On April 12, 2018

Rescuing Rutland neighborhoods, one city-owned house at a time

By Julia Purdy

RUTLAND—All real estate speculation isn’t bad. In Rutland’s case, the city sees it as an avenue toward the revitalization of in-town neighborhoods and a way to get tax sale properties – typically distressed and an invitation to trouble – off its books and into the hands of new owners with the skills and motivation to add to Rutland’s moderate-income housing stock.

“We see it as a win-win,” said Brennan Duffy, executive director of the Rutland Redevelopment Authority (RRA), a partner in the initiative. “We see it as helping somebody save a little bit of money as they make this investment and at the end of the day the city is made whole. These properties are a fabric of the community and having them unoccupied and in a blighted condition doesn’t help anyone,” he added.

Duffy sits on the steering committee for the program, along with the chair of the RRA board, David Cooper, Zoning Administrator Tara Kelly, and aldermen William Notte and Chris Ettori. The committee makes decisions on applications received from prospective purchasers for specific properties.

Compared to other U.S. cities, the program is innovative, most closely resembling the one in St. Louis, Mo. Rather than engaging a real estate broker or auctioning the houses to the highest bidder and potentially perpetuating the cycle of neglect, the city asks applicants to make an offer, accompanied by an end plan and proof of the ability to complete the project.

The lowest amount of back taxes owed on a house in the current round is $18,205; the highest, $93,261.

But recouping the property tax is not the main objective for the program, say city officials.

Standing in the five-unit 117 State St., Kelly told the Mountain Times, “Our preference would be to de-densify properties that have been broken up into too many units. Having these properties sitting here vacant doesn’t help the neighborhood. The sooner we can get it into somebody’s hands, the better.

“About a year ago we put together this process where we can make it fair for people and the city would have a little bit of control over how they move forward. They have to have a good track record and be in good standing with the city, not only in terms of taxes but in code enforcement and how they treat their tenants – good actors. That said, if there are two or more potential purchasers that meet that criteria, then the purchase offer amount may become the determining factor.”

“We’re not concerned where they get the money from, but they must show they have the means to purchase it and put the money into it that they intend to,” said Duffy.
There are few restrictions, and none on who buys.

“They don’t have to be owner-occupants,” said Kelly. “There are some houses where that would be the best fit. That could make a good investment to someone starting out, too, with one unit rented out and one they live in. We’re not restricting. If we had two equal proposals and one was an owner-occupant and one wasn’t, I think we’d go with the owner-occupant. In general, they become a stable character in the neighborhood.”

An extra incentive to owner-occupants is the residential tax stabilization program, which freezes the assessed value at the time of purchase for three years. Eligibility requires a determination of blight by the building inspector and intent to occupy the property as the buyer’s primary residence.

Aside from that, the new owner is on his or her own as long as he or she complies with fire and building codes, said Building Inspector Bob Tanner, who attends the showings.

“They’re in such poor shape and been left for so long, they didn’t put a lot of money into them before the tax sale,” he said. “Some need total gut, some need tear-down.”

Demolition is not prohibited, but an asbestos survey and a demolition permit are required, he said.

So far, the program has been offered in three rounds. Two properties were offered in November 2017, with a nibble but none sold; in February, one sold. This round offers 11 properties in two batches with application deadlines in April 20 and May 1, respectively. Unsold addresses roll over into the next round.

The city aims to bring more housing online, with nine to follow at a later time.

The addresses represent a cross-section of Rutland’s downtown housing stock, from scattered house lots to the faded glory of Rutland’s boom years in the 19th and early 20th century.

Their former style and dignity are easy to overlook when the property is drowning in squalor: broken window blinds, congested floor plans, worn-out roofs, fallen ceilings, sagging porches, rotted trim, piles of trash. But turned posts on shady porches, ornate jigsawed trim, windows framed in stained glass, curved walls and rooflines all offer potential for attractive restoration.

“It takes a certain mindset that says, OK, I’m going to purchase these at a low value, a low cost, and put a significant amount of investment and equity back into them to get them to a place where they can be reused,” said Duffy. “At the end of the day, I think someone’s going to see great value there.”

Panama-born Rudy Jacobson has that mindset. He owns a manufacturing company in West Hatfield, Mass., and has been coming to the Rutland area to “get away from the city,” he told the Mountain Times. He’s not a builder, he said, but he enjoys working on houses for relaxation. He built a second home for his own use on acreage in Pittsford.

In February Jacobson purchased 114 Gibson St. through the city-owned property sale program and plans to rehabilitate it as an investment, as he did with a Maple Street duplex he purchased as a foreclosure a year ago. To help with the house renovations, he employs Ruben, a friend of the family and native of Puebla, Mexico.

Scanning Gibson St., Jacobson said he likes the neighborhood and approves of the new Hickory Street development nearby.

Jacobson’s experience has been positive in Rutland. “It’s a good opportunity from an investment point of view,” he said, “and also to get to know the people.” He especially appreciates the assistance he has gotten from city hall.

Detailed information can be found at rutlandcity.org, rutlandvtbusiness.com, or the building, planning and zoning office at Rutland city hall.

Photo By Julia Purdy
Rudy Jacobson stands in front of 114 Gibson St., which he recently purchased through Rutland city’s sale of city-owned properties. He plans to rehabilitate it and keep it as a rental duplex.

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