Spring Creek Townhomes

The Spring Creek Townhomes were constructed in Northfield in 2013 and quickly rented out. A second phase, which could break group this spring, has a funding gap developers hope the Rice County Board of Commissioners will help fill. (File photo/southerminn.com)

A Northfield housing project appears to hinge on Rice County Commissioners approving $325,000 to meet an unanticipated funding gap.

According to Chris Flood, community development officer for Three Rivers Community Action, which is leading the Spring Creek townhomes II project, the agency was initially awarded $8.6 million to construct 32 housing units. Eight are scheduled to have two bedrooms, 22 are planned to as three-bedroom units, and two are to have as four bedrooms.

Four units will be allotted for the Northfield Community Action Center. Another four will be for people with developmental disabilities through a partnership with Rice County Adult Services and Laura Baker Services Association.

To ensure the project’s affordability, 24 units will be home to residents making below 60% of the area median income. Eight will be at 30% or under.

But when Three Rivers first solicited bids for the Spring Creek II project, they came in about $2.7 million higher than estimated. But due to cost increases surrounding the pandemic, Minnesota Housing Finance Agency tax credits Three Rivers received also increased, allowing the nonprofit to accommodate the unanticipated hike.

According to Flood, the agency then had issues with its contractor and had to rebid the project in July, hoping that a stabilization of markets would earn it lower bids. But that, Flood said, didn’t happen. Bids were another $750,000 higher than the first round of bids in March.

And while there have been about $215,000 in cost reductions and the tax credits fill some of that gap, there’s still a sizable hole.

Flood told the board during its Tuesday meeting that while other reductions could be made, doing so would jeopardize the tax credits, awarded based on the size and number of units and its energy-efficient appliances, equipment and construction. Exterior finishes can’t be modified either, as they’re required by Northfield city ordinances.

According to documents given to commissioners, the Housing Finance Agency appears disinterested in upping its contribution further. The city has stepped up, providing tax increment financing; its Housing & Redevelopment Authority donated land, about 4.5 acres.

That leaves the county as Three Rivers’ best hope for the project in a county with a vacancy rate hovering around 1%

Flood hopes that the board will use some of its federal American Rescue Fund dollars allotted by Congress to help minimize the financial impacts of the pandemic, but board members had questions about timeline and why the project requires amenities like energy efficiency that the housing market typically doesn’t.

“It doesn’t make sense,” said Commissioner Jeff Docken.

Flood explained that the project received a score based on the inclusion of those amenities, and that excluding them now would likely threaten the tex credits, thereby killing the project.

Three Rivers hopes to break ground next spring, so it needs an answer fairly quickly.

The project is supported by the community, County Housing Manager Joy Watson told the board, adding that these units will give some Northfielders a place of their own.

“It will provide housing for individuals that might otherwise be in a group home,” she said.

The Board of Commissioners are expected to vote on the request later this month.

Reach Regional Managing Editor Suzanne Rook at 507-333-3134. ©Copyright 2021 APG Media of Southern Minnesota. All rights reserved.

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