2014HRAYERHutchinson HRA
2014 Year End Report
Hutchinson Housing &
Redevelopment Authority
111 Hassan Street SE
Before Owner Occupied Rehab Loans After
Hutchinson, MN 55350
(320) 234-4251
Fax (320) 234-4240
NMLSR# 396789
www.hutchinsonhra.com
f RA
2014 YEAR END REPORT
Hutchinson Housing &
Redevelopment Authority
The Hutchinson HRA is a public body politic, formed by the Hutchinson City Council in 1969
according to MN State Statue. HRA was created to address a shortage of housing needs for low
income families and to address substandard areas in Hutchinson. Since then the HRA has been
involved in building and operating Park Towers Apartments with HUD Federal funding and is a
HUD High performer. In the 1990's, the Hutchinson HRA helped to redevelop the parcel that is
now Prince of Peace Retirement Living. Since 1990, HRA has been involved with owner
occupied rehab, rental rehab, the school construction program and affordability gap for
workforce housing. The HRA has been instrumental in obtaining Small Cities Development
Program funds, Minnesota Housing Finance Agency Funding, and Greater MN Housing Funds
for housing programs within the city of Hutchinson. Over the past twenty-five years the HRA
has obtained nearly $20M of federal, state or other outside funding for the housing needs in
Hutchinson.
Why does Housing matter?
Housing matters because:
• Decent, affordable housing is shown to stabilize families -for example children who
have stable housing do better in school
• Housing Programs help improve neighborhoods and maintain property values
• Housing Programs provide economic stimulus for the local economy by providing
work for local contractors and businesses
In 2014, the HRA worked on the following housing objectives:
1. Continue to maintain strong emphasis on property management, property improvements,
energy conservation, and tenant services at Park Towers.
2. Support rehabilitation of aging housing stock to preserve housing stock and prevent decline
of neighborhoods.
3. Monitor foreclosures and purchase/rehab/resale or purchase/demolish/new construction bank
owned, short sale, vacant or blighted properties as funding allows.
2014 Hutchinson HRA Year End Report 3/21/2017 Page 1 of 10 Pages
Summary of 2014 Activities:
Park Towers Apartments:
Property improvements and energy conservation remains a priority
$96,177 in federal capital program funds were used as follows: Replaced apartment zone
valves and installed programmable thermostats in all apartments. Replaced rooftop air
hnndlPrc
2. Other Improvements/Repairs: Replaced office computers and purchased
IPad/inspection module. Installed new beauty shop and community room
blinds, purchased new community room furniture, replaced two washers
with front loader energy star washers. Replaced apartment water line shut
off valves, repaired stucco on east side of building, replaced fifty-seven
unit faucets, replaced maintenance vacuum cleaners, contracted for
automatic laundry room door opener.
Property Management
1. Updated/prepared the following: ACOP, Resident Handbook, Lease, 2014 Schedule of
Charges and 2015 Park Towers Annual and 5 Year Plan.
2. Maintained a HUD PHAS High Performer Score of 99 out of 100 on Park Towers operation
and management.
3. Achieved a 99% average occupancy for 2014 and leased twenty apartments.
4. Completed an Energy Audit and Green Physical Needs Assessment.
5. Inspected all units, community areas and systems.
6. Changed vendors for pest control to incorporate dual heat/pesticide treatment of bedbugs.
Tenant Services
Continued focus on providing decent, affordable housing as well as facilitating services needed
by the senior and disabled population at Park Towers. A management goal at Park Towers has
been to support programs and partnerships that address the needs of residents.
• Park Towers continued as a Senior Dining Program Site through a lease with Lutheran
Social Services. Meals are prepared at the Evergreen Senior Dining kitchen, then
delivered and served at Park Towers. 6,466 meals were served at Park Towers in 2014
through the Senior Dining Program. The full cost of a meal is $7.00 and the suggested
donation is $4.00.
• The Park Tower's 2014 budget included funding for Tenant Services to create a monthly
activities calendar and newsletter.
2014 Hutchinson HRA Year End Report 3/21/2017 Page 2 of 10 Pages
City Center Operations:
Home Ownership
MHFA has the MHFA START UP purchase loan for first time homebuyers and is featured on
the HRA website. These loans have an option to obtain funding for down payment and closing
costs along with a first mortgage. MHFA also offers funding through their STEP UP loans for
current homeowners to purchase a new house or refinance their current house.
Owner Occupied Rehabilitation
Two rehab programs, the SCDP program and Minnesota Housing Rehab Loan Program, are
HRA labor intensive, requiring applications screening for eligibility, inspections, work write ups,
procurement and bidding, loan closing with the owner(s), construction oversight, disbursal of
loan proceeds to the contractor, and reports to the state.
The Minnesota Housing Fix Up Loan Program and Community Fix Up Loan Program requires
that the owner submit contractor quotes and that the owner meets loan underwriting criteria to
obtain home improvement loan proceeds. However, HRA inspection and construction
management is not required.
2
SCDP Rehab Program The primary Federal Objective of the Small Cities Development
program for owner occupied rehab is to provide financial assistance to low and moderate -
income homeowners whose homes need rehabilitation. The secondary impact is to
encourage the preservation of housing and improve neighborhoods. The HRA was awarded
$175,400 in SCDP funding for an additional ten owner occupied rehab projects in the NE and
SW neighborhoods of Hutchinson. Homeowners receive a 0% SCDP deferred loan with no
payments, forgiven after ten years. The SCDP loan covers 70% of the repair costs. The
HRA closed out the program in September 2014, closing on four SCDP rehab loans in 2014.
The breakdown for the completion of the total project is as follows:
SCDP $175,312.54
Other leverage funds $195,945.46
Total $371,258.00
Homes improved over the term of the prof ect-twelve.
New Owner Occupied Rehab Program instituted October, 2014
SCDP Owner Occupied City
Revolving Program Income Loan
Program up to $10,000 for a 50% -
deferred loan and 50% owner match.
2014 Hutchinson HRA Year End Report
r i I ME.
One loan closed for the
3/21/2017 Page 3 of 10 Pages
3. Minnesota Housing (MHFA) Rehabilitation (RLP) Program — No RLP loans were closed
with funds unavailable for a portion of the year. The MHFA Rehabilitation Program is a 0%
deferred loan forgiven after fifteen years that stresses safety, livability, and accessibility for
families with very low incomes who own their homes.
4. Minnesota Housing Finance (MHFA) Fix Up Loan and Community. Ftp Loan
Home Improvement Programs — Total eight loans closed. Five Fix -Up Fund Loans and three
Community Fix Up loans as owner matches to SCDP.
CRV Deferred Rehab Loan Program- Two loans were closed as owner matches for the SCDP
or SCDP Program Income loan program.
5. Greater MN Housing Fund -No loans were closed in 2014.
Ten total owner occupied properties were improved in 2014; however multiple loans may have
been needed to fund the rehab project for each property.
2014 Foreclosure Remediation Initiative:
Demolition of an abandoned, blighted house at 907 Lewis Ave occurred during the summer of
2013 and new construction began in the fall of 2013, partnering with the School Construction
Program. This house was sold in the summer of 2014 and received value gap funds from
Minnesota Housing Impact Fund. The Impact Fund requires rehab or new construction
according to Green Criteria, providing an end product that is more energy efficient. For
example, the HRA first new construction house built according to Green Criteria, 400 Lynn
Road, had a HERS rating of 55 which should translate into 45% lower utility bills than standard
construction practices. The 907 Lewis Ave house had a HERS rating of 58. This program
requires a large commitment of staff time to acquire the properties, rehab or demolish according
to EPA guidelines and adhere to the requirements of the Impact Program.
907 Lewis Avenue SW
Total Finished 1,91
Main Floor: 939 G.S.F.
445 Adam Street SE
Secad Floor: 976 G.S.F.
RA
_ Hutchinson Housing &
Redevelopment Authority
(3201234-4251
www.hutrhimonhra.
2014 Hutchinson HRA Year End Report 3/21/2017 Page 4 of 10 Pages
Demolition of a previously bank owned house at 445 Adams Street occurred in the summer of
2014 and new construction began in the fall of 2014, partnering with the school construction
program. This house is scheduled for completion the summer of 2015.
Trends:
1. Rental Housing
Market Rate General Occupancy Rental
The market rate general occupancy rate in the fall of 2014 was 1.89%. A 5.0% vacancy rate
is considered a healthy vacancy rate to allow for turnover and consumer choice. A vacancy
rate of greater than 5.0% indicates a soft demand or mismatch between supply and demand.
Since 1999, the rental vacancy rate has fluctuated from 1.00% to a high of 14.9% in 2009 due
to area layoffs. The Maxfield Housing Study recommends that no additional market rate
general occupancy units be built until 2014 + or until the economy and unemployment rate in
Hutchinson improves. Demand should increase to a level sufficient enough to support the
development without adversely affecting the existing rental market (vacancy rate generally in
the 2.0% range or less). Century Court Apartments general occupancy development has
plans in progress for expansion.
Market Rate General Occupancy Vacancy Rate
14.90%
15.00% 1.50%
10.31%
9.00%
10.00% 7.54% 8.380
7.00%
4.60% 4.68% 5.30% 4.08%
5.00% 7%
2.12% 11-1 1.89%
I
0.00%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Subsidized General Occupancy Rental
The vacancy rate of subsidized general occupancy projects in the fall of 2014 was 2.25%
Vacancies in subsidized developments should typically fall around 2.0% - 3.0%.
Senior Housing
The 2014 vacancy rate for market rate senior housing except for memory care was 3.28%.
Prince of Peace Retirement Living is in the planning stages for development of market rate
Congregate Housing at their downtown location.
The 2013 vacancy rate for affordable/subsidized senior housing was 2.26%. Vacancies in
subsidized developments should typically fall around 2.0 -3.0%.
2014 Hutchinson HRA Year End Report 3/21/2017 Page 5 of 10 Pages
3.50%
3.00%
2.50%
2.00%
1.50%
1.00%
0.50%
0.00%
2014 Vacancy Rates
Market Rate General
Occupancy
Subsidized General Occupancy
Senior Market Rate Rental
Housing
■ Senior Subsidized Rental
Housing
2. Homeownership
The median sales price rose again in 2014, reflecting a housing market recovery in
Hutchinson and is helping decrease the number of homeowners underwater with their
mortgages.
Foreclosures declined in 2014. Low interest rates and an affordable median sales price
provides opportunities for buyers who have good credit and are mortgage ready. The
current interest (February 2015) rate for a first time homebuyer MHFA Start Up loan for an
RD or FHANA loan is 3.25%.
According to information from McLeod County, in 2014 there were 316 sales in Hutchinson
with a median sales price of $133,500.
According to information from the Minneapolis Area Association of Realtors looking at data
for Hutchinson, the 2014 median sales price was $142,000 compared to $125,000 in 2013
and $111,500 in 2012. There were 318 sales in 2014 compared to 285 sales in 2013 and 275
sales in 2012. As of December 2014 there were 124 homes for sale.
The 2014 median family income for McLeod County is $73,100. Based on a household
being able to afford a home priced at 2.5 times their income, not factoring in savings or debt
that they may have, a household would need an income of $53,400 to afford a home priced at
$133,500 the 2014 median sales price of a house.
2014 Hutchinson HRA Year End Report 3/21/2017 Page 6 of 10 Pages
HOME RESALES
CITY OF
HUTCHINSON
2005 throw h 2014
Year
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
Pri.-n Rannn
Under$50,000
Xp_
1
pmt-
5.
Xp_
29
pmt-
10.
51p_
44
pmt-
15.
�Ip_
30
pmt-
12.
�Ip_
24
pmt-
11.
51p_ pmt-
9 4.
51p_
6
pmt-
2.
51p_
5
pmt-
1.
�Ip_
6
pmt-
1.
�Ip_
2
p�t-
0.
$50,000 to $74,999
1
5.
3
11.
3
12.
16
27
11
4.
6
2.
10
2.
8
2.
$75,000 to $99,999
34
10.
36
12.
62
21.
46
19.
32
14.
36 16.
23
10.
17
6.
22
5.
28
7.
$100,000 to $124,99
59
18.
49
17.
18.
48
19.
38
17.
47 21.
43
19.
39
14.
56
14.
56
14.
$125,000 to $149,99
68
21.
59
20.
4
14.
33
13.
38
17.
46 21.
34
15.
63
22.
67
17.
86
22.
$150,000 to $174,99
5
16.
29
10.
5.
22
9.
23
10.
20 9.
51
22.
59
21.
88
23.
83
21.
$175,000 to $199,99
21
6.
1
5.
1
4.
9
3.
12
5.
12 5.
22
9.
36
12.
45
11.
46
12.
$200000,
48
15.
3
10.
2
9.
23
9.
33
15.
19 8.
36
15.
54
19.
85
22.
72
18.
Total
31
100.
28
100.
28
100.
24
100.
21e
100.
21e 100.
226
100.
279
100.
379
100.
381
100.
Median
$133,500
$121,000
$101,400
$109,950
$121,600
$117,750
$146,750
$157,900
$158,000
1$152!:1=l
152
2004 resale breakdown
numbers includes
some
sales not
included in
median talc.
Sources:
Peterson -Paulsen Associates Inc
Maxfield Research
Inc.
McLeod Count
Assessor's
Office
The 2014 median family income for McLeod County is $73,100. Based on a household
being able to afford a home priced at 2.5 times their income, not factoring in savings or debt
that they may have, a household would need an income of $53,400 to afford a home priced at
$133,500 the 2014 median sales price of a house.
2014 Hutchinson HRA Year End Report 3/21/2017 Page 6 of 10 Pages
3. Housing Construction in Hutchinson
According to the City of Hutchinson, Planning/Zoning/Building Department, there were 23
single family homes built in 2014. There is an adequate supply of 284 residential lots
available compared to 299 lots as of January 1, 2014.
M1
300
200
100
0
Residential Lots Available
331 317 314 309
323 314 299 4
1997 1998 1999 2000 20012002 2003 2004 2005 2006 2007 2008 2009 2010 20112012 2013 2014
100
90
80
70
60
50
40
30
20
10
0
Number of New Dwelling Units Construction
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
The above charts & maps are from the Department of Planning, Zoning and Building 2013 Year Report
2014 Hutchinson HRA Year End Report 3/21/2017 Page 7 of 10 Pages
4. Foreclosure Update
200
150
w
N 100
50
C]
McLeod County and Hutchinson
Foreclosure Counts
2007 2008 2009 2010 2011 2012 2013 2014
■ IVICLeoa County
■ Hutchinson
Number of Foreclosures in McLeod County and Hutchinson
Year
McLeod
Hutchinson
2001
37
2002
43
2003
48
2004
48
14
2005
56
2006
72
2007
142
40
2008
159
42
2009
135
50
2010
200
62
2011
176
77
2012
135
45
2013
93
39
2014
75
28
2014 Sheriff Sales Cancelled In Hutchinson
14
2015 Sheriff Sales Scheduled to Date In Hutchinson
14
2014 Hutchinson HRA Year End Report 3/21/2017 Page 8 of 10 Pages
2014 Hutchinson HRA Summary:
2014 Federal & State
Funds Administered
Park Towers:
Federal Operating Funds $129,611.00
Federal Capital Funds $96,177.00
Homeowner Rehab Loans closed
DEED/SCDP
MHFA:
CFUF
FUF
Unsecured FUL
CRV
Foreclosure Remediation:
CRV Value Gap -907 Lewis Ave
$63,736.00
SCDP City Revolving PI Funds
$26,140.56
$93,929.63
$6,946.55
$17,154.00
$11,984.01
2014 Local Funds
Administered
$9,215.00
Total 2014 Federal & State Funds Total 2014 Local Funds
Administered $445,678.75 Administered $9,215.00
Funds Available:
SCDP City Revolving Local Income
SCDP City Revolving Program Income
Housing Fund Loan Balances:
HRA Notes Receivable
City SCDP New Construction
City SCDP Rehab
Total Balance of City SCDP Loans
Receivable
2014 Budgets
Park Towers
City Center
Total HRA Budget
2014 HRA Personnel
Executive Director
HRA City Center Program Coordinator
Park Towers Public Housing Specialist
Park Towers Maintenance/Custodian
$94,944.72
$70,997.48
$101,565.79
$322,450.00
$545,239.91
$867,689.91
$500,360.00 Budget
$379,235.00 Year End Actual
$879,595.00
4.0 Total FTE
2014 Hutchinson HRA Year End Report 3/21/2017 Page 9 of 10 Pages
Hutchinson HRA Priorities for 2015:
• Continue to offer entry cost assistance and affordability gap funding targeted to income
eligible home buyers of homes sold by the HRA for the HRA foreclosure/abandoned
house initiative.
• Submit Rental Rehab SCDP application to DEED for the downtown area of Hutchinson.
This application will support the community's efforts for a vibrant downtown.
• Continue to administer the Minnesota Housing Fix- Up Loan Program. Administer the
Community Fix- Up Loan and offer discount loan program (4% interest rate) targeted to
the SCDP neighborhoods, houses cited not in compliance with nuisance ordinance, or
identified specific rehab need of roof replacement.
• Continue to administer the Minnesota Housing Rehab Loan Program for owner occupied
rehab.
• Continue to administer Program Income owner occupied rehab funds.
• The HRA and school construction class is scheduled to complete the
acquisition/demolition /new construction of a blighted property at 445 Adams Street in
June 2015.
• Evaluate 2015 project potential for a rehab or demolition/new construction of a vacant
property in Hutchinson. Evaluate new construction project on vacant lots at Island View
Heights.
• Continue to request free radon test kits for Radon Awareness month from the Minnesota
Department of Health for distribution in Hutchinson. Over 1000 free radon test kits have
been picked up by residents of Hutchinson at City Center. Hutchinson is in a high radon
area; radon mitigation is recommended at radon levels above 4.Opc/L.
• With a general occupancy vacancy rate of 1.89%, support the 2015 development of a
general occupancy rental project.
• Modernize the elevators at Park Towers with 2015 Capital Funds.
G: HRA/Year End Report/2014 HRA You End Report
2014 Hutchinson HRA Year End Report 3/21/2017 Page 10 of 10 Pages