City of Palisade Demographics

 

Section Table of Content:

Page

Demographic Data Overview

P-2

Population Estimates and Trends

P-4

Population Projections

P-5

Population by Age

P-6

Population by Age - Comparison with Minnesota

P-7

Households Estimates and Trends

P-8

Average Household Size

P-9

Household Projections

P-10

Households by Age of Householder

P-11

Household Characteristics

P-12

Households by Tenure

P-13

Income Data

P-14

Existing Housing Inventory

P-15

Permanent and Seasonal Housing

P-16

Home Values

P-17

Home Sales

P-18

Home Sales - Historical Data

P-19

Housing Condition

P-20

Land and Infrastructure Availability

P-21

Rental Housing

P-22

Findings and Recommendations

P-23


 

City of Palisade


Demographic Data Overview


Sources of Data


The following pages contain demographic data obtained from a variety of local, state and national sources. During the course of this Study, Census data was being released from the 2000 Census. Whenever data from the Census was available, it has been used in this Study. However, some characteristics, such as income related information, had not been released when this Study was prepared, so estimates from other sources have been used.


Primary data sources, in addition to the 2000 Census, include prior year estimates from the U.S. Census Bureau, the Minnesota State Demographer’s Office, Claritas, Inc., an Arlington, VA based data reporting service, and Woods & Poole Economics, Inc., a Washington, DC based economic forecasting company.


The data that we have obtained from Claritas, Inc. is for the Palisade Market Area, as defined below. Because of the relatively small size of Palisade, estimates and projections are very difficult to make with a reasonable degree of accuracy. Estimates and projections are more reliable when made for a larger area. For this reason, we have only used the Claritas information for the Market Area and the County. Woods & Poole only issues their estimates and projections at the County-wide level.


Market Area Definition


We have provided demographic data on population, households, income and other characteristics for the City of Palisade, and for a primary market area that surrounds the City. The primary market area is referred to in the Study as the Palisade Market Area. This market area includes jurisdictions including the City of Palisade, the Townships of Fleming, Logan, Morrison, Waukenabo and Workman; and the Northwest Aitkin Unorganized area.


A map showing the Palisade Market Area is provided on the following page.


Although the geographic boundaries of this Market Area represent the Aitkin County jurisdictions immediately surrounding the City, housing in Palisade has the potential to draw from a larger Market Area. The inclusion of a Palisade Market Area definition is intended to represent a primary area that is oriented to the City. The inclusion of demographic data for this area allows for some degree of comparison between the City and the surrounding jurisdictions. For most demographic characteristics, we have also included data for Aitkin County as a whole, to again provide a perspective on broader market conditions in the larger region.




 

Palisade

      Market Area


Population Estimates and Trends


Table 1 Population Trends - 1980-2000

 

1980 Population

1990 Population

% Change 1980-1990

2000 Population

% Change 1990-2000

Palisade

155

144

-7.10

118

-18.1%

Palisade Market Area

1,608

1,422

-11.6%

1,731

21.7%

Aitkin County

13,404

12,425

-7.3%

15,301

23.1%

Source: U.S. Census Bureau

 

►          After experiencing a population loss of more than 10% in the 1980s, Palisade losses have accelerated over the last 10 years. According to the Census, Palisade lost 26 people, for a population loss of more than 18% between 1990 and 2000. Palisade’s population losses on a percentage basis are the largest of any of the political subdivisions in Aitkin County.

 

►          Although the jurisdictions forming the Palisade Market Area had a higher rate of population loss in the 1980s, they have reversed this trend in the 1990s. The Palisade Market Area experienced a population increase of nearly 22% from 1990 to 2000. However, the Market Area population level in 2000 is only 7.6% higher than it was in 1980.

 

►          Aitkin County has grown at an even faster rate. After a population loss of more than 7% in the 1980s, the County added population at a rate greater than 23% from 1990 to 2000.

 

►          Although the 2000 Census data released to date does not show the components of population gains and losses, in their 1999 County estimates, the Census Bureau identified the sources of population gains and losses for counties. In Aitkin County, they estimated population decreases for deaths exceeding births, but a significant population gain due to domestic in-migration. While the Palisade Market Area represents only a portion of the entire County, it is probable that the causes of population change are similar to County-wide patterns, with domestic in-migration as the largest component of the population gain that has occurred since 1990.

 

►          Although we consider the 2000 Census data to be the most reliable indicator of population levels, we have also obtained current-year population estimates from Claritas, Inc., a private data reporting service. The Claritas estimates for 2001 show an estimated population of 15,518 people in Aitkin County, and 1,715 for the Palisade Market Area. These estimates are relatively consistent with the 2000 Census data.

 

►          We have also obtained a 2001 population estimate from Woods & Poole Economics, a private economic forecasting service. They estimate the Aitkin County population to be 14,550 people in 2001, well below the 2000 Census figures.


Population Projections


The following table presents possible population level projections using four different sources. The 10 year growth trend is based on the rate of change between 1990 and 2000, using the 1990 Census and the 2000 Census, and projects this rate of growth forward between 2000 and 2006. The 20 year growth trend uses the same methodology, but calculates an annual growth rate from 1980 to 2000. The third and fourth projections are provided by Claritas, Inc., and Woods & Poole Economics, private companies that provide demographic data. Woods & Poole only issues data and projections at the County level.


Table 2 Population Projections Through 2006

 

2000 Population

Census

2006 Projection from 10 year growth trends

2006 Projection from 20 year growth trends

2006 Claritas Projection

2006 Woods & Poole Projection

 Palisade

118

105

110

N/A

N/A

 Market Area

1,731

1,957

1,771

1,824

N/A

Aitkin County

15,301

17,426

15,951

16,611

15,190

Source: U.S. Census Bureau; Claritas, Inc.; Woods & Poole Economics, Inc.; Community Partners Research, Inc.

 

►          Population projections calculated from recent trends for the City of Palisade are relatively consistent when calculated over a 10 year or a 20 year time period. The City has lost population in each of the last two decades. In our opinion, it is reasonable to assume that during the 6 year period between 2000 and 2006 the City will lose between 8 and 13 additional people.

 

►          Projections for the Palisade Market Area and the County of Aitkin vary depending on a 10 year versus 20 year calculation method. Both the Market Area and the County lost population in the 1980s, but rebounded with larger population gains in the 1990s. These methods anticipate that the Market Area will add between 40 and 226 people from 2000 to 2006. In this same projection period, Aitkin County is expected to add between 651 and 2,125 people.

 

►          Starting from their lower 2001 population estimate of 1,715, Claritas projects that the Market Area will add 109 people and that the County will add 1,093 people between 2001 and 2006. These projections are well within the ranges provided above.

 

►          Woods & Poole Economics projects that Aitkin County will add 640 people from 2001 to 2006. Again, they start with a lower base year estimate for 2001. While Woods & Poole’s estimates and projections are too low, they do anticipate continued County-wide growth into the foreseeable future.


Population By Age


The following table compares the City, Market Area and County populations by age in 1990 and 2000, along with the percentage changes. While this table examines the changes over the last 10 years, the table on the following page compares the City, Market Area and County with the State of Minnesota for the distribution of population by age.


Table 3 Persons by Age - 1990 - 2000


Age

City of Palisade

Market Area

Aitkin County

1990

2000

% Change

1990

2000

% Change

1990

2000

% Change

 0-19

31

27

-12.9%

374

380

1.6%

3,197

3,544

10.9%

20-24

3

8

166%

39

54

38.5%

359

486

35.4%

25-44

44

26

-40.9%

348

390

12.1%

2,989

3,302

10.5%

45-64

25

29

16.0%

382

529

38.5%

2,952

4,452

50.8%

65-74

22

12

-45.5%

193

250

29.5%

1,730

1,993

15.2%

75-84

14

13

-7.1%

73

110

50.7%

898

1,130

25.8%

 85+

5

3

-40.0%

13

18

38.5%

300

394

31.3%

Total

144

118

-18.1%

1,422

1,731

21.7%

12,425

15,301

23.1%

Source: U.S. Census; Community Partners Research, Inc.

 

►          With a relatively small population, and with population loss in the last decade, the City has experienced a decrease in the number of people in most age cohorts. The largest numeric losses were in the age ranges between 25 and 44 years old, and in the age ranges between 65 and 74 years old. There was also a decrease in the number of children age 19 years old and younger. The only age ranges that added population were the 20 to 24 year old young adults, and the population in the 45 to 64 year old age ranges, where the population increased by 16%.

 

►          In the Palisade Market Area, every age group reported an increase in population between 1990 and 2000, although the number of children age 19 and younger increased by only 6 people. On a percentage basis, all of the age ranges 45 year old and older increased by more than 29%. There was also a large percentage increase in the number of young adults in the 20 to 24 year old age range.

 

►          Despite the relatively large percentage growth of population in the primary child-rearing age groups, the Palisade Market Area’s percentage of children increased by less than 2% 1990 and 2000.

 

►          The older senior population, age 85 and older, increased by more than 38% in the Market Area, but this age cohort is a very small percentage of the total Market Area population, with only 18 people in this age range.


Population By Age - Comparison to Minnesota


The following table compares the City, Market Area and County populations by age in 2000 to State-wide age distribution patterns.


Table 4 Persons by Age - 1990 - 2000


Age

Palisade

Market Area

Aitkin County

Minnesota

2000

Percent

2000

Percent

2000

Percent

2000 Percent

 0-19

27

22.9%

380

22.0%

3,544

23.2%

29.1%

20-24

8

6.8%

54

3.1%

486

3.2%

6.6%

25-44

26

22.0%

390

22.5%

3,302

21.6%

30.5%

45-64

29

24.6%

529

30.6%

4,452

29.1%

21.7%

65-74

12

10.2%

250

14.4%

1,993

13.0%

6.0%

75-84

13

11.0%

110

6.4%

1,130

7.4%

4.3%

 85+

3

2.5%

18

1.0%

394

2.6%

1.7%

Total

118

100%

1,731

100%

15,301

100%

100%

Source: U.S. Census; Community Partners Research, Inc.

 

►          The percentage of children in the City and in the surrounding Market Area is slightly below the County-wide percentage, and is well below the State-wide percentage for children in the population.

 

►          The City’s percentage of population is lower than the comparable State-wide percentages for all age groups under 45 years old. For the age ranges above 45 years old, the City’s percentages are above the State-wide average.

 

►          While the Market Area has an above-average population of senior citizens in the age ranges between 65 and 84 years old, there is a below average percentage of senior citizens age 85 and older. This implies that older seniors tend to leave the area as they age, probably looking for additional medical and service options in larger neighboring communities.

 

►          According to the 2000 Census, the median age in the City of Palisade is 44.0 years old and in the County it is 46.5 years old. For the entire State of Minnesota the median age is 35.4 years old.


Household Estimates and Trends


Table 5 Household Trends - 1980-2000

 

1980 Households

1990 Households

% Change 1980-1990

2000 Households

% Change 1990-2000

Palisade

68

59

-13.2%

53

-10.2%

Palisade Market Area

553

552

-0.2%

719

30.3%

Aitkin County

5,005

5,126

2.4%

6,644

29.6%

Source: U.S. Census Bureau; Community Partners Research, Inc.

 

►          The City of Palisade has lost households in each of the last two decades. In the 1980s, the City lost 9 households, for a 13.2% loss. In the 1990s, the City lost an additional 6 households, for a loss rate of 10.2%.

 

►          Household growth in the Palisade Market Area was very strong over the last decade. >From 1990 to 2000, the Market Area added 167 new households, or a household increase of more than 30%. Although the Market Area had a significant population loss in the 1980s, the household level remained almost unchanged during that decade. Most of the household growth in the Market Area occurred in the Waukenabo, Workman and Fleming Townships, which offer lake shore and rural residential options.

 

►          Aitkin County’s household growth approached 30% in the 1990s. While all regions of the County added households, the majority of the household growth occurred in the jurisdictions that form the Aitkin Market Area.

 

►          Although the 2000 Census data released to date does not show the components of household gains and losses, in their 1999 County estimates, the Census Bureau identified the sources of population gains and losses for counties. In Aitkin County, they estimated population decreases for deaths exceeding births, but a significant population gain due to domestic in-migration. While the Palisade Market Area represents only a portion of the entire County, it is probable that the causes of household change are similar to County-wide patterns, with domestic in-migration as the largest component of growth.

 

►          Increasingly, seasonal use structures in northern Minnesota are being converted to year-round residences, as people move into the area to retire, or tele-commute to their employment. While a number of new houses may have been built in the Market Area to house new residents, it is also possible that many new households have occupied an existing unit that was previously a seasonal-use structure.

 

•          Claritas, Inc., estimates that there are 696 households in the Market Area in 2001, reasonably consistent with 2000 Census data.



Average Household Size


The following table provides U.S. Census Bureau information on average household size. We have also provided projections by Claritas, Inc., which were prepared prior to the release of any 2000 Census data.


Table 6 Average Number of Persons Per Household 1980-2006

 

1980 Census

1990 Census

2000 Census

2006 Projected Claritas

Palisade

2.28

2.44

2.23

N/A

Palisade Market Area

2.91

2.58

2.41

2.42

Aitkin County

2.65

2.39

2.28

2.21

Source: U.S. Census; Claritas, Inc.

 

►          In most areas in Minnesota and across the nation, average household size has been decreasing in recent decades. This has been due to household composition changes, such as more single parent families, more senior households due to longer life spans, etc. Although the average household size in Palisade increased between 1980 and 1990, the average size decreased from 1990 to 2000. The City’s average household size has decreased from 2.28 persons per household in 1980 to 2.23 persons in 2000. For the State of Minnesota, the average household size was 2.52 people in 2000.

 

►          Average household sizes for the Market Area and for the County as a whole have continued to decrease in the 1980s and 1990s. Although the averages are higher than for the City of Palisade, they are still well below the State-wide average.

 

►          The 2006 projection from Claritas shows that the average household size is expected to decrease over the next five years for the Market Area and the County. Claritas estimates a higher average household size in 2001 of 2.46 persons per household in the Market Area, and expects this to decrease to 2.42 persons by 2006.

 

►          Woods & Poole projects that the Aitkin County average household size will decline from 2.35 persons per household in 2001 to 2.31 persons in 2006.


Household Projections

 

The following table presents possible household level projections using four different sources. The 10 year growth trend is based on the rate of change between 1990 and 2000, using the 1990 Census and the 2000 Census, and projects this rate of growth forward to 2006. The 20 year growth trend uses the same methodology, but calculates an annual growth rate from 1980 to 2000. The third and fourth projections are provided by Claritas, Inc., and Woods & Poole Economics, private companies that provide demographic data. Woods & Poole only issues data and projections at the County level.


Table 7 Household Projections Through 2006

 

2000 Household Estimate

2006 Projection from 10 year growth trends

2006 Projection from 20 year growth trends

2006 Claritas, Inc. Projection

2006 Woods & Poole Projection

 Palisade

53

50

49

N/A

N/A

Palisade Market Area

719

850

784

753

N/A

Aitkin County

6,644

7,825

7,297

7,422

6,480

Source: Community Partners Research, Inc.; Claritas, Inc.

 

►          Our projections indicate that the City of Palisade is expected to lose between 3 and 4 households between 2000 and 2006.

 

►          Projections for the Palisade Market Area and the County of Palisade vary depending on a 10 year versus 20 year calculation method. These two methods anticipate that the Market Area will add between 65 and 131 households from 2000 to 2006. In this same projection period, Aitkin County is expected to add between 653 and 1,181 households.

►          The Claritas projection for the Palisade Market Area indicates an increase of 57 households between 2001 and 2006, below the range provided above. Claritas starts with a lower base year (2001) estimate than the 2000 Census. Claritas projects that the County will add 622 households between 2001 and 2006. This projection is near the lower end of the range provided above.

 

►          Woods & Poole Economics projects that Aitkin County will add 430 households from 2000 to 2006. Woods & Poole’s base year estimate for 2000 is well below the County household count reported by the Census. While their estimates and projections are too low, they do anticipate continued County-wide growth into the foreseeable future.


Households By Age of Householder


The following table compares Market Area households by age of householder in 1990 and 2000, along with the numeric and percentage changes.


Table 8 Market Area Households by Age - 1990 - 2000

Age of Householder

Palisade Market Area

1990

2000

Numeric Change

Percentage Change

15-24

7

12

5

71.4%

25-34

73

62

-11

-15.1%

35-44

92

129

37

40.2%

45-54

82

138

56

68.3%

55-64

118

140

22

18.6%

65-74

119

148

29

24.4%

75-84

53

75

22

41.5%

 85+

8

15

7

87.5%

Total

552

719

167

30.3%

Source: U.S. Census; Community Partners Research, Inc.

 

►          Census data show that the Palisade Market Area has added households in most age ranges since 1990. The only age group showing a net loss of households was the 25 to 34 year old range which lost 11 households between 1990 and 2000.

 

►          The largest numeric gains occurred in the 45 to 54 year old age group.

 

►          All of the senior citizen age groups increased in size, with a net gain of 58 households in the age ranges 65 years old and older.


Household Characteristics


The following table presents data on household characteristics from the 2000 Census. Data has been presented as percentages of the total households to allow for comparative analysis between the City, the Market Areas and State.


Table 9 Households by Type - 2000

 

Married Couple Family

Male Householder

No Wife Present

Female Householder No Husband Present

Non-Family Household

With Related Children

W/O Related Children

With Related Children

W/O Related Children

With Related Children

W/O Related Children

1 Person Household

Non-Family Household

Palisade

11.3%

35.8%

5.7%

1.9%

7.5%

9.4%

26.4%

1.9%

Market Area

17.9%

48.0%

2.4%

1.8%

2.2%

3.2%

20.3%

4.2%

Aitkin Co.

16.9%

40.5%

2.1%

1.3%

3.6%

2.6%

28.7%

4.2%

Minnesota

25.2%

28.5%

2.0%

1.6%

5.9%

3.0%

26.9%

6.9%

Source: 2000 Census; Community Partners Research, Inc.

 

►          According to the Census, Palisade’s percentage of married couples with children was well below average when compared to the County and the State of Minnesota. The City did have above average percentages of single parent families with children, and married couples without children when compared to the percentages for the State.

 

►          While the Market Area and the County had a below average percentage of married couples with children when compared to the State-wide average, the percentage of married couples without children was well above average. This would be consistent with some of the surrounding township and unorganized area’s popularity as a retirement location.



Households by Tenure


Table 10 Households by Tenure - 2000

 

Occupied Units

Owner-Occupied Units

% Owner Units

Renter-Occupied Units

% Rented Units

Palisade

53

50

94.3%

3

5.7%

Palisade Market Area

719

672

93.5%

47

6.5%

Aitkin County

6,644

5,676

85.4%

968

14.6%

Minnesota

1,895,127

1,412,865

74.6%

482,262

25.4%

Source: U.S. Census

 

►          According to the Census, nearly all of Palisade’s housing units are owner-occupied. The Census found only 3 rental units, representing less than 6% of the occupied housing stock. State-wide, the percentage of rental housing is greater than 25%.

 

►          The surrounding townships also offer primarily owner-occupied housing. The rate of owner-occupancy in the entire Market Area is more than 93%.




Income Data


Income data from the 2000 Census is not scheduled for release until 2002. Income data has been presented from a 2001 estimate of income calculated by Claritas, Inc., a national data reporting company. Income includes total money received in the stated calendar year by all household members 15 years old and over. Because of the relatively small size of Palisade, which creates difficulties in accurately estimating income levels, data is only provided for the larger Market Area and the County.


The first table provides a median income estimate for all households, while the second table provides a median income estimate for all families that have more than one related individual living in the same household.


Table 11 Estimated Household Income - 1989 to 2001

 

Household Income

1989 Median

2001 Median

% Change

Palisade Market Area

$18,511

$29,167

57.6%

Aitkin County

$17,487

$26,494

51.5%

Source: Claritas, Inc.


Table 12 Estimated Family Income - 1989 to 2001

 

Family Income

1989 Median

2001 Median

% Change

Palisade Market Area

$20,884

$33,036

58.2%

Aitkin County

$21,836

$33,134

51.7%

Source: Claritas, Inc.

 

►          Using the commonly accepted standard that 30% of gross income can be applied to housing expenses without experiencing a cost burden, a median income household in the Palisade Market Area could afford approximately $729 per month for housing and a median income family could afford $826 per month.

 

►          Using the mortgage affordability calculator of the National Association of Realtors, a household earning the Market Area’s median household income of $29,167 can afford to purchase a house at approximately $60,000. This assumes relatively low fixed debt, $3,000 available for a down payment, and a 30 year fixed rate mortgage at 7.25%. A median income family, with identical terms but having higher fixed debt and $5,000 for down payment can afford an $85,000 house. Closing costs have not been included in either calculation.

 

►          Household income estimates for 2001 indicate that approximately 17.7% of Palisade Market Area households have incomes above $50,000. Households in this income range will generally have incomes sufficient for the costs associated with new home construction, or houses above $125,000.


Existing Housing Inventory


Table 13 Occupied Housing Units by Year Built

 

1939 and Earlier

1940-1959

1960-1979

1980-1989

1990-2000*

Owned

Rented

Owned

Rented

Owned

Rented

Owned

Rented

Owned

Rented

Palisade

22

7

14

0

6

0

3

0

0

0

Source: 1990 Census; Building Permits

* The tenure and occupancy status for units constructed since 1990 is not exactly known. This table assumes tenure based on the best available information on structure type, and from the City’s building permit records.

 

►          The owner-occupied housing stock in Palisade is very old. The 1990 Census identified nearly 49% of the owner-occupied housing units at that time as pre-1940 construction. This was nearly two times greater than the State-wide average for pre-1940 housing of approximately 25%.

 

►          All of the City’s rental housing units reported in the 1990 Census were pre-1940 built housing.


Table 14 Palisade Housing Units By Number of Units and Tenure

 

Total Units - 1990

Owner Occupied 1990

Renter Occupied 1990

Unit changes 1990-2000

Total

Census+new units

1 Unit Detached

65

41

10

0

65

1 Unit Attached

1

1

0

0

1

2 Units

0

0

0

0

0

3-4 Units

0

0

0

0

0

5+ Units

0

0

0

0

0

Mobile Home

8

6

0

-2

6

Total

74

48

10

-2

72

Source: 1990 Census; Building Permits

 

►          Palisade has had no new housing in the last decade. Based on a visual count of housing units in the City, it appears that 2 mobile homes have been removed since 1990.

 

►          Only limited information is available on demolished units, but it appears that 1 house has had a serious fire and has been lost.

 

►          The unit counts reported in the 1990 Census for single family, duplex and mobile home units are higher than those obtained from a visual unit inventory completed in 2001. It is possible that additional units have been lost since 1990. It is also possible that some units at the edges of the City limits were not included in the visual inventory completed for this Study.



Permanent and Seasonal Housing


Like many areas in northern Minnesota, the area surrounding Palisade has a large number of seasonal use housing units. Increasingly, these seasonal use units are being converted to year-round housing units, to accommodate both retirees who are moving into the area, and also working age households who are looking to take advantage of the lakes, trees and other amenities of a wilderness housing location. The following table provides information on seasonal use housing units.


Table 15 Seasonal Use and Year-Round Occupied Housing Units - 2000

 


Total Units

Year-Round Occupancy Units

Seasonal Use Units

Units

Percent

Units

Percent

Palisade

66

60

90.9%

6

9.1%

Palisade Market Area

1,768

827

46.8%

941

53.2%

Aitkin County

14,168

7,499

52.9%

6,669

47.1%

Source: 2000 Census

 

►          Although there were only 6 seasonal use housing units identified within the City of Palisade, seasonal use units make up more than 53% of the stock in the Market Area, representing 941 housing units. The largest number of seasonal use units were in Fleming Township, Waukenabo Township and Workman Township. These three jurisdictions have accounted for most of the household growth that has occurred in the Palisade Market Area since 1990.

 

►          Information from utility providers in northern Minnesota indicates that in some areas, as many as 5% of the seasonal use units are converted to year-round use on an annual basis. This conversion to year-round use allows for significant, permanent household growth in the area without a commensurate level of new housing construction activity. The availability of these seasonal use units in the surrounding rural areas also helps to explain the significantly higher household growth rates that the Market Areas are experiencing when compared to the Cities in the area.





Home Values

Table 16 Estimated Owner Occupied House Value - 2001

 

2001 Median Home Value Estimate

Palisade

$26,355

Source: Community Partners Research, Inc.; Aitkin County Assessor

 

►          Data on median owner-occupied home values is from the Aitkin County Assessor’s Office. Data was reviewed on 63 homesteaded houses. This data may include two and three-unit structures where the owner occupies one of the units in the building.

 

►          The median value in the Assessor’s data is $25,100, which represents the estimated market value in January 2000. Estimated market values are supposed to be within 95% of actual market value, and generally lag slightly behind true sales values. To adjust this value, we have increased the median value by 5%, bringing the current estimated median home value to $26,355.


County estimated market value data has also been used to analyze the number of homesteaded houses in the City that fall into defined value ranges. The first value range identifies the number and percentage of houses compared to $77,540, based on the purchase price limit for first-time home buyer programs available through the Minnesota Housing Finance Agency (MHFA). The second value range compares house values to $85,000, the approximate purchase amount that is considered affordable at the Palisade Market Area median family income level of $33,036, with a 5% down payment.


Table 17 Owner-Occupied Houses By Specified Value Range - 2001

Value Range

Number of Homesteaded Houses

Percent of Homesteaded Houses

$0 - $77,540

Eligible for first-time buyer

61

96.8%

$77,540+

Above limits for first-time buyer

2

3.2%

$0 - $85,000

Affordable at median household income

61

96.8%

$85,001+

Above affordable level at median income

2

3.2%

Source: Aitkin County Assessor; Community Partners Research, Inc.

 

►          Based on home value estimates generated from County estimated market values, nearly 97% of the City’s existing single family housing stock is in a price range that is eligible for first-time home buyer mortgage programs, and an equal percentage of the houses is also affordable to households at the Palisade median family income level of $33,036.


Home Sales


The previous page examined all owner-occupied houses in the City as an indicator of ownership affordability. This section examines those houses that have been sold within a recent 17 month time period. It is important to note that the number of houses that have sold is relatively small, and may not be an accurate indicator of overall home values. However, this sample does provide some insight into those units that are turning-over in the City.


Table 18 Median Value of Recent Residential Sales - February 2000 - June 2001

 

Number of Good Sales

Median Sale Price

Palisade

6

$44,000

Source: Community Partners Research, Inc.; Aitkin County Assessor

 

►          Because of the small number of sales in Palisade in any year, we have reviewed sales over a 17 month period ending June 30, 2001, there were 6 improved residential sales in Palisade that were considered to be “arms length” transactions, according to the County Assessor. Sales that are not “arms length” include, but are not limited to, sales between relatives, forced sales and foreclosures, and estate transfers that are not available on the open market. Only the “arms length” transactions have been reviewed for this study.

 

►           The median sales price for the residential sales reviewed was $44,000. The highest valued sale was for $62,500 and the lowest valued sale for $15,000.


Table 19 Residential Sales By Specified Value Range - February 2000 - June 2001

Value Range

Number of Residential Sales

Percent of Residential Sales

$0 - $77,540

Eligible for first-time buyer

6

100%

$77,541+

Above first-time buyer limit

0

0%

$0 - $87,150

Affordable at median household income

6

100%

$87,151+

Above affordable level at median income

0

0%

Source: Aitkin County Assessor; Community Partners Research, Inc.

Note: This table reflects “qualified” sales as determined by the County Assessor. Sales for less than fair market value have not been included.

 

►          Sales data show that all of the sales occurred in a price range that is eligible for first-time home buyer mortgage assistance through the MN Housing Finance Agency, and all of the recent sales occurred in a price range that is considered to be affordable to households at the Palisade median household income level of $33,036.


County-wide Home Sales - Historical Data


The Minnesota Demographer’s Office has compiled County-level data on median home sales prices over the last 17 years to analyze price trends for single family houses. This data is only available for all of Aitkin County. The median sales price has been obtained from sales ratio reports submitted by the Aitkin County Assessor’s Office to the Minnesota Department of Revenue. It is important to note that houses sold in a given year may not be a statistically valid sample of all home values in the County. However, this annual sample does provide insight into home values over a number of years and information on those units that are turning-over in the County.


Table 20 Median Value of Residential Sales - 1984/85 to 1999/2000

 

Median Sale Price

Percent Change 1990-2000

Percent Change 1998/99-1999/2000

1984-1985

1989-1990

1995-1996

1998-1999

1999-2000

Aitkin County

$31,000

$32,250

$54,200

$70,000

$75,000

132.6%

7.1%

Minnesota

$64,000

$70,000

$87,500

$112,500

$124,500

77.9%

10.7%

Source: Minnesota State Demographer; Community Partners Research, Inc.

 

►          The median home sales price in Aitkin County has increased at a rapid rate over the last decade. From the 12 month period ending October 1, 1990 to the 12 month period ending October 1, 2000, the median sales price increased by nearly 133%. This percentage increase was well above the State-wide increase of approximately 80% during the same time period.

 

►          While the percentage increase is significant, it is explained in part by the relatively low median sales price in the County. The County’s median for the 1989-1990 sales period was $32,250. This was less than half of the State-wide median sales price in that year of $70,000.

 

►          For the 1989-1990 sales period, Aitkin County had the 31st lowest median sales value of 87 counties analyzed. For the 1999-2000 sales period, the County had the 44th lowest value of 87 counties reviewed.

 

►          The median income data for Aitkin County provided earlier in this Study estimate that the median household income level and the median family income level have increased by approximately 52% between 1989 and 2001. In this same time period the median home sales price has increased by nearly 133%.


Housing Condition


In May 2001, Community Partners Research, Inc. representatives conducted a visual ‘windshield’ survey of single family/duplex houses in Palisade. Houses that appeared to contain 3 or more residential units and mobile homes were excluded from the survey. The visual survey looked at 63 single family/duplex structures.


The visual survey also identified and rated 6 mobile homes in the City. The ratings for mobile homes are provided separately in the following table.


Houses were categorized in one of four levels of physical condition, Sound, Minor Repair, Major Repair, and Dilapidated as defined below. The visual survey analyzed only the physical condition of the visible exterior of each structure. Exterior condition is assumed to be a reasonable indicator of the structure’s interior quality.


Dilapidated houses need major renovation to become decent, safe and sanitary housing. Some Dilapidated properties may be abandoned and may be candidates for demolition and clearance. Major Rehabilitation is defined as a house needing multiple major improvements such as roof, windows, sidings, structural/foundation, etc. Houses in this condition category may or may not be economically feasible to rehabilitate. Minor Repair houses are judged to be generally in good condition and require less extensive repair, such as one major improvement. Houses in this condition category will generally be good candidates for rehabilitation programs because they are in a salable price range and are economically feasible to repair. Sound houses are judged to be in good, ‘move-in’ condition. Sound houses may contain minor code violations and still be considered Sound.


Table 21 Windshield Survey Condition Estimate - 2001

 

Sound

Minor Repair

Major Repair

Dilapidated

Total

Single Family/Duplex

16/25.4%

27/42.9%

16/25.4%

4/6.3%

63

Mobile Homes

3/50.0%

1/16.7%

2/33.3%

0/0%

6

Palisade Total

19/27.5%

28/40.6%

18/26.1%

4/5.8%

69

Source: Community Partners Research, Inc.

 

►          The visual condition survey identified most of the houses in the City as needing repair, although most of these houses required only minor repair. The survey did identify 16 single family/duplex structures and 2 mobile homes as needing major repair.

 

►          The analysis rated 4 single family/duplex homes as dilapidated. One additional house had been substantially damaged by a fire. These structures may be beyond repair, and could be candidates for demolition and clearance.


Land and Infrastructure Availability


In order to accommodate future housing development activity, the City will need adequate land suitable for residential development, and will need municipal sewer and water capacity sufficient to support additional residential users. While this study did not obtain independent verification of land or services availability, it did attempt to collect general information on the City’s physical ability to accommodate future residential growth. This information was most often obtained from either City staff or elected officials.


Land Availability - Single Family Development


Palisade has had almost no new housing construction over the last 40 years. Information contained in the 1990 Census indicates that only 9 houses have been added to the City since 1960. That Census also listed 8 mobile homes in the City, which would probably represent most of the post-1960 housing units.


No new residential subdivisions have been created for many years. According to City officials, Palisade has a limited supply of developed land that is available for new home construction.


The City has identified a 3 acre site in the City limits that would be suitable for residential development. The City also could annex a larger parcel if needed for development. While these parcels are available and would be suitable for residential development, municipal infrastructure would need to be provided. With low demand for new housing construction, it is doubtful that a private developer would find it economically feasible to develop a new subdivision unless it could be developed in small phases to eliminate a large, up-front cash outlay for municipal services.


Land Availability - Multifamily Development


It is probable that any future multifamily rental housing development would be modest in scale. It may be possible to construct a small rental project on an in-fill parcel. There are parcels on or near the City’s main commercial street that may be suitable for a small multifamily development.


Municipal Services


According to City officials, improvements to the City’s public water system were made in the mid-1990s. The City has recently received grant and loan funding through the Small Cities Development Program and USDA Rural Development to upgrade the sewer system.


Rental Housing


At the time of the 2000 Census, only 3 units, or approximately 6% of the occupied housing stock in Palisade was renter occupied. Palisade’s percentage of rental housing was very low. The State-wide rate of renter occupancy in 2000 was 25.4%.


At the time of the 1990 Census, all of the City’s rental housing was in single family homes. All of these rental houses were older units, built before 1940.


At the time of the 1990 Census, the City had 10 occupied renter households. The 2000 Census reported only 3 renter households. Despite the decrease in the number of renters, the 2000 Census did not identify any vacant rental housing units in Palisade. This would imply that some of the houses used for rental in 2000 have been converted to owner-occupancy, converted to seasonal use, or have been lost from the housing stock.


Rental Housing Survey


There are no multifamily rental buildings in Palisade, and only 3 single family rental units exist. No rental survey was conducted in Palisade.


City of Palisade


Findings and Recommendations


Key Statistics


The first number represents the City of Palisade/the second number, when provided, is for the Palisade Market Area which includes the City of Palisade and the Townships of Fleming, Logan, Morrison, Waukenabo and Workman; and the Northwest Aitkin Unorganized area


2000 Population = 118/1,731

2000 Households = 53/719

Projected household changes from 2000 to 2006 = -3 to -4 households in Palisade

Projected household changes from 2000 to 2006 = 65 to 131 households Market Area


2000 tenure rates = 94.3% owner, 5.7% renter

2001 Median owner-occupied house value = $26,355

Median value of recent sales = $44,000 (6 sales)


2001 Median Household Income = $29,167 Market Area

2001 Median Family Income = $33,036 Market Area

2000 Average number of persons per household = 2.23/2.41

Monthly rent payment ability (Market Area median income household) = $729

Affordable rent payment ability (50%of Market Area median income) = $365

Affordable ownership (Market Area median income household) = $60,000

Affordable Ownership (Market Area median income family) = $85,000



Growth Projections


The City of Palisade is the only incorporated city in Aitkin County that has lost population and households in the last 10 years. The City also lost population and households in the 1980s. Using Census Bureau statistics, the City’s population has decreased by nearly 24%, and the number of households has decreased by more than 22% from 1980 to 2000.


It is our understanding that the City may be filing an appeal with the 2000 Census, believing that an undercount has occurred. There is some evidence that the Census Bureau did miss some people in the City. The 2000 Census identifies 53 households in the City, including 50 owner-occupied houses, but County tax data shows 63 homesteaded houses in Palisade. However, it is not certain that all of these homesteaded houses were actually occupied by permanent residents.


Growth patterns in the Townships that form the Market Area have been a bit more stable. While the Market Area lost population in the 1980s, the household level remained stable during that decade. Since 1990, growth of both population and households has occurred. In total, the jurisdictions that form the Market Area added 167 new households in the 1990s. The largest numeric household growth occurred in Waukenabo, Fleming and Workman Townships. Combined, these 3 Townships accounted for more than 72% of the Market Area’s growth. All of these Townships have lake shore residential development options.


Much of the growth in the Townships around Palisade can be attributed to the popularity of lake shore living. The Market Area still contains more than 940 seasonal use residential units. This inventory of seasonal use housing offers significant potential for conversion or re-use as year-round housing, and the prospect that an increase in permanent residents can be expected for the foreseeable future.


Our traditional projection methods yield some variation in the growth potential for the City and the Market Area through 2006. The 1990s were extremely strong economic years for the nation, and part of the population rebound in Aitkin County and much of Greater Minnesota can be attributed to strong growth in employment, wages and wealth. A prolonged economic slow-down or recession could alter the growth patterns that became established in the area in the 1990s.


The near-term projections for household growth that we have used for this Study anticipate that growth will continue to occur, although at a slower pace than experienced over the last decade. We believe that household levels in the City of Palisade will decrease by approximately -3 to -4 households between 2000 and 2006. However, there may be some vacant housing units in the City that would allow for limited household growth. Past building patterns would not indicate that many new houses will be added to the City. The most realistic prospect would be for one or more mobile homes to moved into the City for new residents.


For the Palisade Market Area, we would expect between 65 and 131 permanent households to be added between 2000 and 2006, with the most realistic projection near the middle to slightly below the middle of this range. This equates to an annual average of between 12 and 16 new households per year. We would expect that some of this household growth will utilize existing, seasonal-use housing units, and this growth will not require a commensurate level of new unit construction.


We are projecting slower household growth in the near-future for three primary reasons. First, some of the household gains over the last decade were due to the availability of lower-cost housing units. After population and household losses in the 1980s, there were housing units available for sale or rent in the early part of the last decade. These units were available and affordable to new households that were looking to move into the Palisade area. With household growth since the early 1990s, the supply of good quality vacant units has decreased, and many households will find it more difficult to move into the area in an affordable housing unit.


Second, the availability of prime lakeshore sites continues to decline in Aitkin County. The availability of high-amenity sites in the townships surrounding Palisade has been one of the primary factors generating strong household growth over the last decade. As the number of prime sites decreases, and the price of sites increases, there will be fewer opportunities in the immediate area to attract new residents.


The third reason for slightly reduced growth rates is the economy, both locally and regionally. The 1990s represented one of the strongest periods of economic growth in our nation’s history. As documented in the Employment and Local Economic Trends section of this Study, Aitkin County shared in this economic growth through job creation and gains in average wages. With a slowing economy in recent years, we would expect less growth in the near-term generated by employment opportunities in the immediate area.


Our projections are based on normal growth patterns. A large, golf course development has been proposed in the Palisade area that would eventually include a number of housing units. If developed, we believe that these units will be both seasonal-use and year-round occupancy. This could lead to greater household growth for the area than past patterns would predict.


With relatively limited household growth projected through 2006 for the area forming the Palisade Market Area, we would expect to see only slight movement in the number of households in most of the age ranges. The age ranges that are expected to show the greatest amount of growth are among households 55 years old and older. This would be consistent with the Area’s popularity for lake shore living. Households in these age ranges tend to be predominantly home owners and will probably be looking for high amenity housing locations, such as lakeshore sites. The growth expected in these age ranges will primarily demand owner-occupied housing production.


There is also some projected growth among younger households, age 34 and younger. Households in these age ranges tend to rent with greater frequency than older households. People in this age range also tend to be first time home buyers.


While there should be some increase among older senior citizens, age 80 and older, reflecting longer average life-spans, growth in these age ranges is not expected to be as large as in some other parts of the County. There are relatively few services in the Palisade area that cater to the needs of older seniors, such as a hospital or senior life-cycle housing. As a result, while there is an above average number of younger senior citizens, there is a below average number of older seniors in the area.


These growth projections will be incorporated into the specific housing recommendations that follow.




Strengths For Housing Development


The following strengths of the community were identified through statistical data, local interviews, previous research and on-site review of the local housing stock.

 

►          Palisade benefits from natural amenities - The area around Palisade contains lake shore and wilderness residential options. This has attracted new people to the area as a permanent place to live. These high-amenity locations not only attract residents, but they also add to the quality of life for all local residents.

 

►          Palisade is a small, self-contained community - Despite its small size, Palisade still has many retail/services that have disappeared from other small towns. There is a grocery/convenience store, 3 restaurants, and a K-4 school. Palisade’s distance from larger communities have allowed some of these businesses the opportunity to continue to operate.

 

►          IRRRB eligible - The Iron Range Resources and Rehabilitation Board is becoming less involved in housing development than they have been in past years, but they remain a valuable resource for economic and community development in the area.

 

►          Attractive location for seniors and retirees - With its nearby lakes and natural amenities, the area around Palisade has been a popular location for retired and semi-retired households. The percentage of empty-nesters and seniors in the in the age ranges between 55 and 74 years old is above the State-wide average.

 

►          Commuting distance to Aitkin and McGregor- Most of the Aitkin County employment opportunities are in Aitkin. Palisade residents are within a reasonable commuting distance to Aitkin for employment.

 

►          Affordable existing housing stock - A large majority of the existing single-family houses in Palisade are very affordable, priced at $50,000 or less. However, some of these houses are older, and may need maintenance and rehabilitation to remain desirable options.

 

►          Improved municipal sewer a water systems - In recent years, the City has secured grant and loan funds for improvements to its municipal public facilities systems.



Barriers or Limitations to Housing Activities


Our research also identified the following barriers, or limitations, that hinder or prevent certain housing activities in the City of Palisade.

 

►          Competition with other jurisdictions - Although the area has grown over the last 10 years, this growth has occurred outside of the City limits, in the surrounding townships. This is especially true of higher valued homes and higher income households. While Palisade still benefits economically, the City does not capture the expanded tax base resulting from this rural growth.

 

►          Declining population and households limit housing development opportunities - Although the 2000 Census may be challenged, preliminary data shows that Palisade is the only City in the County that has lost population and households over the last decade. Even if the Census did under count people

 

►          Value Gap Deters New Owner-Occupied Construction - Based on market values for property taxes and recent residential sales, we estimate that the median priced home in Palisade is valued at $23,000 to $32,000. This is well below the comparable cost for new housing construction, which will generally be well above $100,000.00 for a stick-built house with commonly expected amenities. This creates a significant “value gap” between new construction and existing homes. This is an obvious disincentive for any type of speculative building, but also serves to deter customized construction, unless the owner is willing to accept a potential loss on their investment.

 

►          Condition of the Housing Stock - While the existing stock is very affordable, much of it is old and may need substantial improvement to meet expectations of potential buyers. Our survey of housing conditions rated a majority of houses and mobile homes in the City as needing repair, although most of these structures only required minor repair.

 

►          Staff Capacity Limitations - The City operates with limited personnel. It is very difficult for existing staff with current responsibilities to develop new housing initiatives. The County HRA is also available, but also has limited staff availability to initiate new projects.

 

►          Economic difficulties - Although the City’s economy has improved over the last decade, the County’s unemployment rate was more than double the State-wide rate in 2000.

 

►          Lower incomes limit housing choices - Income estimates for Palisade and the surrounding market areas indicate that incomes are relatively low. The Market Area’s estimated median household income for 2001, $23,618, translates into an approximate ownership affordability level of $60,000, and an affordable rent level between $295 and $590 per month. While these affordability levels match up well with prices for existing housing in the City, they are generally not well matched to the prices for new housing construction.

 

►          Limited employment and services - Very few employment opportunities are provided in or around Palisade. Most residents must commute a half hour or more to their places of work. The City also lacks basic retail/commercial services, again requiring residents to commute as far as Mora for groceries, medicines, medical clinics, etc.


Recommendations, Strategies and Housing Market Opportunities


Based on the research contained in this study, and the housing strengths and barriers identified above, we believe that the following recommendations are realistic options for the City of Palisade. They are based on the following strategies:

 

►          Focus heavily on the preservation, maintenance and improvement of the housing stock that already exists in the City - While some housing construction may occur in coming years, most of the housing opportunities will continue to be provided by the housing stock that is already on the ground. This is especially important for affordable housing opportunities, as it will almost always be less expensive to offer an affordable unit through rehabilitation versus new construction. Units that are lost due to deterioration and obsolescence cannot be replaced for a similar price.

 

►          Be realistic in expectations for new housing development - Residential growth has not occurred in the recent past, and is not likely to occur in the near future. It appears that mobile homes have been the only housing units added to the City in many years. Any future development should be consistent with the growth prospects of the City.

 

►          The market for new housing development will generally not occur without proactive community involvement - Much of the housing development that has occurred in the smaller cities in Northeastern Minnesota in the recent past has involved some form of public involvement or subsidy. Cities have been active developers of rental housing and residential subdivisions. Palisade has been at a competitive disadvantage compared to the surrounding townships when it comes to new home construction. To attract new housing development, public subsidies or other assistance will probably be required.

 

►          Take advantage of housing subsidy opportunities - In addition to competing more successfully with rural locations, some form of public subsidy will probably be required to make new housing development affordable for low and moderate income residents. With relatively low incomes in the area, costs associated with new housing construction is beyond the financial means of most area households.


Recommendations

 

1.         Consider the development of a small, publicly supported rental housing project


Findings: Although Palisade is a very small community, its relative isolation from other cities has allowed it to retain some of the services and functions that have disappeared from other small towns. The City has a grocery/convenience store, multiple restaurants, 2 gas stations, a laundromat, community center, a K-4 elementary school and other offerings typically absent in a city of only 118 people.


Palisade has no multifamily rental housing. The only rental units are provided in single family homes or mobile homes. Households looking to rent their housing would be forced to look for apartments in Aitkin or McGregor. This is especially true of senior citizens, who may look to move out of their single family house and into a no maintenance, secure rental unit.


Palisade, and its surrounding Market Area are under served with rental housing. The renter-occupancy tenure rate in the City is less than 6%, and for the entire Market Area, the rental tenure rate is below 7%. However, this low rate of rental housing is due to the fact that it is extremely difficult to construct and maintain rental housing in a community a small as Palisade.


Compounding the problem is the out-migration of people and households that has been occurring since at least 1980. While the City is planning to challenge the Census findings, the official statistics for the City show that it has continued to lose population and households over the last decade. The 2000 Census shows that the City’s population level has decreased by 24%, and the number of households has decreased by 22% since 1980.


While it can be argued that the lack of rental housing has contributed to this household loss, the City must also recognize that constructing new units, with 20 or 30 year financing requirements, appears to be a risky proposition. A sustained market demand for units will be based in large part on the community’s vitality and desirability as a residential location.


Recommendation: We would encourage the City to take the initial steps to explore the prospect of constructing a small, moderate rent apartment project. Other small cities around Minnesota have been able to cost-effectively develop 4 unit rental projects. We believe that it is very unlikely that a private developer would take on this project. If developed, these rental units would probably need to be publicly owned and publicly supported.


Some communities have done extensive local field research as part of their planning process. By involving local senior citizens, new teachers, and other prospective tenants, these cities have gained useful information to help design a project. Through this process, acceptable rent levels, unit configuration and amenities, potential locations, and other useful input can be obtained. Most importantly, this can help the community decide on the realistic level of demand for units. It may be possible to take commitments from future tenants. Having some of the units pre-leased before construction may be critical in obtaining project financing.


The City should also be prepared to be a heavy contributor to and financial backer of the project. Many communities have pledged their general obligation taxing authority to guarantee payment on bonds issued for the project. While this pouts the financial burden and risk on the local tax payers, a project like this should probably be viewed as a community-wide investment.


Other contributions would also be required, such as site donation, waiver of sewer and water hook-up fees, and recognition that a publicly owned project will not pay full property tax.


If, after careful planning, the City decides to proceed with a project, we would recommend a development that contains primarily two bedroom units. This housing will be a long-term asset to the community. While one bedroom apartments may be less expensive to construct, they will generally prove to be less marketable in future years. New units, even publicly owned and publicly subsidized units will command rents that are generally higher than rents for any older units in the area. Tenant households willing to pay the rent level for a new unit will be looking for amenities and square footage in their new home.



Gross rental rates for newer rental housing in Aitkin have been in the $600 to $650 per month range for a two bedroom unit. These rents are very attractive for new construction. In many communities, privately owned rental units would charge between $750 and $850 for a new, two bedroom unit. Although there are a number of households in the Market Area that can afford rents of more than $600 without experiencing a cost burden, there may be an attitudinal barrier to rents this high. We would strongly encourage the City to try and achieve gross rent levels under $600, if possible. Research with prospective tenants can help the City define the maximum price point that is acceptable to area households.


Many of these publicly developed rental projects are owned by a City or County Housing and Redevelopment Authority. Other communities in Northeastern Minnesota have been able to secure IRRRB contributions to subsidize the project. While IRRRB is becoming less involved in housing development, this potential funding source should be explored, along with any other potential grant funding that could help to lower the debt service costs required by the project.

 

2.         Continue with rehabilitate efforts


Findings: The City’s existing housing stock will provide the large majority of the affordably priced housing, both now and into the future. Existing houses generally sell at a discount to their replacement value. It will be impossible to replace affordable, existing units that are lost to deterioration.


Our analysis of housing condition found that nearly all of Palisade’s housing units need repair. While many of these houses only require minor repairs, which makes rehabilitation programs economically feasible, we did rate 16 houses and 2 mobile homes as needing major repair. With low home values in the City, it can be difficult to cost-effectively rehabilitate older housing.


Recommendation: The City has already taken the most important step in addressing its housing rehabilitation needs. Small Cities Development Program (SCDP) funds have been secured for a concentrated rehabilitation program.


On-going rehabilitation efforts are recommended for owner-occupied homes. The City should pursue the housing rehabilitation funds through the Lakes and Pines CAC, and other local program providers.

 

3.         Acquire and clear dilapidated properties as needed


Findings: The City may contain houses that are too deteriorated to rehabilitate. The windshield condition survey rated 4 houses as dilapidated and possibly beyond repair. Another house had suffered significant fire damage but was still standing at the time of the condition survey. To improve the appearance of the community, a program should be developed to acquire and demolish dilapidated structures as needed.


Recommendations: The City should look for resources to acquire and demolish severely dilapidated structures, with affordable home redevelopment on the available lots. IRRRB has been active in the past in helping to remove blighted structures.


Some communities have been able to offer affordable home ownership through modular homes on lower priced lots. In-fill building sites created through acquisition and clearance activities may provide appropriate sites for modular homes or other lower priced options.


Habitat for Humanity has been active in creating housing in Aitkin. Acquired properties could be donated to Habitat for the development lower priced homes.


4.         Utilize the MURL Program


Findings: Palisade has an older, lower valued housing stock, with many homes in need of repair. Our analysis of estimated market values for property taxes and recent sales activity indicates that the median priced home in the City is valued between $26,000 and $44,000. As homes below the median price come up for sale, they may not be attractive options for potential home buyers because of the amount of repair work that is required.


The Minnesota Urban and Rural Homesteading (MURL) Program is funded by the Legislature through the Minnesota Housing Finance Agency. Under the program, the City or a housing agency purchases an existing home that needs rehabilitation, rehabilitates the home, sells the home to a low income family and provides a mortgage with no down payment, no interest and a monthly payment that is affordable for the family. The MURL Program accomplishes many community goals, including the promotion of home ownership for lower income people, and the repair of substandard housing units.


In many cases, the cost of acquisition and rehab will exceed the house’s after rehab value. Although a public subsidy may be involved, the costs to rehab and sell an existing housing unit are generally lower than the subsidy required to provide an equally affordable unit through new construction.


Recommendations: As part of rehabilitation efforts, we recommend that the City promote and utilize the availability of MURL Program funds through MHFA to purchase, repair and re-sell lower valued houses to low and moderate income people. In addition to MURL funds, other possible funding sources include SCDP and other MHFA programs.


5.         Promote and access all programs that assist with home ownership


Findings: Home ownership is generally the preferred housing option for most households and most communities. Home ownership provides for community stability, improves housing quality and strengthens the tax base. The affordable home prices in Palisade are conducive to the promotion of home ownership.


Recommendation: While very few houses come up for sale in Palisade, potential home buyers should be made aware of assistance programs that may be available for first time home buyers. The Central Minnesota Housing Partnership has worked with many of the innovative ownership programs, and can help potential buyers access the programs that are available.



 

6.         Consider the development of a small subdivision for modular homes and mobile homes


Findings: Palisade has had almost no new home construction in recent decades. The only additions to the housing stock have been mobile homes moved into the community.


Most new housing that has been constructed in the immediate area has been oriented to the lakes and wilderness locations. Estimated market value data indicate that there are only two houses in Palisade valued at $75,000 or more. The lower values for existing homes acts as a disincentive for the construction of new, higher valued homes within the City. While some customized construction of higher valued homes may occur, the owners must accept the fact that the home may never re-sell for the price of construction.


Some communities, including Bovey and Coleraine in neighboring Itasca County, have developed small residential subdivisions that offer lower priced residential lots. These subdivisions allow mobile homes and modular housing units. These lower priced units are price compatible with older homes in the community. They also are consistent with the community’s market strength as a location for affordable housing.


Both of these communities were able to use Iron Range Resources and Rehabilitation Board (IRRRB) funding to off-set the infrastructure costs, which allowed the lots to be sold at a low price. IRRRB has recently moved away from housing development as a priority activity, and the availability of funds for a similar project in Palisade is not known.


Recommendation: While the City may never attract a large volume of new home building, encouraging construction that is consistent with existing home values and with area income levels will help to facilitate new units. We would caution to keep any subdivision small in scale. Since 1980, only a handful of housing units have been added to Palisade. A subdivision that allows small phases to be brought on-line can keep infrastructure development costs to a minimum.



7.         Develop a staff relationship with area housing agencies


Findings: The community will need staff resources to plan and implement many of the housing ideas advanced in this study. The City has an active County Housing and Redevelopment Authority (HRA), Lakes and Pines CAC, the Central Minnesota Housing Partnership (CMHP) and the Arrowhead Economic Opportunity Agency (AEOA), all providing housing programs and technical assistance. These agencies all have proven track-records with housing program development and delivery.


Recommendation: While the City is fortunate to have multiple agencies for housing activities, this arrangement could result in no single agency having responsibility to coordinate and implement the housing initiatives recommended in this Study. While there has traditionally been a good degree of staff interaction between these agencies, it will be important that a coordinated approach be used to prioritize and assign responsibility for certain housing programs.