City of McGregor

Section Table of Contents:


Page

Demographic Data Overview

Mc-2

Population Estimates and Trends

Mc-4

Population Projections

Mc-5

Population by Age

Mc-6

Population by Age - Comparison with Minnesota

Mc-7

Households Estimates and Trends

Mc-8

Average Household Size

Mc-9

Household Projections

Mc-10

Households by Age of Householder

Mc-11

Household Characteristics

Mc-12

Households by Tenure

Mc-13

Income Data

Mc-14

Existing Housing Inventory

Mc-15

Permanent and Seasonal Housing

Mc-16

Census Housing Vacancy

Mc-17

Home Values

Mc-18

Home Sales

Mc-19

Home Sales - Historical Data

Mc-20

Housing Condition

Mc-21

Land and Infrastructure Availability

Mc-22

Rental Housing

Mc-23

Findings and Recommendations

Mc-26


 City of McGregor


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 McGregor Market Area, as defined below. Because of the relatively small size of McGregor, 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 McGregor, and for a primary market area that surrounds the City. The primary market area is referred to in the Study as the McGregor Market Area. This market area includes the City of McGregor and the City of Tamarack, the Townships of Balsam, Beaver, Clark, Haugen, Jevne, Libby, McGregor, Rice River, Salo, Shamrock, Spalding and Turner; and the Unorganized area of Davidson.


A map showing the McGregor 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 McGregor has the potential to draw from a larger Market Area. The inclusion of a McGregor 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.








 

McGregor

      Market Area


Population Estimates and Trends


Table 1 Population Trends - 1980-2000

 

1980 Population

1990 Population

% Change 1980-1990

2000 Population

% Change 1990-2000

McGregor

447

376

-15.9%

404

7.4%

McGregor Market Area

2,860

2,692

-5.9%

3,255

20.9%

Aitkin County

13,404

12,425

-7.3%

15,301

23.1%

Source: U.S. Census Bureau

 

►          After experiencing a population loss of nearly 16% in the 1980s, McGregor had a slight population increase over the last 10 years. According to the Census, McGregor added 28 people, for a population increase of 7.4% between 1990 and 2000. However, adjusting for the large population losses of the 1980s, the City’s population is still nearly10% lower than it was in 1980.

 

►          The jurisdictions forming the McGregor Market Area showed similar growth patterns to the City of McGregor. After losing nearly 6% of its population in the 1980s, the Market Area experienced a population increase of nearly 21% from 1990 to 2000. The Market Area population level in 2000 is approximately 14% above the population level in 1980.

 

►          Aitkin County has grown at an even faster rate over the last 10 years. 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 McGregor 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 3,360 for the McGregor 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

 McGregor

404

422

392

N/A

N/A

 Market Area

3,255

3,663

3,390

3,592

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 McGregor differ depending on the inclusion of 1980s population data, when the City lost approximately 16% of its total population. In the 1990s, population trends reversed, and the City added a small number of people. Projections based on the last 10 years may be overly optimistic, since part of the population gain of the 1990s was due to housing unit availability from the out-migration in the 1980s. However, the projection based on 20 year patterns may be too pessimistic. In our opinion, it is reasonable to assume that population growth over the 6 year period between 2000 and 2006 will be within the range between -8 and 18 people.

 

►          Projections for the McGregor Market Area and the County of Aitkin also vary depending on a 10 year versus 20 year calculation method. These methods anticipate that the Market Area will add between 135 and 408 people from 2000 to 2006. In this same projection period, Aitkin County is expected to add between 651 and 2,125 people.

 

►          Claritas projects that the Market Area will add 232 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 McGregor

Market Area

Aitkin County

1990

2000

% Change

1990

2000

% Change

1990

2000

% Change

 0-19

119

121

1.7%

713

763

7.0%

3,197

3,544

10.9%

20-24

21

27

28.6%

77

107

39.0%

359

486

35.4%

25-44

86

84

-2.3%

653

671

2.8%

2,989

3,302

10.5%

45-64

76

87

14.5%

679

962

41.7%

2,952

4,452

50.8%

65-74

36

38

5.6%

399

459

15.0%

1,730

1,993

15.2%

75-84

29

33

13.8%

147

255

73.5%

898

1,130

25.8%

 85+

9

14

55.6%

24

38

58.3%

300

394

31.3%

Total

376

404

7.4%

2,692

3,255

20.9%

12,425

15,301

23.1%

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

 

►          Over the last decade, the City has experienced increases in most of the age ranges. The only age range that had a loss was the number of people age 25 to 44 years old, which only decreased by 2 people. The largest numeric gains were in the age ranges 45 to 64 years old, and among older seniors age 85 and older.

 

►          In the McGregor Market Area, every age group reported an increase in population between 1990 and 2000. There was a large percentage and numeric increase in the population between 45 and 64 years old. Much of the “baby boom generation” was in this age cohort in 2000. People in these age ranges also represented the largest increase for Aitkin County as a whole.

 

►          Despite total population growth of nearly 21% in the Market Area, the percentage of children increased by only 7% between 1990 and 2000.

 

►          The older senior population, age 85 and older, increased by more than 58% in the Market Area, but this age cohort is a very small percentage of the total Market Area population.


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

McGregor

Market Area

Aitkin County

Minnesota

2000

Percent

2000

Percent

2000

Percent

2000 Percent

 0-19

121

30.0%

763

23.4%

3,544

23.2%

29.1%

20-24

27

6.7%

107

3.3%

486

3.2%

6.6%

25-44

84

20.8%

671

20.6%

3,302

21.6%

30.5%

45-64

87

21.5%

962

29.6%

4,452

29.1%

21.7%

65-74

38

9.4%

459

14.1%

1,993

13.0%

6.0%

75-84

33

8.2%

255

7.8%

1,130

7.4%

4.3%

 85+

14

3.5%

38

1.2%

394

2.6%

1.7%

Total

404

100%

3,255

100%

15,301

100%

100%

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

 

►          The percentage of children in the City’s population is well above the County-wide level, and slightly higher than the State-wide percentage for children in the population.

 

►          The City’s percentage of population in the prime child-rearing age ranges between 25 and 44 years old is well below the State-wide average, despite the above average number of children.

 

►          The City has above average percentages for all senior citizen age groups, age 65 and older. These percentages are between 1 ½ and 2 time above the State-wide percentage.

 

►          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, when compared to the State of Minnesota. 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 McGregor was 38.3 years old and in the County it was 46.5 years old. For the entire State of Minnesota the median age was 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

McGregor

181

162

-10.5%

182

12.3%

McGregor Market Area

1,060

1,119

5.6%

1,454

29.9%

Aitkin County

5,005

5,126

2.4%

6,644

29.6%

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

 

►          After a decade of household losses in the 1980s, the City of McGregor experienced a household growth rate of more than 12% from 1990 to 2000. The household level reported in the 2000 Census was 1 household higher than in 1980.

 

►          Household growth in the McGregor Market Area was very strong over the last decade. >From 1990 to 2000, the Market Area added 335 new households, or a household increase of nearly 30%. The Market Area also had some increase in households in the 1980s, despite a decrease in population. Over 56% of the household growth in the Market Area occurred in Shamrock Township, which includes much of the prime lake shore on Big Sandy Lake.

 

►          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 McGregor 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 1,467 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

McGregor

2.47

2.32

2.22

N/A

McGregor Market Area

2.70

2.41

2.24

2.25

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. This trend of smaller household sizes has been occurring in McGregor as the average household size has decreased from 2.47 persons per household in 1980 to 2.22 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 average sizes are higher than for the City of McGregor, 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 starts with a higher current-year estimate for 2001, and expects the average size to decrease slightly through 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.


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 7 Market Area Households by Age - 1990 - 2000

Age of Householder

McGregor Market Area

1990

2000

Numeric Change

Percentage Change

15-24

26

29

3

11.5%

25-34

161

113

-48

-29.8%

35-44

172

245

73

42.4%

45-54

152

250

98

64.5%

55-64

232

302

70

30.2%

65-74

252

293

41

16.3%

75-84

108

193

85

78.7%

 85+

16

29

13

81.3%

Total

1,119

1,454

335

29.9%

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

 

►          Census data show that the McGregor 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 48 households between 1990 and 2000.

 

►          The largest numeric gains occurred in the 45 to 54 year old age group which added 98 households, and the 75 to 84 year old age range which added 85 households.

 

►          All of the senior citizen age groups increased in size, with the number of households in the 65 and older ranges adding 139 additional households between 1990 and 2000.


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 8 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

 McGregor

182

195

182

N/A

N/A

McGregor Market Area

1,454

1,715

1,616

1,599

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 McGregor is expected to add between 0 and 13 new households between 2000 and 2006.

 

►          Projections for the McGregor Market Area and the County of Aitkin vary depending on a 10 year versus 20 year calculation method. These two methods anticipate that the Market Area will add between 162 and 261 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 McGregor Market Area indicates an increase of 132 households between 2001 and 2006, below the range provided above. Claritas starts with a higher 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.


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

McGregor

14.8%

24.7%

3.3%

1.1%

9.3%

4.9%

39.6%

2.2%

Market Area

15.3%

39.9%

2.2%

1.1%

4.3%

3.0%

30.3%

4.1%

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, McGregor’s percentage of married couples with children was well below average when compared to the State of Minnesota. The City’s percentage of 1 person households was well above the comparable averages. A large number of 1 person households is common in communities with a large, older senior population.

 

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

 

►          While McGregor did have a below average percentage of married couples with children, the City did have an above average percentage of single parent families with children.


Households by Tenure


Table 10 Households by Tenure - 2000

 

Occupied Units

Owner-Occupied Units

% Owner Units

Renter-Occupied Units

% Rented Units

McGregor

182

103

56.6%

79

43.4%

McGregor Market Area

1,454

1,266

87.1%

188

12.9%

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 2000 Census, McGregor has a high percentage of renter-occupied housing when compared to the State of Minnesota. The City’s percentage of rental housing is very comparable to the City of Aitkin. While an above average percentage of rental units is somewhat typical for cities that serve as a rental center for a surrounding area, such as Aitkin, cities the size of McGregor do not typically have such a large supply of rental housing units.

 

►          Although the City of McGregor has a high percentage of rental housing units, the surrounding townships have primarily owner-occupied housing. Excluding units in McGregor, the surrounding jurisdictions in the Market Area have over 91% of their housing owner-occupied.



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 McGregor, 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

McGregor Market Area

$15,974

$24,189

51.4%

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

McGregor Market Area

$18,679

$28,382

51.9%

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 McGregor Market Area could afford approximately $605 per month for housing and a median income family could afford $710 per month. This amount may reduced by other consumer debt.

 

►          Using the mortgage affordability calculator of the National Association of Realtors, a household earning the McGregor Market Area’s median household income of $25,026 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 a down payment can afford a $69,230 house. Closing costs have not been included in either calculation.

 

►          Household income estimates for 2001 indicate that approximately 17.2% of McGregor 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

1990-2001*

Owned

Rented

Owned

Rented

Owned

Rented

Owned

Rented

Owned

Rented

McGregor

17

2

21

7

51

46

10

5

5

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 McGregor is relatively new. The 1990 Census reported only 17% of the owner-occupied housing units at that time as pre-1940 construction. The State-wide average for pre-1940 housing was 25% according to the 1990 Census. McGregor has a large number of mobile homes, which contributes to the relatively recent dates of construction for many owner-occupied housing units.

 

►          Most of the City’s rental housing was built after 1960. The Census identified only 3% of the occupied rental units as pre-1940 built housing.


Table 14 McGregor Housing Units By Number of Units and Tenure

 

Total Units - 1990

Owner Occupied 1990

Renter Occupied 1990

Unit changes 1990-2001

Total

Census+new units

1 Unit Detached

104

67

23

5

109

1 Unit Attached

2

2

0

0

2

2 Units

2

0

2

0

2

3-4 Units

4

1

2

-3

0

5+ Units

30

1

26

0

30

Mobile Home

36

26

5

7

43

Total

178

97

58

9

186

Source: 1990 Census; Building Permits

 

►          McGregor has had only five new house constructed in the last decade. Based on a visual count, it appears that 7 mobile homes have been added to the community.

 

►          Only limited information is available on demolished units, but from a visual count of units, it appears that a few houses were removed in the 1990s. The City did know of a three-unit apartment that had been demolished.

 

►          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 McGregor 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

McGregor

199

192

96.5%

7

3.5%

McGregor Market Area

3,859

1,782

46.2%

2,077

53.8%

Aitkin County

14,168

7,499

52.9%

6,669

47.1%

Source: 2000 Census

 

►          Although there were only 7 seasonal use housing units identified within the City of McGregor, seasonal use units make up nearly 54% of the stock in the Market Area, representing 2,077 housing units. The largest number of seasonal use units were in Shamrock Township, which had 1,281 of the Market Area’s 2,077 seasonal use housing units. Shamrock Township accounted for more than 56% of all household growth that occurred in the Market Area between 1990 and 2000.

 

►          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.





Census Housing Vacancy


The 2000 Census provided information on the occupancy/vacancy status at the time the Census was taken.


Table 16 Vacant Housing Units - 2000

 

Total Units

Total Vacant Units

Seasonal Use Vacant

Vacant For Rent

Vacant For Sale

Other Vacant

McGregor

199

17

7

6

0

4

Market Area

3,859

2,405

2,077

8

14

268

Aitkin County

14,168

7,524

6,669

97

68

690

Source: 2000 Census

 

►          The Census reported that there were 6 vacant rental units and no vacant owner-occupied units in McGregor at the time of the Census. This equates to a vacancy rate of 7.1% for rental housing. State-wide, the 2000 vacancy rate was 4.1% for rental housing and 0.9% for owned housing according to the Census.

 

►          The Census lists a large number of “other vacant” units in the Market Area. The status of these units is not always defined. In some cases, these are units that are vacant temporarily due to turn-over, such as units that have been recently sold but the new owner has not yet moved in. It is possible that some of these units may also represent resort-type housing units. The largest number of “other vacant” units in Aitkin County are in Shamrock Township, with 207 such units. Shamrock Township includes much of the development on Big Sandy Lake.



Home Values

Table 17 Estimated Owner Occupied House Value - 2001

 

2000 Median Home Value Estimate

McGregor

$41,843

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 94 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 $39,850, which represents the estimated market value in January 2001. 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 $41,843.


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 $69,230, the approximate purchase amount that is considered affordable at the McGregor Market Area median family income level of $28,382, with a 5% down payment. The second value range compares house values to$77,540, based on the purchase price limit for first-time home buyer programs available through the Minnesota Housing Finance Agency (MHFA).


Table 18 Owner-Occupied Houses By Specified Value Range - 2001

Value Range

Number of Homesteaded Houses

Percent of Homesteaded Houses

$0 - $69,230

Affordable at median household income

86

91.5%

$69,231+

Above affordable level at median income

8

8.5%

$0 - $77,540

Eligible for first-time buyer

90

95.7%

$77,540+

Above limits for first-time buyer

4

4.3%

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

 

►          Based on home value estimates generated from County estimated market values, nearly 96% 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 more than 91% of the houses are affordable to households at the McGregor median family income level of $28,382.


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 12 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 19 Median Value of Recent Residential Sales - March 2000 - February 2001

 

Number of Good Sales

Median Sale Price

McGregor

5

$57,450

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

 

►          In the 12 month period ending February 28, 2001, there were 5 improved residential sales of owner-occupied houses in McGregor 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 $57,450. The highest valued sale was for $86,500 and the lowest valued sale for $53,500.


Table 20 Residential Sales By Specified Value Range - March 2000 - February 2001

Value Range

Number of Residential Sales

Percent of Residential Sales

$0 - $69,230

Affordable at median household income

4

80%

$69,231+

Above affordable level at median income

1

20%

$0 - $77,540

Eligible for first-time buyer

4

80%

$77,540+

Above limits for first-time buyer

1

20%

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

Note: This table reflects “qualified” sales as determined by the County Assessor.

 

►          Although very few house sell each year in McGregor, sales data show that approximately 80% 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 an equal percentage occurred in a price range that is considered to be affordable to households at the McGregor Market Area median family income level.


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 21 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 McGregor. Houses that appeared to contain 3 or more residential units and mobile homes were excluded from the survey. The visual survey looked at 101 single family/duplex structures.


The visual survey also identified and rated 43 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 22 Windshield Survey Condition Estimate - 2001

 

Sound

Minor Repair

Major Repair

Dilapidated

Total

Single Family/Duplex

42/41.6%

40/39.6%

17/16.8%

2/2.0%

101

Mobile Homes

12/27.9%

22/51.2%

8/18.6%

1/23%

43

McGregor Total

54/37.5%

62/43.1%

25/17.4%

3/2.1%

144

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 17 single family/duplex structures and 8 mobile homes as needing major repair.

 

►          The analysis rated 2 single family/duplex homes and 1 mobile home as dilapidated. These structures may be beyond repair, and could be candidates for demolition and clearance.

 

►          The City has three small mobile home parks, as well as mobile homes in scattered locations in the community. Most of the mobile homes needing major repair are in the City’s neighborhoods, not in the mobile home parks.


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


McGregor has had very limited new housing construction over the last 11 years. No new residential subdivisions have been created for many years. According to City officials, McGregor has a limited supply of developed land that is available for new home construction.


A visual inspection of the City identified a number of vacant, “in-fill” parcels around the City. However, these vacant lots were not identified as being for sale, and the availability of these lots for new housing construction is not known.


Much of the City is surrounded by lower ground that is not suitable for development. The City has indicated that a tract of higher ground is available that could be annexed into the City for future residential development. However, 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, provided some redevelopment occurred to remove existing structures. Possible land added through annexation may also be suitable for higher density development.


Municipal Services


According to City officials, the municipal sewer system was upgraded 7 years ago, and is in good condition.


The City is beginning construction on a municipal water system in 2001. Funding through the Small Cities Development Program and USDA Rural Development has been secured for the project.


The lack of a municipal water system has been viewed as a barrier to growth in the past. The new municipal water system will allow for greater development potential.


Rental Housing


At the time of the 2000 Census, 43.4% of the occupied housing stock in McGregor was renter occupied. This represented 79 rental units. McGregor’s percentage of rental housing was comparable to the City of Aitkin, and well above the State-wide average of 25.4% rented housing. The 2000 Census reported 6 units that were available for rent but vacant. Adding vacant and occupied units, there are an estimated 85 rental housing units in the City.


Since 1990, there have been no new units constructed specifically for renter occupancy. However, the 2000 Census reported 18 additional occupied rental housing units than existed at the time of the 1990 Census. Our visual inspection of the City found a higher number of mobile homes than existed in 1990. Mobile homes added to the community may account for some of the growth of renter households. There are also fewer vacant units reported in 2000 than in 1990, which may also explain the growth in renter-occupied housing units.


Rental Housing Survey


As part of this housing study, a survey was conducted of multifamily buildings in the City. The survey included rental properties with 4 or more units.


Information was collected from 43 of approximately 85 estimated rental units in McGregor, or approximately 50% of all units. For purposes of new unit construction, it was assumed that most future development would be oriented towards larger buildings and developments, and properties with 4 or more units offer the best comparison.


The survey was conducted by Community Partners Research, Inc., during the months of September 2001.



Market Rate Rental Summary


No market rate rental properties exist in McGregor that have four or more units. All of the City’s market rate rental housing is in single family houses, mobile homes, or two and three unit structures. We did not attempt to contact this segment of the market.


Subsidized Summary


All of the subsidized units in McGregor are owned by the Aitkin County HRA. The HRA has a 30 unit apartment building designated for occupancy by senior, handicapped and disabled households, and the HRA has 13 scattered site single family homes for general occupancy. The HRA reported 1 vacant unit in the senior apartments. They also reported that there is frequent turn-over in the scattered site houses, but that they have an adequate number of applications to fill units at this time. However, in March 2001, the HRA had 4 vacant 3 bedroom units in the scattered site houses.




Occupancy/Vacancy


While we found a vacancy rate of just over 2%, it is obvious that this rate is subject to change, due to turn-over in the HRA’s scattered site units and other single family/mobile home rentals in the City. The Census Bureau’s reported vacancy rate of 7.1% in 2000 appears to be consistent with vacancy patterns in March of this year.


Rental Rates


There was no meaningful information collected on area rental rates, since all of the units in the survey were federally subsidized. The HRA has implemented “ceiling rents”, as listed below, that are intended to prevent moderate income tenants who pay 30% of their income from paying more than the prevailing rental rates for the community.


            HRA Ceiling Rent Levels

 

            1 Bedroom - $348

            2 Bedroom - $419

            3 Bedroom - $531

            4 Bedroom - $594


Section 8 Existing Rent Assistance


The Section 8 Existing Rent Assistance Program also provides subsidized housing. This program provides tenant-based rent assistance and can be used in any suitable rental unit in McGregor. The Aitkin County HRA manages the program and reported 34 households receiving assistance in Aitkin and Mille Lacs Counties. There are no McGregor households receiving rent assistance at this time.





Table 23 McGregor Multifamily Rental Housing Inventory

Name

Number of Units/ Bedroom Mix

Rent

Vacancy/

Wait List

Tenant Mix

Comments

Subsidized


Pioneer Villa


29 - 1 Bedroom

1 - 2 Bedroom


30% of income

flat rent of $348


1 vacant unit


Senior, HC, Disabled

HUD Public Housing apartments for senior, handicap and disabled occupancy built in 1969 . Tenants pay 30% of income for rent. Flat 1 bedroom rent of $348 for moderate income households. 1 vacant unit reported.


Scattered Site Public Housing


13 single family houses with 3 and 4 bedrooms



30% of income


No vacancies


General occupancy

Public Housing scattered site houses. All tenants pay rent based on 30% of income. Flat rents of $531 for 3 bedroom and $594 for 4 bedroom units prevent moderate income households from paying more than prevailing rates in the area. Although units are currently full, manager reports that they have had a poor occupancy history, with vacant units usually available.

Section 8 Existing Program

no households in McGregor

30% of income

N/A

General occupancy

Section 8 Existing Program serves Aitkin and Mille Lacs Counties. Currently 22 households in Aitkin County receive assistance, including 21 households in Aitkin and 1 household in Hill City.

Source: Community Partners Research, Inc.


City of McGregor


Findings and Recommendations


Key Statistics


The first number represents the City of McGregor/the second number, when provided, is for the McGregor Market Area which includes the City of McGregor and the City of Tamarack, the Townships of Balsam, Beaver, Clark, Haugen, Jevne, Libby, McGregor, Rice River, Salo, Shamrock, Spalding and Turner; and the Unorganized area of Davidson.


2000 Population = 404/3,255

2000 Households = 182/1,454

Projected household changes from 2000 to 2006 = 0 to 13 households in McGregor

Projected household changes from 2000 to 2006 = 162 to 261 households Market Area


2000 tenure rates = 56.6% owner, 43.4% renter

2001 Median owner-occupied house value = $41,843

Median value of recent sales = $57,450 (5 sales)


2001 Median Household Income = $24,189 Market Area

2001 Median Family Income = $28,382 Market Area

2000 Average number of persons per household = 2.22/2.24

Monthly rent payment ability (Market Area median income household) = $605

Affordable rent payment ability (50%of Market Area median income) = $302

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

Affordable Ownership (Market Area median income family) = $69,230


Growth Projections


Both the City of McGregor and the surrounding rural areas that form the McGregor Market Area, as defined in this Study, have prospered over the last decade. After experiencing population and household losses during the 1980s, the City of McGregor has added population and households since 1990. While the City has grown over the last 10 years, the 2000 Census reported that the City has only one more household and 43 fewer people than it did 20 years ago.


Growth patterns in the Townships that form the Market Area have been a bit more stable. While the area lost some population in the 1980s, there was a slight increase in the number of households. In the 1990s, both population and households increased. While all of the individual jurisdictions forming the Market Area added households between 1990 and 2000, over 56% of all the Area’s household growth occurred in a single Township. Shamrock Township, which includes much of the southern lake shore of Big Sandy Lake, added 188 of the 335 new permanent households.


Our traditional projection methods yield a wide 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.


Much of the growth in the Townships around McGregor can be attributed to the popularity of lake shore living. Shamrock Township had the largest numeric increase in year-round households of any individual jurisdiction in the County, according to the 2000 Census. The Market Area still contains more than 2,000 seasonal use residential units. This large inventory of seasonal use housing still 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.


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 growth in the City of McGregor will be approximately 0 to 13 additional households between 2000 and 2006, although the most realistic projection would be near the middle of this range. This would equate to an annual average of 1 or 2 new households per year.


For the McGregor Market Area, we would expect between 162 to 261 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 30 and 35 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 McGregor area. For example, the 2000 Census reported 8 fewer vacant units for sale or rent in McGregor in 2000 than existed in the 1990 Census. Part of the City’s net gain of 20 new households is probably due in part to the availability of these vacant units. As the supply of vacant units has decreased, 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 McGregor 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.


With relatively strong household growth projected through 2006 for the area forming the McGregor Market Area, we would expect to see stable to increasing numbers of households in most of the age ranges. However, changes in the number of households will be most pronounced in certain age groups, due to both an aging of the existing population, and the most likely profile of new households moving into the area. Changes in the percentage of households in different age ranges will have an impact on housing demand.


The most significant increases by age group that are projected to occur by 2006 will be among households age 45 to 64 years old, reflecting in part the movement of the “baby boomers” through the aging cycle. 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. As households in these age groups grow older, they may increasingly look for lower maintenance housing options, such as townhouse developments, that fit with their lifestyle.


There is also a projected increase among households age 25 to 34 years old. Households in the younger age ranges tend to rent with much greater frequency, and also form the majority of first time home buyer households.


While there is some growth projected among senior households, this increase is not expected to be as large as in some other parts of the County. There are relatively few services in the McGregor 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.

 

►          McGregor serves as a small regional center for the surrounding Market Area - Although McGregor is relatively small, there is a large seasonal/tourist population in the lake areas just north of the City. McGregor’s retail economy benefits from this influx of population.

 

►          McGregor has new public facilities - The City has been successful in securing grant and loan funds to upgrade the municipal sewer system and to construct a municipal water system. Construction on the water system began in 2001. The absence of City water was a barrier to past housing and commercial development.

 

►          Attractive location for seniors and retirees - With its nearby lakes and natural amenities, the area around McGregor has been a popular location for retired and semi-retired households. The percentage of seniors in the in the age ranges between 65 and 79 years old is well above the State-wide average.

 

►          Employment base - The City has five area employers that have a work force of 30 or more people. These employment opportunities in the community have helped to provide stability and growth to the area population.

 

►          Affordable existing housing stock - A large majority of the existing single-family houses in McGregor are very affordable, priced at $60,000 or less. However, some of these houses are older, and may need maintenance and rehabilitation to remain desirable options.

 

►          Active housing developers - There are private developers who would like to become involved in affordable housing development. The lack of a municipal water system has helped to prevent past development activity.

 

►          Proximity to tourism and recreational areas - McGregor is close to a number of desirable recreational lake opportunities, including Big Sandy Lake. Lakes in the Market Area have had a major impact on the area’s growth over the last decade. These high-amenity locations not only attract permanent residents, but they also add to the quality of life for all local residents and add to the tourism economy.


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 McGregor.

 

►          Competition with other jurisdictions - Although the area has grown over the last 10years, most of 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 McGregor still benefits economically, the City does not capture the expanded tax base resulting from this rural growth.

 

►          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 McGregor is valued at $42,000 to $58,000. 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. Units lost to deterioration or obsolescence cannot be replaced in a similar price range. 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 to assist the City but also has limited staff availability to initiate new projects.

 

►          Economic difficulties - Although the City’s economy has improved over much of 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 McGregor and the surrounding market areas indicate that incomes are relatively low. The Market Area’s estimated median household income for 2001, $24,189, translates into an approximate ownership affordability level of $60,000, and an affordable rent level between $302 and $605 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 land availability - McGregor has only a limited supply of improved land for residential development. Although land can be annexed, the cost of providing public utilities may be cost prohibitive for some types of housing development.


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 McGregor. 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 will 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. Evidence suggests that the existing stock is generally being well maintained. Emphasis on continued improvement will be important to meet future housing needs.

 

►          Promote home ownership - Home ownership is the preferred option for most households. Home ownership assists in creating community stability and commitment to the community. McGregor has a high number of renter households. While many of these renters are seniors, who do not wish to own a home, there are also many younger families that are renting their housing. These households may be interested in home ownership, if an affordable opportunity is available.

 

►          Be realistic in expectations for new housing development - Large scale residential growth has not occurred in the recent past, and is not likely to occur in the near future. The City has averaged less than 1 new housing start per year over the last 20 years. With the exception of Aitkin, there has been very little housing development activity in any of the Cities in the County. The scale of activities proposed for McGregor in the future should be compatible with the City’s growth potential.

 

►          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. McGregor has been at a competitive disadvantage compared to the surrounding townships when it comes to new home construction. To attract a substantial amount of new home construction in the City of McGregor, 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, new home construction is beyond the financial means of most area households.

 

►          Prioritize community housing goals - Many of the recommendations in this Study will require staff-intensive efforts. The City should prioritize its housing plans and should establish goals to achieve its plan.

Recommendations

 

1.         Develop 6 to 8 moderate rent housing units


Findings: The City of McGregor has a large stock of rental housing units, but no high quality market rate apartments exist in the community. The City’s only true apartment building, Pioneer Villa, provides one bedroom units for low and moderate income senior citizens. This building had only one vacant unit at the time of this Study.


Nearly all of the City’s other rental options are in single family houses or mobile home. There are 13 scattered site public housing units that serve low and moderate income large families. Although there is some evidence of vacancies in this segment of the market, this is largely due to a number of these units in the City.


There are no high quality apartment units for higher income households, or senior citizens who do not wish to live in Pioneer Villa.


The jurisdictions that form the McGregor Market Area are a popular location for seniors. Many of these people have moved to the area to retire on the area lakes. However, as these people age, and are no longer interested in maintaining a single family home or lake shore property, they have generally been forced to leave the McGregor area to find age-appropriate housing options.


Other small cities around Minnesota have been active in the construction of small rental housing projects. While most communities would prefer to see the private sector construct and own rental housing, a combination of high construction costs, high property taxes, and low return on investment has severely limited the amount of privately funded rental construction that has occurred in the last 15 years.


Public agencies, using their access to tax exempt financing, reduced property tax rates and non-profit motivation have been successful in developing affordable rental housing. These projects can be further enhanced by general obligation tax pledges, or other forms of subsidy that allow below-market rent levels. While these projects are publicly owned, and often involve other public subsidies, any tenant income restrictions are usually fairly high, and most area tenants can qualify to live in the units.


While there are a number of examples of publicly developed projects to look at as a model, we are aware of one that is currently under construction that can provide a realistic look at estimated construction costs. The Douglas County HRA is constructing 10 units in a twin home configuration in the City of Alexandria. There is a mix of two and three bedroom units. Two bedroom units have one bathroom and attached double garage. With the garage, there is 1,415 square feet. The three bedroom units have one bathroom and an attached double garage. With the garage, there is 1,627 square feet in these units.


The estimated gross rent for the two bedroom units is approximately $680 per month, or approximately $.70/square foot for the unit living space. The estimated gross rents for a three bedroom unit are $750, or approximately $.65/square foot.


Recommendation: We recommend that the City explore the possibility of developing 6 to 8 rental housing units, primarily designed to serve active senior households with moderate to higher incomes. If a private developer is not available to construct these units, the City should explore the possibility of a publicly owned rental project.


While we believe that these units should be designated for general occupancy, to serve the broader rental market, we believe that the primary market will be senior citizens. The project’s design should take into account features appropriate for senior tenants. One-level living, with attached parking would be preferred. Since this development will serve a more active group of seniors, a town house, twin home, or cottage style design with individual entrances would be appropriate.


Recommended Unit Mix, Sizes and Rents

for McGregor General Occupancy Market Rate Project


            Unit Type                   No. of Units                Size (Sq. Ft.)               Gross Rent


            2 Bedroom                   4 - 5                       950 - 1,050               $650-$700

            3 Bedroom                   2 - 3                   1,125-1,225              $725-$775

            Total                            6 - 8


Although the recommended gross rents are comparable to recent projects in Aitkin, which have been successfully received in the market place, these rent levels are substantially higher than prevailing rents in the McGregor area. Any additional subsidies that can be applied to this project to lower the final gross rent levels will enhance the project’s potential for success.


Our recommendation of 6 to 8 units is rather modest, given the lack of market rate apartments in the area. If these units are successfully leased, and a waiting list for occupancy develops, it would be possible to construct a second phase of units. By configuring the project as twin home or town house units, it would be possible to add additional units in increments as the need dictates.


Another option for construction that the City may wish to consider is to use modular housing units. A private developer in Buhl has used a modular product to develop duplex and four-plex rental housing. This type of construction may be cost-effective for a project in McGregor.


 

2.         Promote on-going housing rehabilitation efforts


Findings: McGregor has a tremendous asset in its existing housing stock. Existing units, both now and into the future, will represent the large majority of the affordable housing opportunities. Existing units generally sell at a discount to their replacement value. Units that are not maintained and improved may slip into disrepair and be lost from the housing stock. Efforts and investment in housing rehabilitation activities will be critical to offering affordable housing opportunities.



Our windshield survey of housing conditions found 40 single houses needing minor repair, and 17 single family houses needing major repair. We also identified 22 mobile homes needing minor repair and 8 mobile homes needing major repair.


Recommendation: We recommend continued emphasis on housing rehabilitation activities to address on-going housing rehabilitation needs and to upgrade the existing housing stock. The City of McGregor, Lakes & Pines CAC and AEOA should continue to seek local, state and federal funds to assist in financing the housing rehabilitation programs.


McGregor Township was recently awarded Small Cities Development Program funds to rehabilitate owner-occupied housing. A similar, concentrated program in the City of McGregor is recommended.


 

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


Findings: New housing development has been hindered in the past by the absence of a municipal water system. Over the last 21 years, McGregor has averaged less than one new housing start per year. Construction of a City water system began in 2001. This should create new opportunities for the development of land for residential construction.


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 no houses in McGregor valued at $90,000 or more. The lower values for existing homes act as a disincentive for the construction of new, higher valued homes within the City.


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 cost 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. McGregor does not have access to IRRRB funding, so an alternate source would need to be found to lower the lot pricing.


Recommendation: While the City may never attract a large volume of new home building, encouraging construction that is consistent with existing home values and area incomes will help to facilitate new units. The City has a high rate of renter occupied housing. Many of these renters currently rent single family homes or mobile homes. A program that creates affordable ownership opportunities may help to move some of these households towards home ownership.

 

4.         Consider a mobile home park improvement program


Findings: McGregor has a large number of mobile homes. There are 3 small mobile home parks, with additional units scattered throughout the City. The condition inventory rated 22 of the mobile homes as needing minor repair, and 8 mobile homes as needing major repair.


Because mobile homes tend to decrease in value and because mobile home parks generally have a large number of households in a small physical area, mobile homes and mobile home parks generally have unique issues and problems. Several cities have initiated innovative programs that have addressed mobile home and mobile home park issues. These programs include:

 

►          Operation Safe Mobile Home Park - Mobile home owners of substandard mobile homes were given the option of selling their mobile homes to the City at a fixed price of $3,000. The substandard homes are then removed from the park and demolished/salvaged.

 

►          Time of Sale Inspections of Mobile Homes - The Time of Sale inspection program is designed to provide safe living conditions to community residents through the identification and elimination of basic life safety hazards in older mobile home units. Properties located within neighborhoods zoned for mobile homes are subject to inspection prior to their sale. All identified safety hazards must be corrected before the unit is sold and/or occupied. The ordinance does not apply to newly constructed mobile homes, to those properties sold by their first owner within three years of the initial purchase, or to those units sold for salvage.


Recommendation: The City of McGregor should consider the implementation of programs to address conditions in the City’s mobile home parks.


 

5.         Explore the potential sale of some scattered site public housing units


Findings: The Aitkin County HRA has 13 scattered site single family homes in McGregor that are used to provide affordable rental housing for lower income families. While this is a valuable resource for the community, and offers a good share of the City’s better quality rental housing, the units have at times experienced occupancy problems. In September 2001, all of the units were rented. But in March of 2001, there were 4 vacancies in these units.


Some Public Housing Agencies have been allowed to sell single family public housing units. Often the units are sold to the current tenant, or another low income home buyer. Proceeds of the sale can then be applied to other community housing activities.


Recommendation: While we would generally recommend that a City work hard to preserve its supply of affordable rental housing, there is evidence that some of the scattered site units in McGregor could be sold, without negatively impacting the affordable housing stock. There have been periodic vacancy problems with these units, and a high rate of tenant turn-over.


Along with the units in Pioneer Villa, nearly 24% of McGregor’s households live in subsidized housing. With a large supply of other affordable units, including rental mobile homes, the City has a very high percentage of rental housing.


If it is determined that excess capacity exists, some of the scattered site units could be sold to lower income home buyers. This would increase the rate of owner-occupancy in the community, and lower the number of potentially vacant rental units.

 

6.         Promote the availability of Section 8 Existing rent assistance


Findings: McGregor has a large renter population. While 43 of these renter households live in subsidized units that allow rent based on income, there are 36 or more renter households that are not subsidized.


The City’s median household income is relatively low. It is probable that many of the City’s renters are income qualified to receive rent assistance. However, there are no McGregor households currently on the Section 8 Existing Program.


Recommendation: The community should advertise and promote the availability of the Section 8 program as a way to assist with the provision of affordable housing. The program’s funding only allows for a limited number of Aitkin County households to receive assistance at one time, and there is a waiting list for assistance. But lower income households should be encouraged to apply for the program to get started on the waiting list. There may be a possibility that more assistance could be obtained from the federal government in the future.



7.         Work with rental property owners on tax issues/other programs


Findings: Minnesota’s property tax structure for rental housing has been a barrier to both new rental construction and the provision of affordable units. Legislative changes in the past few years related to rental property tax reductions may represent an opportunity for the City to work cooperatively with rental property owners to assist them in lowering their property tax burden.


To qualify for lower tax rates, there will need to be some certification to the State of direct benefit to low and moderate income tenants. The Aitkin County HRA currently does certification and monitoring of 4d properties in Aitkin County.


Recommendation: We recommend that the City work with rental property owners to promote the property tax reduction option and to assist with the qualification requirements. This will help to provide affordable rental housing options.


From the City’s perspective, this program may reduce the amount of property tax collected from rental parcels. However, the increased cash flow for property owners may help to improve the physical condition of some buildings and help landlords cope with costs they may incur due to rehabilitation.


 

8.         Acquire and clear dilapidated properties as needed


Findings: The City may contain houses that are too deteriorated to rehabilitate. The windshield condition survey rated 2 houses and 1 mobile home as dilapidated and possibly beyond repair. To improve the quality of the City’s neighborhoods, and to maintain 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. The Minnesota Housing Finance Agency and the Minnesota Department of Trade and Economic Development have been willing to help communities with clearance activities in the past.


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.



9.         Utilize the MURL Program


Findings: McGregor has a large stock of older, lower valued homes, with many 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 $42,000 and $57,000. 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 continue to 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.

 

10.       Continue to coordinate relationships 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.