City council approves $900K loan for housing project

  WORTHINGTON -- The Worthington City Council approved Monday a $900,000 loan over 30 years that will assist in financing a student housing project at Minnesota West Community & Technical College’s Worthington campus.

Lisa Graphenteen, chief operating officer at the Southwest Minnesota Housing Partnership, asked the council to help finance the potential project, which would build 31 units and 124 beds on the MWCTC Worthington campus. The project idea would be submitted to MWCTC, which is asking developers to submit proposals to build on-campus housing after receiving a $500,000 grant.

Worthington City Administrator Steve Robinson said the $900,000 loan would not necessarily go to the SWMHP, but to whichever developer was selected to build student housing by MWCTC.

Council members displayed confusion toward the terms of the loan during discussion.

“We’re committing $900,000 to a project we don’t even know who the prime lender is or who the developer is,” Mike Harmon said.

Graphenteen clarified that the city’s loan would be gap financing; money to get the operation off of the ground. The project would be funded by private lenders as well, but they needed to get funding on board before submitting a project idea to MWCTC.

“This is a very unique situation in that it's all being structured around this request for proposals that’s based off of a grant,” Graphenteen said. “Because it is structured like this, we have to say who the partners would be.”

Kuhle said he feels the project is crucial.

“This project is important for the college, for growth at the college,” Kuhle said. “This college is not gonna grow unless they have on-site housing. It alleviates housing in the city as well.”

The interest rate for the loan is not yet determined but the council declared it would not exceed the prime interest rate, which currently sits at 3.5 percent. The loan will take the remainder of funds from the Housing Stock Development fund, which was allocated $2 million from sale of hospital proceeds. Previously, $800,000 of the funds was invested in Rising Sun Estates and $300,000 was used for the Worthington Rediscover program.

In another matter, council members indicated it had no authority to adopt a resolution concerning the upcoming District 518 referendum vote. The Strong Schools, Strong Communities committee had asked the council to pass a resolution in support of the referendum during its Sep. 26 meeting.

However, Mayor Mike Kuhle gave a statement on behalf of the council.

“The educational systems in our community help determine the quality of the labor force and therefore the health of the economy,” Kuhle said. “Graduates of our schools join the workforce and pay taxes that support our parks, streets, infrastructure, police and fire departments. Quality education has an immense social and economic benefit to our city and its residents.”

Also Monday, the council opted to decline making an immediate decision about the future of the Prairie View Golf Links property.

Last Tuesday, the Prairie View Council Committee recommended that the council cease ownership of the 130-acre property and -- through a deal with Pheasants Forever -- sell it to the DNR, which would convert it into a nature area. The council postponed making a decision Monday on whether or not to give up control of the former Prairie Lake Golf Links location.

“We can’t act on this tonight on the information we have received,” Rod Sankey said.

In other news, the council:

• Passed a resolution authorizing interfund loans of up to $1,200,000 to pay for development of soccer fields. The loan will be repaid from the Parks and Recreation fund, and will be offset by savings not being used on the golf course.

• Awarded a contract to Nomad Pipeline Services to replace the industrial wastewater sewer system attached to JBS that runs under the I-90 crossing. City Engineer Dwayne Haffield said Nomad was the lowest of four bidders at $341,000, but the cost was ultimately much higher than original estimates. Haffield said the city would use capital improvement funds to finance the project as well as reserve funds, due to the “critical nature of the project.”

• Amended a change to allow entertainment venues to be built on the Prairie Expo property. PBK Investments LLC has entered into a Memorandum of Understanding to build a movie theater at the location.

• Issued a special use permit to Dan’s LLC for property it owns at 98 Nobles St. to construct two storage buildings on the southwest portion of the lot.

• Issued a special use permit to South Lake Development LLC for property it owns southeast of Knollwood Drive and First Avenue Southwest. The company is constructing 18 housing units on the west end of the property.

• Amended changes to the Worthington Cable Television Public Access Channels Joint Powers Board, after Minnesota West Community and Technical College withdrew from the board. The board will now consist of seven members instead of 10, as the college president and two of the school’s representatives are removed.

• Appointed a slate of election judges for the Nov. 8 general election and set the city’s Board of Canvass meeting for 6 p.m. Nov. 14.