01-14-2004 Council Workshop Agenda

Home Browse Search

Jagoe, Jessica From: Hanson, Joel Sent: Friday, December 26, 2003 2:44 PM To: Bill Blesener; Matt Anderson; Mayor Fahey (E- mail); Rick Montour Glanzer, Kathy; Jagoe, Jessica; Rueckert, Shelly Subject: Purchase of 594 County Road B2 We met with Ali Enyati this morning about the purchase of his home at 594 County Road B2. (This is the house we have had some significant code enforcement activity at over the past number of years.) Page 1 of 2 Ali is not interested in selling his home on his own. He doesn't have the money to fix it up. Plus, when the work would get accomplished is a question. I had another party interested in looking at the house (Dave Rustad after a suggestion by Council Member LaValle). However, Ali will not deal with another party at this time. He will only deal with us. (At least that is what he says.) I had Bob Pedersen take a look at the house. His analysis says the market value would be in the $225,000 to $235,000 range Tess whatever it takes to fix it up to comply with the court order plus other items to make it ready for sale. (Best guess today is $20,000 - and that is a guess!) Ali initially said he wanted $240,000. After considerable discussion, he came down to $220,000 cash. I had suggested a lower amount, but he was not interested and said that was his bottom offer. Otherwise, he will rent out the house to a Section 8 client for about $1,500 per month. He claims no other rentals or occupants so it would meet zoning code as long as he complied with the court order. I explained to him the City is not doing this to try to make a profit, but we do want to cover our costs. I then proposed that we would pay him $200,000. We would also give him an addition sum for rent (final amounts and period to be determined - but assume three months at $550 per month or $1650.) We would have a contractual agreement that would bind us to fixing up the house to comply with the court order as well as any other work we felt necessary to make the house saleable (this may include new siding, roof repairs, ceiling repair and re- spraying in upper level, painting, and restoration of the basement and garage to single family status. Other work could also be necessary on the exterior of the house for a retaining wall and brick area. ve..,in we complete the work, we would have the house appraised. We would then assume that amount is the selling price. From that number, we would deduct a 7% real estate commission, the cost of the improvements, and a small overhead factor for staff time (say $2,000). If the remaining amount is over $200,000, we would issue a check to Mr. Enyati for the amount over $200,000. An example of how this might look is: Appraised Value - $245,000 _ess 7% - 17,150 _ess Improvements - 21,000 Less Admin. - 2,000 Amount Due Enyati - 4,500 -le is agreeable to the concept. However, he initially wanted to stay in the house. I think that would be detrimental to the transaction and that is why I propose we pay him an additional amount to cover rent until the transaction is finalized. We may be able to cover the rent by lowering the actual real estate commission below 7 %. Otherwise, I don't know that we can .ecover it. I believe this is an either or i.e. either he lives there or we pay rent. Otherwise, I don't think we get this done. I would like to avoid our involvement in this transaction, but I believe it is unavoidable. We could take a hard line and send him to jail, but it would end our ability to deal with him, except possibly in a situation where he is facing foreclosure. I think our acquisition will solve a long term problem once and for all. I need to know what you think by next Friday. 111 be gone until Friday (Jan 2nd) and he is coming in that day for an answer. I will be around home on Saturday if you need to talk about it. Thanks for considering this. Joel Joel Hanson City Administrator City of Little Canada ;651) 766-4040 7