Working with Wells Fargo could accelerate groundbreaking, Tri-Valley CEO says
By Mike Christopherson (Crookston Times)
In order to get dirt moving sooner rather than later, Crookston’s Agassiz Townhomes project might turn to the private financing sector, specifically, Wells Fargo Bank, while the tax credit investment market remains on hold due to the unanticipated election of Donald Trump and uncertainty over how much his administration will seek to change the nation’s tax code.
Word came earlier this year that the 30-unit townhome project to be built on the west side of North Broadway near the intersection of Fisher Avenue – as well as numerous other projects like it – was on hold at least until the summer as tax credit investors could get a feel for the Trump administration’s intentions regarding the tax code. Agassiz Townhomes is still ideally situated and ready to roll, and is on a “when” and not “if” status after Minnesota Housing in the fall of 2016 approved a financing package for the project that includes widespread local investment and several million dollars worth of tax credits.
But Jason Carlson, CEO of Tri-Valley Opportunity Council, which would take on ownership of the project – as it did previously with the successful Crookston Townhomes project – says that rather than wait for several more months to see if the tax credit marking “gets moving again,” Tri-Valley is instead working with Wells Fargo to keep Agassiz Townhomes progressing toward construction.
“We’re working on a project with them that has good pricing, considering where we think the market will be once it opens up again,” Carlson explained.
But, he added, the switch in strategy doesn’t come entirely without a downside.
“We will have to accept some terms we didn’t think we’d have to back in October,” Carlson said. “But we need to get the project going.”
With a letter of intent from Wells Fargo in hand, Carlson spoke with Minnesota Housing on Wednesday about what Tri-Valley was looking to do to jumpstart Agassiz Townhomes. Other, similar projects are facing similar dilemmas, he added, but he figures Agassiz Townhomes is one of the few with a letter of intent from a bank willing to purchase the tax credits.
“If you recall, we had one of the best projects ever in October with no (financing) gap, and we were on track for a fast closing because (Minnesota Housing) had no money in the project. Now, it’s almost a sure thing that they will, which is not uncommon.
“The election changed our project,” Carlson added. “Such is life.”
He said Wells Fargo approached Tri-Valley about working together on Agassiz Townhomes. If Minnesota Housing looks favorably on the shift in strategy, he said the package could close very quickly. The design work for the townhomes is complete and the building is very close to being shovel-ready. “We’re in as good a position as any project in the state right now,” Carlson stressed, reiterating the Agassiz Townhomes was the only project in greater Minnesota to be awarded tax credits in the 2016 funding cycle, and Minnesota Housing wants to see it completed.
But going with Wells Fargo alters terms of the financing package, including increasing the financial risk in a couple areas. Still, Carlson said, Tri-Valley recognizes the importance of the project and is “willing to forge ahead.”
He added that Tri-Valley tried to find a bank locally to work with, but on the underwriting side, there are things a bank like Wells Fargo is capable of that the local banks simply aren’t. “If you want the king’s shilling, you do the king’s bidding,” Carlson said. “Wells Fargo is in a good situation right now; there’s not a lot of money moving, so they can sort of call the shots. (Minnesota Housing) will have a hard time bending, but they want to get the project moving, too.”