Housing crisis threatens Rochester's ambitious growth plans

ROCHESTER – The residents of the Zumbro Ridge Estates mobile home park said they had no idea they could ever be anything but renters on their land until they were called to an urgent meeting last April.

The private owner of the park would soon put it up for sale, they were told. Did the residents want to buy it?

What followed was a series of meetings, bank approvals and a closing like that faced by any first-time home buyer, only this was for the inhabitants of a 122-site trailer park north of town.

"Never in my wildest dreams did I think we would be buying this someday," said Krista Paulsen, a mobile-home owner and treasurer of the park's co-op board.

The residents' buyout of the park, made possible by a nonprofit agency that focuses on such deals, is the first of its kind in Rochester and illustrates how difficult it is to break into the local housing market, where a mushrooming affordable housing crisis threatens to slow growth and push more people into homelessness.

This economically vibrant city already was considered one of the hottest real estate markets in the state before the Mayo Clinic's $5.6 billion expansion, known as Destination Medical Center (DMC), took off in earnest last year with multiple construction projects worth hundreds of millions of dollars.

The average sales price for Rochester homes, according to the Southeast Minnesota Realtors Association, jumped almost 10 percent this year, from $182,341 to $200,498.

Well-kept houses priced in the $200,000 range have been getting multiple offers the day they hit the market, and people looking for cheaper homes or who qualify for some type of government housing assistance face an even starker reality, said Marty Cormack, president of the local Society of St. Vincent de Paul.

Cormack recently wrote to city leaders urging them to create affordable housing soon, saying he's seen more homeless people around town and fears for their safety during winter. Catholic parish volunteers say they're getting more rent payment help requests than the church is able to provide, he said.

"We face running out of money very soon," Cormack said.

Some affordable housing construction is underway, but a local study out last year warned that even the most aggressive plan was likely to create less than half of the 4,500 affordable homes needed by 2020 to keep pace with growth in Olmsted County.

That's potentially a problem for Mayo's ambitious DMC plan, which is projected to bring 30,000 jobs over 20 years and, presumably, thousands of new residents.

Lt. Gov. Tina Smith, chairwoman of the DMC Corporation Board, said at this month's board meeting that while affordable housing is not part of the board's official mission, it's vital for Mayo's future.

Steve Borchardt, housing initiative director for the Rochester Area Foundation, said he's promoted the construction of affordable housing for years and mostly heard back from city leaders and the private sector that market forces would solve the problem. But that hasn't worked, he said, and he's now sensing support for some kind of intervention.

The local activist community wants to see Mayo take a more direct role in solving the problem. Mayo CEO John Noseworthy raised the issue at a recent business luncheon, but a spokesperson said the clinic has no specific plans other than to continue to support the work of the Rochester Area Foundation. To keep the issue on Mayo's radar, members of local nonprofit Communities United for Rochester Empowerment plan an informational picket Monday outside Mayo's offices.

City Council Member Michael Wojcik listed 17 steps on his blog that the city could take to fix the housing shortage, including using low-priced condos, manufactured homes and accessory dwelling units to quickly add housing stock while employing a variety of financial incentives to accelerate housing growth.

The local builders association, meanwhile, has undertaken an ambitious project to design a house that could be quickly built and sold for $200,000.

Paulsen, one of the resident owners of the Zumbro Ridge Estates mobile home park, said she sees a future for parks like hers. If the Mayo Clinic grows, it will need more janitors, clerical staff and part-time workers, and houses like hers offer good value at an affordable price, especially since park residents now own the land beneath their homes, she said.

Since taking over the park's ownership, residents have fixed up the park office with hopes of making it a community center. They plan to fill potholes and erect a needed guardrail along one precarious stretch of road within the park. And they're talking about more quality-of-life projects, like adding a playground or forest paths to the nearby Zumbro River.

Everyone's taking more pride in their homes, said Hilari Erickson, a resident and Zumbro Ridge board secretary. "It's a huge turnaround when you realize you're a part owner," she said.

Their park has benefited from another novel housing solution: Members of the Bear Creek Christian Church, a local congregation, have stopped by to fix homes and build decks for free or at a steep discount. The church's 150 members made it their mission to help house the poor after seeing the local housing crisis grow worse year by year, said Bear Creek outreach pastor Jeff Urban.

Soon the church hopes to close on its biggest deal yet: the purchase of the 38-acre campus of Crossroads Bible College, a 104-year-old institution south of downtown that recently shuttered due to declining enrollment. Urban said the congregation hopes to convert the college dormitory into a 43-unit apartment building with low rents.

"Everyone sees the problem but no one has the money for it, so we're hoping this will be one little piece of the puzzle," he said.

Matt McKinney • 612-673-7329