So let’s recap what we have so far:<\/p>\n
On June 25th, 2008, the Saint Paul City Council passed<\/a> ordinance 07-1194 4<\/a> (“Green Sheet” number 3046791). You can read it for yourself – but in essence, it amends the city’s legislative code to say the following (I’m summarizing below):<\/p>\n To sell a vacant (or “dangerous” or “nuisance”) house, you need a Certificate of Occupancy.<\/strong><\/p>\n To get a Certificate of Occupancy, you need to…:<\/strong><\/p>\n Now, let’s posit a hypothetical; say you’re a bank. You’ve had to foreclose on a ton<\/em> of properties, because your CEO’s dimbulb nutslap of a nephew went to a bunch of\u00a0sleazy brokers\u00a0and bought a ton of Adjustable Rate Mortgages (ARMs) that were going to adjust to eleventy-billion percent, and went and spent it all on jet-skis and tipping waitresses at Hooters. Naturally, when the ARMs adjusted the owners defaulted; as housing values sagged, the owners came up “upside down”; they owed you more than the house could sell for.<\/p>\n So you foreclosed on ’em. Business is business, right?<\/p>\n Ordinarily, you’d wait out the market and sell the place when you could get a good enough price to make it worth selling. In the meantime, you are the owner; you and your bank are responsible for the property taxes and – to keep it saleable and keep the city’s code enforcement people off your back – enough maintenance to keep it ready for some <\/em>approach to the market.<\/p>\n You grab a file at random from the pile of “foreclosure” files on your desk. You open it up. It’s a house on the North End of Saint Paul.<\/p>\n Eventually – I don’t think this is irrationally exuberant – the market’ll rebound. Right?<\/p>\n You have to hope so – because until then, the house that your bank is into for, say, $200,000 (plus fees and whatever maintenance it takes), would fetch $175,000, as is, if you tried to sell it today (and could find a buyer). Maybe less, since there are more and more foreclosures popping up in the neighborhood.<\/p>\n But the City has just passed a law saying:<\/p>\n To sell the property to anyone<\/em>, you need a Certificate of Occupancy.<\/p>\n To get a Certificate of Occupancy, you need to…:<\/p>\n “Hm”, sez you, the banker and accidental owner of the property. “We have to pony up a bond, and get all <\/em>the work done, to current codes<\/em>, before we can even try to sell this house”.<\/p>\n “What would that <\/em>mean?”<\/p>\n So you get an inspection. And you get the following letter back from the City (with marginal notes in blue<\/font>:<\/p>\n (The letter below is an actual letter, to the owner of an actual vacant property, forwarded to me by a contact in Ramsey County’s government who wishes to remain anonymous. It is by no means atypical of a punch list for repairs to an older house – in this case, a 90-something-year-old home on the North End, not far off Rice Street, an area heavily beset by the foreclosure epidemic. I’ve redacted personal information and the address. I can scan and post the original, if needed)<\/p>\n [NAME REDACTED] Re: [Your property’s address]<\/p>\n File#: 04 215708 VB2<\/p>\n Dear Property Owner<\/p>\n Pursuant to your request the above-reference property was inspected and the following report is submitted:<\/p>\n BUILDING<\/strong><\/u><\/p>\n ELECTRICAL<\/strong><\/u><\/p><\/blockquote>\n PLUMBING<\/strong><\/u><\/p><\/blockquote>\n HEATING<\/strong><\/u><\/p><\/blockquote>\n ZONING<\/u><\/strong><\/p><\/blockquote>\n NOTES<\/strong><\/u><\/p><\/blockquote>\n Sincerely,<\/p><\/blockquote>\n [Name redacted] Remember – all of these <\/em>have to be done (save for the two “recommended” items) before anyone can live in the place<\/em>.<\/p>\n Any builders out there wanna take a whack at estimating this? I am going to take a very ill-informed whack at this, and say $20,000. I think I’m being conservative. Remember – you have a bank to run; no sweat equity here; you need to hire the work done.<\/p>\n And until your bank ponies up for all of this work<\/em>, nobody can occupy it – hence, almost nobody will buy it (because they’ll just inherit the same problem!)<\/p>\n So, Mr. Banker – what do you do with the property? Remember – it’s already <\/em>upside down. Its value is falling, since the rest of the block is slowly going vacant. You’re paying property taxes on it. So to sell this house, by the time you are ready you’ll have (counting the original loan liability, my conservative estimate of repairs, and property taxes, and vacancy fees) well over $225,000 on a house that, maybe, will be worth $165,000 for the foreseeable future.<\/p>\n That’s a $60,000 bath.<\/p>\n For one house.<\/p>\n And the one in the next file? And the next one? And the next one?<\/p>\n Repeat this process for most of the 2,000 currently vacant properties in Saint Paul. And for the dozens coming up vacant every month (my estimate; the five Twin Cities law firms that specialize in foreclosures say there are 500 foreclosures a month in the Twin Cities, today, and they are disproportionally focused in Minneapolis and Saint Paul.<\/p>\n So what does this mean for Saint Paul?<\/p>\n Good question.<\/p>\n We’ll look at it from a couple of sides – from the mortgage lender side, and the City of Saint Paul’s as well – on Monday.<\/p>\n UPDATE:\u00a0 I floated this scenario past Dan Bostrom, City Councilman for Ward Six, the north-east part of Saint Paul.\u00a0<\/p>\n He got a chuckle out of it.\u00a0 It doesn’t go far enough<\/em>.\u00a0 I am<\/em>, indeed, too conservative in many cases.\u00a0 “There are houses out there with $200,000 mortgages that aren’t worth $30,000”, he said, “And it’ll take $100,000 to bring them up to code”.\u00a0\u00a0 More from Bostrom – and a couple of other City Council reps – next week.<\/p>\n At any rate – put yourself back in the banker’s shoes, and plug those <\/em>numbers in; you’ve foreclosed on $200,000 in loan, you’ll have over $300,000 in by the time it can be occupied, and by then you might – might – <\/em>get back half of that when the market starts to tilt toward some kind of equilibrium.<\/p>\n More next week.<\/p>\n (Read the whole series: Part I<\/a>, Part II<\/a>, Part III<\/a>, Part IV<\/a>, Part V<\/a>)<\/p>\n","protected":false},"excerpt":{"rendered":" So let’s recap what we have so far: On June 25th, 2008, the Saint Paul City Council passed ordinance 07-1194 4 (“Green Sheet” number 3046791). You can read it for yourself – but in essence, it amends the city’s legislative code to say the following (I’m summarizing below): To sell a vacant (or “dangerous” or […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[51,28],"tags":[199],"class_list":["post-2922","post","type-post","status-publish","format-standard","hentry","category-liberal-tyranny","category-st-paul","tag-st-paul-land-grab"],"_links":{"self":[{"href":"http:\/\/www.shotinthedark.info\/wp\/index.php?rest_route=\/wp\/v2\/posts\/2922","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.shotinthedark.info\/wp\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.shotinthedark.info\/wp\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.shotinthedark.info\/wp\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/www.shotinthedark.info\/wp\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2922"}],"version-history":[{"count":1,"href":"http:\/\/www.shotinthedark.info\/wp\/index.php?rest_route=\/wp\/v2\/posts\/2922\/revisions"}],"predecessor-version":[{"id":26132,"href":"http:\/\/www.shotinthedark.info\/wp\/index.php?rest_route=\/wp\/v2\/posts\/2922\/revisions\/26132"}],"wp:attachment":[{"href":"http:\/\/www.shotinthedark.info\/wp\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2922"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.shotinthedark.info\/wp\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2922"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.shotinthedark.info\/wp\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2922"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n
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\nSTATE OF MN TRUST [Department Redacted]
\n50 KELLOGG BOULEVARD WEST SUITE [redacted]
\nSAINT PAUL, MN 55102-1657<\/p>\n\n
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\n[Title redacted]<\/p><\/blockquote>\n<\/blockquote>\n