Grant pursued to create apartments above former drug store

by Marianne Gasaway

The new owners of an iconic downtown Clear Lake building hope to qualify for a new state grant created to support rehabilitation of upper story housing in downtowns.

Monday night the Clear Lake City Council set two public hearings concerning a grant application requested by Austin and Jessica Wood, owners of the former Corner Drug (and later Thrifty White Pharmacy) building at 2 N. 4th St.  The first hearing on Aug. 16 will focus on obtaining input into a Community Development and Housing Needs Assessment.  Input from the public is requested in identifying needs and projects to improve the city. The second hearing will focus on input regarding the submission of a Community Development Block Grant-Coronavirus Housing Conversion Grant application to the Iowa Economic Development Authority (IEDA). The grant would be used for the development of residential apartments on the second story of the Corner Drug building.

Myrtle Nelson, executive director of the North Iowa Area Council of Governments, and City Administrator Scott Flory explained federal funds earmarked for COVID-19 relief are available to cities through the new grant.  

Awards are limited to existing buildings to either rehabilitate un-occupiable units or convert existing space into new units.  All spaces must be vacant and un-occupiable at the time of application.  “Un-occupiable” means an existing space that is not currently able to be occupied, or would not be occupiable with minimal minor improvements such as paint, flooring, or cosmetic updates.  The property must be located in an existing downtown.  The maximum award per project is $500,000.  

Applications must be submitted to the IEDA through the municipality in which the housing project is located, and in coordination with a CDBG experienced grant administrator.

Nelson said the state is interested in addressing workforce shortages and is funneling CARES Act money into addressing housing needs for workers.  

[wlm_nonmember]To read more of this article, please login or sign up for our E-Edition[/wlm_nonmember][wlm_ismember]

“One of the primary issues is what kind of housing we offer them, both to recruit them and to keep them here, so the state funnelled money into this program,” she said.  “It also believes in creating strong downtowns.”

The Woods have already gutted the first floor of the building and renovated it as retail space.  The proposed second story apartment layout would include two two-bedroom apartments and one one-bedroom apartment.   

The potential grant to the city would be passed through to the developer in reimbursement of a percentage of a cost that they incur.  The assistance to the developer would be provided as a three-year forgivable loan in the amount of $500,000.  As a condition of the grant, the developer is required to rent two of the three units to low to moderate  income residents.  After the three-year period the developer can rent to whomever they choose.

“Obviously if they are going to put that kind of money into a unit, they are going to get a good, quality tenant. We’re seeing some pretty impressive things actually happening in these upper-story projects,” said Nelson, noting the total amount budgeted for projects such as the one proposed in Clear Lake is about $1 million.

Flory said Clear Lake does not routinely qualify for CDBG funding.

“Normally we just do not meet the standard eligibility requirements for Community Development Block Grants, which for communities like Clear Lake are typically things that benefit low and moderate income people on a wider percentage than just a targeted area type of thing. Even for us, it would be difficult to achieve that.”

The last time Clear Lake received CDBG funding was in the wake of flooding experienced in 2008.

Application for the grant is expected to be made by Sept. 1.

The Woods have already gutted the first floor of the building and renovated it for retail space.  

[/wlm_ismember]