The Prior Lake City Council on Jan. 12 approved a contribution totaling $225,000 to Twin Cities Habitat for Humanity, with funds paid from Local Affordable Housing Aid (LAHA) received in the past two years.

During 2024 and 2025, Prior Lake received more than $376,000 from the 0.25% metro area sales and use tax program implemented in 2023 to support future affordable housing initiatives. Participation in LAHA was mandated for all cities in the seven-county metro area with a population over 10,000.

Twin Cities Habitat for Humanity is nearing completion of three four-unit townhome buildings near Ponds Park on 170th Street. The townhomes are sold to residents making 80% or less of the area median income.

The first building was completed in 2024 and the city contributed $30,280 from its LAHA fund. The second was finished last year, with $32,125 granted by the city for the project.

To date, all of the finished units have been sold. The third building is expected to be completed this year.

Organization managers shared with city staff at the Jan. 12 meeting that funding gaps have occurred with construction and development costs associated with the Prior Lake project. They have encountered a shortage of volunteers to work on the project, so additional contractors had to be hired at a cost of more than $1 million. Other challenges have involved owner affordability and homeowner association fees that are running $100 per month higher than originally anticipated.

Representatives from Habitat for Humanity said at the council meeting they appreciated the city’s support and additional funding. One noted that the affordability gaps are real since starter homes are no longer being built and little is available in the price range for first-time home buyers.

After the $225,000 contribution is issued, the city’s balance in the LAHA fund will be $8,127. It will receive additional funding from the state in 2026 that is expected to be approximately $250,000, according to City Manager Jason Wedel.