Doing something — anything — about the debacle in the housing market is a job that falls mainly to Congress. The House opens hearings this week on a $300 billion plan to slow down the cascade of foreclosures that are turning some urban neighborhoods into ghost towns.
But cities aren’t altogether helpless in the matter. Some hard-hit cities are suing lenders they consider predatory. Cleveland, where one of 10 homes stands empty, has sued more than 20 companies for creating a public nuisance. Buffalo, N.Y., has filed a similar barrage of lawsuits, and Baltimore has gone to federal court against Wells Fargo alleging racial intent in targeting mostly black neighborhoods, a charge the bank denies.
Minneapolis joined the parade last week by suing TJ Waconia of Roseville, alleging mortgage fraud in three North Side neighborhoods. The city says the company flipped 140 homes between 2003 and 2005. More than half of those homes, it says, are now in foreclosure with three-quarters of those abandoned.
That’s the real tragedy of what has happened. Not only have individuals been victimized, whole communities have been damaged by the greed and irresponsibility of a relatively few lenders, brokers and borrowers.
North Minneapolis, after decades of struggle, appeared to be making significant progress. Now it’s back on the critical list. City officials estimate that 560 north side homes stand boarded and vacant. While the foreclosure crisis stretches deep into the suburbs, the north side holds far and away the metro area’s largest concentration of troubled properties. That list is growing.
‘Collaboration is powerful’
It would be easy to simply give up and allow the north side to devolve into another version of the Detroit-Gary-North Philadelphia pattern of urban decay: vast, eerie stretches of weedy, vacant real estate with only a scattering of houses. Indeed, demolishing perhaps one-third of the north side’s abandoned homes is one option the city is now considering.
But Minneapolis has three important attributes that some cities lack: a stubborn refusal to consider itself just another Rust Belt casualty, a relatively strong housing stock and a talent for collaboration. The importance of collaboration with corporate and non-profit partners cannot be overstated. With the precipitous decline in state and federal aid, no city government, no matter how well run, can muster the resources to accomplish its tasks without private assistance.
“Collaboration is powerful,” said Elizabeth Ryan, a former city housing official now with the Family Housing Fund. “It’s amazing what you can accomplish if you don’t care who gets to take credit.”
Collaboration is even more effective if the work can be tightly concentrated, she said. That’s what the city has done with its “cluster” redevelopment strategy. Without the wherewithal to rehabilitate all or even most of its boarded houses, Minneapolis has tried to make the most of limited money by concentrating its efforts in a half-dozen hardest hit north side neighborhoods. That way the impact is greater. Neighbors and investors see and react to visible progress. Confidence will rise if people can see actual evidence of new homes going up and responsible owner-occupants moving in. At least that’s the intent of the program.
“We want these projects to be catalytic,” said Jill Kiener, coordinator for the program’s financial generator, the Northside Home Fund. The General Mills and Home Depot foundations and Franklin National Bank have joined with the city and a slew of non-profit partners, including Project for Pride in Living (PPL), the McKnight Foundation and the Family Housing Fund, to form the $42 million Northside fund and related efforts. With guidance from neighborhood organizations, the fund chose six clusters of about 360 homes in the Jordan, Hawthorne, McKinley and Willard Hay communities for special attention.
Competition with private investors
Consider two examples: the Hawthorne Eco-Village, centered at 36th Avenue and 6th Street North, and the Cottage Park cluster, just off West Broadway along James Avenue North.
Home Depot and PPL are key partners at the Hawthorne site. So far, three houses have been rehabbed and nine others designated for purchase. Thirty trees have been planted and neighbors will tend others at tree nursery on a vacant lot. Meanwhile, construction is set to begin next year on a seven-bungalow development on 36th Avenue. Investors see this as a first phase that will expand into dozens of high-profile rehab projects in future years. Green construction practices and full landscaping are being emphasized.
At Cottage Park, four new homes have been built, a half-dozen rehabbed, and several partners hope to revive a vacant church building at the corner of James and Ilion. Developer Stuart Ackerberg of the Ackerberg Group has been personally involved in the revival that includes a re-landscaped park and special artwork painted on window boards to disguise boarded homes. It’s all part of trying to keep communities viable until the housing market improves.
These are modest efforts considering the scope of the problem. And they are only a slice of the city’s broader efforts to prevent foreclosure and to redevelop problem properties. “We have the structure,” said Tom Streitz, director of housing policy and development for the city. “What we need is the capital. We have nowhere near the scale we need to redevelop this community.”
One thing people don’t understand, Streitz said, is that the city and its partners are in desperate competition with private investors for many of these troubled properties. The city wants to buy these properties, rehab them in a responsible way and turn them back to the private market. Many of the private investors want to make only minimal repairs to the houses and market them as cheap rentals. “This is a competition of values,” Streitz said. “The difference is that they’re in it just for the profit and we’re interested in rebuilding the community.”
But without more capital, the private buyers — Streitz resists calling them slum lords — will gain an even stronger foothold on the north side, he said.
Events in Washington may help. Hearings open this week in the U.S. House on a $300 billion plan to help avoid further foreclosures. If that happens, places like the North Side may get a chance to breathe again. If the package goes further to include financing for stabilizing homes in low-income neighborhoods, Minneapolis seems poised with a collaborative structure to put the money to work.