4-28-06 Prof Paper

HOUSING IMPACT ANALYSIS

Conducted for the Greenway Area Business Association Itasca Development Corporation/Jobs 2020 and Itasca County Housing and Redevelopment Authority

Rebecca Cohen May 11, 2006

The author of this paper hereby grants permission for its contents to be shared with other students in the ‘Community Economic Development’ course at the Humphrey Institute, and other interested parties.

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Overview Despite record-setting home sales and homeownership rates in recent years, growing shares of low- and moderate-income workers in urban and rural areas across the country are having difficulty finding affordable housing (Joint Center for Housing Studies 2005). Evidence suggests that housing options are increasingly scarce for workers in a range of occupations whose earnings exceed the upper income limits of federal housing subsidy programs but fall short of the level needed to pay for market rate housing near job centers.1 The lack of workforce housing adversely impacts both the welfare of those households shut out of the local housing market, and the productivity and economic development potential of impacted areas. Responses to this problem tend to fall into two categories. Some advocates call for the introduction of supply-side policies that promote development of affordable housing and relax or eliminate ordinances that stand in its way. Others suggest that employers must play a stronger role in addressing housing demand, through direct wage increases and homeowner assistance programs. While the feasibility of, and preferences for different strategies will vary, the need for prompt action to address workforce housing shortages can be found in communities across the country, as indicated in this paper by a study of Itasca County, Minnesota. This rural area stands to face a major housing affordability crisis in the next five years, as Minnesota Steel and Excelsior Energy each prepare to open an industrial facility in the region. While the companies resolve permitting and financing issues, all affected parties must consider how they will address the heightened pressure for workforce housing expected to result from the operation of these two facilities. 1

See the Center for Housing Policy’s Paycheck to Paycheck 2005 findings database for comparisons of median housing costs and annual income for a range of occupations in 181 metropolitan areas. Accessible at: www.nhc.org/ chp/p2p. For further discussion, see Haughey, R. (2001) “Challenges to Developing Workforce Housing” ULI Land Use Policy Forum Report, Los Angeles: ULI; US Conference of Mayors (2002) “National Housing Agenda” Washington, DC: Mayors National Housing Forum.

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This report focuses predominantly on the housing needs of workers filling the auxiliary positions generated by the Minnesota Steel and Excelsior Energy projects. After a brief description of existing conditions in and around Itasca County, the following sections assess the expected housing demands of temporary construction workers and permanent plant employees relocating to the area. An exploration of trends in the construction industry and the local real estate market suggests that neither of these groups should experience difficulty finding suitable housing close to the workplace. Those filling job openings indirectly associated with operation of the plants, however, will face greater obstacles in securing affordable housing. This paper will demonstrate that a mismatch exists between what these workers can afford to pay and the cost of available units in Itasca County. The remainder of the paper presents strategies for creating workforce housing and assesses the viability of each, concluding with recommendations for further research. Existing conditions Geography Itasca County is located in north central Minnesota, roughly eighty miles northwest of Duluth and 200 miles north of the Twin Cities. As US Route 169 crosses the southeast corner of the county, the highway passes through a succession of small cities and towns settled by logging and mining interests in the late 19th century. Excelsior Energy and Minnesota Steel have chosen two of these towns, Taconite and Nashwauk, for the sites of their proposed projects: a coal gasification plant and steel slab production facility. Both communities lie less than 25 miles from the city of Grand Rapids, the Itasca county seat and most populous municipality, home to nearly 8,500 residents in 2004 (see Figure 1) (MNPro 2005).

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Figure 1: Area map

Representatives from the Itasca Development Corporation and Housing and Redevelopment Authority estimate a generous labor shed for the proposed plants, extending approximately forty miles north and south from Nashwauk, west to the village of Cohasset near the border of Itasca and Cass Counties, and east to Gilbert, MN, in St. Louis County (McDermott 2005; Edington 2005).2 Data from the 2000 US Census confirm local willingness to endure long commute times, indicating that over twenty percent of workers living in Itasca County travel more than thirty minutes to work (see Appendix 1). The labor shed covers most of Itasca County, and encompasses the southwestern-most portion of adjacent St. Louis County, including the city of Hibbing and small towns of Chisholm, Virginia, and Gilbert. This portion represents only a small fraction of this vast county, which is the largest county east of the Mississippi River, covering an area of 6,860 square miles (Saint Louis County 2005). Although the labor shed spans a sizeable area, much of the land included remains uninhabited, covered by acres of County-, State-, National- and privately-owned forests and boasting over 1,000 lakes. When the 2000 US Census was taken, the population of the identified geographic area totaled 89,314, capturing the majority (88 percent) of those residing in Itasca 2

Census tracts encompassed by this area include tracts 113, 121, 122, 123, 124, 125, 126, 127, 128, 130, 131, 132, 133, 134, 135, and 151 in St. Louis County, and tracts 9803, 9804, 9805, 9806, 9807, 9808, 9809, and 9810 in Itasca County.

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County but only one-quarter of St. Louis County residents (US Census: Summary File (SF) 3 2000). These people lived in 37,954 households, yielding an average of 2.4 individuals in each household (ibid). Occupancy and tenure The Minnesota homeownership rate of 74.5 percent is one of the highest in the country, second only to the state of West Virginia (Knowledgeplex 2005). The area of analysis has an even higher homeownership rate—according to the 2000 US Census, owners occupy 78.6 percent of all non-vacant housing units in the identified census tracts (US Census: SF3 2000). In both Itasca and St. Louis Counties, single-family detached homes comprise over 70 percent of all residential structures, a phenomenon partially explained by the limited development and capacity of municipal wastewater treatment collection systems in unincorporated parts of either county (Knowledgeplex 2005; Edington 2005). Because of the region’s natural beauty and recreational opportunities, many local and non-local people also maintain summer or weekend homes in north central Minnesota. When reporting occupancy status, the US Census designates those units used for seasonal or recreational purposes as vacant residences; consequently, without adjustment, the vacancy rate of the area appears extremely high (see Table 1). Table 1: Adjusted vacancy rates in Census tracts with the highest proportions of seasonal units

Total housing units Vacant housing units Vacancy rate (percent) Seasonal units Adjusted vacancy rate (percent)

Tract 9804 3,693 2,266 61.4 2,147 3.2

Tract 9803 2,430 775 31.9 691 3.5

Tract 151 1,694 526 31.1 452 4.4

Tract 9807 2,478 612 24.7 536 3.1

Source: US Census: Summary File 3 2000

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Accounting for these special uses in all Census tracts brings the overall labor shed vacancy rate down from 16.8 percent to 5.1 percent (2,338 units), a figure only slightly higher than the statewide vacancy rate of 3.0 percent. Roughly half of these 2,338 vacant units were available for sale or rent at the time of the 2000 US Census. The vast majority of available rental units could be found in and around the larger cities and towns, such as Grand Rapids, Hibbing, and Virginia, while for-sale homes were distributed fairly evenly throughout the area (US Census: SF3 2000). Projected conditions Households Projections indicate that both St. Louis and Itasca counties will experience household growth in the next few decades, albeit at a more modest rate than most metropolitan areas and the state of Minnesota overall. Absent the influence of new production facilities, projections indicate that the number of households in St. Louis County will grow by 11.9 percent from 2000 to 2015, while the number of households in Itasca County is projected to grow by 18.1 percent during the same period (Minnesota State Demographic Center (MNSDC) 2003). Itasca County’s explosive growth in households composed of seniors living alone and other nonfamily households explains most of the difference in 2000-2015 household growth rates between counties.3 During this time period, these household types are projected to grow at rates that more than double those in St. Louis County (see Appendix 2). The identified labor shed encompasses portions of both counties, however household projections are not available at disaggregations below the county level. An approximate projection of household growth can be derived by applying household trends within the labor shed between 1990 and 2000 to the subsequent decade. For example, between 1990 and 2000 3

Nonfamily households may include unmarried people living with their adult children or grandchildren, or people living with brothers, sisters and other relatives (MN State Demographic Center 2003).

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modest household growth in the St. Louis County portion of the labor shed failed to keep pace with growth in the rest of the county. As a result, the labor shed’s share of all county households shrunk by 2.2 percent (see Table 2). Table 2: Household growth within the labor shed by county Share of county households within the labor shed St. Louis County 1990 2000 2010 Itasca County 1990 2000 2010

Percent change-share of county households

Total number of households within the labor shed

Percent change-total number of households

-2.2 -2.2

21,686 22,153 22,640

2.2 2.2

4.8 4.8

13,100 15,801 19,056

20.6 20.6

27.4 26.8 26.2 84.9 88.7 92.7

Source: MNSDC 2000 and author's calculations

Conversely, between 1990 and 2000, the number of households in the Itasca County portion of the labor shed grew by over 20 percent, increasing the labor shed’s share of county households. Assuming these trends continue into the next decade, the total number of households within the labor shed in 2010 will reach 41,696—an increase of nearly 10 percent, or 3,742 households. In the absence of projections at the census tract level, similar methods can be used to project labor shed population in 2010 (see Table 3). Table 3: Labor shed projected population

1990 2000 2010

Labor shed population 86,513 89,314 92,172

Percent change 3.2 3.2

Source: US Census 1990, 2000, SF:3 and author’s calculations

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A projected population of 92,172 yields an average of 2.2 people per household—a decline of 0.2 from 2000. Not surprisingly, in both Itasca and St. Louis Counties projections show households composed of individuals living alone growing faster than any other household type (MNSDC 2003). The proposed Minnesota Steel and Excelsior Energy projects will have an important impact on labor shed population and household growth patterns. The projected job creation directly and indirectly stimulated by operation of these facilities will induce migration into the labor shed, as temporary and permanent workers from around the region take advantage of new employment opportunities (see Table 4). Table 4: Projected labor shed job creation

Minnesota Steel Excelsior Energy TOTAL

Temporary construction jobs 2,000 1,000 3,000

Permanent full-time jobs 700 150 850

Ancillary jobs 2,100 290 2,390

Source: Minnesota Steel 2005; Micheletti 2005; University of Minnesota-Duluth 2005

The next section addresses the housing impact brought about by construction of these facilities. Temporary housing needs While currently engaged in the environmental scoping and review process, officials from both Minnesota Steel and Excelsior Energy expect construction to begin in 2007, assuming permitting and financing procedures progress as scheduled (Minnesota Steel 2005; Micheletti 2005). Minnesota Steel’s shorter construction timeline indicates that production will begin two years later, while Excelsior Energy’s Mesaba One plant will be fully operational in 2011 (ibid). During these four years, the combined 3,000 member construction workforce will be drawn from both local and non-local firms. Non-local workers will likely move on following completion of 9

their assignments, but temporary accommodations must be provided during the construction period. At present, neither Minnesota Steel nor Excelsior Energy has identified a general contractor, making it difficult to predict the geographic areas from which employees will be drawn. Although representatives from both companies express the desire to hire locally, a sizable share of workers will likely come from Duluth, the Twin Cities, and other areas beyond the labor shed (Edington 2005). The following section draws from interviews with Twin Cities contractors who often work on large industrial projects and presents typical strategies for meeting the housing needs of non-local workers.4 The robust tourism industry and lack of rental units in the study area present obstacles to some standard approaches to this problem, but other viable alternatives indicate that construction workers will have suitable housing. An exploration of conditions in the city of Gillette, Wyoming, provides an additional perspective on strategies to accommodate a large temporary workforce. Although more populous than Grand Rapids, Gillette faces similar housing pressures and some of the same constraints. City officials have offered some creative responses worthy of consideration. Housing strategies As identified by the staff of construction firms in Minneapolis and St. Paul, potential courses of action for housing temporary workers include: • • •

Secure all available hotel rooms in the area for employee use; Purchase apartment buildings, or rent local apartments for construction workers; or Construct an inexpensive compound with minimal infrastructure for temporary use during construction.

All three options were identified by all interviewees as fairly standard choices that have worked

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Phone interviews were conducted with staff at Ryan construction, Adolfson and Peterson Construction, and Kraus Anderson Companies in Minneapolis, as well as Hunt Electric Corporation in St. Paul.

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in other communities. The unique characteristics of the Grand Rapids area, however, require closer examination of the feasibility of each. The first option, reserving hotel rooms within the commuter shed for an extended period of time, would likely meet with opposition from local proprietors, as Itasca and St. Louis Counties are both year-round tourist destinations. An estimated 1,500 hotel rooms can be found within the study area, although demand for these rooms persists in all seasons as visitors take advantage of the recreational opportunities the area has to offer (Visit Grand Rapids 2005). Skiers, snowmobilers and other devotees of winter sports come for the Olympic-caliber Ole Mangseth Memorial Ski Jump in Coleraine and more than 1,000 miles of snowmobile trails in Itasca County. In warmer months, the lakes and natural beauty bring in visitors from all over the region, while hunters are drawn to the area throughout the year. Setting aside a large proportion of hotel rooms over a four-year period in order to accommodate a share of the 3,000 construction workers could seriously damage the local recreation and tourism industry, causing visitors to seek out alternative destinations in the future (Edington 2005). Representatives from the construction industry also suggest apartment rental as a means to provide temporary housing to employees. As of the 2000 Census, 718 units were available for rent within the identified labor shed (US Census: SF3 2000). More recent analyses of housing in Itasca County, however, indicate that the local rental market may have tightened. A 2003 study of Grand Rapids found a vacancy rate of only 1.0 percent for market rate general occupancy units (Bujold and Sjogren 2003). As a result, the viability of accommodating construction workers in existing rental housing units may also prove difficult. Accordingly, a temporary housing compound, sometimes referred to as a base camp, may present the best option for temporary worker housing.

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Gillette, Wyoming Exploration of strategies under consideration in Gillette, Wyoming, a community facing similar temporary housing pressures, may prove instructive. Gillette, a town of approximately 19,000 in northeast Wyoming’s Campbell County, lies between the Black Hills of South Dakota and the Big Horn Mountains. Known for its easily accessible reserves of coal and natural gas, boomtowns in Campbell County have grown and dwindled as the nation’s energy needs have evolved. At present, approximately thirty percent of all US coal comes from Campbell County, and opportunities in the mining and utilities industries continue to grow (Schroeder 2006). With minimal rental units and hotel vacancy rates of approximately one percent, the city faces challenges similar to Grand Rapids, with three new power plants set to come on line in and around Gillette in the next five years (ibid). At present, the Wygen II power plant is garnering the most attention from the press and local officials. At its peak, plant construction will require a workforce of 400, most of whom are expected to come from out of the area (Concerns raised 2005). The director of the Gillette community development authority (CDA) has raised concerns about the existing housing market’s ability to accommodate this influx of people (Power plant 2005). With limited hotel rooms and rental options, local authorities have identified some creative solutions for addressing temporary housing needs. At present, the CDA is revising an ordinance that would increase the land available to temporary residents by allowing construction housing in areas zoned exclusively for industrial and commercial uses. The pending ordinance permits up to ten recreational vehicles (RVs) in each industrial or commercial district, all of which must be connected to the city water system

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(Mcrae 2006). According to the ordinance, the RVs may only be occupied by workers linked to ongoing construction, with project developers liable for financing and infrastructure costs. Another strategy being pursued in Gillette involves working in cooperation with a local community college to develop temporary housing options (Schroder 2006). In partnership with the college, developers would finance the construction and operation of a new dormitory reserved for temporary workers during plant construction. At project completion, the community college would assume control of, and financial responsibility for the dorm, which would then be opened up to students. While neither of these approaches has been implemented yet, they present new ways of thinking about increasing housing options for construction workers. The state of Wyoming has also convened an industrial siting council, responsible for impact review and permit issuance for new industrial developments costing more than $155 million. This bi-partisan council is similar to Minnesota’s Environmental Quality Board (EQB), although whereas the EQB focuses primarily on environmental impacts, the industrial siting council prioritizes socio-economic outcomes such as the drain on public services, schools, and housing caused by new facilities and their employees (Industrial Siting 2005). Developers must address all undesirable impacts, or identify strategies for doing so, before building permits will be issued. The council came into existence in 1975 as a result of concerns about adequate housing supply at a time when many temporary workers stayed in their cars or set up camp sites during construction (Schroeder 2006). To receive permits, developers may be ordered to establish base camps for their workers or pay for hotel rooms when available (ibid). While implementing any of these strategies in Grand Rapids would require adjustment to suit local conditions, experiences in Gillette suggest that the community would be wise to consider ways of expanding its temporary housing capacity. According to Tom Schroeder,

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principal of the Industrial Siting Council, economic development in Gillette has suffered as a result of inadequate housing opportunities. Schroeder suggests that companies seeking to locate in the resource-rich area have run into problems finding both temporary and permanent workers due to the scarcity of local housing options, a sentiment echoed by staff at the CDA. Plant employee housing needs Permanent housing will also need to be supplied for those workers who relocate to the Grand Rapids area as the Minnesota Steel and Excelsior Energy plants become fully operational. Representatives from Minnesota Steel estimate an average annual salary of $70,000, including benefits, for all workers at the plant—roughly $52,500 in annual cash salary (Elmore 2005). In the absence of specific information from Excelsior Energy representatives, similar average salary estimates are applied to the Mesaba One facility, which will require a skilled workforce for nearly all positions. Analysis of the housing demand directly generated by these facilities and current activity in real estate and homebuilding suggests that new permanent employees will not have difficulty finding affordable housing in the labor shed. Local workforce capacity When running at peak capacity, the facilities will require a combined total of approximately 850 full-time employees. These employees will be drawn from both local and non-local skilled labor pools. Assuming prospective employees who currently reside within the labor shed are adequately housed, the proportion of workers expected to relocate from out of the area will indicate the number of housing units needed to meet the anticipated demand. An assessment of the local workforce capacity provides greater insight into the share of new positions that can reasonably be filled by individuals currently living in the labor shed.

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The 2000 US Census indicates that the overall study area had a weighted unemployment rate of 6.1 percent in that year (US Census: SF 3 2000). Itasca County unemployment peaked at 8.0 percent in 2003, coinciding with lay-offs at the Blandin Paper mill, although the area has since experienced a recovery. The average unemployment rate in Itasca County reached 5.8 percent in 2005, the lowest annual average in over 15 years, with the exception of 2000. St. Louis County maintained a fairly steady average unemployment rate of 4.7 percent (Minnesota Department of Employment and Economic Development (MN DEED) 2005). These trends coincide with modest population growth in both counties (see Table 5). Table 5: Trends in unemployment rate and population

Itasca County St. Louis County Minnesota

Average unemployment rate (%)* 2000 2005 Change 5.7 5.8 0.1 4.3 4.9 0.6 3.2 4.0 0.8

2000 43,992 200,528 4,919,479

Population 2005 45,770 202,850 5,197,200

Change 4.0 1.2 5.6

*Average unemployment rate is not seasonally adjusted Source: MN DEED 2005; MNSDC 2003

Unemployment figures for Itasca and St. Louis counties are higher than the state average, although by a smaller degree than in previous years. Local figures are also slightly higher than the national average unemployment rate of 4.6 percent (ibid). The relatively low unemployment rates in the labor shed area should not be taken as an indication that local competition for new positions at Minnesota Steel and Excelsior Energy will be scarce. As suggested by Peter McDermott, president of Itasca Development Corporation, “local people want to stay in the area” (McDermott 2005). When opportunities requiring skilled labor and paying higher wages become scarce, a sizable proportion of the workforce may accept jobs for which they are over-qualified, taking advantage of limited employment opportunities in

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order to remain in the Grand Rapids region. While unemployment statistics would not capture these individuals, they will most likely be inclined to fill the more desirable positions that become available once the new facilities begin hiring. Local residents also suggest that members of the workforce have extended the distance they will commute in order to secure gainful employment, with some residents traveling as far as eighty miles east to Duluth on a daily basis (Christianson 2005). In 2000, nearly ten percent of all workers over 16 living in the labor shed faced an average travel time to work of more than forty minutes (US Census: SF 3 2000). In rural areas, this long commute time probably indicates distance traveled, rather than time spent in traffic congestion. Where skill levels match, these employees would likely try to secure work at one of the nearby industrial facilities, rather than continuing to commute long distances for similar jobs. At present, McDermott suggests that skill levels in the community would allow local residents to fill approximately 25 percent of new jobs created by these projects. Neither plant, however, is expected to begin operating until 2009. This gap during construction presents the opportunity for at least three years of workforce development and training. Efforts are already underway to inform high school and college students about potential job opportunities and the skills needed to qualify for these positions; Vermillion Community College in Ely has been developing “programs to help train people to take advantage of these upcoming jobs” (Strauss 2005). The Minnesota Workforce Center in Grand Rapids and other regional community colleges can also be expected to tailor programs to anticipated employment opportunities, allowing McDermott to estimate that by the time company executives begin hiring, members of the local workforce will be qualified to fill between fifty and 75 percent of the permanent positions (McDermott 2005).

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Homeownership opportunities With a conservative approximation that the local workforce will qualify for half of the new positions, 425 jobs will need to be filled by individuals relocating to the labor shed area. Roughly twenty percent of current labor shed residents rent, rather than own their homes; however, this study assumes all new employees will be seeking homeownership opportunities. A housing impact analysis conducted for the Grand Rapids area indicates that rental units tend to be occupied by seniors or low-income households—individuals and families seeking lower maintenance responsibilities or living on a limited budget—while new employees will have relatively high earnings (Bujold and Sjogren 2003). Moreover, local residents report that a stigma may be associated with renting in northern Minnesota, where homeownership is much more common (Nelson 2005). As such, this analysis continues under the assumption that all 425 new employees will be looking to buy or build somewhere to live. At present, the Range Association and Itasca County Boards of Realtors list nearly 1,000 single-family and manufactured homes for sale in the labor shed, the vast majority of which are located in Itasca County (Scherf 2006; National Association of Realtors 2006).5 The price of single-family detached homes in the city of Grand Rapids averages around $150,000, with prices closer to $120,000 for Itasca County homes on lots smaller than three acres outside the city. Outlying homes on lots larger than three acres cost an average of $185,500, with prices doubling on the lakeshore (Scherf 2005). Prices in St. Louis County are similar, with most homes listed between $75,000 and $200,000. Typically, homes remain on the market for 90 days, and the number of listings has increased by nearly 20 percent over the past four months (Scherf 2006).6 5

The Range Association of Realtors covers a geographic range that extends well beyond the labor shed, so individual listings were aggregated for the following areas: Buhl, Chisholm, Eveleth, Gilbert, Hibbing, Keewatin, Mountain Iron, Nashwauk, Parkville, Pengilly, Side Lake and Virginia. 6 Caution must be taken in interpreting these listings, as homes for sale by owner or through other means are not accounted for in Realtors figures.

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The Minnesota Builders Association is also active in the region, with over 700 members in Northern Minnesota—300 of which are based in Itasca and St. Louis counties (Christianson 2005). Megan Christianson, executive officer of the Northern Minnesota Builders Association (NMBA), reports that more and more, new construction in the area tends to be customized to the end user’s preferences, with development generally costing at least $200,000 (ibid). Christianson notes that as overall labor and material costs have continued to rise, homebuyers have become increasingly dissatisfied with spec houses built before a commission has been issued. Buyers will pay a premium price for a structure that meets their specific needs, rather than living in a “cookie cutter” house (ibid). As suggested by the custom-built nature of most new homes, members of the NMBA typically build only one or two new single-family homes each year, focusing primarily on remodeling and light commercial work. Multiple sources suggest these builders would be unwilling and unable to develop a large-scale project, at least in the short-range timeframe before the factories open (Edington 2005; McDermott 2005; Christianson 2005). With a maximum of 425 new homebuyers from out of the area, however, the combined capacity of the real estate market and local builders should be able to reasonably accommodate this demand. Housing market affordability—permanent employees In general, owner-occupied housing is considered affordable if a household spends no more than 2.5 to 3 times its annual income on the purchase (Bujold and Sjogren 2003). With an annual cash salary of $52,500, a new factory employee would be able to afford a house costing between $131,250 and $157,500. Although construction of a detached custom-built home would be less feasible for a single wage earner family, if home prices remain stable new employee households should be able to find affordable housing in the labor shed without difficulty.

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In nearly half of the married-couple families within the labor shed, however, both spouses participate in the workforce (see Table 6). Table 6: Share of families in labor shed with two wage earners

Married couple families Husband in labor force Employed or in Armed Forces Unemployed

Total, all census tracts 20,170 13,673 13,163 510

Wife in labor force

Share of dual wage earner families (%) 52 77

10,500 10,139 361

Source: US Census: SF 3 2000

When considering only those families in which the husband is in the labor force, the share of dual wage earners rises to over three-quarters of all families. Even if a new employee’s spouse earned minimum wage, the amount the family would be able to spend on a new house would increase accordingly. For example, with a second income of $20,000, a family could afford to spend up to $217,500 on a new home. Given the level of vacancies and relative affordability of the local real estate market, and the preference for custom-built homes and capacity of the NMBA, development of new homes for permanent employees of Minnesota Steel and Excelsior Energy need not be a top concern of local authorities. Auxiliary employee housing needs The expansion of the regional economic base will inevitably create a multiplier effect, stimulating demand for additional goods and services to support the new households and enterprises and generating jobs to meet this demand. Many of the local workers offered employment in the new facilities will leave behind lower-wage positions for which they had been over-qualified; these openings will need to be filled as well. Under the assumption that industry growth will reflect the present structure of the local economy, the following section explores the

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local employment composition to determine the industries in which job growth will be greatest. Subsequently, an assessment of the local housing market’s ability to absorb these workers will reveal a shortage of affordable options for those relocating to the area to fill positions in supporting industries. Local employment structure The following classification of the local employment structure provides an initial framework with which to explore the projected industrial distribution of new auxiliary jobs and their associated wage rates. Although employment and wage details are not available at disaggregations below the county level, Itasca County figures serve as a proxy for the entire study area (see Table 7).7 Table 7: Itasca County 2004 employment structure and average weekly wage

Leisure & Hospitality Retail Trade Other Services Professional & Business Services FIRE* Trade, Transportation & Utilities Information Education & Health Services Wholesale Trade Construction Public Administration Natural Resources & Mining Manufacturing

Percent of total employment 10 15 5 7 3 5** 1 25 3 5 7 3 9

Weekly wage (2003) $184 381 383 414 463 518 523 554 581 640 655 889 1,000

Adjusted weekly wage (1/06 dollars) $198 411 413 446 499 558 564 597 626 690 706 958 1,078

Estimated annual earnings, full-time employees $9,915 20,531 20,638 22,309 24,949 27,913 28,182 29,853 31,308 34,487 35,295 47,905 53,886

*Finance, Insurance and Real Estate **Wholesale and Retail Trade are part of the Trade, Transportation & Utilities (TTU) industry; the percent of total employment in TTU was listed at 23% in the original source, but has been reduced to 5% in this table to eliminate overlap. Source: Northland Connection 2005; author's calculations

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St. Louis County covers a massive area and includes the metropolitan area of Duluth. Conditions in the St. Louis County portion of the study area are likely to be more similar to Itasca County than to St. Louis County as a whole.

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At present wage levels, forty percent of Itasca County employees earn less than $500 a week if working full-time, or under $25,000 annually. An additional thirty percent of employees earn below $30,000 each year. Conditions in the county are similar to the region as a whole; roughly forty percent of jobs in the Arrowhead pay less than $10 an hour (Strauss 2005)8. Researchers at the University of Minnesota—Duluth’s Labovitz School of Business and Economics used IMPLAN software to evaluate the economic impact of Excelsior Energy’s coal gasification plant. Their study estimated that 290 full- and part-time auxiliary positions will be created in the region as a result of plant operations (see Table 8). Table 8: Auxiliary job creation

Excelsior Energy Minnesota Steel Total

Direct employment 150 700 850

Projected full- and part-time auxiliary jobs in the region 290 2,100 2,390

Source: University of Minnesota-Duluth 2005; Minnesota Steel 2005

Although offering no evidence to support their figures, representatives of Minnesota Steel cite a larger multiplier for new jobs spurred by the steel slab manufacturing facility; promotional materials project 2,100 newly created jobs in other industries. In addition, currently underemployed local residents can be expected to leave their positions to pursue better-paying opportunities when the new facilities begin hiring. McDermott estimated that the local workforce will be able to fill between 50 and 75 percent of the 850 new positions. If 425 workers vacate their current jobs, a combined total of 2,815 new openings will be available in the region.9

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The Arrowhead region, in northeast Minnesota, encompasses Aitkin, Carlton, Cook, Itasca, Koochiching, Lake and St. Louis counties. 9 This analysis intentionally uses the low end of McDermott’s estimate of permanent employees coming from the study area to avoid artificially inflating the number of newly created positions by including high-school and fulltime college students in estimates of local employees leaving their current positions to work at the new plants.

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Housing market affordability—auxiliary employees At present, communities in the study area are ill-prepared to accommodate those members of the auxiliary workforce earning wages too low to afford the average home sales price. Analysis of questionnaires completed by local employers for a 2003 study of housing needs in Grand Rapids and greater Itasca County indicated that “housing concerns are prevalent…many employers perceive that housing prices in Grand Rapids are high and that moderate-income employees cannot afford existing housing” (Bujold and Sjogren 2003, p. 21). The same report found a very limited number of general occupancy apartments, and noted a vacancy rate of only 1.0 percent for market-rate units (ibid, p. 35).10 A desirable vacancy rate falls closer to five percent, allowing renters sufficient choice and discouraging rent inflation. Finding available subsidized and affordable units presents a greater challenge, with “no vacancies reported by building managers, and long waiting lists” at most subsidized projects in the area (ibid, p.v). The creation of an estimated 2,815 new positions, combined with a projected ten percent growth in households over the next ten years, will undoubtedly exacerbate the already tight affordable housing market. As noted, lending conventions suggest that homebuyers can afford to spend between 2.5 and 3 times their annual income on the purchase of a house (ibid). The Department of Housing and Urban Development (HUD) has set rental affordability standards at thirty percent of household income. According to these criteria, a household with an annual income of $25,000 can afford to spend $7,500 each year ($625 per month) on rental housing, or buy a $75,000 house.

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The geographic area covered by the Maxfield Research study differs somewhat from the area in the labor shed. For the purposes of this study, however, general trends in the rental market as identified by the Maxfield study are assumed to apply to the larger labor shed area.

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When compared with the expected income of single-wage earner households employed in many of the new ancillary positions, application of these standards indicates cause for concern. At projected wage rates, 45 percent (1,273) of employees without another wage-earner in their household will not be able to afford monthly rent payments of more than $700 (see Table 8). Moreover, nearly three-quarters of these employees will be unable to afford a $100,000 house. Table 8: Housing affordability at projected wage rates

Leisure & Hospitality Retail Trade Other Services Professional & Business Services FIRE* Trade, Transportation & Utilities Information Education & Health Services Wholesale Trade

Percent of total employment 10 15 5 7 3 5** 1 25 3

Adjusted weekly wage (1/06 dollars) $198 411 413 446 499 558 564 597 626

Affordable monthly rent 248 513 516 558 624 698 705 746 783

Affordable home price 29,745 61,592 61,915 66,926 74,847 83,739 84,547 89,558 93,923

5 7 3 9

690 706 958 1,078

862 882 1,198 1,347

103,461 105,886 143,714 161,658

Construction Public Administration Natural Resources & Mining Manufacturing Source: Northland Connection 2005; author's calculations

Even in a dual wage earner household, those employed in the Leisure & Hospitality sector would not be able to afford average area home prices. Employees in this industry fill ten percent of total area jobs, or roughly 280 of the new ancillary jobs. When compared with monthly rent averages in Itasca County, wages in all ancillary positions are more appropriately scaled to the cost of rental housing in the area. Based on prevailing rental rates, most dual-earner households could easily afford monthly payments at apartments of all sizes; small single-earner households could be accommodated as well (see Table 9).

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Table 9: Monthly rent averages, Itasca County*

0-bedroom 1-bedroom 2-bedroom 3-bedroom

2003 Rent averages $310 533 568 780

2005 Constant dollars 331 569 606 833

*Due to data limitations, it was not possible to calculate rent averages for the entire study area. Source: Bujold and Sjogren 2003; author's calculations

It is essential to recognize, however, that mounting pressure on the leasing market can cause rent levels to escalate. More importantly, there are virtually no vacancies in the local rental housing market and an extremely limited number of rental units overall. Without any increase in the rental and starter-home housing stock, families relocating to the study area will be vulnerable to the deleterious side effects of an extremely tight housing market. As households scramble to find housing near their place of employment, some will purchase lower-cost houses, which tend to be older and may be in disrepair. High demand is likely to drive up the cost of even substandard units, further worsening the shortage of options available to low- and moderate-income earners. As in Gillette, the inadequacy of the housing stock could also seriously undermine the growth potential of the study region and constrain economic development. Demand for workforce housing Given the recognized demand for rental units and lower-cost homes in the study area, it may appear surprising that few developers have moved in to take advantage of this market. At issue is the fact that development and construction of units within the means of a low- and moderate-income workforce simply does not yield the revenue developers need to make a profit. Without subsidies or other cost-saving incentives of any sort, total costs of production exceed the

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value of the house or income received from apartment rental (Nelson 2005). As indicated by local building trends, housing development is typically most feasible on the upper and lower margins, where the market, or government subsidy, can support construction costs. For those families who earn too much to qualify for housing assistance, but do not make enough to buy market-rate homes, options are limited. This problem is not unique to the Grand Rapids area, nor is it new. Nationally, rental housing opportunities for very low and high-income households increased from 1985 to 1999, at the same time that the number of rental units affordable to low and moderate-income households declined (Haughey 2002, p.3). Housing advocates have increasingly recognized shortages of workforce housing, defined by the Urban Land Institute as affordable to those earning between 60 and 120 percent of area median income (AMI) (ibid, p.4). At these levels, households do not qualify for most federal housing subsidies, but are typically unable to afford market rate housing. The 2005 AMIs for Itasca and St. Louis counties were $51,450 and $54,850 respectively, placing most of the auxiliary workers towards the low end of this range (National Low Income Housing Coalition 2005). If local home sale prices continue to outpace income levels, this shortage will only grow worse (see Table 10). Table 10: Itasca County income and home sale price increases, 2001-2005

2001 2002 2003 2004 2005* 2001-2005

Median family income $41,800 41,800 49,800 49,800 51,450

Percent increase 0 19 0 3 23

Median home sale price $78,900 82,000 99,500 105,000 112,000

Percent increase 4 21 6 7 42

*2005 sales data are for January through July only Source: Itasca Economic Development Council 2005

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Strategies for workforce housing development As recognition of the shortage of affordable workforce housing has grown, a variety of innovative strategies to address this problem have been developed. The following section presents some of these approaches, first concentrating on supply side strategies, or those that contribute to an increased supply of workforce housing. Subsequently, those tactics that address demand and consumer purchasing power are presented. Supply-side strategies Proponents of supply-side strategies suggest that measures must be taken to increase the stock of housing affordable to low- and moderate-income households. Supply-side strategies may include the establishment of tax-increment financing districts that induce developers to build on a particular site, or direct government involvement in housing construction. This section presents three strategies—commercial linkage fees, inclusionary zoning, and manufactured housing—that do require government involvement, but no allocation of public money. Instead, affordable housing options are expanded through developer fees and non-monetary incentives. Commercial linkage fees Municipalities impose commercial linkage fees on developers of new commercial enterprises as an indirect means of ensuring that affordable housing will be available to prospective employees. These one-time fees, also known as housing impact fees, are typically assessed on the basis of square-footage and only levied on developers of projects that surpass a pre-determined size threshold, to avoid penalizing small businesses with limited earnings (Hendrickson 2005). Fees may vary depending on the nature of the structure (ie whether it is a warehouse, hotel, or office) but generally do not exceed $1 per square foot (ibid).

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Proceeds are deposited into a fund to be used for affordable housing initiatives. Communities have considerable flexibility in setting requirements for award eligibility; qualified uses may include the creation, preservation or maintenance of workforce housing in close proximity to the workplace, or establishment of an employee housing fix-up fund. Although revenue from commercial linkage fees may be modest in small towns, proceeds can be used to lower housing construction costs and accordingly the price of new residential units. The fees present a means of developing affordable housing or improving housing stock without raising taxes, increasing public debt or transferring funds from other programs. As businesses in the service and retail industries relocate to the Grand Rapids area in response to increased economic activity, the revenue received would grow, helping to ensure that lower-wage employees have housing options. An argument could be made that imposing a fee on new commercial construction could deter businesses from coming to the area, or cause them to locate just outside of fee boundaries; regional cooperation would be needed to mitigate these potential negative effects. As demonstrated in Gillette, WY, economic development suffers when the workforce cannot live in close proximity to employers. Commercial linkage fees help to address this spatial mismatch. Inclusionary zoning Inclusionary zoning can be used as a tool to encourage developers to include a predetermined share of affordable units in any new market-rate residential development.11 Participants are rewarded with an array of incentives such as density bonuses, expedited permitting and reduced parking requirements, all of which help reduce development costs (Hendrickson 2005). In order to qualify for these incentives, a specified share of all project units 11

In some municipalities, developers may donate land or make a cash payment in lieu of development.

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must remain affordable to households at or below a certain income level for a specified period of time. For example, in Montgomery County, Maryland, 15 percent of all units in any multi-family development with more than 35 units must be set aside for households earning at or below 65 percent of area median income for a period of twenty years (Brown 2001). Specific eligibility and time standards, however, are at the municipality’s discretion. To address workforce housing shortages, priority for affordable units may be given to people employed in the city or county. While this policy can apply to rental or homeowner development, the relative affordability of rental units in the study area may undermine its initial impact in the Grand Rapids area. Moreover, inclusionary zoning typically only applies to projects where the number of new units exceeds a certain size threshold. While zoning administrators may set this threshold at whatever level they wish, the minimal level of subdivision development in the Grand Rapids area could mean that inclusionary zoning standards will be applicable in a very limited number of projects. Nevertheless, projected regional growth could change this dynamic. In 2002, the city of Grand Rapids began implementation of an eight year scheme for the orderly annexation of adjacent unincorporated land. Christianson estimates that 300 homes could fit amply on recently annexed land, indicating that the potential for larger-scale residential development exists. Additionally, as housing pressure mounts, the cost of rental units could rise as well. Inclusionary zoning would ensure that a portion of units remain affordable, even in the face of rising rents. Because there is no financial expenditure associated with this strategy, implementation does not require any monetary contribution from local jurisdictions. Likewise, payment received from the market-rate units subsidizes the reduced rent or purchase price of the affordable units, which may also be smaller or include fewer amenities thereby further lowering development costs. Should subdivision or multi-family development in the Grand Rapids area increase,

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inclusionary zoning would insure a portion of new units would be affordable to low- and middleincome households. In addition, as the senior population continues to age, supportive housing developments will be forced to include units affordable to seniors on a fixed income. Manufactured home zoning allowances Manufactured homes present an increasingly popular affordable housing alternative, representing ten percent of all US single-family housing starts in 2004 (Manufactured Housing Institute (MHI) 2006). The 2003 average sales price was $54,900, or $59,290 in 2006 dollars, a cost savings of approximately half the average home sales price in the study area (ibid). A recent study conducted for HUD by researchers at Abt Associates found that when combined with land ownership, investment in manufactured housing generally provides a positive return to owners (Boehm & Schlottman 2004). Moreover, owners of manufactured homes report higher average neighborhood and housing quality satisfaction than residents of rental units (ibid). Additionally, these homes can be built and installed relatively quickly and at reduced construction financing costs, facilitating prompt expansion of housing options for low- and moderate-income households (Haughey 2002). Formerly referred to as mobile homes, today a majority of manufactured homes are never moved once they are installed (MHI 2006). In fact, double-section homes may be virtually indistinguishable from stick-built homes, particularly in neighborhoods with ranch-style or modest housing stock (Beamish et al 2001). Nevertheless, in some communities a negative perception of manufactured housing persists, and oftentimes regulations and ordinances complicate the siting of these units. As of 2000, mobile homes composed only 3.7 percent of the housing stock in Grand Rapids, as compared with the national average of eight percent

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(Knowledgeplex 2000; MHI 2006). Re-evaluating zoning ordinances to ease accommodation of manufactured homes could quickly ease pressure on the local affordable housing market. Demand-side strategies Advocates of demand-side strategies argue that enhancing low- and moderate-income households’ purchasing power presents a more efficient means of addressing housing affordability. The Housing Choice Voucher program, one of the largest federal housing programs, follows this rationale by subsidizing a portion of the rent payments of poor tenants. This section presents two strategies, both of which hold area employers responsible for closing the housing affordability gap. Increased wage requirements The most direct way to address workforce housing affordability would be to introduce a local living wage ordinance, requiring all employers to offer competitive wages and benefits. This rate can be set using a variety of benchmarks, including poverty line figures, food stamp eligibility standards, and family self-sufficiency studies (ACORN 2003). The Universal Living Wage Campaign (ULW) uses HUD’s thirty percent affordability standard for rental units to determine adequate wages, although this formula could certainly be adapted to areas where homeownership is more prevalent, as is the case in the study area (ULW 2001). Additions to the ordinance may include requirements for first-source hiring, or for initial advertisement of new positions on a local basis only (ibid). According to McDermott, a variety of local and non-local factors undermine the feasibility of wage reform in the Grand Rapids area, at least for now. Low workforce skill levels, exacerbated by educated young adults’ escalating emigration to the Twin Cities and other areas

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outside the region, have allowed employers to keep wages low, particularly in those positions that do not require skilled labor. Additionally, the area’s history of high unemployment rates has allowed employers to pay the minimum wage, as a willing workforce takes available positions. Moreover, the cost of doing business in rural Minnesota is relatively high, with costs for heat, shipping, sewer and water and technical support higher than in other areas (McDermott 2006). As such, business owners reduce labor costs to remain solvent. With the confluence of these factors, McDermott suggests that until changes in the economic environment are made, introducing a higher minimum wage would only cause the community to lose much-needed jobs. At present, local companies in the paper milling, mining and utilities industries do pay living wages because they must retain their skilled laborers and are sufficiently large to pay more for this workforce. Small start-up companies, however, would be unable to afford the cost of business in the region and would likely relocate to other areas. Those companies that could afford to stay, even with the increased cost of labor, would be unwilling to pay more for lower-skilled employees (ibid). These constraining factors should not be taken as indication that higher wages are not needed, nor that a living wage initiative could never succeed in the study area. According to a report issued by the Itasca Economic Development Council (IEDC), the Itasca County average annual wage paid per job, while once equal to the statewide average, had sunk to two-thirds the state level in 2003 (IEDC 2005). As home prices continue to escalate, the need for higher compensation will only grow. At present, the Itasca Development Corporation is engaged in workforce training programs, in order to improve the skill levels of current residents. Moreover, increased economic activity ought to further reduce local unemployment rates. With improved

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economic conditions, the community will be in a better position to require higher wages from employers. Employer-assisted housing Employer-assisted housing has its origins in the “company town,” which was common in the US and the Iron Range in the 1900s, as mining interests moved across the area. Today, company towns “are being revived under the rubric of employer-assisted housing,” although contemporary advocates recognize drawbacks of the earlier system and limit the company’s role to the realm of home financing (Sullivan 2004). Many practitioners now encourage the establishment of partnerships between employers and the workforce as a means to create affordable housing. Employer-assisted housing strategies can take a variety of forms. In most cases, employers provide direct assistance with the purchase of a home, generally through closing cost or down payment loans and grants, group mortgage origination plans or mortgage buydown programs (Bell 2002). These loans may be forgiven incrementally, as the employee remains with the company, or offered at below-market interest rates. Through this assistance, minimum-wage earners can more easily cover the gap between their earnings and the cost of buying a house. The company also benefits from working with and assisting its employees. These programs can help guarantee the presence of an available labor pool and generate “better relationships with the community, government, organized labor, and most importantly the employees of the company” (HousingMinnesota 2005). Many advocates feel communitywide employer-assisted housing is easiest to provide in small towns such as Grand Rapids, where the relationships between a company, its employees, and the local government are clearer, and

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housing options are scarcer as there are not inexpensive suburbs or central city areas in the immediate area, where workers can relocate to cut down on housing costs (Sullivan 2004). Recommendations for further research As local stakeholders begin to think about the best ways to ensure that an adequate supply of workforce housing exists in the study area, some additional situations and scenarios should be taken into consideration. Completion of additional studies would also refine current assumptions and resolve persistent questions, allowing for a more accurate base scenario from which to develop housing development strategies. Obtain estimates of local construction capacity As the permitting process progresses and companies get closer to hiring contractors to work on their projects, local officials will be able to consult with those firms to determine where their workforce and subcontractors are drawn from. By that time, however, it may be too late to ensure that suitable accommodations are provided for non-local temporary workers. To arrive at a precise estimate of non-local construction employment, company officials should be consulted regarding the proportion of construction workers needed in various trades, which can be applied to the projected number of total workers at each project. Local union representatives can then be asked to estimate the number of their members who will be available to work on these projects; the balance will be non-local employees.12 Survey of hotel owners and proprietors As previously mentioned, the Grand Rapids area benefits from the tourist trade yearround. In this analysis, it is assumed that housing temporary construction workers in area hotel 12

This method was suggested by Itasca Development Corporation/Jobs 2020 president Peter McDermott, and was attempted for this analysis. Unfortunately, the unresponsiveness of company officials prevented its application.

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rooms during the construction period is not a feasible option. However, it is possible that some proprietors would be willing to reserve a block of rooms for workers, particularly during times when tourism slows. A survey of area owners is recommended to assess the possibility of accommodating construction workers in this manner. Updated housing market analysis This analysis has drawn heavily from a housing market analysis completed by Maxfield Research Inc. in 2003 for the Housing and Redevelopment Authority of Grand Rapids, City of Grand Rapids, and Independent School District #318. It is recommended that a similarly comprehensive study be conducted for the labor shed area, accounting for both growth projected by the State Demographer and growth stemming from the operation of the Minnesota Steel and Excelsior Energy facilities, in order to create an updated snapshot of housing conditions and anticipated housing needs. This analysis should include an inventory of unoccupied housing that is not for sale as well. Approximately half of the 2,338 vacant non-seasonal units identified by the 2000 US Census were not for sale or rent; these structures could present opportunities for rehabilitation—a means of creating affordable housing that is considerably less costly than creating new structures. Implications of the Blandin paper mill expansion The Blandin paper mill is the second-largest employer in Grand Rapids, with roughly 500 employees (Northland Connection 2005). Currently, a project to replace an old paper machine with a new, more efficient one is under consideration. While the net employment impact of this project would be negligible, approximately 1,000 additional temporary workers would be needed during the construction period (Chandler 2005). If this project goes forward, temporary housing

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needs would skyrocket—a scenario that local officials ought to take under consideration. Should the project fail to go through, an estimated 250 local jobs would be lost, according to the Minnesota Department of Natural Resources' draft Environmental Impact Statement (Brissett 2006). The local impact of this job loss would be dramatic and far-reaching, and would likely affect the number of local employees filling new permanent and auxiliary positions.

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Works Cited ACORN (2003) Living Wage Resource Center. [Online]. Available: . Beamish, J., R. Goss, J. Atiles, and Y. Kim. (2001) Not a Trailer Anymore: Perceptions of Manufactured Housing. Housing Policy Debate 12 (2). [Online]. Available: . Bell, C. (2002) Workforce Housing: The New Economic Imperative? Housing Facts and Findings 4 (2). [Online]. Available: . Boehm T. and A. Schlottman (2004) Is Manufactured Housing a Good Alternative for LowIncome Families? Evidence from the American Housing Survey. Washington, DC: HUD Office of Policy Development & Research. Brissett, J. (2006, February 25) Blandin considers Duluth Warehouse. Duluth News Tribune. [Online]. Available: . Brown, K. (2001) Expanding Affordable Housing Through Inclusionary Zoning: Lessons from the Washington Metropolitan Area. Washington, DC: The Brookings Institution Center on Urban and Metropolitan Policy. Bujold, M. and Sjogren, M. (2003) Housing Market Analysis and Demand Estimates for Grand Rapids, Minnesota. Minneapolis: Maxfield Research Inc. Chandler, G. (2005) Personal communication. Blandin Paper. 17 October 2005. Christianson, M. (2005) Personal communication. Northern Minnesota Builders Association. 10 November 2005. Concerns raised about Gillette housing market. (2005, June 7) Billings Gazette. [Online]. Available: . Edington, T. (2005) Personal communication. Itasca County Housing Redevelopment Authority. 10 November 2005. Elmore, J. (2005) Personal communication. Minnesota Steel. 13 December 2005. Haughey, R. (2002, June 25-26). Workforce Housing: Barriers, Solutions, and Model Programs. ULI Land Use Policy Forum Report. [Online]. Available: .

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Hendrickson, C. (2005) A Community Guide to Creating Affordable Housing. Business and Professional People for the Public Interest. [Online]. Available: . HousingMinnesota (2005) WHC Toolkit. [Online]. Available: . Industrial Siting (2005) Wyoming Department of Environmental Quality. [Online]. Available: . Itasca Economic Development Council (IEDC) (2005) Community Report: Socioeconomic Indicators Itasca County Area. Grand Rapids, MN: IEDC. Joint Center for Housing Studies (2005) The State of the Nation’s Housing 2005. Cambridge, MA: Harvard University. Knowledgeplex (2005) [Online]. Available: . Manufactured Housing Institute (2006) Fast Facts. [Online]. Available: . McDermott, P. (2005) Personal communication. Itasca Development Corporation/Jobs 2020. 10 November 2005. McDermott, P. (2006) Personal communication. Itasca Development Corporation/Jobs 2020. 27 February 2006. McRae, S. (2006) Personal communication. Gillette Community Development Authority. 9 March 2006. Micheletti, P. (2005) Personal communication. Excelsior Energy. 14 October 2005. MN Pro (2005) Community Profile for Grand Rapids Minnesota MNPro. [Online]. Available: (12 October 2005). Minnesota Department of Employment and Economic Development (2005) Unemployment Statistics: Minnesota Counties September 2005. Positively Minnesota. [Online]. Available: (13 November 2005). Minnesota State Demographic Center (2000) Historic Minnesota Population and Household Estimates. [Online] Available: . Minnesota State Demographic Center (2003) Minnesota Household Projections 20002030. [Online] Available: (7 October 2005).

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Minnesota Steel (2005) Project Description [Online]. Available: (29 October 2005). National Association of Realtors (2006) Northern Minnesota Real Estate [Online]. Available: . National Low Income Housing Coalition (2005) Out of Reach. [Online]. Available: . Nelson, S. (2005) Personal communication. St. Louis County. 15 November 2005. Northland Connection (2005) Itasca County Industries: Leading Employers [Online]. Available: (5 October 2005). Power plant will need 400 workers (2005, May 30) Casper Star-Tribune [Online]. Available: . Saint Louis County (2005) [Online]. Available: (10 November 2005). Scherf, P. (2005) Personal communication. Itasca County Board of Realtors. 27 October 2005. Scherf, P. (2006) Personal communication. Itasca County Board of Realtors. 27 February 2006. Schroeder, T. (2006) Personal communication. Wyoming Industrial Siting Council. 9 March 2006. Strauss, K. (2005, October 9) Future bright in development, according to DEED spokeswoman. Timberjay Newspapers. [Online]. Available: (15 September 2005). Sullivan, T. (2004, November) Putting the Force in Workforce Housing. Planning. [Online]. Available: . Universal Living Wage Campaign (2001) ULW Formula. [Online]. Available: . University of Minnesota-Duluth (2005) The Economic Impact of Constructing and Operating an Integrated Gasification Combined-Cycle Power-Generation Facility on the Iron Range. [Online]. Available: (12 December 2005). US Census (2000) Data Sets: Summary File 3. [Online]. Available: . US Census (1990) Data Sets: Summary File 3. [Online]. Available: .

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Visit Grand Rapids (2005) Grand Rapids Minnesota Conferencing Lodging [Online]. Available: (25 October 2005).

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Appendix 1: Labor Shed Exhibit A: Where Workers Employed in the City of Grand Rapids Live Baseline Count of Jobs

2003 Count Share 1,914 100.00%

All Jobs (Private Sector Only) Cities/Towns Where Workers Live

2002 Count Share 1,587 100.00%

2003 Count 1,044 457 133 36 33 211

* Unincorporated Areas * Grand Rapids * Cohasset * La Prairie * Hibbing * All Other Locations Counties Where Workers Live

2002 Share 54.50% 23.90 6.90 1.90 1.70 11

Count 806 413 115 29 14 210

2003 Count 1,620 103 30 25 21 115

* Itasca * St. Louis * Hennepin * Cass * Dakota * All Other Locations

Share 50.80% 26 7.20 1.80 0.90 13.20

2002 Share 84.60% 5.40 1.60 1.30 1.10 6

Count 1,314 58 38 11 8 126

Share 82.80% 3.70 2.40 0.70 0.50 7.90

Source: US Census Bureau LED On the Map

Exhibit B: Travel Time to Work for Workers Age 16+

Total: Worked at home Did not work at home: Less than 5 minutes 5 to 9 minutes 10 to 14 minutes 15 to 19 minutes 20 to 24 minutes 25 to 29 minutes 30 to 34 minutes 35 to 39 minutes 40 to 44 minutes 45 to 59 minutes 60 to 89 minutes 90 or more minutes

Itasca County, Minnesota 18,909 772 18,137 906 3,010 3,599 3,043 2,590 914 1,490 245 391 760 639 550

Share of all Workers 4.1% 4.8 15.9 19.0 16.1 13.7 4.8 7.9 1.3 2.1 4.0 3.4 2.9

U.S. Census Bureau 2000

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Appendix 2: Household Projections, 2000-2015 Amount Change, 2000-2015

Percent Change, 2000-2015

2000

2015

Itasca County Total Households Married Couples Other Family Nonfamily, Living Alone Living Alone, 65+ Other Nonfamily

17789 10370 2015 4634 2178 770

21010 11600 2360 5990 2710 1050

3221 1230 345 1356 532 280

18.1 11.9 17.1 29.3 24.4 36.4

St. Louis County Total Households Married Couples Other Family Nonfamily, Living Alone Living Alone, 65+ Other Nonfamily

82619 40706 10668 25804 10719 5441

92410 43710 11576 30760 11726 6370

9791 3004 908 4956 1007 929

11.9 7.4 8.5 19.2 9.4 17.1

Source: Minnesota State Demographer, 2003

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Appendix 3: Number of Households and Percent of all County Households in 1990 and 2000

Census Tract St. Louis County 113 121* 122 123 124 125 126 127 128 130 131 132 133 134 135 151 Total Itasca County 9803 9804 9805 9806 9807 9808 9809 9810 Total

Number of Households-1990

Share of all County Households--1990

Number of Households-2000

Share of all County Households--2000

870 2,004 977 1,139 2,084 1,300 2,196 464 1,416 1,198 1,503 1,642 1,729 1,157 835 1,172 21,686

1.10% 2.53 1.24 1.44 2.63 1.64 2.78 0.59 1.79 1.51 1.90 2.08 2.19 1.46 1.06 1.48 27.41

891 2,043 811 1,301 1,937 1,374 2,192 965 1,353 1,340 1,268 1,723 1,732 1,214 837 1,172 22,153

1.08% 2.47 0.98 1.57 2.34 1.66 2.65 1.17 1.64 1.62 1.53 2.08 2.09 1.47 1.01 1.42 26.78

1,246 747 1,128 926 1,393 3,051 2,379 2,230 13,100

8.08 4.84 7.31 6.00 9.03 19.78 15.42 14.46 84.92

1,656 1,443 1,171 1,129 1,875 3,414 2,642 2,471 15,801

9.29 8.10 6.57 6.34 10.52 19.16 14.83 13.87 88.68

* Tract 121 was referred to as Tract 121.98 in the 1990 Census, but the geographic area covered remained the same from 1990 to 2000. Source: 1990 US Census SF 3; 2000 US Census SF 3

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