Some concerns with St. Paul’s Vacant Building Registration System

I sent the following to a number of St. Paul officials earlier this year. It pretty much sums up my experience with trying to find an affordable house here.

To whom it may concern,

I’m a former St. Paul resident who is interested in buying property in
the city. As a younger first time homebuyer with some construction
experience, I’d like to find something affordable in the “fixer upper”
range. However, while searching for property in St. Paul, I’ve been
frustrated time and again by the Vacant Building Registration and
Category system. I’ve had the same experience reported by friends
interested in St. Paul property. To me, the VBR system seems to run
counter to St. Paul’s goal of maintaining affordable owner-occupied
housing and a stable tax base. This system appears detrimental to the
future of St. Paul, especially in our current housing market.

For those not familiar with the Vacant Building system, here’s how it
looks to the average homebuyer. A house in St. Paul is either
“occupied” (which can mean it’s maintained by owners living
elsewhere), or it is “registered vacant” (foreclosed with occupants
evicted). If a house is “occupied”, you can buy it as-is with
disclosure of a Truth in Housing Report. If it is vacant, it falls
into one of three categories.

“Category One” is a house that city officials are relatively happy
with. It has few if any problems, but buyers may have to do some
repairs before being allowed to move in.

“Category Two” usually means the house is boarded up or has multiple
problems. To the buyer, these properties are a huge turn off. Category
Two requires a buyer to bring the property up to code (modern code,
not the code of the construction date), before being allowed to occupy
it. In practical terms, this means owner-occupants are unlikely to buy
a Category Two home, since they have to make major renovations and
live somewhere else until the city is satisfied with repairs. If the
city’s requirements are too expensive for any buyers, the house
eventually degrades into a Category Three.

“Category Three”, to the buyer, is usually a write-off. The city
considers them dangerous, and the threat of demolition hangs
constantly over the property until all work is completed. In the worst
case, these may be obviously-collapsing rotten wrecks, but sometimes
they’re simply foreclosed properties that have sat for a while and
deteriorated past Category Two, perhaps by having the copper stolen or
the windows broken. Even if repairable, these houses are avoided by
everyone, and typically torn down at the city’s expense.

To the outsider (the typical homebuyer), the formula for categorizing
vacant houses is a mysterious and arcane process. Information on
specific properties is available in a city database, but can be
confusing or meaningless out of context. Common things like “partial
basements” or “poor handrails” can apparently decide a house’s fate.
Interior items like rusty furnaces and cracked plumbing fixtures,
though not structurally part of the house, might tip the scales
between categories, suddenly requiring an otherwise sound building to
be completely modernized to today’s standards. Code Compliance can
mean everything from larger windows, higher ceilings, and new wiring,
to a complete rebuild of major structural elements. Due to the
difference in building and housing codes over time, Code Compliance
can be impractical and cost prohibitive for historic homes. It can be
a death sentence for any house over a certain age.

What does this mean to the St. Paul home buyer? Essentially, a large
percentage of vacant properties are not worth considering. The VBR
system is a frightening and incomprehensible thing.  Non-savvy buyers
could purchase a home and then find themselves facing unaffordable
repairs or imminent demolition. Even informed buyers can find a
property has slipped from one category to another between purchase and
closing, as seen in recent news articles. Properties in the same
condition can be found in more handyman-friendly municipalities as
“Fixer Uppers”, where the buyer can purchase, live in, and repair the
house at their convenience, not on the city’s schedule. For the first
time homebuyer like me, looking for a deal or a “handyman special”,
these factors make St. Paul quite unattractive. Anything affordable in
the city is treated with suspicion, or ignored completely.

What does this mean for St. Paul? Intentional or not, the city is
preventing many vacant properties from being re-occupied. With a
number of nearby cities to choose from, some with less stringent
requirements, there’s no reason for anyone to buy a Category Two or
Three house. These houses will eventually be torn down at city
expense. The land will either sit vacant, be taken by the city for
delinquent taxes, or be bought for a few thousand to expand a
neighbor’s yard. In any case, there is little to no income for the
city. Not just the property tax, but also the sales tax and economic
activity from potential residents are gone. The city can hope that
someone will eventually build a modern home on that lot, but this is
unlikely even in the best of economic times. Builders and buyers of
new homes do not like city-size lots. They don’t like “problem areas”
with high numbers of vacant or demolished buildings. During economic
boom times, new construction happens in the suburbs. During economic
downturns, buyers choose cheaper existing properties rather than
expensive new construction. The city can finance or subsidize projects
on the land, but these come with their own financial burden. This
results in a lose-lose situation, a house demolished or categorized
out of affordability today might never profit the city again.

I can see three supposed benefits of the Vacant Building registration
system, but I feel that they are empty benefits, already provided by
other programs. For one, homebuyers may be saved by the VBR from
buying an unsafe or dangerous house. However, they are already
protected by the Truth in Housing program, which requires informed
consent through independent assessment and disclosure of property
condition. Secondly, the VBR and Code Compliance requirements may
prevent the spread of substandard rental property. However, there are
already separate rental licensing and fire safety programs to prevent
this, each with its own inspections. Thirdly, required repairs may
keep people from neglecting dilapidated or ugly houses. Again, there
is already a program for this, the city can and does levy assessments
against properties for anything from trashy yards to decaying
exteriors, so a buyer cannot simply ignore repairs. In all three
cases, major repairs also require licensed contractors, and there are
state and federal codes covering safety and quality standards. As
such, there is really no reason for the VBR and Category system to
exist. It is redundant, it does nothing to protect buyers, and it does
nothing to mitigate the spread of vacant housing. If anything, the VBR
and Category system encourages the neglect and eventual destruction of
vacant homes.

I realize that city politics move slowly, and change may be unpopular.
However, as a frustrated homebuyer trying to become a contributing St.
Paul resident, I feel that some reform is needed. Eliminate the VBR
and Category system. Eliminate the threats of Code Compliance and
demolition for all but the very worst properties. Allow buyers to live
in and repair properties as their time and finances allows. Reconsider
the Code Compliance requirements so that older properties don’t need
to be fully modernized, OR, offer and publicize incentives for the
average person to afford Code Compliance. Relax the restrictions and
eliminate some of the hoops that homebuyers have to jump through. Work
to attract people who are dedicated to improving old homes, and thus
improving neighborhoods and the city as a whole. We can keep St. Paul
beautiful, livable, and free of neglected properties, but it doesn’t
have to be done by tearing down half the city and driving away
residents. Give the handymen and fixer-upper buyers a break, and give
the tax base of St. Paul a break.

Thank you for your consideration,

-Gabe Emerson
Minneapolis, MN

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One Response to Some concerns with St. Paul’s Vacant Building Registration System

  1. Josh says:

    Very well written.

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