Senior housing kicks off Hugo redevelopment

A 100-unit senior housing complex opening later this year may well propel development in downtown Hugo, but it won't come close to satisfying Washington County's projected demand for more senior housing.

The project, known as Keystone Place at LaValle Fields, is the first piece of a larger downtown development effort taking shape in the city.

That plan also calls for making major improvements to Lions Park and offering possible financial incentives to attract businesses to properties Hugo has acquired on along Hwy. 61, city administrator Bryan Bear said. Construction of more senior housing in the area, as well as multifamily housing, also is anticipated.

"There's still significant demand for commercial development and room in the market here in the downtown," Bear said.

The city adopted a downtown development plan in 2007, but the initiative stalled when the recession hit. An updated market study completed in late 2013, however, found demand for 330 housing units and 76,000 square feet of commercial space, including retail, office and a hotel, in downtown Hugo, which is competing to attract commercial and retail projects with the Interstate 35 corridor more than a mile west.

"We wanted to confirm as we were pulling out of the recession that there's still a market for commercial activity here in the downtown and that the pull of land out by the interstate wasn't overpowering this location," Bear said.

Keystone Place will include 29 independent living, 49 assisted living and 22 memory care units, with 24-hour staffing and a licensed nursing director who will oversee care. A sales office likely will open this month in Hugo.

Bear said the city expects another 65 senior housing units and a multifamily residential project to eventually be built downtown as well.

To encourage development nearby, Hugo's Park Commission also recently approved plans for Lions Park that call for building a large pavilion with an amphitheater, a veterans memorial, a skating area, a splash pad, and a skate park.

The city is exploring financing options for the improvements, Bear said. No cost estimate was immediately available. Work would begin during the next construction season at the earliest.

As Keystone Place prepares to open later this summer or fall, construction continues on the 208-unit first phase of the St. Therese senior housing complex in southern Woodbury, which is expected to open in 2016.

Despite both projects adding to the county's senior housing supply, demand for that housing, especially affordable units, remains strong, said Melissa Taphorn, deputy executive director of the Washington County Housing and Redevelopment Authority.

With residents between the ages of 55 to 74 making up the fastest-growing age group in the county, the assessment projected that the county would need 3,964 more senior housing units by 2020, including 487 affordable and 212 subsidized units. That's more than double the 3,137 available when the study was done.

The authority plans to begin work this fall on a 79-unit, affordable senior rental project at the site of the former Piccadilly restaurant in Mahtomedi, Taphorn said.

It also is working with housing authorities across the state on legislation seeking state funding to develop affordable senior housing for low-income residents and for those who need some services, but not full assisted living services.

The aim, said Ryan Gruber, executive assistant of the Washington County Housing and Redevelopment Authority, is to "find a way to bridge the gap for a lot of our lower- and moderate-income residents for whom some of these market-rate senior living projects are probably out of reach."