South Bend Report on Vacant and Dilapidated

7/28/2019 South Bend Report on Vacant and Dilapidated

1/78

Vacant & Abandoned Properties

ask Force Report

City o South BendPete Buttigieg, Mayor

February 2013


2/78


3/78

ask Force Members

Mayor Pete ButtigiegCo-Chair

James KellyCo-ChairClinical Proessor o Law, University o Notre DameCommunity Develpopment Clinic, Notre Dame Clinical Law Center

Karen AinsleyExecutive Director, Near Northwest Neighborhood, Inc.

Marilyn GachawCommunity Developer, First Step Properties

Mark GouldAssistant Vice-President and Community Relations Ocer1st Source Bank

Mitch HeppenheimerDeputy County Attorney, St. Joseph County

Penny HughesRealtor/Realestate investor, Hughes Investments

Andrew KostielneyPresident, St. Joseph County Board o Commissioners

Anne MannixPresident, Neighborhood Development Associates, LLC

Elizabeth MaradikPlanner, Department o Community Investment, City o South Bend

Special thanks to:Michael Cwidak-KusbachFrieda Fein

Chrystal OConnorMalcolm Phelan

Marco Mariani

Executive Director, South Bend Heritage Foundation

Pam MeyerDirector Neighborhood Engagement

Department o Community Investment, City o South BendPete MullenAuditor, St.Joseph County

Raael MortonPresident, St. Joseph County Council

Ann-Carol NashAssistant City Attorney, Legal Department, City o South Bend

Kathryn RoosDeputy Chie o Sta, Oce o the Mayor, City o South Bend

im Scott1st District Councilmember, City o South Bend

Cathy oppelDirector, Department o Code Enorcement, City o South Bend

fg. 1 Newly constructed homes by a private developer on once vacant lots, East Bank Village


4/78

able o Contents

Introduction

Letter o introduction

Mayor Pete ButtigiegStatement o Purpose

Jim Kelly

Data-Driven

Decision-Making:Assessing the problem

History

Population declineLoss o manuacturingNational housing crisisProperty value reassessment

Current conditions

Vacant and abadoned properties

Location and concentrationFocus on abandoned housesOwnership o abandoned houses

Neighborhood market conditions

Market condition classicationsMarket indicators

Recommendations

What the City should doWhat the community can do

Code Enorcement:

ackling Vacant &Abandoned Properties

Broad Responsibility

Legal Authority

Administrative orders & hearingsDemolition o the structureOrder to repair the property

argeted Code Enorcement eorts

Focusing order or repair eortsPrioritizing the demolitions list

Te missing pieces

ReceivershipLand banking

Stablization & maintenance o

abandoned properties

Recommendations


Executive Summary

Understanding o past and present

situation

Focus on elimination o abandoned

house nuisances

Pursue land banking

Develop resources and reuse

options


5/78

Land Banks & ax Sales:

Long-term LegislativeSolutions

Purpose & unction o land banks

AcquisitionManagementDisposition

History

First and second generationTird generation and beyond

ax sales

Current tax sale processCommisioners salesNeed or tax sale reormSolutions to tax sale problem

Redevelopment Strategies

Renovation or demolitionManagementDisposition

Foreclosure preventionFunding sourcesax recapturePenalties and interest on taxesFederal grants

State-wide legislation

2006 reormsCurrent legislative eorts

Recommendations

What they City should do

What the community can do

History o resources and reuse

CDBG/CDBG-RHOMENSP1/NSP3

Community Partners

Neighborhood Housing ServicesSouth Bend Heritage FoundationNear Northwest NeighborhoodNNROHabitat or HumanityHousing Assistance Oce

Current operations & unding

Housing counselingOwner occupied rehab programsRehab & new constructionFinancing assistance

DemoltionOther strategiesMarketingQuality o lieNeighborhood capacity building

Resource strategies

Work with nancial institutionsSel-sustaining programsaxing vacant propertiesLeveraging municipal unds

Appendix

I. Market condition classication

indicators

II. Demolition prioritization orm

III. Good samaritan law

IV. Federal unding and resource

allocation breakdowns

V. ax sale and Commissioners

Certicate sale process

VI. Denitions

VII. Acronyms

Reuse strategies

Pocket parkSide-lot programCommunity gardenWildower & native grass spacesLarge open spaces & linear parksUrban orestUrban agricultureWater managementEnergy generationHousing redevelopment

Reuse tools

Recommendations


Resources & Reuse: Planning or the uture


6/78


7/78

Te issue o vacant and abandoned properties has been a major concern or South Bend and cities like us throughout the Midwest. Te economicshocks o past decades, combined with population shifs and changes in the housing market, have combined to leave communities like ours withmore homes than amilies can ll, and many teetering on the brink between demolition and rehabilitation.

Shortly afer taking oce, I convened a group o city and county ocials, private sector practitioners, and neighborhood advocates to orm aworking group on this policy challenge. Co-chaired by academic expert Jim Kelly rom the Law School o the University o Notre Dame, thisgroup took on the dual challenge o analyzing the dimensions o South Bends problem, and assessing the elements o a comprehensive solution.

Te ask Force met over a dozen times throughout 2012, and held three eld hearings to share initial ndings and gather input rom aectedneighborhoods. Based on this work, they were able to create a much more sophisticated view o the dimensions o our abandoned property prob-lem than we have ever had beore. Tanks to their work, instead o ying nearly blind, we now have a deep and rich body o data to guide policydecisions going into the uture.

Even more importantly, the group was able to evaluate a number o short-term and long-term policy approaches to deal with vacant and aban-doned houses. Teir recommendations range rom small tweaks to the way we already handle problem properties, to wholesale change in statelaws governing the ability o municipalities to acquire and dispose o land.

Tere is no magic wand to deal with the issue, and the reports recommendations are not a cure-all. But the inormation and recommendationshere will guide our administrations policy and activities as we undertake more proactive and ambitious action to improve our neighborhoods.

Over the next ve years, we will coordinate internally and externally to address the problemsdescribed in this report, using the tools the task orce has identied. Change will not come over-night, but citizens will see a dierence in our responsiveness and eciency in dealing with prob-

lem properties.

I also made a point o asking that the ask Force identiy ways that citizens and private actorswanting to help address the problem can make a dierence, and this report includes inormationon how you can be part o the solution. Tis is a community problem, and it will be addressed bythe whole communitygovernment and citizens working together to ensure every neighborhoodis a great place to live.

Pete ButtigiegMayor

Introduction

2I

ntroduction

fg. 2 Te well-kept homes o River Park


8/78

In the decade that I have spent working at the neighborhood, city, and state levels to help older communities conront the problem o vacant andabandoned properties, I have had no experience more ullling than serving with Mayor Pete Buttigieg as co-chair o South Bends Vacant andAbandoned Properties ask Force. Te Mayor recognizes the vital importance o eective strategies to deal with abandoned houses in SouthBends neighborhoods. Te ask Force, in partnership with the City administration, reached out to those most aected by vacant property nui-sances to develop solutions. Tis report presents those strategies so that the conversation may continue even as the City moves orward to acili-tate the transormation o South Bends vacant and abandoned properties.

Our work as a ask Force ocused on understanding the problem, moving orward on immediate and long-term responses and marshaling the re-sources or helping older neighborhoods overcome the enormous challenge o vacant and abandoned houses and lots. Our report mirrors theseour ocus areas: Data-Driven Decision-Making, Code Enorcement, Land Banks and ax Sales, and Resources and Reuse.

Te working groups that took up each o these areas were guided by three principles. First, good decisions require a ull understanding o the rel-evant inormation. Second, the success o any governmental intervention must be measured by the outcomes achieved more than by the outputs

produced. Tird, the communities most aected by the problem o vacant and abandoned properties must be engaged in shaping and imple-menting the responses.

As one way o moving orward on this last principle, the ask Force supplemented its bi-weekly meetings with three community hearings in threeneighborhoods hardest hit by the problems associated with vacant and abandoned properties. Te rst two, held at Muessel Elementary Schooland Kennedy Primary Academy, ocused on gaining input rom community members about not only the problems they saw but also the solu-

tions they could contribute. Te third orum, held at Riley High School, allowed the ask Force topreview and receive eedback on its initial ndings and recommendations.

Te Report that ollows is the work o many hands coordinated and led by the Citys Deputy Chie

o Sta Kathryn Roos. Te members o the ask Force listed at the ront o the Report served notonly as deliberators but as workers. Te Report would not have been possible without the help oseveral others, including Michael Cwidak-Kusbach, Malcolm Phelan, Frieda Fein, and ChrystalOConnor. In addition to helping produce the report, city planner Elizabeth Maradik producedthe Neighborhood Market Condition mapping system eatured in the Data-Driven Decision-Making section. Although much o what the ask Force has produced amounts to guideposts oruture action, this mapping system tool allows the City to make the critical resource decisions thatwill allow South Bends neighborhoods to preserve and renew their vitality.

Jim KellyCo-Chair Vacant and Abandoned Properties ask Force

Introduction

fg. 3 Homes rom the turn o the century line Portage Ave.


9/78

4I

ntroduction


10/78

o control the uture o the vacant and aban-

doned properties problem in South Bend, the

City needs to understand its past and present.

Te vacant and abandoned proper-ties problem in South Bend has severalcauses, including population decline, losso manuacturing, the national housingcrisis, and eects o property value reas-

sessment.

At the request o the ask Force, theCitys Department o Community Invest-ment has mapped neighborhood marketconditions to help the Department oCode Enorcement ocus its enorcementand demolition resources.

Te City should make the inormation

relevant to vacant and abandoned prop-erties, especially vacant houses, availableto the public through its website.

Te City should continue to evaluateand update not only its data, but also itsapproach to measuring neighborhoodmarket conditions.

Using the proper use o owner, propertycondition and neighborhood marketconditions data, the City should cat-egorize all abandoned houses into threegroups, each with its own particularresponse or action:

ype o Abandoned

House

City Response

Houses to berepaired now

Code EnorcementOrder to Repair

Houses that can berepaired, but onlylater

Land Bank withoutDemolition

Houses that will notbe repaired

Demolition, thenLand Bank

Te City should develop regular progress

reports about its eorts to prevent, re-claim and renew vacant and abandonedproperties and make this inormationreely available to the public.

Te City needs to ocus Code Enorcement

on what it can do best: Promptly eliminate

abandoned house nuisances.

Code Enorcement should identiywhich abandoned house nuisances canbe eliminated promptly through eitherrepair order proceedings or demolition.

Code Enorcement should aggressivelypursue repair orders only:Against any owner who has the undsto complete repairs and alsoOn any abandoned house in aneighborhood with a market strongenough to support a rehabilitationloan on the property.

Executive Summary

fg. 4 Te community works to repair homes throughRebuilding ogether


11/78

6E

xecutiveSumm

ary

Te City needs to pursue land banking eorts,

both short and long-term, to make vacant lots

and remaining abandoned houses available

or productive use by new owners.

Te City should work with the Countyto begin the partial land banking eortscurrently allowed under existing law.

Te City should continue to supportstatewide legislation that enables theestablishment and unding o a thirdgeneration land bank to acquire tax-delinquent vacant properties through areormed tax sale process and make them

available or productive use.

Te City should work with the community

to develop resources and reuse options or

vacant and abandoned properties.

Te City should partner with banks,

other community nancial institutions,as well as local non-prots to directinvestment into neighborhoods in a waythat will spur new stability and growth,including the building o new homes.Te City should partner with commu-nity groups and volunteers to transorm

vacant lots into side yards or adjoininghomeowners, community gardens orother community assets.

o guarantee that abandoned houses inhealthy neighborhoods can be promptlyrepaired, the City should develop a va-cant house receivership strategy.

Te remainder o the tax delinquentabandoned houses should be acquiredby a land bank, afer being demolished inecessary.

Te City should und the demolitiono all severely dilapidated abandonedhouses that are both unlikely ever to beoccupied again and will allow or bene-cial reuse.

fg. 5 Rebuilding ogether helps homeowners makerepairs to their homes

fg. 6Older homes that have been preserved throughrehabilitation

fg. 7Vacant lots are the ideal location or communitygardens


12/78

Data-Driven Decision-MakingAssessing the problem

fg. 8 Population change, 1960-2010

History o vacant and

abandoned properties

A number o actors over the years have con-tributed to the amount o vacant and aban-doned homes in South Bend, including: Population decline Loss o manuacturing

National housing crisis Property value reassessment

Population decline

Between 1960 and 2010 the City o SouthBends population decreased rom 132,445 to101,168, a 23.6% decline. During this sametime period the St. Joseph County popula-tion (which includes South Bends popula-

tion) increased rom 238,614 to 266,931, an11.9% increase (see gs. 8 & 9).

Loss o manuacturing

Much o the population decline can be at-tributed to the decrease in manuacturingollowing World War II. Like many Rust Beltcities, in the second hal o the 19th cen-

tury, South Bends industrial economy grewrapidly.

Locally owned and operated manuacturersincluded the Studebaker Brothers Manuac-turing Company, the Oliver Chilled PlowWorks, the Birdsell Manuacturing Com-pany, and the Bendix Corporation, as wellas numerous smaller supporting industries.However, in the years ollowing World WarII, industrial growth declined. South Bendwas particularly hard hit when the Stude-

baker plant closed in December 1963.

National housing crisis

In 2006, the housing bubble burst and homeprices began to all, contributing to a na-tionwide rise in the number o oreclosures.Te housing bubble impacted communitiesacross the country and was driven by mul-tiple actors: Relaxed standards or mortgage loans

Housing price speculation Low mortgage interest rates Low short-term interest rates (such as

adjustable rate mortgages or ARMs)

As housing prices ell, many homeownerssoon held mortgages that were greater thanthe value o their homes. Homeowners wereunable to renance or sell their property giv-en the gap between its value and what theyowed the banks on the mortgage, trappingmany in mortgages that they could no longeraord or reasons including unemploymentor change in their mortgage interest rate (i.e.ARM).


13/78

8

Data-DrivenDe

cision-Making

fg. 9Change in South Bend population, 1970-2010 fg. 10Foreclosures occuring in South Bend rom 2001-2007

Lending institutions began the oreclosure process when homeown-ers were unable, or unwilling, to make their mortgage payments.Foreclosed homes ooded the market and housing prices were de-pressed even urther.

From 2001 until 2007 there were 6,777 oreclosures in South Bendalone (see g. 10). Te recent national economic downturn, or TeGreat Recession, was partially ueled by the housing crisis. It hasresulted in high unemployment rates in the region and contributedto the continued uncertainty in the housing market.


14/78


Property value reassessment

In 2002, St. Joseph County underwent aproperty value reassessment process toupdate the valuation o properties or taxingpurposes. Te new system resulted in sig-nicant increases in assessed values or manyhomes, especially in the older, central neigh-borhoods o South Bend. Tis ultimately

resulted in large property tax increases ormany property owners with tax bills rom2002 to 2003 increasing by more than 100%or over 25% o city parcels. Tis placed asignicant - and unexpected - burden onmany property owners when they receivedtax bills in 2003. I property owners couldnot aord to pay their increased taxes, theyeither became delinquent on their taxes oron their mortgage payments, leading to taxsale, oreclosures and/or abandonment.

Current Conditions

Tere is a general understanding that va-cant and abandoned properties are a hugeconcern in South Bend, but what does thatmean? What do our neighborhoods looklike today? Several actors help to urtherdescribe the problem our community aces: Number o vacant and abandoned prop-

erties Location and concentration Focus on abandoned houses Ownership o abandoned houses

Number o vacant and abandoned

properties

Te City o South Bends Department oCode Enorcement conducted a citywidesurvey o all homes in the spring o 2011 toidentiy vacant and abandoned properties.Code Enorcement used the ollowing deni-tions or its survey: Vacant property no one has lived in the

house or at least 90 days Abandoned property the home is

vacant (according to above denition)AND has a code violation that has notbeen addressed or more than 30 days.

As a result o the survey, over 1,900 proper-ties were identied as vacant (see g. 13).Tese properties can range rom emptyrentals to homes currently on the market orhomes that are completely abandoned. Outo those 1,900 properties, Code Enorce-ment ound that 1,275 homes were not only

vacant, but also abandoned. It is importantto note that abandoned properties are asubset o vacant properties, so all abandonedhomes are vacant, but not all vacant homesare abandoned.

fg. 12 Vacant properties are located next to well main-tained homes

fg. 11 Assessed values o homes in older neighborhoodsincreased signicantly


15/78

10fg. 13 Vacant and abandoned properties

Data-DrivenDe

cision-Making

Location and concentration

Tere is a concentration o vacancy andabandonment in the central areas o SouthBend. Tis can be attributed to a number oactors. Greater supply than demand

Population decline o more than31,000 people rom 1960 to 2010

Increase o 3,734 housing units rom1960 to 2010

Expansion o city boundariesGeographic area expanded rom 23.9square miles to 41.6 square milesrom 1960 to 2010

Increased housing optionsOlder homes in central areas sometimes lack modern amenitiesNew homes at edge o city oer largeyards, master suites, and multiplebathrooms


16/78

Focus on abandoned houses

Abandoned houses are the main ocus o theask Force. Tese are vacant properties thathave serious code violations that are not be-ing addressed. In other words, an unrespon-sive property owner is negatively aectingthe appearance and value o a neighborhood.Abandonment tends to occur when the

cost o owning and maintaining a propertyis greater than the returns. No matter thecircumstances, the owner ultimately decidesthat it is better nancially to walk away romthe house rather than to continue investingmoney into the property.

o move beyond the current state o theabandoned house problem to a more prom-ising uture, the City needs three key pieceso inormation: the physical condition othe structure, the nancial resources o thepropertys owner, and the strength o theneighborhood real estate market. Tere isno data more important than the inorma-tion obtained by Code Enorcement inspec-tors about the condition o the property. Byunderstanding what needs to be done, theCity can get a handle on how much money is

needed to complete the repairs.


Ownership o Abandoned Houses

One o the main challenges o abandonedhouses is the unwillingness or the inability oowners to make the necessary repairs. Con-trary to widespread impressions, the Cityo South Bend does not own such proper-ties. Private individuals or entities own thehomes. ypes o owners include:

Homeowners that have walked away be-cause o oreclosure and higher taxes

Te estate o a resident who has passedaway

Investor who has walked away due toover extension or afer purchasing aproperty without realizing its condition.

Understanding who owns the property andwhat resources the owner has is every bit as

important to the Citys response strategy asknowing the condition o the property itsel.

fg. 14 Te surrounding area impacts the desirability oa house

fg. 15 A concentration o investment leads to a strongermarket


17/78

12

Data-DrivenDe

cision-Making

Neighborhood market

conditions

An abandoned house owned by someonewho lacks the money needed to repair itpresents a special problem. Ultimately, theCitys judgment on whether that abandonedhouse can be repaired now or only later will

depend on the economic conditions in theneighborhood around the property. Teask Force used available data to establishcriteria to evaluate various solutions: Market condition classications Market indicators

Market condition classications

Solutions to address abandoned houses willdier depending on the market and causes.Te ask Force quickly understood that themarket conditions o the Citys neighbor-hoods needed to be better understood in or-der to assist in nding appropriate solutions.As such, a ramework or market conditionclassications was established; this includedour distinctive types that would reect thehousing market in smaller geographical

areas throughout the City. We propose theollowing classications:

1. Conservation Area: An area where thehousing market is strong and little or nopublic intervention is needed. Te privatemarket should eectively address abandonedproperties.

2. Stabilization Area: An area where thehousing market unctions relatively well, butis beginning to show signs o decline. With-

out some attention, the area could declineurther. Tis is a transitional area whereprivate investment still occurs and minimalpublic intervention is needed in order tohelp stabilize the area.

3. Revitalization Area: An area where thehousing market does not unction as well asit could and assistance and/or incentives areneeded. Te area is somewhat distressed and

some private investment is occurring; somepublic investment is needed to improve thearea.

4. Reinvestment Area: An area where thehousing market has limited to no demand.Tis area has experienced signicant decline,including widespread vacancy and abandon-ment. Tere is minimal private investment

and public investment is needed.

fg. 16Poorly maintained vacant homes have a negativeimpact on the surrounding neighborhood

fg. 17Stronger markets need little public assistance todeal with abandoned homes


18/78


Market indicators

In order to determine what areas in the city limits all within these classications, a data-drivenapproach was used to evaluate market conditions. Data was collected or nine indicators thatreect the current conditions o the housing market (see g. 18).

Indicator Signicance

Average Change in Assessed Value(% change rom Pay Year 2003 to

Pay Year 2013)

Assessments are completed through a market based analysis; home value indicates the strength o thehousing market in an area; shows change in value or area over time

Percent o Abandoned Properties Percent o residential properties that have been vacant or at least 90 days AND have an active code viola-tion not addressed or at least 30 days; indicates that there is not a sucient economic benet to repairhome (i.e. no return on investment)

Percent o CommissionersCerticate Sale Properties

Percent o properties that were available at the Spring 2011 Commissioners Certicate Sale; these proper-ties have back taxes and were not purchased at the Fall tax sale; implication is that property has less valuethan back taxes and market demand is low

Percent o Foreclosures Share o homes that have been oreclosed upon between 2001 and 2007; high oreclosures indicate areaswhere undesirable loan practices (subprime, predatory, etc.) and/or high unemployment and/or specula-

tive buying occurredAverage Home Sale Price Sales price reects the strength o the demand or housing in an area; higher prices indicate stronger de-

mand

Average Days Home on Market Length o time it takes to sell a house reects the strength o the demand in an area; areas where homes sellquickly indicate a stronger demand

Mortgage to Sales Ratio Percent o home sales where a mortgage was obtained; mortgaged purchases tend to be homeowners vs.investors

Vacant Properties Percent o residential properties that have not been occupied or at least 90 days; indicates desirability oarea (i.e. i highly desired, homes will be occupied)

Homeownership Rate Neighborhoods with high homeownership rates will signal more stable and more desirable areas

All nine indicators were analyzed at a small-scale geographic level (census block groups)or the entire City. Based on the inormationgathered, each block group was classied(see g. 19). See Appendix I or additionalindicator inormation.

fg. 18 Neighborhood market condition indicators


19/78

fg. 19Neighborhood market condition classication by census block group

14

Data-DrivenDe

cision-Making

Te market condition classications map,alone, does not determine where resourceswill be deployed. Rather, when movingorward to address vacant and abandonedproperties, the neighborhood classicationwill be examined in conjunction with thelocation o existing assets, such as parks andschools, as well as where existing invest-mentboth public and privateis occur-

ring. As such, the analysis o the indicatorsand resulting map do not pick the winnersand losers when it comes to abandonedproperties and uture investment.

Tis analysis helps to clariy the conversa-tion on where eorts should be ocused andwhat those eorts should be. Te ask Forcecreated a toolbox o activities that can helpto address vacant and abandoned properties

within each o the neighborhood classica-tions (see Resources and Reuse). Since thehousing market diers in each o the ourneighborhood classications, dierent typeso activities will need to occur within each othe areas or maximum impact. Once targetareas have been identied, the table will beused to select the appropriate activities orimplementation.


20/78


Recommendations:

What the City should do

Recommendation 1: Utilize data and

the market condition classications to

assist with addressing vacant and aban-

doned properties.

1.1 Continue to collect data or the mar-ket condition indicators.

1.2 Begin collecting data to assist witha more in-depth understanding o theproblem, such as predictive indicators toidentiy properties in danger o becom-ing abandoned (i.e. assist with targetingpreventative activities).

1.3 Continue evaluating perormance

o areas based on neighborhood marketcondition classications. 1.4 Modiy, remove, and/or introduce

new market indicators as appropriate toensure the City is conducting an accurateevaluation o market conditions.

Recommendation 2: Evaluate.

2.1 Update market conditions analysisover time in order to determine areaswhere the market conditions have im-proved, declined, or stayed the same.

2.2 Evaluate impact o actions takenbased on changes in market conditions.

2.3 Modiy strategies as needed, such astargeting dierent locations, changingthe implementation process, etc.

2.4 Review descriptions and denitionsor market condition classications andmodiy as appropriate. Tis may involvemodiying the denition and/or the in-

clusion o an additional category.

Recommendation 3: Keep the public

inormed about vacant and abandoned

properties and the status o recommen-

dations.

3.1 Share progress reports, includingupdated data and maps, on the Citywebsite.

3.2 Develop a straight orward reportingsystem the community can use to reportcode violations.

Recommendation 4: Seek out best

practices or addressing vacant and

abandoned properties, implement as

appropriate.

4.1 Research and evaluate best practicesor data collection and analysis. 4.2 Research and evaluate programs and

initiatives, as well as their implementa-tion, which can have an impact on thenumber o vacant and abandoned prop-erties.

4.3 Research and review evaluation pro-cesses that can eectively examine Cityeorts.

fg. 20Market conditions help determine how to addressvacant homes


21/78

16

Data-DrivenDe

cision-Making

Recommendations:

What the community can do

Recommendation 1: Support City

eorts by reporting conditions and

circumstances surrounding vacant or

abandoned properties. 1.1 Participate in Code Enorcement

training sessions provided to neighborsby the City.

1.2 Use the City website to report codeviolations such as poor housing condi-tions, trash or tall grass.

1.3 Report vacant and abandoned prop-erties through the City website and otheravailable methods.

1.4 Use secure reporting methods to

provide the City with sensitive inorma-tion about a home such as when the

owner is in a nursing home.

fg. 21 Initiatives like a side-lot program should be explored as a way to address vacant lots aer demolition


22/78

Code Enorcementackling Vacant and Abandoned Properties

Code Enorcements Broad

Responsibility

Te Department o Code Enorcementensures that the municipal code is beingollowed throughout South Bend and aimsto maintain and improve the physical qual-ity o lie in our neighborhoods. Not only is

Code Enorcement responsible or animalcontrol and environmental issues such asunmowed lawns or piles o dumped trash but it also addresses housing code violations.Code Enorcement has a team o inspectorsthat monitors properties throughout the city including responding to citizen complaints or potential code violations. Code En-orcement can assess nes against propertyowners who break municipal code or con-

tinue to leave problems unresolved.

Code Enorcement is responsible or nearlyevery aspect o the Citys response to vacantproperties, including identiying, tracking,and responding to all types o abandonedproperty issues.

fg. 22 Fire damaged houses are a hazard to the com-munity and are torn down as quickly as possible

Legal Authority

Under Indianas Unsae Building Law, CodeEnorcement can bring legal proceedingsagainst property owners to compel them toaddress code violations ound at their prop-erties through: Administrative orders and hearings Demolition o the structure Order to repair the property

Administrative orders and hearings

Indianas Unsae Building Law provides oran enorcement authority (Code Enorce-ment) to issue orders regarding property,including orders to clean, repair, vacate,or demolish structures on the property. It

also provides or administrative hearings atwhich the property owner may be heard, andat which the hearing authority may arm,modiy or rescind the administrative orderand take other actions as appropriate. It alsoprovides or an opportunity or the propertyowner to appeal to a court or review o theorder, and or the City to seek additionalrelie by court orders.

Demolition o the structure

Indianas Unsae Building Law allows CodeEnorcement to demolish an abandonedhouse i the condition o the property andthe threat it poses to people or nearby prop-erties justies its removal. What does thismean or abandoned houses in South Bend?

Some cases are easy. When a home is se-verely damaged and becomes a danger toresidents, such as the house in g. 22, theproperty is torn down and removed as soonas possible. Te City o South Bend currentlyhas enough demolition unds annually topromptly eliminate houses in this extremecondition but not many more.


23/78

18

CodeEnforcem

ent

fg. 23 Exterior o a dilapidated home which requiresinspection prior to pursuing demolition

fg. 24 Interior o above dilapidated house

fg. 25 Not all properties are easily categorized as demo-lition vs. repair candidates by looking at the exterior

fg. 26An interior inspection o a property provides aclearer understanding o i it should be demolished

Some properties are clearly severely dilapi-dated but require an interior inspection inorder to make sure that they are beyondrepair prior to Code Enorcement being ableto pursue demolition (see g. 23). But, onceCode Enorcement is able to look inside ahouse, like the one shown in g. 24, it will gothrough the required process in order to ob-tain legal authority to demolish the property.

Once demolition has been armed by thehearing authority the property will be placedon Code Enorcements demolition list.

Other properties, even when ully inspected,require a more thorough evaluation beorea decision whether to pursue demolitioncan be made. Although the house is vacant,and may be abandoned, it does not meanthat the house is beyond repair and requires

demolition. Te repairs required must bereviewed in order to determine i it is nan-cially easible or a property owner to makethem (see gs. 25 & 26). Because the lawrecognizes that destroying private property isa drastic measure, the Unsae Building Lawoers the property owner an extensive set onotices, hearings and opportunities to repairthe property. Unless there is an immediatedanger to public saety, these proceedingstake several months.


24/78


Order to repair the property

Te Unsae Building Law also allows CodeEnorcement to bring a housing code vio-lation beore a hearing ocer in order tocompel the property owner to repair a house.Te process or getting an order to repairis demanding on the City in both sta timeand resources. Ultimately the legal process

to obtain and enorce an order to repair cantake months i not longer. Legally, ownersare given time to x up properties even ithey may have no chance o rehabilitatingthe property during that time. Rehabilita-tion is ofen the most eective use o re-sources and by concentrating on propertiesthat can be rehabilitated, Code Enorcement,in conjunction with the Legal Department,can pursue legal action that can assure reha-

bilitation o every qualiying vacant house.

fg. 27Vacant house that is a candidate or order torepair proceedings

argeted Code Enorcement

Eorts

Te enhanced enorcement tools o orderor repair and demolition are very importantin promptly eliminating abandoned housesrom South Bend neighborhoods. Becauseboth are so drastic, they require extensiveinvestigations, notices to stakeholders, and

legal hearings. Tis legal process that CodeEnorcement must ollow is ultimately verydemanding on Code Enorcement and LegalDepartment sta time. Fig. 28 provides anoverview o the required Code Enorcementlegal process.

Even afer that process, both call or signi-cant money to eliminate the nuisance: Te typical demolition costs $6,000. Te required rehabilitation is certain to

cost the homeowner at least that amountand can require many times more.

In the end, these enhanced enorcementtools work i and when the money is avail-able. So Code Enorcement must strategi-cally utilize its resources by: Focusing its order-or-repair eorts Prioritizing the demolitions list

Focusing order or repair eorts

By collecting and using data about neigh-borhood properties and market conditions,Code Enorcement can concentrate on therelatively ew abandoned houses eitherowned by persons that have the resourcesto x them up or in neighborhoods withmarket conditions strong enough to sup-

port investment. I an owner does not needa loan to rehabilitate the abandoned house,Code Enorcement should ask the courtto orce that owner to make repairs. I anowner lacks the unds to make the repairs,Code Enorcement needs to know moreabout whether or not house repairs can benanced.

I they strategically ocus on obtaining and

enorcing repair and demolition orders, theycan quickly resolve abandoned house nui-sances instead o continuing to spend re-sources maintaining the property and tryingto work with unresponsive property ownerswho have long stopped caring or the house.


25/78

20

CodeEnforcem

ent

fg. 28 Overview o the legal process Code Enorcement must ollow when addressing a violation


26/78


Prioritizing the demolitions list

Prompted by the ask Forces discussion odemolition priorities, the Code Enorcementsub-committee developed a orm or takingall the relevant inormation about a severelydilapidated house and using it to assign a de-molition priority score. Trough this scor-ing process, Code Enorcement is bringingtogether data rom its own inspections, 911call activity, neighborhood market conditiondata, and historic preservation resources. Acopy o the orm is reproduced in AppendixII.

In reviewing the demolition priority score,the ask Force decided to use Code Enorce-ments guiding principles in recommend-ing how demolition unding should beincreased and targeted. Because demolitionis a drastic step or the neighborhood andnot just the property owner, the City shouldnot seek it in every case where the law allowsit. Homeowners in strong market neigh-borhoods sometimes become so concernedabout a dilapidated house that they urge itsdemolition rather than keep waiting or it tobe rehabilitated. But creating a vacant lot,especially without a strong plan or its reuse,

can hurt a neighborhood in the long-term.

Even in more struggling neighborhoods,tearing down every abandoned house thatmeets the legal test will not help that com-munity, either right now or in the longrun. Te City recognizes the importance oevaluating the houses that pose the greatestthreats to neighbors and rst responders andthe sites that oer the best opportunities orrehabilitation. As such, three actors identiy

which abandoned houses should be demol-ished as soon as possible: First, the house must be severely dilapi-

dated, as the law only allows the publicdemolition o properties that have littleor no possibility o repair.

Second, there must be no chance that thehouse will be rehabilitated in the near u-ture. While the law does not limit CodeEnorcements authority this strictly, the

City cannot aord to tear down proper-ties that might soon be part o a neigh-borhood block with more o its housesully restored.

Tird, the City must move an abandonedhouse to top priority status only aferthere is a plan or the reuse o the vacantlot. Next door neighbors and commu-nity members anxious to see derelicthouses removed can move the processorward by committing to care or the

new open space as a side yard, commu-nity garden, or pocket park.

With these three requirements in place, theCity can assure community members thatevery teardown in an aggressive demolitionplan will be a step orward to a more vibrantuture or the neighborhood and the city as awhole.

Receivership and Land Bank-

ing: Te Missing Pieces

While regular maintenance and repairs canusually be completed on a home in need oattention, especially under a repair orderrom Code Enorcement, some homeownersare unable to complete the necessary repairs.In these instances, the only hope or the res-

toration o that house may be with someoneother than the current owner. When thishappens there is a need or: Receivership Land Banking

Receivership

For an abandoned house in conservation,stabilization, or in many revitalization areas,

the neighborhood real estate market may be


27/78

24

CodeEnforcem

ent

suciently strong to support a rehabilitationloan on the property. I the owner is unwill-ing or unable to get such a loan, the City canuse a remedy under the Unsae Building Lawcalled receivership.

In a receivership proceeding, Code Enorce-ment asks the court to name a nonprot ora qualied person to make essential repairs

and place a lien on the abandoned house. Ithe lien goes unpaid, the receiver can get thecosts back through a oreclosure sale, as-suming the demand or the house is strongenough to pay or the repairs made. TeCity, in partnership with local banks, canwork to set up a revolving und to nancethe repair o those abandoned houses thatcan repay the cost o rehabilitation upon re-sale. With a nanced receivership process in

place, the City would be able to assure home-owners in conservation, stabilization andmany revitalization areas that every aban-doned house can be promptly rehabilitatedthrough Code Enorcement proceedings.

Land Banking

What about the abandoned houses in re-

investment and some revitalization areaswhere the market is too weak to support

the private investment the houses need orimmediate rehabilitation? Demolition maybe an important step orward in many cases,but these properties need to be made avail-able or productive reuse through a landbank. An abandoned house may not be ableto be xed up now because its located on ablock that already has several other aban-doned houses. But, i a developer can easily

and inexpensively acquire all the abandonedhouses on that block, then the entire neigh-borhood has a dramatically brighter uture.By acquiring abandoned properties andmaking them available in groups, land banksplay a crucial role in acilitating productivereuse, providing a piece o the puzzle thatCode Enorcement cannot. For more inor-mation on land banks see Land Banks andax Sales: Long-term Legislative Solutions.

Stabilization and Ongoing

Maintenance o Abandoned

Properties

In addition to eliminating abandoned prop-erty nuisances, Code Enorcement is alsoresponsible or minimizing the harm caused

by abandoned houses and lots that have not

yet been taken care o. As part o its legalproceedings against delinquent owners,Code Enorcement has sought permissionto make essential exterior repairs, removedebris, and, in partnership with the Parks& Recreation Department, mow grass. Terecently enacted Good Samaritan Law allowsany person or group to clean up and mowthe yard around a house that is or is suspect-

ed to be abandoned. o review the law andwhat it allows, please see Appendix III.

Community groups should explore possibili-ties or clean-ups o privately owned vacantlots and the yards o abandoned houses. TeCity has provided support and materials orclean ups o alleys, parks and other publicspace. Te City should now explore with theLegal Department the possibility o support-

ing neighborhood eorts around vacant andabandoned properties. Te City should alsoreevaluate which kinds o clean-up, repairand maintenance activity still require thecostly legal proceedings Code Enorcementhas been using prior to the passage o theGood Samaritan Law.


28/78


Recommendations:

What the City should do:

Recommendation 1: Increase nancial

resources dedicated to demolition. 1.1 Focus on signicantly dilapidated

abandoned houses that cannot be reha-bilitated in the near uture.

1.2 Focus on houses that sit on land thatcan be put to productive use, such as aside yard or a neighbor, a communitygarden or an immediate developmentsite.

Recommendation 2: Narrow the ocus

o houses that go to repair order pro-

ceedings.

2.1 Focus on owners that can repairhouses. 2.2 Focus on houses that are in neigh-

borhoods with markets strong enough tosupport rehabilitation loans.

2.3 Focus on houses in areas with exist-ing reuse strategies.

Recommendation 3: Develop Code

Enorcements capacity to pursue re-

ceivership. 3.1 Partner with local banks to establish

a revolving und. 3.2 Focus on properties in conservation,

stabilization, and revitalization areas. 3.3 Develop a list o qualied receivers.

Recommendation 4: Continue to sup-

port and expand neighborhood group

clean-up eorts. 4.1 Provide special trash pick-up. 4.2 Provide clean-up supplies such as

trash bags and gloves to neighborhoodgroups.

Recommendation 5: Utilize availabledata to determine likelihood o repair. 5.1 Assess the nancial resources o the

owner. 5.2 Consider market condition o neigh-

borhood.

Recommendation 6: Reevaluate Cityprocesses given the enactment o the

Good Samaritan Law. 6.1 Evaluate need to bring legal proceed-

ings on abandoned properties in order toclean and mow vacant lots and the yardsaround vacant and abandoned houses.

fg. 30Neighbors picking up litter

fg. 29Neighbors clear a sidewalk as part o a neighbor-hood clean-up


29/78

26

CodeEnforcem

ent

Recommendations:

What the community can do:

Recommendation 1: Work with Code

Enorcement to address vacant and

abandoned properties. 1.1 Report vacant lot and abandoned

house violations to Code Enorcement.

1.2 Participate in the Code Enorcementhearing process or order to repairs anddemolitions when they are located in theresidents neighborhood and they haversthand knowledge.

1.3 Report code violations, such as gra-ti locations, trash, and unkempt lawnsto the City.

1.4 Report suspicious and illegal activ-ity surrounding vacant or abandonedhouses.

Recommendation 2: Exercise the rights

provided by the Good Samaritan law. 2.1 Remove trash around vacant and

abandoned properties and lots. 2.2 Mow and weed vacant and aban-

doned properties and lots.

fg. 32 Neighbors work together to clean the neighborhood as part o the NNNs Adopt-A-Block program

fg. 31 Neighbors work to clean-up a vacant lot fg. 33 Neighbors clean an alley o litter


30/78


31/78

Land Banks & ax SalesLong-term Legislative Solutions

28

LandBanks&TaxSales

Purpose and unction o land

banks

A land bank is a governmental authoritycreated to address the problem o vacant andabandoned property within a community byeliminating barriers to redevelopment.

In the communities in which land bankingis most eective, legislation empowers theland banks to eciently deal with vacant,abandoned and tax-oreclosed propertiesthrough: Acquisition Management Disposition

Counties and cities generally do not have the

resources or legal tools to acquire tax-delin-quent vacant and abandoned real estate, buta land bank can streamline the title transerprocess and make properties available or re-development on a large scale. Land banks arecreated as public authorities or non-protpublic corporations that operate on the locallevel.

Acquisition

Land banks acquire most o their proper-ties through a reormed tax sale process;land banks also may purchase property andreceive donations o property rom banks orprivate citizens.

Management

Once land banks have acquired a property,they evaluate the property and may makerenovations or demolish structures based onthe propertys condition and prospects orsale. Some land banks maintain acquisitionsas rental properties.

Disposition

Land banks acilitate both traditional salesand less commonly used paths to propertyownership such as land contracts, rent-to-own options, and side-lot purchase pro-grams. Te variety and scope o land bank-ing programs make them an eective tool toexpedite the return o vacant and abandonedproperties to productive use and to help revi-talize communities.

fg. 35 Land bankoperations

fg. 34 A homeowner rehabilitated this ormer oreclosure and incorporated a vacant lot into a garden


32/78

Land Banks & ax Sales

History o land banks

Te idea o land banking as a tool to combatthe problem o vacant and abandoned prop-erties was developed in the 1960s and hasevolved over time, each version addressingthe issues o the day: First and second generations Tird generation and beyond

Te rst and second generations

Te City o St. Louis established the na-tions rst land bank in 1971, and over thenext two decades, Cleveland, Louisville, andAtlanta established similarly structured landbanks. Tese rst generation land bankswere an improvement over existing pro-cesses, but had limited success due to theirnarrow scope o authority to acquire and sellabandoned properties.

In 2002, Genesee County, Michigan (inwhich the primary city is Flint) establisheda land bank which was signicantly moreeective than its predecessors, with changesdesigned specically to avoid the shortcom-ings o the rst generation. Following thissuccess, Cuyahoga County, Ohio, whereCleveland is located, re-structured its exist-ing land bank based on the Genesee model.

Tese second generation land banks haveboth received national attention or the suc-cess o their programs. Cuyahoga County Land Reutilization

Corporation (CCLRC)Operating or 2 yearsReturned almost 100 properties toproductive useDemolished over 300 properties

Holds over 900 properties ininventory

Genesee County Land Bank Authority(GCLBA)

Operating or 9 yearsDemolished over 1,700 buildingsHolds over 8,000 properties ininventoryReturned over 5,000 properties toproductive useRaised $12.8 million in tax revenue

Increased property values by 10.7%in Flint, Michigan in rst three years

fg. 36Land banks across the United States

Long-term Legislative Solutions


33/78

30

LandBanks&TaxSales

Tird generation and beyond

Te success o the Genesee and Cuyahogaland banks inspired a new wave o landbanking programs. Tese new land banksadopt the more ecient and eective struc-ture o the second generation land banks, buttheir ormative legislation is simpler, makingit easier or individual counties to success-ully orm land banks. In the spring o 2012,the state legislatures o Georgia and NewYork passed acts authorizing third genera-tion land banks. Similar legislation passedthe Pennsylvania General Assembly in theall o 2012.

ax Sales

Te tax sale process is directly related to landbanks as vacant and abandoned propertiestend to cycle through tax sales repeatedly,never becoming productive properties onthe tax rolls. Trough reorms, the tax saleprocess could become part o the solution.o do so, there are several aspects o the tax

sale process that need to be considered: Current tax sale process Commissioners certicate sale Need or tax sale reorm Solutions to the tax sale problem

Current tax sale process

ax sales generally are structured to helpcounties make up some o the lost revenuerom unpaid taxes. Te current process inmost counties resembles something o theollowing: Afer a property has been deemed tax

delinquent, the property is put up or taxsale in an attempt to recover the unpaidtaxes.

A private investor may buy a tax certi-cate, thereby paying the county all thetaxes and ees owed.

I the original owner does not redeemthe property by paying the private inves-tor back (in ull and with interest) withinthe 1 year redemption period, the privateinvestor may go through the legal pro-

cess o taking the title to the property.See g. 39 and Appendix V or ax andCommissioners Certicate Sale process.

fg. 37CCLRC created pocket park rom vacant lot

fg. 38 GCLBA rehabilitated and sold this home


34/78


Commissioners Certicate Sales

Each Spring, St. Joseph County holds aCommissioners Certicate Sale; a propertyis eligible to be included in the sale i it hasalready gone through at least one tax saleatwhich it was not purchasedand the ownerhas not paid the owed taxes and ees toredeem the property. At the CommissionersCerticate Sale a property goes through asimilar process as at tax sale. I unsold at taxsale and still behind on taxes then the prop-

erty is oered or sale again, only this timethe Commissioners have the authority tooer it at a lower price than the unpaid taxesand nes. I the Commissioners Certicateis purchased at auction, the original ownerhas 120 days to pay their unpaid taxes andredeem the property. I the property re-mains unsold (unless the back taxes and eesare paid) it will cycle through the process

and go back to tax sale. Tere were a totalo 1,909 properties available at the March2012 Commissioners Certicate Sale (see

g. 41). O the 1,909 properties available atthe 2012 Commissioners Certicate Sale,1,299 (68.0%) were available at the 2010 sale,and 1,116 (58.5%) were available at the 2011sale. Tere are 966 properties that have beenavailable at all three o these CommissionersCerticate Sales. Tese properties continu-ally cycle through the tax sale and Com-missioners Certicate Sales without being

purchased. In turn, the properties accrueadditional taxes and ees.

fg. 39ax sale and Commissioners Certicate Sale process timeline


35/78

32

LandBanks&TaxSales

fg. 41 Properties available at the Commissioners Certicate Sale, March 2012

For example, one abandoned propertylocated in the Near Westside accrued over$6,500 o additional delinquent taxes, specialassessments and ees in three years. By 2013,over $8,000 o the delinquent unds owedwere attributed to special assessments - suchas civil penalties due to code violations.

fg. 40Example o taxes and ees accumulating or anabandoned property

* Sale scheduled or March 2013


36/78


Te need or tax sale reorm

ax sales are designed to assist local govern-ment in recouping unpaid taxes, but thereare some drawbacks to the process. Specula-tive investors have capitalized on the processby purchasing a property lien at tax sale: With the assumption that the original

owner will redeem the property - since

it is a desirable property they will notwant to lose. When the original ownerredeems the property, the purchaser getsall o their money back plus a gener-ous interest rate making the return oninvestment greater than other short-terminvestments.

Or, investors could see an opportunityto take ownership o the property andmake a prot on it, whether they ip it

(sell it quickly) or use it as an investmentproperty, such as a rental. In these casesthe worst-case scenario, rom the inves-tors perspective, is the original ownerredeems the property and the investormakes a prot.

In both o these cases, the County receivesthe delinquent taxes owed on the property;but it does not always have a positive impacton neighborhoods.

Investors will cherry pick properties thatthey are airly certain will be redeemed andbenet by receiving the high interest rate eeon their money. Since the investors gener-ally ocus on those properties with the mostpromise or redemption some believe thatthe original property owner will pay thedelinquent taxes, plus ees, whether an inves-tor purchases the lien at tax sale or not, and

question why the extra unds go to the inves-tor instead o local government. Yet othersbelieve that only the pressure o losing theproperty is what makes the original ownerpay their delinquent taxes so the money theinvestor receives is an important incentive inthe process. o address both sides o the is-sue some have proposed that a portion o theinterest paid by the original owner should goto the government and a portion should go

to the investor.

Many times investors are not amiliar withthe local market and purchase a propertylien at tax sale sight unseen. However,because o the change in the local hous-ing market due to many actors includ-ing population shifs, lower market values,higher taxes and other actors the specula-tive investments do not always have the same

return as they once did. As original property

owners are less likely to redeem their proper-ties, third party investors were suddenly lefwith the title to properties in subprime hous-ing markets that they were never intendingto own.

Te low housing values make rehabilita-tion prohibitively costly or many investors,meaning that the house remains in, or alls

into, disrepair, undeveloped and at risk oalling into a continuous cycle o tax delin-quency. I the property becomes abandonedthen it leads to increased maintenance costsor the city, resulting in multiple liens accru-ing on the property. I the value o the liensbuilds up to be greater than the propertys

value, sale o the property becomes less likely since the liens need to be paid o at thetime o transerring the title - and oppor-

tunities or development decrease. Becauseo the current structure o tax sales, privateinvestors do not have incentives to be a parto a redevelopment project that many o theproperties available at tax sales most need.Instead o solving the problem o vacant andabandoned property, tax sales ofen make itworse.


37/78

34

LandBanks&TaxSales

Solutions to the tax sale problem

Land banking legislation has included re-orms to the tax sale process to allow landbanks to gain control o property tax saleinventories in need o redevelopment. In some counties, private investors no

longer play a role in tax sales and thecounty retains all liens to tax-delinquentproperty.

In other areas, the county, in consulta-tion with the land bank, may choose toretain the liens to property it deems tobe in need o development beore thetax sale and any liens not retained by thecounty are oered to private investors attax sale.

When the county retains the lien, there aretwo possible outcomes.

I the lien is redeemed, the county makesa prot rom the ees and interests on thedelinquent taxes, and the original ownerretains the rights to his property.

I the property is not redeemed, thecounty gains the title to the propertyand can transer it to the land bank. Teproperty will then be entered into one othe land banks programs with the even-tual goal o reentry into the real estate

market and return to productive use.

Te reorms to the tax sale process removethe responsibility o abandoned propertyredevelopment rom private investors andempower counties and land banks to eec-tively end the cycle o tax delinquency.

fg. 42 Well-kept homes contribute to the overall assessed values o surrounding homes


38/78


Redevelopment strategies orland banks

Te second generation land banks employ avariety o redevelopment strategies to returnproperties on their inventories to produc-tive use. Afer acquiring a property, the landbanks sta assesses its condition and the realestate market beore making developmentrecommendations specic to that property.Based on these recommendations, the prop-erty is channeled into one o the land banksprograms: Renovation or demolition Management Disposition Foreclosure prevention

Renovation vs. demolition

Houses acquired by land banks that arein poor condition are either renovated ordemolished. Land banks manage the generalprocesses o demolition and renovation, in-cluding hazardous material checks, biddingon contracts, and managing contractors.Several actors are considered beore a prop-erty is renovated or demolished:

Land banks renovate when:Minimal or inexpensive repairs arerequiredTe property is strategically locatedNeighborhood market is strongProbability o resale is highTe property has historicalsignicance

Land banks demolish in cases o:

Extremely poor or unsae conditionSeverely decreasing neighborhoodconditionExceedingly expensive renovationcosts

Management

Afer land bank properties have undergoneeither demolition or renovation, they may

not sell quickly and the lank bank may haveto hold the property in its inventory or awhile. Land banks have developed variousprograms to prevent their properties romdeteriorating: Buildings

Board up windowsChange locksDisconnect utilitiesCut grassWeather-proo

Vacant LotsPick-up trashRemove weedsCut grass

Many land banks oer maintenance pro-grams that encourage community involve-ment. Private citizens or community groupsare invited to apply or access to lots, which

then become their responsibility. Ofenthese programs include special initiatives toinclude local youth as a way to oster a senseo investment in the community. Community members are encouraged to

Plant gardensCut grassPick-up trash

fg. 43 Neighbors plant a garden on a vacant lot


39/78

36

LandBanks&TaxSalesfg. 44 Dilapidated vacant homes have a negative im-pact on a nieghborhood (beore)

Disposition

In counties where there is a need or landbanks, demand or real estate on the openmarket is ofen low. Because o this, landbanks have developed a number o programsto encourage potential buyers, especiallylow-income or rst-time homeowners. Rent-to-own programs allow potential

buyers to rent homes rom their localland bank and have the option o count-ing rent payments toward the purchaseo the house, resulting in eventual own-ership.

Land contracts allow land banks tonance the purchase o property andthe purchaser repays the loan in install-ments, ofen with credit given or reno-

vations. Side lot transer programs allow current

homeowners to purchase vacant lots nextto their property at lower-than-marketprices.

Market price sales are more likely inneighborhoods with stronger marketsand thus are more tempting to privatecitizens.

Large scale development programs allowland banks to bundle and sell propertiesto developers. Te process o collecting

individual tracts o urban land is costlyor developers but once the tracts areassembled by the land bank they canusually be sold at market price.

ax oreclosure prevention

Aside rom managing vacant and abandonedproperties, the second generation land banks

ofen have tax oreclosure prevention pro-grams. Working in conjunction with thecounty treasurer, a land bank can oer one-or two-year reprieves on delinquent prop-erty taxes to homeowners who demonstratenancial distress and can present a plan tobegin making payments on their owed prop-erty taxes. Allowing greater leniency in taxoreclosure proceedings ofen results in theowner eventually paying back the delinquent

taxes. In the meantime, the owner continuesto be invested in the property. Tis preventsmany o the biggest problems associatedwith vacant and abandoned properties suchas the spread o blight and decreasing neigh-borhood property values.

fg. 45 I rehabilitated they can contribute to a neighbor-hood (aer)


40/78


Funding sources

Second generation land banks are not -nanced through a general revenue und, butinstead receive unding rom specic rev-enue sources. Tis unding comes rom threemain sources; ax recapture Penalties and interest on delinquent real

estate taxes Grants rom the ederal government

Tese are the three largest sources o landbank unding. Additionally, land bankshave access to many less lucrative undingoptions. Land banks are generally able totake out loans against the property in theirinventories to und small-scale projects.Land bank unding is also supplemented by

private donations and the prots rom thesale o land bank properties, though neithertends to constitute a signicant portion o aland banks budgets.

ax recapture

ax recapture puts money generated by landbank operations back into the land bank. A

portion o property taxes rom all proper-

ties sold by the land bank is designated orthe land bank or the rst ew years afer thesale. For example, in Michigan, 50 percento property taxes rom all properties sold bythe GCLBA are transerred to the GCLBAor the rst ve years afer the propertyssale. Tough the countys general revenueund technically only receives a portion othe property taxes, without the land banks

actions the county would not be collectingany taxes on the property. Tus the countyultimately stands to make more revenueunder this cost-sharing agreement than i itcollected 100 percent. ax recapture alonegenerally will not sustain land banks in theirrst years o operations but may eventuallyprovide most o the sustained unding theland bank needs.

Penalties and interest on delinquentreal estate taxes

Te existing reorms to the tax sale processthat allow the county to retain the liensto tax-delinquent properties also create asignicant new source o unding or thecounties. When liens are redeemed, as mostare, the county makes a prot rom the ees

and interest on the delinquent taxes. Landbanks play a crucial role in the process by

acting as a repository or all liens that are notredeemed. Because o this, land banking leg-islation ofen contains provisions that allowthe county treasurer to advance a portion othe prots rom interest and ees on delin-quent taxes to the land bank.

Grants

Te U.S. Department o Housing and Ur-ban Developments Neighborhood Sta-bilization Program (NSP) had providedsignicant unding to assist with local landbanking programs. Tese ederal grantswere especially helpul or demolitions andrenovations, a land banks most expensiveactivities. Both the GCLBA and the CCLRCreceived large ederal grants. Without thegrant money, the land banks would still have

been unctional, but they would have hadto scale back their demolition and renova-tion programs. NSP was a one-time specialallocation, but other ederal programs suchas Community Development Block Grant(CDBG) could potentially be utilized orsome aspects o land banking.


41/78

38

LandBanks&TaxSales

fg. 46Proposed vacant and abandoned expediated tax sale process, as allowed by the 2006 reorms

State-wide legislation

Previous and current legislation in the Stateo Indiana can help South Bend address

vacant and abandoned properties: 2006 reorms Current legislative eorts

2006 reorms

In 2006, the Indiana state legislature passedPublic Law 169-2006 (HEA 1102), a series oreorms that allow county executives to moreeectively address the problem o vacant andabandoned properties in their communi-ties. Tough based on the second genera-tion land bank legislation, the Indiana law issomewhat more limited in scope. Te 2006reorms provide or: Changes to code enorcement procedures Allowing city or county department o

development to orm land banks Changes to tax sale process

Te 2006 reorms allow code enorcementto issue penalities against properties thatare repeat violators. Tese penalties can becharged as nuisance abatement liens, whichi lef unpaid, can be sold at tax sale and canlead to transer o the propertys deed. Tisexpedites the process by which counties

can acquire the right to develop vacant andabandoned houses.

Te 2006 reorms also authorized the estab-lishment o partial land banks, which havepowers very similar to most second genera-tion land banks, allowing them to acquire,hold, develop, and sell property. Unlike mostsecond generation land banks, however, the2006 reorms create land banks under the

direct control o local departments o devel-opment. Because o this, the land banks arepotentially subject to personnel changes witheach election cycle and do not have a guar-anteed source o unding.

Te 2006 reorms also allow the county tocertiy property as vacant and abandonedbeore tax sale. Once certied vacant and

abandoned, a property goes through anexpedited tax sale which reduces the re-demption period o its lien by six months,thus decreasing the period o time duringwhich the property deteriorates and cannotbe redeveloped. Te new tax sale procedurealso allows or the title o properties not soldat the tax sale to be automatically transerredto the county. Te county may then transer

this property to a land bank or urther rede-velopment. Tough land banks may developproperties not sold at tax sale, they are notable to select specic properties to be trans-erred beore the tax sale, making it harder toenact long-term neighborhood developmentinitiatives. Much o the language in PublicLaw 169-2006 reers specically to MarionCounty, although all Indiana counties maytake advantage o the reorms.


42/78


Current Legislative Eorts

During the 2012 legislative session, the Indi-ana state legislature passed House Bill 1249,which created a study committee to researchland banking practices and policy. Te com-mittee then drafed a bill based on third gen-eration land banking legislation that wouldallow county and municipal governments to

establish more eective land banks. Tis bill,House Bill 1317, was introduced in the 2013legislative session and was again sent to asummer study committee to discuss the billurther.

Te new legislation would expand on the2006 reorms to allow land banks to oper-ate outside o direct governmental control,oer unding sources and allow counties to

urther reorm their tax sale processes. Inthe proposed legislation, instead o operatingunder the direct control o a department othe local government, land banks could begovernment authorities or non-prot corpo-rations.

Also the draf legislation suggests specicmethods o unding or land banks, not de-pendent on allocations rom annual countyor municipal budgets. Dedicated unding or

Indiana land banks would include 50 percento the ees and interest on delinquent taxes,property taxes on properties sold by the landbank or the rst three years afer the sale,and all prots rom the sale o properties.Tese changes would establish a relativelystable annual budget or land banks, improv-ing their ability to achieve redevelopmentgoals.

Te legislation being drafed would alsooverhaul the tax sale process. Te redemp-tion period or tax-delinquent propertieswould be changed to end beore the tax sale,so that the deeds to tax-oreclosed propertywould be sold instead o the liens to tax-de-linquent properties. All private buyers wouldenter the sale with the intention o acquiringactual property and would be more likely to

be interested in playing an active role in itsdevelopment. Land banks would have theoption to acquire any unredeemed propertythey were interested in beore the sale, givingthem greater power to enact targeted rede-

velopment initiatives.

fg. 47GCLBA was able to obtain this problem property,repair it and oer it or sale

fg. 48 CCLRC has this property or sale aer rehabilita-tion


43/78

40

LandBanks&TaxSales

Recommendations:What the City should do:

Recommendation 1: Work with

St. Joseph County to enact an intergov-

ernmental agreement taking advantage

o the 2006 reorms. 1.1 Improve the eciency o the tax sale

process by working with the county toapprove denitions o Vacant and Aban-doned properties so as to enact 2006reorms.

1.2 Establish a partial land bank as allowed under the current law. 1.3 Implement strategic oreclosures o

Code Enorcement liens.

Recommendation 2: Support third

generation land banking and tax sale

reorm legislation at the state level. 2.1 Cooperate with legislators as the pro-

posed bills are shaped and move throughthe State legislature.

2.2 Oer testimony to the severity oproblem and the important role a landbank could play in South Bend.

Recommendations:What the community can do:

Recommendation 1: Support third

generation land banking and tax sale

reorm legislation at the state level. 1.1 Call and write to local State repre-

sentatives in support o land banking

legislation and tax sale reorm .

fg. 49CCLRC returns homes to a positive infuence ona neighborhood

fg. 50A CCLRC home currently available or sale

fg. 51 A GCLBA rehabilitated home currently or sale


44/78


45/78

Resources & ReusePlanning or the uture

42

Resources&Reuse

History o resources and reuse

o analyze and eliminate the problem ovacant and abandoned properties, the City oSouth Bend must use its resources to revi-talize and cultivate sustainable, innovativeways to reuse vacant properties. Te askForce has explored the past and current useo ederal unds to use them or vacant and

abandoned properties in South Bend. Teask Force has also ound new ways city resi-dents can take advantage o vacant lots andopen spaces to make their neighborhoodsmore vibrant places to live.

Early South Bend neighborhood revitaliza-tion eorts began in the mid-1970s and early1980s; and have included physical develop-ment as well as neighborhood engagement,

public services, and capacity building activi-ties. At that time, ederal unds were theonly resources allocated to the physical workoccurring in targeted revitalization areas.Since resources were scarce, the resultingwork was limited in its impact.

South Bend is considered an entitlementcommunity by the U.S. Department oHousing and Urban Development (HUD),which means that it receives a yearly alloca-

tion o unding in order to develop viablecommunities by providing decent housing,suitable living environment, and opportuni-ties to expand economic opportunities. Fed-eral unding over the years has consisted o: Community Development Block Grant

(CDBG) / Community DevelopmentBlock Grant Recovery (CDBG-R)

HOME Investment Partnership Program(HOME)

Neighborhood Stabilization Program1 (NSP1) / Neighborhood StabilizationProgram 3 (NSP3)

CDBG/CDBG-R

South Bend alls into a ederal categorycalled entitlement community, whichmeans it receives an annual allocation o

Community Development Block Grant(CDBG) unding. CDBG unding was ashigh as $4 million in the early 1980s, but hasbeen reduced to under $2.3 million in 2012.Tese unds are used or activities principallyor the benet o low and moderate-incomepersons (up to 80 percent o area median in-come as determined annually by HUD). Teederal government uses a ormula to deter-

mine how much o the available unding isdedicated to each entitlement community.

Te American Recovery and ReinvestmentAct o 2009 provided a one-time allocationo Community Development Block GrantRecovery (CDBG-R) unding. Tis wasprovided or housing, community, and eco-nomic development and assistance or low-to moderate-income persons and specialpopulations. All unds have been allocatedand spent.

HOME

Te HOME Investment Partnership Pro-gram (HOME) unds are also received asan annual allocation; the unds go to the St.Joseph County Housing Consortium (Con-sortium) which is composed o South Bend,Mishawaka and St. Joseph County. HOMEunding has uctuated over the years and

has been reduced by Congress, resultingin current level o $705,582 in 2012. Teseunds are used or the benet o low andmoderate-income persons (up to 80 percento area median income as determined annu-ally by HUD). Te ederal government usesa ormula to determine how much undingwill be dedicated.

fg. 52 A home that was rehabilitated with Federal unds


46/78

Resources & Reuse

NSP1/NSP3

South Bend also received unding throughone-time special allocations based on ederallegislation or Neighborhood StabilizationProgram (NSP1) made available throughHousing and Recovery Act 2008 (HERA) and Neighborhood Stabilization Program 3(NSP3) made available through Wall Street

Reorm and Consumer Protection Act o2010, commonly known as the Dodd-FrankAct.

NSP1 and NSP 3 appropriations were createdor emergency assistance or the redevelop-ment o vacant, abandoned, and oreclosedresidential properties and allowed or abroader target population then other ederalunds. Tis allowed governments to assist

low, moderate, and middle income people(up to 120 percent o area median income asdetermined annually by HUD). All undshave been allocated and are largely spent.

All ederal unded activities are dened bythe St. Joseph County Housing ConsortiumsHousing and Community DevelopmentPlan (HCD Plan), which denes the type oactivities, who will implement these activi-

ties, and the process by which awards will be

Planning or the uture

made. Te 2012-2014 HCD Plan indicatesthe priority needs and objectives to supportstrong neighborhood revitalization activities.o see the HCD Plan in its entirety, please

visit www.southbendin.gov/government/content/hcd-plan. See Appendix IV ormore inormation on Federal unding andassisted programs.

Community PartnersOver time the City has developed partner-ships with existing non-prots to implementprograms that would address needs and pri-orities. With these relationships, eorts wereusually limited to certain neighborhoods asdened by the HCD Plan. Te partners thatthe City has worked with include: Neighborhood Housing Services, Inc.

South Bend Heritage Foundation Near Northwest Neighborhood, Inc. Northeast Neighborhood Revitalization

Organization Habitat or Humanity o St. Joseph

County Housing Assistance Oce

Neighborhood Housing Services, Inc.

Neighborhood Housing Services, Inc. (NHS)is no longer in existence. Te organizationwas a non-prot that ormed in 1979 in or-der to address housing related needs withinspecic South Bend neighborhoods.

South Bend Heritage Foundation

South Bend Heritage Foundation (SBHF) isa non-prot organization that has been inexistence or over 30 years. Te organizationcan work throughout the city, but mainlyocuses its eorts in the near west side. Teorganizations housing related work includesrehabilitation and new construction.

fg. 53 A SBHF rehabilitated home


47/78

44

Resources&Reuse

Near Northwest Neighborhood, Inc.

Te Near Northwest Neighborhood, Inc.(NNN) began as a neighborhood associationin 1974 and has since become a non-protorganization with a mission, in part, to pro-

vide aordable housing. Te NNN com-pletes rehabilitation and new constructiono housing in the near northwest o SouthBend.

Northeast Neighborhood RevitalizationOrganization

Te Northeast Neighborhood Revitaliza-tion Organization (NNRO) is a collabora-tion between residents and area institutionswith an interest in the northeast neighbor-hood. Partners include the University oNotre Dame, Memorial Hospital, St. Joseph

Regional Medical Center, South Bend Clinicand the City o South Bend. Te organiza-tions work includes rehabilitation and newconstruction o housing in the northeastneighborhood.

Habitat or Humanity o St. JosephCounty

Habitat or Humanity (HFH) is a county-wide non-prot organization. HFH works toprovide sae and decent housing in commu-nities by building new housing. HFH is aninternational organization; the local aliatewas established in St. Joseph County in 1986.

Housing Assistance Oce

Te Housing Assistance Oces (HAO) mis-sion is to provide aordable housing to low-moderate income amilies. It operates andadministers the St. Joseph County HousingAuthority.

fg. 55 A home rehabilitated by the NNN fg. 56A new home in the NNROs riangle develop-ment

fg. 57A newly constructed Habitat home

fg. 54 NNN neighbors clean-up a vacant lot duringAdopt-A-Block


48/78

Resources & ReusePlanning or the uture

Current Operations andFunding

With 30 years o ederal aid, our communitysuccessully: Eliminated blighted inuences Created several new public acilities by

rehabilitating old, deteriorating, andunder-utilized buildings

Rehabilitated hundreds o homesthroughout the community

Built many new homes Helped new homebuyers to buy homes

in South Bend

Currently, a number o programs addresspriority needs in South Bendas identi-ed in the HCD Plan. Tese programs assistwith reducing the prevalence o vacant and

abandoned properties by addressing hous-ing as well as other neighborhood issues, likehomeowner education and home rehabilita-tion. Services include: Housing counseling Owner occupied rehabilitation programs Rehabilitation and new construction o

housing Homeowner down payment programs

and nancing assistance Demolition

Housing counseling

Te City o South Bend is certied by HUDas a Housing Counseling Agency and oersa number o counseling options, includinghomebuyer education and oreclosure pre-

vention. During 2011, the sole counselor inthe City administration oered counseling to214 households.

Tis work is important because it preventsoreclosures. Given the negative impact ooreclosures on a community and the spikeo these issues during the housing crisis,preventing additional oreclosures is a highpriority. As such, oreclosure counselingprovides help to residents navigating thecomplex oreclosure process. In 2011, thehousing counselor assisted 135 households

with mortgage deault issues. Budget coun-seling is also oered; i sought prior to miss-ing payments, it can also help a householdrom reaching the point o oreclosure orhelp prepare them or homeownership.

In addition, homebuyer education counsel-ing is oered or pre- and post- home pur-chase. Tis provides new homeowners witha undamental education on the responsibili-

ties o homeownership.

Owner occupied rehabilitationprograms

Tere are three owner-occupied rehabilita-tion programs that oer assistance to incomequaliying households: City o South Bends South Bend Home

Improvement Program (SBHIP) Rebuilding ogether St. Joseph County Real Services Aging in Place Program

From 2007 to 2011, nearly $3.4 million oederal unds were invested in over 450homes. In many cases, the assistance pro-

vided allowed the homeowner to remainliving in their own home, given limitedoptions elsewhere. Geographically, SBHIPis a citywide program. Rebuilding ogetherworks throughout South Bend, but it targetsits resources each year to a specic neighbor-hood. Additionally, Real Services Aging inPlace program oers assistance to elderlyhomeowners in the 46619 zip code.

Rehabilitation and new construction o

housing

Te City partners with local non-prots torehabilitate homes and construct inll singleamily homes or sale to homeowners. Terehabilitation o existing housing with robust


49/78

46

Resources&Reuse

architectural eatures can return once vacantand abandoned homes to a positive reusewhile new construction can reuse under-utilized properties (in some cases includingdemolition o a vacant property).

Homeowner down payment &

nancing assistance

Home ownership generally stabilizes aneighborhood and its value. Te REWARDProgram oers down payment assistanceand Community Homebuyers Corporation(CHC) oers mortgages and subsidies toincome qualied households. Both o theseprograms are leveraged by private com-munity investment through local nancialinstitutions. CHC is a consortium o six localnancial institutions that pools resources

to provide mortgages. Additionally, therequired pre- and post-counseling providea new home purchaser with an essentialunderstanding o being a h

Documents

South Bend Report on Vacant and Dilapidated