In downtown St. Paul, PAK Properties and the Halverson and Blaiser Group plan to purchase the historic Commerce Building from an affordable housing provider, in a deal that relies on the city forgiving more than $1.22 million in unpaid municipal loans.
The Commerce Building, a former 1912 office building located at 10 Fourth St. E., is a 100-unit, 12-story affordable housing development owned by CommonBond Communities. All of the units are currently geared toward residents earning 60% of area median income or less, with 11 units targeted to long-term homeless residents and others backed by HOME loans, Community Development Block Grants or the federal Section 811 program, which supports residents with disabilities.
CommonBond Communities — which converted the building from an office structure to housing from 2007 to 2011 — determined that it could no longer “sustainably own or manage the project” and pay back multiple private and public sector loans, including loans to the city’s Housing and Redevelopment Authority, according to a city staff report. The nonprofit contemplated bank foreclosure.
Instead, PAK Properties offered to buy the structure for $3.2 million, in partnership with the Halverson and Blaiser Group as part-owner and property manager. The sale keeps a number of tax credit-backed units affordable through 2037 and 2041, respectively, though other units will gradually be converted to higher rents.
As a result of the sale, the St. Paul Housing and Redevelopment Authority is poised to receive only partial repayment of $2.9 million in HRA loans issued to the project between 2007 and 2011.
The city council met as the HRA on Wednesday and approved forgiving up to $1.23 million in combined principal and interest on the three HRA loans, including a Community Development Block Grant loan, a Metropolitan Council loan and a HOME loan.
As a result of the repayment, six residences will no longer be targeted for long-term homeless residents. CommonBond Communities is expected to provide transition services to different buildings for those residents though a plan approved by the Minnesota Housing Finance Agency.
Ramsey County is providing funding to PAK properties to maintain the remaining five units geared toward the long-term homeless, with services provided by Simpson Housing. Existing Section 811 units, which provide supportive housing for people with disabilities, will remain enrolled in that program.
Residents will be offered one-year lease extensions and the opportunity to be placed on CommonBond Communities’ priority wait list for rent-assisted units in the nonprofit’s other structures. CommonBond Communities will cover moving expenses for six months after the sale.
The building will continue to be listed on the National Register of Historic Places after the sale, which is expected to close at the end of March.
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