Other business, we will, recess and move into a Rochester economic development authority meeting for January for 07/06/2026. First up is our consent agenda. There is, one item, the raj the EDA minutes of May 4. Is there a motion for approval? For approval. Second. Motion made by council member, Keane and seconded by council member Doering. All in favor say aye. Aye. Opposed say nay. Motion passes, moving on to reports and recommendations,
we have one item on our business this evening which is amendments to purchase and develop assistance agreements relating to the Civic Center North apartment project, mister Brent Svenby. Good evening, EDU president Schubert, members of the EDA and mayor Norton. Brent Svenby here with community development. So back in March 2022, after going through an RFP process, the city selected Sherman and Associates to partner with them for the redevelopment of the Civic Center North site.
At the end of twenty twenty four, the city established a tax increment financing district for the property. In June of last year, the council approved, purchase and development assistance agreement in related to the project at the Civic Center North. Since that time, city staff has worked closely with Sherman and Associates to maintain the project schedule and meet the existing requirements to close and commence construction by the end of June of this year. Significant work has occurred over the past several months to advance the project.
The affordable housing component is supposed to be closed on tax exempt bonds. The market Rate tower building has a partial phase permit issued, and the development team has secured commitments for a majority of the required project equity. In addition, Sermon and Associates has invested approximately $3,500,000 into the predevelopment and project cost, demonstrating a financial commitment and continued confidence in the project. On June 23, Sherman and Associates formally requested a ninety day extension to the closing date,
citing continued challenges in the capital markets and the need to finalize remaining equity, commitments, and permanent financing for the project. Staff recognizes the significance of the project and the substantial investment already made by Sherman and Associates, following the negotiation period between city staff and the Sherman team. Staff is recommending that a seventy day extension be granted instead of the requested ninety days. Staff believes that this time frame provides significant opportunity to complete the financing while maintaining
accountability and preserving the city's ability to pursue ultimate redevelopment opportunities if necessary. While the alternative development scenario is possible, staff does not feel or believe that the city would be in a position to meaningfully advance another proposal within the next seventy days for the site. It is unlikely that another developer could replicate the current development program with the same densities. Again, they are proposing a 265 unit market rate building and a 76 unit senior affordable
housing project on the site. Again, given the competitive nature of the low income housing tax credit and housing bond programs, replacing these financing resources and delivering a comparable mixed income development would be challenging and could delay redevelopment of this important riverside even further. As part of the negotiated of the terms of seventy days instead of the ninety days, Sherman and Associates has agreed to a $200,000 nonperformance fee fee.
Basically, if, Sherman and Associates do not close on the property within the seventy days, they would owe the city $200,000, for non it's for a non conformance fee. I do have Chris Sherman here with us this evening that would like to address the EDA, in more detail in regards to the request. But I'm happy to report that Sherman Associates has been a wonderful team to work with these number of number of years on the project, and we feel that we can get a project closed and start construction within seventy days, which would put us at sometime before September 14,
where they would have to close on the land and start construction on the project. So with this, I'll turn it over to Chris Sherman, if that's okay with the EDU members. Come forward, Mr. Sherman. Thanks for being here this evening. My pleasure. Mayor, council president, council members, Chris Sherman, president, Sherman Associates, really appreciate your time tonight. Brent, thank you very much for the remarks, and it's been a pleasure working with city staff in this project for the last four and a half years. We recognize we're four and a half years into a process to deliver three forty nine homes on this site.
Over the last four and a half years, we have gone through a lot of, various considerations with the city as we looked at different iterations of the project. We also have faced some macro conditions that the project has encountered along the way. Sherman Associates is a developer owner operator that really takes pride in delivering generational housing. The product we deliver and have been delivering for forty eight years, we want to deliver product that generations from now people are going to look at and say that was done well. And part of our reason for really being such a,
a massive, focused effort right now on, on Rochester is we find alignment in all the great things the City of Rochester is doing. Our mission, building communities, enriching neighborhoods, really ties into what we want to be doing along the riverfront for decades to come. I will be here for decades to come, and the product that we look to deliver here to three forty nine families is one that we certainly are going to be able to stand behind long term. We are at the finish line of this process. Dollars 140,000,000 of capital coming to closing here. Our targeted closing date that we're communicating to all parties is August 15.
It has been a road to move, housing production forward the last few years. There have been challenges, but we are a group that sees things at the finish line and do not take shortcuts along the way to make a deal work. We take the right road to deliver the quality product that you, the council, you, the mayor, city staff, and residents of the city can be proud of long term. And as a developer owner and long term operator, that's key for us. We want to build product, deliver product that is going to be well served, for the households living there generations from now.
I'll keep my remarks brief because I'm happy to dive into any questions, in detail, but I don't want to go too deep here as I know you've been up here for a couple hours now, and I do really appreciate your time tonight. Thank you, mister Sherman. Council member, you can you can have a seat. I have a question for him. Oh, well, I'm gonna go to council member Fredericks first, and then if you do You're gonna go in order. Oh, whatever. Council member Fredericks. Can you get it done in seventy days? Yes. Okay. That's your question? Okay. Council member Palmer. Well, that's, interesting because in in,
06/16/2025, your office said that you would be starting early next year, which would have been probably January or February of this year. So we're sitting here now with an expired agreement that you want to extend it for seventy days, but you're going to close in April, you're going to close in August 15 with all your cash. Is it might, what am I missing here? Council Member Palmer, thank you for the question. Over the last year, we did and often have the last five or six years pursued outside equity. What we've, determined over the last six months,
really going back to early this year, late last year, is, a need to bring forward our own capital. So, we, Sherman Associates, are bringing forward a majority of the owner equity, and it has been challenging in the marketplace to bring in third party equity for ground up new development over the last couple years. Higher interest rates and really the ability to buy existing multifamily at discounts compared to building new have made it more attractive for outside equity to go into acquisitions. We have made the decision over the last six to nine months to bring in our own equity. That does take some time.
We are bringing about $13,000,000 of owner equity to the table for this closing. We recognize that as we sat here a year ago and laid out our closing timeline for this $140,000,000 project, that we were being, accurate in the moment. I think as a developer, we always try to put dates out there that are both reasonable, but also get all of our trains to the finish line. We have nine financial partners on these two deals between our banks, our tax credit syndicator, pref equity partner, and ourselves. And key for us is making sure sure each of those parties is working towards
those aligned dates, and at times these closings do get delayed. We are a group that consistently for forty eight years has closed our deal. Sometimes it takes longer than others, and when we can't find the outside source, we find an alternative. In this case, we're bringing forward our own capital, internal capital, to get this project closed. And that's what's allowed us to make more of this firm commitment here to get to an August 15 closing is we now are going to be a majority, almost all of the equity. So that's different than where it was at before when we were working to try to find an outside equity group. Well, First and Bank on the old Y site is a market rate apartment that was
built without any assistance. You're getting twenty five years of TIF, so the city's helping out with that. The city's giving you the land. And in in my where I'm having my difficulty on this is is in 2021, we needed apartments. We really don't need more apartments at this moment. We're doing pretty good on apartments. And so, you're getting how much in developer, fees? $13,000,000, developer fee? In developer fee? Mhmm. No. Our our developer fee on the market rate deal is about 3,000,000, a paid fee in the affordable deals.
Currently, we're deferring all of our fee on the affordable deal. So Deferring or eliminating it? We're deferring it. The on affordable housing, we generate tax credits based on basis. So our developer fee is basis eligible, and that's allowing us to qualify for more federal low income housing tax credits to build the project. But all of our fees deferred permanently. So it'll ultimately, from a structure standpoint, get paid out cash flow, but we get none of it paid during the develop development period on the affordable. So our total development fee that we're getting paid during the development period is about
3,500,000 total for the $140,000,000 project. And you understand my questions? I mean I do. Absolutely, council member. I understand the questions. Certainly, on both the affordable and the market rate deal, there are gaps. The affordable really is driven by delivering housing at 30% AMI and 50% AMI for seniors, and that does deliver a gap that the federal loan closing tax credits can't fill on their own. A majority of the tax increment is going to the affordable. We are using some of it on the market rate deal. The market rate deal is a concrete product,
15 stories, and we view that as a product type that certainly has a longer useful life than stick frame. So, I think that is a key consideration here for kind of what is allowing that market rate deal to be considered for the tax increment source is the fact that it is a concrete product that is going to have a longer, long term useful life for the City Of Rochester. And your permits have been issued and you've paid for your permits already? The permits are ready to be picked up by the council. We've not paid for our permits yet, but we have incurred $3,500,000 of costs on design and other pre development expenses.
Over the last four years? Over the last four years, yes. Okay. Thank you for those questions, council member. Further questions? Is there a motion on this side? Council member Miller? I guess I do have a a quick question just since this is the other things have advanced since this project was last before us, and I'm just looking at this elevation for looking East on Center Street. Does this site development plan integrate with the two way bike network on the north side of the block that we're actively constructing from the the river to, 11th Avenue East?
And we've also seen these site development plans for Mayo buildings along East Center West Center Street. I guess maybe this is a question for staff, maybe for miss Woodward. Are are we causing a problem here? Because I'm looking at this rendering, and it just shows trees where likely that path would be continuous. I'm sorry to disrupt this process with that question, but I I just don't necessarily see how this, integrates with that. I just wanna make sure that we're not creating a block for No. I think while it's not being shown on the rendering, it is intentioned that the bike lanes are going in.
Okay. It's also out in front of where the proposed Granger Building. There will be bike lanes in front of there as well. And I saw that. I I and I appreciate that. I I just am not seeing it in the renderings here, and I just wanna make sure that we're not doing different projects at different times and approvals and creating conflicts in a continuous network. There there shouldn't be a conflict. I think the rendering might just be a little bit older and it didn't incorporate that, but that design is moving forward, and there shouldn't be any conflicts. And then a question for you, Mr. Sherman, that you addressed, before the meeting, but could you just say on the record how this delay to August impacts your
overall construction timeline and lease out? Thank you for the thank you for the question, Councilmember Miller. We have been working with our general contractor Franich Companies to, tighten up the construction schedule. On the multifamily construction front, housing production is down a lot across the state. In, up in the Twin Cities, it's down about 75%. So, as we've been working with Fran and companies on getting to the same set delivery date of April 30 previously, that was based on a June start. We're now looking at an August start. And we've asked them to tighten up the construction schedule by two months so we
can still get to an 04/30/2028 delivery date, build it two months faster, and that's driven by more multifamily labor availability that is gonna, in certain cases, be here in the Rochester Metro and other cases, be driving down from the Twin Cities. So we're now looking at the exact same opening date, April 2028. Great. Thank you. Council member Fredericks. I'll make a motion adopting a resolution approving amendments to the to the purchase and development assistance agreement between the Rochester Economic Development Authority and the Rochester Civic Lot Limited
Partnership and the purchase and development assistance agreement between the, I better put these on. Rochester Economic Development Authority and Rochester Tower LLC regarding the Civic Center North Apartments project associated with tax increment financing district hashtag eight two dash one. Second. A motion made by council member Fredericks and seconded by council member Miller. Any further I'm looking forward to this project. It's gonna add some needed affordable housing in the downtown area as well as market
rate and the senior housing. I like the project. Your 3 and a half million dollar investment upfront before you even know you're gonna get it home is quite substantial. I'd hate to pull that away from you. Council member Wall. You you know and this is for mister Sherman, and Dan, you know from previous discussions that I'm uncomfortable with extensions of course. I do like the project. I am, proud of the fact, from the Maxfield studies that we've reduced affordable housing need by 26% between 2025, and I think that's something that we can,
continue to lift up as a city council and city staff and the community that's really trying to make a dent in the needs for the community. I I would love you to come to the microphone, and and, August 15 is forty days away. On day 41, you got heavy machinery moving. Day 42. Usually, it's just two days. I will accept 42. Thank you. Okay. Gotta get title out there to take some photos and appreciate that question, council member. Thank you, Councilmember. You don't wanna make them mad. No, not at all.
I just wanna say I, I, even though it's four and a half years and, and I have been in several different positions in that four and a half years, both seeing this project from a planning and zoning commission standpoint in here on the council. I really, respect your tenacity and your stick to it ness, with this project. I do think that with a rental housing rate, occupancy rate of more than 95%. I think this community can use some more rental,
units and affordable units. I'm, very excited to hear about this being a real premier project for Sherman going forward and that you have a commitment to Rochester going beyond this. I think as I've said on this dais many times, I think it's really important for us in this community to see the diversity of developers coming into Rochester and, and, building and and, being neighbors with us. So, I appreciate that.
With that, all in favor, say aye. Aye. Opposed, say nay. Motion passes unanimously. Thank you. Is there a motion to adjourn the EDA? So moved. Second. All in favor, say aye. Aye. Opposed, say nay. Motion passes.