Affordable housing developers continue to target Mankato

MANKATO — A proposed 64-unit affordable housing complex targeted at working families just west of downtown Mankato didn't survive the first round of cuts in the highly competitive annual battle for state and federal housing assistance.

But that project could be back in 2025 for another try, and a second project — which would provide supportive housing for people emerging from homelessness — made the initial cut this summer and could be funded in December.

The two applications by affordable housing developers continues a trend of firms working nearly every year to bring new projects to Mankato.

"We're just really glad that they're all very willing to invest in Mankato," said Nancy Bokelmann, associate director for housing and economic development for the city of Mankato.

The 64-unit project that fell short was proposed by Cohen-Esrey Development Group, the developer of a complex of new housing just north of Cub Foods West known as "The Neighborhood."

The first components of the project on the former municipal Public Works Department site totaled $28.1 million. Already completed is Sinclair Flats , a 48-unit structure providing workforce housing for families, with 38 apartments reserved for households earning 60% or less of the county median. Under construction with completion expected in the spring is Lewis Lofts, a 64-unit apartment building entirely dedicated to income-eligible residents age 55 and older.

Ground has not yet been broken on 10 market-rate townhouses to be known as "Main Street Townhomes" on the north side of the 5-acre site.

Under an application submitted to Minnesota Housing, formerly known as the Minnesota Housing Finance Agency, The Neighborhood would have grown from 122 total units to 186 (166 of them with controlled rents and reserved for tenants meeting income thresholds). The new 64-unit apartment building was slated for a portion of the old Kato Cab site just across Sibley Parkway from Lewis Lofts, according to Brian Sweeney, development director for Cohen-Esrey.

"It would be a family project like Sinclair Flats," Sweeney said of the target market.

The four-story building would have offered 16 units with one-bedroom, 26 with two bedrooms, 16 with three and six with four. In keeping with the tribute to Sinclair Lewis's " Main Street," which the Minnesota author was working on during a brief period as a Mankato resident in 1919, the fourth element of The Neighborhood would have been called "The Carroll" in honor of character Carol Kennicott.

The project didn't make the initial cut for state and federal assistance administered by Minnesota Housing. An official with the agency told The Free Press only about a third of this year's applications will ultimately be approved, due to limited funding and high demand across the state for affordable housing projects.

Bokelmann is hopeful Cohen-Esrey will try again in 2025.

"Maybe there's more work to do and we can go back next year having more time to work on the project," he said.

Sweeney didn't make any firm commitments but suggested it's possible.

"We're exploring it," he said.

Part of the problem this year was the Kato Cab site needed to be rezoned and the designated land use for the property needed to be changed to allow for housing. Those issues hadn't been addressed at the time of the application, and the City Council hadn't yet pledged a $100,000 contribution — as it has traditionally done for similar projects — using federal housing grants allocated to the city each year.

Those unresolved issues probably cost the application points in Minnesota Housing's scoring system, Sweeney said.

Still in the running in this year's competition is a joint effort by the city, Blue Earth County and Trellis Co. of Minneapolis to build 40 units of supportive housing at 750 Linder Ave. one block west of The Neighborhood. Along with housing units, the project would offer services, including case management, for people facing barriers to other forms of housing until they can find more permanent living arrangements.

"Originally we applied in 2023 with a new shelter as a part of the building, but now it's going to be a phased approach with the supportive housing moving forward first," said Justin Eilers, vice president of housing development for Trellis.

If the first phase is successful, the homeless shelter would be pursued next.

Along with Trellis and Cohen-Esrey, other developers have contributed multiple affordable housing projects in Mankato in the past 20 years including Joseph Development, Southwest Minnesota Housing Partnership and CommonBond Communities.

The reason Cohen-Esrey keeps coming back is two-fold, according to Sweeney.

"One, there's a tremendous need. Our market study says it's very deep and wide in terms of interest in the product," he said of the local demand for lower-cost apartments. "Secondly, the city of Mankato has just been great to work with. It's great to work with communities that want to work with you and make it happen. And Mankato is certainly that."

Bokelmann also credited Blue Earth County, which pledged $2 million to the homeless shelter project, for its partnership with the city in exploring ways to boost the amount of affordable housing.