$38M to turn tide of foreclosure in Minnesota

  • Article by: CHRIS HAVENS
  • Star Tribune
  • February 28, 2009 - 9:05 AM

A 100-year-old vacant Frogtown home with boarded windows and cracked ceilings served as the backdrop Friday to an announcement by state and local officials that more than $38 million will go to revive Minnesota neighborhoods reeling from the effects of the foreclosure crisis.

The federal money is intended to reduce the number of vacant buildings in St. Paul by 5 percent and help Minneapolis buy and fix more than 150 houses. Along with millions of dollars aimed at similar efforts in smaller communities, it's expected to create 250 new jobs, said Dan Bartholomay, Minnesota Housing Finance Agency commissioner.

The money comes from the $3.9 billion Neighborhood Stabilization Program passed by Congress last year and administered in the state by the Minnesota Housing Finance Agency. One of the largest recent infusions of cash to revitalize neighborhoods, the program will send $27 million to metro governments and $11 million to outstate communities to buy property, demolish or fix up vacant buildings and provide financial assistance to qualified homebuyers.

Out of 21 recipients throughout the state, Minneapolis will get $8.4 million, the largest share of the money. That should allow the city to buy about 80 foreclosed properties and rehab another 80, city officials said.

St. Paul will get the second-highest amount, at $6.3 million. That should allow the city to purchase from 80 to 100 properties for demolition or rehabilitation.

The Washington County Housing and Redevelopment Authority will receive $1.6 million. That money will be used to buy 20 foreclosed houses in Cottage Grove and 10 houses and one 12-unit apartment building in Oakdale, said Barbara Dacy, the agency's executive director.

A national problem

The explosion in foreclosures that has led to vacant buildings and deteriorating neighborhoods is a problem that spans beyond Minnesota's borders. Cities and agencies around the nation are attacking the crisis through many different ways, from filing lawsuits to buying up problem properties.

"This is not a task that just one group of people can work on," said state Sen. Linda Higgins, who represents the hard-hit area of north Minneapolis.

The core counties of Hennepin and Ramsey had the highest number of foreclosures in the state in 2008, with 7,300 and 3,000 respectively. Dakota County had more than 2,000 foreclosures, and Anoka County had more than 2,200.

Outside the metro, St. Louis County saw 476 foreclosures, Stearns County had 422 and Olmsted County had 403.

In the city of St. Paul, nearly 2,000 properties -- the majority of them residential and tied to foreclosure -- sit vacant.

The problem isn't just the number of foreclosed and vacant houses, but the concentration in some low-income neighborhoods, said St. Paul Mayor Chris Coleman.

The city will target the money toward the Frogtown, North End, Lower East Side and Dayton's Bluff neighborhoods. Those neighborhoods are part of Coleman's $25 million Invest St. Paul initiative and were selected on the basis of property values, home vacancies, mortgage foreclosures, crime rates and water-utility shutoffs. The city is trying to acquire vacant properties that are massed in various blocks.

The challenge, of course, is that there are never enough resources. While the $6.3 million might not solve all of St. Paul's problems, it will go a long way, Coleman said.

There are 3,000 foreclosed properties in Minneapolis, but just one can create problems for an entire neighborhood, said Mayor R.T. Rybak.

While his city is buying, boarding and razing buildings, it's also providing more than $1 million in incentives to lure homeowners into neighborhoods with solid, but empty, houses.

It's a recovery process, Rybak said, that will happen one property at a time.

"We're going to win back our neighborhoods," he said.

Chris Havens • 612-673-4148

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