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Agenda 3
<br />HRA Meeting
<br />Minutes Tuesday, January 20, 2015
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<br />Ms. Olson provided the historical timeline of the project from the GMHC perspective; and
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<br />while recognizing that staff was seeking termination of the PDA, asked that the HRA continue
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<br />to work with the GMHC to move toward construction of the project.
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<br />Ms. Olson noted that, even though the PDA had expired on June 30, 2014, GMHC and HRA
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<br />staff had continued to work together; and in hind-sight admitted that GMHC should have asked
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<br />for an extension, but continued to anticipate finalization of all aspects of the project to proceed
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<br />to a negotiated development agreement and purchase agreement. Ms. Olson noted that GMHC
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<br />had spend in excess of $200,000 to-date (e.g. for architectural services, fees, permits, and
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<br />environmental studies) all front-end expenses and such a loss of revenue without a subsequent
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<br />project would damage their overall housing efforts throughout the Twin Cities area. In the last
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<br />five years, Ms. Olson noted that the GMHC had completed and sold 269 single-family homes,
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<br />75 just in 2014 alone; and had held a Letter of Credit with U. S. Bank since 1992, and had
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<br />been relying on that Letter of Credit for this project as well. In hind-sight again, Ms. Olson
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<br />admitted that perhaps the timeframe had been too aggressive, since this project was unique in a
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<br />unique neighborhood, requiring many community meetings and subsequent project and design
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<br />changes to meet preferences. Ms. Olson noted that the cluster aspect of the project was
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<br />complicated and with changes required along the way for water management on site beyond
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<br />watershed district requirements, and additional costs for a water retention system in excess of
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<br />$200,000 as requested by the City, in addition to removal of one unit and changing design of
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<br />another unit to accommodate the site had caused further delays in the projected timeline.
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<br />Once those details had been finalized, Ms. Olson advised that GMHC met with their long-term
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<br />lender, U. S. Bank, on August 5, 2014, but City staff was not comfortable with the
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<br />requirements of the lender, nor was the lender comfortable with the requirements of staff; at
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<br />which point staff suggested GMHC look at a new lender, preferably locally. Ms. Olson
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<br />advised that GMHC met with three different lenders, with two providing proposals, and
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<br />GMHC selecting Western Bank. Ms. Olson noted that, since that time, GMHC had been
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<br />working with Western to redefine the project and construct it in three phases. Ms. Olson noted
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<br />that GMHC already had interest from people in the single family homes; and Western Bank
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<br />had ordered an appraisal on November 19, 2014, which had been anticipated within 4-6 weeks.
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<br />However, Ms. Olson noted that, since the project was complicated, the appraisal was also
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<br />complicated in addressing numerous housing types; and therefore, had been delayed and only
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<br />received by the lender last Friday afternoon, January 16, 2015, immediately before the Martin
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<br />Luther King holiday on Monday, January, 19. 2015, providing little time for review between
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<br />its receipt and tonights meeting. Upon receipt of the appraisal, Ms. Olson noted that the
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<br />lender could no longer have direct interaction with the appraiser, and therefore more time
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<br />would be needed as questions came forward as part of the review.
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<br />Ms. Olson opined that GMHC felt they had been continuing to work in good faith to move the
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<br />project ahead, spending considerable time and money, and therefore had been surprised that
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<br />staff was recommending that their relationship be terminated and should not continue. Given
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<br />the delays beyond their control, Ms. Olson respectfully asked that the HRA consider
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<br />recommending to the City Council additional time for GMHC to continue moving forward.
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<br />Ms. Olson opined that a new developer would take as much or more time to get a project
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<br />moving forward as well.
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<br />Ms. Terry Fleming, Sr. Vice President, Western Bank (lender)
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<br />Ms. Fleming concurred with the comments of Ms. Olson, noting that Western was very
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<br />interested in getting credit to GMHC for the project, and was working at their best possible
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<br />pace to do so with this complex project. Ms. Fleming advised that Western Bank would like to
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<br />see the project happen and be a part of it. Ms. Fleming further advised that, with the appraisal
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<br />coming in last Friday, it had been sent immediately to their credit department for review; and
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<br />she anticipated their recommendation within the next two weeks in support of moving the
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<br />project forward. Based on the energy and efforts expended to-date that she had witnessed of
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