Paying the cost of foreclosed/vacant properties

A Twin Cities-based organization and some Coon Rapids residents have called on the Coon Rapids City Council to take steps to stop paying the cost of vacant/foreclosed homes in Coon Rapids.

Logo on the website for Our Future Minnesota, which, together with some Coon Rapids residents, wants the Coon Rapids City Council to enact an ordinance requiring banks to pay for the cost of their foreclosed/vacant properties in the city. Source: Our Future Minnesota
Logo on the website for Our Future Minnesota, which, together with some Coon Rapids residents, wants the Coon Rapids City Council to enact an ordinance requiring banks to pay for the cost of their foreclosed/vacant properties in the city. Source: Our Future Minnesota

Four residents spoke at the June 5 open mik portion of the Coon Rapids City Council and presented a petition with 164 signatures from residents supporting a model ordinance that was presented to the council by Our Future Minnesota.

Under the proposed ordinance, banks would be required to register their foreclosed properties with the city, including contact information on who would be maintaining the property and the registration process would also include a fee to cover the maintenance costs of monitoring the property.

Our Future Minnesota, whose website states that “it is engaging parents, families and students across Minnesota to work for a better state – one with excellent schools, quality care for our seniors and safe roads and bridges” – has launched a “Big Banks Make Bad Neighbors” program.

According to Emily Bisek, communications director, Our Future Minnesota, Coon Rapids was chosen by the organization for the model ordinance because it has been hit hard by foreclosures and has a lot of vacant homes.

“Coon Rapids has taken some good first steps in dealing with the vacant homes issue, but we want it go all the way and make a real difference,” Bisek said.

Specifically, the model ordinance would require big banks to pay for the maintenance of foreclosed properties, instead of taxpayer dollars picking up the tab, she said in a press release.

A city of Minneapolis ordinance was cited as an example by Our Future Minnesota; it charges the owner of a foreclosed property $6,000 up front, regardless if there are any issues with the property that the city has to deal with.

As is normal with an open mik request, the council referred it to staff for a report to be provided at the next council meeting which is Tuesday, July 17 because the Tuesday, July 3 meeting has been canceled by the council because of its proximity to the Fourth of July holiday.

According to a report issued by Our Future Minnesota, between 2008 and 2011 the number of unsecured homes jumped near 350 percent and the number of complaints for unkempt properties “skyrocketed” from 172 in 2005 to a high of 1,244 in 2009, while during the same period, the number of times the city had to send out a crew to clean up those properties went from 11 to 374.

One of the open mik speakers, Jeanie Johnston told the council that she and her husband now live in 425 square feet in Columbia Heights after formerly owning a 3,500 square-foot home in Coon Rapids.

The bank foreclosed on the home after refusing to negotiate their mortgage after she lost her job and she and her husband, the longtime pastor at Crossroads Church on Foley Boulevard, had difficulty meeting their payments, she said.

“Foreclosed properties rip apart the fabric of the community,” Johnston said.

“Taxpayers should not be footing the bill to clean up neglected properties.”

Resident Kristina Clark and her husband are currently going through foreclosure on their Coon Rapids home and the bank won’t modify the loan so they can keep their home, she said.

“We want to put pressure on the big banks to work with homeowners in the city,” Clark said.

Jefferson Fietek is a lifelong resident of Coon Rapids and has seen the detrimental impact of foreclosures on the neighborhood where his parents still live and the area of the city where he currently resides, he said.

“I am saddened by the unwillingness of big banks to work with homeowners and I don’t think the city should be footing the bill for foreclosed homes,” Fietek said.

Carol Nieters, executive director of SEIU Local 284, which represents support staff in several school districts, including Anoka-Hennepin School District 11, described the proposed ordinance as a “simple solution” for the city to cover the costs of “troublesome properties.”

Banks caused the foreclosure crisis and “should not be let off the hook,” according to Nieters.

Current city action to deal with vacant properties does not go far enough, Nieters said.

Mayor Tim Howe said he appreciated the “professionalism” shown in the presentation and asked if Our Future Minnesota plans to go to other cities.

According to Nieters, the organization has worked with the cities of Minneapolis and St. Paul, as well as some school districts, and plans to “try to broaden its reach.”

Howe said the council is always willing to listen to ideas, but it does have to follow a legal process and did tighten up its regulations in response to the increase in foreclosed/vacant properties.

Minneapolis’ $6,000 charge up front was “very interesting,” he said.

According to Kristin DeGrande, the figures provided by Our Future Minnesota in its report were “not entirely accurate” and the organization underestimated the steps the city takes to deal with foreclosed/vacant properties.

When city crews respond to code or other issues with vacant properties, the cost of city staff time and abatement, if necessary, is assessed back to the properties via property taxes, DeGrande said in an interview following the council meeting.

In cases of code violations, an administrative citation is issued by the city if compliance does not occur within a specified time period, she said.

Under state law, those citations can be appealed to the city’s Board of Adjustment and Appeals, but if they are denied, then the cost has to be paid either within a certain time or it becomes an assessment against the property, DeGrande said.

The council has also put in place a vacant property monitoring fee, according to DeGrande.

That fee of $600 a year for residential and $1,000 for commercial properties is charged if the city is called out to a vacant property three of four times a year and once imposed, the fee is charged each year until the property is sold, DeGrande said.

Before any citations or fees can be imposed against a property, vacant or not, the city is required by law to send a letter to the property owner, who has 30 days to fix the violation before any fine or fee can be charged, she said.

“We want properties to be in compliance, look good and be well maintained,” DeGrande said.

“But we have certain protocols that we have to follow.”

The city continues to come up with new tools to address foreclosed/vacant property issues, for example water shut-offs to prevent potential problems, DeGrande said.

Under this policy, the city shuts off water to properties that are either unoccupied or without utilities and to get water restored to the property, the owner has to file an application along with a $75 inspection fee because the water won’t be turned back on until the property is inspected.

The water restoration policy lists issues that would prevent water from being turned back on – no heat, no gas or electric service, no exposes wiring, no broken or damaged water pipes, severe mold issues, weather tight building, severe structural problems or unsuitable for habitation.

According to DeGrande, the number of vacant properties in Coon Rapids dipped below 500 for the first time in four years last fall.

“The housing market is stabilizing and home values are going up,” DeGrande said. “These are all positive signs.”

But the city is always willing to listen to ways to improve its policies, she said.

Peter Bodley is at [email protected]