County HRA approves new lease with Stepping Stone Emergency Housing

A seven-year lease for Stepping Stone Emergency Housing to use a county building at the Rum River Human Service Center in Anoka was approved by the Anoka County Housing and Redevelopment Authority Sept. 13.

SSEH has operated as a homeless shelter with a maximum of 66 adult men and women, ages 18 and older, on the first floor/basement of the Cronin Building at the campus since 2012.

Under the new lease, SSEH will increase its space from 17,255 square feet to 22,940 square feet by taking over and remodeling a portion of the second floor, while also paying additional rent plus utilities.

The current rent of $2.58 a square foot will increase to $3 a square foot, said Steve Griffiths, SSEH co-interim executive director and business manager. SSEH won’t be increasing the number of people it serves. Rather, more dormitory space will be added to meet new state requirements.

In the past, SSEH housed eight clients in a dormitory room, but when the COVID-19 pandemic hit, the nonprofit had to rent hotel space for about half its residents. That’s still the case because of a new state mandate that no more than four people can be in a dormitory room

In addition, the lease spells out a repayment schedule for a new boiler that the county is paying the cost upfront, estimated at $326,400. The zero interest, seven-year loan will have monthly payments, a balloon payment at the end or any combination that is financially feasible for SSEH.

The vote of the HRA Board of Trustees, which comprises the seven members of the Anoka County Board, was 6-0. Trustee Mike Gamache, vice chairperson of the SSEH Board of Directors, abstained.

But while the HRA trustees supported the lease agreement, getting there was not plain sailing.

County Administrator Rhonda Sivarajah said that then SSEH Executive Director Julie Jeppson met with the county board at a work session in January to seek board approval to move into a portion of the second floor which would allow SSEH to apply for a state grant for a remodeling project that would include separating it from the county’s enhanced treatment program that also has space on the second floor area.

The board was agreeable and Jeppson indicated that SSEH would also cover the cost of the boiler that was needed to move the building off the central plant steam system operation, Sivarajah said.

But SSEH was awarded $1,918,017, not the $2.3 million it requested, Jeppson said in a follow-up interview, and she pursued other sources of funding to fill the gap but was not successful.

Sivarajah said Jeppson was amenable to the rent increase and the county was willing to pay for the cost of the boiler as part of a five-year loan.

That offer came from the board’s Facilities Management and Construction Subcommittee comprising Commissioner Scott Schulte, county board and HRA chairperson, and Commissioner Matt Look, who chairs the Finance and Capital Improvements Committee.

The county is in the process of installing boilers in all the buildings on the human service center campus, five of them that includes the Cronin Building, because the steam plant is old, outdated and inefficient, and it would cost millions of dollars to make needed upgrades, Schulte said in an interview.

The money for the Cronin Building boiler will likely be from the county’s asset preservation fund with the loan payments going back into that account.

Sivarajah said when the proposed lease agreement was sent to SSEH, Jeppson was surprised and then left the organization.

“She had never gone to the SSEH board for approval,” Sivarajah said.

In the interview with ABC Newspapers, Jeppson said the last conversation she had had with Sivarajah about the lease was at the Mayor’s Prayer Breakfast in Anoka May 20.

Jeppson said she received the lease agreement from the county July 19, just 10 days before her last day with SSEH, which was July 29.

Jeppson, who had been with SSEH for 10 years, the last five as executive director, resigned to campaign full time for election to the county board in the District 6 open seat, she said. She currently serves on the Blaine City Council.

Her surprise was because the lease document contained terms that had never been discussed, for example the payback schedule on the loan and when the rent increase would go into effect, Jeppson said.

The SSEH board wished Jeppson well when she turned in her resignation and she left in good standing, Gamache said in an interview.

The board, which meets once a month, needed clarification on some terms of the lease, including loan payback and the effective date of the rent hike, he said.

That led to a meeting Sept. 7 involving SSEH Board Chairperson Tim DeLapp and Secretary Tom Stinson with Schulte and Trustee Julie Braastad, county board vice chairperson, along with Sivarajah, Cindy Cesare, county human services officer, and Andrew Dykstra, county facilities management and construction director.

The purpose was to reach an agreement that SSEH and the county could both live with, Sivarajah said.

“The SSEH board members came with a wish list and the county agreed to it,” Schulte said.

The lease was extended from five to seven years so the boiler loan can be paid back over a longer period of time, the repayment schedule was changed to allow SSEH to have smaller monthly payments and the rent increase won’t go into effect until SSHE takes occupancy of the second floor instead of the date of the lease signing, Schulte said.

The state is now requiring a long-term lease, a minimum of five years, not the annual lease renewals that were in place before, Schulte said

“We understand the value of the organization,” he said.

While fully supportive of the SSEH request, some board members were critical of Jeppson and her role in the process.

Look said it was “very disingenuous,” Trustee Robyn West accused Jeppson of lying and Braastad felt “intentionally misled.”

“But I want to put the past behind us and move forward,” Braastad said.

Gamache said there had been no lying.

In his view, Jeppson, as executive director, was moving too fast to do something good for the community, Schulte said.

The county needs to do everything it can to ensure that SSEH is successful helping the homeless otherwise it will be spending a lot more money, he said.

Jeppson has not watched the HRA meeting, but has heard about the comments, she said.

“It’s very frustrating to have my integrity questioned and it’s purely political,” said Jeppson, who is running for the open seat where West is retiring.

Trustee Mandy Meisner asked about future rent increases and was told by Sivarajah, the rent can be increased each year with 180 days notice under the lease.

There is a verbal agreement that any rent increase will never exceed the consumer price index as long as he is HRA chairperson, Schulte said.

“That makes me feel better,” Meisner said.

Griffiths, who was at the HRA meeting, was delighted by the lease approval. “It’s a big step forward,” he said.

Griffiths said a contract has been awarded for the second-floor remodeling work and it can now move forward. He hopes the project is completed by the end of this year, Griffith said.

Stepping Stone’s mission is to provide emergency shelter and critical support services to individuals 18 and older experiencing homelessness while striving toward self-sufficiency, its website states.

The shelter gets the bulk of its revenues from federal and state sources, as well as fundraising, Gamache said.

Jeppson did a “fantastic job” with funding, including setting up a reserve account “if things go wrong,” Gamache said.

The lease has an option for a five-year renewal by mutual agreement. There is a 270- day (nine-month) termination clause.

SOURCE: Hometown Source