6D(13) Administrative Settlement

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~~c.3) ~ ~ sOUTA 6 O~ ~\\1, IICf~//~Q'O F'ti ~ / ~i U ~~~~ p Community & Economic Development ~ ~~"' ~' 1200 County-City Building, 227 West Jefferson, South Bend, Indiana 46601-1830 Phone 574/235-9371 Fax 574/235-9021 To: Redevelopment Commission From: David Relos, Economic Development Planner Subject: Administrative Settlement for acquisition of 733 W. Indiana Ave. Date: July 23, 2010 This is the staff report for the administrative settlement that is needed for the acquisition of 733 W. Indiana Avenue. According to the Uniform Relocation Act (Act), which has been adopted as the Commission's relocation policy, an administrative settlement is authorized in cases where an additional payment is necessary to acquire a property. Before the Commission today was Resolution No. 2734, setting the offer price for this property at $24,500, which is the average appraised value. When looking strictly at the income approach, the average appraised value is $29,375. The house is assessed at $30,600. The property owner has supplied staff with an appraisal that was done in November 2004,. from which he was granted a loan by TCU in December 2004, in the amount of $55,000. This loan appears on the title search Meridian completed in May 2010. The owner currently owes approximately $40,000 on this loan, which has been verified. The property owner also supplied a formula for rental properties he states TCU uses to value rental properties. According to this formula, the property would be valued at approximately $42,000. Staff did verify with TCU that they use a cap rate of 9 - 11 %. Also verified is the lease for $650 /month in rent. The property owner has agreed to accept $40,000, the amount currently owed on this property. Staff feels the acquisition cost of $40,000 is reasonable for this property, and requests your approval of the administrative settlement to allow for the acquisition of this property. What We Do Today Makes A Difference!