Gasp! Renters in elite Minneapolis condo district?

It is the city's last slice of prime land, smack in the middle of what was once an asphalt tundra between downtown and the river. The Mill District is now one of the city's most desired, where median incomes are 32 percent higher than surrounding areas, rents soar 25 percent above the average and residents buy organic kale at the market or pick at Star Prairie trout in local restaurants.

If the full Minneapolis City Council takes the advice of staff and committee recommendations made Monday, the coveted address of 205 Park Av. will soon be home to — gasp! — renters. Some of them will also be poor. Well, comparatively poor — if you consider someone who can pay at least $950 for an apartment poor.

Developer Sherman Associates set aside 23 of the 115 units as affordable housing, meaning that only residents whose income is below 60 percent of the area median income will qualify for the cheaper apartments. That was an important factor for a City Council that recently settled with the U.S. Department of Housing and Urban Development over complaints that it wasn't trying hard enough to spread affordable housing into wealthier neighborhoods.

At least that's what they said at the committee meeting.

The Sherman project won the hearts of council members over Grand Real Estate Advisors, which wanted to build condos that started at about $500,000 and topped out at more than $1 million. The Minneapolis Downtown Neighborhood Association polled area residents, who came down solidly in favor of owner-occupied condos, and flooded city staff and council members with calls and mail.

What surprised many involved was the fervor of the opposition to the deal. Not to the affordable housing, but to the existence of rental apartments adjacent to condos that fetch some of the highest prices in town.

Some of the correspondence and conversations had a "those people" tone to them, according to several sources who did not want to be named. When I asked for e-mails, City Council members declined to supply them, but interviews with several people involved in the debate spoke of threats by residents to unseat politicians and to move out of the city, taking their tax dollars with them. Some people accused the council of conducting social experiments at current residents' expense, they said.

Tamburino and others said residents are concerned with such things as architecture in the historical district, increased traffic due to a denser development, and the existence of many apartment buildings already in the neighborhood, including some with affordable and subsidized housing. He said the NIMBY (not in my backyard) accusations were brought up in a public meeting, with no proof to support them.

"There will be over 200 more units of affordable housing in the area, and that doesn't include People Serving People or Emmanuel Housing," Tamburino said. He said many area residents support affordable housing nearby, but "we already have more than our fair share of affordability, as well as apartments. If this is what [the council] is saying, I want to see [affordable housing] over on Lake of the Isles and Cedar too."

I asked Tamburino if residents thought they should be able to pick their neighbors.

"Absolutely we should not be able to pick our neighbors, that's not what this is about," he said.

It would be easy to peg this as a case of current owners preferring to rub elbows with millionaires. For some, it probably is. But Peggy Lucas, the developer behind Grand and a pioneer in the Mill District who lives there, sounds saddened by the accusation.

"I've built affordable housing in many neighborhoods, and this one never gave any pushback," said Lucas. In fact, residents have told her "this is the kind of neighborhood I want to live in."

Grand was trying to work out an "affordable" purchase option, with some condos at about $295,000, but a lack of solid details made it hard for the council to determine the feasibility, according to the staff report.

At the committee hearing, council members stressed their desire to get the market value for the lot. Sherman offered $3.3 million while Grand bid $1.9 million, arguing that the long-term tax benefits would outweigh the lower offer.

Sherman did not ask for any city subsidies, but would use the market-rate apartments to subsidize the lower price units.

"It's a new world order, no subsidies for Sherman," quipped Myron Orfield, long a critic of the city's attempts at integration.

Though the council mentioned a previous lawsuit and settlement with HUD as partial rationale for the choice, Orfield said the HUD action involves creating affordable housing in good school districts, which neither proposal claimed to do. "I don't think it has anything to do with that," said Orfield. "That doesn't mean it's a bad project."

Orfield doubted either proposal would greatly diversify the downtown neighborhood, but rather draw young white residents in the early stages of their careers, "unless [Sherman] has an affirmative rental plan."

That doesn't mean they weren't good proposals.

"The idea of inclusionary zoning is a good idea," said Orfield. "I just wish the council would use it some place like Linden Hills."

jtevlin@startribune.com • 612-673-1702