A Policy Rx for the Homeless Crisis

broken christmasDespite HUD Secretary Shaun Donovan proclaiming in March that President Obama would send legislation to Capitol Hill to resolve the nation’s homelessness crisis, nothing has happened. Not counting those still left homeless because of Sandy, there remain close to one million Americans who won’t sleep tonight under their own roof, and 10 to 12 million will be homeless at least one night this year.

Whatever the reason for federal inaction, a solution exists that doesn’t even have to involve Washington.

There is a way to turn the country’s nearly 900,000 empty houses, condos and townhouses seized by foreclosure or abandoned into places to live for homeless individuals and families. And it can be done without trying to get legislation through a dysfunctional Congress or contending with the right wing “pain caucuses” dominating so many state legislatures.

Existing Authority

Municipal governments have the authority to rescue empty and abandoned houses.

The power to do so is rooted in “eminent domain” and governments use it frequently to seize private property for road construction and schools to power lines and even commercial development.

The irony is that John Robert’s Supreme Court is not friendly to progressive ideas, and it’s probably never thought of the homeless. But it created a precedent for cities using eminent domain to help the needy.

In 2005, the Court said New London Conneticutt  could use the procedure to seize private property, including homes, so corporate developers could build a new shopping mall. The Court expanded the definition of eminent domain to include seizures where someone might turn a profit. The precedent means there’s no reason why a city could not do the same thing, taking over empty or abandoned houses, condos and townhouses, fixing them up and making them available to homeless families or individuals.

If something can be done for private profit, it can be done for the public good.

Eminent Domain

Assume that a house has stood empty since First Greedy Bank foreclosed on the delinquent owner in spring. The city uses eminent domain to seize the property after it’s empty for, say, six months because it’s in the city’s interest to repair what has become a deteriorating eyesore and make it livable for a homeless family.

The town offers “fair market value” to First Greedy. But what is fair value? The bank wants $100,000 because that’s the outstanding mortgage. The city responds that there are other abandoned houses in the neighborhood, and that similar occupied homes nearby are going unsold at $50,000. So, the value is determined the same way as in any eminent domain proceeding when two sides can’t agree: The average of three independent appraisals, which might be as low as $40,000.

Funding the plan could be done just as creatively.

Assume there are foreclosed houses in a city worth $25-million, including the cost of making repairs. The municipality sells $25-million worth of 30 year tax free bonds to investors. With money so cheap, the town would pay three percent, possibly less.

When a homeless person or family moves in, what they pay the city is equal to what the municipality has to pay every month to meet its debt obligation on the specific property. As part of the deal, the municipality could declare a property tax holiday for maybe three years – precisely what governments do all the time for businesses – to hold down costs for the new owners.

Needless to say, bankers wouldn’t be crazy about the idea even though the law would be on the side of municipalities. Banks could tell it to the Supreme’s.

Supreme’s Blessing

Kelo v. New London, the Roberts’ eminent domain decision, is the magic key given to cities to solve the nation’s massive homeless problem created by the First Greedy’s.

Declining property values in one neighborhood reduces the city’s tax revenue. In turn, this reduces its ability to provide services to all parts of a city, ranging from schools to street and sewer maintenance, and fire protection to hospitals – including areas not affected by foreclosures.

Moreover, as it provided housing, a city would create local jobs.

Homes taken under eminent domain would likely need repairs, sometimes major fixes, before they would be livable again, especially if they’ve been standing empty for a while.

This means work for carpenters, electricians, plumbers, roofers, brick layers, painters, glaziers and landscapers. The house probably would need new appliances and windows, possibly a furnace and even mundane items like door knobs and light switches. Everything would be bought from local companies not directly involved in the rehabbing – but need employees to sell, deliver, install and service the products. The positive economic effects of refurbishing empty homes would ripple through a city.

Best of all, homeless families and people would have an affordable, decent place to live in a neighborhood where decline was halted and reversed.

Loving Care

To ensure that the home is cared for, the city could require that the people moving in actually work on the rehab as Habitat For Humanity does. People take pride in their new place if they’ve put a chunk of their own time, energy and sweat into the project.

They are especially likely to treat their new home with TLC if they own it, as opposed to renting it from government as was done in the old urban housing projects that went up as fast as possible from the late 1950s through the 1970s.

The problem that arose then was that people who don’t own the place where they live didn’t always treat it well. In the 1990s, St. Louis Missouri had a major problem with public housing deteriorating and becoming crime hubs. The city turned some of the projects into co-op’s, letting residents buy their apartment at a low cost. Almost immediately, several things happened.

  • Druggies and prostitutes disappeared because they didn’t qualify as buyers.
  • Residents took care of the entire property, not just their unit.
  • People policed each other, ensuring that old problems did not reappear.

All that is required for the same thing to happen now is for cities to take over empty properties, make the needed repairs, hand the title over to homeless people, and let them ensure that their neighborhood turns itself around.

Not every homeless person would qualify. People with untreated addiction problems or mental illnesses likely would be excluded because they’re probably incapable of maintaining a home. But a nationwide program could reduce the country’s homelessness by anywhere from 50% to 70%.

While eminent domain laws vary slightly from state to state, the differences aren’t enough to block using the concept in every state to take a big chunk out of America’s homeless problem. The beauty is that this approach doesn’t require political will or even politics. Cities could start tomorrow.

Charley James

Author and journalist Charley James’ next book is about his experience becoming homeless. When published, Charley will donate a percentage of his advance and royalties to homeless organizations.

More articles by Charley James Help keep Charley living indoors.

Follow Charley on Twitter @SuddenlyHomeles. Posted: Saturday, 22 September 2012 Charley’s next book is about his experience being homeless. When published, he will donate a percentage of his royalties to homeless organizations.

Published: Sunday, 9 December 201

Published by the LA Progressive on December 9, 2012
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About Charley James

If you are born in Milwaukee, chances are you're born a Democrat. So, I gravitated naturally to liberal politics as an activist and a journalist. I've been writing since I was eight and, after working in newsrooms for far too long, I have devoted much of the past decade as an independent investigtative jouralist. For much of the past year, I've been writing about homelessness - America's immorality play.