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Wadena's new development looks more costly than expected – but still worthwhile as housing solution

Wadena Development Authority officials still want to move the project forward noting a major need for housing that is not going to get any cheaper.

Folkestad'sEast.png
The Folkestad's East Addition is the subject of discussion for development. Two developers are looking at the site. The pink highlighted area (nine lots) could be developed with nine twin homes. The green area would be a nature park area. The grey area is being looked at by another developer for 40 units on 20 lots.
Image contributed by Wadena County
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WADENA — Costs to add infrastructure to an area of Wadena that could potentially see over 40 new housing units added have ballooned based on an engineer’s estimate from about $1.2 million to $2.4 million.

It’s a sticker shock that took some significant discussion for the Wadena Development Authority board on Thursday, Feb. 17 before they moved ahead with purchasing the property in Folkestad’s East Addition and continued on with plans to develop the area.

The purchase price of $265,000 was a first step that the WDA board could take and one needed to advance the project forward. It passed unanimously with the board of directors.

When faced with the present need for housing and developers seemingly eager to develop where infrastructure is ready, the board agreed it was a project that still needed to happen to keep Wadena moving forward.

“If Wadena is going to grow, we’ve got to keep moving,” Wadena volunteer Jim Kramer said to the group. He recognized there was risk and that this is a multi-year project, but it was also one that was not going to get cheaper. Infrastructure would not be going in until summer of 2023 at the earliest.

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“I like this project, but I'm disappointed in the increase,” Mayor George Deiss said of the recent cost estimate. The estimate it still far from an actual bid and as city utility superintendent David Evans said, cost estimates can fluctuate wildly in the current climate.

It now comes down to figuring out how to pay for the infrastructure costs, gain approval from the city council for some of that funding and determine whether developers will follow through with their plans once the city has done their work. Part of that should involve some form of development agreement between the city and the developer, according to city attorney Jeff Pederson.

The cost

Breaking down the cost of this project includes the following considerations:

  • Property purchase: $265,000
  • Legal fees, consulting and engineering: $25,000
  • Infrastructure estimates: $2,405,000

That’s about $2.7 million dollars just to prepare the site for someone to start building and connect to utilities.
Not deterred by the cost increase, Wadena Economic Development director Dean Uselman said he believes it would not be difficult to slim the cost of the project down significantly. He suggested they could have a project closer to the $2 million mark with some basic chopping to the plan.

“I’m pretty confident we can reduce that $2.4 million down to $2 million or less,” Uselman said. “It’s definitely an eye opener, but there are savings we could realize through this.”

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How to pay for it

Potential funding for this project includes $100,000 from the tax levy fund; $200,000 from loan funds; $250,000 from the city of Wadena ARPA funds; $575,000 from the Wadena County ARPA funds; and a potential $300,000 refund that is expected to come back to the city from an overpayment during the Hwy 10 construction project. These are possibilities at this point and $550,000 of this amount has not been committed to the project.

Even if all those came through, there’s still over $1 million to raise when considering the $2.7 million figure. But there are a lot of variables and ifs and hows to figure out in coming months to keep this moving.

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Uselman outlined thoughts on paying for extra costs including possible state and federal funding, funding through the Infrastructure law, or even tax abatement through the city, county and school.

Board member Jeff Browne quickly calculated that abating $1 million would be a fairly effective way to gather the funds without limiting the amount of property taxes from coming into the government entities. The increase to property taxes in the county has been estimated to be over $100,000 annually with this development once properties began to be taxed.

To move the group to a vote, Pederson outlined the options of moving ahead considering the costs. Ultimately the board came to a consensus that they could not back out from at least trying to make this project happen. At worst, the WDA will soon own a new chunk of land that already has interest and homes being built.

Uselman also briefly spoke about another development project. That includes 26 acres adjacent to the Carter/Oakridge addition. It’s not the same quality, and is a smaller size, but it is in Otter Tail County and the city already owns it, reasons this area may also soon see some development.

He's a writer, editor, photographer, truth seeker and promoter of the Wadena area.
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