Cottage Grove Reviews $56M Workforce Housing Project Amid High Demand for Affordable Units
Cottage Grove, MN – May 14, 2025 – In response to a growing need for affordable housing, Cottage Grove is reviewing a proposed $55.9 million workforce housing development that could bring 164 new rental units to the city. The project, proposed by Real Estate Equities, was discussed during a sketch plan review at the May 7 City Council workshop meeting.
While no formal decisions were made, the project is scheduled for site plan review, rezoning consideration, and a comprehensive plan amendment at the Planning Commission meeting on May 19, with final approval expected to go before the City Council in June, according to Samantha Pierret, the city’s senior planner.
The proposed site is located between Hadley Avenue and 100th Street, and the development would include 35 one-bedroom, 86 two-bedroom, and 43 three-bedroom apartments, with a mix of 148 underground and 164 surface parking stalls.
“This was an opportunity for Real Estate Equities to reintroduce themselves to the council and present their project concept,” Pierret said. “It also allowed the council to consider a potential funding request.”
St. Paul-based Real Estate Equities, which currently manages more than 4,500 apartment units in Minnesota and Arizona, has been working on the proposal since 2024. Despite economic challenges such as high interest rates and rising construction costs, the firm remains optimistic.
“We’re very excited about the project,” said Alex Bisanz, development partner at Real Estate Equities. “We’ve been working on it for a while. There’s been a lot of headwinds… but we’re working really hard to get this to happen.” Bisanz expressed hopes of securing bonds and beginning construction by the end of 2025.
The developer has requested about $1 million in tax increment financing (TIF) to help fund the project. However, the city’s financial consultant, Ehlers, recommends providing $785,000 in Local Affordable Housing Aid instead of creating a new TIF district.
The project site is currently designated as “medium density residential” under Cottage Grove’s 2040 Comprehensive Plan, and a plan amendment would be required to permit the higher-density housing proposed.
City staff highlighted the urgent need for affordable rentals in the area. According to a 2024 study by Maxfield Research and Consulting, Cottage Grove’s affordable housing stock currently has 0% vacancy, indicating severe pent-up demand. The study estimates the city could support up to 177 subsidized rental units, closely aligning with the scope of the Real Estate Equities project.
As Cottage Grove joins many metro-area communities grappling with housing affordability, this development could become a significant step toward meeting the demand for quality, income-accessible living options.
