Minutes: Sept. 2014 Meeting

[Christel Manning]

The Economic Development group met on Monday, Sept. 8, 2014, from 6 – 7:15 pm at 333 Front Street. Present: Christel Manning, Manoj Viswanathan, Marina Romani, David Hunter, Brian Kiss, Laurie Lopez, Natalie Coe, Leslie Flowers, Lee Cruz, Nathalie Bonafe, Carla Weil, Erik Johnson, Melissa Waldron.

This was a special meeting with LCI director Erik Johnson and LCI neighborhood specialist Laurie Lopez to address the problem of blighted housing in our neighborhoods. The intent was to discuss the general problem of banks and government institutions sitting on abandoned houses, rather than focus on solving the problem of any particular property.

CSNA members presented our perception of the problem, illustrated by Natalie’s experience in trying to purchase #15 Lewis Street which has been held by CHFA for nearly a year. Erik then explained several factors that cause this problem, including:

• Banks prioritizing neighborhoods with higher property values. Banks prefer not to foreclose because it makes these assets show up as a liability on their balance sheets. So they often cherry pick those properties they think they can sell at higher value (usually short sales), and places like Woodbridge get priority over Fair Haven. This creates a state of limbo until the market improves.
• The bundling of mortgages that caused the 2008 financial crisis muddled ownership, so it is often difficult to determine who is responsible for the property.
• Contracts to maintain the vacant property are bid out separately for each item (fix windows, mow lawn, etc.) and each maintenance company will do only what they bid for; anything else falls through the cracks.

So what can we do?

Erik said each property has its own story, but he promised he will investigate the #15 Lewis Street problem and try to move it forward. CHFA claims they must pass it on to HUD before it can be sold, but HUD will not receive it in its current condition. So who is responsible for cleaning it up? Erik said that if HUD will not be a receiver, the city could do so.

Tools the city has to deal with these kinds of properties include:

• Foreclosure registration program. Banks must let the city know when they initiate foreclosure on a property. But last year, the state adopted its own registration program, so now many banks register there, which means it takes the city longer to find out.
• The city works with various agencies to help owners who are in financial trouble (e.g., by referring them to counseling) so they can stay. But it may take a long time to find out who these owners are, and by that time it may be too late.
• Anti-blight ordinance. This give the city the right to board up an abandoned house, cut the grass, pick up trash etc. The city can put a lien on the property to cover their costs, and if the house sits for 90 days, they can foreclose on these liens. But this does not mean the city gains control of the house. The owner has the right to fix the blight, plus the bank may pay the expenses so they can keep the property. In the best case scenario, the shortest time the city can legally gain control of a blighted house is 210 days.

Bottom line is, the city’s tools are very slow and cumbersome, and tend to maintain the status quo. The best solutions are market solutions, i.e., finding willing and qualified buyers for these houses.

Info on foreclosures is publically available on websites like Zillow and at www.jud.ct.gov/jud2.htm. The problem is that these sites list all properties that have liens against them, and the two most common lien holders are the City of New Haven and WPCA. So not all of these properties will actually foreclose.

There are brokers who specialize in foreclosure properties, and it would be good to engage them to focus on our neighborhood. But these brokers want to make money, and they will often sell to flippers who are not good for our neighborhood in the long run.

Conclusion: there is no quick and easy fix for this problem, there are things CSNA can do.

1. Identify and reach out to current owners, and encourage them to get help sooner than the city is able to. Carla Weil’s organization, Greater New Haven Community Loan Fund, could help us with this. They have access to lists of foreclosures and could also recruit Yale students to do canvassing
2. Develop relationships with realtors. Lee has started this process.
3. Keep marketing our neighborhood as a destination area that is currently undervalued.

We will follow up on these ideas at our next meeting.