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City embarks on Phase 2 of workforce housing plan

If a $650,000 grant request is awarded, the newly completed Meadow View apartments off Career Path in Park Rapids will have a twin called Meadow's Edge.

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Mary Thompson

The Park Rapids City Council approved a grant application to support Phase 2 of a local workforce housing project during a special meeting on Jan. 10.

Mary Thompson with the Hubbard County Housing and Redevelopment Authority (HRA) discussed their request for a $650,000 grant from the Minnesota Housing Finance Agency’s Workforce Housing Development Program.

She said even after completing the Meadow View apartments east of Walmart, demographics continue to show “there is still a need for this particular market of apartment building.”

Meadow View opened for occupancy on Jan. 1 and as of Jan. 10, Thompson said, 10 units were filled and more applications were in process. “We fully expect that we’ll be half-full by the end of the month,” she said.

Thompson said a comparable apartment building typically fills up in six months to a year, but with the community’s 3 percent housing vacancy, the new complex should fill faster than average.

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In an economy measure she described as “plan for two, build one,” the site plan for Meadow View included a second building to the south, which the HRA is calling Meadow’s Edge. Similar to the first building, it will have two one-bedroom, 18 two-bedroom and eight three-bedroom units. Thompson called this shared design a cost-saving feature.

Residents must pass a background check and have enough income to pay rent, she said, stressing that the rent is calculated to suit workers making $12-$15 per hour and is too high for a Section 8 voucher. People applying to be tenants at Meadow View have included new workers, retired people looking to downsize and residents fleeing less attractive housing.

Road work ahead

With 28 more housing units on Career Path, Thompson said, “it’s really going to be necessary to do something with the road. That was something that we knew, going into the first project.”

Built into the current proposal, she said, is a plan to extend sanitary sewer, water and urban section street, curb and gutter up Career Path with minimal financial impact to the city and adjacent property owners.

Thompson said the grant requires $1 in local matching funds for every $2 in state funding, but the HRA plans to defer its developer fee and use previous expenses toward the project to cover part of the match. However, the city would need to contribute about $300,000 if the project moves forward – which it could meet by doing the Career Path improvements.

“This is right on the heels of a completion of our first one,” Thompson said. “It’s a very competitive grant. … Because we have already received funding (for Meadow View), there is a chance that we may not get it.

“But the other side of that coin is that we have a history of performing. All of the projects that we have done to this point have been on time and on budget, or under budget, and we’re getting them filled immediately. We really are having some good success, so I hope that the state will weigh those factors in.”

City staff comment

City Administrator Ryan Mathisrud said that if approved, the grant would function like the previous workforce housing grant in 2018, with the city serving as the fiduciary for the funds.

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He also described funding options for the street improvements, explaining that:

  • According the HRA’s application, grant monies will be used to buy down the city’s share of the street improvements from the city engineer’s cost estimate of $435,000 to $300,000.

  • Grant funds will also pay the costs assessable to adjacent property owners, saving the city the cost of holding a special assessment hearing.

  • The city could pay for $285,000 of its share out of enterprise and stormwater funds, with the remaining $15,000 coming from other public funding sources.

  • It may be possible to forgo bonding for the project. Options include paying directly out of the general fund levy, borrowing from an enterprise fund and paying it back with interest, or taking the balance from liquor store reserves.

“The benefit of this type of project, compared to other developer-driven projects, is that this one immediately pays property taxes,” Mathisrud said. “That will reduce the impact to the general fund right away.”
He compared this to tax increment financing used to support other housing projects, which delays the collection of property taxes.

Mathisrud noted that the immediate decision is only about approving the grant application, but if it is awarded and the city accepts it, a street improvement project will happen.

City Planner Andrew Mack said if the project is funded, public hearings and permit approvals will give the city some control on the project.

Regarding the street project, Mack said, “the sooner a task order can be created … whether or not the grant’s approved, the better the bids will be on the project.”

Seizing opportunity

Council member Tom Conway said even if the second building doesn’t happen, he said, “a road is going to have to be improved. We are just delaying it. Right now, we have an opportunity to gain an advantage by doing it … if nothing else, an assessment of another apartment building.”

“And getting some help with it,” added Mayor Ryan Leckner. “Those other property owners on that road are really benefiting because they’re getting their assessments paid.”

“It may be a little earlier than we were planning on doing it,” said Conway, “but if we wait until we were planning on doing it, we may not have the opportunity to gain as much out of doing it.”

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Conway moved to approve a resolution to submit the grant application. Thompson noted that the resolution includes an assurance that matching funds will be available.

Conway’s motion passed without dissent.

Related Topics: GOVERNMENT AND POLITICS
Robin Fish is a staff reporter at the Park Rapids Enterprise. Contact him at rfish@parkrapidsenterprise.com or 218-252-3053.
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