This article originally appeared in The Post Bulletin on October 4, 2016. Written by Ken Klotzbach.
Nate Stencil, of South Dakota-based Stencil Group, presented plans Monday at a Rochester City Council meeting to transform the site into a four-story, 135-unit apartment building called Eastgate Apartments.
An attractive feature of the development in the eyes of council members was Stencil's proposal to apply for housing tax credits and rent 80 percent of the units at an affordable rate.
The council voted to approve a zone change for the site's three acres from B-4 general commercial district to B-1 commercial restricted district. The council also approved a preliminary incentive development plan for the project.
The site at 1201 Eastgate Drive is in a primarily commercial area but the developer saw the pieces in place for a housing project — access to pedestrian trails, public transportation and amenities.
"We know that as the site sits today, it's a little hard to envision this multifamily use," Stencil said. "But I think that bringing this to the area will hopefully trigger some further development … "It is kind of in the middle of the commercial use right now but if you look just a little beyond it, we feel that this is a good fit for the neighborhood."
Stencil said he would in January apply to the Minnesota Housing Finance Agency for a Low-Income Housing Tax Credit. If granted, the credit would offer a 10-year reduction in tax liability in exchange for capital to build affordable units. Stencil planned for 20 percent of the units to rent at market-rate and 80 percent to rent at 60 percent of area median income.
The developer proposed a mix of unit sizes: six studio apartments, 76 one-bedroom apartments and 53 two-bedroom units, according to the application.
Rochester Area Foundation Housing Initiative Director Steve Borchardt spoke in support of the project during a public hearing Monday night. Borchardt provided council members with a list of 4,405 rental units in Rochester that were planned, already approved, under construction or already leasing.
Just 130 or fewer of those units would rent at the rate Stencil was approving, Borchardt said.
"He's not asking us for local money. He's doing this with state money and he's making it work," Borchardt said. "I think it's a pretty attractive use for that intersection given the demand that we're facing here."
Council member Mark Bilderback called the proposal "a very promising project" despite some concerns from Rochester-Olmsted Planning Staff, who had reviewed the project based on the city's zoning and land use manual codes.
"It's something that we need in this city, it looks good, and I understand some of the concerns … but I think we can make this a good area and a safe area and that's what I'm looking for," Bilderback said.
The project will return for another public hearing when the developer forms a final incentive development plan.
Also at the meeting:
The council approved a special district amendment requested by development group Riverfront Investors, represented Monday by Jeff Brown. The developer has planned a 103-unit extended stay hotel on a site nearby an under construction luxury housing complex.
The amendment allowed for greater total square footage and building height. The request also extended the hours of operation for a restaurant on the site. It would be allowed to operate until 12:30 a.m. on Thursday through Saturday evenings.