ROCHESTER — A pair of public hearings Monday will make way for potential financing of two planned affordable housing projects in Rochester.
The Rochester City Council will accept input on requests to issue tax-exempt Housing Revenue Bonds for
a 76-unit complex planned at the southwest corner of the existing Civic Center North Parking Lot,
217 E. Center St., and the first phase of a 141-unit complex south of Civic Center Drive near Fifth Avenue Northwest.
Both projects are seeking tax-exempt financing and state tax credits to produce apartments that will include units with rent deemed affordable to households earning 50% of the area median income, according to reports
prepared by Senior Administrative Analyst Brent Svenby.
The Civic Center adjacent project, being developed by Sherman Associates, seeks to create the 76-unit affordable complex for senior housing in tandem to a 265-unit market-rate residential tower at the Center Street site west of the Zumbro River bridge.
Rochester was awarded an allocation of $16 million in potential bonds for the project in January, which will expire in July, if they are not issued to the developers.
“The bonds give the borrower access to tax-exempt financing, which means lower interest costs and allows the borrower to obtain 4% Low-Income Housing Tax Credits, which generate a significant source of equity for the project,” Svenby’s report to the City Council states.
If the bonds are issued, the related debt would be secured using the developer’s assets under the related loan agreement. No money is expected to pass through the city’s books, and the city will not make any pledges to pay the debt.
“The bonds will not constitute a general or moral obligation of the city,” the report states. “They will not be secured by or (be) payable from any property or assets of the city or by any taxing power of the city.
“The bonds will not affect any debt limitation imposed on the city and will not have any adverse impact on the credit of the city, even if the borrower encounters financial difficulties with respect to the project.”
The city is planning its own support for the Sherman project, with the council being asked to approve
up to $13.5 million in tax increment financing.
The separate action will be considered on Monday with the council acting as the city’s Economic Development Authority.
While the Sherman project appears to be moving forward with the ability to secure the bonds, Svenby reports the project near Civic Center Drive could see a delay.
“At this time, it doesn’t appear that the borrower will be able to close on the bonds by the expiration date,” he reported to the council in connection to a potential $24.7 million in bonds for Onward Investors, which is
developing the project dubbed The Loom Apartments.
Contributed / Onward Investors
If Onward cannot close on the bonds before they expire in July, a second application can be extended. By holding the public hearing Monday, the council would meet obligations for the current or the future financing.
City involvement in obtaining bonds for housing projects isn’t new, but it’s been a few years since Rochester has used the option.
The city’s last support for housing bonds was for the 128-unit Bella Grove project in 2019. Before that, affordable housing projects that received bonds included River Glen, Flats on 4th, and Eastgate developments.
Meetings scheduled to be held during the week of June 16 include:
Rochester
• City Council, 6 p.m. Monday in council chambers of the city-county Government Center, 151 Fourth St. SE. The meeting will livestream at
rochestermn.gov/meetings/council-meetings
and be available on Spectrum cable channel 180 or 188. The council will also meet as the city’s economic development authority.
• Library Board, 4:30 p.m. Wednesday in the first floor meeting room of the Rochester Public Library, 101 Second St. SE.
Olmsted County
• Physical Development Committee, 1 p.m. Tuesday in conference room 1 of the Government Center.
• Health, Housing and Human Services Committee, 2:30 p.m. Tuesday in conference room 2 of the Government Center.
• Administrative Committee, 4 p.m. Tuesday in conference room 1 of the city-county Government Center.
• Board of County Commissioners, 6 p.m. Tuesday in the board chambers of the Government Center.
• Board of Appeals and Equalization, 7 p.m. Tuesday in the board chambers of the Government Center.
• Sheriff’s Civil Service Commission, 8 a.m. Wednesday with the location to be posted at
olmstedcounty.primegov.com/public/portal.
Rochester Public Schools
• School Board, 5:30 p.m. Tuesday in the boardroom of the Edison Building, 615 Seventh St. SW.
