Howard Hedstrom, chair of the Cook County/Grand Marais Economic Development Authority (EDA) board and EDA Director Mary Somnis presented a letter during the July 27 Grand Marais City Council meeting requesting up to $175,000 to support an upcoming housing project. Hedstrom explained that based on studies on the issue of growth in Grand Marais, one major problem is affordable housing.
Often, properties are sold to wealthy individuals for high prices, making them no longer affordable, Hedstrom said. To combat the problem and provide workforce housing, the EDA, working with One Roof Community Housing, plans to build seven homes that will be available for prices ranging from $140,000 to $200,000. About $25,000 of the requested $175,000 will go into each home.
“It’s a land trust model where the developer, in this case One Roof, will retain the ownership of the land and sell the house to a prospective house owner,” Hedstrom explained. “And that way, they will also retain some control of the cost. As people buy these houses, they buy at an affordable rate because they are somewhat subsidized from grant money and all the incentives that come in. If they turn around and sell that in a few years, they will get the normal appreciation. They would get their investments if they made any improvements.”
Hedstrom also noted that the caveat, “up to” $175,000, is included since the intent is to look for other forms of local support so that the entire amount does not have to come from the City of Grand Marais.
A motion was made and passed to approve the requested $175,000 in funding for the housing project.
Construction manager or general contractor for the public works facility project?
The next step for the public works facility project to be built at the former Tomteboda/ Grand Marais Inn site is to determine whether to risk going with a general contractor in hopes of saving a little money, or work with a construction manager to ensure the city is not blindsided by any unexpected costs.
“There are a lot of concerns with both options,” said Mayor Jay Arrowsmith DeCoux. “The concerns of going with a construction manager are that we pay for the guarantee that it is going to cost a certain amount of money. Then we know that it’s going to cost that money, which is great, but if it gets done for under that, we are still on the hook for that same amount. General contracting is the other way. If it gets done under budget, hurray for us. But if it gets done over budget, then we are paying that money.”
City Administrator Mike Roth pointed out that with a project as complex as the public works facility, it was unlikely that the city would be able to save any money.
“Consider the projects that have happened locally, recently, and whether or not any of them ever had an opportunity to come in below bid or below expectation. I think it’s pretty rare that you are going to have a project this complex that is going to come in below cost,” Roth said.
“I’m not as worried about the money part, not that I’m not worried about it, but I feel that the management of the project would be better run and it would be easier for us to not have to be thinking about it as much,” said Councilor Tracy Benson, who then added, “We should certainly keep our risk down.”
Agreeing on the importance of keeping the risk of overspending to a minimum, the council unanimously approved a motion to hire a construction manager for the project.
In other business
. Council heard an update on a recent state legislative session from Bradley Peterson from the Coalition of Greater Minnesota Cities. One item of discussion was the fact that Grand Marais has such a strong tax base, causing receding local government aid. Peterson said the Coalition is working on solutions since there are other small cities with the same dilemma.
. The council approved a motion to accept and sign the agreement for a $20,000 grant from the Iron Range Resources and Rehabilitation Board (IRRRB) for the community-planning project.
. The council reviewed the 2017 budget calendar, and took some time to consider whether it was feasible to add additional public restrooms to the list of priorities. It was decided the council would revisit the issue at the following meeting.
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