Though you’re probably not aware of it, the city has been giving away homes and vacant lots of land to responsible and willing citizens for years. Tucked into the city’s real estate office, the Urban Homestead Program has been very successful at helping homeowners grow their property by homesteading adjacent vacant lots. On the other hand, it has had little luck homesteading its own, vacant residential homes. One West Side community organization—PUSH Buffalo—is proposing a plan that builds on the current homesteading program to make it a more effective community stabilizer.

“Urban homesteading” is a modern spin on the 1862 Homestead Act, which promised a settler 160 acres of undeveloped land on the American frontier if he stayed on it for at least five years and improved the land by farming it and building a house. It was a hugely successful program, and more than 80 million acres of the American West were settled this way before the turn of the century. Perhaps the most vivid image of homesteading in the contemporary mind is of the Oklahoma Land Rush of 1889. On April 22 of that year, 50,000 settlers lined up along the borders of Oklahoma Territory, where a high-noon signal from US Cavalry officers set off a crazed race—on horses, wagons, bicycles, trains and foot—to stake the best claims. Whole cities were established overnight. “Unlike Rome,” wrote a correspondent for Harper’s Weekly at the time, “the city of Guthrie was built in a day,” exploding with a population of more than 10,000 in only a day.

1976 saw the end of homesteading in the 48 contiguous states under the Federal Land Policy and Management Act. Around the same time, however, American cities were reeling from the late 1960s middle class flight to the suburbs. Whole swaths of city were abandoned, demanding increased services for the urban poor left behind while eroding the tax base. Landlords walked away from back taxes, leaving more abandoned properties and further devaluing what was left. The self-repeating cycle of vandalism and arson took hold. Sound familiar?

In a bold move to reverse this trend, several cities—Wilmington, Philadelphia and Baltimore—enacted urban homesteading programs. People could purchase abandoned, city-owned properties for $1 down if they agreed to bring them up to code and stay put for a number of years, usually five. The programs were successful, with Baltimore’s eventually becoming the model that dozens of other cities imitated.

Buffalo’s Urban Homestead program has taken on many different shapes over the years. In the mid 1990s, for instance, then-city comptroller Joel Giambra unveiled a plan where the city rehabilitated vacant and tax-foreclosed homes using Federal HUD funds, and then sold them to low- and moderate-income families (M&T Bank agreed to finance mortgages on the houses).

Today the program is set up to allow participation in three ways (as taken from the city’s real estate Web site), all of which come at a hypothetical cost of only $1:

1. Vacant Lot Next to an Existing Home: Applicant must OWN AND OCCUPY the residential structure adjoining the city-owned vacant lot to be homesteaded. The applicant must be current on all city and county property taxes, water, sewer and user fee charges; have no other liens owed to the City of Buffalo; or property code violations on any properties owned. The applicant will be required to clean and improve the vacant parcel and maintain the property for a period of 36 months.

2. Homesteading a Vacant Residential Home: ANY first time home buyer wishing to acquire a city-owned single or two-family home through homesteading muyst provide sufficient proof of FINANCIAL ABILITY to repair and maintain the property. REPAIRS MUST BE COMPLETED WITHIN 18 MONTHS OF TRANSFER AND OCCUPY THE RESIDENCE FOR 36 MONTHS.

3. Homesteading Vacant Land for New Home Construction: City-owned lots acquired through tax foreclosure can be homesteaded after the applicant provides CERTIFIED BUILDING PLANS AND PROOF OF FINANCING for the construction of the home.

The vacant land homesteading program is quite successful. The city owns hundreds of vacant lots, all of which cost money to maintain and which generate no tax income. When the city conveys one of those lots to an adjacent homeowner, it’s a win-win situation. The homeowner gets extra space for a garden or yard, the neighborhood benefits from the beautification of the lot and the city has one more tax-generating plot of land that it need not maintain. That program is running smoothly, though it could benefit from more publicity.

The other two arms of that program have been less successful. One city official told me that fewer than a dozen vacant properties have been homesteaded in the past three or four years—hardly an effective tool for community stabilization.

In part that probably has to do with where the homestead-eligible houses are located. They are city-owned properties within Urban Renewal and Comprehensive Code Enforcement Areas—neighborhoods that “are in the worst shape,” as one official said. These neighborhoods are scattershot around the city—Schiller Park, Broadway-Fillmore, Lakeview, the Fruit Belt, Seneca-Babcock and Black Rock are a few examples. The obvious pitfall here is that if a homesteader secures a loan to rehab a home in one of these neighborhoods—probably anywhere from $20K to $50K—it’s likely that, due to poor market conditions in the neighborhood, the house will not be worth the money that went into repairing it. For example, the city currently has four homestead-eligible houses on Jewett Avenue, in the Leroy district. The market here is so unstable that in the past four years houses have sold for as high as $40K, averaged below $20K and have frequently sold for well under $10K. It’s unlikely these houses will be brought up to code that cheaply. There needs to be a way to improve an entire market.

Rochester experienced the same problem with its urban homesteading lottery, which was discontinued in the last few years. The city went above and beyond expectations to set the program up to favor homesteaders: Its inspectors spent four months creating an inventory of homestead-eligible homes, along with detailed rehab plans and estimates for every home they sold (for $1) at the auction. But the program failed. Kathy Sheets, from Rochester’s planning department, explained it this way: “The problem was really the cost of the repairs that were necessary. In order for the model to work, the property’s got to be mortgageable at the end, so if the rehab costs exceed the value of the home after it’s rehabbed, you don’t have a workable project. The market conditions were too poor.”

How do you create a better housing market, then? PUSH Buffalo has an idea, and they aren’t the first to think of it: Concentrate your resources. This approach is what made Baltimore’s first wave of homesteading successful. Its Otterbein community, only a couple blocks from that city’s inner harbor, was quickly decaying in the early 1970s as its residens fled to the suburbs, and officials began eyeing the neighborhood for a new interstate highway. The city decided to give Otterbein a chance, though, and opened 110 units to homesteaders. Several thousand people attended an open house of the structures and then entered a lottery to get one of the houses. Winners were selected, and almost overnight the community was repopulated. Today Otterbein is a swanky district that thrives on the redevelopment of the Inner Harbor. You’d never guess it was on the verge of demolition 30 years ago.

PUSH is realistic. They don’t envision Lakeview becoming an enclave of upper-middle class stability overnight. What they propose is a small pilot project, a concentrated effort at repopulating and rebuilding one neighborhood.

Here’s the plan, as put forward by PUSH’s Aaron Bartley and Eric Walker: Identify 100 homes in a neighborhood that need work but aren’t disastrous. That neighborhood needs to be a borderline one—next to a district with a stable market. By way of argument, we’ll say the West Side neighborhood bordered by Richmond, Rhode Island, 15th, Hampshire, Grant and Lafayette—which borders the very prosperous “Elmwood Village” and includes the recovering Grant-Ferry commercial district. If the city doesn’t own 100 properties here, it can doubtless work out a deal to take some HUD tax-foreclosed houses and can seize some abandoned, tax-delinquent properties. Next, have inspectors visit these properties and perform a basic triage of approximately how much it would cost to bring each one up to code. The very best might cost $10-20K and the very worst as much as $70K. (A bonus would be if inspectors could write up rehab plans for the houses, as Rochester did.)

Create two or three pools of houses based on the amount of work they need. Do an advertising blitz about a homesteading lottery, and provide the real estate division’s phone number. As potential homesteaders call, funnel them into a loan counseling and assessment process. HomeFront, Inc. is a development agency that already performs this service for Buffalo, as well as other organizations. HomeFront has expertise in low-income homeowners and, through its partnerships with local financial institutions, might be able to prequalify homesteaders for home improvement loans based on their assets ($20K for low-income people, perhaps, and $50K for middle income). Once they’re qualified by HomeFront, they can enter the homesteading lottery, and receive a number between 1 and 100. The first person gets the first pick of a house in his or her income pool.

Imagine what would happen in that neighborhood if suddenly 100 owner-occupants put $20-50K into their houses—that adds up to a $2-5 million private investment. In theory, that would significantly strengthen the housing market in that area. Couple that with a concentration of block grant funds in the Grant-Ferry commercial district, and you’ve begun to rebuild the fabric of that neighborhood.

Bartley and Walker know that, just like homeownership itself is no panacea, an urban homesteading program will never make the city “turn a corner” and beat back all of its problems. After all, even the most successful homestead programs rarely converted more than 500 or so abandoned homes in their tenure. But it is a way to link available resources to improve an existing program. A homesteader probably isn’t used to navigating his own financing, and might not have a clue of what he’s getting into when the $1 dream lights up his eyes. But by putting all of the resources within his reach, they can put the dual dreams of homeownership and stable neighborhoods within reach, too.

—peter koch

It Works There attempts to spark dialogue about the problems facing Buffalo, and offer creative solutions and ideas to improve life here. If, in your travels, you’ve encountered other good ideas for Buffalo, we’d like to hear about ’em. Call us at 881-6604 or email peter@artvoice.com.