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Continued: Area near U seeks to keep owners in homes

  • Article by: IAN LARSON , Star Tribune
  • Last update: February 21, 2010 - 11:44 PM

When Cameron Naughton of Minneapolis started looking for a new home, she never imagined she would be able to afford the large duplex she had walked past for years in her Marcy-Holmes neighborhood.

But with help from a special loan designed to promote owner-occupancy in a neighborhood full of rentals, Naughton and her husband, Nicolas Ramirez, bought the house, renovated it and moved in with their kids on Dec. 30.

The $10,000 loan -- which will be forgiven if they stay five years -- came through a program called the University District Alliance, a joint effort of the University of Minnesota and surrounding communities to counter the deterioration that comes with too much rental housing.

"It's all part of a bigger bundle of work [to] improve the quality of life in the neighborhoods around campus, to encourage residence and investment," said Jan Morlock of the Office of University Relations.

But it's not students the alliance has in its sights.

"What we're opposed to are the poor conditions that students are living in as a result of the absentee landlords [who] don't take care of their properties and are not providing a good service for the students," alliance steering committee co-chairman Dick Poppele said.

When a buyer converts a home to a rental, its value jumps, but it's usually not long before it begins to get run down, Poppele said.

The alliance is composed of representatives from the university, the city, and neighborhood and business associations.

Administrators of the program say they've doled out most of the $150,000 that the loan program started with in 2008. It was part of a $750,000 appropriation that the alliance received from the state Legislature, to use for a package of incentives designed to buck the absentee-ownership trend.

First, the alliance paid 20 mostly older homeowners $2,000 each for a 25-year option to buy their houses for fair market value when they choose to sell. The alliance plans to renovate and sell the houses it acquires to people who agree to be owner-occupants.

Second, the alliance offered five-year, forgivable, $10,000 loans to 15 buyers such as Naughton and Ramirez who intend to occupy their houses. Only four of those loans remain available.

Finally, the alliance created a website to promote homes for sale to owner-occupants around campus.

The alliance and its agent, the Greater Metropolitan Housing Corporation, have so far bought only one house through the option program, but more will follow as residents move out, GMHC President Carolyn Olson said.

The group has no plans to buy back rental properties.

"I don't know of any pockets deep enough to be able to do that," Poppele said. "You're talking about buying a house for $500,000, putting in maybe $100,000 worth of repairs, and then selling it for what, maybe $250,000? That's a huge gap."

Said Morlock: "Even if we wanted to, I don't think we could freeze-dry anything the way it is."

With its larger, more expensive houses, the Prospect Park neighborhood has been a smaller target for absentee landlords, said Katie Fournier, an alliance member.

The group may request money from the Legislature and private sources to continue its efforts, Fournier said.

Prospect Park resident Wendy Looman said that unlike absentee landlords, residents invest community spirit, not just money, in a neighborhood.

In much of Marcy-Holmes, houses with two or three mailboxes, basement entrances and gangly fire escapes show how college rentals dominate. Weekends can be loud and parties late.

University political science senior Joshua Martinson, a Marcy-Holmes resident, said many of the houses are noisy and run-down.

"This is pretty much a college neighborhood," he said, "so if families want to move here, they should expect that [atmosphere]."

For some, the area still has a certain charm.

"I feel very rooted in this community," Fournier said. "I'm willing to take an occasional loud evening."

Naughton said that so far they've found the neighborhood mostly peaceful, and they're happy being close to work and their children's school.

Said Naughton, "We're just so excited for spring, to have a yard for the kids to play in."

Ian Larson is a University of Minnesota student reporter on assignment for the Star Tribune.

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