Monday, April 5, 2010

CACLV Purchases West Ward Foreclosure for Green Rehab Project

1207 Bushkill Street


Posted by: Noel Jones


As reported by Ed Sieger in the Express Times, Community Action Committee of the Lehigh Valley (CACLV) has finally purchased its first West Ward foreclosure for the green rehab project reported in The West Word in January (available in pdf form under the Downloadable Documents link on the right of this home page), a program which is funded with federal stimulus money through President Obama's Neighborhood Stabilization Program. The address chosen was a half-twin on 1207 Bushkill Street, pictured above.


David and I went over to take a look, and while any rehabs in the neighborhood are good news, I must say, I'm a bit disappointed. Not only does this house not look bad at all from the outside (as you can see) but it is situated on an almost idyllic block in our neighborhood that, according to Ed's article, is still mostly owner-occupied, and sports clean, quiet streets and nicely trimmed hedges. The house itself has a lovely big wooden deck in the back, and a fish pond.  A picture of this block is currently at the top right of this home page.


I had understood the aim of this project to be rehabbing foreclosed homes on blocks that are troubled by blight and the parking density of multiple single-
family homes that have been converted over the years into multi-family rentals. That is the aim of the City of Easton's green rehab project, led by Gretchen Lippincott, Director of Planning and Development and head of the Redevelopment Authority. As I posted before, the city bought blighted properties on Ferry and Pine Streets, where there is high rental density, and the property on Ferry Street will be de-converted back into a single family home, bringing down parking density on the street and improving the look of one of the neighborhood's major thoroughfares. Part of the city's strategy is also to rehab homes in close proximity, to try to brighten up one blighted area at a time by clustering. I had hoped that CACLV might employ a similar strategy by taking on properties at the far end of Washington, Lehigh or Butler Streets to de-convert and reduce density there, and to take on on areas more affected by blight than on the 1200 block of Bushkill, which is already a very sweet street.


CACLV reported a couple of months ago in another Express Times article by Ed Sieger that they were having trouble securing foreclosed properties, and that investors were gobbling them up too fast, which may have something to do with this selection, but the city managed to secure their two properties before that article came out, properties in close proximity to each other and in their targeted area.


Anyway, as best I can tell, the Redevelopment Authority and CACLV are operating under different strategies to improve the neighborhood--the city's strategy to make a difference where it's most needed now, and CACLV's strategy, which seems to be to preserve the remaining well-kept, peaceful blocks in our neighborhood from becoming blighted and densely populated. I'm not passing judgment on either strategy, I just like the city's strategy better.


What do you think?

17 comments:

Dennis R. Lieb said...

Noel,

My response to your question isn't whether I like one strategy better than the other but that there needs to be "A Strategy". It can be one or the other of the two views you gave, in which case we should pick one. It could be a hybrid where each org works on a different problem simulatneously, but then it would be nice to know if they are actually pursuing something like that or if this is just being left to the gods.

I came across a very articulate editorial a few months ago about prioritizing where redevelopment money goes in cases like this...how do you handle the triage process? If I can find it again I will link it in a new post.

The Chidsey Street property (covered in a sidebar story next to the Bushkill Street one) is a case study in how NOT to dispose of ERA properties, how NOT to plan/vision for the future and how NOT to engage the public for input. It's a long story for a small property but it will have to wait fo it's own post.

DRL

David Caines said...

Having been to all of the meetings and such, I had believed the CACLV's plan was more in line with what the city has done. I also think both plans have thier merits, but agree with Dennis that in this time of ecconomic down turn an overall stratrgy would be an eceptional idea.
Lights in the darkness...
Still these are three lights in the darkness, and I'll commend all involved. And I'll be currious to see just ho CACLV spend this long awaited money in the future.
Thanks Noel.
David

Anonymous said...

there are SO many properties that need to be rehabbed I see where the CACLV would have a hard time deciding on which to get. mabe they figured they can get more/better attention if it is situated on a nice block (I agree, 1200 block of bushkill is pretty nice).
there is one (maybe 2?) rehabbed homes on N7th right by the bakery that were redone some time ago by some org (can't remember the sign on the porch) and they are STILL vacant. sometimes the marketing of these things doesn't work out too well.

Julie Zando-Dennis said...

I agree that it would behoove the CACLV to describe their purchasing strategy to the residents of the West Ward. The house pictured is far nicer than a number of houses on my street. CACLV, your constituency would like you to comment on your strategy . . . Are you listening?

David Caines said...

I think both straegies are valid, but some overall plan would be a great help. Still, the "shot gun" approach might be just the answer. We cannot allow working areas to slide, and yet we must raise up those ares that are failing.
I am at this time, coresponding with a number of outside groups/ agencies though with the disabilty being a facotor I can't speak for results.
We in the end are the ones who must deal with our success' or failures. We in the end are ultimately responsible.
Cudos, to the CACLV for acting, and to the city as well.
Progress is progress, even if it is one house at a time.
I agree with Denis that an overall strategy would be best...but the more help the better. If you would like to put one forward Denis, I will listen, and probably support it.
A progress report-
When we first moved here, we noticed an EPD car down our road maybe once a week, now we see them 5-6 times a day, thanks for the support. I can't say which protocol they are following but as the block gets better thier presence is more noticeable.
As well, the "Bike Rodeo" gave us hope. Police officers interacting with local kids, parents,... and teaching (OR at least trying to), which I sometimes think is thier main role.
I can only hope that they stay the course, "At risk kids" respond mostly to concerted sustained effort. I see hope here, or I wouldn't bother bieng here. Cudos, EPd and keep it up.
Thanks,
David
Thanks,
David

Alan Jennings said...

We appreciate the amount of interest you have shown in the work CACLV is doing through the West Ward Neighborhood Partnership. We even appreciate the prodding and criticism. We can always be better at what we do. Also, our most important constituency is the residents of the neighborhood. So don't let us off the hook.

Your posting on Monday about our acquisition of 1207 Bushkill Street raised legitimate questions and I’m happy to try to respond.

The West Ward's housing stock is a top priority of the West Ward Neighborhood Partnership. Since the Partnership began we have made improvements to about a dozen or so porches, and improved 50 residential façades. That is barely a beginning. We have applied for additional funds to do more façades (however, competition for dramatically reduced state funding makes us minimally optimistic that we will receive those funds). We do have funding to begin our green housing rehab program, starting with funding made available under the federal Neighborhood Stabilization Program. These funds will enable us to do two properties in the West Ward. More about that later in this posting. We are very optimistic that we will receive another $500,000 to do more green housing rehab. We are also committing to weatherize at least 100 income-eligible homes in the neighborhood. Finally, we are anxiously anticipating an announcement from the U.S. Department of Energy on a request for an additional $5 million to dramatically expand our green building rehabilitation efforts. Given competition for those funds, supporters of our project might want to start praying.

Back to the Neighborhood Stabilization Program. Just for clarity’s sake, I should mention that the Lehigh Valley Community Land Trust (LVCLT), a subsidiary of CACLV, is responsible for the purchase and rehabilitation of the homes mentioned in the article.

Due to some bureaucratic and political challenges, we did not receive our funding until late December, 2009. This put enormous pressure on us because the contract requires us to acquire 10 properties by March 31. Writing on April 7, I can now say that this proved to be impossible. The question is whether the state will give us additional breathing room.

So, the first thing people need to understand is that the time-consuming process of identifying, vetting, and acquiring foreclosed properties made this program almost impossible to administer.

Second, NSP regulations are ugly and have required a fair amount of financing gymnastics, and the delays have made it difficult to compete with unsavory investors who are not doing our urban neighborhoods any justice

Third, there are some pretty unscrupulous business dealings in the real estate foreclosure "industry" these days. I can't divulge the details, but I can assure your readers that we are tenaciously pursuing these bad actors. They are further complicating the process.

Now, about 1207 Bushkill Street. The intersection of Wood and Bushkill streets has been victimized by a high number of foreclosures within the past twelve months. This is a strange development; we have no firm explanation for why this is happening. It might be because some creepy mortgage broker cut a bunch of bad deals, or it may just be a sign of the times. When standing on the sidewalk of 1207 Bushkill Street, we can point to four other homes that are in the foreclosure process within the past three months. In addition, there are currently three homes for sale on this block alone. The other side of this twin is vacant and “for sale or rent by owner”.

(Continued on next post)

Alan Jennings said...

(Continued from previous post)

According to guidelines provided by Pennsylvania’s Department of Community and Economic Development (PA DCED), the two areas for which Neighborhood Stabilization Funds (NSP) are appropriate include “tipping point neighborhoods” and “redevelopment areas”. LVCLT’s initial Easton purchase would support the first category. Our opinion is that the neighborhood appears to be “tipping” towards disinvestment and potentially neighborhood decline. The excessive number of foreclosures near 1207 Bushkill is an early warning sign, a red flag that should not be ignored. If left totally to market dynamics we believe this neighborhood would trend to a predominance of rental properties. I don't need to tell you or your readers how important owner-occupied housing is to a neighborhood. This is an important neighborhood because it is located near the 13th Street interchange, a key gateway to the city. LVCLT has considered this single purchase on that block to be strategic. Here, preemption is the key.

We agree that there are other areas in need of clustered redevelopment efforts, as Noel mentioned. We support this concept and will pursue this approach where it is feasible. A case in point is a property near the city’s Ferry Street acquisition on the 800 block. We took a serious look at this foreclosure and rejected it because its requirements were outside the scope of our program. First, the house was simply too large for a low-to-moderate income family to affordably upkeep and heat. Second, the bank was selling the foreclosed property as an income-producing, three-unit asset with an inflated price. While it is true we can offer less than the asking price, the cost of rehabilitation, conversion and purchase made this property economically unfeasible. Ultimately, these deals have to work or CACLV takes a hit it cannot afford.

LVCLT has attempted to purchase other properties in the West Ward but has lost them to investors because the rules require us to properly pursue a course of due diligence. Two examples of this are 1257 and 1259 Washington Street. We couldn’t make that transaction work.

When negotiating the foreclosure market, LVCLT staff will keep both strategies in mind, because we feel that each is valid and appropriate in a given circumstance. The unpredictability of the foreclosure market and deadline to implement the grant necessitates that LVCLT remain open to both strategies.

We are all in this together.

~Alan Jennings, CACLV

David Caines said...

Allan,
I agree..we are al in this together and I am happy for the help, whatever form it takes.
Thanks,
David

noel jones said...

Thanks for posting, Alan. The additional info on the behind-the-scenes investing drama helps. I hope the money for the other facade grants comes through--they really help brighten a block, as it did on my corner when I got mine a few years ago.

One thing residents are having trouble getting their brains around though, is why it takes $420K to rehab two houses that are picked up at a foreclosure rate. Could you explain some of the costs that we wouldn't know about on the surface? If the foreclosures are being picked up for less than $50k each (I'm assuming this because the city's two foreclosures that they are green rehabbing were acquired for less than $50K), and there's $320K after that for the two houses, then that's $160K each, right? That sounds like approx., $210 put into each property, and then if they are being sold to low-mmoderate income first-time home-buyers, how does that work? The city had mentioned hoping to get 4-6 homes out of their $500K of NSP money--that's only $80K more than what the Land Trust is working with, right?

Any background you can offer on this would help residents to understand the program better--thanks!

Dennis R. Lieb said...

Three quick thoughts:

The federal governement just revised the rules for cities to make it easier for them to use Neighborhood Stabilization funds to acquire forclosed and other dilinquent/distressed properties. I would hope the city and/or CACLV are applying this new asset to the task at hand.

Facade grants - if to be continued - MUST include design guidelines and material standards going forward. It isn't enough to "improve" a property if we end up with inappropriate materials like vinyl siding, T-111 or preasure treated lumber on the street-facing facades of buildings and porches. Architectural quality is what made the neighborhoods worth living in and the subsequent destruction of that ambience by siding and brickcote salesmen in the 50's through 70's has led to it's downfall. We need architectural quality - and not Home Depot do-it-yourself mentality - to win the day.

The three properties clustered around N 7th and Northampton Streets that are owned by Allentown's Alliance for Building Communities are sitting, half finished and have been that way for four years. They will not be completed because of disruptions in that organizations internal structure. Regardless of the city's previous unwillingness to address these properties, it is now time to take responsibility for getting them back into active use. They were originally rental deconversions, have had gut-out and other considerable work already completed and meet the proper scale requirements for first-time buyers. In light if the criteria mentioned above, lets get them off the vacant property list and in the hands of new residents.

DRL

Julie Zando-Dennis said...

Thanks for posting Alan. It seems that you made a thoughtful choice.

Noel raises a good question: how does $160K get applied to each property? I purchased a home that needs a lot of work, but after extensive structural and cosmetic work, will not come close to approaching $160k in improvements. How is the $160k being allocated?

Alan Jennings said...

Thanks for the opportunity to respond to questions about the cost of rehabbing houses under the Neighborhood Stabilization Program.

First, we are obligated to acquire, rehab and sell 10 houses valleywide with a $2.2 million grant. We intend to do more as long as the state doesn’t pull the funding out from under us.

Second, in your post you assume that foreclosed homes are the cheapest homes. That’s not necessarily the case; often banks overprice them. We’ve literally seen a house marketed for $50,000 dollars as a short sale be repossessed by a bank and then re-listed at $100,000.

Third, the city’s two purchases were $35,000 and $59,000, not, as you said, “picked up for less than $50,000 each.”

Fourth, the budgeted amount for acquisition is $111,500 per house; for rehabilitation it’s about $70,000. The reality is that we are under budget on most houses, precisely because we want to do as many properties as possible.

Fifth, not all of the funds go to acquisition and rehab. The grant also includes money for homeowner counseling, lead-based paint training for contractors, property insurance, and property maintenance, and some other soft costs. Also, roughly 10% of the funds cover administrative costs.

I hope I answered all of your questions.

~Alan Jennings, CACLV

noel jones said...

Thanks for posting, Alan.

Anonymous said...

Hi Alan could you tell us a little more about LVCLT. And who is on it.

Anonymous said...

hi alan you out there.

Dennis R. Lieb said...

Responding to the comment by Alan that..."the city’s two purchases were $35,000 and $59,000, not, as you said, 'picked up for less than $50,000 each.'"

That's splitting semantic hairs. Two properties at $35k and $59K equals $94,000 total acquisition price. That's an average price of $47,000, which is less than $50k ea. When you nitpick every comment we make you look petty.

I will however support your comments on the hidden soft costs of rehab...for instance, as a former Community Development org. board member I know that training contractors on lead paint removal is a legal requirement for them being able to do the work. It can hold up projects and make it tough to find qualified contractors to bid jobs...all part of the mess we must deal with when defered property maintenance and strip mining of buildings for rent revenue are ignored for decades.

DRL

Thomas said...

There are also so many beautiful homes that have been rehabilitated in our community. It's quite sad, because anyone can still purchase these homes and can make it look prettier than before. Other homes have only few damages like broken windows, unfixed doors,roof and siding. Boston community will make sure that every house counts and that they will really analyze if it can still be rehabbed or not.