Decision Looms on Potential Sale of Huntington Place Apartments
The owner of Brooklyn Park’s largest apartment complex has spent months asking the city council to forgive an outstanding loan so it can sell the property to a private investor.
Now, lenders affiliated with the potential sale are trying to sweeten the deal, offing financial incentives to entice the Brooklyn Park City Council to forgive the loan.
Nonprofit housing developer Aeon is behind on its loan payments for Huntington Place, the second largest apartment complex in the Twin Cities. The complex has often been the subject of complaints related to livability and crime.
With looming threats of foreclosure, Aeon wants to sell the property to New York-based MAS Capital Group.
Eric Johnson, president and CEO of the nonprofit, says the time to make the sale is running out.
“We need a decision, we have to move. Our lenders have held — that doesn’t mean they’re going to hold forever guys,” he told the Brooklyn Park City Council on Monday. “We’re running out of time. Our lender-investor has been patient.”
Loan Forgiveness
For the sale to MAS Capital Group to go through, the Brooklyn Park City Council would need to forgive a $3.8 million loan it gave to Aeon in 2020.
In exchange, MAS Capital is willing to keep a series of restrictive covenants on the deed that cap rental rates.
The sale would keep the rents affordable, although MAS Capital does plan to raise rent costs if it buys the property. Rental costs are between $900 and $950 per month for each of Huntington’s 834 one-bedroom apartments. MAS would increase those rates to $1,100 per month.
“It is unheard of that you have investors willing to walk away from $55 plus million to sell this property to maintain the [affordability covenants]” Johnson said. “It is literally unheard of.”
A sale would also keep the property off the foreclosure market, where anyone could purchase the property at a reduced rate and without any rent restrictions.
Aeon paid about $76 million for complex in 2020.
City staff members say MAS is now expected to pay approximately $30-40 million for the complex. At foreclosure, it could sell for as little as $10-15 million.
If foreclosure proceedings move ahead, the city would be unlikely to get back any of the $3.8 million loan.
Huntington Place Apartments is for sale, but Brooklyn Park would have to forgive a $3.8 million loan for the sale to go through.
Financial Incentives
The council has previously pushed back a vote on loan forgiveness.
Now, there’s two potential financial incentives that could help move the sale forward.
Aeon has access to a $4 million unused federal grant through the Department of Housing and Urban Development.
According to Community Development Director Tim Gladhill, there’s a chance Brooklyn Park could access that grant and use it to renovate Zanewood Recreation Center.
Zanewood is located adjacent to Huntington Place, and the city already plans to spend about $10 million renovating the facility.
Meanwhile, lenders on the project offered to pay a $450,000 settlement to the city if the balance of the $3.8 million loan is forgiven. But, that offer only stands if the city doesn’t accept the $4 million in federal funds.
What’s Next?
After considering discussion, the council asked city staff to make a counter offer to the lenders.
In the counter offer, Brooklyn Park would offer to forgive the loan in exchange for both the $450,000 settlement and the $4 million in federal grants.
Gladhill said he was not “super confident” the lenders would agree to the deal.
It’s also unclear if the full council would support that proposal.
“Just because I don’t know where I currently stand and what route to follow through with doesn’t mean that I’m not thinking about it,” said Council Member Amanda Cheng Xiong. “Okay? I think about this when I’m in the shower, literally. I think about this before I go to sleep.”
Council Member Nichole Klonowski said she was concerned about prospect of a foreclosure sale.
“So we talk about postponing a vote, and I understand the desire to do that — I don’t think that’s prudent,” she said. “We have some options on the table that I think are in the best interest of the city. They’re pragmatic.”
Mayor Hollies Winston asked Hennepin County and state officials to step in and offer financial support that would improve livability conditions at the complex.
“When you talk about asbestos, that is something that the state needs to look into,” he said. “I want to let the state and the county know that because many of the folks at Huntington Place come from the same place that my family comes from, you don’t get to simply talk displacement but ignore quality of life and health issues.”
The council could discuss the issue again as early as next week.
