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More housing coming to Red Wing

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The Red Wing City Council took a step toward ending the housing shortage in Red Wing on Monday, Oct. 8. by approving a plan to build two developments.

This plan will result in up to 250 units being built on two different sites. One site will be northeast of Walmart on Tyler Road. The other will be southwest of the Mayo Clinic Health System Red Wing. The units will be apartments and townhouses and will include affordable housing and housing for seniors.

The developer, Keller Baartman Properties, applied for tax-increment financing in September 2017. The city and Housing & Redevelopment Authority held a variety of meetings and hearings on this proposal before Monday's vote.

Of the units planned to be built, 100 will be designated as affordable. There will also be 78 units of senior housing.

Ripple effect

One positive impact of this project will be the increase in available housing units for families, officials said. Since there is not enough senior housing to meet the demand in Red Wing, those who are 55 and older are not moving out of their houses. This can contribute to the lack of housing units on the market.

The HRA's position is that by building housing for seniors, more single-family housing will become available and attract more families into Red Wing.

With the increase in houses on the market and the building of affordable housing, the HRA estimates that there will be an increase of about 90 students in the city, which will, according to their findings, result in about $570,000 in aid from the state being given to the school district per year.

"I used about one and one half children per townhome unit with the 64 units to come up with the 90 children at the Keller Baartman Proposal." said Randal Hemmerlin, the executive director of the HRA.

Hemmerlin went on to explain that he only used the townhomes for his estimate and did not include families that may come into the city as houses are sold by seniors who move into senior housing.

"Consequently, 90 students may be a conservative number, but it helps make the point that we expect a rise in students with the new housing," he said.

Five-year plan

The project likely will take five years to complete and cost $46 million. According to the HRA, Red Wing is not at risk for this amount because a "pay-as-you-go" method will be used for this project.

The state of Minnesota explains that pay-as-you-go means that the developer finances the cost of the project at the beginning. The municipality, in this case Red Wing, will later pay the developer for expenses with a bond. This bond will be paid with the revenues from the housing units.

The State Auditor's Office lays out in a document that "failure by the municipality to make bond payments because of insufficient TIF revenues does not constitute a default." This means that this project has no risk for the city.

Keller Baartman Properties can collect property tax increment payments for up to 25 years. The money that the city receives from the project will be reinvested in the HRA.

Now that the City Council has approved this resolution, it will be taken to the HRA Board for officially acceptance before closing the deal with the developer. Plans and financing will be made once the developer and HRA have closed the deal.