Rheasa Otto, a mom of two children who works downtown, was thrilled this spring to be one of the first tenants to move in to a three-bedroom apartment in East Town Apartments, a 169-unit complex that has risen from a former church parking lot east of 6th Street and Chicago Avenue.
East Town Apartments near U.S. Bank Stadium a winner for working-class residents
The 169-unit complex has risen from a former church parking lot east of 6th St. and Chicago Avenue.
May 30, 2020 at 7:19PM
East Town Apartments also is one of the only residential complexes built for the working class after a decade of mostly luxury multifamily construction in the loop.
Otto pays $1,293 monthly, only $120 more than her former two-bedroom apartment in Robbinsdale.
She walks her preschool kids to the Metro Kids day care at adjacent First Covenant Church, and then would stroll to work a few blocks away at Wells Fargo, were she not working electronically from home. No more commute and $10-a-day parking. Her car stays in underground parking, where residents pay less than $100 a month.
"To wake up here every morning is surreal," said Otto, who has worked at Wells Fargo since 2016. "I enjoy being downtown for work and networking and there are other families with kids in the day care. I am so grateful."
The $42 million apartment project, in the planning stages for years, has rents that range from $724 for efficiencies to $1,491 for the largest three-bedroom units. It serves families who make up to $67,000, which is 60% of Twin Cities-area household median income.
The project replaced a surface parking lot. It provides rental income for First Covenant, a neighborhood-focused congregation that also houses a homeless shelter for 50 adults in partnership with Hennepin County and St. Stephen's Human Services, and other enterprises.
"This important housing project almost died a hundred deaths before becoming reality," said the Rev. Dan Collison of First Covenant. "The [developer] overcame incredible odds to get this project built. Over these five years we have learned to think as realistically as a nonprofit developer, hope idealistically as community partners, and believe fervently as people of faith who love God. The East Town Apartments are good for downtown, for East Town and the Elliot Park neighborhood and good for the First Covenant … and its investment in the community."
All the stakeholders in the project get long-term benefits. The project is financed primarily by a long-term, low-rate mortgage and acquired federal tax credits that total a combined $26.5 million. The package was spearheaded by U.S. Bank.
The developer-owner, Community Housing Development Corp. (CHDC), contributed equity valued at $7.8 million in the form of a delayed developer fee and a loan. Hennepin County, the Metropolitan Council and the Pohlad Foundation contributed close to $1 million.
The residents get a quality place to live at a reasonable rent and, in a walk-and-transit neighborhood, can opt out of car ownership.
The church, which when Collison arrived in 2009 was mired in debt and uncertainty, no longer has to maintain a parking lot. Instead, First Covenant, under a deal with CHDC, gets at least $120,000 annually under a long-term lease it holds on the underground public parking facility. CHDC will yield ownership of the parking to First Covenant after retiring about $5 million in related debt and other conditions.
"This is one of the few affordable projects downtown in a decade," said CHDC President Elizabeth Flannery. "This project is structured to serve up to moderate-income working people, not deeply affordable housing to serve the most-vulnerable citizens. You'd be lucky to get a three bedroom for $2,800 elsewhere in East Town. This also is energy-efficient, high-quality construction. Rent includes the utilities. We don't have pools or big party rooms. The amenity is you are downtown and don't need a car.
"We're not walking away with developer fees. We oversee parking and management and we get distributions from the cash flow and parking. It is a long-term partnership with First Covenant. We just opened and are already 85% leased."
The project took five years to pull together financing, adapt to tax-law changes and was marred by dispute between CHDC and its former partner on the project, Ryan Cos. That was resolved in CHDC's favor in 2019 by a summary judgment ruling by Hennepin County Judge Ron Abrams and an undisclosed financial settlement between the parties.
CHDC owns and manages about 4,000 affordable units in the Twin Cities.
A virtual grand opening for East Town Apartments is scheduled for June 24.
This is a welcome project in a downtown area that could use more workforce housing.
The party supply company told employees on Friday that it’s going out of business.
