Bridge loan rescues senior project as Twin Cities affordable housing expands

Twin Cities boost for affordable housing as multiple projects secure funding and start construction

Lead: A cluster of affordable housing efforts in the Twin Cities moved forward this year after lenders and local agencies stepped in to finance and build new homes. Short-term construction lending rescued a senior housing plan in St. Paul, a nonprofit developer closed a $32.9 million package for a 60-unit project, and a public housing agency broke ground on 11 deeply affordable townhomes. At the same time, debate over student-oriented housing is shaping local elections as the city balances growth and neighborhood concerns.

Bridge loan keeps senior project alive in St. Paul

A local affordable housing developer faced tough site and financing challenges on a planned senior community and secured a short-term construction loan from a commercial bank to keep the project alive. The bridge loan filled a critical gap in the construction budget and allowed work to continue while longer-term financing and site issues were resolved. The developer has since moved its banking relationship to that lender for a range of services, including future site financing, lines of credit and deposit accounts with favorable terms. Bank representatives described their approach as relationship-based, serving both local and national affordable housing clients with a full suite of lending and treasury services.

$32.9 million closed for East 7th Street development

A 60-unit affordable housing development on East 7th Street secured a full construction financing package totaling $32.9 million. The package included $18.9 million in equity tied to 9 percent low-income housing tax credits and a $14 million bridge loan. Construction began in December and is already well underway, with the project expected to open within about 12 months. The building will offer one- to five-bedroom apartments and will set aside 17 units for households earning up to 30 percent of the area median income (AMI) and 43 units for households at or below 60 percent AMI. Additional targeted units will serve residents living with disabilities and people experiencing homelessness; the latter will be coordinated with county housing support and the local coordinated entry system.

The new community will include shared spaces such as a gym, wellness room, storage, a conference room and a playground. State-level housing tax credits enacted in recent years played an important role in making the financing possible, and similar credits have supported other modest affordable developments across the region.

Public housing agency breaks ground on deeply affordable townhomes

The local public housing agency, with county funding, broke ground on a small project that will add 11 deeply affordable townhomes across two existing developments. The $4.8 million effort will create seven townhomes at one site and four at another. Units are being built for families earning less than 30 percent of AMI and will include accessible layouts, sprinkler systems, enhanced security and durable finishes meant to serve residents for decades. The agency described these units as the final use of its remaining public housing subsidies and said the work supports greater household stability and self-reliance.

Local politics and student-oriented housing

A special election for a city council seat highlighted how student housing near a private university has become a flashpoint. Since zoning rules were relaxed in 2023, more student-oriented housing has appeared on formerly single-family lots near the campus. Candidates in the race offered a range of views: some oppose a moratorium on student development, arguing it could worsen city revenue and housing supply problems, while others support a pause or limited hold to gather community input and study the effects of zoning changes. The contest is being watched as an early sign of voter sentiment ahead of a larger municipal election later in the year.

Where the market stands

The broader multifamily construction pipeline in the metropolitan area shows steady volume but shrinking affordable completions on the immediate horizon. At one point the pipeline measured in the billions of square feet of planned construction, and developers were working on roughly 8,000 multifamily units in the market. Of those, about 2,000 units were in fully affordable projects. Last year more than 2,360 affordable units came online regionwide, but projections indicate the area could deliver roughly 1,822 affordable apartments in the coming year, a near 23 percent drop from the previous year.

These shifts underscore the role of public subsidies, tax credit equity and short-term lending in getting projects across the finish line. Bank participation in affordable housing lending, state housing tax credits and county support for deeply affordable units all contributed to recent progress.

What this means for residents

New units targeted to very low- and low-income households, units set aside for people experiencing homelessness and accessible townhomes aim to expand housing options for households under the greatest pressure. Smaller infill projects and targeted public housing additions offer rapid, place-based increases in supply, while larger tax-credit-financed buildings add scale. Still, projections for fewer affordable completions next year suggest a continued gap between need and new supply unless policy or funding shifts increase production.