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#4 Approve acquisition of 1332 Hawthorne (File Res. #2010-736) NEIGHBORHOOD SERVICES MEMORANDUM September 30, 2010 TO: City Council FROM: Jennifer Petruzzello, Neighborhood Services Director SUBJECT: Action on a Proposed Resolution Authorizing the Acquisition of Tax Foreclosed Property at 1332 Hawthorne Avenue (File Resolution No. 2010-736) 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, one residential home was foreclosed upon. Under State Statutes, the City may acquire tax foreclosed properties for a price equal to the delinquent taxes, special assessments and charges, interest, and closing costs. Acquiring this property for rehabilitation purposes is consistent with City plans and recent City efforts to stabilize neighborhoods. Note issue funding is available for neighborhood property acquisitions. Department Recommendation Staff is recommending that the City acquire the residential property located at 1332 Hawthorne Avenue under the Rock County Tax Foreclosure Program for the purpose of neighborhood improvement utilizing note issue funding. Specifically, the Plan Commission and the Neighborhood Services Department recommend that the City Council support a motion to approve Resolution 2010- 736 authorizing the purchase of the real property located at 1332 Hawthorne Avenue, at a purchase price of $13,925.95. The property would then be rehabilitated and offered for re-sale with a deed restriction to maintain the property as owner-occupied. Any proceeds from the resale would be utilized to support the acquisition, demolition or rehabilitation of other neighborhood or downtown property acquisitions. City Manager Recommendation The CityManager concurs with the Department recommendation. Suggested Motion I move to approve file resolution 2010-736 authorizing the purchase of 1332 Hawthorne Avenue at a price of $13,925.95, as part of the City’s neighborhood improvement efforts. 1 Background Rock County foreclosed on the residential property located at 1332 Hawthorne Avenue on September 20, 2010. 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 2006. The property owner was provided an opportunity to avoid the foreclosure by paying 2006 taxes by August 5, 2010 or all past due taxes by September 20, 2010. 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. Property Address County Tax County Interest Closing Total Cost to Due Due Cost Acquire 1332 Hawthorne $9,869.50 $3,806.45 $250 $13,925.95 Purchasing properties under the Rock County Tax Foreclosure process is a fairly new program for the City of Janesville. Funding for the acquisition and rehabilitation of this property is proposed to come from note issue funding allocated for neighborhood and downtown property acquisitions. Five hundred Thousand ($500,000) dollars were included within the 2009 Note Issue, and approximately $300,000 remains to be allocated for specific projects. The property located at 1332 Hawthorne Avenue is single family, owner occupied property that was built in approximately 1949 and is zoned R2-Limited General Residence. The 1,575 square foot home has 4 bedrooms and one and one-half baths. In addition, there is a 440 sf detached garage. This property is a Cape Code style home with a brick exterior. The property is listed on assessor’s records as being in average condition. In addition, assessor’s records indicate an estimated fair market value of $111,319. 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 moderate in nature. Rehabilitation would likely include: construction of a new roof, replacement gutters, new windows, new garage doors, energy efficiency improvements, and interior finish improvements. Assuming the above, rehabilitation is estimated at $40,000. 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. 2 Analysis A. The project is consistent with the City of Janesville Comprehensive Plan, which calls for the revitalization of neighborhoods that have experienced decline, and directs 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. The Plan Commission reviewed this acquisition on October 4, 2010, and 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. C. Other advantages to acquiring this property at this time include: low acquisition cost, the renovation of a single-family home within the Community Development Block Grant target area, the ability to ensure this home is rehabilitated to a safe housing standard, the opportunity to deed restrict this property as owner occupied and the opportunity to obtain sale proceeds to be used to support future redevelopment efforts. D. The greatest potential disadvantage or risk to acquiring this property is the uncertainty regarding the rehabilitation estimate due to the City’s inability to inspect the interior of the property before acquisition. Based upon the exterior condition of the property, rehabilitation costs are estimated to be moderate. Attachments: Location Map Photographs of Properties GVS Information Sheet cc: Eric Levitt, City Manager Jay Winzenz, Assistant City Manager/ Director of Administrative Services Jean Wulf, City Clerk Treasurer 3 RESOLUTION NO. 2010-736 RESOLUTION AUTHORIZING THE ACQUISITION OF REAL PROPERTY LOCATED AT 1332 HAWTHORNE AVENUE 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 property located at 1332 Hawthorne Avenue 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: 1332 Hawthorne Ave. - $13,675.95 plus $250 in closing costs; and WHEREAS , the rehabilitation cost are estimated at $40,000; and WHEREAS , the City of Janesville Comprehensive Plan calls for the revitalization of neighborhoods that have experienced decline, and directs the City to acquire vacant, dilapidated, and tax-delinquent properties for rehabilitation and resale to increase owner- occupancy in target neighborhood areas; and WHEREAS, the City of Janesville Comprehensive Plan advocates stabilizing and promoting continued investment in existing neighborhoods; and WHEREAS , the Janesville Plan Commission has reviewed this proposed acquisition on October 4, 2010 and found it to be consistent with long range City plans, but not commenting upon the financial aspects of the transaction; and WHEREAS , the Common Council approved Five Hundred Thousand Dollars ($500,000) in the 2009 Note issue for neighborhood and downtown property acquisitions for rehabilitation purposes; and WHEREAS , the funding source for the acquisition and rehabilitation of 1332 Hawthorne Avenue is the 2009 Note Issue; and WHEREAS, any proceeds from the resale of 1332 Hawthorne will be utilized to support the acquisition, demolition or rehabilitation of other neighborhood or downtown properties; and WHEREAS , The Common Council hereby find that this disposition is in the best interest of the City and of benefit to the taxpayers and community. 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 and/or his designee 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 ïííî q Ô»¹»²¼ ÍËÞÖÛÝÌ Í×ÌÛ Ü¿¬»æ çñîíñïð Í½¿´»æ ïþã ïððù Ó¿° Ý±±®¼·²¿¬»æ Òóïé ÔÑÝßÌ×ÑÒ ÓßÐ Ý×ÌÇ ÑÚ ÖßÒÛÍÊ×ÔÔÛ ÓßÐ ï ïííî Ø¿©¬¸±®²» ßª»²«» ÐÔßÒÒ×ÒÙ ÍÛÎÊ×ÝÛÍ ÍæÐ®±¶»½¬ÄÐ´¿²²·²¹ÄÝ¿»ÄÝ¿»îðïðÄÒóïéÁß½¯«··¬·±² ïííî Ø¿©¬¸±®²» 1332 Hawthorne Avenue