Crow Wing County officials are hoping value reductions on hundreds of tax-forfeited properties will entice people to buy at the public land sale later this month.
Among those properties are close to 70 parcels previously set aside for potential acquisition by a developer interested in building affordable workforce housing in Breezy Point. In a 4-1 decision, the county board voted June 23 to return these empty parcels to the public land sale auction in July — parcels removed from the list as the Crow Wing County Housing and Residential Authority worked to hash out an agreement with the housing developer based in Holdingford. Commissioner Bill Brekken, who represents Breezy Point on the county board, voted against the motion. The decision came after the board approved a request for action from Land Services Director Gary Griffin in late May to reduce the value by 25% of any tax-forfeited tracts left unsold for three years or more.
Griffin told the board the developer — identified as Bob Warzecha with HBW LLC in HRA materials — first intended to acquire 130-150 parcels before amending his request to about half that. These lots are scattered throughout the city, which is home to the highest concentration of tax-forfeited property in the county. In light of the board’s decision to reduce the value of unsold tracts, Griffin asked commissioners whether they were interested in making those parcels available to the public first, rather than allowing the HRA to proceed with the developer’s request.
Weighing in at the meeting via Microsoft Teams were Mark Miller, a Breezy Point resident and owner of MJ Builders of MN, Breezy Point City Council member Michael Moroni and resident Todd Roggenkamp. All three voiced support for the idea of making the land available during the public sale.
“I know a lot of people in Breezy Point that support this,” said Miller, who also serves on the city’s planning commission. “I think given the opportunity the county will see a large influx of purchasing at the July 24 auction that will bring in, you know, market value dollars for Crow Wing County.”
Mayor expresses disappointment
Not everyone in Breezy Point supports the interruption of the developer’s plans to work with HRA in building homes on the empty lots, many of which have languished on the county’s tax-forfeit list for years.
Mayor Tom Lillehei said by phone last week he had high hopes for the potential development. In a “Mayor’s Notebook” published on the city’s Facebook page June 19, Lillehei described the developer’s interest as “perhaps the most exciting event since I took office.”
He said the developer was doing his homework and seeking innovative solutions that could result in a major housing boom in the area. But he said he was disappointed with the county commissioners’ decision and felt as though they did not have all the information. This included the timeline of events, which Lillehei said was incorrectly relayed to board members. While Moroni told the board the developer came to light after the decision to reduce tax-forfeited values, Lillehei said he knew of the plans in late April, and Griffin said his office learned on May 15 of Warzecha’s HRA application.
“We’re looking at a developer that is willing to develop a large number of city lots into buildable homes and now all of a sudden it’s jerked out from under him,” Lillehei said during an interview. “You can probably tell I’m a little frustrated by that.”
He also noted he felt opposition to the developer’s plans was based in part on misinformation and bigotry shared on social media, claiming the new homes would be Section 8 housing and part of a plot to relocate Somali-Americans to the area.
A phone call to Warzecha seeking comment was not returned. An application to the HRA completed by Warzecha states his intent to develop and build low- to medium-income affordable housing as part of an effort to eliminate blight. In seeking acquisition of the properties, Warzecha utilized a program in which HRA works to encourage development of tax-forfeited properties. It requires projects of this nature to result in blight elimination and/or increased availability of affordable housing, defined as attainable for someone earning 115% of average median income.
This program was used to spur redevelopment of Brainerd Oaks, Serene Pines and Dal-Mar Estates in 2016 in Brainerd, all of which sat mostly empty after falling victim to the Great Recession in 2008. Those properties were also burdened with lopsided special assessments from the city for utilities development, which discouraged potential buyers. Four years later, that project has resulted in 47 homes developed and sold to end buyers, with another seven under construction, according to the HRA.
Too good of a deal?
Opposition was not solely based on misinformation, however. Some expressed concerns about how inexpensively the developer would be able to purchase the property. When the HRA’s tax-forfeited land program is used, the typical procedure sees the county deeding the property to HRA for $1 a tract, if agreed upon by the county board. The HRA then works to sell the land to an interested developer at an amount less than the assessed value while negotiating a contract that would guarantee development at a set pace and other parameters ensuring the project meets the authority’s criteria.
A recent change to the HRA’s tax-forfeited land policy — prompted by recommendations in a countywide workforce housing study released this spring — meant properties could be transferred to developers at $0, plus any special tax assessments and other costs associated with the negotiations.
“To encourage development of tax forfeited properties, Crow Wing County HRA should consider selling land to builders at significantly steeper discounts or outright granting land to builders to construct affordable residential units,” the study stated.
The HRA board obliged that recommendation at its May 12 meeting. John Schommer, HRA rehab coordinator, said last week all projects the HRA undertakes must ultimately be approved by the county board. He described Warzecha’s application as being in the infancy stage of a development project.
“They’re responsible for it, it’s completely their decision,” Schommer said during a phone interview. “We have to go to them and request the lots, so they have full control over it. … It’s their discretion, it’s kind of out of our hands.”
Griffin said he sees the county board’s decisions as win-wins — the price reduction on tracts could result in a significant run on tax-forfeited properties, returning them to the tax rolls, and the developer still has the opportunity to bid on the parcels he’s interested in at that sale. He said if some or all of the Breezy parcels don’t sell, the developer could initiate the process again with the HRA, which would still be a positive outcome.
“It’s going to be, I would think, fairly reasonable prices,” Griffin said. “They may want to, maybe just want to come to purchase them, too. Obviously, it’s not as attractive as for free.”
The 69 tracts Warzecha included on his application total just over 50 acres with a combined starting bid price of $488,481.13. This amounts to an average starting bid of $7,291 per tract, which can contain multiple lots. Two of the tracts listed in the application do not appear to be available in the upcoming land sale, and some of the lots within one of those tracts are now listed as privately owned in county records.