29 May 2024
DULUTH — City councilors have signaled their commitment to building more affordable housing, even as they granted city officials more flexibility about spending more than $14.5 million in remaining federal pandemic-relief funds.
The council had previously directed the city to channel all those remaining funds into projects designed to provide more affordable housing as part of a $19.2 million pledge made in 2021.
But on Tuesday, a newly elected slate of councilors approved a resolution that would send all unused pandemic relief funds to the Duluth Economic Development Authority, where they could be used to provide support for other initiatives like blight reduction, various forms of new housing, new child care facilities and “economic development opportunities.”
DEDA will be expected to execute contracts with three developers, dedicating the vast majority of the remaining federal funds to complete housing projects that were already in the works, including:
$2.75 million for Wadena West, a housing project Center City Housing is building behind Menards in West Duluth.
$4 million for The Residence, an 80-unit apartment building Merge Urban Development plans to erect near the Wheeler Athletic Complex.
$3.8 million for Brae View, a 72-unit senior development One Roof Community Housing aims to build in the Hillside neighborhood.
Still, the projects leave about $3.9 million of federal aid in play. Mayor Roger Reinert sought to authorize DEDA to consider using those funds for a variety of purposes.
In all, Duluth received $58 million in federal pandemic relief assistance through the American Rescue Plan Act. A previously elected City Council chose to direct a large portion of that money to support housing deemed affordable for people earning no more than 80% of the area median income.
Nancy Cashman, executive director of Center City Housing, said the city continues to play a crucial role in bringing affordable housing projects forward in a complex and competitive landscape.
She contends such projects are a worthy target for COVID-19 recovery funds. “Low-income communities have really been hit the hardest and are still recovering more than some other communities,” she said. “So, I really hope these funds stay for housing.”
Jeff Corey, executive director of One Roof Community Housing for more than 25 years, praised the city as “a fantastic partner” and referred to the recent local investment of federal ARPA in affordable housing as “a once-in-a-career thing.”
He said $1 of local funding can leverage about $4-$5 in outside investment for a community land trust home and up to $10 for a project such as Brae View.
While Duluth has made significant progress, Corey estimated that even with projects currently in the pipeline, the city is about 2,600 housing units shy of what it needs, based on the findings of a 2019 study by Maxfield Research and Associates.
City Administrator David Montgomery delivered an unexpected dose of positive news to the council Tuesday, announcing the city had just received notice from the U.S. Department of Housing and Urban Development that it will receive an additional nearly $2 million in ARPA support that can also be used to meet local housing needs. He expects those funds to arrive in the next couple of months and said city administration is willing to consult with city councilors on the best use of those dollars.
The proposal to funnel unspent ARPA funds into DEDA is designed to satisfy a requirement that the local aid must be obligated by the end of 2024 and spent by 2026 or returned to federal control. The resolution’s “statement of purpose” says: “This transfer eliminates the risk of ARPA funds not being spent in time due to project delays or other unforeseen circumstances.”
While 2nd District Councilor Mike Mayou voiced his support for the strategy, he continued to call for better “guardrails” to ensure the aid continues to support affordable housing projects.
“We have made a difference,” he said. “But we need to continue to push and we need to continue to invest. I think we all recognize that.”
Mayou moved to table the resolution to allow time for more spending details to be defined, noting that the city still has ample opportunity to complete the transfer to DEDA well before the Dec. 31 deadline.
His motion was seconded by 1st District Councilor Wendy Durrwachter, but it failed by a 6-2 margin. At large Councilor Azrin Awal was absent.
“This is just step one — transferring money so we can protect the timeline,” Council President Roz Randorf said.
She expressed confidence that the resolution will provide sufficient structure to guide DEDA’s use of the funds — decisions that will still require council approval.
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