Local Real Estate Investor Proposes Solution to Urban Blight
Around 200 people spoke at last week’s public hearing on Councilwoman Deb Gross’s land bank legislation, according to Gross’s chief of staff Nathaniel Hansen.
At least one of those people, Josh Caldwell of the Pittsburgh Real Estate Investors Association, has gone public with his proposal for fighting urban blight.
He said the idea came to him as he listened to some people’s concerns about the land bank bill.
“They were worried about the government over-stepping its bounds,” Caldwell said. “They were worried about land speculators coming in and buying up large swaths of property, just tearing stuff down, and they were worried that they wouldn’t have any input in the process.”
Hansen said Gross welcomes public input on her legislation, and that she hopes the creation of a land bank for city-owned and tax-delinquent properties will both empower community members and incentivize development.
One way to incentivize that development, Caldwell said, is by allowing investors to rehabilitate houses that they can then sell to community groups through owner financing.
“The community organization could then buy a property with no cash down, nothing involved in the deal originally, with an in-place mortgage, though they wouldn’t be the end user,” Caldwell said. “It would be their job to select somebody from the community to become a first-time homebuyer.”
Caldwell said this scheme would remove barriers for first-time homebuyers, and would help investors achieve a profit on properties that might otherwise be too expensive to rehabilitate.
“The investor in that case could actually recover their money and make something that would look like a profit by owner-financing it at a low interest rate, and using the power of compounding interest to recover what would appear to be an upside-down cost in the process,” Caldwell said.
Hansen said Caldwell’s plan is just one of many mechanisms that could be put into place to deal with blighted properties.
Caldwell called Gross’s land bank legislation “shortsighted,” saying that it does not include a “mechanism … to deal with houses that don’t make economic sense to rehab.”
However, Hansen said that when Gross wrote the legislation, she purposefully did not include every single detail of how the land bank might function. Instead, she wanted to leave room for public input.
According to Gross’s website, there are approximately 35,000 “physically, economically, or for other reasons, distressed parcels” in the city of Pittsburgh, which cost this city as much as $20 million to manage annually.