15th Street Flats clears major hurdle

15th Street Flats clears major hurdle

October 21, 2017

15th Street Flats clears major hurdle

WILLMAR—The potential workforce housing development planned for Willmar, called 15th Street Flats, has conquered a major hurdle this week, as the Minnesota Housing Finance Agency approved approximately $8 million in tax credits and $1,259,000 in Minnesota Housing investment.

“I am really happy. This is significant,” said Aaron Backman, executive director of the Kandiyohi County and City of Willmar Economic Development Commission.

According to Minnesota Housing, the tax credits are dollar-for-dollar federal tax credits for affordable housing investments, while the Minnesota Housing investment portion may include deferred and/or amortizing loans and grants.

15th Street Flats, estimated at $9.3 million, is to be a 47-unit affordable housing project, built with high-quality materials and including several amenities such as a fitness center, community room and playground. A significant number of the units will be two- or three-bedroom apartments, good for larger families.

“This will be a nice development,” Backman said.

The awarding of the tax credits was a much needed victory for the project.

“It is the majority of the funding for the project,” said Erin Anderson, vice president of development for Commonwealth Development Corporation, developer of the project.

When Commonwealth first applied for assistance from the Minnesota Housing Finance Agency, there were some concerns about success because a second local housing project was also applying, Hanson Apartments in Willmar. This time it all worked out: Both projects were awarded assistance.

“It is a bit unusual to have two projects approved in Greater Minnesota in the same city,” Backman said.

Hanson Apartments received a total of $6.5 million in assistance, $5.3 million of that in Minnesota Housing investment. Smaller amounts awarded were in Minnesota Housing rent assistance and investment from the Greater Minnesota Housing Fund and the state Department of Employment and Economic Development.

The Hanson Apartments project is a renovation project, which will help retain affordable housing in Willmar, while 15th Street Flats will add more housing, which was a need recognized in the Vision 2040 housing study.

“There is a definite need. This addresses part of the housing needs,” Backman said.

The selection process for housing funding is very competitive. There are about 60 different multi-family and single-family projects approved statewide. Hanson Apartments and 15th Street Flats were the only multi-family projects chosen in the southwest region, from Big Stone to Rock County and from Yellow Medicine across to McLeod counties.

“They were up against some significant projects,” Backman said. “We feel fortunate.”

Backman said the 15th Street project was highly ranked due to the need in Willmar for more affordable housing and the project’s location. The apartment building will be located on 15th Street Southeast, behind the Pizza Ranch and near the YMCA and Lakeland Elementary. The neighborhood already has multi-family housing and will not require extensive site preparation.

“Why not use an area already served by our roads and utilities?” Backman asked. “I believe it is a real positive location.”

The Willmar City Council in June approved a resolution of support for 15th Street Flats, which also included preliminary approval of a tax increment financing district for the project. This will help the city meet its obligation for a 5 percent local match that was part of the tax credit application. The city still needs to formally approve the TIF district after a public hearing.

The tax increment financing district would generate $39,058 a year in increment financing available to Commonwealth, or a net present value of about $464,562 over the 15-year life of the housing TIF district, if approved by the city, Kandiyohi County and Willmar Public Schools.

The base taxes of the property would continue to be paid to the city, county and school. Tax increment financing allows the use of additional property taxes generated by a new development to be captured to pay for certain development expenses.

While being awarded the tax credits and investment from the Minnesota Housing Finance Agency is a big success, it is only one step toward completion for 15th Street Flats. Over the next few months, Commonwealth will work on detailed architectural drawings of the project and plan to seek bids in January and February 2018. Closing on the awarded funding should happen in spring 2018, with construction following soon afterward.

Backman is optimistic for the project’s future.

“This $9.3 million 15th Street Flats project is looking good,” Backman said.

West Central Tribune by Shelby Lindrud

Translate »