The Coon Rapids Housing and Redevelopment Authority has become a landlord.
The authority, which comprises the seven members of the Coon Rapids City Council, with some reluctance on the part of a few members, approved a purchase agreement to buy three buildings totaling 20 one-bedroom apartment units at 9864-9950 East River Road.
A sale price of $849,000 was negotiated with the owner, Palis Properties LLC, with the money to pay for it coming from a tax increment financing district, which has previously been used for property acquisitions in the area.
The authority vote was 6-1 in favor, with Councilmember Denise Klint voting no.
The housing and redevelopment authority has become a landlord because the three-acre property lies within the Port Riverwalk redevelopment area of Coon Rapids Boulevard and the city already owns property to the west and north.
According to Matt Brown, community development specialist, the city owns the vacant land on both sides of East River Road west and north toward Avocet Street.
“While the property is approximately three acres in area, a majority of the site is wet and undevelopable,” Brown wrote in a report to the authority.
“In the long term, it is envisioned that the site will be combined with the HRA’s land to the west for residential development.”
The sale price reflects the market value for the property, according to Brown.
Closing is expected to take place by the end of this year, Brown said.
There is currently a property line issue with the title of this land that would likely hinder a sale to a private party, he said.
The apartment units in the buildings are currently occupied with rents ranging from $570 to $605 a month.
That won’t change with the housing and redevelopment authority taking ownership – for at least a few years, according to Brown.
The property is currently managed by a caretaker who lives on-site and receives reduced rent and the city plans to enter into a maintenance agreement with that person, Brown wrote in his report to the authority.
But as tenants move out voluntarily, units will not be rented out anymore, he wrote.
Rental income at full occupancy is between $130,000 and $140,000 a year and with expenses estimated at 50 percent of income, the city would derive between $65,000 to $70,000 in operating income, he wrote.
That money would be used to offset relocation expenses for which tenants would be eligible under federal law, even if they move out of their own accord, according to Marc Nevinski, community development director.
He estimated relocation benefits would be in the $10,000 to $20,000 range per renter, “hopefully not higher,” Nevinski said.
Final relocation of tenants would depend on the timing of future redevelopment and building maintenance needs, Brown wrote.
What concerned several councilmembers and prompted Klint to vote against the purchase was the federal requirement to pay relocation benefits to tenants who move.
“That’s very expensive with 20 units,” Klint said.
Councilmember Jerry Koch was not excited about taking the property off the tax rolls and the authority becoming a landlord to 1950s “tinder box” apartments, he said.
But he would reluctantly vote for the purchase as a means to provide impetus to redevelopment in Port Riverwalk, Koch said.
Koch would like to see more numbers on the relocation packages, he said.
Nevinski was not enthused about the city becoming a landlord either, but he said this was an opportunity with a willing seller.
According to Councilmember Bruce Sanders, by assembling properties in Port Riverwalk, “we can help speed up the process.”
Councilmember Paul Johnson said this purchase ties into the whole Port Riverwalk area and the creek bed that is part of this property is “a highly desirable amenity.”
“We should move forward as quickly as we can,” he said.
In Mayor Tim Howe’s view, the city has made a commitment to redevelop the Port Riverwalk area as part of its long-range planning.
That includes acquiring and putting together properties that can be developed by the private sector, Howe said.
Peter Bodley is at firstname.lastname@example.org