Trenton has 1,200 residential and commercial properties for sale as-is. You might even call them “handyman specials.” All were abandoned and are boarded up, and the city acquired nearly all the properties through foreclosure after the owners failed to pay property taxes.
“The city is not set up to be a landlord,” says #b#Henrietta Owusu#/b#, acting director of Trenton’s Housing and Economic Development Department. The city is, however, interested in seeing the properties refurbished, reoccupied, and returned to the tax rolls. Trenton has an established process for those interested in buying any of its properties for sale — and it’s not as simple as offering the desired price and sealing the deal.
“We want to be certain the buyer knows what work the property requires to be brought up to code,” Owusu says. “We don’t want someone to place a down payment only to lose it once they realize they can’t afford the work needed to bring the property up to code.”
To help potential buyers and developers understand the purchase and redevelopment process, Owusu and #b#Andrew Carten#/b#, director of planning at the Housing and Economic Development Department, will present a “Small Developers Forum – How to Buy Property from the City” on Thursday, October 21, from 10:30 a.m. to noon at the Trenton Country Club, 201 Sullivan Way, Ewing. The event is part of Trenton Small Business Week, which closes Friday, October 22, with the Trenton Renaissance Ball. For more information about this free event, call the Department of Housing and Economic Development at 609-989-9518.
Originally from Ghana in West Africa, Owusu credits her father with her career choice as an urban planner. Her mother still lives in Ghana but comes to visit. “My father was an attorney and a judge,” Owusu says. “He I thought I’d grow up and become a lawyer like him. He would proudly introduce me as his daughter who’d go into law. But when I was 17, he told me that I wouldn’t make a good lawyer because I was too passionate about my beliefs — and a good lawyer must be able to argue both sides of an issue.”
Owusu was so upset with her father that she wouldn’t talk with him for months. “One day, he gave me some pamphlets on urban planning. I liked what I read.”
She entered the Kwame Nkrumah University of Science and Technology in Ghana, where she earned a bachelor’s in urban planning in 1991. She worked for three years at the World Bank Desk in Ghana’s Ministry of Finance and Development.
Her father traveled a great deal and Owusu lived with him for several months in Italy and England. In London, she met an American whom she would later marry. She followed him to the United States 18 years ago and quickly resumed her career.
Owusu worked in housing and development in Orange and East Orange, before returning to school. She earned a master’s in city and regional planning at Rutgers in 1997. She is currently studying at the University of Maryland, primarily through its online program, for a Pd.D in management.
Now Owusu is using her urban planning expertise in Trenton, which suffers from poverty and many of other urban issues common to rustbelt cities.
#b#A lot of bunk to debunk#/b#. There are many myths people believe about the city and its many properties for sale, Owusu says. “We want to debunk these myths and explain the process for buying property from the city. Some people think the city likes to acquire property or that we could sell each for a dollar, if we wanted to.”
Many of the city’s available properties are in redevelopment areas, which cover wide swaths of Trenton. Property must undergo a rigorous process before the City Council will designate it for a redevelopment area. The property must meet certain conditions. For example, it must be in a blighted area, be abandoned, have a number of outstanding housing code violations, or be the subject of numerous police reports.
The city sets redevelopment objectives for property designated for a redevelopment area and may exercise eminent domain to achieve them. As many as 40 to 50 properties within an area can be grouped into a package that can be sold to a single developer. Properties in these areas face easier redevelopment standards. For example, they aren’t required to use sustainable materials, which are required for projects outside these areas. Redevelopment areas can also attract state and federal grants.
#b#The process#/b#. An interested developer would present a request for proposal to the city when interested in acquiring a package of properties in a redevelopment area. Properties outside of redevelopment areas are usually sold as single properties, often at auction.
The city determines if a property sale is a viable for a particular developer. It might appear attractive for a developer to offer buy a property at a low price. But even a $1 purchase price might prove to be a bad investment if the developer eventually learns that it will cost $250,000 to refurbish a property to code.
“The city prefers to sell to local and minority individuals,” Owusu says. “But we don’t want to convey properties to developers unless they can demonstrate they can afford to refurbish the properties to code. We review their finances and determine the total costs needed to redevelop the property. We bring in people from the city to provide information needed to meet zoning, planning and utilities requirements, as well as an architect. We then can back into the purchase price.”
A developer will be required to present architectural plans before the city will agree to sell a property and provide a work permit. “We don’t just do a cost-benefit analysis,” Owusu says. “The city is less interested in the sale price than in ensuring that it will be feasible for the buyer to restore the property and that it is the right plan for the neighborhood.”
One developer, for example, wanted to buy, restore and reopen a closed gas station. The city denied the bid because it had rezoned the property to residential to make it more compatible with the immediate area.
#b#Reducing absenteeism#/b#. The city has an abundance of rental properties and would like to see more owner-occupied properties. “We’d like to tilt the balance so we have a better mix of owner versus rental properties,” Owusu says.
There is an incentive for small and large developers alike to buy these properties, which usually are sold below market value. The developers can then refurbish and sell them for a profit. There are three boarded up properties in the 100 and 200 block area of Bellevue Avenue that offer a potential return for small developers, Owusu says. The properties are in the midst of two packages of 37 residential and 22 residential units that Trenton worked through a redevelopment program to restore.
“This is now a stable area,” Owusu says. “The other properties have all been rehabilitated, are up to code, and occupied. The city has added new sidewalks and lighting, and repaved the street. It also has primed the pump so a developer could make a nice investment by buying one or more of these three houses.”
#b#Beware the timeframe#/b#. The foreclosure process is one Trenton is always reluctant to take. “The process takes a long time,” she says. “The city first tries to sell a tax lien on a delinquent property. It begins foreclosure only when no buyer can be found.”
Developers can offer to buy a property at any time. The city also holds auctions; the next is planned for Saturday, November 13, when about 100 properties will be offered. Houses in recent auctions sold for $1,000 to $27,000. Another auction will be scheduled in early 2011.
The city does not maintain a public online listing of the properties but each is identified by green and white boards. A a notice in its front window states that the property is available for sale, unless it is being held for a redevelopment project. In addition, interested developers can pick up a list of city-owned properties from the Department of Housing and Economic Development. The city also advertises the auction list and the conveyance of all properties are advertised.
“These properties offer a developer the chance to make a profit while the city gains the return of properties to the tax roles – and revived neighborhoods in Trenton,” Owusu says.