Although there have been setbacks, the Tofte Town board continues to seek affordable senior housing options that will allow older residents the chance to stay in the community after they are too old or too frail to care for their homes.
Dick Grabko of Community Connections came before the Tofte Town board on Thursday, November 14, 2013 with an update on financing for the estimated $1.9 million project.
Grabko has been hired to help the township develop 10 senior housing units. Whether they turn out to be small homes or townhomes or apartments or a combination of those remains to be seen.
Grabko said he and several others met with the Northland Foundation’s Director of Business Finance, John Elden, to discuss gap-financing alternatives for the senior housing project.
Grabko and Nick Anhut, of Ehlers Associates, presented a project description and discussed a 10-year operating period, describing the need for the facility as determined by the updated market study. Assuming debt coverage with net revenues, the team presented a gap amount of $274,000.
While Grabko said he thought the Tofte project was well received at the meeting with Northland Foundation, Nick Anhut wrote that he thought Elden “…revealed some hesitancy to engage the foundation since its traditional clientele consists of various private entities such as local businesses and nonprofit organizations.
“Further, it appears Northland itself is not a large grantor. Its most accessible financing tools involve direct and participating loans ranging between $50 and $500K and are generally structured with short-term balloon maturities (although the amortization can be extended 15-20 years),” said Anhut.
Based on the meeting with Northland, Grabko and Anhut came up with three possibilities to help reduce the $274,000 gap.
The first assumes the preferred financing mechanism of the town issuing its own general obligation abatement bonds over a 20-year repayment term.
The second scenario assumes the amortization of the bonds will fluctuate to match the 1.10x coverage requirement. Basically, future debt payments increase to match future net revenue increases. This adjustment eliminates the need for working capital and increases the bond capacity enough to reduce the gap by $85,000 to $189,000.
The last scenario uses the same amortization schedule, but increases the town’s bonding amount to eliminate the gap. However, an annual town subsidy of $15,000 is needed in order to make debt service payments and maintain the 1.10x coverage.
Tofte Supervisor Paul James said the third option was, “absolutely out of the question. But the second option looks like it could be something we could pursue.”
Fellow supervisors Jim King and D.C. Olson concurred with James.
One housing option the board has been looking at comes from Dynamic Homes, and prices for the models the board have seen so far are $115,000.
“What if we took out a garage from those packages?” James asked Grabko. “Would we save $5,000 per house? Maybe we could build a community garage and that would lower the price? What if we went from two-bedroom to one-bedroom houses with storage? What would happen if we went to quadplexes? We need to get the gap financing down. It’s one thing to ask Northland for $189,000 and another thing to ask them for maybe $50,000, but I would think we would have a better chance at getting $50,000,” James said.
Grabko suggested each of the supervisors make a “punch list” with different options for Dynamic Homes when they meet with the board in December. The board agreed with him and will begin working on their lists.
Grabko also informed the board that the $350,000 infrastructure grant the township has applied for with the Iron Range Resources Rehabilitation Board (IRRRB) has been forwarded to the board of directors by the staff. But, he added, he has been told that the IRRRB has less money to give out this year than in the past, and that acrossthe board cuts to grants were going to have to be made.
“There is still no guarantee we will get the grant, because the board still has to approve it. But due to acrossthe board cuts, we might not get the $350,000 we have applied for.”
Supervisor James said he received a letter from Colleen Hollinger Petters who wanted to volunteer to help the township with their senior housing project.
Petters wrote: “I am part of a company, Collegeville Companies, that just built senior housing and an assisted living (facility) near St. Joseph, MN. We have learned a great deal in the building of the assisted living cottages we finished and the senior homes we have under way, and I would be happy to share this information with you, if you would find that helpful. I would include our president and CEO in the discussions, as they were part of the day-today construction oversight. If you care to come tour, we would be happy to host your visit.”
Petters, who owns a cabin in Lutsen, said she read about the Tofte senior housing project in the Cook County News-Herald.
Collegeville Companies is developing Mill Stream Village in St. Joseph, Minnesota, which offers private homes for sale and rent, and assisted living rental cottages.
James said he was impressed with the offer and asked his board colleagues what they thought about it.
“I’m impressed that she’s not in it for the money. I think we should take her up on it and go tour the facility,” King said.
“We need to respond to her right away. We need to send her a thank you and set up a trip,” said Olson.
James asked township clerk
Barb Gervais to send Petters a letter of thanks and to find a time that would work for Petters for the board to come and tour the Mill Stream
Village.
.The town board is continuing to look at options for having the tennis court fixed. A letter the township sent to architect Tim Meyer in September hasn’t been responded to yet, said James. Meyer’s firm was responsible for the drawings for the court, and the drawings turned out to be incorrect and tennis players have pointed that out to the township supervisors.
It would cost $70,000 to fix the court, but James said that Meyer has suggested in past conversations he wants the cost to fix the court distributed between the township, the county, the Cook County Tennis Association as well as his firm.
“Their response has been disappointing,” said King.
James said the contract with Meyer calls for arbitration in the case of a dispute. “So that’s what we’re left with,” he said.
. No final agreement has been reached yet between the township and the Birch Grove Community Center foundation on a lease agreement. “The lawyers didn’t complete the lease agreement yet,” said King.
“What we need to get is an agreement everyone is happy with,” James said.
The lawyers for both parties intended to meet on Tuesday, November 19, but no word of an agreement has been heard yet.
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