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HRA Meeting <br />Minutes – September 13, 2011 <br />Page 2 <br />1 <br />8.Presentations <br />2 <br />3 <br />9.Action/Discussion Items <br />4 <br />5 <br />a.Authorize the write down of second mortgage on 279 Elmer Street <br />6 <br />Kelsey provided a brief summary of this request to authorize reduction of the repayment of the <br />7 <br />second mortgage loan on 279 Elmer Street fro $58,000 to $3,000; as detailed in the Request for <br />8 <br />HRA Action dated September 13, 2011. Ms. Kelsey noted that the funds originated from <br />9 <br />Community Business Development Grant (CBDG) funds through Ramsey County, shown in <br />10 <br />the budget as HRA 720 Restricted Loan Funds, and were for form repayment from other loans. <br />11 <br />12 <br />At the request of Member Quam as to whether the new owner complied, or if income <br />13 <br />restrictions continued to apply to the property, Ms. Kelsey responded that the new owner did <br />14 <br />not comply, and that the restrictions only applied with the first owner, and no longer applicable <br />15 <br />once the home was sold. Ms. Kelsey advised that it was the original intent that the HRA <br />16 <br />would be reimbursed for its original loan amount; however, that was not the case for this loan. <br />17 <br />18 <br />At the request of Member Masche, Ms. Kelsey clarified that the original CBDG funds were <br />19 <br />from the federal government to Ramsey County proportionately to be disseminated to cities <br />20 <br />applying for funds for applicable loan programs. <br />21 <br />22 <br />Member Pust, with confirmation by Ms. Kelsey, noted that the HRA value of the second <br />23 <br />mortgage was $235,000, with $177,000 as the first mortgage amount initially; with the HRA <br />24 <br />having $58,000 and the GMAC having $2,500. <br />25 <br />26 <br />Member Pust questioned how many other situations having used public funding may be out <br />27 <br />there. <br />28 <br />29 <br />Ms. Kelsey advised that this was the only one that she was aware of having utilized CBDG <br />30 <br />funds. <br />31 <br />32 <br />Member Pust questioned the current market value of the property. <br />33 <br />34 <br />Tim Lundgren, Edina Realty present on behalf of current owners, Ronald and Karen <br />35 <br />Vaillancourt, 279 Elmer Street <br />36 <br />Written comments of Mr. Lundgren, dated September 7, 2011, were included as part of the <br />37 <br />staff report dated September 13, 2011. <br />38 <br />39 <br />Mr. Lundgren advised that, for the buyer’s purpose, the current market value was $120,000; <br />40 <br />with comparable appraisals at that value coming in from the owner and first lien holder. <br />41 <br />42 <br />Members conferred with Mr. Lundgren on the reason for this request; original value of the <br />43 <br />house at $235,000 before the market peaked; court-ordered sale of the property; loss of job of <br />44 <br />the major wage earner, and pending divorce of the current owners; existence of a note signed <br />45 <br />by both Ronald and Karen Vaillancourt and their security interest(s) in the property; potential <br />46 <br />rationale for possible collection of the notes over time; and recommendation of City Attorney <br />47 <br />Steve Bubal (sp?) to write down this loan, rather than attempting to get payment on the <br />48 <br />outstanding note. <br />49 <br />50 <br />Member Masche clarified that forgiveness of the promissory note and loan were both part of <br />51 <br />the requested action. <br />52 <br />53 <br />Member Kelsey Pust expressed her reluctance in not receiving anything back from the <br />54 <br />investment of public monies from the homeowners; and while understanding that it was not <br /> <br />