Marshall, Minn. – As affordable housing grew tougher to find in this rural Minnesota community, one of the first to notice was the Schwan Food Co., Inc.
The lack of housing was starting to impact the growing company’s ability to secure a workforce, said Rick Goodemann, executive director of the Southwest Minnesota Housing Partnership (SWMHP).
With housing hard to get in Marshall, people were settling in nearby communities – until housing in those towns was also absorbed – and people were driving nearly an hour to get to work.
The housing crunch reached the point where city officials called a meeting between the food company and SWMHP. Together, the frozen food giant and the nonprofit have built a $16.7 million, 131-unit housing development, with more housing under way. A second phase is under construction.
The project, Marshall Parkway would likely not have been developed without Schwan’s help, said Goodemann. His organization was formed in 1992 to support economic development throughout the region. It started in about 14 counties but is now active in 30 rural counties. It has helped build $200 million worth of development, including 5,400 housing units.
Known for its yellow trucks that deliver frozen food to homes across the nation, the Schwan Food Co. is headquartered in Marshall. It has roughly 3,000 employees in the city of about 14,000.
“As the major employer in town and a company that is very supportive of the need for community amenities, we felt that it was important to lead the initiative to ensure we had high-quality affordable housing available, not just for our employees, but the citizens of Marshall and the surrounding areas,” said Bill McCormack, executive vice president at Schwan.
After hearing about how SWMHP developed entry-level homes in another community, Schwan agreed to help support a project in Marshall. Schwan provided approximately $430,000 for the first phase. The company’s participation included providing a construction loan, offering homebuyer assistance to help with closing costs, and even contributing some land for a townhome development.
Housing at Marshall Parkway includes 83 single-family homes and 48 rental units, which are composed of a 30-unit low-income housing tax credit project and an 18-unit townhome development that was financed with tax-exempt bonds issued by Marshall Economic Development Authority.
The affordable single-family homes ranged in price from about $104,000 to $127,000. The market-rate homes approached $200,000. About 60 percent of the homebuyers earn no more than 80 percent of the area median income (AMI). About 18 percent earn no more than 50 percent of AMI. Roughly one-third of the people living in the first-phase single-family homes are Schwan employees.
The project has helped stabilize the workforce, according to Goodemann, explaining that it has allowed people to settle in the community and become first-time homeowners. The residents also do not have to drive through harsh winter storms to get to work. Marshall Parkway is about a half mile from the Schwan facility. Built on land that the city held an option on, the project is part of a large redevelopment district.
Marshall Parkway is among the projects highlighted in Solving America’s Shortage of Homes Working Families Can Afford: Fifteen Success Stories, a 2006 report by Homes for Working Families, Fannie Mae Foundation, and the Urban Land Institute.
Minnesota Housing, the state housing finance agency, provided financing for the project, including about $540,000 through its Economic Development and Housing Challenge program, which challenges local communities and employers to invest in housing, said Bob Odman, assistant commissioner for multifamily housing.
Other key financing partners included the Marshall Economic Development Authority, Greater Minnesota Housing Fund, the city of Marshall, and the Federal Home Loan Bank of Des Moines. Each of the three projects in the first phase had its own financing.
About $1.4 million in housing tax credit equity was raised for the 30-unit rental project by Enterprise Community Investment, Inc.
Families buying the single-family homes were able to use a variety of loan products from Minnesota Housing, U.S. Department of Agriculture’s Rural Development, and local lenders.
SWMHP is working on subsequent phases of the development. A second phase of 80 single-family homes is under construction, with the first several homes scheduled to be completed this summer. There are two other phases planned.
Schwan has committed approximately $1.8 million for the latest phases. SWMHP is using the funds as construction and land-acquisition loans. As homes are sold, the money comes back and is committed toward gap financing, according to Goodemann. Greater Minnesota Housing Fund has also committed $1 million for the later phases, starting with the second.
SWMHP has completed 11 employer-assisted housing projects, demonstrating that these partnerships can be successful in smaller communities. In rural Nicollet, the nonprofit raised about $241,000 from 15 employers. This deal was done in partnership with the Nicollet Economic Development Authority.
“Labor shortages have been acute in southwest Minnesota for a long time,” Goodemann said. “Cities are used to working with employers.”
One of the lessons that Goodemann has learned over the years is that it’s important to be precise when approaching an employer for participation. He makes sure to explain how funds are used and the benefits of a project. In addition, he will share examples of how other employers have taken part in housing developments.
Goodemann said his group has also been aggressive about finding permanent mortgage products for new buyers. Homebuyer education and mortgage counseling have also been key.
