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Duluth makes statewide pitch for new housing

(File / News Tribune)

Unless Duluth can attract more new residential construction, the city's shortage of desirable and affordable homes could hamstring its future economic growth, Mayor Don Ness said Thursday.

He pointed to a recent study that estimates Duluth will need an additional 2,300 housing units by 2020 to accommodate its expanding workforce.

But the challenge facing the city also represents a unique opportunity that could prove fleeting.

"You can either capture the moment or miss it," Ness said.

He noted that several factors make this an attractive time to invest in Duluth, including the pent-up demand for housing, low vacancy rates, the availability of attractive financing terms and the high priority the city and state are placing on affordable housing.

A housing summit at the Duluth Entertainment Convention Center on Thursday was designed to help draw statewide attention to the need for more housing in the city, said Keith Hamre, Duluth's director of planning and construction services.

Mary Tingerthal, commissioner of the Minnesota Housing Finance Agency, praised the city of Duluth for bringing developers, business leaders and housing agencies together for the event.

"I offer kudos to the city for putting together this summit and bringing all these people who can be part of the solution together around the same table," she said.

Tingerthal said many people in the construction industry are a bit gun-shy following the recent economic downturn.

"Homebuilders were so badly hurt that even the strong ones are being very cautious. That's why we as a state have created some programs to help prime the pump," Tingerthal said.

Warren Hanson, CEO of the Greater Minnesota Housing Fund, said his agency has orchestrated an investment of about $90 million in the past 19 years and has had a hand in creating an additional 11,000 units of affordable housing in partnership with employers from the private sector.

Hanson said Minnesota's employer-assisted housing programs are widely viewed as a national model.

He said employers have found housing investments a useful way to enhance recruitment efforts, minimize turnover and stabilize the neighborhoods in which their employees live. Hanson said businesses in other communities have formed partnerships to address housing needs, and thinks there is an opportunity for employers in Duluth to do the same. The Greater Minnesota Housing Fund has helped provide gap funding for such partnerships and also has often taken a lead role in putting deals together.

He said there are a number of ways for employers to play a role through directly investing in projects, donating land and sometimes even assuming the role of a developer.

Chris Eng, director of the Duluth Economic Development Authority, said discussions with a number of large employers, such as Essentia Health and St. Luke's, already have begun. He said the business opportunity Duluth now offers is compelling.

Ness, in an interview, pointed out that last year alone, firms in the city hired 424 people into new science and technology jobs

Hamre expects to see a surge in construction this summer.

But Ness said Wednesday's housing summit probably will not begin to bear full fruit until 2015 or 2016. He said it will take local businesses in the construction industry and developers from outside the Twin Ports to achieve the kind of progress Duluth needs to make.

"By getting all these players together in the same room, hearing the same message and learning about the same opportunities, we can start fitting the pieces together. We want to move this from the conceptual level to real investment quickly," he said.