Over 15 years, the South St. Paul Housing and Redevelopment Agency has purchased 109 houses, cleared the lots and seen 100 new homes built.
When it was time for Judy Leppe of South St. Paul to move to a nursing home last year, her daughter, Allyson Jelinski of Lakeville, wondered how she would ever sell her mother's substandard house.
The tiny structure at 723 1st Av. was so small it had no bedrooms -- just a living room, bathroom and kitchen with a sleeping loft reachable by ladder.
"South St. Paul requires a lot of updates before a home can be sold, so I knew quite a financial investment would need to be made," Jelinksi said. Even with improvements she doubted she could sell it.
Checking with the city, she was relieved to learn that the house would be one the Housing and Redevelopment Authority would buy and raze as part of a program to clear old lots for new housing.
Started in 1996, the program -- called Rediscover South St. Paul -- this fall logged its 100th new home built on lots cleared of dilapidated houses.
South St. Paul went into the housing renewal business because it could not count on the private housing market to remove dilapidated homes, said Mayor Beth Baumann.
The community, which will mark its 125th birthday next year, still has smaller lots and houses that reflect its history as a home to immigrants who came to work in the South St. Paul stockyards and packing houses that once lined the city's Mississippi riverfront.
Although renewal is happening on its own in cities like Edina, where developers regularly buy small older houses, raze them and build large new homes at a profit, in South St. Paul, where the lots can be as narrow as 40 to 60 feet, developers cannot build big enough homes to clear a profit if they have to buy, demolish and rebuild the houses on their own, said Branna Lindell, HRA executive director.
Before the housing renewal program began, people who couldn't sell their homes would turn them into rental properties, Baumann said. "It was really making the town look dilapidated."
Looking for a solution, South St. Paul followed the lead of Richfield, which began a similar program in 1990 and now counts 120 new houses as a result.
Funds for South St. Paul's program come from the city tax levy, government grants and the proceeds from lot sales.
Last year the HRA bought four homes at a cost of $145,277. After demolishing the houses and clearing the land, the total cost for the year came to $184,575. In the last three years, some houses purchased by the program have been in foreclosure, and that has made acquisition of the houses cheaper, Lindell said.
In 2006 -- before the drop in housing prices -- purchasing and removing four homes cost $751,247.
Fixer-uppers need not apply
"We only buy houses that are in really, really rough shape," Lindell said. "We are not looking to tear down houses that can be fixed up.
"Our mission is to try and stave off housing deterioration and to try to improve neighborhoods."
A new house on the block encourages neighboring homeowners to fix up their homes, Baumann said.
"It's been a win for people to get out of older homes that were beyond repair, and it's a win for the neighborhood," Baumann said.
Jelinksi said she was grateful for the program. Because mortgage companies won't lend money for a house without bedrooms, "we would probably have had to look for a cash buyer and sell it as is,'' she said. "Finding a cash buyer in this economy would have been kind of hard to do."
Lots close to St. Paul used to sell briskly, but the depressed economy has slowed lot sales and for the first time the HRA has an inventory of nine lots for sale, Lindell said. The HRA still is buying houses, and because values have gone down so much, it now gets some for less than $50,000.
The HRA typically sells lots for between $30,000 and $50,000, Lindell said.,
On a 40-foot lot, the city requires that the purchaser build a split-level, a two-story house or a rambler valued at between $222,000 and $267,000, with finished living area of at least 1,290 square feet.
On 60-foot lots, the city requires slightly bigger construction ranging from a $241,000 split level to a $293,000 two-story home. The new houses must be owner-occupied.
The HRA hears about homes that qualify for the program through city inspectors, neighbor complaints and Realtors. "We have our ears to the ground," Lindell said. "We don't want houses sitting empty, waiting to be sold."
Laurie Blake • 952-746-3287