11/01/1978 Meeting - Laserfiche WebLink

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Charles Kupper, HCC Director, said this property was one of three prop- e erties on the Monroe Park site which was being developed with CD funds. In July 1977, when the park was to be constructed, it was decided the property should not be torn down, noting the CD policy not to demolish property. Bids were requested, with two successful bids for two pieces of property. The third property was much larger, and bids were not received to remove it. In cooperation with the Westside Community, it was decided to use CD funds to remove and refurbish the house, with the condition that it be sold to a family in the low/moderate-income range, the money to be recaptured from the sale and recycled to the Westside neighborhood. He said four goals from the Community Development and neighborhood had entered into this decision: 1) To retain the structure; 2) to accommodate moving the house as it was compatible with the neighborhood; 3) to sell it to a single-family owner/occupant at a price in the low/medium-income group; and 4) to recapture City money and recycle into the Westside program. Paul Osborn, HCC, reviewed the memo distributed to Council regarding the method of sale. The goal .would be to recover as much of the money as possible as quickly as possible. The proposed process would have three lien agreements: 1) From a commercial lender, probably between $20,000 and $28,000; 2) a rehabilitation revolving loan, carrying the difference between the first debt and the cash investment ($48,000); and 3) the rehabilitation revolving loan fund would carry the difference between the e investment ($48,000) and the appraised value ($58,500). The payment on the third debt would be deferred as long as the buyer owns and occupies the house. When the buyer moves or sells, the entire balance would become due. He noted that since it was hoped to sell the house to a family of low- to medium-income, it was necessary to keep the monthly payment down to 25 to 35 percent of the family's gross monthly income. This particular funding process would allow the payments to be approximately $403 per month. He said lenders indicated they would prefer a five-percent down payment which would be in the neighborhood of $3,000. Another option would be for the City to sellon a land sales contract with no down payment. The house would be open for a two- to three-week period with advertising. Applications would be taken with a drawing of ten names. That list would be used to select a qualified buyer. He said the second loan agreement would carry an interest rate of three percent, with the third loan agreement carrying none. Mr. Hamel wondered what sort of insurance the City might have to control the second ownership, that the single-family residence would not be sold and used as a rental. Mr. Osborn said there was no method of assuring the buyer would stay for any length of time. The major concern was the City getting a return on its investment. He said, however, there was some discussion that the third lien might be a disappearing one, in that $50 per month he reduced to encourage the buyer to stay. That suggestion was dropped, as there were some problems regarding taxing income. e 11/1/78--7 "5