A Minneapolis developer is looking to work with the city of Cottage Grove in the interest of helping bring new housing to the city.
Coming to a workshop at the March 19 City Council meeting, Yellow Tree Development expressed interest in a site off East Point Douglas Road, just off Hardwood Avenue South at Camel’s Hump.
Site challenges include steep wooded slopes, bedrock, and a restrictive Minnesota Land Trust Covenant from 2007 that forbids grading to occur above an 860-foot elevation, as well as preservation of a future trail and overlook at the site.
Cutting into the hillside below 860 feet, the proposed five story, 164-unit apartment building by Yellow Tree would be market rate, top out at 55 feet high from adjacent grade and include a two-level indoor garage with 129 enclosed as well as 85 open parking spaces. The proposed apartments would include 88 one-bedrooms, 24 two-bedrooms, and four three-bedrooms. One-bedroom apartments at the site would range from 596 square feet to 805 square feet, two bedrooms from 1,075 to around 1,200 square feet, and three bedrooms from just under 1,300 square feet and up. Several studio apartments under 500 square feet would be included in the design as well, along with amenity, alcove, trash and utility spaces. A patio would be over the level two parking while the fifth floor would have an amenity deck. Individual apartments would include walkout balcony space as well.
Ineligible for tax increment financing (TIF) in part from its market rate nature, the proposed $40.8 million apartment development by Yellow Tree would cost $255,000 per unit to construct, the developer seeking 15 years or $1.18 million in tax abatement subsidies from the city to help make the project viable.
Based on a review of economics as prepared by Ehlers for the city, the project proposed by Yellow Tree would require no less than 10 years of abatement with a present value no less than $848,800. Development if approved would start in 2025, tax abatement starting in 2027.
With Cottage Grove’s below average rental vacancy of 2.7 percent and consequent hot housing market making it attractive to real estate developers, other urban projects by Yellow Tree include the Abbey Apartments in Minneapolis’ historic Loring Park, the Odie Apartments at West 28th Street, Wakpada Apartments near Minnehaha Falls, and MN 46 Apartments on Minnehaha Avenue. Yellow Tree has constructed a total of 25,500 units and 30 buildings across the metro area since 2018.
Cottage Grove City Planner Samantha Pierret called the council’s feedback “favorable” after the March 19 workshop was over.
“They have a couple things to work out like the architectural materials stands, parking and access from the road,” Pierret said of Yellow Tree, “but we are willing to work with them.”
City zoning code requires 65 percent of an apartment building’s exterior materials to be Class 1 or 2 material, with examples including brick, glass and concrete block. Class 3 materials under city code include metal panels and lap siding.
Materials for the development as proposed March 19 include cement board siding, metal panels brick, burnished block, composite windows, prefinished aluminum decks and metal trim, and cement board panel. The five-story apartment building with 187,320 square feet still needs to pass several hurdles to reach fruition, including a formal tax abatement process, plan commission review, and city council approval. Should the project move forward, it would involve a development agreement being drafted and a look back at Total Development Costs, or TDC. Previous proposals have stalled in part due to site restrictions.
The net reward, should it arrive, could be additional one- two- and three-bedroom apartments for Cottage Grove.