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Case Studies in Community-Based Efforts to Stabilize Neighborhoods from the Effects of Foreclosures

Case Studies in Community-Based Efforts to Stabilize Neighborhoods from the Effects of Foreclosures . All Team Meeting Presentation-Dec. 19, 2011. David Turcotte & Emily Vidrine University of Massachusetts Lowell and Michael P. Johnson, Rachel Drew & Felicia M. Sullivan

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Case Studies in Community-Based Efforts to Stabilize Neighborhoods from the Effects of Foreclosures

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  1. Case Studies in Community-Based Efforts to Stabilize Neighborhoods from the Effects of Foreclosures All Team Meeting Presentation-Dec. 19, 2011 David Turcotte & Emily Vidrine University of Massachusetts Lowell and Michael P. Johnson, Rachel Drew & Felicia M. Sullivan University of Massachusetts Boston

  2. Introduction • Foreclosures key cause of recession (Bernanke 2008). • Decreases in median housing values (Joint Center for Housing Studies 2009) • Unemployment depletes savings (First American Core Logic 2009) • 4 trillion wealth loss 2006-2008-estimates $350 billion monthly (Baker & Rosnick 2008) • Blacks &Hispanics disproportionally effected (Carr 2007) • Foreclosures in Massachusetts are increasing again

  3. Neighborhood Impacts Housing vacancies* Unanticipated renter mobility* Decreased housing values* Increased crime* Higher insurance rates* Loss municipal tax revenue* Higher municipal expenditures* Elevated foreclosure rates & clustering enhance effects (Schuetz, Been & Ellen 2008) *Atlas and Dreier 2008; Schuetz, Been and Ellen 2008; Kingsley, Smith and Price 2009;Leonard and Murdoch 2009; Malach 2009

  4. National & State Responses • Housing and Economic Recovery Act of 2008, $3.92 billion-Neighborhood Stabilization Program (NSP) • American Recovery and Reinvestment Act of 2009 (Recovery Act) $2 billion for NSP2 • Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 ($1 billion for NSP3) • National Community Stabilization Trust • Massachusetts $20 million acquisition fund

  5. CDC Responses in Massachusetts • Majority (MACDC 62 members) engaged in foreclosure acquisition and redevelopment • Mass Foreclosure Task Force created to develop strategies • CHAPA develops online database of foreclosed properties • CHAPA operates “first look” program created byNational Community Stabilization Trust

  6. Why focus on CDCs? • Key actor in redevelopment (Taylor 2008) • Growth in sophistication & size (Gass 2008) • Key federal partner to address foreclosure problem (Malach 2008, Taylor 2008)

  7. Research Questions • What are the responses of CDCs to problems caused by the foreclosure crisis? In what ways can foreclosure A/R enable neighborhood stabilization? • What A/R strategies are used by the CDCs in study? In what ways do these strategies help achieve their goals of stabilization and redevelopment ? • What external/internal factors have affected their success in foreclosed housing A/R ? In particular, what roles have for-profit developers and government programs and policies played? • What lessons can CDCs learn from these cases that could inform their foreclosure A/R efforts? What type of public interventions are needed to assist CDCs in acquiring and developing foreclosed properties?

  8. Why Case Study Research? • 14 case studies of CDCs & NPOs (Gass 2008) • HANDS case study (Hersh 2009)* • Goal: In-depth description of two CDCs • Contribute to existing knowledge • Successes, challenges, lessons learned *Housing & Neighborhood Development Services, Inc. Urban EssexCounty, NJ

  9. Case Study #1-CBA • Lowell, MA (30 miles northwest of Boston) • 4th largest City100,000+ • Acre neighborhood focus • Interest in expanding • Owns/manages 380 Affordable rental units • Development model • Results-acquisition/demolition 2 properties, 23 units

  10. Case #2-CND • Chelsea, MA (borders Boston) • Smaller city, < 40,000 residents • Bellingham neighborhood focus • Expansion to adjacent city • 100 scattered site 2-3 unit rental housing • Development model • Results, 7 properties-21 units

  11. Methodology • Case Study Selection • Continuation of previous research • Different size “gateway” cities • Different markets and regions • Concentrated neighborhood vs. citywide approach • Unit of analysis-foreclosure acquisition & redevelopment activities (RE committee) • Data gathering • Interviews • Document & archival record review • Observations • Review of other foreclosure data • Trianglulation

  12. Case Study Propositions to Guide Research • Government policies at all levels are facilitating efforts by CDCs to acquire and redevelop foreclosed housing and that these policies reflect the unique role of CDCs in neighborhood development • CDC mission and business models are influenced by, neighborhood characteristics and attributes of specific housing acquisition opportunities • Housing acquisition strategies result in purchased units that are consistent with CDC missions, though perhaps not achieving organizational goals

  13. Criteria to Assist Data Analysis • Level of foreclosure acquisition success • Level of impact-foreclosure acquisition activity • Level of government efforts to engage CDCs in redeveloping foreclosed housing • Extent that policy aids/hinders CDCs acquisitions efforts • Characteristics of neighborhoods chosen vs. not chosen • Characteristics of candidate properties chosen vs. not chosen

  14. Acquisition Strategies • Track pending foreclosures & REOs • National Community Stabilization Trust “First Look” • Lowell (CBA)-degree of building blight; prominence within the neighborhood; proximity to other CBA property; the concentration level of foreclosures; vacancy status; multi-family property • Chelsea (CND)-main commuting corridors; proximity to CND property & blocks with higher homeownership/Neighborhood Circle participation, foreclosure clusters.

  15. Challenges • Lack of leverage with lenders/services • Competition-private investors/homeowners • Limited opportunities & time under “First Look” program • Funding requirements/restrictions & limitations in scope • Expectations not achieved-drain of staff resources • Lack of unrestricted capital • Funding gaps

  16. Lessons Learned • Limited data on impact of CDCs • Organizational capacity crucial • Investment of intensive staff time • Acquisition/development models may differ • Conditions beyond control of CDCs • Need for flexibility • Policies have had mixed results

  17. Policy Recommendations • Limited data on impact of CDCs • Organizational capacity crucial • Investment of intensive staff time • Acquisition/development models may differ • Conditions beyond control of CDCs • Need for flexibility • Policies have had mixed results

  18. Next Steps • Limited data on impact of CDCs • Organizational capacity crucial • Investment of intensive staff time • Acquisition/development models may differ • Conditions beyond control of CDCs • Need for flexibility • Policies have had mixed results

  19. Contact Information David Turcotte, Sc.D. University of Massachusetts Lowell Institute for Housing Sustainability 600 Suffolk Street, First Floor South Lowell, MA 01854 Email: David_Turcotte@uml.edu Telephone: (978) 934-4682

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