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#08 Authorize demolition of tax foreclosed property at 203 Linn Street (File Res. #2012-886) NEIGHBORHOOD SERVICES MEMORANDUM February 16, 2012 TO: City Council FROM: Jennifer Petruzzello, Neighborhood Services Director SUBJECT: Action on a Proposed Resolution Authorizing the Demolition of Tax Foreclosed Property located at 203 Linn St. (File Resolution #2012- 886) Summary In 2009, the City Council approved the purchase of property located at 203 Linn Street under the Rock County Tax Foreclosure Program for the purpose of rehabilitating and reselling the property. Upon review of the interior structure, it was determined that rehabilitation costs significantly exceed original estimates In late 2010, the City Council authorized staff to seek private proposals regarding the rehabilitation of the property (in exchange the City would donate the property), and explore the construction of a new home that would replicate many of the historic features of the property if there was not interest in rehabilitation. Since that time, staff has consulted with a structural engineer, who indicated that rehabilitation of the structure does not appear to be feasible or cost effective. As a result, staff is now seeking Council approval to demolish the structure. The vacant lot would then be maintained by the City until such time as it is feasible to redevelop the lot with a residential structure that is sensitive to the architecture of the neighborhood. Department Recommendation Staff is recommending that the City Council approve the demolition of the residential structure located at 203 Linn Street and the maintenance of this lot until such time as it is redeveloped. Specifically, the Neighborhood Services Department recommends that the City Council support a motion to approve Resolution 2012-886 authorizing the demolition of improvements upon real property located at 203 Linn Street. City Manager Recommendation The City Manager concurs with the staff recommendation. Suggested Motion I move to approve file resolution 2012-886 authorizing the demolition of improvements upon real property located at 203 Linn Street, as part of the City’s neighborhood improvement efforts. 1 Background In 2009, the City Council authorized the purchase of property located at 203 Linn Street under the Rock County Tax Foreclosure Program for blight elimination or rehabilitation purposes. Under State Statutes, the City acquired this property for a price equal to the delinquent taxes, special assessments and charges, interest and closing costs. The City’s portion of these charges is returned to the city. The property was purchased for a total price of $4,719, with $765 returned to the City for a net cost of $3,954. The property at 203 Linn Street is a 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. Based upon an exterior inspection, it was originally believed that rehabilitation would be extensive and was therefore estimated at $90,000. Purchasing this property under the Tax Foreclosure Program is consistent with the City of Janesville Comprehensive Plan, the Look West and Old Fourth Ward Neighborhood Revitalization Plan and recent City efforts to invest in the improvement of our historic central city neighborhoods. In addition, these purchases allow the City the opportunity to revitalize neighborhoods that have experienced decline, increase the percentage of owner-occupied housing in the area, and eliminate blight. The greatest potential disadvantage or risk to acquiring the properties through tax foreclosure is the uncertainty regarding the rehabilitation costs due to the City’s inability to inspect the interior of these properties before acquisition. Upon acquiring the property and completing an internal rehabilitation evaluation, significant structural issues were identified including: foundation cracks, exterior brick failure, roof damage, fire damage, electrical concerns, and HVAC concerns. In addition, all flooring, walls, cabinets, and fixtures are damaged beyond repair and would require full replacement. Some historical features remain in the property’s interior (i.e. trim, built in cabinets, windows original size). In late 2010, the City Council authorized staff to seek private proposals regarding the rehabilitation of the property (in exchange the City would donate the property), and explore the construction of a new home that would replicate many of the historic features of the property. Under this scenario, the property would be donated to a private individual who would enter into an agreement to rehabilitate the structure, to maintain the exterior historic character of the building, to meet federal minimum housing quality standards, and to maintain or sell the property with a deed restriction to be owner-occupied. If satisfactory and acceptable 2 proposals were not received, staff intended to obtain cost estimates for the construction of a new home that would replicate many of the historic components of the existing structure. Staff contracted with a structural engineer to obtain information that was intended to be used for making development plans for the property. His conclusion was that “The basic structure, walls, foundations, and frames are not adequate to allow proper and long lasting repairs to the finish surfaces. Cosmetic, surface, repair will not be durable due to structure defects. Rehabilitation of the structure to satisfy building code requirements does not appear to be feasible or cost effective”. In addition, he notes that the brick covered walls and rubble stone foundations cannot be repaired to a structurally sound, durable, weather resistant, or energy efficient construction. A copy of his report is attached. Funding for the purchase and planned rehabilitation of the property at 203 Linn was provided through Tax Increment Financing. The Project Plan for TIF 33 includes $250,000 for neighborhood housing improvement efforts and 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. TIF funds may not be used to demolish structures listed on the national historic register of historic places. The property located at 203 Linn is specifically mentioned as a contributing structure th within the 4 Ward Historic District. If this resolution is approved, funding for the acquisition and demolition of the property located at 203 Linn Street is proposed to come from note issue funding allocated for neighborhood and downtown property acquisitions. Currently approximately $218,000 remains to be allocated for specific projects. The demolition costs are estimated at $7,000 and annual maintenance costs are estimated at $720 per year. If demolished, staff will offer Habitat for Humanity an opportunity to salvage any items from the property and will seek bids for the demolition of the structure. After demolition, the City will maintain the lot as a vacant lot, until such time as it is feasible to redevelop the lot with a residential structure that is sensitive to the architecture of the neighborhood. Analysis A. The project is consistent with the City of Janesville Look West & Old Forth Ward Neighborhood Revitalization Plan, 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. 3 B. Funding for the demolition of 203 Linn Street is available through prior year note issue funding for neighborhood property acquisitions. C. Demolishing the structure will eliminate a property that is currently having a blighting influence on the neighborhood. The department has received complaints regarding the condition of this property, and we periodically have issues with vandalism and dumping at the property. D. An alternative to the department recommendation would be to continue to seek proposals for the private rehabilitation of 203 Linn Street with full disclosure of the engineer’s report. This may allow the structure to be temporarily rehabilitated while minimizing the risk of high redevelopment costs to taxpayers. Potential disadvantages to this alternative could include: further delay in project progress allowing the blighted influence to continue, and administrative time and effort to advertise the donation, evaluate proposals and monitor the rehabilitation. “The Plan Commission was updated on this project and staff’s recommendation to demolish the structure at their meeting on February 20, 2012. The Plan Commission’s role is to ensure that the acquisition is consistent with City Plans. Their original 2009 review found the project consistent with City plans, which call for the City to purchase tax foreclosed properties for either rehabilitation or demolition to improve the housing stock and/or reduce density.” E. Another alternative to the department recommendation would be to proceed to design a newly constructed home at this site. Design and construction could be funded with TIF. However, given that the housing market remains soft and other City rehabilitated homes and private homes are for sale in the neighborhood, a more financially conservative approach would be to maintain the structure as vacant open space at this time. If new construction is ultimately pursued, it may allow the City to provide a positive example of infill development that is sensitive to the neighborhood’s character. New construction would restore additional residential assessed value to the tax roll. With the high inventory of houses currently for sale, the ultimate sales price may not be as high as desired. Attachments: Location Map Photographs of Property Structural Engineer’s Report Property Data Card cc: Eric Levitt, City Manager Jay Winzenz, Assistant City Manager/ Director of Administrative Services 4 RESOLUTION NO. 2012-886 RESOLUTION AUTHORIZING THE DEMOLITION OF REAL PROPERTY LOCATED AT 203 LINN 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 , on September 28, 2009, the Common Council of the City of Janesville approved Resolution No. 2009-638 authorized the acquisition and rehabilitation of 203 Linn Street utilizing TIF 33 Increment for the purpose of rehabilitation and resale; and, WHEREAS , the City of Janesville acquired the property at a price of Four Thousand Seven Hundred Nineteen and no/100 Dollars ($4,719) through the Rock County Tax Foreclosure Program grant; and, WHEREAS, it has been determined that rehabilitation is no longer feasible based upon a structural engineer’s report, which notes that the brick covered walls and rubble stone foundations cannot be repaired to a structurally sound, durable, weather resistant, or energy efficient construction; and, WHEREAS , the City of Janesville intends to demolish the structure and maintain the lot for future infill development; and, WHEREAS , the City of Janesville Comprehensive Plan calls for the revitalization of neighborhoods that have experienced decline, and recommends that the City acquire vacant, dilapidated, and tax-delinquent properties for rehabilitation, resale, and/or demolition in order to increase owner-occupancy or enhance the health, safety, and good order in central city neighborhood areas; and, WHEREAS , the Council find this demolition and proposed public use(s) in the best interest of the City and of benefit to the public; and WHEREAS , the TIF 33 account will be reimbursed for acquisition costs and the funding source for the acquisition and demolition of 203 Linn Street is prior year’s note issue funding. NOW, THEREFORE, BE IT RESOLVED by the Common Council of the City of Janesville does hereby approve and authorize; the City Manager and/or his designee(s) to demolish 203 Linn Street 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 Dongarra-Adams Eric J. Levitt, City Manager Liebert McDonald ATTEST: Rashkin Steeber Voskuil Jean Ann Wulf, City Clerk-Treasurer APPROVED AS TO FORM: Wald Klimczyk, City Attorney Proposed by: Neighborhood Services Department Prepared by: Neighborhood Services Director MCKINLEY ST W VANBUREN ST 203 W HOLMES ST Ô»¹»²¼ SUBJECT PROPERTY Ü¿¬»æ ðîñïíñïî Í½¿´»æ ïþã ïëðù Ó¿° Ý±±®¼·²¿¬»æ Ôóïì ÔÑÝßÌ×ÑÒ ÓßÐ Ý×ÌÇ ÑÚ ÖßÒÛÍÊ×ÔÔÛ ÓßÐ ï îðí Ô×ÒÒ ÍÌ ÐÔßÒÒ×ÒÙ ÍÛÎÊ×ÝÛÍ ÍæÐ®±¶»½¬ÄÐ´¿²²·²¹ÄÝ¿»ÄÝ¿»óîðïðÄÔóïìÁß½¯«·¬·±²óîðí Ô·²² 203 Linn Street 203 Linn Street 203 Linn Street 203 Linn Street