ZUMBROTA — An apartment building is more than just an apartment building.

At least that's the hope in Zumbrota where a new 57-unit, $8 million apartment project breaks ground May 3, looking to start welcoming residents in spring 2022.

Aside from simply providing 57 new addresses for people, Zumbrota City Council Member Sara Durhman said there are other benefits to putting 57 apartments right next to your small town downtown.

"It’s such a great location for people to embrace downtown and shop downtown," Durhman said.

Location, location, location

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The new apartment building will occupy the block of space between Third and Fourth streets, a block west of Main Street on West Avenue. That puts it across the street from Nilssen's Hub Food Center, and within a block or two of several restaurants, the post office and the town's pharmacy.

The location, said Zumbrota City Administrator Brian Grudem, will benefit everyone from seniors who want to be close to shopping and the pharmacy, to people who are looking for a small town where they won't be required to drive as part of their non-work lives.

The apartment building will be something new for Zumbrota, where the current largest multi-family dwelling is about eight units, Grudem said.

Making a deal

The new apartments, which will be all rental units, will get built with some assistance from the city.

Zumbrota's City Council approved a 26-year tax-increment financing program of nearly $2.4 million toward the overall cost. That means the city won't collect taxes on the increased value of the property until that TIF is paid off. Grudem said the city is also looking at waiving some fees such as sewer and water hookup to help sweeten the deal for the developer, Keller/Baartman Properties of Red Wing.

"In order to get these projects built, they almost need to TIF financing," Durhman said.

While that is a big investment from the city, Durhman said there are big benefits. First is the concentration of housing it brings to the downtown area. Second is that 57 apartments offer housing for a variety of niches such as young single people who work in town, or seniors looking to downsize from the home where they raised their family, but who aren't yet ready to move into assisted living.

That last group means freeing up some single-family homes which may attract young families to move to Zumbrota.

"Many employers, the people they hire can’t live in Zumbrota because there’s nowhere to live," she said.

The final step was to sell the TIF idea to Zumbrota's taxpayers.

"People were kind of hesitant to do the TIF financing, but once they learned what this would do, they were all in," Durhman said.

The right partner

As for herself, Durhman said she was convinced when the city's economic development authority began talking with and looking into the work of Keller/Baartman.

She said the EDA took a trip to Red Wing to look at Keller/Baartman properties there, and the EDA members were amazed at the quality of the units as well as the retention rates of the residents.

"It’s such a nice quality product," Durhman said. "They are very well thought out with regard to how people really live today."

Bob Keller of Keller/Baartman said most of the units will be one-bedroom apartments along with a few two-bedroom units and some studios apartments.

Keller noted that Goodhue County completed a study in 2020 that shows the need for more and diverse housing options is growing, not just in the population center of Red Wing but in towns across Goodhue County. Those cities along the U.S. Highway 52 corridor, such as Pine Island and Zumbrota, are seeing a particular demand for more housing.

"We started doing research on the needs in the county," Keller said. "Those cities need housing, and they wanted to look at our Red Wing project. They know they have a need, they’ve tried to develop that for several years. But it’s really tough to get things going in these small towns."

While the apartment building will have market-rate units, part of the TIF deal includes having 40 percent of the units available to people making 60 percent or less of the median area income.

As for filling the building with tenants, Grudem said he believes the demand is there and waiting.

"This really fills a big gap for us," Grudem said. "They already got a lot of calls. Someone requested a specific unit on a specific corner of the building."