Request for Committee Action
A briefing memo explaining the purpose, background, and impact of the requested action.
550 West Lake Street Affordable Housing Project: Housing Revenue Bond Issuance (RCA-2024-00263)
ORIGINATING DEPARTMENT
To Committee(s)
| # | Committee Name | Meeting Date |
|---|---|---|
| 1 | Business, Housing & Zoning Committee | March 12, 2024 |
Action Item(s)
| # | File Type | Subcategory | Item Description |
|---|---|---|---|
| 1 | Resolution | Bond | Passage of Resolution authorizing preliminary and final approval of the issuance of Tax Exempt Multifamily Housing Revenue Entitlement Bonds in an amount not to exceed $21,000,000 for the 550 West Lake Street project at 550 West Lake Street. |
Previous Actions
2023-01091 - 550 West Lake Street Tax Increment Financing (TIF) Plan
2023-01023 - 550 Lake Street Apartments Tax Increment Financing Plan: 550 West Lake St
2022-00036 - 2021 Affordable Housing Trust Fund Award recommendations
2021-00450 - Applications for environmental grant funding in the spring 2021 brownfield grant round
Ward / Neighborhood / Address
| # | Ward | Neighborhood | Address |
|---|---|---|---|
| 1. | Ward 10 | Whittier | 550 West Lake Street |
Background Analysis
550 West Lake Street is a new construction project proposed by Lupe Development Partners for the northeast corner of Garfield Ave S and Lake St W in the Whittier neighborhood of Ward 10. This project is the final phase of Lupe's redevelopment of the site and represents the developer's off-site production commitments under a previous phase's Inclusionary Zoning requirements. Phase 1 is a 111-unit affordable rental project that was completed in the fall of 2020 and Phase 2 is a 132-unit market rate development that completed construction in March 2022.
This Phase 3 will include 110 rental units in a 6-story building. The units will be affordable to households at or below 30%, 50% and 80% Area Median Income in a mix of 0-, 2-, 3-, and 4-bedrooms. Eighteen units are subject to a HAP contract and will be supported with Section 8 Project Based Vouchers and there are an additional six units set aside for homeless households. Simpson Housing is the identified service provider and services will be provided on-site. Simpson, Lupe and the property management team will enter into a Memorandum of Understanding that will specify the roles of each entity in serving the residents of the project.
In addition to the rental units, the project will include approximately 5,000 square feet of programming and amenity space and 1,000 square feet of commercial/retail space fronting Lake St W, noting that if retail is not feasible, the developer is prepared to convert this space to amenity if necessary. Project amenities include indoor bicycle storage, a community room, a business center, an exercise room, indoor play area for children and a pet washing/grooming station.
The total development cost for the project is currently estimated at $41,108,424. Developer participation in the project includes $400,000 in deferred developer fee. The total developer fee of $3,925,000 is in compliance with the City's developer fee guidelines. The project has secured all the necessary financing to complete the project, with the exception of this bond request. The applicant is requesting up to $21,000,000 in Tax Exempt Multifamily Housing Revenue Bonds, which represents the final funding approval needed for the project to proceed to closing in the Spring. Please refer to the attached Project Data Worksheet for details on the project sources and uses.
The developer is requesting and staff is recommending approval for the issuance of up to $21,000,000 in Tax Exempt Multifamily Housing Entitlement Revenue Bonds from the City of Minneapolis. This revenue bond allocation will enable the project to meet the required 50% test. The entitlement bonds will generate approximately $12 million in Housing Tax Credit (HTC) equity to the project as a source of funds.
The current status of the City's HRB Entitlement is shown in the table below:
|
Allocation |
Amount |
|
2022 Entitlement Remaining |
$46,275,254 |
|
2023 Entitlement Remaining |
$60,065,092 |
|
2024 Entitlement Remaining |
$64,519,662 |
|
Northrup King Building (pending) |
$(31,000,000) |
|
Wadaag Commons (pending) |
$(13,700,000) |
|
3030 Nicollet Ave Project (pending) |
$(26,500,000) |
|
550 West Lake (pending) |
$(21,000,000) |
|
Balance for other projects |
$78,660,008 |
Bond Purchase/Underwriter: US Bank
Tax Credit Equity Investor: US Bank
Bond Counsel: Kennedy and Graven
Council Member: Aisha Chughtai
ANTICIPATED PROJECT TIMELINE
Final Funding Approvals -- March 2024
Project Closing -- May 2024
Construction Start -- May 2024
Construction Completion -- August 2025
100% Lease Up -- December 2025