After reviewing a recently completed housing study from Twin Cities-based Maxfield Research and Consulting, Faribault’s City Council is set to formally take another crack at finding a developer interested in adding multifamily housing units downtown.
First reviewed in February by the city’s Housing and Redevelopment Authority, the study provides the most comprehensive look yet at the regional housing picture. While the long-term effects of COVID cloud projections, it’s clear that the market today is extremely tight.
With that in mind, councilors directed staff to prepare a request for proposal that it hopes will bring a multifamily housing complex to 217 Mill Street, the former home of Lockerby Sheet Metal that has been city-owned since 2019.
First, the property will have to undergo a blight analysis so that it’s eligible for Tax Increment Financing. Community and Economic Development Director Deanna Kuennen said the analysis is expected to take several more months and the city will have to hire a contractor to conduct it, so it will most likely be fall before an RFP can be issued.
Though putting a multifamily housing development on the property has been “Plan A” since the city first purchased the property, the council commissioned the 91-page comprehensive housing report largely to make sure it was still the right choice.
A much briefer 2017 report from Maxfield found a dire shortage of multifamily housing in the city and surrounding areas. A 5% vacancy rate is typically considered the minimum needed for healthy functioning of the market, but Faribault’s vacancy rate clocked in at less than 1%.
The city responded by recruiting multifamily housing developers to town, with significant success. Three separate developments are expected to be completed over the course of this year, bringing hundreds of units to the market.
Among the developers the city tried to work with was Roers Companies. The Minnetonka-based company liked 217 Mill Street enough as a potential location for multifamily housing that it was willing to look past the property’s location in the Straight River Floodplain.
Roers brought forward a vision for a 69-unit apartment building on the site, with 80% of the units designated as affordable. However, the developers needed state assistance to make the project work, and chose to walk away from that project when they weren’t able to secure help.
Rather than rush to find another developer, the city opted to commission to study because they wanted to get a sense not only of how COVID-19 may have changed the market, but what impact the new housing projects would have as well.
The hospitality industry has certainly been hurt by COVID, and Rice County’s was among the region’s most robust pre-pandemic. However, Kuennen noted in her memo that Faribault’s leading industries have continued to do well.
With job growth outpacing other cities in the region the city anticipates strong growth over the coming years, adding a projected 705 people from 2020 to 2025. However, Kuennen noted that such growth will be difficult to sustain with insufficient housing supply.
Maxwell’s report highlights inadequacies across the housing market, but most significantly in the area of market rate housing. Of the 380 additional units Maxwell believes will be needed over the next decade to accommodate the city’s growth, 235 would be market rate.
Councilor Jonathan Wood, a local builder who serves as the Council’s representative on the HRA, has cautioned the city not to overlook the additional 145 units that Maxwell should be either “shallow subsidy” rentals (91 units) or “deep subsidy” rentals (54 units).
With Faribault’s proximity to the Twin Cities, securing developers to build even market rate projects can be a challenge. Adding in the additional uncertainty of applying for competitive grant dollars often makes affordable projects even more challenging.
Still, the most interest among councilors was for a market rate development. By adding market rate housing, Mayor Kevin Voracek emphasized that the city could help create room for residents across the housing spectrum to move into a home or apartment that better suits their needs.
Several councilors expressed a desire to see proposals that would move beyond a traditional apartment complex. Councilor Janna Viscomi touted the potential for row houses, arguing they would fit the neighborhood better, while Royal Ross suggested condos as an option.
The city is likely to keep its RFP relatively open, allowing developers a significant amount of flexibility. Any proposed development will have to be in line with the city’s Journey to 2040 plan, and Kuennen additional conversations could provide further guidance to developers.
“There could certainly be some additional details included,” she said.
A familiar face representing a township just outside of Faribault shook up the conversation at Tuesday’s Rice County Transportation and Ditch Committee meeting — but it seems unlikely that his bold solution to a troublesome problem will come to pass.
Preston Bauer, a member of Cannon City Township’s Board of Supervisors as well as the Rice County Planning Commission, asked Rice County Commissioners to consider agreeing to a contract that would have Rice County take over maintenance and repair of all the township’s roads.
Like most Rice County townships, Cannon City Township has traditionally contracted out for road grading and snow plowing. However, the township’s longtime contractor recently decided to stop servicing the township, and no other contractors stepped up to take over the job.
That puts the township in a difficult position, said Board of Supervisors Chair Clayton Mechura. While purchasing a snow plow or grader could be one option, the township didn’t budget for it and won’t revisit its annual levy until March.
Bauer thinks that service consolidation could make sense. Noting that he was initially elected to the Township Board over opposition to increasing the township’s zoning powers, he said that townships have historically played a far greater role in government than they do now.
“At our Township Hall, we even have old marriage and birth records,” he said. “They did way more than we do now.”
While townships certainly play a smaller role than they have historically, road maintenance remains their most important and expensive task. While Rice County itself is responsible for more than 400 miles of its own roads, townships have many more to take care of themselves.
Cannon City Township wouldn’t be able to formally transfer all of its roads to the county, but Bauer envisions that it might reach an agreement with the Rice County Highway Department as it would with any private contractor.
Bauer offered warm praise for the Highway Department, saying that by contracting out maintenance to County Engineer Dennis Luebbe’s staff, township residents could know that their roads are being looked at by the best of the best.
Luebbe appreciated the flattery, but was no fan of the idea. The county engineer wasn’t even entirely sure if such an arrangement would be legal, though as the county currently has agreements with cities regarding road maintenance, he believes it most likely would be.
If such an arrangement could be made to work, Luebbe raised concerns over the precedent it could set. With seven other Rice County townships currently contracting out road maintenance, working with the county could be a great deal for all of them — and a burden for Luebbe’s staff.
County Commissioner Jeff Docken was also skeptical, though he and Luebbe maintained that the idea would continue to be explored. If the county were to take on the additional responsibilities of Cannon City’s road maintenance, he anticipated that it would need to hire another staff person and more equipment.
Even though Bauer’s Cannon City Township colleagues said they support looking into the possibility, they aren’t completely sold either. Treasurer Pam Wunderlich said that while it’s a worthwhile idea, costs will need to be carefully examined.
“This kind of discussion would have to be brought up at an annual meeting,” she said. “And we would need to find out what the cost would be before we can even present it to the residents.”