Blue Earth County (the “County”) will own and operate a portfolio of public housing units located throughout the County, including Breckenridge Apartments, an 18-unit mixed-finance development, and 47 scattered-site units (collectively, the “Development”). The County also previously acquired an additional 19 scattered-site units from the Blue Earth County Economic Development Authority (BECEDA) pursuant to Section 18 of the U.S. Housing Act.
BECEDA has received approval from the U.S. Department of Housing and Urban Development (HUD) to convert the remaining public housing units to long-term Section 8 assistance under the Rental Assistance Demonstration (RAD) program, combined with a Section 18 disposition (the “RAD/Section 18 Conversions”). This conversion process is intended to provide a more stable and sustainable funding structure while preserving the long-term affordability of the housing units.
Under the proposed structure, BECEDA will administer the RAD Project-Based Voucher Housing Assistance Payment contracts and continue to serve as the contract administrator with HUD, as well as retain ownership of the properties. The Economic Development Authority of Mankato (MEDA) proposed to assume responsibility for day-to-day property management and operations of the converted units.
The proposed action before the Board is approval of a resolution authorizing the Economic Development Authority of Mankato (MEDA) to enter into a Property Management Agreement with Blue Earth County. Under this agreement, MEDA will act as the County’s agent in managing and operating the RAD/Section 18 units in compliance with all applicable HUD requirements, including RAD program rules and the Project-Based Voucher Housing Assistance Payment contracts.
The agreement provides that MEDA will be responsible for comprehensive property management services, including leasing, tenant eligibility and compliance, rent collection, maintenance and repairs, financial management, and reporting. All activities must be carried out in accordance with federal, state, and local regulations, as well as project-specific requirements established through the RAD conversion documents.
The initial term of the agreement is five years, with automatic renewals unless terminated by either party. MEDA will receive a management fee equal to six percent of gross project receipts, which will be paid from project operating revenues. The agreement also establishes financial management requirements consistent with HUD standards, including the maintenance of operating, security deposit, operating reserve, and replacement reserve accounts. The replacement reserve will be initially funded at closing and supported by ongoing monthly deposits.
The agreement further clarifies that MEDA will operate within an approved budget and management plan and will have authority to carry out day-to-day operational decisions on behalf of the County. Standard provisions related to insurance, indemnification, and limitation of liability are included and are consistent with similar public housing management arrangements.
This partnership also strengthens coordination between MEDA, Blue Earth County, and BECEDA and contributes to the long-term preservation and quality operation of affordable housing resources within the region.
The financial impact of the agreement is expected to be neutral to positive for MEDA. Management fees will be paid from project revenues, and all operating expenses will be borne by the project. No direct local subsidy is required.
