Foreclosure surge left one Minneapolis fund flush

Amid all the budget woes hitting Minneapolis City Hall, there's one bit of bright news.

The program for boarding up and tearing down dilapidated Minneapolis buildings is flush with cash.

One big reason is a dose of federal stimulus funds. Another is the property assessment money rolling in from a North Side inspection crackdown several years ago.

But when city regulatory officials asked to divert most of the surplus to paying for a new property-tracking system for which they've been squirreling away money for several years, City Council members jerked their reins.

Before the regulators shift the $4.2 million to nearly complete the financing of a new $12 million computer system, already approved in concept by the council, some council members want more questions answered.

One is whether money that's by ordinance devoted to nuisance abatement can be used for other purposes, or even potentially returned to the city's cash-strapped general fund. Another is whether the new system to keep track of property conditions by address is the city's highest-priority technology need.

Minneapolis uses multiple tools to keep properties spruced up. It orders owners to cut grass or remove rubbish. It sends crews to do the work if owners don't and adds the cost to the next year's tax bill if the owner doesn't pay. It boards up properties that are vacant and open to trespassing. It also charges many owners of such properties a $6,650 annual fee. And in worst cases, buildings considered too far gone are razed, and the cost of about $15,000 for a typical house is assessed on the next tax bill.

With many homes empty because of foreclosure, the revolving fund that finances these anti-nuisance activities has been busy. A federal program to help cities reeling from foreclosures supplied $1.7 million toward tear-downs. Plus, a big housing inspection push in 2006 on the North Side has brought in assessments paid by owners who didn't comply.

The revolving fund was established in 2006 after regulatory officials kept having to beg money from the council or neighborhoods to tear down dilapidated homes. Money recovered through assessments and other charges replenishes the fund. "This is [a fund] that can be used over and over again," said Henry Reimer, assistant director of regulatory services.

The city long has used computers to keep track of property records. But regulatory workers need to master three or four systems, and other departments maintain additional property databases. That's unwieldy when a user wants to pull up all the information about a property, according to Rocco Forte, regulatory services director. Plus the main property record system is so old that it's no longer getting technical support.

So his Department of Regulatory Services and Emergency Preparedness got council approval to begin putting aside money for a replacement system, estimated to cost $10 million. Further research and cost increases raised that to $12 million for a system Forte hopes to install by 2013.

The department has banked $6 million to date, mainly from not filling vacancies or saving costs in areas such as contracts to board up buildings or cut grass. By shifting another $4.2 million from the nuisance property fund, the department would be within striking distance of having what it needs for the replacement. It plans to assume the entire cost of buying the new system, even though it has only about half of the city employees who would use it. The cost of upkeep will be apportioned according to use.

Forte and Reimer said the revolving fund's surplus will probably be short-lived. The federal aid isn't likely to repeat, collections from assessments are dropping as the sale of forfeited homes sometimes doesn't cover outstanding taxes and costs, and there hasn't been a recent big inspections push to generate more money.

Steve Brandt • 612-673-4438