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Patrick Springer and Erik Burgess, Forum staff writers, Published March 14 2013

Fargo buyout homes likely to go for pennies on the dollar at auction

FARGO - Seven stately homes in the flood-prone Harwood Drive and Oak Creek Drive neighborhoods go on the auction block Monday.

The houses, with assessed values ranging from $340,800 to $510,500, would make attractive homes in new locations, but there’s a catch for prospective buyers:

Width restrictions imposed by the city of Fargo would make moving the homes to a new location difficult or impractical, according to a home mover and interested buyer.

The city of Fargo bought the houses to improve flood control measures under its voluntary buyout program and is selling the properties at auction to recoup taxpayer dollars.

City commissioners have authorized buyouts of up to 56 homes this year. If all the homeowners took the offers – 110 percent of assessed value – the total cost would be more than $23.5 million, according to city figures.

Jim Pralle, of Horace, has his eye on one of the homes slated for auction, 501 Harwood Drive S., with an assessed value of $456,600.

But after consulting with a house mover, Pralle concluded it would be impossible to move the house he’d like to buy.

To preserve trees and other property, the city has imposed a width restriction of 27 feet for homes to be removed from Oak Creek Drive, 32 feet along Harwood Drive, both in south Fargo.

John Schmidt, a house mover from Kindred, has been consulted by homeowners and prospective buyers in both neighborhoods about the feasibility of moving homes, given the width restrictions.

His conclusion is that obstacles and width restrictions make it impossible or impractical to move any of the buyout homes along Harwood Drive.

Removal would require homes to be broken into several pieces, driving up the cost as well as decreasing the attractiveness of moving the homes, Schmidt said.

Pralle contends that the city would be better off by sacrificing a few trees on Oak Creek Drive so whole houses could be moved, instead of removing salvage materials, which he said is the likely result because of the width restriction.

Alternatively, one home not on Monday’s buyout auction list could be removed to allow others to be moved out, Pralle said.

“It’s sad to see these houses torn down,” he said, adding that purchases of whole houses would bring much more revenue to the city than homes purchased only for salvage materials.

Although the homes will be sold at auction Monday, in a sale beginning 1 p.m. in the City Commission chambers at City Hall, the houses don’t have to be removed until the end of June, Pralle said.

“Obviously we’ve got some time,” he said. “I don’t understand why they’re so eager to sell them or tear them down. I don’t understand the rush.”

Nathan Boerboom, a division engineer for the city of Fargo, said many boulevard trees would have to be cut down in both neighborhoods to relax the width restrictions, imposed after input by city foresters.

“The problem is there would be significant tree removal,” he said. “It’s not just a few trees.”

The heavy loss of trees would diminish the neighborhood’s attractiveness to remaining homeowners, he said.

“The city does not want to adversely affect any of our boulevard trees by the removal of these homes,” Boerboom said. “We’re allowing for some tree branches to be tied or moved, as long as they’re not damaged.”

The determination of whether a home can be moved, in pieces or in whole, is left up to the buyer, as long as the restrictions are met, Boerboom said.

The loss of trees does pose a dilemma for the city, balancing preservation of neighborhood values with the possibility it could recoup significantly more money through auction sales, Schmidt said.

“I’m sure Fargo is in a hard spot,” he said, adding he believes that sacrificing five homes would enable the sale of 15 homes, including a future auction round. “It’s a hard place for them either way.”

Another auction is planned later this year, with hopes it will be in July or August, Boerboom said. Circumstances likely will allow more flexible width restrictions for those homes, he said.

Once homes are removed, the city plans to build flood levees in both neighborhoods, part of Fargo’s push to raise flood protection to a Red River flood of 42.5 feet, regarded as the 100-year flood level.

Jim Lakoduk of Pifer’s Auction & Realty, which is handling Monday’s auction, said many prospective buyers have been looking at the buyout homes.

“There is a lot of interest,” he said. Potential buyers are concerned about the ability to move the homes, a decision that rests with the buyer, he added.

“Almost anything can be moved if somebody’s got enough money and they’re willing to chop it in pieces,” Lakoduk said.

Rob Hasey, a civil engineer for city of Fargo, said bidding will start at 10 percent of the price the city paid for the buyout homes. If no bids come at 10 percent and the original owner isn’t interested in buying it back at 8 percent, the city will restart bidding at 1 percent of what it paid.

Hasey expects many of the homes will be bought at the minimum price for salvaging, “even if they just get cabinets and windows and doors out.”

“I don’t anticipate any of them to not sell,” he said.

Fargo buyout homes in Monday auction

1. 4489 Oak Creek Drive S., amount city paid: $496,100.00

2. 4481 Oak Creek Drive S., $375,760.00

3. 4465 Oak Creek Drive S., $487,410.00

4. 4469 Oak Creek Drive S., $374,880.00

5. 501 Harwood Drive S., $502,260.00

6. 4461 Oak Creek Drive S., $438,130.00

7. 437 Harwood Drive S., $561,550.00

If you go

What: Auction of Fargo buyout homes

When: Monday at 1 p.m.

Where: Fargo City Commission room in City Hall, 200 3rd St. N.

Info: A public open house will be held in the homes on Saturday from 1 to 4 p.m.

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Readers can reach Forum reporters Patrick Springer at (701) 241-5522 and Erik Burgess at (701) 241-5518