number of vacant properties in St. Paul is on the rise due to the growing
number of foreclosures. Here's a list anyway:
http://www.stpaul.gov/depts/dsi/codeinsp/vblist.html
There are a number of worthy measures afoot to stem the growth of foreclosures
and curtail the various lending and property scams that are causing the
alarming rise in vacancies. I have nothing but praise for them all. I'm
having a hard time, however, getting anyone to pay much attention to the blight
that occurs to the neighborhood, after the fact, when the vacant properties
begin to deteriorate. That's my issue.
The bank that ends up in possession of the paper asset after the foreclosure is
not typically equipped to maintain the physical property nor keep it occupied.
I'm not faulting the bank, they just don't keep a staff of landlords and
property managers on the payroll to provide for remediation and tenancy. To
the bank, the property is simply one piece of paper in a big stack of mortgage
assets and, as long as they continue to pay the property taxes, their asset is
protected. They do have to keep the grass cut and shovel the sidewalks,
though, don't they? And I confess I don't even know how these services are
accomplished or enforced. Anyone? Because I think it would provide a
foot-in-the-door. (read on)
Councilman Thune's office has said they're placing their faith in movements by
bank shareholders to pressure banks into short-selling these properties to
avoid taking the hit for depreciation. I just don't see that happening, and I
don't think it's necessarily good for the housing market, either.
The Community Stabilization Project has had incidental success in pleading with
the bank to continue the current tenancy, especially in the case of "straw
buyer" scams where the tenant hasn't even received the required notice (not the
bank's fault, either, but. . .). Far more often than not, however, the bank
doesn't have anyone to send a rent check to, and isn't interested in putting
anyone on the payroll to start collecting them.
In the meantime, vermin begin to bore their way into the buildings and the
property begins the lengthy descent into condemnation, devaluation, and
demolition. Drug traffickers have been known to create clandestine entries
into these properties to use them for warehousing and sales centers. Nearby
residents become disgusted and frustrated and the tax base stagnates.
What to do. It seems entirely do-able to form a sort of non-profit, NGO
property management service that would provide for remediation and continuing
occupancy. Such a service would generate a margin of revenue for the bank
after paying its operating expenses. It would also retain the value of the
bank's asset. The hard part, of course, is creating some incentive for the
bank to pay attention to remediation and occupancy, even if it's made easy.
It's a problem that's not going away, and I think it's time to formulate a
community response in recognition of the fact that the neighborhood itself is
ultimately a victim of these easy-credit and "straw buyer" scams.
I don't see the free market correcting itself in this case. Or, perhaps
there's simply a regulatory obstacle that needs to be removed to prove the
bumper stickers right.
Guy Western
the West Side