By Breann Gala and MPC Research Assistant Jason Brown - October 10, 2013
The Chicago Tribune published an article on Tuesday, Oct. 8, 2013, entitled “Dealing with Chicago’s vacant buildings isn’t an open-and-shut matter.” The article examined the “daunting” state of Chicago’s vacant buildings, highlighting the great complexities of revitalizing this sector of the housing market. Focusing on the city’s West Humboldt Park neighborhood, with its shrinking population and increasing crime rates, the article points out that that registration may be the biggest issue, noting, “Today, only 5,158 vacant buildings are registered in the city, less than one-third of the estimated total that are vacant.” The past couple of years have seen great steps taken toward addressing the foreclosure crisis, blight, and instability. Key efforts include:
- The formation of the Cook County Land Bank that will acquire, hold, maintain, and dispose of land for economic development purposes;
- The City of Chicago and Cook County Vacant Building Ordinances that requires mortgage holders and owners of vacant buildings to register them or face penalties; and
- The National Foreclosure Settlement that distributed $70 million to stabilize communities.
While these efforts represent three steps forward, we’ve taken one step back with the a recent court ruling that Fannie Mae and Freddie Mac are exempt from the City of Chicago Vacant Buildings Ordinance. Between this ruling and low levels of registration, crime rates on vacant properties have risen and questionable investment models have developed that may be stripping neighborhoods of needed dollars and weakening the chances of future investment and purchases; opportunities are slipping through the cracks.
While it may seem that any kind of investment would be positive at this point, John Groene, neighborhood director of Neighborhood Housing Service’s local office, raises the specter of what he calls “buy-and-board investors,” who buy property and let it sit boarded up in hopes of a rising market, all along standing as an obstacle to their own progress. These investors, along with “milkers”—investors who invest very little in upgrading homes, rent them out and pursue investment merely for short-term profit—leech value from potential development, leaving the neighborhood around their investments worse off.
So, how can this region attract responsible, future-minded developers and investors? As Allan Malach, of Center for Community Progress, stated in MPC’s publication Managing Single-Family Rental Homes, “Simply passing ordinances doesn’t work; an ordinance that sits on the books and is not enforced is worse than no ordinance at all. Ordinances need to be paired with strong, effective regulation.” Regulation of the City of Chicago’s ordinance will be two-fold: encouraging the right kind of investors so that development is ongoing, and facilitating communication between the city and observant, proactive residents who will notice negative changes and demand a response. MPC will pursue a pilot to test strategies for attracting positive investors to our communities and ensuring the Cook County Land Bank is up and running. We look forward to partnering with government, community organizations and the private sector to ensure that we continue to create healthy, stable neighborhoods.