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~ ~ ~7~ SpU Ty 8F ~ ~ $F ,.Ali I~';i~. ~O~ v \~\%<O Community & Economic Development "~~~az' r Z` ~,~ :~?. - .1865.. 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 1507 S. Taylor St. Date: August 06, 2010 This is the staff report for the administrative settlement that is needed for the acquisition of 1507 S. Taylor Street. 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. 2740, setting the offer price for this property at $27,000, which is the average appraised value. Because the warehouse attached to the 2 story, 2 unit rental house is owner occupied, neither commercial appraiser valued the property from an income approach. Twelve years ago, the property owner purchased the property for $59,000. Over the years, he has upgraded the roof and electrical services. Between the two units in the house, the property owner receives $900 per month in rent. Based on this income stream, deducting a 10% vacancy rate, $604 per year in real estate taxes, $800 per year for insurance, and $1,000 per year in maintenance, the net income per year is $7,316. At a cap rate of 11 %, the value of the rental house itself would be $66,500. Staff did verify with a local credit union that they use a cap rate of 9 - 11 %. The property owner, who owns over 200 properties in this area, has agreed to accept $95,000 for this property. This purchase price would relieve the Commission of any relocation assistance for both the owner's warehouse and tenants, as the owner is waiting for the Commission's decision before he signs any long term leases for the tenants currently residing in the two apartments. Staff feels the acquisition cost of $95,000 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!