Construction on the long-awaited Towne Square Development Project on South Highway 75 will begin this spring, according to action at the March 9 City Council meeting.
Council members approved a development agreement with Alvin Johnson of Town Square LLC to construct two 27-unit apartment buildings on the former Sharkee’s and Mert’s property that the city owns.
The agreement stipulates items the developer will do as well as the items the city of Luverne will provide as incentives for the project.
One apartment building will receive a $680,000 workforce housing grant and a $550,000 loan with 2-percent interest and payments deferred for 10 years.
The two apartments will be constructed in the TIF District and the land will be conveyed for $1.
The site development provided by the city includes paving the parking areas.
The site development costs, as well as costs already incurred in acquiring the property, demolishing the structures and installing utilities will be repaid with future tax increments.
The developer will sign a promissory note and a personal guarantee for the $550,000 deferred loan and agrees to the terms and conditions of the $680,000 workforce housing grant.
The assessment agreement states that the agreed upon market value of each 27-unit apartment complex will be $4 million for a total market value of $8 million.
Johnson and Don Jahnke, the builder, attended Tuesday’s council meeting to answer questions about the plans.
“We designed it in accordance with the grant and with what we felt the city could use to keep rent rates at a workable number for a small town,” Jahnke said.
“We’re really looking forward to seeing the buildings go up and also getting publicity for their efficiency. It’s a very environmentally friendly project to bring into a town.”
By that, he means the units will be built with “Extreme Structural Insulated Panels.” They’ll have high performance heat pumps, in-floor heat, LED lighting that qualifies for Energy Star, and the Net Zero Ready Program.
“It will be one of the greenest, most efficient multi-family buildings in the Midwest,” he told the Star Herald after the meeting.
The development includes one- and two-bedroom units
There will be two one-bedroom units on each floor. Some units will have two bedrooms and two baths, and there are also two-bedroom one-bath units on the corners with more windows.
“Each building has three levels, with elevators, so we can serve all ages on any floor,” Jahnke said.
Mayor Pat Baustian said that will also help Luverne fill a need for senior housing as well.
“Given the time invested in this project, it’s going to be wonderful to see it kick off and watch you develop that site and apartment buildings going up,” Baustian said.
“Using this workforce housing grant … housing is expensive and apartments are short and this will definitely help with our workforce.”
Jahnke said he’s grateful to have Johnson working with him on the project.
“It’s nice to have a developer with his background and experience who’s willing to work in a small town,” Jahnke said. “Ninety percent of them would run to Sioux falls, so it’s been great getting to know him.”
Johnson joined Tuesday’s meeting in Luverne via Zoom from his office in Texas.
“Thank you for the opportunity,” he said. “I look forward to being here in the spring.”
He gave credit to Jahnke for doing the legwork on the project.
“I happened to be the guy to walk through the door at the right time,” Johnson said. “They’ve worked tirelessly on this for years. When our purpose and our passion collide the magic happens, and that’s what’s happened today in Luverne, Minnesota.”
Councilwoman Caroline Thorson said she looks forward to the development having a lasting impact in Luverne.
“We’re thrilled to have this development take place for our community, for our citizens, and for our future citizens,” she said. “Thanks for taking a chance and reaching out to our community.”
Jahnke said dirt work will begin when the frost is out of the ground this spring.
Plans still call for a mixed use development of retail and residential to front the property along Highway 75.
The entire development was delayed in 2019 when the area qualified for federal Opportunity Zone investments.
However, the parameters of the incentive didn’t meet what investors were looking for and the project proceeded without it.