When is investing an act of charity? My work in Melrose Mercy.
A little over 18 months ago, I could no longer stand the modest pace of the progress in Midtown, so I decided to focus my efforts in the city's poorest neighborhood to see if I could help jumpstart a come back in Melrose Mercy. I have outlined on this website some of the programs that I launched or changed. Here I want to layout a few of the "investments" that I have made in the neighborhood. I realized going into this effort that I could not make money and do an effective job of using the houses that I rehab to encourage a neighborhood comeback. That was fine with me because neighborhood renewal is the goal.
Here are some concrete examples of the "investments" that I made in the Melrose Mercy neighborhood:
1) 1936 Melrose Ave S. Purchased Nov. 2011 for $15,800. Rehab cost $81,835. Rehab cost was high because termites required significant reconstruction including the porches, the bathroom and portions of the roof.
Because the possible sale price was no more than $65,000, I decided to rent it for $800/Month to a very nice lady. Happily, 3 houses have been rehabbed on the street since and another boarded house just sold.
2) 1734 12th Ave S. Purchased Dec 2012 for $28,000. Rehab cost $30,000. House is for sale for $55,000. Everything from roof to floor has been redone.
3) 1243 - 21st St. S Purchased in 2012 for $15,000 with intention of rehabbing. After spending $2000 on building plans, it became obvious that the termite damage was too severe to rehab. We demolished it for $3,000. I hope to get a new home built there. Currently, it is an expensive vacant lot.
4) 1523 Preston St. S. Purchased March 2013 for $19,000. Projected rehab cost is $30,000. There is another boarded home in foreclosure next door so I do not believe it can sell for more than $40,000 at this time. I plan to rent it out and hope that it's transition from a boarded home to a nice home on the street will cause a ripple and other homes will be improved.
5) Vacant lot in 1900 block of Melrose. I purchased a vacant lot on the same block that I rehabbed a house. At this point, we have simply cleaned it up and hope to be able to build on it at some point.
6) 1650 19th Ave S. I first saw this partially built house when I was going door to door after being appointed to council. It has a foundation, walls and plumbing stubbed in. Then, the builder went bust and abandoned it. Staff said there was nothing I could do at the time. A few years later after I pushed for choices, I was told it was possible to buy the tax deeds and in about 1 year force the sale of the property. I did that. No one else bid and so it became my responsibility. The problem worsened because the city had cut the grass and such during the intermediate years which resulted in 30,000 of additional liens. Since I am a city official, staff is reluctant to enter into the same kind of agreement that any other citizen can get which is if the new owner finishes building the house, most liens would be forgiven. Bottom line is that I am going to give this property to a non-profit who will finish building it. Money lost is about $7,000 less any tax deduction. The neighborhood will get an eyesore turned into an asset.
The nature of being in public office means that everything I do is looked at with a critical eye. Financial disclosure and public records require much of this to be disclosed. I wanted to simply layout the math so people understand this is no a money making venture.
Another complication I have found is that programs intended to help first time homebuyers and those to stimulate renewal are off limits for potential homebuyers and for me as long as I am in office. I am prepared to lose money in the neighborhood if it helps generate sufficient momentum to help the neighborhood comeback. It does however, make it more difficult to sell the home to a first time homebuyer. I will happily step aside once the momentum results in rehabs that provide decent housing for the neighborhood. My wife will be very happy when this happens as well.