Moorhead,, Minnesota

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1 City of Moorhead Moorhead,, Minnesota Stonemill Estates Redevelopment Plan May 2013 City of Moorhead 500 Center Avenue Moorhead, MN Stonemill Estates Redevelopment Plan 1

2 INTRODUCTION The plat for Stonemill Estates First Addition, generally located between Highway 75 and 14 th Street South and 44 th Avenue and 46 th Avenue South, was recorded on October 23, 2006 (Document No ) and included: 194 lots to accommodate single family attached and detached units Eight lots to accommodate approximately 276 medium to high density units (Lots 1, 2 and 3 Block 1; Lots 1 and 3 Block 2; Lots 7 and 8 Block 3; and Lot 1 Block 11) One lot (Lot 5 Block 1) originally purchased by the City utilizing Community Development Block Grant funds for the possible construction of approximately 45 residential units (for rental to or purchase by persons of low and moderate income) or a mixed use development 9 acres (395,348 square feet) of parkland dedication 4.5 acres (197,667 square feet) of storm water ponds/drainage Local utility services for Stonemill Estates were planned to be installed in phases. Of the 194 single family lots in the subdivision, 77 were serviced with local utilities. Of those buildable lots, 16 have homes constructed on them and 35 are publicly owned as the result of tax delinquency. In addition to the single family lots, there are eight multifamily lots (seven serviced, one partially serviced) that are publicly owned as a result of the tax delinquency. Subdivision Total SF Lots Serviced Stonemill Estates Single Family Lots Not serviced Building Permits (through April 2013) Tax Forfeit Lots buildable / serviced Tax Forfeit Lots Not buildable / not serviced* Stonemill Estates *Requires extension of local municipal improvements AUTHORITY TO ESTABLISH REDEVELOPMENT PLAN At their November 13, 2012 meeting, the Moorhead City Council approved Resolution authorizing the purchase of 162 tax forfeited lots 1 in Stonemill Estates First Addition at no cost to the City. Minnesota Statutes , subd. 1a(d) allows for a County to convey tax forfeited lots at less than market value to a City if a determination is made that it is in the interest of the public to provide an incentive to correct conditions that make the land undesirable in the open market. When this occurs, the City is required to document plans for correcting the undesirable conditions and the specific law(s) that empower it to acquire the property to address the blighted conditions Single Family Buildable lots 119 Single Family Unserviced lots 8 Multifamily lots Stonemill Estates Redevelopment Plan 2

3 REDEVELOPMENT PLAN The Stonemill Estates First Addition Redevelopment Plan (the Plan ) has been prepared to facilitate the development of lots in the subdivision which have reverted to public ownership as the result of delinquent taxes. It is also anticipated that the modifications included within this Plan will support development of lots held in private ownership in the subdivision. This Plan identifies existing conditions which have made development in Stonemill Estates difficult in the market and the proposed modifications to correct said conditions in order to achieve the following objectives: Create an environment which encourages and supports private investment in building single and multifamily dwellings in Stonemill Estates. Protect Moorhead taxpayers by selling lots to recoup special assessments and foster development on lots to secure future special assessment payments. Increase the property tax base and generate additional School District enrollment. The three conditions identified and addressed in this Plan which have created real or perceived blight for the subdivision include: 1. Disproportionately distributed special assessments, 2. Covenants which limit the ability of builders to construct housing units which are popular in the region, and 3. Lot configuration of single family lots which is not common in the region. It is anticipated that the City of Moorhead will have completed the title work on or about August 1, Timelines noted in this Plan are subject to change and are dependent upon the date by which the City receives clear title to the property. 1. SPECIAL ASSESSMENTS Existing Conditions: Construction of the first phase of local improvements for Stonemill Estates began in the summer of 2006; a time when the housing market was in an upswing and the prices for materials, labor and energy were high. When the construction costs for the infrastructure to service the subdivision were known, the developer of Stonemill Estates provided City staff with a breakdown of how they wanted the special assessments assigned to the lots. Generally, the special assessment assignments were not evenly spread on the multifamily lots and spread at an excessively high amount on the lots abutting the ponds and other un-serviced lots. Stonemill Estates Redevelopment Plan 3

4 Proposed Modifications: The full costs associated with infrastructure installation must be spread to the lots in Stonemill Estates to meet the debt service obligations. The special assessment distribution will be addressed utilizing the following approach: 1. Determine market value of the lots and assign a lot price inclusive of special assessments. 2. Utilize a 40%-60% sales approach up to 60% of the lot(s) sales price may be assumed as special assessments and amortized over 20 years and the remaining percentage will be used to recover prior year unpaid special assessments. This approach will allow the City to re-assign appropriate special assessments to each lot based on market value. Forty percent of lot sales proceeds will be allocated toward selling expenses, on-going maintenance and payment of delinquent special assessments; sixty percent will be allocated to pay for the uncertified special assessments. Estimated Timeline: First and Second Quarter of 2013: Set market values and assign lot prices (done) Issue Request for Proposals (RFP) for all or a portion of western/multi-family lots (done) 2. COVENANTS Existing Conditions: The developer recorded restrictive covenants for Stonemill Estates in October of 2007 (Document No ) which are very limiting on the types of housing that can be built. These covenants make it difficult for builders and homeowners to obtain financing to purchase lots and construct homes. Based on a cursory review, it also appears that some of the developed lots in the subdivision do not meet the covenants. Article X Section 1 of the covenants outlines the process to amend the covenants, which includes holding a meeting with lot owners (property owner meeting held on April 10, 2013 and builder/owner meeting held on April 17, 2013). Proposed Modifications: It is clear after review of the covenants that the covenants have contributed to or been the direct contributing factor to the lack of builder and consumer interest in the subdivision. The amended covenants are available for review by contacting the City of Moorhead Planning Office or by visiting A property owner/neighborhood meeting and builder/owner meeting were held to provide an overview of the proposed covenant amendments. Stonemill Estates Redevelopment Plan 4

5 Estimated Timeline: First and Second Quarter of 2013: Draft proposed covenant revisions (done) Hold property owner meetings to discuss and hear comments on proposed revisions (done) Record amended covenants (done) 3. LOT CONFIGURATION Existing Conditions: Single Family Attached and Detached Lots: There are 154 single family lots which became publicly owned following the tax forfeit process. Of those, 35 are buildable lots. The remaining 119 are not serviced with local utilities and are not buildable at this time. Multifamily Lots: There are eight multifamily lots that which became publicly owned following the tax forfeiture process seven of which are serviced and buildable and one which is partially serviced. Proposed Modifications: Single Family Attached and Detached Lots un-serviced/not buildable lots: For the platted lots which are not serviced by roads and local utilities, it is recommended that the area be reviewed and reconfigured to create a layout which will be more popular in the market. This review should include the following areas of review: - Lot size - Alleyways - Street and lot configuration - Number of lots and impact to distribution of special assessments - Analyze absorption of buildable lots to identify desirable configurations Multifamily Lots: The City-owned lots in the southwest corner of the subdivision (Highway 75 and 46 th Avenue) have been identified as a priority and prime location for high quality development and will be included in a Request for Proposals that was released in May The RFP will be flexible and allow proposers to suggest possible changes to parcel configuration, zoning and traffic flow to maximize value and market demand. Stonemill Estates Redevelopment Plan 5

6 Estimated Timeline: Ongoing Sale of Single Family Attached and Detached Buildable Lots: Lots are currently being marketed and sold. Future Single Family Attached and Detached Un-Serviced/Not Buildable Lots: It is recommended that these lots be analyzed in conjunction with review of the redistribution of special assessments. The number of lots in the subdivision will impact how the special assessments are distributed. If an alternative lot configuration is suggested, an estimate of the proposed special assessments to be distributed to the lots will be prepared. Multifamily Lots: Second Quarter 2013: Issue RFP for lots in the southwest corner of the subdivision (done) Market the following properties: (done) o Parcel th Ave S o Parcel Blue Stem Way o Parcel Blue Stem Way o Parcel th Ave S Ongoing: following review of responses received for the above noted RFP, review development options for the western/multifamily lots. ADDITIONAL CONSIDERATIONS In addition to the three conditions noted above, the City will also address the following: Tax Increment Financing: A Tax Increment Financing district (TIF) for low income housing was established in Stonemill Estates in 2007, however all undeveloped parcels were removed from the district by the Mayor and City Council at their April 8, 2013 meeting (Resolution ). The Make Moorhead Home two-year property tax abatement is in effect through By statute, the new abatement cannot be given to property within a TIF district, which was the reason for removing all undeveloped parcels from the District. All newly constructed homes qualify for the abatement regardless of income level. The broader abatement is more attractive to more buyers thus the abatement increases the chances of selling more lots. A recently approved 0%/$5,000 deferred loan applied to special assessments is also available citywide for newly constructed homes. In addition Greater Minnesota Housing Finance Agency (GMHF) currently has a general program for funding to assist with constructing low income housing that is available to all builders city wide. Stonemill Estates Redevelopment Plan 6

7 Increased Maintenance: Maintenance Plan (see attached map): numerous maintenance efforts will be made throughout the subdivision to address removal/leveling/shaping of clay and dirt materials. Agricultural leases will include provisions for site maintenance. Marketing: Marketing efforts are underway. Purchase agreements are drafted. ATTACHMENTS - Stonemill Estates General Location Map - Maintenance Map - Lot Price Map (As of April 2013) For information on this Plan or publically owned lots in Stonemill Estates, please contact: City of Moorhead Community Services Department 500 Center Avenue 4 th Floor Moorhead, MN Stonemill Estates Redevelopment Plan 7