David Salmela, an award-winning Duluth architect, has a list of people waiting to move into Salmela-designed homes, which can sometimes fetch more than seven-figure prices. So does Seanne Thomas, a Twin Cities real estate broker who caters to entry-level buyers.

While many of Salmela's clients can afford the best design that money can buy, one of his latest is a St. Paul nonprofit that has hired him to design more than a dozen modular, solar-powered houses that are being craned into place on a redevelopment site in one of the poorest neighborhoods in the city.

With a star architect and high-end materials and construction techniques, the project shatters many of the stereotypes about the quality and character of affordable housing.

"Just because it's affordable doesn't mean it can't be quality," said Thomas, who says buyers have been waiting more than a year for a chance to buy a house in Village on Rivoli, which is among the biggest single-family housing developments in St. Paul in decades.

Thomas, who will market the homes for the Dayton's Bluff Neighborhood Housing Services, has high hopes that the project will help boost housing values in the area and set a new standard for the way affordable housing is built in the Twin Cities.

The houses will be priced at less than $250,000 — a fraction of what most new homes sell for today and a hot commodity at a time when house prices are increasing swiftly as buyers scramble to outbid one another.

During just the past eight years the median sale price of a house in the Twin Cities has doubled to more than $300,000 and options for first-time buyers are dwindling. At the end of February, just 556 houses priced from $190,000 to $250,000 were for sale in the Twin Cities metro — about half as many as the year before, according to the Minneapolis Area Realtors.

The Village on Rivoli project has another mission: train a new generation of workers in a modular housing factory that will replace a vacant warehouse near downtown St. Paul. That effort is being led by Gary Findell, a Twin Cities general contractor who wants to reduce the cost of modular houses by building them closer to their construction site.

"We felt strongly that building these where they're going to be located, and using local labor is a really good thing," he said.

The Village on Rivoli is part of a larger redevelopment project in Railroad Island, a working-class neighborhood that's in the heart of one of the poorest census tracts in St. Paul.

Jim Erchul, executive director of the Dayton's Bluff Neighborhood Housing Services (DBNHS), has shepherded the project through several economic ups and downs and has patiently navigated the complexities — and delays — that are inherent when working with the bureaucracies that help make these projects happen.

Findell, a former landscape architect, has been involved in the redevelopment project for many years. About three years ago he founded NeuHus and plans to launch his own modular-housing factory in the Midway neighborhood in St. Paul in partnership with Extreme Panel Technology in Cottonwood, Minn., and several business partners and investors.

While he firmly believes that factory-built homes can be more affordable than those built on site, he's not the first to try. Several Twin Cities nonprofits, including the Dayton's Bluff group, have experimented with the idea with mixed results.

"They work well, but weren't putting locals to work and we weren't saving money," said Erchul. "The math didn't work."

With construction costs at record highs, Findell is determined. He plans to use structural insulated panels, which are insulating foam cores sandwiched between structural panels, that can be used for the floor, walls and roofs. It's a system, advocates said, that is more energy efficient and less expensive than site-built wood-framed walls because they can be assembled with precision inside a factory.

Salmela joined the effort more than a year ago after meeting Findell at an event where the architect was speaking. Already, the team has partnered on a handful of privately commissioned houses that are being built with the insulated panel technology.

Findell said Salmela's designs lend themselves well to the narrow, 16-foot wide sections being used at Rivoli. The first two are being built by Northstar Systembuilt in Redwood Falls, Minn., but the others will be built in the Midway facility, which will employ 40 to 50 workers. Some of the first employees, he said, will be graduates of City Academy's YouthBuild program who will be mentored by experienced carpenters and other trades people.

Findell said the 16-foot sections create an opportunity for Salmela to employ a fundamental design element: big windows on at least two sides of every room and an open stairwell that allows light to filter from one floor to the next.

"This has been a guiding factor all my life," said Salmela. "And I'm applying it here."

Findell knew it was the right concept after staying in a similarly sized rental home Salmela designed in Grand Marais, Minn.

"I realized that the 16-foot house width was really livable ... with the quality of the light and air," he said. "That made me look at different ways of putting the house together."

Compared with more traditional houses that were built in earlier phases of the Rivoli project, the Salmela designs are more compact. The houses will have 1,280 square feet including three bedrooms, two bathrooms, an eating area and laundry. But with natural light flowing into the rooms and long views toward downtown St. Paul, the houses will feel much larger, Salmela said.

Findell said that by reducing the size of the houses, he's able to spend that money on finer elements such as H Windows, a high-end product that's made in Ashland, Wis.

"Instead of paying for another 300 square feet of volume, we're using better materials to build a house that's going to perform better," he said.

Last month, crews started building the first two houses. For each dwelling, cranes stacked two 16-foot by 40-foot sections atop a concrete block garage that's 8 feet shorter than the two sections above. The cantilevered top sections create a sheltered ground-floor entry space. The south-facing end of the house will be covered with solar panels that are expected to generate most, if not all, the power that's used by residents.

"There's a beautiful graphic abstraction to the structure," said Salmela. "There's something very intriguing about it."

With the first two homes already craned in place, the team is tweaking the design of the next several.

While about two-thirds of the work is being done in a factory, the onsite work will be done by union labor, which adds to the cost of the project, said Erchul. While that's far less expensive than most new homes in the area, the houses will still require a subsidy that will cover the gap between what the houses cost to build and what they can charge. Buyers can earn no more than 80% of the local area median income. For a family of four, that's $78,500.

Thomas said she won't start marketing them until they are finished, furnished and photographed, but with buyers regularly competing with 10 offers or more on every property, she expects them to go quickly.

"People have been waiting for this for more than a year," she said. "This is just a drop in the bucket [when it comes to satisfying demand], but I think it could become a new model."

Jim Buchta • 612-673-7376