HRA Meeting Date: September 19, 2024
To: Members of the Housing and Redevelopment Authority
From: Melissa Hanson, Housing Coordinator
Title
HRA to Consider a Resolution Authorizing Designation of Tentative Developer Status for Oberto Properties, LLC and Rice County Habitat for Humanity.
Body
Action Requested:
HRA is being asked by Oberto Properties, LLC and Rice County Habitat for Humanity to grant them Tentative Developer Status to pursue a residential redevelopment opportunity on HRA-owned lot at 307 Sumner Street East.
Summary Report:
The HRA’s mission is to be a partner in providing a sufficient supply of affordable, adequate, safe and sanitary dwellings in Northfield. Our goal is to create a community with housing opportunities available along the entire housing spectrum: from renters to homeownership, first-time homeowners, to senior living, workforce housing and empty-nesters. We strive to create affordable housing opportunities and strengthen our neighborhoods utilizing:
• Sustainability
• Innovation
• Partnerships
• Community Input
Oberto Properties, LLC (Oberto) is a small, real estate developer that resides in, and is very much a part of, the fabric of Northfield. Oberto has a history of purchasing blighted, unusable commercial spaces and rehabbing them as well as having experience with commercial new construction, having built the Rebound Self Storage.
Rice County Habitat for Humanity (Habitat) is a nonprofit organization dedicated to building a world where everyone has a safe, stable, and affordable place to call home. Habitat believes that affordable housing plays a critical role in strong and stable communities. Habitat has a long history of providing affordable housing, through both rehab and new construction, in Rice County and has recently expanded their rehab arm by adding Starfish under their umbrella of programs.
Oberto and Habitat is interested in developing the HRA owned lot at 307 Sumner Street East. The proposal is part of a larger vision by Oberto Properties, LLC that is being referred to as Northfield R1 Revitalization and Reasonable Cost Housing Development Initiative.
Oberto and Habitat are requesting that for a period of six months (180 days) that the HRA grant them Tentative Developer Status in order to do their due diligence to determine, at their expense, the feasibility of developing the property for residential homeownership. Tentative Developer Status provides the assurance that Oberto and Habitat needs in order for them to invest in site-specific design and engineering work, as well as to pursue funding sources. Without having some period of exclusivity, those efforts become risky beyond the comfort level of many small organizations and its governance for expending limited resources. Additionally, potential funders become less likely to participate in a project without certainty regarding the site control.
Under the Tentative Developer agreement, if the HRA chooses to move forward with the proposed redevelopment, the HRA, Oberto and Habitat would then negotiate a mutually acceptable purchase agreement in compliance with applicable law using the HRA form purchase agreement for the sale of the property by HRA to Oberto and Habitat via quit claim deed, and subsequent consideration of approval of such negotiated purchase agreement by the Board of Commissioners of the HRA at a future duly noticed public meeting of the HRA.
Under this agreement, if the HRA does not move forward with the proposed Oberto and Habitat redevelopment, the Tentative Developer status automatically terminates at the end of 180 days without penalty to either party.
During the time that the Tentative Developer Status is in place, if authorized, staff will work with Oberto, Habitat, advocacy groups and the closest neighbors, through neighbor meetings in order to inform community members about the proposed project, and housing needs in Northfield, as well get input from the broader community about their thoughts, opinions, and fears about this type of housing development model.
Alternative Options:
The HRA could choose not to grant Tentative Developer Status to Oberto and Habitat, at which point the project will not be able to move forward and Oberto and Habitat could stop their efforts working with City and HRA staff.
The HRA could choose to amend the agreement as presented in multiple ways including:
• length of time of the agreement
• adding specific checkpoints for decision-making
• adding benchmarks to guide Oberto and Habitat and the HRA
Financial Impacts:
Total financial impacts have yet to be determined. Potential impacts include: loss of increased tax base; loss of workers; and related continuing negative impacts of a housing supply shortage, including costs borne by the City and HRA to mitigate existing unsafe or unhealthy housing units. Positive financial impacts could include: increased tax base; reduced housing cost burden for existing residents; additional grant opportunities to write down costs such as infrastructure.
Tentative Timelines:
September 2024 - finalize agreement
September 2024 to March 2025 - due diligence, including site investigation, community meetings
March 2025 to June 2025 - additional due diligence as needed
Spring 2025 - potential to break ground