In cities where foreclosures remain an epidemic, it is not uncommon for homes to sit vacant and abandoned for prolonged periods of time.
These vacant properties aren’t always properly maintained or secured by the lenders and servicers who have taken responsibility for them, which can make them prime targets for vandalism, squatting and raging parties.
Unmaintained, vacant properties are eyesores that can reduce neighborhood property values, decrease the overall aesthetics of a neighborhood and can even present a threat to public health.
Because of these negative impacts and frequent problems with property neglect, a growing number of municipalities have adopted vacant property maintenance programs or ordinances.
Chula Vista sets the tone
One of the first jurisdictions to implement such a program was Chula Vista, a city south of San Diego with more than 2,000 vacant properties.
Since Chula Vista’s Abandoned Residential Property Program went into effect in October 2007 (see program), the city has issued about $1.4 million in fines on lenders and servicing agents, according to Doug Leeper, the city’s code enforcement manager who authored the language for the program.
The program requires lenders to inspect defaulted properties to identify whether they are occupied. If a property is found to be vacant, the program requires that the lender register the property through the free Mortgage Electronic Registration System (MERS) or with the city for $70.
Following registration the lender must ensure the property is inspected once a week and is immediately secured and maintained to the neighborhood standard.
"I tell the lending industry, ‘All we’re asking is the bare minimum of what you’d want done if the home was by you,’ " Leeper said, explaining that includes cutting the grass; keeping yards free of trash; securing all doors, windows and yard gates; and cleaning pools.
The program also requires that a 24-hour contact number of the company responsible for the maintenance of the property be visibly posted on the property.
"The hardest part (of the program) is finding who is the responsible party," Leeper said, which is why the program’s mandatory registration and contact information components are key.
Members of the community are also integral to the program’s success, as they often alert the city of vacant, unmaintained properties.
When the city finds violations, it issues a notice that provides the responsible party 30 days to comply. Following that period the party can be fined up to $1,000 a day for noncompliance, which typically is enough to force the lenders to properly maintain and secure the property.
"They (lenders) speak one language — money," Leeper said.
Despite the program’s success, the local real estate association opposes the requirements, as lenders have passed fines onto local agents.
"If the lender can pass the fine onto the agent, that’s because the agent signed an agreement with the lender (to maintain the property)," Leeper said. …CONTINUED
Following Chula Vista’s lead
Since Chula Vista’s program became effective, the city’s code enforcement department has fielded calls from nearly 400 jurisdictions interested in adopting similar policies.
One of these cities was Stockton, Calif., which from July 2007 to July 2008 had the highest foreclosure rate in the nation, according to foreclosure data company RealtyTrac, and remains a foreclosure hot spot.
During the first half of 2009, the Stockton, Calif., metro area had one foreclosure-related filing for every 18 homes (see article), compared with nation-leading Las Vegas (one filing for every 13 homes).
As of August 2008, Stockton implemented a vacant property ordinance, (see ordinance summary), which is similar to Chula Vista’s program in terms of maintenance, security and posted contact information requirements.
But because of budgetary and manpower issues, Stockton’s ordinance does not require lenders to register with the city, according to Peter Lemos, code enforcement field manager.
"We’re still reactive. We’re not out looking for REO (bank-owned) or vacant properties," Lemos said.
Because of this, the city is often unaware of vacant properties and relies heavily on residents and real estate agents to report unmaintained properties.
Once notified of an unmaintained property, the city will contact the responsible party and typically give that party 30 days to get the property into compliance.
After that time the city can fine the party $200 a day for noncompliance.
"Overall, if it’s a marketable property they’ll (lenders) get an agency servicing company on it," Lemos said, adding that the city has seen a big increase in fines issued despite dealing with less than half of the 4,200 to 4,500 estimated vacant properties in the city.
Similar to Stockton, Cleveland has an initiative dubbed "Breaking the Cycle of Abandonment and Foreclosure" that contains maintenance, security and contact information requirements but does not require lenders to register properties with the city (see initiative summary).
With an estimated 8,000 vacant or abandoned properties within the city, identification of these properties poses the largest challenge, according to Jay Westbrook, councilman of Ward 18.
Unlike Stockton, though, Cleveland has some staff who survey neighborhoods for unmaintained, vacant properties.
"We have housing code field inspectors and a nationally recognized network of nonprofit development corporations," Westbrook said.
"We have charged them with regular surveys of our neighborhoods. We’ve become sophisticated in trying to determine if a property is marginally neglected or grossly abandoned."
Demolition and redevelopment
Despite the aid of these two groups, Westbrook said the magnitude of Cleveland’s foreclosure crisis continues to be greater than the city’s ability to respond. …CONTINUED
As a result, some responsible parties walk away from properties, leaving the home abandoned for a prolonged period of time. A percentage of these properties are candidates for demolition rather than repair, he noted.
"In situations where lenders walk away from the property, we will and do use code enforcement and prosecution to determine if there is a responsible (servicing) agent," Westbrook said.
If that can’t be determined and the property is condemned or deemed a public hazard, the city will demolish the property.
"We’re probably conducting about 1,000 ‘demos’ a year," Westbrook said.
Following demolition work, the property becomes park of the city-operated land bank.
Properties from the land bank are given to nonprofit developers or back to the community, to be used as green space, a community garden or an expansion of an adjoining property.
The demolition and redevelopment of properties is also a focus of other cities hard hit by foreclosures.
The city of Detroit will use $14 million worth of funding and grants to demolish blighted properties as part of its neighborhood stabilization program, according to Marja Winters, deputy director of planning and development (see program).
The majority of the properties are acquired from Wayne County or in coordination with the Michigan Land Bank.
Indianapolis has received $29 million in U.S. Housing and Urban Development money and will use a portion to acquire, demolish, rehabilitate and/or redevelop abandoned properties (see release).
In August 2007, Buffalo, N.Y., launched a "5 in 5" Demolition Plan with the goal of demolishing more than 5,000 vacant structures during the following five years (see plan summary).
A focus on ordinances
While demolition is a significant part of these cities’ solution to reducing the number of abandoned properties, other large cities remain focused on the success of their maintenance ordinances, primarily because the ordinances have been effective for less than a year.
In November 2008, an amended version of Chicago’s vacant property ordinance went into effect (see ordinance page).
According to Bill McCaffrey, a spokesman for the city, the ordinance has had an impact, as more than 5,000 vacant properties have been registered since the amended ordinance was implemented.
Boston’s registration and maintenance-related ordinance has been effective for nearly a year. During that time more than 2,000 properties have been registered (see ordinance page).
"We’ve issued quite a few fines and have had a good response from banks (in terms of registration and maintenance compliance)," said Dion Irish, assistant commission of the city’s Housing Division.
Erik Pisor is a freelance writer in Southern California.
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