cover
TO: Mayor Thomas J. Weisner
FROM: Jeff McLaughlin, Neighborhood Redevelopment Manager
DATE: June 18, 2014
SUBJECT:
Resolution to Approve an Amendment to a Development Agreement between the City of Aurora and Boreas LLC to Dispose of a Municipally Owned Property Located at 83 North Avenue - Neighborhood Stabilization Program (NSP)
PURPOSE:
This report, seeks approval for a Resolution to amend a previously approved Development Agreement between Boreas LLC and the City of Aurora that would sell a property located at 83 North Avenue (PIN# 15-27-105-001)("Property") in Aurora that would add the Property to existing single family residential acquisitions that will be rehabilitated and rented under the Aurora Impact Initiative.
In exchange for selling the Property at a di-minimus value, the City will receive one additional unit of housing to be rented to persons who earn at-or-below 50% of the area median income with affordability restrictions that will be enforced with legal covenants for a period of not less than 15 years. Since 2009, the City has invested approximately $60,000 in NSP funds into the Property in acquisition and maintenance which would represent its entire investment in the Property. The reuse of the Property as workforce rental housing is one of the main goals of the NSP program.
The Aurora Impact Initiative is a program designed to address the foreclosure crisis in Aurora, and provide affordable rental housing interspersed within homeownership neighborhoods. Under the original City Council approved Development Agreement for the Aurora Impact Initiative (R14-032), Boreas LLC is purchasing 40 vacant and foreclosed single family homes containing 2, 3, and 4 bedrooms, and will rehabilitate these homes for rental housing. The City has funded a portion of acquisition for 10 of the 40 homes, and the Property would be added as a de-facto 11th funded unit. All existing terms of the Agreement between Boreas LLC and the City will remain the same. All homes under the Aurora Impact Initiative will be made affordable with project based housing choice vouchers provided by the Aurora Housing Authority.
BACKGROUND:
The recommendation by Staff to dispose of the Property under the Aurora Impact Initiative comes after nearly 6 months of investigating alternative reuse scenarios for the Property. In October of 2013, the Finance Committee directed Neighborhood Redevelopment Division (NRD) staff to explore alternative disposition scenarios for the Property.
Acting on this request, on 14 October 2013 staff sought approval to dispose of the Property via the Request for Proposal (RFP) process. The intent of the RFP was to sell the Property for the sum of $1 (One Dollar) in exchange for a historically sensitive rehabilitation which staff estimated in the $200,000 - $250,000 range based on a City bid process in 2012 and an analysis from the City's non-profit housing partners in 2013. The RFP was due on 27 November 2013, and no bids were received.
In December of 2013, NRD convened a team of staff members from the Community Services, Building, and Planning departments to look at options for the Property. After much discussion as to feasibility and cost scenarios, the following options were explored:
1. Partnership proposal with the Fox Valley Park District. This scenario would possibly involve conserving the Property off site in a location such as Blackberry Farm. The costs would be significant, even if the house does not need to be brought to building code standards as it would be conserved as a historic structure (relic). Overall, costs were estimated at:
a. $59,226 Buyout of the NSP program (as preservation is not a Program objective);
b. $50,000 Moving off-site (given access and neighborhood issues, the Property would probably need to be moved;
c. Land - Unknown (assumes Park District land);
d. $150,000 Conservation (historic analysis, engineering, interior demolition of renovations, stabilization);
TOTAL Estimate: $260,000
NOTE: This proposal was discussed with the FVPD who declined to financially participate in this partnership when the full costs were known.
2. Historic stabilization. This scenario would have the property conserved on-site as a historic structure. We see costs estimated at:
a. $59,226 Buyout of the NSP program (as preservation is not a Program objective);
b. $150,000 Conservation (historic analysis, engineering, interior demolition of renovations, stabilization).
TOTAL Estimate: $209,000
3. Renovation as affordable housing. This scenario would have the house substantially rehabilitated to current building codes for reuse as affordable housing available to persons or families earning at-or-below 120% of the area median income. This includes complete lead paint and asbestos abatement. This scenario is an NSP eligible reuse and therefore requires no buy-out from the Program. We see costs estimated at:
a. $200,000 - $250,000 (based on a staff solicitation in September of 2012 and an analysis by the City's housing partners in 2013).
Sale at an estimated $80,000 fair market value (Zillow.com 10/13)
b. Rehab Estimate: $250,000
c. Resale Value - $80,000
TOTAL Estimate: $170,000
NOTE: There are currently no NSP, CDBG or HOME (i.e., City workforce housing) funds available for rehabilitation of the Property in 2014, or very likely in 2015.
4. Mothball. This scenario would have the house conserved on-site for a future use. This is not an NSP eligible reuse, the property would require a buy-out from the NSP program and transfer for maintenance to an applicable municipal department. We see costs estimated at:
a. $59,226 Buyout of the NSP program (as there is not an objective);
b. $5,000/$10,000 annually for property maintenance and management.
TOTAL Estimate: $60,000 + $10,000 annually
5. Demolition. This scenario involves clearance of the site, with a workforce housing end use available to persons or families earning at-or-below 120% of the area median income. The site would require the deeding over to a local not-for-profit to eventually construct a house. We see costs estimated at:
a. $59,226 Buyout of the NSP program (because the site could not be rebuilt - see note below);
b. $31,000 (Based on a City bid for demolition of 121 N. Highland in July of 2013).
TOTAL Estimate: $90,000
Note: If the Property is demolished, the land parcel at 83 North Avenue cannot be redeveloped as the substandard lot size does not meet current zoning and building codes.
6. Disposal through the Aurora Impact Initiative. The main scenario discussed in this report, and the staff recommendation, would be to sell the Property to Boreas LLC who would substantially renovate and modernize the Property for use as a single family rental property under the existing Aurora Impact Initiative. Under the larger budget for the Aurora Impact Initiative, renovations are estimated at $250,000. The Property would be required to meet the Housing Quality Standards of the Aurora Housing Authority, as the unit would be eligible for a Housing Choice Voucher.
TOTAL Estimate: $0
DISCUSSION:
The Property is held under the NSP program, and cannot remain in the NSP inventory without a redevelopment scenario. The Property is currently not meeting NSP program objectives, which is the production of decent, safe, and sanitary moderate income housing. The Property must have a disposition scenario or will ultimately become subject to administrative action from the U.S. Department of Housing and Urban Development. The City has invested approximately $60,000 in federal NSP dollars for acquisition and maintenance of the Property.
IMPACT STATEMENT:
The City has invested approximately $60,000 in NSP funds into the Property in acquisition and maintenance which would represent its entire investment in the Property. Rehabilitation and modernization of the Property, a cost that will be borne by Boreas LLC under the proposed Amendment, is estimated at $250,000.
RECOMMENDATIONS:
That the Finance Committee Approves an Amendment to a Development Agreement between the City of Aurora and Boreas LLC for the sale of 83 North Avenue under the Aurora Impact Initiative and authorize the City's Redevelopment Manager to execute the Amendment and any ministerial documents related to this transaction.
cc: Alderman Saville, Chairman
Alderman Donnell
Alderman Irvin
Alderman Hart-Burns, Alternate
CITY OF AURORA, ILLINOIS
RESOLUTION NO. _________
DATE OF PASSAGE ________________
title
A Resolution to Approve an Amendment to a Development Agreement between the City of Aurora and Boreas LLC to Dispose of a Municipally Owned Property Located at 83 North Avenue - Neighborhood Stabilization Program (NSP)
body
WHEREAS, the City of Aurora has a population of more than 25,000 persons and is, therefore, a home rule unit under subsection (a) of Section 6 of Article VII of the Illinois Constitution of 1970; and
WHEREAS, subject to said Section, a home rule unit may exercise any power and perform any function pertaining to its government and affairs for the protection of the public health, safety, morals, and welfare; and
WHEREAS, the primary objective described by the U.S. Department of Housing and Urban Development (HUD) for the Neighborhood Stabilization Program is for the purpose of assisting in the development of decent, safe, and sanitary workforce housing;
WHEREAS, the disposition of the property known as 83 North Avenue under an amended Development Agreement between the City of Aurora and Boreas LLC meets NSP program goals; and
WHEREAS, it is an NSP Program goal that the City of Aurora partner with developers to enter into agreements that implement projects in an effective and efficient manner.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Aurora, Illinois, finds as facts all of the preamble recitals of this Resolution and hereby approves an Amendment to a Development agreement between the City of Aurora and Boreas LLC regarding a disposition of a City owned property located at 83 North Avenue and authorizes the City's Redevelopment Manager to execute the Amendment and any ministerial documents related to this transaction.
PASSED AND APPROVED on ______________.
AYES ____ NAYS ____ NOT VOTING ____ ABSENT ____
____________________________ __________________________
Alderman Bohman, Ward 1 Alderman Garza, Ward 2
____________________________ __________________________
Alderman Mesiacos, Ward 3 Alderman Donnell, Ward 4
____________________________ __________________________
Alderman Peters, Ward 5 Alderman Saville, Ward 6
____________________________ __________________________
Alderman Hart-Burns, Ward 7 Alderman Mervine, Ward 8
____________________________ __________________________
Alderman Bugg, Ward 9 Alderman Johnson, Ward 10
____________________________ __________________________
Alderman Irvin, At Large Alderman O'Connor, At Large
ATTEST:
____________________________ __________________________
City Clerk Mayor
Amendment to a Development Agreement between the City of Aurora and Boreas LLC