DULUTH – Last year, more than 30 job candidates declined positions with Duluth-based Cirrus Aircraft because they couldn’t find housing — a prime example of why a new nonprofit formed to spur market-rate housing developments will appeal to area job-seekers, its creators say.
New employer-led nonprofit hopes to lure workers to Duluth with housing investments
Essentia Health is the first major employer to invest in Duluth-based Northland Housing Partners.
The Minnesota Star Tribune
October 24, 2024 at 4:07PM
Northland Housing Partners (NHP) is an employer-led group that includes Essentia Health and other local business leaders aiming to attract workers. On Wednesday, it announced at a news conference its first loan of $2 million to the developer of the RiverWest project in western Duluth that will include 20 single-family houses overlooking the St. Louis River.
So far, the nonprofit has gathered more than $11 million in committed investments between Essentia and the Duluth Superior Area Community Foundation, and is looking to build to $25 million. The money is expected to act as gap financing and will be loaned to developers.
“People love northern Minnesota, northern Wisconsin — people want to live here,” said Dr. David C. Herman, CEO of Essentia Health, among the region’s largest employers. “But the challenge that many of us have as employers is where will people live when they move?”
Duluth and much of the region has experienced a housing crunch for years, especially for more affordable homes. But there’s also a shortage of market-rate homes, real estate agents and city officials say.
“We have a full-blown housing crisis, and complaining about it isn’t changing a thing,” said Shaun Floerke, CEO of the Duluth Superior Foundation.
The foundation typically invests in the stock market to aid in its giving but is also choosing to invest in housing to help solve the problem, he said.
Many regional employers say a dearth of housing makes attracting and keeping employees difficult, said Rachel Johnson, NHP CEO and head of the Area Partnership for Economic Expansion. And higher interest rates and stricter lending requirements for developers have created a need for more private investment in housing projects.
NHP is seeking other employers to join their efforts, and is looking to invest in both multifamily and single-family projects in northeast Minnesota and northwest Wisconsin.
The availability of new apartments allows aging single-family homeowners to sell and downsize, said David Gaddie, a longtime bank executive and chairman of Essentia’s board.
And that house “can be sold to a young family that needs housing, and they can move on up the ladder,” he said.
Developments chosen for loans won’t be targeted to employees sought by a specific employer. The nonprofit is considering loans to projects in Superior, Wis., and Coleraine, Minn., and expects to offer investments between $2 million and $5 million.
Herman said Essentia has long invested in affordable housing, including a 72-unit project for seniors near its former downtown hospital. Without housing, “good health is almost impossible,” he said, and he’s hopeful other employers will consider housing investments that might yield lower monetary returns, “but a great return” on employee recruits.
The nonprofit’s board includes Gaddie, Herman, former Wells Fargo executive Phil Rolle, interim (and former) Maurice’s CEO George Goldfarb, and former Allete CEO Alan Hodnik.
The employer-led concept is unusual, said Abbot Apter, the nonprofit’s chief financial officer and CEO of investment company SolPacific.
“I think we just invented it,” he said, noting its architects are all longtime area executives who “innovated something that we think is going to have traction.”
The new houses in the RiverWest development will list for prices ranging between $650,000 and $950,000. Several have already sold.
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