Lead to Succeed - Zach Hautala (Director at Iron County Economic Chamber Alliance), Jacqui McElroy (Director of Business Development at S.C. Swiderski), Kortni Wolf (Development Manager at S.C. Swiderski), and Gerard Valesano (City Manager at the City of

In the first episode of Lead to Succeed in 2025, host Steve Arwood sits down with key players behind a major housing project in Crystal Falls. Guests Zach Hautala (Director at Iron County Economic Chamber Alliance), Jacqui McElroy (Director of Business Development at S.C. Swiderski), Kortni Wolf (Development Manager at S.C. Swiderski), and Gerard Valesano (City Manager at the City of Crystal Falls) discuss how a proactive and cooperative approach led to 68 new middle-market rental units in a region facing a housing shortage. Learn how city leaders, developers, and economic partners worked together to create a model that other U.P. communities can follow. 

Tune in to hear how this project came to life and what it means for the future of housing in Michigan’s Upper Peninsula. 

Learn more about InvestUP at https://www.investupmi.com. Connect with us on social media at https://www.linkedin.com/company/invest-up-mi/.

Transcript

Well, hello, and welcome to another installment of Lead to Succeed, a program sponsored by InvestUP. We highlight projects, people, and great ideas, and today we have a collection of folks from both a developer, a city, and an economic development corporation who have solved an issue.

The issue is housing. And very shortly, there will be 68 new Walden family middle market units in the city of Crystal Falls, which given the size of the city of Crystal Falls, is a big achievement.. So, to kind of start out on this project, I'm going to turn to Zach and Zach, maybe you introduce yourself and give us a little background on how this came about.

And please feel free for anybody else to jump in. I only ask that when you do you introduce yourself. Thank you. Go ahead, Zach. 

Yeah, I'll give a quick start. I'm Zach Hautala, Executive Director of the Iron County Economic Chamber Alliance, and this first started with some news coverage of SC Swiderski’s investments and developments in both Florence and Niagara, Wisconsin that have a very close proximity to Iron County here.

I saw some of the news coverage and did a little bit of investigating and just happened to try cold calling them, telling them who I was, you know, the issue that we had, of course, around housing and then within about 2.5 weeks later, I got a call back from, I believe it was Kortni, just saying, thank you for your call. Tell me more about what you have going on. And that was a process that was started in fall of 2022. And like we mentioned earlier, the rest has been history from there. From that point, we had a great conversation with SC Swiderski, and then we started bringing in some municipal leaders from around our County saying, Hey, we have this opportunity. Please come up with a list of properties that you yourself own as the municipality, and then we'll invite SC Swiderski up here to look at them and continue the process on from there. 

So, Kortni, from the company standpoint, and please introduce yourself and a little bit about the company, too. But why did you find this interesting? What, what about this made you want to come look?

Thanks, Steve. I'm Kortni Wolf. I'm the development manager here at SC Swiderski and speaking with Zach initially, we were really excited because we look at a lot of land, we look at over 100 parcels of land a year, and our company has always wanted to expand out of Wisconsin, and because we have sites, successful sites in Florence and Niagara, it's just a natural progression to move into Michigan. So, we felt that it was a really good fit and were really excited to start those initial conversations back in 2022. 

We'll throw this one over to Jacqui. What is the kind of market niche that Swiderski focuses on? And I know it's very nicely done multifamily from what I've seen, but is that really your space in the market as you as you kind of evolve this? 

Yes, I'm Jacqui McElroy. I'm a director of business development at SC Swiderski. So we've been in business for 33 years and we just provide housing and build communities. We do very well. We're based in a smaller community of Mosinee, and we do very well in the small and middle markets. And we're trying to service the housing that we see as the biggest need in most of those communities that we researched. And it's kind of that middle housing you're talking about, or people call it maybe workforce housing. So we've designed a variety of buildings that work well in those markets. And we're trying to service people from 60 to 120 percent of the median income of those areas. So Courtney runs an incredible team. They research, um, like she said, a hundred parcels of land. And in that research, we're trying to identify what needs they have. And we also have a design team here. So all these buildings are designed in-house. We've designed them to fit these middle markets and doing a variety. So even on this site, as you mentioned, there are 68 units. But there are 14 different floor plans, so we're able to kind of hit all of the different types of people that might be looking for housing, whether it be young professionals, families, empty nesters, we have some great one level units that we're planning for this site. So really, we've basically built our business to service communities and what they need for housing.

Gerard when this came to you, came to the city, in front of your boards and commissions. What was the reaction? I mean, was this, it appears the reaction was relatively aggressive on the city's part, but how did you process through this?

Actually, it went quite well. This is probably the most frequently asked question in City Hall, do we have any properties or do we have any homes for sale? And that answer would be no, continuously for quite some time. So, when this opportunity came along, and for me to be able to explain it to our council, of the need, they all were pretty much on board.

Of course, small town. A lot of times they're skeptical as to what operations are coming in and you have to really sell it to them. But it was a, it was a pretty welcoming, adventure to be quite honest and not only the need for it, but like you said, we, I would say the medical field and education is where we have professionals that need places to live in Crystal Falls.

Yeah. And that was strained. You'd have people that were living, possibly finding a place in Iron Mountain or outer surrounding areas to have to travel. So, the opportunity was at the right time. And we had a council that was proactive towards some of the other projects we've had, so it was a good thing.

So let's talk about the kind of the project a bit. There's three components to this, as I see it from the outside, the city came in and said, we have some, I don't know if I'd call it surplus, but we have some land available, and the developer said, well, if we could achieve some type of value on that land, right. Here's the package we could put on it and sewer and water and some infrastructure had to be brought to it, which was, financed through the Build U.P. fund. Now I'm probably going to say this and you're going to roll your eyes, but from the outside looking in, it seemed like a relatively simple and straightforward transaction. Am I characterizing that correctly? It looked like everybody was on the same page. And this thing came together in pretty quick time for projects of this size. 

Yeah, you stole my word, straightforward is what I was planning on using to describe. Just working with Crystal Falls, the developer agreement in general, we work with a lot of different municipalities and we go through these negotiations with a lot of different people, and this was the most straightforward one that we've ever worked on. And, you know, it doesn't mean that it was necessarily simple. It just means that everyone put everything on the table and we discussed what we needed and Crystal Falls discussed what they needed and we came together. So, it was really a wonderful process and it was quite refreshing compared to a lot of others that we've worked through.

Is it creating some excitement? 

I got a call actually from kind of an empty nester couple in Iron River wondering how they get on the list for these. So, is it.

Has it been robust in terms of interest for these units? 

Yes, we keep an interest list here from day one. You know, even before it's kind of turned over to our marketing team, which now currently our marketing team would take anyone who's on the list. So you can send anything my way. You can go on our website and actually submit it. And then I believe we sent out a newsletter that will get everyone up-to-date on what's going on with this project.

So, I encourage everyone to do that. But yes, the excitement has been there. We're getting ready to do our big marketing push this year. So yeah, there is excitement all around with lots of interested parties.

 When are you going to put it out for full lease? Do you have a date in mind yet when this will be open to deposits or whatever the process you're following?

Well, we do open each unit as the building is complete. So, we'll come up with our phasing plan and then from that point on we do start teasing the units and Jacqui could talk a little bit more about the strategy behind this, but we do make sure people are allowed to rent the units as soon as they're available.

Great. And the end date when it's supposed to be fully complete, I believe is sometime in 2026. Am I correct on that?

Yes. 

How hard, and I need to do a little self promotion here on the Build  U.P. fund, but I believe we provided quite a value at the low-interest financing that we provided for this infrastructure. And I guess, I've talked about this opportunity with a lot of communities in the Upper Peninsula. And I've referred them back to Crystal Falls and said, look, there's a pattern here you can follow. It is not hard. I think one of the issues we have in some communities in the Upper Peninsula is that they know they have housing issues, but proactively going out and doing what Crystal Falls did seems to be somewhat of an obstacle from the city and or from Zach's standpoint, if you had any advice for these communities, what would you tell them to do?

My advice would be maybe sometimes go out of your comfort zone, a that the worst thing you can ever be told in any situation is no. So in this case, we could have been told, Hey, that's not in our market right now. We're not currently interested. And then you just continue to move on with normal business. So I would just encourage people to reach out to opportunities. And again, the worst you can be told is no.

And I don't know if Gerard has anything to add on there. 

I would add that one of the points that not only is the project itself going to be wonderful housing for people, maintenance-free housing for those who would seek that. So, those people live in nice homes around the area. They sell those, they move into the new and now we have a market of some nice houses that that'll be for sale, which we haven't had here in decades to be quite honest with you. So, that fact was also welcoming. Yeah, and that's when we talk housing and we talk about new housing, that's the benefit really to cycle the market and you have now new units coming down that in many places in the Upper Peninsula, people would never leave their homes and those would never turn over to the developer..

How did you determine that 68 units was the right size or was that what you could get on this piece of property? Was there a method there? What was your market analysis like? I'll let Jacqui take this one. 

As part of our research process, we have a lot of demographics that we look at, and so of course in this community, it does have a smaller population, but we know we can draw from the surrounding areas, which is what happened in our Florence and Niagara.

And you have a high homeownership rate, and what we look at is, we know sometimes it's high just because there are not a lot of rental options. So obviously, we saw that there was a hole in the market for quality rentals. And as we said, as demographics change some of the empty nesters are looking for maintenance-free living. So we've designed units specifically for them. So the number we do with the population, with similar size properties, what kind of demand we saw there. And so, for instance, we opened that Niagara property and it got fully leased up almost as each building opened, so we could see what the demand is. And that was 44 units. So we're like, I think we're going to go slightly larger because this has a draw for a little bit larger area in the county. And so we came up with this and we were also trying to achieve a certain unit mix with the one, two and three bedrooms. So there was a specific reason we wanted a certain number of each type of unit, as well.

Great. As you look at your market, and I don't want you to tell me any trade secrets, but are there, are you investigating other places in the Upper Peninsula? I know I've given your name out liberally to communities that say, well, you know, gee, we'd really like to take a look at something like that. What's your capacity? Or you're trajectory on our side of the border. 

Well, we would like to build more. Would like to have a companion. You know, eventually, we want to have a hub in Michigan. So we need to build around that hub and truly we have looked at so many different parcels of land in Michigan and different communities, and we're still looking for that next one. So we're open to reviewing anything and everything that comes our way. We have a really good feasibility process that we go through. Pretty standard research but then we make sure that it fits within what we need in order to have a successful development. Anything that you know about, send it our way because we are looking to build more. 

In Michigan. And after we build it, we are the property managers long term. So once we're in that community, like she said, we want to get more because there's those economies of scale. We can have more full-time employees, we can have maintenance technicians, our own painters and cleaners, and so we'll build that hub as she mentioned. So we are looking for more in that radius around this project. 

Excellent. Would you go all the way over to the east side of the upper peninsula, or is that geography a little too distant for where you're at right now?

I mean, we could, we would probably need a connector. You know, we want to make sure that we can connect the dots in a way so that we can properly manage the properties, as Jacqui mentioned. But yeah, we would consider anything. It just, you know, obviously the model that we've done here that Gerard and Zach have brought forth is the most successful model there is. And so if we can find another community that's willing to do that, to work through that with us, yeah, the sky's the limit.

Great. Well, I use this example everywhere I go to talk about what's possible. This is an example where a city, a developer funders, came together and said, we can put this deal together. It's not hard. And I think you've done a great service, not only to the Crystal Falls region, but I think the future here and what is possible.

So, from Invest and for Build, we thank you all very much for what you're doing, and wish you great success.