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HomeMy WebLinkAbout1998 10-20 HCM MINUTES OF THE PROCEEDINGS OF THE HOUSING COMMISSION OF THE CITY OF BROOKLYN CENTER IN THE COUNTY OF HENNEPIN AND STATE OF MINNESOTA REGULAR SESSION OCTOBER 20, 1998 CONFERENCE ROOM B BROOKLYN CENTER CITY HALL CALL TO ORDER The Brooklyn Center Housing Commission was called to order by Chairperson Robert Torres at 7:00 p.m. ROLL CALL Chairperson Robert Torres, Commissioners James Lano, Lloyd Deuel, Ernie Erickson, Michael VonDeLinde, Mark Yelich, and Donald Arm. Also present were Council Liaison Bob Peppe, Mayor Myrna Kragness and Community Development Specialist Tom Bublitz. Commissioner Christopher Russell was absent from the meeting. APPROVAL OF AGENDA There was a motion by Commissioner Erickson and seconded by Commissioner Arm to approve the agenda as submitted.. The motion passed. APPROVAL OF MINUTES July 21, 1998 and August 18, 1998 There was a motion by Commissioner Erickson and seconded by Commissioner Arm to approve the minutes of the July 21, 1998 and August 18, 1998 Housing Commission meeting as submitted. The motion passed. TIME OF SALE ORDINANCE Commissioner Erickson stated that, as he committed to at the last meeting, he followed up with Council members to determine their positions on the Time of Sale ordinance. He then proceeded to review his discussions with Council members. Commissioner Erickson stated he discussed the Time of Sale ordinance with Councilmember Lasman and she indicated that she believes it is a good concept but needs some fine tuning so no one is in danger of being convicted of a misdemeanor if they are unable to correct certain hazardous items. She noted that there may need to be a redefinition of hazards and cited the example of smoke detectors being required in every bedroom and that this may not be necessary if there is only a single person living in the house. She added that some hazards are less hazardous than others. 10 -20 -98 -1- Commissioner Erickson relayed his conversation with Councilmember Hilstrom who indicated that if significant costs will be necessary to fund the administration of the Time of Sale ordinance there would need to be a budget cut somewhere else in the budget. He added that in his conversation with Councilmember Hilstrom she indicated she had received comments from residents about code enforcement officers looking in people's backyards and that this was a concern for some individuals. Commissioner Erickson commented he believes if code enforcement officers see a good appearing house from the front there will likely not be a reason to enter the backyard but if there is a troublesome appearance in the front yard there may be reason to investigate in the backyard of residences. Councilmember Bob Peppe arrived at 7:10 p.m. Commissioner Erickson stated, in discussing the Time of Sale ordinance with Councilmember Carmody, she supports the point of sale ordinance in its present form and suggested the Housing Commission members should attend the City Council meeting where the Time of Sale ordinance will be considered. Mayor Kragness stated she is supportive of the concept of upgrading the housing stock but questioned whether the City might be mandating something they do not need. She stated that she would like the realtors association to present their information on buyer inspections. Chairperson Robert Torres recognized Mr. Bill Gerst representing the Minneapolis Area Association of Realtors. Mr. Gerst stated that when the City of Minneapolis was conducting hearings on their Time of Sale ordinance many real estate agents in Minneapolis testified that there were a growing number of buyer inspections. During the Minneapolis hearing process, there were no hard data available to prove that buyer inspections were on the increase. Mr. Gerst indicated he has attempted to get objective data from realtors and agencies regarding their experience with buyer inspections. He added that in his survey he asked individual agents to respond on their own sales and also requested an agency response with regard to overall buyer inspections in a particular agency. He explained his response was received in the form of percentages of sales that included a buyer inspection. He added that he had information on percentages of inspections done in offices and also from agents. He explained this survey included data from January 1, 1997 through June 1998. He further explained that information was given in the form of percentages of inspections as opposed to the total number of sales for proprietary reasons. He added that a growing number of offices and agents have recorded a significant increase in buyer inspections over the last two to three years. Mr. Gerst presented his report summary to the Housing Commission which indicated a significant number of buyer inspections being done from both individual agents and from agencies. Commissioner Arm inquired whether cities that have Time of Sale ordinances allow for a waiver of ordinance requirements if the buyer does an inspection. Commissioner Erickson commented that if a buyer does the inspection it is unlikely that they would share it with anyone else and that the ordinance requires that an inspection be done at the time the house goes on the market. 10 -20 -98 -2- Commissioner Erickson commented that this past real estate season in Brooklyn Center, and other cities, has been very hot and that offers are often made above the asking price and two to S three offers may be made on a single home. He inquired of Mr. Gerst, if there is a situation where two families put in a bid at the same price and one is contingent on a buyer having an inspection done and the other is non contingent which is likely to be accepted. Mr. Gerst responded that, everything else being equal, the seller would certainly take the offer without the contingency. Mayor Kragness stated she had sold her mothers' home in Brooklyn Park recently and bought a policy to cover appliances functioning after the sale. She asked Mr. Gerst how often this is used. Mr. Gerst stated that this is a fairly new program and that Edina Realty has been the main agency offering this program. Commissioner Erickson referred Commission members to the memorandum from the City Attorney and pointed out that the memo addressed some important points and noted that a secondary goal of Time of Sale inspection programs is to provide good turnover housing to first time buyers. He commented that realtors use a disclosure statement signed by the seller but this is not required by law and that additional arbitration is being ,used in certain transactions and that binding arbitration is a way of dealing with house problems. Commissioner Arm commented that some items in a home are obvious, such as outlets needing ground fault interrupters and rooms needing smoke detectors, but he stated he believes the average homeowner does not have any idea that they may have a cracked heat exchanger, for example. Commissioner Erickson inquired of Commissioner members whether or not there are certain items im Section 12 -1508 of the ordinance that could be eliminated as hazardous items. Commissioner Arm stated that he does not see anything that the Commission could eliminate in the list of hazardous items in the current proposed ordinance. Mayor Kragness commented that paragraph number 4 in section 12 -1508, regarding an agreement that the buyer may execute to provide that they correct hazardous items, was extensively discussed by the City Council. Chairperson Torres recognized Ms. Donna Zieska, a resident present in the audience. Ms. Zieska commented that the insurance Mayor Kragness referred to earlier, for appliances, is quite expensive and that sometimes it is a situation where someone new buying a home uses the house, including the appliances, in a different manner causing problems to occur. She stated she believes insurance that would last a year is not a good idea since the new buyers could abuse the appliances during that year. She also commented she is wrestling with the cost of an inspection which would be approximately $300. Commissioner Erickson pointed out that a $300 inspection would be one that would be initiated 10 -20 -98 -3- by the buyer and that a Time of Sale ordinance, under the requirements of the proposed ordinance, would not be that expensive. Commissioner Lano commented that he had a buyers inspection done on a house he bought in Brooklyn Center and the inspection took approximately four hours and cost $250. Ms. Zieska stated that if the City has required inspections the costs for such an inspection should be a minimum. She added that if residents have to get their properties up to code before they sell it this is going to be a great burden and problem. She added that many people buy older homes with known problems and then fix them up. She suggested that there be some tax break for repairs required under a Time of Sale ordinance. She added that this would be an incentive for a buyer and that the incentive program would be better than sellers giving a quick fix to home repairs under a Time of Sale ordinance. Commissioner Erickson commented that he does not think the City could implement a program of tax breaks at the local level. Commission members discussed the issue of administrative time required to administer a Time of Sale ordinance. The Community Development Specialist noted that this year has been a particularly busy year for the inspection staff and that next year, with the approach of the Brookdale remodeling, will be an equally if not busier year. He stated that there is a concern that the inspection staff may be stretched with a Time of Sale ordinance. Mr. Bill Gerst stated that if the City believes they will not have enough staff to administer a Time of Sale Ordinance he thinks that his report shows an increasing reliance on private inspections from buyers. He also states he believes the real estate market has gone beyond the need for cities to enact ordinances such as Time of Sale type ordinances. Mr. Gerst stated that if the City does pass a Time of Sale ordinance he would request that two areas in the ordinance be clarified. Number one, he stated that he does not understand section 12 -1511 IMMEDIATE HAZARDS and specifically paragraph B of this section. He stated that this entire section, and particularly paragraph B, needs to be clarified. Number two, he stated that it is unclear in the ordinance whether the seller will have to make repairs within 90 days if the house does not sell. He emphasized this is not clear in the ordinance as proposed. Mayor Kragness inquired whether buyer inspections are still increasing. Mr. Gerst replied that his data shows that they are increasing and that the FHA is now recommending private inspections be done on FHA insured homes. Commissioner Lano stated he has bought two homes in Brooklyn Center and both of the homes had buyer inspections done on them. He stated he believes the City is going halfway in proposing this Time of Sale ordinance and does not think the City can have it both ways. He added he believes that there needs to be staff involvement in such an ordinance to make it 10 -20 -98 -4- successful. Also, he noted Mr. Bublitz had previously stated that none of the cities that have Time of Sale ordinances can show objective proof that these ordinances have improved the city's overall housing stock. Mayor Kragness inquired whether the City may be mandating something that is already being done by the real estate industry. Commissioner Yelich pointed out that the Commission should be aware of the purpose of the ordinance which is to maintain the overall housing stock in the City and not to protect buyers or sellers. He pointed out that this has been lost in many of the discussions of the Commission. i The Community Development Specialist inquired of Mr. Gerst whether an ordinance requiring realtors to provide information on private inspections would be beneficial. Mr. Gerst replied. that he did not think an ordinance like this would be workable and cited the example of the Department of Health requiring that realtors distribute brochures on well abandonment. He noted that this particular approach was not terribly successful. Commissioner Deuel stated that he doesn't know what the typical Brooklyn Center house and that he believes people are buying homes and not fixing them up properly. He ,stated he believes the Time of Sale ordinance is a start and that he thinks the percentages of buyer inspections would go up if the ordinance is implemented. Commissioner Lano stated that he believes the number of buyer inspections may go down if an ordinance like this is implemented since buyers would assume that the inspection is already being done by the City. Council Liaison Peppe stated he would like to address the current infrastructure improvements that are underway in Brooklyn Center and the subsequent increase in property values related to the current street replacement program. He explained these projects are helping to encourage homeowners to improve their properties. He added that he has looked at the yards of people with new curb and gutter and has noted additional exterior improvements to the homes in many cases. Council Liaison Peppe continued and noted that there are many unanswered questions regarding a Time of Sale ordinance and that his main concern is upgrading the housing stock and that this may be accomplished by proxy by improving infrastructure. Commissioner Erickson stated it was his understanding that the City's street replacement program does not reach beyond a five year plan for specific areas and that the overall replacement program would take 25 years. Council Liaison Peppe commented that the street replacement program is a multi -year program but that a significant amount has already been done and as the City gets to the Brookdale improvements and other areas there will be a positive change in the community. 10 -20 -98 -5- Mayor Kragness commented that the schedule for street replacement is somewhat based on the condition of sewers in a particular area and that this is a critical point with regard to scheduling the improvements. Chairperson Torres commented that he had his streets done two years ago at an assessment of $2,500. He pointed out that this assessment cost may take away from housing improvements in some situations. Ms. Donna Zieska stated that she sees some good points and bad points of a Time of Sale ordinance but the overriding bad point is government control. She stated she agrees that hazardous things should be corrected but with the help of real estate people not the government. Chairperson Torres stated that it was his understanding Councilmember Hilstrom's concern is the issue of addressing the correction of hazardous items if a house does not sell. He also noted that one of Councilmember Lasman's concerns is to clarify the language in the ordinance as to what happens after the inspection is done by the initial evaluator. Commissioner Erickson stated that the ordinance before the Commission this evening is the alternative language ordinance which addresses the agreement between seller and buyer to correct the items and he referred Commission members to section 1508 paragraph 4 which allows the buyer to enter into an agreement with the seller to correct hazardous items. Commissioner Arm questioned whether there should be a time limit on correction of hazardous items by the buyer. Commissioner Erickson responded that the ordinance now says that correction of hazardous items shall be completed with reasonable completion dates no more than 90 days. He added that one thing the ordinance does not have is a subheading on the situation where corrections are required even if the house does not sell. Commissioner Arm stated that the 90 day period addresses corrections done by the buyer but it is not clear on the time limit for corrections to be done by the seller if the house does not sell. Chairperson Torres suggested that language be added to the ordinance which would require the seller to correct the hazardous items within 90 days from the date the items are identified or show some proof of intention to correct the items. Mayor Kragness commented that 90 days may not give enough time for some individuals to obtain financing to do corrections if that is needed. Commissioner Erickson suggested that Chairperson Torres' language be included in the ordinance but that the time period be extended to 180 days. Mr. Bill Gerst of the Minneapolis Area Association of Realtors stated that the Minneapolis ordinance requires that the buyer or seller must complete the hazardous item correction within 10 -20 -98 -6- 90 days from the date of the disclosure report and that this 90 day period covers corrections done by the seller if the house sells or not and also corrections done by a buyer if the correction is deferred to the buyer. There was a motion by Commissioner Deuel and seconded by Commissioner Erickson to amend the proposed alternate Time of Sale ordinance to include the language from the Minneapolis Truth in Housing oridnance which states that "all required repair /replace items must be completed by the buyer or seller within 90 days of the date of the disclosure report whether or not the property is sold, unless otherwise excepted by this chapter" and to direct staff to clarify section 12 -1511 of the proposed Time of Sale ordinance. The motion passed. Commissioner Erickson stated that the City Council has directed the Housing Commission to return with a decision within three meetings and he added that he believes the Commission has met that goal. There was a motion by Commission Erickson and seconded by Commissioner Arm to forward the ordinance to the City Council as amended by the Commission's previous motion. Voting in favor: Chairperson Torres, Commissioners Deuel, Erickson, VonDeLinde and Arm. Voting against: Commissioners Lano and Yelich. The motion passed. ADJOURNMENT There was a motion by Commissioner Yelich and seconded by Commissioner Arm to adjourn the meeting. The motion passed. The Brooklyn Center Housing Commission adjourned at 9:30 p.m. Chairperson 10 -20 -98 -7-