City council approves land transfer for housing project, preps for preliminary levy

A housing development in Grand Marais moved one step closer to construction on Sept. 2, following approval from the Grand Marais City Council to convey a parcel of land to the Cook County Housing Redevelopment Authority.

The proposed 16-unit housing project will be located on the former Tomteboda Motel site, next to the WTIP radio station. As of August, Arboda Lofts, LLC, is the developer for the project. Arboda Lofts, LLC is owned by Ryan Nelson of Duluth-based P&R Properties, the same company behind the Gunflint Vue apartments in Grand Marais.

The project was first proposed more than two years ago, but moved closer to becoming a reality this summer after local officials shifted to a new developer because of concerns about meeting a deadline tied to $1.3 million in state funding. The Minnesota Housing Finance Agency awarded the project the funding in 2025, with completion required by January 2028. As part of the arrangement, the city agreed to sell the property to the HRA for $1 to develop new housing.

The project will be the third housing development within the City of Grand Marais in the past couple of years. The first housing project was the 51-unit Gunflint Vue apartments, followed by The Heights, a 36-unit apartment complex. City officials and council members said both developments are fully occupied and discussed tenant demographics.

“Here we are looking at the third one potentially starting; it’s really quite a success story,” said City Administrator Mike Roth.

HRA Director Jeff Brand said, “I just want to take a moment to pause and thank the city for continuing to be partners on this project because having $1.3 million come to any community right now is really a difficult challenge.”

With the city now unanimously approving conveyance of the property, the next step will be for the HRA to convey the property to the developer. The HRA, city, and Cook County Economic Development Authority have all signed a developer’s agreement with Arboda Lofts, LLC.

The developer intends to begin site work and construction this fall and make good headway on the project before winter arrives.

Exterior rendering of the 16-unit housing project | HRA

The project will include a mix of housing affordability levels. Of the 16 units, five will be designated for households at 60% of Area Median Income (AMI) and six at 80% of AMI. The remaining five units will be offered at market rate. The AMI affordability requirements will remain in place for 10 years after the units are made available, according to the developer’s agreement.

The combination of AMI and market-rate units is similar to The Heights and Gunflint Vue apartments.

Minnesota Housing Finance Agency determines the AMI by county, which is used to establish reduced rent parameters. The agency uses wage surveys to determine the maximum annual gross income for an individual and sets housing costs at no more than 30% of that income.

Review of Budget

Over the past couple of months, city officials have met with department heads and begun preparing the preliminary levy.

During the Sept. 2 meeting, Roth outlined the initial similarities and differences between the 2026 and 2027 budgets. Roth said the city will make slight changes as it prepares to set the 2027 levy. A few uncertainties remain, including medical insurance costs and the final expected revenue from the Grand Marais Recreation Park.

As of the Sept. 2 meeting, the city is considering a 4.81% levy increase for the 2027 budget. The city will review and set the official preliminary levy before the end of the month.

Kalli Hawkins September 3, 2026