KANSAS CITY — When the mortgage meltdown began five years ago, Kansas City already had an abandoned housing problem, with about 3,000 vacant structures.
The city estimates the number has grown to 7,000 houses, but a new partnership between privately funded rehabbers, Legal Aid of Western Missouri, Kansas City government and neighborhood leaders are hoping to reverse that trend.
The coalition is reclaiming some of the abandoned and foreclosed homes, fixing them up and putting them back on the market, the Kansas City Star reported. The goal is to take over abandoned, tax-delinquent homes from absentee owners or banks and put them into the hands of people who will live in them and keep them up.
A home that stood vacant for four years was ravaged by squatters, stripped of copper and filled with trash. After Legal Aid reclaimed the house through court action, rehabber Steven Gher and his partners bought it for a few thousand dollars, renovated it and put it on the market for $29,000. Now, someone who puts $2,000 down and makes payments of less than $450 a month can pay it off in 10 years.
"It's one of these beautiful old houses, all oak floors, trim, stone porch," Gher said.
In the past, community development corporations would use federal money to build new houses on old, neglected blocks, which resulted in $100,000 homes often sitting empty amid crumbling neighborhoods.
"To the extent we can get the prices down, that will open up a whole new level of market demand," said Michael Duffy, managing attorney for Legal Aid's economic development unit. "There's a lot of low-income people who need housing in our city, but they can't afford a $50,000 house. They can afford a $25,000 house."
Legal Aid is pursuing about 50 abandoned housing cases in court a year, which could increase in 2013 with city money to hire more staff.
Last year, Bank of America promised to donate 75 houses and up to $875,000 to renovate or demolish those structures. Most will be demolished, but the city expects to sell about 25 to people who will use bank funds for needed repairs.
A few of the bank-donated houses could sell for $50,000 or more, but many properties on the city's east side are going for $5,000, with Bank of America reimbursing up to $20,000 for repairs.
David Park, deputy director of the Neighborhoods and Housing Department, said the city isn't as concerned about the price as it is in getting the homes owned and occupied.
"We're just looking to make sure it gets into fully responsible hands," he said, adding that the banks might otherwise auction the properties.
Bank of America and Wells Fargo also have donated dozens of homes directly to neighborhood groups, including the Truman Road Corridor Association. Director Dave Biersmith said the association may pay $1,000 for the homes, do fiscally prudent repairs and find very low-income people to buy them for $5,000 to $10,000.
He said the group doesn't sell to outside investors and tries to pick people who have the skills or connections to do further repairs.
The lack of bank financing for more rehabbers and developers to get homes ready for occupancy has been a major obstacle to faster reclamation of properties. Duffy and the city are working with Erica Dobreff, president of the Gateway Community Development Fund, to provide a revolving loan fund of up to $1 million that would be capitalized by the city, banks and other investors.
"The ability to reclaim properties and neighborhoods is perhaps the most important thing that can be done for the city," Dobreff said.