Developer Selected for West Waterfront Housing

The City of Sturgeon Bay has selected a developer to work with on a market-rate residential development for West Waterfront land that’s expected to fetch between $1,200 and $1,500 monthly for one- and two-bedroom apartments.

The Plan Commission recommended Northpointe Development Corporation last month, and the Sturgeon Bay Common Council approved that recommendation Tuesday evening.

The Plan Commission had selected Northpointe Development in October from among two submitted proposals. The other came from T. Wall Enterprises, whose architect designed the Bay Lofts development.

Northpointe’s original plan was to rent half the units at market rate and half at a workforce housing rate, or a rate that low-to-moderate-income (LMI) individuals could afford. LMI housing is considered to be for individuals who earn up to 80 percent of the county’s median income, estimated at $58,287 in 2020.

That proposal fell apart when the city learned the developer could not use $1.4 million in Door County Community Development Block Grant money unless it were eliminating blight by rehabbing replacement LMI housing. 

“For some unknown reason, constructing new housing from scratch is not eligible, even though it benefits low-to-moderate-income individuals,” said Marty Olejniczak, Sturgeon Bay community development director, during the Plan Commission’s November meeting. “It’s one of the mysteries of the community development block program.”

The loss of the $1.4 million forced Northpointe back to the financial drawing board. The new proposal contained more one- and two-bedroom units – 52 instead of the original 40 units – but all will be rented at market rates beginning at $1,200 a month for a 700-square-foot, one-bedroom apartment.

“We really wanted to do an affordable housing project,” said 

Andy Dumke, co-founder of Northpointe Development, on Tuesday evening. “But we love the site and community and adjusted the plan.”

Council members praised the development and the developer for investing in Sturgeon Bay. The upscaled apartments were also more in line with what some had envisioned for the waterfront property.

“I had concerns about workforce [housing] and market mix,” said Alder Gary Nault, explaining that needs may clash between recreational home users and those with full-time jobs. “This is way more into my vision for the waterfront.”

Northpointe’s new proposal requires $1.47 million in Tax Increment Financing District (TID) support and deferred developer fees of $1.13 million. TIDs derive revenue from taxes paid on new development. The higher the new value, the more money to fund the development, with the excess, in theory, paying for public improvements. Northpointe’s original proposal had an estimated value of $3.81 million. Now that the development contains all market-rate units, the new taxable value has been estimated at $6.5 million. 

That estimate would generate enough dollars to pay off the developer, with up to $750,000 remaining to finance public improvements on the promenade, Olejniczak said.

No retail space has been reserved within the development.

“The challenges with this site [are] it really is small, and we’re fitting a lot on-site,” Dumke said about the lot that’s just under one acre. Another challenge is parking, when 15-20 additional parking stalls would be needed if, for example, a restaurant user were included.

The council’s approval to work with the developer is “really just getting the project out of the starting gate,” Olejniczak said Tuesday evening. The commission and council will be involved with development reviews and approvals, and a public hearing will be required so residents can weigh in. 

Dumke said if construction begins by early summer of 2021, the building could be ready for leasing in the spring of 2022.