Vacant, abandoned and blighted properties have challenged community developers, housing advocates, tenants and municipal officials for years. Recently, the Center for Community Progress (www.communityprogress.net) brought together practitioners from Massachusetts and two other states to address the challenges posed by these properties through the Community Progress Leadership Institute (CPLI), a four-day symposium held at Harvard Law School.   

Three communities from Massachusetts (Brockton, Fitchburg and Lawrence) were chosen through a competitive process to participate in CPLI last month, along with MACDC, the MA Attorney General’s office, and representatives from cities in Missouri and North Carolina.  Each Massachusetts city delegation included a representative from a CDC (Neighbor Works of Southern MA in Brockton, Twin Cities CDC in Fitchburg, and Lawrence Community Works in Lawrence), along with city officials from local departments including City  Solicitors, Community Development Directors, and representatives from departments responsible for code enforcement, public health, and tax collection.  Most of the sessions focused on the numerous challenges associated with blighted properties and creative strategies for addressing them.  These included sessions on using data and analyzing markets; property tax systems and receivership; code enforcement, and land banking.  The Institute also offered some valuable sessions on the type of collaborative leadership needed to solve these challenges. The Institute culminated in State-specific planning sessions, where all the participants from Massachusetts could discuss how to take what we have learned and shared back to our communities.

Some of the key take-aways for me included:

Understanding markets is key to identifying successful strategies for a property or a neighborhood.  Markets are a driving factor when people consider where to live, invest, or build.  All strategies to address individual properties or neighborhoods are affected by the market, but markets are not all-powerful.  There are strategies than can influence the market.  Effective strategies are driven by data that can tell you how well the market is working and what affects the market.  There are national data sources (such as the Census and the U.S. Postal Service), local data sources (such as property records and tax records), and “point-source data”- data you can collect on individual properties.  Once you have the data, you can collaborate with others, in City government and outside of it, to develop a neighborhood action plan.

Code enforcement strategies should be applied strategically based on market factors.  Strategic code enforcement involves understanding your inventory of blighted properties, using data to identify a menu of remedies, and making market-driven decisions to deploy scarce resources.  This can be effective in all but the weakest markets.  In very weak markets, a strategy of boarding up vacant buildings and cleaning up illegal dumping may be appropriate.

Court-Ordered Receivership has proven to be effective tool.  Under Receivership, a Court appoints a receiver to manage blighted properties (vacant or occupied), spend on necessary repairs, and put a lien on the properties for the costs incurred.  In a middle-market neighborhood, where properties have value, the threat alone of Receivership may be enough incentive for a property owner to make the necessary repairs.  If there are a large number of blighted properties in a neighborhood, Receivership may be the best strategy for addressing blight.  Through the Attorney General’s Abandoned Housing Initiative, Massachusetts has aggressively addressed vacant properties in a number of communities.

Property tax systems need to be efficient, effective, and equitable.    An efficient system establishes clear timelines for each stage of enforcement, including what a property owner must pay and when the owner can redeem the property. An effective system yields maximum payments and avoids abandonment and deterioration.  An equitable system provides built-in circuit breakers for targeted populations (such as elderly, disabled and low-income people), with a clear program of hardship payment plans for certain properties.  While some municipalities sell their tax liens for an immediate infusion of cash, this means losing control of the properties and foregoing the interest payments associated with tax delinquent properties.

You don’t need to have a Land Bank to do land banking.  A Land Bank is a public entity that focuses on the conversion of vacant, abandoned, and tax-delinquent properties into productive use.  It can be an effective tool where other tools fail: when code enforcement is not effective because property owners have no economic incentive to invest in repairs, and where owners who acquire properties auctioned due to tax foreclosure repeat the cycle of disrepair.  Syracuse, New York pursued an aggressive strategy of tax foreclosure, resulting in a significant payment of delinquent taxes, a portion of which were used to fund the operation of the Greater Syracuse Land Bank to acquire many of the properties whose owners continued to neglect both their properties and their tax obligations.  While Massachusetts does not have State enabling legislation to allow municipalities to establish Land Banks, many communities have Redevelopment Authorities with untapped power and potential to acquire and convert properties to productive use, i.e. to “land bank”.

It all needs to work together.  On the last day of CPLI, all the participants from Massachusetts met to discuss their priorities and how they could work together to implement the strategies discussed over the prior three days.  We discussed the need for improved data collection systems, ideas for incentivizing compliance with code enforcement, strategies for dealing with tax title properties, and how to use the State’s Receivership statute to greater effect.  Within each City, all agreed that a more systematic and integrated system for addressing blighted properties can be accomplished through the cooperation of the various local stakeholders.  Statewide, we agreed that re-convening the participants to discuss strategies and share progress would be helpful- for the three communities involved in CPLI and other municipalities statewide.  MACDC and the MA Attorney General’s office agreed to convene the group and to organize a training on Receivership, as the first steps in an ongoing process.

Each vacant, abandoned and blighted property has a story, and typically its condition results from a number of inter-related and reinforcing factors- a weak real estate market, a neglectful property owner, and/or a lack of effective government response. By approaching the problems associated with these properties in a data-driven, collaborative, and aggressive manner, many of these properties can be turned around- resulting in better living conditions for residents, stronger neighborhood markets, and more housing for Massachusetts residents. 

The most important decisions affecting how much the State spends on affordable housing will be squarely on the shoulders of the new Governor.  The State’s “Capital Budget”, which arguably has a bigger impact on affordable housing than what is commonly called the “State Budget” (and is more accurately called the “State Operating Budget”), is something over which the State Legislature has no control.

The State Operating Budget contains the funds appropriated by the State Legislature every year for all matter of State spending requirements.  This budget is absolutely essential for meeting a myriad of needs, including the need for affordable housing.  The Massachusetts Rental Voucher Program (MRVP) provides rental assistance so that very low-income families can afford to live in an apartment.  Other programs help individuals and families avoid homelessness, or helps them find housing and shelter if they become homeless.  The State cannot house families in need without these programs and other essential programs funded through the State Operating Budget.

Likewise, adequate funds from the State’s Capital Budget are essential to meeting the affordable housing needs of families across the State.  And in fact, the programs that provide the dollars for the actual construction or rehabilitation of this housing come primarily from the Housing Capital Budget, or as they are commonly called, bond funds.  Public housing authorities rely on bond funds for necessary improvements to the aging public housing stock.  Private affordable housing developers, including many nonprofits and CDCs, rely on bond funds for both the production and preservation of affordable housing.  Providers of housing for persons with disabilities rely on these bond funds as well.

Thus, the amount of the State’s Housing Capital Budget will be among the most consequential decisions facing Governor-Elect Baker in 2015, and each year thereafter.  At the MACDC Convention on October 25, then-candidate Charlie Baker made this pledge with regard to the housing capital budget: “We will not spend any less than the $190 million that is already on the table.”  Getting this pledge is a great first step!  But we have our work cut out for us - to hold the new Governor to his pledge to not cut the housing capital budget, and to advocate for a much-needed increase.

Like the State Operating Budget, the State’s Capital Budget originates with the State Legislature, through passage of a Housing Bond Bill.  While the operating budget appropriates specific dollar amounts to be spent on programs, however, the capital budget establishes overall spending caps, within which the Governor can raise funds through the sale of bonds.  In 2014, the Legislature passed, and Governor Patrick signed, a $1.4 Billion Housing Bond bill, establishing spending caps for nine separate housing programs for what is expected to be a 5-year period.  This was the largest housing bond bill in the State’s history, and provided authority to the Governor to spend what is needed on important housing programs.  It doesn’t take a complex algorithm, but merely a calculator, to figure out that $1.4 Billion over 5 years comes out to $280 million per year.  Yet Governor Patrick’s most recent Housing Capital Budget, released for the fiscal year that began July 1, provides an increase from the prior year to just over $190 million for the current year.  Why the mismatch?

In 2014, the Governor, through the Executive Office for Administration and Finance (A&F), established a 5-year Capital Investment Plan that covers the broad spectrum of investment categories to be funded through the sale of bonds.  These include housing, economic development, transportation, health and human services, energy and environment- to name a few.  From this plan, the Administration sets spending limits (bond caps) for the current fiscal year for each of these categories.  Therefore, in any given year, the amount of the bond cap for housing is a function of two determinations by the Governor: first, the overall amount of funds that the State spends in the capital budget, and second, the relative share of that amount to be spent on housing.  Within the caps established by the Housing Bond Bill, the amount of the housing bond cap is totally within the Governor’s sole discretion.

How has housing fared over the years in the capital budget?  Well, in fiscal year 2007 (the year that started July 1, 2006), then-Governor Romney’s last capital budget set the housing capital budget at $147 million.  Since then, in the capital budgets established by Governor Patrick, we have seen an increase, to where the housing capital budget (for fiscal year 2015) currently stands at $190.5 million, an increase of just under 30% over 8 years.

Of course, the dollars are spent on specific programs that allow important housing projects to go forward, which is why we ask for more money. (Massachusetts FY 2015 Housing Capital Budget)  The Affordable Housing Trust Fund, the Housing Stabilization Fund, and the Housing Innovations Fund help address the pipeline of affordable rental and homeownership development proposals that are forced to wait too long, often several years, for commitments of state resources.  The Facilities Consolidation Fund and the Community Based Housing Program expand housing choice for persons with disabilities.  The demand for funds under these, and other, programs far exceeds their supply.  Furthermore, the State dollars awarded leverage tens of millions of federal dollars from low-income housing tax credits and other programs, and locally-allocated dollars as well.  This is why each year MACDC, and our allies, advocate with the Governor for more money in the Housing Capital Budget.

There is one thing we know about Governor-Elect Baker, from his role in a prior administration as the Secretary of Administration and Finance.  He knows that when it comes to programs to fund affordable housing development, the capital budget is the key.  And so do we.

On a warm, sunny morning in late September, approximately 35 people gathered to celebrate the Open House for Westhampton Woods, Phase II, a 8-unit affordable housing development for seniors in the hilltowns of Western Massachusetts. Sponsored by Hilltown CDC, the construction of the second phase is the culmination of a community effort that began in 2000 when local residents, organized through the Westhampton Congregational Church, approached Hilltown CDC for assistance. The success of Phase I, completed in 2005, led to development of this second phase, bringing the total number of homes on this lovely wooded site to 15.

The successful development of any affordable housing in Massachusetts is challenging. Land suitable for building can be hard to find, restrictive zoning laws can be a barrier, and sponsors must often queue up through several competitive funding rounds to access the subsidized funds required. The development of rural housing adds an additional layer of challenges and impediments, especially in a town like Westhampton, which has fewer than 2,000 residents. Municipalities typically have limited capacity, and few dollars to contribute. Rural areas lack the infrastructure (water, sewer, and roads), and the market rents in these areas tend to be lower. Rural projects tend to be smaller so that they can adhere to the rural character of the town in which they are located and because neither the community nor the market will support a large, dense development. While smaller projects can have some advantages (such as faster permitting and wood-frame construction) they lack certain economies of scale. More significantly, low income housing tax credits - the primary source of subsidizing affordable housing in MA- are simply not an available source for small projects.

Yet affordable housing is urgently needed in all communities in Massachusetts, including rural communities. Rural communities face a range of housing challenges from decreasing and aging populations, an aging housing stock and, in some regions, high demand pressures from second home buyers. Incomes in rural areas tend to be lower, exacerbated by limited or no access to public transportation and few employment opportunities, and rental housing in some communities is almost nonexistent.

MACDC has joined an effort initiated by the Massachusetts Housing Partnership (MHP), a quasi-public agency, to take on the challenges associated with rural housing in Massachusetts. MHP has brought together CDCs and other nonprofit organizations, State agencies, regional planning agencies, and local officials to identify and advocate for strategies to address these challenges. We expect recommendations to be forthcoming this fall, to the incoming Governor and to the MA Department of Housing and Community Development (DHCD).

Despite the challenges, we gathered to celebrate Westhampton Woods. This was especially exciting for me, as I was the Housing Director at Hilltown CDC in 2000 when the residents approached the CDC and asked for help in developing senior housing. I can vividly recall those early meetings in the Church basement, where all we had was the “who” (local volunteers and a responsive CDC), the “what” (senior housing), and the “why” (seniors who could no longer maintain their homes had nowhere in town to go), but no idea of the how and the where and the when. On this bright September day almost 15 years later, at 13 Main Road in Westhampton, those questions were answered.

The challenge facing the Commonwealth of Massachusetts now is to provide a path to answering these questions for more rural residents. At the Westhampton Open House, DHCD Undersecretary Aaron Gornstein noted the importance of housing options for seniors, and pledged DHCD’s support for smaller-scale rental projects. Rita Farrell from MHP added that this was a model they would like to see replicated in many rural communities. When support from State agencies is combined with resident initiative and a capable nonprofit developer, our Commonwealth has the potential for many more celebrations like the one in Westhampton.

Massachusetts Governor Deval Patrick released his capital budget for Fiscal Year 2015, and the Housing Capital Budget is increased by $11 million over the FY14 amount, now totalling just over $190.5 million. The capital budget for privately-produced housing (not including public housing) is now at just over $100 million, the first time it has reached this milestone in the eight years of the Patrick Administration. This is good news!  

For FY15, there are significant increases for the Housing Stabilization Fund, the Housing Innovations Fund, the Facilities Consolidation Fund, and the Home Modification Fund. MACDC, in collaboration with CHAPA and our allies in The Building Blocks Coalition, have long advocated for an increase in the Capital Budget and we are very pleased to see such a significant increase this year. It will directly result in the production of more housing for families who desperately need it.

Click here for a spreadsheet with the detail of the FY15 budget, along with a comparison of how the housing capital budget has varied over the past eight years.