Even if it’s temporary, Tofte Township is looking to partner with Cook County/ Grand Marais Economic Development Authority (EDA) in the hopes it can get its long-planned housing development off of the ground.
The EDA has statutory authority to manage a housing project, something Tofte seeks but doesn’t yet have.
Tofte Township Supervisor Jeanne Larson is the housing project manager. “There is much misinformation about this project circulating in our community, that so desperately needs housing and the facts need to be presented. We have a project that was ready to be built in 2015 but was shut down because of the circumstances beyond our control,” Larson said.
Two years ago it looked like smooth sailing for the development. Meetings were held with the public who History & Feasibility Study voiced support. A site on the Birch Grove property was selected. Grants from the Iron Range Resources Rehabilitation Board (IRRRB) for infrastructure were received. Bonds were priced, surveying and site work conducted, and Dynamic Homes was contracted to build the homes. But one problem remained, Tofte Township didn’t have legal authority to operate and manage the project, and, with that, everything came to a screeching halt.
The goal was to have Dynamic Homes build six twin patio homes and have them ready for rent by fall, 2015. But an individual bill crafted by the late Representative Dave Dill (DFL) and Senator Tom Bakk (DFL) that would have given the township authority to manage the units was stalled in a larger bill that didn’t get passed in the special session. It also failed in 2016 when the governor wouldn’t sign the tax bill (where the housing bill written for Tofte was tucked into) because of a $100 million error in it, and because the bill didn’t contain money for a light rail project.
Special legislation is needed for Tofte because Minnesota townships don’t have housing authority the way that cities or towns do. When the bill crafted by Bakk and Dill finally gets signed into law, Tofte will provide housing for the elderly, and provide housing for individuals or families with incomes not greater than 120 percent of the median household income as estimated by the United States.
The bill would allow Tofte the ability to levy but would not “limit the power of the Cook County/Grand Marais Joint Economic Development Authority to exercise jurisdiction within the town of Tofte.”
Most of the other money to complete the project will come from sales of a township bond(s) at $1,654,000. Sales of those bonds have been put off until the legislation passes. Tofte has also received $350,000 from the Iron Range Resource Rehabilitation Board (IRRRB) for infrastructure and roads for the housing project.
Larson submitted three proposals, or scenarios to the EDA on September 21 outlining ways it could operate the housing project. The township’s hired legal team of Christopher Virta, Fryberger, Buchanan-Smith & Frederick P.A., drafted the proposals,
Under the first scenario the EDA would lease the land where the housing will be located while the township would contribute IRRRB grant money and existing infrastructure, documents and plans, plus pledge tax abatements to fund a debt service reserve fund equal to one year’s worth of principal and interest on the bonds (issued by EDA).
The EDA would issue housing revenue bonds (30-35 year term) secured by rents from the housing project, and would own and operate (or contract out for the management of) the housing project. The EDA would also pledge rents from the housing project to pay the debt service on the bonds.
In this scenario, the county would need to become involved as well.
The county would consider providing a general obligation pledge for the EDA’s bonds that allows for a more favorable interest rate on the obligations and commits the county to levy taxes in the event the rents are insufficient to pay debt service on the bonds.
In exchange for the county granting a pledge on the bonds, Tofte could agree to indemnify the county up to a certain dollar amount (i.e. reimburse the county if it has to levy taxes to pay debt service on the EDA bonds).
In scenario #2 the county would issue G.O. tax abatement bonds as it did for the Superior National Golf Course and in scenario #3 Tofte would issue G.O. tax abatement obligations and grant a long-term lease to the EDA to manage the project. The conveyance of property and the terms outlined in these last two scenarios are similar or the same as in scenario 1.
Larson said conditions in these situations are negotiable. She included certain things Tofte could do to reduce the risk for the EDA and the county, and certain things the county could do that would help the viability of the project but are not required.
EDA Director Mary Somnis said her board would discuss the proposal from Tofte at an upcoming meeting, but first, it needs more information about the project before it can make an informed decision.
The Town of Tofte completed its 10-year comprehensive plan in 2005 and renewed that program in January 2015 with funding assistance from the IRRRB.
One of the key issues identified was housing, specifically for residents 55 or older. This issue was reinforced during our Community Conversations this past winter. There were two sessions held at Birch Grove Community Center where approximately 50 people participated in this two-part event.
The following outlines our history, market research and Initial Feasibility Analysis for Birch Grove Village:
. January 2011: The Tofte Township Board engaged Community Partners Research, Inc., Steve Griesert and Scott Knudson to complete an analysis of the need for a senior assisted living facility to serve the Tofte, Lutsen and Schroeder Townships area of Cook County. The study found the need was too small for assisted living in the designated marketplace.
. July 2012: Senior Rental Housing Analysis of Tofte Township and the surrounding area was completed, and it demonstrated the feasibility of 8-10 units for high quality senior rental units based on pent-up demand with the belief that 40 percent of the units will be preleased before the completion of construction.
. June 2013: Community Resource Development, LLC, Dick Grabko & Gary Lamppa were engaged to provide Developer Representative Services for the Tofte Township Board, and a project team was organized.
. August 2013: Several focus groups (Citizen Participation Meetings) were held at the Birch Grove Community Center to identify what seniors were specifically interested in to determine the type of project to be developed.
. July & August 2014: Senior Housing booths were held at the July 4th Celebration in Tofte and National Senior Citizens Day Open House at Birch Grove Community Center during Senior Lunch. We had eight parties who signed up indicating their keen interest in renting a unit, six individuals who signed up to be on the Senior Housing Advisory Board and five people respond to the naming contest. It appears it will be called Birch Grove Villages.
. July 2014: Ehlers & Associates presented a public meeting on Bond Offering and proforma.
. October 2014: Contract with Community Resource Development terminated.
. November 2014: Jeanne Larson, Tofte Township Supervisor, appointed by Town Board to be Housing Project Manager. Met with EDA board member to give an update and gain participation in the project.
The proposal made to One Roof Housing to take on the project, One Roof Housing declined because they would need to be the developer, not consistent with their mission. Discussed project with EDA to take on the project, rejected by EDA because they lacked the resources for the project.
Investigated other options for housing ownership, none were found to be viable.
The well was completed with adequate pressure for the units.
. January 2015: Bill sponsored by Senator Bakk and Representative Dill for Tofte to have Housing Authority for the project. Tofte testified at numerous hearings, bill noncontroversial at the State level
. May 2015: Bill changed from Senior housing to “housing” by Cook County Chamber of Commerce and EDA. Bid documents published, project ready to be implemented.
. June 2015: No action by the State Legislature, project shut down until next Session in 2016; letters of support for project from the EDA and the Chamber sent to Senator Bakk
. January – September 2016: Bill reintroduced by Senator Bakk and Representative Eklund without controversy, no action to date by the governor and State Legislature.
. August 2016: Cook County Planning & Zoning approves amended CUP/PUD.
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