Duluth giving away land to spark affordable housing projects

DULUTH – The city is giving away free land in exchange for housing projects that will address the shortage of low-cost homes here.

The Rebuild Duluth program opened for applications Friday, and city staff hope to have proposals selected by spring.

"We need new ideas to identify and reduce the costs for creating housing within our city," Mayor Emily Larson said. "Rebuild Duluth allows for developers, entrepreneurs and individuals to help us solve this housing math problem."

By the end of 2021 it is hoped a dozen or more new homes will dot the city at 13 different sites. The properties are a collection of mostly narrow lots that in many cases wouldn't fit more than a duplex — builders or developers are encouraged to get creative with tiny homes, slab on grade or more innovative proposals that focus especially on affordability.

"We're looking at simpler designs and a much smaller footprint," said Duluth planning manager Ben VanTassel.

When new single-family homes are built in the area, they are typically $300,000 and up, nearly twice the median sale price.

"We've set a very lofty goal — we want to see if we can get prices in the $115,000 to $180,000 range," VanTassel said.

The city is not requiring the Rebuild Duluth units to be owner-occupied, but if the price is right it would be ideal if the homes weren't rentals, VanTassel said.

But once the city selects an applicant to build on the site, it's "out of our hands" whether the builder moves in, sells or rents the property, he added.

Since 1980 Duluth has added roughly 1,400 housing units, according to the city's housing indicator report. Though the population has decreased in that time, nearly half of Duluth homes were built before 1940 and are in need of revitalization. Statewide just 16% of the housing stock was built before World War II.

"With so many hundred-year-old homes still in existence, the question remains of quality and habitability," the report says.

Nearly all of the net gain in housing in recent years has been in apartments or other multifamily projects, and rent has risen to an average of $1,100 a month.

"A house that's built for under $200,000 can cost less than rent on a newer apartment," VanTassel said.

At market rates, Duluth may be unloading anywhere from $100,000 to $350,000 worth of property to spur development in a program that doesn't appear to have an equal in other cities, city staff found.

In addition to adding more homes to the city, VanTassel said he wants Rebuild Duluth to find out whether shaving off the property cost is enough to make new homes affordable for folks making around $50,000, the median household income.

VanTassel said the program's success will be measured on "what have we learned, and can it be replicated."