VII.2. Request for Financial Assistance – Blake Road Station; ElverumMay 18, 2021 Council Report 2021-054
REQUEST FOR FINANCIAL ASSISTANCE – BLAKE ROAD STATION
Proposed Action
Staff recommends adoption of the following motion: Move to direct staff to prepare a loan agreement
for HRA consideration between TF Hopkins, LLC and the City of Hopkins.
With this motion, the loan agreement will be prepared and brought forward for action at a future
meeting.
Overview
The Blake Road Station project is the redevelopment of 7.4 acres of land located at the intersection of
Excelsior Boulevard and Blake Road South. Trilogy Real Estate Group has proposed to develop the
site in a three-phase, multi-modal transit-oriented development adjacent to the Blake Road Southwest
LRT Station. Each phase will build upon the improvements of the previous phase and will ultimately
result in an increasingly connected, pedestrian friendly, and transit-focused community.
The project will add to the mix of housing choices for area residents, providing a new opportunity to
live immediately adjacent to the light rail transit station. The development also includes some retail
space, with tenants yet to be identified. The development will substantially increase the taxable
market value of the property. The first phase alone will result in an estimated annual increase in local
property taxes from $28,000 per year to approximately $456,000.
The expectation has been that this development proposal would not rely on a City financial subsidy
and therefore conversations have not focused on what community goals could be achieved through
financial participation by the City. However, over the time it has taken to put the project together
several factors have caused an increase in project budget to the point the developer has indicated it
is not financially feasible without City assistance.
Primary Issues to Consider
•What is the financial assistance request from Trilogy?
•Is the assistance necessary for the project to move forward?
•What is the appropriate level of assistance and what are the recommended terms?
Supporting Information
•Public financing application
•Memo from Stacie Kvilvang, Ehlers
___________________________
Kersten Elverum, Director of Planning & Development
Financial Impact: $0 Budgeted: Y/N NA___ Source: TBD
Related Documents (CIP, ERP, etc.): _______________________________________
Council Report 2021-054
Page 2
Analysis of the Issues
What is the financial assistance request from Trilogy?
Trilogy Real Estate Group has submitted an application to the City of Hopkins for financial assistance
to support the Blake Road Station development. The request is for $4,169,492 for the first phase;
$14,248,657 for all three phases. There are several factors that have contributed to the financial gap
in the project including environmental remediation, escalating lumber costs, design changes and
other project changes. The specific request is as follows:
Retail Subsidy is required to bridge the gap between market rates for community serving
retail and rates needed to sustain the project. At the City’s request, retail has been added
into the program for Building A (previously only Site B had a retail component). Note that
retail was considered for Building C, but at the time of review a lone retail use was not
viable. The retail subsidy will allow the development to sustain the retail component and
offers affordable rents for tenants.
Environmental and Demolition Grant(s) are requested as the work & costs associated with
abatement of regulated materials, remediation of contaminated soils and the resulting
additional building controls and construction premiums added to the funding shortfall. Non-
City grant opportunities were pursued and a $340,521 Environmental Grant from DEED
was awarded to the project.
Below Grade Parking Grant is requested due to additional building costs associated with
the request for an enhanced pedestrian experience and add/increased parking for retail
use. The development was modified to accommodate this request by bringing down
residential, amenity and add retail components on to the ground level which reduced
parking on Levels 1 and 2. In order to maintain parking counts, a partial level of below
grade parking is needed to accommodate the optimal parking ratio. Additionally, it was
asked that all 4 sides of the building be treated as ‘frontages’ with enhanced facades in lieu
of only the facades facing Blake or Excelsior. The result is the design conveyed in the PUD
and Site Plan in which the development serves as a gateway to Hopkins.
Is the assistance necessary for the project to move forward?
City staff, and our financial consultant, Ehler’s, believe that some additional financial assistance is
necessary for the project to move forward (see attached memo.) It is staff’s recommendation that the
basis for the assistance be tied to the environmental remediation necessary for development. The
City and developer were successful in obtaining a clean-up grant through DEED totaling $340,521,
but were not successful in applications to Hennepin County and the Met Council. The total costs of
remediation, demolition and related costs for phase I are $1,111,188, leaving a balance of $685,000
after adjustments are made. Providing assistance to the developer for these costs will bring the site
into a level field as greenfield sites or sites without significant environmental issues, and staff
supports assisting with the environmental clean-up costs.
The developer and the City of Hopkins will pursue environmental clean-up funds for phase II and
phase III, estimated to cost $1.95 million. If they are not successful in obtaining grant funds for the
total cost, less required developer match, the developer has requested City assistance to bridge
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Page 3
those potential future gaps. Staff is supportive of assistance for future environmental costs, if
needed.
The design changes, including parking and facades, are included in the items provided in the Planned
Unit Development (PUD) zoning exchange. The retail subsidy was a new concept that has not been
previously discussed with the developer and the benefits to the community are not understood at this
time. The first phase of construction, which is the only phase of the project that is being considered
for site plan approval, only has 2000 square feet of retail space which is anticipated to be leased at
market rates.
As the second and third phases of the development are brought forward for site plan approval, the
developer may revisit the opportunity to work with the City to shape a development that meets
community goals and as a result, revisit a request for assistance for affordable commercial space, as
it is merited.
What is the appropriate level of assistance and what are the recommended terms?
Based on the information provided, it is staff’s recommendation that the City, through the Housing
and Redevelopment Authority, provide a forgivable loan to the developer of $685,000 for phase I and
a commitment for future phases with conditions that will identified in the agreement. Funds for the
loan would be provided through excess Tax Increment Financing (TIF) from the 2-11 TIF District.
These funds are eligible expenditures for redevelopment.
It would also be conditioned on the project receiving its land use approvals (the project will be
presented to the Planning Commission and City Council in May/June) and moving forward.
The loan would be forgiven after 10 years, but would be required to be paid back if the property was
sold or transferred within the 10-year period. If this is supported by the City Council, staff will work on
a loan agreement to be considered by the Hopkins HRA at a future meeting.
The developer has indicated that the project may not be able to move forward without a more
significant level of public assistance. Ehlers has completed a preliminary review of the developer’s
proforma and has concluded that it may not be necessary due to certain fees the developer has
control over, removal of up-front costs paid by the City and additional proforma issues. Additionally, it
should be noted that the project area is within a Federal Opportunity Zone that brings tax benefits to
investors.
If the City Council is interested in providing more subsidy, by creating a new TIF District or pledging
additional TIF from 2-11, the Council should identify if the project would need to change to justify the
additional subsidy since it has not been put through that lens. To fully analyze the appropriate level
of subsidy from the City, additional information would be required of the developer and closer
examination of the proforma would be required to meet a “But For” test.
Alternatives
The City Council has the following alternatives regarding this item:
• Direct staff to prepare loan documents with the terms outline by staff.
• Amend the terms.
Council Report 2021-054
Page 4
• Elect to not provide any financial assistance to the Blake Road Station development
project.
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1010 1st Street South • Hopkins, MN 55343 • Phone (952) 935-8474 • www.hopkinsmn.com
APPLICATION FOR PUBLIC FINANCING
Applicant Information
1. Applicant Name: TF Hopkins, LLC, a Delaware limited liability company
(Name should be the officially registered name of the business entity.)
Address: 520 W. Erie Street, Suite 100, Chicago, IL 60654
Telephone: (312) 750-0900 Email Address: tbiere@triologyreg.com
2. Name of Person Completing the application: Justin P. Weinberg, Taft Stettinius
& Hollister LLP
Address: 2200 IDS Center 80 South 8th Street, Minneapolis MN 55402
Telephone: 612-977-8780 Email Address: jweinberg@taftlaw.com
3. Names and Addresses of Architect, Engineer, and General Contractor for this
project:
Attorney Name: Justin P. Weinberg, Taft Stettinius & Hollister LLP
Address: 2200 IDS Center, 80 S 8th Street, Minneapolis, MN 55402-2157
Telephone: (612) 977-8780 Email Address:jweinberg@taftlaw.com
Architect Name: Elness Swenson Graham Architects, Inc
Address: 500 Washington Ave S, Minneapolis, MN 55415
Telephone: (612) 501-0308 Email Address: heather.whalen@esgarch.com
Engineer Name: Kimberly Horn
Address: 767 N Eustis St #100, St Paul, MN 55114
Telephone: (651) 645-4197 Email Address: trish.sieh@kimberly-horn.com
General Contractor Name: TBD
Address:
Telephone: Email Address:
4. If the applicant is a corporation, please name officers, directors, or stockholders
holding more that 5% of the stock of the corporation. If the corporation is not
formed, provide as much information as possible concerning potential officers,
directors, or stockholders:
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Applicant is a single member Delaware limited liability company
4a. If the applicant is a general partnership, name of the general partners and if a
limited partnership, state the general partners and limited partners with more than
5% interest in the limited partnership. If the partnership is not formed, provide as
much information as possible concerning potential officers, directors or
stockholders.
N/A
4b. Has the applicant ever been in bankruptcy? If yes, please describe the
circumstances.
Yes (please Explain):
No: X
4c. Has the applicant ever been convicted of a felony? Is yes, please describe the
circumstances.
Yes (please Explain):
No: X
4d. Has the applicant ever defaulted on any bond or mortgage commitment?
Yes (please Explain):
No: X
Project Information
1. PID#’s, legal description, address, and size of project site:
PID#: Parcel 1: 1911721420044, Parcel 2: 1911721420045, Parcel 3: 1911721420046
Address:
Parcel 1: 1009 Hill St, Hopkins, MN
Parcel 2: 8594 Excelsior Blvd, Hopkins MN, 55343
Parcel 3: 8490 Excelsior Blvd, Hopkins MN, 55343
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Legal Description:
Parcel 1 - Lot 1, Block 1, Hopkins Commerce Center Addition, Hennepin
County, Minnesota. Registered Land -Certificate of Title No. 866673.
Parcel 2 - Lot 2, Block 1, Hopkins Commerce Center Addition, Hennepin
County, Minnesota. Registered Land -Certificate of Title No. 866674.
Parcel 3 - Lot 3, Block 1, Hopkins Commerce Center Addition, Hennepin
County, Minnesota. Registered Land -Certificate of Title No. 866675.
Size of Project Size (Acres): 7.4 Acres
2. Current ownership of the site: Hopkins Commerce Center LLP; Michael Launer, 7000
Gleason Rd, Edina, MN 55439
3. Do you have current control of the site:
Yes: X
No:
4. Project description.
The Blake Road Station project is the redevelopment of 7.4 acres of land located at the
intersection of Excelsior Boulevard and Blake Road South in Hopkins, MN. Trilogy Real
Estate Group is working with the City of Hopkins to develop the site in a three-phase,
multi-modal transit-oriented development adjacent to the Blake Road Southwest LRT
Station. Each phase will build upon the improvements of the previous phase and will
ultimately result in an increasingly connected, pedestrian friendly, and transit-focused
community. The project will add to the mix of housing choices for area residents,
providing a new opportunity to live immediately adjacent to the light rail transit station.
5. If property is to be subdivided or replatted, please describe.
Yes, currently planning to replat once phase III of the project is complete.
6. Estimated project costs: (Please enclose detailed sources and uses, unit count with
rents and sq/ft, detailed operating expenses and 15-year operating Pro Forma).
SEE ATTACHED EXHIBIT
7. Source of Financing
SEE ATTACHED EXHIBIT. In addition, to support retail tenants, the City
must provide either a rent subsidy, grants or low-cost financing the bridge a
gap of market rates and the rates needed to sustain the project. That gap is up
to $19.00 per square foot. Such funding can be provided directly to the
landlord; or, to the tenants.
8. Project Construction Schedule:
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Phase 1: August 2021 – April 2023
Phase 2: Spring 2022 – Fall 2023
Phase 3: Depending on current tenants exercising options, 2026-2027 or 2031-
2032.
9. Total Estimated Market Value of Project upon completion
Phase 1: $68,568,744
Phase 2: $82,612,497
Phase 3: $100,221,505
10. Please indicate whether or not the project meets one or more of Hopkins’ Eligible
Uses as identified in section 4.01 of the City’s Tax Increment and Tax Abatement
Policy (identify eligibility and state reason):
Yes, the project will meet the Eligible Uses. Those would include, without
limitation, redevelop blighted or underutilized areas of the community; promote
neighborhood stabilization and revitalization by removal of blight and upgrading
in existing housing stock; removal or blight and encouragement of redevelopment
in a commercial and industrial area of the City to encourage high levels of
property maintenance; increase in local business potential; and, acceleration of the
development process and achieve development on ths site that would not be
developed without this assistance. The last point cannot be emphasized enough –
this development must have assistance in order to meet market viability.
11. Will any public official of the City, either directly or indirectly, benefit from the
issuance of public assistance within the meaning of Minnesota Statutes, Section
412.311 or 471.87? If yes, please explain the circumstances.
Yes (please Explain):
No: X
Public Assistance Request
1. Amount of public assistance.
Grants for the demolition, environmental and basement for building 1 – all as
set forth in the attachment.
2. Form of assistance.
Grants.
3. Describe the purpose for which public assistance (TIF, Tax Abatement, etc.) is
required.
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grants (demolition, environmental and basement in building)
4. Please submit an itemized list of project costs for which public assistance is being
requested.
See attached.
5. State specific reasons why, “but for” the use of public assistance, this project would
not be possible.
The project, which includes all 3 phases, simply is not economically viable without
the assistance.
Application Process
1. The following documents must accompany the Application:
A. A detailed sources & uses statement, unit mix with rents and sq/ft, detailed
operating expenses and 15-year project Pro Forma
B. Parcel Map depicting the proposed redevelopment area
C. Site plans and floors plans (as available)
D. Significant additional information may be requested at any time by the
City/HRA and may be in addition to the materials outlined in this application.
The Applicant shall be required to submit any and all information as requested
by the City/HRA.
2. Applicant acknowledges and agrees to pay the $1,000 Public Assistance Application
Fee and is non-refundable.
3. At the time of acceptance by staff of the Public Financing Application, the applicant
shall deposit $10,000 with the City/HRA to cover attorney and consultant costs
incurred as part of conducting any fiscal analysis that may be required to meet the
requirements of utilizing any public financing, drafting and negotiating a
development agreement, and establishing a TIF district or abatement. If additional
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expenses are incurred beyond the $10,000, prior to the execution of a development
agreement, the City/HRA shall notify the applicant in writing and the applicant will
be required to deposit additional funds upon notice.
4. The Applicant shall hold the City/HRA, its officers, consultants, attorneys, and agents
harmless from any and all claims arising from or in connection with the Project or
Public Assistance Application, including but not limited to, any legal or actual
violations of any State or Federal securities laws.
5. The Applicant recognizes and agrees that the City/HRA reserves the right to deny
any application for Public Assistance at any stage of the proceedings prior to adopting
the resolution approving the public assistance, that the Applicant is not entitled to rely
on any preliminary actions by the City/HRA prior to the final resolution, and that all
expenditures, obligations, costs, fees, or liabilities incurred by the Applicant in
connection with the Project are incurred by the Applicant at its sole risk and expense
and not in reliance on any actions of the City/HRA.
The undersigned, a duly authorized representative of the Applicant, hereby certifies
that the foregoing information is true, correct, and complete as of the date hereof and
agrees that the Applicant shall be bound by the terms and provisions herein.
TF Hopkins, LLC, a Delaware limited liability company
By: ________________________________________
K. Shaylan Baldwin, Secretary
Date:__________________________________
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April 30, 2021
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ATTACHMENT 1
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ATTACHMENT 2
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MEMORANDUM
TO: Kersten Elverum – Director of Planning and Development
FROM: Stacie Kvilvang - Ehlers
DATE: May 18, 2021
SUBJECT: Trilogy Request for Assistance
Trilogy is planning on constructing approximately 770 apartment units and 11,000 sq/ft of retail at corner of Blake
Road, Excelsior Boulevard and Pierce Avenue. They initially requested approximately $13.9 million in TIF
assistance for environmental clean-up, site preparation, commercial lease subsidy and parking for all three
phases of the proposed development. The recommendation is to address the gap in environmental clean-up
and demolition costs, which are costs any redevelopment would incur. Based upon discussions with staff and
consultants their overall ask has been reduced to cover environmental and demolition costs totaling
approximately $2.65 million.
Trilogy intends to move forward with Phase I this year, which consists of approximately 220 apartments and
2,000 sq/ft of retail. The costs associated with environmental clean-up and demolition are detailed below:
The City and Trilogy applied for grants from Hennepin County, DEED and Metropolitan Council to cover these
costs. The City only received grant funds from DEED in the amount of $340,521, which is $770,667 less than
the total costs. Staff reviewed the costs not covered by the grants and determined that the City could provide
$685,000 in up front assistance to cover these redevelopment costs. The remaining difference of $85,667 is to
be paid by the Developer as noted in the table below:
The environmental and demolition costs for Phase II and Phase III total approximately $1.95 million ($1.2 million
and $750,000 respectively). The City and Trilogy intend to apply for grants for these
Use Amount
Pre-Development Environmental Work 108,628$
Contaminated Soil Removal 66,600$
Remedial Action Plan Implementation 60,000$
Vapor Mitigation 215,800$
Asbestos Abatement 125,160$
Demolition 360,000$
Stormwater System per MPCA 170,000$
MPCA Fees 5,000$
TOTAL 1,111,188$
Source Cost
Environment Remediation/Demolition 1,111,188$
DEED Grant (340,521)$
Net Costs Not Funded By Grants 770,667$
Developer Paid (85,667)$
Net City Contribution 685,000$
Phases as well, but if unsuccessful, Trilogy is requesting that the City provide up-front assistance for these costs,
just like in Phase I.
The funding source for these costs will come from TIF District 2-11 (Super Valu), which is a redevelopment TIF
District that the City/HRA has cash available for use on qualified redevelopment expenditures like these (these
are restricted funds per State Statute and can only be used for qualified purposes). The District currently has
enough funds in the account to pay the $2.65 million in costs as they arise, without impeding the City from having
dollars available for other qualified redevelopment purposes in the future.
Overall, investment of $2.65 million into the various Phases will net significant returns to the City in the form of
future tax base and taxes. Currently the pay 2021 taxable value of the three parcels is $6.93 million and
generates approximately $252,000 in annual taxes, of which the City’s portion is approximately $63,000. Upon
completion, the value of each Phase and future City portion of taxes is noted in the table below:
As shown, Phase I will provide approximately $456,000 in annual taxes to the City (currently receiving only
$28,000) and all Phases combined will be approximately $1.6 million. This is an overall increase of 2,600% in
valuation growth.
Based upon these factors and preliminary “high level” review of the development proforma, the request is
reasonable and will not unduly enrich the developer.
Please contact me at 651-697-8506 with any questions.
Total Taxable
Ph ase Sq Ft/Units Market Value
1 220 53,900,000
2 250 61,250,000
3 300 73,500,000
TOTAL 770 188,650,000
Future Taxable Value
City County School Total Local Mk Value
Portion Portion District Taxes Taxes
Phase I Apt $455,886 $257,440 $178,396 $62,221 $953,942 $77,390 $1,031,332
Phase II Apt $518,053 $292,545 $202,722 $70,705 $1,084,025 $87,943 $1,171,968
Phase III Apt $621,663 $351,054 $243,267 $84,847 $1,300,831 $105,531 $1,406,362
TOTAL $1,595,602 $901,040 $624,384 $217,773 $3,338,798 $270,864 $3,609,662
Tax Calculations
New Use Misc TOTAL