WORTHINGTON, MINN. - When the Southwest Minnesota Housing Partnership (SWMHP) began its substantial rehabilitation of the Viking Terrace Apartments, it set aside four units for homeless families.

Because Worthington only has about 11,000 residents, the developers thought four units would be enough. That was before they received 12 qualified applications for the units.

“We’re putting more people in than we had anticipated, which was a shock,” said Rick Goodemann, SWMHP’s executive director. “We knew it was a problem, we just didn’t think it was quite that large.” The developers deepened the rent targeting on other affordable units to accommodate the higher-than-anticipated need.

Viking Terrace, a four-building, 60-unit complex, now houses nine formerly homeless families, in addition to 42 households earning up to 50 percent of the AMI. The development was built in 1978 as a HUD Sec. 236 property, and by the time SWMHP got involved in January 2006, the property was blighted and in default.

The area needed the property as much as the property needed a facelift. The city underwent a demographic shift in the 1990s when meat processor Swift & Co., which employs 2,300, expanded its operations. Between 1990 and 2000, the city’s Hispanic population grew by 1,933, and now accounts for nearly 20 percent of the population. Even so, Swift is bussing some employees from as far as 60 miles away to fill its workforce needs.

SWMHP incorporated several green building elements, including installing more insulation, Energy Star appliances, and recycled carpeting. SWMHP also retrofitted the buildings with geothermal heating and cooling systems, which cost $480,000, or almost 10 percent of the overall development cost.

SWMHP expects the systems to boost heating efficiency by at least 32 percent and cooling efficiency by 28 percent or more, lowering operating costs by more than a third.

The project was chosen as one of the pilot projects of the Minnesota Green Communities program, which provided a $150,000 grant to help offset the costs of the geothermal system.

SWMHP also focused on outdoor space, developing a picnic area, a volleyball court, a full basketball court, and enhancing the existing playgrounds. “It’s something that needs to become part of our thinking, to consider how can we develop outside space that helps build the community,” Goodemann said.

Services are another important part of the development. SWMHP partnered with the Southwest Mental Health Center to provide supportive services for families that have experienced long-term homelessness. Services focus on mental health and substance abuse services, job training, and “life skills” training.

Worthington is about 50 miles away from the nearest city of 50,000 or more, Sioux Falls, S.D., and 150 miles from Minneapolis. Finding the right service providers in such a rural area proved a challenge. “When you’re in a rural area, you have to coordinate those services and help train those providers,” Goodemann said.

LIHTCs, which were syndicated by Enterprise Community Investment, Inc., generated about $2.4 million in equity. The city provided a reduction in taxes for three years, and reduced the building permit fees while fast tracking the permit application.

Additionally, the Minnesota Housing Finance Agency’s HOME Rental Rehabilitation program awarded about $765,000; the assumption of the FHA Sec. 236 loan brought in $613,835; Greater Minnesota Housing Fund provided $435,000; and NeighborWorks America provided about $206,500 in a low-interest loan.

Additional project information, as provided in application by the nominator.

Q. Why does the nominated project deserve to be recognized based on the award criteria of this contest?

A. The city of Worthington, Minn., and the Southwest Minnesota Housing Partnership (SWMHP) partnered to undertake a comprehensive planning process that would identify local housing needs, prioritize them, and identify resources that were needed to accomplish goals. The preservation of the existing multifamily and single-family housing stock was prioritized during this process. This process sought broad community participation.

The project was an existing 60-unit development built in 1978 as a HUD 236 property. While providing a valuable housing resource, the project began to deteriorate and was in need of substantial rehabilitation. The SWMHP worked with numerous partners, including the city of Worthington, to develop a viable plan for the preservation of the building. This project was one of four selected as the first recipients of funding through the Minnesota Green Communities Demonstration projects. This has been the only project in two rounds of funding in Minnesota that has bee selected from a rural community of a population of under 25,000, illustrating the commitment of the Partnership to bring green technology to affordable housing in rural areas.

The project also offers four units of permanent supportive housing for families experiencing long-term homelessness. The area lacked permanent supportive housing options for homeless families, so a goal in the financial restructuring of the project was to ensure that units were set aside to meet this need. The SWMHP partnered with the Southwest Mental Health Center to provide supportive services for the families.

This project is a proud symbol to the community of how partnerships and planning for local needs can bring a positive investment to the area. In addition to this project, the planning process undertaken by the community has rehabilitated single-family homes, rental units, and commercial units. It has brought resources to acquire homes and rehabilitate them in conjunction with first-time homebuyer resources, such as entry-cost assistance and gap assistance. It has resulted in the development of new single-family and multifamily units, and has also prioritized redevelopment opportunities that remove blighted propertied to allow for infill housing development. Local leadership has been an essential key in the revitalization of this building, and has been a strong supporter of affordable housing initiatives.

Q. How does this project represent an innovative solution to a specific development challenge?

A. The SWMHP had the opportunity to provide long-term cost savings to both the owner and the tenants of Viking Terrace as part of the rehabilitation process through the incorporation of numerous green technologies. Environmentally friendly methods were used such as rehabilitation of an existing affordable apartment building close to downtown amenities and employment; high-efficiency geothermal heating and cooling system; enhanced insulation of the building envelope; ENERGY STAR appliances; energy-efficient lighting; water-conserving appliances and fixtures; whole-unit ventilation system, including continuous ventilation of bathrooms; low-VOC paints, sealants, and adhesives; metal roofing; cement fiber siding; interior finish materials using recycled content; and onsite recycling of demolition and construction materials.

The project also included a partnership with the National Center for Healthy Housing (NCHH) to measure the impact of the environmental initiatives. As part of the this project, the National Center for Healthy Housing was chosen as a recipient of the Growing Up Healthy Partnership through the Blue Cross/Blue Shield of Minnesota Foundation. The NCHH has been interviewing tenants on energy usage to assess the impact of the rehabilitation activities. The project also incorporated the University of Minnesota to assist with environmental testing.