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HomeMy WebLinkAbout1974 12-10 HCMCall to Order Roll Call Approval of Minutes 11 -12 -74 Real Estate in Brooklyn Center Minutes of the Proceedings of the Housing Commission of the City of Brooklyn Center in the County of Hennepin and the State of Minnesota REGULAR SESSION DECEMBER 10, 1974 CITY HALL The Brooklyn Center Housing Commission met in regular session and was called to order by Chairman Howard at 7:30 p.m. Chairman Howard, Commissioners Nelson, Magnuson, Haroldson, Ward, Beikler and Kohrt. Also present were Councilman Bill Fignar, Director of Planning and Inspection Blair Tremere and Administrative Assistant James Lacina. Motion by Commissioner Nelson and seconded by Commissioner Haroldson to approve the minutes of the November 12, 1974 meeting as submitted. The motion passed unanimously. Chairman Howard introduced the first item of business on the agenda, the presentation by Commissioner Dale Magnuson on real estate in Brooklyn Center. He noted that the Commission was fortunate to have expert resource personnel serving as members. Commissioner Magnuson began his presentation by stating that the average house in Brooklyn Center sold for $30,252 in 1973 and so far in 1974 it has been approximately 8% higher or about $32,600. He indicated that houses in Brooklyn Center ranged from $11,000 to $69,900 in selling price. Commissioner Weitzel arrived at 7 :35 p.m. He briefly explained the problems with the market and the hesitancy of people to buy and sell. He then outlined the financing procedures for the FHA, GI and conventional methods of purchasing homes. Fl noted that there seemed to be plenty of money available at 9% interest plus i for FHA, and 9% for GI. He did state, however, that conventional mortgage money was very scarce due to the state usery laws. He explained the purchasing procedure and noted that the buyer was subject to the interest at closing. he then talked briefly on improvements made to homes to qualify for FHA mortgage insurance. He noted that the FHA required specific standards be met before they would offer mortgage insurance for a house. He also commented as to the possi- bility of purchasing a house on a contract for deed. He stated that this option was available to people who could not get approval because of credit ratings or in times of high interest rates and bad market. Councilman Fignar inquired as to the contract for deed concept. Commissioner Magnuson responded by stating that there was an 8% ceiling on the inter- est rate for contract for deed and that it was favorable to the buyer if he could obtain an arrangement like this He noted that there were risks involved and that the contract for deed did not represent ownership in anyway. Commissioner Hastings arrived at ;45 p.m. He also stated that the contract for deed is used in cases where the house does not meet the FHA code. He further stated that a house may be remortgaged under FHA after it has been brought up to meet the FHA standards. There was a brief discussion on the default policy and the general provisions of the contract for deed. Commissioner Weitzel inquired as to the income required to purchase a new house in Brooklyn Center. Commissioner Magnuson responded by stating that at present the formula runs at four, to one He explained this formula by stating that the principle interest, taxes and insurance multiplied by four should equal your gross income for each month. He then noted that it would take approximately $1,400 a month income to purchase a $32,000 home. Commissioner Weitzel noted that this current practice virtually prohibits young people from buying a home. Commissioner Magnuson responded by stating that this is one of the reasons that the housing market has been very slow. Chairman Howard inquired as to ti.= possibility of mortgage assumption. Commissioner Magnuson responded by stating that a mortgage in good standing may be assumed for usually a small assumption fee. He indicated that this practice required paying the difference between the asking price and the remainder of the mortgage and usually assured a lower interest for the buyer. 12/10/74 -2- Councilman Fignar inquired as to the respon- sibility for meeting the FHA codes before sale. Commissioner Magnuson stated that it was the responsibility of the seller to insure that the code has been met. Commissioner Haroldson noted that the Housing Maintenance Code would also have restrictions for codes to be met along with the building code and inquired as to the com- patibility between the FHA standards. Commis- sioner Magnuson noted that the FHA inspector would approve a house only if it meets the FHA codes which usually are consistent with the building codes. He also noted that the Housing Maintenance Code and a certificate of occupancy would be looked at favorably by an FHA inspector in reviewing a house. Commissioner Ward briefly commented on the Brooklyn Center Housing Maintenance Code and the certificate of occupancy required. Mr. Tremere noted that the certificate of occupancy concept was not a part of the Brooklyn Center Code for single family dwellings. He noted that the Brooklyn Center Housing Maintenance Code was directed, at this time, towards enforce- ment in multiple family dwellings. He did note, however, that at some point of time in the future the Code could be adapted, and would hopefully be adapted, towards single family homes. Chairman Howard inquired as to the home improve- ment portion of financing. Commissioner Magnuson responded by stating that generally .for $1,000 that is put into a home above grade would result in $1,000 worth of value at the time of sale. He stated that for each $1,000 you put in a house on the exterior you would retain about $250 worth of value at sale and for each $1,000 put in a basement you would retain approximately $500 in value. Chairman Howard then introduced Commissioner Leo Beikler who talked briefly on home improvement financing. Commissioner Beikler stated that he had contacted three lending institutions in Brooklyn Center regarding home improvement loans. He noted that Home Federal Savings and Loan had a home improve- ment loan available up to $10,000 with a 12 year maximum at 12%; Midwest Federal $10,000 at 12%; and Brooklyn Center State Bank $7,000 for 84 months -3- 12/10/74 at 12%. He noted that Brooklyn Center State Bank was currently only lending to its regular customers. Commissioner Magnuson then commented as to the price of housing in Brooklyn Center compared to other communities® He noted that Brooklyn Center was approximately $1,000 higher than its neigh- boring communities of Crystal, Robbinsdale and New Hope. He listed in the ranking order the communities with the housing values. 10 Brooklyn Center, Brooklyn Park 20 Robbinsdale, New Hope 3 Osseo, Anoka 4. North Minneapolis He briefly commented as to the reasons for the higher cost of housing in Brooklyn Center. He explained that in general Brooklyn Center is viewed as having better planning, more defined areas for commercial and residential areas, good services, proximity to shopping and good trans- portation. Commissioner Ward inquired as to parcels of land th remained in Brooklyn Center available for R-1 development. Mr. Tremere responded by stating that at present there was only one major tract of land left to be developed as an R-1 use. He noted that this area has 37 single family lots located near 67th east, of Bryant and west of Camden. resumed at 1005 p.m. 12/10/74 -4- Commissioner Magnuson noted that land costs in Brooklyn Center run approximately $110 per front foot primarily because of the in-street services and utilities. Commissioner Weitzel commented briefly on the salability of a home in Brooklyn Center that is approximately 20 years old. ColimOssioner Magnuson rioted that homes in Brooklyn Center, in general, are well kept and salability at this point seems very good. He noted that construction of homes and basic construction is better nd that houses are basically being built to higher standards because of codes. The Housing Commission recessed at 9:50 p.m- and Housing Programs Chairman Howard commented briefly on a housing program that was initiated in Minneapolis and noted that he wanted the Commission to keep in tune to these programs and the possibility of using such programs in Brooklyn Center. Coun- cilman Fignar commended the Commissioners for their effort in keeping aware of housing pro- grams and noted that he was sure this effort would pay off in the future for involvement in housing programs and maintaining quality housing in Brooklyn Center. Chairman Howard then commented briefly as to the activities of the HRA. Councilman Fignar noted that the HRA approved a budget of approximately one third of a mill and that this money would be placed in a reserve fund and used for future projects as the HRA sees fit. Letter of Commendation Adj ournment Chairman Howard noted that Dan Hartman would be leaving the Commission as he accepted a position in Champlin. He noted that the Com- mission should send a letter of commendation to Mr. Hartman and thank him for his input and help in organizing the Commission. Chairman Howard also noted that Commissioner Nelson was resigning from the Commission due to personal conflicts and thanked her for her excellent input and resource ability to the Commission. He thanked Commissioners Magnuson and Beikler for their informative presentations and back- ground work regarding the housing market in Brooklyn Center. Motion by Commissioner Ward and seconded by Commissioner Hastings to adjourn the meeting. The motion passed unanimously. The Brooklyn Center Housing Commission adjourned at 10 :35 p.m. Chairman