City staff brief council on Minnesota Housing RFP; two local projects seek support and HUD precommitments

DULUTH — City housing staff on Monday walked Duluth's Committee of the Whole through Minnesota Housing's multifamily consolidated request for proposals and introduced two local applicants seeking state funding and local endorsements.

Lehi Fancook, a housing planner in the city's Planning and Economic Development Department, told councilors the consolidated RFP is one of Minnesota Housing's largest annual funding opportunities and the main way many large affordable rental projects secure financing. "This is one of Minnesota Housing's biggest annual funding opportunities for affordable housing across the state," Fancook said, noting the city needs more than 2,000 affordable units by 2030.

Both local applicants in this cycle asked the city to support their state applications and to approve a pre‑commitment of FY27 HUD funds of $400,000 each. Fancook said the Community Development Committee already approved the HUD pre‑commitments and that two separate resolutions of support will come to the full council at its May 26 meeting.

The two projects presented are:

- Decker 2 (1 Roof Community Housing): a proposed 45‑unit affordable apartment building near Decker Road adjacent to an existing 1 Roof project. The project would include one‑, two‑ and three‑bedroom units targeted at households at or below 50% of area median income (AMI), with a subset of units at 30% AMI. Fancook said 7 units are designated for high‑priority homeless households and 5 units for households with a member with a disability.

- Mission Heights (Union Gospel Mission): a planned mixed‑use building where the Union Gospel Mission would relocate its engagement center to the first floor and operate 40 permanent supportive efficiency apartments on the upper floors for adults experiencing or at risk of homelessness.

Councilors focused questions on financing, per‑unit costs and supportive services. Katie Haglund, speaking for Union Gospel Mission, said the project team has requested $8,856,000 in state bonding to fund the engagement center (first floor) and has begun local fundraising. "Essentially, what it will do if we don't get bonding is just delay, delay, delay," Haglund said, adding the group had raised "about a quarter of $1,000,000 thus far."

Haglund described the engagement center as a triage and drop‑in space that would provide on‑site medical care, showers, laundry, a dining hall designed to serve roughly 200 people at a time and a warming function for limited winter days. She also said the Mission is coordinating with Damiano Center and CHUM and planned a joint press conference the next morning to publicize the relocation and services.

Caleb Anderson of the HRA explained ownership and financing structure expectations if bonds fund the first floor: "So for the 1st Floor, with our intent to be funding the project with general obligation bonds from the state, there's a requirement that the property be owned by a government entity," Anderson said. He said the HRA intends to own and lease the first‑floor engagement center to UGM on a long lease while UGM or a subsidiary would own the housing units above.

Decker 2 representatives said the project mixes general workforce/family housing with supportive units. Project representatives said about half the units would use a new state housing voucher program called Bring It Home for initial assistance and that county providers would deliver supportive services for the homeless‑designated units.

Councilors reiterated that Minnesota Housing scores projects on priorities in the state's Qualified Allocation Plan — including permanent supportive housing, larger family units and financial readiness — and noted applicants must justify per‑unit cost variances when projects exceed typical thresholds.

The council did not take an immediate vote on the two state applications during the Committee of the Whole; city staff said formal resolutions of support and the HUD pre‑commitment approval will come to the council at its next meeting. Minnesota Housing applications are due to the state in early July and selections typically are announced in mid‑December.

Other council business that evening included the approval of routine items: the consent agenda was adopted, a poll‑attachment license agreement with Minnesota Power (annual fee $18.50 per pole) was approved with one abstention noted for Councilor Forsman because of employment with Minnesota Power, and an amended parking agreement providing reserved spaces for Hermantown Church of the Assemblies of God passed on the council floor. Several ordinances (including ISD 709 and multiple small‑cell wireless concurrent use permits for AT&T) were read for the first time.