Tax credits approved for apartments in former school
NEW ULM — One of the first steps to alleviating New Ulm’s housing shortage is moving forward now.
Tax credits for the State Street Apartments, currently being developed by the Community Housing Development Corporation (CHDC), were approved Thursday.
“It was great news to get the final piece put together (Thursday) and learn that MHFA (Minnesota Housing Finance Agency) is going to go ahead with this and allow the corporation to come in and undertake this project and get the tax credit housing going because we are in desperate need of affordable rent units in the city of New Ulm,” Dan Braam, the chair of the New Ulm Housing Needs Initiative Task Force, said.
The apartments are expected to cost $15.3 million. The largest portion of funding, just under $8.1 million, comes in the form of the low-income housing tax credit (LIHTC).
LIHTC started in 1987 and is a federal income tax credit. The credit is awarded to owners who can then sell the credit to investors to generate capital for a project.
Minnesota Housing’s partner, the Greater Minnesota Housing Fund (GMHF), committed $547,000 to the project, as well, Megan Ryan, the director of communications for MHFA, said.
The fund is a nonprofit founded in 1996 to address affordable housing needs in underserved regions of the state, according to its website.
The remaining $6.6 million will come from city tax increment financing, which passed preliminary approval in June, and from state historic tax credits.
Work is expected to start on the 55 units in mid-2018 and wrap one year later. Potential tenants may apply starting in early 2019, four months before the apartments are open.
“This project reflects New Ulm’s deep community values by preserving a historic asset while increasing housing opportunities for families at a variety of income levels,” CHDC Senior Vice President Heidi Rathmann said. “As a nonprofit developer, we are honored to help the City of New Ulm meet its housing goals.”
The project was not always guaranteed. Earlier this summer, the project had been eliminated from further consideration by the MHFA.
A lack of a community action plan is what the agency cited when it first cut the project, Braam said.
That confused the task force, which was involved in putting the plan together, so they appealed the decision, Braam said.
After MHFA representatives came out to examine the building and a groundswell of local support, the MHFA reversed its position.
The Minneapolis-based CHDC purchased the future apartments from CentraSota LLC last spring, after the latter had stopped paying utilities, causing havoc with the attached State Street Theater Company (SSTC).
CentraSota and SSTC received their respective halves of the building from CENATE, a citizens group that had purchased the building in 2014.
Connor Cummiskey can be emailed at email@example.com.