MANKATO — After two failed attempts to bring a $25 million affordable housing project to Mankato’s old Public Works Department site, the City Council has picked a new development firm that’s looking to go even bigger.

A $36 million plan from the Cohen-Esrey Development Group offers nearly 100 units of affordable housing as part of a complex that would include 117 apartments and townhomes on the vacant lot north of Cub Foods West. The council’s decision Monday night brings to an end the two-year effort by Southwest Minnesota Housing Partnership to redevelop the 5-acre site.

Cohen-Esrey’s project description promised to turn the lot “into a beautiful new Urban Community for downtown Mankato,” one offering “a variety of affordable, workforce and market-rate housing options, multiple green space for community gatherings, and a retail component that can serve as a community asset.”

A review panel made up of Council President Mike Laven, council members Jenn Melby-Kelley and Dennis Dieken, and city staff looked at the two proposals in detail in recent weeks. Laven said he preferred the appearance of the Cohen-Esrey redevelopment — multiple buildings spread across the parcel — because it didn’t have a stereotypical affordable-housing look.

And the entire panel — which recommended SWMHP two years ago over Cohen-Esrey and another competitor — agreed that Cohen-Esrey’s revised plan was larger, targeted a wider range of tenants and has a more flexible funding strategy.

“Both proposals were very complete, but there was consensus among the panel,” said Kristin Prososki, associate director of housing and economic development for the city.

The council, acting as the Mankato Economic Development Authority, unanimously agreed.

Kansas-based Cohen-Esrey’s plan gives a nod to one of Minnesota’s most famous authors. Sinclair Flats would be a 48-unit apartment building — 10 market-rate units and 38 reserved for lower-income workers — across Lamm Street from the Children’s Museum of Southern Minnesota. On the western end of the lot would be Lewis Lofts —a pair of four-story 30-unit buildings aimed at providing affordable housing for senior citizens.

Between the Sinclair and Lewis buildings would be Main Street Townhomes, nine townhouses targeted at average-income individuals and families (80-125% of the median income.)

Most of the senior apartments would rent from $802 and $956 per month — targeted at seniors with incomes of 60% or less of the area median. The units aimed at working-age individuals and families would range from $360 to $655 for one bedroom, the low end for tenants with incomes of up to 30% of the area median, the higher end for those at 60% of the median. Two-bedroom apartments range from $426 to $956, with three bedrooms renting for between $888 and $1,092. The median income for an individual in 2019 was $27,500, rising to $31,400 for a two-person household and $39,250 for a family of four.

A 7,500-square-foot retail building is also included in the plans, with Cohen-Esrey stating that the preferred tenant would be a daycare center or possibly a Montessori pre-school.

The proposal assumes that Stoltzman Road would be extended through the Cub Foods parking lot and through the center of the housing complex, connecting with Sibley Parkway on the parcel’s north side.

Southwest Minnesota Housing Partnership was seeking to make a third attempt at redeveloping the property after two previous efforts were derailed by the Minnesota Housing Finance Agency, which declined in 2018 and 2019 to award SWMHP the affordable housing tax credits that were central to the development’s financing. This year’s revised proposal from the Slayton-based housing developer included a pair of 42-unit buildings.

Of the 84 units in the SWMHP proposal, 19 were to have market-rate rents of $1,100 to $1,500 per month. The 65 units that would have been rented to people based on income eligibility ranged from $760 to $925 for one-bedroom apartments, from $849 to $1,100 for two bedrooms and from $1,035 to $1,300 for three bedrooms.

Both projects require city subsidies, mainly tax-increment financing that would allow property taxes on the development to be used to help cover project costs — 16 years worth of property tax payments for Cohen-Esrey and 20 years for SWMHP. Cohen-Esrey would pay $250,000 for the city-owned lot, compared to $1 offered by SWMHP, but SWMHP’s financial plan includes the cost of construction of the Stoltzman Road extension, and Cohen-Esrey’s would require the city to build the street.

Monday’s council action authorizes City Manager Pat Hentges to finalize a detailed agreement with Cohen-Esrey.

As with the past two years, the fate of the project depends on the Minnesota Housing Finance Agency. Each year, affordable housing projects from across the state come to the agency for a limited number of federal tax credits. The highly competitive process always includes many more projects than available credits.

Cohen-Esrey, however, touted the more flexible financing plan it offered. The project’s various components are seeking several different forms of government financing aimed at boosting the amount of affordable housing in the state, and the townhomes and retail building would be privately financed. A decision by the agency is expected in the fall.

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