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Willmar City Council says zoning change would provide local solution to home mortgage challenge

The Willmar City Council will consider a zoning change next month for a house in the middle of the block shown near downtown Willmar. The home's proximity to the central business district puts it in a type of residential zone that makes obtaining a mortgage more difficult. Tribune photo by Ron Adams

WILLMAR -- The Willmar City Council will consider a zoning change next month that officials say would provide a local solution to a home mortgage challenge.

The challenge stems from stricter underwriting standards that are making loans more difficult to obtain for single-family homes located in neighborhoods that are zoned for general business, limited business or multi-family dwellings.

The stricter standards are posing a challenge for David and Anita Ostercamp, who are in the process of selling their home located in the 500 block of Sixth Street Southwest, just south of the downtown area.

The city's comprehensive plan has zoned the neighborhood just south of downtown as R-4, which allows construction of duplex, triplex and four-plex residential units but allows existing single-family homes to continue to exist.

The R-4 zone was enacted years ago to increase housing density near the central business district where "walkable'' amenities and markets could be provided.

Under the city's zoning ordinance, if an existing single-family house in an R-4 zone burns or is damaged beyond 50 percent of its value, the ordinance would not allow the property owner to rebuild the home as a single-family unit.

To help the Ostercamps, the Planning Commission is recommending that the City Council hold a hearing Nov. 7 to consider an ordinance rezoning their property from R-4 to R-3. R-3 allows single-family up to four-plex residential units. The council voted Monday night to set the hearing.

During a Planning Commission's hearing Oct. 12 on the rezoning, letters from a local lender and appraiser were read. The letters stated that non-conforming uses in the past could still obtain loans, but the underwriting standards for loans have become much stricter. They say this is a national issue.

City officials say the rezoning would allow the home to be sold.

"It's the only solution we could see,'' said Bruce Peterson, director of city planning and development services, in an interview.

"We've got people that are going to find themselves in a very difficult position because of the mortgage companies' change in underwriting standards and they're really cracking down and looking to cover what they perceive as a risk a lot differently than they used to,'' he said.

Peterson said the city does not want to not put these types of obstacles in the way of people selling their homes.

"The real estate market's challenging enough without that,'' he said.

In other zoning business, the council approved the preliminary plat of TerWisscha Addition, located at the corner of Lakeland Drive Southeast and Willmar Avenue Southeast. The plat consists of four lots and a private drive consisting of two outlots.

The plat was proposed by John TerWisscha of Willmar and will be the site of a common interest community planned unit development.

Three lots, which have already been platted, are being replatted and will become part of a common interest community involving a private drive via two outlots. One newly created lot will be sold.

The plat will have access from Willmar Avenue or Lakeland Drive.

The fourth newly created lot will only have access from the outlot private street off of Lakeland Drive.

The development is supported by Hope Pregnancy Center of Willmar and has received approval from the Planning Commission.

The commission held a public hearing on Oct 12 to consider the development and was told by Hope Pregnancy Center representatives that they hope to procure a lot for a new office on the site.

David Little
David Little covers the Willmar City Council, Willmar Municipal Utilities and other city news.
(320) 235-1150