An old Upper Peninsula bank property, vacant for over a decade, will be redeveloped into housing with the help of state funding.
The Michigan Strategic Fund awarded developer T&J Properties of Chassell, Inc. a $1.5 million grant to support the development in Houghton County during its Tuesday, May 20 meeting. The $4.5 million investment will transform a blighted Mercantile Bank site into a mixed-use space with 22 housing units.
Jeff Ratcliffe, the executive director of the Keweenaw Economic Development Alliance, said the project is important to Chassell Township, a small community on the shores of Portage Lake.
“It provides housing that is in short supply,” he told the Michigan Strategic Fund board. “It will provide older residents with a better housing options with the potential for freeing up their single-family homes for young families. It will help foster additional new developments in the area, and it will build on the township’s significant investments in recreational infrastructure nearby.”
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T&J Properties plans to redevelop two adjacent properties in downtown Chassell, including the former Mercantile Bank site that’s been vacant since 2012. One of them, containing a partially demolished building, was formerly owned by the Houghton County Land Bank.
The new three-story building will have 16 one-bedroom apartments and six two-bedroom apartments. It will also have commercial space, that will likely be leased to a restaurant operator, and 29 covered parking spaces.
Rents will range from $1,000 to $1,400 a month and be geared toward those earning 70% to 90% of the area median income, or between $49,420 and $63,540 for a two-person household.
Dan Palosaari, the owner of T&J Properties and DP Construction, is spearheading the project. As a lifelong Chassell resident who has worked in the construction industry for 42 years, Palosaari says he’s seen the need for housing in the area.
“The blighted area has been a problem for the township and residents for the past 10 plus years,” he said.“ I am getting to the end of my construction career. I feel the need to do something great for Chassell and the entire area.”
Palosaari says he will be investing 20% in this project alongside bank financing.
The Chassell community is also backing the development with a $100,000 low-interest loan and $387,762 of future tax revenue captured through the a local redevelopment tax incentive tool.
Construction is expected to start this summer and be finished by spring 2026.
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When complete, the project will add much-needed housing to the Upper Peninsula.
The Michigan State Housing Development Authority estimates the entire state is short about about 190,000 units to keep up with demand. But the Upper Peninsula has the highest number of city leaders concerned about housing, with 59% reporting a lack of single-family housing and 61% reporting a shortage of multi-family housing in their communities.
A survey conducted by InvestUP, an economic development organization, also found that a lack of affordable housing is the “top challenge” for the region.
InvestUP has been involved in other efforts to boost the housing stock through its development fund, Build U.P. This has included converting the former Chippewa County Courthouse Annex in Sault Ste. Marie into 11 apartments, adding 68 housing units to Crystal Falls, transforming an old MBank headquarters in Manistique into a mixed-use space and partnering with local schools to construct five new homes.
