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HomeMy WebLinkAbout06-11-2001M:\MasterFiles\1999 thru 2010\2001\EDA\EDA Packets\06-11-2001\Agenda -- June 11, 2001 EDA.doc CITY OF MOUNDS VIEW ECONOMIC DEVELOPMENT AUTHORITY MONDAY, JUNE 11, 2001 AGENDA 1. CALL MEETING TO ORDER 2. ROLL CALL: President Sonterre, Vice President Stigney, Commissioner Marty, Commissioner Quick, Commissioner Thomas 3. APPROVAL OF AGENDA 4. APPROVAL OF MINUTES A. May 14, 2001 EDA Meeting Minutes 5. SPECIAL ORDER OF BUSINESS: 6. REPORTS 7. CONSENT AGENDA 8. EDA BUSINESS A. Consider Resolution 01-EDA-149 Approving and Authorizing the Expenditure of TIF funds for the Mermaid/Edgewood Middle School Regional Storm Water Pond. B. Consider Resolution 01-EDA-150 Approving and Authorizing the Expenditure of TIF Funds for the Purchase of Blighted and Hazardous Property Located at 2091 Hillview Road. 9. ADJOURNMENT PROCEEDINGS OF THE MOUNDS VIEW EDA CITY OF MOUNDS VIEW RAMSEY COUNTY, MINNESOTA Regular Meeting May 14, 2001 Mounds View City Hall 2401 Highway 10, Mounds View, MN 55112 9:08 P.M. 1. CALL MEETING TO ORDER 2. ROLL CALL: Sonterre, Stigney, Marty, Quick, and Thomas. NOT PRESENT: None. 3. AGENDA ADDITIONS There were no additions or corrections to the agenda. MOTION/SECOND: Marty/Quick. To Approve the Agenda for May 14, 2001 as presented. Ayes – 5 Nays – 0 Motion carried. 4. APPROVAL OF EDA MINUTES A. Approve Minutes of April 23, 2001. MOTION/SECOND: Marty/Stigney. To Approve the Minutes of the EDA for April 23, 2001 as presented. Ayes – 5 Nays – 0 Motion carried. 5. SPECIAL ORDER OF BUSINESS None. 6. REPORTS None. Mounds View EDA May 14, 2001 Regular Meeting Page 2 7. CONSENT AGENDA None. 8. EDA BUSINESS A. Consider Approval of Resolution 01-EDA-148, a Resolution Approving and Authorizing the Expenditure of Tax Increment Funds for the Acquisition of 3016 County Road H2 for the Purpose of Future Redevelopment. Economic Development Coordinator Parrish explained that on Wednesday of last week Staff had the opportunity to look at property located at 3016 County Road H2 when they learned it was available by driving by. The property was viewed and Staff feels purchasing the property would be an opportunity to allow for future redevelopment in the area. He noted the City has control of other property in the area and has contemplated redeveloping the area into a residential subdivision. Economic Development Coordinator Parrish noted that, after consultation with the City Administrator, Staff entered into a purchase agreement for the purchase of the property at a reduced price of $150,000. Economic Development Coordinator Parrish stated that Staff anticipates that, should the City purchase the property, the lot could be subdivided and the lot with the house sold or rented until the EDA has a clear indication as to how it wishes to proceed in that area. Commissioner Thomas inquired as to the value of the subdivided property behind the house if the house is sold for $130,000. Economic Development Coordinator Parrish stated he felt the City would come out ahead as it would subdivide at the minimum one (1) acre. He then noted the value of the subdivided lot is speculative at this point but taking into consideration the potential for creating a new residential subdivision he estimates that the City could net approximately $230,000 on the deal. Commissioner Thomas stated she did not want to discuss the hypothetical scenarios for the property but wanted to know the assessed value of the subdivided piece of land knowing there is not currently access to it. Commissioner Quick clarified that the land is not landlocked as the City owns the property on the east side of it and noted a developer would put in a road. Mounds View EDA May 14, 2001 Regular Meeting Page 3 Commissioner Thomas indicated she would like to know the assessed value of the land with no improvements. Commissioner Quick stated that when Council had its goal setting meeting one of the items discussed was lifecycle housing. He then noted that this location might be a perfect location for that type of housing. He further noted that the lot, as it sits unimproved, is not highly valuable but noted the opportunity to join other parcels to create a residential subdivision makes the property valuable. President Sonterre indicated he was impressed with the proposal and stated that the City continues to consider the community as “built out” with no future expansion and noted that anytime there is a way to create buildable lots he supports that effort. Commissioner Thomas indicated she liked the idea but wanted to make sure the City gets its purchase price back out of the property. Commissioner Marty stated it looks like the City would control slightly more than six (6) acres with the acquisition of this property. Economic Development Coordinator Parrish confirmed Commissioner Marty’s statement. President Sonterre stated he was comfortable without having an appraisal as he feels with the size of the lot the City is getting a good price based on what he knows the market value of his house to be. Vice President Stigney indicated that if residents in the area wanted to subdivide their lots to create a subdivision they could do so without the City having to purchase the proposed property. Vice President Stigney asked how much the City paid for the tax forfeited properties next door. Economic Development Coordinator Parrish indicated one tax forfeited parcel was obtained for $10,000 and the other one for between $30,000 and $40,000 but indicated there were not houses on the lots and stated that tax forfeited properties are offered to the City at a reduced rate. Vice President Stigney asked if the property is a blighted property. Economic Development Coordinator Parrish indicated he did not consider the property to be blighted but said there are elements of the house that could be improved. Community Development Director Ericson indicated a case could be made that it is blighted because the house is undersized for the lot, there are areas where there may be concern for the structure of the house, there is evidence of water damage in the ceiling of the expanded area, and Mounds View EDA May 14, 2001 Regular Meeting Page 4 there is some bad siding that should be replaced making the house blighted in comparison to other houses in the area. Vice President Stigney asked whether the City would need to incur expenses to fix the property in order to rent it out. Economic Development Coordinator Parrish indicated there are some things that would need to be brought up to Code but stated those were nominal and should not amount to more than one month’s rent. He then indicated that the property is part of an estate and some improvements, including replacing the roof, have been made in an effort to improve the property. Vice President Stigney stated he did not feel the City needed to purchase the property and then asked if the property would stay in a TIF district. Economic Development Coordinator Parrish indicated that TIF funds would be utilized for the purchase of the property but said the property is not within a TIF district. Vice President Stigney stated he had reservations concerning using TIF funds to purchase the property. Commissioner Quick stated he felt this property is a very intriguing piece of property as it is so large and the City owns other property in the area increasing the potential for redevelopment. MOTION/SECOND: Quick/Sonterre. To Waive the Reading and Approve Resolution 01-EDA- 148, a Resolution Approving and Authorizing the Expenditure of Tax Increment Funds for the Acquisition of 3016 County Road H2 for the Purpose of Future Redevelopment. Commissioner Marty stated he had reservations but thinks with the amount of land involved and due to the fact that the City already controls several properties in that area that this would be a good acquisition for the City. Commissioner Thomas stated she agreed with Commissioner Marty that she had reservations but thinks when considering the price of the property, the size of the property, and knowing the City does not have nearly enough property to build on she is fine with the acquisition. Ayes – 4 Nays – 1(Stigney) Motion carried. Commissioner Quick requested that the house be discussed at the next work session. Mounds View EDA May 14, 2001 Regular Meeting Page 5 9. ADJOURNMENT President Sonterre adjourned the meeting at 9:30 p.m. Respectfully submitted, Recorded and transcribed by: Joan Lenzmeier TimeSaver Off Site Secretarial, Inc. Item No: 8B Meeting Date: June 11, 2001 Type of Business: EDA Action WK: Work Session; PH: Public Hearing; CA: Consent Agenda; CB: Council Business City of Mounds View Staff Report To: Honorable President and Commissioners From: James Ericson, Community Development Director Item Title/Subject: Authorization to Purchase the Hazardous Property Located at 2091 Hillview Road Date of Report: June 7, 2001 Background: The property located at 2091 Hillview Road has been a thorn in the City’s housing stock and a blight upon the community since 1995. The property owner had been tagged with numerous housing, building and nuisance code violations and chose not to comply with the correction orders. In 1997, the property was foreclosed and HUD became the owner of record. Initially, staff thought this was a step in the right direction in resolving the violations at the property and to get the building back on the rental market. However, after no progress was made, the City Council approved Resolution 5136 which ordered the abatement of the building, which had been determined “hazardous” according to Minnesota Statutes. The resolution authorized the razing and removal of the building. Subsequent negotiations with HUD ensued, and an agreement was reached by which HUD would correct the building’s deficiencies no later than July 6, 1998. That day came and went and still no action was taken. Discussions with HUD revealed that they would agree to sell the property to the City to expedite the renovation of the property. The purchase agreement was completed and sent to the Denver property management office. After a substantial period of time had passed, Kennedy & Graven contacted HUD and the Denver office, neither of whom had any recollection of the purchase agreement. With much frustration, Kennedy & Graven completed and sent off a second purchase agreement for the property. Sometime last year, the City became aware that HUD had the property up for bid, after numerous parties stopped in to City Hall inquiring about the building, its deficiencies, and the outstanding work orders. The property was sold, however the buyer was unable to secure financing on the property due to the City’s abatement order. During this time, the City again contacted HUD, asking why they were attempting to sell the property after we (the City and HUD) had a purchase agreement pending. Unbelievably, we were told they had no record of our purchase agreement, and that their property management office had moved from Denver to Dallas, which had cause some internal disruption in their system. After the first attempt to sell the property fell through, HUD again listed it and offered it to the highest bidder. The high bid reportedly came back at $160,000. Once again, the “buyer” could not secure financing, either because of the outstanding abatement order or because the bid price exceeded the building’s value by a large extent. City Staff had discussions with Kennedy & Graven staff, and we determined that to make some progress, either one of two things had to happen. The City would need to release the abatement order on the property and hope that the future owner would be fully cooperative in restoring the building, or the City would need to acquire the property itself. The benefit of purchasing the property from HUD would give the City the most control over what ultimately happens to the building. We have maintained a list of interested parties and continually receive inquiries from builders and remodelers who want to purchase the building. While we have directed them to HUD, they have been unsuccessful in attempting to deal with HUD. This year, the City reintensified its efforts to acquire the property (at a reduced rate) to facilitate its renovation. (The idea being the City would be in a better position, and would have more at stake, to turn the property around.) Staff had placed multiple phone calls to the Dallas office weekly, and only once were the calls returned. That returned call however was productive, in the sense that the case-worker assigned to the property did agree to sell the property to the City. I explained that the City would not be interested in paying what either of the two previous bidders had offered, in fact, we would pay what we had originally agreed to pay in 1998, which was in the $80,000 range. More than two years have passed since the initial purchase agreement was sent to HUD, and we all know how our property values have appreciated during this time. Even so, the representative agreed to sell the property for $80,000 to the City of Mounds View. Kennedy & Graven has drafted the required documents and will forward them to the Dallas office of the property management firm representing HUD. It is hoped they will not be lost this time. Because of the time that has elapsed since we were originally directed to work with HUD to purchase the property, staff felt it would be appropriate to bring this back to the EDA for reauthorization. Resolution 01-EDA-150 ids attached for your reference. While the agreed upon price was $80,000, staff is not completely confident that offer will be accepted, even though we had verbal confirmation. We are thus seeking authorization for expenditure not to exceed $100,000 to acquire the property, even though we hope to pay less than that. For reference, the other four-plexes in the area are assessed at $100,000, which is assumedly less than the true market value of the properties. We have standing offers to purchase the property from the City, all with the understanding that a contract for Private Redevelopment would need to be executed. The bottom line is the City has the opportunity to turn this problem property around. As I have mentioned numerous times, I feel so sorry for the neighbors who have to live next to, and across from, this boarded–up eyesore. They have tolerated the situation far too long. Assuming this purchase agreement is accepted (and is not lost) and the transaction completed, the property would be back on the road to renovation quicker than it would if HUD were in control. Recommendation: Staff recommends adoption of EDA Resolution 01-EDA-150. _____________________________________ James Ericson Community Development Director 763-717-4021 Attachments: 1. Purchase Agreement 2. Resolution 01-EDA150 C:\WINNT\Profiles\Jime\Favorites\Templates\CC Report Template.doc RESOLUTION NO. 01-EDA-150 MOUNDS VIEW ECONOMIC DEVELOPMENT AUTHORITY COUNTY OF RAMSEY STATE OF MINNESOTA RESOLUTION APPROVING AND AUTHORIZING THE EXPENDITURE OF TAX INCREMENT FUNDS FOR THE ACQUISITION OF THE HAZARDOUS BUILDING AT 2091 HILLVIEW ROAD FOR THE PURPOSE OF REDEVELOPMENT It is hereby resolved by the Board of Commissioners (the ΑBoard≅) of the Mounds View Economic Development Authority (the ΑAuthority≅) as follows: Section 1. Recitals. 1.10 The Authority has the powers provided in Minnesota Statutes, Sections 469.124 to 469.134 and 469.090 to 469.108 (collectively, the ΑAct≅). 1.02 Pursuant to and in furtherance of the objectives of the Act, the Authority has undertaken a program to promote development and redevelopment of certain land within the City of Mounds View and in this connection is engaged in carrying out the Mounds View Economic Development Project (the ΑProject≅) within the City. 1.03 There has been approved pursuant to the Act a Project Plan for the Project. 1.04 The redevelopment of property within the Project is a stated objective of the Project Plan. 1.05 In order to achieve the objectives of the Project Plan, the Authority has determined to provide substantial aid and assistance through the financing of certain public costs of development. 1.06 It has been proposed that the Authority acquire the property located in the City at 2091 Hillview Road (the ΑProperty≅) and that the Authority approve the purchase agreement and/or similar agreement(s) (collectively, the ΑAgreement≅) attached as “Appendix A” for the acquisition of the Property for the purposes of redevelopment. Section 2. Resolved. 2.01 The Board hereby determines that the Authority’s execution of the Agreement and the subsequent acquisition and redevelopment of the Property would be in furtherance of the Project Plan and hereby approves and authorizes said actions, including the execution of the Agreement by the officers of the Authority in their discretion and at such time, if any, as they may deem appropriate. RESOLUTION NO. 00-EDA-150 PAGE TWO OF TWO 2.02 Upon execution and delivery of the Agreement, the officers and employees of the Authority (including members of the City Staff, acting in their capacity as staff to the Authority as well) are hereby authorized and directed to take or cause to be taken such actions as may be appropriate or necessary on behalf of the Authority to implement the Agreement, including the acquisition of the Property, which is being accomplished for redevelopment purposes. 2.03 That the Board of the Authority hereby determines that the execution and performance of the Agreement and acquisition of the Property will help realize the public purposes of the Act and are in furtherance of the Project Plan and authorizes the President and Executive Director to appropriate a maximum of $100,000 in tax increment funds to purchase and the property located at 2091 Hillview Road for redevelopment purposes. Adopted by the Board of Commissioners of the Mounds View Economic Development Authority this 11th day of June 2001. ___________________________ Rich Sonterre, President ATTEST: ____________________________ Kathleen Miller, Executive Director Motion: Second: Sonterre: Stigney: Quick: Marty: Thomas: Appendix A: Purchase Agreement