Duluth staff brief council on two MHFA applications; resolutions of support set for May 27

City housing staff on May 12 briefed the Duluth City Council Committee of the Whole on two local applications to the Minnesota Housing Finance Agency’s (MHFA) Multifamily Consolidated Request for Proposals, saying both projects will seek council resolutions of support at the May 27 council meeting.

The presentation, delivered by Lena Fancook, a housing planner in the city’s Planning and Economic Development Department, covered Decker 2, proposed by OneRoof Community Housing, and Mission Heights, proposed by Union Gospel Mission (UGM). “This is one of Minnesota Housing’s biggest annual funding opportunities for affordable housing,” Fancook told the committee.

The Multifamily Consolidated RFP combines multiple funding sources, including low-income housing tax credits, tax-exempt bonds and deferred loans, and awards are competitive under the state’s Qualified Allocation Plan. Fancook said MHFA defines affordable rents in this program as those affordable to households at or below 50% of area median income and that preference is given to projects serving the lowest-income tenants for the longest periods.

Decker 2: OneRoof Community Housing

Decker 2 would be located off Decker Road near Miller Hill and the first Decker phase. City staff described the proposal as a 40–50–unit affordable apartment development primarily featuring two- and three-bedroom units intended to serve families. The city presentation states all units would have rent and income restrictions below 60% AMI for 50 years and that “most” units would be restricted at 30–50% AMI. At least four units are designated for high-priority homeless individuals and five units for families with a disability; OneRoof is coordinating services for those units with Family Rise Together.

Fancook told the committee Decker 2 requested $400,000 in HUD precommitment funding from the Community Development Committee and received that precommitment. The project’s estimated total development cost is about $20,000,000. The Duluth HRA has precommitted 20 units of project-based rental assistance, Saint Louis County is supporting supports for the high-priority homeless units, and OneRoof is contributing the project land, according to the staff presentation.

Mission Heights: Union Gospel Mission

Mission Heights would be built at West Second Street and North Third Avenue West on a surface parking lot across from the Government Services Building. UGM proposes a 40-unit permanent supportive housing building for single adults experiencing or at risk of homelessness, co-located above a future engagement center and dining hall on the ground floor.

City staff reported Mission Heights has requested and received a Community Development Committee precommitment of $4,400,000 in HUD funds. The estimated total development cost is just over $16,000,000. The Duluth HRA has committed $250,000 in HOME-ARP funding to the project, and a local entity (listed in the presentation as DITA) provided a land contribution.

Questions and timeline

Council members asked whether the Mission Heights housing portion depends on funding for the larger engagement center. Caleb Anderson of the Duluth HRA, who said the HRA is serving as co-developer with UGM, replied: “we are hoping to show 50% commitment for the engagement center within our application to Minnesota Housing,” but added that the legislative process at the state level was uncertain and that “sometimes it takes more than one year to seek those funds.”

Fancook walked the committee through the local support timeline: both applicants had already received formal endorsement from the Affordable Housing Coalition and the Heading Home Advisory Council and precommitments from the Community Development Committee; she said resolutions of local support will come before the full City Council on May 27. She also noted the MHFA application deadline is July 10 and that MHFA’s board typically makes final funding recommendations in December.

Why it matters

City staff emphasized that MHFA awards have been a major financing source for several recent Duluth affordable and supportive housing projects and that modest local commitments can unlock far larger state resources. Fancook cited the city’s ongoing housing studies and the 2019 Maxfield Research estimate that Duluth needed thousands of additional affordable units, and noted the city’s rental vacancy for affordable units was reported at roughly 1.1% in recent analysis, far below a healthy 5% rate.

Next steps

Staff said they will present resolutions of support for both projects to the full City Council at its May 27 meeting; those resolutions are the local endorsements MHFA typically considers. Minnesota Housing’s application deadline is July 10; MHFA’s board will make final award recommendations later in the year.

Representatives of the applicants were present for technical questions, and city staff said they will continue to work with the applicants on applications and any outstanding financing contingencies.