Housing & Redevelopment Authority - Regular Meeting

Thank you. Thank you. Thank you. Roll call please. Louie? Coleman? Here. Jost? Here. Kim? Here. Naker? Here. Yang? Here. Chair Johnson?

Here.

Six in favor, one, or I'm sorry, six present, one absent, and Commissioner Bowie is excused. Item number one is MIN 26-21, approval of the June 2026 HRA meeting minutes.

All right, I trust that everyone has had a chance to review the meeting minutes for June. I'll take a motion from Vice Chair Jost to approve. All those in favor?

Aye.

All opposed?

Six in favor, zero opposed. The minutes are approved. Item number two, staff report SR26-134. Introduction to Requested TWV Limited Partnership Loan Amendment, District 3, Ward 2.

All right. We have two staff reports that needed to get in front of us. They'll come back for action on the 22nd. I'll hand it over to Director McMahon.

Thank you, Chair and Commissioners. We have Libby Logsdon here to present on this item for Introduction to Limited Partnership Loan Amendment.

Hello. Welcome, Ms. Lawson.

Thank you.

Apologies, I just sprinted over here from the annex, so I'm a little out of breath. But Chair Johnson, commissioners, my name is Libby Logsdon. I'm a senior project manager on PED's multifamily housing finance team. And today we are going to discuss the requested TWV limited partnership loan amendment.

If you need a minute, Ms. Lockwood, you can take it. We can pause for a second. I can fill it with beautiful pieces around the staff report. Yes, we have water back in the building. We appreciate it. It's welcome. I want to give folks an opportunity to be able to catch their breath here. Appreciate it. No problem. Thank you so much. We definitely empathize having to go back and forward today between here and Osborne. So if you're, like, listen, I... I was like, I know I'm the first item. Appreciate that.

Got to get over there.

But thank you so much. No problem.

I have my breath now, so we can proceed.

Wonderful, wonderful.

So TWVLP is a... a combination of three different common bond properties. So the T stands for Torre de San Miguel, which is 142 units located in District 3. Westminster Place is 99 units located in District 5. And Vista Village is 48 units located in District 3. So back in 2006, these three projects were underwritten together because it was advantageous to all of the projects to be underwritten together at that point in time. And as y'all are aware, lots of things change within the development over the last 20 years. And so at this point, it is unfortunately not advantageous for the three projects to be grouped as one under TWV Limited Partnership. Torrey, being the largest, was selected to kind of go out on its own for funding, and it also had the biggest rehabilitation needs. And Torrey has now secured all necessary funding and is proceeding to a November 2026 financial close. And then the other two projects, as you might remember from a couple weeks ago, there was a reservation for a million dollars for the Minnesota housing application for Westminster and Vista. And those applications are due tomorrow. So I think they are well on their way to having that be submitted. So just to geographically place where we are, the property that's furthest north, that is Westminster Place. The property that is furthest south is Vista Village. And then the property that is just north of the furthest south is Torre de San Miguel. And the developer is Common Bond. Over 55 years of experience as a nonprofit owner and developer, they've owned these properties since at least 2006, but a fairly well-known entity in the affordable housing space. This request is coming right now because of what I mentioned before, that Tory is proceeding to financial close for rehabilitation. And so their request is to essentially keep TWV limited partnership, but remove Tory as collateral from the original CDBG loan. And the purpose of this is that this being done now helps to decrease the cost and complexity of the financing as we move towards closing. If this were to happen at the same time as financial close, the lender would think about this deal as being more risky because it's essentially like a two-step process instead of a one-step process. And at that point, there would be cancellation of debt income fees as well. So it's really to decrease the cost of compliance on the project and decrease the compliance requirements that take a lot of time and then also money. So, and we found out yesterday, actually, that the HRA CDBG loan is actually in the first lien position. So these slides are a bit inaccurate, but it's actually even less risk for the HRA in this. So you'll see... it should actually show that the HRA is in lien position number one. So the original loan was $275,000 with interest now. It's around $727,000. It was originally originated as a loss, and all other details about the loan modification are proposed to be the same beyond moving Tori as collateral. So you can see even with The PARIF loan for Minnesota Housing being in first position, as shown here, the estimated loan to value ratio is around like 15.5%. With the HRA loan being in first position, it's 6.65, or no, 5.65. So even less risk to the HRA since we are in the first. lean position, so there is sufficient collateral to cover the HRA's risk in terms of this loan in the event of default, even with Tory being potentially removed. Staff recommendation is to approve this request to modify the TWV limited partnership loan to remove Tory, and that it will be, or we are proposing that it will still be originated as a loss, so no change in that position. And then the next steps, the application for Minnesota Housing is due tomorrow for the Westminster VISTA projects, and we are proceeding to the anticipated November of 2026 closing for Torrey. So there will be more items before y'all to look forward to. Are there any questions? Commissioner Naker.

Thanks, Chair Johnson. So my understanding is that taking out Torrey from the rest makes it easier for Torrey's closing to proceed, which is obviously desirable. Does it have any effect on the other two's financing?

That's a great question. Chair Johnson, commissioners, Commissioner Naker, apologies if I did that in the incorrect order. It actually is, well, so the cancellation of debt income fees will still apply for the Westminster VISTA project. So it's kind of like kicking the can down the road a little bit. So I think it's estimated that those fees are going to be like $200,000 right now. And the developer is not actually seeking loan forgiveness because it counts as a committed source of funding for their Minnesota housing application. So it's actually beneficial for the project to keep the debt on Westminster and Vista at this point in time. And the properties, as I understand, are not interconnected directly for their operations. So really, this isn't changing really anything for their operations. It's really just changing the place on paper where Tori exists.

Does that answer your question? Yes, thank you. And then a follow-up. You said that the original principal is $275,000. The balance is $727,000. It matures in 2042. Are payments being made over time? Or when you say, is this never going to be paid back?

So these are typically underwritten as deferred. Every 20 years or so is when furlough housing development projects need to be re-syndicated or rehabilitated. And so no fees have been collected so far. No amount of the principal or interest, I believe, has been collected at this point. Because they're deferred. No. Yes. Okay. Good. And so we are anticipating that the developer will request a... a forgiveness of the interest part. But they will, as we are anticipating, they will likely keep the principal amount on their books. Does that make sense? We're getting into some of the more complex financing structures of the deal. But essentially, no. They are not paying because it's set up as a deferred loan. And then typically, at the 20-year syndication period, They assume the loan or they request for it to be forgiven or something. So kind of like at the inflection point, which we're at now. So we anticipate that they will request to get rid of the interest portion but still carry the principal balance.

But not pay any of it back.

It doesn't get paid back.

Yes. So as long as they keep. the property affordable and keep all the terms that they have been required to do, then typically those aren't typically paid back.

Thank you. Any other questions? All right. And seeing none, thank you so much for kind of bringing on the information around this. And if folks have questions, they can reach out to you. OK.

Wonderful. Thank you. Absolutely. Thank you so much.

Item number three is staff report 26-136, introduction to proposed three-year lease with Union Pacific Railroad, UPRR, for exclusive use of HRA property at 43 Water Street for its reconstruction of the Mississippi River lift bridge, District 3, Ward 2.

All right, I appreciate it to get any chance to learn a little bit more about this. We own a few different lots here. One of them is unpaved, and this one is that. And so I'll give it over to Director McMahon, who will be leading in the presentation for it. Welcome.

Hi. Chair, commissioners, thank you so much. I'm pitching in here, and we've got folks that have been working hard on this, so I appreciate Jendell and Daniel Lorenzo's work on this and are also available for follow-up and additional questions. This is just an introduction. This is an item that would have action on the 22nd at our next HRA meeting. So you can see it outlined in red, what we call 43 Water Street. It's actually five different parcels that collectively we just refer to as 43 Water Street. It is currently an HRA-owned parking lot managed by Trans Park Incorporated. It is a gravel parking lot that has been sort of gravel and in that state for quite a while down there. union pacific railroad is going to be doing work on the just adjacent robert street railroad bridge it's actually a three-year project for that bridge work that they're going to be doing and so they approached us to talk about using some of that parcel using that parcel to be able to have to help support that construction project and to really reduce the impact to the surrounding community and neighborhood from all of the construction and everything going on for that project. Again, that project will take three years. And rail and marine traffic will actually remain in service during that bridge construction. Interestingly, a lot of the construction equipment is brought in and used via barge. So over the next three years, if you're interested or you have kids that are interested or not, a lot of folks really like watching that kind of work. And so it's actually, it'll be fascinating to see the equipment come in on a barge and the barge kind of park underneath and use it. It's not a typical way you see construction in the city. If folks like watching, it'll be an interesting one to watch for the next few years. Under the proposed lease terms, yeah, Union Pacific can use a lot for a construction trailer and employee parking. So like I said, not the equipment necessarily. The equipment's coming in via barge. This would be a trailer and employee parking during those three years of construction. This helps keep the employee parking out of the surrounding neighborhood and area and really minimizes that disruption to the community. Additionally, Union Pacific would then be responsible for maintenance and security of the site during that time. which is an added benefit to that location. They would pay the HRA $1,600 a month in rent, which will total $19,200 a year to the HRA, noting that currently, approximately, the usual annual amount that the HRA receives in parking revenue is around $11,000. So again, we're getting around $11,000 annually now in parking revenue. This being a lease we would get from Union Pacific, $19,200 a year. Also noting that were the parking lot to try and continue to operate as a parking lot moving into the future, it doesn't have an adequate stormwater system in place. Again, it is gravel. It is not paved. There would be significant work that would need to be done in order to continue to operate this as a parking lot into the future. That's significant capital investment. The revenues just simply don't support that level of investment to continue to use it as a parking operations. The Westside Flats Master Plan identifies a space as future parkland or for park operations. Previously, including for this year actually, Parks has entered into an agreement with the HRA to use this lot to support things like the Yacht Club Festival and other large events at Harriet Island and really support those large events and community festivals so that encourages people in the neighborhood to have those opportunities to gather and to celebrate. After the Union Pacific lease ends, the intent would be to work with Parks on transferring this property to the city for their use. But any future conveyance after the end of the three-year lease with Union Pacific would require additional HRA approvals at that point, and so it would be back before you if the land were to be proposed to be conveyed to Parks at that time. And then just noting quick, it says August 5th here for the action date. It should be the 22nd in the next HRA meeting, not the 5th. So apologies for that. If there are any questions, happy to answer and happy to follow up.

I do appreciate just getting kind of like a full run through of it. And I appreciate the added financial piece to it. I think it's just really important to understand what we have, what we're spending now versus what we stand to either gain or lose in any situation. So I do appreciate that additional insight as well. All right, so yes, the third Wednesday is coming up, so we will not meet on the third Wednesday, but we also will not meet on the fifth Wednesday as well. So just a reminder, the 22nd is our last HRA meeting for July. And then we'll come back in August and have quite a few things as we gear up for budget season. So with that, we are adjourned.