The Brainerd City Council Monday adopted a resolution Monday to support the Healthy Communities Partnership Housing Task Force in its efforts to reduce the number of blighted homes in southeast Brainerd. It also authorized the task force to use the city’s housing revolving loan fund for the program.
Anne Nelson Fisher, a task force member; Jeff Torfin, with the Greater Lakes Association of Realtors; and Dan Frank, with the Initiative Foundation, gave a presentation to the council Monday on the Scattered Site Replacement program.
The purpose of the program is to identify substandard housing, purchase the property, demolish or rehabilitate the home, then either donate the property to Habitat for Humanity or sell it to a building or buyer team.
The task force canvassed the city to find the area with the greatest concentration of substandard housing, which they determined was from about 11th Street Southeast to 19th Street Southeast from Laurel to Pine streets. This became the target area, said Fisher.
Fisher said blighted properties reduce the property value for surrounding well-kept homes in the vicinity and ultimately affect the community’s tax base.
While not all foreclosures involve blighted or substandard homes, the city of Brainerd so far had more than 60 foreclosed sheriff sales in 2010 and at least 50 foreclosed sheriff sales so far in 2011, said Fisher.
Torfin added that each foreclosure leads to a drop of about 1 percent in the value of nearby homes. He said the number of vacant homes has skyrocketed as a result of the foreclosure crisis.
Blighted homes reduce property values for surrounding neighbors, but also a lack of upkeep is contagious, resulting in an increased risk of crime, vandalism and fire.
Torfin said there are good signs with new real estate listings down only -7.3 percent year-to-date, a 9.1 percent increase from last year. He said closed sales in the city are up 12.7 percent year-to-date but there are other concerns. He said the city of Brainerd had a median sales price drop of 17.9 percent year-to-date from 2010.
Council member Kelly Bevans asked if private investors aren’t buying up these blighted homes and flipping them for a profit, how is this task force going to be successful.
“It’s not that our organization is going to make money at it,” Fisher responded. “It’s going to make a long-term investment in our neighborhoods by eliminating substandard housing which will then improve property values for the surrounding areas and ultimately the tax base.”
“This is a model project for the state,” Torfin said. “We do have an opportunity right now as the city of Brainerd.”
Torfin said big banks own many of these properties and want them off their books. He said the group is looking at banks to donate or sell the properties at a discount so the organizations involved in this program can ultimately get more families back into these foreclosed properties.
Fisher said the task force would like to use funds from the city’s housing revolving loan fund for the program, which the council approved Monday.
“If we’ve got money in the housing revolving loan fund that can only be used for housing, I would support that,” said council member Bob Olson. “I support what you’re doing.”
“The city had a very high rate of rentals and we feel to make neighborhoods stronger, increasing that owner occupancy rate is a big key because you have people buying into their neighborhood,” said Fisher.
“I think this is a win-win situation for the city,” said council member Lucy Nesheim.
The task force had asked the council to consider modifying the Willows II Tax Increment Financing plan at a future meeting for potential housing initiatives from the task force but the council did not support that request.