A Bloomington apartment complex slated for rehabilitation will preserve more than 300 units of affordable housing as a result of the ownership’s effort to preserve affordable helping with the help of the city.
The 306 units that comprise the Village Club Apartments on the city’s east side are being sold to a nonprofit company that builds, maintains and manages more than 4,000 affordable housing units throughout the Twin Cities. During its Dec. 16 meeting, the Bloomington City Council approved a $7 million loan to Aeon for the rehabilitation and redevelopment of the Village Club site, which will eventually bring additional units to the multi-unit development south of Mall of America.
The project is the first under the city’s Affordable Housing Trust Fund, which was created last February under the city’s Opportunity Housing Ordinance. The trust fund will provide gap financing for Aeon’s purchase and redevelopment of the property, which needs rehabilitation due to deferred maintenance, according to Eric Johnson, the city’s community development director.
The $7 million will help Aeon address immediate health and safety needs at the property, including the installation of fire doors and Americans with Disabilities Act improvements, Johnson noted.
Cities and nonprofit organizations often struggle to preserve affordable housing in a community, as they have difficulty competing with private market investors who look to raise rents if they redevelop existing apartment complexes, according to Johnson. The Village Club opportunity required quick action on the part of Aeon and the city, which many cities are cannot facilitate due to a lack of resources, he explained.
The acquisition and rehabilitation are estimated at $50 million, and repayment of the $7 million loan through the city’s Housing and Redevelopment Authority is scheduled in two phases, with $3 million being repaid by 2021 and the remaining $4 million to be financed over 20 years, Johnson noted.
The agreement between the city and Aeon calls for at least 60% of the existing units to be occupied by renters with incomes no greater than 60% of the area median income. The remaining units would rent at no more than 80% of the area median income, and rent limits based upon those incomes are set as part of the agreement, according to Johnson.
Additional units added at the property would be provided to families earning no more than 60% of the area median income, he noted.
The city’s trust fund is being created through tax-increment revenue bonds that should help the city secure grants for additional affordable housing projects, according to Lori Economy-Scholler, the city’s chief financial officer.
The redevelopment project agreement is, “a wonderful activity for the city to enter into,” Councilmember Jack Baloga said, noting the expedience with which the agreement was struck. “We have an opportunity to do other kinds of things. I’m sure that the opportunities will exceed the capacity.
“It’s my hope that we exceed that capacity quite quickly.”
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