Auction buyers breathe new life into vacant north Minneapolis homes

Bree St. Peters is in a rush to fix up her future home.

She and others who bought abandoned north Minneapolis houses at a special Hennepin County auction last year — under the condition they fix them up and live in them — are racing against a one-year Sunday deadline to get the projects done. She's removed most of the lead paint at the duplex, installed windows and gutted the kitchen, which is now awaiting new cabinets. But there's still work to be done.

Her progress is offering county officials lessons in what could become a new tool for revitalizing neighborhoods hit by the foreclosure crisis. Small rehab firms are poised to buy more North Side homes from the city this year than any year in recent history, but housing officials are most interested in seeing responsible homeowners invest and put down roots in the city's most challenged neighborhoods.

"I think it's a great opportunity," said St. Peters, who plans to get an extension to complete the work.

But results have been mixed. Half of the six buyers likely won't complete the rehabs. Of those whose projects will not be finished, one is awaiting sentencing in a federal drug and weapons case, and another was injured after falling off a truck. Still, officials are encouraged that the sale is producing a few new homeowners living in spruced-up houses — something that's not guaranteed in a regular auction where tax-forfeited properties go to the highest bidder.

"One of the complaints I hear from people in the neighborhoods is that these [bidders] are speculators, these are slumlords that are simply trying to grab these properties," said Mark Chapin, the county's director of resident and real estate services.

But the special auction buyers are different. "They're not speculators and they're not going to flip it," Chapin said.

Tax forfeitures are on the decline after peaking during the recession, but there are still plenty of homes that need extra care. The North Side has about 305 vacant properties, 62 percent of the vacancies in Minneapolis, some of which may ultimately fall into foreclosure or forfeiture.

A family home

The duplex St. Peters purchased on N. 3rd Street has been vacant for more than six years on a block comprising almost entirely rental properties. Someone had attempted to hot-wire its electrical box, starting a fire that scarred the house's back end. She bought it without touring the inside, but as a former contractor she could see it had good bones.

She walked through the property recently, explaining how it was taking shape.

"That's going to be my room!" her 4-year-old daughter, Zea Andriolo, exclaimed.

St. Peters thinks the special county auction was a good idea worth repeating. But a city requirement that only contractors perform the work made the rehab more expensive, she said, and the timeline was tight.

"The idea of us being able to get them done really quickly is a little tough," St. Peters said.

Channy Leaneagh, who lives nearby, said she's glad to have a neighbor who will be invested in the community.

"I've been waiting for somebody to move in there because it's a beautiful home," Leaneagh said. "And I was really excited when I saw someone fixing it up."

A friend of St. Peters is almost done rehabbing a home that was purchased by his father at the auction. Another success story is Jennifer Gonzalez, who will soon move into a freshly rehabbed home on 3rd Avenue North.

"It felt like a lot of work, but we got it," Gonzalez said.

Record year for sales

Independent rehabbers are also showing more interest in North Side properties.

A city program for "recycling" vacant houses — most of them tax-forfeitures — has already sold or approved 32 home sales this year, more than any prior year and double last year's total. Some are in rough enough shape that they are sold for $1, and most were sold for under $30,000. The buyers were mostly small rehab companies that will fix them up and sell them.

If the county's special auction buyers do not finish work and move into the homes, the county will reclaim the properties.

The average auction sale price was just upward of $15,000, but rehabs of long-vacant properties aren't simple. St. Peters paid $31,000 and expects her remodel will cost at least $60,000.

Chapin said the county is assessing how these special sales should fit into their overall tax-forfeited property strategy. Changes could include financing that would allow the county to pull back unsuccessful properties sooner, creating incentives for people to finish the rehabilitation, and including more homes that are easier to renovate.

"Of the six properties, five were condemned," Chapin said. "So you're dealing with some really difficult properties to start with."

Eric Roper • 612-673-1732

Twitter: @StribRoper