Resolution authorizing the Rental Assistance Demonstration (RAD) / Section 18 Conversion and Disposition to the City of Mankato.

The Economic Development Authority of Mankato (EDA) currently owns and operates public housing units throughout Mankato, including Orness Plaza and scattered-site properties totaling one hundred thirty (130) units.

On April 1, 2025, the EDA completed the disposition of forty-nine (49) scattered-site public housing units to the City of Mankato pursuant to Section 18 of the United States Housing Act of 1937 (the “Section 18 Units”).

The EDA has since received approval from the U.S. Department of Housing and Urban Development (HUD) to convert its remaining public housing units to long-term Section 8 assistance under the Rental Assistance Demonstration (RAD) program, utilizing a blended RAD/Section 18 approach (the “RAD/Section 18 Conversions”).

To implement this conversion, the EDA will undertake a coordinated set of actions to reposition its remaining public housing portfolio. Ownership of the development—including Orness Plaza and the remaining scattered-site units—will be conveyed to the City of Mankato for nominal consideration. This transfer is necessary because the EDA cannot administer Project-Based Voucher (PBV) assistance on units that it also owns. Accordingly, transferring ownership to the City ensures compliance with federal requirements while preserving long-term affordability.

In conjunction with the conversion, the EDA will enter into two Project-Based Voucher Housing Assistance Payments (PBV HAP) contracts with the City. Through these agreements, the units will transition from public housing subsidy to long-term Section 8 assistance under RAD. The EDA will retain an ongoing administrative role as contract administrator, overseeing compliance and facilitating the flow of subsidy from HUD.

Following the transfer, the City will own the units and is expected to pursue a management agreement with the Economic Development Authority of Blue Earth County to ensure continued professional management and operational continuity.

The EDA will utilize its existing Housing Choice Voucher program infrastructure to ensure that all federal requirements related to Project-Based Voucher administration are met. Notably, the transaction does not involve external financing or low-income housing tax credits, thereby simplifying implementation and reducing transactional complexity. The development will continue to benefit from tax-exempt status through an existing PILOT agreement.

Overall, the proposed disposition to the City of Mankato ensures continued public stewardship of the properties, preserves long-term affordability, enhances operational sustainability, and aligns housing resources with community goals.

Staff recommends approval of the proposed resolution authorizing the RAD/Section 18 conversion and the disposition of properties to the City of Mankato and authorizes the Executive Director, or her designee, to negotiate and execute the RAD Section 8 Project Based HAP Contracts and documents necessary for the conversion.