HomeMy WebLinkAbout07-28-1997 EDA # g1 Oaf oa
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2. ROLL CALL- President McCarty
Vice President Koopmr einers
...:..�,. Secretary Trude
Commissioner Quick
Commissioner Stigney
3. APPROVAL OF AGI.
A ACTION: ATV
Come
4• APPItQYAI,QVS.
July 14,"1997 MeetingNo: 39
EDA ACTION: ATI
Continents: •
5. CONSENT AQ t1
None
6. PLIBL3GT1-1EA Q •
Public Nearing and Consideration of Resolution No. 97. DA 72 Giving Cond*tional Approval
to the Sale of ann Located at 2625 Highway 10 for the Purposes of a Redevelopment
Project Staff Report.No. EDA-97-81C (Staff Presenter: Cathy Bennett, Director of
Economic Developmetlt)
filoEDA ACTION: ATD
comments:
7. ADS UIIVSS , , , , '. . , 0
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Reioit ofD�Brod 1Vtember�a
i 1 Report of President McCarty
2. Report of Vi�:President Koopm ners
3. Report of Secretary Tred8 (,:3
4, Report of Cgissioners
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Report of Treasurer Kesse:
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1, PROC D1 GSOFThEMOi1NDSyIEW
2" Ecol oMIc DEVELOPMENTAD O
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4 MdegngNb 39
July 11,1997
6 Mounds Vier CilrHall
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11
12 The Economia velopment A�tth7rity wag called to by Pr dent McCartyat 9:11`p ,on July-14,
13. 1997
14
t 16 . . Julie x ' ,Rogersum,Y. ?g Koo •� •Carly
1 p_ r,�li4 ++.,, C r C1+ ��i *Chuck S 14dn&: unity
1= Develop t Director Pam + 144,ate Mtttt'tioy I,on
20 ,
21 QT None
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S It was noted Item 7�yA)sho t *emove d flout i the en4a.
20 3-7 1AQr0)/49,490144-1.4‘14#4<90hto Y rove tft ,
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Y' Mottov'C.aed _ "
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33 11+:IOTUON/ �CQl ti) T}'u ip/I t opmtohi rr to l +vd` 'the 'of theBDA t g on a 23,1'997 as
36 v• 0,nt,
� ,' 5 0 'lotion 0a
40 A. A Olio Hearing for 8aoO P.M. 08 Monday,4,00,2"1.097 tb"consider the eaI of 2625 Highway
41 1o.°
43 MO11OWW/SECt-of1 ' ck "
p /Qt11 to Set a Pttb o lung f .$00 p,m.oda Mondays July 28 1997to
.e sale 2625 lghwaay►l0.
45
0 nays - Motion Cawed'
4'
48• zt
49;
S0 There Were- Pu uo Hearings scl iuted fc thi8,
' Sd E, onside tion of G
a ru►tiniII Easement#o N5 tar Itt .
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July 14, 199'
Page 2
1 M lett Reso utiou N }Ei?l 7l wou d give fly EDA dent au.. Etc lave ®'
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atty ` z' � ' � �wit�r� She noel t�t`At���y�iS�d herself woldd be "
3 wo, g wjth NS° tY y tlse.::#. age that will a w the city to bly trove the easement f ua the f
4' the oily would l to develop the lotin a�t stay..
5 •
,6 MOTIQN/ GOND Tru ✓Q ok to rove) l►.utionNo,974 1-71,O'a gap Easement to NSP far.
` Utility1 and41SE ltorizing the President `E .utive Director to Ex to Electrical Distribution Easeme t
$ A_a ,,_„
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1'3 vii opment. ..
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1S Sidon the th a ate s t to oc�plish in order for the city to eve
1.6 forwardthe i of estaballsluog a g v�► ut4=�t;&om Long kt� ►ay 10 th4 s
17 anew sly to on at cod ive d}Ii wa 10 ,per o tt s to itpossible
18 to d veli a city t the4. on the} 'N+ l ty. 1*ilk, t,f;..-:-'p on t e north
19 -$*_-�hc to t > lint tl` gs mites of plt�« 'b�e-oityeat
0 .rvyided an of$ 1, therefores _auk to r1�e t Al.--,.;
•21 ,:, ,,, , set�g��to pay fc t s ites, ; ; t
23 MOTION/SECOND: -:',,,,', 0010-71::00-',?....r.7.7.-.:-A.r hO�i -' . professional,-se. ►ces for Highway lb
24 CorrldtiI Develops
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2C VDTE, 5 ayes o`erC
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30 Rtp4 'ED4t ,4#rq!M;om4 :
2 No
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3 No art.
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40Commissioner Quick No Wit.
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92 Commi toner Stigney: No amort.
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` EDA Meeting#39
July 14, 1997
Page 3 •
1 MOTION/SECOND: Quick/Trude to adjourn the EDA Meeting of July 14, 1997 at 9:25 p.m. 4
2 :
3 VOTE: 5 ayes 0 nays Motion carried '.':
4
5 Respecthzllyf+ submitted,
8
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9 T:.,. ; .., D.Saeflce
10 -.,, . 1 Secretary
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•
Item No. 6A,
Staff Report No. EDA-97-81C
1110 Meeting Date: . July 28, 1997
Type of Business: PH
WK Work Session;PH;Public.[,rearing;
• CA:Consent Agenda:EDAB:EDA Business
Mounds View Economic Development Authority `•ft
t ff R ort
To: EDA Board Members
From: Cathy Bennett, Director of Economic Development •
Item Title/Subject: Public Nearing and Consideration of Resolution.No, 97-EDA72
Authorizing the Sale of Land Located at 2625 Highway 10 for
the Purposes of a Redevelopment Project
Date of Report: July 25, 1997
Reaspn for3'ublic.Hea ing
Per Section 469.105 of the MN State Statues,an economic development authority may sell property
owned by it within the city if it determines that the sale is in the best interests of the city and that the
transaction furthers its general plan of economic development. The authority shall hold a hearing to
allow taxpayers to testify for or against the sale.
In 1994,Mounds View set up the EDA,and modified the tax increment districts into one project. At
that time a public hearing was held which outlined the goals of the project.plan. As part of the
project plan,the EISA:stated that It would take any necessary steps to achieve the goals as set forth in
the plan such as goal number four which states the development of"senior/mature adult and/or other
housing development partnerships or other multi use housing proiects and facilities". The necessary.
steps to achieve the goals include the purchase and sale of land. Therefore,the EDA has already met
the Statutory requirement to hold a public hearing on the purchase and/or sale of land within the
entire City: Staff and the:EDA board-members felt that it was in their best interest and that of the
community to give notice and hold a public hearing on the sale of 262$ Highway 10 to properly
explain the proposed project of which the land°is requested to be part of and provide a public forum
for comment, either for or against the sale,from the community.
RRatlest;tp Purchase gP.A.Land:
MSP Real Estate is requesting that the EDA sell the corner lot located at 2625 Highway 10 to enable
the development of 16"nevy townhomes and the rehabilitation of 40 units at Red Oak Apartments.
They are offering to buy the land for$1:35 per sq. ft. The land is approfdinately 35,000 sq.ft.
Therefore, a purchase price of$47,000: This price is the same per square foot that they are purchasing
the two vacant lots between 2625 Highway 10 and the Red Oak Apartments. In addition;MSP had
the land appraised by a certified appraisal firm.: The appraised value was$1.20 per square foot or
$42,000.
City of Mounds View Staff Report
July 25, 1997 fll)
Page 2
History of Lard:
2625
idighway_10 which is located at the corner of Highway 10, County Road I and Eastwood Road,
was purchased by the ED .," a evelopment purposes 1995. At this'time there Was a-building on
the lot that was convextea 54 ,a'Dingle family hoxne,to i plex. Prior to 1995,the condition of the
house was unstable and Bete' if'ating. Activities inside theehouse:generated neighborhood disturbances
which resulted in •several police calls and inspections. The owner proceeded to improve the house,and
convert the rooms to be rented.as a triplex. The" interior work was primarily complete:but the City,of
Mounds View code required that the riveway be paved arid garages be provided for the tenants. The
owner was unwilling to makethese improvements and decided to sell the'property. After several
mon of negotiation,the EDA purchased the land and" building for$125,000;with the intention of
redev ping the property to.increase the. tax base and aesthetics of the lot. T
based.on appraisals;that came in at$140,000 and$150, Therebaa purchaseprice was
I, 000.� The appxaisals were"based on the current
structure of the home as a triplex and the current zonin 'of theas R»3, The'EDA"then
proceeded.to:demolished the building�at an expense of$6,600, property
It"was the initial.intention of the EDA to rezone the lot for a commercial use. In an effort to identify a
user for these lots, the Economic Development Coimnissiork was directed to ,prepare and"mail'Requests
•`for Information to developers.for suggestions,on uses for the property: 'Tie request,was distributed to
over 25 local'developers in Deceinber of_1995..The Request ditd,not generate any" interestt in a
commercial use for the area. Since then staff received inquiries regarding the lot for a funeral home'
gip
and animal hospital but access on Highway 10 was critical. In an'effort to reevaluate this section of
Highway 10 and the issues:involvedwith the'
. ..properties-located on both lidos of the Highway,the
EDA approved a study which was completed by SRF"Consulting in early 1997, the resuilts,of study
concluded that the EDA owned property'as afree-standing P is uestionai le in light of. the
ro E� q.
traffic access.limitations and that the contribution of the EDA property to die vitality and character of
Section 9-will not be significantunless it is combined with the vacant pro
and a.shared access off Hx wa "10 with the Apartments: properties ngabrecommended,og on the west
throughtheir �` yE Further,SRF Consulting
eir study,that the preferred alternative would be for the EDA to`facilitate a major
renovation of the Apartment,secure town home:or Other medium density residential configurations on
the EDA owned land and vacant land to the west and create a shared access point off Highway 10 for
these parcels. (Attachment A:excerpt from Highway 10, Section 9 Study)`
.C-Proposed JI' jeGt t Stlyer,X.4ice:conInQI3g
The EDA, Planning Commission, Economic Development Commission and Staff have been evaluating
a proposal from MSP Real Estate for the significant rehabilitation of Red Oak Apartments and the
development of 16 new townhomes This project is referred to as Silver Lake Commons The proposal.
addresses the existing deteriorating condition with the Red Oak Apartments and creates.,more of a
community by incorporating the development of 16 new townhomes,a large playarea,community
room,new garages, on-site management office,new fencing and increasett landscaping The.rendering
from MSP shows a completely new look for the Red Oak Apartments that will match the architectural
style of the new units. The:projectkhas. one access point off Highway 10 with" no access onto Eastwood
but an area for safer school bus pick-up and drop-off: . - ,
,.
The existing units are all 1 and 2 bedrooms and the nevi,units will be 3 and,4 bedrooms. All of the..
units are for people who earn less than 60%of the median income which is categorized under State
guidelines as affordable housing. These income levels range froman.estimated$20,000 j'$40,000
dollars per year. It is estimated that the current tenants in the Red Oak Apartments Would qualify
under these income limits,therefore the existing apartments can currently be considered affordable.
The rent proposed for the development range from$509-$650 per month with the exception of 10
• units (5 existing and 5 new) that would be set aside for families that are on public assistance. These
10 units are referred to as Hollman Units under the Hollman Consent.Decree which was the result of a
class action lawsuit filed by tenants of Minneapolis Public Housing claiming discrimination by HUD,
Minneapolis PubJ c Housing Authority and City of.Minneapolis. The Hollman Consent Decree states
that 770 units of public housing in the North Side of Minneapolis will be demolished and replaced
with new and rehabd public housing units in other locations throughout the metro. Currently,
there are approxi l .8 units under constrt( n in Chaska,Minnetonka; Savage,Washington
County,Minneapoliraitd Carver County and 172 units planned in,other suburban locations. The
tenants for the Hallman Units go through both screening by the Minneapolis Public Housing Agency
and the SLC property management. Based on unfavorable tenant profile,SLC can refuse to accept
tenants. (Attachment B: I-lollman Consent Decree Information.Flyer)
•
In reviewing this proposal,several issues have come forward from Council,staff and residents. MSP
Real tate has addressed many of these concerns in the attached letter and supporting documentation
dated July 24, 1997. (Attachment C) In addition,there was a concern that the increase in the number
of children created from the new development will put a strain on the Mounds View School District.
MSP Real Estate met with the Superintendent of Mounds View School District,Jan Witthun. The
Director of Technology, Information and Planning is confident that there is adequate space available at
one of the elementary schools that serve Mounds View.
Conclusions and Options:
The attached resolution would make a conditional approval to sellthe land to MSP Real Estate for the
development of Silver Lake Commons Project. If the project does not move forward,the land is still
under the ownership and control of the EDA. In addition,the sale would legally be tied to a
development agreement which would be an additional assurance that the land is tied to the proposed
development. The EDA may act on the resolution upon closure of the public hearing or they may
defer decision to another meeting when the tax increment request is presented. But,if approved,there
are still several controls that would give the EDA the legal right not to sell the property as noted above.
If approved,the proceeds from the sale of the land is not subject.to the same requirements under State
law for use of Tax Increment Funds. Even though the land was purchased with TIF,the proceeds
would not be considered TIF and not subject to the TIF restrictions. Therefore,the$47,000,or what
ever price is ultimately negotiated,can be used for other City projects that are non TIF eligible: As an
example, two years ago the City discussed setting up first time home buyer program that would buy
down interest rates or provide funds for closing costs. These type of programs can not be funded with
the use of TIF because they are not clearly redevelopment but the land proceeds could be used.
Staff if not prepared to present the final Tax Increment Financing Loan agreement at this time. The
request if for a$230,000, 1%interest deferred 30-year loan due upon sale. This request represents
5%of the total project cost. The EDC recommended a conditional commitment to approve the loan
with assurances that if there were additional funds from the relocation budget after 24 months,the
EDA would receive those funds as partial payment of the loan. Staff is prepared to have a development •
agreement drafted to bring to the EDA in August.
Staff/Commission_Itecoprnmendat on:
® Staff is recommending the approval of Resolution No. 97-EDA72 for several reasons. The resolution is
a conditional approval for the sale to MSP Real Estate and states that the sale would be in furtherance
of the TIF Plan and for the public purposes noted in the TIF Plan to eliminate the blighting influences
City of Mounds View Staff Report
July 25, 1997
Page 4
of substandard housing and increase the availability of quality housing for families. In addition,the
use of the property is in line with the work staff and the EDC have done regarding this area over the
"past several years based on the corridor study and the market analysis by Towel Real Estate. Tying the
sale,of the land to redevelop not only the property but to the entire development provides a much
;,,,dargetereturn. The significantiimprovement of the apartments will enhance the corridor and 4.7v_.
compliment the adjacent prdp 'ties all along the corridor. The type of construction materials and
landscaping can tie into a design theme that we are trying to create along the corridor. In addition,
based on the most recent changes to the tax rate for multi-family housing passed by the legislature,if
the existing apartments are not improved the tax base could drastically be reduced. After reviewing all
the information and being closely involved in the process for the past 6-9 months,I believe this will be
an enhancement to the community with limited (596) investment from the City.
In adclition,The EDC spent two full meetings discussing and analyzing the project and voted to
recommend a conditional commitment to sell the land and provide TIE assistance. As part of the
conditions,the EDC is su s_esting that if the relocation budget is not all used after,24 months from the
date of closing that these proceeds come back to the EDA as partial payment of the loan. This could
result in less than a 5%investment.
D •r'of Economic Development
•
�
ATTACHMENT A
r:} -4--
a CITY OF MOUNDS VIEW
Section 9 Redevelopment Plan
41.
10 Corridor
Highway
Prepared for:
� S
►� City of Mounds View
Economic Development Authority
Economic Development Commission
Ssion
Prepared by:I
SRF Consulting Group, Inc,
One Carlson Parkway, Suite 150
Minneapolis, Minnesota 55447
I (612) 475-0010
(612) 475-2429 (Fax)
1 Aft
April 1997
11111
Residential
Significant opportunities exist for the development and redevelopment of various types of
residential uses within Section 9:
,, PropertieIounds View EPA.PTW Investments and Pleasant Wood Apartments
The EDA-owned property does not have direct access onto TH 10;and due to a median in
County Road I adjacent the property, access to that roadway is limited, as well. As such,
the site on its own is not suitable for high traffic generators such as office or commercial
uses. The property's overall utility as a free-standing property is questionable in light of
these traffic limitations. Consequently, the contribution of the EDA property to the
vitality and character of Section 9 will not be significant unless it is combined with the
vacant properties abutting on the west which are owned by PTW Investments.
However, the PTW Investments property does not currently have access to TH 10.
Therefore, any reasonable expectation for significant development of the EDA and PTW
properties must rely upon shared access 'with Pleasant Wood Apartments. The
recommended course of action to create new residential opportunities on the north side of
the corridor while addressing the distressed aspects of the apartment complex is to:
• Facilitate major renovation of Pleasant Wood, including interior and exterior
rehabilitation and site improvements;
• Secure townhome or other medium density residential configurations for the
EDA/PTW site; and
• Create a shared access point as indicated on the Preferred Alternative.
It is important to recognize that Pleasant Wood Apartments representsa significant -
investment as well as a notable revenue source for the City. It is in the best interest of all
concerned that all of the properties between the Pleasant Wood and Eastwood Road be
considered a single development/redevelopment site,not only for access purposes but so
that current and future investments can be maintained. If Pleasant Wood is not improved
and maintained, it will be difficult at best to secure uses for the EDA/PTW properties that
will contribute positively to the character of the corridor.
Properly: Jones, Duchesneau. Demeules. Enamel {Iocated south and east of Win
Insurance)
Input received at a variety of forums and meetings indicated thatsenior housing is 4)
successful in the area at Silver Lake Point Apartments and that more is not only
appropriate but is needed within Section 9. The Preferred Alternative recommends the
siting of a higher-density senior residential facility just to the northwest of the wetland.
714-23-1997 1115 FROM MPHR 1001 WASHINGTON AV N TO 97843462 P.01/02
ATTACHMENT B
. 0 , . t247
iTire 1997
Who's Moron
A Profile ofrFamilies Who Will Have
iouip. hoete ► ►tor e tDecree sCd
As a result of the Holiman ;.decre e,.sev. h ndrest u of public bo g;on the
Near North Side of • to apolis will demolished and win be.replaced_Public
flew.and
rehabilitated pub hots u In otter'lo ons In M o. and suburbs. The
f es who had b Lily ia�the Num Side pubs housing: at.is demo win
have first priority►to move to these'new homes throughout the Twin Cities area.
profile of the Similes will be moving:
• $19*uiilies,ittcllttding.1297 children.and.42 fiat-time college students.
• Avra
g�- roily�a,is fouls pimple,with. an�-evecttge mcontc of$14,200.
Southeast A' visa Ries make 56%:�,A 1can*A1ner1can 38%, and white
fslt •os SY Less than 1%.oft a are Native Am+ an,and less than 1%also
identified themselves Si WOW*.
• Of the259 fa c fes who.havealready moved,33 have bought homes.in,M eapoh
and t `Manhoftt a took advanta a of$rst4iXne homebuyer
oour Bigg otd tlt�gb the M1 How Atrtho
• lot all these fa iliac wOl choose to look fora home iathe bu rbe but• thole who
have decided do so most din e :thatthaw reason is to have a great place to
xause their children, In selectinga a `'10 on•, esc often look for places that
are close to other funds,eater n f ►members,their workplace,or a church or
comity o tan whore theyalready have relationships.
These f lues will be lookingfor good n' borhoods where. there is a spirit of
velcocae and a comet to a high 4..,,,4.1 of lam.for tfie
•
• ;The iliiotropolita n Heusin+g Oppor'tutt�es fortcaro
Minneapolis Public.H ing Authority.,1001 North Washington Avenue
Minneapolis,_Minnesota 1;(612)342-1478
JUL,-23-1997 11 15 FROM 1001 WASHINGTON AV N TO 97843462 P.02/02
Juno 1997 •
The Hollman Decision and Housing Choice in K,
the Twin Cities region:n What Difference Does it M
- - -ake
In three w*ds,:the most important d crane: the children'futrrre. A follow-up study was done
in the Chicago area of children in flues who had moved to both city and suburban conarnunitie,s
as a result of the(arreara'decision, 1976
h" decision provitiad low-income,
mostly black f n e Binho with ho '
��., housing vouchers that theycould use to move out of
traditionally low-income areas of Chicago. The purpose ofthe lawsuit was similar to that of the
19 ,E ioliman decree in Minneapolis.)
The study thirteen yearsatter the layer,compared the experiairce
of children whose families
bad movedtto subUrhatt eo
aunt aa opposed to those wba:hacinsed their vouchers to move to
Chicago neig borhaods: The fludirags tell the story abouttirepersonal and economic value of
. housing choice:
• Nmety five percent ofsuburban youth completed high school,compared with an 8.0'4 tate for
city children.
•
• After the.move,40%of the youth who had moved to suburban schools were is a"college
•
track"in their high school,compared with only 24%among the youth who had remained in
• Twice as many suburban youth attended college,compared with their counterparts in the city,
and six times as manny attended thur-ye r colleges.
• Of the suburban youth who did nOt attend con,75%were employed fish-rime,compared
with only 41%of the young people who had,remained in the city...
• Four times a s maixyr suburb youth w era earningover$6.50 per hour. Nearly halfthe young
PSP working in the city were
per hour,compared to only 9°/a of the
-T $less than X3;50
suburban youth. Twice as Many q 'the suhurbim youth.(55%),had jobs with benefits.
Housing choice resulted in economic improve t:for adults as well; a significantly higher
perceritage oftbs parents who moved to suburban cornmurrities,and who had been unemployed
before their move Vie, '
employed,��:�- counterparts who remained in the city:
Chicago's experience is not unique. similar results are being observed in other metro regions
where horrsmgimobeity.effort.s are in place,including Tucson and Seattle.
The Metropolitan Housing`Opportunities Program
MiiirleapolisPuelio Housing Authority. 1001 North Washington Avenue
Minneapolis,Mt a<55401 (612)342»1418
/-4 -1W / e:104AM FROM MSP REAL ESTATE: INC. 612 336
yhti kY , a >° ATTACHM ENT C
3r.
MSP
• r e a l . e s t a i e services i n
c
July 24, 1997 •
Cathy Bennett
City of Mounds View
2401ighway 10
Mauve, View, MN 55112
RE: Silver Lake Commons
Mounds View, MN
Dear Cathy:
A variety of issues have come up through the course of neighborhood meetings, public
meetings and most recently an article in the Focus newspaper. I believe it is important to
address each of these issues directly with the facts:
lir
1. People fear property values will decline if the MSP proposal moves forward
In fact, SRF Consulting, Towle Real Estate and Mardell Amundson Appraisers have all
•indicated`that if Red Oak Apattnnents are not rehabbed; properly values in the area are
likely to decline. In fact, the appraiser has concluded that based on the quality, design,
and buffering of our development proposal, the prospects fbr long term appreciation are
good. The critical variables to property appreciation are construction quality, good design
and attentive management our proposal addresses all three. Enclosed is a letter f bm
Mardell Ainvndson Appraisers indicating that our development proposal will not
negatively impact property values. The appraiser has also included an Appraisal journal
article indicating the same conclusion.
2. Crime will increase if the development proposal moves forward.
The property already has a notorious history of having more police calls than any..other
property in the city. The reasons for this are poor screening, inattentive management and
poor upkeep. Our proposal offers professional on-site management, criminal background
checks and the curing of all deferred maintenance items. Our Management Company,
Danziesen Properties, anticipates that police calls,will drop by over 90% once we
complete-this development. •
7-25-1997 0:04AM FROM MSP REAL ESTATE. INC. 612 336 4565 P. 3
3. MSP's proposal would put children in unsafe conditions along Highway 10.
Red Oak Apartments, as it currently exists, is unsafe,forcchildren because the only open
greenspace available for play is along the Highway l0;iight9,f--way. Our propoat
provides 2 structured play areas and an indoor community space where children are safe
to play. We also propose to provide fencing along the Highway 10 corridor to keep
children away from the Highway. Our proposal provides for safe play, whereareas the
current situation is unsafe.
4. *minds View does not need anymore rental property.
City staff, the council'and the community as a whole agree that Mounds View needs to
substantially upgrade the quality of its existing rental housing stock. Our proposal
provides exactly this quality upgrade to the community's worst kept apartments,and
solves child safety issues and crime problems by adding amenities and reducing density.
This level of quality improvement can only be accomplished by including new
construction along with the rehab. The tradeoff is providing 16 additional rental
townhomes (which Mounds View currently has none to offer) versus a substantial rehab
which would otherwise be unavailable. We believe this is a win-win for the city-- •
accomplishing rehab goals and offeting housing diversity not currently available in the
city.
5. The increase in real estate taxes does not offset the increase in services with this
development proposal.
The key here is that under our proposal, Mounds View's tax base will increase. The
normal increase in services with the addition of 16 new townhomes should be more than
covered with the increased tax base. It should be pointed out that the developer,not the
city, will be responsible for installing and maintaining rroadways, installing water, sewer
and fire hydrants, as well as plowing and cleaning roadways. It is also likely that police
calls will decrease, reducing current police requirements regarding this property.
Because of recent legislative changes, taxes on the Red Oak Apartments will likely
decrease substantially in 1998 if our development proposal does not go through (see letter
dated 7/24/97):
Current Taxes: $30,130
1998 Taxes: • $8,892
MSP Projected Taxes: $37,493
•
Mounds View's tax base will increase by $28,601, ($37,493-S8,892) under the MSP
proposal.
7-25-1997 0:05AM FROM MSP REAL ESTATE. INC. 612 336 4565 P.4
410
6. This developmenpproposal is not the highest and best use for this.property the city
should wait for a better proposal.
The Mounds Vievtig Commission, they Economic Development Commission,
SRF Consulting Group,"Towle Real Estate and Mardell Amundson Appraisers have all
reviewed'this property in detail and have all concluded that its highest and best use is for
multi-family development that incorporates the rehabilitation of the existing Red Oak
Apartments. City staff marketed this property for commercial development to 25
developers and received no interest. It is the reasoned opinion of all of the experts as
wel as city staff,.the City Planning Commission and the City Economic Development
Commission ission that multi family is this property's highest and best use.
7. Rental Property will deteriorate over time.
This property has already deteriorated substantially. Our.proposal is to.cure all of this
deterioration with quality, low-maintenance materials. Properties deteriorate because of
ip , lack of money to keep them maintained properly. We haveprepared our operating
budgets to meet or exceed Minnesota.Housing Finance Agency standards for operating
this type of property. Our operating budgets have also been reviewed by MHFA, Ramsey
County, TCF bank as well as the real estate investment department of Key Bank (one of
the nati'on's largest banks) - all have found these operating figures to be more than
adequate to maintain'the quality level of this property over time. Furthermore, our
property manager will institute a preventive maintenance program to insure we maintain
our property's top condition. On top of all this, we will be setting.aside $250/unit each
year in a replacement reserve to begin saving for future replacements. MSP Real
Estate, as well as Milo Pinkerton personally, are providing guarantees to insure the long
term success of this property. Our company, as well as our partners, are investing in this
property because we believe it will appreciate in value over time and we are planning
right now to make that appreciation a reality.
Everybody with whom we have spoken (even our detractors) hal agreed that on its merits,
our development proposal is of the highest quality. We hope that the City will make its
decision based on solving an existing problem with an extremely well thought out, high
quality development.
Sincere ,
O
IP /ire
3e '
aunyb2.1u
7-25-1997 @:OSAM FROM MSP REAL. ESTATE. INC. : 612 336 4565 P. S
.
�+k�;,th; k, .Wd
v • �"'S" �`.1i..5� r• ` � '�'. -.-,*•*
C .r.�rp.T+s.�s7,+W'``t .,T oS[�t < :'x'-',-- . .t `�y ; j'j'tY
MSP 0
real estate services inc
July 24:'1997
Cathy Bennett
City of Mounds View
2401 Highway 10
MoundView, MN 55112
RE: Silver Lake Commons
Mounds View, MN
Dear Cathy:
Enclosed is a real estate tax analysis of the Red Oak Apartments comparing the existing tax
rates to the new multi-family rates just enacted by the Legislature. We assumed that an Ak
owner would choose the lowest tax capacity rate,since the existing rental structure and
resident income levels already comply with the new legislative requirements.
You also requested,information on Valley Farms Apartments -- an apartment community we
rehabilitated in Westfield, Indiana. People you may wish to contact are as follows:
Jack White Tyson Miller
Building Commissioner Police Officer
City of Westfield Westfield Police Department
(317) 896-5577 (317) 896-5236
Sincerel
_.,.....20407.--
Jeff
•
cathyb.ltr
7-25-1997 0:OGAM FROM MSP REAL ESTATE. INC. 612 336 4565 P. 6
REAL ESTATE TAX ANALYSIS
FOR.
RED OAK APARTMENTS
MOUNDS VIEW, 1 MN
Current Taxes under Taxes under
"axes New Legisla ion. MSP praxis.*
(as is-40 units) (as is-40 units) (Rehab &New-S6 Units)
Assessed Value $650,000 $650,000 $2,550,000
Aik x xx
I. Tax Capacity 3A% 1.0% 1.0%
X x x
1997 Tax Rate 1.3633.$ 1.36338 1.36338
Real Estate Taxes $30,130.70 $8,891.97 $37,493.51*
*Includes $3,000 payment in lieu of tax on 10 units.
7-25-1997 0:O6AM FROM MSP REAL ESTATE. INC. 612 336 4566 P_ 7
MARDE 4L •
AMUNDSON `.
JOHNSON &
EIRNESS,, INC.
.1( luat.ion & Consultation '
My 24, 1997
Mr.Jeffrey.R.:Huggett :
Vice President
MSP.Real Estate Services,Inc.
311 Fifth Avenue North
• Minneapolis, MN-55401
Rit IMPACT OF LOW-INCOME HOUSING ON PROPERTY VALUES
.,.
Dear Mr. Huggett:
In conjunctionwith your current proposal to acquire and develop/redevelop the Red Oaks
Apartments property and adjacent vacant land located along U.S.Highway 10 in Mounds.
View,Minnesota,you have asked me to comment on the potential impact of the'project on •
property values in the area. .
. Generally,I have observed that property values'in a nei hborh 'te .
p perty g ood nd to rise or fall with the .
level of maintenance and attention to management of properties that are not occupied by the
owner. In other words, when a project such as Red Oaks Aparuuents(formerly Pleasant
Wood)begins to suffer deferred maintenance or inattentive management,property values in.
the area are threatened. This tends to be true regardless of the type Ofoccupancy of the •
buildings. The single most,important factor on property values in the surrounding area is to
• cure the deferred maintenance and inattentive management of Red'Oak Apartments. '
In my experience working with Section 42 properties throughout the Midwest,I have not •
observed.an adverse impact on nearby property values due to the construction and operation
of an income-restricted development. Section.42 properties are privately owned and •
fmanced, with indirect government involvement through the availability of income tax credits
to sell to investors. The property must be managed very professionally and must maintain
good curb appeal to continue to compete for tenants in the marketplace;or the property.runs.
the risk of non-compliance and/or foreclosure. As a result,Section 42 properties tend to be
indistinguishable from market-rate apartment
properties. Based on rztyreview of your
development proposal,the design appears to meet or exceed.market-rate apartment standards,
and is appropriately buffered from.surrounding single family'neighborhoods. These are two
key ingredients'(along with property management)that bode well for.long term property
value appreciation. •
• . '10
•
AAAAD _ _.7 Tom.. rein♦e .. - ..
7-2b-1997 0:07AM FROM MSP REAL ESTATE. INC. 612 336 4565 P. 8
•
•
•
•
• Mr. Jeffrey.R. Huggett •
July 24,,1997
• •Page•Two
I have attached an article from.the January 1996 issue of the•Appraisal Journal that deals with
•this very issue. The conclusion of the-author is that well-managed low-income properties
•have no•measurable impact on nearby property values. • .
•
• • Z ick you for the opportunity to comment on this issue: •Please feel free to call me if you •
...
t_• have.any:additional questions.
•
Sincerely; •
• MARDELL AMUNDSON JOHNSON•&LErRNESS,INC. • . • • •
•
. #. 11v_eso,at:),4,400e . . •
Michael F. Amundson,MAI . • • • • ••
.• Principal .
7-25-1997.0:07AM FROM MSP REAL ESTATE. INC. 612 336 4565 P. 9
•
Micholik M
• Low-Income. Housing in Our
Backyards?V.� :hat mai n ens to
�p
Residential Property Values?
•
. .
. ••
• .• .
A market analysis Of four very low4income family housing developments in four
•
growing Chicago suburban market areas was conducted.Despite e►xpecta
• tions to the contrary,the evidence indicated that iovoincome housing does not
necessarily lower the value of surrounding residential property or curb further
successful market development in the immediate area..The conditions con-
. . tributing to the success of the four projects analyzed'include good community
planning,good design and buttering of the sites,and good property manage-
ment.
•
•
•
of in my backyard!This shout is espe- • Will residential property values in the
•• • daily strident when the proposed develop- neighborhood plummet when low-
went is low-income housing—row after income housing is built next door?
• row of crowded,ugly,cheaply constructed The certainty about low-income hoes-
• buildings, garbage strewn everywhere,
dirty curtains partially hanging from bent mg is that the residents have met govern-
Every-
rods over screenless windows, and bat- mex�t•estabIished income criteria. Every
thing else is a variable—the density, the
tered cars rusting to death in the parking construction materials and design, the
Iot.This image gives rise to a typically neg- maintenance and management,and the re-
ative reaction. Who would choose to live sultant effect on neighboring residential
• next door to such a place as that? property values. This study suggests that
Midway through the 1990s, 30 years the stereotype is not necessarily accurate
into `The Great Sodety" housing pro- Wand the fear is not necessarily founded.
grams, and 20 years into the Section 8 Further,it reveals that low-income housing
housing experiment,can we answer these built right in our backyards might have no
questionw? effect at all on property values.
• Is the low-income housing stereotype . In mid-1994,a suit was filed seeking to
accurate? prevent the Illinois lousing Development
• Does the commonly held fear of low- Authority (IHDAM from financing the de-
income housing have foundation? velopnnent of 180 units of very low-income W`
Michael S.MORous,MAI.is president and owner of MaRous and,,Company.a real estate appraisal
firm.in addt ion to providing documented appraisals.high `t and best use studies,and marketability
and feasibility studies.he has served as an expert vrtri n proceedings.Past president of the
Chicago Chapter of the Appraisal tnstitete.,Mr.MaRbus iilafitsilifflOchair of the Political Affairs Commit-.„
tee.A graduate of the University ofillirtoN041h a degreeirt Cain land economics.he has published`dd01
. cies in*variety of professional Jourriab.
7-25-1997 0:07AM FROM MSP REAL ESTATE. INC. 612 336 4566 P. 10
housing in a suburb in western Dul'age pied. Therefore, the cor
County,Illinois.The neighbors objected to competent management-
the
anagementthe project,primarily based on the effect cant factor.
they expected that it would have on the Because of the.pre
• property values of their houses.IFIDA be- low-income housing, E.
lieved that the success of such a suit would negative impart was exp
be a deterrent to its activities statewide.As developed for analyzin,
ritto ,hr part of'RDA's full-Scale defense, the po- tempted to account forth
tendo' impact of the development of the the four projects was ee
project on surrounding residential property spect to the compatibilit
values was assessed. In a relatively short went with the surrounds
i time,parameters for a market study were in terms of design and c
set.Residential property values adjoining ity;the condition of the
similar low-and very low-income housing pecially the density. TI
complexes already constructed would be each development was
a analyzed.From a list of recent MUM.prof- presence or absence of lit
• ects in the Chicago metropolitan area,de- ling;the age and conditic
velopments that matched the character's- and the window treatm=
• is tics of the proposed development were of children in the compl
chosen: recently constructed projects (as were considered.Pinalll
opposed to a rehabilitation project)adjoin- surveyed by Interviewin
• I ii ing single-family and/or market multiform- brokers,reviewing multi
j: fly developments;large projects with low- listings and annual sur
i 1 incomeand very low-income family units searching transactions wi
(as opposed to elderly developments),;and focusing especially on t
projects located in developing suburban.ar- ately adjoining or facing
• eas with increasing property values. housing.Summaries of tl
. Three projects on the list&t these erste four projects follow.
ria.Despite its recent completion,`Watet�-
ford Place was included to assess the of- Victorian Park,Streamwc
1 facts on additional development. ixr the The fist project rev etve
• area.A fourth IHDA project built in 1981 Park in Streamwood, i
• J and meeting all of the same criteria was. Streamwood is located
i I: chosen to assess long-term impact on the downtown Chicago in D
1,. market.Although the specific loan guaran- 1994,the population was
•
tees,tax credits,or rent subsidy programs of the average house waf
varied between the four projects,all were income was $46,271. p
entirely either low-income or very low-in Strea rewood Building r
come family housing developments in de- building permits totalle
veloping suburban areas. building permits through
• totalled 1,591.
STUDY PARAMETERS AND The entire 300-unit
• METHODOLOGY 100 low-income units in
and was constructed on
The quality of the management of the pro- acres for a density of abet
jects chosen could not be determined in The allowed density unc
advance. As it turned out, all of the pro- . zoning is 10 unfits per act
jects chosen for thestudy appeared to be built is consistent with the
adequately managed and were fully occu- velopment; the adjacent
TABLE t Victorian Park Summery
.
One Bedroom/One Bath Two.6edfooms/One aro
Total Number of No.of Size(in` Monthly Rent per NO.of Ste an Mo
Low-1 Units Units square feet) Rent square foot Units square feet) Ri
1b0 27 50 $474 $0.63 37(28a) 150 st
eoo 'iSSai 1.:. $0.68 36(19o) 955 se
914 Th.-. A,.Nrwiw,..) i....i.wwl' 1om:,.+n. 1001.
7-25-1997 0 08AM FROM MSP REAL ESTATE. INC. 612 336 4565 P. 1 1
zoned R-3, a designation that allows 6 erage increase was 3.1%,a figureconsistent 40
dwelling units per.:acre. The rear of the with the general market ara according/to
low-income section borders the Windsor the brokers interviewed.Sale prices aver-
Place
subdivision, a single-family neigh- aged 98%of asking prices.Recent sales of
borhood,to the west. identical model houses showed no relation-
•+ Windsor Place is predi
Winately frame ship between value and proximity to low-
houses, some with brick facades;:modest income units. .
ranches;and some two-story-hoists rang-
ing in price from $130,0 50,000. Liberty Lal#01.Apartments,Lake Zurich,
Other,development in the arta includes Illinois _ T.
slightly older single-family housing and The second project reviewed was Liberty
townhouses.Portions of the single-family Lake Apartments in. Lake Zurich,Illinois
neighborhood border the. unsubsidized (see Table 2). Lake Zurich is located 37
Victorian Park apartment buildings. miles northwest of downtown Chicago in
The Victorian Park project was cors- Lake County.In 1094,the population was
structed in 1987 miler a Section 236 interest 14,947;the value of the average house was
! subsidy.]Constriction consists of four-unit $183,781;the average income was$76,876.
S, • and eight-unit two-story frame buildings According to Living in Greater Chago,2134
with attached garages accented with dark building permits were issued in 1993 and
blue or black shutters,patios or balconies, in 1994;four were issued through Septem-
and some landscaping. The property ap- her 30,1994.
pew to be in good condition.The manage- Liberty Lakes was constructed on an ir-
matt resorted that 30 to 40 children live in regularly shaped 8,05-acre site.The density
the low-income housing units. as built is 8.7 units per acre,which is below
The MAP Multiple Listing Service the density allowed under the site's R-4
(MLS)reports that for the first nine months zoning---12 units per acre. Although the io
•
of 1994, 405 houses sold in Streautwood, Liberty Lakes density is somewhat higher
with an average listing price of$136,240 than the nearby R-3 zoning,which allows
• and an averagesale amount of$133,096(or ' 4,35 dwelling units per acre,because of the
. ; about 98%of the asking price).Sales in the mixed uses in the area,the density of Lib-
•
single-funny area immediately adjoining erty Lakes appears consistent with its sur-
. • the subsidized low-income units were ane.
• � =fuxdimgs.Uses to the immediate north are.
lyzed over the life of the development. a public library,a church,and a parochial
. ! Data concerning sales of similar houses in school;uses to the northwest are the Lake
the subdivision not adjacent to the subs]- Zurich main post office and a fire station.
• dized housing as well as resales of houses Two single-family developments are lo-
bordering the subsidized units were col- cated east of Liberty Lakes across a street.
lected." OId Mill Grove is about 20 years old and
The research found 12 sales of single- has housing prices from $120,000 to
i family houses in the immediate vicinity. $200,000,and Jonquil Estates is a new de-
Sales of hou•
ses bordering the low-income veloprnent currently under construction
apartments showed increases in value and planned for 22 houses in.the$229,000
ranging from 2.3%to 3.6%per year;the av- to$292,000 price range. The developer of
•
TABLE 2 Uberhr Lake#summon'
ono Bedroom/One Bath Two Bedrooms/One Bath Three Bedrooms/Of
• �� � Rant
Total No. Size(in Rent Per No. Rent
Size an Rent per' No, Size(N1 Rent
Number of square per square of square per square of square
of Units Units feet). Month -,-t Units feet), 'Month foot Units feet) ft
• 70 8 950 $867 $0.91 28 824 $907 31.10 34 950 S1.05;
1. Under Seetfon 236,tenants ate required to pay at least 30%of their income,wig must be lower than 80%of the median.Ac-
cording to federal guidelines for 1994,80%of dor otedklkittiptplly of four in Wage,Lake,and Cook counties is
839,900.
• 2. CAMS Publishing,Inc.,Lteinn iu a,19994 Editkm(DeortiiitMina*GAMS Publishing,Inc.,1994).
•
. . . ,..a.,—,i... 6...�,n,�. aIvv. 0iC 330 4Jt `. P. 12
I
•
TABLL 3 Waterford Placa
One Bedroom/One Both Two Bedrooms/One Both
Toral Number No,of
Siae(in Monthly Rent per No.of Site(In Monthly Rent per
41111
at Units Units square feet) Rent square foot Units square feet) Rent square foot
288 24 550 5480 $0,87 96. 720 $600 S0,83
168 860 8500 50,58 7;0 $620 S0.86
i P"`` yrs„,.
Jonquil Estates reports that,since an adver- Sale prices in the neighborhood averaged
using sign was posted in May1994, six 97%,of the askinge., i
contracts have beesigned.The rear of the price.
Liberty Lakes site is open area with a de- Waterford'Place Apartments,Zion,
tention pond beyond which are some con- Winois
dominium units. There are 270 parking The newest project analyzed was Water
,e spaces on the site but no garage parking. ford Place Apartments in Zion,Illinois(see •
Constructed in February 1991,Liberty Table 3). Zion is located 45 miles north of i•
Lakes is a dormitory-style development downtown Chicago' in Lake County. In
that consists of 70 units of low-income and 1994,the population was 19,775,the value
very low-income housing,all of which are of an average house was$96,496,and the I •
Section 8 units 3 Of the one-bedroom units, average income was$39,385.According to
six are for the elderly and two are for the Living in Greater Chicago,4 1993 building
mobility impaired.The building appears to permits totalled 134,and 1994 permits to-
be well maintained.The management re- tailed 94 through September 30,1994.
ports that about 120 children live in the de- The Waterford Place site contains 17.42
•
velopment,of which 10 are infants and tad acres for a density of 16.5 units per acre.
•
diem, 10 are high school age,and the rest There is parking for 576 cars.The develop-
ip . . are entary school age meat is denser than the proposed sur-
The MAP MLS for the first 9 months of rounding developmnt, but is part of an
1994 shows that there were 286 sales of sin- overall design.NortliWaterford Place is
gle-family houses in Lake Zurich,with an an area planned for single-family houses;
average listing price of$197,825 and an av- on a deadend road,this single-family de-
erage sale amount of $191,934, or about velopment will eventually connect with its '
•
97%of the asking price.Data available for extension in an area of existing houses.De= '
sales in the single-family area immediately velopment on both sides of this road is
adjoining the subsidized low-income units part of the developer's overall original ,
were analyzed over the life of f the low- plan.'The plan calls for commercial devel-
income development. Data concerning opment along the major arterial at the :
sales of similar houses in the subdivision front of Waterford Place, townhouses to
not adjacent to the subsidized housing as thenorthwest of Waterford Place,and sin- •
_- well as resales of houses bordering the sub- gle-familyhouses to the north. Another '
•
sidized units were collected. major developer has a single-family devel-
Eleven sales of new or existing single- opment known as Butterfield Place.under-
• familyhouses in the Immediate area were way northwest of Waterford Placeto the
found. Resales of houses bordering the east of Waterford Place is farm•land;•a
low-Income apartments showed annual in- cemetery, and the Harbor Ridge single
creases in value of 2.8%, 6.9%,and 9.7%. family development High-tension wires
These figures are superior to the 3.2% to run along the northern rear boundary of
4.6%increases in houses not bordering the the Waterford Place site.
Liberty Lakes low-income house,and su- Waterford Place was constructed in
perior to increases in the generalmarket two phases in 1992 and 1993,using Section , .
area,according to the brokers interviewed. 42 income tax credits.5 There are eight
3. Under Section 8.the government pays the owner the difference between the tenant contribution(30%of income)and a fair
cake jent based on capital anti)operating costa fora period of 20 to 40 yen.Tenants are eligible if t eirincoate is lower than
50%of the anther, adjusted for fancily size,According to federal guideline,SO%of the median income for family of
wt *,p heAlt.,-four in Deese,take,and Cook credo was$5,650. <,
.Y',,'-,4.+4i=irlvitig i+e Greeter Otago.220.
' ”5, Sedan 42 Income Tau Credits are available flir elig0►le new oanseuction or I '
, ^,:;: ,�, � acquisition and rehabilitation of aadstin
The tax credits may be taken for ten years after the project is placed in service with an accrual amount of etedit at a Axedj
1
7-25-1997 0: 10AM FROM MSP REAL ESTATE. INC. 612 336 4565 P. 13
•
•
TABLE` Brookhaven Swnmarl►
One Bedroom/One Bath Two Bedrooms/One or Ona.an -Htdf,Balhs Three 8w/rooms/( a
Rent Rent
Total No. Size(In Rent per No. Size On Rent per No. Size(in Rer
Number of square per. : square of square per square of ReM Ae
of Units Units feet).. Month foot Units feet) Month foot Ur>"if4w„t�ee a per SQu
� Month roe
181 70 700, 3848 $1.21 82 1.100 $1,045 $0.95 16 1,250 51,143 $0.9
13 600 $818 S1.36
rte, a.,
buildings and 36 units per building for a tion was 13,701, the value of the average
total of 288 units. Some of the units are house was $176,897, and the average in-
slightly below grade. Amenities include come was$64,259.Living in Greater Chicago
two detention areas, landscaping, and a reported 1993 total building permits of 594
iclubhouse currently housing the rental of- and 1994 building permits of 578 through
s Liice.The building is fully occupied.Units September 30,1994.6
. • come with carpeting,window treatments, The; Brookhaven site contains '15.8
1' . ceiling fans, and microwave ovens. The acres, resulting in a density as built of
management estimates that 30 to 40 au- about 115 units per acre.A library,a deten-
. • dren live in the complex,of which 20%are tion area,and open space are between the
• school age,5%are high school age,and the low-income housing and the street on
• remainder are elementary school age.The which the project is located.West of the site
developer of Waterford Place previously is county-owned land designated as a for-
has constructed identical developments est preserve. North and west of Brook-
. that are commanding market rents in other haven is a public library, and north of
. • locations in Lake County.The complex ap- Brookhaven is a high school.A small group fik
• . pears to be well maintained. of single-family houses are north of NW
According to the MAP MLS,the aver- Brookhaven,and a newer townhouse de-
age listing price in the Zion and Beach Park velopatent is across the street..
market area for the first 9 months of 1994 Constructed in 1981,the development
. was$99,876,and the average sale price was is entirely Section 8,The 181 units are con-
' $95,328.All lots in Westside Rills,the sin- figured in seven clusters of four buildings.
gle-family development immediately north Of the 70
of Waterford Place, are priced at garden-level one-bedroom units,
$27,900 .12 are handicapped accessible,and of the
and are being sold both to individuals and smaller one-bedroom units, 6 are Nandi-
• to developers. New'.houses:in Westside capped accessible. There are 82 two=
Hills are listed at$132,000 to$136,900. In bedroom units with three slightly varying
Butterfield Place,since marketing began in sizes and configurations and 16 three-
January 1994,22 houses have sold and 10 bedroom units.The main buildings contain
have closed. Listing prices range from a total gross building area Of about 191,000
a, $114,990 to$122,990.In Harbor Ridge,' ist square feet and a total rentable area of
in;prices range from$111,990 to$146,900, about 165,600 square feet.The complex in-
Waterford Place appears to have no ad- eludes a clubhouse, a maintenance build-
verse impact on market demand in the ing,parking,two children's play lots,a ten-
area,as evidenced by continued sales and iris court, and a swirnuung pool. There is
• development of single-family lots buredi- ample unassigned parking. The complex
ately north of this housing development. appears to be in good condition. Manage-
'new reports that there are 142 children liv-
Brookhaven Apartments,Gurnee,Illinois ing in the development, of whom 62 are
The final development analyzed was the preschool age,59 are in elementary school,
oldest one(see Ue ble 4).Brookhaven Apart and 21 arra in high school,
merits is Located in Gurnee,_:Illinois.. 45 According to the Northern Illinois -
miles 40
north of downtown Chicago inn Lake MLS, the average sale price of single-
County.Rapidly growing,the 1994 papule- family homes in Gurnee for 1994 was
,- ti, ,,,,,, ceegge of qualified p�mats,which is gena*IIy rho pion of the projecr that Nowa low-income tenants Ram cm ba no K-zs�x r'+�":, :,
c peater 111663ox of 50S or 60%of the `
tk,,<. ,, +irea'sauadi�reimcvime. '.�. .a�rsm
_ 6. Living i►r GnsirefChi p 21 _ ->,. :�a
s
• . _ MoRous:tow-Incctrne Hotlslno M dur Acriry z
7-25-1557 0: 10AM FROM MSP REAL ESTATE. INC. 612 336 4565 P. 14
•
• $179,941. Data available for sales in the ties adjacent to low-income and very
. low-
single-family area immediately adjoining income family housing was expected.
the Brookhaven low-income units were an- However,there was no evidence of this.'In-.
alyzed from 1988 to the present:The North- stead the evidence showed market values
ern Illinoi ` LS reports that sales for the consistent with property not adjacent to the
first 9 months of 1993 for attached single- low-income units,and values rising at rates
family how l average listing price consistent with the community as a whole.
of $107,490si
ari '4ayerage sale price off° A dampening effect on investment in new
$102,756,or 96%of the asking price.Sales ` development in the'immediate area was
for the first 9.rnonths of 1994 for attached also expected. There was no evidence of
single-family houses had an average listing this either. Instead developers are con- •
price of $109,675 and an average sale strutting and are selling good-quality,
amount of$105,402.This is an increase of single-family housing right,next door to
2.6%in sale price.Data'available since X988 very low-income buildings. •
II
for sales of aownhouses in the area immedi- This study was designed as a market .
ately adjoining the subsidized low-income 'analysis,not as a statistical regression anal- •
±ti units and similar units not immediately ad- ysis.However,a statistical regression anal-
joining were analyzed. The single-family ysis, "Relationships between Affordable i.
Low-and very houses bordering the low-income complex Housing Developments and Neighboring
have not turned over,at least since 1988. Property Values,"conducted by Paul Cum-
low-income The sales of the townhouse units close mints and John Landis,of the Institute for
housing do not to Brookhaven were comparedwith sales Urban and Regional Development of the
of siflnilar'units away from the low-income University of California. at Berkeley,
automatically housing, all in Phase I of the townhouse reached similar conclusions for a variety of
i er the value ofdevelopment.There are four different unit low-income housing types.Although they
tots
models with different layouts and sizes. did'not specifically address the issue of •
finding Units with the A layout'away from density,the authors concluded: '
f` Brookhaven ranged°from a loss in value of poorly y deslgtted, poorly maintained,and
0.89% to an increase in value of 2.93% on poorly managed projects can.affect neigh-
'' development or an annual basis in contrast to a 1.67% in- ` borbood property values-regardless of
crease for an A unit adjacent to— the' whether they are afrordabl a or market-rate'
• prevent siiccesLs�_ jConversely welldesigned,wail:managed,
Brookhaven•units. Increases for B:units and welin projects should not of
market away from Brookhaven ranged from 1.84% feet neighborhood property values,regard.
development to 9.76% annually. Increases for C units less of whether they are affordable or mar-
ranged from 0,89.% to 3.07% away from ketratei
around it. Brookhaven; a C unit facing Brookhaven From au appraiser's viewpoint, the
showed ari increase of 1.38%per year The conclusion must be that low-income and
only D unit sale away from Brookhaven very low-income housing does not auto-
showed a 2%annual increase in contrast to maticany lower the values of surrounding
a 2.5%increase in a D unit facing the low- denti development or prevent sue-
income units.These figures show that re- cessful market development around it.
sales of townhouses .directly facing the apparently,a>development must fulfill
Brookhaven low-income apartments reflect certain specific conditions before the con-
Increases in value consistent with those lore-
elusion can be reached.'Ph t,there must be
ported by the Northern Illinois MLS and good planning on the part of both the coon
with comparable sales of similar units in motility and the developer.The projects re-
Phase I of the adjacent market townhouse viewed were well coordinated with sur- i
development that are not directly adjacent rounding densities and uses,and natural •
•
to the low-income housing. .rid manmade buffers were used to good
effect at all four sites.Second,there must be
CONCLUSION - good construction quality and design.The
9
developments reviewed fit in with the •••
A dampening effect of 3% to 5%.on the , surrounding community; there were no .
market values of residential property val- "public-housing red" doors in sight. The
7. Poul Cupvningiand tobtaLairdia,"tdadauEups:between Affordable Housing Developments atid3Vaigbbdeing Property Val- '
nee working Papaf°399;University et California at 8erkoloy,kodettia for Urban and Regional Development,September 1993,
17.
i
7-25-1997 0: 1 1 AM FROM MSP REAL ESTATE. INC. 612 336 4565 P. 15
one project that was not as attractively de-
phased out; HUD is being dismantled. Aik
signed was well buffered.Third,there must State programs will feel the pinch of these lip
be good management.All four complexes national activities and likely will be tar-
were well maintained with competent on- geted themselves.The negative image irn-
site management. This factor cannot be mediately conjured up by low-income
overlooked, especially when consideririg, housing has no doubt contributed to these
the importance of the integration of these decisions. Yet the need for "decent, safe, '
• complexes into their larger.communities , <f sand sanitary housing for every American"
There is nothing new about these con ,, not diminished sincet goal was ar-
elusions,and the same criteria apply to the ""'dculated in the Housing ktt of 1948.The
successful development of market-rent irony is that now that low-income housing
housing as well.What is new is that these is being well executed,the question has be-
standards are now being achieved for low- come whether or not it will continue to be
income and very low-income housing and built at all.perhaps the greater question is
A that the result serves well todispel the low- whether or not the truth about low-income
income housing stereotype. housing can make a difference in either the
* The shift in the national political tem- reactions of its potential neighbors or in the
•
perament brings high irony to this discus- decisions made about its future.
• sion.Section 8 housing programs are being
•
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•
•
•
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411
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MaRous. Low-Inco ma Hot Leine"in(S,r.
FROM BRIGGS AND MORGAN ST,PAUL 612 223 6645 (THU)07,24' 97 11:42 /ST. 11:41/ NO,3360015-940 P. 2
2200 FIRST NAT[ONAL BADE EUILDING
332 MINNESOTA STREET
SAINT PAUL.MINNESOTA 5310f
• BRIC GS AND MORGAN TELEPHONE M 223-0430
?ACSTMTLE 61Z120
PROFESSIONAL ASSOCIATION WRITER'DIRECT DIAL
(612)223-6420
WRITER'S E-MAIL
July 24, 1997
tACSIMILFAIRU1 IP
thy Bennett
Director of Economic Development
Mounds View City Hall
2401 Highway 10
Mounds View, Minnesota 55112-1499
Re: Condition Approval for Sale by the EDA of the Property at 2625 highway 10
Dear Cathy:
di I understand that you have published the notice of public hearing which we discussed
and reviewed earlier. Next Monday,the Board of EDA will hold that public hearing on the
question of selling the above-mentioned property,which was initially acquired by the EDA
as one implementation of its Housing Replacement Program.
I have enclosed a suggested resolution for the Board to consider next Monday
following the public hearing. This resolution would give a conditional,non-binding approval
to the sale of the property,but subject in all events to final approval by the Board on such
terms as it may or may not find acceptable at some future time,whether or not this property
is eventually conveyed to MSP Real Estate in connection with its proposed new
townhome/apartment rehabilitation project involving this property and several adjacent
properties.
The resolution indicates that the sale price in the future would be the appraised value
or such other amount which the Board may find acceptable at the time. It may turn out to
be the ease, and I believe the law clearly allows this,:that a lesser purchase price might be
necessary in order to provide a sufficient"write-down"of the land costs so that the eventual
developer could feasibly proceed with the project,whether that is MSP or some other entity.
•
7590241 MINNEA?OLIS OPRCB a IDS CIIN7tR•WWAtBATGOS.COIt
WADER-LEX MUNDI.A GLOBAL ASSOCIATION 01 INDrNDENT LAW FIRMS •
FROM BRIGGS AND MORGAN ST,PAUL 612 223 6645 (THU)07,24' 97 11:43 /ST. 11:41/ NO,3360015-940 P. 3
BRZ Gs AAP MORGAN 11
Cathy Bennett
July 24, 1997
Paget
AsK .aye mentioned to yougr the phone, it is not entirely clear to me that this
public E.'-< ,r,i a; absolutely required,. ply because the property in question was acquired
under that roved}lousing Replacem m#Program and was done pursuant to,among other
things, a written approving resolution which I provided to you. I would point out that the
Housing Replacement Program is a component of the overall'Project Plan"of the EDA's
City-wide "master development area" and all of that has heretofore been approved by the
EDA Board with appropriate findings of need,after published notice and prior notification
toounty Board and School Board.
if
In any event,I see no harm in taking this step at this time for legal or other reasons.
t' I do believe that the EDA,would be authorized in the future to negotiate the sale of this
land under the general approval given in this resolution.
If you or any of the EDA Boardmembers have any further questions or comments
on this,please don't hesitate to call me.
9vex %. 0
P. O'Meara
304a
; 0
aztt ;
FROM BRIGGS AND MORGAN ST.PAUL 612 223 6645 (THU)07.24' 97 11:43 /ST, 11:41/ NO.3360015-940 P. 4
• RESOLUTION NO. i7-sox -7a
A RESOLUTION GIVING CONDITIONAL APPROVAL TO
THE SALE OF CERTAIN PROPERTY
It is hereby resolved by the Board of Cottimabtoners (the
"Board") of the` Mounds view Economic Development Authority (the
"Authority") as follows:
1. Re itals.
(a) Pursuant to Minnesota Statutes, Sections 469.124 to
469.134 and 469.090 to 469..108 (collectively, the "Act") , the
Authority (i) has undertaken a program to promote development
and redevelopment of certain land within the City of Mounds
View and is engaged in carrying out the Mounds View Economic
Development Project (the "Project") within the City; (ii) has
approved a. Project Plan for the Project; and (iii) has
approved and adopted a Housing Replacement Program under and
as an aspect of the Project Plan.
(b) The redevelopment of property within the Project is
a stated objective of the Project Plan and the Housing
Replacement Program.
(c) The stated purposes of the Housing Replacement
• Program include reducing the social costs of blight, making
better use of existing public infrastructure, and
redistributing tax base to communities with higher levels of
fiscal needs. The Housing Replacement Program's objectives
include replacing smaller, lower-value housing on scattered
sites throughout the City with larger, new and higher-value .
housing designed for families, the elimination of blighting
influences and substandard housing, and the increase of
available quality housing for families within the City.
(d) Under the Housing Replacement Program the Authority
has heretofore acquired the property located in the City at
2625 Highway 10 (the "Property") .
(e) MSP Real Estate ("MSP") has proposed to purchase the
Property from the Authority which MSP or a related development
entity would then combine with several adjacent parcels in
connection with the construction of new townhomes and the
rehabilitation of existing apartments (collectively, the "MSP
Development") .
(f) On the date hereof, the Board held apublic hearing
on the general question of the Authority's sale of the
359025.1
i
FROM BRIGGS AND MORGAN ST.PAUL 612 223 6645 (THU)07,24'97 11:44 /ST, 11:41/ NO,3360015-940 P. 5
Property. Published notice of the public hearing was given,
and all persons who wished to address the Board on the
question weregiven an opportunity to do so.
2. The Board hereby approves the sale of the Property undlr
the Housing Replacement Program and the Project Plan. Any.f t7.
lsale, together with the terms and conditions related thereto ands '1.
.4 re-use of the Property, Shall be subject to final approval �
the Board in its discretion, whether or not the Property is
conveyed in connection with the proposed MSP Development. The sale
price for the Propertyshall be the appraised value thereof or such
other price as shall be determined by the Board at the time of
final approval, giving due consideration of all aspects of the re-
use of the Property:
,a 3. The Board hereby determines that the sale of the Property
in accordance with the approvals given in this resolution will help
realize the public purposes of the Act and are in furtherance of
the Project Plan and the Housing Replacement Program. This
resolution shall not constitute a purchase agreement respecting the
Property, and the sale thereof shall in all events be conditioned
on and subject to final approval thereof by the Board upon such
terms as the Board may at the time determine in its sole discretion
to be acceptable.
Adopted by the Board of Commissioners of the Mounds View
Economic Development Authority on .
1997.
:iresicient
ATTEST:
Executive Director
2
•
FROM BRIGGS AND MORGAN ST,PAUL 612 223 6645 (THU)07,24' 97 11:44 /ST, 11:41/ NO,3360015-940 P. 6
IP
Executive Director's Certificate
I, the undersigned, being the duly qualified and acting
Executive Director of the Mounds View Economic Development
Authoit4rs, do hereby certify that i have carefully compared the
attached and foregoing resolution adopted at a special or regular
meeting of the Board of Commissioners of said Authority duly called
and regularly held on the date therein indicated with the original
.thereof on file in my office and I further certify the same is a
full, true, and correct copy thereof, insofar as the same relates
to the conditional approval of the sale by. the Authority of certain
property.
2 further certify that Boardmember moved the
adoption of said resolution, that Boardmember
41, seconded said motion, and that upon a vote being taken thereon, the
following Boardmembera voted in favor thereof:
and the following Boardmembers voted against the same:
whereupon said resolution was declared duly passed and adopted.
WITNESS my hand as such Executive Director of said Authority
this __.,_. day of , 2997.
Executive Director
Mounds view Economic
Development Authority
•
359025.7