Developer of 16-unit workforce housing project provides update to city council
A 16-unit workforce housing project proposed by Duval Companies returned before the city council for an update and discussion on May 28.
The proposed 16-unit apartment project is located on the former Tomteboda Motel site in front of the city public works building and adjacent to the WTIP radio station.
City Administrator Mike Roth reintroduced the housing project to the city council during the May 28 meeting, saying that the discussion is “meant to be a refresher and just to get the council back up to speed.”
In February 2024, Alex Duval, owner and developer of Duval Companies, and the former Cook County Housing Redevelopment Authority (HRA) Director Jason Hale approached the city to gauge interest in city participation in the potential 16-unit apartment project.
As part of the city’s participation, the city would sell the land to the HRA for $1.
The city council agreed during the Feb. 14, 2024, meeting to support the project and sell the land for $1, contingent on the project receiving funding from the Minnesota Housing Finance Agency’s Workforce Housing Development Program. While the city would sell the land for $1, the assessed market value of the city-owned parcel would serve as a partial match for the grant funding.
The 16-unit apartment project has now been awarded $1.3 million in funding by the Minnesota Housing Finance Agency.
Duval attended the May 28 city council meeting via Zoom to provide an update and share a timeline of the next steps. He shared that the project has undergone minimal design changes since it was first presented to the city council in February 2024.
“We’re working on refining a few things, but there are no major changes to the form of the building or the project,” Duval said.
The design of the 16-unit apartment project is below.
Proposed 16-unit housing project in Grand Marais
The 16-unit housing project consists of studio apartments, one-bedroom, and two-bedroom options. Duval said he is trying to determine if there is a desire in Grand Marais for a three-bedroom apartment option.
“I’m also very interested to see what kind of reaction and demand there is for the other two apartment projects,” Duval said.
With the 51-unit Gunflint Vue apartment project now complete and accepting tenants and the 36-unit Heights apartment project breaking ground on June 3, Duval said he will be watching to assess demand and determine rental prices.
“We are watching those projects with interest and trying to see how ours is going to be complementary to the needs of the community,” Duval said.
With the project’s award of state funding, the rental cost per unit is derived mainly from Minnesota Housing. Duval said that according to the state agency, workforce housing rent falls within 80% to 120% of the area median income (AMI).
Minnesota Housing determines the AMI by county, which is used to base reduced rent guidelines. In Cook County, the maximum gross income for a single individual applying for a unit at 80% AMI is $54,320.
Duval presented a spreadsheet to the city council, which included a breakdown of AMI income limits by household size and the maximum gross rents by bedroom size.
The spreadsheet indicated that the maximum gross rent for a studio apartment at 80% of the AMI would be $1,334. The maximum for a one-bedroom is $1,429, and a two-bedroom is $1,714.
Duval said Minnesota Housing does not set the rents for the potential costs with an AMI of 120%. Instead, the costs are “more market dependent” and would be based on the apartment rental costs of Gunflint Vue and The Heights.
Given that the Gunflint Vue apartments have recently entered the market, and very soon, an additional 36 units will be available with The Heights apartments, Duval said he wants to spend the next few months watching both projects. He said he doesn’t have rental rates set yet for the 16 units but told the city council, “assume that will be coming in the near future.”
Duval said the objective of the apartment project is to serve the community by providing housing for teachers, healthcare workers, service workers, and “other folks who might be falling within those income ranges. That is the community we are intending to serve.”
Grand Marais Mayor Tracy Benson asked about additional costs for garage space, similar to the Gunflint Vue apartments. Duval said there would be additional costs if a tenant wanted a designated garage space.
Councilor Craig Schulte shared concerns about using the Gunflint Vue apartments as a comparable for setting rental costs. He said that given a one-bedroom apartment is listed for nearly $1,900 and without additional costs or fees, a tenant at Gunflint Vue is paying between $2,000 and $2,300 a month.
“In my opinion, on the surface, that’s not workforce housing,” Schulte said.
Schulte added, “If we’re going to build workforce housing but then have retail rents, I think it’s a challenge for a lot of people.”
Duval said he agreed and intends to have the monthly rental cost for a studio or one-bedroom fall within the range of $1,100 to $1,200. “We want to be somewhere within that strike zone.”
When it comes to the next steps of the project, Duval shared a timeline outlining site infrastructure analysis, site acquisition, groundbreaking, construction, and project completion.
During the summer and into the fall, Duval will work with the city and the HRA to officially acquire the city property for $1. The developer will also continue to fine-tune design plans, obtain property survey and engineering plans for the property, explore financial feasibility, and examine unit rental costs.
If all goes as planned, Duval said the official groundbreaking on the site is expected to begin in late winter or early spring of 2026. Then, construction would be completed in late summer or early fall of 2026.
“We’re very excited and, of course, very interested to see how things continue to evolve,” Duval said. “But committed and again happy to be partnering with you to bring this to Grand Marais.”
Kalli Hawkins May 31, 2025
