Banks Begin To Budge

Paul Bass Photo After years of struggling to negotiate with banks to purchase and revive abandoned slum dwellings, Jim Paley got a great price from Bank of America on three Newhallville houses: free.

It may be too early to declare a turning point in New Haven’s war with bank-slumlords. But Bank of America and another of the city’s problem banks, Wells Fargo, have agreed to turn over five of their neighborhood eyesores to not-for-profit builders.

Wells Fargo has agreed to turn over a house on Fair Haven’s Richard Street free to not-for-profit Mutual Housing/ NeighborWorks New Horizon. Seila Mosquera, who runs the not-for-profit, said the abandoned house is too far gone to renovate. So her agency plans to demolish it and build a new two-family home there.

Wells Fargo is also turning over an Orchard Street home in the Dwight neighborhood to the not-for-profit agency Paley runs, Neighborhood Housing Services (NHS).

Bank of America, meanwhile, has already donated or is in the process of donating three abandoned homes to Paley’s NHS: one on Edgewood Avenue and two on Newhallville’s Huntington Street.

NHS and NeighborWorks don’t just build and fix up houses. They help working families buy and live in them as part of broader efforts to strengthen neighborhoods like Newhallville, Fair Haven, and the Hill. Those families become anchors for neighborhood revival.

The donations mark a new role for the banks, which found themselves either owning or carrying the debt for rundown houses throughout New Haven when their owners defaulted on mortgages during the recent housing/foreclosure crisis. That crisis was brought on in part by massive fraud and subprime lending shortcuts on the part of the banks. Neighbors and city government’s anti-blight agency, the Livable City Initiative (LCI), have conducted an often frustrating years-long battle to get out-of-town banks to take responsibility for the decay, squatters, drug activity and prostitution at many of the properties. Neighbors and officials often spend months trying just to reach a human being at those institutions; often the banks have hesitated to take title to properties that have remain vacant for years. LCI finds itself cutting the grass, boarding and re-boarding up windows. (Read about some of those problems here, here, and here, and here.)

Bank of America’s boost to NHS and NeighborWorks was met with cheers by Erik Johnson, who runs city government’s LCI. Johnson grew up in Newhallville. He has worked hard to focus LCI’s energies on turning around the neighborhood. (Read about some of that here, here, here, and here.

“Maybe this is a new trend where banks are looking to partner with competitive non-profits,” Johnson said. “It’s a real shot at making impact. I like the fact that they’re being more altruistic with non-profits.

At the same time, Johnson said, he’d like to see the banks work more proactively with the city to preserve homes before they deteriorate, rather than “dumping stuff they don’t think they can make money on” after the fact.

“We are always looking to work with our various partners in the city,” Bank of America spokesman T.J. Crawford responded when told of Johnson’s comment.

Cluster Strategy

Last year Bank of America and Wells Fargo and three other banks signed a $25 billion settlement with the federal and state governments to clean up their fraudulent lending practices and help ravaged communities recover from the effects of their predatory practices.

But who’s complaining predatory practices of the past?

“This is a good sign,” Paley said of the property donations during a visit to the properties this week.

“We recognize we can’t go back. We don’t make excuses” for banks’ historic practices, he said. But these donations will enable NHS not only to put working-family owners into rebuilt one- and two-family houses; but also to strengthen its efforts to revive concentrated sections of the Newhallville and Dwight neighborhoods.

The donated house at 207-9 Edgewood abuts another property NHS has already revived. The two Newhallville properties are close to each other on Huntington Street—on the same two-block stretch where NHS has already rebuilt one home and aims to rebuild two others.

The new donations to NHS are Bank of America’s first gifts of the sort in New Haven, according to bank spokesman T. J. Crawford. But, he said, the bank has made similar donations elsewhere, including Bridgeort. (It has also vowed to donate 1,000 homes to injured vets and first-responders and up to another 2,000 homes to Habitat for Humanity.)

The bank aims to make donations strategically, in areas where builders are already making an impact, Crawford said. “Donating these properties will go a long way toward helping NHS achieve their ambitious community development goals.”

Those goals are on full display along Huntington Street between Butler Street and Winchester Avenue, a stretch of Newhallville devastated by outside investors and abandoned properties that dot blocks lined with houses maintained by live-in owners.

NHS, which under Paley has produced over 400 affordable homes over 28 years, first rehabbed the two-and-a-half-story house at 381 Huntington. NHS sold it to Matthew Morgan and Whitney Easton (at right in photo, with Paley and NHS staffer Colleen Trompeter). They still live there eight years later, keeping up the property; they’ve bought and rehabbed another house nearby.

NHS next bought abandoned 406-8 Huntington at the end of the block from a bank in 2010 (price: $34,500). It hopes to put together the money over the next year to begin fixing that one up, too.

It also bought 463 Huntington (pictured) in 2010, with similar plans, from another bank, for $27,500.

Now B of A has agreed to donate 389 Huntington (pictured; deal completed) and 436 Huntington (pictured at the top of the story; deal pending). The same owners left B of A holding the bag on both properties. The fence is broken at 389, but overall the house appears to be in decent shape. B of A has agreed to a “short sale” (at a loss) to NHS of another nearby property, at 152 Newhall St.

It’s all part of “cluster” strategy—make a difference by turning around the problem properties within a few blocks. NHS will also benefit on the new jobs from a new state historic district tax credit it helped the area qualify for earlier this year; along with the Bank of America donations, that will help keep its costs down.

The trashed house at 436 Huntington—fences destroyed, “windows” open to the elements, boards pulled off entranceways—demonstrates how isolated blight can endanger a neighborhood primed for revival. The house sits next to Serenity Garden (pictured), one of the many dazzling greenspaces in Newhallville. Other houses nearby are in solid shape.

A Jobs Dialogue

As he inspected the NHS house awaiting rehab at 406-8 Huntington, at the corner of Newhall, a neighbor engaged Paley in a discussion about another aspect of neighborhood revival: jobs.

The neighbor (who asked not to be photographed or named) is a unionized construction worker, currently between jobs. Paley introduced himself, described the work NHS has taken on in the neighborhood. The neighbor sought to keep his two pit bulls (playing with a Schwinn tire shred in video) quiet as he spoke with Paley.

“Do the people that fix the houses get paid?” the neighbor asked.

Yes, Paley said.

“Let me ask you a question. When a contractor bids to get the job, why you don’t give the guys an ultimatum? [That] they have to hire a certain amount” of local people?

Paley agreed with the goal. He said that he can’t “micro-manage” the contractors and subcontractors he hires, but that they do meet minority-hiring goals.

The neighbor brought up the episode this past May on nearby Lilac Street, where a volunteer Yale canceled an architectural school building project after an attack on an 83-year-old professor there. (Yale turned the project over to NHS, which is completing it.)

“Maybe if you guys had a few local guys or females helping you guys, maybe that guy would never got jumped. Some places you sort of of need a pass. That’s just the way it is,” the neighbor suggested.

He said his point went beyond that one project. He returned to the Huntington Street house awaiting repair.

“Hypothetically speaking,” he said, “if you bought this property, now you put the bid up to have the electricity done. And when the contractor comes to you ... say it’s 30-grand worth of work. You tell the contractor, ‘You’ve got to hire at least one [neighborhood worker] to get three workers.”

“We try. We really do,” Paley responded. “We try to get people who are licensed and insured and diversify the workforce.”

“I kind of can’t go on your word with ‘try.’ If I own something and you want to work for me, you’re gonna do what I ask for if you want the bid. If I tell you, ‘I’ve got $30,000 for you but you’ve gotta hire one of those guys for three guys,’ you’re not gonna say ‘I don’t want it.’”

“It’s sometimes a little more complicated than that. We’re not general contractors.”

“I understand that. But you’re a property owner.”

“When you’ve got some knuckleheads,” the neighbor persisted, “they might see somebody they’re familiar with. They might say, ‘We can’t rob them or beat them up because Louis from down the street is with them. We’re gonna give them a pass.’”

Paley proceeded to tell him about Emerge, a New Haven program helping ex-convicts learn trades and reintegrate into society. NHS hires from there, he said. And he said he will continue to work hard to hire local people.

“I would love to be responsible for employment possibilities for as many Newhallville people” as possible, Paley said. He said that perhaps he’d be able to hire the neighbor when NHS gets to work (maybe next year) on 406-8 Huntington. The neighbors appreciated the remark. He also said he expects to be already working on another construction job.

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posted by: robn on October 15, 2013  3:36pm

Just curious. No mention of whether or not the city got stiffed for years of unpaid property taxes. Was that part of the deal for the banks to turn over the properties? If so and if the house values are equivalent to the value of the unpaid taxes, isn’t the city just buying houses and effectively taking them off of the tax roles until resold or revamped?

posted by: nhs_ofnewhaven on October 15, 2013  5:27pm

Robn, the taxes are fully paid by the bank before NHS takes title, despite the fact that they are selling us the houses for $1.00. And NHS pays taxes on all the properties we acquire, whether we have begun the rehab or not.

Jim Paley

posted by: HewNaven on October 15, 2013  6:43pm

My jaw hit the floor when I read that BofA and Wells Fargo are donating a few of their slum properties to NHS. This is amazing news! Hopefully, it signals a change in how wealthy corporate banks treat the community that surrounds them.

posted by: THREEFIFTHS on October 15, 2013  8:54pm

I wonder is Bank of America still doing this.

Bank of America Ripped Off US Blacks and Hispanics


http://www.emergencyemail.org/newsemergency/anmviewer.asp?a=1660&z=1

posted by: Yaakov on October 16, 2013  10:30am

This is wonderful news! Mr. Paley and the whole NHS team do phenomenal work. It would be wonderful if these banks saw this as an opportunity to get liabilities off of their balance sheets while building a bit of good will in the process. It would also be wonderful to see a few more houses along Edgewood Ave. handed over to NHS!

Keep up the great work!

posted by: just my view on October 16, 2013  2:14pm

My jaw hit the floor with the overt tones of paying for protection.

“The neighbor brought up the episode this past May on nearby Lilac Street, where a volunteer Yale canceled an architectural school building project after an attack on an 83-year-old professor there. (Yale turned the project over to NHS, which is completing it.)

“Maybe if you guys had a few local guys or females helping you guys, maybe that guy would never got jumped. Some places you sort of of need a pass. That’s just the way it is,” the neighbor suggested.”

“When you’ve got some knuckleheads,” the neighbor persisted, “they might see somebody they’re familiar with. They might say, ‘We can’t rob them or beat them up because Louis from down the street is with them. We’re gonna give them a pass.’”

And people wonder why some companies avoid investing in New Haven?

posted by: steven ortiz on October 16, 2013  3:45pm

Not sure that a non profit should be the only ones to have access to blighted properties . Sounds like the tax payer will foot the bill on way or the other . Whether it’s a tax rite off for the bank or the not for profit organization seams like the first time home buyer never seems to be able to cash in on the deal .