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Grafton council approves HIF-contingent plan to build four new homes in NStarr development
Summary
The Grafton City Council unanimously approved financing to partner with the Red River CHDO to develop two single-family homes and one twin (four units) on City-owned lots, contingent on a Housing Incentive Fund award; the plan aims to address local housing shortages and would use HIF to cover appraisal gaps.
The Grafton City Council approved a plan to partner with the Red River Community Housing Development Organization to build a mix of single-family and twin homes on City-owned lots in the NStarr development, contingent on state Housing Incentive Fund (HIF) approval.
Community Development Director Jenny Dusek said the Economic Development Committee recommended the partnership after a 2024 housing study that identified housing as the committee's top priority and suggested targeting 12 new homes per year. The council approved financing for two single-family homes and one twin home (four units total) with total financing estimated between $1.5 million and $2 million, subject to HIF funding.
Dusek explained that HIF funds can cover appraisal gaps and reduce risk to the City, providing up to $120,000 per home for appraisal shortfalls and allowing for a developer fee of $50,000 per house. The proposal calls for two single-family homes of 1,800'2,000 square feet with proposed sale prices of $380,000'$450,000 and a twin-home plan of about 1,600 square feet with a proposed sale price of $350,000 per unit.
The Economic Development Committee's recommendation includes selecting a builder by July 9 and submitting the HIF application by July 15; Dusek noted the HIF program is competitive and applications open in July. Lisa Rotvold of the Red River Regional Council said the regional partner would help manage developer risk and demonstrate market demand for new homes.
The council voted in favor of the financing and partnership on a motion by Brad Burianek, seconded by Kylen Kostrzewski; the roll-call vote showed all seven members present voted in favor and one member was absent. The motion specifies the financing and partnership are contingent on HIF approval and includes an agreement to split the $50,000 developer fee per house with the CHDO.
Next steps set by council staff include issuing final builder selection, submitting the HIF application by the July 15 deadline, and, if funded, finalizing construction contracts by late August with construction to begin in September for completion in summer 2026 (the plan allows for 2027 completion if the State requires it).
