement and generating the closing documents. 3 6.Term of Agreement. This Agreement is effective from the Effective Date through June 15, 2024, unless extended by the Owner with the approval of the Executive Director of the HRA. 7.Agreement. This Agreement constitutes the entire agreement between the parties relative to the proposed Project. Unless specifically described herein, no obligation shall be inferred or construed. 8.Notices. Notice or demand or other communication between the Owner and the HRA shall be sufficiently given if sent by certified or registered mail, postage prepaid, return receipt requested or delivered personally: To the HRA: Richfield Housing and Redevelopment Authority 6700 Portland Avenue South Richfield, MN 55422 Attn: Melissa Poehlman, Executive Director To the Owner: Olin 1, LLC c/o Timothy J. Pabst (The remainder of this page is intentionally left blank.) S-1 IN WITNESS WHEREOF, the parties have executed this Preliminary Donation Agreement effective on the date and year first written above. HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA By Erin Vrieze Daniels Its Chair By Melissa Poehlman Its Executive Director S-2 Execution page of the Owner to the Preliminary Agreement, dated the date and year first written above. OLIN 1, LLC, a Minnesota limited liability company By Timothy J. Pabst, as Trustee of the: Karen A. Mathwig Revocable Trust A-1 EXHIBIT A PROPERTY (Legal description to be confirmed by the title company) THE NORTH 180.26 FEET OF THE EAST 232.00 FEET OF THE WEST 722.00 FEETOF THE SOUTH HALF OF THE SOUTHEAST QUARTER OF THE SOUTHEAST QUARTER OF SECTION 35, TOWNSHIP 28 RANGE 24. ALSO THAT PART OF THE EAST 150 FEET OF THE WEST 630 FEET OF THE SOUTH HALF OF THE SOUTHEAST QUARTER OF THE SOUTHEAST QUARTER OF SECTION 35, TOWNSHIP 28, RANGE 24 LYING SOUTH OF THE NORTH 180.26 FEET THEREOF. ALSO THAT PART OF THE SOUTH HALF OF THE SOUTHEAST QUARTER OF THE SOUTHEAST QUARTER OF SECTION 35, TOWNSHIP 28, RANGE 24 LYING SOUTH OF THE NORTH 180.26 FEET THEREOF AND LYING EAST OF THE WEST 630.00 FEET T HEREOF EXCEPT THAT PORTION CONTAINED IN THE FOLLOWING DESCRIBED TRACT TO WIT: BEGINNING AT A POINT IN THE EAST LINE OF SAID SECTION 35, 383.00 FEET NORTH OF THE SOUTHEAST CORNER OF SAIDSECTION 35; THENCE WEST PARALLEL WITH THE SOUTH LINE OF SAID SECTION 35, 158.00 FEET; THENCE NORTH PARALLEL WITH THE EAST LINE OF SAID SECTION 35, 150 FEET; THENCE EAST PARALLEL WITH THE SOUTH LINE OF SAID SECTION 35, 158.00 FEET TO THE POINT OF BEGINNING. Abstract or Torrens: TORRENS 1600 1710 1620 1640 S B H W Y 7 7 T O W B I 4 9 4BLOOMINGTON AVEEB I494 TO SB HWY77 LINDAULNTOW B I4 9 4 WBI494TOSBHWY77BLOOMINGTON AVE16THAVESSBHW Y77TO WBI49478TH ST E 77TH ST E INTERSTATE 494 INTERSTATE 494 SBH WY 77T O EB I 4 9 4CEDARAV ESW B I 4 9 4 TOSBH W Y77 ± 1600 and1710 - 78th Street East I:\GIS\Community Development\Staff\Econ Dev Manager\HRA Mathwig.mxd HRA and Mathwig Trust Properties 0 210 420105ft Mathwig Trust Property HRA Properties