City, developer set to cover federal loan for Gray’s Landing development
KENT DARR Aug 11, 2015 | 3:57 pm
2 min read time
374 wordsAll Latest News, Real Estate and Development
Sherman Associates Inc. will lend the city of Des Moines an estimated $7.4 million to cover any shortfall in an $8.5 million federal loan to feed development of the Gray’s Landing urban neighborhood between West Martin Luther King Jr. Parkway and the Raccoon River on the north and south and Southwest Ninth and Southwest 16th streets on the east and west.
In exchange, the city will allow the Minneapolis-based developer to collect all of the proceeds from land sales in the the development area. Under the original agreement, the city and Sherman were to share those profits. The city agreed last year to defer those payments.
Under the new agreement, Sherman will be repaid through a rebate of tax increment finance funds at 5 percent interest per year through fiscal 2035. The city first entered an agreement with Sherman in 2007 for development of the area. Progress was delayed in large part by the financial crisis, Sherman and city officials have said.
Much of the original agreement remains intact, with the exception that what first was imagined as a concentration of office park development has shifted to a mix of office and retail development uses. Residential development was pushed ahead of its original timeline in an effort to draw the attention of retailers.
Over the last year, Sherman has launched the construction of a 121-room Holiday Inn Express hotel and is attempting to close financing for the 142-unit Nexus at Gray’s Landing apartment project, the Edge at Gray’s Landing 90-unit apartment project and the Gray’s Lake Office Park.
The city expects permits for those projects to be obtained by the end of the year.
In addition, Sherman is extending Tuttle Street between Southwest Ninth and Southwest 11th streets. That project is expected to be completed this fall.
Assistant City Manager Matt Anderson said the most significant change for the city is that responsibility for repayment of the federal loan will shift from a Sherman-managed limited liability company, which made most of the land purchases in the area, to the parent company, with its broader asset base, net worth and liquidity.
After approving the preliminary terms of the agreement Monday, the City Council will be asked to approve final terms at a later date.
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