MINNEAPOLIS - The 20-story grain elevator towering above a southeast Minneapolis neighborhood isn’t going anywhere. The neighbors wouldn’t allow it. Built in 1936, the Bunge grain elevators are a symbol of Minneapolis’ agricultural past, and residents of the Como neighborhood were insistent on preserving the towering structures.

So local nonprofit developer Project for Pride in Living (PPL), which is leading a three-acre mixed-income redevelopment that would create a host of affordable rental and homeownership units on the site, had to tread carefully.

“We included the neighborhood in the design process,” said Chris Wilson, PPL’s director of real estate development. “We’re saving a piece of the grain elevators, so they’ve still got this neighborhood icon.” Neighborhood groups also wanted the Van Cleve redevelopment to be composed largely of homeownership units instead of the student rentals that predominate in the area.

The tower provides a ready structure to fulfill that request. Local developer Jeffrey Laux plans to build 139 units of market-rate condos in it. Those units will help to offset the cost of the affordable units by generating increased property taxes. The projected future gains in tax revenue can be used to finance the development in a process known as tax increment financing (TIF).

“It’s generating quite a bit of TIF, and the city will allow us to shift 15 percent of that over, so we’ll basically subsidize our land cost with the TIF generated by [the market-rate condos],” said Wilson. The TIF will provide about $400,000 to the project, he said.

PPL began new construction in August on the first phase of Van Cleve, a 35-unit building with eight one-bedroom units for the formerly homeless, and 18 two-bedroom and nine three-bedroom units aimed at those earning up to 50 percent of the area median income (AMI). It’s expected to be finished in August 2008. The second building will include 50 units, 12 of which also will be permanent supportive housing for the formerly homeless, with the rest targeted to those earning up to 50 percent of the AMI. At press time, PPL was applying for tax credits for the second building.

Supportive services such as job training and case management will be provided through a partnership between PPL and local nonprofit Cabrini Partnership.

PPL also is developing seven townhouses targeted at households earning up to 80 percent of the AMI, and Twin Cities Habitat for Humanity is building five additional townhouses for those earning up to 50 percent of the AMI.

Development costs on the first phase total about $7.3 million, with $4.4 million in equity coming from the sale of 9 percent low-income housing tax credits, syndicated by National Equity Fund, Inc. PPL also received $500,000 from Minnesota Housing; $412,000 from the city’s Affordable Housing Trust Fund; $270,000 from the Hennepin County Affordable Housing Incentive Fund; and a $250,000 loan from the Federal Home Loan Bank.

The project was awarded a $105,000 grant from Minnesota Green Communities. PPL and architect UrbanWorks Architecture, LLC, are working with energy modelers to make the building 35 percent more efficient than the state’s building code requires.

“It was a great guideline to follow for affordable housing, because their emphasis is on indoor air quality, energy efficiency, and smart site development,” said Dave Haaland, a principal at UrbanWorks.

A centralized water-heating system, and passive solar heating and passive cooling schemes will be used on the first two buildings. Low-energy fans pump fresh air into the units, and enlarged windows invite more sunlight in. “We insulated the roof more than code, and more than was typical,” said Haaland. “We also provided some sun shades and oriented the building in a way that maximizes the sun.”