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Home My WebLink About16-154 M Resolution No. 16-154 RESOLUTION REGARDING 655 OAK STREET AND THE RELEASE OF LIENS AND OTHER DEBTS AND THE AMENDMENT OF THE COMMUNITY DEVELOPMENT BLOCK GRANT ANNUAL ACTION PLAN TO FACILITATE THE PROPERTY'S DEMOLITION AND CONSTRUCTION OF A NEW HOUSE BY HABITAT FOR HUMANITY WHEREAS,Habitat for Humanity("Habitat")is seeking to acquire the property at 655 Oak Street, Elgin, Illinois (the"Property"); and WHEREAS,the Property has a single-family house located thereon which is currently in a state of disrepair and is uninhabitable; and WHEREAS,Habitat is proposing to demolish the house on the Property and construct a new single-family house; and WHEREAS,the Property is encumbered by several liens and outstanding debts owed to the City of Elgin that would make the proposed project by Habitat unfeasible; and WHEREAS, Habitat has requested the City of Elgin release those liens and debts should it take title to the Property; and WHEREAS, the City of Elgin's Community Development Block Grant (CDBG) Annual Action Plan allocated $25,000 to Habitat for a new roof at its downtown building; and WHEREAS,Habitat has proposed to utilize CDBG funds previously awarded by the City in the amount of$25,000 for demolition and architectural/engineering expenses associated with the redevelopment of the Property; and WHEREAS,upon completion of the new home on the Property,Habitat will sell the Property to an income-eligible household qualified under its homeownership program; and WHEREAS, the proposed use of CDBG funds meets the United States Department of Housing and Urban Development's ("HUD") eligibility criteria, and will address the affordable housing goals discussed in the Kane-Elgin Consolidated Plan; and WHEREAS, it is necessary to amend the City of Elgin's Annual Action Plan for Program Year 2015 in order to include the proposed project in the Plan and reallocate said CDBG funds to it. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ELGIN, ILLINOIS: 1. That conditioned upon Habitat's acquisition of 655 Oak Street, Elgin, Illinois, the City Manager be and is hereby authorized to release and forgive the following liens and other outstanding debts owed to the City of Elgin relating to the Property: $10,085 code related judgment from 2007; $1,557.08 water bill from 2013; $1,310.82 miscellaneous services from various times (board-up services, garbage and waste removal,weed cutting); $700 vacant building fees; $688.99 additional board-up services from 2012; and $150 code related citations. 2. That the City of Elgin Annual Action Plan for Program Year 2015 is hereby amended to include a new project titled"Habitat for Humanity-Oak Street Redevelopment"which involves the demolition and redevelopment of 655 Oak Street. That the project titled"Habitat for Humanity-Roof Replacement"is hereby cancelled and deleted, and that CDBG funds in the amount of$25,000 are reallocated from the cancelled project to the new project. The Director of the City of Elgin's Community Development Department is authorized to sign agreements, certifications, reports and other documents required by HUD to complete the new project described herein. s/David J. Kaptain David J. Kaptain, Mayor Presented: December 21, 2016 Adopted: December 21, 2016 Omnibus Vote: Yeas: 9 Nays: 0 Attest: s/Kimberly Dewis Kimberly Dewis, City Clerk - 2 - ■ ELGIN THE CITY IN THE SUBURBS- AGENDA ITEM: K MEETING DATE: December 7, 2016 ITEM: 655 Oak Street—Release of Liens and Other Debts and Amend Community Development Block Grant Annual Action Plan to Facilitate Property's Demolition and Construction of New Dwelling by Habitat for Humanity ($14,492) OBJECTIVE: Facilitate the transfer of a problem property and provide funding assistance to Habitat for Hu- manity to demolish the existing and construct a new, single-family house. RECOMMENDATION: Approve the release of liens and other outstanding debts totaling$14,492 and reallocate$25,000 of Community Development Block Grant funding to enable Habitat for Humanity to accept the donation of 655 Oak Street, demolish the existing house, and construct a new, single-family dwelling. Habitat for Humanity is seeking to acquire the uninhabitable house at 655 Oak Street. Habitat will demolish the house and construct a new, single-family dwelling. The property is encumbered by several liens and outstanding debts in the city's favor that Habitat cannot afford to assume and that the city will likely never recover. Habitat has asked the city to release those liens and debts should it take title to the property. The liens and outstanding debts due to the city total just under$15,000. The city's Community Development Block Grant(CDBG)Annual Action Plan allocated$25,000 to Habitat for a new roof at its downtown building. Staff is recommending an amendment to the CDBG action plan to enable the$25,000 to be used for the demolition and architectural and en- gineering costs at 655 Oak Street. BACKGROUND The code compliance division has been seeking creative solutions to solving outstanding code cases and 655 Oak Street presents such an opportunity. The city has a long history of code and police efforts at this property. Problems at the property have included but are not limited to the deteriorating condition of the condemned house, boarding the house, several abandoned and unlicensed vehicles, overgrown grass and weeds and trash and debris.The house was last owned by Phillip Brockner, who died in 2013. The owner's brother, Tom Brockner of Tom's Auto Clinic on Prairie Street, is the executor of the estate, and he has been actively seeking to divest the estate of the property.At staff's recommendation,Tom Brockner contacted Habitat for Humanity and began conversations about donating the property to Habitat. Habitat assessed the condition of the house and determined it was too costly to rehabilitate. Habitat has instead proposed de- molishing the existing house and constructing a new one in approximately the same location. Habitat will also reduce the size of the detached garage, which appears to have had a substantial addition at some point in the past. The Elgin Township Assessor lists the 2016 assessed value of 655 Oak Street at$9,661.The house, built in 1900 and just over 1,500 square feet, is assessed at $32,550. The city awarded $25,000 in CDBG funds to Habitat for Humanity to help cover the cost of roof work at the organization's office located at 56 S. Grove Avenue. That building, however, is par- tially within the 100-year floodplain of the Fox River, which triggers additional environmental review regulations and the requirement to purchase special flood insurance, which Habitat's car- rier does not offer. Because of these complications, Habitat is seeking the city's approval to utilize the award for another eligible activity under the CDBG program as described below. OPERATIONAL ANALYSIS The traditional approach to completing a code case such as this is have the corporation counsel file a lawsuit seeking the house's demolition. Once granted, the city would contract to demolish the house and place a lien on the property equal to the amount of the work. The demolition of a house and garage of this size will cost the city$15,000 to $20,000, leaving the city with a vacant lot the estate would then be required to maintain. With the city liens continuing to encumber the property, it will be difficult for the estate to sell or otherwise transfer the property in the foreseeable future. The city's proposed solution will transfer the property's ownership to an en- tity that will oversee the demolition of the house and then construct a new house, increasing the assessed value of the property and the amount of revenue accruing to the various taxing districts. The liens and other outstanding debts owed to the city are itemized as such: $10,085.00 code-related judgment from 2007 $1,557.08 water bill from 2013 $1,310.82 miscellaneous services from various times(board-up services, garbage and waste removal,weed cutting) $700.00 vacant building fees $688.99 additional board-up services from 2012 $150.00 code-related citations from $14,491.89 TOTAL Once it receives title, Habitat for Humanity plans to demolish the vacant and dilapidated single- family home and construct a new single-family home on the site. When completed, the new Ii 2 • • home will be sold to a household that meets the U.S. Department of Housing and Urban Devel- opment's (HUD) income standards and has been qualified under the organization's homeowner- ship program.This project meets HUD's eligibility criteria for the CDBG Program and Habitat has proposed utilizing its $25,000 award for demolition and architectural/engineering costs associ- atedwith the project.The balance of funds needed for the project (approximately$142,000}will be provided by Habitat. For Habitat to utilize the previously approved CDBG award,the city must amend its Annual Action Plan. This action is necessary because the proposed use of funds was not included in the plan, and the proposed project involves a change in both purpose and location. The original purpose was to improve a public facility in the downtown area, and the new purpose is to provide a unit of affordable housing in the South West Area Neighborhood. This change, however, does not constitute a "substantial" amendment as defined in the Citizen Participation Plan. Therefore, a formal public hearing and comment period is not required. Staff met with Habitat to ensure that the proposed new house was in character with homes in the immediate area. With staff concurrence, Habitat proposes to build the same house that is nearly complete at 269 Ann Street (see Figure 1 below). The 1,300 square-foot house has four bedrooms and an elevated porch that runs most of the length of the front of the house. The house would be oriented toward Oak Street. 'r .;''4.t's "? y� ice ':.,._ ,_ . , .• it / aez" #� j �� i •1`b w nr N an : . ., -. -4 ,7-„,.. ..., , . --_ - .:. as.. ., e, _ .,..... -ir ', —4- :fieti..”"_ --'1 4';`,.., '4— -t—,,,*-r''r** '-.-- *.— - Figure 1.Habitat for Humanity house under construction at 269 Ann Street.Habitat proposes to construct the same house at 655 Oak Street.si It!Cl� 3 • INTERESTED PERSONS CONTACTED Staff has worked with Tom Brockner, executor of the estate of Phillip Brockner, Bill Klaves of Habitat for Humanity and Scott Berger of the Kane County Office of Community Reinvestment. FINANCIAL ANALYSIS The city would not collect the approximately $15,000 in liens and outstanding debts owed. The CDBG dollars proposed for this project are not additional CDBG funds, rather the $25,000 allo- cated in 2015 toward a new roof for Habitat for Humanity's downtown office will be repro- grammed to this project which meets the national objectives of the grant. BUDGET IMPACT FUND(S) ACCOUNT(S) PROJECT#(S) AMOUNT AMOUNT BUDGETED AVAILABLE CDBG 230-0000-791.93-36 154362 $25,000 $25,000 LEGAL IMPACT None. ALTERNATIVES The city council may choose not to release the liens and other outstanding debt. In this case, the city will need to file suit in Kane County Circuit Court, seeking permission to demolish the struc- ture. Provided such permission is given,the city will contract to demolish the house and place an additional lien on the property for those costs. Also, the city council may choose not to approve the amendment to the CDBG Annual Action Plan. In that case, Habitat will be required to either acquire flood insurance or propose another use for the grant funding. NEXT STEPS Approve a resolution releasing the liens and outstanding debt and amending the Annual Action Plan. 4 Originators: Marc Mylott, Community Development Director Final Review: Debra Nawrocki, Chief Financial Officer William A. Cogley, Corporation Counsel/Chief Development Officer Richard G. Kozal, City Manager ATTACHMENTS A. Floor Plans of House at 269 Ann Street , 5