Second in a two-part series on Rochester’s
vacant-housing problem.
Eleven percent of Rochester’s houses are vacant. The reason: the city’s housing
stock was built for 300,000 people; Rochester’s population is now less than 220,000.
Throughout the United States, people began to leave cities in the 1950’s, drawn
to the suburbs by the promise of more land for less money. Neighbors followed,
and so did businesses owners, churches, barbers, and teachers.
In the wake of that
migration, investors began buying up properties and turning them into rental
units. But changes in federal tax laws and a softening real-estate market made
those investments less attractive. Housing values dropped, and vacancies began
to rise.
For cities and their neighborhoods,
the vacant houses were more than just an eyesore. They became magnets for
drugs, prostitution, and violent crime. They put enormous stress on cities,
which had to pay for more firefighters and police officers while contending
with a shrinking property-tax base. And the increase in vacancies occurred as other
trends were hitting Rochester: a rise in unemployment in the city, and a
concentration of the region’s poorest people in inner-city neighborhoods.
The effects have been
profound.
Rochester began to address its vacant-housing
problem in the early 1990’s, when it unveiled its first comprehensive
housing policy. The city was, by most accounts, ahead of the rest of the
country. (Which raises the question: What would have happened if the city had
done nothing?)
Seated in his Browncroft-area living room, a gray and white
cat meandering about, Tom Argust recounts the day the late Mayor Tom Ryan asked
him to become the city’s commissioner of community development. It was December
of 1991, and Ryan had just a year left in his last term.
“I thought: ‘Oh, man, he wants me to take this job. What am
I going to do in a year? I’m not going to float. I’m just not a floater,'”
Argust, who is now retired, recalls. “So I said, ‘What’s the one thing you want
to do in one year?’ He kind of paused; he kind of looked out the window. He
answered me with a question, which was typical of him: ‘I don’t know why we
have so many vacant houses and why we can’t do anything about it.'”
So Argust pulled together a team of experts and program
managers and within 30 days rolled out the city’s attack plan. The primary
goal: facilitate home ownership in the city. The secondary goal: facilitate
affordable rental options for those who couldn’t buy a house.
“That was kind of the genesis of this whole thing,” says
Argust, whose one-year appointment turned into a decade-long commitment. He
continued to serve under Mayor Bill Johnson’s administration until his
retirement in 2002.
His team of experts also realized, says Argust, that the
city had to address its housing surplus. Officials decided to demolish two
houses for every one that they created, and, where feasible, convert apartment
complexes back to single-family units. But city officials could do little to
stem residential development outside the city.
Argust pulls out a thick sheaf of papers from a manila envelope.
In it are the numbers that formed the crux of the city’s housing policy.
Brightly colored graphs and pie charts, drawn largely from Census data,
underscore the same message: Despite little to no population growth over the
past several decades, construction in Rochester’s
suburbs grew at alarming rates.
“Now, I’m not into statistics,” Argust says, “but it seems
to me that if we create more housing units than the number of households, we’re
going to have some vacancies.”
“This gets exacerbated,” he says. “For example, the Thruway
Authority, about eight years ago maybe, added two lanes onto the Thruway
between Victor and Canandaigua. I think that was about $35 million to $36
million. Then when that happened, [Route] 332, which goes from the Canandaigua
Thruway exit into Canandaigua, was expanded into a limited-access four-laner,
and that was another $20-some million. Talk about the great sucking sound out
of Monroe County.”
What Argust and his team did not know — and perhaps could
not have known — was that the vacant housing problem was on the verge of
spiraling out of control. And as the years passed, the city’s housing policy
began to look like a small dam in rising floodwaters.
As the city moved forward with its housing initiative, the
Housing Council issued its own study in 2000. While the city had analyzed
vacant structures as a whole, including properties that had gone into
foreclosure and those that were simply unoccupied, the Housing Council study
measured only the former group.
Although the number of vacant properties far exceeded the
numbers of foreclosed properties, the Housing Council’s findings were no less
troubling. “What we didn’t know and couldn’t know was that we were on a wave of
foreclosures that wasn’t going down and wasn’t static,” says Eric Van Dusen,
the Housing Council’s program manager during that time and current program
manager at NeighborWorks of Rochester. “It was going up. As you read in the
foreclosure study, there were 361 foreclosures in 1990. By 2000, there were
over 1,100.”
Indeed, despite aggressive city efforts to increase home
ownership in Rochester, the number
of city landlords skyrocketed in the early 1990s. “From 1990 to 1994,” says Van
Dusen, “the number of single-family houses in the City of Rochester
that went from owner-occupant to investor-owner increased by some 1,600. So if
you do the math on that, that’s six houses every seven days for five
consecutive years. I remember when Tom [Argust] and I talked about that, we
were just shaking our heads like, ‘Oh, my God. Oh, my God.'”
To deal, in part,
with the explosion in rental properties, the city has been increasingly
focusedon promoting mixed-income
projects, such as Chevy Place
on East Avenue and Anthony
Square, off Main Street
near downtown. Some of these projects are designed for both renters and
homeowners, including homeowners in higher income brackets. We must, say City
Councilmember Ben Douglas and other city officials, de-concentrate poverty.
Otherwise, anybody who climbs the economic ladder will follow the exodus out of
the city.
The data paint a realistic, albeit grim, picture, says Tom
Argust. As of 2000, only 5 percent of city houses were assessed at over
$100,000; and those were largely concentrated in the city’s wealthier areas,
such as the Corn Hill and Browncroft neighborhoods.
Julio Vazquez, the city’s new community development
commissioner, says his staff is creating a targeted-initiative policy. That is,
rather than take a piecemeal approach to the vacant housing problem, Vazquez wants
the city to pinpoint a given area and infuse it with incentives for residential
and commercial development.
“What we have done in the past,” he says, “is we’ve
sprinkled some resources all over, citywide, and I don’t think we’re getting
the results that we want. So we’re going to consider targeting some
neighborhoods and perhaps putting more resources in those neighborhoods to see
if we can turn them around.”
High on the list, says Vazquez, are areas with growth
potential. For example, he favors leveraging city funds in the neighborhoods
surrounding PAETECPark,
the new home of the Rochester Rhinos. He also speaks optimistically about
revitalizing North Clinton Avenue,
the proposed site for a new Spanish marketplace, La Marketa. North
Clinton, says Vazquez, already houses several strong Rochester
businesses, such as ITT and Hickey Freeman. “It’s a very challenging area,” he
says, “but if you put in enough resources, I wonder if you could turn that
around.”
Vazquez says he hopes to introduce the targeted initiative policy
in about a year.
Aggressive city
involvement can have its pitfalls. A recent city-funded study by the Center
for Governmental Research indicated that some Rochester
policies — particularly those relating to enforcement — may have
inadvertently contributed to the vacant-housing problem. These policies, CGR
researchers wrote, might be “counter-productive to the city’s best interests.”
Larry “Skip” Weekes, who owns properties in the UpperFalls area, and Jean Longchamps,
who owns property in the Beechwood area, criticize the city’s point system,
which penalizes landlords — not tenants — for code violations such as trash
in the yard or broken fire alarms. “The landlord gets points for anything that
goes wrong on their property,” says Longchamps. “If you accumulate enough points,
they vacate your house.”
Under the current system, landlords are expected to police
tenants’ behavior, such as drug use, says Weekes. “I had 10 houses. I had drugs
in every one of my apartments. You just couldn’t get rid of them,” he says.
“You get points.” And that, says Weekes, makes landlords reluctant to call city
officials and report problems.
Officials in the Duffy administration have promised to
re-evaluate the city’s enforcement policies. Van Dusen, however, hesitates to
blame local government policies for the vacant-housing problem. Did the
policies cause the problem, he asks, or were they in response to existing
market forces? “I think we could argue chicken and egg here,” he says.
Looking ahead, Weekes, a member of the New York State
Property and Business Owners, Inc., says many landlords are worried about the new
city law mandating that all Rochester
rental properties pass lead safety tests, starting July 1. And Weekes says he
will likely abandon his properties if he fails the lead assessment.
It’s far too early to tell whether the new lead legislation will exacerbate the vacant-housing
problem. But several other recent trendsalsohave housing analysts
nervous.
Ruhi Maker, an attorney with the Empire
JusticeCenter,
has spent decades addressing one that impacts the homeowner market: predatory
lending.
These practices include steering people to subprime loans
even when they qualify for prime rates, charging higher interest than a buyer’s
credit allows, and deceptive marketing tactics, according to the federal
Department of Housing and Urban Development website. Predatory lending, Maker
says, predominantly affects minority, poor people both here and across the
country. It’s not a new phenomenon, but it’s one that has spiked in recent
years.
“There’s good subprime lending, and there’s bad subprime
lending,” says Maker. She estimates that about 5 percent of all loans made to
city homebuyers are subprime. But it’s hard to determine which of those loans
were made in buyers’ best interest and which set them up for failure. “It’s
virtually impossible for us to figure that out,” Maker says.
When the Housing Council published its 2000 study, it found
that subprime loans were not significantly increasing the number of foreclosures
throughout the city. But that finding came with a caveat: “Although most
subprime loans were originated very recently, high-interest-rate mortgages
already comprise 20 percent of all Rochester
foreclosures,” researchers wrote.
On the rental end, the CGR study published earlier this year
indicated that more and more out-of-state and foreign investors are buying city
properties because of their low purchase price. This trend, wrote CGR, might
hinder officials’ ability to identify and fine negligent property owners. The
time needed to locate property owners, they added, could further strain city
resources.
James Graham, executive director of property-management
company Genesis REI, thinks outside investors can help the city get properties
back on the tax rolls. A lot of people want to invest in property but don’t
want to deal with the hassles of property management, says Graham. So for a
fee, Genesis buys properties, packages them for re-sale, and oversees property
maintenance and code compliance. “We are,” says Graham, “their eyes and their
ears.”
The myriad factors
impacting Rochester‘s housing market indicate to Eric Van
Dusen that the city does need to change some of its housing policies. Seated in
a NeighborWorks conference room, Van Dusen draws an invisible circle on a table.This circle, he says, represents the
stable housing market. Contained inside it, says Van Dusen, are both homeowners
and investor owners.
This schema is in marked contrast to the city’s housing
policy, which typically places homeowner needs inside the circle and investor-owner
needs outside. While the city’s priorities have evolved, Van Dusen doesn’t
think they have shifted far enough. “I think we’re past the point where we can
talk reasonably about home ownership being the strategy that’s going to stabilize
our neighborhoods,” he says.
In the city, six out of 10 housing units are occupied by
renters, according to the 2000 Census. But many landlords who own city
properties are not there by choice, the Housing Council noted in a 2001 study
of the rental market. Included in the investor-owner group, for example, are
people who moved out of the city but couldn’t sell their house, people who
inherited city property from family members, and real-estate speculators who
thought they could make a quick buck. Most of these landlords lack
property-management experience and are at risk of going into foreclosure, the
Housing Council found.
Foreclosures, however, further diminish homeownership
potential. A Housing Council study done in the 19th Ward between 1997 and 1999
indicated that homes on blocks with a single foreclosure experienced a 14
percent drop in property values, while the value of homes on blocks without any
foreclosures jumped by about 8 percent. “The large number of foreclosures
severely limits the impact of programs aimed at encouraging stable home
ownership,” concluded the study’s authors.
Throughout the years, then, as city officials struggled to
increase homeownership, market factors whittled away at their policy’s
feasibility. “You’ve got this other trend going on that’s undoing everything
you’re doing and then some,” Van Dusen says.
“For many of our neighborhoods, and certainly for the city
as a whole, we have to have an equally aggressive and equally sophisticated
strategy on how to deal with the rental property,” Van Dusen says. “In fact,
the rental strategy may now be the leader in paving the way for an
owner-occupant strategy. Because in certain neighborhoods, unless you stabilize
the rental market, you’re not going to significantly increase owner-occupancy.”
John Kohut has to
shout to be heard over the roar of the refrigerator. We are standing in the
kitchen behind his bar, Four Brothers Tavern on Hudson
Avenue.Stacked
on the shelf behind us are huge bins of spices — turmeric and chilies and
black pepper. He is, Kohut says, only the third owner of the bar, which has
been around since World War I.
History winds like a fine thread through Kohut’s
neighborhood. He has, he says, either lived or worked in Northeast
Rochester ever since he moved here from Ukraine
almost half a century ago at age 5. He watched the area go from a mini Eastern
Europe, full of family-owned barbershops and corner stores, to one
of the city’s most troubled areas. He watched stores close and families move.
He watched his part of the city go from a tightly knit community to a mish-mash
of loosely woven neighborhoods.
Most people who lived in the area 50 years ago are gone, he
says. But some have stayed — by choice. Kohut himself owns a house in the
suburbs but spends more than half his time sleeping in the apartment upstairs.
The good news, he says, is that the city’s worst yearsappear to be over. Even Hudson Avenue,
he says, “is coming back slowly.”
Without recent Census data, the claim is hard to
substantiate, but anecdotal evidence supports him. “I think that we are now at
the tipping point,” agrees Rochester Community Development Commissioner Julio
Vazquez. Certain demographic groups — young professionals, empty nesters —
have been returning to cities across the country, he notes, and Rochester
is no exception. The Urban Land Institute’s recent study of the downtown area
determined that there is strong demand for upscale rental property in the
commercial district. The key now, says Vazquez, is figuring out how to tap the
middle generation.
It is impossible, however, to come to terms with the city’s
vacant-housing problem unless people stop moving out of the city faster than
they’re moving in. Between 2000 and 2004, says Van Dusen, 6,000 people left the
city.
That’s when Argust gets mad. People can blame City Hall, he
says, but how far does the government’s responsibility extend? Sure, city
officials can create incentives to buy homes in the city. They can make it
easier for low-income people to find appropriate services. They can conduct
market analyses to understand historical trends. They can revamp zoning codes
and review enforcement policies. But can they control market forces? Can they
force people to forgo three-car garages and cul-de-sacs? Can they require
people to send their children to city schools?
“The reality is that as long as people continue to build
houses outside the city, whether it’s in the county or the region, and as long
as people leave the region or the county, there is nothing much that the city
can do about that,” says Argust. “We don’t control our destiny.”
“People are blaming the city, blaming something else,” says
Argust. “The reality is that we have done this to ourselves. We have made
conscious decisions to move out, to vacate or abandon not only our homes but
our neighborhoods, and thus create instability in our community, add more costs
to our daily living and, in so doing, reduce the quality of life in the overall
community.
“We have done this,” says Argust. “We have done this. And the whole notion that in America
it’s the individual that reigns supreme — ‘Whatever I want to do I can do.
Nobody’s going to tell me what I can’t do’ — well, that’s fine, but there’s a
price to pay for individualism, and it’s the loss of community. And I think
that’s what has happened.”
This article appears in May 24-30, 2006.
