An unusual trio appears set to pull off an unusual real estate project: an apartment complex for middle-wage workers in a high-profile spot across from U.S. Bank Stadium in downtown Minneapolis.
And they are doing it by taking advantage of the stadium’s hosting of the 2018 Super Bowl to get financing help.
“We are leveraging a moment in time,” said Carl Runck, director of development for Ryan Cos., the private developer partner helping steer the project.
The city in recent years has seen many new luxury apartments pop up, along with a few affordable housing projects in which rents are subsidized. But new housing options for the moderate-income worker — those who earn too much to qualify for a subsidy yet not enough to pay for high rents — have been left out of the downtown residential boom.
Ryan, First Covenant Church, and Community Housing Development Corp. (CHDC) a year ago outlined a rough vision for a six-story apartment building across S. 6th Street from the new Vikings stadium. This week, they submitted to the city a near-final plan for the $38 million project, which was designed by UrbanWorks Architecture.
The financing model is key to the project. Workforce housing, or that which is accessible to people making 50 to 60 percent of the area median income, is difficult to execute. Developers need to make money on a project, and there are two ways to do that typically: build market-rate apartments that fetch rents high enough to pay back the cost of construction or build units for low-income earners that are eligible for government subsidies.
But Ryan, First Covenant and CHDC found a way to make the math work for their project, one that takes the Olympics for inspiration. They have an unnamed private partner with a nice budget for housing and operational space during the Super Bowl festivities that is close to committing to the project.
Since the building’s site is within the Super Bowl’s required security perimeter, 500 feet from the stadium, the group plans to first rent the building to this private entity at a rate that would make the project financially possible — and without subsidy.
This yet-to-be-named partner is working on an expedited timeline that would require the project be complete by November 2017, or three months before the Super Bowl. Elizabeth Flannery, president of CHDC, said the site’s proximity to the stadium makes her confident they will rent the building for the event.
Flannery said it will be a miniature version of the Olympic Village model, in which host cities have benefited from the event’s housing investments by transitioning those buildings to affordable rentals after the event.
The project’s history goes back several years to when Ryan Cos. was mapping out its Downtown East project — the apartment, retail and two-tower Wells Fargo office development on the other side of the stadium.
Public officials blocked the Minneapolis developer’s plans for a workforce housing project because it would require tax-credit financing, and officials felt the redevelopment effort was already receiving enough public assistance.
CHDC and Ryan Cos. put the effort aside until they came across Dan Collison, whose congregation has wanted to transform the city block the church sits on into a wellness-oriented facility.
First Covenant Church, which shares a block with the former Hubert’s Cafe and Sports Bar, already leases its space to an early childhood education center and to Hennepin County for a seasonal overnight homeless shelter. Housing was next on its list.
“This land has become really valuable, and Dan’s congregation had a choice and they chose this type of use,” Runck said.
The group orchestrated a parking lot land swap with the new owners of the Hubert’s site, giving the restaurant — soon to be renovated and reopened as Erik the Red — a parking parcel closer to the restaurant and freeing up the corner for the workforce apartment building.
The building will have between 160 and 170 apartments, ranging from studios to three bedrooms, with some offering balconies, a rarity in affordable housing.
It will include a 188-stall, underground parking garage and 53 surface spots. More than 12,000 square feet of commercial space will line the first floor on the 6th Street side. According to the document submitted to the city, the development group expects this space to be leased by “a local, mission-driven community nonprofit that focuses on youth development, healthy living and social responsibility.”
CHDC owns about 4,000 affordable or workforce housing units throughout the Twin Cities, but Flannery said the challenge with downtown is the cost.
“It’s hard to make it work because there aren’t financing mechanisms out there for these projects,” Flannery said.
The central city runs on the work done by people in this bracket — making between $20,000 and $55,000 a year, depending on household size — yet there’s a dearth of nearby housing options for them.
The group hopes the workforce housing project can help fill the wide gap between low-income rentals and high-income rentals in downtown Minneapolis, and in particular, the booming east downtown area near the stadium.
“There’s a crazy shortage of workforce housing downtown and yet we know there’s huge demand,” Flannery said. “Most people don’t understand that the market doesn’t take care of housing. So the opportunity to develop high quality, safe, affordable housing for people who work nearby in huge.”