Cottage Grove EDA gets development updates; hotel offer pending, 164-unit Yellow Tree project seeks abatement

The Cottage Grove Economic Development Authority received multiple development updates on April 8, 2025, including a staff offer on a prospective hotel site, a 164-unit Yellow Tree market-rate multifamily proposal that has requested a 10-year tax abatement capped at $848,800, and confirmation that a TIF-funded senior housing project filed its annual certificate of compliance.

President Bailey (Mayor Bailey) briefed the EDA on a hotel property for which staff made an offer after an executive session; the city will meet again with the property owner on Monday. City staff said the HVS/HB Sherut (HBS) hotel study completed in December 2022 recommended a 90-room branded hotel as the most likely viable product and identified preferred locations near 80th Street and the 73-acre site adjacent to Walmart.

Yellow Tree multifamily project Staff reported that Yellow Tree Development has proposed a 164-unit market-rate complex along East Point Douglas (near The Legends and behind Kohl’s). At a council workshop on March 19, the EDA and council members indicated the product fits identified housing needs and would be open to a tax abatement if the project advances. The developer requested a tax abatement of 10 years not to exceed $848,800; staff and the city’s financial advisor Ehlers reviewed the request and concluded the project would not qualify for a larger figure reported in an earlier news article. The EDA’s staff noted any abatement agreement would include a look-back provision similar to TIF agreements.

Dominion certificate of compliance City staff reported the annual Certificate of Compliance filing for the TIF-funded senior housing development (referred to as Dominion in the staff report). The certificate confirms the project’s compliance with the development agreement; staff said the agreement requires that 80% of units be affordable senior housing and the remaining 20% remain affordable to other eligible households. The staff report and the submitted tax-credit documentation indicated reported rent levels clustered around "about 50%–60%" (as recorded in the compliance materials) and that the development reported appropriately to the state and Washington County.

Other construction and business updates Staff noted progress on Gerber Collision (exterior walls and roof installed), Llewellyn Apartments and other plan reviews underway, and said Vang’s Kitchen (interior improvements approved, final health inspection complete) plans a grand opening this Saturday. Staff also reported ongoing water-treatment-plant work and other routine project updates.

Next steps and calendar City staff said they will continue negotiations on the hotel property and that three EDA representatives (Mayor Bailey, Kambata and Vice President Olsen) will attend ICSC in May to showcase the hotel RFP and other redevelopment opportunities, including the 73-acre site and business-park parcels. Staff also noted there will be no EDA meeting May 13 but the EDA will meet June 10 when several action items are expected.

Votes at a glance - Approval of minutes from the previous meeting: Motion by EDA member Scott; second by EDA member Chita; outcome: approved. - Adjournment: Motion by EDA member Khambatta; second by EDA member John Baptiste; outcome: approved.

Ending: The EDA received the updates as informational; no formal action on the hotel offer or Yellow Tree abatement occurred at the April 8 meeting. Staff will return with formal items as negotiations and reviews progress.