The vacant house on Kohler Street in the City of Tonawanda had 6 feet of water in the basement, rats and mold throughout.
A house on Broad Street sat empty for years and was the subject of numerous complaints to police.
A third, on Morgan Street, just steps from Tonawanda High School, was quickly becoming a nuisance with a crumbling roof and porch.
All three blighted properties had been foreclosed on and were starting to drag down otherwise stable middle-class neighborhoods.
All three are now getting a second chance. They were acquired last year at the city’s foreclosure auction by the Buffalo Erie Niagara Land Improvement Corporation, also known as a land bank.
“By us fixing that missing tooth, that bad apple, and getting in there to surgically intervene on that block, hopefully we’re bringing the rest of the block up,” said Jocelyn Gordon, the land bank’s executive director. “We’re psychologically and financially improving the well-being of everybody on the block.”
The land bank focuses mainly on “at-risk neighborhoods” with an older housing stock.
“We see a lot of this in the inner-ring suburbs,” said Erie County Executive Mark C. Poloncarz.
Nowhere is the range of the land bank’s potential on better display than at the three properties in the City of Tonawanda. The land bank is making major improvements on the Morgan Street house and renovating the Broad Street house. It demolished the vacant house on Kohler Street and is putting a modular home in its place, a first for the land bank.
“It was an eyesore,” said William Doel, who has lived on Kohler since 1946. “It should have been torn down a long time ago.”
Here’s how the process works: a Town Board or Common Council invites the land bank into their municipality.
Building inspectors, planners and other officials identify vacant and abandoned properties in foreclosure that they’d like the land bank to acquire. The Town of Amherst, for example, has a “distressed properties task force” that meets quarterly and recommends nuisance properties to bring to the land bank’s attention.
The land bank attends annual in-rem foreclosure auctions in Erie County and the cities of Buffalo, Lackawanna and Tonawanda and uses its “superbid” to supersede any other interested parties.
The land bank guarantees it will stabilize and add value to a property, rather than having it possibly sold at auction to a speculator who might invest the bare minimum or nothing at all while milking it for equity and rental income, Gordon said.
No money changes hands between the land bank and the municipality.
“The only way to really make this work is when we acquire them for nothing so we can put maximum value into the house,” Gordon said.
All three Tonawanda properties had outstanding tax liens: $19,132 on Morgan, $21,827 on Kohler and $26,474 on Broad.
The towns and cities might recoup all or some of owed back taxes, or none at all, depending on the land bank’s rehab costs.
But what’s more important is getting the homes occupied by responsible owners again and back on the tax rolls, said Mayor Rick Davis.
“I’m of the mindset that it takes only one home to bring down a neighborhood, but on the flip side it takes only one home to turn a neighborhood around,” he said.
The concept of a land bank began in 1973 in St. Louis and Cleveland but the programs didn’t have much power, said Tarik Abdelazim, associate director of national technical assistance for the Center for Community Progress in Washington, D.C.
A second generation of land banks followed in Michigan and Georgia, he said.
Land banks came to New York with the passage of legislation in 2011 as part of the third generation being created nationwide in Ohio, New York and many other states, he said.
“Each generation basically learned lessons from the prior one and assumed a little more power,” he said.
There was no specific funding for the local land bank aside from $100,000 in seed funding from Erie County, an early supporter of the land bank.
In 2014, the Attorney General’s Office distributed about $25 million from the JPMorgan mortgage-backed securities settlement to land banks across the state. The Buffalo and Erie County land bank got $4.5 million.
Today, the land bank has gained steam and is hitting its stride.
The land bank currently holds title to 23 properties in Amherst, the Town of Tonawanda, Springville, the City of Tonawanda, Lackawanna, Sloan, Kenmore, Angola, Buffalo, Depew, Hamburg, West Seneca, Cheektowaga and Lancaster. It has acquired nearly three dozen properties since 2014. This year, it will complete 17 rehabs of vacant, tax-delinquent, foreclosed homes and return these properties to productive use with responsible owners, Gordon said.
Most often, the bank acquires properties at auctions. But sometimes a bank will simply turn over a vacant home to the land bank for a tax write-off, along with a cash concession. The land bank has received five donations so far, four from Wells Fargo and one from JP Morgan Chase, Gordon said.
That’s what happened to the duplex at 79 Ellen Drive in Cheektowaga, where the land bank used a $15,000 cash concession to replace the roof. There were six offers for the home, which sold for $81,000, $6,000 over the asking price.
But some say the land bank has the potential to do more, especially in the City of Buffalo, which had 747 properties at its last foreclosure auction.
“I think the land bank could realize its truest potential when they get to the point that they have the capacity and funding to go into bad blocks and help transform them into good blocks,” said Alan Oberst, a freelance writer who has written about the land bank and has rehabbed properties on Buffalo’s West Side. “That’s what many of us in the city would love to see the land bank do.”
The Morgan home was quickly becoming a problem for neighbors.
“They had shingles flying off the roof into their yards, windows were broken in and the front porch was collapsing,” Davis said. “To have to live next to that when you’re paying your taxes on time trying to keep your house up can be very disconcerting.”
The home is getting a new roof and a rebuilt front porch along with some updates inside. “We love front porches and think it really is just a gesture to the neighborhood, just makes for a more friendly environment,” said Gordon.
At one point, the single-family home was converted to a double. Now, it’s being converted back.
“There were some investors who were very upset that they didn’t have the chance to bid on this,” Gordon said. “At the same time, we guarantee the city that we would add a tremendous amount of value to that house.”
The home likely would have sold for between $40,000 and $45,000 at auction.
“If this guy paid $45,000, how much is he going to put into it?” Gordon said. “We were able to put a whole $85,000, plus or minus, that we had in our budget toward the rehab.”
When the work is complete, the house could sell for upward of $100,000, she said. It must sell to a moderate-income homebuyer, up to $81,240 for a family of four.
Meanwhile, the modest bungalow on Broad was completely gutted, down to the studs, and given a wide open floor plan.
“This one just had to be taken all the way down, completely ripped apart, walls moved,” Gordon said. “I mean this house was really, really in rough shape.”
The land bank invested just over $100,000 for all-new mechanical systems, appliances and more for the two-bedroom home, which will be listed at $89,900 and also sold under income restrictions.
“We will lose money on this property but there are properties that we’re lucky enough to gain on,” Gordon said.
It will generate between $3,000 and $4,000 in property tax revenue for the city once it’s sold.
“It’s a decent block,” she said. “It’s a good neighborhood. It was really a problem house that the neighbors complained about quite a lot and it sat empty a long time.”
Davis said he’s also pleased with the turnaround on Broad. “Now it’s going to stand out for the right reasons instead of the wrong reasons,” he said.
Surprises awaited the land bank in the Kohler home. Buyers at foreclosure auctions can’t enter the homes until they’re sold, because technically they’re still owned by the previous owner.
“When you buy a property at auction, you don’t know what you’re going to find,” Gordon said.
What they found was the water and mold. Several general contractors told Gordon the home was beyond saving and she realized demolition was the only option.
“I’m glad to see it gone,” said Doel, 88, who complained many times to the city about the property’s overgrown grass and roof holes. “It was a health hazard.”
Constructing a new home on the site would have been cost-prohibitive, Gordon said. So the land bank started to consider a sectional prefabricated home from iQ Modular Homes in Depew, which Gordon said was “shockingly affordable” at $134,000.
Right now, the parcel on Kohler is a large hole in the ground surrounded by orange snow fencing. In March the foundation will be poured and allowed to cure for three weeks.
The walls and roof then will be trucked in piece by piece over a weeklong process Gordon likened to a “barn raising.”
“We’re testing this model,” she said. “We’re ready to use it somewhere else. We’re hoping that we can do it on a site that we own in the Village of Depew. We want to replicate it.”
The 1,180-square-foot, two-bedroom home with a small office and 1½ baths will likely sell for between $115,000 and $120,000, meaning the land bank will also lose money on this one. But it turns a profit on others, which makes it self-sustaining.
“What’s happening is what we hoped would happen,” Poloncarz said. “It’s generating enough revenue from the sale of these properties to reinvest in other properties and continue to generate revenue to self-sustain itself.”
Tonawanda’s experience working with the land bank has been a positive one, Davis said.
“It’s been a great relationship with them,” Davis said. “I’m already eyeing up the list this year for a handful of homes the land bank could possibly team up with the city to rehab and put back on the market.”
For Doel, the modular home on Kohler will be a welcome addition to his street and the end of a long-running nightmare for neighbors.
“I think it’s going to help the neighborhood a lot,” he said. “It’s great to have something that will keep the neighborhood looking nice.”