Foley awards Southside Fairway Estates construction bid; council sets $50,000 target lot price and debates modular homes

The Foley City Council on April 7 awarded the Phase One construction contract for the city-led Southside Fairway Estates to Northern Lines Contracting of Hanover, Minn., and spent much of the meeting laying out how the city will sell lots, use ARPA and grant funds, and whether to permit modular or panelized homes in the development.

Scott Hedlund, a professional engineer with SEH, told the council that bids opened March 18 produced 10 proposals, with the low bid — Northern Lines Contracting — at $1,096,603.07, well below the $1.62 million engineer estimate. “We have no concerns with the low bidder. We have worked with them on multiple projects in the past,” Hedlund said, and recommended awarding the contract to the low bidder. Council members moved, seconded and voted to award the contract to Northern Lines Contracting.

Why it matters: the city is acting as developer to accelerate housing supply and blunt rising property taxes, officials said. The council and staff said roughly $675,000 in American Rescue Plan Act (ARPA) funds will be used on the project, plus about $199,000 already spent on pipe, and that lot sale proceeds and other grants will help fund subsequent phases.

Mayor (role title used in transcript) addressed community concerns that a locally named contractor had been posting about building homes in Foley. The mayor said those posts do not equate to an award or contract: “You can say that you're going to build homes in Foley. That's okay,” the mayor said, and added that no builder, including the business referenced in public posts, has been awarded a lot or contract yet.

Council and staff settled on a target lot price of $50,000, with flexibility to reduce the price to about $45,000 for less desirable lots. Staff noted additional fees that buyers must pay (water/sewer access, meter, park and franchise fees) and recommended prioritizing builders rather than individuals to accelerate construction and return property-tax revenue to the city. Sarah Brock, city administration, said, “We want to target 50,” and council discussed using a developer list (five builders have expressed interest) and outreach through the Central Minnesota Builders Association.

The council also debated which housing types should be allowed. Speakers and staff distinguished between three types: mobile/manufactured homes (federally regulated HUD-code units typically sited in parks), modern modular homes brought in largely complete from a factory, and panelized homes (factory-built wall panels assembled on site). A public commenter and staff noted that panelized and some modular products can meet local building codes and look indistinguishable from traditional stick-built construction once installed.

Several council members said they do not want pre-owned or moved-in houses placed in the development. The staff recommendation was to exclude mobile/manufactured (trailer-style) homes while conducting further research on panelized or modern modular construction. “Panelized homes — once the panelized home is put up, you can't tell it's panelized,” one council member observed during the discussion. The council left final covenant language and precise ordinance wording for a future meeting, likely in May, and asked staff to return with refined language and research on how panelized or modular options might affect surrounding property values.

What council approved now: (1) award of the Phase One construction contract to Northern Lines Contracting for $1,096,603.07, and (2) direction to staff to market lots with an initial advertised price of $50,000, prioritize builder purchasers and continue developing covenants and sale documents. Staff said unsold lots could be offered to additional builders or private buyers with a two-year reverter clause if the buyer fails to build.

Next steps: staff will contact builders on the interest list, work with a local title company to streamline transactions, post sale documents, and return to council with covenant/ordinance language and any necessary tweaks to the sale resolution. The council scheduled additional review and a possible final approval of sale parameters in a May meeting.

Reported authorities and rules: staff said the project uses ARPA funds and that state and federal grant conditions may require minor amendments to agreements, and that certain federal rules (e.g., Davis-Bacon) will apply to specific grant-funded work where applicable.