Brooklyn Park Forgives Nearly $4M Loan for Huntington Place Sale
The Brooklyn Park City Council, acting as the Economic Development Authority, forgave a $3.8 million loan for the owner of Huntington Place Apartments on Monday, March 24.
“It’s the best of a slurry of terrible options,” said Council Member Christian Eriksen.
Aeon, the property’s nonprofit owner, can now move ahead with selling the troubled property to a New York-based investment firm.
With 834 one-bedroom units, Huntington Place is the second largest apartment complex in the Twin Cities. An estimated 2,500 people live at the complex.
Aeon has been pushing a sale of the property for several months, saying they’re at-risk for foreclosure.
“We need a decision, we have to move. Our lenders have held, that doesn’t mean they’re going to hold forever guys,” said Eric Johnson, president and CEO of Aeon during a recent meeting with the council.
If the property went into foreclosure, it could sell on the private market for a reduced rate.
That’s a situation the city of Brooklyn Park and Aeon want to avoid. An unknown new owner could potentially increase rents, displacing large numbers of current residents.
Likewise, if foreclosure proceedings moved forward, Brooklyn Park wouldn’t recoup any of the money it lent to Aeon.
The Brooklyn Park City Council, acting as the Economic Development Authority, forgave a $3.8 million loan for Huntington Place Apartments on Monday, March 24.
Loan Forgiven
Aeon paid about $76 million for Huntington Place in 2020. The city of Brooklyn Park bolstered Aeon’s finances with a $5 million loan.
The nonprofit still owes $3.8 million on that loan and appears unable to pay it back.
Meanwhile, Aeon wants to sell the property to MAS Capital Group.
The New York-based firm has committed to restricting rents at the property and remodeling units.
However, MAS Capital isn’t willing to assume the $3.8 million debt, holding up the sale.
The Brooklyn Park City Council begrudgingly decided to forgive the loan, allowing the sale to move ahead.
” I think that the proposal that’s in front of us tonight gives the city the greatest chance to control the greatest number of variables,” Eriksen said. “And even in that case, it’s terrible.”
He questioned MAS Capital’s plans for the property, while also disparaging the current owner.
“I don’t want to forgive anything to Aeon, because the Aeon folks have been, in my opinion, terrible since the day I met them,” he said. “I think MAS Capital’s numbers are magic — or depend on magic — and I think we’ll be right back here again in a couple years.”
Council Member Tony McGarvey concurred.
“It’s one option out of many terrible options,” he said. “But it is the one that gives the city the most leverage.”
What’s in the Deal?
Although the loan was forgiven, the city of Brooklyn Park won’t go empty-handed.
Aeon’s lenders are returning $450,000 of the $3.8 million to the city.
Additionally, Aeon has offered to transfer a $4 million federal grant over to the city.
That funding would be used to offset the $10 million in costs anticipated for a revamp of the Zanewood Recreation Center.
The popular recreation center sits on Zane Avenue, down the block from Huntington.
Council Member Shelle Page said the council ought to take the deal, but continue fighting for better living conditions at Huntington.
“We got to $450,000 with a possibility of even more, to do more for generations at Huntington,” she said.
Resident Displacement
MAS Capital says it will keep the restricted covenants that cap rent at Huntington.
However, the firm plans to raise monthly rent rates as it assumes ownership.
Currently, rental costs are between $900 and $950 per month at Huntington. MAS would increase those rates to as high as $1,100 per month.
MAS would also plan to rescreen residents as their lease terms end.
Some residents told the council they were taken off-guard by the potential sale.
“We want to make sure that our voices is being heard at every single step so that we are not, like, blindsided like most of us were during this process,” one resident said.
Another, Liz Smith, said she hoped to make Huntington her permanent residence.
“I would be devastated if I was moved out of my home,” she said. “I would be devastated, I would lose everything I own.”
Some city council members urged concerned residents to push Hennepin County and state officials to help fix up Huntington.
“I would disagree that anybody deserves to live in those particular conditions,” Mayor Hollies Winston said. “If you’re going to organize, aim the cannon at the people with the pockets that can make the difference. Because it hasn’t been aimed there. It’s always been aimed at the people with the least in their pocket.”
