The City Council on Tuesday gave the developer of the Park Nicollet site 60 days to get its financing in order after one of the company’s owners experienced health problems that reduced the amount of money available for the project.
In April, to redevelop the Eighth Avenue site, which is a envisioned as . That same month, Paul Klodt, the company’s president and one of two principal owners, suffered a second stroke.
Klodt has recovered but is no longer making business decisions and requires full-time health care, according to a letter John Bell, the company's vice president of construction, sent to the city Tuesday.
Health care costs aren't the biggest part of the funding problem, though. Estate taxes will be due after his death, and the 77-year-old Klodt’s condition has forced the family to set aside money to pay those taxes, Bell wrote, noting that Klodt may live for many more years.
The funding challenges also come in the middle of the ongoing credit crunch. Lenders who might have once required about 15 percent equity now mandate 35 percent equity. The developer may need to put up $5 million to $6 million for the Park Nicollet site, according to Bell.
Klodt Inc. officials are trying to find an equity partner to help with the funding. If they are able to do that, groundbreaking could still start by spring 2013—the likely timeframe from the beginning, although a 2012 start was mentioned as a best-case scenario.
The irony of Klodt Inc.’s funding situation is that the City Council selected the company to develop the site specifically because of its financial wherewithal. Although some council members liked proposals from competing companies better, they thought Klodt Inc.’s financial resources gave it a better shot at seeing the project through than companies that would have had to round up the money in the tough borrowing market.
What do planners envision for the Park Nicollet site? .