Upside down, part III

Star Tribune Tue, 22 Apr 2008 03:03:55 GMT
Part 3: Suburbs stuck with empty houses are trying to figure out what to do now

Wright County welcomed growth with new schools and wide roads. But as half-built subdivisions lie fallow, it's paying the price. Officials are scrambling to revitalize neighborhoods that have fallen into decline just years after they were built. ... Until recently, local governments in Wright County have been large beneficiaries of the explosive housing growth. The county's overall property tax revenue nearly doubled to a projected $46.3 million in 2008 from $24.9 million in 2003. Last year, residential properties accounted for nearly 60 percent of that figure. In Montrose, a city of 2,500, the assessed value of agricultural land plunged 28 percent last year, in large part because fewer developers are buying farmland for subdivisions. In both Otsego and St. Michael, agricultural land values also posted double-digit declines last year. The full impact of the slumping values on local government budgets won't be known for another year or so, when tax assessments catch up with the decline in housing prices. A Wright County commissioner, Dick Mattson, has proposed a hiring freeze. Elmer Eichelberg, another Wright County commissioner, said: "We might need a meeting of the minds and figure out a way to cut costs." Some areas are already feeling a budget squeeze. In Buffalo, the county seat, city officials are grappling with how to pay for the $17 million in bonds issued to pay for the expansion of their waste-water treatment plant. The bonds were to be financed partly from fees assessed from the construction of new houses. But the city's initial forecasts were wildly off the mark. Just 35 new houses were built in Buffalo last year -- compared with a projected 65 -- and none has been constructed in the city so far this year. Buffalo has already refinanced the bonds and raised sewer and water fees by 5.5 percent to make up for the lost income.

[[keywords: LandUse;Living;PropertyTax;Metro;]]