Faribault’s City Council is assessing its options with two centrally located properties it owns after well-laid plans to use them for multi-family housing went awry.
The larger of the two properties discussed at the Council’s Tuesday night work session was the former Lockerby Sheet Metal site at 217 Mill St. Located along the Straight River and next to the viaduct, it provides a central though imperfect site for development.
The family-owned sheet metal company called Faribault home for more than a century, and it occupied the site along the Straight for three decades. However, it began to face financial trouble after floods in 2010 caused a multi-million dollar loss.
To help with the rebuilding process, Lockerby received a $190,000 loan from the Minnesota Investment Fund in 2011. The half-forgivable loan was conditioned on the company staying at its Faribault location for a decade. However, Lockerby abruptly closed its doors in fall 2018 and filed for bankruptcy the next day. Earlier this year, the city purchased the property for $513,000, and quickly entered into a development agreement with Minnetonka-based Roers Cos.
Preliminary plans called for a 69-unit apartment building, with underground parking and onsite amenities. Eighty percent of units in the new complex would have been affordable housing, with 20% priced at market rate.
In order to make the project work, the development applied for tax credits from the Minnesota Housing Finance Agency. However, that application was denied, with the Minnesota Housing Finance Agency instead choosing to back a project on the west side of Faribault, the Lofts at Evergreen Knoll.
Roers recently informed the city that it does not intend to reapply for tax credits. Community and Economic Development Director Deanna Kuennen said she was disappointed, but not surprised.
Although the location is centrally located, its location in the floodplain could be an impediment to attracting some developers. However, Kuennen said that Roers had been comfortable that its proposal would minimize the risks associated with flooding.
Instead, Kuennen said that Roers was concerned about how the project would fare in the highly competitive bid for tax credits. In addition, the developers were concerned about changing market conditions.
Councilors said they share those concerns. To assuage them, they directed Kuennen and Kim Clausen, Director of the Housing and Redevelopment Authority, to request a comprehensive market study on the property. The Lockerby Sheet Metal site was one of numerous multi-family housing developments proposed by developers in recent years, in order to tap into a dire shortage of affordable housing throughout the region.
In addition to those proposed at the Lockerby site, other developments include the 44-unit Hillside Apartments, 111-unit Straight River Apartments, 76-unit Lofts at Evergreen Knoll, and 68-unit Titan Development project.
The Hillside Apartment project has already been completed, while the others have sailed through the city’s approval process.
Though the city’s rental vacancy rate sat at less than 1% just a few years ago, that could change drastically once all of those new units are on the market. In addition, the COVID-19 pandemic has rapidly altered the direction of the economy in just a few months. A comprehensive study could be used to help determine and/or project some of the pandemic’s wide ranging ramifications.
Kuennen said the study will likely cost around $10,000 and take two months to complete. Once finished, it will provide information significantly more in depth than other housing studies the city has commissioned in recent years.
Councilor Jonathan Wood said that the housing study is needed in order for the city to figure out how best to market the property. Wood, who owns his own construction business, said that uncertainty currently abounds in the market for both consumers and businesses.
It’s possible that much of the information could be relevant to how the city approaches the other, much smaller property at the corner of First Street and First Avenue. However, the property’s size and quirks greatly limit its potential development uses.
Owned by the HRA, the two small lots were intended to be marketed to developers along with other city-owned properties nearby. However, developer Mac Hamilton instead preferred land along Division Street for his Hillside Apartments.
Currently, there are no active plans for development, and the city hasn’t been marketing the property as of late. However, Wood and several other councilors expressed support for marketing it for residential use.
Wood said that given the site’s limitations, it’s likely that only a house or a couple of townhomes could fit on a property. He said that with the right developer, such a project could be financially successful.
Other councilors offered different ideas. Councilors Tom Spooner said he’d like to see a mixed use development, with retail accompanying residential space. Others floated the idea of using the site as green space.
Councilor Jana Viscomi expressed doubts that given the large number of vacant buildings downtown, a significant market for such a development would exist. Mayor Kevin Voracek pushed back, pointing out that many of those spaces are not currently on the market.
Voracek also said the city should consider renting out the old Lockerby site to businesses, if only as a stopgap measure. He said that while the site offers a variety of challenges, a handful of businesses have expressed interest.
Thanks to one time funding from the $2 trillion economic stimulus passed by Congress in March, small, Faribault-based businesses could soon get a big boost.
At Tuesday night’s city council work session, Faribault Community and Economic Development Director Deanna Kuennen unveiled a draft proposal to create a new small business assistance program and provide it with $500,000 in funding.
Under the program, businesses with up to five employees could apply for up to $5,000 in grant funding, while those with six to 50 employees could get up to $10,000. The proposal could be go before the council next week with a goal of accepting applications July 20.
In order to ensure that the money is distributed in a timely fashion, Kuennen proposed an application period of just two weeks. Applications would be considered on a first-come, first-served basis, and could be approved at the council’s Aug. 12 meeting.
To receive assistance, a business must be locally based, operated for profit, in good financial standing prior to March 1 and have a business location, with an exception to the last requirement made for licensed in-home daycares. Kuennen said that as many program guidelines are laid out in federal code, they don’t vary significantly by jurisdiction. She also looked to Hennepin County’s successful small business assistance program, which has already distributed two rounds of aid, as a model.
As one of two jurisdictions in the state with a population over 500,000, Hennepin County received its CARES Act aid directly from the federal government. All other jurisdictions had to wait for the state to distribute assistance. Under the distribution formula used, funds were allocated to each community based strictly on head counts, with just over $75 per person going to cities such as Faribault. Under that formula, Faribault has been awarded just under $1.8 million.
The funding can be used by the city for a wide variety of uses, but city officials are particularly interested in providing a boost to small businesses. Kuennen has said that if it sees high demand, the city could devote an additional $500,000.
The new program builds on a previous program authorized at the end of May by Faribault’s Economic Development Authority. Using its own funds, the EDA offered eligible small businesses up to $1,500 in grants.
The grant period was open for two weeks, beginning on June 1. Ultimately, the EDA approved 18 applications for a total of $25,700 in assistance at its June meeting, significantly less than had been budgeted for. By contrast, a $3,000 grant program offered by Rice County was much more popular with local businesses. Authorized on May 12, the county’s program was inundated with requests, receiving 80 in just four days.
Kuennen expressed optimism that a much larger program would garner much more interest. She said that given how many programs are out there, business owners find themselves struggling to keep up — but a large program is likely to be attractive.
Councilor Janna Viscomi said that one reason for the lack of demand is that with an abundance of assistance programs out there, people are worried about jeopardizing their eligibility for a larger program when they apply for a smaller program.
Kuennen said that’s certainly a valid concern, with the large number of programs out there, but added that businesses should be able to apply for both city and county programs, so long as they are used to cover different eligible expenses.
Several councilors also expressed interest in using the funding to assist nonprofit organizations. Kuennen said that while it’s possible to use CARES Act funding for that purpose, the city would not be able to draw from the same account as it uses to assist small businesses.
City Administrator Tim Murray said that while an assistance program could be set up to assist nonprofits, that would draw away from money that may be needed to fund essential city operations, which have become more costly amid the pandemic.
“You’d have to look at whether you can afford to do that,” he said.
Councilor Royal Ross said he hoped that in the future, the grant application process could be streamlined. Ross expressed concerns that not enough funding has gone to the smallest, most vulnerable businesses that lack the money to hire their own accountant.
“The intention has been good, but the system favored larger small businesses that were able to pay a person to do their accounting,” he said. “If there’s some way to help out the mom and pop shops … I hope we can take a closer look at that.”
For Jim Barnes, the new interim executive director for the Exchange Club Center for Family Unity, his daughters’ exit from ECFE in Owatonna served as a turning point for his interest in educating families.
While his daughters furthered their education as kindergartners, Barnes realized he, as a parent, wanted more support.
“Once [children] hit kindergarten, there’s nowhere for parents to really go at that point,” said Barnes. With a laugh, he added, “But the problems don’t go away; they just get bigger.”
Barnes’ former boss, Brad Haugen, told him about a nonprofit called the Exchange Club Center for Family Unity (ECCFU). Located in Owatonna, ECCFU serves Dodge, Waseca, Rice, Steele and Freeborn counties and provides in-home mentoring, support and resources for parents so they can give their best to their children. The nonprofit organization uses a specific technique, the National Exchange Club Parent Mentor Model, that has been proven to prevent child abuse.
Haugen served on the board, and eventually, Barnes joined the board as well.
Another turning point happened for Barnes this year, when former ECCFU Executive Director Annette Duncan resigned from her role and accepted a job as president of Steele County United Way. Needing an interim executive director to step in, the board asked Barnes to fill the vacancy for the time being.
“He’s serving in the role, and he’s done a great job so far,” said Haugen. “… He’s excited about it, too, which is good to have someone looking at it as an opportunity … It’s good for us and good for him, for now, and we’ll see where it goes long term.”
Barnes has a degrees in accounting and business finance as well as experience with nonprofits. He’s also served on the school boards for CHOICE Technical Academy in Owatonna and DREAM Technical Academy in Willmar for the past four years.
As a board member for ECCFU, Barnes has been involved in some decision making and the organization’s transition into a new building. He’s helped with fundraising through the nonprofit’s annual golf tournament at the Owatonna Country Club and others.
Barnes said one of his goals with ECCFU is to simply “keep it going.” Duncan, he said, was such a driving force behind ECCFU that her departure was unexpected. He aims to provide stability, secure more funding and grants, and recruit parent mentors for a new cohort to begin later this month — as well as parents who want to be mentored.
Those interested in being parent mentors need to complete background checks and have a desire to help others. Grandparents can be mentors, said Barnes, or anyone with experience with children. Mentors undergo a 10-week training so ECCFU can pair them with a family that may need help. One mentor/mentee 10-week session concludes next week, and the next will start later this month if the need is there.
Other ECCFU offerings, like parent support groups, are Tuesdays from 6 to 7:30 p.m. via online portal. Similar to ECFE, Barnes said these sessions are designed for parents of teenagers, and staff member Ann Gettis offers tips and strategies for parents to connect with their teens. Anyone from the five-county area may participate in these groups.
“I really support what the organization is trying to do in the counties of southern Minnesota,” said Barnes. “I’m very appreciative to the board for giving me this opportunity to be the interim director.”