SWMHP hoping to move forward with rental units
WORTHINGTON — The Southwest Minnesota Housing Partnership is proposing a new 60-unit apartment complex.
“As everybody knows, the housing in Worthington is critical as far as demand,” said Rick Goodemann, executive director of the Southwest Minnesota Housing Partnership. “We have been unable to fill the demand quickly enough. Every time we do a market analysis, we are falling further and further behind.”
During a meeting Thursday afternoon at the Biotechnology Advancement Center, Goodemann and Warren Hanson, president of the Greater Minnesota Housing Fund, talked with approximately 20 people representing the city, county and local employers.
“We’re really talking about a 60-unit property,” Goodemann said. “We’re looking at eight one-bedroom units, 38 two-bedroom units and 14 three-bedroom units. The main mechanism for getting this project financed is the low-income housing tax credit program.”
Goodemann said to qualify for the program, an application has to be submitted.
“That’s a very competitive application,” he said. “Tax credits are awarded to the project based on meeting a point system and criteria. We get the tax credits and sell those to investors. The equity comes in and funds a portion of the project. In this case, it would be 73 percent of the project.”
Without those tax credits, the ranges of rent can’t be met.
“That’s the major problem,” Goodemann said. “How do we get this done? How do we meet bringing rents that are affordable to the workforce and the median incomes of the community? That’s why the private sector isn’t stepping in and building units.”
Using tax credits for housing targets entry-level workers, Goodemann said. In the 54 proposed income-restricted units, a person or family must be below 60 percent of the area median income. For example, a single person can’t earn more than $25,500. The limit for two people is $29,160, and continues to rise depending on the number in the household. However, just because a household earns more money, that doesn’t mean the rents will increase.
“Once they qualify for the unit, their income can rise indefinitely,” Goodemann said. “Nobody has to leave because their income goes up.”
The building that is being proposed is a 101,742-square foot, three-story building with underground parking. The building’s proposed location is Grand Avenue, near the Northland Mall and Hardee’s. The total development cost is $11.65 million.
Goodemann said the hope is to apply for 2015 tax credits, with construction scheduled to be completed by 2016.
One of the big needs for the project for getting tax credits approved is local participation.
“Low-income housing tax credits are extraordinarily competitive,” Goodemann said. “For every four applications or five applications, one is selected.”
Goodemann said the partnership has experience in these types of projects.
“We are pretty successful at this,” he said. “Last year, we received two out of three; the year before we received three out of three. We are pretty good at this, but it requires a lot of cooperation from the local community to be successful.”
That was the message that Goodemann and Hanson were trying to convey Thursday to employers in the room. As an example, they used the recently-funded Jackson housing project in which AGCO gave a large zero-percent deferred loan.
“That was the only reason Jackson was funded,” Goodemann said. “Without that, we would not have gotten funded.”
For the Worthington project, the goal is to raise $350,000 to $500,000 in employer contributions through investments, loans or grants.
“What we want to do is to make sure there is enough participation,” Goodemann said. “Minnesota Housing doesn’t define what enough participation is; they’re saying significant. We don’t have a lot of clear direction on how much is enough.”
More involvement gives the project more points in the application process, which are used to determine which projects are funded. Employer involvement can be worth up to 24 points. Jackson, for example, scored 74 points when the tax credits were awarded. Without community involvement, the project will not move forward, Goodemann said.
Hanson said the Greater Minnesota Housing Fund would be able to provide some matching funds for employer contributions.
Daily Globe Community Content Coordinator Aaron Hagen may be reached at 376-7323.