At its quarterly meeting, the Destination Medical Center Corporation board of directors hashed out the details for funding badly needed housing projects in Minnesota’s third largest city.
The board committed $12 million last week for projects throughout the DMC district. Of that, just under $7 million will go toward developing affordable housing in the district and will create 400 dwelling units in downtown Rochester and along transit corridors.
This funding comes at a critical time for Rochester as the city attempts to kickstart its construction of for-sale homes. A report from Rochester’s community development director in February said to make up for the city’s shortfall of building housing in years’ past, just under 1,000 for-sale homes need to be built per year.
The city council last week adopted measures to incentivize building more single-family homes within city borders including getting rid of prevailing wage requirements for single-family homes that receive tax increment financing. This rule only applies to single-family homes built outside of the DMC district.
“We know one of the important pieces of infrastructure necessary for Rochester to grow and succeed is housing,” DMC Executive Director Patrick Seeb said. “We are looking at ways that DMC can, alongside other mechanisms and the private market itself, help support housing, development, growth.”
Seeb said the board recognized the precarious place Rochester is in and the group decided to put forward some financial backing to close the gap on some projects.
The two housing projects receiving money from the DMC are the Sherman Associates development, the Civic Center North ($3 million), and an Aeon development, the West Transit Village ($3.9 million). The Sherman project will be mixed income and the Aeon project will be designated for seniors and have some level of affordability.
“The totality of these projects will help address the housing shortage in Rochester,” DMC Corporation Board Secretary Paul Williams said. “It’s encouraging to see a mix of market-rate, affordable, and senior housing in these developments.”
Civic Center North, with the DMC’s support, will now go before the Rochester City Council at its Monday, June 3, meeting. Sherman will also be requesting an additional $13 million worth of TIF for the project, according to staff report documents.
The project will be a 13-story tower, made up of 243 market rate units and a five-story building of 76 units designated for senior housing at 30%, 50% and 60% area median income.
Seeb said Rochester’s need for housing expands to all age ranges. The senior housing that will be provided by both projects, he said, will create a chance for seniors to move out of single-family homes and let younger families move in.
“When you create senior housing, you create a way for people to get out of their single-family home,” he said. “Maybe they raised their family there, but they no longer want the yard and the house and all that comes with it. But there are not very many options in Rochester for seniors a townhouse environment or multifamily environment that is priced at a level that people can get out of their house and into something with less maintenance associated with it.”
The rest of the $12 million is being allocated for helping Rochester’s Downtown Historic District. Because it is now considered public infrastructure, the DMC is able to give to the structures and approved $5 million to go toward renovations for building preservation, updating plumbing, electrical or other systems, ensuring code compliance as well as projects that look to repurpose a space from office to retail.
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