A proposed new 80-unit apartment building moved one step closer to reality Monday, when the Duluth City Council unanimously passed a resolution to provide a $278,000 tax abatement package for the development.
The developer will seek an additional $250,000 in tax abatements from St. Louis County. If that request also proves successful, the resulting $528,000 in total aid would represent about 3.6 percent of the total anticipated project costs. Keith Hamre, Duluth's director of planning and construction services, said the subsidies are expected to leverage an investment of more than $14.6 million in the city.
Local businessman Scott Vesterstein is part of the development team and said that if the Capstone Apartment complex is erected as planned, it would complete a project that began with the construction of the Village At Matterhorn, a 96-unit apartment building that sits just north of the proposed new structure. The pair of apartment buildings are to be located off Matterhorn Drive, west of Burning Tree Road.
The Capstone building would be devoted entirely to market-rate "workforce housing." But Vesterstein said 68 units of affordable housing are available for rent at reduced rates in the Matterhorn building. All told, he notes that affordable housing represents nearly 40 percent of the total unit mix between the two buildings.
The stated target market for the Capstone building is workers earning between $27,000 and $80,000 per year.
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But the least expensive studio apartment units in the building are expected to rent for $900 a month, and 1st District City Councilor Gary Anderson noted that workers on the low end of that stated wage spectrum would need to devote 40 percent of their earnings to shelter.
"I would feel a lot better if you had said this was for people who earn $35,000 or more," said Anderson, questioning the numbers.
Vesterstein agreed that he would expect most of the building's tenants to be workers who earn wages more in line with those paid by AAR, Cirrus Aircraft and the 148th Air National Guard Fighter Wing.
"I believe that we have enough affordable units in the first phase in Village At Matterhorn. Right now, we have nine units at $610 or less. We have 50 two-bedroom units at $686 or less. And we have nine three-bedroom units at $900 or less. So we think that this tenant mix will accommodate a lot of people in that tier," Vesterstein said.
A citizen, Linda Ross Sellner, spoke out against the project, which she views as a public investment in more moderate- to high-end housing.
"I am vehemently opposed to tax abatement for 20 years for this new development of what the city calls 'workforce housing.' First, this project will not comply with the spirit of the law nor its basic requirement that housing projects should be to serve moderate- or low-income housing needs," she said
Ross Sellner accused the city of acting with "reckless abandon" in its support of such projects.
But Capstone garnered the council's full support nevertheless, as the city works to address what has been identified as a growing housing shortage that could hinder future economic development efforts.
