WARREN, Minn. — When Mara Hanel was considering moving to Warren in the 1990s, she researched the town's housing incentives.
Some 20 years later, Hanel still is a Warren resident. She’s also the mayor of the city of 1,550 people 30 miles northeast of Grand Forks.
Warren, like several towns, still offers incentives to attract people to move there.
“In our area, it’s definitely important,” Hanel said. “We have an aging population. As that demographic leaves the area, the community needs new people to take their place. We need our school districts to keep their enrollment and to grow.”
Hanel believes the incentives make a difference to people who are weighing whether to move to a small town like Warren. Housing incentives in Warren include a utility credit of $600 and a free building permit for new residents buying an existing home as their primary residence. Anyone who purchases a home or builds one in Warren also receives a free family swim pass.
In all, Warren offers 10 incentives for prospective new residents.
As the populations of both North Dakota and Minnesota have grown in recent years, rural counties generally have not kept up. According to estimates from the U.S. Census, 14 of 16 counties around Grand Forks lost population between 2010 and 2018, including an estimated loss of 6% to 7% in Minnesota counties like Lake of the Woods, Kittson and Norman, and an estimated loss of 6% to 8% in North Dakota counties like Nelson, Griggs and Pembina.
Meanwhile, Census estimates show North Dakota with a 13% population gain since 2010, from 672,576 to 760,077. Grand Forks County grew more than 5% in that span. In Minnesota, the population grew 5.79%, from 5.3 million to 5.6 million. In the
Hanel moved to Warren for her job as Northwest Regional Arts Council director. She ultimately decided to purchase a manufactured home in Warren when she moved there from Grand Forks, she said. The option to buy manufactured homes, rather than purchasing existing homes or building new ones, is another incentive the city continues to offer residents who seek a moderately priced, yet new, home.
A one-level, three-bedroom manufactured home is for sale in Warren for $190,000.
“Hopefully, it will fill that niche,” Hanel said.
Offering incentives is a good strategy for small towns, as long as the incentives aren’t too extravagant, said Blake Crosby, North Dakota League of Cities executive director.
“It’s a recruitment strategy. It’s an economic development strategy,” Crosby said.
North Dakota is attractive to former residents because it has a good education system and is a safe place to live, Crosby said. People who moved out of North Dakota when they were young are now interested in returning to their hometowns to raise families, he said.
“There is a return-to-your-roots mentality,” Crosby said. “That’s what these parents grew up with.”
The families moving to small towns revitalize them, Crosby said.
“They come in with jobs and skills and ideas, and they join the PTA,” he said. “They get on the park board, they get on the city council.”
Nancy Hodur, director of the North Dakota State University Center for Social Research, said “maintaining a population is critical for small communities in terms of supporting infrastructure and your tax base, which supports schools and local businesses.”
“One or two things need to happen,” Hodur said. “You need to have new people come in, or people will not have to migrate out.”
Down the road a few miles to the west of Warren, the city of Alvarado has an incentive package for new-home construction, said Robert Kleven. The incentives on new construction or on a city-owned lot include no fees for sewer or water hookup, a free building permit and free electricity during construction. The incentives have not been used for a while.
In Argyle, Minn., north of Alvarado and Warren, the city offers city-owned residential lots to prospective buyers at a cost of $1 and payment of any legal fees associated with the transaction, said Tamara Benitt, Argyle deputy city clerk. The city-owned lots are ones that were taken over after taxes were unpaid or the lots were abandoned.
All new residents in Argyle also receive a coupon book that can be used at local businesses, Benitt said.
In need of workers
In Crookston, one of northwest Minnesota’s largest cities, a two-year tax abatement is offered for people building new homes, said Shannon Stassen, Crookston city administrator.
“It’s a two-year tax abatement,” he said. “The city, the school district and the county have all agreed to participate.
“We’re trying to stimulate population growth. Like everywhere in northwest Minnesota and across the state, we’re in need of workforce,” Stassen said. “We’re in the business of recruiting talent.”
Good housing is one of the ways to do that, he said.
The St. Paul Pioneer Press reported last week that Minnesota has 146,513 job openings, the highest number on record. Unemployment in Minnesota is at 3.3%. The national unemployment rate is at 3.5%, the lowest since 1969. North Dakota's rate is lower yet.
Crosby, from the North Dakota League of Cities, said jobs are an important part of the equation for towns seeking new residents.
“We have 20,000 to 30,000 jobs open (throughout North Dakota),” he said. “If we have to give incentives to lower that number, it’s something we need to do. We’re in competition with every other state in the union as far as incentives to come into the state.”
Buxton, N.D., about 20 miles south of Grand Forks, in the past sold several city-owned lots to residents for $1, said Gene Rosholt, Buxton mayor. The plan worked.
“We ran out of property the city owned,” he said. Meanwhile, houses that are for sale move relatively quickly, he said.
“We’ve never gone terribly long with a house for sale,” he said.
Down I-29 in Hillsboro, N.D., the city recently sold all of its homes in the Prairieview Addition, said Terry Sando, Hillsboro City Commission president. After incentives, the price of the lots ranged from $10,500 to $12,500.
Now, the city is looking for new lots to sell and is working with area farmer Patrick Muller, who owns land on the west side of the Hillsboro interchange, Sando said.
The city hopes to annex 80 acres that will be used to build rental units and single-family dwellings. The acreage also will include premium lots along the river, Sando said.
The City Commission is discussing development on an incentive package for the new lots, but nothing has been finalized, Sando said.
More than taxes, lots
Incentive packages offered by area cities aren’t just about tax breaks and lot deals.
In Northwood, N.D., a new housing incentive program offers a city of Northwood Energy Efficiency Rebate of up to $2,000, in addition to a $75,000 exemption on the first two years of tax valuation.
There’s more: As part of the program, new home builders get a $90 Northwood Public Schools activity pass, a $350 Northwood family golf membership, a $300 berm tree, a subscription to the Northwood Gleaner newspaper and $4,000 in Northwood Bucks for residents who build a home for a price of at least $100,000.
The city of Thompson, like nearby Larimore, offers a two-year tax incentive on new residence construction. The first $75,000 of the new home is tax-exempt.
A few cities in the region said their towns don’t offer incentive packages to attract new residents.
“They can be seen as expensive,” said Jim Murphy, Traill County economic development director.
Part of the process is that the expected revenues take time to be realized.
“We do not enjoy the bigger populations that Fargo and Grand Forks have to spread those expenses. They are getting more popular, though,” Murphy said, noting that Hillsboro used Tax Increment Financing for its Riverwood development.
“TIFs certainly have costs associated, and so the communities are making slow, steady progress as they see fit and are working toward increasing populations,” Murphy said.