There has been buzz about housing conservatorship in the news lately. While some stories cast this legal process in a negative light—for example, by saying someone is taking someone’s house or developers are misusing the law—the real story is a little more complicated.
For years, local nonprofits and neighbors have used conservatorship as an avenue to battle blight and bring more affordable housing to our neighborhoods. Now, as recently reported by the Pittsburgh Post-Gazette, housing advocates are pushing for greater use of this law to address scores of dilapidated houses burdening Pittsburgh neighborhoods.
Underscoring the importance of this problem, a Tri-COG Land Bank report noted that properties within 200 feet of a single vacant parcel can see a decrease in value as high as 16.5%.
But before we get ahead of ourselves, what is conservatorship anyway?
According to the 2008 State of Pennsylvania Abandoned and Blighted Property Conservatorship Act, “court-appointed conservators bring residential, commercial and industrial buildings into municipal code compliance when owners fail to comply.”
In simple terms, this real estate law can be likened to having Power of Attorney (POA) over an aging parent. Like a POA, a court-appointed conservator can act as the owner of a house without actually having the deed in their name. The house can be rehabbed, borrowed against, and even rented (with court approval) while in conservatorship. After an individual or organization has been named conservator, they can eventually be granted ownership of the property.
State legislators passed the act as a way to give entities with experience rehabilitating buildings the ability to intervene on behalf of abandoned and blighted properties. The law requires exhaustive efforts to first locate the property’s owner before any actions are taken. If found, the owner then has an opportunity to explain their side to the judge as well as their plan to repair the house.
In many cases, conservatorship can be a powerful way to bring new affordable housing to neighborhoods, as it’s often cheaper to renovate than build new. Besides conservatorship, treasurer’s sales, auction, sheriff sales, foreclosures, and direct sale are the other avenues non-profits and other entities have to take control of abandoned properties.
To be eligible for conservatorship, a property must:
1) not be legally occupied for 12 months,
2) not have been actively marketed 60 days before filing,
3) have no pending foreclosure action, and
4) have been owned for at least six months by the current owner.
An additional nine criteria can apply as well, including things such as being a public nuisance, unfit for human habitation, subject to unauthorized entry, fire risk, attractive nuisance to children, and presence of vermin, debris, uncut vegetation, or physical deterioration. Nonprofits have priority to become conservators, as well as neighbors or businesses within 2,000 feet of a blighted property.
Conservatorship in action in Garfield
How does this play out in real life? Let’s look at an example in Garfield.
With support from Garfield’s community development corporation the Bloomfield-Garfield Corporation and neighbors, ELDI filed a petition on the long vacant and blighted house at 711 North Atlantic Avenue, and on June 19, 2019, became conservator of the property.
As such, ELDI was then able to enter the house to assess how to stabilize it in the short term and fully rehabilitate it in the long term. Stabilization generally requires a new roof, gutters, and doors and cleaning out the interior of the house. To complete a full rehab of 711 North Atlantic, the ELDI team determined that costs would be around $150,000, which is “all new everything” on the inside, essentially creating a brand new house. Of note, the conservator is required to have insurance on the property, tend to the yard and sidewalks, and pay interest on debt financing for stabilization. These holding costs can be significant over a period of years.
In 2020, with stabilization complete and a budget in hand, ELDI staff began to search for funding sources, which, in this instance, included applying for short-term bank financing and securing a commitment from the Urban Redevelopment Authority of Pittsburgh for a $60,000 forgivable second mortgage. This will be applied when the house is sold to an affordable buyer.
While the pandemic slowed court proceedings significantly over the past three years, on November 17, 2022, Judge Paul Lutty of the Allegheny County Court of Common Pleas wrote a court order conveying the deed to ELDI, which will allow a clean, lien-free title when the property is sold to a new homeowner. And though COVID slowed construction as well, 711 North Atlantic now has all new electrical service, plumbing, heating, ventiliation, and air conditioning. It should be complete and ready for an affordable homeowner by the end of 2023.
This is just one example of how ELDI and other nonprofits have been using conservatorship successfully for over a decade to deal with stubborn problem properties in Pittsburgh’s East End and elsewhere.
ELDI’s conservatorship pipeline
ELDI currently has around 40 properties in the conservatorship pipeline, and, to date, has been able to bring around 15 properties out of conservatorship. Six of those properties were converted into affordable housing, with five sold to first-time homeowners. The sixth (6311 Saint Marie Street, pictured above) was torn down and ELDI built a brand new house which it then sold to the Housing Authority of the City of Pittsburgh as an affordable rental unit.
ELDI’s biggest conservatorship case is the massive Saints Peter and Paul Church in East Liberty, of which ELDI became owner in 2018 after years of court hearings and is now working to transform into a community arts and entertainment center.
Conservatorship has several big plusses including the courts’ ability to provide clear title by wiping away liens on properties that may be upside financially (i.e., an old mortgage of $45,000 on a property that appraises for $10,000), it has affordable acquisition costs (usually less than $10,000 in legal fees), and finally, priority is always given to CDCs and nonprofits over other interested parties.
While there are concerns about the conservatorship law being abused by for-profit developers, housing advocates point to the fact that this is unlikely as the law requires courts to fully oversee the terms of a conservatorship. In a city that is struggling to meet housing demands and with a slew of vacant housing left to rot, conservatorship offers a clear pathway to transform blighted properties into high-quality affordable and market-rate for-sale housing that can create long-term generational wealth for our communities.
