The long-delayed project faced yet another hurdle this week—this time from federal mandates on contract language that City Council members thought were irrational.
“It’s because they have a regulation," said Councilman Bruce Rowan. "Whether it’s logical or not, it doesn’t matter. They have a regulation.”
Marketplace & Main is an $11 million mixed-use development at Mainstreet and Seventh Avenue North—the site of the former Hopkins Honda body shop and used car sales lot. It will have more than 50 apartments and townhomes in addition to shops and retail space on the ground floor.
Hopkins signed off on the final Marketplace & Main paperwork Tuesday under pressure from the U.S. Department of Housing and Urban Development and the Federal Housing Administration to insert new requirements—or stop a vital loan guarantee in its tracks.
The Hopkins Housing and Redevelopment Authority OK’d a so-called “master subordination agreement” that puts the city behind HUD in the event Marketplace & Main goes bust. Because HUD has guaranteed the investor’s $9.7 million loan, Hopkins would be unlikely to recover its $900,000 loan.
The City Council, which has the same members as the HRA, then agreed to HUD’s demand that the project’s planned unit development agreement become null if the project falls through. This is the opposite of what usually happens.
These types of agreements allow developers to meet land-use goals in ways that go beyond traditional zoning requirements. They are worked out through much discussion.
The parties involved generally want to keep these agreements alive in the event a project falls through. Someone else could then try to revive the undertaking more easily.
With HUD’s language included, the project would have to start over from the beginning.
Hopkins first approved the Marketplace & Main planned unit development in June 2004. It has been amended four times in addition to Tuesday’s changes.
City Attorney Jerry Steiner told council members he was against the nullification language. But he added that the developer's attorney told him HUD wouldn’t sign off on the loan guarantee without the new language.
“That’s bad policy. We’ve never done that in the past,” he said. “Apparently HUD and FHA have their own way of doing things.”
"This is just such an odd set of circumstances," agreed Bill Beard, president and CEO of The Beard Group, the project's developer.
While the federal mandates clearly rankled some council members, the new language will only become an issue if Marketplace & Main falls through.
At the moment, the is . The developer should close on the property Friday, said Kersten Elverum, director of economic development and planning. and conclude in September 2012.