Agenda Packets - 1998/09/08 - Laserfiche WebLink

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L�. Item No. Meeting Date: 9-8-98 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 Reort To: Honorable Mayor, City Council Members From: Steve Dorgan, Housing Inspector Item Title/Subject: Abatement of Hazardous Building- 2091 Hillview Road Date of Report: September 3, 1998 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, Soji Agboola, 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 which required all noncompliant code items on the property be brought into compliance by July 6, 1998 (attached). 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 because of the abatement order attached to the title. HUD has provided a letter to the City requesting the rehabilitation of the building be arranged (attached). Since the required completion date of July 6, 1998, staff has been approached by several developers regarding the purchase of the property for the purposes of redevelopment. Staff has been working with prospective developers exploring options to purchase and rehabilitate the property. 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 (apprx. $80,100) and in turn sell the property to a prospective developer for rehabilitation. 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 a developer. To date, staff has yet to receive a substantial proposal for purchase and redevelopment of the property. DISCUSSION Throughout the abatement process the property owner, HUD and city staff have attempted most options available to effectively correct the outstanding code violations on the property. At this time, the city maintains the right to exercise HUD's request to arrange for the immediate abatement of the property through the correction of the violations pursuant to the agreement. According to HUD, rehabilitating the building would be the most cost effective redevelopment scenario for the property.