Posted by: Alvin | February 4, 2009

New York City Purchasing Property to Avoid Blight

Heritage

I came across an interesting New York Times article that talks about a new strategy to buy up foreclosed properties that are not resold by the banks in an effort to combat neighbourhood blight.

New York City will spend $24 million in federal financing to rehabilitate and resell 115 foreclosed homes, one of the most aggressive steps city officials have taken in years to prevent vacant foreclosed properties from becoming a blight on neighborhoods…

Under the new program, the city will not take ownership of the properties, but instead will subsidize their rehabilitation through a third party, a nonprofit group called the Restored Homes Housing Development Fund Corporation. The group will purchase a majority of the 115 properties, hold title to the properties during the rehabilitation and then sell them at prices affordable to families making roughly $80,000 to $90,000 a year.

While the mortgage meltdown hasn’t had the same effects in Canada in terms of foreclosed properties (and also because mortgage laws in Canada make it much harder to simply walk away from a property), there may be lessons here. The article notes that a similar initiative was tried in the city back during the 70s and 80s. Back then the city became the landlord for thousands of units whose former owners were far behind their property taxes. The problem was that the city became deluged with failing properties and by the 1990s was “paying $220 million a year to manage and maintain them.

The current partnership model looks like a much more sustainable one. When you consider the costs cities bear in terms of policing, ambulance services, addiction and treatment costs, etc…it makes a lot of sense to do something like this even if it means it comes at a loss per unit for the city.

While there has been talk for a while in Vancouver about the government (whether it be the city or the province) buying up apartments and other buildings in disrepair, fixing them and making them available again, they haven’t been very well thought out. Much like New York experienced back in the 1990s, the civic level of government just doesn’t have the resources to do anything like this on a large scale.

What the city can do though is make use of other policy tools it has at its disposal in addition to purchasing properties. Imagine if Vancouver started to purchase buildings and rezone them to a new designation called ‘cultural/social’. This new zoning would come with significant tax incentives (something that wouldn’t cost the city much if anything since they aren’t deriving revenue from most of these properties in the first place). The city could then partner with housing groups in addition to members of the creative community, higher education institutions, and small business to buy into these newly purchased properties, lured by lower taxes and a stable ownership structure.

The benefit to the city would be numerous. In addition to simply fixing up heritage buildings that have been in disrepair for too long, it would also control the development and zoning applications wherever they did this. This would allow the city to manage who was allowed into these new “cultural zones” and prevent developers from coming into these newly emerging areas a few years down the road and kick start the eventual process of gentrification.

Vancouver City Hall could easily work in conjunction with housing groups as well as community champions and members of the local creative community to plan these neighbourhoods in a socially progressive way that could help save failing communities but at the same time protect swaths of land from runaway gentrification and all the negative side effects it brings with it.

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