Sherman project gets first OK for tax-exempt bonds
The affordable housing piece of Sherman Associates’ planned $125 million mixed-use development in downtown Minneapolis has cleared a financing hurdle with the Hennepin County Board as the project moves toward an expected summer 2019 start.
The board, acting as the Housing and Redevelopment Authority, took the first step last Thursday toward authorizing up to $16 million in tax-exempt multifamily housing revenue bonds for the proposed 90-unit affordable housing building at 500 S. Third St.
The $24 million housing project is part of a larger Sherman redevelopment that calls for 222 market-rate apartments in a 22-story building, 7,000 square feet of commercial space, a six-story parking structure and a new city fire station. Minneapolis-based ESG Architects has design duties.
The development site is at the southwest corner of Washington and Portland avenues. That’s right behind the Crooked Pint Ale House and Eagle Bolt Bar and about three blocks from the U.S. Bank Stadium light rail transit station.
Spencer Agnew, principal planning analyst with Hennepin County, said the board’s action was a preliminary authorization. In essence, it allows the developer to apply for a bond allocation from the state, he said.
The tentative plan calls for another public hearing before the County Board next spring followed by final approval in the summer. That’s contingent on the developer receiving approval from the state, Agnew said.
The bond issuance poses “no financial outlay or tax liability to the county,” Agnew said. “The bonds are solely payable from the revenue from the developer.”
Shane LaFave, Minneapolis-based Sherman’s director of multifamily development, said the project is on track to begin this summer. The County Board approval was “a good first step” toward issuance of the tax-exempt bonds, LaFave said in an interview.
“At the same time, we are working through the entitlement process with the city,” LaFave said. “Lots of plates spinning at the same time, but so far all is going as planned.”
Construction priorities include underground parking and the new fire station, which needs to be up and running before the existing station is torn down, LaFave said. The existing fire station is at 530 S. Third St.
The unit count for the market-rate building has been somewhat of a moving target. LaFave confirmed that the current plan is for 222 units. That’s down slightly from previous reports of 250 units.
LaFave said the unit count “may move around a little,” but he expects it to end up “very close” to the current plan.
A county staff report said the affordable building will offer studios and one-bedroom and two-bedroom apartments. Seventy-two of the apartments will be affordable to households at or below 60 percent of the area median income and 18 will be for households at or below 50 percent of area median income, according to the county.
Based on U.S. Department of Housing and Urban Development guidelines for Hennepin County, 60 percent translates to $39,660 for a one-person household and $56,580 for a four-person household, according to the staff report. The 50 percent limit ranges from $33,050 to $47,150.
Besides the revenue bonds, planned funding sources for the affordable building include 4 percent low-income housing tax credits, tax-increment financing from the city, affordable housing gap funding from state or local sources, and developer equity, according to the staff report.
Elsewhere in downtown, Sherman is constructing two apartment buildings and remodeling the existing Thresher Square building, 724 Washington Ave. S., into a hotel. The apartment projects are the 180-unit East End apartments at 721 Washington Ave. S., and a 122-unit building at 205 Park Ave. S.