MANKATO -- A housing complex that provides apartments for some of Mankato's lowest-income residents faces an uncertain future in the wake of millions of dollars in flood damage last summer.
Heavy rains in July left a third of the units in Homestead Apartments along Monks Avenue uninhabitable, and the nonprofit owners are expected to seek city assistance to preserve the complex as income-based, rent-controlled housing.
"They have 120 units, and 40 were flooded," said Nancy Bokelmann, who oversees housing programs for the city of Mankato. "They have significant costs to repair that, so we do anticipate they will come back to us."
The complex is owned by the nonprofit Southwest Minnesota Housing Partnership, and many of the units are reserved for people who have incomes below certain thresholds. They include Section 8 units that keep rents to no more than 30% of a tenant's income, no matter how low their income is.
"It is key for us to look at this project ... to make sure we can keep those affordable units in our community," Bokelmann said.
The issue was brought to the Mankato City Council, acting as the local Economic Development Authority, in its final meeting of 2025, but a specific request from SWMHP is still being developed and won't come back to the city until sometime next year.
The total replacement costs to get the 40 units fixed and inhabitable is $3.34 million, not including the contents of the apartments. Insurance will cover $2.9 million, but SWMHP is responsible for a $441,000 deductible.
There also has been an ongoing loss of $26,000 a month in rental income even as mortgage payments, property taxes, insurance premiums and utility service charges have continued at a cost of $40,000 to $50,000 a month, according to a summary provided by SWMHP to the city.
"The Homestead Apartments flood represents not only property damage, but a direct threat to the long-term stability of a critical affordable housing asset serving the local workforce and vulnerable households," the summary stated. "With proper support and without further complications, SWMHP expects to restore all 40 units and return displaced families to their homes."
The organization did not respond to questions from The Free Press about the status of the former tenants.
Although the size of the request is to be determined, the organization expects to seek city cost-sharing for an engineering study of the drainage problems in that part of Mankato; to ask the city to assess the stormwater systems and make improvements; and to provide direct financial support for some of the damages not covered by insurance.
"Without financial intervention or support, the risk of permanent loss of these affordable units is real and imminent," the SWMHP document warns. "The lengthy claim processes has threatened operational solvency, the insurance deductible creates an immediate cash crisis, and restricted operating margins leave little cushion for disasters."
The danger isn't that Homestead Apartments will cease to exist, it's that the complex will cease to exist as affordable housing because SWMHP will be forced to sell to a private firm that will rent all of the units at market rates, Bokelmann said.
"If they do not receive the assistance to manage this, they may have to sell the property," she said.