MHP's receivership efforts helping 4 cities stabilize neighborhoods

BOSTON, May 22, 2012 --- An example of MHP's efforts to help communities stabilize foreclosed and abandoned properties was in the spotlightlast monthas state and city officials gathered in New Bedford to tour a property that has been transformed from a neighborhood eyesore into a handsome two-family home that will be sold to a first-time homebuyer.

Attorney General Martha Coakley, state Undersecretary for Housing Aaron Gornstein and New Bedford Mayor Jon Mitchell were among the leaders that toured the two-family home rehabilitated through MHP's Receivership Program.

"What we're trying to do here is become a city of choice, a place where people want to live and raise their children," said Mayor Mitchell during the public tour on April 19. "To do this, we need to revitalize our neighborhoods on a property-by-property basis. Hopefully, what we've done here is rehabilitate a two-family home that will be a plus for the neighborhood for years to come."

In addition to New Bedford, MHP is supporting similar programs in Brockton, Springfield and Worcester in partnership with the cities, the Attorney General's Abandoned Housing Initiative(AGO) and the state Department of Housing and Community Development (DHCD). Over the last three years, MHP has used $250,000 from its own bank funds and $165,000 in federal funds awarded by DHCD to support receivership efforts in these four cities. MHP support has helped assess 380 problem properties totaling 1130 units of housing. The primary focus has been on occupied and unoccupied multi-family properties where owners have not responded to citations for violations of state sanitary codes. All four cities have used receivership to pressure property owners to take responsibility for properties that are putting families and neighborhoods in jeopardy.

"Much of MHP's work has been providing direct technical assistance, trainings, and funding for staff to make receivership a meaningful part of a community's response to foreclosed and abandoned properties ," said MHP Senior Advisor Rita Farrell, who has been leading the receivership program. "This is not a one-size-fits-all program. Each city has its own challenges and opportunities and you need to be thoughtful about setting up a system that addresses their needs."

For example, Brockton, New Bedford and Worcester have appointed nonprofit housing organizations to administer their programs while the City of Springfield has used MHP support to hire an administrator and law clerks to help prepare receivership cases for housing court. New Bedford and Springfield - have used their receivership efforts to target specific properties in close proximity in hopes of triggering wider neighborhood revitalization.

Use of receivership in 4 cities

While these cities may vary in how they execute their receivership programs, all have been effective. Here is a summary of what has been achieved to date:

City of Brockton/The Resource Inc. (TRI)

MHP has contracted with TRI to support the Brockton Redevelopment Authority in getting its program underway. From the program inception in the summer of 2011 to December 2011, they have assessed a total of 27 properties comprising 134 units. Fourteen were being assessed and/or inspected, two were condemned, four were found to be not appropriate for receivership, three were repaired by their owners, three were sold and one is in receivership.

City of New Bedford/The Resource Inc. (TRI)

MHP has contracted with The Resource Inc (TRI) to provide assistance to the City of New Bedford to get its receivership initiative underway. TRI is an approved MHIC borrower under the Neighborhood Stabilization Loan Program. From the program inception until December 2011, TRI has assessed 28 properties comprising 75 units and two retail spaces. Of these, five have been repaired by the owner, 11 were sold, three were being reviewed, five were found not to be appropriate for receivership, and three were in receivership. One receivership property is completed and there are new owners for this newly rehabilitated property.

City of Springfield/Springfield Redevelopment Authority

The City of Springfield's Redevelopment Authority (SRA) is acting as the program administrator of the SRA's Receivership Loan Program. To get the program started, the SRA used MHP funds to hire a full time Senior Program Manager. As of Dec. 2011, the SRA and City of Springfield have inspected a total of 189 properties comprising 456 units to pursue for receivership. Twenty-eight were in housing court, eight had been demolished, 25 were repaired by the owner, 12 were sold, 33 were in receivership and 24 completed receiverships.

City of Worcester/ Worcester Community Housing Resource(WCHR)

As of Dec. 11, 2011, WCHR has inspected 101 properties comprising 349 units. Of those properties, one was in the housing court process, eight have been condemned, 30 have been repaired by the owner, 13 are currently in receivership and 31 are completed receiverships. The outcomes have ranged from the stabilized properties being purchased by a new owner to the properties being purchased by the receiver. In all cases the units have been brought back into compliance with the state sanitary code and occupied.

New Bedford 2-family good example of receivership in practice

The New Bedford two-family is an example of how receivership can be used to combat neighborhood decay. The 150-year old home was bought in 2007 for $235,000 but the owner could not keep up with mortgage payments. The property fell into disrepair and was abandoned in 2010.

The City of New Bedford's Office of Housing and Community Development (OHCD) turned to its receivership program, asking theAttorney General's Office (AGO)to look into the property's ownership history. When the AGO determined that neither the owner nor the banks had interest in fixing it, the AGO filed a receivership petition with the housing court.

On Aug. 19, 2011, the city's designated nonprofit receivership administrator - The Resources, Inc. (TRI) - was appointed as receiver and began to undertake repairs, which included replacement of plumbing, electrical and heating systems, as well as extensive renovations to kitchen, bathrooms, ceilings and walls. These repairs were funded by the Neighborhood Stabilization Loan Fund, which is supported by MHP and administered by the Massachusetts Housing Investment Corp. All told, this fund has provided over $60 million in financing for the rehabilitation of over 450 units of distressed units across the state. MHIC recently has committed $100,000 to MHP to continue its receivership efforts and expand activities into a fifth city.

With repairs now complete, TRI will collaborate withthe City of New Bedford's housing office to sell the property to an income eligible first-time homebuyer. "When we do this, we show every community in the Commonwealth that their neighborhoods are worth saving,'' said state Attorney General Martha Coakley. "You can see that the work that's been done on this property will bring up the entire neighborhood."

The public tour of the rehabilitated two-family home was a striking example of how receivership can be used to create momentum for a neighborhood and a city. During his remarks, Undersecretary for Housing Aaron Gornstein kept the momentum going, announcing that DHCD was awarding $300,000 in federal funds to further support the rehabilitation of abandoned properties in New Bedford.\

"This shows how a distressed property can be turned into an opportunity for a neighborhood," said Gornstein. "Through initiatives like the federal Neighborhood Stabilization Program, the Patrick-Murray administration has helped communities like New Bedford continue to grow, while providing its citizens affordable housing and safer neighborhoods."

For more information about MHP's Receivership Program, contact Senior Advisor Rita Farrell at 413-253-7379 or rfarrell@mhp.net. Or download the receivership guidebook produced by MHP in collaboration with the Attorney General's Office.