Lansing mayoral candidates discuss plans to deal with city’s housing crisis

(Photo by Todd A. Heywood/Michigan Messenger)

LANSING — The housing crisis in Michigan’s capital city is stark. Facing an estimated 10 foreclosures a week, Lansing has nearly 600 red-tagged, or condemned, properties. Between 45 percent and 48 percent of the city’s livable spaces are rentals. The city is also facing a homelessness problem estimated to be 28 homeless persons per 100,000, well above the national average of 22 homeless persons per 100,000. The city’s unemployment rate in May was 11.5 percent.

These issues, combined with dwindling state revenue sharing, have hit the city hard resulting in budget cuts — $5.5 million this budget year alone. Whomever takes the reigns Jan. 1 as the next mayor of Lansing will face these issues and shape the city’s response and recovery.

On Aug. 4, incumbent Virgil Bernero faces Charles Ford, an attorney and Lansing school board member; Carol Wood, an at-large city council member; and Ben Hassenger, a 25-year-old student. The top two vote-getters will face off in the November general election.

Ford, Wood and Bernero each agreed to sit down with Michigan Messenger to discuss how they would address the city’s housing crisis if elected. Hassenger did not respond to multiple email requests seeking his participation. Bernero would only agree to the meeting if members of his administration dealing with housing issues could be present and participate in the interview.

While the Lansing City Charter does not give the mayor direct control over housing issues, it does give the city’s chief executive oversight of multiple city departments, including Planning and Neighborhood Development, that have a role in shaping housing policy.

VIRGIL BERNERO’S PLAN

Lansing Mayor Virgil Bernero

Bernero, 45, said his administration is focused first on keeping neighborhoods strong, which also includes keeping aging housing stock up to code, including cracking down on landlords who let their rental properties deteriorate. Secondly, Bernero, a former state lawmaker and Ingham County commissioner, said his administration is focused on foreclosure prevention and his third priority is homelessness services. Bernero said all of those priorities are overshadowed by his economic development efforts, which he said is the ultimate path out of the housing crisis the city is facing.

“My first line of defense, of course, as mayor of Lansing when it comes to housing is economic development,” he said. “Because if the city is growing and we’ve got good jobs, much of the problems we are talking about will go away.”

Bernero said he spends 60 percent of his day working on economic development. Not only does that include leveraging nearly $500 billion in new development in the city’s downtown, but also harnessing the voices of other mayors of cities tied to the declining fortunes of the state’s auto industry. Bernero’s national profile has been elevated by numerous appearances on Fox News, MSNBC and CBS, where he has become known as one of Michigan’s strongest supporters of General Motors, a key employer for not only the state but its capital city as well.

His national profile has led some Lansing-area union locals to chastise him, including avoiding a June 1 rally hosted by Bernero and Jesse Jackson at the state Capitol to “save the American Dream.” Opponents argue the mayor has spent too much time addressing issues that he has no control over, like free trade pacts, while ignoring issues in his own back yard.

Bernero and his staff said addressing such national issues as free trade is in the interest of the community, because if Lansing’s city government does not push federal officials to renegotiate free trade deals, the state’s economy will continue to collapse along with Lansing’s. That, the mayor and his team argue, will continue to destroy the community and add to unemployment and homelessness, among other issues.

But even Bernero admits his national focus has distracted from local issues like Lansing’s housing crisis, where an estimated 10 homes per week lapse into foreclosure.

In an April interview, Bernero told Michigan Messenger he had “taken his eyes” off the foreclosure crisis in order to address another: GM’s bankruptcy. The mayor said he got a wake-up call about the crisis when he saw Michigan Messenger’s profile of 51-year-old Lansing resident Melody Stratton and her struggles to avoid a foreclosure on her home. His staff stepped in and assisted in getting Stratton connected with Attorney General Mike Cox’s office, and as a result Stratton was able to delay her foreclosure through negotiations with her lender.

“Housing has always been something we do, it was just not as difficult before the foreclosure crisis,” Bernero said. “It’s just difficult to keep up with the volume because cities were not set up to do it. We’re trying to adapt to the demand.”

Under his administration, the city’s housing policy has focused on three areas, the mayor said: Fostering strong neighborhoods, supporting home ownership and establishing and enforcing firm rules for rental properties. He said the city has established the 211 call-in center to assist homeowners facing foreclosure, but it is also working on emergency housing needs through the Human Relations Department. The focus on the mayor’s housing policy is decentralized, operating from various departments, with the day-to-day operations overseen by Bernero appointees.

“If you go out in the city and see code enforcement not adequate, that’s my fault,” Bernero said. “With the homeless, that’s partly my job, but there’s not enough money.”

Bernero said he would rather have all housing in Lansing be owner occupied, but acknowledged part of affordable housing is having an adequate stock of rental properties in the city. Dorothy Boone, development manager from the city’s Planning and Neighborhood Development Department, said since the housing crisis intensified, the number of new rentals has been increasing.

“We can’t exactly stop it,” Bernero said of the rise in rental properties. “People have the right.”

But that has not stopped Bernero — dubbed “America’s angriest mayor” by Fox News — from cracking down on rental properties. He said he has no tolerance for absentee landlords.

“My administration was the first one in decades to put a landlord or two in jail,” he said. “We’ve made it clear that we will enforce the housing code. You’re not going to have slums in our city. People don’t deserve to live that way.”

When Bernero took office in 2006, he promised to crack down on red tagged and non-compliant housing and assured voters that he would remove 100 condemned properties from the city’s rolls through aggressive enforcement action. In 2008, he worked with a group of 13 local churches to create a program to crack down on unlicensed rentals. This crackdown, according to the group, Direct Action and Research Training Center, led to three people per day becoming temporarily homeless.

When Bernero’s red-tagged property crackdown started, the city had about 488 properties that were condemned. Boone said the number was somewhere around 600 in July 2009. Boone and the mayor conceded the number is higher because of the foreclosure crisis. Once a home is emptied of residents, the property’s utilities are shut off and the city red tags the property.

Bernero’s administration is also harnessing Federal Emergency Management Agency funding to purchase and level homes in two neighborhoods which are situated in vulnerable flood zones. The money became available after Hurricane Katrina put much of New Orleans underwater and is part of a plan to prevent massive flood damage in targeted areas adjacent to the Grand River’s flood plain. But not all the eligible homes are being sold to the city, leaving the potential for swaths of empty, city-owned lots which the city may not have money to maintain.

To address that concern, Boone said the city is looking at urban agriculture as a possible answer. She said the city could harness that land for urban farming, or even develop renewable energy plots growing canola seeds for processing into bio-diesel. Boone said plans have not been finalized for the empty land.

Bernero said he supports the idea of urban agriculture, similar to the victory gardens of the Great Depression and World War II. He said such a move would make Lansing’s residents a healthier bunch.

And while the city has been doling out tax incentives to developers for such projects as the Stadium District, which was a mixed-use development including condos across from the city’s baseball stadium; the Farmer’s Market, which will replace an aging farmer’s market with mixed use including retail space and condos; The Accident Fund, which renovated the former Ottawa Street power plant in the city’s downtown, and more, home owners have watched as millions of dollars in tax revenue are cycled back into the pockets of developers — while they struggle to do basic maintenance with their homes. Bernero and Boone said the city is in the final stages of preparing a tax incentive for home owners which would return a portion of the new taxable rate on homes which have major remodeling or additions done to them. They say the program is much like the tax incentives developers receive.

Lansing School Board member Charles Ford

CHARLES FORD’S PLAN

For Charles Ford, a lifelong Lansing resident, the housing crisis will be addressed with one thing: Jobs.

“The whole foreclosure situation, you bring the jobs back. You give people some assistance and then you can deal with that particular problem,” Ford said. “Anytime you live in an area where you are losing jobs, the foreclosure crisis is going to happen.”

Ford said addressing the housing crisis is the reason he supports legislation introduced by State Rep. Robert Jones, a Democrat from Kalamazoo. Under H.B. 4171, the state would impose a new tax on real estate property transfers which could be used to develop a homeless trust fund that would serve to assist the homeless in finding, keeping and maintaining housing. While Ford discussed the bill as a panacea solution to the foreclosure and housing crisis in Lansing, the funds raised would only go to address homelessness issues.

In order to address the foreclosure crisis, Ford said you have to stabilize the city’s declining population. He said that is done through job development in the city.

During the interview, Ford ticked off a need for refocusing Lansing economic development towards alternative energy plants and assisting in the educational development of the city. He argues that the educational components will assist the city in economic development. New economic development, he said, will bring jobs to Lansing, and those jobs will help people purchase homes. He said his plan could be executed quickly once taking office.

Ford said he also wants to invest in small businesses by offering a 50-percent tax break the first year the business establishes itself in the city.

Ford said he is not bothered by the increase in rental properties. “The thing that concerns me is if people don’t want to live in Lansing,” Ford said.

The candidate also said he would review the process by which homes are red tagged, or condemned. He said there was a difference between properties that were owner occupied and those that are rental properties. He believes the city should have a fund set up to assist homeowners in making necessary repairs to property to prevent red tagging, and said he opposes demolishing condemned homes. Ford said the answer might lie with the city fixing such homes, then selling it to someone interested in living there.

Selling fixed-up red tagged properties, he said, would improve the housing purchasing process in the city.

And while the U.S. Department of Housing and Urban Development is reporting an increase in the number of well-qualified buyers being denied mortgages, he said he thinks there is more to the story. “Mortgage companies are not turning away money,” Ford said, adding that if elected mayor, he would question mortgage lenders to see if such allegations were true.

In addition, Ford said the city needs to develop programs to help people stay in their homes, once they purchase them. Those could include budget and financial education for home owners at neighborhood centers he is proposing. He said the education was necessary simply “because some people just make bad choices.”

City council member Carol Wood

CAROL WOOD’S PLAN

“There are absolutely no easy answers,” said Carol Wood, who has sat on the city council for 10 years. “If there were, we would have settled this a long time ago.”

Wood said she believes addressing the housing crisis in Lansing requires a centralized approach. The city council veteran said for her, addressing the foreclosure crisis starts with bringing the players to the table. She rattled off a list of groups, from bankers to lenders to Michigan State Housing Development Authority to foreclosure victims to city officials — who should serve on a commission, to be empaneled the day after the election, to investigate the problem, analyze the causes and effects and recommend ways to address the crisis.

“To say I have all the answers at this time, I don’t,” said Wood. “I have a number of ideas.”

In terms of addressing the growing problem of empty houses left in the wake of the city’s foreclosure crisis, Wood wants to look into using federal stimulus funds to purchase those homes and sell them to homeowners. She also wants to tie major development in the city to housing investments. She talked about the Accident Fund, which is spending millions of dollars to revamp an old power station in downtown Lansing into an office facility, a program aimed at encouraging employees to buy homes in Lansing.

Under the program, the Accident Fund had five $5,000 grants for employees interested in resettling inside the city limits. Within six months, she said, the money was utilized and Lansing had five new owner-occupied homes.

To address the continued crisis in the credit market, which is finding even well-qualified candidates being rejected for loans, Wood would encourage employers in the region to purchase foreclosed properties and sell them to their employees on land contracts.

She also proposed developing a program to put permit fees onto city tax rolls, and forgive them over the course of a set period of time. For instance, if a home owner decided to expand their home, fees for permits would be assigned to the home’s taxes. If a person stayed in that home for five years, the fees would be completely waived.

Wood said she supports expanding Lansing’s Neighborhood Enterprise Zones, which reduce taxes on homes which have made taxable improvements. For instance, if a home owner in an NEZ made $10,000 in taxable improvements, the usual rate would be 50 percent of the $10,000 in state equalized value. In an NEZ, the SEV is reduced again by 50 percent. This means that the homeowner would pay taxes on $2,500 worth of improvements, rather than the $10,000 in improvements.

But Wood is critical of the city’s current program to promote the city as a good environment for potential homeowners.

“Instead of pictures of people putting shovels in the ground on the front of the city website, we need picture after picture of our neighborhoods, our parks, of the things that would encourage people to be part of the community,” she said.

Wood said the city needs to be more progressive in providing city services and recommended that the city’s Planning and Neighborhood Development office be open evenings at least twice a week. This, she said, would make the department accessible and a one-stop shopping location for residents and potential residents. The department would offer everything from building and electrical permits to neighborhood profiles and more. Currently the department is open 9 a.m. to 5 p.m.

She would also make sure the department was holding monthly visits in various neighborhoods, providing localized services that ordinarily would be available only at city hall.

Wood said she had doubts about the city’s purchase of homes on flood plains since it often results in demolitions that leave empty lots.

“Are we going to have one hayfield after another that we can’t take care of? We have to have money set aside to maintain and care for it,” Wood said. “We shouldn’t just be buying property for the sake of buying property because of the flood plain issue.”

She said the problem in the flood plains is that the city, using HUD and other federal monies, cannot provide funding to the residents who live in the areas affected to do basic home repairs. So in Wood’s plan, the council member supports the idea of relocating residents out of the danger zone, once a plan is in place to maintain the empty lots.

“How do we make sure the money they are getting paid for the property is going into reinvestment in Lansing?” she said. Wood said the city should be working with residents who are agreeing to sell to help them locate property in the city which meets their needs, but also to help them to understand that moving costs money, and that is not covered in the purchase price — which is set at the fair market value of the property.

While Bernero said he saw no way to control rental property propagation, Wood said she has a plan for stop that too. A plan, she said, which is vital to the life of the city.

Wood helped spearhead a move to place a six-month moratorium on new rental properties in the city as city council members worked to adopted a new housing code. The move failed.

But Wood stands behind her efforts. The moratorium came before the city’s foreclosure crisis, and at that time 40 percent of the city’s housing stock was comprised of rental properties.

“I want you to know that the statistics have shown over and over again that when a community reaches 50 percent of its housing stock as rentals, it creates less buy into the community. There is a decline in the housing stock,” Wood said.

Boone, who was present during Bernero’s interview, said the current percentage is between 45 and 48 percent, just below the threshold Wood spoke of. “We have to be concerned we don’t reach the tipping point of 50 percent.”

To address that issue, Wood proposes limiting the number of rental properties in much the same way the state restricts the number of liquor licenses. In her scenario, there would be a hard and fast fixed number for rentals, and before a new rental property could be listed, another would have to come off the market and become an owner-occupied property.