MN Housing board update: Bridges program modified, conversion of Fort Snelling buildings considered

At its March meeting, the Minnesota Housing board discussed changes to the Bridges program and the use of Agency tax exempt bonding to convert 26 historic Fort Snelling buildings into affordable apartments, the Upper Post Flats.

In her opening remarks Commissioner Mary Tingerthal informed the board that Minnesota Housing will move its office location this coming August. The Agency will be located in the renovated former Macy’s building in downtown St. Paul.

Modifications to the Bridges program

The board supported modifications to the Bridges Rental Assistance program. Bridges provides a transitional rent subsidy for people with serious mental illness who have applied for Section 8 or some other form of permanent housing assistance. A significant change approved by the board provides greater flexibility in the priority given for those experiencing homelessness. The criterion changed from people experiencing homeless for one year or more or multiple times in the prior three years, to people experiencing homelessness who require supportive housing. In response to a board question, Commissioner Tingerthal said that there were multiple funding sources for the Bridges program, including state appropriations and Minnesota Housing Pool 3 funds.

Restoration of Upper Post Flats at Fort Snelling

The board also considered potential use of Agency tax exempt bond funding to restore the Upper Post Flats. The proposal converts 26 historic buildings at Fort Snelling into 176 apartments. The board report stated that the project does not meet several threshold conditions of the Agency’s debt management policy. The board agreed to hear comments from several individuals who support the project.

DNR Commissioner Tom Landwehr explained to the board that the Upper Post 140-acre property has been owned by the state since 1971 and under the management responsibility of his agency. Five state and local agencies have jurisdiction for the Upper Post. After a failed first RFP to find a developer for the property, they issued a second RFP and awarded development rights to Dominium Corporation. Dominium was seen as the only entity with the experience and financial wherewithal to successfully restore the historic buildings.

A number of other speakers spoke to the historic significance of the Upper Post, its value as a location for affordable housing, and the urgency of moving forward with the Dominium proposal. Speakers included David Kelleher (policy director for the Minnesota Historical Society), Mary Lu Seidel (Chicago field officer director for the National Trust for Historic Preservation), Kyle Makarios (policy director for the Carpenters Union), Cara Letofsky (Metropolitan Council member and president of the Hennepin History Museum), and Hennepin County Commissioner Peter McLaughlin.

Minnesota Housing board member Rebecca Otto asked whether state or federal resources were available to fund the redevelopment of the property. It was later pointed out that, in addition to state funds already spent to stabilize the Upper Post buildings, there would be significant state and federal investment through their respective historic tax credit programs.

Paul Sween and Owen Metz of Dominium and attorney John Herman concluded the presentation by speaking to concerns about the cost of converting the property into rental housing. They presented materials stating that costs of the project on a per-square-foot basis and on a per-bedroom basis were comparable to the nearby CommonBond adaptive reuse to veterans housing of a nearby Fort Snelling building. They stated that this project is ready to go, and that they must act before potential federal tax reform eliminates substantial federal resources now available for the redevelopment.

After the presentations ended, Commissioner Tingerthal informed the board that the Agency’s potential role would be to issue conduit tax exempt bonds on behalf of the developer. While the developer has submitted initial application materials to the Agency for the project, many due diligence items would need to be completed before a complete application could be processed and presented to the board for its consideration.