Credit Crunch Stalls Senior Housing Project

RICHFIELD, MN - The chaos on Wall Street has reached Richfield, where the owners of 29 homes hang in limbo as the developers of a senior housing project that would take their properties struggle to get financing. With possible redevelopment looming over their two blocks for more than a year, homeowners have been unable to sell their houses. But Lou Ann Johnson and her husband, Brian, said they took developers at their word when they heard last spring that "it was not too soon to start looking" for a new place to live, Lou Ann said. The couple found a home they liked in Bloomington, signed a purchase agreement in July and have been waiting for the Richfield project to move forward ever since.

Unable to finish the deal until they sell their house on 17th Avenue S., the couple are worried that they will lose the home they love in Bloomington. "It's been really tough," Lou Ann Johnson said. "We found a house we liked and put money down on it, and they keep telling us (the project) is going through, It's very frustrating."

One of the developers of the stalled $30-million-plus development, called Cedar Point Phase II, said he sympathizes with homeowners and is working hard to resolve things. "We feel just horrible about the people who live over there," said Jan Susee of Metes & Bounds, which is developing the project with Lang Nelson Associates. "We're trying to get things together, but these financial markets are making things a nightmare. "We're continuing to work at it, but it's not easy."

The area targeted for the development is across the street from a new Home Depot and SuperTarget that anchor the Cedar Point Commons development on Hwy. 77. The houses to be razed are on 16th and 17th Avenues between 63rd and 65th Streets.

For the city of Richfield, the development is a way to add affordable housing for seniors and provide a neighborhood buffer to noise from airport runways that are across the highway. "That area is not really appropriate for single-family housing," said Karen Barton, the city's community development manager. "Senior housing is more appropriate because it's multifamily and going to be more internally focused, with not so many external entrances and no balconies."

The proposed development has about 224 rental units, 75 of them assisted living and the rest market-rate apartments. In June, it appeared that the project was on track and that homes could be bought as soon as September. Then the economy soured and big banks got in trouble. Developers and the city are meeting weekly to discuss alternatives. "If we can't resolve these issues with the developer, possibly this development could go away," Barton said. "We have to be fiscally responsible. We're not going in there to throw money at it to help the development happen."

Susee said 25 of the 29 homeowners are willing to sell, but that the project cannot go ahead unless all of the homeowners agree to give up their houses. So far, he said, the city has been unwilling to use condemnation to acquire property. "We aren't a charity," he said. "We're trying to make things work."

Barton said she hopes the situation is resolved by the end of the year. "We do understand the plight of the neighbors there and we want to keep things moving," she said. Tony and Denise Garcia have lived on 16th Avenue S. since 1999 and are impatient for a resolution. "Twenty-nine families are sitting here not knowing to do," Tony Garcia said. "(Airport) noise is nothing compared to living in limbo. Should we spend thousands on the roof? Or will they come and tell us we need to be out of the house in a few months?"

Earlier this year, assuming that the development would take his house by the time the snow flies, Garcia accepted a job transfer to St. Cloud. Now he faces a long commute in winter weather. "We were planning to move to St. Cloud," he said. "Their worst case was that by September it was going to happen. But now they have another excuse, the economy. "We've gotten to the point where we don't believe them anymore."

Johnson's family has lived in her home for 22 years. Redevelopment means the front yard now faces the new SuperTarget. She is tired of the traffic and noise. "We wouldn't have looked for a house if we weren't confident that this was going through," she said. Now she and her husband are just hoping the agreement to buy the house in Bloomington doesn't fall apart. "I guess we just have to sit tight," Johnson said. "We really don't have a choice. There's nothing we can do about it."