Demolition costs surprise Minot property buyers

Associated Press
This Jan. 17, 2012, photo shows Magnum Demolition of Boise, Idaho, demolishing a flood-damaged house in Minot, N.D. People who bought flooded lots after houses were demolished received a surprise recently when they discovered they are on the hook for demolition costs.

MINOT, N.D. (AP) — People who bought flooded lots after houses were demolished received a surprise recently when they discovered they are on the hook for demolition costs.

The Minot City Council's Finance and Improvements Committee heard from some of those buyers Tuesday during discussion on whether to send $745.5 million in assessments for the demolition of 51 homes to the county for inclusion on property taxes.

Donna Marquart said she bought a neighboring lot from the bank after the house was demolished so she could clean the area up. She later received a demolition bill for more than $8,800 on "property that's not worth the $3,500 I spent just to be able to mow it," she said.

"I can't afford to pay this," she said, adding that she'll let it go to the city for unpaid taxes. "I would rather lose the $3,500 I wrote a check for than lose $9,000. It's not worth $12,000. Unfortunately, if this can't be resolved, the city has a brand new piece of property."

Marquart explained that she was not told about any outstanding assessment when she bought the property from a bank.

Darin Ballard said his company, which purchased two lots through a broker, wasn't informed of any demolition assessment by the seller. Because the city hadn't yet imposed an assessment, there was no lien or other information that showed up on a title search.

Ballard, who came from Salt Lake City to build and sell affordable homes in the valley, faces a $36,000 assessment on the two properties.

"We do want to sell those for an affordable price at the end of the day. It's really difficult with those assessments," Ballard said. However, he didn't ask the city for any particular course of action, not wanting the bill to go to taxpayers.

"Politically and financially, it's a hot potato," he said.

A flooded homeowner told the committee that she paid the mortgage with money from the sale of her land after the house was demolished. Now the buyer, who received the bill that she thought the Federal Emergency Management Agency was going to cover, wants her to pay. Had she known a bill was coming, she could have hired a contractor for much less, she said.

Gaylen Ness said he agreed to the demolition because his insurer told him the cost would be covered. Once the bill came, the insurer said the cost is not covered because the house 40 feet from the river was not in the flood plain. The construction of the dams and dike system years ago had eliminated the government's official flood plain in Minot.

The city will be picking up the assessment for owners of land affected by the new flood protection plan who signed up for voluntary buyouts by Sept. 28. Ness, who is eligible, chose not to participate but said he would seek the demolition cost in the price of his property when the city comes around for involuntary acquisition.

Some residents receiving bills argued that the cost was excessive. Assessments range from around $5,800 to more than $28,000.

Hemphill said the need to do environmental and historical impact studies and, in some cases, abate asbestos raised the cost. Legal fees associated with handling the demolition process also were included.

Mark Mattson, a local contractor, said the city's contractor showed up to tear down a house after he had made an agreement to tear it down for $5,300, with the owner removing the asbestos-containing siding. The homeowner had not received the city's notices. Mattson said the city's contractor agreed to do the work for $5,300, including removing the foundation, so was allowed to do so. Now the homeowner has a bill for $18,592 and a foundation still in place, he said.

Ted Selfors said he learned his home was being torn down when he drove by one day and saw it was gone. Now he has a 18,523 bill.

"It's excessive taxes to me," he said.

Houses were demolished after First District Health Unit condemned the property and sent certified letters to homeowners. Notice of demolition also were placed on houses and were published in the newspaper. The city's contractor removed the houses last January and February in cases where homeowners failed to respond or agreed to have the city do the work.

The city had advertised for contractor bids, received eight and hired the lowest bidder.

Cindy Hemphill, city finance director, said the city initially had hoped that FEMA would pay for the demolitions. The contract to demolish the homes didn't include removing foundations because FEMA indicated those costs would not be covered. In the end, FEMA declined to cover any costs.

Hemphill said the city is looking for other grants. There's potential for obtaining some federal or state dollars if additional home buyouts are approved or if the owners qualify as low to moderate income and commit to remain in Minot.

In the meantime, the city needs to certify the assessments to the county by Nov. 1 so that they can be specially assessed to the homeowners' property taxes, should it come to that, Hemphill said.

For that reason, the committee voted to recommend the council approve the assessments.

"This is not a vote that is easy to cast," Alderman Mark Jantzer said. "This isn't something that we want to add as a burden to people. ... But as has been explained, there's a point that we have come to absent any other funding ability to mitigate these costs."

The city council will take up the recommendation Monday.