Loading...
Bee Branch Property Acquisition_Rental PropertiesTHE CITY ©F ~ Dubuque --.., ~ Masterpiece on the Mississippi 2007 TO: The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager SUBJECT: Bee Branch Rental Property Purchases DATE: March 11, 2008 Housing and Community Development Department Director David Harris is recommending a change to the City's property acquisition policy related to implementation of the Drainage Basin Master Plan for rental properties. Federal and Iowa relocation laws require the City to relocate tenants to suitable rental units. This process typically takes 60 to 120 days. As part of negotiation with the property owner, the City requires that vacated units not be re-rented prior to acquisition. The result is that property owners may have vacant units for several months, with no rent revenues. The City is not required by law to reimburse owners for this expense. Housing and Community Development Department Director David Harris is recommending that the City offer a maximum 120-day payment to landlords for vacant units awaiting closing on the sale of the property. The expected cost increase for the entire project is approximately $80,000, which is available in the project budget. I concur with the recommendation and respectfully request Mayor and City Council approval. G./ Mic ael C. Van Milligen MCVM/jh Attachment cc: Barry Lindahl, City Attorney Cindy Steinhauser, Assistant City Manager David Harris, Housing and Community Development Department Director THE CITY OF Dubuque DUB E ~l-~;~~~~ ~~, Masterpiece orz the Mississippi „ 2007 DATE: 11 March 08 TO: Michael Van Milligen, City Manager FROM: David Harris, Housing and Community Development Department SUBJECT: Bee Branch rental property purchase As part of acquiring properties for the Bee Branch Realignment Project, we are purchasing our first rental units. One issue that we have encountered is the cost to landlords for vacant units. Federal and Iowa relocation laws require us to relocate tenants to suitable rental units. This process includes identification of a `comparable' unit available on the market, establishing a rent differential payment for which the tenant is eligible, and providing a 90-day move notice to renters. This process typically takes 60-120 days. After all tenants have moved from the building, we close on the acquisition with the owner. As a policy, we have decided not to acquire occupied properties, as this would add considerable administrative burden as well as liability and potential expense. As part of the negotiation with the owner, we require that the vacated unit(s) not be re- rented prior to our acquisition. Obviously, if units were reoccupied, we would have to start the relocation process over. The result of this is that owners may have vacant units for several months, with no rent revenues. Although we are not required by law to reimburse owners for this expense, the question has been raised as to the `fairness' of this policy. To address this issue, we have surveyed the Bee Branch properties we will be acquiring. These include 47 rental units. We have proceeded on the assumption that offering a maximum 120 day payment to landlords would be equitable, as well as providing an incentive to owners to assist us by working with tenants to facilitate their move to other units. We have estimated the cost of this policy, calculating an average monthly rent at $425. For 47 units, paying owners for four months vacancy would cost $79 900. This is a worst-cost scenario, figuring all units are currently occupied and all would take 120 days to vacate. THE CTTY OF Dubuque -~ "' D~~ ~ NI-An~rica Masterpiece on the Mississippi - . 2007 TO: Michael C. Van Milligen, City Manager FROM: Jenny Larson, Budget Director ~~1L SUBJECT: Bee Branch Rental Vacancy Payments DATE: March 7, 2008 I have previously spoken to Civil Engineer Deron Muehring about the addition of the $80,000 to the Bee Branch Creek Restoration project for rental vacancy payments. The $80,000 rental vacancy payments are not part of the FY 2008 or FY 2009 Bee Branch Creek Restoration budget. In terms of a budget impact, our position is that while $80,000 will add to the cost of the project, no changes to the budget or the utility rate are warranted at this time due to the constant refinement of estimated costs for the various components of the project. Two examples of components that have been refined are: 1. Environmental Costs. The FY08 CIP budget includes an estimated $677,120 for the mitigation of potentially hazardous soils in the first phase of the project south of 16th Street. Preliminary engineering preformed since has revealed that the soil will not be hazardous. The revised estimate for the mitigation of soil is only $33,024. Therefore, the current estimate for the project is $644,096 less than the adopted FY2008 CIP budget for the Bee Branch Creek Restoration Project. 2. Acquisition Costs. The adopted FY07 budget included $1,650,000 for the acquisition of property for the first phase of the project around 16th Street. Based on a closer look at recent sales of commercial property in the area, the estimate in the FY08 CIP budget was increased to $1,709,199. It is my opinion that the $80,000 rental vacancy payments can be added to the Bee Branch Creek Restoration project without impacting the project budget or Stormwater Fee. JML cc: Cindy Steinhauser, Assistant City Manager Deron Muehring, Civil Engineer