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Artspace, a Twin Cities nonprofit that develops housing and work space for low-income artists, is about to start construction on its biggest project in the state: A 100-unit mixed-use apartment building will be built on a once-polluted site in the Harrison neighborhood in north Minneapolis.

Becky Carlson St. Clair, director of property development for Artspace, said the neighborhood's proximity to new transit lines and downtown Minneapolis, where the cost of housing and land is considerably higher, is boosting development — and housing costs — in the area.

"They're really feeling the pressure of increasing rents and gentrification," she said. "So there's a strong focus on maintaining affordability in the area."

The Northside Artspace Lofts will be built on the north half of a block along N. Irving Avenue in what's known as the Glenwood Avenue West Market District, a once-blighted, mostly commercial/industrial zone that's contiguous with several expensive neighborhoods, including Bryn Mawr and the North Loop. The site is within blocks of the planned Blue and Green Line LRT extensions, recreational bike trails and other public transit.

The site, which is within the Bassett Creek Watershed, was once occupied by an industrial dry-cleaning business and parking lot, but has been undeveloped for several years. Contaminated and unstable soils have made the area challenging for developers.

The Twin Cities-based nonprofit has developed more than 50 mixed-use, live/work projects for artists with more than 1,000 housing units across the country.

Like many Artspace projects, the planning process for Northside Lofts took years and was done with the participation of several community partners. In this case, Juxtaposition Arts (JXTA), a community-based arts education organization, is partnering with Artspace on several aspects of the project, including design of a public space, but it'll also occupy satellite space on the ground floor.

Artspace also partnered with Wellington Management, which just finished developing a three-story commercial building on the south half of the same block where Northside Lofts will be built. The Leef Building is a 65,000-square-foot office building that already has several tenants, and Wellington is already at work on a second, larger office building in the area.

Wellington played a key role in launching the project and driving development. In 2016 the company acquired the site and surrounding parcels after another developer didn't follow through with plans to build for-sale condominiums. As part of an effort to secure environmental remediation grants to ready the site for development, Wellington said it would clean up the site and get a commitment from another developer to build 100 income-restricted rental housing units.

Artspace was the perfect partner, said David Wellington, executive vice president at the St. Paul-based firm.

"The project is going to help provide some stability and some affordability long term, and will heighten the creativity that's already in the Harrison community," he said. "I'm hoping this will be just one step in a wonderful outcome for the neighborhood."

The five-story Northside Lofts building, which is expected to be complete by the end of 2021, will have a number of amenities including a large gallery at the main entrance and community work space, gathering areas and gardens. There will also be indoor bike storage and underground parking, and the building will be built to standards set by the Enterprise Community Partners initiative, which encourages more energy-efficient and sustainable multifamily housing.

The $30 million project is funded mostly through Low-Income Housing Tax Credits, but it also received $2.75 million in Affordable Housing Trust Funds from the city of Minneapolis. The Metropolitan Council awarded $1.83 million to the project through a Livable Communities Demonstration Account grant, and additional funding will come from Hennepin County and the state Department of Employment and Economic Development (DEED).

There are several private funding sources as well, including the Bush Foundation, McKnight Foundation, the Pohlad Family Foundation, U.S. Bank, Enterprise Community Partners and Bridgewater Bank.

Nichole Buehler, executive director of the Harrison Neighborhood Association, said that a flurry of development in the area is bringing higher rents that make housing unaffordable for many existing residents. The worry, she said, is that the poorest residents will be displaced.

"Artspace was receptive to our concerns about including deeper affordability," said Buehler.

When the project was initially proposed, all units were to be affordable to those earning 50 to 60% of the area median income (AMI). The neighborhood group asked Artspace to do better by making some of the units available to the poorest people in Harrison, where the median income is $34,000. Rents will be established by the federal government; 10 of the units will be for those who earn 30% of AMI.

"The neighborhood association is trying to promote equitable transit-oriented development," she said, "So any new development benefits current residents and businesses without leading to their displacement."

Jim Buchta • 612-673-7376