The St. Paul Port Authority and its partners have long envisioned 1,000 new units of housing — both market-rate and affordable — at The Heights, the development planned for the former Hillcrest Country Club off Larpenteur Avenue.

Much of that work will have to wait at least a year. Developers Sherman Associates and the JO Companies had hoped the state Legislature would free up $73 million for affordable housing at The Heights through housing infrastructure bonds, which would close a 17% funding gap during the next four years.

The St. Paul Port Authority announced April 25, 2023 that Sherman Associates will be the master residential developer for The Heights, the more than 112 acres of land spanning the former Hillcrest Golf Course. This is a rendition of planned housing for the site. (Courtesy of the St. Paul Port Authority)

The legislative session ended last month without the funding, leaving the developers to break ground on the first two of six new mixed-income apartment buildings in 2025, at the earliest, instead of this summer.

“To develop a wide range of affordability, including deep affordability, we do have a gap, a large gap, much like every affordable housing development has,” said Sherman on Monday. “We submitted that ask to the state, knowing it was a tremendously large ask. This was an important step to begin delivering the overall narrative for this 25-acre housing development. We’re hopeful that it’s just the first big step in conversations over the next year on this project.”

Housing

Sherman, the lead housing developer at The Heights, said the six apartment buildings will span approximately 900 units, of which 60% would readily qualify as affordable or deeply affordable housing. The other 40% of the housing units in those buildings would qualify as “workforce” or “missing middle” market-rate housing. That means they would be priced on the lower side of the market-rate category as far as new construction goes, targeted to families earning between 60% and 120% of area median income.

To hit those goals, Sherman said they’ll review all their options over the next year, including opportunities for added federal support through low-income housing tax credits and New Market tax credits, while sitting down with the Minnesota Housing Finance Agency, state lawmakers, city officials and private financers.

“We’re delayed, but I’m still confident we’re going to get these projects done,” said Todd Hurley, president and chief executive officer of the Port Authority, which acquired the former Hillcrest Country Club for $10 million in 2019. “They’re still looking to fill the gaps around the multi-family construction.”

That news, first reported this month by Finance and Commerce, also was confirmed by Johnny Opara, the chief executive officer of the JO Companies, which had planned to develop between 110 and 230 of the affordable units.

“This impacts all asset classes,” said Opara, in an email last week.

Habitat for Humanity projects are a go

A spokesperson for Twin Cities Habitat for Humanity said the nonprofit would still break ground on their planned project — the first 40 in a series of owner-occupied townhomes and single family homes — later this month.

Overall, Habitat plans 147 units of housing in coming years, with a mix of single-family, twin homes and multi-unit townhomes, said Kaitlyn Dormer, a Habitat spokesperson.

Hurley said Habitat is scheduled to close on the purchase of two blocks at The Heights next week, well in advance of a homebuilding visit from Garth Brooks, Trisha Yearwood and the Jimmy and Rosalyn Carter Work Project Sept. 29 to Oct. 4.

Xcel Energy also plans an east metro operations, job training and service center on 20 acres of land there.

Opara said the three developers will work towards closing on new construction financing in 2025.

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