New apartment building raises hopes and issues

Rising high in the air like the trees they are named for, the White Pine Apartment building in Cloquet is nearing completion. Created in response to a 2014 housing study that showed a serious shortage of housing, particularly for lower income levels, the 35-unit building will be entirely affordable housing.

Debra Shaff, executive director of the Cloquet/Carlton Housing and Redevelopment Authority, explained that the apartments will provide workforce housing.

"They're for people with some sort of income, but who are unable to afford a market rate apartment," she said. The idea for the building was born out of a 2015 strategic planning session after a 2014 housing study showed a shocking lack of housing options in Cloquet and Scanlon.

Adjacent to the Aspen Arms Apartments at 950 14th St. in Cloquet, the new building was constructed on HRA land.

"When I came here 13 years ago, I asked why we had an acre of land undeveloped when there's such a great need," Shaff said. The mission of the HRA is to provide affordable housing opportunities to eligible individuals in Cloquet and Carlton, she said, whether that's through apartments managed by the HRA, or voucher programs that make private rentals more affordable.

Earlier this week, Shaff was delighted to announce that they've already had 78 applications for White Pine - which includes six 1-bedroom, 26 2-bedroom and three 3-bedroom apartments - and they're still taking applications. The building will also have 72 parking spaces, 33 of them underground.

By the third week of July, Shaff expects model units to be ready for touring, and she said the building should be ready for people to move in by Oct. 1

While things look good now, the process hasn't been without issues.

One of those was on display earlier this month when a half-dozen union representatives picketed outside the construction site, holding a large sign that read: "Shame on: Cloquet HRA. Tell (Cloquet HRA) to stop exploiting workers."

Darik Carlson said they were protesting the lack of local union laborers working on the building, and questioning whether or not subcontractors on the project were paying prevailing wage.

"There's a lot of people from the Cloquet area that can do the work and need the work," said Carlson, who is part of Local 106, a mixed local union which includes painters, drywall finishers and glaziers.

Shaff explained that the HRA's original goal was to hire local and pay prevailing wage. Then, after the building got funding from the Minnesota Housing Finance Agency on its first try - a rare occurrence - the corporate tax rate went down and the value of a tax credit decreased. Suddenly, the local HRA and its partners had to try to secure more funding.

When that failed, they did what Shaff called "value engineering" and tried to figure out what to cut. "We decided we could still build if not able to (pay) prevailing wage," she said.

They broke ground in October 2018 and in November the Department of Labor contacted them to ask why they weren't paying prevailing wage.

"We had to go back to the state, and they wanted us to pay prevailing wage," she said. "So we rebid the job. The budget went up by $1.8 million by paying prevailing wage, making the cost almost $8 million."

Long story short, they pushed back on the state requirement and asked for more money to pay for it. And the state found another $1.8 million in funding so the project could proceed with all workers being paid prevailing wage.

"Everyone on the job should be paid prevailing wage: we do paycheck audits," Shaff said, explaining that each subcontractor has to report to the general contractor who reports to the developer who sends the paperwork to the Department of Labor.

As for the lack of local workers - more than half are from out of state, most from North Dakota - Shaff said the HRA had to go with the low bid. She wanted local workers, but between the budget squeeze and having to hire the lowest bid, she said local companies weren't the low bid.

While she regrets that the HRA couldn't make everyone happy, all Shaff has to do is look over at the new apartment building to find balance.

It's the people who will live there that she has to focus her energy on, she said.

"There are teachers [on the list], people who work at the hospital, people who are retired," Shaff said of the list of applicants so far. "They're coming from all over, and that was the intent."

Seven of the 35 apartments will be supportive housing, especially for people with mental health issues who have been homeless or are at risk of being homeless. The Human Development Center in Cloquet will provide whatever services are needed for those tenants.

"For example, if someone has difficulty with budgeting, HDC will help them with that," Shaff said, explaining that supportive services should help them make sure they don't become homeless, by doing things like helping a tenant apply for Social Security versus providing therapy. It will also be up to HDC to rank those applicants in terms of need and vulnerability. All seven units are 2-bedroom, intended for families, Shaff said.

People who want to apply for supportive housing need to see HDC and go through the evaluation process to get on a coordinated entry list. Others can fill out an application at the HRA office inside Aspen Arms, at 950 14th St. Rates will be determined according to the tenant's income.

Although the new apartment building will be owned by the Cloquet HRA, the HRA will not manage White Pine. Metro Plains will manage the apartments, although the two facilities will share some staff, including the groundskeeper and the housekeeper.

Shaff readily admits the building isn't a panacea for the housing shortage in the area - estimated at 500 units short in 2014 - but she says it does fill a need, as will other apartment buildings on the horizon, including apartments at the former Cloquet Middle School, the Willows Edge 55-plus development in Carlton and the next phase of the 14th Street Apartments across from the Fond du Lac Tribal and Community College.

"I'm looking forward to our next project," Shaff said. "I'm thinking low-income senior housing. That niche isn't being filled yet."