by CHRIS ROGERS
It starts with a tragedy.
Debt and back taxes pile up over years to the point where people lose their homes. After years of failing to pay property taxes, Minnesota counties seize owners’ properties in a process called tax forfeiture. Every year, a few Winona County homeowners lose their homes this way.
Normally, counties auction those homes off to the highest bidder and try to recoup lost taxes. But Winona County is considering doing something different with two particular tax-forfeited homes: selling or giving them to Habitat for Humanity to create affordable homes for local families.
Winona County — along with the city of Winona and Habitat for Humanity Winona-Fillmore Counties — is considering such a deal for two tax-forfeited properties that county staff say are unlikely to fetch a good price on auction anyway. “Sometimes for us to tear them down is more than the lot is worth,” Winona County Assessor Steve Hacken said of some dilapidated, tax-forfeited homes. “And I think Habitat has an ability to get donated labor, donated help, and so we think it’s a win-win for everybody on this.”
“When a family moves into a Habitat house, it’s really a dream come true,” Habitat for Humanity Winona-Fillmore Counties Executive Director Amanda Hedlund said. “All of a sudden a family that was cycling through poverty has an asset to grow on,” she added.
There is a huge need for affordable housing in Winona, according to the city and state studies. A 2017 report found that Winona County was tied for first place among Minnesota counties with the highest percentage of residents living in unaffordable housing — where housing costs consumed over 30 percent of residents’ incomes. In 2018, a mayor-appointed Winona Housing Task Force recommended a series of policies the city should use to promote affordable housing development. While the city has numerous programs to preserve existing affordable housing, the city has not implemented programs to create new affordable housing in recent years. While construction of full-priced and luxury apartments has boomed, there have not been any subsidized, affordable housing units built in Winona in years.
The Housing Task Force recommended using tax-forfeited properties to create new affordable housing, a tactic other communities have used with success. Two years later, the city, the county, and Habitat for Humanity are working to possibly make that recommendation a reality.
There are two properties being considered. One is a dilapidated home on North Baker Street with a large hole in its roof, which city building inspectors have ordered to be demolished. Hacken and Winona County Auditor-Treasurer Sandra Suchla said the county is considering transferring that property to the city of Winona Port Authority — which would in turn give it to Habitat — for $1. “It costs us, frankly, more to tear it down than the lot is worth,” Hacken explained when asked why the county is considering giving that property away. State law allows counties to give away forfeited properties for $1 to serve a public purpose, in this case, the creation of affordable housing.
“The building needs to be razed,” Suchla said. “The nice thing about Habitat for Humanity is they have the means to get these sponsors and donors. They have people willing to take the house down at cost. The county doesn’t have that luxury. It would be very expensive for the county to get that property ready for sale, so it’s kind of a win-win. Habitat has a property they can redeem and the county has one fewer house to sell and a lot less expense.”
The second property is a vacant lot on East Broadway where a former home has already been torn down. The county is considering selling that one to Habitat for $5,000, Hacken said. It is a very narrow, 25-foot-wide lot that most private developers would not be interested in, but it is still worth something, he explained. “We feel in the best interests of all the taxpayers we can’t just give that one away,” he stated. “It’d be really difficult for a private developer to build a home on that lot,” Winona Community Development Specialist Nick Larson said.
Giving away higher-value properties to Habitat for Humanity probably would not make sense, Larson said. “On some of these properties, if we have a strong belief that the market will take care of it, we prefer to let that happen,” he said. “It’s these ones that we feel are very difficult to develop that we feel working together with the city, county and Habitat we could accomplish that goal.”
For people trying to create affordable housing, tax-forfeited properties also offer a unique opportunity. In general, it is extremely hard to construct new, affordable, single-family homes because the cost of construction and the cost of land are so high that even a very modest home costs a lot of money.
“For a for-profit developer or one of the traditional builders in town, I think the least expensive, brand-new home that one would be able to build — even slab on grade — I think you’re looking at a quarter-million dollars,” Larson said. “I don’t think a lot of people in Winona would be able to say that’s affordable.”
Tax-forfeited properties offer the chance to build a new home on inexpensive land, reducing the cost of the home.
Of course, if the tax-forfeited properties were auctioned off, a private developer could build homes at the sites, too. However, private builders do not have the same ability to utilize donations and volunteer labor to lower construction costs that Habitat for Humanity has, and once a new home was built, there is no guarantee that a private developer would sell it at an affordable price to a family that needs it.
“It’s valuable for Habitat for Humanity to be involved because we can guarantee the affordability of the home,” Hedlund said. Habitat for Humanity offers interest-free mortgages with payments its families can afford, and the organization has a great track record of helping new homeowners succeed, she explained.
These two potential deals are still in-the-works. The Winona Port Authority Commission gave initial approval for the plan for the North Baker Street property last week.
Importantly, the Winona County Board would need to approve both deals. County staff are still researching and have not yet presented the concept to the County Board. Suchla said she hoped to do that this winter.
“I’m really hopeful it happens,” she said. “I think Habitat for Humanity does really good work, and I like seeing nice little houses that families can call home.”
Asked if these kinds of deals could be used to redevelop other low-value, tax-forfeited properties in the future, Hacken said, “It could be … We’ll see what happens. Seriously, I’m kind of excited about this whole thing because I love the idea. We’re out here trying to solve some of our issues. We can save a little money. [Habitat] can save.” Hacken added, “Especially this Baker [Street] thing — we’re just not seeing where anyone is losing on this thing.”
“If we are successful with being able to develop affordable, single-family homes on these lots, there’s lots of positives: People being able to achieve homeownership, providing affordable housing, and turning what are currently non-revenue-generating lands and turning them into revenue-generating lands,” Larson said, referring to tax revenue. “It benefits the city, the county, and the school district if we can get some homes developed on these parcels.”
Keep reading the Winona Post for more on this story.