Jill SchrammMDN Construction was ongoing Wednesday on the family homeless shelter, at right, and a 17-unit housing complex, back, at the Broadway Circle location near the intersection of South Broadway and 19th Avenue.

The City of Minot will be looking for an entity interested in operating and eventually owning Broadway Circle.

The Minot City Council voted Monday to draft a request for lease-to-own proposals for its property at South Broadway and 19th Avenue.

Broadway Circle consists of a six-unit family homeless shelter and 17-unit low- to moderate-income housing complex, both of which are expected to complete construction this fall. It also includes a commercial property, currently housing the Lord’s Cupboard and a restaurant.

As a National Disaster Resilience grant project through the federal Department of Housing and Urban Development, at least nine of the 17 apartments must be rented to low- to moderate-income individuals throughout its first 20 years of operation.

The city will be responsible for ensuring Broadway Circle operates as intended for low- to moderate-income households for 20 years or it will have to repay the NDR grant dollars. The grant provided $4.33 million, and an amendment allocated another $1.78 million.

“Whether we sell it, give it away, lease it, or whatever we do, we’re going to be in the mix of that for the next 20 years,” Finance Director David Lakefield told the council. “With the lease, we have a little bit more control and some recourse if this thing goes sideways because we still own the property.”

Lakefield said a lease-to-own adds complexity that may have to be dealt with in the future.

“The critical part here is that we get that project up and operating and get them going. I would say there would be nothing stopping us from coming back and reevaluating that at some point in the future if they are successfully operating it and it looks like they are going to make a go of it,” he said.

The council opted to go ahead with lease-to-own but has not set a lease price. City Manager Harold Stewart said the city would want to recoup the $1.3 million it invested beyond the grant dollars, which factors to $65,000 annually over 20 years.

City council member Mark Jantzer said the most important thing is finding an entity that wants to operate Broadway Circle, then giving them an opportunity to be successful. If the city prioritizes getting its money back, it might be the project will struggle, he said.

Chris Plank, the city’s disaster recovery grant administrator, said the city is working with Project BEE, which withdrew from participation in Broadway Circle last February, on possible insurance reimbursement of the city’s investment. With the departure of its executive director and an investigation into misappropriation of funds, Project BEE is pursuing an insurance claim.

Construction on the homeless shelter and apartments is 80-85% complete, Plank said. There is interest by various entities in operating Broadway Circle, but there might not be a nonprofit with the resources to make an outright purchase, he said.

Council member Mike Blessum moved for a lease-to-own arrangement. He said he prefers the city release itself from Broadway Circle as quickly as possible.

“I’m also not a fan of what I feel could be a perpetual cycle of a new entity coming on who’s really strapped for the dollars, can’t make the actual deal work and failing again,” he said.

Blessum also asked about separating the commercial portion of Broadway Circle and selling it separately. City Manager Harold Stewart said there are zoning difficulties because dividing the property leaves both segments in violation of setback and separation requirements. The property layout upon separation would create a violation of the city’s design standards, principal planner Doug Diedrichsen added.

“It would really be an issue of granting ourselves a variance and treating the city differently than we would treat a commercial development,” Diedrichsen said.

Jantzer also noted the commercial property has been tied to Broadway Circle to help financially support a nonprofit in running the apartments and shelter.