St. Anthony: Canvas Apartments in NE Minneapolis underscores need for more affordable units

Construction is underway in northeast Minneapolis on Canvas Apartments, a $71 million, 160-unit affordable housing complex of up to three-bedroom units.

This project was two years in the making and took several sources of private-public financing, including tax credits and revenue bonds.

The complex, which cost more than $400,000 per unit, will boast a rooftop solar array, a children's play area and fitness center. It costs about same as a market-rate complex because land, construction and the cost of meeting building codes are similar.

Subsidies will discount rents for up to 40 years. Most units are affordable to tenants who make 30% to 80% of the Twin Cities-area median household income of $114,000, said Mike Hudson, a partner in LS Black Development.

The rents will range from $600 to $2,400 for housing located on what was once grain silos at California Street and 23rd Avenue NE. And there will be 16 units for formerly homeless and very low-income folks, with support services included.

"We're thrilled to do our part to help provide much-needed, long-term, affordable and workforce housing," said Willy Boulay, another founder and vice president of LS Black. "We look forward to doing much more of this critical work with partners in the coming years."

This is the first project for LS Black, formed by veteran contractor Sterling Black, and Boulay and Hudson, who spun out after several years with Dominion, the Plymouth-based national developer, manager and owner of affordable housing.

"This is the poster child for how complex is financing for affordable housing and why it takes so long," said Minneapolis Council Member Michael Rainville. "I give credit to the [LS Black] people staying with it. It's a great step forward for the city and families who need three-bedroom apartments ... people who have had difficulty finding housing in a good neighborhood. That includes folks at the mosque over on Lowry Avenue who are delighted. They are working and raising children, our future taxpayers."

There's growing emphasis on building more workforce housing — housing affordable to middle-income, working families — in the Twin Cities. And helping house those who are homeless.

Mayor Jacob Frey and the City Council last week approved a record $17.3 million for 2023 in direct investment and 10-year federal tax credits to create or preserve 1,445 units of affordable multifamily rental housing. That will leverage $473.7 million in other funds.

"We are doing our part — at record pace and numbers — to help more Minneapolis residents and families get a roof over their head,'' Frey said in a statement.

Most affordable housing since the 1970s has been built by private developers aided by government subsidies, investment tax credits for affluent and institutional investors, and rent vouchers for some income-eligible tenants.

Anne Mavity, executive director of Minnesota Housing Partnership (MHP), said Minnesota has fallen behind by 100,000 units in terms of workforce housing since the end of the 2008-09 Great Recession that was, ironically, triggered by the housing market balloon-to-bust and unscrupulous lenders.

"We are still playing catch-up," Mavity said. "And the market is not able to [fully] respond to the demand for affordable housing.''

There are about three requests to the Minnesota state housing agency for project funding for every complex that gets funded, according to MHP research.

And MHP and allies, including developers and nonprofits, call on Gov. Tim Walz and the legislature to use more of the state's record, projected fiscal 2023-24 budget surplus for housing incentives.

"Every corner of Minnesota needs more homes that are affordable ... [to] ensure local business can recruit the growing workforce they need to expand and thrive," Mavity said.

A 2018 governor's housing task force determined Minnesota needs 8,800 new rental units a year through 2030 to address the apartment supply gap for households starting at about $35,000 in annual income. And 15,500 new homes annually are needed.

The Twin Cities area alone needs 51,000 affordable housing units to keep up with demand, or 13,000 new units a year through 2040 to keep up with demand due to projected population and workforce growth, according to the Metropolitan Council and Minneapolis Regional Chamber.

The solution partly lies in more government incentives for developers and investors to renovate and build more as well as streamlined regulations. Smaller units, including townhouses, can also help increase supply and cut costs.

There also is more efficient building envisioned by the growth of factory-made housing that is assembled onsite, such as the Minneapolis plant proposed by developer Devean George.

Developer LS Black has to operate Canvas as affordable housing for up to 40 years. It has conceded 80% of its development fee until the project proves its working financially.

"We found our home in affordable housing," said Boulay. "It's a needed public good. We're connected. We want to be the local owners you can get a hold of."