First Homes plans to break ground on 12 workforce-priced townhomes Thursday.
The construction adds to the number of homes the Rochester Area Foundation initiative has in its community land trust throughout Southeast Minnesota. The new total will be 220.
“We are excited to be offering more affordable housing options to Rochester area families by expanding the community land trust with the construction of 12 workforce-priced townhomes,” Foundation President Jennifer Woodford said in announcing the groundbreaking,
The townhomes will be added to the Villas of Valleyside development, which was established earlier this century.
“It’s lots that are open that were never built on,” said Carrie Moscho, the foundation’s communication officer. “It’s all surrounded by units that were built already.”
The townhomes won’t be the first publicly funded housing options in the neighborhood.
In 2003, the Rochester City Council approved $140,000 in tax-increment financing, which helped build 14 townhomes in what was referred to as Villas of Valleyside 2. The related TIF district was decertified in 2015 after related payments were complete.
Additionally, some of the existing townhomes are already in the community land trust.
The new project is being funded with a Minnesota Housing grant of nearly $1.75 million. In addition to the state funds, the foundation received $60,000 from the Greater Minnesota Housing Finance Agency.
Moscho said the project is also made possible with the combined financing help of three banks — F&M Community Bank, Home Federal Savings Bank and First Alliance Credit Union — which are working under a participation model.
The new construction will offer a variety of floor plans similar to the townhomes already in the neighborhood, with pricing ranging from $150,000 to the low $200,000, according to Moscho.
The price range aims to be affordable for households earning 80 percent of the area median income, which is approximately $75,000 for a family of four.
The land trust takes the cost of the land out of the home-buying equation, since qualified buyers purchase the home built on the property and land ownership remains with First Homes.
When the home is sold, a resale formula is used to ensure the seller receives any established equity while also making sure the new purchase price remains affordable for the next homeowner.
The groundbreaking for the Villas at Valleyside project is set for 10 a.m. Thursday at 4210 Mallard Place SE.
The construction is expected to be completed in the spring.