Investing in affordable housing to grow the local economy

The availability of quality, affordable housing is an overlooked aspect of economic development. Stable housing is critical because it helps to build and retain a strong workforce.

When people have access to affordable housing, it’s good for businesses because turnover and training expenses are reduced. It’s also good for the economy because residents have more disposable income to spend in the community. If they own homes, they’re contributing property taxes.

Businesses in Cook County have reported their ability to grow is limited by a lack of workforce housing. That’s why the Cook County Economic Development Agency is working with One Roof Housing on two workforce housing development projects.

One project will provide owner-occupied homes in Grand Marais and the other will provide market rate rental apartments in Lutsen. Arrowhead Cooperative, a Great River Energy member, is consulting and offering its expertise on the projects. The co-op also agreed to the sale of land for the Lutsen development adjacent to its offices.

“Affordable housing is a critical need in our community. We’re serving as a general resource assisting in project needs where we can,” said Yusef Orest, Arrowhead Cooperative’s member services director.

Cook County faces some unique growth challenges because its economy is no longer fueled by logging or fishing. Eighty percent of the county’s economy is now driven by tourism, as natural resources such as the Boundary Waters Canoe Area and Lutsen Mountains are increasingly drawing travelers to the area.

This shift to a more tourist-based economy comes with challenges. John Twiest, Arrowhead Cooperative’s operations manager, notes that a substantial percentage of workers in Cook County are seasonally employed.

“Because of the seasonality of the service industry, resorts and businesses have trouble finding staff in the height of the summer season because there’s no place for them to live,” he said. “On the flip side, with the lack of affordable housing here, how do you get people to move here full time?”

The rental market vacancy rate in Cook County is low even in the off season. And nearly one-third of those renting in the county spend more than 30 percent of their incomes on housing, according to a recent American Community Survey. By federal definitions, spending this much is a “rent burden,” as it can affect their ability to pay for other necessities such as groceries, utilities and health care.

Census data from 2010 Census indicated that 50 percent of all housing units in the county were occupied seasonally or for recreational use. This has contributed to a spike in real estate prices where workers have been priced out of the market. The average median household price in Minnesota is $185,000, while in Cook County it’s $285,000.

One Roof Community Housing is taking the lead on the new housing projects, using the Community Land Trust model of affordable housing development. The Nordic Star workforce housing development in Grand Marais is in progress. Buyers must qualify by income for the single-family dwellings, which will start around $140,000.

Construction on the Lutsen project will commence in the spring. It will include four fourplexes with single and dual bedroom units. Rent will be affordable and include utilities. The target market for this development is resort employees who want to live in the area full time. 

Arrowhead Cooperative performed heat-loss calculations and helped select the most efficient units to heat the apartments. Minnesota Department of Employment and Economic Development funding will help cover about 12 percent of the cost of the 16 rental units in Lutsen.

While it may seem unusual for an electric cooperative to be involved in affordable housing projects, Twiest says the co-op wants to be as involved as it can in solving such important community problems. Its contributions exemplify the cooperative principle of “concern for community,” which emphasizes sustainable community development.