Sources & Uses Schedule

Contents of Full Report Introduction I. Key Elements II. Project Components and Financing III. Workforce Partnership Plan Employment/Contracting Goals IV. Authorizing Redevelopment and Tax Increment Plan Modifications and Project ASnalysis V. Authorization to Sub-Grant Existing TBRA funds to Ryan Companies, Inc., for Environmental Testing and Remediation of ACM at Midtown Exchange VI. Waiver of the City Procurement Policy Attachment 1. Term Sheet Attachment 2. Pre-Development Timeline Attachment 3. Chicago-Lake Redevelopment District Guidelines

 

II. Project Components and Financing

A. Office/Commercial

434,000 S.F of office space within the 1928 building. Ryan is financing this component with equity and private debt.

Development Cost	$52,963,282	Schedule	Status
Sources
Developer Equity	8,910,062	July 2004
Deferred Developer Fee	1,750,000
Historic Tax Credits	8,629,741	July 2004	Uncommitted
Long Term Debt	33,673,479	July 2004	Uncommitted
Total Sources	$52,963,282

 

B. Parking

Ryan will build and own the east side parking ramp of approximately 1,234 stalls. In addition, there will be 406-436 surface and on street stalls in the project. Ryan anticipates that the City will participate in the financing of the ramp. The financing will likely include Pay-Go TIF, HUD Section 108 loan funds, EDI grant funds, a City gap loan of up to $1.1 million, a DTED grant of $433,300, and other sources. Approximately half of the ramp’s $18,300,000 cost will be publicly financed.

Development Cost	$19,121,309	Schedule	Status
Sources
TIF/108	9,213,971	July 2004
EDI Grant	2,000,000	July 2004
Developer Equity	1,216,001	July 2004
Debt	3,938,037	July 2004	Uncommitted
State Bonds	720,000	July 2004
DEED	433,300	July 2004
Met Transit	500,000	July 2004
City Gap Loan	$1,100,000
Total Sources	$19,121,309

 

C. Hotel

A 150 room hotel will be developed by a Ryan joint venture, anticipated to include Wischermann. The hotel will be located on a pad outside the 1928 building at the corner of Chicago Ave and the Midtown Greenway, over the vacated 29th Street. Ryan expects the hotel to be a three-star hotel and is financing this component with equity and private debt.

Development Cost	$17,976,499	Schedule	Status
Sources
Developer Equity	7,190,600	July 2004
Debt	10,785,899	July 2004	Uncommitted
Total Sources	$17,976,499

D. Global Marketplace

75,000 S.F. of retail food and goods organized in an internationally themed public market. Its draw will be the numerous ethnic businesses that are present in the surrounding neighborhoods and the metropolitan area. It will be both an incubator for emerging small businesses and an expanding market for existing successfully operating ethnic businesses. It will be financed through a combination of debt and public and private grants.

Development Cost	$14,777,427	Schedule	Status
Sources
Historic Tax Credit	2,147,856	Fall 2004	Uncommitted
New Market Tax Credit	429,571	Fall 2004	Uncommitted
Debt	3,064,000	Fall 2004	Uncommitted
EDI Grant	1,800,000	Pending
OCS/USDA Grant	850,000	2004	Uncommitted
State Fund	150,000	2004	Uncommitted
Empowerment Zone	636,000	2004	Uncommitted
Foundations	4,700,000	2004-2005	Uncommitted
REDI Loan	1,000,000	Fall 2004	Uncommitted
Total Sources	$14,777,427

E. Housing

There are three housing components included in the scope of the Midtown Exchange project:

1) 53-60 ownership housing units lining the parking ramp, along 29th Street and 11th Avenue to be developed by Project for Pride in Living (PPL);

2) 82-110 ownership housing units within the 1928 Building to be developed by Sherman Associates and probably the Lander Group; and

3) 203-221 rental housing units within the 1928 Building to be developed by Sherman Associates.

1. Ownership Housing Lining Parking Ramp

Lining the perimeter of the parking ramp along 29th Street and 11th Avenue, PPL will develop 53-60 for-sale housing units. The figures in this report are based on 60 units. PPL, Ryan and staff understand that a change in the number of units is possible, along with corresponding cost changes. The estimated construction cost of 60 units is $10.9 million. The 60 unit program consists of four (4) one-bedroom units (averaging 750 S.F.) and fifty-six (56) two-bedroom units (averaging 1,000 S.F.). Fifty-three to sixty parking spaces will be included in the ramp for resident parking. The anticipated average selling price per unit is $172,000. Construction, which will follow the parking ramp construction schedule, is currently expected to start in March 2005, with a December 31, 2005 completion date.

Approximately 95 percent ($10.3 million) of the project’s funding will come from housing sales. PPL is soliciting funding from public and private sources for the balance of the project costs. No City financing is anticipated.

Development Cost	$10,892,800	Schedule	Status
Sources
Housing Sales	10,320,000
MHFA	230,000	Fall 2004 RFP	Uncommitted
Hennepin County	171,400	Spring 2004 RFP	Uncommitted
Private Foundation	171,400	Ongoing	Uncommitted
Total Sources	$10,892,800

2. Ownership Housing in 1928 Building

On floors 9 to 12 of the 1928 Building, Sherman Associates, likely with the Lander Group, plan to construct 82-110 for-sale housing units. The figures in this report are based on 82 units. Sherman, Ryan, and staff understand that a change in the number of units is possible, along with corresponding cost changes. The estimated construction cost of 82 units is $21.5 million (including approximately $7.65 million in shell construction costs). The project will include one and two-bedroom loft-style units averaging approximately 1,175 S.F. in size. One hundred twenty (120) parking spaces will be included in the ramp for resident parking. The anticipated average selling price per unit is $218,000.

Construction is tentatively scheduled to start September 1, 2004, with an expected completion date around March 31, 2006.

The majority of costs (approximately 85% or $18.4 million) will be covered with housing and parking sale proceeds. City financing may include TIF supported revenue bonds or notes sufficient to provide approximately $1,465,000 in net financial assistance. The developer is soliciting funding to cover the balance of the project’s costs (approximately $1,750,000) through applications to Hennepin County, the Minnesota Housing Finance Agency (MHFA), and the Metropolitan Council. To-date, Sherman has met with MHFA, Fannie May, and Hennepin County to discuss the project. Additional meetings are scheduled in May, 2004, with the Metropolitan Council and again with Hennepin County.

Development Cost	$21,615,000	Schedule	Status
Sources
Housing Sales	17,900,000
Garage Proceeds	$500,000
Tax Increment Financing	1,465,000	Fall 2004
MHFA	500,000	Fall 2004 RFP	Uncommitted
Hennepin County TOD	750,000	Spring 2004 RFP	Uncommitted
Metropolitan Council	500,000	Fall 2004 RFP	Uncommitted
Total Sources	$21,615,000

3. Rental Housing in 1928 Building

On floors 2 through 8 of the 1928 Building, Sherman Associates plans to build 203-221 rental housing units. The figures in this report are based on 221 units. Sherman, Ryan, and staff understand that a change in the number of units is possible, along with corresponding cost changes. The estimated cost of 221 units is $40.7million (including approximately $18.3 million in shell construction costs). The project will include approximately six zero-bedroom studios, 128 one-bedroom units (ranging in size from 560 S.F. to 1,100 S.F.) and 87 two-bedroom units (ranging in size from 1,050 S.F. to 1,700 S.F.). Sixty-one units, or approximately 28 percent (6 studio, 28 one-bedroom and 27 two-bedroom), will be affordable at 50% Area Median Income (AMI). In addition, 116 units, or approximately 52 percent, will be affordable at 60% AMI. Rents will range from $650/month to $1,075/month.

Construction is tentatively scheduled to start September 1, 2004, with an expected completion date around March 31, 2006.

Approximately 64% ($26.1 million) of the project’s expenses will be financed with housing revenue bonds, 4% low-income housing tax credit equity (automatic with housing revenue bonds), and historic tax credit equity. City financing would include a pay-go TIF note sufficient to provide approximately $3,035,000 in net financial assistance, and issuance of up to $21 million in housing revenue bonds (approximately $7 million in construction/short term debt and $14 million in long term debt. The balance of the project costs (approximately $11.6 million) is presently unfunded. The developer is currently soliciting soft/gap funding from several sources, including the Minneapolis Affordable Housing Trust Fund and NRP, Empowerment Zone (EZ), MHFA, Met Council, Family Housing Fund, Federal Home Loan Bank, Hennepin County, and private foundations. Several of these soft/gap funding sources are allocated based on competitive RFP processes, and may not be available until 2005. In addition, to ongoing meetings with CPED staff, Sherman has met with HUD, Fannie May, MHFA, Hennepin County and the Phillips Partnership. Future meetings are scheduled with the Metropolitan Council, Family Housing Fund and Hennepin County.

Development Cost	$40,723,150	Schedule	Status
Sources
4% LIHTC Equity	8,900,000	Fall 2004
Historic Tax Credit Equity	6,900,000	Fall 2004
Housing Revenue Bonds	10,265,000	Fall 2004
Tax Increment Financing	3,035,000	Fall 2004
CPED AHTF	3,750,000	Spring/Fall 2004	Uncommitted
Minneapolis NRP	500,000	Fall 2004	Uncommitted
MHFA	3,000,000	Fall 2004	Uncommitted
Metropolitan Council	1,000,000	Fall 2004	Uncommitted
Private Foundations	1,925,000	Ongoing	Uncommitted
Family Housing Fund	450,000	Fall 2004	Uncommitted
Federal Home Loan Bank	330,000	Spring 2005	Uncommitted
Hennepin County	668,150	Fall 2004	Uncommitted
Total Sources	$40,723,150

 

4. Housing Gap

Due to the accelerated project schedule, the housing components in the 1928 building may require an interim standby line of credit of up to $11,550,000 to cover potential timing and/or funding gaps at closing of approximately $13.4 million. The initial amount will be reduced by any awards from the City’s AHTF, EZ, or NRP programs, and from any other soft lenders such as MHFA, FHF, FHLB and Hennepin County. CPED staff must negotiate the terms of this financing with Sherman and Lander and their lenders and will return to the City Council prior to closing for specific authorization.

F. Hennepin County Service Center

Hennepin County has received a $3 million DTED grant to locate a service center in the Midtown Exchange. Hennepin County is preparing plans and specs for the center of approximately 8,000 square feet, located on the ground floor of the project. A portion of the bond proceeds will pay for its share of parking.

G. Metro Transit Hub

Ryan and Metro Transit are near agreement on the placement of a transit hub on the west side of the project. A separate federal Metro Transit grant will pay for this improvement.

H. Midtown Greenway Connections

The Midtown Greenway Coalition plan includes design principles that seek an activated and animated Midtown Greenway with both developed and softened edges, multiple level connections and uses, excellent pedestrian and bikeways onto and off the trails and transit route. The Greenway Urban Design Goals says: “The Sears site represents an excellent place-making opportunity. The Chicago Avenue Bridge, the Greenway ramp access, a plaza to the north, a future transit stop to the south, and high walls offer an opportunity for an integrated aesthetic effect for the urban environment.”

In September 2003 the Greenway Coalition adopted principles they hoped would be included in the final design plans for the redevelopment of the Sears site. Ryan has tried to incorporate those principles as much as possible and meetings with the Greenway Coalition continue.

The Midtown Exchange Project connects to the Greenway in significant and multiple ways.

Multiple means of Ingress/Egress
· A new stair ingress/egress to the Greenway at the Chicago Avenue Bridge.
· Greenway level entrance to the new hotel
· Greenway level entrance at Elliot: A connection with an elevator that goes from Greenway level to street level an aligns to pedestrian walkway to the Abbott Campus and activities within the Midtown Exchange building
· Ryan has been working with Allina/Abbott on an ADA-compliant ramp that connects the Greenway level to the street level on the north side of the Greenway between Chicago and Elliot, for which separate outside funding will be pursued

Animated Edge/”Eyes on the Greenway”
· On the South side of the Greenway in the 1928 building, Allina and other offices overlook the Greenway and Allina will utilize the Greenway level for a conference center and employee cafeteria
· In the 1928 building in the upper levels is housing that provides eyes on the Greenway.
· On the South side of the Greenway east of the building will be townhomes which wrap the parking structure, a portion of which directly face the Greenway
· New on the west side of the 1928 building is a 150 room hotel with a restaurant overlooking the Greenway and a fitness center animating the Greenway at Greenway level

Open Spaces
· The hotel is set 50 feet off the Greenway for a place for an active and programmed transit hub/platform in the future. On the north side a, well landscaped ramp leads up out of the historic trench. The ramp provides some of the breathing space desired for this Greenway node.

Adding light and a better sense of safety and well-being
Demolition of the 1964 building will remove the oppressive character of the large, dark Greenway underpass that has created concerns of personal security among Greenway users, and allow the trail user a better sense of place and connection with Midtown Exchange activities as they use or pass through the area.

Minimize Parking along Greenway edge
The whole of the Greenway edge is animated with programmed uses. The structured parking on the east side of the site is screened from the Greenway by townhomes and on the west side the surface parking is south of the new hotel.

Minimize shadows cast into trench, especially on the bike path
While the height of the hotel along the Greenway will cast a shadow into the trench during the winter, this is mitigated by a lighter, more open and less oppressive space due to the demolition of the 1964 building. It is also balanced by having a stronger, more actively programmed edge that will be substantially more “peopled” (by restaurant, outdoor dining, and fitness center and overlooking rooms) than if the hotel were not there and surface parking were against that Greenway edge.

Provide visual links from the trench to destinations above
Design elements providing visual cues of activities within the Midtown Exchange node will include:
· Greenway level fitness and conferencing spaces, Greenway level terrace that can accommodate programming (like kiosks from the Global Marketplace).
· Way-finding that incorporates project design elements linking the Greenway user to the building user.

Incorporate Public Art
Ryan will pursue incorporating public art into the Greenway interface in its way-finding program and its landscape design.

Subject to ongoing landuse reviewm it would appear CPED staff believes that the Greenway experience at the Midtown Exchange will be pleasant, welcoming, active and safe.