Although faced with daunting challenges, several New Jersey cities have launched efforts to help undo the social and economic blight caused by a proliferation of vacant housing.
In a state where housing markets are still struggling and foreclosures continue to take homes, municipal leaders are trying to promote a turnaround. The approaches vary, but the goals are the same: Provide opportunity for homebuyers and reduce the blight from abandoned properties.
In Trenton, new Mayor Eric Jackson has detailed a five-pronged approach, anchored by a
homestead program that would allow first-time homebuyers to acquire city-owned properties in designated redevelopment areas at very little cost, perhaps as low as $1.
Plans for the program draw on a database that for the first time provides hard numbers for the city’s most visible problem — abandoned and deteriorating buildings in many neighborhoods, virtually from the Statehouse outward.
In Irvington, new Mayor Tony Vauss is following through on promises to redevelop devastated blocks along 22nd Street, beginning with demolition of three of 19 abandoned homes in the area in the past two weeks.
“We are clearing these eyesores so that new development can occur in our town, bringing with it safer neighborhoods, cleaner blocks, and more tax revenue,” said Vauss, who watched the demolitions.
In Newark, organizers of an initiative involving vacant properties in the West Ward last month announced the redevelopment of its first five single-family homes, in the area between Clinton Avenue and South Orange Avenue. In all, the reconstruction has targeted 52 city-owned properties and 40 abandoned by private owners.
In the words of one supporter, the measures aim to “staunch the bleeding” as the state’s urban areas struggle to regain their economic footing and social cohesion. Some appeared to be rebounding before the Great Recession, but the prolonged economic downturn led to layoffs of police and reductions in municipal services, along with business closings and foreclosures.
Three weeks after the West Ward announcement, new Mayor Ras Baraka joined developers to break ground on 24 units of two- and three-bedroom condominiums called The Lofts at Lincoln Park. Classified as affordable housing, the units will have a top price of $159,000, and were partially funded through the state Mortgage and Housing Financing Authority.
On Oct. 21, Jersey City Mayor Steven Fulop joined developers to break ground on the first of three towers planned next to the PATH station, the first with 538 rental units. The two subsequent structures will be even larger. At 70 stories, one would be the tallest residential property in the state.
State’s Housing Market Still Lags
The burst of activity comes at a time when New Jersey’s residential market shows signs of life, but continues to lag behind the national recovery from the recession.
New Jersey housing sale prices increased 3 percent in the 12 months ending in September, while the national rate was 5.6 percent, according to CoreLogic, an Irvine, CA, analytics firm. Home values here remain 20.4 percent below their pre-recession peak, fourth worst among the states, the firm found.
There are few places where that is more evident than in Trenton. Mayor Jackson’s housing program follows the release of a report by Isles Inc., a local community development and environmental organization. Over the summer, the group spearheaded an effort to map the city’s abandoned properties.
The results, released last month, showed 6,242 properties in the city — 23 percent of its total, including 16 percent of its buildings — are completely vacant. The interactive map can be accessed here.
“It’s important to have a system to enable everybody to understand what is happening,” said Martin Johnson, Isles’ president and chief executive officer. The map will be updated regularly and more information added about individual properties, he said.
“Now we have a tool to be begin looking at what would work best in specific neighborhoods throughout the city,” said Monique King-Viehland, Trenton’s director of housing and economic development.
The homesteading program would make houses available cheaply to first-time buyers willing to make necessary repairs and use the homes as their primary residence for 10 years, she said.
Any property going for $1 or thereabouts would require significant rehabilitation, so buyers would have to demonstrate their wherewithal to do the job, King-Viehland said. In exchange, they would get a five-year tax abatement on the value of the repairs.
“We’re looking to launch the program before the end of the year, and we’re taking registrations for applications now,” King-Viehland said. “We probably have over 100 people registered already.”
The registration form for the homestead program is available here.
Another measure would piggyback on recently strengthened state law, requiring owners of vacant property to register, maintain the property and pay escalating fees. The state also allows communities to require banks or other owners of foreclosed properties to designate an in-state contact to handle maintenance and other issues.
Trenton also plans to hire a vacant property coordinator, and identify buildings to board up, maintain or demolish, according to King-Viehland. The final piece will be a study of market conditions by New Jersey Community Capital.
The city hopes to provide homesteading opportunities around already designated redevelopment areas such as “Block 3,” opposite the Sun Bank Arena at Route 129 and Hamilton Avenue in the Roebling district, King-Viehland said.
“There are properties right around it that are owned by the city” and could be available for prospective homesteaders, she said.
Although the homestead program is aimed at a specific, limited market of individual buyers, the organizers acknowledged it already has prompted many inquiries from developers, investors and real-estate interests, some beyond Trenton.
They are aware of the pitfalls in an era when private investors like American Homes 4 Rent, Starwood Waypoint and the Blackstone Group have gobbled up huge shares of housing in some major markets. But some outside interest would be welcome.
“We obviously don’t have the problems of Blackstone, but if we’re successful, we might,” Johnson said. “We would like to see Trenton be a place where a growing number of investors and developers take an interest.”
“Our location is still extremely advantageous,” King-Viehland said, noting the city offers tax credits of up to 40 percent for development in excess of $5 million.
Local real-estate manager and developer Will Holly is optimistic that the new housing initiatives will boost the local economy.
Although his mother is a city councilwoman, Holly acknowledged that local politics can be difficult to negotiate. The loss of jobs, coupled with tight mortgage lending, has made it difficult for prospective homeowners, he said.
Widespread Interest from Developers, Investors
Even so, he said, his firm, Holly Nance Property Solutions, is seeing significant interest, which the mayor’s approach could fuel. Aside from buyers, Holly said, he has attracted investors from as far away as Hawaii and several foreign countries, who are finding opportunities in the city.
Real-estate data suggest 150 homebuyers moved into Trenton last year, “and my company was responsible for a large majority of those people,” he said. While that group may not necessarily be customers for homesteading, private and public housing efforts could complement each other, he said.
Committed local developers could help the city reach some of its housing goals, Holly said. But, like the municipal approach, he primarily is picking up properties already on the market after foreclosures or the departure of renters.
Funneling homesteaders into vacant properties makes sense, because nobody is being displaced as the units come back on the tax rolls, Holly said.
“The age-old question for redevelopment is… where do the people go who are here now?” he said.
King-Viehland acknowledged that all the measures announced so far aim to address “situations that have already taken place,” such as existing blight, rather than providing aid to current homeowners or renters struggling to keep roofs over their heads.
“We are open to having conversations with a variety of partners,” and the city might announce additional measures next year, King-Viehland said. It is a given that “our resources are limited” and addressing other housing issues will require outside help, she said.
Like other urban areas, Trenton faces “a huge set of issues,” but rehabbing and maintaining properties is a good place to start, said Staci Berger, president and chief executive officer of the Housing and Community Development Network of New Jersey.
“I’m not sure how much any municipality can prevent the foreclosure crisis, which is what leads to vacancy problems in a lot of communities,” she said.
But the Jackson administration is trying to prevent the effects from snowballing — abandoned and foreclosed properties contribute crime, health and environmental threats and declining property values, she said.
“It’s better to stanch the bleeding than to let the patient keep dying,” said Berger, “I think they should get a lot of credit for stepping up with these programs.”
Johnson agreed that the mayor’s initial approach is “not focused so much on preserving homes that are at risk of abandonment as those already abandoned.” But he added, “Stabilizing property values is an important first step.”
“These are just the beginning of a set of tasks that the city and others will pull together on,” much as nonprofit organizations and funding helped Isles with the mapping work, he said.
But any revitalization effort must contend with the 800-pound gorilla in the city, since “the state owns 2½ square miles out of seven in Trenton,” including “an enormous amount of asphalt,” Johnson said. The state could help redevelopment simply by putting some of its vast parking lots back on the tax rolls, he said.
Even when government employment was higher and parking spaces crammed, “I never understood why there were all these surface lots and so few parking garages,” he said.
“We’ve had some conversations with the Treasury Department about the parking lots,” King-Viehland said, adding it is too soon to anticipate the outcome of those discussions.