St. Paul Housing and Redevelopment Authority meeting to order. Roll call, please. Commissioner Yang? Here. Nager? Here. Kim? Joest? Here. Jalali is excused. Bowie is excused. And Chair Johnson? Here. That's four present, three absent, two commissioners being excused. Item number one is approval of the minutes approving the February 2025 HRA meeting minutes. All righty. So, after having a second to review the meeting minutes for everyone, are there any questions or anything like that? Otherwise, I'll take a motion from Commissioner Necker to approve.
All those in favor, say aye. Aye. Opposed? Four in favor, zero opposed. The minutes are adopted. Item number two is a public hearing approving and authorizing entering into a lease agreement with Avis Budget Car Rental LLC for retail and parking space in the Block 19 parking ramp located at 151 Seventh Street East, District 17, Ward 2. Okay. So this is a public hearing on this item. But before we take public comment, I wanted to head it over to Director Newton. Certainly. Thank you, Chair Johnson. Commissioners, this item is it's a lease for an Avis car rental to rent the small
retail space in our Block 19 Ramp, and then they would be parking some of their rental cars in the ramp. This is this has been a vacant space, and and there's capacity, in the ramp as well. So it's it's really a good thing all around, and staff recommends approval of the item. Alrighty. So this is a public hearing of this item. If you're here to speak to it, you'll be able to go up to the mics. You don't need to adjust them to pick it up. So if you're here to speak to this item, this is a public hearing. Is there anyone else? Is there anyone here going once? Okay. Seeing none,
I'll take a motion from Ms. Yang to close the public hearing. All those in favor, say aye. Aye. Alrighty. Four in favor, zero votes. To take up The resolution is adopted. The public hearing is closed. I think we'd take a vote. Right? It's okay. Motion to that? Sorry. I have motion to close the public hearing, but is there a motion to close the public hearing and approve? So I can do that. You could do both, Sarah. One at a time. Well, I'll just correct that for the record then. Motion from Ms. Yang to close the public hearing and approve. All those in favor, say aye. Aye. All those opposed? Four in favor, zero opposed. The resolution is adopted. The public hearing is
closed. Item number three is a resolution approving and authorizing the acceptance of a land donation at 1366 Fremont Avenue from West Fargo Bank, NA, in Leo of Payment of Demolition Assessment, District four, Ward seven. So this is another item here that, we will be hearing quickly due to the nature of it and just having a staff report as well as being able to take action today. So I wanted to hand it over to director Newton. Thank you, chair Johnson, commissioners. And we didn't bring a, like, an intro item on this. It's pretty it's pretty simple.
This was a a home that was demolished on a third of an acre lot. It was it was subsequently foreclosed on. And Wells Fargo, the lender, is donating this land to the HRA. We would then include this in our property, you know, as available inventory for residential development. It's also directly adjacent to a city owned lot. So we will be looking at can we combine those lots. And, as it stands, it could support five to six units of housing. But if we combine it with the one next door, it could even maybe support a little bit more. So, we think, again, a good thing all around and staff recommends approval of the item.
Thank you, director Newton. One thing I will say is it's being based in Ward 7, we went through our real estate of our HRA owned land probably as commissioners individually, and I'll just simply say on the East Side, our list is a little bit shorter. And so being able to see an opportunity for, more redevelopment or housing opportunities on the East Side is really important for me. So I appreciate the staff report as well, and we'll entertain a motion from, Commissioner Yudjos to approve, if there's any discussion, any questions, or anything from commissioners before we move forward.
Commissioner Naker. Thanks, Chair Johnson. Just a question about the mechanism here because I'm not familiar with it. Is it it looks like it's in lieu of payment of a demolition assessment. Is that a common practice where a property, instead of paying a demolition assessment, can donate land? Chair Johnson, Commissioner Naker, it's not common that it happens because not common that people wanna donate the land necessarily, but because CDBG is often used by DSI for demolitions, in this case, it was like, you know, the the public purpose needed for the CDBG was to demolish the land and so we're able to just make this this arrangement.
Again, in in lieu of that assessment, they will just donate the land to us. And then Go ahead. Is there a structure that needs to be demolished on the land? It's been demolished, chair. It's already been demolished. And commissioner, it's been demolished. So that cost of demolition stays ours, but we get to live. That's correct. Yes. Any other questions from any of the other commissioners? I think that's a really great question, Commissioner Acre. I also, too, was, curious about just how we get to that space. I do see this as an opportunity with there being a demolition in place to actually still be able to retain this property to be able to see what could be, potential home maybe for a few insiders in the future.
So that's very exciting. So any other questions from commissioners? Okay. Seeing none, Councilmember Joost made the motion to approve. So all those in favor, say aye. Aye. All those opposed? Four in favor, zero opposed. That resolution is adopted. Item number four is a staff report, Introduction to Commerce Building Phase one and two. All right. So we have a staff presentation here today on this. And I think I am really excited that we have a little bit of time to go through the presentation slides and if you have questions just to kind of engage in what,
will come from our commerce built in sales. So I'll hand it over to director Newton for the introduction. Thank you, Chair Johnson. Commissioners, principal project mender, Laura Hainesen, is here. She'll provide an introductory presentation on an item that will come to you for action next week. The current building owners are here, I believe, as well. So we'll let Laura make her presentation. And then if you have questions, we'll do our best to answer those. And again, it'll come for action next week. And I'll turn it over to Laura. Okay. Thank you, director Newton, chair Johnson, commissioners. I'm here to present the Commerce Building Sale and the partial loan forgiveness,
ahead of the HRA or before the HRA. K. So how do I click through? Okay. Some background on the property. It is a, historic downtown building on Wabashaun Fourth built in 1912. Today, it has a hundred units of affordable housing after common bond led the conversion, from office to housing in 02/2007 to 02/2011 in two different phases. All units in the building are subject to tax credit affordability at 60% AMI with additional layers of for greater affordability.
And you can see the three ownership structure here and some of those additional affordability layers in the project for each phase. So you can see top floors are the phase one and the bottom floors are phase two with a separate owner for the ground floor commercial space. So what's next for Commerce building? After years of deficits and advancing more than 1 and a half million dollars to the project, CommonBond Communities has determined they can no longer own or manage the property.
And in in order in order to avoid a foreclosure, CommonBond marketed the property for sale in 02/2024. They received three offers and selected PAC Properties offer of $3,200,000 The sale to PAC Properties will avoid being foreclosure. And by avoiding foreclosure, CommonBond, excuse me, the you can keep the tax credit affordability restrictions in place. Those will be lost in the case of foreclosure. This sale will also limit disruption and uncertainty to current residents and will generate some
sales will generate sales proceeds to repay, a portion of the HRA debt and a portion of Minnesota housing finance debt. And then finally, PAC Properties is a local owner. They have experience with commercial leasing in Downtown Saint Paul, and they'll bring that expertise to this project. So getting a little bit more into the sale and some potential changes to the property, there are 11 long term homeless or LTH units in the building to they're tied to the two MHFA loans.
And when the phase one MHFA loan is repaid as part of this sale, six of those long term homeless units, the restrictions on those will go away. Four of those units are currently occupied and common bond is working with those four residents to transition them to other properties that can provide commensurate level of those services and the rent, that are part of the long term homeless units. The five long term homeless units that will remain, Those will remain in place and be restricted as such, and PAC has identified Simpson as the service provider,
for those services, and Ramsey County has committed funding to that. The there are four section eight eleven units. Those are supportive housing for people with disabilities and they will remain in place with the same services and rents. Sale is anticipated by March 31, since the first position US Bank loan. The mandatory tender date is April 1. The and then I'll get into a little bit more of the debt and on the property, but MHFA, approved the partial forgiveness of their two loans at at their February 27 board meeting
last week. With the sale of the building, CommonBond has committed to supporting the current residents of the of the building, and the property. CommonBond has already notified tenants of the planned sale, and will be providing additional notice and information to residents. This information includes providing each resident with the range of rents that will be allowed on their unit, when their current leases expire. This is because current rents that are under lease, their current rents may be below the maximum allowed, under the tax credit restrictions.
CommonBond has offered or will offer one year lease extensions to all residents that will, you know, kind of maintain continuity for those tenants. And then current residents can also join CommonBond's interest in waiting lists including those for rent assisted units that they may qualify for. And then common commerce there's a lot of comm words here. Commerce residents will be prioritized on those lists, you know, as allowed by Fair Housing laws. Residents can stay in place so long as they have an active lease and moving
expenses will be covered for up to six months post closing. And finally all, all the outcomes for residents will be reported to HRA staff so we can keep track of how this project goes. Getting a little more into the debt and the loan forgiveness request that will be before you next week. When the property was converted to housing, the HRA made three, deferred fully deferred subordinate loans to both phases of the project. The CDBG loan, was to phase one and that current balance is 1,600,000.0.
Met council loan, to also to phase one with a current balance of 563,000 and a home loan to the second phase of the project, and the current balance is 895,000. The total outstanding debt, as you can see, is 3,100,000.0. And CommonBond is requesting partial forgiveness of both our debt and MHF day MHFA existing debt. Common bond estimates or anticipates sales proceeds of just under 3,300,000.0, and that will not be sufficient to pay off all the existing debt.
So kind of the flow of funds, with that repayment, CommonBond will first pay off the US Bank loan in full, then they will repay the principal of the MHFA phase one loan, to the project. MHFA has approved the forgiveness of the interest on that loan, and that will leave one just around 1,900,000.0 of sales proceeds to repay HRA debt, since we have $3,100,000 that the request ahead of you will be, an approximately $1,200,000
of forgiveness of combined debt. With the, available $1,900,000 of payments for HRA loans, we are anticipating it will be split proportionally between the three loans based on the initial investments into the, into the project. So you can see the breakdown here with, the payment amount being largest to the CEBG loan and of course the forgiveness amounts on that last column as well proportional. Commissioner, Neaker has a question. Oh. Sorry. So we have a last one.
Okay. One I can't wait for the last one. One more point about our program income here is that, we would receive the repayments as program income, and they would be, they would fund additional affordable housing projects. So we redeployed to support for affordable housing in Saint Paul. And then, okay. In summary, the request that will be before you next week will be to approve the partial loan forgiveness of up to $11,225,384 of combined principal and interest on three HRA loans to the Commerce Building phase one
and phase two projects, including the CDBT, home, and net council loans. With that, I would be happy to answer questions. I do wanna recognize Heidi Rathman Smith is here. She is the executive vice president for real estate for CommonBond and her colleague, Henry Parker, the director of asset management. Hopefully, I get that all right. Both here from CommonBond and can help address questions. Okay. Commissioner Necker? Thanks, Judas. First of all, I'm saying that I'm struggling for this project. I think it's always a little bit of a bitter pill to swallow when we're not getting fully repaid for a loan that we made.
But, you know, I think the alternative here is to lose the affordability on this completely. And the option that we have here is a local developer who, who has a proven record of not just affordable housing, maintaining historic buildings downtown, and also filling commercial spaces, which those of you who are familiar with the vacant commercial space across the street from our office at Fourth And Wabasha, that used to be a beautiful subway, are probably missing. So, I think that and I know that the developers, the purchasers, committed to trying to fill that space as well. One question I have, Laura, you kind of answered it, but when the dollars come back and specifically the CDBG dollars,
I guess all of them, are they restricted to housing? Or, for example, does CDBG come back into our general pool, and can that be allocated as through our CIB process or through other means for CDBG applications that I know are going out right now? So I can answer a part of that question, chair Johnson, commissioner Naker. We will receive them as program income, so they will be restricted by the program, like the grantor program in the case of CVG or HOME. Those regular, you know, kind of requirements, they'll be restricted to those. The way that we redeploy them,
I don't know and can't answer unless others in the room are able to. Yep. I think, chair Johnson, commissioner, I think, like, the home has to be used for housing and but if your question is about CDBG and I'm looking at Jules, but in my head, it's just gonna go back in as program income and we it may even have less restrictions than it than it has had in the past. So we will get you a definitive answer on that, but I don't believe it has to be like reused for housing. And just to follow-up, the repayment would be imminent and that would those dollars would be available in this
year? Correct. Thanks. Along those lines, I think I have a follow-up question more so from, kind of understanding the process. So I really on a basic level, if you could just share, Laura, these resources are coming back quicker than maybe we I guess, because of the space and the timeline, it's coming back quicker. So what does that process actually look like? Like, walk us through just how we get here from, just basic like, we get a request coming in that there is a a sale. Like, what is the process to get to a space where we're like, okay. This is how we would determine how much of this we would forgive and or
request for forgiveness of the loan. Like, just walk us through that process a little bit more in-depth, if you could, Laura. Sure. Chair Johnson, thank you for the question. This has so the application for loan modification is the initial kind of prod start of the process. Any of our borrowers, you know, when they have a reason, are welcome to apply for modification to their loan terms, and the forgiveness will be considered that. So that's how the process started, you know, with And then I think even before that, the conversations with, PED staff and leadership started as probably back in spring twenty twenty four,
I believe. Jules is nodding. I I took this over from our, esteemed colleague Diane Norquist. So, you know, that that's sort of the initial, you know, the initial conversations around it and the condition and the the challenges for the property were a part of that conversation. And then the loan, modification request with, details. We had a number of back and forth conversations with both the, current owner common bond and the buyer around what that will look like, and sort of what, even just getting into these the details of repayment on the loan,
some negotiation and discussion with our colleagues at MHFA around their restrictions and, how those will be released or changed as part of the deal. So, you know, it's it's a fairly long negotiation. Mhmm. And to your point, I pulled up the slide that shows the maturity date. We are getting these, a portion of these funds much sooner than we would have anticipated with the maturity dates, of 02/1937 and 02/1941. These are fully deferred loans. So we have not received any payments to date and we would not have expected
any payments until those maturity dates. Thank you. Chair Johnson, commissioner, I'll add just to build on to what Laura is saying. In talking with the seller and the potential buyer, we always will convey, you know, we we wanna make sure tenants are are taken care of. The council members are, like, gonna prioritize, you know, and as as you should, the the tenants being protected and, so so all of the kind of transition things that you saw are things that we work through with with them and and all of those things impact the numbers. Right? So that's so how we land on what what what would have to be forgiven
to get to that place is is like that back and forth. And so if that's helpful, know that we we always put forward what what we know are are your priorities around things like this and and then the council member works as, you know, given that information as well and and we have those conversations. So I feel like they did a really good job of figuring out how to have this little impact and as much notice and as and retain as much affordability and all the things that we that we care about in in landing on this, request. Thank you, director Newton. And, yes, I see, Carmen Bond in the room today.
And I just I would just say as the, as the chair, but also a council member who's really really loves to see transition plans and see things in place that do center residents, kind of in this space of, you know, just like in this active business, I think it's really important to have this transition plan that's here. And so I just wanna uplift and say, like, it's always a great thing to see the different commitments from when a sale takes place or when there is a change of ownership that there is at least, proper notification. I you know, reading through the one year lease that is offered to residents,
I just think is really important right now. I think one of the biggest concerns around, access to resources and affordable housing is really being without the the ability to continue to preserve it. So I think it's really important to see that piece, and it was one thing that stuck out from the presentation overall for me, just kind of looking through it. So appreciate the work that has went into that transition plan. It it really did feel, as our residents here in Saint Paul are, centered in this work too and not lost throughout it. So really do appreciate both for you being here today, but also just that work that goes into those conversations and,
Councilmember Naker, your leadership in that, Commissioner Naker in this case, but genuinely appreciate the the leaders and and the roles that it plays with staff and the multiple negotiations, but thought that was quite impressive. Any other questions or comments from commissioners, either for Laura or, for staff? All righty. So, it's my understanding that this will come back to us next week. For this action steps, if you have any questions about it, I'm sure either, council president, Commissioner Naker could be of assistance in any questions or Director Newton. Alrighty. So seeing nothing else on the agenda,
I know next week, I'll just preface, there's quite a few different items that'll be on the agenda. So we'll most likely try to get through the jam packed session. But if you have questions of things that come up next week, don't hesitate to reach out in advance to let us know. With that, we are adjourned.