The city of Mound is back on track to convey 2.35 acres of Harbor District land for the development of a 52-unit cooperative living project after council agreed to transfer the property to the holding company created by developer Lifestyle Communities.

Council members approved the assignment and assumption agreement by a 3-1 vote on Aug. 24, allowing for the specially formed Mound Harbor Holdings, LLC to become a contracting party when Lifestyle closes on the property end of this month.

The A&A agreement is amendment to the purchase and development agreement between Lifestyle Communities and the city of Mound that was approved last July for the $700,000 sale of 2.35 acres of undeveloped city-owned land in Mound’s Harbor District.

Presale of the age-restricted units, which are expected to range from the mid-$300,000s to the mid-$500,000, will begin after closing. The developer has said it intends to sell 60 percent of the units prior to beginning construction, which is set to begin in spring.

But two representatives for Lifestyle Communities found themselves batting at a volley of questions thrown them by council member Paula Larson last Tuesday. Larson, who has objected to the co-op project from the beginning, had supplied the sole vote against the A&A agreement (council member Phil Velsor was absent that evening).

Larson said she felt she was being asked to approve the sale of public property to a company that was not yet a legally operating entity because the filing of Mound Harbor Holdings with the Secretary of State’s office had not yet been completed.

Larson contrasted Lifestyle’s project in Mound with its Borough apartments development in Long Lake and noted that the holding company for the Borough had been formed nine months prior to its mid-July closing date, whereas the city of Mound is one month out from closing and being asked to sign over its land to an entity that technically still doesn’t exist, she said.

“There are a lot of differences [between the Mound project and the Long Lake project], and the difference is not that we’re trying to dupe the city of Mound,” said Tim Nichols, president of Lifestyle Communities.

“Prior to our closing, we will have an entity that is formed and that is recognized by the state of Minnesota as a duly organized entity within the state that will allow us to close the property into that particular company [Mound Harbor Holdings], period,” he said, adding that he was “taken aback” by Larson’s questioning.

Larson had already made clear earlier in Tuesday’s meeting her frustration with what she said seemed to be an ever-changing agreement with Lifestyle and expressed her concerns beyond the filing status of the holding company, referencing also the delayed closing date for the sale of the property as well as the changed name of the project itself, from Zvago to Artessa, a change that was made this spring.

Lifestyle had originall pitched the development under a partnership it then shared with Ecumen. Ben Landhauser, executive vice president for Lifestyle Communities had said at the time of the change that Ecumen had chosen to drop its involvement in developing new co-ops.

“What we’re delivering is exactly what we had proposed to deliver, and we are consistent with our mission, which is cooperative housing without changes,” said Nichols at the recent meeting Aug. 24. “There is a change in the name, and we brought that up before, and we’re here just to perpetuate the conclusion [of the project].”

Putting some background to her skepticism, Larson explained the city’s most recent attempt, in 2018-2019, at developing a similar portion of the Harbor District. The developer for what was to be a spread of 21 townhomes ended up pulling out late in the game due to costs associated with soil mitigation, leaving the city back at square one in finding a developer—and anxious to make good on its TIF obligation.

“What I’m concerned about is I don’t want you to start the project and have it go belly-up like the other project,” said Larson.

A delay in Hennepin County recording the final plat for the development had already contributed to an amendment earlier this year that moved the closing date for the sale of the property from August to Sept. 30. Landhauser, addressing concerns Larson had about his company’s ability to finance the project, confirmed that Lifestyle’s purchase of the land in the Harbor District would be made as a whole—not through installments, as is the case for the Long Lake project after it aw changes in its financing when an investor backed out.

“We will be prepared to close with all the funds necessary to do so and, frankly, to move forward with financing our entire endeavor,” he said.

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