040918 EDA Meeting Packet
EDA MEETING
City Hall, 4401 Xylon Avenue North
Monday, April 9, 2018
President Kathi Hemken
Commissioner John Elder
Commissioner Andy Hoffe
Commissioner Eric Lammle
Commissioner Jonathan London
1. Call to order – EDA Meeting of April 9, 2018
2. Roll call
3. Approval of Minutes:
• March 12, 2018
4. Resolution approving purchase agreement for the acquisition of 5355 Oregon
Avenue North (improvement project no. 1018)
5. Adjournment
EDA Meeting
Page 1 March 12, 2018
City of New Hope
4401 Xylon Avenue North
New Hope, Minnesota 55428
EDA Minutes March 12, 2018
Regular Meeting City Hall
CALL TO ORDER President Hemken called the meeting of the Economic Development Authority to
order at 8:08 p.m.
ROLL CALL Present:
Absent:
Kathi Hemken, President
John Elder, Commissioner
Andy Hoffe, Commissioner
Jonathan London, Commissioner
Eric Lammle, Commissioner
Staff Present:
Aaron Chirpich, Community Development Specialist
Valerie Leone, City Clerk
Chris Long, City Engineer
Susan Rader, Director of Parks and Recreation
Jeff Sargent, Director of Community Development
Bernie Weber, 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 February 12, 2018. Voting in favor: Hemken, Hoffe,
London; Absent: Lammle; Abstained: Elder. Motion carried.
IMP. PROJECT 1007
Item 4
President Hemken introduced for discussion EDA Item 4, Resolution approving
purchase and redevelopment agreement with Tollberg Homes, LLC, for the sale
of 7303 62nd Avenue North (Improvement Project No. 1007).
Mr. Aaron Chirpich, community development specialist, explained RFPs were
distributed to 20 builders marketing the lot for sale for $55,000. He stated
proposals were received from two builders, Tollberg Homes, LLC and Great Buy
Homes Inc. He stated after reviewing the proposals with the city manager, staff is
recommending Tollberg Homes as the preferred builder.
Mr. Chirpich reviewed the proposals from each builder. He stated the proposal by
Tollberg has a finished basement and anticipated sales price of $309,900 which is
slightly higher than Great Buy Homes’ proposal. He stated the EDA has not sold
a lot to Tollberg Homes in the past but city of Crystal staff provided a positive
recommendation of Tollberg’s work in Crystal.
Regarding the site, Mr. Chirpich stated staff has reviewed aerial photos of the site
dating back to 1937 and there are no signs of any previous structures on the site.
Mr. Chirpich stated the development agreement ensures that provisions set forth
in the RFP are met, sets the lot sale price at $55,000, and ensures the structure is
EDA Meeting
Page 2 March 12, 2018
owner-occupied through a restrictive covenant. He noted the land sale closing is
anticipated to occur by the end of May 2018.
Commissioner Elder questioned why the provision for owner occupancy is only
one year instead of ten years.
Mr. Chirpich and Assistant City Attorney Woods explained that if the conditions
were too restrictive it may be difficult to sell homes. It was noted that a buyer
whose paying $300,000 for a property would likely plan to make it their
permanent residence.
Mr. Jeff Sargent, director of community development, pointed out that community
development staff pays close attention to trends, and if properties were becoming
rental properties staff would change the terms on future purchase agreements. He
stated staff would be willing to discuss the issue at a work session. Commissioner
Elder supported further discussion at a work session.
President Hemken opened the floor for comments. There was no one present
desirous of addressing the EDA on the matter.
CLOSE HEARING
Item 4
Motion was made by Council Member Elder, seconded by Council Member Hoffe,
to close the public hearing. All present voted in favor. Motion carried.
RESOLUTION 2018-03
Item 4
Commissioner London introduced the following resolution and moved its
adoption “RESOLUTION APPROVING PURCHASE AND
REDEVELOPMENT AGREEMENT WITH TOLLBERG HOMES, LLC, FOR
THE SALE OF 7303 62ND AVENUE NORTH (IMPROVEMENT PROJECT NO.
1007)”. The motion for the adoption of the foregoing resolution was seconded by
Commissioner Elder, and upon vote being taken thereon, the following voted in
favor thereof: Hemken, Elder, Hoffe, London; and the following voted against the
same: None; Abstained: None; Absent: Lammle; 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 8:20 p.m.
Respectfully submitted,
Valerie Leone, City Clerk
I:\RFA\COMM DEV\Development\Housing\5355 Oregon Avenue\Q & R - 5355 Oregon Acquisition 4-9-18.docx
Request for Action
April 9, 2018
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 5355 Oregon Avenue North (improvement
project no. 1018)
Requested Action
Staff requests the EDA to authorize entering into a purchase agreement for the acquisition of 5355 Oregon
Avenue North, for $170,000 (purchase price) plus any associated fees.
Policy/Past Practice
In the past, the EDA has successfully acquired functionally obsolete properties for redevelopment as part of
the city’s scattered site housing program.
Background
5355 Oregon Avenue is a foreclosed property owned by TCF Bank. The home is a two-bedroom, single-story
rambler that was built in 1952 and sits over a dirt floor crawlspace. The main floor living area is just over 900
square feet. The home has not been substantially improved since built, and does not meet the expectations of
many buyers in the market. Rehabilitation of the home does not make economic sense, as adding onto the
home would prove cost prohibitive. Given the home’s age and functionally obsolete floor plan, staff view the
home as a candidate for demolition to facilitate the development of two new single-family homes.
To accommodate two new homes, the existing lot will have to be subdivided. The subdivision of the property
will include several factors given the unique shape of the corner lot. The city engineer has prepared
preliminary drawings that show the preferred layout for the site. The ideal layout creates two lots that are
nearly compliant with the underlying zoning standards for width and area within the R-1 District. However,
the south parcel falls short of compliance for the required lot area by 464 square feet. Therefore, to complete a
full subdivision of the property, a variance for reduced lot area will be necessary. The buildable area has been
analyzed for both parcels and staff have determined that the lots will provide sufficient space for a variety of
floor plans that meet the required setbacks. The potential subdivision of the subject property will be fully
reviewed by the Planning Commission and their recommendation will be forwarded to the City Council for
final action. The purchase of 5355 Oregon Avenue by the EDA is not contingent on a variance being
approved.
Offer
The house was initially offered at a price of $159,900. Staff toured the property on the first day it was listed
and by the next day the seller had received multiple offers and requested “best and final” offers from all
interested parties. Given the highly competitive nature of the market for distressed properties, staff prepared
an offer of $170,000 that was accepted by the seller on the following day.
Agenda Section
EDA
Item Number
4
Request for Action, Page 2
Budget
Staff have prepared the following preliminary budget for the project:
Expenditures:
• Acquisition $170,000
• Engineering and Survey $5,000
• Demolition and Site Prep $35,000
• Legal $5,000
Total = $215,000
Revenue:
• Lot Sale Proceeds $110,000
Total = $110,000
Value Gap/Loss = $105,000
Funding
Because the house is in relatively good condition, it will not qualify as a blighted property. Therefore, CDBG
grant funds cannot be used for the project and the value gap will have to be covered by EDA reserve funds.
Recommendation
Despite a projected value gap of $105,000 on this project, the long term benefits of securing a double-lot
opportunity are substantial. Staff anticipate that the site will support two new single-family homes valued in
the $350,000 range per home, thereby increasing the value of the property by $550,000. This type of increase
would achieve the broader goal of growing the city’s overall market value on a lot-by-lot basis and bring new
construction to a neighborhood that is located in a distressed census tract. Therefore, staff recommends the
EDA approve the attached resolution prepared by the city attorney and the terms of the attached purchase
agreement.
Attachments
• Resolution
• Location Map
• Sample Lot Layout
• Project Budget
• MLS Listing
• Purchase Agreement
CITY OF NEW HOPE
ECONOMIC DEVELOPMENT AUTHORITY
EDA RESOLUTION NO. 18-___
RESOLUTION APPROVING PURCHASE AGREEMENT
FOR THE ACQUISITION OF 5355 OREGON AVENUE NORTH
(project no. 1018)
BE IT RESOLVED by the Economic Development Authority in and for the City of New
Hope 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, functionally obsolete single family homes for potential purchase by the
Economic Development Authority in and for the City of New Hope, as part of the City’s
scattered site housing program; and
WHEREAS, the City Council has directed City staff to negotiate for the terms most
favorable to the City, and the execution of purchase agreements so as to secure purchase rights
for these real properties, contingent on the review and approval of the Economic Development
Authority in and for the City of New Hope to the terms of the purchase agreements; and
WHEREAS, New Hope City staff have identified the opportunity to purchase certain
real property located at 5355 Oregon Avenue North, New Hope, MN and legally described as:
Lot 1, Block 2, Sunset Heights Addition, Hennepin County, Minnesota (the “Property”) from
TCF National Bank (“Seller”); and
WHEREAS, the Property is currently unoccupied; and
WHEREAS, the house located on the Property was built in 1952 and has a functionally
obsolete floor plan; and
WHEREAS, City staff believes that the best use of the Property is demolition in order to
maximize the tax base through splitting the Property into two separate lots and making them
available for the development of two new residential housing units; and
WHEREAS, the Property will be acquired using Economic Development Authority in a
for the City of New Hope funds; and
WHEREAS, it is in the best interest of the Economic Development Authority in and for
the City of New Hope to purchase the Property from the Seller for the sum of $170,000.00, in
order to redevelop the Property in accordance with the City’s scattered site housing program and
policy; and
WHEREAS, the City staff is hereby seeking approval from the Economic Development
Authority in and for the City of New Hope 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. That the purchase of the Property by the Economic Development Authority in and
for the City of New Hope from the Seller for the sum of $170,000.00, 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, it being in the best interest of the City to purchase the Property for
redevelopment in accordance with the City’s scattered site housing program and
policy.
3. That the payment of $3,400 earnest money to Realty House as set forth in the
Purchase Agreement is approved.
4. The City shall use due diligence for correcting the Property’s blighted condition
and conducting any necessary environmental cleanup of the Property to pursue
this redevelopment 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 April, 2018.
____________________________________
Kathi Hemken, President
Attest: _____________________________
Kirk McDonald, Executive Director
P:\Attorney\SAS\1 Client Files\2 City of New Hope\99-11423 5355 Oregon Ave N\Resolution Approving Purchase of 5355 Oregon Ave N.docx
City of New Hope Single-Family Acquisition and Demolition-- Scattered Site Housing Program
Total Project Cost and Total Funding Sources 5355 Oregon Avenue
New Hope MN, 55428
USES
Amount
Acquisition 170,000
Demolition 15,000
Real Estate Taxes 1,200
Legal/Closing - Purchase 2,000
Install Sewer and Water 2nd Lot 5,500
Power Line Re-location 10,000
Demo Survey 650
Legal/Closing - Sale 2,000
Curb-cut removal 2,500
Engineering/Survey 5,000
Total 213,850
SOURCES
Amount
EDA (lot sale proceeds) 110,000
Total 110,000