HRA staff presents loan modification plan for Jackson Street Village; decision deferred to next meeting

HRA staff presented a loan modification request for Jackson Street Village, a 25-unit family permanent supportive housing project at 1497 Jackson Street in St. Paul. The presentation described a proposed forgiveness of the HRA’s 2002 home loan principal and accrued interest contingent on closing of new financing from the Minnesota Housing Finance Agency (MHFA). The item was a staff report and will return to the HRA for formal action at the next meeting.

Marie Franchette, principal project manager with the PED housing team, said the property was constructed in 2002 and is owned and operated by RS Eden. The project includes 25 units (24 deeply affordable family units and one caretaker unit) with a unit mix Franchette described as four two-bedroom units, 16 three-bedroom units and five four-bedroom units. She said the units are limited to 50% of area median income and are accompanied by project-based vouchers so households pay no more than 30% of income for rent.

Franchette described the HRA’s original 2002 home loan of $387,500 with a 30-year term and 2% interest; the HRA reduced the interest to 0% in 2003 and extended the maturity. The current request asks that the HRA loan be made forgivable upon its maturity in 2032 and that accrued interest be forgiven (staff estimated accrued interest at about $175,553). Franchette said those HRA terms would be contingent on closing of new MHFA financing; at that closing MHFA would be the first lien holder and was reported to be providing the bulk of new financing and to be forgiving prior MHFA loans totaling roughly $2,251,914 as part of the recapitalization.

Franchette said the total recapitalization cost is about $6.4 million, with MHFA providing the majority (staff described roughly $6.2 million in MHFA financing and smaller sources including tax rebate funds, an energy rebate, a Ramsey County contamination-related grant and deferred developer fees). The planned rehabilitation scope includes upgrades to the geothermal system, parking lot replacement, siding, windows, doors, flooring, kitchen cabinets and site security cameras; staff described the work as substantial and contingent on MHFA closing. She noted the assessed value of the project is about $4.5 million and described limited collateral as a factor in recommending forgiveness of the HRA loan.

Caroline Hood, president and CEO of RS Eden, said RS Eden operates as owner, property manager and service provider at Jackson Street Village and described the site as a stable family-supportive housing location. Hood said projects like this are “exceptionally hard to fund” and that recapitalization and loan forgiveness are essential to sustain the existing stock of family permanent supportive housing.

Commissioners raised clarifying questions about income and rent limits, the affordability covenant (MHFA requires 50 years of affordability), allocation of units to high-priority homeless and persons with disabilities (staff said 10 units will be for high-priority homeless and six for persons with disabilities), and details about funding sources (staff identified an Xcel Energy rebate and a Ramsey County site-assessment grant). Commissioner Naker spoke in support on behalf of Commissioner Kim, and several commissioners said they were strongly supportive of the project. No formal vote was taken; staff said the item will return next week for board action.