Minnesota Cities Magazine
More from Jan-Feb 2018 issue

Two-Way Street: How Has Your City Addressed a Housing Shortage?

Perham (Population 3,204)
The City of Perham has a unique claim to fame: We have more jobs (4,400) than people (3,200). We’ve consistently had an average growth of about 120 new jobs per year for the past decade.

As you might imagine, that has led to a struggle to keep housing in sync with jobs. A variety of entities have worked together to address this problem in Perham.

City efforts
The City of Perham works proactively with developers to offer tax increment financing or abatement when they request it. Most multi-family projects have had one or the other in recent years.

The city has ongoing discussions with several outside developers. Two outside developers have recently constructed multi-family housing. One is a 32-unit townhome complex, and the second is a 24-unit reduced-rent apartment building that includes financing from Minnesota Housing Finance Authority.

Perham also applied for and received a state Workforce Housing Development Grant in 2015 in the amount of $620,000. The stars lined up perfectly for this application, because we had a housing project that was shovel-ready with a new site and local development group. The result was a 24-unit apartment building.

Grow Perham
An investment group, Grow Perham, was formed about a decade ago. It is comprised of local businesspeople who have a vested interested in housing because they need to fill jobs. The group has built a 24-unit complex about every 18 months since it was formed.

There are 23 members in Grow Perham (all are local), with ownership ranging from less than 1 percent to 27 percent. There’s a critical common bond: the need to fill jobs. These owners are willing to invest in housing, realizing that this investment has essentially a 0 percent rate of return (although equity is being built).

The direct benefit to the Grow Perham members is that market-rate housing is available for prospective employees. That housing is needed to fill jobs for their companies, which allows them to stay in business in Perham.

Others can do the same
The Grow Perham model can be replicated elsewhere, but it will succeed only if local investors adopt the philosophy of investing not necessarily for personal financial gain, but for the good of the community. Your community must create its own local solutions. This is the cornerstone of Perham’s success.

Bemidji (Population 14,376)
The City of Bemidji has been busy managing and administering numerous housing projects over the past three years. Bemidji has collaborated with developers to build 317 new multi-family units and 93 single-family homes since 2015.

Our new housing includes market-rate and higher-end apartments, condos, and homes, senior-friendly townhomes, student apartments, and an important supportive housing project, the Park Place Apartments.

Special project
The Park Place Apartment complex is a source of pride in Bemidji. It took five years to put together and required key partnerships. It addressed a major community need to provide housing for homeless adults with chemical addictions.

Park Place is a $10.8 million 60-unit apartment building owned and managed by Center City Housing of Duluth. Center City Housing, the Minnesota Housing Finance Authority (MHFA), Headwaters Regional Development Commission, Beltrami County, Sanford Health, City of Bemidji, Bemidji Housing and Redevelopment Authority (HRA), our tribal authorities, and other Bemidji partners made this project happen. The building opened on Oct. 27, 2017, and the occupancy goals are right on target.

Putting the finances together
Funding for the project was complex and came from five primary sources: MHFA housing infrastructure bonds, equity from a housing tax credit investor, the Federal Home Loan Bank of DesMoines, sales tax rebates, and energy rebates. Operational incomes arrive from various sources: tenant income arrangements, Section 8 vouchers/HRA assistance, local tribal contributions, and other sources.

One of the biggest challenges for the City Council and community was understanding the wisdom of building apartments for this population to begin with.

Building community consensus
Over time, the social service community, local city and county officials, local law enforcement leaders, and health care leaders created alignment with the general public. We created community consensus about the public benefit of working to house individuals rather than spending public resources sending folks to the emergency room or jail. Our community agreed on the notion that reliable housing results in stability and self-respect; from that comes hope, sobriety, and life.

We are working hard to create more affordable housing in Bemidji, in addition to market-rate housing. We hope Park Place is the first of many affordable/supportive housing projects.

Read the Jan-Feb 2018 issue of Minnesota Cities magazine

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