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Granite Works redevelopment clarified, revolving loan approved
April 10, 2017

Gabe Licht

DELANO, MN – As Ron Clark Construction and BBS Granite work toward an agreement for the redevelopment of the former Granite Works site in downtown Delano, the city council approved a $30,000 revolving loan of Economic Development Authority funds to be used for environmental testing of the site.

The agreement calls for Clark to hire Wenck to complete the testing, and BBS Granite will repay the loan at the time of the sale or will be assessed for the loan if the land is not sold within two years.

Before Tuesday’s 4-0 vote, with Mayor Dale Graunke absent, City Administrator Phil Kern clarified the location of the potential development and what type of housing the development would include.

“We use the term Granite Works very loosely when we describe the area we’re talking about,” Kern said.

In this case, the Granite Works site is referring to nearly eight acres located on River Street west of the Elm Avenue intersection and butts up against Oak Street. It is not referring to the site to the north that was used as a dumpsite, which has since been excavated. A levee is being built on that site, but it is not suitable for residential development because it is below the flood plain.

“The BBS site is almost completely out of the flood plain,” Kern said.

He explained what portion of that site is slated for development and what portion would remain as is.

“The front office buildings, the front third of the site that fronts River Street, they’re thinking of renovating and operating it as a commercial office,” Kern said. “Clark’s proposal they’ve shared with us is to build the first unit all the way west up against the river . . . Their proposal would leave open the possibility for a second building.”

Phase one is for a 49-unit apartment building. Clark plans to utilize the Minnesota Housing Finance Agency tax credit program to help finance the project, which is common outside of the seven-county metro area, Kern said.

“The developer would get tax credits they could sell on the open market,” Kern said. “The exchange for that is the developer would provide rental units at a fixed rate based on overall county income levels, not just Delano income levels. That rate would be designed to be affordable to families making slightly below the median income.”

In 2016, qualifying incomes ranged from at or below $36,060 for a family of one to $59,760 for a family of six. As long as tenants meet the income threshold when they move in, it does not matter if they make more than the maximum income in the future.

With rent proposed to be $805 per month for a one-bedroom unit, Kern believes the development would have the highest apartment rents in Delano.

“With that, you get a pretty high level of quality of construction,” Kern said, referencing finishes such as granite countertops.

Delano has a history with the MHFA program.

“Gateway Village is a perfect example of it,” Kern said. “It was funded using the same program about 15 years ago. We went through the same discussions we’d go through if Clark proceeds with this project.”

“We all know someone who lives up there: teachers, industrial park workers, office professionals, a fair mix of families, and also a lot of seniors,” Kern added later.

Councilman Jason Franzen classified the potential development as Section 42 housing, not to be confused with Section 8 housing such as Crow River Villa and Ridge Manor Apartments.

“It’s a much different program,” Kern said.

He referred to the potential development as workforce housing.

“This is intended to provide housing for people who are working but maybe can’t afford a down payment yet,” Kern said.

“And not everyone wants a yard and a house and all that,” Mayor Pro Tem Betsy Stolfa added.

Franzen expressed support for the revolving loan.

“I already spent a lot of time with staff on this one,” Franzen said. “It’s complicated. This part tonight is pretty straight forward, with no risk to the city at all. We need more information about the site. The purpose of the loan is to determine the feasibility of the land.”

Councilman Jon Sutherland said he liked the agreement, especially the assessment stipulation.

“If they don’t pay the loan back, it could be assessed to the property,” Sutherland said. “I think it’s a good agreement and helps the property owner.”

In order to approve the revolving loan, the council first had to revise the revolving loan fund policy to add environmental site exploration and/or remediation to the list of uses for revolving loan funds. That list also includes land acquisition, construction or rehabilitation of facilities, site improvements, utilities or infrastructure, machinery and equipment, training, and working capital.

As for the proposed development, Kern said he believes more detailed plans for the site will be available in a few weeks.

Odds and ends

In other business, the council:

• authorized a reduction of security of $47,518 for Backes Companies due to the amount of public infrastructure completed in Parkview Hills Fifth Addition and a reduction of security of about $17,250 for Uppal Group due to the amount of public infrastructure completed in Clover Springs Fourth Addition.

• approved a development agreement for Highland Ridge Fourth Addition. Lennar Corporation will be allowed to begin work before all documents are processed, but Lennar will assume all risks in doing so.

• approved on-sale and Sunday liquor sales licenses for Northwoods Entertainment (doing business as Emagine Theater Delano) and Adam King of The King’s House Restaurant and Bar, which will be located at 725 Babcock Blvd.

• approved the updating of the Delano Economic Development Authority/Crow River Villa Admissions and Continued Occupancy Policy for the first time since November 2003. Due to Housing and Urban Development changes, the document has grown from 57 to 110 pages.

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