The Bloomington City Council on Monday approved a $15 million Affordable Housing Trust Fund, just in time to save more than 300 affordable units at Village Club Apartments from going to a developer that might raise rents.

City officials and the Housing and Redevelopment Authority (HRA) gave the go-ahead to loan $7 million to nonprofit developer Aeon, which will purchase and make improvements to Village Club, located in the South Loop district.

Village Club recently went up for sale, with a closing deadline of Dec. 27. Not wanting to see the property's 306 units go to a private developer, city officials accelerated the process of launching the affordable housing trust fund, which had been planned for 2020.

Eric Anthony Johnson, the city's community development director and interim HRA administrator, called the process an "anomaly" given the quick turnaround time and shared commitment to the work among City Council and city staff.

"The problem is that communities can't often respond fast enough to preserve [affordable units]," Johnson said, explaining that when a property goes on the market, cities often can't compete with national private market investors who then often raise rents. He said the trust fund will allow the city to be "flexible and nimble" to respond to those opportunities to save or create affordable housing.

The trust fund leverages existing city funds along with assistance from Old National Bank and won't put additional pressure on taxpayers, city officials said. Aeon agreed to repay the city $3 million by 2021 and the remaining $4 million over 20 years.

"The critical part here is, this is not an increase to the levy," said Council Member Jack Baloga. "The degree of cost to create 306 affordable housing units is far, far, far greater than what the city is lending to Aeon and having returned."

Aeon plans to spend much of 2020 addressing health and safety repairs at the property and then begin a rehabilitation process. The nonprofit also will apply for other public funding to construct up to 300 additional affordable units on the property.

Establishing an affordable housing trust fund was one of the goals of the city's opportunity housing ordinance, which went into effect in September and offers incentives to affordable housing developers while aiming to be flexible enough to meet their needs.

"Affordable housing trust funds are not standard in the suburbs," said Cherie Shoquist, Bloomington's HRA analyst, who said she went to work for the city because of its demonstrated commitment to affordable housing. "This isn't just about being the right thing to do, it's about an economic standpoint. What's really needed for working families in Bloomington is just affordable apartments."

Under Aeon, at least 60% of the existing Village Club units will be saved for those with incomes no higher than 60% of the area median income. The remaining 40% will be for those with incomes at 80% or less of the area median income.

Aeon CEO Alan Arthur said the need for affordable housing continues to grow.

"We are proud to work with the city of Bloomington as it provides groundbreaking leadership to preserve and create affordable housing for all residents," he said.