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No. 75 Fall 2010

PUBLISHED BY THE

A COMM U N I T Y D E V E LO P M E N T P U B L I C ATION

CASCADE

COMMUNITY AFFAIRS
DEPARTMENT OF THE
FEDERAL RESERVE BANK
OF PHILADELPHIA

2 — Message from the
Community Affairs Officer
3 — The Reform of Vacant
Land Policies in
Philadelphia
4 — Land Banks as a
Redevelopment Tool
6 — ECA Addresses
Challenges of Rising
Energy Costs
8 — Spotlight on Research:
Sustainable Housing:
Consumers’ Perspective
16 — Calendar of Events

AFC Expands Its Energy-Efficiency Lending
By Keith L. Rolland, Community Development Advisor
AFC First Financial Corporation, a consumer finance lender in Allentown, PA, is
increasing the pace of its energy-efficiency
lending to homeowners in 24 states,
including Pennsylvania. To provide AFC
with liquidity, the Pennsylvania Treasury
Department purchased $36.8 million of
AFC Pennsylvania loans and is exploring
alternatives to sell $25 million in loans
outstanding.

programs in three states: Pennsylvania’s
Keystone Home Energy Loan Program
(HELP), Connecticut’s Solar Lease1 and
Energy Efficiency Fund Residential Financing Programs, and the new Kentucky
Home Performance Financing Program. In
21 other states, it makes energy-efficiency
loans through programs operated by 15
manufacturers and four utilities.2 These are
10-year unsecured market-rate loans that
...continued on page 10

AFC underwrites and originates unsecured fixed-rate loans of $1,000 to $20,000
for energy-efficiency improvements and
bases its loan decisions largely on FICO
credit scores, debt-to-income ratios, and
employment verification. AFC relies on
over 2,500 AFC-approved contractors,
including 1,600 in Pennsylvania, to market
energy loans to homeowners and provide
energy products and services.

AFC First Financial Corporation; www.afcfirst.com

INSIDE:

This year, AFC opened a training center
for green jobs training and contractor education in cooperation with Lehigh Carbon
Community College. AFC has trained
500 contractors to Building Performance
Institute standards and is adding training
in geothermal and solar installation.
AFC is co-creator and administrator of
CT Solar Leasing, LLC, a nonbank subsidiary of US
Bancorp, is offering the first ratepayer-funded residential solar leasing program in the U.S. For information, see http://www.ctsolarlease.com/index.php.

1

The 21 states are primarily along the eastern coast
from Maine to Florida and include some midwestern
states.

2

www.philadelphiafed.org

Contractors set up a “blower door test” at an
exterior door of a house to determine air-tightness.
The blower door has a fan that pulls air out of the
house, lowering the air pressure inside the house.
The higher outside air pressure flows into the house
through all unsealed cracks and openings and is
identified by an infrared camera or other means.
1

CASCADE

No. 75
Fall 2010

Cascade is published three times a year by the
Federal Reserve Bank of Philadelphia’s Community
Affairs Department and is available at www.
philadelphiafed.org. Material may be reprinted or
abstracted provided Cascade is credited. The views
expressed in Cascade are not necessarily those
of the Federal Reserve Bank of Philadelphia or
the Federal Reserve System. Send comments and
subscription requests to Keith L. Rolland at 215574-6569 or keith.rolland@phil.frb.org.
COMMUNITY AFFAIRS DEPARTMENT
Kenyatta Burney
Senior Staff Assistant
215-574-6037
kenyatta.burney@phil.frb.org
Albert Chin
Consumer Specialist
215-574-6461
albert.chin@phil.frb.org
Jeri Cohen-Bauman
Lead Administrative Assistant
215-574-6458
jeri.cohen-bauman@phil.frb.org
Andrew T. Hill, Ph.D.
Economic Education Advisor and Team Leader
215-574-4392
andrew.hill@phil.frb.org
Amy B. Lempert
Community Development Advisor and Outreach
Coordinator
215-574-6570
amy.lempert@phil.frb.org
Erin Mierzwa
Community Development Specialist and
Administrative Coordinator
215-574-6641
erin.mierzwa@phil.frb.org
Dede Myers
Vice President and Community Affairs Officer
215-574-6482
dede.myers@phil.frb.org
Harriet Newburger, Ph.D.
Community Development Research Advisor
215-574-3819
harriet.newburger@phil.frb.org
Keith L. Rolland
Community Development Advisor
215-574-6569
keith.rolland@phil.frb.org
Marvin M. Smith, Ph.D.
Community Development Research Advisor
215-574-6393
marty.smith@phil.frb.org
Brian Tyson
Community Affairs Research Assistant
215-574-3492
brian.tyson@phil.frb.org
John J. Wackes
Community Development Specialist
215-574-3810
john.j.wackes@phil.frb.org
Todd Zartman
Economic Education Specialist
215-574-6457
todd.zartman@phil.frb.org

2

Message from the
Community Affairs Officer
This issue of Cascade provides very different articles with a common theme
of renewal: renovating homes to save
money through energy conservation
and rebuilding neighborhoods by putting vacant land and buildings to productive use again. Taking something
that is nonfunctional and putting it to
good use always makes me smile.
The lead story is based on a lender —
AFC First Financial Corporation in
the Lehigh Valley — that has found
a niche in financing money-saving
energy improvements. A companion
story highlights a nonprofit that is
also working to lower energy costs
for low-income consumers. Along the
way, both organizations have created
opportunities for workers to learn new
marketable skills, for the government
to make attractive investments, and
for property owners to pay less to heat
their homes. It is a win-win situation.
Vacant land and abandoned buildings
seem to sit forever, but in Philadelphia
and Genesee County, MI, that is no
longer the norm. Terry Gillen writes
about Philadelphia’s efforts under
Mayor Michael Nutter’s administration
to change how vacant properties are
acquired and converted into new uses.
In his article, Dan Kildee discusses the
new Ford Foundation–funded nonprofit, the Center for Community Progress, and its efforts to take the Genesee
County experience to other communities. In addition to detailing the efforts
to salvage or demolish properties, he
shares four principles that are important for all communities that want to
get control of the vacant buildings that
limit their future growth.
In Washington, D.C., there has been
plenty of other news. This summer,
President Obama signed the Dodd–
Frank Wall Street Reform and Consumer Protection Act, a law that will

revamp many parts of the financial
regulatory system. There are sure to be
some bumps as the details are worked
out, but the creation of a new Bureau
of Consumer Financial Protection is
a positive step in the eyes of many
consumer advocates. Although the
bureau will be housed in the Federal
Reserve, it will be independent and
have substantial powers to write and
enforce regulations for how lenders
serve consumers. We will keep you
posted as we learn more about the
bureau’s role.
And there is more change underway.
In July, the four federal bank and
thrift regulatory agencies — the Board
of Governors of the Federal Reserve
System, the Office of the Comptroller
of the Currency, the Office of Thrift
Supervision, and the Federal Deposit
Insurance Corporation — began hearings on Regulation BB, the Community Reinvestment Act (CRA). These
hearings are the first in more than 15
years — since the procedures for examining banks’ and thrifts’ CRA compliance were dramatically changed
during the Clinton administration. The
questions asked in these CRA hearings, in part, include: Should the agencies revise the regulation and require
examiners to routinely consider activities by affiliates? Should the agencies
consider revisions to the community
development test or to the definition
of community development?
The four regulators also announced
several joint Home Mortgage Disclosure Act (Regulation C) hearings designed to garner public comments on
data elements for financial institutions’
annual reports on mortgage lending
activities. In the coming months, I will
keep you posted on all of these issues.

The Reform of Vacant Land Policies in Philadelphia
By Terry Gillen, Executive Director, Philadelphia Redevelopment Authority
A recent story in the Philadelphia
Inquirer highlighted how Philadelphia’s tax foreclosure process contributes to the city’s vacant property
problems. The reporter described a
home in West Philadelphia that was
located in the middle of a block of
row houses. It was the only vacant
building among otherwise wellcared-for homes. The owners had
divorced and moved away, abandoning the property. Now 15 years later,
the roof, floors, and rear wall are
in danger of collapse, jeopardizing
the adjoining occupied homes. Even
though more than $10,500 is owed in
back taxes, the city has yet to foreclose on the property.
To address difficult situations like
the one described above, the Philadelphia Redevelopment Authority
(RDA) is leading a city-wide effort to
transform Philadelphia’s land management system, and it’s focusing
on vacant land. Last fall, Philadelphia Mayor Michael Nutter set up a
Vacant Land Task Force with the goal
of getting the leading stakeholders
on the vacant land issue to develop a
common vision and work plan.

•

•

worth, eliminating the owner’s
incentive to maintain or sell the
property.2 The city has no plans
to acquire most of these properties through the tax foreclosure
process because of high transaction costs and concerns about
ongoing liability.
Through the tax foreclosure
process, tax delinquent vacant
land is transferred from derelict owners to new responsible
owners. Since the tax foreclosure
process is considered a revenue
collection tool, properties are
selected to be sold based on
an assessment of their marketability at a sheriff’s sale auction.
This auction is a prime feeding
ground for speculators.
The city’s Department of Licenses and Inspections does not have
the tools or resources to hold
property owners accountable for
the maintenance of their properties. Therefore, landowners are
not accountable for the blighting

influence of their landholdings
on surrounding property, and,
as a result, nearby homeowners
suffer unfairly.
The more than 10,000 parcels that are
owned by the public fall under the
control of several city entities, each
with different goals. Management
systems for these parcels are disjointed and lack adequate incentives.
• The RDA owns 2,800 parcels that
were acquired by eminent domain for redevelopment efforts.
• The city of Philadelphia (Department of Public Property) owns
5,700 parcels that were acquired
by tax foreclosure and are surplus to the needs of the city. The
city is under no obligation to
ensure redevelopment; this land
is currently viewed as an asset
to be liquidated at the highest
price.
• The Philadelphia Housing Development Corporation (PHDC)
...continued on page 14

The Current Vacant Land
Management System

•

Redevelopment Authority; www.phila.gov/rda/

Today, the RDA estimates that there
are 40,000 vacant parcels in Philadelphia. Of these parcels, 30,000 are
privately owned.1
More than 60 percent of the
privately owned vacant parcels are more than 10 years’ tax
delinquent, and many of these
properties have more taxes
owed on them than they are

1

Source: Philadelphia Water Department.

2

Source: Philadelphia Revenue Department.

Vacant properties in Philadelphia are being reused for different purposes. A vacant lot has been
“cleaned” and “greened” by the Pennsylvania Horticultural Society.
3

Land Banks as a Redevelopment Tool

By Dan Kildee, Co-Founder and President, Center for Community Progress, Washington, D.C. and Flint, MI
If America’s cities and towns are
going to compete in the 21st century
economy, they must do so by becoming places that attract the younger
generation of workers that our
economy will soon depend on. A key
way to attract younger, creative, and
entrepreneurial workers to our cities
is to transform abandoned properties
into places where these individuals
can work and raise their families.
As difficult as this task is, there is
a tool many communities across
America are using to breathe new life
into once financially devastated communities — land bank authorities.

What Is a Land Bank?

Land banks are public or nonprofit
entities created by local governments
to acquire, manage, maintain, and
repurpose vacant and foreclosed
buildings and lots. These entities are
not financial institutions; they are
single-purpose entities charged with
finding new and meaningful uses
for abandoned properties. The land
bank concept replaces the typical
method local governments use to
enforce tax collection by establishing
a process that eliminates all liens and
past claims and produces a clear title
so that a new owner can purchase
the property.
Land banks can determine pricing
for the properties they sell based
on the market and the property’s
intended use. For example, a “side
lot” — the empty lot next to a
homeowner — is often sold for a
nominal sum, even less than the
taxes and fees owed on that parcel.
In other cases, a land bank can accept nonmonetary consideration as
part of a sale, such as an agreement
to improve the property or put the
property to a particular use. In other
4

cases, properties can be sold at
market value, producing a surplus that offsets the “losses”
on other properties conveyed
on the terms previously mentioned.
These outdated tax foreclosure
systems that the land bank
model is intended to replace
put a higher premium on the
modest collections derived
from such transactions, with
no consideration for the impact
that these types of transactions will have on surrounding properties. That impact is
devastating to a neighborhood
struggling to hold its own in an
already weakened market. The
local governments sell interest in properties to investors
who view property not as real
estate but as an investment on
paper that can be either sold to
another investor or can simply
be written off as a loss. It is rare
that such sales lead to reinvestment in those properties. That
is, families don’t go to tax lien
sales to shop for a home, and
developers don’t go to courthouse auctions to find their
next multimillion dollar location.

The Hotel Berridge was returned to productive use as
a result of development incentives provided by the
Genesee County Land Bank Authority in Michigan.
The Berridge was a single-room–occupancy hotel
converted to mixed-income housing and two commercial units.

A land bank is an alternative to the
outdated tax foreclosure systems
because it gives communities the
opportunity to repurpose abandoned
properties in a manner consistent
with the communities’ values and
needs. Communities can demolish
unsalvageable homes and create
open green spaces or community
gardens, restore interesting buildings, or simply hold land in careful
stewardship until a new purpose can
be determined. The land banks treat
properties as real estate, not as a dis-

posable commodity that, once used,
no longer has a meaningful purpose.
The goal is to provide greater balance between the interest of efficient
tax collection and the interests of the
neighborhoods where the properties
are located. In the long term, a more
careful approach to the disposition
of tax-foreclosed properties ultimately increases tax collections. Careful
reuse of tax-foreclosed properties has
a significant impact on surrounding
properties and their taxable value.
Allowing a vacant property to fall
into the hands of speculators ensures
that blight will spread unchecked,

causing property values to fall as
well as entire neighborhoods.
Approximately 75 communities now
operate formal land bank programs
across the country.1 Although land
banks are most often associated with
communities with large-scale blight
and abandonment, many communities now see the benefit of implementing land banking as a means of
preventing the contagious blight that
can sweep across urban neighborhoods. One of the most active land
banks in the country is the Genesee County Land Bank Authority
(GCLBA) in Flint, MI.

Effect of GCLBA

Based on land banks created earlier
in St. Louis, Cleveland, Atlanta, and
Louisville,2 the GCLBA has become
a model of a more aggressive land
bank. The GCLBA, like other land
banks across the country, was created
to replace an antiquated system of tax
foreclosure and property disposition.
The GCLBA’s mission, however, is to
go beyond land assembly and title
clearance. For example, the land bank
has engaged in redevelopment activities, often serving as a partner in
redevelopment projects by providing
new management or financial capacity for local nonprofit developers. In
some cases, the land bank has acted
as the developer on a project if it
determined that such a development
was a potential catalyst to private
investment. This has proven to be a
successful approach in Flint where
land bank development projects have
led to more than a dozen redevelopment projects adjacent to or near land
bank–initiated development.

1

Since its inception in 2002, the
in explaining the need for the land
GCLBA has demolished over 1,300
bank approach. In 1908, General Moproperties; removed thousands of
tors was founded in Flint. The city
tons of debris from empty lots; and
grew as the automobile industry and
redeveloped or repurposed over
GM grew, and by 1960 the city had
2,500 properties, which under the
expanded from a small town to a city
former system would have simply
with a population of 200,000. As the
been sold at an auction to the highest
auto industry began to struggle and
bidder — typically for a fraction of
cities began to sprawl, Flint faced a
the land’s value. The land bank has
decline in both population and jobs.
used its land assembly and financToday, the number of workers at GM
ing tools to attract over $60 million
has fallen sharply, to less than 10,000.
in new investment on previously
The population, which had peaked at
forgotten land. The land bank is
200,000 in 1960, was less than 110,000
currently a partner with a private
in 2009 — a 45 percent loss in just a
developer in the $30 million redevelfew decades. When people left Flint
opment of the former Durant Hotel.
to find jobs elsewhere, they obviously
The Durant, which sat
empty for 37 years until
the land bank acquired it
The GCLBA, like other land banks
in 2005, is being renoacross the country, was created to
vated into 93 apartments
replace an antiquated system of tax
and commercial space on
the lower floors.
foreclosure and property disposition.
Other development
projects include a partnership with
a local nonprofit that resulted in the
conversion of the Hotel Berridge,
a former 99-room single-room–occupancy “flophouse,” into 21 residential units, including 11 affordable
units, and two commercial units.
The land bank itself redeveloped an
abandoned clothing store as a mixeduse development. The land bank has
also conveyed dozens of commercial
properties that now offer small entrepreneurs a chance to open a business.
Since it was formed, the GCLBA
has acquired nearly 10,000 empty
houses, vacant buildings, and abandoned scattered lots and has begun
transforming the city of Flint, which
serves as an important case study

had to leave their houses behind. And
thus, contagious blight took hold. It
became clear that simply selling those
distressed properties again and again
was a foolish strategy with dire consequences for neighborhoods.
The land bank has reduced the oversupply of housing in Flint’s weak
market and improved the quality
and type of housing by restoring
historic buildings and rehabilitating
homes in areas where the market
will support redevelopment. This
effort, which relies on funding once
diverted into the hands of tax sale
speculators, has affected the trajectory of the neighborhoods in Flint.3
Neighborhoods that were considered
threatened have been stabilized

...continued on page 12

There are 75 land banks in operation.

The earliest major land bank program, the St. Louis Land Reutilization Authority, was created in 1971. Ohio followed suit by adopting state-enabling
legislation in 1976 that permitted the creation of the Cleveland Land Bank. Just over a decade later, both Louisville (1989) and Atlanta (1991) created
parallel land bank authorities with the approval of intergovernmental agreements. After 15 years of economic decline triggered by industrial closings,
the city of Flint and Genesee County created the GCLBA in 2002.

2

3

A study that discusses property value increases as a result of the GCLBA can be found at http://www.aec.msu.edu/theses/fulltext/griswold_ms.pdf.

5

ECA Addresses Challenges of Rising Energy Costs
By Christine Quinn, Community Affairs Intern
With continually rising energy costs
and increasing energy demand, energy efficiency and conservation are of
utmost importance.1 Since 1984, the
Energy Coordinating Agency (ECA)
has strived to help low-income
homeowners in the Philadelphia area
lower their energy consumption.2 Its
efforts include weatherizing homes,
making energy conservation repairs,
and providing energy assistance and
budget counseling to help customers
pay their utility bills. The ECA has
identified several pressing issues:
a widening affordability gap for
utilities, the deteriorated condition
of much of the low-income housing
stock, and a need for consumer energy education and for high-quality
installation of energy conservation
measures.
In the Philadelphia region, utility
companies provide financial assistance to low-income customers, typically targeting those residents who
are having difficulty paying their
utility bills. This assistance is in the
form of a subsidy that is distributed
among the rate base. However, because utility prices are rising significantly, there is a widening affordability gap.3 According to Liz Robinson,
executive director of the ECA, gas,
electric, and water terminations are
on the rise due to increasing energy
costs and declining incomes. She has
observed that these growing costs
place greater burdens on homeowners and may be contributing to the

expanding number of
foreclosures. Robinson
said that a great need
exists for alternative
methods for energy
conservation in order to
proactively approach this
issue along with creating a greater awareness
among policymakers that
rising energy costs are a
problem.

Coolest Block Contest
The “Coolest Block Contest” is an example of a
successful energy education and energy-efficiency
initiative offered by the ECA in conjunction
with the Dow Chemical Company and the city
of Philadelphia. Through this contest, the ECA
was able to weatherize one mixed-income block
in Philadelphia.a The contest winners for this
year were the 1200 block of Wolf Street in South
Philadelphia.b In total, 39 homes on the block will
be weatherized with materials provided by Dow; labor will be provided by ECA to air-seal and insulate
the roof cavity with spray foam and to coat the roofs
with a white acrylic elastomeric paint.

The ECA’s approach to
bridging the affordability
gap is to reduce energy
Liz Robinson believes that “row houses can be
consumption for lowextremely energy efficient” and that weatherizing an
income homeowners.
entire block is much more effective than renovating
In describing the ECA’s
one house at a time. This contest is innovative in that
plan, Robinson said,
it encourages whole communities to work together
“We target low-income
and care for their homes. The ECA has found that
once the block’s homeowners receive help, they are
residents who have the
more likely to continue working with one another to
highest energy consumpfurther improve their block.
tion and who cannot
afford their energy
a
In conjunction with the Cool Block Contest, Mayor Nutter
bills. Many are already
signed the “Cool Roof” legislation. This new law states that
receiving low-income
all “roof coverings over conditioned spaces on low-slope
assistance and subsidies.
roofs on newly constructed buildings shall be Energy Star
rated as highly reflective.” These new reflective roofs will
Our goal is to get energy
reduce energy usage throughout the city and will also
consumption down by
lower homeowners’ energy costs.
50 percent and have an
b
http://www.retrofitphilly.com/owners/index.htm
energy-efficient house.”
To accomplish its goal,
the ECA is working to
implement good building science
One program the ECA has used to
technology, is seeking high-quality
attain its goal is the Weatherization
installation of energy conservation
Assistance Program (WAP).4 The
work, and is working to influence
WAP is a federally funded prothe behavior of homeowners in regram through which low-income
gard to energy conservation.

See the U.S. Energy Information Administration’s website at http://www.eia.doe.gov/. Select Forecasts & Analysis, and then under Reports, select
Annual Energy Outlook 2010.

1

2

From 2008 to 2009, 40,000 households were provided with 73,000 services. This information is available at http://www.ecasavesenergy.org/.

An illustration of the affordability gap, as calculated by the ECA, can be found at http://www.ecasavesenergy.org/sites/www.ecasavesenergy.org/
files/ECA-038.4.pdf.

3

According to the National Housing Trust, the U.S. Department of Energy has made $5 billion available for energy-efficiency improvements — enough
funds to weatherize 600,000 housing units — through the American Recovery and Reinvestment Act (ARRA) WAP. Property owners can qualify for up
to $6,500 per unit for eligible properties. Funds are available only through March 2012.

4

6

However, Robinson also mentioned
the deplorable condition of the
homes of Philadelphia’s low-income
high-energy users. These homes with
above-average energy bills often
need repairs that exceed the maximum of $1,000; therefore, these applicants must be turned away. According to the ECA, approximately 51
percent of the high-use households
are rejected due to excessive repair
costs. The ECA is continually working to expand the services it offers
and to direct those applicants to other organizations that can assist them
when the ECA cannot. Robinson said
that additional resources from both
the public sector and from utilities
are being directed toward conservation efforts for all sectors: residential,
commercial, and industrial.
For example, the ECA recently received a portion of a $25 million Recovery Through Retrofit grant from
the U.S. Department of Energy for
retrofitting residential and commercial buildings to make them more energy efficient.5 With the grant, which
will be used in southeastern Pennsylvania, the ECA will administer
energy upgrades on residential properties whose owners do not qualify
as low income, while The Reinvestment Fund plans to perform energy

upgrades on
commercial
properties.
This program
is called the
EnergyWorks
Program.
As part of the
program, the
ECA is able
to offer lowEnergy Coordinating Agency (ECA) employees air-seal and insulate a roof
interest loans
with spray foam and then coat the roof with a white paint that is durable
and waterproof and provides a reflective coating.
through AFC
First Financial
Corporation, a lender that specializes
high-quality installations, the ECA
in energy-efficiency loans.6 These
provides and mandates certification
loans can be used for energy-efficiento the national standards set forth by
cy upgrades. The program has two
the Building Performance Institute.
levels: silver and gold. The gold level
The center trains approximately 750
uses a whole house approach, which
men and women a year in a range of
begins with an energy analysis of the
energy conservation skills, leading
home that is performed by a certified
to state and national certifications.
building analyst. The silver level can
Through a partnership with the
be a single measure, such as a more
Community College of Philadelphia,
energy-efficient heating system. All
the ECA is able to offer building scianalysts and contractors who particience courses and is also partnering
pate in the EnergyWorks Program
with other universities in the region
will be trained and certified.
to develop a continuum of training
in building science — from high
Another challenge in the region is
school through technical training
the need for energy education. As a
to community college and bachelor
national leader in this area, the ECA
degree programs.
has advocated for and succeeded in
incorporating energy education into
Energy costs will not decrease in
all low-income conservation prothe foreseeable future, and new
grams in the city and in the statewide
alternatives need to be developed.
WAP. The ECA has 15 Neighborhood
Therefore, it is critical to have a
Energy Centers in operation where
more extensive dialogue between
low-income residents can obtain a
the housing and energy sectors in
range of energy services.
order to find better solutions to these
energy issues.
The ECA recently opened the Knight
Green Jobs Training Center in North
For information, contact Liz Robinson
Philadelphia, where it provides men
at 215-609-1033 or lizr@ecasavesenergy.
and women with training that can
org; www.ecasavesenergy.org.
help them qualify for private-sector
jobs. To ensure that trainees have
the skills necessary to complete

5

A Recovery Through Retrofit report is available at http://www.whitehouse.gov/assets/documents/Recovery_Through_Retrofit_Final_Report.pdf.

6

For more information about AFC First Financial, see “AFC Expands Its Energy-Efficiency Lending,” which appears on page 1 of this issue.

7

Energy Coordinating Agency; www.ecasavesenergy.org

homeowners can get assistance
with energy conservation for their
homes, including air-sealing, roof
insulation, heating system repair or
replacement, and many other treatments. Under the federal WAP, the
ECA can spend $6,500 per house and
up to $1,000 for home repairs. To
maximize its use of this funding, the
ECA plans to use the best materials from different manufacturers in
order to provide the highest quality
work.

Sustainable Housing: Consumers’ Perspective
As in the past, economic recovery
will rely on consumers, who can
contribute to the revitalization of
economic activity by increasing their
spending. This is possible only if
consumers have the necessary monetary resources immediately available or access to nonmonetary assets.
Homeownership typically represents
a sizable portion of consumers’
assets. However, recent economic
events have adversely affected the
financial status of many consumers,
leaving them with less equity and,
therefore, feeling less wealthy. Thus,
the meltdown in the housing market
and the general financial crisis have
challenged consumers to rethink
their views of housing and homeownership as well as their overall
financial well-being. Consumers’ current views on homeownership and
their future outlook for the economy
will be a key gauge in determining
their role in stimulating the economy.
Fannie Mae’s latest national housing survey contains insights into the
attitudes of consumers in these two
areas.1 The following is a summary of
some of the results of the survey.

Data and Methodology

Since 1992, Fannie Mae has conducted a national annual survey of the attitudes of Americans about housing,
homeownership, and the economy.
1

The most recent survey was conducted from December 12, 2009, to
January 12, 2010. The survey data
were compiled from two samples of
telephone interviews with Americans 18 years of age or older. The
first sample involved 3,451 individuals, including “a random sample
of 3,051 members of the general
population, including 887 homeowners, 1,110 mortgage borrowers, 908
renters, and 338 underwater borrowers (those who report owing at least
5% more on their mortgage than
their home is worth).”2 The second
sample involved an oversampling
of those delinquent on their mortgage (i.e., at least 60 days behind on
their mortgage payment). Included
in this sample were 400 randomly
selected delinquent borrowers and
186 randomly selected underwater
borrowers who were also delinquent
on their mortgage.
Fannie Mae conducted a similar
survey in December 2003 when
conditions in the housing market
were more favorable. At that time,
mortgage interest rates were at their
lowest since the 1960s, and the sale
of homes was at an all-time high. The
results of the 2003 survey are used
periodically to contrast the results of
the 2009 survey discussed here.

Selected Survey Findings

The Fannie Mae 2009 survey is quite
extensive. Consequently, only highlights will be presented here.3
The Economy and Personal Finances.
The survey respondents’ views on
the economy and their personal
finances might underscore their
prospective role in revitalizing the
economy. According to the survey,
most people are pessimistic about
the economy, yet optimistic about
their own finances. Sixty-one percent
think the economy is on the wrong
track, up from the 43 percent who
voiced this opinion in the 2003 survey. A further look at the various segments of those surveyed reveals that
the majority of delinquent borrowers
(56 percent), homeowners without
a mortgage (or outright homeowners; 63 percent), mortgage holders
(61 percent), renters (60 percent),
underwater borrowers (59 percent),
and Hispanics (57 percent) hold this
unfavorable view, while less than
half (43 percent) of African Americans are pessimistic.
In contrast, when queried about
their personal financial situation for
the coming year, 44 percent think it
will get better as opposed to the 38
percent who think it will stay the
same or the 17 percent who think it

Source: Fannie Mae National Survey, available at http://www.fanniemae.com/media/pdf/2010/National-Housing-Survey-040610.pdf.

2
See http://www.fanniemae.com/media/pdf/2010/Housing-Survey-Fact-Sheet-040610.pdf. The numbers sum to more than 3,051, since some individuals are counted in more than one category.
3

See the survey for more results.

8

will get worse. It is noteworthy that
63 percent of delinquent borrowers
and 73 percent of African Americans
think that they will be better off
financially next year.
Homeownership. Eighty percent of
those surveyed believe that a high
rate of homeownership is important to the economy. In addition, 64
percent think it is a good time to buy
a house. However, 60 percent think
that it is harder to purchase a home
today than it was in their parents’
generation, and 68 percent feel that
it will be even harder for the next
generation. A number of barriers
prevent renters from purchasing
a home. Given the recent decline
in house prices, a possible gauge
of consumers’ attitude toward the
housing market in the near future
might be their view of house price
changes next year. According to the
survey, 37 percent of the respondents believe that housing prices
will increase in the coming year. This
differs considerably from 2003, when
64 percent thought housing prices
would go up. Moreover, nearly a
quarter of the consumers in the 2009
survey think housing prices will decline, while only 9 percent held this
view in 2003.
Appeal of Homeownership. The
survey reveals that consumers (70
percent) believe purchasing a home
is still one of the safest investments;
83 percent held this view in the 2003
survey. Furthermore, 80 percent
indicate that a major reason for buying a home is to have a safe place
to raise children and provide them
with a quality education. In addition to the personal desirability of
owning a home, the vast majority
of respondents (84 percent) indicate
that a high rate of homeownership
is important in strengthening their
local communities.

Homeownership Finances. It is
crucial to obtain the best information
available when selecting a mortgage.
For the consumers in the survey who
have a mortgage, an overwhelming
majority (89 percent) are satisfied
with the information they received.
Interestingly enough, 84 percent of
those with underwater mortgages
were satisfied as well. Nearly twothirds of those surveyed think that
having many different mortgage
products available increases the
chances of finding the best possible
plan for them. When it comes to their
final choice, 93 percent of those with
30-year fixed-rate mortgages are
more satisfied than those (68 percent)
with an adjustable rate mortgage.

to the economy and is potentially
contagious. The survey reveals that
knowing someone who has defaulted makes those who are current on
their mortgage as well as those who
are delinquent over twice as likely
to seriously consider stopping their
payments. However, respondents
report that the negative impact on
their credit score and moral qualms
are factors motivating them to pay
their mortgage. As to whether banks
should foreclose when owners default on their mortgage, 48 percent
say yes, while 43 percent say no. But
53 percent think homeowners are to
blame for getting a mortgage they
can’t afford.

Views of Renters. Seventy-five
percent of renters believe that it
makes more sense to own than rent,
since homeowners are protected
against rent increases and benefit
from house price appreciation. But
the three obstacles most often cited
for not buying are bad credit; lack
of funds to purchase or maintain a
home; and the belief that the time
isn’t right economically to buy a
home. Nonetheless, 50 percent of
renters think they will buy a home in
the next three years.

Doug Duncan, vice president and
chief economist at Fannie Mae, sums
up the survey as follows: “Consumers are still committed to owning a
home, but are showing increased
cautiousness, regardless of whether
they rent, own their homes outright,
or have a mortgage. They are rebalancing their attitudes toward housing and homeownership by adopting
a more realistic, long-term approach,
and are less willing to take risks.
This focus on sustainable housing
is better for the economy, better for
the housing market and better for
America’s families.”

Homeowners in Distress. Survey
respondents indicate that over half of
their debt consists of credit card debt
(28 percent) that is carried over each
month and a first mortgage (27 percent). For those delinquent on their
mortgage, the percentages of debt
owing to credit card debt carried
over and a first mortgage are 59 and
74, respectively, and the percentages
of the two types of debt for underwater borrowers are 35 percent and
60 percent, respectively.
Ninety percent of respondents
were not foreclosed on. Nonetheless, mortgage default is deleterious

Conclusion

Marvin M. Smith, Ph.D.,
Community Development Research Advisor
9

AFC Expands Its Energy-Efficiency Lending
AFC sells to Fannie Mae. AFC is one
of three lenders authorized to sell
energy loans to Fannie Mae.
Since 1999, AFC has closed over
17,000 energy loans totaling more
than $120 million.3 It currently services 6,200 energy loans with balances of $35 million. As of June 30, 2010,
its cumulative default rate was 1.1
percent, and its 90-day delinquency
rate was 1.4 percent, AFC said.
Peter J. Krajsa, AFC’s chairman and
CEO, said that AFC is making new
loans monthly of about $3 million
for improvements in about 450 units
and that its total dollars lent in May
2010 was 185 percent greater than
the amount a year earlier. According
to Krajsa, approximately 70 percent
of the dollar amount of loans closed
by AFC were made to homeowners
outside Pennsylvania.
In a recent interview, Krajsa said that
“our biggest challenge nationally is
finding sustainable capital sources
for new loans and getting more
contractors.” He said that a secondary market is needed to purchase
energy-efficiency loans that are being
made by an increasing number of
state agencies and utilities.4

History of AFC

Krajsa’s parents started AFC in 1947
as an unsecured consumer finance
lender licensed by the Pennsylvania
Department of Banking (PDOB). AFC
started making home equity loans in
1980 and FHA Title 1 home improvement loans in Pennsylvania in 1995.
In 1999, when AFC became one of
three Fannie Mae–approved energy
lenders, it began focusing exclusively
3

on energy-related consumer loans.
AFC makes loans in Pennsylvania
under a mortgage discount company
license issued by the PDOB. It makes
loans in other states under exemptions from state licensing or through
relationships with state or national
banks. The loans are then sold to
Fannie Mae.
AFC’s 25-member staff,
which includes several
former bank lenders, is
mostly engaged in lending and rebate processing.

AFC’s Role in
Pennsylvania

Pennsylvania’s Keystone
Home Energy Loan Program (Keystone HELP)
provides unsecured and
secured loans for energy
improvements to owneroccupied one- and
two-family residential
properties.
In 2006, AFC and the
Pennsylvania Treasury
Department created the
unsecured part of the
program, which evolved
from a regional pilot that
had been started with
the West Penn Power
Sustainable Energy Fund
in 2005.
AFC underwrites,
originates, and services
unsecured Keystone
HELP loans of $1,000 to
$15,000 for up to 10 years

These include about 5,000 loans totaling $40 million that AFC sold to Fannie Mae.

In 2007 and 2008, AFC sold energy loans totaling about $10 million to community
banks in Pennsylvania.

4

10

...continued from page 1

for high-efficiency heating, air conditioning, insulation, windows, doors,
and geothermal improvements.
Interest rates, which are subsidized
by state and federal funds, currently
range from 4.99 percent for loans
implementing improvements recommended by a “whole house” audit

Reactive or Proactive?
An important question in energy-efficiency lending is
whether energy-efficiency improvements are reactive
or proactive.
Peter J. Krajsa, AFC First Financial’s chairman and
CEO, said that reactive energy improvements —
those that must be made, for example, to replace a
broken furnace — constitute 90 percent of the energy-efficiency market. In contrast, proactive improvements require more customer thought, engagement,
and foresight; are more comprehensive and are made
after an energy audit; and include “whole house” airsealing and insulation, higher-efficiency heating and
cooling, and structural repairs.
Krajsa said that more consumers will make highefficiency improvements if they have an affordable
fixed-rate monthly payment that fits their budget and
is offset by energy savings.
He said that successful energy-efficiency lending
programs address consumers who want to make both
reactive and proactive repairs; keep it simple for both
the contractors and the consumers; provide lowerinterest financing for high-efficiency improvements
rather than for lower-efficiency measures; and measure energy savings resulting from the improvements.
Krajsa observed, “Reactive repairs of $3,000 to
$15,000 are too large for a credit card and too small
for a home equity loan. Proactive improvements have
historically been financed with home equity loans.
But in today’s economy, banks want lower loan-tovalue ratios for new loans, and customers have seen
a rapid erosion of their home equity. Some energyefficiency programs are addressing this dilemma
by providing below-market interest rates to attract
consumers with equity who make proactive energy
improvements.”		
				
–Keith L. Rolland

ARRA Funds Energy-Efficiency Financing in Over 40 States
Peter J. Krajsa, chairman and CEO of AFC First Financial Corporation (AFC), said that a substantial inflow of federal American
Recovery and Reinvestment Act (ARRA) energy and weatherization money is driving states and cities to enter the energy lending field.
The U.S. Department of Energy (DOE) received a total of $36.7 billion under the ARRA to invest in clean energy. Grantees under
the ARRA include the private sector, along with states, cities, counties, universities, and U.S. national laboratories.
States, cities, and counties are using ARRA funds under the State Energy Program and Energy Efficiency and Conservation Block
Grant Program (EECBG) to provide more than $750 million in energy-efficiency financing for communities in over 40 states, a
DOE spokesperson said. Some states are becoming involved in energy lending programs for the first time.*
Under the EECBG, the city of Camden, NJ is receiving $5 million for an energy-efficiency project and is working with the New
Jersey Board of Public Utilities and the New Jersey Housing Mortgage Finance Agency.
In another $5 million EECBG award, the city of Lowell, MA is working with the Lowell Development and Financial Corporation,
which will be administering a revolving loan fund for the city. 					
–Keith L. Rolland
* A database of state energy loan programs has been compiled by the National Association of State Energy Officials. See www.naseo.org/
resources/selfs/default.aspx.

to 6.99 percent for loans for Energy
Star–certified improvements.
The unsecured loans require a minimum FICO score of 640 (680 for an
independently employed homeowner) and a maximum debt-to-income
ratio of 50 percent.5
AFC has originated and serviced
5,761 unsecured Keystone HELP
loans totaling $36.8 million as of June
30, 2010. According to AFC, these
loans had a cumulative default rate of
0.53 percent and a 90-day delinquency rate of 1.12 percent as of June 30.
The largest original loan balances for
the unsecured loans are in the metropolitan statistical areas of Pittsburgh,
Lancaster, Allentown–Bethlehem–
Easton, Harrisburg–Lebanon–Carlisle, and Reading, PA, AFC said.

The Pennsylvania Treasury Department has purchased the $36.8 million
in unsecured loans. Paydowns and
payoffs reduced the amount of loans
outstanding to $25 million as of June
30, 2010. An unsecured loan-loss
reserve, which totaled $2.5 million
as of July 30, 2010, is capitalized by
state and federal funds.
Keith Welks, Pennsylvania deputy
treasurer, said that the treasurer’s
office initially believed that there
was an opportunity to generate a
market-based return on investments
in residential energy efficiency. The
Pennsylvania Treasury Department
worked with AFC to expand a regional program by making a $20 million commitment to purchase AFCoriginated loans. He added, “We’ve
modified the program as we’ve seen
what works in the marketplace, what

subsidy funds are available, and
what quality assurance tests showed.
We’ve been very pleased that during
very difficult times for consumer
loans AFC’s loans have proven to be
among the best-performing fixedincome assets in our portfolio.”6
In addition, AFC underwrites and
originates secured Keystone HELP
loans of $5,000 to $35,000 for whole
house improvements7 through the
Renovate and Repair Loan Program
of the Pennsylvania Housing Finance
Agency (PHFA). The secured loans
require a minimum FICO score of
6208 and a maximum debt-to-income
ratio of 45 percent and are made at
up to 120 percent loan-to-value ratios. The PHFA services the loans.
AFC has originated $11 million of
secured loans, which have been pur...continued on next page

AFC said that the 5,761 loans have a weighted FICO-score average of 751 and that 83 percent of the loan dollar originations have FICO scores of 700 or
more. In addition, the 5,761 loans have a weighted debt-to-income ratio of 35 percent.

5

The Pennsylvania Treasury Department recently incorporated environmental considerations into the department’s investment policy. For details, go to
http://www.patreasury.org/Newsletters-2010-07-23.html.

6

Whole house improvements are recommended by an energy audit that predicts a minimum 15 percent to 25 percent energy savings, depending on the
home’s energy profile. According to Krajsa, whole house improvements “seal the building envelope” before other energy-conservation steps are taken.

7

8

The minimum credit score is 580 for borrowers in Philadelphia who have household incomes equal to or less than $85,445.

11

chased by the PHFA. These loans are
made for qualifying improvements,
and many require an energy audit to
assess energy usage and recommend
energy-efficiency measures. The secured Keystone HELP loans are the
only secured energy-efficiency loans
that AFC has made in the United
States.

Observations About AFC’s
Programs

Krajsa said that “the most critical part” of AFC’s energy lending
programs is the role of contractors.
Improvements are performed by
contractors who meet criteria such as
a minimum of three years in operation, proper licensing, satisfactory
business and personal credit references, and a reputation for a high

level of service and workmanship.
Contractors certified by the Building
Performance Institute can perform
whole house improvement projects
with lower interest rates.
AFC pays contractors upon receipt of
completion certificates from contractors as well as verbal confirmation
from homeowners that the work was
completed satisfactorily. According
to Krajsa, AFC conducts 5 percent
quality assurance on its loans.
Krajsa said, “One of the goals of
the AFC loan program is to provide incentives to consumers and
contractors to incorporate energy
audits when possible, but mandating audits before consumers can get
loans can be counterproductive to

Land Banks as a Redevelopment Tool
by converting the source of contagious blight into assets, such as
community gardens or expanded
yards for neighbors. The goal has
been to target intervention, such as
demolition, rehabilitation, or greening, in neighborhoods that are at
the “tipping point” — not the most
distressed areas, but those with a
chance to be salvaged with immediate intervention.

Critical Elements for a Successful Land Bank

The Center for Community Progress
(CCP) and its predecessors — the
National Vacant Properties Campaign and the Genesee Institute —
have assisted dozens of communities
in creating land banks. Based on
experience derived from helping
communities across the country
form land banks, the team at the
Center for Community Progress4 has
concluded that the following four el4

Integrate the land bank management and disposition
process as an element of the
tax collection and foreclosure
system. The tax collection process is often the most effective
means of addressing abandoned
properties because owners typically do not pay taxes on these
properties. Therefore, effective
use of the local governments’
superior tax lien can be the primary mechanism of acquisition
of the properties. Furthermore,
using the fees associated with
delinquent tax collection with
the management and disposition
of properties is a critical element.
Many tax collection systems
privatize profits by selling tax
receivables (tax liens), which
then earn penalties and interest

The team includes Professor Frank Alexander and Amy Hovey.

12

For information, contact Peter J. Krajsa
at 610-433-7486 or pkrajsa@afcfirst.com;
www.afcfirst.com.

...continued from page 5

ements are critical to successful land
bank initiatives:
1.

many consumers who need to make
immediate, time-sensitive improvements. The most effective programs
involve energy expertise, a managed
and dedicated contractor network,
and point-of-purchase financing; and
many lenders, including community
banks, do not have the infrastructure
to effectively develop a platform to
make state-subsidized energy loans.
Many community banks, however,
have seen an opportunity to buy
participations in established energy
loan pools as part of their investment
portfolio.”

so the investor gets a hefty return on the investment. In some
cases, tax deeds are simply sold
at auction; this results in equity
derived from more valuable
properties enriching the smart or
lucky purchasers at the auction.
The most effective land bank
model captures those fees or the
value that would otherwise enrich an “investor” and uses those
financial resources to manage
the properties held by the land
bank. In either scenario — the
sale of liens or the auctioning of
a tax deed — the property would
likely be lost by the owner. This
improved system simply places
the tax collection and foreclosure
process, as well as the earnings
derived from such a process,
under the control of the community, not out-of-state speculators.
It is imperative that any such
public system include a strong

foreclosure prevention effort.
Any community that chooses to
be aggressive in taking the title
to abandoned properties is obligated to work equally hard to
identify and assist those homeowners facing foreclosure due to
financial hardship.
2.

Organize the land bank at the
metropolitan level or around
the most diverse real estate
market possible. The best way
to ensure that a land bank is
sustainable is to ensure that
the land bank can operate in
a diverse real estate market.
Land banks are most effective
when they are not relegated to
ownership of only the worst of
the foreclosed or abandoned
properties. A common fallacy of
tax foreclosure — or property
abandonment — is that it is all
“junk” property. Although most
of the properties in which the
titles are transferred to land
banks would meet that definition, a small percentage of taxforeclosed properties have some
market value. Creating a land
bank that can acquire, develop,
and sell distressed properties in
more functional market areas
increases the possibility that
when more valuable properties
are conveyed to private ownership through a land bank, they
will generate revenues to be
used in managing and improving the most difficult properties.
This source of internal subsidy
is founded on the notion that a
land bank is better positioned
than a public auction to convert
valuable properties to productive use and that they can use
the earnings from land sales to
rehabilitate, clean, board up, or
even bulldoze other properties
in worse condition. The GCLBA
generates between $500,000 and
$1 million per year in land sales;

this money not only recovers the
uncollected taxes on those properties but also funds a robust
property maintenance program.
3.

4.

Make sure that the land bank is
policy driven and that policies
and transactions are transparent. For good reason, the public
is often suspicious of any government role in the real estate
market. In the case of these properties, the government already
owns the property as a result of
tax foreclosure. Still, it is critical
that the operation of a land bank
be fair and predictable. To build
public confidence in a land bank,
the land bank must adopt welldefined policies and priorities
that govern to whom the property can be sold or transferred
and for what purpose. Terms
and pricing policies must also be
clear and uniform.
Emphasize community engagement and participation. The
land held by land banks is typically scattered among neighborhoods throughout the community. Therefore, the land bank has
neighbors, sometimes thousands
of them, and those neighbors
have a right to have their opinions considered when the land
bank determines new uses for
a property. The most successful
land banks engage those neighbors on the policies and practices
that determine the outcomes for
those neighborhoods. The public
is more likely to accept the hard
choices that will inevitably need
to be made regarding property
held by a land bank when those
neighbors have a formal voice
in policy and operations. By
formalizing that process through
regular neighborhood meetings
and perhaps with the formation
of a community advisory council, land banks can get public

input on terms that make that
input more meaningful.
The best land banks develop strategic partnerships with nonprofits,
community organizations, lenders,
and local governments. This is all in
an effort to leverage the resources
available to deal with the most distressed land in the community.
Since this is a relatively new field,
there is much more to learn about
effective land banking strategies
as more communities and states
develop and use these tools. Michigan and most recently Ohio have
adopted laws that allow land banks
to clear the title on a property in an
expedited manner, finance improvements and demolition, and convey
property on flexible terms deemed to
be in the interests of the community.
These actions are often impossible
if the property is held by the local government. In some states, the
idea is just beginning to take form.
In Pennsylvania, land bank legislation is currently being considered.
In the summer of 2010, the CCP
began discussions with advocates
and policymakers in New Jersey and
Delaware, along with a dozen other
states throughout the country.
Although reengineering tax collection, foreclosure, and property
disposition systems is challenging
and complicated, the greatest challenge lies in developing the will to
change and adapt to new ways of
thinking about vacant property and
in seeing land as an asset that can be
converted to productive use again,
not as a disposable commodity. That
is the real challenge, and that realization is the change most needed and
most difficult to achieve.
For more information, contact Dan
Kildee at 877-542-4842 or dkildee@
communityprogress.net;
http://communityprogress.net/.
13

The Reform of Vacant Land Policies in Philadelphia
owns 700 parcels that were
acquired by purchase or donation. The PHDC sells its property
for fair market value and tries
to ensure that buyers have plans
and resources in place to support
redevelopment.
The Philadelphia Housing Authority (PHA) also owns approximately 1,100 parcels that are

the city remain much as they have
been for the past 30 years.

2010: Opportunity for Change

Mayor Nutter designated the RDA to
lead the vacant land reform effort. In
the past, various other city agencies
have overseen the management of
•
vacant land, but none of them dealt
with the acquisition and disposition
of land on a daily basis, as
the RDA has. The RDA has
a deep level of experience
Overall, the landholding systems
and understanding of the
of the city remain much as they
complexities of vacant land
have been for the past 30 years.
management. More important, the RDA has already
made some significant progsurplus to its operational needs.
ress in this area:
The PHA needs HUD approval
to sell or convey this property to
1. In 2008, the RDA had almost
others.
no computer mapping abilities,
whereas today it has state-of-the
Past Reform Efforts
art mapping capacity. This has
The city’s vacant land management
enabled the RDA to engage in
systems have been examined numerplanning efforts that were previous times, and many suggestions
ously impossible. The city’s suchave been made to improve these
cessful application to HUD for
systems. In 1995, the City Planning
$44 million in federal stimulus
Commission published a broad
funds last year could not have
analysis of the vacant land problem
been completed without the
and offered numerous solutions. In
RDA’s mapping technology.
1998, a committee was organized
2. The RDA spent one year develunder the joint leadership of City
oping a complete inventory of
Council and the mayor’s office that
its landholdings and, in June
again suggested several opportuni2009, posted that inventory on its
ties for change, including the agwebsite.
gressive use of tax foreclosure to
3. In 2009, the RDA completed a
clear the titles to vacant properties.
successful pilot program using
Starting in 2001, the Neighborhood
real estate brokers to sell land.
Transformation Initiative (NTI) tried
This pilot program sold nine
to implement some of the previously
parcels, raised $400,000 for the
proposed reforms. In 2006, NTI
RDA, and stimulated more than
attempted to reorganize the city’s
$1.5 million in construction achousing agencies by separating the
tivity. The RDA is in the process
RDA’s land staff from the city’s land
of expanding the program.
staff. However, this separation cre4. The RDA is working with naated further disjointed operations for
tional and statewide networks
the two largest landholding agencies.
of local governments that are
Overall, the landholding systems of
exploring ways to improve va14

...continued from page 3

cant land management systems.
As part of this effort, the RDA
staff and city officials, including
Mayor Nutter, have participated
in several training sessions at
the Kennedy School at Harvard,
which are funded by the Ford
Foundation.
For the past three years, there has
been a growing national effort to
share best practices in vacant property reclamation sponsored by the
Ford Foundation, Smart Growth
America, and the National Vacant
Properties Campaign. Two national
conferences and a roundtable discussion hosted by the Brookings Institution have helped to identify some of
the most effective programs across
the country. Recently, these efforts
have come together in a new national Center for Community Progress.
This center is working to improve
local vacant property management
systems in Pennsylvania, including the city of Philadelphia. The
Housing Alliance of Pennsylvania
has been coordinating vacant land
reform strategies by municipalities
across the state and convening working sessions to focus on legislative
reforms. Finally, and most important,
Philadelphia’s budget crisis means
that the city cannot afford to let any
possible source of revenue generation or economic activity sit idle.

The No Vacancy Project

Philadelphia’s No Vacancy Project
was created to bring together the
appropriate internal and external
stakeholders to explore ideas for vacant land reform. For the first time,
all city agencies that interact with
the vacant land system or the tax lien
system are at the table working together. Members include the Department of Licenses and Inspections,

Redevelopment Authority; www.phila.gov/rda/

the Office of Housing and
Community Development,
the Planning Commission,
the Revenue Department, the
Public Property Department,
members of Philadelphia City
Council, and outside entities, such as the Pennsylvania
Horticultural Society and
representatives from Temple
University and the University
of Pennsylvania. The group
is engaged in the following
tasks:
Affordable housing is being built on a previously vacant lot in North Philadelphia.

1.

2.

3.

4.

5.

3

A working group is overseeing an effort to quantify
the impact of reforming the current system (and conversely, the
cost of not reforming the system)
as a way to focus public support
on the project.
This past winter, the city began
a targeted outreach campaign
involving meetings with elected
officials and other stakeholders.
Also this past winter, a working committee began to conduct
legal research on what system
changes can be made under current law and what changes will
require state or local legislation.
This work is being funded in part
by the Philadelphia Association
of Community Development
Corporations (PACDC), with
additional staff support from the
Housing Alliance of Pennsylvania.
The RDA and the PACDC are
also reaching out to a broader
group of external stakeholders,
including community development corporations and neighborhood groups.
In June, after receiving significant input from the RDA
and members of the Housing
Alliance, a land bank bill was
considered in the Pennsylva-

RDA lists properties for sale or
nia General Assembly. The bill
works with brokers to sell parpassed the House in June and
cels, it finds some demand for
is awaiting action in the Senate.
land — even in a soft economy.
As a result, the city has begun to
The RDA recognizes that most
consider what this might mean
city parcels are not considfor Philadelphia. Philadelphia’s
ered desirable. Identifying and
approach to land banking will
marketing the parcels that have
build on best practices in other
value are its next challenges.
areas, including Genesee County,
2. Take one step at a time. PhilaMI.3 The RDA will also attempt
to build on existing Philadelphia
delphia has a large, compliinstitutions, such as the Vacant
cated land management system;
Property Review Committee.
therefore, change will not come
6. Finally, a working committee is
quickly. The only road to succonsidering ways to protect the
cess is by working through each
residents of occupied buildings.
problem.
The new vacant land
system must include
For the first time, all city agencies
adequate protections
for low-income resithat interact with the vacant land
dents who cannot afsystem or the tax lien system are
ford to pay their taxes,
and the process must
at the table working together.
include safeguards
that ensure that these
3. Support from the top is critical.
residents are treated in a respectIt would not have been possible
ful way.
to get city agencies to tackle this
issue if the mayor did not supLessons Learned
port this effort.
Here are some lessons that the RDA
has learned:
For information, contact Terry Gillen at
215-209-8720 or terry.gillen@rda.phila.
1. Marketing works — even in a
gov; http://www.phila.gov/rda/.
down market. Every time the

For more information about the Genesee County, MI land bank, see “Land Banks as a Redevelopment Tool” on page 4 of this issue.

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Calendar of Events
Governor’s Conference in Housing and Community Development

September 28–29, 2010, Atlantic City
The conference explores innovations in planning, development, and preservation as well as neighborhood revitalization, property
management, green building, housing for special populations, financial resources, and other subjects.
For information, go to http://www.state.nj.us/dca/hmfa/home/conference/index.htm.

Third Annual Lehigh Valley Housing Summit
September 30, 2010, Allentown, PA
For details, go to http://caclv.com/.

Financial Education and Asset-Building Opportunities

October 1, 2010, Federal Reserve Bank of Philadelphia
The meeting focuses on best practices for financial education and asset-building strategies, including strategies that have been used
at volunteer income tax assistance (VITA) sites.
To register, go to http://www.philadelphiafed.org/community-development/events/.

Reclaiming Vacant Properties

October 13–15, 2010, Cleveland
The National Vacant Properties Campaign and Neighborhood Progress, Inc. are sponsoring this conference to teach policies, tools,
and strategies to reclaim vacant and abandoned properties.
For information, contact Jennifer Leonard at 877-542-4842, ext. 152 or jleonard@communityprogress.net.

Sixth Annual Homes Within Reach Conference

November 8–10, 2010, Harrisburg, PA
The Housing Alliance of Pennsylvania’s conference covers best practices in housing, homelessness, and community development,
and focuses on funding, policy and advocacy, planning and design, consumer education, sustainability, and programs for special and
underserved populations.
For information, go to www.housingalliancepa.org.

2010 Governor’s Conference on Housing

November 18, 2010, Dover, DE
For information, visit the Delaware State Housing Authority’s website at http://www.destatehousing.com/.

The Changing Landscape of Community Development:
Linking Research with Policy and Practice in Low-Income Communities

April 28–29, 2011, Arlington, VA
The Community Affairs officers of the Federal Reserve System are hosting the seventh Federal Reserve Community Affairs Research
Conference. The goal of the conference is to highlight new research that informs community development policy and practice.
For information, go to http://www.frbsf.org/community/2011ResearchConference/.
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