Voluntary Acquisition Procedures

This procedure explains how the City buys property, without the threat of legal action.

Governing policy: Acquisition Policy

Department: Community Planning & Economic Development (CPED)

Last revised: January 9, 2009

CPED Real Estate Acquisition Process

Voluntary Acquisition – Includes HUD Foreclosures

If Eminent Domain is a possibility, you must use the Definite Acquisition Procedures.

  1. Selection Process – Project Coordinator
    1. Identify parcel for potential acquisition (May also be initiated by Property owner, Appraiser, Council Member, other CPED Staff or Neighborhood Group).
    2. Determine if property meets one of the following requirements:
      1. Is in a Redevelopment Project Area and property is identified as property that may be acquired.
      2. Has a blight analysis demonstrating that the Property is “substandard” under Minn. Stat Sec. 469.012 or is on the City’s “249” list because it is a “hazardous building” under Minn. Stat. Sec. 463.15, subd. 3.
      3. Is necessary to provide housing for persons of low and moderate income.
      4. Can be acquired by other acquisition authority as identified by Legal staff.
    3. Ensure that if the property is located within a tax increment financing district, that it is identified in the TIF plan as a property that may be acquired. Property must be in the appropriate status prior to committing to acquisition.
    4. Determine if a definite acquisition or voluntary acquisition (if definite acquisition see definite acquisition/eminent domain process).
    5. Contact the CPED Planning Staff using the Land Sale Review form to initiate City Planning Commission Review for consistency with the Comprehensive Plan under Minnesota Statutes Section 462.356, subd. 2, if property is not identified as appropriate for acquisition in a Redevelopment Project Area or is not otherwise exempted from Planning Commission review. Existing waivers include (i) acquisitions for the purposes of blight removal when the purchase/acquisition price of the property is less than $150,000 and (ii) dispositions of non-buildable parcels where a “buildable parcel” is a parcel of real property that has enough frontage width and/or area either by itself or when combined with other adjacent City-owned property to accommodate at least a single family home under the Minneapolis zoning ordinances after taking into consideration any variances or other relief available under such zoning ordinances.
  2. Information Gathering by Project Coordinator
    1. Hennepin County taxpayer information (tax status).
    2. Inspections orders.
    3. Inspections permit history.
    4. Condemnation status – if condemned, why? Check with Regulatory Services staff to see if Director’s Order to demo has been issued and discuss with your Manager the possibility of conflict of interest if order has been issued.
    5. Ownership and/or contact. Research owner information if necessary (sources:    reverse directory, CityTalk, HC Property Information Search terminal, area inspector, etc.).
    6. If there is a particular concern and upon request, Real Estate staff will perform a tract check for foreclosure status, last deed of record and encumbrances.
    7. Legal description of each parcel or easement.
    8. Project Coordinator, in consultation with their manager, to determine whether to proceed on all or a portion of the property. If proceeding, determine funding source for due diligence activities and continue with #3 below. Project Coordinator determines owner willingness to sell (phone contact or casual interest letter or obtain copy of listing).
    9. Project Coordinator determines historic designation status by checking CPED website and sending letter to SHPO.
    10. If a donation, Project Coordinator has their administrative staff gather tax, assessment and water bill information.
    11. Project Coordinator notifies neighborhood (with a copy to the affected Council Member) using the Neighborhood Acquisition-Disposition Notice unless the property is already in a redevelopment project area and identified as appropriate for acquisition. The neighborhood gets 45 days to respond back to the Project Coordinator with any comments unless either (1) the acquisition is for the purpose of blight removal when the purchase price of the property is less than $150,000 and the property is being acquired from HUD or Hennepin County OR (2) the neighborhood has waived its 45 day notice period.
  3. Due diligence
    Project Coordinator coordinates the Acquisition Team comprised of Appraiser, Engineering staff, Relocation staff (when applicable), Construction Management staff and Project Coordinator and ensures the following steps are completed:
    1. Determination of preliminary feasibility, including identification of a budget and source of funds for all acquisition activities.
    2. Project Coordinator mails Preliminary Acquisition Notice to owner and obtains authority to conduct valuation and environmental activities. If environmental activities are invasive, obtain right of entry using the Preliminary Acquisition Notice and Request to do Environmental Testing.
    3. Project Coordinator enters project/property information into MINS, including preliminary analysis budget, identifying whether acquisition funds are federal or not in project funding comments section.
    4. Project Coordinator sends a request for due diligence services through MINS which includes notifying real estate to begin acquisition process, engineering, construction management, appraisal and if needed, relocation, providing each with a funding code for such activity. Notify HPC by assigning the checklist activity to Jack Byers and sending the email.
    5. Project Coordinator schedules the site inspection with the Acquisition Team as needed in Outlook.
    6. Construction Management conducts initial analysis of structural condition for program compliance, completes inspection form, prepares rehab or demo cost estimate, takes digital photos and enters results in MINS.
    7. Engineering staff conducts site inspection for obvious encroachments/ease­ments, review general area geology for known issues with ledge rock, poor load bearing soils or pollution/contamination, public utility service and possible total tree removal and enters estimates in MINS with site clearance estimates.
    8. Staff Appraiser estimates fair market value, enters results in MINS and requests outside appraisal, if needed. Panel appraisal is generally not necessary unless the property is particularly unique or the funding source requires a formal appraisal. If panel appraisal is necessary, CPED Appraiser reviews upon receipt and discusses report with Project Coordinator.
    9. Relocation Coordinator, if needed, meets with client to determine eligibility, calculates assistance and enters results in MINS.
    10. Project Coordinator to evaluate review of soil conditions with Engineering staff and determination of whether additional environmental testing is warranted. Engineering Staff should advise Project Coordinator of findings and make recommendations.
    11. Project Coordinator reviews preliminary cost analysis, including acquisition, disposition, relocation, holding costs, and leasing opportunities, as applicable.
    12. Project Coordinator generates the due diligence checklist report through MINS and determines whether to proceed with acquisition or drop.
  4. Pre-Acquisition
    1. Project Coordinator decides whether to pursue making an offer.
    2. As appropriate, Project Coordinator or Real Estate conducts verbal negotiations with seller to reach mutually agreeable purchase price. No written offers can be made until Fair Market Value established and purchase authorization is obtained. If no agreeable price is reached, notify property owner that acquisition is cancelled.
    3. CPED Appraiser reviews value to determine if it is a reasonable fair market value. If purchase price is anticipated to be above Fair Market Value, Project Coordinator documents justification for offer price above Fair Market Value.
  5. Approval Process
    1. If decision is not to acquire, Project Coordinator drops file from acquisition process and makes note in MINS. If decision to acquire is made, the following occur:
      1. CPED Appraiser prepares Summary of Review Appraiser’s Report.
      2. CPED Appraiser submits a Fair Market Value report, signed by the Project Coordinator’s Manager and Division Director , adopting fair market value, and requesting the CPED Director’s authorization to make an offer, identifying any due diligence shortfalls due to time constraints and including a due diligence checklist and estimate of acquisition and holding costs. Project Coordinator shall review this report prior to finalization.
  6. Offer Process
    1. Real Estate staff or City Attorney staff, with assistance from Project Coordinator, prepares voluntary offer letter and purchase agreement and mail to owner.
    2. Real Estate coordinates execution of purchase agreement. If necessary and appropriate, Project Coordinator and Real Estate conducts further negotiations with seller to attempt to reach mutually agreeable purchase price.  No written offers may be made above the authority obtained from the CPED Director.  If agreed upon purchase price is above the authority previously obtained from the Fair Market Value, document justification for offer price above Fair Market Value and prepare revised Fair Market Value Report for purchase authorization. 
    3. Real Estate sends one original executed copy of purchase agreement to Project Coordinator and Contract Management.
    4. Real Estate orders title commitment from title company unless Real Estate decides to use a Seller provided commitment.
    5. Real Estate reviews title commitment with assistance from Project Coordinator and/or City Attorney staff as appropriate.
    6. If purchase agreement is not executed by owner, Project Coordinator closes out file and makes appropriate notations in MINS.
  7. Closing – Real Estate staff
    1. Establish closing date with seller and title company. Real Estate staff shall notify Project Coordinator of closing date.
    2. Coordinate final walk through prior to closing with Engineering and Construction Management staff and Relocation staff (if applicable).
    3. Review closing statement and order funds for closing.
    4. Attend closing and sign closing statement or arrange for title company to sign on behalf of the City. Ensure that standard City (development property) address for taxpayer purposes is on Deed for filing.
    5. After closing, Real Estate Coordinator sends out acquisition notices to Real Estate Assistant, Project Coordinator, Audit/Finance, Inspections and Engineering (if intent to demo property) & Relocation (if applicable).
    6. Notify Public Works Property Services in MINS to begin property management.
    7. After closing Real Estate notifies Regulatory Services to waive future VBR fees and assessments.
    8. Send out notices to utility companies. (Send all invoices to CPED c/o Public Works, Property Services Division, 350 South Fifth Street, Room 223, Minneapolis, MN 55415, Attention: Julie McGuire.)
    9. Abate taxes.
  8. Pre-Disposition
    1. Real Estate creates disposition file with a copy of acquisition documents.
    2. Relocation Coordinator sends vacate notice to Public Works Property Services to prepare for demolition (if applicable).
    3. Project Coordinator requests demolition services in MINS from Engineering and Public Works Property Services, if applicable.
  9. Record-keeping
    Real Estate maintains final records which consist of, at a minimum, the following:  title commitment, appraisal, purchase agreement, closing documents, check requests, final policy, and all correspondence.

 

**UPDATE MINS THROUGHOUT ENTIRE PROCESS**