Freeborn County board approves financing option for apartments project
Published 4:50 pm Tuesday, February 2, 2021
The Freeborn County Board of Commissioners on Tuesday approved a Property Assessed Clean Energy special assessment of $1 million for the former Marketplace Foods property that is being renovated into apartments.
PACE is a finance option for building owners interested in energy efficiency and renewable energy upgrades, according to the website of the St. Paul Port Authority, which oversees PACE loans through its MinnPACE division.
The money, to Northwest Development Group, must be paid back in 20 years starting in 2022 at an interest rate of 6.44%, said Freeborn County Administrator Tom Jensen. The county’s role will be collecting the assessment at the same time as property taxes, which will in turn be paid back to the Port Authority.
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According to the developer’s application for the funding, the total cost of the project is estimated at $6 million. The PACE loan is expected to be used to finance energy efficiency improvements at the property, including high-efficiency HVAC systems and LED lighting.
The apartment complex is expected to have 50 units and include both one- and two-bedroom, higher-level units. The building would also include amenities such as an exercise area and gathering space for tenants and would likely include the option for indoor parking, the developers previously stated.
Peter Klein with the St. Paul Port Authority said he thought it was “a great project,” particularly when looking at what the building presently looks like and the renderings of what the building is projected to look like when it is completed.
“This is maybe the first one we’ve done of an old retail, converting it into housing,” Klein said. “I think we’re going to see a lot more of those throughout the state.”
Second District Commissioner Dan Belshan asked what happens if the assessment defaults and who would be responsible for the remaining owed funds.
Klein said there is a financial institution funding the project and neither Freeborn County nor the Port Authority would be held responsible for the funds if the payments are not made.
Belshan also asked about the 6.4% interest rate, noting that it seemed high.
Klein said to have a fixed rate for a longer period of time requires a higher interest rate and noted that the property owner viewed this as a less expensive form of financing than other alternatives they might have.