Title
Resolution Approving the Partial Loan Forgiveness of up to $1,255,384 in Combined Principal and Interest on Three (3) Housing and Redevelopment Authority Loans to the Commerce Building Phase I and Commerce Building Phase II Projects, 10 4th Street East, District 17, Ward 2
Body
WHEREAS, the Housing and Redevelopment Authority of the City of Saint Paul, Minnesota (“HRA”) is a public body corporate and politic organized, existing, and operating under the laws of the State of Minnesota, Minn. Stat. Sec. 469.001, et seq. (the “Act”); and
WHEREAS, the HRA has the power to engage in development and redevelopment activities under the Act, and is authorized to create redevelopment projects as defined in the Act, and said activities include but are not limited to: (a) providing adequate, safe and sanitary dwellings, remedying housing shortages for low and moderate income residents, and providing housing for persons of all incomes through housing projects and development, (b) removing and preventing blight or deterioration, (c) bringing substandard buildings and improvements into compliance with public standards, (d) performing duties according to the comprehensive plan, (e) disposing of land for private redevelopment, and (f) improving the tax base and the financial stability of the community; and
WHEREAS, the Commerce Building Phase I and Commerce Building Phase II together are a 100-unit affordable, mixed-use development at 10 4th Street East (the “Project”). The Project was converted from office to housing from 2007 to 2011 by CommonBond Communities (CBC) to provide affordable housing for Saint Paul residents at 30-60% area median income (AMI); and
WHEREAS, the HRA loaned the Project $1,434,024 of Community Development Block Grant (CDBG) funds with a 1% interest rate, fully deferred, with a maturity date of December 31, 2037, in a subordinate lien position; and
WHEREAS, the HRA loaned the Project $563,100 of Metropolitan Council funds with a 0% interest rate, fully deferred, with a maturity date of August 30, 2037, in a subordinate lien position; and
WHEREAS, the HRA loaned the Project $895,173 of HOME funds with a 0% interest rate, fully deferred, with a maturity date of January 21, 2041, in a subordinate lien position; and
WHEREAS, to avoid foreclosure, CBC intends to sell the property to PAK Properties (PAK); and,
WHEREAS, PAK has submitted an application for transfer of ownership of the Low Income Housing Tax Credits (LIHTC) associated with the Project; and
WHEREAS, to ensure the sale, CBC has requested up to $1,255,384 of combined HRA debt be forgiven; and
WHEREAS, on February 11, 2025, the PED Credit Committee reviewed and approved the partial forgiveness of the HRA debt; and
WHEREAS, as a condition of the HRA debt forgiveness, PAK agrees to keep the property affordable in accordance with all existing affordability requirements except for six (6) long term homelessness (LTH) units which will be transitioned to a 30% AMI restriction; and
WHEREAS, CBC has provided the HRA and MHFA with a transition plan for the six (6) LTH tenants; and
WHEREAS, CBC agrees to provide transition services, cover reasonable moving expenses for LTH residents who are relocated, and report to the HRA the outcome of the transition; and
WHEREAS, CBC will provide the HRA with a transition plan regarding notifications and additional support for all Project residents; and
NOW, THEREFORE BE IT RESOLVED, that the HRA Board of Commissioners of the Housing and Redevelopment Authority of the City of Saint Paul, Minnesota takes the following action:
1. Authorizes the forgiveness of up to $1,225,384 of combined HRA debt to avoid foreclosure and facilitate the sale of the Project to PAK Properties; and
2. Authorizes the HRA Executive Director to execute a Transition Agreement with CommonBond Communities; and
3. The HRA Executive Director, staff, and legal counsel for the HRA are further directed and authorized to take all actions necessary to implement this Resolution, including finalizing all documents and agreements necessary to effectuate the activities to be undertaken by this Resolution, subject to approval by the City Attorney’s Office.