Article by: Ryan Soukup
CEDA Team Member Ryan Soukup assisted the Zumbrota Economic Development Authority in structuring a project that closed on the sale of a vacant half-block lot for a 57-unit apartment complex through the approval of a Tax Increment Financing proposal. For the past 15 years, the Zumbrota EDA has owned a half-block open lot adjacent to the commercial downtown. The lot had previously been occupied by Grover Auto, prior to the dealership moving to their current location in 2005. The EDA acquired and redeveloped the lot and has been looking for a multifamily housing project to occupy the area. Yet, time after time, interested developers could not secure the financing to make the project work. This past year however, the EDA and CEDA worked with Keller-Baartman Properties, LLC to provide a 26-year residential TIF in exchange for a 57-unit apartment complex.
Even though the tax revenue will be redirected towards financial assistance, the potential secondary and tertiary benefits to the City are considerable. The 2020 Goodhue County Housing Study determined that Zumbrota’s housing submarket needs hundreds of housing units across all price points and types. This complex will provide workforce housing and diversified housing options to those transitioning between single family homes or downsizing. When people who reside in a single-family home have income changes due to life circumstances or retirement but have no other options to transition between, they risk becoming stuck in their current house whether they can afford to maintain it or not. This can lead to dilapidation of the structure due to delayed maintenance. When the lack of housing supply is large enough, this can have community-wide implications over time.
Additionally, it is hoped that this 57-unit complex will provide stability to taxable market values for the rest of the City. At the end of 2020, Zumbrota saw an average of 12% increase in taxable market values for single family homes. This was driven by high price point sales due to high demand and low supply. One of the ways to stabilize this growth is to increase the supply. This 57-unit apartment will also locate a high density of residences near downtown businesses and amenities, including the local library and trails. According to the US Census Bureau, the median household income for Zumbrota is $60,260. If 57 households locate a block off Main Street, that could mean about $3.4 million living, growing, and spending money in Zumbrota’s economy.
The design of the complex takes on the feel of the Covered Bridge, a local historic landmark in the community.