In preparation for the upcoming session, legislators and stakeholders are exploring legislation to create new tools for West Virginia municipalities and counties to do something about the massive problem that is abandoned and dilapidated property. One option is community homesteading.
What is community homesteading?
Homesteading is a tool to revitalize communities that have a surplus of abandoned and dilapidated housing stock.
Community homesteading programs aim to attract individuals and families to purchase, renovate, and reside in dilapidated homes in designated neighborhoods or communities through financial incentives. These incentives are most commonly developed through public partnerships with private lending institutions.
To ensure these homes don’t fall back into the hands of slumlords or out-of-state speculators, homesteading programs generally require that a buyer lives in the home for at least five years and brings the home up to minimum building, fire, and health code standards.
Community homesteading programs may target the general public, or individuals that work in specific sectors, such as the arts.
Why are West Virginians interested in community homesteading?
Abandoned and dilapidated homes are a problem in every West Virginia community. These problem properties reduce neighboring property values, increase crime and drug activity, and hobble economic development.
Although these homes have seen better days, many could still be viable housing options. However, the appraised value of dilapidated homes is often much lower than the cost of rehab. This means that renovations need to be done out-of-pocket as traditional lenders are often not able to issue mortgages above the appraised value of a home.
A community homesteading program could allow cities and counties to focus on demolishing the most offensive properties, while community-minded individuals and families begin renovating dilapidated homes before these homes reach a point where demolition is necessary.
How has community homesteading worked elsewhere?
The Detroit Neighborhood Initiative provides low, fixed-rate mortgages up to 150 percent of the appraised value of a home for acquisition and rehab. Since the program’s launch in April 2015, 40 individuals have been approved and approximately 15,000 have taken the first steps to apply for the program.
Paducah, Kentucky (right, pop. 26,000) and Oil City, Pennsylvania (pop. 10,000) — smaller, more rural communities — have both implemented wildly successful “Artist Relocation” programs, essentially homesteading programs geared towards artists.
Since 2000, over 75 artists and residents have invested more than $30 million to restore Paducah’s most historic and most rundown neighborhood, and the city is down to its last two properties available.
Similarly, the Oil City Artist Relocation Program has brought an estimated $1.3 million to the local economy, with a mere $175,000 investment by Oil City over the course of six years.
By targeting artists, Paducah and Oil City took the traditional community homesteading model and improved it by adding in economic sector development.
What’s the legislative solution?
Authorization for homesteading has been created through state and local legislation in a number of other states. The Abandoned Properties Coalition has been working with elected officials and stakeholders to research these policies and identify provisions of those pieces of legislation that would be useful to West Virginia communities.
We’re keeping a close watch on this issue at The Hub, and will share more information on the policy proposal once it’s introduced during the 2016 legislative session.
If you are interested in this issue and would like to learn more about it, contact me.