Invested in neighborhood redevelopment

Transcription

1 Invested in neighborhood redevelopment January 15, 2016 On Pekin Street in Providence's Smith Hill neighborhood, a three-story apartment house has been vacant for as long as the neighbor who's lived next to it for four years can remember. The untended backyard has become an illegal dump. In recent weeks, six mattresses, part of a dresser and a broken city garbage bin were piled in a heap. Across the city, in Olneyville, an abandoned, three-story colonial-style home sits on a prominent corner on Amherst Street. The building has been vacant for more than five years, estimated Frank Shea, executive director of ONE Neighborhood Builders, a community-development organization that has wanted to acquire and rehab it for years. Only last month, after making persistent calls, did his staff learn that the bank would finally relinquish the property, agreeing to a short sale. The house is in the middle of a $9 million project that will involve redevelopment of 15 structures. If you do one house it's not very attractive to live there if you are surrounded by other vacant and abandoned properties, Shea said. To really change the neighborhood, you need to change the real estate market in the neighborhood and change people's perception. Six years after the housing and foreclosure crisis hit its peak in Rhode Island, abandoned structures remain a stubborn problem in many cities, marring individual streets and many neighborhoods by association. In Providence, 16 percent of the apartment and home addresses served by the U.S. Postal Service had not received mail for more than three years as of June, a status that is thought to indicate abandonment, according to an analysis by HousingWorks RI at Roger Williams University. In many cities, including Providence, the percentage of housing that has remained unoccupied long term, or for more than three years, has grown between 2010 and In 2010, Providence had 3.1 percent of its addresses identified as unoccupied for three years, compared with the recorded 16 percent. In Central Falls, 22.7 percent of the residential apartments or houses had been vacant that long, an increase from 2.9 percent in In Pawtucket, 14.5 percent of the house addresses had not accepted mail for three years, compared with 2.1 percent five years before.

2 The longer properties remain abandoned, the harder it may be to bring those properties back to have a greater fiscal impact on our struggling municipalities, said Nicole Lagace, director of HousingWorks RI. SHARED PROBLEM Providence is not unique among many of the country's older cities. A report by the Brookings Institution in 2012 examined U.S. Census Bureau data that found a 44 percent increase in the total number of vacant housing units in the U.S. between 2000 and Empty houses, as well as commercial buildings, were disproportionately located in older, industrial cities that had lost their employment base and had declining populations, according to the report. Of the six cities examined in-depth in the report, most had a proportion of vacant housing that far exceeded Rhode Island's cities. In Detroit, 23 percent of the housing units were vacant in 2010, according to the report. In Cleveland and Youngstown, Ohio, 19 percent of the housing units were unoccupied. In Baltimore, 16 percent of the housing units were vacant, while in Pittsburgh, 13 percent were vacant, according to the report data. In Rhode Island, by comparison, the census in 2010 reported 12.7 percent of the housing units in Central Falls were vacant, the greatest percentage of unoccupied housing reported in the Ocean State by the Census Bureau. Among other cities, Providence had 12.3 percent of its housing units listed as vacant, while Woonsocket had 11.2 percent. In Providence, the city registry of vacant properties this year includes 475 structures, but not all vacant houses have been identified. Abandoned and boarded structures are in every neighborhood, according to the data, but hard-hit areas include Silver Lake, Hartford, Lower South Providence, Washington Park, Smith Hill, Valley, Charles and Wanskuck. In Central Falls, another city hard-hit by the housing crisis, a nuisance task force is keeping tabs on 47 vacant and abandoned properties. Three-quarters of these buildings are in pre-foreclosure, meaning the lender has not moved to acquire the property, according to task force chairman Robert Weber. In the two years since the 12-member task force started meeting with property owners, 20 previously abandoned properties have been rehabilitated. What is the impact of abandoned, derelict properties? Officials and community-development leaders in several cities say vacant structures depress real estate values, attract a host of publicsafety problems and dissuade private investment in neighborhoods.

3 No. 1, it creates a public-safety risk, Weber said. In most cases there are squatters living in the property. It's unoccupied in the sense that no one is renting it. But in most cases, when we enter, you can see evidence that at some point, someone was living in the house. Neither Providence nor Central Falls have tallied the economic impact of vacant structures. But just cleaning and securing an abandoned house can cost between $2,000 and $3,000, said Weber. It's lost money every time you have a (vacant) house. TAX INCENTIVES A new state law will create property tax incentives for builders to rehab unoccupied structures purchased through a bank, a foreclosure or an auction. The new law will waive up to two years of taxes on the improvements, or until the developer sells the rehabbed structures. The law, which took effect in July, also affects new construction of housing on speculation, or without a contract in place for a purchase. In Providence, officials have tried to use existing programs to pare the number of vacant or unoccupied dwellings, including through a receivership program. This allows the city to petition the Providence Housing Court to turn over an abandoned property to a private party, or a receiver, who will make improvements. In 2013, the administration of former Mayor Angel Taveras announced the receivership program would be used to rehabilitate the city's vacant houses. But it has been used since only in limited numbers. Four apartment houses in the Charles neighborhood, on Greeley Street, were among the first placed under receivership. Last week, they remained boarded with plywood and barricaded with metal security fencing, but receivers had begun interior work. In late May, the City Council enveloped Greeley Street in a redevelopment district, adding 57 properties in the neighborhood behind the San Miguel School to a 35-year-old redevelopment zone that covers much of Charles Street, north of Branch Avenue. The redevelopment district didn't sweep any of these properties under city control. But the new designation will make it easier for the city to acquire bank-owned, vacant properties in that area, according to Councilman Nicholas Narducci, who represents the neighborhood. It would make it easier for us to take the properties over, say, if the bank is taking too long to do what they need to do, he said. Banks, in fact, are some of the most troublesome property owners, because they do not foreclose on abandoned properties, which prolongs the redevelopment period. Sometimes called zombie foreclosures, these properties are in limbo between an owner who has walked away and a lender who has not followed through to take control.

4 The process of redeveloping abandoned houses is slow and frustrating, but Narducci thinks the receivership program has merit. Of the four houses on Greeley Street, for example, three have been sold to receivers, he said. It doesn't cost the city any money at all, he said. What they do, when they're not working on them, they board them up so nobody can get into them. As part of a transition effort, a housing and neighborhood development committee created by Providence Mayor Jorge O. Elorza identified abandoned, foreclosed and city-owned properties as a significant concern. The committee recommended a focused and comprehensive effort, using a broader spectrum of options, to encourage redevelopment and reduce the number of vacant properties. The mayor is developing a program to address abandoned and derelict properties, which is expected to include the use of receivership, according to spokesman Evan England. More details would be announced in coming weeks, he said. Bringing the receivership program to scale is just one of the tools at the program's disposal, England said. What more can be done? The City Council recently supported an effort to encourage private investment. The council on July 16 gave initial approval to a program of tax incentives directed at 19 out of 25 neighborhoods in the city, those with the greatest poverty levels. The Neighborhood Revitalization Act will allow developers to qualify for tax-stabilization agreements, approved through an administrative process, which would provide phased-in taxes on improvements between $250,000 and $3 million. The program would include rehabilitation of commercial, mixed use or multifamily housing, as well as new construction. Property would not have to be completely vacated or abandoned to qualify, but could have vacant storefronts, for example. FIGHTING BLIGHT In the Smith Hill neighborhood, Councilman Terrence Hassett has been frustrated by the persistence of houses that he described as in disrepair and overly scattered with debris. The same neighborhood in which the city used federal dollars to promote affordable-home ownership in renovated, historical structures, he said, has several abandoned houses that are not secure, which attract illegal dumping. The house on Pekin Street, in particular, has become a problem, he said. In late May, Hassett issued a press release in frustration, calling on the city to take enforcement actions, calling the preservation of the quality of housing stock a basic function of city

5 government. When residents pay their tax bills, they have an expectation of the services the city will provide, he wrote. Two months later, nothing has changed, he says. City employees receive complaints, and log the conditions. And then you wait, and wait and wait. Neighbors grow frustrated, and then stop calling to complain because nothing is done, he said. It sits there. And then it gets progressively worse. And now it develops legs, Hassett said. They're confronted with a house that's in disrepair and nothing is done about it. How do you correct it? What's the cure? The solution, according to neighborhood development organizations, is a long view. The degeneration of a neighborhood did not take place overnight. The rebuilding of a neighborhood will not take place overnight, said Carla DeStefano, executive director of SWAP a " Stop Wasting Abandoned Property a " which began in South Providence in the 1970s, after homeowners left the neighborhood for the suburbs, some literally turning over their deeds to the community organization. Since then, two waves of housing bubbles, fueled by private speculation, have come and gone, DeStefano said. Over the past 20 years, SWAP's approach to redeveloping vacant and abandoned properties, or empty lots, has been strategically focused, with an eye to identifying properties that are worth saving, and then moving in identified neighborhoods. Over that period, the organization has invested almost $100 million in improvements in South Providence. It needs a comprehensive approach, DeStefano said. Our approach was to weave the neighborhood back together again. Block by block, also making strategic purchases, ONE Neighborhood Builders (a recent merger of Olneyville Housing Corporation and Community Works RI) has renovated troublesome properties, or built new homes on vacant lots, which are then leased or sold based on affordable-housing guidelines. The presence of blighted properties in a community can have a variety of negative impacts, according to Shea. If you live next door to a blighted property, you end up with a lot of nuisance issues. They are demonstrated to be a magnet for lots of bad things. If you own a home and live next door to a blighted property, your property is worth less. Blighted properties ultimately reduce city property taxes, because the values decrease, and that discourages private investment, he said. If you drive into a neighborhood and see a lot of blighted properties, it doesn't make you feel comfortable putting your dollars into residential properties or commercial properties there.

6 For this reason, ONE Neighborhood Builders has focused on acquiring properties that are in critical spots, including on corners or at main entry points to the neighborhood. If abandoned, blighted properties can dissuade businesses from entering a neighborhood, or people from moving in, the replacement or rehabbing of these housing units can have the opposite effect. BUSINESS GROWTH In recent years, Shea observed that a small neighborhood supermarket opened, then expanded, in a formerly vacant retail store within a half-mile of 150 newly occupied apartments or homes. The little grocery, Cibao, seems to be doing well. It all is intertwined, Shea said. In the Charles neighborhood, the presence of blighted housing hasn't stopped small-business owners from moving into, or succeeding, on the main commercial streets. Dave Henault opened Ocean State Tackle, a bait shop on Branch Avenue, 12 years ago. He said the location works well for his customers, most of whom drive in from either Interstate 95 or Route 146. But he questioned the value of the city intervening in the residential properties on Greeley Street. Fixing these three houses, what does that fix? he said, motioning to the apartment houses under receivership. When it was owner-occupied, it was a viable neighborhood. On Charles Street, within walking distance of Greeley Street, a former Italian grocery has changed hands. Two months ago, Ankit Andy Patel purchased Carcieri's Super Market, after reviewing the previous owner's financial data and taking a look at the demographics of the surrounding neighborhood. He plans to position the store to meet the needs of local residents, adding more foods and brands that appeal to residents of Caribbean and African descent. Also, because many of his customers walk to the store, including elderly residents, Patel said he'll deliver as long as people buy enough to make it worthwhile. For $10 to $15 (of groceries), we'll deliver to your home. In Olneyville, significant business reinvestment has occurred alongside housing rehabilitation. The Olneyville Merchants Association, which had regrouped in 2009, maintains a membership listing which indicates the neighborhood has more than 200 businesses. The square has been beautified and its storefronts are mostly filled. Businesses have stayed despite challenges in the

7 past, said Michael Solomon, the owner of a longtime restaurant, Wes's Rib House, and a former Providence City Council president. The barbecue restaurant, located on a street behind the square, expanded in Several businesses have opened in recent years, including a nightclub and several restaurants. We've made some strides, he said. Olneyville is clearly a destination.