Skip to main content

Towne Square project still on tract for South Hwy 75

Subhead
Updated Luverne housing study reaffirms demand for apartment units
By
Lori Sorenson

It’s been nearly three years since the former Sharkee’s property was cleared to make way for the new Towne Square mixed-use development along Highway 75 and Hatting Street.
At a liaison meeting last week, city and county officials discussed progress of those plans and the status of a potential groundbreaking.
The conclusion is the same today as it has been for the past couple of years. “We wait,” said Holly Sammons of the Luverne Economic Development Authority.
“Banks are patient, investors are patient, and we must be patient. I know it’s hard, but that’s just the case. We can’t rush decisions like this.”
While it’s hard for the general public to understand why the vacant lot still hasn’t seen construction, Sammons said the time frame is fairly logical from a business standpoint.
For one thing, the 27-unit apartment complex was announced around the time Luverne’s 2016 housing study had just been released.
It showed an urgent need for workforce market rate housing in the $600 to $900 per month range, especially since TruShrimp announced shortly thereafter its plans to bring hundreds of jobs to Luverne.
As the lots were cleared and prepared for development, the property became eligible for Opportunity Zone incentives through the federal Tax Cut and Jobs Act of 2017.
However, that option was stalled by the federal government shutdown, and when DEED offices reopened, the local application was delayed in a paperwork backlog.
Then tru-Shrimp announced in January it would not build its first harbor in Luverne, meaning the housing crunch wouldn’t be as urgent as first thought.
Still on track for the same number of apartments in the Towne Square development, investors requested an updated Luverne housing study to satisfy lenders.
The most recent 2016 study by this time was approaching three years old.
Sammons pointed out that the original study showed an urgent need for more workforce housing long before TruShrimp discussed bringing jobs to Luverne, but she understood the need to reassure lenders.
“They needed the updated numbers to confirm the data and demographics that supports this project,” she said.
That data — all 165 pages — was delivered to city officials last week, and the executive summary confirms what local officials already knew: There’s a shortage of workforce housing in Luverne, and the Towne Square project will go a long way toward meeting that need.
“So now we give that data to the investors, and then we wait,” Sammons said Friday.
 
Commercial and housing neighborhood is goal
Luverne’s Don Jahnke is the developer for the project, and the overall plan is to transform the entire 6-acre area over the next five years into a commercial and housing neighborhood known as the Towne Square Addition.
Property will be sold off as it is developed into housing and commercial property in the mixed-use development.
Because of the more immediate need for housing, Jahnke and investors will first build a 27-unit, one- and two-bedroom apartment building.
 
Deadline for DEED grant
Sammons said it’s unclear whether investors are pursuing Opportunity Zone incentives, but a three-year deadline exists for the project to utilize a $680,000 grant through the Department of Employment and Economic Development.
The grant required a matching investment from the city, which fulfilled that role with a $469,000 investment in improvements (water, sewer, electric, etc.) to the four-acre site.
Sharkee’s and Mert’s were demolished and the two properties are now part of a single Tax Increment Financing (TIF) District that was created in order to recapture some of the acquisition and demolition costs.
The city paid $220,000 for the condemned Sharkee’s property and $160,000 for the piece that housed Mert’s Repair (that moved to a new shop built on a city lot in the industrial park).
The costs for acquisition, demolition, and site improvements of both lots (nearly $500,000) will be recouped with future tax increments.
What that means is whoever buys the bare lot will pay full taxes on the improved property, but the difference between the current tax amount and the new tax amount will pay down the TIF debt.
After the TIF expires in 25 years, local governments will benefit from taxes paid on the full value of the developed lots.
The multi-phased project could produce up to $10 million in market value once the whole area is developed.
Sammons said it’s possible that footings could still be poured this fall on the site, but if need be the group could file for an extension of the grant timeline.
“DEED wants us to utilize that grant, and they (developers) want the grant more than we do,” she said. “But we all have something at stake.”

You must log in to continue reading. Log in or subscribe today.