The city of Andover found a buyer for property in a housing development that has not seen a new home built in three years, according to Andover City Administrator Jim Dickinson.
The Andover Economic Development Authority (EDA) reached an agreement with Ramsey builder Capstone Homes, Inc. to develop about 35 homes on approximately 20 acres at the Parkside at Andover Station housing development.
The city originally planned for multi-family housing in this area, but Dickinson said it was not having any luck marketing townhouses with so many options in neighboring cities, so the market steered the Andover EDA toward single-family homes.
The agreement stipulates that Capstone Homes will purchase two lots on 140th Avenue by May 1, a third lot within 120 days and then another lot every 45 days from the Andover EDA. Community Development Director David Carlberg said that some grading and platting will need to be done by the city to prepare these lots for single-family homes.
The price per lot is on a sliding scale, but Dickinson said the average price per lot, assuming Capstone Homes purchases all 35 lots, is about $35,000 per lot.
This is a low price, he said, but the lots are smaller. A standard single-family home lot in Andover is about 85 feet wide. These lots will be about 60 feet wide.
Dickinson said if Capstone purchases all lots according to the terms of the agreement, the city would receive approximately $1,221,000.
Councilmember Julie Trude asked why the city could not have multiple builders instead of one.
According to Community Development Director David Carlberg, the city put out requests for proposal. There was only one other builder that expressed interest and it only wanted to buy one lot and see how it went.
Trude agrees that it is probably best to have one builder that has a consistent appearance throughout the neighborhood. She has been impressed with other homes this company has developed in Andover and Blaine. They built 48 homes in the Cardinal Ridge development, according to Capstone Homes Owner Ben Minks.
The big pluses are this project will turn around faster than if the EDA had foreclosed on the property last year and homes will start being added to the tax roll and people will be moving in, Trude said.
“That whole area has languished for so long,” she said. “I want to see that neighborhood finished.”
When asked how he thinks the city made out financially from all of this considering the history this site, Dickinson said he feels the city is on track to break even.
“What we’re getting out of it is homes and tax base,” he said.
The housing plan
Minks said his company is planning to build split-level entry homes that would be marketed for around $200,000. The homes would have three bedrooms and two bathrooms and include some high-level amenities like hardwood floors in areas of the house like the kitchen and dining room and granite counter tops.
According to Minks, the market for single-family homes is more attractive now compared with townhouses.
People had turned to townhouses because of the lower prices, but now lower lot prices have made single-family homes more affordable and single-family homes also historically have a better resale value, Minks said.
The EDA is essentially the development arm of the community. Many cities have EDAs because they have taxing authority like the city council and they can purchase and develop land to spur economic growth.
Andover’s EDA includes all five members of the city council along with two residents appointed by the council.
The Andover EDA has been on-again, off-again owners of this property. It originally purchased land from Anoka County in the late 1990s that has become the Andover Station North development area, which includes the Parkside housing development and the ball field complex.
The purchase price, according to Dickinson, was $280,000.
The EDA sold land to Bruggeman Homes for $1.87 million. Premier Bank of Andover financed the development and provided a mortgage, which Dickinson said was in second position to Andover’s mortgage on the property.
Bruggeman Homes ended up building 28 multi-family housing units which were three eight-plexes and one four-plex. The company also built two single-family homes.
Bruggeman Homes ceased operations in January 2011, according to Dickinson, so city staff spent several months negotiating an agreement with Premier Bank before agreeing in October 2011 to pay $1.385 million for the property remaining to be developed along with an existing model home that was in an eight-plex.
The Capstone Homes development would not be the final phase in this Parkside development area. Dickinson said there is still an area where additional multi-family homes could be built.
Eric Hagen is at [email protected]