The path to developing the former Sharkee’s property has been long and winding as city leaders work with government agencies, private investors and local contractors.
Luverne City Council members took action last week to move the $8 million project closer to an October groundbreaking.
They authorized the mayor and city administrator to sign amended and “restated” documents related to the Town Square Apartments.
These include purchase and sale agreements, a development agreement and deferred loan and grant paperwork.
The changes reflect investors Aaron Smith, Bloomington, and Marc Wigder, Florida, joining existing developer Alvin Johnson, Texas, who initially signed agreements in March for the project.
Together, the three investors formed GreenSmith Luverne Holdings LLC as the new developer for the two 27-unit apartment buildings on South Highway 75 at Hatting Street.
Luverne’s Don Jahnke, who is coordinating apartment construction, brought new investors to the project after learning of their interest in green projects in small communities.
“I think both Alvin and I came to Luverne at the behest of Don Jahnke, and I would be remiss if I didn’t say that he’s a great ambassador for your town,” Smith told the council at its Sept. 28 meeting.
“He told me, ‘Aaron, I think what you’re doing … the kind of town that you want to invest in, is where I live.’”
Smith said they visited Luverne this summer and met with local leaders.
“We were so impressed with the community, with what you’re doing in the town,” Smith said.
“It’s the kind of investment that we believe in. We want to invest in smaller towns that are committed to growing and have beautiful downtowns. And, boy. Luverne just fit the bill.”
Johnson and his colleagues have been working with Luverne leaders for the past 18 months.
“All of the city staff has been great to work with,” he said Tuesday via Zoom.
“It is an honor to work with Aaron and Marc on this project. … I think we’re going to make all you guys really, really proud of the product that’s going to be delivered.”
Mayor Pat Baustian acknowledged the long timeline and praised city staff and investors for persevering.
“It’s going to be a great project to provide housing in our community,” he said. “Everybody came together to make it happen, and we appreciate your investment in our community.”
The three investors will sign the new guaranty agreement for the $550,000 loan from the city deferred for 10 years at 2 percent interest.
They’ll also abide by the terms of the federal $680,000 workforce housing grant that Luverne obtained earlier.
All terms and conditions of the previous agreements are included in the new updated agreements.
The two apartments will be constructed in the TIF District and the land will be conveyed for $1.
The site development provided by the city includes paving the parking areas, in addition to costs already incurred in acquiring the property, demolishing the structures and installing utilities.
Future property tax payments will provide revenue to repay the loan for all of the improvements that have been made.
Additional land in TIF District No. 23 along Highway 75 is also available for development.
First Farmers & Merchants Bank in LeSueur, is providing the financing for this project and closed on the loan on Sept. 30.
The bank loan, owner equity, and a federal PACE loan will provide the financing for the construction of the two apartment buildings. PACE (property assessed clean energy) loans finance energy-efficient and renewable energy projects on private property.
Construction will use “Extreme Structural Insulated Panels,” high performance heat pumps, in-floor heat, LED lighting that qualifies for Energy Star, and the Net Zero Ready Program.
The two buildings will have one- and two-bedroom units on three floors with elevators and off-street parking.
Plans still call for a mixed-use retail and residential property to front Highway 75.
Plans were delayed in 2019 when the area qualified for federal Opportunity Zone investments; however, parameters of the incentive didn’t meet what investors were looking for and the project proceeded without it.