Home Again Draft

HOME AGAIN SUMMARY 1) The City retains Enforcement, Prevention and Demolition • Status of all three components detailed in document • Eminent Domain not recommended as an additional enforcement strategy; receivership needs further study (opinions from CA’s Office in document) 2) Acquisition and Rehab become the function of a Housing Trust subsidiary. The City retains checks and balances in the process by: • Writing all rehab specifications, inspect properties and approve contractors • Creating acquisition strategy and identifying the properties the Trust is to acquire • Creating an Advisory Council, staffed with members of the administration, City Council and Trust board • External audit of the Trust done w/oversight from City Auditor 3) We begin our efforts on Oakwood Avenue in the Model Zone. There are 12 vacant properties on this street alone (map provided) • The trust can begin to contact property owners on Oakwood immediately • City Attorney’s Office is reviewing status of each property • City already has $625,000 in Housing Preservation dollars that can be used for acquisition purposes 4) We schedule 72 demolitions over the next 9 months, or 8 demolitions per month for the rest of the year. • A contract is being bid April 1. Additional work can be added to the contract • The program will need an additional $434,000 for ’06 to meet the goal of 72 5) We set up the subsidiary of the Trust on a parallel tract as the items listed above (this way we're getting results and building capacity for out years) • The Housing Trust indicates a subsidiary has already been formed for acquisition and rehabilitation purposes and can be used immediately 6) A communication plan for neighborhoods, CDCs and City Council (calendar attached) 7) Future operating needs (bond money cannot be used for operating needs) • Shared database to track Home Again program • Additional rehab techs for City • Housing Trust estimates needing $240,000 in ’06 for operating expenses (2.5 fulltime employees—an additional employee will be added once capacity is built) • Current operating budget of the City’s Land Bank is $625,127 ($211,000 of which is paid by CDBG funds) • City has received $600,000 from partners (Trust, OHFA, Cap Corp)

DRAFT PLAN FOR HOME AGAIN 3/24/06 Mayor Coleman announced Home Again at his State of the City speech on February 23, 2006. The initiative proposes to dedicate $25 million over six years towards vacant housing in Columbus. There are roughly 3,200 vacant houses in the City, 376 of which have been designated as the worst of the worst. The Mayor has proposed a fivepoint plan for Home Again: I. II. III. IV. V.

Enforcement Prevention Acquisition Rehabilitation Demolition

The following is a summary of the City’s efforts to date on each component of Home Again. ENFORCEMENT On Monday, March 13, Columbus City Council adopted legislation that allows the enforcement component of Home Again to officially begin. The effort is collaboration between the City Attorney’s Office, Development and Public Safety. The team consists of Bridget Carty and Frank Gill in the City Attorney's Office; Bill Walker and Lt. Richard Bash in Safety; Melinda Garcia Metz and Erika Clark Jones in the Mayor's Office; and Mike Farrenkopf, Dana Rose and Greg Davies in Development. The team will meet on a monthly basis, or as needed. The legislation allows the City to placard vacant properties that are considered a public nuisance. In the past, the City could only placard properties that were deemed hazardous. Code Enforcement has ordered 2,500 new placards which are being placed on all openings of any vacant property that is considered a public nuisance. This step is extremely critical in that police officers now have the ability to arrest anyone who is inside a placarded structure. An updated list of placarded homes will be e-mailed weekly from code enforcement to the police division’s community liaison officers. In order to track the information, a website is being created to track all relevant information on a vacant property, including applicable overlays and a history of all known offenses that have occurred at the property. Police stress this increased visibility and enforcement will have an immediate impact on neighborhoods since vacant properties are often associated with criminal activity and arson. Neighborhood leaders have expressed strong support for the enforcement issue. Public Safety has secured funds in the model zone for additional tracking resources. Hand-held devices will be distributed to police officers who will have “real-

time” access to all known information on any placarded structure in their patrol area. Officers will be able to update the information via the hand-held device that will be able to access a database. It is the hope of Safety to demonstrate the usefulness of the technology to possibly take the program citywide at a future date. The new initiative functions as follows: 1. A code enforcement officer is given a list of vacant property addresses. The code officer arrives at an address and gets evidence (pictures, written violations, etc) which is then written into an affidavit 2. The evidence that is gathered, along with a history of the property from Police, is compiled and forwarded to Bridget Carty in the City Attorney’s Office. The legal action is published in the Daily Reporter, thus providing written notice to the property owner, a court date is received and the case moves through the system. 3. If the owner does not comply within 30 days, the property is automatically declared a public nuisance and daily fines begin to accumulate (City will seek maximum of $250 per day). Frank Gill has been hired by the City Attorney to track all court dates and make sure that every case is being followed and that all critical dates are being adhered to. 4. If the property owner does not come into compliance, the foreclosure process is initiated, ultimately leading to a sheriff’s sale. As a result of this new process, the City Attorney’s Office expects 3-6 months will be eliminated. More importantly, police will be able to monitor and provide enforcement in a much more aggressive manner, ultimately leading to safer neighborhoods. The following are thoughts from Dan Drake and John Klein in the City Attorney’s Office on Eminent Domain and Receivership. Eminent Domain: To use eminent domain the City must have a public purpose to support the taking. Generally speaking provided the city makes the necessary findings on each property there is an argument to take nuisance type properties for redevelopment. However, a couple of caveats. Because the public's adverse reaction to last summer's US Supreme Court case in Kelo v. New London the General Assembly is looking to cut back on eminent domain powers in Ohio. In addition the Ohio Supreme court is considering these types of taking in the Norwood case. Both may place severe limitations or at least create legal obstacles to these types of takes. Using eminent domain, if the city can legally do so in the future, is not a fast or inexpensive process. I would estimate that for any particular property the process to getting clear title in the city would take a minimum of 2 years. Any program to acquire properties through eminent domain requires expenditures for title searches and appraisals,

court costs and payment of compensation to the property onwer(s) for the market value of the property. Receivership: As to the use of Receiverships as a mechanism to assist the city in acquiring such properties, there may have been a communication disconnect between Bridget Carty of our group and Bill Graves. Bridget and Bill did talk about the initiative generally and the interest in acquiring properties. She did indicate that Cleveland may utilize the Receivership process to some degree, but that Columbus has not. The City has not utilized this procedure, which is a creature purely of the Ohio Revised Code, because it does lend itself very easily in my opinion, to expediting the City's ownership of property or in obtaining responsible ownership by others. Under the statutory scheme, a lienholder, judgment creditor (such as the City which has a judgment for accumulated building code violation fines for example) may apply to the Court, in which a proceeding about an individual property already is pending, for the appointment of a Receiver to take over the management and control of the property, to collect rents if any, to repair the property, or to liquidate it at a judicial sale and pay the proceeds to the lienholders as in a foreclosure sale. Unfortunately, the City cannot be the Receiver, nor can any other person or entity having an interest in the property. This is similar to a Trustee in Bankruptcy having authority over the property of the bankrupt to manage or liquidate it for the benefit of the creditors. If the end goal is to sell the property, the Receiver applies to the court for authority to do so, and usually that means a judicial sale to the highest bidder after an appraisal, publication of notice, etc. A Receivership cannot be the end purpose of a proceeding. The City could not commence a proceeding against the owner of a dilapidated structure against which it had not already acquired some lien, judgment, or other interest unlike an eminent domain proceeding. A Receivership is an equitable remedy used in conjunction with other claims involving property, both real and/or personal. The Receiver appointed by the Court answers to the Court and is entitled to a fee for his services as well. In some cases, the Receiver is also entitled to obtain his own legal counsel who also is entitled to a fee. So is the appraiser where the Receiver asks the court for authority to sell the property. The entire process takes many months, or much longer if the owner decides to contest the process. And, as I said the City would first have to acquire some other judgment to begin with. That's the Receivership process in a nutshell, and if you or the Mayor would like a more fulsome discussion we are available any time. PREVENTION For 2006, City Council allocated $2 million for the Housing Preservation Bond Fund. Of that $2 million, $1.125 million was allocated to the Roof Repair Plus program and another $250,000 was allocated for emergency shelter rehabilitation. The City has initiated 88 roof repair cases. Of those, 6 have been completed; 23 are in construction and

59 are active cases that have not yet reached construction. The average cost of a roof repair is $11,000. The City has flexibility in spending the remaining $625,000. There is a backlog for roof repair projects that the money can be directed to, or it can be added to the $3 million designated for Home Again in 2006 (of the $3 million; $1 million has been earmarked for prevention). One could argue since the money is already appropriated, we could use it to acquire properties in our defined target area. In either case, there will be no issues with spending the money in 2006. Additionally, the bond funds are expected to be spent quickly or designated for other housing components. DEMOLITION A realistic goal for 2006 would be to demolish 8 vacant houses per month for nine months for a grand total of 72 demolitions in 2006. Each demolition averages $8,000, for a grand total of $576,000. The current budget for demolition in 2006 is $142,000. Therefore, an additional $434,000 would be needed to accomplish our goal of 72 demolitions. At this time, we have 20 structures we know we could demolish. We are working with the City Attorney’s Office on possibly having all demolitions attached to a court order. According to Brigdet Carty this could be done in the same or/less time as our current process. On April 1, Development is having a bid opening that will result in a contract that will enable us to perform the demolitions referenced above.

ACQUISITION AND REHABILITATION The recommendation is to turn both components over to the Housing Trust, using the following model: As discussed above, it is recommended that the Enforcement, Prevention and Demolition phases of HOME AGAIN be managed internally by the City. These involve either the use of government enforcement powers or functions that are currently managed by the City in a successful way. By contrast, the acquisition, rehab and sale of properties involve participation in the marketplace, and these functions can be more efficiently and successfully managed by an independent not-for-profit entity. Many US cities have delegated these functions to such entities because: (1) there is a single-focus on the initiative; and (2) there are fewer bureaucratic hurdles.

With that, it is recommended that the City engage The Affordable Housing Trust for Columbus and Franklin County ("The Housing Trust") as its prime contractor to drive the successful Acquisition and Rehabilitation phases of HOME AGAIN. This recommendation also includes The Housing Trust assuming responsibility for the residential portion of the City's Land Bank. STRUCTURE AND ACCOUNTABILITY: A wholly-owned subsidiary of The Housing Trust ("Trust Sub") will be exclusively used to carry out the acquisition, rehab and sales activities of HOME AGAIN. Some of the activities of HOME AGAIN will be handled by employees of the Trust Sub or The Housing Trust, and some will be contracted to others. Several features of the model will ensure accountability by The Housing Trust to the City. First, The Housing Trust will consult regularly with City staff and an Advisory Council consisting of representatives from the administration and City Council. This will result in ongoing progress measurement. Second, the City and The Housing Trust will collaborate in identifying targeted neighborhoods and properties. Third, the City's Housing Division will be used for: writing rehab specs; making progress inspections; and approving eligible contractors. Finally, the external independent audit of The Housing Trust and Trust Sub is conducted with the oversight of the City Auditor, and the audit report is incorporated into the City's audit. PROCESS: Acquisition: Redevelopment priorities will be identified by the City, and the Trust Sub will conduct feasibility assessments. The Trust Sub will also identify opportunities for HOME AGAIN. Properties could be acquired by the City through enforcement actions, and then deeded to Trust Sub; or properties could be purchased directly by Trust Sub from willing sellers. Such purchase prices would have to be market-justified in the context of the overall goals of HOME AGAIN. It is generally believed that targets should be narrow rather than scattered; e.g. increased synergy from redeveloping several houses on a street. Rehabilitation: City Housing Division staff will write the rehab specifications for each property. These specifications will only address issues of code violation -- not cosmetic changes. The Trust Sub will select a contractor from the City's approved list to complete the rehab. The Housing Trust is sensitive to the possible roles for Community Development Corporations based in or near targeted areas. These CDC's are already customers of The Housing Trust. At the same time, it is generally believed that many CDC's do not have enough capacity to produce adequate results for the program. Consequently, a range of for-profit and not-for-profit sub-contractors would be considered. Sale: Either before, during or after the rehab process, the Trust Sub or its agents will market the properties for sale.

Alternative Approach: An alternative model could be used in instances where vacant houses are unusual in a neighborhood. In such cases, a property could be transferred to an eligible buyer who would be directly responsible for the rehab. The buyer's bank would combine its loan with rehab funds from the Trust Sub, and the bank would be responsible for disbursements and ensuring completion. STAFFING AND COST: It is preliminarily estimated that the Trust Sub will carry overhead operating expenses of $240,000 during the remainder of calendar 2006 -exclusive of third party contracts that would be associated directly with the acquisition, rehab, maintenance and sale of property. Mark Milligan will have executive management responsibility, and it is anticipated that 2.5 FTE's will be added at the outset -- increasing to 3.5 FTE's when justified by achievement. READINESS TO PROCEED: Because the Trust Sub has already been formed, the program could be implemented in early April. (Under this scenario, portfolio management, i.e. upkeep of properties, would be the responsibility of the Housing Trust and its subsidiary) In addition to the model above, here is some research on what other cities have done when weighing the pros and cons of this issue: Land Bank Research Re: Pros and Cons of Land Bank Authorities Most urban cities are burdened by a growing number of vacant, tax-delinquent properties. Over the past 30 years, a number of land banking programs were initiated to curb this trend. The Local Initiatives Support Corporation (LISC) published a study in 2005 of 5 metropolitan areas with formalized land bank programs considered to be successful in their revitalization efforts: Atlanta, Cleveland, Genesee, Louisville and St. Louis. Each of these cities varies in their amount of vacant properties, but it’s interesting to note that 3 of the 5 cities (Atlanta, Genesee and Louisville) use authorities to manage their land bank program. St. Louis uses an authority for the sale and redevelopment of its land bank property. Only Cleveland operates completely within local government. However, Cleveland’s program limits itself far more than the other programs by only banking unimproved vacant land. Cleveland State University conducted a study in 2005 that included all of the above cites with the addition of Baltimore. Baltimore has received recent notoriety in the land bank industry as successfully revitalizing vacant properties. Baltimore is interesting in that is does not have a formalized land bank program. Instead Baltimore formed a partnership with the Baltimore Economy and Efficiency Foundation and the Greater Baltimore Board of Realtors. They implemented an initiative called Selling City Owned Properties Efficiently (SCORE). This program

offers incentives to local realtors that represent and sell City-owned property. This program uses realtors much the way St. Louis uses its authority in that a nongovernmental organization is doing the selling. Based off of the above studies, below are some the general pros and cons to using an authority to manage a land bank program. PROS: 1. Maneuver through the Real Estate Process more efficiently a. A non-profit authority, with its own corporate structure and bylaws, in collaboration with local government, can acquire and sell property much more quickly and efficiently because it is not subject to many of the ordinances that a government agency is. b. A non-profit authority has more flexibility to negotiate real estate pricing and terms on a case-by-case basis in the best interest if the City. Local government tends to lack the ability to efficiently negotiate land sales. 2. Qualify for more funding a. A non-profit authority is eligible for funding from a larger array of funding sources for the use of acquisition, rehabilitation and disposition of vacant properties. This allows the authority to exist on more than just local government funding. b. Local government is limited by nature in the type of funds it can receive for redevelopment projects. 3. Coordinate independently with government Agencies a. Vacant property initiatives require strong communication between local, county and state government. Authorities, in some instances, are able to bridge gaps between the various levels of government to facilitate the government foreclosure process, as well as, needed changes in laws and regulations concerning the land bank. CONS: 1. Lack ability to manage land bank properties a. Many authorities are great at the acquisition and disposition of property, but are poor at managing the properties while in their possession. This leads to further blight and community frustration. b. Many authorities also lack the ability to manage properties that are going through the rehab process. A land bank program is only successful if it is able to get the properties sold and rehabilitated. Often properties are sold to developers who either never start or complete the rehab process. In this

instance, the authority needs to have the ability to revert the property back into authority ownership. c. The above tends to be a problem to both authority and government owned land banks. 2. Lifespan of authorities can be short a. As a general rule, land banks need 5 years to demonstrate success. Reasons being that is takes time to work through any foreclosure process, as well as, to complete a significant number of rehabs and new builds. Many authorities are legislated out of existence, due to a lack of awareness of the real estate process on the part of local government, before they have had a chance to demonstrate their success. Sources: •

Land Bank Authorities: A Guide for the Creation and Operation of Local Land Banks. Frank S. Alexander, Local Initiatives Support Corporation (LISC), April 2005.

•

Best Practices in Land Bank Operation. Maxine Goodman, Levin College of

Urban Affairs,

Cleveland State University, June 2005. ATTACHED IN A SEPARATE DOCUMENT IS A LEGAL SUMMARY FROM BRICKER AND ECKLER ON ANY POTENTIAL PROGRAM