Developing as a social service

Lutheran Social Service of Minnesota is the state's largest provider of aid for refugee families, but the agency hasn't delved as deeply into owning and managing low-income housing over the years as have some other social service nonprofits.

That is set to change this year as LSS teams with veteran St. Paul apartment owners Rich Pakonen and Clint Blaiser in a $14.7 million effort to rehabilitate the Rolling Hills apartment complex on St. Paul's East Side, which in recent years has become a first stop for refugee families who have fled religious and ethnic persecution in Myanmar.

Under a deal expected close soon, LSS will become a development partner in Rolling Hills, with 51 percent ownership. With the help of project manager the Landon Group, LSS has succeeded in lining up the tax credits, grants and bank financing needed to carry out a rehab of the 1960s apartment complex.

Maureen Warren, vice president of special projects for LSS, said the nonprofit first became involved with Rolling Hills while working with the Karen people -- an ethnic group indigenous to southeastern Myanmar and western Thailand whose populations for many years were persecuted by Myanmar's totalitarian military regime.

The Karen are mainly Christian and were allied with opposition leader Aung San Suu Kyi, and so were seen as a threat by the Myanmar government. Many were forced to flee to refugee camps in Thailand as they were driven into extreme poverty by the physical destruction of their villages, the use of torture and forced labor.

Warren said the enclave of Myanmar refugees at the six-building, 108-unit Rolling Hills campus presented her group with a unique opportunity to concentrate its efforts in one place to help these refugees gain the footing they need to succeed in building new lives in the United States.

"We became aware of the property because it was serving some of the same people we serve," she said. "What appealed to us is that it's affordable, and it has efficiencies, one-, two- and three-bedroom units. Finding two- and three-bedroom affordable units is particularly a challenge."

The credits are marketed to socially conscious investors who can use their tax benefits and at the same time provide housing for the neediest people.

Late last year the quest was rewarded, and now the project is a go, Landon said.

"Just before Christmas we selected a tax credit investor, the National Equity Fund, and the Park Midway Bank has come aboard as the lender -- this is the first time they have done a loan for a low-income tax-credit project, so we're excited about that," she said.

In addition to apartment rehabbing, another key piece of the effort will be the construction of a new community center that LSS will be able to use as a one-stop shop for myriad social services needed by the Karen refugees.

Blaiser said the move makes sense as the next step for Rolling Hills, which his partnership has owned and managed for about a decade.

"But we're kind of market-rate apartment guys, and LSS are the experts at helping the refugees with things like finding jobs, career counseling and getting acclimated to our culture. In the end it's a win-win for everyone -- they will be nice, renovated buildings with a new community room."