A 99-unit affordable apartment building will soon fill an empty lot on Payne Avenue owned by the city of St. Paul.

The city council recently approved a new $4.1 million tax increment financing district for 848 Payne Ave., the grassy lot between Kendall’s Ace Hardware and the former Ward 6 bar and restaurant.

Minneapolis-based developer Schafer Richardson has proposed a 99-unit, four-story rental housing project that will include 5,600 square feet of ground-level commercial space, as well as surface parking.

The $24 million project, originally projected to cost $17.5 million, had been proposed in 2016, but was delayed while the developer struggled to close a funding gap. A project manager for Schafer Richardson declined to discuss updated project costs on Wednesday.

All of the units will be rented to families earning 60 percent or less of area median income, according to a spokeswoman for St. Paul Planning and Economic Development. Under the Metropolitan Council’s 2018 affordability limits, that means a two-bedroom apartment would rent for no more than $1,273.

Roughly 20 units would be priced even lower, at or below 50 percent of area median income, which amounts to $1,061 for a two-bedroom.

Construction of the affordable housing will be subsidized by financing provided by the city’s Housing and Redevelopment Authority.

The funds will be paid back over the course of 25 years at a rate averaging roughly $160,000 per year, using money that would otherwise have gone toward city, county and school district property taxes. Related Articles Marchers shut down I-94 through St. Paul to protest Breonna Taylor decision

Metro Transit workers reject contract offer, vote to authorize strike

St. Paul man charged in connection with gang-related drive-by shooting

St. Paul City Council approves $600,000 charge for downtown improvement district

St. Paul schools superintendent gets high marks, but board wants progress on equity, enrollment, student achievement

Construction could begin this summer and wrap up by fall 2020, according to city staff. The first TIF payments will begin in 2021, according to the redevelopment plan and TIF agreement.

The St. Paul HRA, which is the current landowner, would offer the land to the developer at market value. The TIF would provide $2.44 million for the affordable housing, $410,000 for administrative costs and $1.28 million for interest expenses on the HRA loan or pay-as-you-go fiscal note.