A planned 180-unit, six-story mixed-income apartment complex within walking distance to downtown Rochester received support for a potential $4.44 million in public financing Tuesday.

“This is the deliverance on a promise we made several years ago,” said R.T. Rybak, Destination Medical Center Corp. Board chairman, referring to a goal of helping build affordable housing in Rochester.

The board unanimously approved committing $2.2 million in DMC state infrastructure funds to the $39.3 million project. It also supported a proposed nearly $2.24 million in tax-increment financing, which the Rochester City Council will consider on April 5.

The DMC funds will come from $7 million in state funding that the board has earmarked to support private development this year.

Rybak said those funds have helped spur development of hotels and other private projects in the past, but the board is hoping to focus on workforce and housing needs in the future.

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The proposed project, known as the Bryk on Broadway Apartments, will be built at the intersection of Civic Center Drive and North Broadway, across from the Kemps dairy facility.

The agreement approved Tuesday calls for 54 apartments to be targeted at households earning $50,000, which is 50 percent of the area median income. Another 18 units will be available for people earning nearly $61,000, with the remaining 108 apartments dedicated to households earning $78,500 a year, which is 80 percent of the area median income.

A November report to the board stated the plan calls for 115 one-bedroom apartments, 24 two-bedroom units and 41 studio apartments.

The number of planned apartments for the lowest income bracket increased from a goal of 36 in the November report.

An artist rendering shows the planned Bryk on Broadway Apartments from a November 2020 Destination Medical Center Corp. board discussion. The project is planned for the intersection of Broadway and Civic Center Drive.  (contributed)
An artist rendering shows the planned Bryk on Broadway Apartments from a November 2020 Destination Medical Center Corp. board discussion. The project is planned for the intersection of Broadway and Civic Center Drive. (contributed)

Kevin Bright, DMC EDA director of energy and sustainability, said the project goes beyond providing affordable rents for people earning less than the median income.

“The rents that you pay at a housing complex matter, but we also see some benefits of this specific housing development, given that it’s within walking distance to major bus transit networks, as well as biking and walking trails,” he said.

“Another benefit is the lower utility costs associated with the sustainable performance requirements tied to the DMC legislation,” he added, noting the building’s sustainability is expected to be 60 percent better than if it was merely built to code.

Catherine Malmberg, DMC Economic Development Agency’s interim director of economic development and placemaking, said the efforts come with added costs for developers.

The commitment to lower rents means developers will forego $8.7 million they could collect over the 30-year agreement, she said.

Additionally, Rochester Assistant City Administrator Terry Spaeth provided information stating the developers, Rochester resident Dirk Erickson and family members, have shown a $4.44 million gap in financing for the project.

The gap comes with a plan for the developers to provide $6 million in their own equity to fund the project.

DMCC board member Paul Williams, who is president and CEO of Project for Pride in Living, said that commitment is significant.

“I think it’s phenomenal to have a private developer willing to put their equity on the line in developing affordable workforce housing,” he said. “In the broader community development world, we would kill for this opportunity and this solution.”

Patrick Seeb, executive director of the DMC EDA, said the developers could have considered a market-rate project to fill the funding gap, but it would have required higher rents.

“In our own assessment, we do not believe this project could deliver on the board’s goal of workforce housing -- particularly at that 50 percent level -- without support from the city and DMC,” he said.

Rochester City Council President Brooke Carlson, who sits on the DMCC board, said she sees a variety of benefits in the project, including the potential to seek a grocery store or infant-care facility in the development’s commercial space.

“From my perspective as a city council person and as a DMCC board member, this is absolutely worth the investment,” she said.

With plans to seek city council approval of the TIF request, the project is expected to start construction this summer with a potential opening in December 2022.