Loading...
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