A new housing project in St. Louis Park would bring the city closer to its goals of affordable housing and environmental protection, but like most developments aimed at housing low-income Minnesotans, the developer says the building won’t work without public funding .
The proposed 60-unit Union Park Flats on Alabama Avenue adjacent to Union Congregational Church have more than $20 million in state tax credits and funds from Hennepin County and the Metropolitan Council, plus a smaller private loan estimated at $28.7 million US dollars received cost of building. Still, the Pride in Living developer project needs $450,000 more and is looking to St. Louis Park to fill the gap. The money would come from a revolving affordable housing loan fund seeded with money from the city’s tax increase finance (TIF) counties.
All of this public funding is needed, the developer said, because the low rents the building will fetch will not be enough to pay for a traditional bank loan.
“Because our rents are so low, we don’t have enough cash flow,” said Mandy Pant, project manager at Project for Pride in Living, a Minneapolis nonprofit.
The proposed Union Park Flats are just blocks from a future light rail station, and the developer plans energy saving measures and a rain garden. The apartments will only be for low- to middle-income individuals and families — people desperately wanted in St. Louis Park’s medical offices and restaurants, said Karen Barton, director of urban development. Some of the smaller apartments could be rented for less than $700 a month, according to Met Council affordability definitions, and the building will have 15 three- and four-bedroom apartments large enough for families.
Construction is expected to start in the summer.
“These are entities that we strongly support from a city standpoint,” said Jennifer Monson, St. Louis Park’s redevelopment administrator. “Getting cheaper and family-sized units is a high priority for the City Council.”
St. Louis Park has surpassed its goals for building affordable housing for middle-income people, Barton said, but isn’t there to build units for low-income people.
“We’re well on our way to meeting these goals, but they’re the hardest to achieve,” she said.
Of nearly 3,000 units under development at St. Louis Park, fewer than 800 will be affordable. Nonprofit organizations are developing almost all of the extremely affordable units for people earning 30% of the region’s median income or less — $35,200 for a family of four or $27,000 for a single person.
Some of the largest residential buildings under construction in St. Louis Park contain little or no affordable housing, according to City Assembly documents. Other cities are in a similar position: According to a report prepared for Edina’s Housing and Redevelopment Authority, this city has approved just 22 ultra-affordable housing in recent years — less than 3% of what the city will need by 2040 .
St. Louis Park officials presented a recommendation to the council this week to approve the loan, and the council will vote on funding in the spring.
The loan would be the latest of 10 grants, tax credits and loans behind the Union Park Flats project, Pant said, adding that it took years for all the various government agencies involved to approve all funding for the development.
Before public funding is locked in, a project can enter a spiral of escalating costs — meaning the developer has to ask for even more money and construction is further delayed.
“The project is getting more expensive, so you’re chasing your tail,” Pant said.