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Item No. 3 Meeting Date: 3-1-99 Staff Report No. Type of Business: WK WK: Work Session;PH:Public Hearing; CA:Consent Agenda;EDAB:EDA Business Mounds View Economic Development Authority Staff Report To: Honorable Mayor, City Council Members From: Steve Dorgan, Housing Inspector Item Title/Subject: 2091 Hillview Dr. —Proposed Redevelopment Date of Report: February 25, 1999 BACKGROUND In July of 1997,the City Council ordered the abatement of code violations for the building located at 2091 Hillview Road due to hazardous conditions. The property owner subsequently released ownership of the property to Principal Residential Mortgage in September of 1997. In October of 1997,Principal Mortgage conveyed the property by"Special Warranty Deed"to the Department of Housing and Urban Development(HUD). In January of 1998,the City entered into an agreement with HUD that required all noncompliant code items on the property be brought into compliance by July 6, 1998. The agreement provided HUD the opportunity to sell the property and have all outstanding code violations on the property corrected. The agreement provides that if the required corrections were not made,HUD may specify "whether the abatement should be in the form of repairs or remediation to abate conditions or razing and removing the improvements on the property". HUD attempted to sell the property through auction on two separate occasions prior to July 6, 1998. Each time a bid on the property was approved,the buyer's mortgage company would not approve a loan due to the abatement order attached to the title. On July 29, 1998, HUD provided a letter to the City requesting the rehabilitation of the building be arranged. At the regular meeting on September 8, 1998 the City Council directed staff to proceed with the abatement of the property by arranging for the correction of all noncompliant code items and have all costs reimbursed by HUD at the time of sale. At this time, no corrections of noncompliant code items have been made. Staff began to draft a"request for proposal"to arrange for the abatement of all noncompliant code items, as well as continue to work with prospective developers to explore options to purchase and rehabilitate the property. Although immediate abatement would eliminate existing code violations, complete rehabilitation of the property would be more beneficial and provide higher quality housing. In addition, by facilitating the purchase of the property by a private developer, city staff would minimize administrative time required to arrange for and carry out the abatement procedure. Staff has been working with several prospective developers to facilitate the purchase and rehabilitation the building since July of 1998 and has just recently received a redevelopment proposal. Unfortunately, a developer would not be able to purchase the property directly from HUD unless through an auction. However,the City may purchase the property from HUD at a 10% discount(approx. $80,100)and in turn sell the property to a prospective developer for rehabilitation. PROPOSED REDEVELOPMENT Staff has received a request from Reentry Services in cooperation with Ramsey County with interest in acquisition and redevelopment of the subject site. Staff has been working with the County and Reentry Services on redevelopment options for the site. Reentry Services has received a funding commitment in the amount of$80,000 from the Family Housing Fund and at least$80,000 from Ramsey County Community Development Block Grant/HOME Funds for acquisition and redevelopment purposes. Reentry Services is proposing to acquire and rehabilitate the subject building for the purposes of providing transitional housing for tenants provided through the East Metro Woman's Council and Wilder Foundation. They also currently operate a similar residence at a duplex home they own in the city. The city has received no complaints or code violations at the duplex property. Reentry