021317 EDA Meeting Packet
EDA MEETING
City Hall, 4401 Xylon Avenue North
Monday, February 13, 2017
Commences upon adjournment of the City Council Meeting
Agenda
President Kathi Hemken
Commissioner John Elder
Commissioner Andy Hoffe
Commissioner Eric Lammle
Commissioner Jonathan London
1. Call to order – EDA Meeting of February 13, 2017
2. Roll call
3. Approval of Minutes:
January 23, 2017
4. Resolution approving Purchase Agreement for the acquisition of 3984 Zealand
Avenue North (project no. 997)
5. Adjournment
EDA Meeting
Page 1 January 23, 2017
CITY OF NEW HOPE
4401 Xylon Avenue North
New Hope, Minnesota 55428
EDA Minutes January 23, 2017
Regular Meeting City Hall
CALL TO ORDER President Hemken called the meeting of the Economic Development Authority
to order at 7:46 p.m.
ROLL CALL Present:
Kathi Hemken, President
John Elder, Commissioner
Andy Hoffe, Commissioner
Eric Lammle, Commissioner
Jonathan London, Commissioner
Staff Present:
Tim Fournier, Police Chief
Valerie Leone, City Clerk
Chris Long, City Engineer
Susan Rader, Director of Parks and Recreation
Jeff Sargent, Director of Community Development
Bernie Weber, Interim Director of Public Works
Stacy Woods, Assistant City Attorney
APPROVAL OF
MINUTES
Item 3
Motion was made by Commissioner Hoffe, seconded by Commissioner
London, to approve the minutes of December 12, 2016. All present voted in
favor. Motion carried.
CEE HOME ENERGY
SQUAD VISITS
Item 4
President Hemken introduced for discussion EDA Item 4, Resolution
approving agreement with Center for Energy and Environment to perform
Home Energy Squad Visits and Home Energy Squad Enhanced Visits in the
city of New Hope through December 31, 2019.
Mr. Jeff Sargent, director of community development, stated the resolution
approves an agreement with the Center for Energy and Environment to
continue the Home Energy Visits program through December 31, 2019. He
explained the EDA authorized the initiation of this program in January of 2013
and renewed the contract in 2015. He stated CEE performs visits to help
homeowners identify and implement energy savings opportunities in their
homes, and the program includes the direct install of energy saving materials
which probably exceeds the $50 fee.
Members of the EDA provided positive comments regarding the program.
Commissioner London inquired of the usage. Mr. Sargent reported 124
residents took advantage of the program in the first two years, and he estimated
the number to be about 30 homes per year for the past two years. He stated he
would obtain the actual figures for the years 2015 and 2016 and relay the
information to the EDA.
EDA Meeting
Page 2 January 23, 2017
RESOLUTION 2017‐01
Item 4
Commissioner London introduced the following resolution and moved its
adoption “RESOLUTION APPROVING AGREEMENT WITH CENTER FOR
ENERGY AND ENVIRONMENT TO PERFORM HOME ENERGY SQUAD
VISITS AND HOME ENERGY SQUAD ENHANCED VISITS IN THE CITY
OF NEW HOPE THROUGH DECEMBER 31, 2019”. The motion for the
adoption of the foregoing resolution was seconded by Commissioner Hoffe,
and upon vote being taken thereon, the following voted in favor thereof:
Hemken, Elder, Hoffe, Lammle, London; and the following voted against the
same: None; Abstained: None; Absent: None; whereupon the resolution was
declared duly passed and adopted, signed by the president which was attested
to by the executive director.
ADJOURNMENT Motion was made by Commissioner London, seconded by Commissioner
Hoffe, to adjourn the meeting. All present voted in favor. Motion carried. The
New Hope EDA adjourned at 7:50 p.m.
Respectfully submitted,
Valerie Leone, City Clerk
I:\RFA\COMM DEV\Development\Q & R 3984 Zealand Acquistion 2‐13‐17.docx
Request for Action
February 13, 2017
Approved by: Kirk McDonald, City Manager
Originating Department: Community Development
By: Aaron Chirpich, CD Specialist
Agenda Title
Resolution approving Purchase Agreement for the acquisition of 3984 Zealand Ave N (project no. 997)
Requested Action
Staff requests the EDA authorize entering into a Purchase Agreement for the acquisition of 3984 Zealand
Avenue North, for $165,000 (purchase price) plus any associated fees.
Policy/Past Practice
In the past, the EDA has successfully acquired vacant and distressed properties as part of the city’s
scattered‐site housing program.
Background
The EDA has directed community development staff to pursue the acquisition of distressed single‐family
homes. For the past two years, the EDA has focused on homes that were candidates for demolition. During
this time, the EDA has purchased seven homes that have been razed to make room for the construction of ten
new homes. Staff remains committed to finding additional opportunities for demolition. However, these
properties have become more difficult to acquire for a variety of reasons. The primary barrier is lack of
inventory, as the EDA has purchased many of the worst single‐family nuisance properties available in the
city. Secondly, the market for distressed properties has become much more competitive. This competition has
led to a rise in prices that has coincided with an improving economy.
These market forces have led staff to research opportunities within the rehabilitation sector, as staff have
identified what staff considers a market failure. As acquisition prices have risen, the back‐end sales value of
the newly rehabilitated homes has not kept pace. In other words, investors are paying more for distressed
properties, and completing fewer improvements on each project. This provides an opening for the EDA to
produce what should be a better product. The EDA is motivated by improving neighborhoods, rather than
profit. As such, the EDA has the ability to invest more money into each project, with the goal of breaking
even. For example, staff have observed several recent “flips” within the city where very few exterior
improvements have been completed. Often times, the exterior amenities such as siding, windows, and
roofing remain untouched, as they are expensive to replace. This is an area where staff see a chance for the
EDA to make headway. The portion of the project that would typically go to investor profit can now be
applied to improving the appearance of these homes from the curb. Exterior improvements have the biggest
impact on the so‐called “keeping up with the Joneses” effect that staff want to stimulate in the city’s core
neighborhoods.
3984 Zealand
3984 Zealand is a vacant and foreclosed property that was part of an estate. The former owners had secured a
reverse mortgage on the home before passing away. The home has received very few upgrades since it was
built in 1964, and suffers from a lack of general maintenance. Despite its deficiencies, it remains a solid home
Agenda Section
EDA
Item Number
4
Request for Action, Page 2
with enough positive attributes to build off. As such, staff recommend acquiring this home in order to
complete a demonstration project. Staff feels that the timing is right to enter this market and begin investing
in rehabilitation opportunities. The highlights of work that staff would like to complete on the home include:
New roof, siding, windows and overhead garage door
New kitchen
Re‐condition existing hardwood floors
Re‐model the master bath
Gut main bath and replace with new fixtures
New interior doors and trim
Fresh paint throughout
New carpet in lower level
3984 Zealand was offered for sale with a list price of $150,000. After viewing the property, staff submitted an
offer of $157,000 in anticipation of heavy competition for the home. Staff were notified two days later that the
seller had received multiple offers, and was requesting the “best and final” offer from each interested buyer.
Staff responded by increasing the EDA’s offer to $165,000, and the seller accepted. The offer submitted is
contingent upon EDA board approval. A full project budget is attached to this RFA.
Funding
Staff recommend using EDA funds for this project, as the goal is to recapture the EDA’s investment through
the sale of the home. With no anticipated loss, the EDA can avoid the use of CDBG grant funds that come
with income restrictions for the back‐end buyer. This means that the EDA can sell the home to anyone
regardless of income. Staff feel that this approach will allow the EDA to maximize the value/sales price of the
home.
Recommendation
Staff is seeking approval of the acquisition of 3984 Zealand Avenue. Staff recommends the EDA approve the
attached resolution prepared by the City Attorney and the terms of the attached purchase agreement.
Attachments
Resolution
Project budget
Location map
MLS listing for the property
Purchase agreement
CITY OF NEW HOPE
ECONOMIC DEVELOPMENT AUTHORITY
EDA RESOLUTION NO. 17-
RESOLUTION APPROVING PURCHASE AGREEMENT
FOR THE ACQUISITION OF 3984 ZEALAND AVENUE NORTH
(project no. 997)
BE IT RESOLVED by the Economic Development Authority in and for the City of New Hope
(“EDA”) as follows:
WHEREAS, on September 22, 2014, the City Council adopted Resolution No.14-126 at the City
Council meeting authorizing City community development staff to actively pursue the acquisition of
distressed single family homes for potential purchase by the EDA, as part of the City’s scattered site housing
program;
WHEREAS, the City Council has directed City staff to negotiate for the terms most favorable to
the City and EDA, and the execution of purchase agreements so as to secure purchase rights for these real
properties, contingent on the review and approval of the EDA to the terms of the purchase agreements;
WHEREAS, City staff have identified the opportunity to purchase certain real property which
has been foreclosed upon located at 3984 Zealand Avenue North, New Hope, MN, P.I.D. 18-118-21-42-
0041, and legally described as: Lot 10, Block 2, Hipp’s Hopewood Hills Revised Addition, Hennepin
County, Minnesota (the “Property”) from The Bank of New York Mellon, as Trustee for Mortgage
Equity Conversion Asset Trust 2010-1 (“Seller”);
WHEREAS, the Property is currently unoccupied;
WHEREAS, the house located on the Property was built in 1964, and while suffering from a lack
of general maintenance and upgrades, is a solid home that City staff believes could be rehabilitated;
WHEREAS, City staff believes that the best use of the Property is rehabilitation and renovation;
WHEREAS, the Property will be acquired with EDA funds;
WHEREAS, it is in the best interest of the EDA to purchase the Property from Seller, in order to
rehabilitate the Property in accordance with the City’s scattered site housing program and policy; and
WHEREAS, City staff is hereby seeking approval from the EDA of the Purchase Agreement,
subject to the review and approval by the City Attorney of proper title evidence and other terms relating to
the closing on the sale of the Property.
NOW, THEREFORE, BE IT RESOLVED by the Economic Development Authority in and for
the City of New Hope as follows:
1. That the above recitals are incorporated herein by reference.
2. It is in the best interest of the EDA to purchase the Property for rehabilitation in accordance
with the City’s scattered site housing program and policy.
3. That the purchase of the Property by EDA from Seller, for a sum of $165,000.00, with
other terms and conditions as set forth in the Purchase Agreement attached hereto as
Exhibit A, is approved subject to the review and approval by the City Attorney of proper
title evidence and other terms relating to the closing on the sale of the Property.
4. The City and EDA shall use due diligence for rehabilitating the Property’s condition and
conducting any necessary renovations and cleanup of the Property to pursue this
rehabilitation purpose and return the Property to the tax rolls for the benefit of all taxing
jurisdictions.
5. The President and Executive Director and the New Hope City staff are authorized and
directed to sign all appropriate documents, and to take whatever additional actions are
necessary or desirable, to complete the purchase of the Property in accordance with the
Purchase Agreement.
Dated the _____ day of February, 2017.
____________________________________
Kathi Hemken, President
Attest: _____________________________
Kirk McDonald, Executive Director
City of New Hope Single-Family Acquisition and Rehab-- Scattered Site Housing Program
Total Project Cost and Total Funding Sources 3984 Zealand Avenue
New Hope MN, 55427
USES
Amount
Acquisition 165,000
Rehab/Construction 65,885
Real Estate Taxes 3,115 Current Tax Value $187,000
Legal 1,500 Current Property Tax $3,115
Listing Fee 13,000
Closing, Recording Fees 1,500 Estimated Tax Amount "after rehab" $4,200
"based on a value of $255,000"
Contingency 5,000
Total 255,000
SOURCES
Amount
EDA 255,000
Total 255,000
Anticipated Sales Price 255,000