After years of slow growth, Watertown courts home buyers

  • Article by: EMMA NELSON , Star Tribune
  • Updated: July 8, 2014 - 1:52 PM

The town is offering permit incentives until Dec. 31 in an effort to fill its vacant lots.

Richard and Julaine Schimmel moved from Crystal to a spot outside Watertown in 1970, and brought their house with them.

More than four decades later, they’ve decided to leave the house but not the community. And it’s a good time for it — in an effort to fill its vacant lots with new houses, Watertown is currently offering buyers a nearly $10,000 incentive.

“This is really the community we wanted to be in,” Richard Schimmel said of the Carver County town. “We’re just trying to find ways to make it more affordable.”

It’s common for small towns to court buyers this way, offering everything from tax abatements or discounted sewer hookups to free lots.

“[Watertown is] a third-ring community … and as such they’re a little bit light on the traditional amenities,” said Arnie Esterbrooks, vice president of the land development company Rolling Green. “So you have to entice people to move in there.”

Watertown has about 4,000 residents, and 385 vacant lots.

The number of building permits for new single-family homes there spiked in the early 2000s, with an average of about 70 permits annually from 2000 to 2004. The bubble burst with the recession, though, and in 2012 there was just one permit issued.

The recession didn’t send Watertown’s vacant lots into foreclosure the way it did in nearby towns like Waconia and Delano. Instead, developers have held on, paying their taxes and continuing to market their properties. It’s kept prices high, which in turn has made it tough to attract new residents.

Esterbrooks, who’s collaborating with the city on the incentive program, said the recession forced his company to reduce prices across the board by about 30 percent.

“We were in a situation where we lowered our prices about as much as we could possibly do, and it still wasn’t getting [buyers] off the fence,” he said.

To mitigate that, the city is offering 15 permits with a $9,500 credit for water, sewer and stormwater trunk fees for new single-family homes and townhouses until Oct. 31. If any permits are left after that, they’ll come with a $7,125 credit until Dec. 31. As of June 25, seven permits were spoken for.

City Administrator Shane Fineran said the short time frame is meant to spur quick growth.

“We didn’t want this to drag out over a period of 12 months or 18 months,” he said. “We wanted to see some activity right now.”

Offering this incentive means Watertown will take a financial hit, but one that both city officials and developers hope will be temporary.

“We’re really not looking right now at the profit margins,” Esterbrooks said. “Short-term loss will give us a long-term gain.”

Waiting for newcomers

Though several lots have been claimed, not all will house new residents.

Developers are using some of the lots to build spec homes that may entice future buyers, Fineran said. Meanwhile, other lots are going to current residents, like the Schimmels.

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