City of Sandstone excited for Essentia Health backed workforce-housing project

Thanks to strong community support from key partners like Essentia Health, the City of Sandstone is excited to move forward with an important project that will bring 32 units of workforce housing to the area. Driving this important work is funding and support from engaged community partners that includes a contribution of nearly $180,000 from Essentia Health.

The much-needed housing units will be located in the historic Sandstone School in the heart of downtown. The building is listed in the National Register of Historic Places, with the earliest construction from 1901 and 1910. The building has been vacant since 2004. With abatement complete, construction began on July 14, and should be move-in ready by July 2026.

After securing most of the funding, the City of Sandstone was left with a $1.7 million gap. Essentia contributed more than 10% of that – $179,400 – to bring the project to fruition.

“People have been wanting something to happen at ‘The Rock’ ever since the school closed in 2004,” said Kathy George, the administrator for Sandstone. “They have watched as this historic, iconic building, which once was the heart of the community, deteriorate – with very little hope of coming back to life. The current redevelopment plan is exciting and community members are so grateful to developer Meghan Elliott for her efforts to bring the ‘heart’ back to the community.”  

“Essentia is thrilled to collaborate with the City of Sandstone on this essential workforce-housing project, addressing a critical community need,” said Sam Barney, administrator at Essentia Health-Moose Lake. “Our mission to make a healthy difference in people’s lives goes beyond exceptional care — it drives us to foster vibrant, thriving and sustainable communities. By contributing to the revitalization of the historic Sandstone School, we’re reinforcing our commitment to economic vitality and quality of life in a region we’re proud to serve.”

According to a study performed by the City in 2023, there are no market-rate units available for rent in Sandstone – a big problem as several businesses in the area are planning expansions that are dependent on additional housing.

These 32 units in the Sandstone School will be located near several natural resource areas, including multiple parks and the Kettle River. The site also includes significant green space, with on-site parking and bike storage. The project will be a certified historic project, meaning that the historic character of the building will be retained, and all work will be reviewed and approved by the State Historic Preservation Office and the National Park Service.

This project revitalizes an important community resource, creates housing to support the local workforce, increases safety and significantly increases vibrancy downtown.

Rental rates will be targeted at individuals earning between 60-80% of the area’s median income.

The rest of the $17-million project was supported by state and federal historic tax credits, the Minnesota Historical Society, tax increment financing, the Minnesota Climate Innovation and Finance Agency, Minnesota Housing Finance Agency, the Initiative Foundation and more.