A pair of local real estate developers are seeking to transform the Corn Palace Inn into an apartment complex geared toward college students.

The Mitchell developers, Justin Thiesse and Jordan Hanson, brought their plan in front of the city Planning and Zoning Commission on Monday. It entails renovating the hotel to make way for up to 78 apartment rental units. While the Commission unanimously approved the plan, the board attached a contingency that stipulates the developers must comply with the state’s fire safety regulations, which could potentially require installing a sprinkler system throughout the complex.

“Mitchell Technical College and Dakota Wesleyan University only has enough dorms to support about 12% of its student population, so there is a huge demand,” Hanson said. “Our target audience is going to be people around the ages of 18 to 25. We want to see Mitchell continue to grow, and this project would help boost growth.”

Commission member Kevin Genzlinger questioned whether the location of the housing complex is the right area.

“I think the bigger question is if we want apartments like this on Burr Street. I’m sympathetic for both sides here, but is that the place for long term apartments?” Genzlinger asked.

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With the new Starbucks coffee shop nearing completion along South Burr Street, paired with the close proximity of Mitchell Technical College on the south side of the city, Hanson said the Corn Palace Inn is an ideal location for the type of apartment complex he and Thiesse are planning to develop.

While Thiesse and Hanson have big plans for the 1001 S. Burr St. hotel, they are in the process of purchasing the property from its current owner, Fredericksen Motels, Inc. The purchase is partially dependent on the city’s approval of the project, Hanson noted. The Mitchell City Council will have the final say in approving the apartment complex plan at the Feb. 1 meeting.

For the housing complex to materialize, Thiesse and Hanson have to apply for a conditional use permit that would allow the hotel rooms to become multi-family dwellings. However, the city’s building inspector John Hegg said the hotel’s conditional use permit switching from retail service and trade to multi-family dwellings would require more regulations, such as installing a fire safety sprinkler system that he noted can be a costly project.

“You have to look at the state fire codes, not the city’s. Every five units need to be totally fire separated or you put a sprinkler system in the building,” Hegg said. “I love the idea for the property, and I don’t want to see a dead horse in the town, but that will be the state fire marshal's ruling, I believe.”

Although the hotel industry has taken a major hit from the pandemic, Thiesse said there’s been a unique trend at the Corn Palace Inn. As hotel occupancy has dipped amid COVID-19, Thiesse said there has been an increase in long-term stays at the Corn Palace Inn, presenting an opportunity for the hotel to transition into an apartment complex with the option of monthly and yearly leasing.

“Our intent is to significantly improve the area with long term multi-family housing. Right now, they have about 30 people who live there month-to-month,” Thiesse said during Monday’s Planning and Zoning Commission meeting. “Whether we buy it or not, this is what it will be used for.”

While the apartment complex will target college students and younger single-family adults, Hanson said it could also provide temporary living quarters for construction workers who are in the process of completing a long term project in the city.

“This could also be used for a transition housing option for workers who were in need of a job and landed one in Mitchell, but the lack of affordable houses available are hampering them from moving to Mitchell right away,” Hanson said. “There are a ton of jobs available right now, but there are almost no places to live.”

Hanson pointed to the lack of affordable housing options, specifically rental properties, as another factor that motivated him to pursue the apartment complex project with Thiesse.

According to Brian Eliason, real estate broker with Mitchell Realty, the availability of affordable rental properties and apartments in the city has dwindled during the pandemic with the influx of new tenants. While rental properties and apartments have been a hot commodity, Eliason said local hotels have experienced just the opposite with steep drops in occupancy.

By allowing the hotel to operate as an apartment complex, Eliason said it would provide more affordable housing options to meet the current demand, while boosting revenue for local hotels to stave off the economic downturn that’s been induced by the pandemic.

“The hotels are doing the monthly rentals because the market demands it,” Eliason said. “There appears to be far too many motel and hotel rooms in Mitchell that have remained vacant, while at the same time the housing and rental market has tightened substantially. The plan for this property would help mitigate those problems.”