- Associated Press - Saturday, June 28, 2014

HARMONY, Minn. (AP) - The southeastern Minnesota city of Harmony really wants new residents - so much that it’s offering to pay up to $12,000 to families willing to build new homes there.

The community of 1,020 recently began offering rebates to counter the loss of young professionals to other communities after officials learned that younger people don’t want to live in old homes that need work, the Star Tribune of Minneapolis reported Saturday (https://strib.mn/1qWFrUa ).

“The younger people coming here, they don’t want to live in their grandmother’s house,” said Steve Cremer, president of Harmony Enterprises, which manufactures trash compactors and recycling equipment. Cremer estimates that 95 percent of his employees live outside of Harmony, in cities such as St. Charles, Rushford and Rochester.

So, Harmony is offering $5,000 to people who build a house worth $125,000, and up to $12,000 for a $250,000 home. The city has at least 15 lots that are shovel-ready. Lots with dilapidated, vacant homes can also qualify.

Existing single-family houses might cost $60,000 but then require $50,000 of work, said Christopher Skaalen, head of the Harmony Economic Development Authority. The young professionals whom the city is seeking want move-in-ready homes, he said.

“We do have homes like that, but they never go on the market,” said Skaalen, president of First Southeast Bank. Instead, they’re snapped up privately, without ever being listed.

Another southeastern Minnesota city, Stewartville, began offering $5,000 for new homes last year. More than a dozen people have taken advantage of the program, city administrator William Schimmel Jr. said. He said they’re still gathering data on how it’s worked, including new property tax revenue.

“It’s worked - very much so,” he said. “I know that some think, ‘Oh, those folks were going to build anyway.’ But we’ve seen new investment.”

But some researchers say such incentives often don’t work.

Ben Winchester, a University of Minnesota Extension research fellow, studied housing incentives in a handful of counties and found “they did not appear to make a significant difference,” he said. Rather than attracting new residents, the programs were used mostly by people already living there.


Information from: Star Tribune, https://www.startribune.com

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