A lawsuit filed Monday by nonprofit developer Aeon to reverse the sale of a St. Anthony mobile-home park to Continental Property Group will be one of the first tests of a little-used state law governing such sales.
Minneapolis-based Aeon, which develops affordable housing, claims the June 13 sale of the Lowry Grove Park was not legal because of a statute that allows residents of a mobile home park or a designee to match a purchase offer for the land within 45 days to keep the park open. Aeon submitted a matching $6 million offer June 10, one day before the 45-day deadline.
Even so, the park was sold to Wayzata-based Continental, according to a certificate of real estate value that became public June 21. The park’s former owner, Phil Johnson, and a Continental executive say the sale was legal.
In the joint suit, Aeon is represented by Faegre Baker Daniels’ Minneapolis office and residents by the St. Paul-based Housing Justice Center.
Housing advocates and lawyers are watching how the suit plays out in court.
“In the cases I’ve seen, the owner closes the park and then sells it, not the owner sells the park to an owner that intends to close it,” said Doug Clark, an attorney at Mid-Minnesota Legal Aid’s Minneapolis office who is versed in the state statute.
In a rejection letter to Aeon’s offer, Johnson’s lawyers from Speeter & Johnson claim Aeon didn’t meet all of the required terms to buy the property out from under Continental, which first offered to purchase the land in April. The letter was an attachment in Aeon’s suit.
“Because no one met the statutory requirements, the buyer and seller closed on the purchase as they were contractually obligated to do,” Traci Tomas, president of Continental, said in a statement Wednesday.
The June 13 letter from Speeter & Johnson claims Aeon did not receive enough signatures to prove it had a majority consensus of residents that wanted the nonprofit to purchase the park on their behalf.
Lowry Grove residents collected more than 90 signatures to authorize Aeon’s purchase of land under the 95 mobile homes. But the letter claims that many of those signatures are duplicates, from people living in the same home or not from homeowners.
The letter also says Aeon’s offer did not match Continental’s purchase agreement because it would have pushed the closing date out another 45 days.
“Delaying the closing date by more than five weeks would damage Lowry Grove financially, would jeopardize the existing sale and financing if Aeon were to back out,” according to the letter.
Clark said he isn’t sure that proposing a closing date later than Continental’s would necessarily make Aeon’s offer void, per the state statute.
“I would argue that the period of time is meaningless if they can’t have a reasonable amount of time to raise the money,” he said. “But I’ve never litigated it.”
Aeon and the residents are also seeking damages and a reimbursement for filing and attorney’s fees, according to the lawsuit filed in Hennepin County District Court.
Aeon President Alan Arthur said Tuesday he thinks the court will rule in the nonprofit’s favor to keep the park open, which houses many families and individuals making 50 percent of the area median income or less.
“Our job is to save these extremely important homes, improve them – they need capital reinvestment, no question about that – and that’s what we’ll do,” he said.
If Aeon is allowed to purchase the property, the developer would update utilities and other infrastructure and consider developing more housing on the 15-acre site, Arthur said.
Two weeks ago, Continental, which plans to close Lowry Grove and build a multifamily development, sent closure notices to the residents. The letters set off a nine-month process to close the park, which will include an Aug. 18 public hearing.
The city is staying neutral on the lawsuit and sale, but can use the public hearing to inform residents of their rights and how they’ll be compensated for relocation or for their homes if they cannot be moved, said St. Anthony City Manager Mark Casey.
“More than anything … our focus is definitely on the people affected by the closure,” he said.
Continental’s plans are in line with the city’s comprehensive plan. A 2008 comprehensive planning document calls for medium-density development on the site.
The new owner is considering townhomes or apartments with an affordable housing component.
Arthur said he hopes the courts will hear the case before the August public hearing. So far, a court date has not been set.