Duluth HRA Pursues Funding for Dozen Affordable Homes in Morgan Park

The Duluth Housing and Redevelopment Authority has asked city officials to approve a tax-increment financing package that would forgo $1.3 million in future property tax revenues, clearing the financial path to construct approximately a dozen affordable, owner-occupied single-family homes on the western end of Morgan Park.

The project, called the Orchards of Morgan Park, has already secured $1.12 million in support from the Minnesota Housing Finance Agency. Staff estimate that the future tax collections proposed to be redirected would be sufficient to finance a $977,000 bond in support of construction. The undeveloped site currently carries an estimated market value of just $40,300; fully built out, that figure is expected to climb to $3.18 million.

HRA member Keppers said the authority sees the project as central to a broader goal of expanding homeownership in the neighborhood. HRA members are eager to bring more owner-occupied housing to Morgan Park, Keppers said, as a means "to help families build wealth."

Tax-increment financing is a form of public subsidy which takes new property taxes generated by a project for a defined period of time and uses a portion of those funds to pay for certain eligible development costs. The proposed TIF agreement would last until the end of 2054, after which time all future property taxes from the Orchards of Morgan Park would flow in full to local taxing authorities, including the city, county and school district. Before the package moves forward, both the Duluth Economic Development Authority and the Duluth City Council must authorize it. City officials also must make a statutory determination that the site would likely remain undeveloped without the proposed assistance.

The project's design reflects deliberate choices to keep future ownership costs manageable. Initial plans had contemplated a shared orchard at the center of the development, but Keppers noted that arrangement likely would have required the formation of a homeowners association with ongoing fees. Rather than creating an ongoing expense for future residents, she said the authority has opted instead to include fruit trees planted in the individual yards, preserving the orchard character of the project without the administrative overhead.

Keppers said ideally construction would begin yet this year, with homes potentially appearing on the market as soon as next spring.