Vacant and Abandoned Properties Task Force Session Summary

Mayors in attendance representing municipalities across the country included, but were not limited to: 

• West Palm Beach, FL
• Beverly Hills, CA
• Camrey, PR
• St. Louis, MO
• Green Bay, WI
• Indianapolis, IN
• San Diego, CA
• Little Rock, AK
• Westfield, MI
• Solon, OH
• Shaker Heights, OH
• Dallas, TX
• Fort Myers, FL 

Opening Remarks and Introductions

Mayor John Brenner opened the session by sharing a summary of findings from a survey by various member cities of the status of vacant properties within America’s communities.  Survey findings were compiled into a formal report, which is scheduled to be released at the Conference.  Overall, the survey revealed the following: 

• The mortgage crisis has increased the volume of foreclosures and has directly limited the ability of municipalities to avoid its drastic economic impacts.  The ability to respond to foreclosures and abandoned properties is affected by the recession.
• The economic crisis poses serious problems that are more exaggerated than in previous years.  A majority of responding cities expect the volume of vacant properties to continue to increase.
• The survey indicated that cities are allocating Neighborhood Stabilization Program (NSP) funds to either demolition or rehabilitation, with more being utilized for the latter.  Although deemed as helpful, most municipal representatives do not consider NSP dollars as equally distributed or sufficient to adequately address the negative impacts of blight.  Applications for NSP II are anticipated to continue the efforts initiated by the program’s first round.

Neighborhood Enhancement Fund, City of Green Bay, WI

Mayor James Schmitt offered an overview of an enhancement program broadly utilized and found extremely successful within Green Bay. 

Details include: 

•  $7.5 Million program utilizing municipal bonds and borrowed funds (to be repaid in 10 years), to purchase vacant properties and fully rehabilitate them into productive re-use. An overview of the funding structure was provided.
• Oversight is provided by an appointed Redevelopment Authority.
• The City promotes bulk development efforts to generate and realize concentrated neighborhood improvements. 
• To increase effectiveness, this initiative is leveraged with other programs and agencies, including the Wisconsin Economic Development Authority.
• To date, 102 properties have been completed.  8% have been landbanked, as the City is also turning vacant land into much needed public greenspace.  This approach endorses the conversion of two-family structures to single-family units.
• This program offers much flexibility, cost savings, and expedited closings, as it is independent of Federal guidelines and restrictions.
• Both high carrying costs and political implications stemming from the selection of properties and distribution of funds were noted as direct liabilities.
•  A nuisance abatement team was implemented by the City to assist with implementing this program by identifying target properties, and thereby providing measures to assist with the subsequent acquisitions. 

Neighborhood Life Initiative, City of St. Louis, MO

Mayor Francis Slay offered a snapshot of St. Louis’ efforts to address a backlog of unresolved building code violations through the Municipal Courts. 

• Community Development Block Grant funds were allocated for the establishment of a problematic property task force and the designation of a Judge solely for the purpose of addressing vacant and/or blighted structures.  To maintain the ongoing operation of this program, full funding is provided through the collection of assigned fees, fines, penalties, and liens – over $1 Million to date.
• Fees for vacant buildings are assessed and accrue on a monthly basis, which is deemed to be an effective tool in encouraging the speedy transfer of property ownership to responsible parties.  Municipal liens must be paid prior to a property transferring, and the City maintains the statutory right to foreclose on such liens.
• Since 2002, over 8,900 properties have been brought into compliance.  Since 2005, over 6,000 cases have involved illegal uses.
• Resolution to the former backlog of properties with violations has led to the implementation of an administrative process that includes intervention as an effective tool for gaining compliance.
• To encourage redevelopment efforts the City is actively involved in land assembly for a minimum of 75 acres within a 300 acre area.  Collaboration with the State offers tax credits to the developer.

• This program is identified as a defensive measure to protect the investments made by adjacent and nearby property owners by offering a layer of stability and increasing neighborhood confidence.
• To increase neighborhood impact and project effectiveness, a broad range of other tools and programs will be utilized to compliment target measures, including, but not limited to, foreclosure prevention.
• Mercy Portfolio Services will manage the property acquisition, ownership (including all associated carrying costs), and rehabilitation responsibilities on behalf of the City.
• NSP will also be used as a soft second mortgage for qualified homebuyers, which may be forgiven after a designated period of time.

• Code Enforcement officials documented that the much needed contact information for the responsible parties for a vacant property was not obtainable.  In direct response, the Industry upgraded the existing MERS database to include the direct point of contact for both the servicer and field service company.  A new iReg option was created to increase the participation by non-member servicers and thereby increase the number of loans on MERS.
• Over 65 Million loans are currently on MERS, and that number continues to rise through the Initiative.  Loans are uploaded through the iReg option upon determination that the property is vacant.
• Due to the immense volume of enacted municipal Vacant Property Registration Ordinances, many of which include inconsistent and ineffective language and requirements, MERS has been identified as a viable alternative to hard copy registrations.  Cities, like Chula Vista, CA, are changing their current VPR’s to include this provision and are waiving the associated registration fees if the property is on MERS.
• Based on the overwhelming and documented success of the MERS Initiative within six Pilot Cities since January 2009, the program is now being expanded to over 200 additional cities to a broader, more national level.
• Direct collaboration by the industry with cities across the nation has revealed that municipal representatives and servicers share the common goal of maintaining property conditions and the integrity of neighborhoods.