Everyone remembers the financial meltdown that coincided with the bursting of the housing bubble in 2008. Since early 2009, during the first term of President Obama, the plans for the stimulus package gave way to a novel and sustainable way of combating the rampant foreclosure problems. Although Kansas City was plagued with this problem and the crime associated with it even before the events, the housing bust intensified the effects. Kansas City’s Representative, Emanuel Cleaver II (Missouri, 5th district) received congressional funding around 2009 to address the vacant housing problems in crime infested areas of Kansas City, MO called the Green Impact Zone.
The rehabilitation phenomenon is not new to Kansas City. Since 2003, close to 150 actions have been brought under the Abandoned Housing Act, or R.S. MO. 441.500, by local non-profit organizations. In the past three years about seventy cases have been brought against unoccupied, tax-delinquent, nuisance properties in itself by Legal Aid of Western Missouri, a city-funded organization dealing with economic and community development. About thirty houses have been acquired using the act and are under the ownership of neighborhood organizations who are in the process of rehabbing the properties. The process would have been stimulated considerably but there is little supplementary funding for rehabilitation and current public sources of funding do not work well due to an overemphasis on regulatory compliance and programmatic goals.
Since 2010, the city’s housing department leveraged private funding dried up. However, more cases have been resolved and more title secured than in the three years prior, despite only a fraction of the earlier funding being available. Presently there is a target rich environment because of the number and distribution of homes where record title is held by defunct investor groups or overwhelmed out of state mortgage companies, or properties are in the name of deceased persons with no probate estate. At times, properties were purchased by out of state speculative investors.
Neighborhood organizations have therefore shown a growing willingness to partner with investors or developers to lend their name to abandoned housing act cases if it results in an occupied home with the potential for a homeowner through lease purchase transactions. Some new partners have emerged such as business associations, faith based organizations, and state agencies like Local Investment Commission. Although exhaustive efforts to work through the existing nonprofit agencies and new city initiatives have borne little fruit, there is some indication that funders and financial institutions are looking for new ways of structuring community development investment.
There is increasing evidence that stranded investors, owners and lenders of long vacant urban core property are willing to let them go or even donate them. Various new groups or investors who are willing to partner with neighborhoods have emerged over the past year and have begun preparations to undertake new or increased activity. However, the project still struggles with inadequate availability of both funding and rehab expertise to even target the wide range of areas served.
Financial sustainability is also a desirable objective as it appears possible to keep net loan payments to modest amounts on homes acquired if rehab costs are kept to a prudent level. Emerging groups like immigrants, public employee union members, or employees of large service sector companies can provide a pool of customers for these properties, while alleviating the predicament that comes with run-down, vacant houses in the urban core of a major metropolitan city. Kansas City is on its way towards a more vibrant, equitable urban core, and it has the full involvement of its local players and stakeholders.
Should more groups come forward and adopt this model to catalyze additional change? Should the city take a more aggressive stance on this initiative, even if it means added regulatory compliance for groups?
Credits: Photographs by Nathan Zoschke and Martin Seliger. Data linked to sources.