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HRA 05/09/2011 - 30014CITY OF FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY COMMISSION MAY 9. 2011 CALL TO ORDER: Chairperson Commers called the HRA Meeting to order at 7:20 p.m. ROLL CALL: MEMBERS PRESENT: MEMBERS ABSENT: NONMEMBERS PRESENT: ACTION ITEMS: 1. Approval of Expenditures Larry Commers William Holm Stephen Eggert John Meyer Pat Gabel Paul Bolin, HRA Assistant Executive Director Becky Kiernan, Accountant MOTION by Commissioner Eggert to approve the expenditures as presented. Seconded by Commissioner Holm. Chairperson Commers asked what the administrative expenses covered. Becky Kiernan, Accountant, said the city bills HRA quarterly for Staff time plus health insurance. Commissioner Holm asked about the Metro Home and Garden Show expenses, he understood that those expenses would be reimbursed. Paul Bolin, HRA Assistant Executive Director, said that is correct. Fridley is the fiscal agent for the show and the revenues collected from the vendors exceed the expenses. UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY 2. Approval of March 3, 2011 Meeting Minutes MOTION by Commissioner Holm to approve the March 3, 2011 minutes as presented. Seconded by Commissioner Meyer. UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY 3. Approval of Property Disposition Procedures — Scattered Site Lots Paul Bolin, HRA Assistant Executive Director, said that the Housing Replacement Program (HRP) was re-established in June 2010. The purpose of this program is to eliminate blighted and substandard homes, preserve/expand tax base with new construction and encourage neighborhood revitalization. Staff has been looking at foreclosures during this poor housing market and purchased four homes so far. Staff have received recent inquiries from the public regarding vacant lots and if they will be for sale. Mr. Bolin said staff would like to continue the HRP Process for selling lots that was in place during the first phase of the program but make the following changes: • Increase in Lot Reservation Fee from $500 up to $1,000 • Allow factory stick built (modular) homes that meet all construction and design standards Mr. Bolin said that only a Licensed Builder would be able to purchase and build a home. The builder or an individual may reserve a lot for up to 60 days for $1,000. During the 60 day reservation period there would be a signed Purchase Agreement between the builder/buyer, a full set of house plans submitted for review and evidence of financing. Mr. Bolin said that HRA would still review the project, authorize the sale and enter into a contract for private redevelopment. All projects must meet Authority design guidelines as outlined in the Patternbook for New Homes. A Public Hearing authorizing the sale must also be held. Mr. Bolin said that the proposed change in the increase of lot reservation fee will discourage those not serious f�om preventing sale to a party that is ready to build. Mr. Bolin also suggested the Authority allow factory stick built (modular) homes. The quality of this type of home is better than some site built homes and they must rneet the design criteria found in book. Mr. Bolin said that this program will be marketed on the city website, newsletter, and the electronic billboard. A notice would also be sent to MN Realtors and the Metro Builders Association to make their members aware of this program. Listing price for the properties are proposed to be 10% less than the City's assessed land value. Authority must approve and hold hearing prior to any sale taking place. Staff recommends the Authority approve the mazketing and sale of the Housing Replacement Program properties as presented. Staff further recommends that this sales model also be used for the remaining Gateway West lots. Chairperson Commers thought that lots used to be 50% of the assessed value. Mr. Bolin said the assessor thinks asking 10% below market value would be fair. For example the lot at 434 Liberty Street assessed value is $54,000 so the asking price would $48,600. These are suggested starting prices. We don't know how realistic these prices are until someone tells us it's too high. For the most part people will try to finance the lot as part of an appraisal. It is a starting point and we can come down from there if needed. Staff will take advantage of the expertise from the realtor we have been working with and if the price seems too high an appraiser can look at it. Comraissioner Meyer thought people should just be able to make an offer for the lots and if the price seemed fair, the Authority should sell it. Commissioner Eggert said that with price of gas at nearly $5.00 a gallon, Fridley is a convenient location for many people wanting to build in Fridley. If people get a break on the lot the Authority would have to see what they plan to build. There are formulas available for when people'build a home, so much for the land and so much for the house. He did not think the lots should be given away at a low price and there are certain houses that the Authority will approve to fit in the area. Chairperson Commers did not see any harm in putting a value on the lots and being flexible with negotiations. Staff can give the price to the iirst four people and see what their reaction is. He was more concerned about building modular homes. He would like more information about modular homes and how they have improved before he would vote for approval to build them. There would need to be specifications on the manufactured homes assuring that they are built according to plan meeting code and design criteria. Commissioner Eggert said there are many modular type homes including trailers and double wides, but there are some home builders that build modular homes wall by wall. He added that to be approved they would have to meet Minnesota building code and have a basement. Commissioner Meyer said that there is nothing wrong with the modular homes and building inspectors are ok with them. Regarding the price of the lots, whether HRA gets $15,000 for a lot or $30,000 for a lot, the major concern is what goes on the lot. He did not want HRA to get too involved with the lot price because that is secondary to what goes on the lot. Commissioner Holm asked if building guidelines require a basement. Mr. Bolin answered yes; all single family homes must have a basement per city code. Commissioner Holm asked to review the timeline for building the home from the start. Mr. Bolin reviewed the Overview of Development Process: Step 1: Lot Reservation Step 2: BuilderBuyer works on preparing plans, arranging financing and executing a purchase agreement. Must be submitted to HRA within this time frame. (Up to 60 Days) Step 3: HRA staff review of plans and related project documents. (Up to 30 Days) Step 4: HRA meeting to review and approve the project. Builder can submit application and plans to City for building permit. (Up to 30 Days) Step 5: Developer and HRA execute development contract. (No later than 30 Days after HRA Approval) Step 6: Closing. HRA sells lot to builder and conveys title. (No later than 60 Days after HRA Approval) Step 7: Construction (Maximum of 120 days, weather permitting) Mr. Bolin said that he anticipates that within the first 60 days staff will work with the buyer and builder on the plan. Staff will be in contact with the people throughout the process and if they run into problems, the timeline is an example of the worst case scenario. Commissioner Holm asked if the lots would be sold on a first come first serve basis. Mr. Bolin said that is conect, that is one of the reasons staff would like to put prices on the properties. Chairperson Commers asked if it was customary for a developer to pay cash for a lot before construction begins. Mr. Bolin said that would be easiest but there will be a provision for them to use construction financing and HRA to subordinate to them. Chairperson Commers said that in a typical subordination, if something goes wrong with construction or events change, the mortgage company has first rights to the property. HRA will have to make sure the purchaser is credit worthy. Mr. Bolin said that by the end of the 60 days the purchaser will need construction financing and the home owner will be qualified for permanent financing. Commissioner Eggert asked if a11 10 properties would be listed or just few. Mr. Bolin said for right now they would include Gateway West (91ots), 434 Liberty Street, 521 Fairmont and 381 Ironton. The Authority has some other parcels scattered about but some aze not buildable. Chairperson Commers was ok with putting the lots up for sale on the west side especially if people are interested in buying the lots. Mr. Bolin said he would report back to the HRA next month, any interest in the properties. Chairperson Commers asked why modular homes had to be spelled out in the guidelines. If a purchaser wanted to bring one forward, they could do so and ask for approval at that time. Mr. Bolin said that last time modular homes were specifically prohibited. He said that language could be taken out. Chairperson Commers was happy to hear modular homes are of good quality now but would like to take out the language. MOTION by Commissioner Holm to approve the Property Disposition Procedures — Scattered Site Lots with the removal of number 3— modular homes. Seconded by Commissioner Eggert. UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY INFORMATIONAL ITEMS: 1. Home Improvement Demonstration Project Update Paul Bolin, HRA Assistant Executive Director, said that the Authority purchased the home on 831 Mississippi Street in 2009 for $127,500. HRA invested $60K in improvements as part of the Demonstration program. 2,500 attendees came to open houses and this increased the loan activity and building permits. Mr. Bolin said that the median home value has decreased by 15% since our purchase ($135K to $114K) and the percent of the original asking price received has also decreased from 91 % to 85.8%. Staff has received an offer on this home. The original offer was $150K less $SK in seller concessions and a$2K bonus for their realtor (bottom line -$143,000). The final offer received is $157, SOO less $SK in seller concessions and some minor repairs (bottom line - $152,500). The closing on this home would be on June 3. Staff recommends the Authority approve the terms of the purchase and set a public hearing on the sale of the property, for June 2, 2011. Mr. Bolin said that the home on 4757 2"d Street will be completed by May 18�' with open houses scheduled the weekend of May 21 and 22 from 11 AM until4PM. MOTION by Commissioner Eggert to approve the purchase agreement for 831 Mississippi Street in the amount of $157,500. Seconded by Commissioner Meyer. UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY 2. Scattered Site Housing Replacement Program Update Paul Bolin, HRA Assistant Executive Director Home at 434 Liberiy was demolished last month and lot is now prepped for resale. Staff has continued to look at homes on a weekly basis and negotiated a purchase on 381 Ironton Street for $50,000. MOTION by Commissioner Holm to approve the purchase of the property located at 381 Ironton Street. Seconded by Commissioner Meyer. UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY 3. Gateway Northeast — Demolition Update Paul Bolin, HRA Assistant Executive Director, said that the demolition in the Gateway Northeast area went well. The contractor, Buberl Recycling, is excellent to work with and there have been no problems. 4. Housing Loan Program Update Paul Bolin, HRA Assistant Executive Director, said that in April there were no loans closed and year to date there is one RLF loan and two others making three year to date. There were two remodel advisor visits in March/April making a total of three year to date. OTHER UPDATES: Paul Bolin, HRA Assistant Executive Director, said that last Thursday staff attended the Northstar Developer's Tour. 21 developers were on the bus and they stopped and toured each station. They talked about development opportunities around the site. Staff showed developers the JLT and Gateway NE properties and land around the station. Staff has contacted the broker about the JLT vacant property on I-694 and East River Road. They are marketing the property. Mr. Bolin said the property on 57�' and Main owned by Steve Linn made an early payoff on the TIF note. A new tenant is going in and they are remodeling the building. The TIF District runs through 2016. There are a few more years to collect increment to pay the Authority back. Mr. Bolin gave a brief update on the court case between the City of East Bethel and the Anoka County HRA, regarding Anoka County's authority to levy in the City of East Bethel. ADJOURNMENT: MOTION by Commissioner Holm to adjourn. Seconded by Commissioner Meyer. UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE MEETING ADJOURNED AT 9:10 P.M. Respectfully Submitted, ��/'L�' Krista Monsrud, Recording Secretary CITY OF FRIDLEY SIGN-IN SHEET HOUSING & REDEVELOPMENT AUTHORITY MEETING L� ---------------------------------------------------------------------- ---------------------------------------------------------------------- Name and Address Agenda Item of Interest