'Grand' living: Construction of 48-unit Grand Terrace to begin in late summer
WORTHINGTON -- With just six vacant units remaining in Worthington's newest housing development, Rising Sun Estates, Southwest Minnesota Housing Partnership is gearing up to build another 48-unit apartment complex in the community.Unlike Rising S...
WORTHINGTON - With just six vacant units remaining in Worthington’s newest housing development, Rising Sun Estates, Southwest Minnesota Housing Partnership is gearing up to build another 48-unit apartment complex in the community.
Unlike Rising Sun’s market rate units, Grand Terrace Apartments will be available to individuals and families who meet initial income qualifications of 60 percent of the area median income, according to Rick Goodeman, Chief Executive Officer of Southwest Minnesota Housing Partnership (SWMHP).
The 48-unit complex will be constructed north of Oxford Street and west of the planned Grand Avenue street extension. With the infrastructure already in place, Goodeman said he’s hoping for the street to be in place by the time construction of the apartment building begins in late August or early September. Construction on the complex is estimated to take 11 months to complete.
The two-story apartment building will include eight one-bedroom, 31 two-bedroom and 11 three-bedroom units. Goodeman said preliminary plans also include a community space and a computer lab.
Grand Terrace Apartments will be funded through a low-income housing tax credit program within the Minnesota Housing Finance Agency. Construction will be financed through private activity bonds and 4 percent tax credits, Goodeman said.
While there will be initial income qualifications, Goodeman said once a family has secured a unit, their income can grow and there is no limit on how much.
“It’s meant as more of an entry level workforce type of project,” he said. “It’s really designed and fills a portion of the entry level workforce need. The need is pretty overwhelming, but we keep chewing off parts of it.”
SWMHP is no stranger to housing projects in Worthington. The agency spearheaded the Rising Sun Estates development, and also led recent renovations to the 48-unit Nobles Square Apartments.
“We’re trying to preserve properties,” Goodeman said. “Even though (Nobles Square) wasn’t meeting the need for new product, it was keeping product that was there in better condition and longevity, so we weren’t losing any more (housing).”
The housing partnership also owns Viking Terrace, Willow Court and the New Castle townhomes in Worthington.
Goodeman said the lack of resources, including cuts at the federal level and overwhelming demand across the state, has made it difficult to secure the resources needed to complete more housing projects in Worthington.
“This project is certainly helpful, but getting a project every two or three years is not going to solve the problem,” he said. “We’re really excited about this - obviously it’s going to meet a need, and we can’t wait to get this going.”
Randy Thompson, executive director of Worthington’s Housing and Redevelopment Authority, which owns and manages Rising Sun Estates, said it has just three 2-bedroom units and three 3-bedroom units available after opening about five months ago.
“It has filled a little bit faster than we’ve anticipated,” Thompson said, adding that the HRA anticipated it would take at least six months for all of the apartments to be rented.
The 48-unit Rising Sun Estates consists of 32 three-bedroom units and 16 two-bedroom units, with market rate prices set at $850 per month for a two-bedroom unit or $950 for a three-bedroom unit. Thompson said occupants include a cross-section of people, from college students to young families and the semi-retired.
While Rising Sun Estates has helped to take a little pressure off of the city’s housing needs, Worthington Director of Community and Economic Development Brad Chapulis said the city remains at essentially a 0 percent vacancy rate.
“There definitely is a need for housing across the spectrum,” Chapulis said.
“We’re seeing new family construction start-ups - spec homes - being built at a little better pace than what we have been the previous five years, so that’s a good sign,” he said. “However, we still have a need that’s been exemplified in the 2013 housing needs assessment.”
The housing study completed two years ago identified a need for 80 to 85 market rate units, and 170-175 affordable rate units to be constructed through 2020 in Worthington. Just two years into that assessment, the only units constructed were Rising Sun Estates.
“Rising Sun Estates is a unique situation where we borrowed money to an internal agency to provide housing,” Chapulis said. “We’re not structured to where we can be playing the role of gap financing.”
Instead, the city’s role is to try to incentivize private sector investment in the rental market. Such was the basis for the Nobles Home Initiative. As of yet, the five-year tax forgiveness program hasn’t attracted developers to complete multi-family housing projects, however, Nobles Home Initiative has been successful for single-family home construction.
Chapulis said a sustainable model for housing expansion in Worthington is to get private sector investment into the industry and the economy, and to work at a pace that won’t flood the market.
“We need to look at it from a standpoint of bringing those units into the market in a way that’s going to aid the growth of the economy and not injure it,” he said.