City Administrator Al Roder’s Friday Memo for week of Mar. 10-14

al-roder Northfield City Administrator Al Roder publishes a memo to the mayor and city council each week on Friday. It summarizes many of the staff activities for the week. fridaymemothumbThe Friday memos are published and archived in PDF form at the bottom of his web page.

See his Friday memo for last week and then comment or ask questions about it here.

See the Northfield city calendar for public meetings that are scheduled this week.

NOTE: There a city council meeting tonight at 7 pm (agenda pdf here).

10 thoughts on “City Administrator Al Roder’s Friday Memo for week of Mar. 10-14”

  1. What are we to make of the NON-mention of the Crossings issues which are on the agenda for tonight’s council meeting? I would think with all the financial problems, lawsuits being written about in financial news, some public section on this would be in the Friday report.

    Last August we had the Mayor raise questions to the council, the State Auditor’s dept, and the public, about Pay Plan issues, and possible problems with the Crossings project.

    It seems no one wanted to take these raised questions seriously. Should we now revisit ALL the issues raised by the Mayor last summer, since at least two seemed to have weight, and see what else has been ignored by the council and possibly Administration?

    Our city council has been so focussed on personality issues, that they have possibly not seen problems with much larger implications for the community.

    I am also thoroughly tired of “specious” arguments. We have several council/staff members that have become expert at this destructive form of dialogue.

    Remember that most actions are not taken, until a majority of the council has voted to do so. One cannot blame the Mayor and his lawsuit for all the legal fees the council has voted for; some of the lawsuit fees are probably covered by the League of MN Cities insurance fund…. But I would presume Everett 1&2 are not. What’s that up to now? $60,000?

    As we hear the disastrous and frightening financial news from around the world this morning, does it put all this personal petty squabbling about”style” in some perspective?

    This council’s style has been described as “a Perfect Storm” of personalities; given recent exchanges at council meetings, I’d have to include the City Administrator in that “storm”.

    Have they just all been pushed to the limits by their interactive style?
    I know I have…………

  2. Griff, what do you think the solution should be?
    The city, like many individuals, banks and companies — a lot of very smart people — bought into the condo movement. The crash was so sudden that some projects sold well and others that came on line a few weeks or months later failed.
    Realistically, the city can’t force MH to build more buildings that will sit empty. It seems it’s a matter of sitting down and figuring out how to minimize the pain as the project developer works through this – with the knowledge that nothing more will be built for the foreseeable future.
    Getting financing to buy a condo in a weak project is almost impossible. Even developments in the Cities and in Minnetonka are offering rent-to-own and rental condos to fill buildings that came on line late. The lucky developers, who failed with their projects still on the drawing board, have reworked projects as general rentals and senior rentals.

  3. Anne – your “very smart people” comment reminded me of this:

    A long time ago I heard Carl Ican being interviewed about his corporate take over of TWA. When he gained control he called his first meeting of all the executives. When he arrived the VP of finance, who had an MBA from Harvard, was not there. Mr Ican asked where he was ? The reply was “he is giving a speech at the Wharton School of Business.”

    Then Mr Ican asked, “what is he telling them how to lose $400 Million a year ?”

    He was fired upon his return.

  4. David,
    My only point was that the collapse of the condo market – and the financing problems in the entire residential and commercial real estate market – hit so suddenly last summer that it caught a lot of people by surprise. You can read market reports from January ’07 and even July ’07 and the numbers looked good, but things fell apart in August.
    I’m just saying that criticizing city staff or even Mathern is pretty pointless. You just do what everybody else has done and look for ways to adjust the plans and the expectations and move forward.

  5. The Crossing to my mind was ill fated from it’s inception but what is done is done. The lawsuit probably signals recognition by those parties holding debt paper on the project that little or no value is left for them to recover. The tendency in these situations is to hide the bad news but the best thing the principals could do now is lay bare the true economics of the project in a blog like Locally Grown so many people could be thinking about solutions. The principals probably have nothing left to lose.

    How much debt is out against the project, how much in liens, how many units, how much to finish the units (are the values such that the units can even be finished if they were free) ? Can the banks holding this debt liquidate the property at a big loss or does it in turn secure debt they owe – if so what entity controls the project ? Etc.

  6. Anne, I don’t have a solution but all along I’ve been asking for more transparency about what’s going on.  Info about the negotiations re: a hotel, luxury rental, student housing, and the problems with soil contamination, has been hard to come by.

    You’ve written about the development when things were rosy in ’05 and ’06:

    It would be great if you now wrote something in-depth about the problems, eg, the MH default on their loan to Highland Bank last year; their problems here in Northfield compared to the problems with their Lilydale development, etc.

    In the City Biz about The Crossing:

    Last year, Mendota Homes defaulted on its loan and entered into a forebearance agreement with Highland that included a $1.3 million advance to pay off contractors and finish construction on 22 units that were under construction. Highland didn’t get Frandsen’s consent for the forbearance agreement or the advance, which wasn’t enough to pay off debts and finish the units, the complaint said.

  7. We generally don’t do stories about individual projects unraveling, and there are so many that it would hard to count this as a major story. There are the foreclosures and empty space in the Heart of Burnsville and problems in downtown Elk River, several projects in Uptown and in downtown Mpls., Cannon Falls, Rochester (where they never got off the drawing board). Even Excelsior and Grand, the poster child for the trend, has struggled, and the Ramsey Town Center ended up a $1 billion story of failure, greed, fraud and tragedy. I could go on and on…
    I admit that back in 2005 I was new in town and new to the condo trend and wrote as optimistically as every other reporter. It soon became apparent that the ‘vertical’ mixed use projects were problematic, particularly in small towns. The hard fact is that no one ever chose to live above a restaurant if they could afford to live anywhere else — except in places like New York City or San Francisco or spots with high density and no available residential land. Housing over retail was low-income housing for retail workers. So housing over retail didn’t work for residents or businesses, particularly in small towns. Horizontal mixed use, with retail in one area and housing nearby but not in the same building. That means the Crossing has some chance when the market improves.
    The other key issue was the very new phenomenon of ‘flipping,’ that caught everyone by surprise. Many condo owners took deposits on units, but only found out when they neared completion that about 25 percent of the people who had bought units never intended to live in them. Owners compared notes and soon realized that there were hundreds of units counted as sold that actually were in limbo, which distorted demand and left everyone hanging — just as the subprime collapse left many homeowners who might be tempted to buy condos unable to sell their homes or get financing on new units. It’s a huge mess.
    I did do a story for our last issue about the trend of converting condo projects to rentals, senior rentals and rent-to-own. I can list a dozen of those throughout the region.
    In short there is no good short-term answer for the Crossing. It was a risk that people chose not to question, which is how the entire nation got into this financial mess.
    The construction is solid and over time it can be filled, but my guess is that it will lose value and when the price is low enough someone will buy it and make it work. If it gets finished with lower-end buildouts, it will be harder to rebuild its value.
    And anyone who expects transparency in a private real estate transaction is naive. The city gets only the information it secures by demanding it in the original agreement. To assume public access, is, well…we know what happens when you assume.

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