Kansas City is making modest headway in dealing with thousands of vacant and decrepit houses.
But it’s also becoming increasingly clear that the pace of progress is so slow that the crisis won’t be solved by city government alone. City officials estimate that, with Legal Aid’s help, they get just a few hundred houses fixed up and sold each year, and 200 more houses demolished.
That’s just a fraction of the 6,000 vacant problem properties on the city inventory, and more are being added all the time.
“We’ll be finished with the houses about the same time we repave all the roads,” Mayor Sly James said ruefully at a meeting on the crisis last week.
So city officials say they plan to appeal to banks to help create a loan pool of $5 million to $10 million to help private rehabbers fix up and sell the houses more quickly. It’s a proposal they’ve made in the past with little success, but they’re not giving up. That type of urban core investment may be part of the criteria they look at when they choose banks to do business with next year.
“Our wish is that we could find several banks that would be willing to contribute to a loan pool,” said John Wood, director of the City’s Neighborhoods and Housing Services Department.
City officials and Legal Aid representatives said there are plenty of high-quality rehabbers who can put between $8,000 and $25,000 into an urban core home and get each property sold and occupied for about $50,000, but they can’t scale up their efforts without more funding.
“They can only do five at a time because that’s the limit of their capital,” said David Park, deputy director of Neighborhoods and Housing Services, who is the city’s point person on the vacant housing problem.
Wood had a long career in banking before he took his position with the city several years ago, and he knows banks are risk-averse, especially about making loans in the urban core. He recalls attending a meeting in March 2011 where the idea of a loan pool was discussed with representatives of several banks, but it never went anywhere.
Still, he insists it is doable and says the city is willing to put up $500,000 to $1 million to absorb any losses the banks might incur.
“I can understand the reticence,” Wood said of the banks. “But at the same time, we can’t ignore these properties, because not doing anything only worsens the problem.”
Representatives of two banks that handle the city’s deposits, Bank of America and Commerce Bank, said Friday that they didn’t have enough information about the city’s idea to comment on it.
But Bank of America spokeswoman Diane Wagner said BOA has already developed a good partnership with the city, as demonstrated by a 2012 agreement to donate 75 foreclosed houses to the city along with up to $875,000 to rehab or demolish them.
“Bank of America remains committed to a comprehensive neighborhood stabilization approach,” Wagner said.
City officials insist they are seeing some signs of hope as the bank foreclosure crisis abates.
Whereas Kansas City bank foreclosures totaled more than 5,000 in 2010, they’ve dropped to 2,000 this year, Park said.
Plus, in the past year, the city has established a Land Bank to fix up and sell derelict properties, and it’s working with Legal Aid and other groups to more aggressively address the problem. It’s still daunting, but Park says the city’s strategies are showing preliminary results, and buyers are interested.
Among the strategies the city is using:
. Attorneys with Legal Aid work with neighborhoods to force negligent owners to fix up their properties or relinquish them for sale to high-quality rehabbers who will fix them up and get them sold or rented. The agency has a caseload of about 240 and turns around 60 to 80 cases per year, said Michael Duffy, managing attorney for Legal Aid’s economic development unit.
. The Land Bank got going in earnest this summer with 3,636 neglected properties, including about 850 with structures. Eighty-five have been approved for sale, but more than half were vacant lots. Five structures have been approved for demolition and 16 for renovation.
. Of the 75 foreclosed properties that Bank of America had pledged to donate to the city, the bank has so far donated 39 houses and $520,000 for rehab or demolition.
Councilman Jim Glover, who has a long history of promoting urban core redevelopment, said he’s encouraged by the preliminary success of the city’s programs. But it’s not enough.
“We have to develop more tools to acquire the properties at a faster rate and ensure the financing is in place to restore them,” he said. “I’m very confident there’s a market in the central core of the city for these houses, once fixed up.”
A big problem, Park told the City Council, is the growing list of structures that probably should be torn down. So far that list totals nearly 1,200, up from 785 last year. The city has budgeted $1.7 million, but at an average of $8,000 per house, that handles only about 200. “And of course we’ll be adding more to the list during the year,” Park said, “So that means we’ll make little to no progress, or worse, and the number will be even higher in May of 2014.”
Duffy said many of those buildings could perhaps be saved from demolition if the city or private sector got to them sooner.
Wood said the city will keep pushing for the loan pool. And the timing could be advantageous because the city will seek new proposals in the middle part of next year from banks wishing to handle the city’s deposits, which total more than $1 billion. The city could encourage banks’ willingness to help the city with the vacant housing problem as part of that selection process.
Council members were receptive to that approach.
“Let’s make that a priority,” said 5th District Councilman Michael Brooks, whose district includes many of the problem properties. “It’s part of the solution.”