City looks to save blighted homes

Authority hopes to start program to salvage some properties

The Altoona Redevelopment Authority is working on a deal by which a local bank will forgive a mortgage on a deteriorated house that was headed for foreclosure and slated for demolition -- so the city can renovate it.

It's the first attempt at what officials hope will establish a template for saving blighted dwellings before they're too far gone.

PennCrest Bank has informally agreed to forgiving the mortgage as a charitable donation for the pilot project, officials said at a meeting Friday.

The mortgage forgiveness would occur only after the city acquires the property on the 1300 block of 21st Avenue from the owner, who reportedly is willing to give it up to get out from under code and mortgage obligations, according to authority member and City Councilman Ron Beatty.

The house has "good bones," but it needs to be gutted and rebuilt, with new utility systems, Beatty said.

It's a bad house in a good neighborhood, which magnifies the importance of the project, Beatty said.

The city will manage the 21st Street renovation, because the extensive work that's necessary means there would be an insufficient "spread" between project costs and resale value to attract the private sector, Beatty said.

There are several other bad homes in good neighborhoods that officials have identified that may be ripe for similar interventions, Beatty said.

With the help of recently passed state laws and the city's new Land Bank, which is operated by the same board as the Redevelopment Authority, the city is planning to intervene to prevent demolition whenever rehabilitation is feasible, Beatty said.

The new policy is a corrective to one the city has pursued for decades: using Community Development Block Grant funding to demolish buildings that the city Planning Commission has declared blighted, according to Beatty.

The blight declarations occur after the Department of Codes and Inspections reaches an impasse with those properties.

Often, their owners have died without heirs or with heirs who don't want to be bothered, Beatty said.

After demolition, the resulting vacant lots usually are burdened with liens, including one the city places for cost of demolition, along with liens that accumulate from city workers mowing the properties, Beatty said.

Those liens can discourage potential buyers who might otherwise consider redevelopment.

Demolition diminishes the tax base, he said. Rehabilitation builds it back up.

In cases where there's enough profit to be made, it will be better for the city to turn the work over to the private sector, Beatty said.

In some cases, the city might be able to make a rehabilitation profitable if it pays for preparatory work up front, like asbestos or lead remediation, he said.

In other cases, churches, civic groups and nonprofits are being recruited by Councilman Dave Ellis to make modest repairs for homeowners who can't afford them.

Similarly, title searches can enable the city to alert banks that hold mortgages on properties that are falling afoul of the Codes Department. This could lead to action by the banks to protect their mortgage collateral, warding off further deterioration, Beatty said.

The banks could pay for strategic repairs, like roofs, he said, or foreclose if necessary.

Mortgage holders are obligated to maintain their properties.

When a house becomes so blighted that it needs to be torn down, it's no win for the bank, as a vacant lot is usually not much of an asset here, according to Beatty.

A notification to PennCrest about the code enforcement efforts that went into the 21st Avenue property over the past four years might have averted the deterioration of that house -- and lightened the burden on the codes department, Beatty said.

Ultimately, Beatty wants to restore the position of executive director for the Redevelopment Authority/Land Bank, so that a professional would be managing the kinds of activities he envisions.

"We're trying to create a flexible system to salvage houses that need it," Beatty said. "This (the action on the 21st Avenue house) is a potential trial run."

Mirror Staff Writer William Kibler is at 814-949-7038.