Development embodies area’s housing concerns

by Nathan Hines

“Tall Ceilings.” “Outdoor Patios.” “Slightly Funky Feel.” These are just a few of the characteristics listed in the realty literature for the 21st Avenue Lofts, a housing development currently under construction just south of Franklin Avenue.
The homes are being built by The Lander Group in partnership with Seward Redesign, the Seward Neighborhood Group, and the Minneapolis Community Development Agency. The entire project will eventually include five two-story townhouses and two lofts on 21st Avenue, next door to the Blue Nile restaurant.
Even in the middle stages of its completion, a walkthrough one of the townhomes will verify that the new 1,400+ square foot homes will deliver the listed features as promised. However, it is the realtor’s label of “affordable,” coupled with listed prices of $185,000 to $189,000, that prompt questions about the aims of the partners involved in the project, and about affordable housing in the Seward neighborhood.
The SNG, with Neighborhood Revitalization Program funds for addressing blighted properties in the Seward neighborhood, hired Seward Redesign in 1998 to oversee the renewal of the site of the Estelle apartment building on 21st Avenue.
Founded in 1969 as a nonprofit housing developer, Seward Redesign expanded their mission to become a Community Development Corporation (CDC) in 1985 and have since been involved in various aspects of residential and commercial development in the Seward neighborhood.
The NRP provides funds specifically for improving blighted properties in the neighborhood. The Estelle apartment building was a dilapidated five-unit rental property in violation of several building codes, including asbestos and lead paint contamination. The city had declared on unit unfit for occupation, and the property was razed.
The 21st Avenue Lofts will be built on the Estelle site and an adjacent lot currently owned by the MCDA. Seward Redesign applied to the MCDA, and was awarded the development rights for the vacant home. It was subsequently determined that rehabilitating the boarded-up house would not be financially feasible.
LoAnn Crepeau, assets manager at Seward Redesign, said the SNG plan called for high density, owner-occupied housing to be sold at a current market rate. In 1999 Seward Redesign published requests for proposals dealing with the renewal of the Estelle property in accordance with NRP criteria.
“We received two proposals at that time, neither of which were financially feasible,” said Crepeau. Neither proposed plan would have generated enough money to recoup the cost of construction, she said.
In the year 2000, new zoning laws that allowed for higher density housing at the location, and an unprecedented rise in the housing market changed the property’s status. Market value homes, rather than affordable housing, were necessary, Crepeau said, because the area constitutes an “impacted census tract,” one with a sufficiently high percentage of low-income subsidized housing to disallow the introduction of more subsidized units. This is due, in part, to the nearby Seward Towers, the 638-unit building which is also managed by Seward Redesign, and which Crepeau estimates to be 99 percent federally subsidized (Section 8) housing.
The theoretical basis of impacted tract laws, according to Spencer Blaw, executive director of the Minnesota Tenants Union, is one of “spatial diffusion,” with the aim of deconcentrating poverty.
“At the same time, [it is expected that] new opportunities for affordable housing in other areas will be created. There has been little success at that,” Blaw said. “Opportunities are not being created. In fact, they’re drying up.”
“Our goal is to promote and preserve affordable housing,” said Crepeau, who said that the affordable housing crisis in the Twin Cities has worsened dramatically in the last three years. By way of illustrating the extent of the housing crunch, she said that there is currently a waiting list for vacancies in Seward Towers, with an average waiting period of between eight and twelve months. “Even if people have an adequate income, there is such a shortage of rental property, period, particularly if you have a large family.”
In the case of the 21st Avenue Lofts, Seward Redesign was hired simply to implement the plan put forth by the SNG. In March, 2000, Seward Redesign reissued the request for proposals, and by that time, Crepeau said, “market forces had created a much more feasible situation.” Seward Redesign accepted the proposal of the for-profit Michael Lander development group, which calls for the donation of the land to The Lander Group, and the construction of the 21st Avenue Lofts. According to Don Johnson, Project Administrator for The Lander Group, his company and Seward Redesign will then split any profits garnered in the sale of the units. Johnson said the profits were expected to be “nominal.” The NRP plan also provided relocation benefits for three families formerly residing in the Estelle apartments.
The completion date for all seven of the 21st Avenue Loft’s one-bedroom units is contingent on their sale, said Linda Messenger, executive sales associate for Burnet Realty. The first two townhouses, which may be visited by appointment, are expected to be completed in the next 60 days.