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Northland nets housing aid: Duluth, Cloquet come up big in funding round

A resident steps outside to have a smoke on one of the new benches outside the Esmond Building, formerly the Seaway Hotel, in 2015. File / News Tribune

Duluth and Cloquet both received word this week that they will receive the key funding they need to move ahead with a couple of multi-million dollar apartment projects:

• Minnesota Housing will invest more than $8.1 million and provide nearly $3.6 million in tax credit equity to help Center City Housing Corp. build Garfield Square Apartments in Duluth.

• And the same state agency will provide more than $7.7 million in tax credit equity to convert the former Cloquet Middle School into a 57-unit apartment building.

Garfield Square

The construction of Garfield Square — a 50-unit apartment building to be built at the corner of Garfield Avenue and Superior Street just west of the Duluth Gospel Tabernacle — is expected to begin next spring or early summer. Rick Klun, Center City's executive director, predicts the $13.4 million project will take 10 to 12 months to complete and should be ready to welcome its first tenants by mid-2019.

Klun said the project has been three to four years in the making and will provide replacement housing for the residents of the Esmond Hotel Apartments, formerly known as the Seaway Hotel.

The water-damaged building provides housing for many of Duluth's most marginalized renters and was on the verge of closure a few years ago, after it was condemned for habitation.

"The city of Duluth and the HRA were very courageous when they kept the old Seaway Hotel open. Otherwise, more than 70 people would have been made instantly homeless," said Klun, of the entities that swooped in to assume ownership and make needed emergency repairs.

While the building has been stabilized under its new name — the Esmond — Klun said it continues to operate in substandard conditions, and the new Garfield Square building will greatly improve residents' standard of living. The new single-bedroom apartments will each feature their own bathroom and kitchen area, unlike at the Esmond, where residents share such basics.

The Esmond is now home to about 70 people, but Klun expressed confidence that turnover will be sufficient to reduce that number to no more than 50 by the time Garfield Square is ready for occupancy.

The building will be staffed around the clock and offer supportive services to residents, Klun said.

As for the Esmond, Jill Keppers, executive director of the Duluth Housing and Redevelopment Authority, said: "The Housing and Redevelopment Authority will be working together with our architects to put together a request for proposals to seek a development partner. We anticipate the building will continue to be mixed use, with retail on the bottom and housing on the top."

The HRA has agreed to provide Section 8 vouchers for all 50 units at Garfield Square, enabling residents to pay no more than the equivalent of 30 percent of their monthly income as rent.

Keppers expressed appreciation for the state funding Garfield Square will receive, saying: "Funds like this are hard to come by. It's a hard fight for supportive housing units. But it's critical in our fight against homelessness as a city, when we have residents with lots of high barriers to housing, and this is one step to really make a big dent in that."

Cloquet school

The project in Cloquet should save the city's public school system $1.3 million — the estimated cost to take down the old building. Schools Superintendent Ken Scarbrough said those demolition funds should now be freed up to use on other needed projects elsewhere in the district, such as roof repairs at its elementary schools.

"This is something that's going to be a great resource for the community of Cloquet," he said.

Meanwhile, the project also will provide critically needed housing in the community.

Citing a housing study conducted in Cloquet about four years ago, Scarbrough said: "The need for affordable housing and workforce housing was absolutely immense in our community."

Minnesota Housing's support for the Cloquet apartment building is expected to leverage the additional investment needed to complete what's expected to be a $14.1 million project, with Roers Investments serving as the developer and using historic tax credits to help finance the apartments.

The building will offer a range of units from single-room studio apartments up to three bedrooms. It will target households earning between $37,980 and $56,430 per year.

Broad benefits

At a Friday press conference on the site of the future Garfield Square building, Duluth Mayor Emily Larson talked about the broad benefits of the state funds being made available to the city.

"We are here to announce the investment of $10 million from the Minnesota Housing Finance Agency into housing projects to meet the needs of affordable housing for renters and homeowners here in Duluth. This is a portfolio of projects that includes very low-income residents who will be housed here at Garfield Square in new, safe, healthy housing. It includes rental rehab through the HRA, and it includes affordable home ownership with One Roof," she said.

Larson gave much of the credit for the successful funding request to the team efforts of local agencies, city staff and legislators. She also noted that the state funds will be leveraged.

"The kind of projects we're talking about today represent $17 million of housing investment in the city of Duluth," Larson said. "That is significant. It is needed. We could use more, but we are thrilled with what we are going to be able to get done."

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