Consider Dominium Development & Acquisitions, LLC Letter of Intent (portions may be closed to the public)
 

PURPOSE
Consider attached Letter of Intent (LOI) from Dominium Development & Acquisitions, LLC.
 
BACKGROUND
Dominium is a national affordable housing development and management company (click here for a link to Dominium website: http://www.dominiumapartments.com/about-dominium.html).  Dominium is considered by many within the real estate industry to be a quality development company with a solid track record of quality projects.

Over the past 30-45 days, staff has discussed the opportunity of a potential senior independent living project located in The COR with Dominium.  On April 27, 2015 Dominium submitted a LOI for 4.94 acres of City owned land located between Coborn's and the future Common Bond Project.  Dominium is offering the City's asking price ($5.00 per square foot).  The proposed project is valued by Dominum at $24.1M, includes 124 units, and is anticipated to look similar to a recently completed senior independent living project in Saint Anthony Village (http://www.landingsatsilverlakevillage.com/). Staff has reviewed COR development standards with Dominium; and, the concept plan Dominium has outlined appears to generally comply at this point.

After the original LOI was submitted on April 27, it was reviewed by Staff within the context of the City's adopted Policy for the Sale of City of Land.  Comments were submitted to Dominium; attached is an amended and updated LOI.  It is Staff's opinion, the major topic of discussion for the EDA and City Council is the requested City financial assistance.

NA

OBSERVATIONS
Based on the attached and adopted City Housing Assistance Policy (and Policy for the Sale of City Owned Land), below are the next steps in this process:

1.  Council consider project concept and willingness to conceptually provide financial assistance to the project.  The City would sign the LOI with Dominium.  NOTE: this would not legally obligate the City to any specific level of assistance.  With this step, staff will also recommend review of a concept plan by the Planning Commission.

2.  Dominium submits a formal business subsidy application for detailed review and underwriting by Ehlers.  A recommendation for the actual "required/ needed" level of financial assistance is provided by Ehlers.  NOTE: this could be different than what was agreed upon in the LOI.

3.  Both Dominium and the City review the formal recommendation provided by Ehlers.  Both parties consider if they would like to move forward with a Purchase Agreement (PA) based on the suggested level of City assistance.  A PA would lock in both parties to certain performance items (i.e. a specific City Financial Assistance number).

It should be noted, Dominium is willing/ interested in applying for Metropolitan Council and Anoka County HRA funding.  However, it is their position, a commitment from the City is needed before a PA is executed; and before they apply for other funds.  Dominium is interested in a 2016 project if their identified financing gap can be addressed.  However, if Metropolitan Council funding is needed for this project, it may be pushed to 2017 (due to application and award timing).

 ALTERNATIVES
Staff is looking for direction on two general items:
1. Does the general project concept fit the property/ is the overall development concept acceptable?
2. What level of financial assistance is the City Council comfortable with considering from a preliminary/ conceptual perspective?

Below are alternatives for item #2
(A) Counter offer Dominium before moving forward with step 1 above--staff recommendation (see next section for details).  Staff would like the City assistance request to be adjusted within the LOI to comparable projects within the Twin Cities market.
(B) Accept the LOI as presented and move forward with step 1.
(C) Do not accept offer and end negotiations.

NA

Staff has reviewed this project, and process with Ehlers.  Staff has asked that Ehlers provide recommended guidelines for "maximum" City participation in a housing project.  Please see attached.  Ehlers will be at this meeting to discuss this MEMO.  This recommendation is based on review/ comparison of several other projects located within the Twin Cities market; including Dominium projects.

Based on the attached MEMO, it is Staff's perspective that the City should counter offer Dominium before moving to "Step 1."  In other words, Staff believes the Dominium proposal for City financial assistance is currently too high ($2.2M - $2.6M, or 9.12% to 10.77% of total project costs from the City).  Staff supports using 15 years of TIF as a maximum threshold as outlined by Ehlers; and/or potentially discussing the sale price of land.  NOTE: depending on how the number is calculated, 15 years of TIF is expected to range from $850,00-$1.2M in present value terms.  Attached is a breakdown of the Dominium offer/ request and the Staff suggested "maximum" City assistance.

Provide a recommendation for City Council consideration.  Please see alternatives and recommendation sections.

Staff is looking for direction on two general items:
1. Does the project concept fit the property/ is the overall development concept acceptable?
2. What level of financial assistance is the City Council comfortable with considering from a preliminary/ conceptual perspective?