In the city of Saint Paul, there are 2200 plus vacant homes, and the inspection staff at the city agree that they are probably counting about half of the total. That means about 4% of the units are vacant in the City overall, and a lot more expected to hit foreclosure. As bad as this is, I’m quite sure that Saint Paul has a better handle on this than most cities across the nation, and is far ahead of any suburb.
What does this mean for the future?
We’re still working that out, but I recent had a chance to hear Sheri Pemberton of Planning and Economic Development (PED) tell the Fort Road Federation what the city wants to do with all this. The first order of business is to characterize the pockets of vacant and foreclosed homes into places where the market is still working, starting to falter, or has totally broken down. The latter is where you find empty blocks and houses being offered for $40k or less. The strategies to deal with these are based on saving houses where the market is working and creating a new market where there is none now.
Saving houses on otherwise good blocks is a matter of finding homeowners that are willing to take a little bit of a chance. Many of these properties just need a good renovation cycle, which is to say someone who wants to do them up right rather than a quick slam that will get them rented again. We’re trying to break the cycles of bad renovation, rental, value increase, and foreclosure that have plagued some buildings for up to a hundred years. That means we need the knowledge of how to do this and good constructions loans. Mentorship from people like me is something the city can put together easily.
Construction loans are impossible to come by right now, so Purchase and Renovation loans called 203ks need to be explored by the city. This is where the city floats bonds to front the money to buy and renovate the home while a Supervisor or Coach watches the whole project. That kind of money is hard to come by now, especially since municipal bonds have pretty high yields. If the Federal Government does one thing to help cities, funding 203ks will help a lot
In places where the market has died, local organizations called CDCs (Community Development Corporations) will have to take over. The Fort Road Federation had great success with the last major project it took on, the “Brewery Breakthrough”. This was where the area behind Schmidt’s Brewery was completely re-do, with about 20 houses demolished, 4 moved, and several new townhomes put in their place. It was a big project that did produce a lot of construction jobs if the Feds become WPA minded.
The City of Saint Paul is still putting together its plan for the next 5 years, but we can see where it will go. We do have a lot of success in Saint Paul doing things well, so we have lot to pull from. Between what we’ve done well in the past and some high quality PR telling people how great this city is, we’ll do well.
Let’s hope all our cities can do as well.
Barataria - The work of Erik Hare 
I’m trying to put your analysis into context with some info from Saint Paul Real Estate: http://www.stpaulrealestateblog.com/st_paul_real_estate/2009/01/wild-numbers.html
Also, those category 3 properties can be a real challenge because they need a Certificate of Occupancy: http://www.stpaulrealestateblog.com/st_paul_real_estate/2009/01/rumor-control.html
Last spring, the city passed an ordinance saying that a CatII or CatIII vacant house (about 90% of the total) needed to be brought up to *current* building codes to get a certificate of occupancy. This means at least $100K of work for most of the vacant homes, most of which predate the Great Depression.
Critics said that this ordinance would essentially make “sweat equity” impossible, and would turn over the 4-5,000 vacant properties to the city and the non-profits that are bestest friend with the City Council.
Seems the critics were right.
Thanks, Cristy! Before we get down to work, we have some serious policy changes to think long and hard about. I was going to get into those, but in all honesty I don’t like to complain without an alternative – since I don’t have one yet, I let it go for now.
To A Saint Paulite, you’re also very right. When that happened, a lot of us out in the neighborhood were upset – people normally Democrats in good standing. This has been characterized as a partisan political issue, but it is not. The first link in this piece is about frustration with this same situation:
https://erikhare.wordpress.com/2008/06/11/urban-return/
We have to concentrate on what works. I was very pleased to hear that the City is interested in getting individuals to renno homes because that is, no question, the best way to go. It’s about people and their commitment to Saint Paul. That also includes a lot of changes so that people want to make that commitment. We should be talking about EVERYTHING at this stage, IMHO.
Now, as to the CDCs and other nonprofits that often do the work – they do have a role. I know it’s galling when $250k or so is put into a home that sells for far less, but that’s what’s needed under the current codes. Simply put, in situations like this it’s probably better to have a homeowner do that so that the subsidy is sweat equity rather than cash.
But there will be times when CDCs have a key role to play – and that’s been described as neighborhoods where the market has completely failed. I like that. Should there be more oversight when we put money into those neighborhoods? I’m all for it IF (big if) it’s done in a way that doesn’t increase bureaucracy and jack the price up even more.
I’m optimistic, yes. I see the City understanding just how big the problem is. That means that we may have to change a lot of policies and get LIEP on board to make things happen more quickly and reasonably. Hey, let’s all lean on them! We have a crisis, and I think we aren’t just screwing around hoping it’ll go away. I think a lot of people can tell us about their experience and make it all work one Hell of a lot better. Only a fool wouldn’t listen.
If this little post is one step in getting people together to make serious changes, I’ll be happy. I’d like more comments like this because you have a damned fine point. Let’s get organized and really change things to make this work!
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