From Eyesores to Assets: CDC Abandoned Property Strategies

As Pat Morrissy, executive director of Housing and Neighborhood Development Services, Inc. (HANDS), a community development corporation in Orange, New Jersey, tells people, vacant lots and abandoned buildings “can suck the life out of a neighborhood.” They impair the health of neighborhood residents, encourage criminal activity and raise the risk of fires. They reduce property values and make already struggling neighborhoods less appealing to prospective homebuyers who can choose where they live. Of all the physical factors blighting the lives of inner-city residents, abandoned properties may be the single most destructive, because they affect so many other conditions, making these other challenging problems that much worse.

Because vacant properties have such an impact, a strategy that focuses on them can transform an entire neighborhood, building the opportunity to create vibrant, economically diverse communities. As a result, as CDCs have looked at conditions in their neighborhoods and worked with residents to frame rebuilding strategies, vacant and abandoned properties have increasingly become a major part of their efforts. As Morrissy says, “to save a neighborhood that’s in danger of going down, you can’t simply add new homes. You have to put the process of decline in reverse.”

Vacant Lots
In the late 1990s, residents of Southwest Baltimore came together to plan for the revitalization of their community, a neighborhood of 20,000 residents west of the city’s downtown. One of their first concerns was the number of overgrown vacant lots riddled with trash and debris throughout the neighborhood. “They were the first thing people saw when they came into the neighborhood,” recalls Zach Holl, program director for the Bon Secours of Maryland Foundation, which spearheaded the effort. “Ten percent of the neighborhood was vacant lots, and they looked like hell.” For a community determined to rebuild its housing market and attract a diverse population, these lots, created as abandoned houses were torn down, were a major obstacle.

The result was an innovative Open Space Management Program, bringing together community and outside partners to turn the neighborhood’s vacant lots from a neighborhood eyesore into a community asset. In the first year, they turned 185 vacant lots into attractive, well-maintained open spaces, while acquiring an additional 40 lots for reuse for side yards and other purposes. Bon Secours enlisted a wide range of partner organizations – including Civic Works, a nonprofit youth service organization, which carried out site improvements and major maintenance; the Community Law Center, which provided legal assistance; and the Neighborhood Design Center, which helped with lot design and selection of plant materials. Although the City of Baltimore was initially skeptical about the effort, they soon realized its value and provided a variety of helpful support services to Operation ReachOut SouthWest (OROSW), the community’s umbrella organization.

For the program’s organizers, this was about more than just vacant lots. It was about market building and community pride. After the program had gotten off the ground with staff involvement, the community became more engaged. From the beginning, OROSW has sponsored “Clean and Green” competitions, where neighborhood residents form teams that take responsibility for at least five lots and compete for valuable awards that are handed out each year at a banquet and award ceremony.

As cities move aggressively to demolish abandoned buildings, more and more vacant lots are created, often replacing one problem with another. In 1975, Philadelphia contained 30,000 abandoned buildings and only 6,000 vacant lots; by 2001, it still had roughly 30,000 abandoned buildings, but over 30,000 vacant lots. As fast as buildings were being torn down, more were being abandoned, while the lots were gathering trash and debris. One organization that decided to do something about it was the New Kensington CDC(NKCDC), an organization serving a cluster of distressed neighborhoods – Kensington, Fishtown and Port Richmond – northeast of Center City. By 1995, this one area contained over 1,100 vacant lots, ranging from postage stamp lots to abandoned one-time industrial tracts.

As in Southwest Baltimore, the CDC realized that these lots were not only health and safety hazards, they discouraged nearby owners from fixing up their properties and prompted anyone who could afford the move to leave the neighborhood. In 1996, the CDC started its Vacant Land Management program, with technical support from the Pennsylvania Horticultural Society and a combination of CDBG and foundation funds.

By 2004, NKCDC had reclaimed over 600 of the vacant parcels, stabilizing them, planting trees and selling 200 to homeowners as side yards. Consolidating lots into larger parcels, NKCDC also created a community garden center on a high-profile site on Frankford Avenue, the neighborhood’s main street, and worked with Greensgrow Farms, a community agriculture organization, to create a three-quarter acre urban farm on the site of an abandoned galvanized steel plant, which today supplies fresh produce to many of Philadelphia’s most exclusive restaurants.

After 10 years, the CDC’s efforts have had a dramatic effect on the community. “The program has made a tremendous physical impact,” says NKCDC executive director Sandy Salzman. “With the increasing amount of clean and green spaces – replacing what were once trashed vacant lots – people no longer feel threatened by their surroundings.” A recent study by the Wharton School at the University of Pennsylvania found that while being next to a vacant lot reduces property values, being next to a lot that NKCDC had cleaned, landscaped and stabilized led to a long-term increase of 30 percent compared to other properties in the area. Now, after decades of being neglected, Kensington and Fishtown are being “discovered.”

Abandoned Houses
Operation ReachOut SouthWest wasn’t the only Baltimore organization that saw vacant properties as both problem and solution. In 1995, a new CDC had just been set up across town in Patterson Park, a badly disinvested neighborhood ravaged by crime and drugs. Fewer and fewer homeowners were interested in buying in the area, and properties were being rented out or bought by slumlords who would milk the property for a few years and then walk away. Homeownership rates were dropping, and in parts of the neighborhood one out of four homes stood vacant and abandoned. In the heart of the neighborhood, the once-magnificent 19th century Patterson Park had so deteriorated that many of the neighborhood’s residents never entered it.

Patterson Park CDC (PPCDC) set out to gain control of the vacant houses in the neighborhood, rehabilitate them to a high standard, sell some and rent others. Most houses were sold at market rates, while rental units were offered at below-market levels, reflecting the CDC’s goal of creating an economically and socially diverse community of choice. By 2002, PPCDC had already rehabbed 261 homes, of which they had sold 120 and rented out 141. By that year, PPCDC was selling its houses for nearly $120,000, or almost three times the $45,000 they commanded in 1997. By the spring of 2006, the CDC was listing one of its houses for $399,000. PPCDC was also a key player in the restoration of the park, which has since become a major neighborhood asset.

Vacant, abandoned properties have also been the focus of HANDS’ efforts, in Orange, New Jersey. By the 1980s Orange, an older working-class suburb of Newark, was in bad shape. Property values were down, crime was up and abandoned properties were commonplace, destabilizing many blocks. With nearly 300 abandoned houses scattered around this small city of little more than two square miles, few neighborhoods were immune to their destructive effect.

HANDS had begun building and rehabilitating scattered affordable housing for first-time homebuyers in 1985, but after 10 years they realized that something critical was missing. In 1996, they adopted a new approach focusing directly on the city’s abandoned houses; in Morrissy’s words, to “take the biggest eyesore on a block where…the neighbors don’t even want to walk past…take it, get control of it…and transform it into a house that sends a positive message about what’s going on in the neighborhood.” HANDS prepared an inventory of Orange’s problem properties and systematically set out to gain control of them, tracking down property owners and lienholders across the United States, buying tax liens and foreclosing, clearing title. Using a mixture of public and private funds, HANDS rehabilitated the properties, sold them to first-time homebuyers and put them back on the tax rolls.

The results have been dramatic. By 2005, the number of abandoned houses in Orange had dropped to barely 70 properties, of which Morrissy says, “only a dozen of these are real hard core.” Meanwhile, between 2000 and 2004, the average sales price in Orange increased by 50 percent, from $118,000 to $178,000. HANDS, in fact, has begun to shift gears, taking on a comprehensive revitalization strategy for the city’s Valley neighborhood, which will include a large-scale mixed-use redevelopment of a cluster of former hat factories in partnership with two for-profit developers.

Neither Patterson Park CDC nor HANDS limited themselves to city-owned properties, or waited for properties to be offered them, either by the city or by private owners. Perhaps the most critical single element in the success of their efforts was that both CDCs made the same entrepreneurial decision: to move aggressively to acquire properties, using whatever financial resources, legal and negotiating tools that were available. Both organizations took risks, taking control of properties that they might not be able to use immediately, and banking properties for future reuse. While they partnered with city government, they did not allow the city to dictate either the scope or the pace of their efforts. They recognized a fundamental reality – without control of properties, one cannot control the future of the community.

Lessons for CDCs
The experience of the four CDCs described here, along with others around the country, demonstrates clearly that a strategy that prioritizes vacant properties – either vacant lots or abandoned houses – can be an effective means of bringing neighborhoods back, restoring residents’ faith in their community and turning around long-term decline in property values. Besides the importance of gaining control of properties, other key lessons include:

Vacant properties must be a priority. While no CDC is likely to focus exclusively on vacant properties, a vacant property strategy demands that it be a priority for the organization; that it be a steady, ongoing effort; and that tracking the status of vacant properties in the neighborhood be a constant, rather than intermittent, task.

Scale is critical. The nature of abandoned properties is that every one is a problem, and that scattered, haphazard efforts are not valuable. NKCDC may not have cleaned up every one of the 1,100 vacant lots in the neighborhood, but they transformed over 600 of them. Patterson Park CDC reclaimed nearly 300 houses in less than eight years. While a long-term strategy is critical, without the ability to go to scale – and do so relatively quickly – a CDC will not be able to get ahead of the problem and generate productive long-term results.

A long-term commitment is needed. Even once the CDC is operating at scale, dealing with vacant properties can be a slow process, especially, as in Orange, where the heart of the strategy called for getting control of buildings from irresponsible private owners. The effects of the strategy are also gradual, and only visible after years of effort. HANDS, Patterson Park and New Kensington have all been pursuing their vacant property strategies for 10 or more years.

Vacant property strategies require specialized expertise. The expertise required will vary depending on the type of properties and the strategy being pursued. HANDS needed to recruit expertise in arcane areas of property law such as tax foreclosure, while Bon Secours needed both legal and design expertise for its Southwest Baltimore strategy. Without the guidance of the Pennsylvania Horticultural Society, NKCDC would have had a far harder time putting together its vacant land management program.

The strategy must be tied to other community building efforts. None of these CDCs does only vacant properties. The open space program in Southwest Baltimore is part of a comprehensive revitalization strategy incorporating many different programs and activities. NKCDC and HANDS run homebuyer counseling and assistance programs, and Patterson Park CDC’s activities include organizing park programs and providing services to new immigrants. All of these efforts are coordinated with the vacant property strategy; HANDS and PPCDC use their homebuyer counseling programs to funnel buyers into the vacant houses they restore, while OROSW and NKCDC both use their open space or vacant lot programs as ways to build resident engagement and community cohesion.

The most important lesson, however, is that abandoned property strategies work. Far more than many alternative CDC activities, including affordable housing construction, such strategies go directly to the heart of why the housing market in an area is not functioning effectively, and why the neighborhood’s problems seem so intractable. They are not easy, and not for the faint-hearted, but abandoned property strategies have the potential to be transformative strategies for the revitalization of distressed inner-city neighborhoods.

Alan Mallach is research director for the National Housing Institute. His latest book isBringing Buildings Back: From Abandoned Properties to Community Assets.


Anticipating Change

Just as vacant, abandoned properties act as a drag on property values, an effective strategy that eliminates them or – as in Southwest Baltimore or Kensington – neutralizes their negative effects, can become a spur to increase property values. Where the location of the neighborhood is conducive to higher property values, the increase can be dramatic. Both Patterson Park and Kensington are located relatively close to areas that had begun to gentrify in the 1990s, while Orange is located in the heart of the New York metropolitan area, with commuter rail access to Newark and New York City.

These neighborhoods have changed dramatically in the past few years. Where vacant houses might once sit abandoned in Orange neighborhoods for years or decades, today – except for a handful with intractable legal or title problems – investors and speculators move quickly to snap up vacant properties, fixing them up and reselling or renting them out. In Patterson Park, houses that might not have found a buyer at any price 10 years ago are selling for more than $300,000.

This is both good and bad. A stronger market can mean a healthier neighborhood, where economically diverse homebuyers choose to buy and where upwardly mobile families choose to stay. At the same time it creates increasing pressure on the area’s lower-income families and individuals who previously found the neighborhood an affordable place to live. CDCs should anticipate that, over time, a rising market may force many of those families out of their community, through higher property taxes on homeowners, rent increases or displacement, as existing buildings are converted to homeownership or demolished for more profitable uses. Markets are powerful forces and can easily preempt the CDC’s goal of building an economically diverse community. Once they take hold, there may be little a CDC can do to preserve affordability and maintain diversity.

A CDC in an impoverished, struggling neighborhood pockmarked by vacant lots and abandoned houses may find it difficult even to imagine the possibility that, within a few years, demand might increase to the point where competition for the neighborhood’s houses may become a problem. Yet that is precisely what is required. Each organization contemplating a vacant property strategy – or indeed any comprehensive revitalization effort – must ask itself how it will deal with market pressures, if and when those pressures arise. Only by anticipating change, and building strategies to hold onto affordable housing, can a CDC create the conditions in which an economically diverse population is a sustainable reality for a neighborhood, rather than a transitional state between an impoverished neighborhood and an affluent one.

– A.M.


Research Notes

• Bringing Buildings Back, the first comprehensive guide to abandoned property, is now available. It contains a wealth of good practices, like those described in this issue’s Research Update, and provides strategies for prevention, management and the reuse of such property.

• Shared Equity Homeownership: The Changing Landscape of Resale-Restricted, Owner-Occupied Housing will be available on nhi.org later in 2006. This report examines the role of third-sector housing – inclusionary units, limited-equity coops and community land trusts – in providing an affordable form of homeownership for millions of Americans whose incomes are between 30 percent and 120 percent of local area median income.

Alan Mallach
Alan Mallach, senior fellow at the Center for Community Progress and the National Housing Institute, is the author of many works on housing and planning, including Bringing Buildings Back, A Decent Home, and Inclusionary Housing in International Perspective. He served as director of housing and economic development for Trenton, New Jersey, from 1990 to 1999, and teaches in the City and Regional Planning program at Pratt Institute.

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