Replacement of 1970s scattered site public housing units using the Low Income Housing Tax Credit program.

No action required.

As part of the RAD conversion of Mankato’s scattered-site public housing, we are requesting HUD approval to transfer Housing Assistance Payment (HAP) contracts for 40 units originally constructed in the 1970s. These units need replacement due to significant structural issues, primarily stemming from water damage within the walls caused by their original design. Several units also face ongoing issues related to sewer replacement needs, hillside erosion, limited green space for children, and inadequate parking.

The proposed HAP transfer is contingent upon securing Low-Income Housing Tax Credits (LIHTCs) through Minnesota Housing. To support this effort, staff will engage a development consultant from Rippley Richards to assist with the application to Minnesota Housing, planned for July 2026. The consultant's responsibilities will include project and team coordination, financial modeling, preparation of funding applications, and support through financial closing and the start of construction. Rippley Richards has a strong history of successful partnerships with Minnesota Housing on LIHTC-funded projects and brings valuable experience in guiding RAD conversions for unit replacement.
 

The goal is to develop a new family townhome community—like the Breckenridge Townhomes in Eagle Lake, managed by the Blue Earth County EDA—that would provide a one-for-one replacement of the existing units. The proposed unit mix includes 4 two-bedroom townhomes, 29 three-bedroom townhomes, and 7 four-bedroom single-family homes.
 

This proposed HAP transfer presents an opportunity to consolidate housing onto a single site, enhancing property management and maintenance efficiency through a consistent on-site staff presence. It also enables us to address issues at the scattered locations such as hillside erosion, site density, green space needs, and expanding opportunities for homeownership.
 

We are in discussions with Habitat for Humanity of South-Central Minnesota and Southwest Minnesota Housing Partnership to explore a collaborative effort to redevelop the former scattered sites into additional affordable housing through the Partnership Community Land Trust. Redevelopment grant funding is available to assist with the demolition of the deteriorated units.