Plans for a 164-unit apartment complex in an industrial zone overcame an uphill battle to open in 2019, fueling support for a proposed second phase.

“There is a need for this kind of housing there,” Rochester Planning and Zoning commissioner Kraig Durst said Wednesday before the commission voted 6-1 to recommend approval of a preliminary plan for an additional 141 apartments to be built.

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Nate Stencil of the Sioux Falls-based Stencil Group said the success of the Technology Park Apartments, 3731 Technology Drive, pointed to expanding the project on a neighboring lot.

“Both buildings filled within about 90 days, demonstrating a strong need for this type of housing at this price point,” he said of the first phase that included two apartment buildings.

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Forty percent of the initial apartments rented at rates affordable to people earning 60 percent of the area median income, and Stencil said the price was obtainable without access to state or federal tax credits.

The proposed new development is expected to use similar funding support to keep rents at lower rates.

Patrick Ostrom of Real Estate Equities said the approach to creating housing, which includes using land purchased outside traditional residential neighborhoods, has made the project possible.

“We think it’s a great use for the city and the site,” he said.

While the commission supported the project, Desmond McGeough, a planner with the city’s Community Development Department, said city staff is recommending denial, largely based on location.

“We are concerned about the commercial inventory loss at this particular location,” he said.

Durst said he sees the project as a benefit to the businesses in the area, saying he seen peoplewalking from the apartments to jobs at nearby Crenlo and CostCo.

“These businesses need people to work there and not everybody has a driver's license and not everyone has a car,” he said.

In 2017, Stencil struggled to make a similar argument, failing to get support from city staff or the planning and zoning commission. A split Rochester City Council eventually approved the project.

Commissioners cited the outcome of that decision Wednesday as they voted to recommend the added development.

“We have heard about the need for affordable housing, and there was an exception made, so there’s a precedent,” commissioner Asif Hossain said.

The city council is expected to review the preliminary plan for the project next month.