BEMIDJI — It’s been nearly a year since Bemidji officials issued an order to vacate an apartment building deemed unfit for its low-income elderly and disabled inhabitants.
The building’s owner is now looking for the city’s help to rebuild that housing. The Bemidji City Council voted unanimously on a resolution supporting tax increment financing, or TIF, for Schuett Companies to rebuild units at Red Pine Estates at its Monday, June 17 meeting.
Schuett Companies, based in Golden Valley, manages 1,600 units of affordable housing in the Upper Midwest. Red Pine Estates includes several townhome buildings designed for low-income families and an apartment building for disabled and senior tenants.
Last year, 50 units at the apartment building were vacated with little notice after a building inspection revealed dangerous conditions.
Tom Schuett, the company’s CEO, told the Council the company will pursue grants and tax credits to tear down the old building and rebuild one 59-unit building for senior and disabled tenants. In the second phase, Schuett is planning a 36-unit family apartment building.
"We've been here since the ‘80s. ... We really are committed to this community,” Schuett said. “We secured that building so nobody could break into it and it couldn't be become a dredge or a burden on the community. We're committed to Bemidji.”
With the council’s resolution, Schuett Companies will still need to pursue a formal TIF process that includes a public hearing, but with state deadlines coming up next month, the resolution shows the city’s support for the project.
Council members voiced their concerns about the safety of the old Red Pine building, including the area’s council representative Josh Peterson.
“What if we were to grant you this TIF? What reassurances can you give me and the community to know that this building will be inspected and maintained to standards so that nothing like this ever happens again?” Peterson asked.
Schuett responded that numerous stakeholders require annual inspections, including the Minnesota Housing Finance Agency and Housing and Urban Development.
“Our partners alongside our own staff and our investors and lenders all have inspected these properties annually. Not once every 10 years. Annually. Any defects that were noted in those inspections were taken care of,” he said.
“How did this happen? I can't answer that specifically, but what I can tell you is that Red Pine never failed any of these inspections,” Schuett added.
The resolution received unanimous support due to the city’s housing shortage.
Schuett Companies is still looking for investors to rebuild, but after learning that a lump sum of the TIF from the city would be unlikely, Schuett reiterated his commitment to the project.
“I didn't come here knowing whether or not I would receive those funds. Really had no idea," Schuett said. "So if what you're saying is, upfront or lump sum payment isn't a possibility, we're going to have to find it somewhere else, but I'm committed to bringing these units back.”
In a second phase, Schuett said he envisions eventually replacing the townhome buildings.
“The plan at this point is to continue to operate the townhomes until such a time as they can move into the new building, so we're not going to displace any of those residents,” Schuett said, explaining that those buildings, at the moment, are fine.
“We really don't want to displace any more people,” he added.
This is the second housing project proposed in recent months in Bemidji.
The Headwaters Regional Development Commission recently entered a TIF agreement with the city for 39 workforce housing units near the Sanford Bemidji campus.
Workforce housing generally serves renters who have incomes too high for government subsidies but can’t afford market-rate housing.
“We can tear this down. We can build a new one. But what assurances can you offer us that some other council is not going to be sitting here 26 years from now and having the same conversation?” Bemidji Mayor Jorge Prince asked.
As Bemidji’s affordable housing continues to age, he said he hopes the fix offered by Schuett will last the full term of the TIF agreement.
