Amber Union brings affordable apartments to historic 1940s building in Falcon Heights

A 75-year-old, quasi-Art Deco office building in Falcon Heights has new life as an affordable housing project.

Amber Union offers 125 apartments for residents making 50% of the area median income.

With numerous sources of public financing, Edina-based Buhl Investors led the $57 million redevelopment project. City and federal officials gathered Thursday for a ceremonial ribbon-cutting in the lobby that features vintage terrazzo floors under an art deco light fixture.

The U.S. Department of Housing and Urban Development (HUD), the project's main lender, provided $18.2 million in financing.

"We are having an affordable housing crisis. We are losing many more affordable units than we are constructing," said Michele Smith, the Minnesota field office director for HUD.

Project financing also includes state and federal historic tax credits, low-income housing tax credits, grants from Ramsey County and the Metropolitan Council, and tax increment financing from the city of Falcon Heights.

A recent report from the St. Paul-based nonprofit Minnesota Housing Partnership found that between 2013 and 2019 the metro area lost 52,000 affordable housing units and only completed financing for 7,762 new affordable units. The losses, according to the nonprofit, are driven by the expiration of affordability requirements.

Amber Union offers studios up to four-bedroom units. More than three-fourths of the apartments have two or more bedrooms. The building includes 59 two-bedroom units, 28 three-bedroom units and four four-bedroom units.

Affordable apartments cost essentially the same as market-rate units to build. The Amber Union project budget breaks down to a cost of $456,000 per unit.

"You can't do this cheaply," said Harry Mohagen, a director at Buhl Investors.

Factors that contributed to the cost were the use of 100% union labor, as required by HUD financing, and the need to tap specialized trade workers to maintain historic features in the property, Mohagen said.

Affordable housing developers typically tap tax credits and other public sources of money to close the financing gap between market-rate and affordable rental rates.

Buildings must be on the register to earn historic tax credits. That also brings historic requirements governing modifications to the property.

Mohagen said that the building's layout lent itself to a residential conversion. A separate building that housed a parking garage was also converted and is now home to 39 units. The two buildings are connected by a short skyway.

The building still sports the original, large aluminum-framed windows.

Buhl acquired the building in 2019. After completing a renovation of the Soap Factory building in Minneapolis, a project that included historic tax credits, the developer began scouting for other older properties.

The developer weighed retaining office space in Falcon Heights but switched gears after learning of the city's interest in new affordable housing.

The building was largely vacant in recent years. It did house the nonprofit TIES Center, which supports students with disabilities, earning its moniker as the TIES Building.

Amber Union is now 60% leased, and 40% of the units are already occupied. Residents began moving in during October.