MANKATO — The Mankato City Council enthusiastically endorsed a nearly $23 million plan to transform the last large vacant property near downtown Mankato Monday night.

Presented with three competing concepts for redevelopment of the 5-acre lot just north of Cub Foods West, the council approved a proposal to bring dozens of affordable apartments, a supportive housing complex for families at risk of homelessness and a large new preschool/daycare.

All three components of the project developed by the Southwest Minnesota Housing Partnership and engineering firm ISG address critical deficits in the city, according to Mankato Housing and Economic Development Coordinator Kristin Prososki.

"The proposal really went the furthest to meet the documented community needs," Prososki said.

Council member Karen Foreman said the child care component pushed that proposal to the top.

"I found that to be a very compelling aspect of their proposal," Foreman said.

Council members unanimously authorized City Manager Pat Hentges to negotiate a detailed development agreement with the Southwest Minnesota Housing Partnership (SMHP), including what level of local property tax subsidies might be provided, and bring a final contract back to the council in May or June. The contract, under the resolution passed by the council, will give SMHP development rights for the next 18 months and the Slayton-based nonprofit must "secure financing for a major component of the phased project within 12 months."

The winning proposal includes a $10.2 million 48-unit apartment building with 36 units reserved for renters earning less than 60 percent of the median income in the area (the median income for a family of four in Blue Earth County is about $75,000). Rents for one-, two-, and three-unit apartments would be $585, $680 and $785, respectively.

The four-level building, with the lowest floor serving as a parking garage, would include another 12 units with rents ranging from $785 to $1,050 monthly for renters who don't meet the income guidelines.

An $8.2 million three-story building, with parking on the lower level and apartments above, would have 30 units of supportive housing for tenants — primarily women with children — attempting to recover from chemical dependency, mental health issues and non-violent criminal histories. The facility, along with providing quality housing, would assist residents with health care needs, job training, addiction counseling and more to help stabilize their lives and avoid a future fall into homelessness.

Access to the development would be provided by an extension of Stoltzman Road through the Cub Foods parking lot to the Sibley Parkway. The portion of the extended Stoltzman between Linder Avenue and the Sibley Parkway would be bordered by park-like green space with walking trails on either side.

On the eastern edge of the parcel, just across Lamm Street from the Children’s Museum, would be a $4.5 million two-story building with a preschool on one floor and a daycare on another. At a combined 20,000 square feet, the new building would be about 25 percent larger than the children's museum and would include a playground area and a parking lot.

The winning SMHP/ISG proposal was recommended by a city selection committee — made up of city staff and Council members Mike Laven, Jenn Melby-Kelley and Dennis Dieken — over two other ambitious plans for the site.

The other proposals were from the Kansas-based Cohen-Esrey Development Group and a joint plan from Joseph Development of Rochester and local real estate developer Tailwind Group. They offered a mix of affordable housing, market-rate apartments and commercial development.

Both had the potential to be larger than the winning plan — $25 million for the Joseph Development/Tailwind plan and up to $35 million for the two-phase Cohen-Esrey concept — and they offered $450,000 and $300,000, respectively, for the city-owned parcel compared to a $1 offer in the SMHP/ISG proposal.

"Quite frankly, they are projects we've seen in Mankato already ...," Laven said on the two plans. "It's safe. We know it works."

But neither of the other proposals addressed homelessness or the growing shortfall in child care slots.

"Here's where we have a need and we need to address it," Laven said.

He also predicted the project will prompt further development in the former industrial area the city has been working to revitalize for the past decade with the creation of Sibley Parkway.

"... The vibrancy it's going to create along that corridor, it's a tipping point," Laven said.

The fate of the affordable housing apartments depends on winning approval of federal tax credits in a statewide competition that will be decided this fall — credits that would provide nearly $6.5 million of equity for the $10.2 building.

The SMHP proposal also suggests $367,000 in local property tax subsidies would be needed, along with $250,000 in state grants to deal with anticipated pollution and soil problems.

The developer is expected to seek tax subsidies for the child care/preschool building, as well.

Initial construction of the affordable housing building — and possibly the daycare/preschool — could begin a year from now with the supportive housing building waiting at least until 2020.

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