MN: Proposed Civic Center Drive development targets affordable housing and transit access

Developers of a planned 282-unit apartment complex on the edge of the Kutzky Park neighborhood expect the location to help keep rents affordable, while also encouraging tenants to take advantage of newly developed transportation infrastructure.

"We're pairing affordable housing with those investments that have been made," said Chris Osmundson, a representative of Minnetonka-based Onward Investors.

The developers are planning a seven-story apartment complex on the south side of Civic Center Drive, between Fourth and Sixth avenues.

With 282 apartments planned — ranging in size from one to four bedrooms — the building would include approximately 180 interior first-floor and underground parking stalls, meeting city requirements.

Osmundson, who helped develop the Berkman Apartments, 217 14th Ave. SW, and Essex Place Apartments, 937 41st St. NW, with other companies, said he knows the less than one-to-one parking ratio will raise questions from neighbors and others as the plans move forward.

"Parking literally comes up with every project," he said, pointing out that Onward Development has had success with similar projects in other communities, especially when connected to nearby transit options or within walking distance to major employers.

He said the location along Civic Center Drive means the new apartments will be near the northern edge of the Mayo Clinic campus, which is expected to draw a broad demographic occupancy, with many people likely working downtown.

"Some of them may work at Mayo, and some may work at different locations," he said, adding that tenants are expected to "span a gamut in terms of background and cultures."

The location also offers unique access to state tax credits that can help keep rents affordable to households earning half of the current area median income.

That affordability, Osmundson said, will be enhanced by the location and access to various transportation options, including the expectation of a less than 3-minute walk to Rochester's planned rapid-transit system through downtown.

"Part of having affordable housing is not just having affordable housing, but it's also trying to get people to have more exposable income available to them," he said, noting the option to not need a vehicle reduces household expenses.

Olmsted County Commissioner Laurel Podulke-Smith, who is also a Kutzky Park Neighborhood resident, said the proposal fits changes being seen in the area.

"There is a pretty strong trend, especially among younger generations, of being car-free, and this is especially true for downtown and downtown-adjacent neighborhoods," she said.

Osmundson said developers are working with the city to determine what on-street parking options might be available, but he added that the complex's management team, Shelter Corp., will also work with tenants to provide greater access to multi-modal options.

"I do think the vehicular activity can be substantially reduced with the people who are going to live here," he said, noting some residents might move in with a car and discover they don't need it.

Since the project will cater to people with lower incomes, he said some tenants will already be using public transportation options and the location will provide better access to what the city offers.

"Because it is affordable housing, we do typically have less people with cars," he said.

The affordability is expected to be supported through 4% Low-Income Housing Tax Credits through the Minnesota Housing Finance Agency, with plans to build the site in two phases expected to enhance the ability to tap the financial assistance.

The Rochester City Council approved support Monday for the revenue bonds needed to receive the tax credits. They are for $24.7 million for the first phase and nearly $27.4 million for the second phase.

The state agency is expected to determine by the end of January whether the first phase will be supported by the requested tax credits.

If support is received, Osmundson said a 14-month construction period could start in July for the first half of the project, which will occur east of Sixth Street Northwest. The eastern half of the project would then be expected to start during the summer of 2026, with the entire project completed by 2027.

"We are really pretty early in the process," Osmundson said.

Onward Investors expect to submit a site development plan within 30 days for city review, which will spur a process that could put building permits in place as soon as April. While the plan will face staff review, he said other aspects of the development are likely to require City Council approval.

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