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Paynesville Press - July 13, 2005

EDAP considering rental townhome project

By Michael Jacobson

A proposal to build 16 townhomes in the Wilglo Acres Addition by EDAP (the Economic Development Authority of Paynesville) drew mixed reviews from six attendees at a public hearing last week. Four local rental property owners expressed concerns about the proposal while the consultant and a former economic development director spoke in favor of the $1.86-million project.

EDAP was approached years ago to do this project but has never wanted to enter what they consider a private market, board members agreed on Wednesday, July 6, at the public hearing at city hall. The board feels there's been a missing niche in the local rental market, specifically upscale rental housing, especially three-bedroom units.

Since Stearns Manufacturing left Paynesville, partly due to an inability to hire enough workers because of a lack of affordable housing, EDAP became more interested in this rental townhome proposal this time. The Paynesville City Council recently added Housing Rehabilitation Authority to EDAP's charter.

Proposed are 16 rental townhomes: four three-bedroom, double-garage units (proposed $850 monthly rental); four two-bedroom, double-garage units (proposed $775 monthly rental); and eight two-bedroom, single-garage units (proposed $675 monthly rental).

EDAP is considering a proposal by F&L Management & Develop-ment, Inc., to build these townhomes. "We believe there is a definite need for this type of housing in Paynesville," said Diane Weick, a project coordinator with F&L Management & Development, Inc., "and we've seen it across the state."

Matt Dickhausen - representing a group of rental property owners in Paynesville (him, his wife Danielle, Reed Quarfot, and Lew Storkamp) - raised a number of concerns about this EDAP proposal at the public hearing last week. Their concerns ranged from philosophical (government shouldn't provide rental properties) to the scope of the project (Are 16 units too many?) to questioning assumptions in the proposed cashflows and wondering if F&L's proposed fee ($128,000) is too large.

Dickhausen told the board that they should at least get another proposal from a second company and really should look at working with local rental property owners first.

The proposed project is projected to cash flow, meaning the revenue bonds issued by the city should be repaid with rental income from the 16 townhomes. Dickhausen, though, questioned the risk involved and said, "We would really feel unhappy Šif our tax dollars went to compete against us."

Joe Egge, the former economic development director for Meeker County and a friend of Tom Serie from F&L Management & Development, said he had built 120 housing units with F&L in Meeker County and heard these same complaints in every community before they were built. They are the right concerns, he added, and they had all these and more in Meeker County.

But in every market, said Egge, the addition of rental townhomes improved the overall rental market.

"Does EDAP belong in the rental market? Somebody does," said Egge, who cited housing as the top concern when Bobcat built a plant in Litchfield.

(The proposed rental townhomes also were criticized by local resident Leo Louis at a city council meeting last month before the council voted to add HRA to EDAP's bylaws. EDAP, said Louis, should concentrate on jobs and bringing industry to town, not housing.)

Most of the EDAP board - which includes Press publisher Peter Jacobson - expressed continuing interest in the project following the hearing, but EDAP did not make a decision last week. They are expected to discuss this proposal again at their next meeting on Tuesday, July 19, at 5:30 p.m. at city hall.

One question that Jeff Bertram, a member of both EDAP and the city council, wants answered before then is whether any private parties are planning to build rental townhomes in the near future. Jason Ferche, Bertram noted last week at the hearing, has 18 townhomes in a rough concept plan for 230 acres that he wants to annex to the north side of the city. Bertram wants to know if these will be rental units (which would fill the niche that concerns EDAP) and when they would be built.

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