49.Stressed Rental Costs Versus Home Ownership

I looked at a $20,000.00 a year income on micalc.com using their mortgage calculator. I input a mortgage amount of $40,000.00 with real estate taxes of $1500.00 and comprehensive home owners insurance premium of $600.00. The monthly payment would be $193.00

Sure beats the median rent.

Many abandoned and blighted houses with sweat equity can be rehabilitated for $40.000.00

A goal to encourage single occupant home ownership is not not a pipe dream in Sharon with its supply of abandoned and blighted properties.

As the principle component of household wealth is a house, there is the situation where persons of modest earning capacity could become a a home owner.

48. Most Renters Have Stressed Household Budgets

 If you rent in Sharon, PA you likely have an income of $20,000 a year or less. 57% of renter occupied housing have households with an annual income of $20,000 a year or less.

What is the rent obligation as a percentage of a $20,000 a year household income? Rent for 1.8% of these household is less than 20% of the household budget. 10.4% have an impact of 20% to 29% of their household budget being taken up by rent. Those with an impact of 30% or more of their household budget going to rent is 39.5% of renters with income of less than $20,000 a year.

Renting households with incomes in the $20,000 to $34,999 range, they represent  21.2% of renter occupied housing units in Sharon, PA.

The impact upon their household budgets in the $20,000 to $34,999 range  as a percentage is that for those having a 20% or less impact on their household budget is 4.8%. For a 20% to 29% impact it is 6.2%. For an impact of 30% or more of the household budget it is 10.2% of the household income.

78.2% of renter occupied housing units have been accounted for so far in this description. THey ar in the have naught and home little quintile bands of income distribution.

Renting households with incomes in the $35,000 to $49,999 range, they represent 7.5% of renter occupied housing units in Sharon, PA.

The impact upon the household budget for the $35,000 to $49,999 range with a percentage impact of 20% of their budget is 3.2%. For a 20% to 29% impact it is 4.1%. For an impact of 30% or more of the household budget it is 0.3% of the household budget.

So, 85.7% of renter households have household incomes of $49,999 a year or less. The majority of renters have household incomes of $20,000 a year of less.

Rent as a percentage of a household’s income for the majority of renters is burdensome.

The household incomes are concentrated in the “have naughts” and “have a little” quintile bands for the measurement of income distribution. ( First quintile - have naughts, Second quintile - have little, Third quintile - have something, Fourth quintile - have enough, Fifth quintile - have yachts.)

The Census Bureau reports that the median monthly rent in Sharon, PA per the Census Bureau in 2015 was $584.00. That is, half the renters pay less and half pay more than $$584.00.
(https://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?src=CF)



https://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?src=CF:

47, Sharon Incomes - https://factfinder.census.gov/ Housing Rental Budgets

For the whole story on Cnesus Bureau date, see: https://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?src=CF

From the 2015 Census Bureau estimates, the median annual income for Sharon, PA was $30,720.

The mean annual income was $48,118. In 2015 the poverty rate for all families was 20.1%.

The median monthly rent was $582 and in 2016 it was $614.

The median household income for renter occupied units was $18, 359 in  2015

The monthly housing costs as a percentage of household income in 2015:

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46. "Taking Blight Into Your Own Hands," Post Gazette - March 16, 2017

    Article follows photographs:

Northside house, Pittsburgh.

Sweat equity in action.

Urban property saved. Private investment.

Brian O'Neill: Taking blight into your own hands

BRIAN O'NEILL

Pittsburgh Post-Gazette Columnist

boneill@post-gazette.com

MAR 16, 2017 2:13 AM

A few years before Renee Rosensteel and Bill O’Driscoll bought their 10-room, 19th-century fixer-upper on the North Side, the state Legislature passed a bill designed to find saviors for homes that nobody had been able to rescue.

That proved fortuitous for this couple. It wasn’t too long after their move-in in 2012 that bricks from the chimney top of a home on Juniata Street fell very close to the car Ms. Rosensteel had parked behind their home on Chateau Street. She raised a ruckus with the tenant but, by the time bricks fell again a year or so later, the tenant had died and the owner was gone, too, so “there was no one to raise a ruckus with.”

This new state law provided the mechanism for what she describes “as a surgical strike on blight.” There’s remaining paperwork, but the house on Juniata now belongs to Ms. Rosensteel and her husband. They’ve done all they’ve needed to do under the Blighted and Abandoned Property Conservatorship law, which has meant everything from hundreds of sloppy hours of grunt work to paying about $7,000 in back taxes to borrowing against their own home to pay contractors and legal fees.

About 45 appointed conservators in Allegheny County are working through this new process, but this is the first property acquisition that has been brought to completion, the couple’s attorney believes.

“I’ve never had clients who worked so hard,” lawyer Kiersten Lane said.

We walked through the old house Wednesday morning. Renovations are far from complete but the heat’s on and Ms. Rosensteel can almost make you believe the first floor will be ready for Airbnb rentals in a month.

Money from that should help pay for turning the upper two floors into an apartment, which sure beats falling bricks.

Countless residents of older neighborhoods, in and out of the city, have to hope this small victory against blight can be replicated many times over. Innumerable long-abandoned buildings in Allegheny County and beyond haven’t a savior in sight because the legal brambles around such places are so daunting.

Under this act, a neighbor within 2000 feet, a nonprofit, a redevelopment authority, the municipality or the school district can ask a judge to appoint a responsible party to bring a property into compliance with code standards. Stipulations include the home being free of foreclosure and no legal occupants for a year.

This route to a deed is “not for the faint of heart,” Ms. Rosensteel said, but she walked me through the steps she and her husband took to become conservators.

After the second brickfall about three years ago, she saw a building inspector poking around the property, and he told her it was about to go on the demolition list, Ms. Rosensteel called LaShawn Burton-Faulk, executive director of the Manchester Citizens Corp., who joined her in keeping it off the demo list.

The owner of the Juniata property had died a couple of years before they moved in behind it, Ms. Rosensteel said. That woman had left no will and had no legal heir, but a stepson had rented the house to a tenant who then also died. The heat was turned off, vandals stole pipes and people started going in and out of the place without any title to it. Then the chimney fell again and “I had a really compelling reason to do this” conservatorship.

After getting control of the house through the courts, the couple made more than one trip to the police station to turn in drug paraphernalia and bullets that had been left behind. A confrontation with a man who’d been coming and going from the house began badly but ended amicably, and then all that was ahead of them were just the usual recurring headaches of any major gut job.

The Housing Alliance of Pennsylvania issued a handbook in 2013 to help guide potential conservators, and Ms. Rosensteel, a professional photographer, has no shortage of before-and-after photos to show how far they’ve come.

She won’t say how much they’ve sunk into this project but “we’ve documented everything.” Any pretenders to this property “would have to pay us back every single dime.”

Looking out a third-floor window, she said, “We got really lucky on that roof. That’s 100-year-old slate. It stays. It does what it’s supposed to do.”

There’s reason to believe this new state law does, too.

Brian O’Neill: boneill@post-gazette.com or 412-263-1947 or Twitter @brotheroneill

45. Local Legal Talent? Revitalization

In making a presentation to members of a church recently they immediately understood the significance of the Pennsylvania Abandoned and Blighted Property Conservatorship Act. I explained that I wanted to create a groundswell of interest in the Act as I see the potential for private efforts to be significant for revitalization. They used as an example an abandoned and blighted property in the immediate vicinity of their church. How can they begin a petition?

I explained that to find a competent attorney in the administration of the Act my search led me to Allegheny County. The Attorney I identified and had a conversation with had been involved with some 70 plus  conservatorships. He enlightened me in detail about the Act. I am now sharing the Act with others before having him visit Sharon, PA.

What about local attorneys? The sad thing about my search was that two attorneys who were suggested to me as being effective and competent in the field of real estate law 1., had not the slightest idea of what I was referring to and 2., when the text of the law was shared with them their silence indicated they were comfortable with their affairs and practice. Their lack of curiosity or interest was and is in itself contributing to the problem of abandoned and blighted properties in Sharon, PA.

44. Sharon, PA Incomes -- PA Department of Revenue

This writer is no Piketty. But, for Sharon, PA,  the income inequality can be summarized as the top 2% earn the equivalent of the bottom 74% together.

What this means is that opportunities to bootstrap with sweat equity owner occupied homes through a structure and revitalized land bank or a conservatorship is a great community need.

When looking at income distribution and its inequality in 20% or quintile bands one way to so from lowest quintile to highest quintile is to use descriptive terms: Have naught (to $22,800), Have little (to $43,511), Have something (to $72,001), Have enough (to $117,001), Have yachts.

For this discussion 2015 data from the Census Bureau and the Pennsylvania Department of Revenue is used.

The have yachts band, to give some perspective, ranges from $117,002 to within 5% of the top of the fifth quintile band. So, the top 5% begin at $214,000. For the lower part of the quintile handsome motorboats rather than yachts are the norm. Now, the top 1% begins at about $443,100. Some of them have cabin cruisers. It is in reality the top one tenth of 1% that begins to own yachts as the entry income is $11,300,000. At the very highest incomes there are yacht owners who own the yacht factory and the place where the factory is located.

Sharon has a disproportionate number of have naughts and its share of have yachts. The simplest way to express income inequality is from naughts to yachts.

The have naughts and the have little when faced with rental costs have severe problem. The have something quintile band of income is $43,512 to $72,001 does not have the same percentage of income burden as have nothing and have little households do. It is within the third, have something quintile, where the median income for the USA rested at $56,516. Median means that half of the households earn less and half the households earn more.

With income distribution basic facts for the USA reviewed, what is the situation in Sharon, PA?

The flat Pennsylvania income tax gives an accurate picture of the incomes of citizens within a school district. The Department of Revenue posts on its website income tax revenue date by school district. As the City of Sharon School District covers the boundaries of the City of Sharon, the data is accurate.

The latest Department of Revenue data posted on its website is for 2015. Data is displayed by taxable income bands. The percentage of returns for an income band was computed from the Department of Revenue data. The Average income per return for each income band was computed using the Department of Revenue data. Looking at the total taxable income there is a significant range. Total taxable income is displayed dropping  the three 000 to right total taxable income.

			TOTAL TAXABLE	Avg Tax Income
TAXABLE INCOME	NUMBER OF	% Returns	INCOME
0 - 999 . . . . . . . .	546	10	125	228
1000 - 2999 . . . .	353	6	705	1,997
3000 - 4999 . . . .	284	17	1,126	3,964
5000 - 6999 . . . .	285	5	1,694	5,943
7000 - 8999 . . . .	239	10	1,896	7,933
9000 - 10999 . . .	196	3	1,965	10,025
11000 - 12999 . .	213	4	2,564	12,037
13000 - 14999 . .	213	4	2,982	14,000
15000 - 16999 . .	196	3	3,130	15,969
17000 - 18999 . .	186	3	3,342	17,967
19000 - 21999 . .	267	5	5,474	20,501
22000 - 24999 . .	219	4	5,148	23,508
25000 - 29999 . .	344	6	9,459	27,497
30000 - 34999 . .	258	5	8,379	32,476
35000 - 39999 . .	200	4	7,495	37,475
40000 - 49999 . .	331	7	14,857	44,885
50000 - 74999 . .	483	9	29,537	61,153
75000 - 99999 . .	228	4	19,674	82,289
100000 - 149999	184	3	21,796	118,456
150000 - 249999	61	1	11,494	188,426
250000 or MORE	33	1	17,052	516,727
TOTAL. . . . . . . . .	5,319		169,894

43. Another Conservatorship Candidate?

A Queen Ann victorian style home that is abandoned and blighted. The slate roof is badly in need of repair. Circa 1900?  It is in the vicinity of the Case Avenue K-12 complex, hospital, vibrant churches, library and the hospital. 

The property has a side lot that is as large as the house's lot. The side lot is overgrown.

The rear of the house shows that it once was once used as a rentatl property.

The rear portion of the house house might be older than the front of the house. There is a separate brick garage at the rear of the property.

Adjacent to the property is a well-maintained circa 1920 home. Its real estate value as all real estate values has been diminished by abandoned and blighted properties in the City of Sharon.

Arguably the house from its outward appearance only appears to be abandoned. How does it fit the definition of blight under the Pennsylvania Abandoned and Blighted Property Conservatorship Act? 

The Act defines blight as being any three of this list to establish blighted condition of the property. Any of the three described conditions establish blight: 1., The Property needs substantial rehabilitation and none has been done the last 12 months. 2.,The blighted property by its existence decreased property values or business activity. 3., The blighted property by its existence is a public nuisance. 4., The property is unfit for occupancy. 5., The property is an attractive nuisance. 6., The property is a health or safety hazard. 7., The property is subject to entry and is dangerous. 8., The property increases fire risk. 

The condition of the properties roof by itself indicates the need for substantial rehabilitation. From its condition there is a presumption that there is likely problems with water infiltration and with it mold. The blighted property merely by its existence decreases property values. As such, it is a public nuisance. The property has met the first three items on the Act's list. Given the condition of the roof it is the likely reason the house is not occupied as it is unfit for occupancy. By being abandoned it creates by that fact an attractive nuisance for break- in, squatting, partying, illegal activity, vandalism, etc. It is likely a health hazard due to the condition of the roof. Being abandoned with likely health risks such as mold the property is dangerous. As it is subject to invasion it is a fire risk by either the result of vandalism or the crime of arson.

The property, merely by observation from public access provided from the public street and alley, is blighted.

If a petition for conservatorship were filed and awarded, the tax delinquency is manageable upon sale as the property is not on the Repository List eligible for Judicial Tax Sale. If the property was burdened with years of say 3, 5, 10, etc. years of accrued real estate taxes then that would be an impediment for a person to pursue a petition.

42. Use / Fix It or Lose It -- Let's Review -- Conservatorship

Use It or Lose It ---- Explanation and Comments - Real Estate Conservatorship 

“Fix It or Lose It” - Described here are advantages and the potential benefits inherent to the Pennsylvania Abandoned and Blighted Property  Conservatorship Act. 

Suppose you live in a municipality with abandoned and blighted properties. Imagine being able to petition the County Court of Common Pleas to take possession and control to rehabilitate or demolish abandoned and blighted property within 2000 feet of your residence / property.

The Pennsylvania Abandoned and Blighted Property Conservatorship Act affords such an opportunity. The Act addresses the interests of injured third parties. WHo are injured third parties? Anyone within 2000 feet of an abandeoned and blighted property is an injured third party.

A conservatorship allows injured third parties to seek a custodial role over a nuisance property to rehabilitate it or demolish it. It does so with protected rights to the petitioner for a conservatorship to recover costs and provides a pathway option for the conservator for ownership.
 

The underlying principle to the Act is that it presumes an injured party to  be a community member with property within 2000 feet of the blighted and abandoned property. Any and all abandoned properties diminish property values, pose safety and fire risks and are a public nuisance. The community member can be an individual property owner in the affected municipality or a non-profit in the municipality. For example a church. Or hospital or a school or veteran group in the municipality can petition for a conservatorship. So can a municipality pursue a petiton for conservatorship.
 

A petitioner in their petition to the Court must establish the 2000 foot rule of their property. Once that is done the petitioner will demonstrate that the property is abandoned by showing it has not been lawfully occupied for the last 12 months. The owner has not marketed the property within the last 60 days. There cannot be a foreclosure action being made. The current owner has owned the property for longer than 6 months. The owner is not on active duty in the U.S. Armed Forces.
 

Next, the petitioner will establish blighted condition of the property. Any of the three described conditions establish blight: 1., The Property needs substantial rehabilitation and none has been done the last 12 months. 2.,The blighted property by its existence decreased property values or business activity. 3., The blighted property by its existence is a public nuisance. 4., The property is unfit for occupancy. 5., The property is an attractive nuisance. 6., The property is a health or safety hazard. 7., The property is subject to entry and is dangerous. 8., The property increases fire risk.
 

The goal of a real estate conservatorship petition is revitalization by the petitioner for conservatorship or by the owner. How? Why? A petition for real estate conservatorship of abandoned and blighted property provides for Judicial regulation for a limited number of parties under particular circumstance. Owners have the right to defend against an action before an appointment by the Court of a conservator by declaring a willingness to remediate. The owner must post a performance bond and repay legal and architectural fees plus 20% to the petitioner. In the event the owner does not defend their right to possession and allows the conservator to proceed, when the conservator sells the property the owner has the priority to retain ownership with their having priority to continue ownership and control by paying the conservator for all expenses (legal, architectural, construction or demolition as the case may be plus 20% of those costs). In either situation, petitioner conservator or owner defense, the Court will supervise rehabilitation or demolition. The injury to the community will be corrected.
 

In other words, all respondents - petitioner or owner - have the same right to abate, intervene and redeem.
 

The procedure for conservatorship requires immediate improvement supervised by the Court. Therein lies the advantage to the community over a Judicial sale. A Judicial sale occurs when two previous annual Upset Tax Sales for tax arrearages failed. A property is placed upon a Repository List. Any person assuring a minimum payment of $1000.00 to the County may have a property on the Repository List scheduled for a Judicial Tax Sale. As a Judicial Tax Sale is a public auction, any person may bid. All past tax liens and any mortgage or loan lien are cleared. But, the winning bidder has no future obligation to rehabilitate or demolish. They have a future real estate tax liability. They will have a current obligation to minimally secure the property and minimally meet building code requirement for grass, shrubbery and trees. So, a blighted and abandoned property acquired at a Judicial Tax Sale, unless a petition is filed, can remain blighted and abandoned.

Abandoned and blighted properties may or may not be tax delinquent.  Tax delinquency does not control the Act. What is controlling is that the property is both abandoned and blighted. The Act is not dependent upon a Judicial sale.
 

The Act presupposes after completion by the conservator of the rehabilitation or demolition that a sale will occur. All real estate tax liens, municipal sewer liens, municipal water liens are first to be satisfied in a sale. But, then the conservator has the first private lien ahead of all others. Therein lies a risk to the conservator if the contingent government arrearages are not satisfied by a sale. An incentive for petitioners under the Act would be for the affected County, School District, Municipality to waive all arrearages and  delinquencies in order to see blighted and abandoned properties rehabilitated or demolished by private initiative. Otherwise, government liens will discourage petitioners.  

The worse risk for a government is to perpetuate blight and abandonment in the slight, speculative hope of recovering lost revenue as opposed to creating an incentive for petitioners. Arguably, not making such an incentive for injured parties use the Act  is absurd.

Here is the elegant part of the Act. The County Court of Common Pleas oversees the case from initial petition to termination of the conservatorship. The Court appoints the conservator and the detailed conservator plan. As mentioned, the Court can grant a lien or security interest with priority over all other lies with the exception of government liens. The Court can authorize the conservator to sell the property being clear of all other liens, claims and encumbrances other than any amount in tax delinquency if delinquent. The Court is authorized to approve the distribution of the proceeds of the sale.
 

In going to Court, the petitioner as “a person of interest” files a petition showing the property meets the statutory conditions previously discussed with documentation supporting the claims. For example, the Court needs photographs of the property, plot map, identification by street address and property identification number, condition report made from a point of public access by an architect or engineer. The conservator will be identified in the petition. A preliminary plan of rehabilitation or demolition by an architect or engineer will be submitted to the Court.
 

The Preliminary Plan will describe the petitioner, provide a site plan and map, photographs, inspection report - feasibility data and cost estimate. The Preliminary plan will also provide a structural assessment from public access. Sources of financing based upon the cost estimate will be demonstrated. And, the future conveyance after rehabilitation or demolish will be discussed as to how the conservatorship will be terminated.
 

These are the steps leading to the first hearing of the petition. All parties with an interest will be notified per the legal principle of lis pendens. The petition will be served upon the parties. At the hearing, the owner can defend his possession and control be committing to rehabilitation or demolition. If there is no defense, then the conservator is appointed and the conservator now controls the property. Again, in either case there is a final plan for the property. The owner must post a performance bond if a defense has been made with a commitment to rehabilitate or demolish by the owner.
 

Now then, getting it done is the next order of business. The Court appoints the Conservator. The Conservator now has a right of entry. With that, a final plan is created and presented to the Court for its approval and supervision. In the final plan the conservator gives the who, what, when and how of how the plan will be accomplished. The financing will be identified and confirmed. The Court issues an order to begin based upon the final plan.
 

While what has been discussed has been for a citizen property owner as an injured party of interest to petition for conservatorship, the Act provides a hierarchy of the right to petition. First is the senior lien holder. Second is a nonprofit organization in the community. Third is a governmental unit. Then the individual may petition. Thus there might be senior lien holder or nonprofit or a government unit can preempt an individual in making a petition. If they do so,they will be obligated to rehabilitate or demolish.
 

The conservator must demonstrate the competence to develop a preliminary plan. They must be able to take possession and control upon appointment. Appointment requires securing the property by erecting appropriate safeguards and thus controlling the property. Further competence must be demonstrated to implement the final plan and in doing so provide status reports to the Court.
 

Then ultimately, the Court will supervise the disposition of the property. The Court may authorize a private or public sale.