Developers KEH, Inc., are proposing to renovate the former Colonial Manor nursing home in Balaton into a 10-unit apartment building. They were seeking help from Lyon County and the city of Balaton to raise matching funds for a state grant application for the project.

MARSHALL — A proposal to renovate a former nursing home in Balaton into a 10-unit apartment building met with a positive response from Lyon County commissioners on Tuesday. Helping developers with matching funds for a state grant application would support area workforce housing needs, commissioners said.

“To me, this is an easy EDA thing to do, to get started at it. Because we’ve talked about that for a long time,” said Commissioner Rick Anderson.

Commissioners voted to designate $100,000 for the housing development project.

Kasey Holm appeared before the county board Tuesday to talk about a proposed renovation project at the former Colonial Manor nursing home building. Developers KEH, Inc. closed on the property early this year, he said.

Colonial Manor was originally owned by the city of Balaton. The nursing home closed in 2019.

“What we’re intending on doing is creating market-rate housing out of the existing building. So that will consist of single bedroom, two-bedroom and possibly three-bedroom apartments,” Holm said. “The project totals are looking somewhere around the $650,000 mark for the rehab of the property.”

Holm said KEH was applying for grant funding through the state Workforce Housing Development Program. This year, the grant program has up to $39 million in deferred funding available for applicants statewide.

“The applicant has to be a government entity, it cannot be private. So, the city of Balaton has agreed to sponsor KEH, Inc., in the application for this grant,” Holm said. “At this point, we are early in the planning of this project, but it’s going to have to go fairly quickly. The grant (application) is due by the end of April.”

The grants also require a local match. “We’re trying to kind of get our match, because if we can’t get that match lined up, really there’s no sense in applying for the grant,” Holm said.

“We’re looking to try and get around a $125,000 to $130,000 match. That would allow us to get approximately $250,000 from the state to go toward the project,” he said. The rest of the cost of the project would be on the developers. Holm said the city of Balaton had agreed to a tax abatement for part of the local matching funds, and he was approaching Lyon County for additional support.

Anderson said the apartment project would be a good way for the county to start addressing ongoing economic development needs, like housing and child care.

“Those are two issues that we think benefit everybody in the county,” he said.

Commissioners didn’t name a specific source for the county’s portion of the matching funds. However, they did discuss possible sources like funds from renewable energy production, or the county’s American Rescue Plan Act funds.

Commissioners voted to designate $100,000 toward the Balaton housing project.