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#4 Acquisition and demolition of 127 North Terrace Street (File Res. #2009-655) NEIGHBORHOOD SERVICES MEMORANDUM November 9, 2009 TO: City Council FROM: Kelly Lee, Neighborhood Development Specialist SUBJECT: Acquisition and Demolition of 127 North Terrace Street (File Res. 2009-655) Summary The Neighborhood Services Department has received a Neighborhood Stabilization Program (NSP) grant award of $1,003,743 to acquire, rehabilitate, demolish and redevelop foreclosed and abandoned properties. The property located at 127 North Terrace Street is a foreclosed home that is consistent with the grant application and award criteria. Department Recommendation The Plan Commission and the Neighborhood Services Department recommend that the City Council support a motion to approve Resolution 2009-655 authorizing the purchase of the property located at 127 North Terrace Street, at an acquisition price not to exceed $30,000 as part of the Neighborhood Stabilization Grant Program (NSP). City Manager Recommendation The City Manager concurs with the recommendation. Suggested Motion I move to approve file resolution 2009-655 authorizing the purchase of 127 North Terrace Street, at an acquisition price not to exceed $30,000 as part of the Neighborhood Stabilization Grant Program. Background The Housing and Economic Recovery Act (HERA) of 2008 created the Neighborhood Stabilization Program, under which states, cities and counties will receive a total of $3.92 billion to acquire, rehabilitate, demolish, and redevelop foreclosed and abandoned residential properties. NSP funds are considered Community Development Block Grant (CDBG) funds. In January 2009, the City Council authorized staff to apply for a Neighborhood Stabilization grant Program through the State of Wisconsin Department of Commerce. The City of Janesville has been awarded $1,003,743 to acquire 1 foreclosed properties for the purpose of rehabilitation, redevelopment, or demolition. The Community Development Authority (CDA) and the Neighborhood Action Team assisted in formulating criteria for potential Neighborhood Stabilization Program grant projects, including: location in area of greatest need; located within either of the two redevelopment sites as identified in the City of Janesville Look West & Old Fourth Ward Neighborhood Revitalization Plan (Adopted th December 8, 2008); properties located along collector, major arterial streets, or minor arterial streets; properties located near schools or parks; properties th identified as poor or fair condition on the 4 Ward and Look West Housing Condition Report (or of similar condition for census tracts 6 &10). The property located at 127 North Terrace Street is a foreclosed home owned by Blackhawk State Bank in Beloit, Wisconsin. The building was most recently used as a single family home, but had been a two unit in the past. The house, built in approximately 1880 is 2148 square feet, three bedroom and 2 and a half baths. The property is located in census tract 4, which has been identified as one of the areas of greatest need. The property is in walking distance to both parks and schools. In addition, the property is identified in average condition according to th the 4 Ward and Look West Housing Condition Report. This was an exterior assessment of the property and did not take into account the interior condition. Staff has toured the property and found the interior of the property in a considerable state of disrepair. The property sustained significant water damage during recent storms while the property was vacant. The bank has attempted to mitigate mold growth by removing drywall; however, it appears that there is an ongoing issue. In addition, the recent owner had attempted to make improvements to the property without permits, inspections or general knowledge of construction; thereby, creating structural defects and significant electrical issues that would require a significant amount of rehabilitation. NSP funds may be used to demolish blighted structures that exhibit signs of deterioration sufficient to constitute a threat to human health, safety and public welfare. Staff believes that this property fits this definition. The grant requires the City of Janesville to have an appraisal done for properties with a purchase price over $25,000. The City of Janesville has ordered an appraisal, but does not have the results at this time; however the seller has provided a copy of an appraisal prepared by Rally Appraisal of Madison. The report estimates the market value for the property to be $34,000 as of June 18, 2009. The Neighborhood Services Department feels that it is in the best interest of the neighborhood to remove the two unit property that has been vacant for the past 2 six months and has reached an agreement with the bank for a purchase price of $30,000 contingent upon Plan Commission and City Council Approval. The project would include acquisition and demolition of the property funded by the Neighborhood Stabilization Program (NSP) grant. The estimated cost for demolition is $15,000. Once the project is complete, the lot will be donated to a not-for-profit organization for redevelopment. The donation will be conditioned on approval by staff regarding architectural design of a replacement single- family, owner-occupied home. Staff feels that it is more economically responsible to demolish the property and allow a not-for-profit to rebuild an energy efficient home that would match the existing style and architecture of the neighborhood. The house would be sold to an individual who is low to moderate income. Any materials that are salvageable will be offered to Habitat for Humanity. The City has negotiated a conditional purchase price of $30,000. This falls within the limits established in the grant application. Analysis A. The property is zoned R-2, Limited General Residential. B. The project will include acquisition and demolition of the property funded through the Neighborhood Stabilization Program (NSP) grant. C. The project is consistent with the criteria outlined by the Community Development Authority and the Neighborhood Action Team. The home is located in census tract 4 which has been identified as one of the areas of greatest need in Janesville. The property is within walking distance of both parks and schools. The property is listed as average condition in the th 4 Ward and Look West Housing Condition Report based on an exterior only inspection. D. The project is consistent with the City of Janesville Look West & Old Fourth Ward Neighborhood Revitalization Plan as well as the City of Janesville Comprehensive Plan. Plan Commission Action Duane Cherek, Manager of Planning Services presented the written staff report. There was a motion by Zolidis with a second by Helgerson to forward the proposed acquisition to the City Council with a favorable recommendation noting that the Plan Commission has not reviewed the financial aspects of this transaction. The motion carried on a 4-0-1 vote. cc: Eric Levitt, City Manager Jay Winzenz, Dir. of Administrative Services/Assistant City Manager Jennifer Petruzzello, Neighborhood Services Director 3 RESOLUTION NO. 2009-655 RESOLUTION AUTHORIZING THE ACQUISITION AND DEMOLITION OF REAL PROPERTY LOCATED AT 127 N TERRACE STREET WHEREAS , Wis. Stats. §§ 62.22 (1), 62.23 (17)(a), 62.23 (17)(b), 66.0101, 62.11(5), Chapter 32, and other pertinent Wisconsin Statutes permit the City’s acquisition, development, ownership, protection, improvement, conservation, public use, demolition, disposition, and other disposal of parkland, open space, riverfront properties, blighted properties, redevelopment, and development properties; and WHEREAS, the City of Janesville has been awarded $1,003,743 through the Neighborhood Stabilization Program (NSP) grant; and WHEREAS , the Neighborhood Stabilization Program (NSP) grant must be used for acquisition, rehabilitation, or demolition of foreclosed properties; and WHEREAS , the Community Development Authority (CDA) and the Neighborhood Action Team assisted in formulating criteria for potential Neighborhood Stabilization Program grant projects, including: location in area of greatest need; located within either of the two redevelopment sites as identified in the City of Janesville Look West & Old th Fourth Ward Neighborhood Revitalization Plan (Adopted December 8, 2008); properties located along collector, major arterial streets, or minor arterial streets; properties located near schools or parks; properties identified as poor or fair condition th on the 4 Ward and Look West Housing Condition Report (or of similar condition for census tracts 6 &10); and WHEREAS , the City of Janesville Administration has negotiated an offer to purchase 127 N Terrace Street in the amount of Thirty Thousand Dollars ($30,000); and WHEREAS , the Janesville Plan Commission has reviewed this proposed acquisition on November 16, 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 Council find this acquisition and proposed public use(s) in the best interest of the City and of benefit to the public; and WHEREAS , the funding source for the acquisition and demolition is the Neighborhood Stabilization Program (NSP) grant: NOW, THEREFORE, BE IT RESOLVED by the Common Council of the City of Janesville that the City’s acquisition of 127 N Terrace Street in the amount of Thirty Thousand Dollars ($30,000) for the above described public purpose(s) is hereby approved and authorized; the City Manager and/or his designee(s) may acquire and close upon the City’s purchase of the Property from the owner(s) on behalf of the City; 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: Wald Klimczyk, City Attorney Proposed by: Neighborhood Services Department Prepared by: Neighborhood Development Specialist ïîé ÒÑÎÌØ ÌÛÎÎßÝÛ ÍÌ q Ô»¹»²¼ ÍËÞÖÛÝÌ Í×ÌÛ Ü¿¬»æ êñçñðç Í½¿´»æ ïþã ïððù Ó¿° Ý±±®¼·²¿¬»æ Õóïë ÔÑÝßÌ×ÑÒ ÓßÐ Ý×ÌÇ ÑÚ ÖßÒÛÍÊ×ÔÔÛ ÓßÐ ï ïîé ÒÑÎÌØ ÌÛÎÎßÝÛ ÍÌÎÛÛÌ ÐÔßÒÒ×ÒÙ ÍÛÎÊ×ÝÛÍ ÍæÐ®±¶»½¬ÄÐ´¿²²·²¹ÄÝ¿»ÄÕóïëÁïîéÒÌ»®®¿½»