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Office of the Mayor
NEWS RELEASE
May 29, 2007
10 a.m.
Luecke plans to reduce abandoned houses by 72%
Contact: Mikki Dobski, Director of Communications&Special Projects, 235-5855 or 876-
1564, Jeff Gibney,Interim Director of Community and Economic Development, 235-9375, or
Catherine Toppel, Director of Code Enforcement, 235-5914
Mayor Stephen J. Luecke today introduced a three-year, $6.825 million strategy to reduce
South Bend's vacant houses by more than one-fifth, with most of the focus aimed at
reducing abandoned houses by 72 percent.
The comprehensive strategy includes the demolition of 400 derelict houses and the
revitalization of 45 distinctive properties in targeted neighborhoods. It builds on the city's
existing work in code enforcement, on public-private homebuilding partnerships with
successful track records and on a national trend of homebuyers returning to urban
neighborhoods.
The centerpiece of the strategy is a public-private effort to attract all income levels of
homebuyers to targeted city neighborhoods, initially concentrated on the city's west and
northwest sides. Over three years, the city would make available 45 homes to nonprofit
community development corporations. The nonprofits would market and sell the
properties for $1 apiece to owner occupants or developers who would refurbish them.
The eventual owner occupant must reside in the home for five years.
Total cost of the strategy is almost evenly divided as a$3.45 million outlay by the city is
used to leverage an anticipated $3.375 million private investment.
"With this comprehensive strategy, today marks aturning point for troubled properties in
South Bend and a significant step toward returning them to productive and active use,"
Luecke said. "Prospective homeowners will be drawn to these $1 homes because of the
city's heritage and the quality of life afforded by the front-porch neighborhoods in which
they are located. They are indeed diamonds in the rough, waiting for an inspired and
committed homeowner to make them shine."
When completed,the plan will exceed Luecke's directive in his 2007 State of the City
address—a 10 percent reduction over three years—more than a year ahead of schedule.
Speaking with members of the South Bend Common Council at a home renovated by the
Near Northwest Neighborhood Inc. at 615 Cottage Grove Ave., Luecke outlined the
city's new vacant and abandoned housing strategy, which was identified as a key
objective of City Plan, South Bend's 20-year comprehensive plan.
The strategy calls for the city to:
• Demolish nearly 400 substandard properties citywide and in targeted neighborhoods
with the highest concentration of abandoned buildings for $1.95 million. (Many of the
properties also include garages or other structures.)
• Acquire and clean out 45 abandoned or vacant homes in targeted neighborhoods on
the city's northwest and west sides for $1.5 million.
• Sell for $1 each these 45 homes to homebuyers or developers (with sale restriction to
owner occupants) who would invest at least $75,000 in rehabilitation in each home
for a total of$3.375 million in private-sector funds. (Individual homebuyers would be
required to reside in the home for five years, while developers would have to
complete all rehabilitation work before sale, and a five-year occupancy requirement
would apply to the subsequent buyer.)
• Work on vacated properties with the St. Joseph County Homebuilders Association,
Habitat for Humanity and other nonprofits for infill housing or, when possible, sell
the lot to a neighboring homeowner.
• Identify entire blocks as the focus of a specific demolition and redevelopment
strategy.
• Provide incentives for residential housing development in South Bend. In a recent
meeting with the Home Builders Association of St. Joseph Valley, city officials
discussed possible incentives for either scattered single site or large multi-unit
developments. Incentives range from tax abatement to residential Tax Incremental
Financing districts, utilities and infrastructure aid, architectural design services,
identification of available building sites and financial assistance programs for
qualified customers.
• Propose for consideration by the Common Council a vacant house registration
ordinance, which would require registration of any home that is vacant for more than
90 days and in violation of existing code regulations, if there are not ongoing efforts
to market, sell or renovate the property.
• Free up additional resources for boarding up unsafe structures.
• Remain flexible in its implementation of the strategy in order to respond to market
changes or unforeseen opportunities.
Vacant and abandoned housing is a nationwide problem with such properties accounting
for about 15 percent of the area of the typical large city, more than 12,000 acres on
average, according the Brookings Institution.
South Bend has 621 houses that are both vacant and abandoned, according to a May 2006
survey by the city's Department of Code Enforcement. They represent 28 percent of all
vacant houses throughout the city. To produce that tally, code inspectors made on-site
visits of each property—a task that will become easier this year as inspectors receive new
handheld digital devices to streamline their work and make information up-to-date 24/7.
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"Many cities lack an accurate tally of the number of vacant and abandoned houses so we
already have an understanding of the scope of this challenge," said Catherine Toppel,
director of code enforcement. "In addition, we have been researching an ordinance to
register vacant houses for more than a year, so we're ready to work with the council
toward the adoption of another tool to use in improving our neighborhoods."
The city distinguishes between vacant properties —which have no code enforcement
violations and up-to-date taxes—and abandoned properties. Vacant properties that don't
have activity for three months are considered abandoned. In addition to the vacant and
abandoned properties, Code Enforcement staff also counted 1,048 homes for sale and 237
for rent in their survey, which adds up to 3,468 vacant, abandoned, for sale and for rent
properties.
This strategy's plan to end the abandonment of 445 houses would represent a reduction of
72 percent of the city's 621 abandoned houses. Of the overall figure of 2,183 vacant
homes, it represents a reduction of 20.4 percent.
"The demolitions will stabilize distressed neighborhoods while the renovated homes will
help stimulate investment in commercially viable neighborhoods," said Jeff Gibney,
interim director of community and economic development. "The bulk of the money that
goes into every $1 house will be private."
South Bend's Code Enforcement staff has an active list of 95 derelict properties, but
insufficient funds for demolition. Using nearly $500,000 in reprogrammed 2006
Community Development Block Grant funds in the Community and Economic
Development budget, Code Enforcement will begin work immediately on those
properties citywide for which it already has legal authority to proceed with demolition.
With those funds, demolition also will proceed in 2007 on other homes in census tracts
with the highest concentration of abandoned buildings.
"By using Community Development Block Grant funds only for demolition, there's no
income requirement associated with those properties," Toppel said. "The city can sell
those properties to developers, adjacent homeowners or neighborhood groups without
income limitations."
Another $750,000 each in CDBG funds again in 2008 and 2009 will provide Code
Enforcement the resources to demolish another 300 substandard homes in targeted
neighborhoods.
With the $1 home program, the city will use the Community and Economic Development
capital improvement funds to acquire saleable properties so there will be no income
restrictions for prospective homebuyers. The acquisition and rehabilitation program will
be administered by non-profit community development corporations, whose
responsibilities will include acquisition, specification writing, inspections, client selection
and closing.
The city has budgeted $500,000 each in 2007, 2008 and 2009 to acquire 45 abandoned or
vacant houses.
In his 2007 State of the City address, Luecke pledged to reduce vacant housing by 10
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percent over the next three years by developing "a series of strategies to address the
negative effects of abandoned properties [and] to set higher standards for the maintenance
of vacant lots."
In addition to identification and inspection of abandoned and vacant properties, Code
Enforcement already works through both education and enforcement to ensure that
properties are maintained for public safety. When necessary, property owners are cited or
taken to court to comply with city codes.
In March, the city won a major court ruling to give teeth to its efforts to require real-
estate owners in bankruptcy proceedings to adequately maintain their properties. The
U.S. Bankruptcy Court for the District of Northern Indiana determined that property
owners cannot avoid the obligations of maintaining their properties while in chapter 7
bankruptcy proceedings. In addition, the owner continues to have the same property
maintenance obligations, and cannot push those obligations onto a lender holding the
mortgage lien, if the lender does not foreclose on the property.
In addition, the vacant and abandoned housing strategy prohibits participation by any
prospective buyers with existing properties with code violations. If any purchasers are
later discovered to have existing violations, the sales are subject to forfeiture.
National market studies indicate that there is a return of people moving into cities,
including first-time homebuyers, single professionals, childless couples, empty nesters
and immigrants.
"City dwellers tend to value neighborhood vibrancy and diversity, the accessibility of
restaurants and cultural attractions, and the ability to walk to work," Luecke said. "Cities
need good housing to become the vibrant centers of cultural and social life that they are
destined to be. Once people begin to see improvement on the street, you're going to
continue to see aturnaround in other private investment in our neighborhoods."
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