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CC Memo—2091 Hillview Road February 24, 1999 Page 2 Services is a nonprofit agency and are tax exempt. Property taxes are not paid for the existing duplex and would not be paid for the subject site if acquired. DISCUSSION Throughout the abatement process the property owner,HUD and city staff have attempted most options available to sell the subject site. The preferable scenario would be for the property to be sold to a credible party for complete rehabilitation. This would provide decent, safe and livable housing for the building that may also promote further rehabilitation of the surrounding properties. Other options may include abatement of code violations by the city, demolition of the structure, or release of the abatement order by the city for HUD to auction the property again. If the City performs and abatement on the property as requested by HUD, only corrections to obtain code compliance may be made. HUD did not request demolition of the building,however this scenario would result in a vacant lot that may be difficult to market for redevelopment. The city may also choose to release the existing abatement order on the property and allow HUD to once again auction the property,however again only corrections to obtain code compliance would be required. Reentry Services is proposing to acquire the property from the city with the intention of completely rehabilitating the building to provide transitional housing. The proposed redevelopment project has secured financial backing from two separate funding sources that would ensure a complete rehabilitation project. For Reentry Services to obtain the property,the City would need to purchase the property from HUD (at a 10% discount)and resell the property to Reentry Services. The purchase and resale would occur simultaneously at one closing. All closing costs are proposed to be paid by Reentry Services so there would be no costs incurred by the City. Essentially, formal approval by the EDA or City Council would be required to purchase the property from HUD for resale to Reentry Services and create a development/purchase agreement between the City and Re-Entry to ensure noncompliant code items are corrected as part of the redevelopment process. Since the abatement order was approved in June of 1997, minimal progress has been made to rehabilitate or redevelop the subject property. The proposal by Reentry Services provides for the complete rehabilitation of the subject site. Complete rehabilitation of the subject site would help secure the neighborhood and promote rehabilitation of other buildings in the area. The most prospective option for redevelopment of the building would be for the City to purchase the property at a discount from HUD and sell the property to an established developer. ACTION TO BE CONSIDERED Provide direction to staff concerning whether or not to proceed with the acquisition and resale of the property to Reentry Services for the redevelopment of property located at 2091 Hillview Road. A Steve Dorgan W 211. Housing Inspector 717-4023 Attachments: 1) Location Map 2) Letter of Proposal—Reentry Services