How Can Municipalities Confront the Vacant Property Challenge

A collaboration between the Chicago Metropolitan Agency for Planning, the Metropolitan Mayors Caucus, and Business and Professional People for the Public Interest produced a report in March 2010, entitled How Can Municipalities Confront the Vacant Property Challenge?The brief offers nine tools to respond to the challenge of vacant and abandoned properties in the context of the home mortgage foreclosure crisis.

Tool 1: An Early Warning Database

As simple as a spreadsheet, this information tool collects and organizes basic data about conditions that suggest a property is likely to become vacant such as tax delinquency or utility shut-offs.  The information can be shared by police and fire departments, code enforcement officials, and neighborhood organizations.

Tool 2: One Party Responsible for Maintenance

Properties are often abandoned before a foreclosure process is complete.  As a result, a more concerted effort is required to identify the right person at a financial institution having an interest in the property to ensure that it is secured and maintained.  A national database maintained by the mortgage industry includes essential information about many at-risk properties.

Tool 3: Collaboration

Municipal departments need to work together to better address vacant property problems.  There are roles for public safety officers, code enforcement, public works, attorneys, and also community stakeholders.  Joint neighborhood inspection teams are one example of this kind of collaboration.  Where at-risk neighborhoods straddle municipal boundaries, it may be necessary to collaborate across jurisdictional lines.

Tool 4: Vacant Building Registry

Requiring owners or financial institutions (usually a lender having a lien) to register vacant buildings and pay fees to ensure maintenance have become commonplace.  Effective programs require registrants to provide 24-hour contact information and to prepare plans to return the property to productive use.  Steep fines can be included for noncompliance.

Tool 5: Targeting Resources

Allocation of resources cannot be an ad hoc process that focuses on an immediate response to a community complaint.  Targeting requires a deliberate and sustained effort to address a set of systemic goals and outcomes that serve the wider community.  While there are risks that all neighborhoods will not receive the same kind of resource allocation, the end result is that resources which are available will be put to maximum effectiveness.

Tool 6: Recovering Costs of Maintenance

Municipal liens on properties to recover the cost of some maintenance activities at the time of a foreclosure sale often amount to little or nothing because other encumbrances (such as mortgages) take priority.  The State of Illinois adopted a law granting municipalities a special kind of lien which allows local governments to perform certain activities - pick up trash, mow lawns, secure windows and doors, put up fencing - and receive priority payment at the time of foreclosure sale.

Tool 7: Receivership

This strategy relies on court intervention to grant a municipality the rights to take care of a property in need of major repair or rehabilitation in lieu of the actual owner.  Although used infrequently and with variations across different states, the strategy allows the receiver the opportunity to make needed repairs and secure third-party financing for such repairs. The lender is protected for the full value of any repair loans through a priority lien on the property.

Tool 8: Acquiring Properties

Municipalities can acquire properties individually or as part of a coordinated acquisition and redevelopment strategy.  Land banks, where permitted, can be effective tools for acquisition of large numbers of properties.  This strategy is most useful for properties with no near-term prospect of being redeveloped by the private market.

Tool 9: Demolition

When a property is causing very serious problems that present a danger to the surrounding community, and the owner is not taking necessary steps to address the problems, a municipality may initiate demolition proceedings under procedures set forth in state or local law.  Often costing less than bringing the building up to code, demolition can help stabilize a neighborhood and lay the foundation for future redevelopment.

For further information visit the website: www.bpichicago.org or call the affordable housing team at 1-312-641-5570.