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#2 Acquisition of 305 S Pearl; 203 Linn; 903 McKinley (File Res. #2009-638) NEIGHBORHOOD SERVICES MEMORANDUM September 22, 2009 TO: City Council FROM: Jennifer Petruzzello, Neighborhood Services Director SUBJECT: Acquisition of 305 S. Pearl St., 203 Linn St. and 903 McKinley St. (File Resolution No. 2009-638) Summary Each year, Rock County initiates foreclose actions on properties which are delinquent on their property taxes. Under this program, the City has a first right to purchase the properties before public auction. This year, three residential properties were foreclosed upon within the Historic Fourth Ward Neighborhood. Under State Statutes, the City may acquire these properties for a price equal to the delinquent taxes, special assessments and charges, interest, and closing costs. The City’s portion of these charges is then returned to the City. Acquiring these properties for blight elimination or rehabilitation purposes is consistent with City plans and recent City efforts to invest in the improvement of our historic central city neighborhoods. TIF funding is available to acquire and rehabilitate two of the properties and to acquire and demolition the other. Department Recommendation Staff is recommending that the City acquire three residential properties under the Rock County Tax Foreclosure Program for the purpose of neighborhood improvement utilizing tax increment from TIF No. 31 and TIF No. 33. Specifically, the Plan Commission and the Neighborhood Services Department recommend that the City Council support a motion to approve Resolution 2009-638 authorizing the purchase of the properties located at 305 S. Pearl Street, 203 Linn Street and 903 McKinley Street, at a purchase price of $18,597.17 plus closing costs estimated at $1,200. A total of $3,797.01 would be returned to the City for our share of delinquent payments. City Manager Recommendation The City Manager concurs with Neighborhood Services Department and Plan Commission recommendations. Suggested Motion I move to approve file resolution 2009-638 authorizing the purchase of 305 S. Pearl Street, 203 Linn Street and 903 McKinley, at price of $18,597.17 plus closing costs estimated at $1,200, as part of the City’s neighborhood improvement efforts. 1 Background Rock County foreclosed on the properties located at 305 S. Pearl Street, 203 Linn Street, and 903 McKinley Street on September 15, 2009. The County’s Finance Committee made a decision to foreclose on these properties due to delinquent property taxes, special assessments and charges. The delinquency on these properties began in 2005. Because the City has an interest in the properties through unpaid City taxes and specials, the City has a first right to acquire the properties before Rock County sells the properties at a public auction. The purchase price is set by the County at an amount equal to the delinquent taxes, special assessments and charges, and interest plus closing costs. The City’s portion of the outstanding balance is returned to the City. Property Delinquent Cost to Acquire City’s Net Cost Address Taxes, Share Special (Returned Assessments, to City) Charges, Interest 305 S. Pearl $6,456.22 $6,456.22 plus $400 $2,287.39 $4,568.83 est. closing cost 203 Linn $4,319 $4,319 plus $400 $765.08 $3,953.92 est. closing cost 903 McKinley $7,821.95 $7,821.95 plus $400 $744.54 $7,477.41 est. closing cost Total $18,597.17 $18,597.17 plus $3,797.01 $16,000.16 $1,200 est. closing cost Purchasing properties under the Rock County Tax Foreclosure process is a new program proposed to be funded through TIF Increment. The TIF 31 and TIF 33 Plans, which includes projects located within one-half mile of the delineated TIF boundary, includes provisions to provide low interest and/or forgivable loans to residential property owners to help revitalize and stabilize the residential neighborhoods. Additionally funds are included to acquire and remove blighted properties to provide sites for architecturally sensitive infill redevelopment. The property located at 305 S. Pearl is located with the one-half mile boundary of TIF 31. The properties located at 203 Linn Street and 903 McKinley are located with the one-half mile boundary of TIF 33. The TIF Project Plans for TIF 31 and TIF 33 included $125,000 and $250,000 respectively for neighborhood improvement efforts. I would propose that these funds be used for a combination of blight elimination activities and rehabilitation projects. As rehabilitated projects are resold, the funds could continue to be used for additional neighborhood housing improvement efforts. 2 The property located at 305 S. Pearl Street is vacant single family home that was built in approximately 1880 and is zoned M-4 Central General Industrial. The 822 square foot, one-story property has 3 bedrooms and one bath. In addition, there is a 180 sf shed and 280 sf detached garage. The property is located next to the railroad property on Pearl Street. The property is in a blighted condition, and there is currently araze or repair order on the property. Staff is recommending that this structure be demolished at an estimated cost of $8,500. The property located at 203 Linn Street is single family, rental property that was built in approximately 1910 and is zoned R2-Limited General Residence. The 1,548 square foot, two-story property has 3 bedrooms and one bath. In addition, there is a 400 sf detached garage. This property is a c. 1855 Greek Revival home, which is listed in the National Register of Historic Places as a contributing th structure within the 4 Ward Historic District. The property is listed on assessor’s records as being in poor condition. Since this is a tax foreclosed property, the City has not been able to view the interior of the property, however, based upon an exterior inspection, it is believed that rehabilitation of this property will be extensive. Rehabilitation costs are estimated at $90,000. City staff is proposing the acquisition, rehabilitation and resale of the property. The City will place deed restrictions on the property to assure the property remains in an owner occupied status. The property located at 903 McKinley Street is single family, rental property that was built in approximately 1880 and is zoned R3- General Residence. The 1,700 square foot, 1 ¾-story property has 3 bedrooms and one bath. . This property is th a c. 1855 Greek Revival home, and is a contributing structure in the 4 Ward Historic District. The property is listed on assessor’s records as being in poor to average condition. Based upon an exterior inspection, it is believed that rehabilitation of this property will be extensive. Rehabilitation costs are estimated at $90,000. Since this is a tax foreclosed property, the City has not been able to view the interior of the property. Rehabilitation costs are estimated at $90,000. City staff is proposing the acquisition, rehabilitation and resale of the property. The City will place deed restrictions on the property to assure the property remains in an owner occupied status. Analysis A. The project is consistent with the City of Janesville Look West & Old Fourth Ward Neighborhood Revitalization Plans, as well as the City of Janesville Comprehensive Plan. These plans call for the revitalization of neighborhoods that have experienced decline, including the Historic Fourth Ward Neighborhoods. The plans also direct the City to acquire vacant, dilapidated, and tax-delinquent properties for rehabilitation and resale to increase owner-occupancy in target neighborhood areas. B. State Statutes require that the Plan Commission review any proposed acquisition of land to determine if it is consistent with established City plans. Based on this analysis, staff believes the purchase of properties is consistent 3 with the Look West and Old Fourth Ward Neighborhood Revitalization Plans, as well as the City of Janesville Comprehensive Plan. C. Other advantages to acquiring these properties at this time include: low acquisition cost, the removal of a blighted property at 305 S. Pearl Street, th the renovation of 2 historically significant properties within the 4 Ward Neighborhood, and the opportunity to deed restrict these properties as owner occupied properties. D. The greatest potential disadvantage or risk to acquiring the properties at 203 Linn St. and 903 McKinley is the uncertainty regarding the rehabilitation estimate due to the City’s inability to inspect the interior of these properties before acquisition. Based upon the poor condition of the exterior, rehabilitation costs are estimated to be high at $90,000 for each property. As a worst case scenario, if staff finds that the costs to rehabilitate are cost prohibitive, we will bring the property back to the Plan Commission and City Council for possible demolition. Again, this would be a worst case scenario. E. Another potential disadvantage is staff’s capacity to manage two significant rehabilitation projects, on top of the rehabilitation projects we will complete under the Neighborhood Stabilization Program in 2009 and 2010. I envision a project timeline that includes the demolition of 305 S. Pearl St. this winter, exterior rehabilitation of 203 Linn St. and 903 McKinley St. occurring over the winter (i.e. some demo) and spring (masonry, roof, windows), and interior rehabilitation occurring after the completion of the NSP rehabilitation projects. F. The Plan Commission unanimously agreed to forward this item to the City Council with a favorable recommendation noting the Plan Commission has not reviewed the financial aspects of this transaction Attachments: Location Map Photographs of Properties GVS Information Sheets for Properties Map of TIF 31, delineating the ½ mile boundary Map of TIF 33, delineating the ½ mile boundary cc: Eric Levitt, City Manager Jay Winzenz, Assistant City Manager/ Director of Administrative Services Doug Venable, Economic Development Director Jean Wulf, City Clerk Treasurer 4 RESOLUTION NO. 2009-638 RESOLUTION AUTHORIZING THE ACQUISITION OF REAL PROPERTY LOCATED AT 305 S PEARL STREET, 203 LINN STREET, AND 903 MCKINLEY STREET WHEREAS , Wis. Stats. §§62.22 (1), 62.23 (17) (a), 62.23 (17) (b), 66.0101, 62.11(5) and Chapter 32 and other pertinent Wisconsin Statutes permit the City’s acquisition, development, ownership, protection, and conservation of parkland, open space, riverfront properties, and development properties; and WHEREAS, Rock County has foreclosed upon the properties located at 305 S. Pearl Street, 203 Linn Street, and 903 McKinley Street located in the City of Janesville, County of Rock, State of Wisconsin for delinquent property taxes as outlined in Wis. Stats. §75.521; and WHEREAS , the City of Janesville has a first right to acquire the properties before they are sold at public auction; and WHEREAS , the purchase price for such properties is equal to the amount of delinquent taxes, special assessments and charges, and interest plus closing costs as follows: 305 S. Pearl St. - $6,456.22 plus $400 est. closing cost ($2,287.39 returned to City) 203 Linn St. - $4,319 plus $400 est. closing cost ($765.08 returned to City) 903 McKinley St. - $7,821.95 plus $400 est. closing cost ($744.54 returned to City); and WHEREAS , the demolition cost for 305 S. Pearl St. is estimated at: $8,500, the rehabilitation cost for 203 Linn St. is estimated at $90,000, and the rehabilitation cost for 903 McKinley St. is estimated at $90,000; and WHEREAS , the City Council adopted the Look West & Old Fourth Ward Neighborhood Revitalization Plan on December 8, 2008, which identifies home and property maintenance and historic preservation among the critical issues for neighborhood improvement; and WHEREAS , the Janesville Plan Commission has reviewed this proposed acquisition on September 21, 2009 and found it to be consistent with long range City plans, but not commenting upon the financial aspects of the transaction; and WHEREAS , the TIF No. 31 project plan includes costs incurred for assistance with projects located within one-half mile of the delineated TIF boundary, and funds were included to acquire and remove blighted properties and/or to provide sites for architecturally sensitive infill redevelopment; and WHEREAS , the funding source for the acquisition and demolition of 305 S. Pearl Street is TIF 31 Increment; and WHEREAS , the TIF No. 33 project plan includes costs incurred for assistance with projects located within one-half mile of the delineated TIF boundary, and funds were included to acquire and remove blighted properties and/or to provide sites for architecturally sensitive infill redevelopment; and WHEREAS , the funding source for the acquisition and rehabilitation of 203 Linn Street and 903 McKinley Street is TIF 33 Increment: NOW, THEREFORE, BE IT RESOLVED by the Common Council of the City of Janesville that they hereby approve and authorize the City Manager and/or his designee(s) to acquire and close upon the City’s purchase of the Properties described above from the owners on behalf of the City in the manner and for the amounts set forth in the above recitals; and BE IT FURTHER RESOLVED , that the City Manager and/or his designee(s) on behalf of the City of Janesville is/are hereby authorized and empowered to negotiate, draft, modify, review, execute, and enter into additional agreements, record, file and/or make minor modifications and/or amendments to any and all documents, papers, forms, and agreements, and to take whatever other actions as the City Manager may determine, from time to time and at any time, necessary and/or desirable to effectuate the intent of this resolution and/or the public good. ADOPTED: Motion by: Second by: APPROVED: Councilmember Aye Nay Pass Absent Brunner McDonald Eric J. Levitt, City Manager Perrotto Rashkin ATTEST: Steeber Truman Voskuil Jean Ann Wulf, City Clerk-Treasurer APPROVED AS TO FORM: City Attorney Proposed by: Neighborhood Services Department Prepared by: Neighborhood Services Director çðí ÓÝÕ×ÒÔÛÇ ÍÌ MCKINLEY ST îðí Ô×ÒÒ ÍÌ W VANBUREN ST íðë Í ÐÛßÎÔ ÍÌ W HOLMES ST JOHNSON ST Ô»¹»²¼ SUBJECT PROPERTIES Ü¿¬»æ çñïéñðç Í½¿´»æ ïþã ïððù Ó¿° Ý±±®¼·²¿¬»æ ÕñÔóïì ÔÑÝßÌ×ÑÒ ÓßÐ Ý×ÌÇ ÑÚ ÖßÒÛÍÊ×ÔÔÛ ßÝÏË×Í×Ì×ÑÒ ÑÚ íðë Í ÐÛßÎÔ ÍÌô ÓßÐ ï ÐÔßÒÒ×ÒÙ ÍÛÎÊ×ÝÛÍ çðí ÓÝÕ×ÒÔÛÇ ÍÌ ú îðí Ô×ÒÒ ÍÌ ÍæÐ®±¶»½¬ÄÐ´¿²²·²¹ÄÝ¿»ÄÝ¿»óîððçÄÕóÔóïìÁß½¯«··¬·±² 305 SOUTH PEARL ST 203 LINN STREET 903 MCKINLEY STREET MCKINLEYST WILSONAVE Legend TIF31-Half-MileBoundaryCityLimits Date:8/11/2008 AreaOutsideCityLimitsWhereTIF TIF31-Boundary Scale:1"=1,500' AssistanceCannotBeProvided MapCoordinate:J14 LOCATIONMAP CITYOFJANESVILLE CourtStreetTIF31 MAP5 PLANNINGSERVICES S:\Projects\Planning\Al MCKINLEYST WHOLMESST AreaWithin1/2MileofTIF33 Legend TIF33HalfMileBoundary Date:8/11/2008 Scale:1"=1,000' TIF33-Boundary MapCoordinate:Q13 LOCATIONMAP CITYOFJANESVILLE MineralPointAvenueTIF33 MAP5 PLANNINGSERVICES S:\Projects\Planning\Al\