Although the majority of the Ramsey Housing and Redevelopment Authority (HRA) voted to accept an early principal reduction payment on The Residence, one HRA member was concerned that it was the city’s money being used to make the payment.
Before accepting the $500,000 principal payment from Flaherty and Collins at the Oct. 16 special meeting, HRA member David Elvig wanted to go through the project’s draw schedule compared with the final pro-forma for the project, which is a 230-unit luxury apartment building.
When the pro-forma came to the city, Elvig said he looked for areas of potential leakage, including the developer’s fee.
At that time, everything seemed reasonable, but when the new draw schedule came to the HRA there were several additional line items and new costs, he said.
The pro-forma included developer’s equity of $1 million and a developer’s fee of $1,349,905, but nothing for a contractor’s fee, according to Elvig.
Now the draw schedule includes a line item for a developer’s overhead of $1.2 million and a development contingency of $679,480 as well as a builder’s overhead of $401,135 and builder’s profit of $1 million, all of which were not included in the pro-forma, Elvig said.
Several of the line items also increased, including the travel expenses, which went from about $44,000 to $150,000, he said.
The lines add up to approximately $3 million, the same amount of equity Flaherty and Collins is supposed to be putting into the project, Elvig said.
The new draw schedule also does not show from where Flaherty and Collins is drawing the money for the early payment, he said.
Elvig said he is concerned the Indiana-based company is using the city bond proceeds for its equity portion.
“We did not want to city to pay for any developer fees until the end of the project,” he said.
The amounts were part of the pro-forma, but they were under different line items, said Stacy Kvilvang of Ehlers and Associates, who represents the city.
The draw schedule is more detailed with costs broken out into additional line items, she said.
While Elvig said he was satisfied, he was the only vote against the early payment.
The vote was 5-1 and HRA Chairman Colin McGlone abstained from the vote because his wife is employee by Flaherty and Collins for the project.
Tammy Sakry is at firstname.lastname@example.org