Agenda Packets - 2002/04/01 - Laserfiche WebLink

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Item No: 4 Meeting Date: April 1, 2002 Type of Business: Worksession City of Mounds View Staff Report To: Honorable Mayor and City Council From: James Ericson, Community Development Director Item Title/Subject: Discuss Future of City’s Rental Properties Date of Report: March 27, 2002 Background: The City owns two single-family residential properties which were purchased with the intent to foster redevelopment. Both properties, 7861 Groveland Road and 3016 County Road H2, are currently leased on a month-to-month basis. The monthly rent for the Groveland Road property is $975; for the County Road H2 property, the monthly rent is $825. Unfortunately, collection of the rent and the oversight has proven to be an administrative headache. Discussion: With more than a year of experience in maintaining the rental properties, staff thought it would be a good idea to reevaluate the City’s options and to make a determination whether to continue renting the properties on a month-to-month basis or to explore other alternatives for the property. In a perfect world, renting the properties while the City awaits redevelopment offers is a great idea. Collectively, the City would take in $21,600 annually, which is a pretty good return on the investment. However, at least 20% of that amount is spent on repairs, maintenance and property taxes, which results in a net of about $17,000; still a substantial annual return for properties being held for future redevelopment. Unfortunately, a percentage of the rent proceeds are also used to offset the staff time and administration of the homes, and I would argue that once the staff and administrative component is figured in, the annual return is minimized to the point of asking the question, “Is it worth it?” Both tenants have been habitually late in paying their rents, often going more than one month before getting caught up from previous months back-rent. (Rent for each month is considered “late” if not received by the tenth day of that month.) The expectation has regrettably shifted so that we now expect the rent to be late. This shift in expectation caused an oversight on the City’s part, whereas the tenant at 7861 Groveland has fallen several months behind in his rent. Multiple letters were sent without response until the tenant finally made contact with staff in February, apologizing for his situation yet desiring to work out a repayment schedule. We consented to a repayment agreement on the condition that the March rent would be paid in full on or before its due date or we would proceed with eviction. Unfortunately, the due date came and went, and we have received no payments from the tenant. Kennedy & Graven were subsequently asked to draft the eviction paperwork and begin the process of collecting what the City is owed in back rent. In the case of 3016 County Road H2, the tenant is currently behind by $100 plus the $25 late fee. We have also been notified that the tenant is behind on her utilities to the point