Resolution considering the Phase V contract with the Partnership Community Land Trust for implementation services of the Community Land Trust.

Adoption of the attached resolution.

The Economic Development Authority’s (EDA) commitment has enabled Southwest Minnesota Housing Partnership (SWMHP) to leverage significant additional public and private resources, substantially increasing housing production and accelerating delivery timelines.

With the addition of New Markets Tax Credit (NMTC) financing, SWMHP now has greater flexibility to strategically layer County and City funds, Minnesota Housing Finance Agency (MHFA) resources, and NMTC capital on a project-by-project basis. This integrated approach has strengthened the program’s efficiency and impact, allowing for increased production of permanently affordable homes.

This progress is now clearly visible in Mankato, with 21 homes projected to be delivered to income-qualified buyers in 2026.
 
Program Status and Phase Updates
Completed Phases
Phase I – Acquisition/Rehabilitation (Completed)
Phase I focused on three acquisition/rehabilitation homes serving households at or below 80% AMI. City investment provided a purchase price write-down, while CDBG funds addressed health and safety improvements.

• Homes closed: December 2023, June 2024, March 2025
• Outcome: All three homes successfully rehabilitated and sold to income-qualified buyers

Phase II – New Construction (Completed)
Phase II delivered three new construction homes serving households at or below 60% AMI. City and SWMHP contributions were leveraged to secure MHFA and Target Foundation funding.

• One home was purchased in March 2024 and sold in October 2024
• Two homes were constructed in partnership with local developers and sold in August 2025

Active Phases
Phase III – Acquisition/Rehabilitation (In Progress)
Phase III includes five homes serving households at or below 80% AMI.

• Two homes acquired to date
• One home completed and sold (December 2025)
• One home under construction, anticipated for sale in June 2026
• Three additional opportunities actively being pursued

Phases III, IV, and V – New Construction (In Progress)
With enhanced funding flexibility, SWMHP is advancing a significant pipeline of new construction homes in 2026:

• 17 homes under construction this year
• Four twin homes on Scotch Lane, available Spring 2026.
• Eight homes in Good Counsel Meadows along North 4th Street, including a mix of modular and stick-built homes.
• Seven lots secured near Jefferson Quarry along 8th Avenue, with five homes currently planned as PCLT units and potential expansion to include two additional homes.

All new construction is currently structured to serve households at or below 80% AMI to align with NMTC requirements, while maintaining the ability to reach up to 100% AMI as funding alignment allows.
 
Homebuyer Demand and Readiness
Demand for PCLT homes continues to increase through outreach efforts, partnerships, and market visibility.

• Pipeline includes multiple mortgage-ready buyers
• Household sizes range from 1 to 11 individuals
• Buyers are qualifying for mortgages between $180,000 and $300,000

However, SWMHP continues to prioritize long-term affordability by targeting housing costs closer to 30% of household income, which often requires reducing mortgage amounts to approximately $160,000–$215,000 through layered financing.
Staff are actively working with buyers to utilize:

• State down payment assistance programs
• USDA financing (pending CLT eligibility approval)
• Housing vouchers and other local resources

Local lenders, including Old National Bank, U.S. Bank, and Guild Mortgage, are now actively financing PCLT homes, improving transaction efficiency and buyer access.
 
Program Momentum and Impact

• 7 families currently housed
• 21 additional homes expected within 18 months
• 28 total homes projected in Mankato

The City’s initial investment has been highly leveraged, with its share of subsidy decreasing significantly over time—from fully funding early write-downs to approximately 11% in current projects. The County’s invests will be seen in Phase IV and V homes this year.

The initiative continues to attract additional funding from multiple partners, including MHFA, Greater Minnesota Housing Fund, Blue Earth County, philanthropic organizations, and NMTC financing.

SWMHP’s long-term vision is to develop 100 PCLT homes regionally, with Mankato serving as a leading implementation model.
 
Phase V Funding Commitment
Although SWMHP was not awarded MHFA funding for Phase V, the organization can proceed with a portion of planned development due to NMTC resources already secured.

Specifically, 5 of the originally planned 10 new construction homes can move forward, provided that local gap financing is secured.
SWMHP requests approval of the following funding commitments, consistent with prior Letters of Support:

• City of Mankato: $125,000 ($25,000 per home)
• Blue Earth County: $75,000 ($15,000 per home)

To support the construction of five (5) new PCLT homes and maintain current development momentum. These local funds will be leveraged with NMTC and other sources, maximizing impact. Staff recommends that the Board approve the Phase V contract in order to sustain the strong momentum of this initiative and position the project for continued success. Approval at this stage is critical to maintaining construction timelines for 2026, ensuring that progress remains on schedule and aligned with prior commitments. It will also allow the project to fully leverage existing NMTC allocations, maximizing available resources and preserving the financial structure already in place.

In addition, moving forward with Phase V will support the continued expansion of affordable homeownership opportunities, advancing the organization’s mission and responding to ongoing community needs. Finally, approval will reinforce the City of Mankato’s role as a leader in innovative housing solutions, demonstrating a continued commitment to forward-thinking strategies that address housing challenges in a sustainable and impactful way.
 
Action Requested
The requested action is adoption of the Resolution authorizing the Executive Director to enter into a service contract for Phase V with the Partnership Community Land Trust through December 31, 2027.