There’s a familiar refrain heard at selectmen and council meetings around the state whenever a municipality ends up owning a house, commercial building or land when the owner fails to pay the property taxes. The town or city “isn’t in the real estate business,” residents often say, scolding municipal boards when officials contemplate reasons for improving or retaining the properties. Yet there are good reasons for towns and cities to do just that, reasons that result in increased property tax revenues and economic activity.
The city of Bangor is using a program, funded with federal money, that allows it to purchase and renovate blighted houses and then sell them for the amount of money spent, and no more. The buyers must meet certain income requirements. The program allows the city to use the federal money as a kind of revolving fund, so after the house is sold, the proceeds can be invested in another blighted property.
The federal stimulus funds remove much of the risk of such municipal involvement in the local housing market. But towns and cities in Maine should consider taking this approach more often, even without outside funding. Typically, municipalities that end up with houses or land when property taxes aren’t paid put the properties on the market as is through a sealed bid process. Unless the bid is lower than the taxes that were owed, the property is sold, and municipal officials pat themselves on the back for getting the property back on the tax rolls.
There is another approach, and the best example of its success is found in Charleston, S.C. The city’s Department of Housing and Community Development has targeted several blighted neighborhoods and purchased, renovated and sold previously decrepit houses and then sold them to middle class and working class families. The before and after photos, which can be seen on the department’s page at charlestoncity.info, are dramatic.
While it’s true that a city the size of Charleston is better able to divert hundreds of thousands of dollars to house purchase and renovation, and can afford to wait for a buyer, smaller towns and cities in Maine can follow the same principle on a smaller scale. As Charleston has done, towns and cities can demolish tax-acquired property to create parks, when appropriate. They can renovate and sell houses, and watch as the positive peer pressure spurs renovation and investment up and down the block.
Or they choose an even less risky and less expensive way to improve the local housing stock. Working harder at insisting that rental properties meet life safety and building codes also spurs investment by landlords, and in some cases nudges owners to sell rather than remain absentee landlords. That effort may mean contracting out part of the increased workload to a certified code officer, but ensuring that rental properties are safe is important.
Along with law enforcement and firefighting, this sort of involvement is at the core of the mission of municipal government.