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HRA hears Sibley Park and Sibley Court $88.9M recapitalization plan; subordination of $500,000 HRA loan proposed
Summary
Staff presented a recapitalization and rehabilitation plan for Sibley Park (114 units) and Sibley Court (122 units). The proposal would recapitalize the combined project with conduit bonds, syndication from 4% LIHTC, and subordinate an existing $500,000 HRA loan to new financing; no final HRA action was taken and the item will return for adoption.
The Saint Paul HRA received an introductory staff report on a proposed recapitalization and rehabilitation of Sibley Park (211 East Seventh Street, 114 units) and Sibley Court (122 units), two adjacent multifamily properties that together have 236 units. Staff said the owners seek to refinance and recapitalize the combined project to support approximately $24.4 million in rehabilitation and preserve all units as affordable for an additional 30 years.
Principal project manager Marie Francik (staff) summarized the financing and affordability changes and said the HRA would be asked to approve a resubordination of a $500,000 HRA loan and modified loan terms at a future meeting. Director Newton and staff explained the item had been presented previously and returned for fuller discussion. No final vote was taken; staff indicated the item will come back to the HRA for adoption next week.
The recapitalization as presented would use conduit revenue bonds and include roughly $25 million in syndication proceeds from 4% Low-Income Housing Tax Credits. The total project cost presented in the staff materials was approximately $88.9 million, with about $24.4 million budgeted for rehabilitation (roughly stated as about $100,000 per unit across both properties). Under the proposed financing, the combined project would convert to 100% affordable units with average income-targeting at 60% Area Median Income (AMI) and unit rents ranging from 30% to 80% AMI, with rent restrictions extended for 30 years.
Staff and the developer, Jay Reinhart, president of Orbach Affordable Housing Solutions, provided further detail about the planned rehabilitation. Reinhart said the $24.4 million for rehab would address building envelopes and systems: "It's mainly gonna take care of roofing...facades, windows...interior work is gonna be kitchens, bathrooms, flooring, closets. We're gonna do HVAC work. So it's really a head to toe rehabilitation." The presentation noted developer and financing items including existing MHFA subordinate loans of approximately $2.1 million and a seller loan component in the capital stack.
Commissioners raised questions about preserving larger family units, the length of affordability restrictions and tenant relocation during rehab. Staff said the HRA loan currently is deferred and due at maturity; the proposed new terms call for annual payments of $15,000 for 15 years with a remaining balance to be repaid thereafter (figures as presented in staff materials). Staff said MHFA would take a similar payment schedule for its subordinated loans (noted in the presentation as $60,000 per year for 15 years). The HRA did not act on the item at the meeting; staff said the item will return for adoption at the next meeting.
What happens next: Staff will return with an action item for formal adoption. Commissioners and staff identified follow-up items including final loan documentation, confirmation of tenant relocation plans and any further affordability term negotiations.
