Kamla Lewis, Director of Neighborhood Revitalization

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1 TO: c.c. FROM: Members of Council Earl Leiken, Mayor Jeri Chaikin, CAO Kamla Lewis, Director of Neighborhood Revitalization DATE: September 20, 2016 RE: Sale of 3726 Traver Road to CAP Construction LLC. Staff is recommending the sale of the single family house located at 3726 Traver Road (PPN ) to the rehab firm, CAP Construction LLC. under the guidelines of the City s purchase-private rehab sale procedures. The goal of this transaction is to get this property back into productive use by transferring it to a reputable firm for rehab and sale to an owner occupant. This recommendation was reviewed by the Neighborhood Revitalization Committee and the Finance Committee at their September meetings. The City acquired 3726 Traver Road through the tax foreclosure process. The City became the owner of this property on July 29, At the time the property was $34,179 tax delinquent. This three bedroom house was built in 1926 and is in considerable disrepair and will require substantial rehab. It does not appear to have been updated since it was built. Proposals were sought from all rehab firms participating in the Shaker Renovator Program, and one proposal was received from CAP Construction LLC (formerly known as Eastside Suites), owned by Anthony and Christie Paciorek. Proposed Renovations In addition to correcting all Point of Sale violations, CAP Construction LLC proposes to make the following upgrades to the property: installing new electrical, plumbing, central heating & air conditioning, foam insulation on third floor and where walls are gutted, adding a security system, new cabinetry, countertops, new lighting and plumbing fixtures, new tile flooring and re-finishing the hardwood floors. The expected cost of renovations is approx. $125,000 (excluding labor costs). Buyer Background The proposed buyer of the property, CAP Construction LLC., has completed 19 similar renovations in the following cities: Shaker Heights (6), Cleveland (10), & Euclid (3). The most recent was 3677 Winchell Road, which was sold for $165,000 in March The City just approved the sale of Fairmount to CAP Construction for renovation under the Private Purchase Rehab program. CITY OF SHAKER HEIGHTS I NEIGHBORHOOD REVITALIZATION 3450 LEE ROAD I SHAKER HEIGHTS, OH I TEL I FAX I WEB shakeronline.com

00 and any additional costs associated with the City s acquisition of the property, including closing costs, taxes, title work, etc., so that the transaction would be cost neutral to the City.

2 CAP Construction LLC has consistently produced high quality rehabs and has an excellent reputation with all City departments. Proposed Sale Structure If the sale is approved by Council, the City would sell the property to CAP Construction LLC for $1.00 and any additional costs associated with the City s acquisition of the property, including closing costs, taxes, title work, etc., so that the transaction would be cost neutral to the City. These actual costs are typically not known until shortly before closing. The City would also enter into a development and use agreement with CAP Construction LLC that would commit them to completing the rehab within 6 months of transfer and selling to an owner occupant. Goals of the Proposed Sale Return property to productive use: By returning this property to productive use, the City would strengthen this section of the Sussex neighborhood. Rehabbing this house rather than demolishing it would represent approx. $165,000 of property tax value, resulting in approx. $7,000 in annual property tax revenue to the City, schools and library. Save City funds: If sale of this property to CAP Construction LLC does not go through, the City will have to demolish the structure at a cost of approx. $15,000, and be responsible for the ongoing maintenance of the resulting vacant lot, which would be approx. $670 per year. RECOMMENDATION Staff requests that Council authorize the sale of 3726 Traver Road to CAP Construction LLC., such that the transaction is cost neutral to the City, recapturing any acquisition costs. We ask that this be passed on first reading so that the rehab can begin as soon as possible.

3 CITY OF SHAKER HEIGHTS I NEIGHBORHOOD REVITALIZATION 3450 LEE ROAD I SHAKER HEIGHTS, OH I TEL I FAX I WEB shakeronline.com

4 ORDINANCE NO. BY: Authorizing a Development Agreement with CAP Construction LLC, for the sale, rehabilitation and re-sale of the City-owned property located at 3726 Traver Road, Shaker Heights, Ohio, Permanent Parcel Number , authorizing the disposition of City-owned property. WHEREAS, in September 2010, the Neighborhood Revitalization Committee endorsed the City s Private Purchase- Rehab Program with the goal of returning vacant and/or abandoned residential properties to productive use by transferring properties that the City has acquired to reputable firms for rehabilitation and sale to owner-occupants; and WHEREAS, on July 29, 2016, the City acquired the property at 3726 Traver Road, Shaker Heights, Ohio through the tax foreclosure process; and WHEREAS, the condition of the subject property represents a public nuisance, for which the City has had to expend funds to maintain the yard on the exterior, and that will require the demolition of the property at the approximate cost to the City of $15,000 if it is not rehabilitated; and WHEREAS, Council determines that the subject property has no or a negative fair market value, as it is in considerable disrepair, such that the sale of the property for $1.00 to a reputable developer that will rehabilitate the property and return it to a productive use, preserving the City s housing stock and property tax base, is warranted; and WHEREAS, the City sought proposals from all rehab firms participating in the City s Shaker Renovator Program, which prescreens and qualifies developers to ensure the sale of distressed properties to reputable and financially capable firms, and one proposal was received from CAP Construction LLC (formerly known as Eastside Suites); and WHEREAS, the Director of Neighborhood Revitalization has recommended that the City enter into a Development Agreement with CAP Construction LLC for the sale to CAP Construction LLC for $1.00 of the City-owned property located at 3726 Traver Road, Shaker Heights, Ohio, for the rehabilitation and re-sale of the property under the City s Private Purchase-Rehab Program.

5 NOW, THEREFORE, BE IT ORDAINED by the Council of the City of Shaker Heights, Ohio, as follows: Section 1. The Mayor is hereby authorized and directed to enter into a Development Agreement with CAP Construction LLC for the sale, rehabilitation and re-sale, of the City-owned property located at 3726 Traver Road, Shaker Heights, Ohio, Permanent Parcel Number Section 2. Pursuant to the terms of said Development Agreement, the Mayor is further authorized and directed to sell the City-owned property located at 3726 Traver Road, Shaker Heights, Ohio, Permanent Parcel Number , for $1.00 to CAP Construction LLC on the terms and conditions set forth in the Development Agreement. Section 3. This ordinance shall take effect from and after the earliest time allowed by law. Enacted Approved this day of EARL M. LEIKEN, Mayor Attest: JERI E. CHAIKIN Clerk of Council coun16/0920capconstructiondevagree3726traver 2

Memorandum CITY OF SHAKER HEIGHTS I ECONOMIC DEVELOPMENT

Memorandum CITY OF SHAKER HEIGHTS I ECONOMIC DEVELOPMENT Memorandum To: City Council Cc: From: Mayor Earl M. Leiken Chief Administrative Officer Jeri E. Chaikin Tania Menesse, Director Economic Development Date: October 23, 2017 Re: Authorize the City Administration