During the New Jersey State League of Municipalities annual conference last November, it’s clear that municipalities face a growing problem of vacant and abandoned properties. We spoke with many people who wanted strategies and tools to help them manage these properties in a way that was beneficial for the entire community.
It turns out there are steps municipalities can take to address this issue. But the problem and its causes aren’t simple and the solutions aren’t one size fits all.
So where do you begin? One of the first steps you should take is to assess the abandoned and vacant property issue in your community. Ask yourself the following questions:
How many properties are there?
Where are they?
Who owns them?
Why are they stuck in neutral?
Depending on your town’s size, this analysis can be municipality-wide or limited to a target area so it’s more manageable. The point is to get a good understanding of the problem. This will help determine which strategies and resources are most appropriate for you.
Once you’ve analyzed the problem, you’re in a great position to move forward. One thing to consider is adopting an Abandoned Properties Ordinance that mirrors the State’s Abandoned Properties Rehabilitation Act (N.J.S.A. 55:19-78 through 107). Give your municipality the legal standing to use the tools needed by creating an Abandoned Properties List that can be used to compel action.
Now that you’ve set the foundation, here are some other steps that may be appropriate:
Vacant Property Registration Fee.
Did you know that you can charge property owners an annual fee for allowing properties to remain vacant for extended periods of time? Many municipalities are not taking advantage of this. The fees can escalate each year a property is vacant and provide an incentive for owners (both banks and individuals) to do something with the property. The fees can go toward funding a permanent solution to the vacant property problem.
If there’s a cluster of vacant and abandoned properties, you may want to designate an Area in Need of Redevelopment or an Area in Need of Rehabilitation. Both can be done through the state Local Housing and Redevelopment Act (N.J.S.A. 40A:12A).
If residential properties are part of the problem, then you may need to take further action. The degree of municipal involvement in residential properties is customized to every community and situation. Some municipalities help developers, while others actually do hands-on development themselves.
There are other housing programs that offer strategies and resources to turn the issue of abandoned/vacant properties around. Here are nine options:
Funding is used to “buy down” the cost of a market-rate house to make it more affordable for a family that otherwise couldn’t pay full price.
A municipality takes ownership or site control over contiguous properties, making their redevelopment more attractive to private developers. Municipalities and developers aren’t always on the same side of an issue, but this is situation that could be a win-win if the issues and resources specific to your properties mesh.
Affordable Housing Trust Funds.
Locally collected housing development fees are available in some municipalities for use in creating affordable housing units.
Funding from the U.S. Department of Housing and Urban Development (HUD) is available to some municipalities and counties and to the State of New Jersey for the creation of affordable housing units.
Another source of HUD funds, this one can be used on a limited basis for the demolition or rehab of blighted residential or commercial properties.
Regional Contribution Agreement (RCA) balances.
RCAs were permitted under prior state affordable housing regulations and allowed one municipality to provide funds to another municipality to take on some affordable housing obligations. Current state law does not allow for new RCAs, but there are balances remaining in some accounts under prior state regulations. These can be used to create affordable housing units. (Interested in learning about our affordable housing program? Visit http://www.triadhousingprograms.com/).
Federal Home Loan Bank (FHLB).
The FHLB provides funding for affordable housing programs. New Jersey is within the FHLB of New York’s service area.
This program is part of the NJ Housing Mortgage Finance Agency to help finance construction of market-rate housing in Emerging Markets. What are emerging markets? Markets where the cost to build new market-rate housing exceeds the market-rate price.
A number of banks, foundations and community funds have financing available for a variety of development types. Also, private developers are always ready to participate in deals that make financial sense to them.
We know some of these strategies are complex and may take your municipality in new and unchartered areas. But here’s the thing: with conditions likely to worsen and adversely impact neighborhoods, inaction is not an option.
Want to talk more about these strategies and resources? Give us a call at 856-690-9590 or email firstname.lastname@example.org to set up a free consultation.
This article originally appeared in the March 2016 issue of NJ Municipalities, the official publication of the New Jersey State League of Municipalities.