04/04/2010 Council Packet - Laserfiche WebLink

Home Search

• • • WS — Item 2 WORK SESSION STAFF REPORT Work Session Item 2 Date: January 4, 2010 To: City Council From: Mary Alice Divine Re: Update on Legacy Project Background In 2007 the undeveloped properties owned by Hartford Group, the master developer of the Legacy at Woods Edge downtown project, went into foreclosure. The mortgage for the properties is held by a consortium of banks. The redemption period for the properties ends in May 2010, at which time they will go into tax forfeit. Staff has met with representatives from OSM, the current loan servicer, and the commercial broker from CB Richard Ellis who was retained by OSM to market the property. The representatives from OSM indicated that the consortium has no interest in redeeming the properties. To do so they would need to pay off the back taxes and assessments, interest and penalties. They contend that the property values have dropped below the redemption amount and due to the current economy, any buyer would likely have to carry costs on the land for 3 -5 years before development may occur. Staff and consulting attorney, Steve Bubul of Kennedy & Graven, have discussed options regarding the future of the properties. When the properties go tax forfeit, the back taxes are wiped clean, but the city can, at any time, place the assessments back on. The city has first rights to the property after forfeit; however, the city must demonstrate that it will be used for public purposes only. If the city does not take the property, or purchase the property at a value determined by the County Board, it will eventually be put up for public auction. This process can take considerable time. City staff and Mr. Bubul met with staff from Anoka County Property Tax Division in December. Mr. Bubul discussed the potential for obtaining a "deed in lieu" of forfeiture to avoid the necessity of forfeiture. He and the county have worked through such a transaction in the past, so there is precedent for this to occur. 1