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HRA 05/07/1998 - 6299HOUSING & REDEVELOPMENT AUTHORITY MEETING THURSDAY, MAY 7, 1998 7:30 P.M. PUBLIC COPY (Please return to Community Development Department) CITY OF FRIDLEY HOUSING & REDEVELOPMENT AUTHORITY MEETING THURSDAY, MAY 7,1998,7:30 P.M. AGENDA LOCATION: Council Chambers (upper level), Fridley Municipal Center April 2, 1998 • Claims and Expenses .. ............................... 1-113 • Public Hearing to Sell 10 Acres of Fridley Executive Center to MEPC American Properties............ 2 - 2A • Acquisition of 1015 Mississippi Street .................... 3-3C • Acquisition of Shorty's at 5755 University Avenue........... 4-4K • 57 h Avenue Project Update ............................. 5 • Lake Pointe Intersection Update ........................ 6 - 6A • Update on MHFA Mortgage Program ..................... 7 • Update on Home Remodeling Fair ....................... 8 CITY OF FRIDLEY HOUSING & REDEVELOPMENT AUTHORITY MEETING APRIL 2, 1998 5 • ••-�_; Chairperson Commers called the April 2, 1998, Housing and Redevelopment Authority meeting to order at 7:30 p.m. ROLL CALL: Members Present: Larry Commers, Virginia Schnabel, John Meyer Members Absent: Jim McFarland, Duane Prairie Others Present: William Bums, Executive Director Barbara Dacy, Community Development Director Grant Femelius, Housing Coordinator Jim Casserly, Financial Consultant Craig Ellestad, Accountant Carol and George Hatcher, 1015 Mississippi Street . -- -• • • . - • •-N_ AUTHORITY MOTION: by Ms. Schnabel, seconded by Mr. Meyer to approve the March 5, 1998, Housing and Redevelopment Authority minutes as presented. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. 1. CLAIMS AND EXPENSES: Mr. Ellestad distributed copies of his memo dated April 2, 1998, listing additional expenses for approval. Ms. Schnabel inquired as to Check #26626 identified as the acquisition of 611 Lafayette Street on the Billing for Administrative and Operating Expenses for March 1998. Ms. Dacy noted that this was coded incorrectly and is for the acquisition of 611 Buffalo Street. HOUSING & REDEVELOPMENT AUTHORITY MTG., APRIL 2, 1998 - PAGE 2 Mr. Commers asked what the City's commitment is on the Remodeling Handbook and what has been spent to date. Mr. Ellestad explained that the City has received reimbursement from all participating cities and this payment represents the City's first payment in the amount of $10,000. Mr. Meyer noted that the list of additional expenses requiring approval from Mr. Ellestad includes a payment to Holstad & Larson, PLC for the acquisition of 5297 Lincoln Street in the amount of $37,500. He felt this should be removed until the HRA has taken formal action on the request for acquisition. In addition, the amount is listed at $37,500, when the actual purchase price is $35.000. Mr. Ellestad explained that the checks listed on the memo of additional expenses are not processed until the day following the HRA meeting. This item was included in the list only to allow for the closing prior to the next scheduled HRA meeting, based on HRA approval. The $37,500 will also cover additional expenses (taxes, etc.) for which the HRA is responsible. Typically, the HRA does receive some refund at the closing. Mr. Meyer stated he did not believe the HRA should be paying real estate taxes on properties they purchase and asked that this matter be investigated. Ms. Dacy noted that this would be taken care of prior to the next HRA meeting. Ms. Schnabel noted that the check for the acquisition of 5297 Lincoln Street could be removed at this time and approved if necessary after the HRA has formally approved the purchase of the property. MOTION by Mr. Meyer, seconded by Ms. Schnabel to approve the Billings for Administrative and Operating Expenses, together with the additional expenses, as outlined in Mr. Ellestad's memo dated April 2, 1998 with the AMENDMENT that the acquisition of 5297 Lincoln Street in the amount of $37,500 be stricken. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. ACTION ITEMS: 2. CONSIDER ACQUISITION OF 611 LAFAYETTE STREET: Ms. Dacy stated she had spoken with the owner's attorney and has negotiated an agreement to recommend to the HRA. The property was originally identified on the City's Scattered Site Acquisition list last year and is an eligible site for the Housing Replacement Program. At that time, the owner did not want to initiate HOUSING & REDEVELOPMENT AUTHORITY MTG., APRIL 2, 1998 - PAGE 3 negotiations for the sale of his property; however, since that time the property has sustained considerable fire damage. The lot is 5,500 square feet and considered buildable according to the City's ordinance. Negotiations have continued since the last HRA meeting and they have reached an agreeable purchase price of $5,500, with the HRA assuming the demolition costs to remove the existing building. The owner has agreed to satisfy the first mortgage which exists against the property and the MHFA lien in second position. The owner's attorney has verbally confirmed the agreement and a letter has been sent documenting this. It is, therefore, staffs recommendation that the HRA approve the purchase of the property in the amount of $5,500 and authorize staff to prepare and execute the necessary documents. Mr. Commers stated it is his understanding that there is an available lot with which this property can be combined. Ms. Dacy explained that the lot is not available at this time; however, she has been in contact with the owner of the property immediately to the west of this site which is unbuildable because of the lot area. The owner is investigating two options; either selling the lot at this time or possibly doing a minor amount of remodeling. She also may be interested in acquiring the HRA site to tie into her existing site; however, she has indicated that she is not prepared to make a decision at this time. The HRA site along with the site to the west could be combined and turned into a buildable lot. Mr. Commers asked what would happen if she is not interested in combining the lots. Ms. Dacy noted that she did ask the property owner if she would be interested in selling her property to the HRA in the future and she responded affirmatively. There are no guarantees however. Mr. Commers stated that the owners of the property at 611 Lafayette are not happy with the City's position and asked Ms. Dacy for a brief summary of the situation. Ms. Dacy noted that the fire which occurred in December destroyed, according to the City's determination, more than 50% of the structure's value. The owner did not agree with the City and indicated that it was their desire to stay in the home and rehab it to its original condition. However, the City Code is specific and states that if more than 50% of the value is damaged, the non - conformity must revert to a conforming use. MOTION by Ms. Schnabel, seconded by Mr. Meyer, to approve the acquisition of the property at 611 Lafayette Street in the amount of $5,500. UPON A VOICE VOTE, ALL MEMBERS VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. HOUSING & REDEVELOPMENT AUTHORITY MTG., APRIL 2, 1998 - PAGE 4 3. CONSIDER ACQUISITION OF 5297 LINCOLN STREET AND 1015 MISSISSIPPI STREET. 5297 Lincoln Street: Mr. Femelius explained that this property is a single family home built in 1950. The interior of the house has been completely gutted and it is in a severely dilapidated condition (uninhabitable). The deficiencies include: no utility services - plumbing, heating and electrical, the roof and stucco are deteriorating and there is poor drainage around the foundation. The owner purchased the property in 1996 for $30,000 with intent to occupy the property as his permanent residence. However, the cost involved in rehabbing the property was cost prohibitive so he contacted the HRA. The condition of the house meets the requirements of the Housing Replacement Program. The property value for taxes payable in 1998 is $45,107, much of which is land value. The fee appraiser appraised the property at $31,100, and the City negotiated a purchase price of $35,00, contingent upon the owner signing a relocation waiver and removing all of the personal property on the site. The staff recommends approving the purchase in the amount of $35,000. Ms. Schnabel noted that the property which the HRA approved for purchase prior to this was valued at a far less amount than this particular property and she wondered what substantiated the difference. Mr. Femelius explained that this is a buildable lot. The property at 611 Lafayette is not a buildable lot and therefore has less value. Mr. Commers noted that the location is also a key factor - the property is likely worth more. Ms. Schnabel asked about the real estate tax issue for this property. Mr. Femelius again stated that staff will be exploring the tax issue and that the HRA will not pay if they are not responsible. He again noted that the difference between the approved expense and the acquisition price is for the additional expenses which may be the HRA's responsibility at the time of closing. Any excess will be refunded to the HRA at that time. Mr. Commers stated there is a difference between delinquent taxes and taxes that are levied. It would be his understanding that any delinquent taxes are the responsibility of the owner and that the HRA's liability would only be for taxes from the time that they purchase the property. MOTION by Ms. Schnabel, seconded by Mr. Meyer to approve the acquisition of the property at 5297 Lincoln Street N.E. HOUSING & REDEVELOPMENT AUTHORITY MTG., APRIL 2, 1998 - PAGE 5 MOTION by Ms. Schnabel, seconded by Mr. Meyer TO AMEND the previous motion to include approval of the additional expense for acquisition of this property, as outlined in the April 2, 1998 memo from Craig Ellestad. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY AS AMENDED. 1015 Mississippi Street_N.E.: Mr. Femelius explained that this house was built in 1949, is a one story home with a crawl space. The home has two bedrooms, one bathroom, a kitchen /dining room area and living room with a total living area of 906 square feet. The house was built without proper footings and over time, the house has shown some signs of settlement (garage floor is breaking up significantly). The owners had planned to remodel the home and construct a new foundation, including an expansion, however it ended up to be a very cost - prohibitive project. The owners applied for a loan with the HRA, but it was determined that the scope of the work did not meet the perimeters of the program. The owners, George and Carol Hatcher, purchased the property in 1993 for $57,000. They currently have a first mortgage against the property for $72,000. This property does meet the criteria for the Housing Replacement Program. The assessed value is $70,365. It was appraised for $64,000 and the HRA negotiated a sale price of $68,000. The staffs recommendation is to approve the purchase of the property in the amount of $68,000. Mr..Commers asked how this property meets the criteria of the Housing Replacement Program. Mr. Femelius explained that it is based on the square footage, the dilapidated state and the lack of proper footings. The lot is 107'X 250' and would be suitable for a new home. Mr. Meyer asked about the lack of footings. Mr. Femelius explained that when the house was constructed there were no concrete footings put in place. The block foundation is essentially resting on bare ground and in some areas is starting to settle. The kitchen floor is sloping from settlement and the garage floor is also breaking up. Mr. Commers asked what would happen if the HRA does not purchase the property. Mr. Femelius stated the owner would probably try to sell the property themselves. HOUSING & REDEVELOPMENT AUTHORITY MTG., APRIL 2, 1998 - PAGE 6 Mr. Meyer stated there are foundation problems in many homes that can be corrected. The HRA does not know the cost involved in putting in proper footings or if some rehab could be done to restore the property. He agreed that it does appear to be some deficiencies; however, the purpose of the Housing Replacement Program is not to take on someone else's deficiencies. The house is nicely maintained and it is not any apparent detriment to the neighborhood' Ms. Dacy stated she had reviewed the case with Mr. Femelius; and based upon the fact that the owners did attempt to rehabilitate it and analyzed providing a full foundation, staff feels it does meet the criteria for the program. Mr. and Mrs. Hatcher were present to discuss the situation with the HRA. Mrs. Hatcher explained that they have had a couple of contractors out to look at the property. It has been determined that no footings exist . The settlement that has occurred is approximately 3 -1/2 to 4 inches. The only thing that is keeping it from further settling is that there is timber sitting on cinder block holding up the house. Mr. Hatcher explained that they have tried for the past three Summers to do some remodeling to the house. He dug a hole and found the bottom of his foundation approximately 12 -18 inches down. When he went into the crawl space he found 2 X 4 's nailed end to end to rough -cut beams which are resting on cinder blocks. A hydraulic floor jack holds the bathtub up. Two house movers came out and would agree to lift up the house, but would require them to sign a waiver stating the contractor would not be responsible if the house fell in on itself. The cost just to pick up the house and set it back down was $5,000. That did not include any excavation work underneath the house. Mr. Commers asked if the installation of footings and a foundation was an eligible improvement under the loan program. Mr. Femelius noted that the scope of the project that the owners were discussing was essentially building a new home which was not eligible. That is why they were denied financing. Mr. Meyer stated if the house were lifted up to allow for new footings and replacement of floor joists, etc., the cost would be far less than the owner's original scope of work which included a new basement. He felt the owners should perhaps explore other alternatives which would provide proper support for the building. Mr. Hatcher noted that the cost could reach $20,000 to $25,000 for a 900 square foot home which may or may not be possible because of the way the house is constructed. He noted that the last contractor who came out indicated that it HOUSING & REDEVELOPMENT AUTHORITY MTG., APRIL 2, 1998 - PAGE 7 would be difficult to lift the house to allow for the installation of a new support system. Mr. Meyer stated he feels there are other practical ways to get around the difficulties, and he feels a new foundation and floor system would be advantageous to all. Ms. Schnabel asked if a building Inspector has been out to evaluate the property. Mr. Femelius stated that he was the only one from staff who had been out to the property. Ms. Dacy noted that staff would be happy to table this item to allow time for a building Inspector to go out and inspect the property. A report could be prepared for the HRXs review at the next meeting. Mr. Commers stated he understands the difficulty of the situation; however, he does not feel that should be the criteria for acquiring the property. Mr. Femelius noted that the HRA is not asking to purchase the property to bail the owners out of a hardship. The issue is the condition of the property. However, if the HRA would so desire, a more detailed report of the condition of the property could be obtained. Ms. Dacy explained that the requirements in the State Law are based on condition and structural issues. This property is probably one of the older homes in the community. The value of the property is probably higher due to the lot size and location. Mr. Bums stated staff has resisted the hardship of the case. This is a very buildable lot with a house that has a terminal condition. Ms. Schnabel stated she would like to obtain a report from the building inspector as well as obtain additional information from the owners (information from appraisers /consultants in regard to the condition). She has some concern that there may be other properties in the community that meet the criteria for the Housing Replacement Program better than this. Mr. Meyer stated he is not convinced that all other options have been exercised that would have a lower cost to the property owner. MOTION by Ms. Schnabel, seconded by Mr. Meyer to table this request until such time as they can get additional information from staff and the property owner. HOUSING & REDEVELOPMENT AUTHORITY MTG., APRIL 2, 1998 - PAGE 8 UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. INFORMATION ITEMS: 4. UPDATE ON LAKE POINTE TECHNOLOGY CENTER: Ms. Dacy explained that the three issues identified in her memo of March 27th have been resolved: 1. MEPC has agreed to pay for 1/2 of the lighting for the streets affecting its 10 acre site up to a maximum of $25,000 which will be assessed over a 10 year time frame. 2 A July 15, 1998 deadline has been established for them to obtain approval from their Board of Directors regarding the initiation of the project. 3. The agreement will terminate if the intersection improvements are not initiated by November 1, 1998. MEPC will retain the option to close on the property prior to November 1. Mr. Commers asked if there was any issue over what would constitute intersection improvements. Mr. Casserly stated this would include anything that would be done under the terms of the contract. Mr. Commers asked if there is any information as to where the State is at this point. Ms. Dacy explained that one office of MNDOT has completed their plan review. The signatures on the title pages are being obtained and they are now preparing the special provisions language that goes into the Cooperative Agreement. Mr. Commers asked about the eight acres of turn back that is not part of the site. Ms. Dacy stated the tumback is actually about 1/2 acre in size -- between the 8 acres and Highway 65. Mr. Casserly stated they are still working out some minor issues and will prepare an executed copy of the agreement and have it circulated. HOUSING & REDEVELOPMENT AUTHORITY MTG., APRIL 2, 1998 - PAGE 9 5. COMMISSION AND COUNCIL SURVEY RESULTS: Ms. Dacy noted that a copy of the survey was included in the Agenda so that all Advisory Commissions that participated in the survey saw the results. This is a planning tool and will be used to identify the goals and objectives and gives them a list of things to accomplish. Mr. Bums noted that staff sent out 47 surveys to commission members and 26 or 27 were completed and returned. One thing that pertained to the HRA was on the citizen survey where citizens indicated that more emphasis needed to be placed on community development commercial /industrial property. Mr. Commers stated there are some identifiable issues related to the HRA that should be discussed at the next meeting and determine if a response is in order. Ms. Dacy stated the two areas she noted were the image enhancements and the balance of commercial and industrial redevelopment versus the amount of housing redevelopment activities. Mr. Bums indicated that they recently received the Business Surveys which pretty much parallels the Citizen Survey in regard to the redevelopment issue, with an indication that more emphasis should be spent on commercial and industrial development. Mr. Commers stated the HRA needs to identify why the emphasis has been shifted to residential redevelopment. He noted that the State Representative also has a survey out regarding University Avenue and whether or not money should be appropriated for cleaning up the medians, etc. The City may wish to request a copy of the results of that survey. Mr. Commers asked Ms. Dacy to explain the term "Absorbed" on Page 6E, Objective 3a. Ms. Dacy explained that this term is used if the activity does not require an extra expenditure of City funds. One idea listed under the Planning Objectives (pg. 6G, Objective #5), would be to share an intern between the Housing division and the Planning division which would be a part-time position of 20 hours per week for the first three months of 1999. The next 18 months are expected to be very busy for the City including preparation of the Comprehensive Plan, evaluating redevelopment of salvage yards /Frank's Used Cars. Additionally, the Apartment Rehab issue will need to be looked at along with Housing Rehab. A discussion followed in regard to various options and resources for Intern positions. HOUSING & REDEVELOPMENT AUTHORITY MTG., APRIL 2, 1998 - PAGE 10 7. HOME REMODELING FAIR UPDATE: Mr. Femelius reminded the HRA that the Remodeling Fair will be held on Saturday, April 18, at the Fridley High School from 10:00 a.m. to 3:00 p.m. Approximately 70 vendors have signed up and various workshops will be held to provide information to homeowners. Mr. Commers noted the Loan Delinquency Policy and Procedures had been included in the agenda packet as per request by the HRA. Mr. Femelius provided a brief summary of the Policy when someone becomes delinquent on their payment. He noted that this matter was talked about at the staff level last Fall and it was suggested that some type of policy be adopted for the HRA in the event of default. This has been discussed with Commissioner McFarland and some research has been done. This information will be provided at one of the next HRA meetings with some type of policy for consideration. 8. REQUEST FOR I.I.E. ASSISTANCE FOR METAL TEK: Mr. Commers noted the memo from Ms. Dacy of March 31, 1998 in regard to this issue. Ms. Dacy stated she believes this proposal as outlined is worthwhile. The site has very poor soil conditions and the estimated amount of soil correction assistance is approximately $80,000 to $100,000. It appears that the guidelines for assistance can be met. Staff would like to continue negotiating with the contractor and prepare a development contract for review at the HRA's May meeting. Mr. Commers stated that in terms of residents wishing to see some industrial /commercial development, and it was the Commissioner's consensus that staff should continue the negotiation process. 9. OTHER BUSINESS: Mr. Commers noted that staff had provided them with a copy of the Fridley Rambler Edition of the Remodeling Handbook. Mr. Femelius noted that this handbook is in the process of being printed and will be unveiled at the remodeling fair. It is a free guide for Fridley residents and provides homeowners with very helpful information on remodeling a rambler. The Commissioners congratulated Mr. Femelius on his fine work on this handbook. ADJOURNMENT: MOTION by Ms. Schnabel, seconded by Mr. Meyer to adjourn the meeting. HOUSING & REDEVELOPMENT AUTHORITY MTG., APRIL 2, 1998 - PAGE 11 UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED AND THE APRIL 2, 1998, MEETING OF THE HOUSING AND REDEVELOPMENT AUTHORITY ADJOURNED AT 9:05 P.M. Respectfully submitted, Tamara D. Saefke Recording Secretary TO: FRIDLEY H.R.A FROM: CITY OF FRIDLEY RE: BILLING FOR ADMINISTRATIVE AND OPERATING EXPENSES APRIL 1998 Account Vs for HRA's Use ADMINISTRATIVE BILLING: ADMINISTRATIVE PERSONAL SERVICES ADMINISTRATIVE OVERHEAD COMPUTER OVERHEAD (For Micro & Mini computers) TOTAL ADMINISTRATIVE BILLING: 460- 0000 - 430 -4107 OPERATING EXPENSES: USPS - POSTAGE 262 - 0000 -430 -4332 USPS - POSTAGE 460 - 0000 - 430-4332 US WEST - TELEPHONE 460- 0000 - 430 -4332 TOTAL OPERATING EXPENSES: BENEFITS EXPENSES: CITY OF FRIDLEY - HEALTH INS 262 - 0000 -219 -1001 CITY OF FRIDLEY - DENTAL INS 262- 0000 - 219 -1100 CITY OF FRIDLEY - LIFE INS 262- 0000 - 219 -1200 TOTAL BENEFITS EXPENSES: TOTAL EXPENDITURES - File: \EXDATA\HRA\TIF198BILL.)ds Details APRIL 1998 21,006.58 292.58 212.42 Account #'s for CR City's Use Code 101 -0000 -341 -1200 H1 101- 0000 - 336 -3000 HA 101- 0000 - 336 -3000 HA 29.82 236 -0000- 336 -3000 HA 38.90 236 -0000- 336 -3000 HA 23.30 236 -0000- 336 -3000 HA 92.02 185.59 236 - 0000 - 219 -1001 11 22.53 236 -0000- 219 -1100 12 3.50 236- 0000 - 219 -1200 13 1 1 -A go n O z 0 O O O O z 0 z 0 O O n O O O O W O I O N 1 1 1-0 C ; D R N 00 R r1i 0 N 0 ��O 0 o N 0 m Z 7pCp 0 •O —4 •NN A `NN • ® co C O m C • O O O 4 '01 7OCpC ��0 .•o O t t O t O . 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U H I .d .i .f .t ..f .i .1 .a ..r .i ..4 ..4 .i ..j .i .i ..4 ..1 .i ..4 .i .i .1 -1,4 ..I .4 .1 .i .1 .1 .1 .1 ..1 x Q W I W Q ( .+ Ha\ \ \ \ \ \ \ \ N. \ \ N. \ \ \ N. \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ ¢XJ 2A 1 . q a. r.a. i. f .#.l.I.i.a.r.iIs.I.a.0.1.4.4.4.4.4.1.4.4.1.1..1 -1.+ il0olu 1 000000000000000000000000000000000000 W 0 H I I \\\\\ \\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\ CeLex I ! MIA IA b7Nh7h7Nb7IAb7u7h7ICI b7b7MICJhh7b7fAIAb7ffJb7b7V7b7b7b7OtAMb7tA :1 IL LL ! I 1 -B DATE: April 30, 1998 MEMORANDUM HOUSING REDEVELOPMENT AUTHORITY TO: William Bums, Executive Director of HRA FROM: Barbara Dacy, Community Development Director SUBJECT: Public Hearing for Sale of 10 Acres of the Fridley Executive Center Site Background Minnesota Statute, Section 469.029, requires the HRA to conduct a public hearing prior to the sale of property. Because the HRA will be conveying 10 acres of the Fridley Executive Center site to MEPC American Properties, staff has scheduled the required public hearing for Thursday, May 7, 1998. All of the planning application approvals have been obtained by the developer, and the HRA has approved the resolution authorizing the execution of the development contract with several amendments over the last 2 -3 months. Proposed Construction The developer is proposing to construct a 106,000 square foot one -story tech flex building on the westerly 10 acres of the property. The final plat for the property is now being prepared. The title company has completed its analysis and provided staff with a title commitment, and the execution copies of the development contract are now being prepared. MnDOT is preparing to open bids on May 28, 1998, and construction on the intersection project will begin in July. MEPC intends to begin construction during the same timeframe, and groundbreaking is tentatively scheduled for August 1998. The proposed purchase price for the property is approximately $2.50 /square foot which equates to a total purchase price of $1,089,000. Sale of 10 Acres of Fridley Executive Center Site April 30, 1998 Page 2 i:rrI ma Staff recommends that the HRA conduct a public hearing regarding the sale of 10 acres of land to MEPC American Properties in compliance with State Statute. BD:Is M -98 -98 2 -A DATE: April 29, 1998 MEMORANDUM HOUSING REDEVELOPMENT AUTHORITY TO: William W. Bums, Executive Director of HRA FROM: Barbara Dacy, Community Development Director Grant Femelius, Housing Coordinator SUBJECT: Consider Acquisition of 1015 Mississippi Street This item was previously discussed at the April HRA meeting. As you recall, the HRA directed staff to conduct a more detailed analysis of the property and determine whether it might be feasible to repair the structure rather than tear it down. On April 7, 1998, an inspection was conducted by Ron Julkowski, Chief Building Official, Dave Mayer, Remodeling Advisor, and Grant Femelius. A copy of the inspection report is attached. V4iRrTaif� . •�• The inspection confirmed that there are a number of severe structural problems with the home. The house has no basement, but does have a crawl space approximately 16" high. The foundation consists of a two course, concrete block wall on bare ground. There are no frost footings to support the block wall and as a result the house has experienced substantial settlement. Compounding the problem is the fact that the floor system is inadequate, including the joists, beams and posts. For example, 2" x 4" and 2" x 6" lumber have been used for the floor joists when 2" x 8" boards are required to meet minimum code. Many of the floor joists have been "toe" nailed rather than using traditional steel joist hangers to provide the necessary support. The inspection report also identified other problems including no crawl space ventilation, roof failure over the back porch, the furnace is located in the garage, and a multiple roof system which lacks proper ventilation. 3 MAY 98 HRA ITEMS.doc (GF) 04/30/98 Consider Acquisition of 1015 Mississippi St. April 30, 1998 Page 2 Feasibility of Repairing Structure The process of repairing the home would be somewhat complicated and risky. To install the proper foundation with footings would require lifting the home off the ground. Several problems would likely be encountered. First, due to the height of the crawl space, it would be nearly impossible to slide in the proper temporary beams to support the house. Second, because of the undersized floor joists and nailing method there is a high degree of risk that the structure might collapse onto itself during process. Third, the code would require that the either the new foundation be built 18" higher than grade or that the existing floor system be reconstructed with treated lumber. Once these repairs begin, all of the plumbing, electrical and mechanical systems would have to be upgraded to current code. It is also likely that during the process additional repairs would have to be made such installing new sheetrock, replacing windows and doors, etc. According to the Chief Building Official it would be cost- prohibitive to repair the existing structure due to the nature of its construction. His preliminary estimate is that it would cost $50,000 to $60,000 to repair the structure. Staff spoke with one contractor who said that he would charge 1 % of the estimated construction cost just to look at the house and prepare a bid. He also said that he would probably have trouble finding an excavator to take on the project. We should also point out even if the repairs were made, the value of the home wouldn't change significantly. The owners probably would not recover their repair cost. RECOMMENDATION Staff recommends that the HRA authorize the purchase of 1015 Mississippi St.. for $68,000 and to authorize staff to prepare the necessary documents to close on the purchase of the property. GF M -98 -91 3 -A MAY 98 HRA ITEMS.doc (GF) 04/30/98 MEMO TO: Grant Fernelius, Housing Coordinator iVIEMO FROM: Ron Julkowski, Building Official MEMO DATE: -April 8, 1998 REGARDING: Substandard Conditions Located at 1015 Mississippi St NE The following items were observed during an inspection on April 7, 1998 at the above address; 1) House and garage foundation consisted of 2 courses of block set on grade. MINIMUM CODE: Proper size concrete footing minimum 42 inches below grade and proper size block. 2) Floor joists size 2" x 4" Pine,. 16 inches on center; 12 foot span on the south half of house; 2" x 6" Pine, 16 inches on center; 8 foot and 10 foot spans on the north half of house. MINIMUM CODE: Minimum joist size with a 12 foot span would be SPF (Spruce Pine Fir) 2" x 8 ", 16 inches on center. 3) Post and beam floor joist support system: Posts set on top of a concrete block; Beams varied in size: Two sizes noted; 3" x 6" and 4" x 6 ". Beam length and post spacing could not be measured. MINIMUM CODE: Post shall bear on adequate size concrete footing size and depth. Beams shall be sized for a minimum of 50 lbs per square foot. 4) Crawl space depth from the bottom of the floor joist to grade is approximately 16 inches. MINIMUM CODE: Beams shall be treated wood if closer than 12 inches to exposed ground. Floor joist shall be treated wood if closer than 18 inches from grade. 5) Crawl space lacks ventilation and access. MINIMUM CODE: Minimum 1 square foot of ventilation for each 150 square feet of floor area. Minimum access opening shall be 18" x 24" . 6) Garage rafters are 2" x 4 ", 24 inches on center with a clear span of 10 feet. MINIMUM CODE: 2" x 6" SPF, 16 inches on center. I Memo to Grant Fernelius Re: 1015 Mississippi St NE April 8, 1998 Page 2 7) Rear porch roof is under 3:12 pitch and shows signs of failure. Center of roof has severe deflection. Interior roof has water damage. Size of rafters unknown. MINIMUM CODE: Proper size rafters for span. Proper attic and soffit ventilation. Minimum R44 ceiling insulation. 8) Existing house has two roofs framed over original. CODE ISSUES: Ventilation, insulation, and added load to bearing walls and foundation. 9) Block foundation does not have proper anchorage to structure. MINIMUM CODE: Sill plates shall be bolted to the foundation with not less than 1/2" diameter steel bolts embedded at least 7 inches into concrete; maximum spacing of 6 feet. 10) House furnace is installed in garage. CODE ISSUES: When a furnace is installed in a garage, it must be completely in a separate compartment having access only from the outside of the garage. Combustion air shall be taken from the outside only. All equipment which has a flame or spark shall be elevated at least 18 inches above the floor. These violations and code issues were noted on only part of the structure that could be seen. Limited access to the crawl space and attic prevented a closer look at the structure, insulation, and mechanical elements. What was observed, in my opinion, are repairs that would have to be completed to meet the minimum building, electrical, and mechanical code requirements and would far exceed the cost of demolition of the structure and rebuilding of a new structure on the lot. Kurff,1 3 -C DATE: April 29, 1998 MEMORANDUM HOUSING REDEVELOPMENT AUTHORITY TO: William Bums, Executive Director of HRA FROM: Barbara Dacy, Community Development Director SUBJECT: Acquisition of JR Automotive /Shorty's Towing Background The City has contemplated some type of redevelopment at the northeast comer of 57h Avenue and University Avenue since the 1980s. A memo found in the address file from 1987 suggests a potential HRA acquisition. In 1988 and 1989, the HRA was meeting periodically with Winfield Development and Crosstown Bank for an 18,000 square foot redevelopment project which at that time included the Rapid Oil site. The project did not proceed but the HRA did evaluate acquiring the Rapid Oil site since Rapid Oil was applying for a special use permit to construct an upgraded facility. In 1991, the HRA decided not to pursue acquisition of the Rapid Oil site since there were other redevelopment priorities pending at that time (southwest quadrant and Lake Pointe). In 1995, the HRA acquired the Frank's Used Car site in Hyde Park. Redevelopment scenarios for this site and the northeast quadrant of 57' Avenue and University Avenue were developed and reviewed with the HRA, City Council, and Planning Commission. After a neighborhood meeting with Hyde Park residents in 1996, it was decided to wait until the southwest quadrant development, Christenson Crossing, was more fully developed and to work on some of the traffic concerns raised by the residents at the meeting. The 571 Avenue reconstruction project is out for bid and will start this summer. The Christenson Crossing project is nearing completion with 102 out of 118 units under construction. At the March 1998 meeting, the HRA expressed concerns regarding acquiring the JR Automotive /Shorty's Towing site, but authorized staff to proceed with the appraisal process. The appraisal was delivered to staff on April 16, 1998. When staff contacted 0 Acquisition of JR Automotive /Shorty's Towing April 29, 1998 Page 2 the owner to schedule negotiations, the owner stated that another party (vending machine business) sent him a purchase agreement of $107,750. Since that time, a chiropractor has also expressed strong interest in the site and is also contemplating submitting another offer to the owner. Building and Site Issues The site is 16,860 square feet in size and the building is 2,046 square feet. The assessor's valuation is $75,500, $50,600 for the land and $24,900 for the building. The lot is considered nonconforming because of its size, but a use may reoccupy the building until the building is damaged beyond 50% of its value. The appraisal suggested a value of $89,000. Because a previous offer has been made at an "arm's length" transaction, staff has offered $108,000 to purchase the property with the contingency that the closing will not occur until the environmental clean -up has been properly addressed. There is an underground storage tank which is to be removed on Friday, May 1, 1998. If there is any further contamination present, staff will present that information to the HRA at Thursday's meeting. While the purchase price is higher than anticipated, the cost is comparable to the City's acquisition cost of the old Custom Mechanical site which was conveyed to the HRA for two new single family homes (sites were at Third Street and 60' Avenue in Hyde Park). The City paid $105,000 for the site, and the lot was about 13,000 square feet in size. Potential Redevelopment The proposed acquisition is one of four parcels which would comprise a 1.8 acre site (see attached matrix). Two of the parcels are vacant and the third parcel is a duplex. Potential uses include owner - occupied townhomes, apartments, single family lots, or a neighborhood commercial center as originally proposed several years ago. Because the site is surrounded by commercial and multiple family uses, a medium to light density residential project may be appropriate. If the HRA acquires the JR site, the City Council would like to conduct a neighborhood meeting to inform the residents about the City's plans. The Council would, however, like to avoid "landbanking° for a significant length of time (10 -15 years) and suggested that a plan be developed to acquire the remaining parcels within a reasonable timeframe. Staff is now working on the issues surrounding the acquisition of the duplex and will present more information at Thursday's meeting. 4 -A Acquisition of JR Automotive /Shorty's Towing April 29, 1998 Page 3 Why Purchase the Site Now? There are several reasons to buy the site at this time: 1. The cost of acquisition will be lower now than in the future. No relocation costs are required at this time since the building is vacant. It is likely, given other pending offers, that the building will be occupied if the City pursues a project in the future. 2. The remaining project area includes two vacant parcels which do not have structures on them; therefore, the acquisition and demolition costs are lower. 3. Removing the blighted image of the building and parcel and constructing a new project (residential or commercial) will improve the image of the City, especially at a major gateway to the City. The 5r Avenue reconstruction project will greatly improve the appearance and image on the west side of University. Acquiring this parcel is the first step in putting together a redevelopment plan for the northeast comer of the intersection and the northwest comer of the intersection (Frank's Used Cars). Recommendation Despite the slightly larger than anticipated purchase price, staff recommends the HRA proceed with the acquisition. Redevelopment of this site will greatly improve the image of the community as well as provide an opportunity to develop uses which meet the community's needs. Staff recommends the HRA pass a motion authorizing the Executive Director and the Chairperson to execute the appropriate documents to acquire the JR Automotive /Shorty's Towing site for $108,000 subject to the seller completing the necessary clean -up of any environmental contamination on the property. The purchase agreement is not in the packet, but is being prepared by Jim Casserly. A copy will be mailed to the HRA or handed out at the meeting. BD/bd M -98 -95 a,.j.vdt; .+►.�. t 4 y t: �.; ` Jkl X,,..w;. =� .�i"':� , �, ; f t•X' s r ._ � �'+. -0Zti as r s? t i�� Y t F,� Y �• d' . r ~�„� s :�. ��: F rte. ► -. * sir f _l� £, "�V 1"-0 1 Y 1'• f �. -? F.� "�'� yl� j•,Ai�: r•" y� -?� -, . ;, S y�;x; lx. 5� t��y,(�!�L ' yc,,;} 4 s Ji "R1� r� r. 7 � �.:4v 1 ti4 x @• *`s;.t"4�i"x s r.: � e„r � e� rfffi I' , off �,.■r'ir �v� 4. J�� °Arr J✓ �. � ,,� ,'�,�r,. � - ��' IL t � t x 4 aJ ' A'S� w,; :ter J � -�;'" ��A .: ,� �'. •yy � "� �.`> iniPfinulft inunniiny F.ra� -�� 1,. • rC� c t S r ,F ? Y: ,t ' r. a,Y r �.. �, ,4�.. 1 1 it t M �"',�,'ixx .t-■. �,� Y -�j, ,,,{rte- r,(fi�. S: ?, x' ,,,� �' t . � .it 1,,'��` `�'K ''?.•' y � A gm d"�+ -r �'� ? ' t .x"a'1 z 1S' r '� s;✓tit ¢ t'�°.'Y * . s t i 7 } r E rtS ,rf. a. ;' a � "---' z . a ^}'�, �� -r c r. - .-4h... -- �`•....�,�aii„ a:�Tc..p „ r .-rte . i h r, -: z �yT ..r .�'�T�'�7i*�•,i' � �, 1f, �*r..f,�rs.9v�+^' a r� s ;�'.��y�r�.� -y - r ^FVaf.'§.- a.�YrH.. 1 „ +b,.4`�'i �- ': t �{.Y �+7.F.- [irW.Y�uLti.f -Kc "! J�,.re tfc>•i.Y?aT>�'� :A}'�.` ' • ` q 5. �` 1; ✓ .�� `v;. c^r. -ir- -- ti43 ..;. T 4 =. 'ar tiy�� L�� ' �yt LA *cz'XyT fsgc.z.i'' xzvrsr� y- s. -+}-7 v..1. ` s s l�'•- rrf'� A c tt _ rrti 4 t 47 "tZl 1 1� �i Jet.. _i`X'.0 k�"k i, �'(S•.e'.. v PW87 -248 Engineering Sewer Wale' Parks Streels Maintenance MEMORANDUM TO: Jock Robertson, HRA Executive Director FROM: John G. Flora, Public Works Director DATE: July 24, 1987 SUBJECT: Redevelopment Property Shorty's Towing property, at the corner of 57th Place and University Avenue East Service Drive is vacant. This maybe an opportune time for the HRA to acquire this parcel and save future relocation costs if this property is to be redeveloped. JGF /mh i M_ CITYOF FRIDLEY 2 1 1 ca 1 (V 2 ca V: co ; 2 2 cd 2 2 a-+ CD CD 4? � ccs 2 2 2 co CO cd co O 2 2 :3 > > :3 2 + cn cn cn cn 2 p� 2 O O o 0 2 ff 2 N co coo co 2 2 co T' C6 co 2 Z 2 T T T 2 z 2 N N N a) N 2 J 2 to (n Cq 05 2 2 J J 2 0 2 J J 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 N O O 2 N 2 LO co co 2 ccr) 2 N 2 co LO 2 2 613- 2 2 2 2 2 2 2 > > > > 2 2 N 2 LJ.I 2 CD N N 2 0Ni c CO aa)i N cd N 2 Q 2 cco cn N can 2 > 2 Q Q Q a Q � a 2 Q ca � i� o a 20 > > N 1 1 ca 1 (V V: co ; Q. 0 a 4 -E 13 4 -F 5755 University Avenue NE, Fridley, MN 55432 TYPE: Improved commercial site. FEADDRESS: According to county records the owner is: Icena Schuur, with a mailing address of: 330 Pleasant Avenue, Big Lake, MN 55309. APPRAISED: Fee Simple L PURPOSE: Estimate Fair Market Value APPRAISAL USE: Acquisition GROSS BUILDING AREA: 2,046 s.f. DATE BUILT: 1965 (from Phase H Report — no year built data indicated on county records) . SITE SIZE• 16,860 s.f., according to county Plat map ZONING: "C -2,' General Business District, as governed by the City of Fridley PROPERTY I.D. #: 233024240073 and 233024240072 ASSESSOR'S MARKET VALUE: Combined values YEAR 1997 LAUD $50,600 fl m� G $24,900 T $75,500 1997 PROPERTY TAX AMOUNT: Combined amounts $2,734.24 Assessment balance of $171.60 HIGHEST AND BEST USE BEFORE ACQUISMON: Improved commercial Pad site HIGHEST AND BEST USE AFTER ACQUISITION: N /A, acquisition is total taking LAND VALUE BEFORE BY MARKET APPROACH: $59,000 IMPROVEMENT VALUE VIA COST APPROACH: $30,000 APPRAISER'S ESTIMATE OF MARKET VALUE BEFORE TAKING: $89,000 APPRAISER'S ESTIMATE OF MARKET VALUE AFTER TAKING: $0.00 APPRAISER'S ESTIMATE OF DAMAGES: $89'000 DATE OF VALUATION: April 6, 1998, the date of inspection APPRAISERS: Paul G. Schwartz, Certified General Appraiser 13 4 -F GATEWAY EAST Single Family Detached, Traditional ♦ Requiress relocation of service road/extension of 4th Street ♦ Yields 7 units Senior Apartment Building ♦ Yields 50 units ♦ Includes underground parking Single Family Attached, #1 ♦ Similar to Augsburg project ♦ Includes underground parking ♦ Yields 18 units Single Family Attached, #2 ♦ Two clusters of 9 units, 18 units total ♦ Requires construction of a 25'x 90' private road 4 -G Uj1 VartrY AVENUE 4 -H UNiveptsrry AojLr- 4TR 4 -1 Okjivez.5rrY AvmuE 4 -J N J Ilk L,�Jmof-t-5ffy Awjur— *M sue- 4 -K DATE: April 30, 1998 MEMORANDUM HOUSING REDEVELOPMENT AUTHORITY TO: William Bums, Executive Director of HRA FROM: Barbara Dacy, Community Development Director SUBJECT: V1 Avenue Project Update Four bids were submitted on the 57t' Avenue Improvement Project. The lowest bidder was Forest Lake Construction at $886,687.92. The original engineer's estimate for the project was approximately $824,240. Staff is now working through the bid prices to determine the exact amount of the HRH's share. More information will be presented to the HRA at Thursday's meeting. BD:ls M -98 -99 5 DATE: April 30, 1998 MEMORANDUM HOUSING REDEVELOPMENT AUTHORITY TO: William Bums, Executive Director of HRA FROM: Barbara Dacy, Community Development Director SUBJECT: Update on Lake Point Intersection Costs Since the City received notification from the Federal Government that ISTEA funds would be available for the Lake Pointe reconstruction project, MnDOT has made several changes to the scope of the project. As a result, there are additonal engineering fees associated with the project as well as construction costs. MnDOT, however, has agreed to take on those additional expenses, and the City has received an estimate as to its share of the project. The original grant from the Federal Government was $1,900,000, 20% of which is to be paid by the local government. The HRA requested the City to make the ISTEA application on its behalf, and the $380,000 local share has been included in the HRA's 1998 budget. The HRA has expended approximately $268,725 in both preliminary and final engineering fees. The construction estimate has been prepared and the City's construction cost is estimated at $117,662.47. There is also another additional engineering charge of $30,427 which MnDOT may eventually agree to pay. Therefore, the worst case scenario for the HRA's cost in this project is estimated at $416,814.47. This amount may be reduced to $386,387.47, depending on the outcome of the engineer's analysis of the additional engineering costs. The total project cost now is approximately $4,355,000. The letter from Susan Mason dated April 7, 1998, details the reasons for the increased project costs from MnDOT. In summary, the changes included storm sewer work, a retaining wall along Central Avenue, designing the bike trail in conformance with federal standards, revising the northwest 694 ramp according to MnDOT's standards, and replacing the pavement on Highway 65. 0 Update on Lake Pointe Intersection Costs April 30, 1998 Page 2 The bids will be opened on May 28, 1998. The City Council will be approving the final plans and awarding the bid at the June 8, 1998, Council meeting. The work to be completed in 1998 will include storm water utility installation, filling in a portion of Moore Lake to add the southbound right turn lane on Highway 65, adding temporary travel lanes, and completing smaller miscellaneous tasks. The bulk of the road reconstruction and replacement will occur in 1999. No action is needed by the HRA at this meeting; however, final action on authorizing issuance of the remaining HRA share will be on a future HRA agenda. BD:Is M -98 -97 6 -A DATE: April 29, 1998 MEMORANDUM HOUSING f_ L 1 REDEVELOPMENT AUTHORITY TO: William W. Bums, Executive Director of HRA FROM: Barbara Dacy, Community Development Director Grant Femelius, Housing Coordinator SUBJECT: Update on MHFA First -Time Homebuyer Program The Minnesota Housing Finance Agency (MHFA) notified us that the bonds have sold to fund the 1s' time homebuyer program. The HRA received $734,000 for the program. A network of participating lenders actually process the applications and make the loans. Once a loan is made, the lender sells it to MHFA who in turn uses the bond money to buy the loan. The funds are then deducted from the community's allocation until the money is exhausted. The program expires on December 15, 1998. The program, which began on April 15, 1998, provides mortgage financing at 6.05% for a 30 year term. To qualify, the borrower must be a first -time homebuyer, have an annual income of less than $48,640, have good credit, and purchase an existing single - family home. The maximum loan is $95,000. We also have permission from MHFA to include new construction on our scattered site lots. More updates will follow in the coming months as the program gets underway. GF M -98 -92 7 MAY 98 HRA ITEMS.doc (GF) 04/30/98 DATE: April 29, 1998 MEMORANDUM HOUSING REDEVELOPMENT AUTHORITY TO: William W. Bums, Executive Director of HRA FROM: Barbara Dacy, Community Development Director Grant Femelius, Housing Coordinator SUBJECT: Update on Home Remodeling Fair The 3rd annual Home Remodeling and Garden Fair was held on Saturday, April 18' at the Fridley High School. The fair ran from 10:00 a.m. to 3:00 p.m. More than 60 different contractors were on hand including general remodelers, plum- bers, electricians, window and door installers, roofing and siding con - tractors, landscapers, nursery specialists and many more. A copy of the program is attached. The City and HRA were also represented at the fair. Staff from the Building inspections Division were in attendance, as well as the Remodeling Advisor, the Recycling Coordinator and a representative from the Police Department. In addition, staff from the Community Development Department volunteered their time to work at the Information and Door Prize booths to answer questions'and provide directions. CEE had several representative to handle questions about the HRA's financing programs. The turnout for the fair was not as good as prior years. Based on the number of programs that were distributed we estimated attendance at 350 to 400 people. This was down from 1,200 to 1,500 on average the last two years. Part of the low attendance may have been due to the nice weather. We will continue to evaluate the results from the customer and vendor surveys and determine what needs to be changed for future events. GF M -98 -93 MAY 98 HRA ITEMS.doc (GF) 04/30/98 DATE: April 29, 1998 MEMORANDUM HOUSING REDEVELOPMENT AUTHORITY TO: William W. Bums, Executive Director of HRA FROM: Barbara Dacy, Community Development Director Grant Femelius, Housing Coordinator SUBJECT: Update on Loan Delinquency Policy At the April HRA meeting, staff presented information on the collection procedures of our loan servicer, the Community Reinvestment Fund (CRF). During the discussion staff indicated that it may be appropropriate to develop a more formal policy, particularly for loans that go into default and may need to be foreclosed or written -off. Staff is still evaluating a policy for the HRA to consider and will have more information at the June meeting. GF M -98 -94 MAY 98 HRA ITEMS.doc (GF) 04/30/98