Minneapolis-based multifamily developer Sherman Associates Inc. has paid just under $1.5 million for 16 acres in Coon Rapids, MN, where this summer it will begin construction on a mixed-use development.
Sherman’s plans for the first phase call for two four-story, mixed-income apartment buildings and a single-story, 4,000-square-foot standalone retail structure on the south eight acres of the site, which is a triangle of vacant land bounded to the east by Northdale Blvd. NW, on the west by the North Star Commuter Rail Line and on the north by the Riverdale Commons retail area. It is immediately adjacent to the Northstar Commuter Rail’s Riverdale Transit Station.
Coon Rapids West will be a mixed-income building with 71 units aimed at renters making from 30 to 50 percent of the area median income, which stood at $90,400 for 2017, according to the U.S. Department of Housing and Urban Development. Coon Rapids East will be a market rate apartment building with 180 flats.
Coon Rapids West will cost about $17.8 million to develop, said Will Anderson, a developer with Sherman, while Coon Rapids East will cost approximately $41 million. The total development cost for the commercial space is still in flux, Anderson said, since the precise design of that building is still underway.
The second phase will likely entail a senior housing development on the remaining acreage.
Most of Sherman’s Twin Cities holdings are in Minneapolis and St. Paul proper.
Anderson said one big draw to Coon Rapids was the Northstar Commuter Rail, a 40-mile light rail line that runs north and west from downtown Minneapolis to Big Lake. Though the rail line has been operational since 2009, multifamily development immediately adjacent to it has been somewhat muted so far.
“There hasn’t been a ton of this type of product type built along it but our analysis has shown that there is a strong market for it,” Anderson said on Thursday.
The land deal unfolded with three back-to-back sales. Coon Rapids Housing and Redevelopment Authority paid the Anoka County Regional Rail Authority $2.3 million for the parcel. In turn, entities tied to Sherman bought the property in two separate transactions, one for $999,900 and another for $500,000.
All closed on March 30, according to a certificates of real estate value made public on Monday. The purchase price works out to about $93,744 an acre. The property had an assessed value of $3.43 million for taxes payable in 2019, according to Anoka County records, and was last sold in 2003 to the railroad authority for $2.27 million.
The deal with Sherman has been in the works since 2016, when the HRA first approved purchase agreements with the other parties, according to documents on file with the city of Coon Rapids. In July 2017, the city’s Economic Development Authority approved a tax increment financing plan that would contribute $492,000 in TIF funds to the affordable apartment building, and $1.78 million to the market-rate project.
Sherman is in the process of finalizing financing with its lender, Jones Lang LaSalle Multifamily, Anderson said. That process should be complete in 90 days, he noted.
If all goes well, construction will begin this summer, with completion of the mixed-income building in the summer of 2019 and the market-rate building by the end of 2019.