The MN Opportunity Zone Challenge kicked off in March and the first round of submissions closed June 30. The goal of the Challenge was to spur activity across the state because at the outset of 2019 – almost 13 months after the Investing in Opportunities Act passed – community-led projects weren’t percolating.

Round one of the OZ Challenge included 16 projects, totaling over $300m in development. Five were from communities with populations below 5,000; two from towns 5-20,000 and two from Twin Cities suburban communities. Duluth also had a number of projects entered into the Challenge.

All projects entered into the Challenge are included in the MNOppCo Directory and are featured in a national directory, The Opportunity Exchange.

Three TOP PPRIZE WINNERS and two runners up were awarded third-party pre-planning grants at the Be Inspired Summit Wednesday, Sept 18 at the Marriott NW Conference Center in Brooklyn Park. Pictured with prize recipients are the MN Opportunity Zone Challenge judges (L to R: Jai Winston, Knight Foundation; Jamie Stolpestad, MN Opportunity Zones Advisors; Rachel Reilly, Economic Innovation Group; Bob Isaacson, Business Finance at MN Dept of Economic Development – DEED; Mike Morrell, Sunrise Banks; Meredith Udoibok, Community Finance at DEED; JooHee Pomplun, The Alliance Minneapolis).

 

Category 1: Twin Cities Suburbs

Brooklyns Building Project

$7,500 Pre-Planning Grant Winner

Mike Brady (second from left), shared information about this project, a co-op -style working space with a planned exit that will provide the businesses within the building joint ownership of the property and building.

Brooklyn Center’s burgeoning entrepreneurial community is a result of the city becoming home to one of the highest populations of foreign born populations throughout the entire state of Minnesota. Mr. Brady is pairing his real estate expertise with the community’s need for a small-business accelerator to provide an increased likelihood of success to emerging businesses. Says Brady, “The companies’ potential will be enhanced demonstrably by having a site from which to launch and learn from each other. We can also host resources such as the Small Business Administration and bring in faculty from near-by North Hennepin Community College and the Hennepin Technical College.” Brooklyn Center City staff confirmed how this project is well-aligned with its recently-developed key strategic priorities: resulting recommendations from its Resident Economic Study and Target Redevelopment.

The Brooklyns Building at 1601 James Circle North has been vacant for over ten years and this is seen as a catalytic project that will lead to further investment in an area which has seen disinvestment over the same period of time.

The Brooklyns Building (81,000 sf, ground up construction, three stories) has an all-in budget of $26M; its proforma allows for flexible leasing for early commitments and ample common spaces to encourage interaction and critical collaboration. Additional information about this project is available at https://mnoppco.com/our-portfolio/brooklyns-building/ or by emailing Mike Brady.

Category 2: Population 5,000 to 20,000

Redwood Falls’ Normandale Mobile Home Park

$7,500 Pre-Planning Grant Winner

Redwood Falls, population 5,187 (approximately 100 miles southwest of Minneapolis) has a housing occupancy rate of 97%. Workforce housing shortages are plaguing communities throughout the state, as documented in the MN Housing Finance Agency’s February, 2019 Report: ‘Key Issues and Trends in Housing.’

Tom Quackenbush, plant manager for Daktronics, a major Redwood Falls’ employer shares, “Many of our current workers are nearing retirement, not only leaving the workforce, but staying in their homes for years to come. Expanded housing options are critical to provide housing for the replacement workforce we need, as rural communities such as ours will depend on proactive solutions such as Brian’s to support the people who drive our businesses and, therefore, our local economies.”

Redwood Falls’ affordable / workforce housing would expand exponentially courtesy of Brian Ertel’s plan to replace an old-model manufactured-housing park with current-model homes. This modern approach to efficient land use and population density goals will offer substantially-reduced sustainability impacts such as reduced energy and water usage, lower construction waste — these new homes are manufactured within miles of the Park — improved stormwater management and lowered greenhouse gas emissions while offering residents affordable housing, lowered utility bills and equity / wealth-building opportunities currently out-of-reach for residents new to Redwood Falls because of the city’s housing shortage. New manufactured housing is heavier and far-more attractive vs. the former trailer-home models of yester-year.

Developer Brian Ertel (R) is seen above with Mike Morrell of Sunrise Banks, Saint Paul, one of the MN Opportunity Zone Challenge sponsors and judges. Brian can be emailed here.

Category 3: Population under 5,000

Silver Bays’ Adventure Park

$7,500 Pre-Planning Grant Winner

Quiet little Silver Bay, 55 miles beyond Duluth along Lake Superior’s north shore, has been strengthening itself as a destination for visitors and Alice Tibbetts and Phil Huston envision expanding their wildly-successful Adventure Park in ways that will further change the Silver Bay tourism landscape. The Adventure Park on the North Shore began in 2017 with a rock climbing wall (named ‘Eleanor’) when Tibbets and Huston removed an old gas station, returning what was then a contaminated site to a pristine recreational attraction. A high-ropes course with ziplining debuted in May, 2018 and Tibbets & Huston are now seeking equity investment to make their additional expansion plans a reality.

Two projects were entries into the MN Opportunity Zone Challenge: A 4600 sf food hall-concept building adjacent to the ropes course, modeled after Keg & Case in Saint Paul (recently named the U.S.’ number one food hall), providing a facility for year-round use by visitors partaking in in a growing Adventure Park. Eventual plans include rental of electric bikes, a family-friendly mountain bike pump track and trail, platform tents along a creek for primitive camping, and climbing on Eleanor, as well as 1.2 billion year-old cliffs nestled within the 7.5 acres of high-visibility, commercially-zoned Highway 61 frontage.

The other Challenge entry, Adventure Investors, is an operating business seeking opportunity zone fund investors. This is also managed by Alice Tibbetts and Phil Huston, experienced real estate investors. Tibetts and Huston moved from the Twin Cities to Silver Bay in 2016 and already have a strong relationship with the city of Silver Bay to work together to promote tourism, including the creation of a new promotional video linked here. Email Tibbetts here.

Category 3: Population under 5,000

Granite Falls’ Clock Tower Development

$5000 Pre-Planning Grant Runner-Up

Granite Falls, 125 miles due west of Minneapolis, is a bustling Main Street America* community of approximately 3,000 people. It is the county seat of Yellow Medicine County and Kirk Bustrom of the Upper Minnesota Valley Regional Development Corporation and Cathy Anderson, Granite Falls Economic Development Authority, pitched for Qualified Opportunity Fund equity investment a mixed-use complex to complement Granite Falls’ quaint, historic downtown adjacent to the banks of the Minnesota River. Granite Falls’ Riverfront Revitalization initiative is underway to better-leverage the downtown’s primary asset, pairing well with this proposed mixed-use project.

This new-construction facility would “transition a portion of Granite Falls’ downtown, giving it a significant facelift,” Anderson shared during her Pitch at the Be Inspired Summit September 18. She explained the Granite Falls EDA owns three parcels and is proposing the removal of dilapidated structures primarily vacant since 2001 to bring into the city much-needed additional housing. The street-level of the three-story structure would welcome retail / commercial storefronts, joining downtown businesses with high foot-traffic counts among buildings that date from the 1870s to the 1970s; this building will be a new landmark for downtown Granite Falls. The upper two floors will host units available for market-rate housing lacking in Granite Falls; it is anticipated this will add approximately 28 units, attractive due to their location merely one block from the river.

Cost estimate for this project is just over $5M, as the land is already controlled by the EDA. Anticipated IRR to a Qualified Opportunity Fund is 10.38%, an incredibly attractive proposition. For more information, see this project profile or email Cathy Anderson.

*Main Street America is a proven framework for community-driven, comprehensive revitalization. Granite Falls believes the Main Street America work it has already employed will be further enhanced by this project. This includes its commitment to replacing the current structures as to assist existing businesses in talent acquisition and retention. The Main Street program helps small cities maximize their people and building assets. A thriving downtown has a powerful impact on a community and the proposed redevelopment site is within walking distance of the Minnesota River, where recreational water-related economic development plans are underway (i.e. kayaking, rafting and physical changes to a current dam to allow a chute and fish passage directly parallel to downtown).

Category 3: Population under 5,000

Aitkin County Growth’s

Housing Development Project

$5000 Pre-Planning Grant Runner-Up

Barb Carr (2nd from Left in photo with MN Opportunity Zone Judges noted above), director of Aitkin County Growth, an economic-development focused not-for-profit entity, pitched to attendees of the Be Inspired Summit that the community of Aitkin (125 miles north of the Twin Cities up either Hwy 169 or MN65 north) has numerous parcels available for development, focusing specifically on a Housing Development profiled here on the MNOppCo Directory.

Aitkin Growth engaged Maxfield Research to prepare a comprehensive housing needs analysis for the city of Aitkin, concluding a demand for a variety of housing products including: general occupancy rental housing targeting market rate and affordable households; entry-level ownership housing for first-time home buyers; move-up housing; executive housing; and, senior housing.

With occupancy rates hovering near 5%, the Minnesota Avenue Housing Development project is focused on market-rate housing. This project seeks to develop 30 unites of apartment housing on Minnesota Avenue, the main thoroughfare through downtown Aitkin. The property is owned by Aitkin County Growth, which has already demolished the building previously on the site, working the MN Pollution Control Agency and the Dept of Employment & Economic Development to thoroughly prepare the site for new use. The proposed new building, two- and three-bedroom apartments, has a total project cost of $5M; Aitkin County Growth is seeking QOF equity investment of approximately $3M.

Aitkin is the largest city in Aitkin County, offering growth opportunities for its diverse economy, which includes tourism, forest products, agriculture and an increasing manufacturing sector. Aitkin is the gateway to the Brainerd Lakes Area, with direct highway connections to Duluth and the Iron Range.

Aitkin has numerous other projects it would like to see leveraging qualified opportunity funds’ equity investment; visit the MNOppCo Directory to learn more or email Barb Carr directly.

The Minnesota Opportunity Collaborative is a partnership that seeks to inspire investment in designated Opportunity Zones. It brings together developers, investors, businesses, and community development entities to host a statewide project and site directory, hold educational events, and share best practices on a regular basis.

Thank you to our founding partners! 

The Minnesota Opportunity Collaborative is powered by The Northspan Group, Inc. & Community Exchange, and funded in part by the Opportunity Zone Fund, the Morgan Fund, and the Community Opportunity Fund of the Duluth Superior Area Community Foundation.