Saturday, June 22, 2013

Gary, Indiana to sell 7,000 properties for $1.00 each.

Gary, Indiana has proposed two steps that may predict the future for cities across the country:
(1) The Daily Mail reports that the City would like to operate on 40% less land.  40% of Gary's land would "return to nature" under this plan.
(2)  Gary owns 7,000 properties (compared with the roughly 500 owned by Harrisburg, PA).  Gary proposes to sell these properties for $1.00 each. 
  • In the next few months the city is planning to auction off the housing for $1 each.
  • The homes would each need $15,000-$30,000 in repairs.
  • Buyers would have to agree to renovate their purchases as quickly as possible.
  • If buildings are beyond repair, NBC reports that a 'deconstruction' program could be initiated - to take apart buildings and recycle materials.
This approach fails to recognize the title defects that result from prior tax sales.  The City is unable to convey good title to these buyers.  The buyers will have to file quiet title actions (against prior owners) in order to clear the title and obtain financing for the repairs. 
Despite the flaws in this proposal, urban consolidation is an approach that will become almost mandatory as municipalities struggle with declining revenues and increasing service costs.
Compare this approach with the approach taken by Detroit in recent years

Update - August 25, 2013
Tara Steele provides more information on the "catches" in this program.