Range boom triggers housing concerns

It's an odd turn of events for northeast Minnesota's Iron Range. At the same time a weak economy is forcing job cuts nationwide, the Iron Range is planning for thousands of new jobs.

Those jobs will bring workers, and those workers will need homes.

A new housing study finds the Iron Range could come up short as many as 2,700 housing units. That's if all six of the large-scale projects actually fall into place.

Three projects are considered underway or almost certain, including Essar Corp.'s Minnesota Steel plant; power plant upgrades by Minnesota Power; and Mesabi Nugget's iron nugget project now under construction.

Even with just those three projects, Iron Range Resources Commissioner Sandy Layman said growth will be impressive.

"These projects could lead to 2,500 permanent jobs, and more than 7,000 construction jobs; and potentially additional spin-off jobs as well," she said.

The housing report is one of the first public achievements of the Range Readiness Initiative created a year ago.

Now, the group is trying to figure out how, where, and when to build those homes. The study finds a lot of room to improve housing that's already in place, and to build new homes in dozens of towns from Grand Rapids to Ely.

Warren Hanson, with the Greater Minnesota Housing Fund, said groups like his will try to steer new construction into those towns.

"Because it takes advantage of existing infrastructure, it's more fiscally sound to do that," said Hanson. "We get a double whammy -- it's a win-win situation. We get housing stock, and we get property values increasing in the small cities and towns in the existing neighborhoods."

But even under the rosiest scenario on the Range, it's not the best time to build new homes. Lenders now require more money down, and Hanson said a borrower's credit rating has to be about 100 points higher now than it would have a year ago.

"That does create a big credit crunch, and I think it does make it harder for builders to build spec housing, knowing that it's going to be harder to sell that housing," Hanson said.

Still, Hanson said, the Iron Range housing boom is on the verge of taking off, just as soon as a major employer like Minnesota Steel announces its final plans.

"This will become a hot market for lenders," he said.

Minnesota Steel is expecting permits to allow it to begin construction this summer. Polymet Corp. is in the midst of environmental studies for its proposed copper-nickel mine near Hoyt Lakes.

Two other precious metals mines, a coal gasification power plant, and a taconite plant expansion in Keewatin are considered a little farther down the road.

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