TAFT: Indy needs demolition and renovation

A debate has been growing in Indianapolis about the wisdom of demolishing some of the 10,000 abandoned houses plaguing its core neighborhoods. The city has announced plans to use Rebuild Indy funds to demolish about 1,500 homes in the next year to respond to neighbors who suffer through the blight.

The plan has raised alarm among some neighbors and historic preservationists who view such demolition as senseless wrecking of historic architectural fabric.

It is clear the city must demolish many structures that are highly deteriorated or poorly located. This will achieve positive community results only if demolition is accompanied by a unified effort of local government, community development not-for-profits and banks equipping individual buyers to renovate homes that are feasible to save.

Convening these groups to implement a large-scale “urban homesteading” effort should become another item on Mayor Ballard’s growing neighborhood revitalization to-do list.

No city has ever demolished its way to urban health, and places like Detroit and the north side of St. Louis illustrate the ultimate end of runaway demolition. On the other hand, studies have shown that crime increases and property values drop in a block with even one vacant house.

So what should be done with abandoned homes?

Preservationists have suggested that local government should transfer these properties and the approximately $8,000 per house budgeted for demolition to new homeowners willing to fix them up as their own homes.

However, many of these houses are not actually owned by the government.

Also, the funds budgeted for demolition are usually far less than the cost of making the houses habitable. Lenders have restricted mortgage standards so tightly since the start of the housing crisis that it is almost impossible to obtain a single loan for acquisition and significant renovation of a house, particularly for buyers who don’t have a 20-percent down payment.

Another suggestion is for not-for-profit groups like Habitat for Humanity or community development corporations to acquire and renovate these homes, then sell or rent them out to new residents. While such work now occurs on a modest scale, the 30 years of not-for-profit home acquisition and renovation in Indianapolis has resulted in fewer than 2,000 fully renovated homes.

Even a dramatic increase in funding for such efforts seems unlikely to achieve a significant reduction in abandonment, due to the constrained development capacity and financial stress the recession has caused for these groups.

In the past three years, investor groups increasingly have acquired foreclosed homes and turned them into long-term rentals. While such investment has certainly prevented an even larger abandonment problem, these rental homes are unlikely to spur other investment around them.

The only real solution to the abandoned housing problem is a combined strategy of identifying and demolishing the houses that will never be viable again, while simultaneously fostering the creation of tools and partnerships that will empower individuals to purchase and renovate vacant homes for their own use.

Groups like the Indianapolis Neighborhood Housing Partnership can use their extensive experience in affordable lending to partner with banks to create acquisition/rehab mortgages.

Community-based organizations can point prospective buyers to homes in redeveloping neighborhood pockets and link them with contractors who have the ability to complete quality rehab work. Real estate agents can work together to roll out creative marketing approaches that lift up the benefits of urban living. Major employers in our urban core can offer incentives to their employees to live close to work. Trade groups can retrain unemployed construction workers to perform home renovation instead of production building.

These partnerships could not only revive vacant homes, but also inject much-needed economic activity into our city.

I hope Ballard can call a truce in the demolition argument and inspire our city to come together and take the ambitious steps necessary to restore each viable vacant home and demolish those with no useful future.•

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Taft is Indianapolis executive director of Local Initiatives Support Corp., a not-for-profit that invests in neighborhood redevelopment projects. Send comments on this column to ibjedit@ibj.com.