Erik Burgess, Published April 08 2013
Moorhead won't hold 'fire sale' for acquired lots
Following tax forfeitures, the city came into ownership of 38 undeveloped lots in Stonemill Estates and 20 such lots in the Johnson Farms subdivisions in south Moorhead last year. The city is responsible for paying off the bonding used to develop the land, which would have been paid for with special assessments if the land had been developed and houses had been built.
The City Council voted 6-1 to approve setting aside $25,000 in general fund reserves to maintain the lots and market them. In the same action, the council also removed those 38 lots in Stonemill Estates from a tax-increment finance zone that was previously established in that subdivision.
Mayor Mark Voxland said the lots, which range in price from $17,500 to $47,000, will not be dumped into the marketplace at a below-market value, which is what happens in a “fire sale.”
“We don’t have to sell them quick,” Voxland told The Forum before the council meeting. “We know that we need to sell so many a year, and that’s what we’re going to do. We’re going to market these as if we were a business.”
In Stonemill Estates, the developer was a Twin Cities firm that got hit hard by the housing recession of 2008 and decided to abandon some of the development work here, Voxland said. He said the same was likely true for the Johnson Farms subdivision. There are some homes already built in either subdivision, but each has many open lots and some cleanup work to be done.
“They just didn’t do anything with it,” Voxland said of Stonemill Estates. “They developed it, then the market turned south and they disappeared.”
Voxland said Monday that he didn’t know exactly how many lots would need to be sold per year to maintain bond payments.
Councilwoman Heidi Durand said rumors had been circulating that the city was planning on underselling the lots, which would frustrate and hinder private development in the city.
Deputy City Manager Scott Hutchins echoed the mayor’s comments.
“The concept is not at all to undercut the private sector whatsoever,” Hutchins said. “A fire sale, an auction, none of this is occurring here. These are properties that we hope we’ve priced correctly to the market.”
Hutchins said developers have been kept in the loop, and that if adjustments need to be made to the city’s pricing of these lots, the city would be open to those revisions.
Some council members said Monday night that the city playing the role of developer is not a desirable position to be in.
“We didn’t ask to be in this situation, no doubt,” said Councilwoman Brenda Elmer. “But the fact of the matter is, these lots have come over to us.”
Voxland said when developments are starting out, the city uses bonding to provide 67 percent of the costs to build new infrastructure while the developer provides 33 percent.
Councilman Luther Stueland, who voted against the measures, said the city’s policy to pay two-thirds for a development put them in this unsavory situation.
“Right now, it’s the taxpayers in Moorhead that are stuck holding the bag here,” Stueland said. “Nobody wanted to be in this situation, but we kind of asked for it.”
The city also plans on replatting Stonemill Estates, Voxland said. The previous developer planned on developing the area to include alleyways, which Voxland said the city would like to remove.
“We’re basically giving our staff the power to redo that whole area into something that’s more in line with the market in 2013,” Voxland said.
Councilman Steve Gehrtz was absent Monday night.
If you go
What: Neighborhood meeting
When: 4:30 to 6:30 p.m. Wednesday
Where: S.G. Reinersten Elementary, 1201 40th Ave. S., Moorhead
Info: Discussion of concerns regarding the city’s maintenance of tax-forfeited lots in Stonemill Estates and Johnson Farms subdivisions.
Readers can reach Forum reporter Erik Burgess at (701) 241-5518