Concept Paper for Capital Region Vacant Building Fund

CONCEPT PAPER FOR CAPITAL REGION VACANT BUILDING FUND

Sample Project: Take Stock in Your Block

Note: Sheridan Hollow, like many inner city neighborhoods in the Capital Region, has vacant housing stock in need of repairs. Subsidies are needed as the cost of repair exceeds market values. A program to rehabilitate vacant properties for occupancy by owner occupants or as affordable rental units meets several Sheridan Hollow community goals, including reduced vacancy, incentives for local ownership, incentives for neighbors to buy adjacent vacant properties, development of a variety of high quality housing types.

The following program was designed with Sheridan Hollow needs in mind, but crafted as a regional proposal to make potential funding awardsmore viable.

Take Stock in Your Block

For a regional economy to be vibrant, strong, prosperous and creative, its urban centers must include quality neighborhoods of choice. Businesses are more likely to locate in areas that will attract workers and customers – places that are safe, attractive, and offer a range of desirable and affordable housing options. More quality housing is needed in our urban areas to serve existing residents as well as accommodate the influx of employees from Start-Up NY, Global Foundries expansion and other tech companies. In addition to providing a quality living experience for all residents, healthy cities relieve pressures of sprawl. Open space and wise land use improve the regional economy and quality of life. The Capital Region’s Sustainability Plan embraces this vision for our urban areas.

This project addresses the housing blight and abandonment in the core urban areas of the Capital Region (as found in most upstate communities) by jumpstarting the market transactions of small residential and/or mixed use properties. The impact of such redevelopment in several targeted areas through this promotion/retention strategy will increase market values thereby leading to the availability of conventional financing, while also preventing the further erosion of urban cores and protecting the investments of current stakeholders who live and work in these communities. The result will be mixed-income, and where possible, mixed-use neighborhoods that redevelop the housing stock and appeal of urban communities while building a demand for local contractors and suppliers in the effort.

Statement of Need:This project implements the goals of the Capital Region’s Sustainability Plan by addressing issues in this region’s low-income and transitional neighborhoods. Our urban centers have been severely impacted by the foreclosure crisis and economic downturn, leaving hundreds of 1-4 family vacant buildings festering in each city. The Troy Vacant Property Registry has listed close to 600 properties as vacant; the number is higher in Albany and Schenectady.

Many of these properties are in deplorable shape; they are typically older, multi-family buildings that have experienced years of disinvestment and deferred maintenance. The yards and sidewalks are often trash-filled and unsightly. In many cases, these buildings have been stripped of copper plumbing and fixtures.

The costs of purchase and rehabilitation of these homes often exceed their market values, making conventional financing virtually impossible to obtain. Even demolition of these properties can be quite costly – typically around $30,000 - $40,000 for small buildings. The cost to build new housing on vacant lots equals or exceeds the cost of rehabilitation, and by building new, the community loses historic housing stock that gives the region its character. Consequently, vacant buildings will continue to exert blighting influences, driving away potential developers, businesses and homebuyers from those very neighborhoods that would benefit most from investment.

A new tool that is available in the region are the Albany County, Schenectady, and City of Troy Land Banks. Land Banks assist with site control and building stabilization, but have not had sufficient funding to complete the rehabilitation of the properties. This program proposes to work with the Land Banks to find responsible owners and sufficient resources to bring the buildings back to occupancy.

“Take Stock in Your Block” Proposal: A partnership of community development groups (the Community Development Alliance of the Capital District) proposes the creation of a program to make vacant properties viable again. “Take Stock in Your Block” would incentivize new and responsible ownership and the rehabilitation of 60 units in concentrated areas in Albany, Troy, Schenectady, Cohoes, and Green Island. Buildings will be available for owner occupancy and/or for purchase by nearby local owners -- people who have already invested in their neighborhood and therefore have the most at stake in the success of their neighborhood. This program is modeled on a successful Take Stock in Your Block project in 2003-‘04 in Troy and formalizes a property acquisition and rehab process that many commercial property owners use on Central and Delaware Avenues in Albany to ensure that their businesses are not surrounded by blighting, vacant buildings. This program also includes funding for demolition of fifteen buildings that are too expensive to repair and the disposition of their lots made available to adjacent property owners as side lots.

Impact of the proposed Capital Region Take Stock in Your Block pilot program:

• Serve as a model of regional cooperation while addressing many of the region’s most pressing challenges.
• Rehabilitate 60 units of housing located in our cities.
• Create jobs and economic activity through the utilization of locally-owned businesses, including small micro enterprises owned by low-income people, minorities and women.
• Encourage local owners to purchase nearby vacant properties and develop viable plans for rehabilitation or demolition, whichever provides the best and most appropriate neighborhood use.
• Improve area property values that will lead to increased private investment, leveraging additional resources.
• Transform blighted areas into vibrant communities that appeal to new businesses and others to invest locally.

Programmatically, Take Stock in Your Block will:

• Provide grant funding, private financing and support incentives to neighborhood residents to defray the high costs of purchase, rehab, and/or demolition, including:
• Repair grants of up to $50,000 per unit, which will leverage private financing. This subsidy is needed to incentivize rehab investment that exceeds existing market values.
• Reasonable acquisition and construction financing from the Community Loan Fund of the Capital Region, which serves as the region’s premier Community Development Financial Institution (CDFI) lender and from private lenders.
• Weatherization and NYSERDA HPwES programs to make the units more energy efficient.
• Place-based Section 8 certificates (potentially available in Albany through the Housing Authority).
• Landlord training (currently offered by housing agency partners).
• Construction advice from partners such as TAP, a not-for-profit architectural firm that specializes in urban rehabilitation projects.

• Leverage the work of the Albany County Land Bank, Schenectady County and the City of Troy Land Bank. Land Banks can acquire and stabilize vacant properties – the Take Stock program will provide the financing needed for rehabilitation that will bring the buildings back to re-use. Take Stock will ensure that the buildings will be owned and managed by local, near-by property owners who receive landlord and property management training that will make their ownership successful.
• Be administered in each city by community development partners committed to their city’s revitalization. These grassroots, not-for-profit organizations have long histories of community revitalization activities and successes.
• In Albany, oversight will be done by the Community Development Alliance (Affordable Housing Partnership, Albany Community Land Trust, Community Loan Fund of the Capital Region and United Tenants).
• In Troy, oversight will be provided by the Troy Rehabilitation and Improvement Program (TRIP), Inc.
• In Schenectady, the program will partner with Better Neighborhoods and the Schenectady Land Trust
• In Green Island and Cohoes, oversight will be provided by partner Albany County Rural Housing Alliance.

Organization Background

The Affordable Housing Partnership will serve as the lead agency for this project on behalf of the Community Development Alliance of the Capital District. The Alliance is a membership organization of the most experienced community development agencies in the region that have come together to have a greater regional impact on the issues that our urban areas share – need for reinvestment in infrastructure, housing, commercial areas, small businesses, and re-use of abandoned, vacant buildings. Alliance members include:

Affordable Housing Partnership of the Capital Region

Albany Community Land Trust

Community Loan Fund of the Capital Region

United Tenants of Albany

Each of these organizations has between 20-40 years of experience in managing government contracts for community development activity. This collaborative effort permits a sharing of expertise and experience in a wide variety of community development activities.

Challenges:

A major obstacle to redevelopment of abandoned buildings is the financial conundrum that the rehabilitation costs of many of these buildingsare higher than their post-rehab values. Part of the cost can be attributed to the expense of lead abatement and asbestos removal. Another obstacle has been diverse ownership and the scattered site nature of vacant properties. Through use of municipal incentives such as vacant building fees, and by using Land Banks to take control over vacant properties, properties can get in the hands of developers who are prepared to move forward with redevelopment. Otherwise, regional or state-level regulatory and legislative obstacles should be minimal -- buildings selected will not require zoning changes and will be able to be rehabilitated to state and local building codes.

Feasibility:

We estimate that up to $50,000 per unit is needed as “development subsidy” -- funds that address the gap between the cost of rehabilitation to code and the market value of a building after rehabilitation. Traditional sources of government subsidy funds do not easily work for these kinds of rental rehabilitation projects. The primary rental rehab program available in New York State is a tax credit project that works best with 30-50 units in one location. Other funding requires very low income occupancy to be competitive, and while we support affordable housing development, successful neighborhoods need a mix of incomes, tenure and uses (and not concentrated poverty) to thrive. Flexible funding is needed to rehabilitate buildings for rental occupancy, thereby strengthening neighborhoods.

Capital Funding Proposal

Uses of Funds: 30 buildings, average 2 units per building for 60 units; 15 side lots

USES OF FUNDS
Acquisition Rehab Program / per 2 unit bldg / Total Project: 30 bldgs
Property Acquisition / 15,000 / 450,000
Property Rehabilitation / 175,000 / 5,250,000
Property Carrying Costs / 10,000 / 300,000
Project Coordination / 4,500 / 135,000
204,500 / 6,135,000
Side Lot Program / per lot / 15 lots
Acq; Demo; Legal / 40,000 / 600,000
TOTAL Program / 6,735,000
POSSIBLE SOURCES
OF FUNDS
Acquisition Rehab Program / per 2 unit bldg / Total Project: 30 bldgs
Private Lenders / 80,000 / 2,400,000
Land Bank/NYS AG $ / 15,000 / 450,000
Other Subsidies / 15,000 / 450,000
NYSERDA / 5,000 / 150,000
Private Equity/Bldg Owner / 10,000 / 300,000
CREDC / 79,500 / 2,385,000
204,500 / 6,135,000
Side Lot Program / per lot / 15 lots
Other: CDBG/UI / 15,000 / 225,000
CREDC / 25,000 / 375,000
40,000 / 600,000
TOTAL Program / 6,735,000

Community Development Benefit:

The project will assist underserved neighborhoods in identifying key vacant buildings in need of rehabilitation and connect those properties with local investors or homeowners with the ability to effectively redevelop the property. Take Stock will provide the necessary gap funding that makes building redevelopment financially feasible and combine it with financial and technical assistance that will make the projects successful. Properties will be targeted that will have the greatest potential for long-term, spill over impact in the neighborhood, generating additional investment by other local investors. The project will succeed through collaboration between the public and private sectors. Key to the success of this project will be the local input by community residents and stakeholders with the community at heart. This will have a positive impact on the region as a whole as revitalized downtown and inner city communities reflect positively on the region as a desirable place to live. Better housing and neighborhood conditions help stabilize family life so that residents are better prepared to engage in education and workforce development programs that lead to overall advancement for families and community.

Take Stock in Your Block8/17/20151