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Rail to residential? Business owner plans to expand Bemidji’s downtown with housing, office development

Local business owner Mitch Rautio plans to develop Bemidji's downtown rail corridor making more space for housing and businesses. (Jillian Gandsey | Bemidji Pioneer)1 / 2
An artist's rendering of the proposed plan for the downtown Bemidji Rail District. (Karvakko Engineering)2 / 2

BEMIDJI -- A stretch of road separates an active downtown and a sprawling empty, vacant space that once was an industrial hub in Bemidji.

For local business owner Mitch Rautio, it's a piece of property that has gone unused for far too long.

Dubbed the 'rail corridor' by many for its former use of trains passing through, the land is located just south of Bemidji's downtown area, extending from Park Avenue Northwest to the area near the Mississippi River and bordered by existing rail lines.

For Rautio, the property has the potential to serve as both a way to provide more housing in Bemidji's downtown district while also giving office space to businesses, too.

"I get a lot of calls for housing downtown, so that was one of my ideas, to spur that development with new housing for the downtown area," Rautio said. "There will be multi-use buildings, where you could have retail or office space on the first floor and apartments on the second floor."

To make the development happen, Rautio has been in contact with city officials. The city purchased the property in 2003 to install a sewer system and pave the Paul Bunyan Trail that runs through the area.

"It's always been a utility corridor," said Bemidji City Manager Nate Mathews. "It was once a rail corridor and now it has a sewer system and trail system going through it. It also has a high voltage transmission line running through and two 12-inch gas pipelines. It's a tricky site (for development)."

Additionally, the land once served as a site for heavy industrial use, including gas stations, a bulk oil plant and a coal gasification plant.

Because of its history, Mathews said the city and Rautio are working through an environmental review process to assess potential contamination in the ground.

"We talked to Mitch and he expressed interest in developing it. Knowing that there's potential pollution in the ground and risks for the city to sell it, we did a Phase I environmental review earlier this year in April," Mathews said. "The Phase I was a historical documentation review of all the past uses."

The next step in the partnership between the city and Rautio was to write a grant to the state Department of Employment and Economic Development for the ensuing phases, including contamination studies and potential cleanup.

"There will be 50 push probes at various depths of the ground at locations where there could be footings," Mathews said. "There will be both soil vapor tests and ground water tests."

"We're trying to get a good picture of what environmental things, coal or gas, that need to be dealt with and what remediation needs to take place," Rautio said. "Next summer, the hope is to be ready to put a shovel in the ground. We have to start cleaning up the area where the first building will go."

While Rautio has a plan, and the project has officially started, the process will take time before an exchange of land can occur.

"We need to figure out what he's interested in purchasing and then find out what the value would be," Mathews said. "We typically, as a city, get an appraisal of it, to get the value of the land."

The purchase also has to wait until the remediation is finished, as grant money from DEED is required to go to the city government to clean up the property, Rautio said.

According to Mathews, the first amount of funding from DEED, $30,000, has been awarded to the city to begin the environmental remediation process.

Other matters related to the land deal need to be worked out, too. For example, Mathews said part of the property is used by the city to place snow removed from the downtown streets.

Rautio’s plan for the rail corridor isn’t the only one proposed for the area, either. Another entity, Duluth-based Center City Housing Corp., is planning to build a 60-unit apartment complex for chronic inebriates and the recently homeless in the corner of the area. The complex will be built at the intersection of Park Avenue Northwest and Third Street.

An urban crowd

The land Rautio is at looking ranges from 20-24 acres of property and the site could include 24 brownstone-style apartment buildings and 15 to 20 buildings with space for mixed-use development.

"It will be very similar to University Heights (a series of apartment complexes along Bemidji Avenue)," Rautio said. "It's where you come up with a master plan for the whole thing and then you build one building, one section at a time."

As the development spreads, Rautio said he plans to continue the city grid into the corridor to complement the downtown area, rather than compete with it.

For the housing, Rautio said the apartments would be geared toward a younger crowd seeking an urban environment in the central walking district.

"There's a need for more space downtown, people want to be there. I think we can develop a really unique, classy environment," Rautio said. "There would be an opportunity to make them green and add rooftop gardens, too."

"I think millennials are looking for nice coworking space and an area where they can walk to parks, bars, and theater options," Mathews said. "You look at other cities and they've updated their downtown districts. It provides another alternative way of living. Mitch is a landlord downtown and he knows there's a lot of requests."

Whether it's a groundbreaking or the start of cleanup, Rautio said the hope is to begin next June. As a whole, Rautio said the entire project could take roughly 10 years.

"It seems like towns go through a phase where they sprawl out, then they start coming back and concentrating on the center again. I think that's where we're at," Rautio said. "I wouldn't be doing this if I didn't' think Bemidji was growing."

"Right now, it's property that's just dark and vacant, not doing anything for our community. If we can get the tax base to grow and we can get some residential and retail facilities in the downtown, that would be tremendous for us," Mathews said. "It's a great opportunity, you have to go for it."

Matthew Liedke

Matthew Liedke is the city, county and state government reporter for the Bemidji Pioneer. He also covers business, politics and financial news.

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