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Application for $4.5 million key to new apartment development
Ely city officials are looking south for the most critical piece in the funding puzzle that would result in a new workforce housing development in town.
At a special meeting Tuesday, council members authorized an application for more than $4.5 million from the Minnesota Housing Finance Agency.
That funding is needed for a better than $9 million development, dubbed Wilderness Escape, calling for a three-story, 37-unit, market rate workforce apartment building.
The project has taken shape over the last several months and recently got a boost by way of an $850,000 grant from the Iron Range Resources and Rehabilitation Board.
MHFA funds, however, are needed to bring the project forward The city, through its housing and redevelopment authority, is working with private development company D.W. Jones, Inc., which has completed numerous housing projects across the state.
Once the project is completed, the apartment building will be owned by the Ely HRA.
Harold Langowski, the city’s clerk-treasurer and operations director, presented the application for MHFA funs Tuesday and reviewed the latest details, which included a slight increase in overall construction costs.
“They have updated the cost estimates for the project,” said Langowski.
T h e c it y’s r e qu e st for MHFA funds is for $4,556,512, which falls within agency guidelines which limit funding to less than 50 percent of total costs.
“It has to be less than 50,” said Langowski. “That’s why they needed to revise the numbers and make sure we would still be on the right side of 50. It’s making it... It still falls within the guidelines for what we can apply for.”
Plans call for a mix of studio, one bedroom, two bedroom and three bedroom units, ranging from a little as 447 square feet of living space to better than 1,200 square feet Each unit will be equipped with appliances including a refrigerator, range with exhaust fan, microwave and dishwasher, as well as a washer and dryer. Rents will include utilities including water, sewer and garbage. Most units will have a deck.
As outlined in the city’s application for MHFA funds, rents would be $750 for studio units, $950-$1,000 for one-bedroom units, $1,125-$1,250 for two-bedroom units and $1,350 for three-bedroom units.
The city has set aside property for the development on the west side of Ely, adjacent to the Grahek and Sibley apartments near Ely-Bloomenson Community Hospital.
The IRRRB funding was a key milestone in moving the project forward and the city will utilize its HRA levy an borrow to fill remaining funding gaps.
The project comes amid a shortage of affordable, workforce housing in town, and as city officials contend more housing is needed to help businesses attract and retain workers, and to maintain and build the local economy.
A housing study commissioned by the city also showed significant demand for workforce housing.
According to the narrative in the city’s application, “There has literally been no now multifamily housing constructed for 17 years in Ely,” and at the time of the study conducted last year by Maxfield Research, they identified 65 total units in the primary market with zero percent vacancy.
Another section of the narrative states “The housing shortage is a barrier to employers’ ability to attract and retain workers, and in some cases, employers are losing workers due to the lack of housing. A new rental housing project would be in strong demand and probably fill immediately if it were priced appropriately for the area’s workforce.”
Infrastructure work near the property could begin this fall and may coincide with other city projects, but construction isn’t likely to begin until 2025 with occupancy not until the following year.
D.W. Jones, Inc., has built workforce housing projects with as many as 104 units in communities including Roseau, Warroad, Pelican Rapids, Alexandria, Long Prairie, Glenwood and Thief River Falls.
