Ramsey housing authority scales back on development

When the city of Ramsey began preparations last year to develop 17 single-family homes in what is called the COR Three development, the site preparations were less expensive than now anticipated and it hoped to make more money from the lot sales.

The COR Three development that was supposed to include 17 single family homes in this area has been slow to get going. The Ramsey Housing and Redevelopment Authority May 28 approved limiting the development to four homes for now and grading and reseeding the rest of the site. The city will look to get the site work done in the next 30 days and then market the four lots to a home builder. Photo by Eric Hagen

The COR Three development that was supposed to include 17 single family homes in this area has been slow to get going. The Ramsey Housing and Redevelopment Authority May 28 approved limiting the development to four homes for now and grading and reseeding the rest of the site. The city will look to get the site work done in the next 30 days and then market the four lots to a home builder. Photo by Eric Hagen

Fast forward one year and the city of Ramsey is shelving 13 of those homes and will only proceed with the four lots adjacent to the planned North Commons Park. The COR Three development is on the north side of Bunker Lake Boulevard and west of Zeolite Street.

“We couldn’t generate the revenue with the lots to offset the expenses,” said Ramsey City Administrator Kurt Ulrich.

According to Ulrich, five years ago those lots may have sold for $75,000 to $80,000, but comparable lots were only selling for about $35,000 now. The city could get $40,000 for each with them being across the street from a city park, Ulrich said.

The soil quality is worse than anticipated, so Ulrich said the city canceled the initial contract with County Line Excavating of Foley, but the city will work with this company or another if it has a lower quote to re-grade the site and bring city sewer and water service to these four lots. This will happen within the next 30 days, he said.

Another step will be to place the final lift of asphalt on 148th Lane and 149th Avenue.

The option the Ramsey Housing and Redevelopment Authority unanimously approved May 28 is anticipated to put the city’s investment into this project $51,945 in the hole. That was the best outcome of the four options city staff presented, but the net loss is still projected to be $1,046,825.

“This is a tough one because there is no good option,” said Mayor Sarah Strommen. “We’re faced with a choice of a bunch of options that are subpar.”

The biggest reason for such huge losses for each of the four options is because the city spent $851,285 to buy the land and it will still be holding onto three-quarters of the lots in hopes that the economy will bounce back enough in the future to move the rest of these homes forward.

This property was part of the overall 150-acre, $6.75 million purchase the Ramsey City Council approved in March 2009 for the Ramsey Town Center property, which was later re-branded as the COR.

Strommen said selling the four lots to a home builder at least minimizes some of the city’s losses.

“This whole exercise is a perfect example of why a city should not be involved as a developer,” Councilmember Chris Riley said.

Councilmember Jason Tossey has talked to neighbors of this site who are furious about the two mounds of dirt where some kids ride their mountain bikes and culverts sitting there since work stopped last winter.

Councilmember John LeTourneau said he was “flabbergasted” as well about these losses, but he did not want the city to completely abandon the entire 17-home project.

Although the city, county, school district and other taxing authorities would have more property tax revenue had the Ramsey HRA asked for all 17 single-family homes to be developed, the decreased value of the lots was the main factor the authority considered as was the increased contractor costs to prepare these additional sites.

For example, a storm water pipe would be needed to run under Bunker Lake Boulevard so the water runoff could have gone to Lake Ramsey on the south side of the county road. Just this work was estimated to cost $75,000. The stormwater drainage for these four new homes can be handled on the north side of Bunker Lake Boulevard.

The housing and redevelopment authority did contemplate walking away from the project, but the projected losses were just over $10,000 more than the option it chose. The contractor costs would have been less to just grade and restore the turf and clean up the site, but there would be no land sale revenue coming in.

Eric Hagen is at eric.hagen@ecm-inc.com

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