At a generally slow time for multifamily construction, two notable apartment projects are moving forward in an unlikely location a Twin Cities suburb known mostly for its single-family housing stock.
Yellow Tree Development won city approvals in May for a 168-unit market-rate apartment project on the northwest corner of Dushane Parkway and Spruce Street in Farmington. The 3.5-acre development site is part of a vacant 15-acre parcel owned by Hy-Vee and is across the street from the Vermillion River Crossings Senior housing complex.
The Dakota County CDA has added some senior housing in recent years, but the Yellow Tree project is just the second non-age-restricted market-rate multifamily housing development Farmington has seen in nearly three decades, said Deanna Kuennen, the city’s community and economic development director.
The first project, a 74-unit building under construction on a redevelopment site in downtown Farmington, is scheduled for completion in September. Ebert Construction’s “upscale market-rate” building will offer a mix of apartment sizes and amenities such as a sky lounge, game room and community room, according to Ebert’s website .
“They're the first ones that came in and they're proving out the market. But [the Ebert project] also created interest from other developers,” Kuennen said in an interview. “And Yellow Tree is now the second developer to commit to investing in our community and bringing a quality market-rate product forward.”
Robb Lubenow, Yellow Tree’s co-founder and development lead, said the project could be in the ground later this year.
“It's a tricky time for any multifamily development,” Lubenow said at a planning commission meeting in May. “But we're confident that this could start yet this summer. There are a few items that are yet to be determined between us, the landowners and the financing side of things. But our intent is to get approvals, and then kind of keep moving the ball forward and start this as soon as possible. If it drags into October, November, we probably won’t start until next year.
Farmington has been meeting with prospective developers on a regular basis, Kuennen said. Recent studies, she added, show a need for more than 400 new apartment units, and employers have also talked about needing more housing options.
Single-family homes account for most of the city’s new housing. Through May, the city has permitted 83 single-family housing units this year, up from 28 units during the same period last year, according to the Keystone report. No multifamily projects are reflected in the report.
“We've definitely seen plenty of single-family home construction. And so this just brings in another option and continues to round out the variety that we have to offer. So we're super excited about it,” Kuennen said.
In the metro area as a whole, high interest rates and construction costs are weighing heavily on multifamily development. Through May, cities in the 13-county metro area have permitted 843 new multifamily units this year, down 58% from 2023.
Farmington doesn’t have city-owned land available for development, so any new projects would require private party negotiations, Kuennen said. But the city is putting out the welcome mat for multifamily developers.
“We've worked really hard to tell Farmington’s story and to get out in front of developers. We know that there are pressures coming to us from the north with Rosemount growing the way it is and from the west with Lakeville growing the way it is. And we want to be in charge of our own destiny,” Kuennen said.
On May 20, the City Council granted a series of approvals for the $42 million Yellow Tree project. Among those is a 10-year, $1.17 million tax abatement agreement. The existing vacant site generates $11,416 per year in taxes and that will climb to $229,125 annually once the site is developed, according to city documents.
Mayor Joshua Hoyt thanked Yellow Tree for its willingness to work with the city.
“You're actually coming to the table, investing in our community,” Hoyt said at the May 20 City Council meeting. “There's a lot of opinions about what this land should have been or ways that it could have been used. And for the six years that I've been sitting here, there hasn't been anybody willing to step up and actually invest and put their money where their mouth is.
“You see a need in our community. We have the absorption rate and the need [for market-rate apartments]. It's going to support prospective employers who are looking at bringing their businesses here.”
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