This isn’t an annexation. It’s a bailout.

This story is not unique: a mid-sized Midwestern town is preparing to adopt a 50-year-old neighborhood.

If you read between the lines, news of annexation often times read as case studies against low-density suburban development. This article from Mankato demonstrates (unintentionally) why these types of subdivisions can be so problematic.

All quotes related to the annexation were taken from the Free Press. I recommend reading it here first.

South View Heights No. 2 is not part of the city while everything surrounding it is. The 1960s subdivision has been leapfrogged by other development over the years, but has rejected opportunities to join city services in exchange for lower taxes.

City v Not City

These are homes befitting the American Dream of the 1960s. The neighborhood has nice, modest homes and is surrounded by creeks and ravines. Nothing fancy, but residents genuinely care for their homes and take good care.

For the area, these are above average homes that range in value from around $170k to $290k. The median home price is approximately $213k, which is around $40k above the local average (thanks Zillow).

After the city adopts this neighborhood, the average house will pay around $2,800 per year in taxes (up from the current $2,000). Keep these numbers in mind and ask yourself, “Will the extra $800 in extra city taxes help cover the true long-term costs?”

Water. Sewer. Roads. All in disrepair.

50 years has passed, and as the newspaper accurately puts it; “The new addition to Mankato’s family of neighborhoods is handsome enough, but it’s showing its age.” 

“The water tower, obviously, is broken, and (roughly 85 percent of) the septic systems are non-compliant,” said [homeowner]. “And we have a failing water line. And the road is shot.”

This is the end of the first life-cycle of infrastructure, and this hamlet of 61 homes is unable to tax itself the necessary amount to fix the things that need repair.
Homeowners petitioned the city to consider annexation. This move would hook the neighborhood up to city water and sewer lines and help fix the street. The City estimates a hook up at around $2.66 million (approximately $40k per household).
“A recently completed feasibility report put the preliminary assessment against each property at $29,298 — which is down from earlier estimates that approached $40,000. (Most residents also will face several thousand dollars in costs for utility connections from their home to the city lines.)”

4 thoughts on “This isn’t an annexation. It’s a bailout.

  1. Great write-up. Obviously it’s already happening, but we’re gonna see so much more of this in the future. I’m sympathetic to not letting people in these situations crash and burn–though it sounds like these are fairly affluent homeowners in this case. But how far do we go with bailing people out of situations of their own making, especially when it doesn’t solve the underlying issue? This seems especially problematic when we still have several generations that put a lot of their eggs into the basket of their homes as primary stores of their wealth.

    1. David – Thanks for commenting. It’s a precarious situation we’ve put ourselves in. I agree that we shouldn’t completely abandon people, but I also feel very (very) uneasy with bailing them out. My hunch is that, if they aren’t bailed out, it will likely become housing for people of lower incomes. I agree that we’ve “put our eggs in one basket” for housing. -Nate

  2. I love this example. Now multiply this by 100 million homes all across the country. At a certain point the states and feds won’t be able to bail out everyone. The locals won’t be able to fix everything. And the home owners may not have the cash or desire to rebuild their own immediate infrastructure. The solution? Well…not every problem has a solution. Some places are simply going to lose value, decline, and devolve into something less than what they are now. Other places may adapt with chamber pots and outhouses (that was good enough for Queen Elizabeth, Napoleon, George Washington, and Abraham Lincoln) if the authorities are willing to certify such things. Meanwhile, people with money will migrate to better places with fewer challenges. “Failure fixes itself.”

    1. Johnny – Thoughtful comment, as always. You nailed it with this line: “Not every problem has a solution”. I think this is one of those situations. We aren’t going to go around bailing everyone out. We don’t have the resources. Failure will fix itself. Many of these subdivisions may become ghost towns.
      This particular example is a little closer to the center of town; but countless of them are way outside of town. Those pose even a bigger problem. Thanks again. _Nate

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