dollar house pilot program: what you need to know
FTCTV guest contributor Clark Randall takes a deep dive into St. Louis' Dollar House Pilot program
"The LRA (Land Revitalization Authority) is always seeking new ways to sell more of the buildings that it owns. The LRA Commission has authorized a one-year pilot program to sell single family residential properties owned by the Land Reutilization Authority of the City of St. Louis for $1.00, subject to certain requirements."
These are a few of the city’s own words concerning the new Dollar House Pilot Program. And to understand the story of the program is to understand, first, the Land Revitalization Authority (LRA).
The LRA was created in 1971, it’s the portion of city government which owns property, functioning as a landbank for the city. The LRA comes into ownership when residents fall behind on their property taxes and are forced into forfeiture. However, before it falls into the LRA’s hands, the city holds “tax sales”, where people can reclaim the property they fell behind on, or buy homes that another owner is forfeiting.
To buy, you have to come cash in hand, a policy which restricts buyers to those who can liquidate some thousands of dollars on a given Saturday morning. Consequently, the best properties are picked off by investors, speculators and, at times, those looking to expand their reach at a discount. But many properties slip through the cracks to the LRA. Today, the LRA owns a total of around 12,500 properties.
With that in mind, the city is responsible for the maintenance of each of these properties, a job which costs the city millions each year. A job which they struggle, today and historically, to keep up with.
LRA owned homes are often overgrown, stripped out, and hardly secured, it’s all recognizable. The Dollar House Pilot program is, in part, simply a way for the LRA to rid themselves of properties they do not want and cannot afford to take care of. Which is, in and of itself, not a bad thing. But selling it as accessible empowerment for residents who can’t afford another route to homeownership is.
Soon after the LRA was created, residents in north St. Louis were up in arms. The LRA was leaving homes vacant and unkept, burying property values for homeowners and creating vacuums for crime. Vacancies hurt property values for everyone on the block and everyone in the neighborhood. As property values decline, institutions are undercut, especially public schools whose existence depends on property taxes.
“The largest slum landlord in the city is the city,” Martin Walsh, then St. Louis City Building Commissioner, said to the Post-Dispatch in 1991.
Democratic alderman of the 21st, John Collins-Muhammed sponsored legislation for the Dollar House Pilot Program. In an interview, Muhammad says about eighty percent of his job is spent handling issues that arise from vacancies. Muhammad tweeted, earlier this year:
SLDC & LRA division are the biggest slum lords in my Ward. Hundreds of properties look like bombs hit them. We have laws that governs how property should look, vacant & occupied. It’s funny how a City that forces residents to comply doesn’t even comply w/ the Property they own.
Muhammed’s ward has one of the highest vacancy rates, so it makes sense that he would get behind an initiative on the issue. And the majority of coverage is congratulatory. “We keep seeing families that are trickling out of St. Louis and we want to keep them here, but we have to give them the type of incentives to stay here,” Muhammad tells the St. Louis Business Journal of the program.
Muhammad’s town hall for the program at Harris-Stowe attracted several hundred residents and was standing room only. He showed a slide that read in all caps, “DO YOU BELIEVE IN A DOLLAR AND A DREAM?”
The city tried this program in the 1980s. The results were mixed—some people came away with a decent home; some people lived in those homes for years. But the program will be harder to implement today than four decades ago.
The LRA will only use properties that have been vacant in their hands for over five years. To the contrary, when the program ran previously, many of the homes were newly acquired by the LRA; they did not require the structural repairs of prolonged abandonment. Time, too, has passed. Now, according to census data, the majority of homes on the north side are approaching one-hundred years old, if not older.
There are 552 vacant homes eligible for the program today, far from the 49 that were available when the program was first tried. To qualify, homes must be single-family and under 1,500 square feet. The $1 headline is disingenuous for many reasons. For one, there is a $25 application fee, $70 homeowners’ course, $83 in processing fees, and $250 in title insurance. Secondly, none of these homes are in livable condition.
The St. Louis Business Journal reported that repairs would average, in total, “between $5,000 and $15,000”. I asked Michael Allen about this number, and he replied that most eligible homes would likely take anywhere from $25,000 to $100,000 to rehab. Another developer in south St. Louis told me he would expect average figures closer to $100,000.
Rehabbers participating will have 12o days to bring the exterior into code compliance and eighteen months for the interior. After obtaining an occupancy permit, the home will be sold for one dollar. If any of these rules are violated, the property will go back into the hands of the city.
Alongside residential segregation in St. Louis there is banking segregation. In 2017, less than 4% of all mortgages in the city of St. Louis were made north of Delmar. Redlining, or at least the skeleton of it, can still be seen in the city. Discrimination and appraisal gaps plague access to finance: if, for example, a house in Greater Ville is bought and a $100,000 loan (to keep the numbers even) brings the home up to a good living condition, the property value will likely be appraised, still, at under the cost of rehab—creating the gap.
Until underlying issues of financial access and the history of redlining is addressed, programs like this will likely struggle to get their feet off the ground. The housing and segregation crisis in St. Louis deserve more than exciting, but cheap shortcuts to prosperity and equity.
Homeownership is the American route to stability and wealth, and Black people were effectively locked out for the better part of the 20thcentury. This helps explain why the average assets of white families are twentyfold that of Black families, according to New York Times reporting in 2017. A ratio which grows annually.
There is a larger picture in the background of the Dollar House Pilot program. It draws this much attention in part because Black homeownership is at a historic low as of today. All homeownership gains for Black families since the Fair Housing Act of 1968 were wiped out by the foreclosure crisis, which did not end for Black people in 2012 when the market recovered—it continued at least another five years according to scholarship.
By the end of 2009, half of all Black wealth in America had disappeared.
In an underdiscussed report, median Black household wealth is expected to hit zero by 2053based on current trends, continued discrimination, and the increased, crushing effects of student loan debt.
The program, to return to St. Louis, is being pushed towards Black residents in particular, judging by the crowd which showed at Muhammad’s townhall. The program is speaking to the crisis, but selling a false dream. If the LRA wanted to empower residents, why not offer recently acquired homes? Homes that haven’t been vacant for half a decade. Why not extend the time allotted for rehab? Why not subsidize loans for Black residents who want to participate? A method deemed “greenlining”which is being discussed in St. Louis now.
The Dollar Home Pilot Program is not attempting to change anything structurally in St. Louis. It is, essentially, an aesthetic, or an attempt. Not many will scrutinize the results, and no one, certainly, expects it to solve vacancy, or even touch the racial wealth gap—but it is an effort. It’s also therefore, cynically speaking, a win-win for politicians to propose.
The conundrum St. Louis faces, of course, can never be addressed in one fell swoop. But hesitations can arise when proposed solutions don’t approach the root causes of such.