City Uses State Receivership Laws To Combat Blight
The city that was hit hardest by the foreclosure crisis in Massachusetts has seen hundreds of abandoned homes fixed up and put back on the market by court-appointed receivers. Springfield’s use of the receivership laws to combat neighborhood blight was held out today as a model for the rest of the state.
Standing in front of a single-family home that was renovated, repaired, and is now for sale in the city’s Forest Park neighborhood, Mayor Domenic Sarno pointed to a map of the city showing the locations of over 250 homes that during the last seven years were put into receivership, rehabbed and returned to the housing market.
" We have done this in every nook and cranny in the city of Springfield," said Sarno. " One of the first houses we did was just off Eastern Ave. That was a drug den we cleaned out. Then we did Longhill Ave. and on and on."
Receivership allows the city to petition a judge to appoint someone to take over a property that has been cited for state sanitary code violations and where it is clear the owner is unable or unwilling to bring the building into code compliance.
The houses are rehabbed with the oversight of the court and then sold. The receivers invest their own money and are assigned a lien that puts them first in line to pocket the proceeds from the sale of the house after all back taxes are paid.
Sarno said the goal of the program is to save historic houses from demolition and stabilize neighborhoods.
Springfield’s use of receivership as a tool to eradicate blight and preserve its housing stock won high praise Friday from Massachusetts Housing Court Judge Dina Fein.
" The receivership program here in Springfield sets the gold standard for this work all around the state and arguably all around the country," said Fein.
The laws allowing for the appointment of a receiver to rehab properties had been little used until the Great Recession and the foreclosure crisis. For several years, Springfield had the highest rate of foreclosures of any city in the state.
Lisa DeSousa, an attorney for the city who specializes in housing issues, said the city files about 80 receivership petitions with the court a year.
" So, we have to give notice to all the lien holders. It gives a chance for the banks to step in and say ' no,no we don't want to lose our collateral, we'll step in and bring it into compliance.' That happens about 30 percent of the time when we bring these types of motions," said DeSousa.
Without receivership, the city has few good options when it comes to abandoned houses, according to Geraldine McCafferty, the city’s director of housing. The property could be sold, as is, at a tax foreclosure auction, or demolished at city expense.
" What we are seeing here is private investment coming in and restoring what would be in various ways a very expensive problem for the city," said McCafferty.
Accepting a court appointed receivership is a risk that Darrell Williams of Saw Construction Co. said he is willing to take. He’s done 15 home rehabs as a receiver-contractor.
" I live in Springfield, and I was raised in Springfield, so I want to give back to the community and bring the city back to life, and we are, bringing it back to life," said Williams.
Williams said he has $190,000 sunk into the single family house at 65 Riverview Terrace, where the mayor and others visited Friday. His lien is worth $230,000. The house is on the market with an asking price of $309,000.