Developers share plans to remodel Lakeview Homes

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Two Mankato developers proposing to purchase Lakeview Homes revealed plans last week to convert the building and surrounding property into a long term health care facility.

Since August, City officials have been negotiating the sale of Lakeview Homes (nursing home, Oak Terrace, Heritage House) with Mick Montag and Dennis Hood. The two developers and the City’s financial consultant presented a plan Wednesday to the City Council and approximately 30 audience members.

According to financial consultant Dick Asleson, the developers will extensively remodel the facility. When completed, it would include at least 37 nursing home beds, 16 memory care/Alzheimer units (16-18), 22 assisted living units (22-26), and at least 15 senior apartment units (16-18).

Montag said original plans called for 42-48 nursing home beds. He now believes that demand will be tempered by the potential number of assisted living units (26) to be included in the facility. Montag also said there is more demand for single bed nursing home rooms. The current 54-bed facility has only two single rooms, he reported.

Assisted by a sketch, Montag presented the remodeling plans and the proposed additions for the facility. A common entrance would be located south of the current entrance to the nursing home, Montag explained. There would be a “T” shaped wing added to the north side of the nursing home while the east wing would be converted into the Alzheimer unit.

Montag and Hood plan to utilize the basement of the nursing home for senior apartments. A majority of the senior apartments will have views of Lake Titloe, Montag explained.

The first phase of remodeling would include “cosmetic improvements” to the nursing home, according to Montag. Phase two would involve work on senior apartments followed by the addition of the Alzheimer unit.

Montag anticipates 15 months of construction before the project is complete. Depending upon the occupancy rate of the facilities at the time of construction, temporary housing may be required for residents of the Oak Terrace senior apartments.

According to Hood, all existing employees of Lakeview Homes would have the opportunity to be hired. “Our goal is to keep everyone,” Hood said. The plan is to offer salaries and benefit packages that are comparable to area facilities, he explained.

FINANCING RECAP

According to Asleson’s report, the proposed financing package for the development is as follows:

Developer Cash $1.2 million

Tax increment assistance $1.1 million

Loan from City $1.0 million

Housing bonds $5.1 to $6.5 million

Total Project $8.4 to $9.8 million

To City for purchase $900,000

NET PROJECT $7.5 to 8.9 million

The developer would make payments on the loan based on cash flow from the nursing home, with an interest rate of 5.00% on the unpaid balance, according to Asleson’s report.

Asleson listed four other notes he felt were important in the development agreement. They included:

• The Tax Increment District will be a “Housing District.”

• Tax increment dollars cannot be spent on the nursing home. These dollars can only be spent on housing components due to state law restrictions.

• Housing District Income Requirement – At least 20% of the housing units (nursing home beds not included) must be rented to persons/families that, at occupancy, have an annual income of less than 50% of the area median income.

• The housing units will be rented only to persons who are at least age 55 (age 62 and older will be given preference if there is a waiting list.

According to City Administrator Lonny Johnson, Gaylord’s City Council is planning to make a decision on the proposed Tax Increment Financing (TIF) and the proposed development agreement Wednesday (tonight).

Mayor Doug Quast supports the development agreement calling it a “win-win” situation. With the nursing home surplus declining, Quast believes the City needs to take some type of action. He believes the proposal by Montag and Hood will provide more opportunities and will bring a state-of-the-art facility to Gaylord.

Council member Roger Bruellman said anyone would be proud to have a long term health care facility like the one Montag and Hood operate in North Mankato. But, Bruellman said he cannot support this proposal because of the length of the tax increment financing and the $1 million loan from the City. He believes this money could be used for other priorities in the City.

Bruellman will not have a vote on the proposed development agreement as he and Dale Breuer had their terms on the City Council expire Monday.

Voting on the proposed development agreement will be council members Brenda Pautsch, Carl Wetzel, Sue Jacobson and newcomers Jessica Uecker and Pat Pinske.

Jacobson and Pinske spoke in favor of the project last week. Jacobson said the City would be getting tax money that it isn’t currently collected on the facility. She also views the $1 million loan as an investment in Gaylord.

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