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In an effort to make a 62-unit workforce housing project feasible for a developer on the 300 block of downtown Albert Lea, the Albert Lea City Council on Monday approved a grant application through the Minnesota Housing Agency in support of the project.

Mark Basara with Rebound Partners, the entity that is looking to redevelop the block, said the company has acquired the final parcel of the block, the former Broadway Theater, at 338 S. Broadway.

The Northfield firm, combined with a group of local investors and the Albert Lea Economic Development Agency, also previously purchased the building at 302 S. Broadway, known as the Wedge-Jones Building, and has plans separately for historic rehabilitation of that building with a restaurant on the lower level and offices on the upper floor.

It is in a purchase agreement with the city for the parcels in-between the Wedge-Jones and Broadway Theater buildings, at 310, 314, 324 and 332 S. Broadway. Two of the properties are open lots left behind from the demolition of buildings that were in major disrepair, and the other two still have buildings standing.

Basara said they are analyzing multi-family development there — specifically a four-story, 62-unit complex with on-site parking. He said he thinks it would be a nice project for the block and fit in well into the community. The units would be market-rate.

He noted the importance of tax-increment finance and the workforce housing grant in the success of the project and said he appreciated city staff who have gotten behind the project.

City Manager Ian Rigg said the total project cost is estimated at $17 million and currently has a $6.3 million gap in financing.

The Minnesota Housing grant request will be for $4.25 million, which would require a match of about $2.125 million from the city, Rigg said. That could come in many forms, including already expended demolition and site correction costs, forgiveness of land value in the purchase price and the present value of a pay-as-you-go TIF agreement.

Rigg said the city has already spent about $658,000 on the properties from 310 to 338 S. Broadway, whether that’s establishment of TIF, demolition or site improvements, which is currently backed by an interfund loan.

He said TIF generation is anticipated to create $2.5 million for this project development, along with about $300,000 for the 302 building, for a combined $2.8 million that could be generated.

As the projects stand, the properties provide little in tax because of their lower values, and Rigg said he doesn’t think if they remained that the city could say it would never have to put more money into those buildings.

“It is very much in the city’s interest I feel to move forward with this application and see where things go,” he said.

Rigg said the final commitment from the city would not come until the grant is approved and final paperwork is received from the finance agency.

The outcome of the grant application is expected in mid- to late August, Besara said.

Second Ward Councilor Larry Baker asked what would happen if the grant did not come to fruition and whether there was an alternative plan.

Besara said they do not have other plans at this point as they have been focused on bringing the development to fruition.

“We’re committed to Albert Lea and we want to make an improvement here on this block and we think we can whether it’s this project or something else in them future …” he said. “We’re going to stick to it.”