HRA Meeting Date: February 6, 2025
To: Members of the Housing and Redevelopment Authority
From: Jake Reilly, Community Development Director
Melissa Hanson, Housing Coordinator
Title
Update and Discussion Regarding Redevelopment of 307 Sumner Street.
Body
Action Requested:
HRA to consider a resolution supporting the sale of 307 Sumner Street to Oberto Properties, LLC and Rice County Habitat for Humanity.
Summary Report:
The Development Team has provided the following documents (Attachment 2) as requested in Resolution 2024-005:
• Construction Financing commitment letter from 1st United Bank
• Rice County Habitat for Humanity (RCHFH) cash flow
• RCHFH Profit and Loss Statement
• RCHFH Balance Sheet
• Letter from Minnesota Housing identifying $60K of State Housing Tax Credits (SHTC) to the Sumner Street property. Note: in our Homeowner Financing Example, we have 20K per unit from the SHTC listed. We are hopeful that we will get at least 20K more when the program opens again in the spring of 2025.
• Projected Cost PER UNIT (nothing changed since original submittal in December 2024)
• Homeowner Financing examples (where the partner family financing will come from) (nothing changed since original submittal December 2024)
• Detailed plans for the two duplexes (same design as presented at the December 2024, HRA mtg but with further detail)
RCHFH and Oberto Properties’ representatives have had preliminary conversations with the Building and Planning divisions of Community Development. The team has not yet made formal application to either department. They are prepared to do so with assurance of the land commitment by the HRA. Staff will require a pre-application meeting and a community information meeting for this project.
The applicant will provide an update to the HRA.
Staff recommend that the HRA Board approve resolution 2024-00X so that the staff and developer team can move forward with due diligence related to subdividing the property and to solve for encroachment from a neighboring structure into the air space of 307 Sumner Street.
History/Background
The HRA’s mission is to be a partner in providing a sufficient supply of affordable, adequate, safe and sanitary dwellings in Northfield. Our goal is to create a community with housing opportunities available along the entire housing spectrum: from renters to homeownership, first-time homeowners, to senior living, workforce housing and empty nesters. We strive to create affordable housing opportunities and strengthen our neighborhoods utilizing:
• Sustainability
• Innovation
• Partnerships
• Community Input
Oberto Properties, LLC (Oberto) is a small, real estate developer that resides in, and is a part of, Northfield. Oberto has a history of purchasing blighted, unused commercial spaces and rehabbing them as well as having experience with commercial new construction, having built the Rebound Self Storage.
Rice County Habitat for Humanity (Habitat) is a nonprofit organization dedicated to building a world where everyone has a safe, stable, and affordable place to call home. Habitat believes that affordable housing plays a critical role in strong and stable communities. Habitat has a long history of providing affordable housing, through both rehab and new construction, in Rice County and has recently expanded their rehab arm by adding Starfish, a newly established Northfield non-profit, under their umbrella of programs.
The HRA approved Resolution 2024-005, Authorizing Designation of Tentative Developer Status for Oberto and Habitat for a period of 180 days.
The resolution states that within the time frame, the proposer will complete the following:
1. Within 90 days (December 18, 2024), for the Project, complete a formal scope of work with architectural/engineering plans and specifications to include site plan, elevations, incorporate Northfield’s Sustainable Building guidelines, exterior treatments/materials for review by HRA and suitable for submission to the Building Department to obtain the proper building permits.
2. Within 90 days (December 18, 2024), for the Project, submit evidence of availability of construction financing for review by HRA staff for acceptability.
3. Finalize a detailed development budget and business plan for approval by the HRA staff.
4. Within 120 days (January 17, 2025), a HRA approved scope of work must be completed.
5. Within 180 days (March 18, 2025), receive all approvals for zoning, licenses and any other required City or State approvals required for the Project.
6. Negotiate final terms and conditions of a purchase agreement and development agreement which will include review of all compliance requirements, details of the bidding process and a sworn construction cost statement from their selected contractor for the Project.
Alternative Options:
The HRA could delay, defer, or decline to vote on the resolution.
Financial Impacts:
Total financial impacts have yet to be determined. However, more homes are needed, which will more likely than not have a positive impact on the city’s tax capacity. With more units on the site, more of the city’s utility infrastructure will be used than under the previous single-family home. Because the homes are proposed to be constructed following the city’s sustainable building code requirements and therefore are more likely than not to use city utilities more efficiently than in the scenario of the previous structure. Utility fees should therefore recoup any cost incurred to the city regarding water and wastewater infrastructure.
Tentative Timelines:
September 2024 - finalize agreement
September 2024 to March 2025 - due diligence, including site investigation, community meetings
March 2025 to June 2025 - additional due diligence as needed
Spring 2025 - potential to break ground