City of Melrose comes up with plan to deal with shortage

Melrose has a housing shortage.

Among the reasons for the shortage is land availability in the city on which to build. 

No more. 

City Council members, during their June 16 monthly meeting, approved a purchase agreement allowing the Melrose Area Development Authority board to purchase land on the west side of town for construction of 25 single family houses and five acres for multi-family development, including apartments. 

They have also signed a purchase agreement and an option to purchase agreement to buy two properties on the east side of town, bringing the total lots to 42-single family, plus five acres for multi-family housing.  

Now the city is marketing these lots, asking developers and individuals interested in building homes/apartments to submit a proposal to purchase land and build a home in response to the city’s request for proposals. 

It has been a process to get to this point. 

Traci Ryan, of Ryan Development Consulting, said when the city hired her two years ago housing was a priority. MADA board members, city staff, city engineers and Ryan worked together to complete a housing strategy, while conducting housing and workforce studies. 

“We can’t attract businesses unless we have a labor force, and there won’t be a labor force if there is no housing,” Ryan said. “When your major employers look at expanding or keeping their operations open in Melrose, available labor force will be a significant factor.” 

 She said the workforce study showed people who work in the community, if given the opportunity to live in the community, would. In talking with a CentraCare professional, she learned the lack of housing could be a deterrent for recruiting physicians. 

“Melrose is not a bedroom community. You are creating bedroom communities all around you because Melrose has more jobs than you have residents and you are not addressing housing,” Ryan said. 

The housing study indicated the types of housing needed are across the board – single- and multi-family dwellings, apartments, patio homes, etc.  

But in order to increase housing, land needed to be secured, which had to be balanced with the financial risk and economy issues. 

Ryan said with no developers ready to venture down this road, the city came up with a plan.  

“When the housing market is tight, small cities have to take control of their future and drive some of these things because developers are more inclined to invest in larger markets, but they have to be very careful to manage their risk,” Ryan said. “In Melrose’s case, the city secured property and, while it is not our preference to be the developer, it may be necessary to get something started. Our intention is to market it to developers, builders and residents that could come in and build. We simply wanted to secure the land.” 

“Is this risky? Absolutely, but the city cannot afford to not address the housing issue because development is happening all around us,” she added. “The city and MADA just have to be smart about where and how much they invest.” 

To date, the city has close to $450,000 tied up in land purchases, which is being paid for through a city land acquisition fund, and the MADA board reallocated a portion of their revolving loan fund to help address housing issues.   

When securing land, the MADA board and city staff looked at land around the community that was possibly available, prices for land, how easily the land could be served with public utilities and improvements, and from that came a recommendation to pursue three areas.

 “Along with housing demand, it is likely the city will have to partner with developers to make public improvement costs, like water, sewer and streets, feasible,” Ryan said.  

The housing strategy was adopted, property secured and the city engineers provided feasibility reports, concepts and cost estimates, and now the city is in the marketing stage.

Ryan said the concept works, if done right. She cited the example of the city of Osakis.

“They built two housing subdivisions, bought the land, constructed public improvements and marketed it,” she said. 

Ryan explained this is a different economy with interest rates and lumber prices, as well as supply chain issues -- all factors in how this effort will play out.

The request for proposal satisfies the legal requirements to provide equal access to city-owned properties in a way that the city can limit the number of lots developers can take and encourages local businesses, builders and individuals to secure property to build. It will allow the city to compare proposals side by side for quality, impact and need for assistance. 

“It allowed us to create a public format where everyone is considered fairly,” Ryan sad.  

The deadline to submit RFPs is July 1, after which the MADA board will review proposals. Interested individuals should contact the city. Proposals have to include the lot choice, price, idea of building plans and they must be ready to construct within 18 months of the city installing streets/utilities. 

Ryan said this housing project has taken teamwork, with a major component being property owners willing to sell their land to the city. 

“The community is pulling together with forward thinking,” Ryan said. “If this comes together, with the support of the community and people who have connections to the community, we can all be successful …, and I believe we can be successful.”