The Freeborn National Bank and Jacobson Apartments will not receive tax credits  in the fall grant round from the state for a proposed renovation project, according to state officials this week.

The announcement, by Minnesota Housing Finance Agency officials and Gov. Mark Dayton, marks the third time the state has opted not to award credits for the project.

Albert Lea City Manager Chad Adams said city officials will talk with Kansas-based developer Cohen-Esrey and Minnesota Housing officials in the next week to find out more about why the project was not awarded the credits.

“We are disappointed and frustrated that the state of Minnesota did not approve a bonding bill this year, which would have authorized bonding dollars to housing,” Adams said. “Our prospect of being awarded tax credits are significantly better during an even year when the state of Minnesota typically approves a bonding bill, due to additional funding appropriated to housing projects.”

Plans by Kansas-based developer Cohen-Esrey call for turning the buildings — on the corner of Broadway and William Street — into 21 apartments on the upper floors, with The Albert Lea Art Center and The Interchange Wine & Coffee Bistro on the ground level. The community would also be able to rent out space for events.

Adams said after finding out the reasons why the project did not receive tax credits, the city will decide whether to proceed with the project for another application or whether to take the project in another direction.

He said he plans to bring more information back to the Albert Lea City Council work session in November.

He said he anticipates the city to request more community dialogue as well about the project, as it has been three years since the community last weighed in on the project.

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.