Walls are already going up, but a postponed groundbreaking ceremony was held Thursday for a new mixed-income housing complex in Northwest Rochester.
The ceremony for the Technology Apartmentsproject was a welcomed event for participants.
"Like many communities, Rochester has a clear and demonstrated need for affordable housing," Rochester City Council President Randy Staver said during the event.
The groundbreaking came approximately six months after construction efforts started on the 164-unit complex at 3731 Technology Drive, next to Benchmark Electronics.
It was also two months after the initial ceremony was called off due to subzero temperatures.
With construction already underway, the first of two buildings is expected to be complete in September and the second is slated to be ready in December. Bill Bisanz, the CEO of Real Estate Equities, said marketing efforts could start as early as May, with a temporary rental office planned to open this summer.
While not receiving public subsidy, the $19.7 million project is expected to provide apartments catering to households earning 60 percent to 80 percent of the area’s annual median income.
Approximately half of the planned 164 apartments will have two bedrooms, with the remainder being either one-bedroom units or studios, according to Bisanz.
Forty percent of the units will be priced affordably for individuals earning an annual income of $40,000, which is approximately 60 percent of the area’s annual median income. It puts anticipated rents at an estimated $1,150 a month for a two-bedroom apartment.
At least another 35 percent will be rented at prices targeting residents earning 80 percent of the city’s median income, or about $55,000 a year. The remaining apartments are expected to be priced approximately $200 to $300 less than similar apartments in the area.
Bisanz said the prices are possible based on how the project is being financed and constructed.
Real Estate Equities has worked with Merchants Capital to secure a 10-year loan through a first-ever Freddie Mac program that doesn’t rely on tax credits and secures an early interest rate.
Additionally, the Greater Minnesota Housing Fund has committed $3.4 million to help keep rent prices down.
On Thursday, Warren Hanson, president and CEO of the Greater Minnesota Housing Fund, said the planned rents could have been even lower if traditional subsidies were obtained.
The project, which was initially approvedby the Rochester City Council in 2017, failed to receive $1.1 million in tax-increment financing sought by Sioux Falls-based Stencil Group, which delayed construction until Real Estate Equities purchased the land and secured the innovative financing.
Hanson said the effort, which is the first in the nation to use the financing option, is something he hopes can be duplicated.
"We consider it to be an example we can export throughout the state," he said.