By Beth Bily
Grand Rapids Community Development Director Rob Mattei knows his city is an outlier when compared with other rural Minnesota cities.
A recent report by Minnesota 2020, a Twin Cities-based think tank, found that rural Minnesota cities were hit hard when the bottom fell out of the housing market. The statewide study found that although Greater Minnesota didn’t experience the pre-recession housing boom as did metropolitan areas, small cities did experience higher foreclosure rates and falling market values as the impact of the wider economy hit.
The study also concluded that many communities in Greater Minnesota haven’t really recovered from the loss. Hibbing, for example, has a six-month waiting list for affordable housing with both apartments and rentals in “especially short supply.” In Brainerd and Baxter, median home prices fell between $60,000 and $70,000 – and have only made modest recoveries.
Grand Rapids, however, is experiencing a surge in new construction. Mattei notes, however, that public partnerships with private developments are aiding the uptick.
“Grand Rapids had a very good year in 2013, with 160 new residential units permitted,” he said.
Some recent residential housing projects include the 73-unit Majestic Pines assisted living facility and the First Avenue Condominium project, now under construction, which will include 36 units at market rate.
The First Avenue Condominiums project is being developed by Alexandria-based Innovative Companies. But, prior to beginning construction, the city received significant grant support that allowed development to take place. Previously, the site was occupied by St. Joseph’s School, which had to be demolished.
The Iron Range Resources and Rehabilitation Agency provided two separate grants ($250,000 and $41,000) to cover demolition and asbestos abatement. There also was redevelopment funding available through the city and Itasca County to cover site work costs.
“That project really took a lot of collaboration,” said Mattei, adding that without site redevelopment funding the project probably wouldn’t have got off the ground.
While not yet finalized, the city also has a pre-development agreement in place with Brainerd/Baxter-based Kuepers, which plans to develop two 35-unit apartment buildings in the city.
While public-private partnerships are jump-starting some developments here, demand also is playing a role.
“There’s a segment of our demographic that’s looking to downsize,” said Mattei. “I would also hope some of it is reflective job growth.”
Magnetation, which moved its headquarters to Grand Rapids in late 2011, is a primary driver of job growth in the area as is Grand Itasca Clinic and Hospital.
“You can’t really do economic development very well if you don’t have housing to match the new jobs,” said Mattei.
New grant funding
The city also will benefit significantly this year from a recently announced $615,000 award from the Minnesota Department of Employment and Economic Development. The grant will target rehabilitation projects for both commercial and residential properties.
The city has identified a corridor along Highway 2 from Ogle’s Marketplace Foods to the Westside Spur station. In coming weeks, the city will accept grant applications from local businesses for allocations up to $32,000 (or 60 percent of the total project cost, whichever is less) for six projects.
The commercial redevelopment grants can be used for storefront improvements or improving handicap accessibility. Matching funds also are available through the Grand Rapids Economic Development Authority’s commercial building improvement program, which is a revolving loan fund. The loan program has a 10-year term that’s 100 percent forgivable if the business stays in the same location that long.
“We want to spur a little bit of investment,” said Mattei.
The city’s Housing and Redevelopment Authority will administer grant funding for residential properties. Funds are in place for 12 owner rehabilitation projects at a maximum of $22,400 each and 15 rental rehabilitations at a maximum grant amount of $5,600. Qualifying projects would include such things as a new roof, new siding, the installation of energy efficient heating systems as well as other deficiencies.
“The award of this grant to assist home owners and businesses in our city will only further our goal of making Grand Rapids a sustainably healthy community,” added City Administrator Tom Pagel.
Local economic developers also are optimistic that not only is housing construction on the uptick but so are potential new commercial developments.
One notable development is progressing on a former brownfield. Itasca Economic Development Corp. President Mark Zimmerman said that he and his staff are working to reach a closing agreement on the former Ainsworth site, located near the city of Grand Rapids.
The economic development organization assumed ownership of the former manufacturing site (renamed the Itasca Eco-Park) in late 2009 and announced a tentative sale agreement in 2012 with J.M. Longyear. Zimmerman said they expect to finalize the sale of the 121-acre site by the end of this year.
Although Marquette, Mich., based-Longyear hasn’t announced how the property would potentially be used, the company does own and manage a number of natural resources-based businesses in Michigan, Minnesota and Canada. That’s led to speculation that the company intends to use the site for next generation forest products manufacturing. In its annual report, IEDC executives said Longyear selected the site “for its many desirable attributes to support cost-effective commercial use, including its proximity to the wood resource and potential product markets.”
The former Ainsworth site already has been partially repurposed and has two tenants – Cutsforth Manufacturing, which has a new 9,800 square foot facility located on 25 acres that was completed last year – and Hammerlund Construction, which has been issued permits to move forward with phase one construction of a new 5,000-square-foot headquarters facility. During phase two construction, the company will build an 11,000 square foot equipment service facility.
Zimmerman said that recent events at the Eco-Park site are indicative of a wider upward trend in commercial activity in and around Grand Rapids.
“We’re definitely seeing an uptick in this kind of activity,” he said.