St. Paul is about to find out how the do-it-yourself approach to urban rehabbing pays off.

Four long-vacant 19th-century houses in the historic Dayton’s Bluff neighborhood are going on the market, thanks to months of renovation work directed not by private developers but by the city’s Housing and Redevelopment Authority (HRA).

It isn’t a moneymaking venture for St. Paul. The first phase of the project cost $1.2 million, including what the HRA paid for the houses and what it cost to restore them to historic standards and add the amenities that homeowners expect, including two-car garages. The first two houses will be listed for $219,900 and $165,000.

What made it a good investment was the chance to stabilize a neighborhood worth saving, said City Council President Kathy Lantry, who represents the stretch of E. 4th Street between Maria and Bates avenues that is the heart of the Fourth Street Preservation Project.

“We really needed to fundamentally change the balance in the neighborhood … and this opportunity is not going to come around again,” she said.

Change already was evident this week, as a work crew for Hugo-based Charles Nosie Construction put finishing touches on a gray Italianate-style two-story with mustard trim at 326 Maria.

Project manager Bruce Boudreau said the job had been a challenge because of the customized millwork and other details the city required to maintain the house’s 1879 character. He said those details have extended the work, prompting the HRA to fine Nosie $100 for each day beyond the agreed-upon June 15 end date.

“But it’s nice to see it done,” Boudreau said. “It’s going to really bring the culture back to the neighborhood.”

For the first phase of the project, the HRA acquired five houses on the block, demolished one to make room for garages and renovated four of them. The average construction cost per rehabbed house came to $230,000.

Proof of real change will come if private money follows the public investment, said Roxanne Young, project manager with the St. Paul Planning and Economic Development Department. She said it was part of St. Paul’s shift to a new “cluster” development strategy that upgrades homes in pockets rather than scattered over 20-block stretches.

“We can have a greater impact when we work within a two-block area … If we say we’re going to be doing these projects within this cluster area, we’re hoping to incent other private developers to come within it,” Young said.

City Council bought houses

The Fourth Street project began in 2008, when the City Council acting as the HRA began snapping up houses in the area with funds from the city’s Invest St. Paul program — most of them rundown rentals notorious to police — to sell at bargain rates to buyers who promised to rehab them and ensure they were owner-occupied.

The foreclosure crisis helped the city get good deals on the homes, which would then be sold for less to those willing to fix them up, Lantry said. It bought the Maria house for $65,000 and offered it for $26,000. A fire-damaged house at 689 E. 4th St. was purchased by the city for $65,000 and put on the market for $1.

But rehab estimates ran into the six figures, and many prospective owners were scared off by the amount of work required. Each house needed new plumbing, electrical and HVAC systems, and had to be restored within the historic district’s guidelines.

“We couldn’t get good folks to invest,” Lantry said.

Phase II: 3 more houses

The lesson learned, she said, was the city had to invest first to get the ball rolling and build confidence in the neighborhood. Using funds from the federal Neighborhood Stabilization Program, the HRA became the developer and hired contactors for the work.

The first two houses completed, an 1885 duplex at 685-687 4th St. and a 1900 Queen Anne at 693 4th St., will be going on the market soon. The other two homes, the Italianate at 326 Maria and an 1899 Queen Anne at 695 4th St., will be put up for sale later this month. The properties will be listed on the MLS database used by Realtors and promoted on city websites.

Phase II of the project begins next week, when the city’s Heritage Preservation Commission will hold public hearings on the rehabbing of three houses across the street. Work on them is expected to begin this fall, with completion scheduled next spring.

“If the city is going to invest, it ought to be obvious,” Lantry said. “If you drive down 4th Street today, you ought to say, ‘Holy mackerel, what a difference.’ ”