Inez DeMare bought an empty house on a small lot in the Lyndale neighborhood of south Minneapolis in 1996, planning to restore it with her father to create a place for both of them to live.

Now he's long dead, and the house on W. 32nd Street sits empty and deteriorated — holding the less than distinguished honor of being the longest standing property on the city's list of vacant houses.

DeMare, for her part, continues to insist that the rehab will get done.

"Hopefully by the end of September," she said, even though she has not finished the work specified in two building permits she got more than two years ago.

Her situation highlights a bedeviling problem for city officials. The city's 550 vacant houses are in nearly every neighborhood of the city, piling up not only complaints from neighbors, but also expensive fines that can make it harder for owners to raise money needed to restore houses.

"We don't want to be punitive," said Nuria Rivera-Vandermyde, who runs the city department that tracks and monitors vacant homes. "This department has the opportunity to use the carrot or the stick approach."

She and her staffers say there is often a compelling story behind every property on the list. Sometimes mental illness or physical disability is a factor; often there are financial woes. Sometimes a relative wants to hang onto the family home for nostalgic reasons but lacks the ability to fix it up.

Of the hundreds of vacant properties in the city, five have held a place on the list for 10 years. Eighty have been listed more than five years; more than 200 properties have been listed more than three years.

Inspectors are required to determine whether a vacant house should be demolished or rehabbed and keep an eye on the properties to make sure that they are not becoming havens for squatters or nuisances.

The list peaked at 952 properties in 2008, when a surge in foreclosures caused the number of abandoned or neglected homes to soar. The list is smaller now than it has been at any time since 2006, and fewer buildings on the list are being demolished.

Annual fee raised to $7,000

City officials dramatically boosted the annual fee for owners of vacant homes to $7,000, up from just $400 before the foreclosure crisis began. The fee is designed to help the city recover the staff costs of making sure that vacant properties are in good order and not inhabited by trespassers. But policymakers also hope that the hefty charge will spur owners to fix their properties.

Homeowners, such as DeMare, say the annual fees sap the money they need for repairs. In 1998, two years after she bought the house, it was condemned by the city. That triggered a thorough inspection for work needed before the house could be occupied. Three years later, it landed on the vacant list.

DeMare said the sudden death in 1999 of her father, who had home-repair skills, left her depressed. She made little progress after that, getting no permits for work until 2010.

"I make sure it is well-maintained, and it's checked on a daily basis to avoid any problems," she said in her appeal to the city. "I'm told that it doesn't look like a boarded house."

In 2010, she finished some structural and basement work, but lost the property to Hennepin County for failing to pay property taxes and registration fees. The county ordered her to leave the land and stop all construction work.

Eventually, the city waived overdue fees and the county took the rare step of returning the property to DeMare.

So the house continues to sit empty. DeMare also lost a $2,000 bond she posted.

Nearby neighbor Lydia Walker calls the house "not a problem property at all."

But it's not pristine, either. Plastic fencing surrounds the excavation for the sidewalk steps. There's a roof over the front porch area, but no porch and no front door steps. Tarps and pallets are piled in back.

Hennepin as homeowner

Owners of other vacant houses have similar struggles. Robert Randolph has been working on his house in the Windom Park neighborhood of northeast Minneapolis for more than a decade.

He cited a construction injury and subsequent disability, parental illness and lack of money caused by city fees.

Randolph insisted that he is almost done rehabilitating the house, with only finishing wallboard and installing trim left. At 59, he said, he also took longer because he's planning to live out his life there and took pains to make a safe, sturdy, energy-efficient house "that will be here 150 years from now."

In the Victory neighborhood of north Minneapolis, the owner of a Thomas Avenue N. duplex held onto it for years, racking up dozens of nuisance citations, ranging from smashed windows to inoperable vehicles. In a 2011 appeal of his annual fee, owner Gregory Zurbay blamed being out of work for his slow progress on a property he said was his only retirement asset.

"These fines are in effect sapping the equity from my property," he said in 2011, shortly before forfeiting the property to the county for unpaid taxes.

Zurbay's dilemma highlights another reality with the list. Tax forfeiture means Hennepin County now owns more homes on the list than anybody else.

Once in county hands, officials can auction the homes or turn them over to the city if officials have redevelopment plans of their own.

A neighborhood group wants Zurbay's house demolished, but a developer is interested in it. So far, the city has made no decision.

"This one stood out because way before the foreclosures it was empty and the grass was tall," said Victory staff member Debbie Nelson, who added that such homes attract squatters and drive down values of neighboring homes.

A 2013 city analysis of longer-term vacant properties recommended ways to give owners more incentive to rehab buildings. One idea was to offer incentives for long-vacant properties weighed down by mounting special assessments. Other ideas include turning over the homes to individuals or groups to oversee the rehab and reaching out to banks that may still own the homes but have lost track of them.

Rivera-Vandermyde, who runs the city's regulatory department, said she prefers that her staff work with willing property owners. For some, the hefty registration fee is an incentive, but for others, the fees are a burden that put rehabilitation out of reach.

"My goal is not to assess property owners out of their house," she said.

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