Minneapolis 927

St. Paul 2,000

Sources: Cities of St. Paul and Minneapolis.

• • •

"We're in a rebuilding mode ... the city is priming the pump.''

-- TOM STREITZ, Minneapolis director of Housing Policy and Development.

Editorial: Turning empty homes into opportunities

  • June 27, 2008 - 6:34 PM

It's a basic, well-known investment principle: Buy low, sell high. And with home prices dropping due to the credit crisis, foreclosures and the economy, it's a good time to use that advice.

Yet it matters mightily who gets those bargain-basement deals on homes -- especially in urban areas with growing numbers of foreclosed, vacant houses. The same lower prices that can benefit responsible buyers can also open doors for irresponsible speculators and slumlords. The last thing city neighborhoods need is a new wave of absentee owners who don't care for their properties.

To their credit, the core cities of Minneapolis and St. Paul are taking sensible, proactive steps to head off that problem. By adjusting some housing codes and regulations, the cities have developed good blight-prevention policies that can be models for other cities and counties.

Minneapolis, for example, now charges a $1,000 fee to change a vacant house from homestead to rental. The idea is to discourage such conversions. The city also imposes a hefty $6,000 annual fee on vacant property owners under certain conditions. That helps the city cover the costs of boarding up abandoned homes as well of maintenance tasks such as mowing and shoveling. Vacant houses can also affect policing costs when they attract drug dealing, vandalism or other illegal activity. According to housing officials, that high fee has prompted several owners to turn properties over to the city.

In another effort to reclaim and develop homes for families, the city successfully brought legal action against Roseville-based TJ Waconia for mortgage fraud that resulted in dozens of foreclosures on the North Side. As a result, the city controls 140 more homes that will be made available to responsible owners.

In St. Paul this week, council members wisely approved the last of several vacant-property code reforms. Under the new ordinances, owners must bring buildings up to safety codes before they can be sold. In addition, buyers of mid-level "fixer-uppers'' have to prove their financial ability to fix the homes before the sale can close. Basic safety concerns, such as improper electrical wiring, broken windows or deteriorating roofs, walls and ceilings must be addressed.

And like Minneapolis, St. Paul has increased the cost of owning a building that sits empty too long. The city once charged owners only $250 annually; now the fee is $1,000.

Minneapolis housing officials say their efforts are paying off because the hardest-hit communities are beginning to attract good buyers. Nearly 500 people recently applied for a city program that offered funds to use toward down payments or home improvements. Applicants must live in the house, get homeownership counseling and buy on a block with at least one vacant house.

It is difficult to see boarded-up homes sprout like weeds. But it is encouraging that city governments are taking smart steps to turn "buying low'' into building stronger communities.

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