New homes on rise in city

There's been at least one unexpected side effect of coronavirus in the city of Cloquet and nationwide: new single-family housing projects are already significantly higher than last year's total.

Cloquet Community Development director Holly Hansen said the increase was somewhat unexpected but a welcome surprise. She credits the low interest rates for at least part of the boom.

"We scratch our heads sometimes," Hansen told the Pine Knot last week. "We know there's a Covid recession going on right now, but we are very busy with building inspections."

In 2019, including mobile homes, the city approved six new single-family construction permits valued at just over $1 million for the entire year.

Through the first seven months of 2020, the city has approved permits for eight new homes valued at a total of almost $1.38 million, including two mobile homes. On top of that, the city approved permits for two townhomes this year with a combined value of more than $550,000.

New home construction is still far below the boom of the early 2000s in Cloquet, when single-family construction peaked at 26 units per year, then hit a low of two units in 2011, according to a 2014 housing study of Cloquet and Scanlon housing needs.

That 2014 housing study found a need for 240 owned housing units - 200 single-family, 40 multifamily such as townhomes and duplexes - in the two cities by 2025 to meet demand for housing. The study also cited a need for 260 rented, mostly higher-density units. (See the July 17 Pine Knot News story on the multifamily rental market growth.)

While developers and organizations such as the Cloquet/Carlton Housing Authority have built a grand total of 128 new apartment units in Cloquet since the study came out - meeting almost half the calculated need - owned housing units have lagged by comparison. A total of 50 new homes were constructed from 2014 through 2019, or a quarter of the goal of 200 single-family units.

The community development director said it is more challenging to encourage growth of single-family homes, because they're more expensive and more challenging to build per unit. But the city and other agencies have taken a number of steps since 2014 to do exactly that, with the Cloquet Economic Development Authority and the Cloquet City Council approving its first-ever tax increment financing (TIF) district for housing for the Country Club Patio Homes project in 2017. That project resulted in the construction of 12 single-family homes near Carlton Avenue West and Reservation Road. Homebuyers had to meet certain income guidelines, and the rebates of future property taxes (TIF funds) helped make up the difference between the actual construction cost of the homes and the more affordable purchase price (average $230,000) under the terms of the agreement.

Additionally, Hansen explained, the city and EDA have used many different ways to try to improve the local housing selection, even cleaning up the old water tower site so it could be redeveloped into two stick-built home sites. One of those homes on Avenue E was completed and sold in 2019; the other is under construction and already sold. The estimated value of those homes is $320,000 each.

Both the Country Club Patio Homes and the water tower projects fill a niche that Hansen called "move up, move down housing," meaning homes that could provide an older homeowner a place to live once the kids have moved out, or a place for families to move up to once they've outgrown a starter home. Boss Builders constructed slab-on-grade housing at the city's former water tower site, which is an attractive housing format appropriate for all ages.

Earlier this summer, the Cloquet City Council also approved a tax increment finance housing district for the next phase of the Trails Edge senior duplex rental project. Owner Jim Kuklis previously constructed 11 buildings (with two units each) and will now construct the remaining five lots along the south edge of the project. The project is age-restricted to residents 55 and older, and no children are allowed.

In addition to trying to help boost new construction, other initiatives aimed to improve the condition of the existing local housing stock, because nearly half the homes in Cloquet and Scanlon are more than 50 years old.

These included a matching grant program for home improvements and a land trust program that rehabilitated several foreclosed properties within the city. People had to income-qualify for both programs. The Small Cities Development Grant funding program from 2015-17 ultimately led to the renovation of 11 owner-occupied homes and two rental properties. Property owners had to provide a matching investment of 30 percent of the costs. The four One Roof Community Housing land trust home rehabs could be sold only to applicants earning between 50-80 percent of area median income, or less than $49,000.

The city has also torn down a number of blighted properties, and so has Carlton County, as recently experienced at 315 Avenue B, to improve neighborhoods and open up lots for redevelopment. Hansen acknowledged, particularly in the area of single-family homes, that the city hasn't been the driving force in many cases, but they've tried to help.

"We have tried to use all tools that we have had the opportunity to use because we needed to make things happen," Hansen said.

And the markets, or fallout from a pandemic, will do their part too.