The Albert Lea City Council voted unanimously Tuesday to sell the historic Freeborn National Bank and Jacobson Apartments buildings to Kansas-based developer Cohen-Esrey Affordable Partners.

The sale — for $400,000 — is contingent on Cohen-Esrey’s receipt of historic and housing tax credits to renovate the buildings. City officials said the closing on the sale could be in December or January if the project is awarded the credits later this year.

“I’m excited about the opportunity to move ahead with this project, but there are still some hurdles we have to pass,” said Albert Lea Mayor Vern Rasmussen.

Cohen-Esrey hopes to turn the buildings — on the corner of Broadway and William Street — into 21 apartments on the upper floors, with the Albert Lea Art Center and Prairie Wind Coffee on the ground level. The community will also be able to rent out space for events.

The apartments would not be subsidized housing but would be income-limited — meaning only residents who make up to a certain amount of income would be allowed to live there. Rent would be $540 for a two-bedroom apartment and $460 for a one-bedroom apartment.

“Thank you for entrusting this valuable asset to our firm,” said Clint Jayne with Cohen-Esrey. “We take that very seriously.”

Some people have questioned why the apartments could not be market rate and whether the Art Center would be the best tenant for the ground floor. Jayne has publicly talked about renting the space to the Art Center for $1 a year, and the Art Center on Tuesday kicked off a capital campaign to raise money for the building.

City officials have stated they did not receive a plausible market rate proposal for the building and said the housing tax credits available for income-limited housing are not available for market-rate properties.

“Yes, we all wanted more, but I can appreciate that something at least is happening, moving forward,” said downtown property owner Robert Hoffman, who also manages more than 200 rental dwellings in the city.

Resident Harold Kamrath said he was concerned that rents paid in the buildings would not stay local.

Second ward councior Larry Baker said the effort to sell the buildings is another part of the plan the city and the council have to make the downtown more viable.

“If we don’t go down this road, that building’s probably going to sit there for another four years, another five years,” said Baker said.

The city has owned the buildings since 1998.

Built in 1922, the Freeborn National Bank was originally constructed as a bank on the first floor and medical and professional offices in the upper floors. The Jacobson’s first two floors were constructed in 1888, and the two upper floors were added in 1923. The buildings share a staircase and elevator.

In 2006, the city spent about $2 million to restore the exterior of the bank building, including tuckpointing, a new roof, a skylight and new water, sewer and electrical service to the buildings, among other improvements.

The city still owes $1.6 million of the exterior renovations.

A developer will need to replace electrical, plumbing and heating and air conditioning, among other improvements.

The city will be responsible for paving the parking lot to the east of the buildings, though Cohen-Esrey could apply for grants to cost-share the project.

The city will also be able to review and approve tenants of the main floor of the bank building for the first five years.

“This has been a long time in coming,” said 3rd Ward Councilor George Marin.