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Item No. 11 Staff Report No. 97-2175WS • Meeting Date: August 4, 1997 Type of Business: WK WK: Work Session;PH:Public Hearing; CA:Consent Agenda;CB: Council Business City of Mounds View Staff Report To: EDA President and Board Members From: Jennifer Bergman, Housing Inspector Item Title/Subject: Discussion Regarding Proposals for 8265 Spring Lake Road Date of Report: August 1, 1997 Discussion: In August, 1996,we purchased a home at 8265 Spring Lake Road from the Department of Housing and Urban Development under the Housing Replacement Program for$49,500. The property was appraised at$52,000, of which$30,000 is for the lot and$22,000 is for the house. The house met the blighted condition due to a bowing foundation. In October, 1996, we contracted services with Herbst& Sons Construction Company to have the home demolished for $6,300. The total investment by the EDA in this property has been$55,800. • On May 22, 1997, advertised the lot for sale by sending out a packet of information to approximately 15 interested developers and home buyers (see Attachment 1). In order to be considered for the purchase of the lot, we required an offer in writing which indicated four items: (1)Evidence of a builder and a buyer team; (2)An offer price on the lot; (3)A description of the proposed new home; and(4) The estimated value of the home upon completion. We asked that proposals be submitted by June 30, 1997. By June 30, we had only received one proposal. We placed a for sale sign on the property and extended the offer deadline to July 31. I received many phone calls and sent out an additional 20 packets. By July 31, we still have had only one response. The response we received is from a licensed general contractor who plans to build the home for himself(see Attachment 2). His primary work has been in the rehabilitation of houses, however, he has built one home. His original offer for the lot was $25,000. After some negotiation, he submitted another letter stating that he would purchase the lot for$27,000: His price was a result of the road reconstruction planned for Spring Lake Road in 1998. He had received an estimate of $3,000 for assessments for the reconstruction, and he reduced the appraised price by the amount. There are three steps in the procedure for buying a lot under the Housing Replacement Program. The first step is to select a builder/buyer team based the offer which was submitted including the • four items listed above. The second step is sign the Participation Agreement which requires the Developer to pay $500 and, in return, the EDA will grant the Developer exclusive rights to the property (see Attachment 3). The third step is to execute a Contract for Private Development