He’d like to do something similar a second time, only this time around have local contractors bid on aspects of the home construction
No collaboration goes perfectly, especially when there are a lot of players seated at the table and several of them are putting some skin in the game, but with the house built by Homark Homes in Red Lake Falls now sold for a price a little bit below the asking price in developer Kevin Ross’ Carman View Estates on Crookston’s southern end, CHEDA Executive Director Craig Hoiseth says the collaboration should be considered a success, and he’d like to do it again.
“Certainly, that is our intent,” he tells the Times.
But he envisions a slightly different methodology this time around. Rather than have Homark Homes construct a modular house that would be purchased through a shared investment involving CHEDA and Ross, Hoiseth said he and Ross have talked about a process that would have local contractors bid on each segment of the house’s construction. That model was tried previously, he explained, but “it’s not easy for our contractors and suppliers to wait on final payment until after the house sells, so ultimately we went with the modular home by Homark.”
Hoiseth hopes to bring a plan for the next potential collaboration involving Ross and his residential development to his board in the next couple of months. If the board is agreeable, Hoiseth said he’d like to try and get another home built in the development yet this year.
It hasn’t been easy for Ross when it comes to selling lots and getting lots of homes built in his subdivision. So he’s met with City of Crookston and CHEDA officials many times over the years, and previous collaborations have involved the City putting a lift station in to serve the subdivision, and the City also paving a gravel street. Ross also previously agreed to divide some of the largest lots into smaller lots to decrease their price and, in theory, make them more affordable for potential buyers.
But the collaboration with Homark took things to a new level. Minnesota Housing held a “housing institute” attended by representatives from Crookston, Red Lake Falls, Warren and East Grand Forks. With smaller, rural communities facing a “value gap” when it comes to the cost of building a new home compared to what it would normally sell for, the cities were looking for a way to close that gap. A modular Homark house was desired possibility.
To increase purchasing power, Crookston, Red Lake Falls and Warren ordered three houses from Homark. Doing so helped shrink the value gap. (Warren and Red Lake Falls have yet to sell their Homark homes.)
Financing partners included NW Multi-County HRA, Northwest Minnesota Foundation and United Valley Bank. In Crookston, CHEDA and Ross each put in dollars to show local “skin in the game,” Hoiseth explained.
Tri-Valley Opportunity Council facilitated the project, which Hoiseth said was a “huge” factor in keeping the project moving forward. “They did this at no cost and provided significant coordination services and also allowed us to bypass some of the regulations regarding bidding processes that we as municipalities are encumbered with,” he explained.
The Homark house in Crookston sold for $185,000 in cash, lower than the $199,999 asking price. CHEDA and Ross shared in “taking a little haircut” on the $15,000 gap, Hoiseth said, but that doesn’t mean the collaboration shouldn’t be deemed a success. “I really want to shout this out, to recognize it as a win,” he said. “We had a Homark home because it’s not easy to build houses, we funded the gap properly and, yes, we ate some of it. But that’s OK. It’s a win. …We have a happy customer, a resident of Crookston that will be paying property taxes and utilizing the infrastructure investment that the City put in.”
Ross also sold the adjacent lot to the customer in order to construct a shed/garage structure. When alerted to that specific development, a couple of Hoiseth’s board members expressed concern about adjacent lots having large outbuildings built on them as opposed to actual houses. Board member Paul Eickhof said “big sheds across from houses” look “terrible” and reduce the visual appeal of neighborhoods. “If that was on my street, I wouldn’t like it,” Eickhof noted.
Hoiseth understands the concerns, but said the large shed adjacent to a house, especially larger lots in more rural areas or developments on the edges of communities, is something that today’s homeowner often desires.
“Downsizing is easier said than done, and here in America we are fortunate to have the opportunity to accumulate a lot of possessions. Storing boats, four wheelers, ice houses, or an extra car does take up space,” he explained. “Having these things outside also can be quite unsightly and contribute to the devaluation of the asset so we need to at least look at the alternatives.
“We will likely see this same type of phenomenon play out on the cul-de-sacs behind Barrette Street (as part of a collaboration with developer Bob Herkenhoff) as well as at Carman View,” Hoiseth continued. “I personally do not have a problem with it, but certainly having the discussion about what we would like to see in each of our various housing developments is a valid and constructive one to have.”