A new apartment project in St. Louis Park would move the city closer to its affordable housing and environmental goals, but like most developments that aim to house low-income Minnesotans, the developer says the building won't work without public financing.
The proposed 60-unit Union Park Flats on Alabama Avenue, next to Union Congregational Church, has received more than $20 million in state tax credits and funds from Hennepin County and the Metropolitan Council, as well as a smaller private loan toward the estimated $28.7 million cost of the building. Still, developer Project for Pride in Living needs $450,000 more, and is looking to St. Louis Park to fill the gap. The money would come from a revolving loan fund for affordable housing, seeded with money collected from the city's tax-increment financing (TIF) districts.
All this public financing is needed, the developer said, because the low rents the building will collect won't be enough to pay a conventional bank loan.
"Because our rents are so low, we don't have enough cash flow," said Mandy Pant, project manager with Project for Pride in Living, a Minneapolis nonprofit.
The proposed Union Park Flats sits just blocks from a future light-rail station, and the developer is planning energy-saving measures and a rain garden. The apartments will be only for individuals and families with low to moderate incomes — people St. Louis Park's medical offices and restaurants are desperate to hire, said Karen Barton, city community development director. Some of the smaller apartments could rent for less than $700 per month, according to Met Council definitions of affordability, and the building will have 15 three- and four-bedroom apartments big enough for families.
Construction is expected to begin by summer.
"These are units that we are very supportive of, from the city standpoint," said St. Louis Park Redevelopment Administrator Jennifer Monson. "Getting more deeply affordable units and family-sized units is a high priority for the City Council."
St. Louis Park has exceeded its goals for building homes affordable for moderate-income people, Barton said, but it is not so far ahead on building units for lower-income people.
"We're on track to meet those goals, but they are the toughest ones to build," she said.
Of nearly 3,000 units under development in St. Louis Park, fewer than 800 will be affordable. Nonprofits are developing nearly all of the deeply affordable units, for people making 30% of the area median income or less — $35,200 for a family of four or $27,000 for a single person.
Some of the largest apartment buildings under construction in St. Louis Park include few deeply affordable apartments, or none at all, according to city meeting documents. Other cities are in similar positions: According to a report prepared for Edina's Housing and Redevelopment Authority, that city has approved just 22 deeply affordable apartments in the past few years — less than 3% of what the city estimates it will need by 2040.
St. Louis Park staff presented a recommendation this week to the council to approve the loan, and the council will vote on the funding in the spring.
The loan would be the last of 10 grants, tax credits and loans behind the Union Park Flats project, Pant said, adding that it has taken years for all the different government bodies involved to approve all the funding for the development.
Before public financing is nailed down, a project can be caught in a cycle of rising costs — meaning the developer needs to ask for even more money, and construction is further delayed.
"The project becomes more expensive, so you're sort of chasing your tail," Pant said.