A ‘transformational’ increase in affordable housing in the Twin Cities as new projects break ground

A flurry of new affordable housing projects are breaking ground or opening up across Minneapolis and St. Paul this month, aiming to meet a dire need, thanks in part to historic state funding increases last year.

On Tuesday, Trellis and Agate Housing and Services celebrated a groundbreaking in Minneapolis for a new 54-bed shelter and 50 affordable apartments in the Longfellow neighborhood. On Thursday, Project for Pride in Living and Wells Fargo will break ground on 110 affordable apartments off Lake Street and Nicollet Avenue.

Nearby, in the Whittier neighborhood, Simpson Housing Services and Project for Pride in Living started construction this month on a 72-bed shelter and 42 affordable apartments, Simpson’s biggest project in its four decades. And in St. Paul last month, Emma Norton Services and Project for Pride in Living opened new supportive and affordable housing in the Highland Bridge redevelopment.

“It’s quite transformational with all the new developments and buildings that are going up. And at the end of the day, there’s still more need,” said Kyle Hanson, executive director of Agate. “We’re so far behind the amount of units needed.”

Nonprofit leaders credit the DFL-controlled Legislature last year for approving a $1 billion housing bill — much of which was one-time spending from the state’s record-breaking budget surplus — for expediting projects waiting for final funding. Cities and counties also had remaining federal COVID-19 funds that benefited some projects.

“There’s been a backlog of projects that have been just waiting and ready to go,” said Paul Williams, CEO of Project for Pride in Living. “More resources helped accelerate the work.”

The state still faces persistent shortages in homeless shelter beds and affordable housing. Minnesota is short 114,000 affordable rental homes, according to the National Low Income Housing Coalition.

“It is an exciting moment to see all these projects so desperately needed ... and we are desperately far behind,” said Anne Mavity, executive director of the Minnesota Housing Partnership, which has pushed for a constitutional amendment to create a “legacy fund” for housing projects. “We are trying to bridge this gap ... 40 apartments at a time. We need to completely rethink how we create a system that can more easily and cost-effectively create the homes that Minnesotans need.”

While homelessness in Minnesota has declined slightly in the past five years, it still remains at the second-highest level in 30 years of Wilder Research tracking data. Nonprofits on the front lines of helping Minnesotans in need are juggling rising operating costs of current buildings with the higher costs of building new ones, Williams said.

“Every nonprofit and for-profit that is operating affordable housing now is struggling to break even,” Williams said. “It’s a real pressure point.”

Agate’s new shelter and affordable housing off 27th Avenue S. will likely open by fall 2025. The $25 million project was initially expected to start last year, but it was delayed by financing.

The Legislature approved the final $12 million in bonding bill funding and capital improvement grants last year. Without that state aid, Hanson said the project would have been delayed to drum up donations.

“We haven’t seen funding like this in a couple of decades,” Hanson said.

The building replaced a restaurant, destroyed by arsonists in 2020 after George Floyd’s murder, and adjacent properties. The project will provide more privacy for residents with six- to eight-bed rooms instead of the decades-old model of filling a church basement with bunk beds.

At Simpson United Methodist Church in the Whittier neighborhood, residents have stayed in bunk beds in windowless basement rooms for decades. The congregation gave Simpson the church when it disbanded in 2017, and the church was demolished last winter to make way for the new four-story shelter and affordable apartments developed by Project for Pride in Living and Simpson.

The shelter and efficiency apartments should open next year. Most of the $40 million cost came from federal and local government, including $5 million approved by the Legislature in 2023.

With homeless encampments increasing due to full shelters and people not feeling safe in existing shelters, the 8- or 10-person rooms will better help Minnesotans move on to permanent housing than a crowded room of bunk beds, said Steve Horsfield, executive director of Simpson.

“The more dignity we build into the system, the better that we make it, the more folks we’re going to get off the streets,” he said.

Off Lake Street, Project for Pride in Living’s $58 million six-story project that’s breaking ground Thursday is slated to open next year with one- to four-bedroom apartments, replacing a Wells Fargo that burned down in the 2020 riots near the former Kmart. The building will also have a Wells Fargo and businesses owned by entrepreneurs of color, part of a broader effort to increase equity in development, Williams said.

“That was an important response to George Floyd,” he said. “We doubled down on that strategy in this project.”

Most of the project is paid by local and federal governments, which approved funding faster than usual, Williams said, because it’s a large project in a high-profile corridor of Minneapolis.

In St. Paul, Emma Norton and Project for Pride in Living opened Restoring Waters last month, 60 units of affordable supportive housing, mostly for single women with a history of homelessness, mental illness or chemical dependency.

Emma Norton moved the program from 1960s dorm-style apartments in downtown St. Paul to mostly one-bedroom apartments, with case managers, a wellness clinic and meditation room as well as the organization’s offices. The $25 million project was mostly publicly funded.

Next door, Project for Pride in Living opened Nellie Francis Court last month, providing 75 low-income apartments for adults and families.

“Homelessness is something we can solve in our communities,” Emma Norton Executive Director Tonya Brownlow said. “We continue to need more and to build more because it costs us too much as a society when we think people living on the streets is an acceptable solution.”