Members of the city Ways & Means Committee Wednesday evening unanimously gave the go ahead for city leaders to proceed with plans to partner with developer Bob Herkenhoff as part of an effort to develop 16 residential lots on the east side of Barrette Street, with Mayor Dave Genereux trying to ease any hesitancy among some council members by stressing the "pilot" nature of the fledgling Crookston Homestead Act.
The plan was crafted in large part by CHEDA Executive Director Craig Hoiseth and City Administrator Tony Chladek and endorsed by the CHEDA Board of Directors earlier this month. It involves Herkenhoff, who's looking to develop Nature's View Estates in Crookston's northeast corner, "gifting" the lots to the city in return for a tax abatement on three lots in the new subdivision for a period not to exceed 15 years. With possession of the lots, the thinking goes, the city would then be able to give them away to participating citizens, who would be required to build a home within a certain amount of time.
The idea behind the Crookston Homestead Act, Hoiseth and Chladek have explained, is that, since the housing market crash and "Great Recession" potential homeowners are having a much harder time getting financing to build a home. If they have to pay $15,000 to $20,000 for a lot up front, having enough equity to get a mortgage is that much more difficult. But if they get a lot essentially free of charge, that could serve as a springboard to building a home and adding to the community's tax base.
Herkenhoff is the first developer to sign on, but if the "pilot" project goes well, Genereux said, other lots in town could be eligible, and other developers could become partners in the Homestead Act. He stressed that Wednesday's committee action allows the city to continue moving ahead on the deal with Herkenhoff, but that many details still need to be worked out and that the city council will be able to weigh in on the plans in the future.
Back in "the game"?
The city, after many years of marketing and selling lots in Evergreen Estates and Eickhof's Third Resubdivision, both of which are now full, has recently been content to step to the sidelines and let developers like Herkenhoff, Kevin Ross and the Northwest Minnesota Housing Cooperative take the lead on residential housing development in Crookston. While lots are being sold and some homes are being built, Hoiseth said growth is essentially at a trickle.
The Crookston Homestead Act amounts to the city getting back into the "development game," At Large City Council Member Wayne Melbye said Wednesday. While stressing he's not necessarily against that, Melbye wondered why the city couldn't accomplish the same goals of the Crookston Homestead Act on land it already owns on the north side of Fisher Ave., adjacent to Crookston Sports Center.
Page 2 of 2 - "(Herkenhoff) doesn't want us to come in and compete with what he's trying to do, but he sure wants us to market these lots if we step in and take over," Melbye said. "So now we're going to step in and do the heavy lifting."
Eventually, the city could expand the Crookston Homestead Act to the land around the CSC, Chladek said. But, he added, the utility work necessary to build on the lots along Barrette Street will cost $80,000 to $100,000, while extending utilities to build a bunch of homes north and northeast of the CSC would cost "several hundred thousand dollars."
The city was interested in the land that's now Nature's View Estates several years ago, but backed away because of wetland concerns. Council Member Keith Mykleseth reiterated Wednesday that, although he's in favor of developing the 16 lots, there likely won't be any future phases possible further to the east because of wetland issues. "It will sure make for a nice view out the back for those who build there, and it will be nice for them to know that more homes won't be built there," Mykleseth said. "But I want people to know that, going forward, this is probably going to be the only phase we can do there."
Genereux and other council members agreed that if the Crookston Homestead Act's "pilot" phase jump-starts new home construction along Barrette Street, it's worth the city entering into a less-than-perfect partnership.
"Maybe this is what it takes to get things going; some people got together and kicked the can around and this is what they came up with," Genereux said. "If we can make this work we can add other parcels as others come forward."
Ward One Council Member Tom Jorgens said city leaders and the council have been talking about boosting residential housing efforts "for what seems like forever." The Crookston Homestead Act could be the catalyst everyone's been searching for, he added.
"But are you getting enough out of these 16 lots to make it worthwhile?" Melbye said. "That's what I'm wondering."