Opening prices for 11 lots to be set at market rate, and current incentives will continue forward, with room to enhance them
After discussing at length over multiple meetings in recent weeks how to best price 11 new home lots in Crookston and what incentive package might spur the most rapid construction on those City-owned lots after they sell, members of the Crookston City Council, Mayor Wayne Melbye and other officials, after another in-depth debate this week, pivoted pretty quickly and decided to take a more flexible approach as the lots are put up for sale.
Working on a one-year contract with Century 21 Red River Realty, the council will let the realtor advertise and otherwise market the 11 lots at “market-rate” prices, and if a buyer is OK with paying the asking price, that’s what the council would prefer. But if a buyer makes an offer below the asking price and a negotiation commences, the council will meet in closed session to decide what price to accept, or not accept.
And, as far as what type of incentive package to make available to people who buy a lot – whether it’s City-owned or owned by a private interests – the council will proceed with the current package that’s been in place for years, but will leave the window open to discuss modifications or enhancements in the future as lots are sold and people look to maximize their financial position as they prepare to build a home.
Of the 11 lots, three have been carved out of a portion of Hoven Lane Park on Hoven Lane and Century 21 Red River Realty’s Dave Hennings initially suggested that they be priced at $20,000, since they might be attractive to buyers because they’re in an established neighborhood with mature trees. The other eight lots, located on Pirate Drive, are seen as the City’s first foray into a much larger residential subdivision featuring multiple types of housing northeast of Crookston Sports Center. Those eight lots are expected to be priced in the $17,000 to $18,000 range.
The council is also poised to approve covenants restricting what size and type of home can be constructed on the 11 lots. On Hoven Lane, the minimum size is a bit smaller so the trio of home will mesh well with existing homes in the neighborhoods. The covenants for the homes on Pirate Drive will allow larger homes to be built.
As the discussion on selling the lots and incentivizing prompt home construction continues, City Administrator Shannon Stassen has put forth some options for specific incentives, and has made available $100,000 from the budget to provide direct assistance to people – he suggested up to $5,000 – who need as much financial leverage and/or equity as possible when they’re looking to buy a lot and build a house.
The general consensus among Stassen, council members, Melbye and CHEDA Executive Director Craig Hoiseth is that most people, when it comes to paying up to $20,000 for a lot and then looking to build a home that could cost around $250,000, aren’t going to have the financial equity readily available to seal the deal. Unless they’re financially comfortable already or have previously sold a home and have those sale proceeds to tap into, Stassen said it’s going to be difficult for most people to secure a mortgage without such financial assistance coming from elsewhere.
But none of these debates have gone on very long before someone mentions Bob Herkenhoff’s lots along Eickhof Boulevard, which were priced in the $25,000 range but “sold like hotcakes” anyway, and big, expensive homes have since been constructed.
Herkenhoff’s lots contain a “water feature” that’s accessible to the adjacent property owners, contains fish and is surrounded by mature trees. Some council members, such as At Large Council Member Bobby Baird, when the price of the lots on Pirate Drive is discussed, feel it’s somewhat ridiculous to market the “water feature” located next to Pirate Drive, which, he and others have said, is little more than a drainage pond dug as part of the construction of the Sports Center. Looking at the larger picture, Baird said he’s concerned that the City is pricing the lots too high and hoping that expensive homes will be built as a result – within a two-year required window in order to get any incentives. If the goal is to get homes built and on the tax rolls as soon as possible, he said he doesn’t think the council’s current strategy is going to achieve that goal.
“I’m sorry, but we’ve gotta do something different here. We want to get houses on the tax base, but I can’t see people jumping at two hundred something for housing,” Baird said. “Nothing against the community, but we don’t have the hourly wages for this. Not a lot of people in this town can afford a $250,000 house.”
Stassen, seconded by the mayor, said the council won’t know until it puts “something out there” and gives it some time to see what transpires. Everyone agrees that what might transpire, given uphill battle many will face when trying to buy a lot and build on their own, is developers might be the first to look at buying one or more lots and building homes. The council is going to have to realize that and embrace it, Stassen said.
“We have to start somewhere, so we say this is where we think we’re and we go with it,” Melbye said. “If it doesn’t work, we go back to the table.”