The Albert Lea Planning Commission on Tuesday gave the go-ahead to the proposed development announced last week in the Freeborn National Bank and Jacobson Apartments buildings.

In what was a 5-2 vote, the commission voted to move the project forward to the Albert Lea City Council for a public hearing at its meeting next Tuesday.

The commission looked at whether the development proposal — for 21 multi-family housing units in the upper floors and the Albert Lea Art Center on the main floor — followed the city’s vision for the downtown as identified in the comprehensive plan.

Clint Jayne of Kansas-based developer Cohen-Esrey said the project 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. The apartments would be a flat $460 a month for a one-bedroom unit and $540 a month for a two-bedroom.

The company would pay for the project using both historic and housing tax credits. Jayne said the project is contingent on the award of the housing tax credits, but if the project does not get the credits in the first application, he will reapply until they are awarded.

The goal is to close on the sale of the property, at the corner of Broadway and William Street, by January 2015, with construction to be completed in September or October of the same year, if the tax credits are awarded during the first round.

Jayne said there is a possibility the apartments could go from income limited to market rate after 15 years in operation, but this would depend on market conditions at that point.

A few of the commissioners asked whether having the Art Center on the first floor of the building was the best option, and Jayne said he thought doing so would give the most flexibility for community use. Residents could rent portions of the main floor for events, with the Art Center being in charge of rentals.

Commissioner Doug Olson questioned whether having the Art Center on the first floor would drive people downtown.

He and Chairman Jon Murray ultimately voted against the proposal.

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.

The two buildings have been under city ownership since 1998.

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. Inside, crews have cleaned out asbestos, filled in the basement and taken out a majority of the plumbing.

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.