Vermilion Housing seeking major grant to renovate apartments in Tower and Soudan

TOWER-SOUDAN- The Vermilion Housing Corporation board should learn in December if their $10 million grant application to the Minnesota Housing Finance Agency to renovate the 1970s-era apartments in Tower and Soudan is successful. While the majority of the project is expected to be grant-funded, the remainder will be a long-term loan through USDA Rural Development.
The board has been working with the Minnesota Housing Partnership (MHP) and Walker-based D.W. Jones, a property management company with an extensive background in the region, to develop a plan to rebuild the apartments from the inside out. This is the second year the group has applied for grant funding. The application last year was a finalist but did not make the final cut for funding. This year, with the help of D.W. Jones, the board has assembled a more complete application. If successful, D.W. Jones will assist in managing the apartments.
“USDA 515 applications are complex and can take months to prepare,” said Kendra Home, MHP Community Development Manager. “MHP helps small rural organizations navigate USDA’s requirements, coordinate with other financing partners, and move these preservation projects forward.”
“This year we are cautiously optimistic,” said Vermilion Housing President Tim Tomsich. “We haven’t gotten a ‘no funding’ letter, and they haven’t asked us for any additional information.”
Tomsich noted the community interest in revitalizing the apartments, to help provide more housing opportunities. As it is, several of the apartments are not in rentable condition.
“Our whole community has been pulling together to preserve these homes. We’ve had financial contributions or commitments from St. Louis County, the city of Tower, Breitung township, IRRR, and the Minnesota Housing Partnership, sending a strong message of unity here,” Tomsich said.
Tomsich said their updated grant application included all the historical documentation required, some dating back over 50 years, as well as a detailed management plan, developed by D.W. Jones, for operating the apartments in the future. These details were not all part of last year’s application, he said. The plan also includes the logistics for how the renovations would take place, how it would impact tenants, and how tenants’ costs would be covered during the renovation process. Apartments will be renovated one at a time, and storage units will be placed on site for the apartment’s belongings. Contractors will move belongings in and out for the residents. Residents will need to move off-site for two weeks, and during that time their apartment will be torn “down to the studs,” Tomsich said, and then rebuilt with all new walls, doors, appliances, and kitchen and bathroom fixtures. Tenants will be paid to cover costs, including housing and food, during the time they are out of their apartments. Once one apartment is completed, work on the second will begin, until the project is complete. All the construction and renovation materials needed will be onsite before the project gets underway.
“People will move in and out as each apartment is done,” Tomsich said.
The project also includes exterior work, including new roofing and siding for the three buildings in Tower and one in Soudan.
The renovations in Tower would reduce the total number of rental units from 52 to 47, but this will increase the number of two-bedroom and three-bedroom apartments available. Soudan’s mix would remain the same with 11 one-bedroom and one two-bedroom unit.
The changes in Tower are being driven by demand. Tomsich said currently there are over a dozen one-bedroom units in Tower vacant, with a higher demand for larger units to fit families. The buildings were originally built for senior and handicapped individuals, but now are home to many more low to moderate-income families with children.
The apartments offer subsidized rents, based on income. The current buildings were constructed between 1976 and 1983, and they are all in need of major repairs. The current funding for the apartments is set to expire as the original mortgages are paid off, along with the loss of subsidized rental income. This had led to losses of low-income rentals throughout the state as some buildings choose to leave the program and just accept market-rate tenants.
The new project will keep the apartments part of the USDA Section 515 program, allowing for subsidized rents based on income. If the grant application is successful, site preparations would begin next summer and apartment renovations next fall. The exterior renovations would be completed by June 2028, Tomsich said.
“Preserving these homes for working people is critical to our economic viability,” said Tower Mayor Dave Setterberg.  Tower council member and TEDA president Joe Morin of Tower agreed. “We should preserve it, because you’ll never get it back,” he said, noting the economic challenge of building new homes in rural Minnesota.