Consider Proposed Deal Structure - The Residence at The COR Project

Over the past several months, work has continued on finalizing a financing package for the Flaherty and Collins - The Residence at The COR project.

City representatives have met with Flaherty and Collins representatives at the ICSC conference in May, which included a representative of PNC Bank, the source of primary financing on the deal. In a followup meeting in Minneapolis, the development team met again with Flaherty and Collins and three Representatives of PNC Bank.

In previous worksessions, the HRA has considered several options to participate in the construction financing and facilitate a project start in either the fall of this year, or spring of 2012. 

On June 30th, 2011 PNC Bank approved the project in committee with direction to modify the appraisal based on a number of discussions over the last several weeks. Subsequently, a commitment letter was received by F & C from PNC outlining the proposed loan. With the HRA approval of June 28, to modify the approved TIF structure setting the principal after completed plans are available to the assessor, the development team will work to finalize the deal terms necessary to commence construction on the proposed schedule.

Subsequent to the June approval by PNC, the appraisal was modified as discussed and a final commitment letter sent from PNC to F&C with their final terms.  While the deal structure is generally in line with previous discussions, there were several financial conditions in the PNC commitment that required further discussion at the August 15th HRA work session. Discussion on August 15th was generally focussed on evaluating two options for participation in the construction financing.  The first was to proceed with PNC as the primary lender of approximately $21m, and the HRA participating in the project through TIF bonds for the remaining $6m on a three year term. The second option discussed considered the HRA's options to participate as the primary lender and secure a first position on the project. Consensus direction at the August 15 meeting was to prepare a structure based on PNC as primary lender, and present at the August 23rd regular meeting.

Stacie Kvilvang with Ehlers and/or Thomas Bray form Briggs and Morgan will be present.

As part of the consideration of the proposed option, the development team will recap the real estate deal as proposed today, as modified since the original approval in December of 2010. We will also outline the structure and process for the TIF bond sale proposed to fund the construction loan, as well as the sensitivity analysis of the risk components of the loan and the backup funding options associated with those risks. A memo outlining the basics of this process is attached to this case.

The development team recommends the HRA consider the current deal structure and financing proposal and direct the development team to proceed to document modifications based on the discussion at the meeting and the direction provided.

If the direction from the HRA is to proceed, the development team recommends the HRA start the process of preparation for the sale of the bonds to finance the proposed construction loan.

TIF 14/Proceeds of Land Sale

Direct the development team to proceed to document modifications based on discussions at the meeting, and the direction of the HRA.

Direct the development team to proceed with preparations related to the sale of TIF Revenue Bonds in support of the financing associated with the Flaherty and Collins project.