RESOLVED, that the proper city officers are hereby authorized to purchase the below-described property in St. Louis County, Minnesota, from Mary L. Anderson for the proposed residential facility for chronic alcoholics for the sum of $90,000, payable from 262-020-5434-CD02CD-Hous-HS05:

           Lots 44, 46 and 48, West Third Street, Duluth Proper First Division.

STATEMENT OF PURPOSE:  The purpose of this resolution is to authorize the purchase of the so-called San Marco property from Mary Anderson for the sum of $90,000. The purpose of this acquisition is to provide property for the construction of a residential facility for persons of low income with special emphasis on housing for persons suffering from chronic alcoholism.

The property in question consists of three, 50-foot lots at the southeast corner of Third Avenue West and Third Street containing about 21,000 square feet of property. The land is occupied by five buildings, several of which are inter-connected and all of which have been condemned by the building official either for demolition or for occupancy and are therefore vacant.

The largest of the buildings is the old San Marco apartments building located on the south side of Third Street and the related and connected annex building which is condemned for demolition. There are three other structures involved, one of which is at the corner of Third Avenue West and Third Street and the other two of which front on the avenue which are condemned for habitation. This property was identified as an ideal location for the planned residential facility for persons of low income with special emphasis on housing for persons suffering from chronic alcoholism both because of its central location and accessability to services and transportation needed by the expected resident population and also because it would not result in the displacement of any existing legal tenancies, especially those of persons with low and moderate incomes.

Some time ago, the city entered into an agreement with Center City housing corporation to serve as the developer for this project and Center City, in turn, attempted a negotiated purchase with Mrs. Anderson and her husband, Roy M. Anderson but were unable to do so. Thereafter, the city determined to acquire the property by condemnation and later entered into an agreement with DEDA to serve as its condemning agent in order to obviate any potential legal issues that might have been raised regarding the city’s authority to condemn property for this purpose. DEDA commenced the acquisition process last fall and instituted its condemnation action in December of 2004.

The city had originally secured an appraisal of the property establishing its value as $60,000. The land itself is valued at $180,000 but the condition of the buildings required that they be demolished, rendering them a negative value to the property equal to the cost of demolition which resulted in the net value of $60,000.

The Andersons had originally countered with a demand for $600,000 based on the fact that the property was valued for real estate tax purposes in excess of $700,000; this value was based on the value of the property at a time when it was in reasonably good repair, was licensed for rental housing and fully occupied by rent-paying tenants, none of which conditions exist today.

Subsequent to these exchanges, Mr. Anderson died, Mrs. Anderson was provided with a copy of the appraisal and DEDA commenced the condemnation action, which brought the issue to a head.

After substantial discussion over several months, Mrs. Anderson agreed to sell the property to the city in fee simple absolute and by warranty deed for $90,000 (see the agreement). Because Mrs. Anderson was not a legal resident of the property at the time the condemnation action was commenced, her relocation benefits are limited to moving expenses and included in the above settlement figure is the obligation for Mrs. Anderson to remove any personal property she wishes to retain at her cost within 45 days of the closing on the property.