Monday, June 2, 2014
"The Jordan Garden House" Had its Slummy Contract Canceled
1716 26th Avenue North is often referred to as "The Jordan Garden House" due to its proximity to the "peace garden" at the corner of 26th and Knox Avenue North. (Although the Jordan Area Community Council does not own the house.) The house has been a vacant eyesore for years, since it went from one owner to tax forfeiture. And since Hennepin County has had low or nonexistent standards for who they'll sell tax-forfeited properties to, this one was purchased by the infamous Ken Welch of Assertive Properties.
The story that sticks with me about Welch with this house is that reportedly a local non-profit developer was interested in making an offer to buy and rehab the house. The developer figured Welch would be open to a deal, as the house simply couldn't be financially viable in its boarded and vacant state. The annual VBR fees alone had to make the property untenable. Instead, the offer was rebuffed on the grounds that the place was still financially worth keeping even in that condition. Why would that be, I wonder? I have my own theories, but welcome any ideas folks may have.
For the purpose of this post, however, the important development is that Welch/Assertive no longer owns the house. And here's how that happened:
When the house was sold through tax forfeiture, it was sold on a contract of 10% down and an annual payment of 10% of the remaining balance over ten years. So if it sold for $30,000, then the contract terms would be a $3,000 down payment and ten annual payments of $2,700. The financial arrangement is between the new buyer and Hennepin County, who still holds the rough equivalent of a mortgage against the property. The boilerplate language of those contracts states that the new buyer must keep the property in a livable, rentable, or salable condition, or must bring the property to such conditions within twelve months.
While I don't yet have evidence to back up this theory, my gut feeling is that the county didn't do such a great job of enforcing those contracts. From what I've seen lately, it does appear that they are stepping up that enforcement, but a longstanding practice of selling to known slumlords and other shady actors means there's a lot of catching up to do.
If the buyer fails to bring the house up to acceptable standards within twelve months, and if the contract has yet to be paid in full, the county can cancel the contract and retake possession of the property. And that's what appears to have happened here. The neighborhood is watching how the property will be handled moving forward, and the expectation is that another slumlord owner is simply not acceptable.
The situation brings up a series of questions about how the county's management of such properties has impacted north Minneapolis. I wonder, in the past ten years, how many north Minneapolis properties were sold under such contracts? How many of those were vacant or otherwise deficient in their condition? How many of the vacant properties remained that way for twelve months or more? How many are STILL in such a state? How many times has the county taken steps to enforce this clause and either gotten a rehab or repossessed the house? And how many were purchased by property owners with a known history of exactly this kind of behavior?
To be fair, the cancellation of this particular contract and hopefully others like it does represent a move in the right direction, and I'm glad to see Hennepin County take such steps. But this measure is necessary only because the county has had policies in place for years that allowed numerous such transactions to occur. How many more times will a person or company known as a bad actor be allowed to buy tax forfeited properties in north Minneapolis? We should be able to answer that by saying, "Not one more."