Housing targeted for Hermantown
St. Louis County bet six figures last week on much-needed Twin Ports housing coming to the city of Hermantown, where 230 acres across Maple Grove Road from Sam's Club is in the process of being outfitted with city services.
The move was said to be a prelude to the arrival of a range of housing units to go with some commercial developments.
Despite not yet having development agreements in place, a Hermantown city official testified at a public hearing last week that a wave of construction could be done by the end of 2020.
"It's fairly aggressive," Hermantown city administrator John Mulder told the News Tribune on Monday, "but that's what we're shooting for."
The St. Louis County Board unanimously approved $860,000 in dedicated tax moneys to the city of Hermantown at the public hearing in Duluth.
The county portion will be used in a planned $6 million sewer trunkline extension. The city of Hermantown has been in talks with developers about at least two separate housing sites which would connect to the trunkline, Mulder told the board. The plan was enthusiastically received and no dissenting speakers were recorded at the hearing.
"We need housing that people can afford," said Commissioner Frank Jewell, citing nearby AAR and Cirrus Aircraft — staples in a local aerospace industry which supports more than 3,400 jobs, according to a 2017 report. "I love the project and support it."
One supposed development was targeted for what was referred to as "Stebner Farms property" — one of four pieces of land that make up the 230 acres. The development was described in board literature as "multi-family housing, duplexes, triplexes, single-family dwellings and commercial development." Another development was described as "a 27-unit residential development on the Engwalls property adjacent to Anderson Road."
The 9,000-foot sewer trunkline extension will be built this summer, Mulder said.
In addition to the county contribution, the city intends to use sales tax and special assessment revenue to pay for the sewer trunkline. Water lines would come later, Mulder said, in conjunction with roads built to access the new developments.
Though there are not currently any development agreements, Mulder said there were ongoing talks with multiple developers. Talks began 18 months ago, he said, with developers wanting a tie-in to an existing sewer trunkline. But the city's line was near capacity, a fact which spurred conversations about further development of the trunkline.
"This is not a situation where we just dreamt this up," Mulder told the News Tribune. "We also know that there is a certain amount of, 'If you want development, you've got to make the investment.'"
Confidence to partner with Hermantown on the project also came from St. Louis County Planning and Community Development Department Director Barbara Hayden, who told the County Board, "From an economic perspective, if I could have my way on every project we fund it would be infrastructure."
Hayden admitted the project was "unique" for not being tied to already delivered projects. Commissioner Keith Nelson said he was supportive up front, but also wondered aloud about potential drawbacks. Private developers would benefit from the rise in property values brought upon by a new city sewer connection, he said, adding that deals of a six-figure magnitude typically come with agreements already in place.
"We're going to give up over three-quarters of a million in property tax moneys," Nelson said, "I want to make sure we're building and growing in order to make that investment make sense for us."
Mulder assuaged those at the hearing with a convincing portrait of the city's role in property development.
"The city (of Hermantown) hasn't taken a position where we become the developer," Mulder said. "We allow the private sector to do that development. We submit the public infrastructure to make it happen, and that's how we promote economic development."
Also included in sewer trunkline are plans to construct trail segments from Stebner and Maple Grove roads to Hermantown Road. Ultimately, the city hopes to build a trail that would link to the Munger Trail to the south.
The city of Hermantown began last week to seek easements from owners of 11 properties where the sewer trunkline will cross.
The tax abatement approved by the county would come from taxes collected on nearby Mills Fleet Farm, where property taxes are currently being used through 2019 to fund roads around that site.
The sewer trunkline project would be paid off between 2020-23, ultimately freeing Fleet Farm property taxes to go into the county's general coffers.
In 2018, Mills Fleet Farm was assessed at $525,778.
"After this, we need to get that on the tax roll so it will serve the general fund," Mulder said when asked by the News Tribune if the city of Hermantown would attempt to work to earmark those dollars in perpetuity.
In a Twin Ports market clamoring for housing, betting on prospects was something the county was willing to do.
"Infrastructure is one of the places we have the most impact," Jewell said, "and clearly something where we can help cities expand their tax base, which helps St. Louis County out."
Sources involved in the story said that dozens of market rate and workforce housing units were in play. Workforce housing can be a nebulous term, they said. It can be based on a percentage of median income or differing income limits depending on household size and things such as first-time homebuyer status.