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AMID HOUSING CRISIS, BUILDINGS CONTINUE
TO BE DEMOLISHED IN MINNEAPOLIS

   

Background Analysis

The Twin Cities have a shortage of housing for middle- and low-income residents. Yet, public policy in Minneapolis continues to support the needless demolition of buildings that could house some of these people. The most cost-effective way to provide affordable housing would be to stop the demolitions. Instead, housing advocates have focused on getting more money out of the legislature to build new housing.

There is a pattern to the process of demolishing buildings. First, the building becomes linked to crime. Then, “neighbors” protest this situation and the building becomes a “problem property”. The city of Minneapolis has ways to deal with problem properties. One of them is to put the property on the so-called “249 list”, concerning public nuisances. After neighborhood input, the Minneapolis City Council is authorized to take the property and tear it down at the owner’s expense. While another crime site is removed, the homeless have one less opportunity to find a place to live.

City officials insist that buildings are not torn down because of crime. Rather, it is because the crime-linked buildings have structural or maintenance problems which city inspectors have identified as needing to be corrected immediately. Each work order has a price tag. If the total cost of these repairs exceed a building’s estimated market value, then city officials feel justified in demolishing the building rather than rehabbing it or making repairs.

There are several problems with this. First, city inspectors lack a uniform and consistent set of standards by which to judge issues of building maintenance. Working within a complaint-driven system, they are subject to political pressure, both from “neighbors” and from City Council members. If a City Council member instructs the neighborhood inspector to find something wrong with a building, you can be sure that a heavy load of work orders will follow and an “objective” case can be made that the building is structurally unsound.

A second problem is that the city’s estimate of “fair market value” may bear little resemblance to a building’s assessed value or to what a reasonable person might think it was worth. The Minneapolis Community Development Agency (MCDA) said that David Sundberg’s five-bedroom house at 1812 25th Avenue North had a fair market value of $3,000 when it condemned this property using the city’s powers of eminent domain. The house had a value of $66,900 on the tax rolls. MCDA’s justification was to compare this building with other condemned properties in the neighborhood many of whose owners had walked away from their investments. Sam Czaplewski received $1.00 for his property on James Avenue North which was condemned by eminent domain because the MCDA said that the cost of renovation exceeded its market value.

That brings us to the third problem: the estimated costs of renovation. Many of the estimates which the MCDA and other such organizations use for the cost of renovating a building seem excessively high. There is little transparency to the process. David Sundberg owned another building on 3330 Chicago Avenue South which the MCDA acquired from a bank. The MCDA demolished this building in October 1999 because it said the building was not worth the $175,000 needed to renovate it. Yet, a group of experienced landlords and property experts who had viewed the interior of the building before it was demolished said that the building was basically in good shape. One private contractor estimated that he could do a “Cadillac job” of bringing the building up to code for $35,000. Another said he could do an adequate job of renovation for $5,000.

Time and time again, the city of Minneapolis or its agencies order buildings to be demolished because they say that demolition is more cost-effective than rehabilitation. They use a combination of high repair costs and low market values to justify these decisions. The “experts” who make the valuations of market values and costs may be city employees or appraisers who frequently work with the city or representatives of housing non-profits that receive city favors. The numbers which they generate are not subject to outside review but are taken as fact in making housing decisions.

Minneapolis Property Rights Action Committee held a public demonstration in front of the property at 3330 Chicago Avenue South on September 10,1999 to show news reporters, state legislators, and others a building scheduled to be demolished which members of this landlord group believed to be in reasonably good condition. They mailed out invitations two to three weeks ahead of the event. Coincidentally or not so coincidentally, the MCDA began demolishing the building earlier in the week of the planned demonstration. Persons attending this event no longer had the opportunity to inspect the building (at least from the outside) but could see the bulldozers at work.

More planned demolitions

On March 14, 2000, the housing committee of the Central Neighborhood Improvement Association (CNIA) voted to demolish three buildings in south Minneapolis which were vacant and boarded though not tax-forfeited. All three buildings were on the “249 List”. The vote on March 14th was preliminary to bringing the measure before the CNIA board which was expected to endorse the proposal before sending it to the Minneapolis City Council.

The City Council, as previously stated, has the authority to order the buildings demolished and charge the costs of demolition plus administrative fees to the building owners.

The three buildings in question are located at:

3225 2nd Avenue South (a duplex)
3641-43 Columbus Avenue South (a 4-plex)
3719 Park Avenue South

Before the votes were taken, committee members were given copies of a “preliminary property assessment” for each building. We have copies of reports for the first two buildings. According to these reports:

The duplex at 3225 2nd Avenue South had an acquisition price of $42,000. The estimated cost of “construction” (renovation) was $224,800. Other costs related to renovation (such as contingency, marketing, and developer fees) were $65,000. The total “development cost” was therefore $331,800.

The four-plex at 3641-43 Columbus Avenue South had an acquisition price of $84,000. The cost of construction was $280,800, and other costs were $80,830. The total development cost was $445,180.

It was disclosed that a representative of the Southside Neighborhood Housing Services had made these estimates of development costs. This person had made the estimates from an inspection of the building’s exterior, having not had access to the interior. SNHS works closely with the Central Neighborhood and the city on housing issues. Its executive director (who might have done the estimates) is a former MCDA employee.

 

ENOUGH IS ENOUGH - Stop Demolitions based on bad rehab numbers

You really need to see for yourself what is happening - more housing units being torn down in Minneapolis because of “neighborhood recommendations” made with bad information about the cost of rehabbing old homes. We think we can document this situation. To the extent that you think the affordable housing crisis is important, we challenge you to take a look at one of its root causes. Let us demonstrate how foolish decisions continue to be made in Minneapolis to tear down housing units even while city officials go hat in hand to the state asking for money to replace the missing housing.

On March 14th, a committee of the Central Neighborhood Improvement Association voted to recommend demolition of three buildings because, in one case, it would cost $224,800 to renovate a duplex and, in another case, $280,800 to renovate a four-plex in south Minneapolis. We think that these numbers are way out in orbit - totally bogus and fictitious. We have seen the so-called “work orders” on these buildings, and it is mostly minor stuff. Yet, public decisions may be driven by the bad estimates.

We hope to contact the owners of these buildings and request permission to inspect the interiors. We will gather our own panel of experts to evaluate the repair work that needs to be done. We will come up with our own estimates. If these estimates are much lower, we will tell the world. If they are not, we will eat crow.

Come, join us on this search for truth. You are welcome to bring your own building appraiser, or watch ours at work, or simply see for yourself what is the condition of these buildings.

Let us know if you are interested. If we wait too long, these buildings will be gone - joining the thousands of others that have been ripped down in Minneapolis in the past ten years.

See the Minneapolis housing crisis at its source. It’s a tour you will not soon forget.

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