Minneapolis approves use of tax subsidies for market-rate housing

A divided Minneapolis City Council on Friday approved the use of tax subsidies for a large housing complex off the Blue Line's Franklin Avenue light-rail stop.

Without public discussion, the council voted 8-4 to provide the developer of Seward Commons with tax-increment financing (TIF) for the construction of two five-story buildings on the site. The vote was supposed to happen three weeks ago, but it was delayed after some council members objected to the city subsidizing market-rate units.

Developers had requested around $3.7 million for one building with 128 market-rate units and $600,000 for a building with 32 larger units for low-income families. Seward Redesign and its development partners hope to break ground on the market-rate building in the fall.

"I am thrilled," said Sheldon Mains, board president for Seward Redesign, a nonprofit. "This is a project that Seward Redesign … has been working on for years."

Seward Commons is southeast of the Blue Line stop and across from the temporary homeless shelter known as the Navigation Center. The complex already has one affordable building for seniors and another for people with mental illness.

With tax-increment financing, cities use higher property taxes generated by a development for certain infrastructure needs. The TIF money for the market-rate building in Seward Commons would come only from taxes generated at that particular building.

Council members in support of using the subsidies felt it was important to look at all the affordable units the project was bringing.

"I think [the project] might actually help get more investment in the whole area and turn things around," Council Member Cam Gordon said. "This is a historically industrial area that has had very little investment, especially housing."

Nawal Noor, president of partner developer Noor Cos., said the funding was necessary to build market-rate housing in the area. It would be the first rental housing without income limits built in the Seward neighborhood in more than 35 years, according to developers.

"Intentionally, it's to really create a spectrum of places for people to live," Noor said. "We want to maintain the diversity and the thriving neighborhood that we have."

Council Members Lisa Goodman, Steve Fletcher and Jeremiah Ellison, who had previously voiced concerns about allowing tax subsidies to be given to market-rate housing, voted against the use of TIF. Council Member Linea Palmisano joined them in the dissenting vote.

Even with the tax subsidy, developers are still securing private money to construct Wadaag Commons, the building with 32 units of affordable housing, and construction isn't anticipated to begin until 2020 or 2021, according to city documents.

"We can do this," Mains said. "I have no question that it's gonna happen."

Miguel Otárola • 612-673-4753