FAIRMONT — The sale of a city-owned lot to Habitat for Humanity of Martin and Faribault Counties hit a snag at the Fairmont City Council meeting Monday after a neighboring homeowner expressed his desire to buy the property.

The council held a public hearing on the real estate transfer of 512 N. Elm St. to Habitat at its April 13 meeting. No one spoke at the public hearing, and the city had received no communication supporting or opposing the sale at that time.

On April 16, Lowell Abelson of 522 N. Elm St. sent an email to the mayor and council expressing his desire to buy the abutting property.

Staci Thompson, executive director of the local Habitat branch, said she has been working with the city for the past couple of years to find sites to move two homes, donated by John Thate, from Lake Avenue. One was moved last fall to 407 N. Elm St., and plans were made to move the second house to 512 N. Elm St. after the current tenant’s lease was over at the end of this year.

“When we move into a neighborhood, the neighborhood improves, and property values go up,” Thompson told the council, adding that she appreciates the cooperation and generosity of the city in past Habitat projects.

Abelson said he recently moved back into his childhood home at 522 N. Elm St. and wants to acquire the neighboring lot to build a garage.

“I’m not suddenly coming out of the woodwork. I inquired about that lot before the city ever owned it,” Abelson said. “I had no idea Habitat gets the lot for $1. I never expected anything like that.”

He estimated the cost of tree removal on the lot would cost between $5,000 and $8,000, and said he had “no problem” paying $2,250 for the property, which is what the city previously charged when selling land to a neighboring property owner.

The city acquires blighted homes through unpaid property taxes and razes the uninhabitable structures. It has been the city’s practice, but not a written policy, to sell the vacant lot to an abutting property owner for $2,250.

Council members had varied questions and opinions about the sale.

Bruce Peters recommended delaying the vote since the house move would not take place until next year. If Habitat receives the lot, moving the house would require just a straight shot down Fourth Street with minimal utility disruption, but those moving costs would increase if the house had to be moved farther away from its current site.

“If we choose to sell it to a different party, we need to find some way to compensate Habitat for the increased cost (of moving). I do not want Habitat to pay one more dime,” he said. “I think it would be up to Mr. Abelson to absorb them (added costs).”

Randy Lubenow questioned if that would be legal, to require Abelson to pay any additional moving costs.

Robert Scott, attorney for Flaherty & Hood, the city’s interim civil counsel, said he would have to delve into the matter but suggested the city could make that a term of the sale agreement.

“We haven’t sold this yet so the sale price could reflect those potential costs,” Peters said.

He said he planned to vote no on the sale.

“I think we should take a little time to see if there’s an available lot that would work and see if the neighbor is interested in paying for it. My no vote would be a postponement vote,” Peters said.

On a motion from Tom Hawkins and a second by Ruth Cyphers, the motion to transfer the property to Habitat for Humanity failed by a 3-2 vote, with Wayne Hasek joining Peters and Lubenow in the majority.

Mayor Debbie Foster said the council still needs the legal opinion of the City Attorney concerning passing on the additional moving costs. She also asked Mark Sievert, interim city administrator, to work with Thompson in securing an alternative site for the house, if needed, on other city-owned property.