What Happened
The City of Lowell seized an abandoned property, aided by a Massachusetts regulation, and in four months had the building renovated and on the market for sale.
Behind The Scenes
An “Abandoned Housing Initiative,” created by the Mass. Attorneys’ General office, is an economic development program that empowers towns to identify neglected properties and appoint a receiver to bring the property up to code. The priority is to work with the owner, but in cases where the owner can not be identified or can not assume responsibility, receivership may be utilized.
Lowell was able to appoint a receiver to such a foreclosed property, which had failed to rectify sanitary code violations.
The Market
Since the program was put in place in 2009, 14 receiverships have been completed and 85 cases were closed once pressure from the AG’s office was applied to building owners. According to The Boston Globe, there are currently 198 active cases in the program, with 16 headed towards receivership. The cases cover 29 cities.
Specifics
In the Lowell case, the building owner owed more than $24,000 in back taxes. Payments could not be made, so the State Housing Court gave receivership to a private developer, who then submitted a budget to renovate the 2-unit home.
The bank owning the mortgage could have also taken ownership of the building, but would have had to pay the private developer the court-approved renovation budget amount of $265,000. As a result, foreclosure proceedings began, and later ended with the developer securing the property for the same amount.
Positive Momentum
Lowell has found the program to be the first step in creating momentum in neighborhoods hit hard by the downturn. The City Manager in Lowell believes the program is a win for taxpayers because there is little public expense, but significant positive change. Without using grants or city funds, an eyesore can be quickly overhauled.
Once the property is sold after being fixed up, the first $24,000 will go to Lowell for the unpaid taxes.
Research
You can read more about the Mass. Abandoned Housing Initiative at the Web site of AG Martha Coakley.
More information about receivership and lending is also available, as is an online Receivership Financing Form used by the AG’s office.
There is even a downloadable AHI Receivership Model that can be reviewed.
To talk with someone about the program, send email
to abandonedhousing@state.ma.us.
Other cities using similar initiatives include: