The Freeborn National Bank and Jacobson Apartments buildings could sell for $400,000 under a proposed purchase agreement between a Kansas-based developer and Albert Lea officials.

The project would not receive any subsidies from the city such as tax abatements or loans, and the property would go right back onto the tax rolls, with the first full payment of taxes likely coming in 2017, said City Manager Chad Adams.

Cohen-Esrey Affordable Partners hopes to turn the buildings, which have been in city hands since 1998, into 21 multi-family housing units on the upper floors, with the Albert Lea Art Center and Prairie Wind Coffee at the street level.

The developer has proposed to pay for the project through housing and historic tax credits.

“I just think it’s really exciting for the downtown,” Adams said.

Community members are invited to share their thoughts about the potential sale and use of the buildings during a public hearing Tuesday night in front of the Albert Lea City Council, he said.

The council could vote on the sale the same night, but it is likely the closing for the sale would not be until December or early January.

The deal is contingent on whether Cohen-Esrey is awarded housing tax credits for the project, but Adams said the city could grant an extension for the closing to let the developer reapply for grants a second time if needed.

Under the agreement, the city would continue to own the parking stalls east of the buildings, but 29 stalls would be dedicated for people who live in the building.

Cohen-Esrey would build a main stairwell for residents in the back of the building — likely extending the building back into the existing alley.

Adams said the alley will be reconfigured, and the city will be in charge of repaving the parking lot.

The apartments would not be subsidized housing but would be income-limited — meaning only residents who make up a certain amount of income would be allowed to live there.

Adams said some people wanted market rate housing in the building, but the city has not received a feasible proposal for that. The housing tax credits available for income-limited housing are not available for market rate units.

“If we were to do market rate housing, the city would have to potentially kick in a seven-figure number,” he said. “It might also include tax abatements and waiving taxes.”

The project could switch to market rate after 15 years as income-limited.

Regarding the first floor of the Freeborn National Bank building, Clint Jayne with Cohen-Esrey has publicly acknowledged the Art Center would rent its portion of the building for $1 a year, but noted the organization is also starting a capital campaign to raise money for the finishing of the building.

The developer will complete the basics of the first floor, but the Art Center must raise its own funding for things such as lighting, dividers and signage.

Jayne said he knows some are in favor and some are opposed to the idea of the Art Center in the building, but he thinks the option will allow the most public access to the building.

“We really want to encourage the community to use the first floor,” Jayne said. “I just really feel it’s so important that the community had access to that.”

The Art Center will be in charge of renting out the first floor for community use, and the city will have 80 hours of free use in the building per year.

In 2007, the city spent about $2 million to restore the exterior of the bank building, including tuck-pointing, a new roof, a skylight and new water, sewer and electrical service to the buildings, among other improvements.

Adams said the city still owes $1.6 million of that cost.

The $400,000 sale would go toward paying off that debt.

The Freeborn National Bank was built in 1922. It 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.

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

At one point, city officials estimated renovations would cost another $4 million to $6 million.

 

Share your opinion

City officials are inviting the public to share their thoughts about the proposed purchase agreement for the Freeborn National Bank and Jacobson Apartments buildings at a public hearing at 7 p.m. Tuesday during the Albert Lea City Council meeting.