As the Cook County – Grand Marais Economic Development Authority (EDA) finally reached a financial settlement with an engineering firm for work that had been done by that firm for a housing project that never happened, discussion was under way about another possible project.
Settlement reached on Sawtooth Cottages project
In 2008, after many months of considering a residential subdivision with some affordable housing units, the EDA halted its work with the Northern Communities Land Trust on a project called Sawtooth Cottages, adjacent to its Cedar Grove Business Park in Grand Marais. At that time, EDA board members expressed concerns about the small size of the proposed footprints of the homes and about how the economic downturn would affect potential buyers when they attempted to obtain mortgages. At the September 30, 2008 EDA meeting, board members regretfully passed a unanimous motion to not proceed.
However, before deciding to discontinue the housing project, the EDA had contracted with Short, Elliot, Hendrickson (SEH) of Duluth to create engineering plans for the proposed 13-lot development. In an August 22, 2008 meeting after bids were let and came in much higher than anticipated, stakeholders in the Sawtooth Cottages project met and discussed downsizing the project. Bonding options, tax-increment financing, and reducing the number of donated lots were discussed. SEH engineer Dick Grabko said he believed his firm would reduce its fees to draft a new proposal with decreased lot sizes and clustered homes, which would save on infrastructure expenses.
SEH provided engineering and surveying for the plan under a development agreement. Since no lots had been developed or sold, SEH received no reimbursement at the end of the agreement in 2012 and sought legal action, requesting to be paid $126,000 for its work on the now defunct project.
At the June 11, 2013 EDA meeting, the EDA board passed a motion to accept a settlement recommended by its attorney of $30,000, to be paid to SEH in $10,000 increments immediately, in March 2014 and March 2015.
Starting a new housing project?
Another potential housing project has not even gotten to the engineering stages and it is already causing consternation among some community members. At the May EDA meeting, the EDA board heard a tentative proposal from Leah Hall of AEOA for a multiunit facility on land donated by the EDA, which would provide “fair market housing.” Hall said AEOA would be the developer for the project, putting together the design and the funding package. However, Hall said, the AEOA would not pursue the project if the EDA did not want them to. The development fee would be 10 percent.
At the end of that meeting, the EDA board asked Chair Mark Sandbo to contact Hall to tell her to proceed with planning for a housing project.
At the subsequent June EDA meeting, after its housing administrator, Nancy Grabko of Community Fundraising Solutions, questioned the 10 percent development fee proposed by AEOA, the EDA appeared to reverse its decision to work with AEOA. At that meeting, EDA Chair Sandbo said it was not “a done deal.”
The EDA’s apparent change of direction brought a citizen forward during the meeting’s public comment period. Laurie Spry, president of the Grand Marais Apartments Inc. (GMAI), on behalf of the GMAI board, spoke in support of the EDA working with AEOA. Spry said her board had been frustrated by what it felt was a lack of response from the EDA when it sought help to renovate its nearly 40-year-old senior apartment complex. Spry said because her board felt there was little interest on the part of the EDA to help, it contacted USDA Rural Development, which referred them to AEOA. Spry said that is how AEOA became the primary grant writer for the renovations needed for Grand Marais Apartments. She said Hall and AEOA had written five grants and garnered $370,000 for Grand Marais Apartments. Two more grants are pending, she said, and could bring in another $124,000. Also because of AEOA, said Spry, Grand Marais Apartments has been able to increase its low-income rentals from 8 units to 13.
“We feel very strongly that this relationship and the percentage AEOA takes is well worth it because of the attention to detail and the speed in which we have received the funding thus far,” said Spry.
Later in the meeting, AEOA representatives defended their record of work in Cook County. AEOA’s Scott Zahorik distributed a handout listing HOME-funded activities that showed HOME Consortium funding totaling $628,467.51 for Cook County from 1992 through 2013. Zahorik said the amount of HOME funding is dependent on a county’s population and based on Cook County’s population, the amount earmarked for Cook County was $412,158.49. “The bottom line is that Cook County has done fairly well,” said Zahorik.
AEOA’s Leah Hall spoke, noting that the 10 percent developer’s fee is “reasonable according to MHFA and GMHF [Minnesota Housing Financing Agency and Greater Minnesota Housing Fund].” Hall said AEOA is a non-profit developer and relies on development funds to run its division, including administration, staff costs, travel and the production of affordable housing in its service area. “With these funds we are able to front money for projects,” said Hall. Hall said she believed AEOA working on the housing project would greatly benefit Cook County.
EDA Board Member Abby Toftey said she had received calls after the May EDA meeting from citizens excited about the possibility of the housing project.
There was a great deal of discussion—and concern— about whether AEOA would be competing for the same funds that the EDA seeks.
Zahorik said, “There is plenty of need and work to be done out there. I’m hoping we can work to get things done and not feel that we are in competition with one another. I’d like to keep an open relationship with Cook County.”
EDA Housing Administrator Nancy Grabko noted that a definition of collaboration is that “everyone gives up something.” She asked the AEOA representatives, “We asked, how do we partner? Can we do some stuff locally? We were told no, AEOA is not a funding entity.”
Hall replied, “In that meeting, I said AEOA would have the developer role. I’m not sure how it would work with a secondary developer. I didn’t say it was not possible.”
Sandbo said he has heard from people asking why the EDA can’t keep some of the 10 percent developer’s fee. EDA Board Member Heidi Doo-Kirk exclaimed, “They are not taking it away from us! AEOA is finding the funding and bringing it to us.
“We need to quit fighting and work together. I don’t want to be here 20 years from now, still with no housing!” she said.
EDA Board Member Scott Harrison said, “Forget about being co-developers. That would be complicated. I would consider Nancy’s role as ‘boots on the ground.’”
Zahorik nodded, “Maybe it is semantics. There is some risk that we are taking with this project. AEOA survives on these fees, but we are open to looking at ways to work together.”
A motion was made by Doo-Kirk, seconded by Harrison, asking the AEOA to move forward with the housing proposal. The motion carried unanimously and Doo-Kirk added emphatically, “Today!”
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