In a deal that Kansas City officials hope will be replicated by other lenders, Bank of America on Tuesday promised to donate 75 houses to the city along with up to $875,000 to rehabilitate or demolish those structures.
A list of the vacant properties hasn’t been compiled, but most will be on the depressed East Side, particularly in the Green Impact Zone and near the Police Department’s East Patrol Division headquarters being built near 27th Street and Prospect Avenue.
Local officials lauded the move, which came one day after civic, nonprofit and business leaders announced their new program to improve conditions in the inner city as part of the chamber of commerce’s Big 5 program.
The city’s deal with Bank of America is separate from that and has been in the works for a year. But like that other effort, it’s seen as another important step in stemming the decline of neighborhoods, particularly those where foreclosures have exacerbated an already steep decline.
“Our neighborhoods cannot be reborn as long as every other house is boarded up or in disrepair,” Mayor Sly James said in a written statement. “The partnership announced today will reinvest in the heart of our city. My thanks to Bank of America and the dozens of city staff who helped to make this program a reality.”
Under the agreement, Bank of America will hand over 25 foreclosed-upon properties that are salvageable and fit for resale after being renovated. An additional 50 that are not worth saving eventually will be torn down so that the land can be redeveloped or converted to another use.
The bank also promised to pay up to $20,000 for each rehab project and $7,500 for each house demolished, said assistant city manager John Wood.
“This is a significant partnership and the first of its kind in Kansas City,” Wood said in an interview.
He and others at City Hall are counting on this program serving as a model for other lenders who might be open to donating foreclosed properties that, if allowed to continue deteriorating, would lead to lower values for neighboring properties, as well as crime and blight.
And many already are a harmful influence, neighborhood groups says.
Long criticized for its business practices during the home foreclosure crisis, Bank of America has cut similar deals with Detroit, Chicago and, most recently, the Cuyahoga Land Bank in Cleveland.
Kansas City doesn’t have a land bank — yet. Legislation to establish one is pending in the Missouri General Assembly.
Meanwhile, the city’s homesteading authority will serve a similar role. That is to be a holding place for the donated properties which, perhaps, can be resold to police officers and civilian employees in the East Patrol Division, according to the joint press release issued by the bank and the city.
Overall, the idea is for all 75 properties to be sold to for-profit and nonprofit developers and, ultimately, returned to the tax rolls.
Mayor Pro Tem Cindy Circo, who heads the City Council’s housing effort, hailed the arrangement with Bank of America as a significant milestone. But she concedes it is just a drop in the bucket in a city with at least 12,000 vacant houses, many of which are in poor condition.
The problem was growing even before home foreclosures began mounting around 2008, then got worse.
“It was the last storm that blew down the last tree,” Circo said of the home mortgage crisis.
Already, the city demolishes 125 dangerous structures a year, so the bank’s promise to fund 50 more demolitions is more than welcome, Wood said. But there are hundreds more on the city’s dangerous buildings list, so the city would welcome help from other lenders.
“We would love to have other banks follow suit,” he said.
Like other big home lenders, Bank of America has taken heat from financially strapped homeowners who complain that their lender was less than helpful when it came to modifying the terms of their loans. Bank of America also recently agreed to an $11.8 billion settlement to resolve state and federal investigations into the bank’s loan practices, including so-called “robo-signing” of lending documents.
However, the agreement with Kansas City was a good-will gesture and entirely voluntary.
In a written statement, Spence Heddens, who heads up the Bank of America’s Kansas City operations, said his company “is committed to a comprehensive neighborhood stabilization approach to help support our customers and the communities we serve and live in.”
Also praising the deal was U.S. Rep. Emanuel Cleaver, a Kansas City Democrat who pushed federal officials to establish the Green Zone, an area aimed at receiving federal stimulus dollars for energy conservation and other improvements. Some but not all of the Bank of America properties are in that zone, which is between 39th and 51st streets, Troost Avenue on the west and roughly Prospect Avenue and Swope Parkway on the east.