New Process to Purchase City Owned Properties and a New City Judge

Newburgh NY Rescue Me Collage

If you are interested in buying an abandoned home in Newburgh, the process might have gotten a little easier. The city recently (in October) published a new form online called PODA – Private Owner Development Aquisition. The key here is in the words “private owner”. That means that is not for flippers or for property managers, it is for people who want to buy a home to live in it for themselves. The form calls them a “principal homeowner”. With the high rental-occupancy rate of many homes in Newburgh, this new process could help end the flipping cycle that have seen in city auctions. The new homeowner will sign a waiver prohibiting the sale of the property for the next 5 years.

This news also coincides with an announcement from Assemblyman Frank Skartados’ office regarding approval from Gov. Cuomo for a new city judge to deal with quality of life issues like absentee landlords. Skartados was quoted saying, “By securing this additional state-funded judge for Newburgh, the city will be able to crack down on serious code violations in a timely fashion.” City of Newburgh Police Chief Michael D. Ferrara agreed saying, “The end result could be more attractive neighborhoods, vibrant businesses and a better looking city for everyone. Property values should maintain if not increase and codes enforcement when consistent in a neighborhood can help reduce crime.”

The same press release said the new third judge could bring as much as $1 million a year in revenue to Newburgh from increased prosecutions of absentee and negligent landlords. We already know there are approximately 700 abandoned buildings in Newburgh. It will be interesting to see how the new judge will be able to lower that number and cycle these buildings back to the homebuyer pool.

For now, for those of you genuinely interested in buying a rescue me home, browse some of our picks. However, the city has a document online that has pictures and details of all their properties that essentially would apply to the new PODA form.

Undoubtedly there will be critics. What do you make of this news? Will it help aleviate Newburgh’s vacant building and quaility of life problems?

25 Comment

  • So there are gang bangers roaming around vandalizing property and conducting other nefarious activities. And there is an under staffed police force to handle crime. But the city is worried about code violations and deploys funding and an entire resource to handle that? What am I missing here?

    • Peter vacant and abandoned buildings help fuel the fire for illegal activity. If all the buildings were occupied there would be more eyes on the street to report bad things happening and less hideouts and it would increase property values making areas appealing to prospective buyers. The second thing is that if a 3rd judge can bring in more than $1million a year, that money could go to funding more police officers etc. Where would the money come from now?

      • Cher, I don’t buy the $1m a year in revenue from fines. It’s improbable, and could portend a very draconian state of affairs for Newburgh were it to occur. Will we be fined for not painting the nails lavender in order to raise those funds year after year? You see where I’m going with this.

        I have no issue with putting properties directly in the hands of homeowners and clamping down on the ‘flipping’ of homes. I think it’s a great idea. I bought my properties at market value, restored/renovated them at my own cost and rented them to good long term tenants who are a credit to the neighborhood. During my 11 years owning homes there, I’ve seen my share of slumlords in Newburgh and it galls me at what they get away with. However, many of these folks are well connected and whether this new approach has any effect on them remains to be seen.

        • All valid points Peter. We have yet to see how effective this process will be. There really hasn’t been a formal announcement of this new form either…I just came across it from someone else sending it over to me.

          • It would be interesting to see if the city levies fines on itself for all the decrepit buildings it owns, inclusive of all the historic buildings within its portfolio that they’ve let rot.

  • Here are the rules from the form

    Program Guidelines
    1. Prospective owners will provide evidence of financial capacity to purchase and rehabilitate the target property. –I wonder how estimates of cost are made, by prospective owner, or the city?
    2. Properties will be purchased based upon a “Quick Sale Value”.
    3. The applicant must be the principal homeowner.
    4. The prospective homeowner must complete all exterior and interior work within 12-18 months from the date of the closing. –I wonder how the timeline is determined, and what ‘complete’ means (based on the written cost estimates? What if the person is doing some on their own?)
    5. A prospective homeowner buying a home in the historic district must adhere to Architectural Review Commission guidelines and building code to receive a Certificate of Occupancy when rehabilitation is completed. –does this require a review PRIOR to any work beginning? preparing the list of work and the estimates delays work until approval is obtained?
    6. Prospective Homeowner must sign a deed covenant, which prohibits the sale of this property and deed transfer for a five year time period.
    7. Final sale is subject to the approval of the City of Newburgh City Council.–what is the length of the process from offer until vote?
    8. The property is sold subject to unpaid school taxes for the tax years of 2013-2014
    and also subject to all school taxes levied subsequent to the date of the Newburgh City Council resolution authorizing the sale.
    9. Property will be placed on the tax rolls after closing and deed filing.–starting to pay the taxes when there can be a delay of months is not encouraging.

    This is a start, but it needs many more of the details filled in. There are also many assumptions that are built in to this list of items, and it already could be a daunting process that would preclude a first time homebuyer…

    I think the land bank has had some experience and success and is working well for the few properties, so I also wonder who in the city is administering this particular new program and whether it overlaps to some extent with the guidelines and process already set forth by the land bank…just musing….

    I hope it works. I also hope the city is not counting on any million dollar ‘windfall’ too soon!

    • Agree Hannah. One of the biggest issues I think for many people will be that this is probably a cash offer. Some of these homes would not qualify for a loan. So someone who is really handy or can pay to hire out the work themselves would be looking at these homes.

  • Now if only they could lower the taxes or give some kind of tax break on these properties…

  • Would I be able to purchase a muti family property, renovate and rent it out but not sell for five years? Or would I have to physically live there.

    • James,
      I doubt it. They are interested in having ‘owner occupied’ homes in an area with a poor school system, high crime and a number of other factors.

      There are now REITs for investing in rental properties (run by Blackstone etc) which may give a higher ROE with less headaches. Personally, I think that is a better idea. My 2 cents.

      Lots of luck to you.

  • Some of these property would qualify for a renovation loan. Often called a 203K loan. The key is home ownership. Getting these properties back on the tax roles may not solve all of Newburghs’s problems, but it sure can’t hurt it either.

  • Here we go again! A politician injecting another uneducated response to a problem with more wasted money from the state coffers. Has anyone actually observed the housing court in action? It’s not for a lack of judges that we are not getting results. It’s everything BUT that. Also funny they’re quoting the police chief- what would he know about codes? Why not the head of codes, the fire chief? Or the head codes officer? And what’s this about new revenue in the form of going after some of the most unfairly taxed building owners in the entire Hudson Valley? Who get less for their money every year? There are ways to go after slumlords, but as Peter suggests, this “solution” will only lead to more people who are doing the right thing going to court to defend why their bushes weren’t cut the right height or their purple paint fading to an unacceptable shade. As codes works now, they go for low hanging fruit. Now they’re going to go for the rotting fruit on the ground to make their numbers.

    The flipping phenomenon is simply the result of people buying buildings because the prices are cheap. It doesn’t take long for most of these amateur investors to discover that there are many other considerations than the price of the buildings. It comes down to the city knowingly selling buildings to people as if it’s a source for fast revenue. With the high taxes, expecting results with anything more than giving most of these buildings away for $1 is ignorant. It was ignorant at the height of the market, it’s a higher form of ignorant now. The City Council didn’t approve the offer for the Monell mansion- and they’re not maintaining the security of it nor are they even so much as throwing a tarp over it to control the leaking roof. It looks like the City Council thinks that someone else will come along. Well it’s been 3 years. What are they waiting for?

    @Colleen, it’s the current owners who deserve a tax break. It would be better if the city worked honestly and efficiently to put all the abandoned buildings back on the tax roles. If we’re so solvent now- the joke of the year as told by our city manager- then maybe for every building sold there would be a break evenly split between all taxpayers as a form of goodwill.

  • Getting as many of these properties owner occupied is the true goal to recovery for Newburgh.. This is a way for the residents to win back the City of Newburgh. Although this is not perfect, It is a start.
    Thanks for sharing the info on this. I have many young professionals looking to move to the area and may be candidates for a situation like this.

  • @Peter, you are so right! The city has always warehoused properties, more than they could maintain. The government has been a big part of the problem by refusing to rid themselves- and us taxpayers- from the burden of maintenance and LIABILITY for these properties. Not to mention the frustration of the owners of neighboring properties. The former owner of our current building was forced to fence in their dumpster- as required by code- yet one block away, city hall’s misshapen dumpster- that could fall at any moment on a passerby- is blatantly sitting out in the open. What’s even worse is the garbage strewn all over the fire department’s property- where the chief code officer, Mr. Vatter, works! Meanwhile the public safety building is full of mold and leaking creating an unhealthy situation for city employees, especially the police, in the same building!

    • It looks pretty clear that the best hope for these properties is for the land bank to be handed the reins and the city to move out of their own way. Any process that becomes cumbersome will fail…and that has happened one too many times…There is enough experience now about what to do and what NOT to do…

      • Hannah, you’re funny. The Land Bank IS the city government along with institutions that have a history of actively destroying viable buildings for their own purposes. Will the Land Bank maintain the buildings? Will they take on the liability? Or will they, like with the Washington St and Grand St properties, make the city do their bidding with city money until they’re ready to sell them to pay their own new set of expenses- without reimbursing the city? Citing Philadelphia’s new Land Bank contains no justification for Newburgh’s. In larger cities this makes sense. In a micro neighborhood in a small city, it makes zero sense. Why are we always looking to re-invent the wheel around here? There are concrete methods to deal with this situation. Handing off responsibilities from one institution to another- as yet untested- institution is not logical. The biggest roadblock: the codes department. Which brings us back to this wasteful 3rd judge situation. Will the city enforce code on these buildings under the aegis of the Land Bank? Or will they continue to be rule-free placing the burden- and violations- on building owner neighbors who have to pay higher insurance and tax bills while the values of their properties are degraded further by city/Land Bank controlled properties? Where are those codes PR sweeps? They did one on Dubois, ticketed petty violations and blatantly ignored something as egregious as an illegal boarding house. At this point it’s more than obvious that they were doing the hospital’s bidding, not the community’s. Yet look who chairs the Land Bank- the codes chief!

        • The land bank is an entirely different legal entity. I know because I am one of the members of the citizens committee!

          The reason for posting the article was to point out some of the criticisms made when city councils do NOT ‘step out of the way’ and let the land bank do its job,…

          I am in complete agreement, we should not be repackaging the same ole, same ole and need some real thinking OUTSIDE the box.

          Until we create alternatives and present fleshed out plans to city leadership, then nothing more will be offered than the same ideas over and over. Perhaps with some fresh thinking and new leadership things will begin to move forward.

          Honestly, in the end, it doesn’t matter who does the work; it matters that it gets done.

    • @Michael,

      Bereft of any creativity or business acumen to create jobs or attract industries the politicians have opted to raise funds by fining and penalizing a group. It is the low road Choose a group, paint them with a broad brush and villify them until they pay. In this case the group chosen is homeowners, particularly “absentee landlords”.

      Let me illustrate how pernicious this move is, as I’m sure you know, but I do it for the benefit of other readers. There are about 6300 properties rented in the city which is two thirds of all occupied properties, meaning landlords (including the absentee ones) pay two thirds or more of all property taxes collected.

      And what do landlords get? The highest property tax rates in the Hudson Valley. So approximately one third of the annual rent goes to property taxes, making the city effectively a partner in any real estate investment in the city of newburgh. Then out comes $$ for maintenance, water, sanitation etc.

      And now comes the Code Police, looking to collect at least another million more per year from the same 6300 properties, and mind you, they are making up the codes we all need to comply with. Talk about a rigged game.

      Any good investor has to know when to take your profits or cut your losses. I think we’re there now. I hope they find a lot of owner occupied folks to take over and fund their little bureaucracy, though I doubt it because those folks have got to realize you get nothing for the $$ you lay out in taxes other than rampant crime, a poor school system and a filthy city which they never can seem to clean up with all the grant money they get.

      I like the city of newburgh and had hopes of one day either moving there permanently or keeping one of the properties as a weekend/ summer home. I hope it gets better but moves like these new fines and useless city judges is not encouraging.

      I hope I’m wrong and better days are ahead.

  • I really don’t see how this new process helps get these properties sold and renovated. If anything it seems to make it more complicated. Not only would the prospective buyer have to pay the sale price… but the also rehab costs and any unpaid taxes. To be granted the privilege to pay all this (to the city) you first have to pass a stringent review of income as well as past and present tax returns? How is this an incentive?
    The City of Newburgh seems to take the position that people are knocking down their door to buy these properties.
    I wish this were the case. I really do.
    I am a historic property owner in the city and a landlord with extensive experience in historic home renovations (as well as a degree in Historic Architecture and Design), yet it is people like me that the city seems to go after because I am revenue generator for the city. This drives people with a passion for rehabilitating Newburgh away.
    Also- while I understand the concept of Owner Occupied residences, the criteria set for buying these properties seems to be high. Will the people that are able to meet this criteria want to live in the areas where these properties are located? I don’t know… and therein lies the rub.
    It’s a shame because I love Newburgh and its history and would really love to buy the Monell mansion as my next primary residence (and renovate it to its original grandeur, as this is my passion) but I don’t think I could afford it (and I make a much higher than average income). It would be nice if the city would work with people like me a bit more with incentives and tax breaks, but they don’t seem interested. I am hoping they will prove me wrong…

    • Since we have Hannah here in this discussion, and she a member of the board, maybe she can explain how the land bank process will improve our situation. Instead of pollyanna-ish comments, let’s have some substance, Hannah. Expecting the city council to “get out of the way” sounds more like a power play than a solution to me.

      • Michael I am not on the board. I am on the citizen’s committee. There will be solutions, but I hesitate to comment negatively, and rather try to bring together positive action. You will hear more when there is something substantial to comment on. You say Pollyanna like it’s a bad thing…:)

        • So as a member of the citizens committee you have no idea exactly how or why the Land Bank will be any better than our present institutional failures except as blind faith and hope? Now there’s a foundation for progress if I ever heard one, not.

          I’m still waiting on an explanation of how spending $300,000 of our CDBG monies to raze three buildings (money that was directed to a former tenant of the mayor’s boarding house) to hand the properties to the Land Bank for their own funding- without compensating the city- is in the community’s interest? Or how spending money to tear out slate sidewalks on a street that needs development- and if successful, ripping out those very same “improved” crappy concrete ones- creating a crosswalk in the middle of a block from one empty lot to another- when we need crosswalks urgently in other parts of the city that are already fairly functional and creating bumpered inefficient parking in a city that has major street parking issues could ever, in any stretch of the imagination, be termed as responsible? So far this is all we got in the short history of the Land Bank. Care to fill us in to what’s positive about it?

    • @Dansloane,

      You are correct! The City treats us as though we ought to genuflect before them because we are privileged to pay their high taxes, fees, fines and spend OUR money rehabbing the area. This city judge proposal and process to purchase city property is more of the same, unfortunately.

      In the early 2000’s it was private owners like me who came in and bought at market value and spent our own money to renovate and restore, resulting in the small turnaround the city had. It wasn’t the folks who received property from the city for $1 who did it. Most of those folks were either slumlords or left the properties abandoned, many of which appear now in the “Rescue Me” section on this blog.

      Singling out a group and taxing/fining them to death is detrimental to the City. I’ve suggested on several occasions here that the city needs to broaden the tax base. More industry means more taxes and more people working, who will also generate tax revenue. Additional tax revenue which can be used for cops, firefighters, sanitation, city services and schools.

      In short, Newburgh needs BUSINESSES. Homeowners will follow. I am mystified as to why the City believes that folks will be interested in buying/investing in a home in a high crime, high tax, poor schools, no job area. What incentive do they have?