An Edina hotel that will soon be converted to affordable housing has sold for $8.57 million.
Shaner Edina LLC of State College, Pennsylvania, sold the property at 3400 Edinborough Way to 3400 Edinborough Partners LLC, an entity related to the Alpha Investment Group, according to a certificate of real estate value made public late last week.
The sale advances a conversion that will turn the 133-room hotel into 136 affordable homes. The Edina Planning Commission recommended approval of the project this fall and the City Council signed off on the plans in the first week of December.
Patrick Juetten of the Alpha Investment Group said Monday that he hopes to begin the conversion project in February and have the remodeled units available for occupancy in the spring. The project includes just under $3 million worth of improvements, he said.
Most of the units will be one-bedrooms, which will rent for about $1,250 per month, he said. Also included are seven two-bedroom apartments and seven studios. Starting next month, the plan is to lease up some of the existing units as short-term rentals, he said.
A recent city staff report reveals that the project will include units affordable at 80% or less of the area's median income, with 44 units at 60% AMI.
Juetten said the conversion doesn't require public financial assistance, a rarity in affordable housing. At the developer's request, the Edina City Council agreed to waive a requirement for covered parking, a move that will reduce the project cost and make the rents more affordable.
Instead, the project will use existing surface parking, which "seems to fit naturally" with Class B buildings, Juetten said.
A recent city staff report reveals that the hotel currently offers 185 surface parking stalls, which exceeds the city's requirement of 170 spaces. To meet the city's code, the developer would have needed to construct 136 "detached garages" on the site.
"While constructing detached garages could be accomplished, it would drive up the cost/rents for the apartments and would not add to the aesthetic of the site," the staff report notes.
Hotel conversions make sense at a time when construction costs are rising, Juetten said. What's more, he added, the units can be ready for occupancy more quickly compared to a ground-up construction project.
"I think, long term, we've got to start thinking more about how go about delivering affordable units, because new construction takes time and it's expensive," Juetten said. "And if you're going for the state and federal money pools, it's a bit of a lottery. You don't know if you're getting funded or not."
Hennepin County property records show that the hotel was built in 1989. In September 2005, the building sold for $6.797 million. The estimated market value is $7.08 million.