Hennepin County recently helped fund its 10,000th affordable housing unit

Hennepin County hit a historical landmark this spring in its two-decade campaign to help pay for a diverse stock of affordable housing.

The county has now helped fund more than 10,000 affordable rental and ownership housing units since 2000, spending $78 million during that time. The county's aid also allowed it to leverage another $1.9 billion from other sources to complete the projects.

It would be hard to find a place in the county without an affordable housing complex the county has played a role in developing. The most recent project, the Amber Apartments on Hiawatha Avenue in south Minneapolis, opened in September. RS Eden was awarded $300,000 for the 81-unit project designated for people earning less than 30% to 50% of the area median income.

When the county started its Affordable Housing Incentive Fund (AHIF) two decades ago, it consisted of $2 million and leaned hard on matching grants from foundations and other groups. Many of the projects built from Rogers to Edina to Minneapolis include units set aside for people experiencing long-term homelessness.

"The fund gives the county a specific voice on what affordable housing will look like," said Julia Welle Ayres, the county's director of housing development and finance. "The fund has been like the little train that could and keeps chugging along."

The incentive fund provides financial assistance to municipalities, private and nonprofit housing developers typically in the form of a deferred low-interest loan. Projects include rental, new construction and transitional housing serving families, individuals, seniors and the special needs population, she said.

One of the first developments funded by the county was The Lindquist Apartments, a 24-unit complex in north Minneapolis that provides housing and services for youth between 16 and 24 who are experiencing homelessness. In 2014, the 50-unit Bottineau Ridge Apartments was constructed in Maple Grove with a $265,000 county award. Project For Pride in Living received $700,000 to develop Maya Commons in southeast Minneapolis, which incorporated a historic grain elevator as the building lobby.

"When we started the fund, there was definitely a shortage of affordable housing for people receiving public assistance," Welle Ayres said. "While most of the projects are in the core cities because of more available financing, we are always looking to fund developments in the suburbs."

When approving a project, the county looks beyond just affordability. County officials consider its proximity to transit and jobs, the community's livability and if the project will contribute to neighborhood development, she said.

CommonBond Communities worked with the county on a five-story, 120-unit redevelopment project on the former Prince of Peace Lutheran Church site in St. Louis Park. Called Rise on 7, the complex will also have a 6,600-square-foot day care. Besides nearly $1 million from the incentive fund, the county is adding another $1.7 million to ensure that 19 units have rents affordable to households that earn less than 30% of the area median income for 15 years.

"We loved working with Hennepin County," said Cecile Bedor, executive vice president of real estate for CommonBond Communities. "They're pretty innovative on how they deploy funds and flexible on project needs. The staff is professional, very supportive and really engaged. If they think a project won't work, they tell you and give clear reasons why."

The incentive fund was originally conceived as a public-private partnership to demonstrate if would work.

"And the answer is yes, yes and yes," said Anne Mavity, executive director of the Minnesota Housing Partnership, which advocates for affordable housing. "The impact is notable. Their ability to be on the front end of funding these projects gives them a role of influence and can be responsive to local needs."

Counties need investments to solve the housing challenges because a place to live is fundamental to a whole community's health, Mavity said. The housing crisis during the pandemic illuminated the continuing issue, she said.

Hennepin County has helped subsidize 280 "deeply affordable units" in Minneapolis developed by Alliance Housing Inc., including a $16.3 million project at 3301 Nicollet Av. in Minneapolis that will open next month. It will include 50 studio and 14 single-bedroom apartments, and the property rent levels will provide a housing option for workers earning $10-$15 an hour.

"Local funding like Hennepin County's AHIF program is so important in leveraging other funding sources like Minnesota Housing," said Jessie Hendel, executive director of Alliance Housing Inc. "Hennepin County's willingness to commit AHIF funds early in a project's development demonstrates local support, which is an important step in securing other funding sources."

The incentive funds are flexible and can be used for construction and related costs, with fewer restrictions than come with some other funding sources, Hendel said. The organization received $700,000 of incentive money for the Nicollet project.