San Bernardino Takes Drastic Step to Solve its Empty House Problem

RENU San Bernardino gets property owners before a judge, if need be, to get them to restore their rundown or abandoned house. If that doesn’t work a third party is brought in. It’s harsh, but city officials say the problem is that serious.

How much of a problem has San Bernardino had historically with abandoned and dilapidated houses?

Enough that the city will take the matter to court, if it must, to deal with the issue.

In April 2015, San Bernardino began RENU San Bernardino, which operates through the city attorney’s office, said Lauren Daniels, the deputy city attorney in charge of the program.

RENU identifies run down or vacated houses, properties that have usually been foreclosed on, that can be restored and put up for resale. If the owner is uncooperative or can’t be located, the property can be turned over, through a court order, to a third party, known as a receiver.

The receiver, who has control of the property, then arranges financing to make it livable and marketable again.

Since it began, RENU [Receivership Empowering Neighborhood Upkeep] has restored eight houses. Eight other properties are currently being restored or are under consideration for refurbishment, Daniels said.

In June, an open house was held at 3121 Bangor Ave. in the northern part of city. The five-bedroom house just south of San Manuel Indian Bingo & Casino was reportedly vacant for five years and most recently occupied by vagrants.

That structure, one of eight properties refurbished by RENU, went on the market for $394,500, Daniels said.

That’s a  better-than-average price in the San Bernardino County housing market: the median price of a home there in July was $280,000, according to CoreLogic in Irvine, which tracks the Southern California housing industry.

No city can afford to have too many abandoned homes. Empty and rundown houses not only damage property values in their neighborhood, they can add to crime and keep businesses from locating in a city.

Abandoned or severely run down houses are a problem throughout the United States, especially in the Rust Belt, and the recession made the problem worse, according to the U.S. Department of Housing and Urban Development.

A foreclosed house can hurt surrounding property values anywhere from 0.9 percent  to 8.9 percent, depending on the market, according to HUD.

Taking the issue to court is extreme, but doing so shows how serious the problem is.

“It’s drastic, and it can be a long process, but the city has a serious problem with distressed houses,” Daniels said. “We knew we had to do something about it.”

Once it identifies bad properties that it believes are restorable, the city takes one of two actions: it gets the property owner to make the necessary repairs, or it gets the home into the hands of the receiver, GS Strategies Inc., a real estate agency in San Bernardino.

At that point, San Bernardino is effectively done with the effort, having invested no city money in the process, only staff time.

“We bring in a third party to restore the property, if we have to,” said Daniels, who compared RENU to home restoration programs in Ontario and Riverside. “We don’t make money off of this. I think there’s a misconception that we’re profiting from it, but we’re not.

“We’re just getting the houses restored by a third party. The property is not sold. The legal title never changes.”

The process begins when a complaint is filed, usually by the police department or code enforcement regarding an abandoned or unsightly house. That filing usually happen after multiple complaints from neighbors.

Being rundown and unsightly is not enough. A house has to be considered a danger to the rest of the community – exposed electrical wiring or a collapsed roof, for example – to qualify for RENU.

“It has to be a real health and safety hazard,” Daniels said.

If that’s the case, the city attorney’s office then contacts the property owner and anyone else connected with the property. If those parties fail to act, the city attorney’s office then petitions San Bernardino Superior Court for a hearing date, during which both sides present their case: the property owner is allowed to defend the condition of the property.

In some cases, setting a court date gets the property owners’ attention.

“That’s when a lot of them decide they need to start making repairs,” which is fine with us,” Daniels said. “We prefer not having to go to court.”

If the home owner doesn’t respond, or can’t give a suitable explanation for the condition of the property, a receiver is appointed. The receiver then assess the cost of restoring the structure and arranges financing to pay for the repair work.

Most of the restoration funding comes from private sources who have made similar investments before and are familiar with the process. They’re willing to take the risk if the property can be salvaged and is in a good location.

Once restored, a house usually goes back on the market and is sold.

So far, whenever RENU has required a court-appointed receiver, GS Strategies has filled that role. Company officials did not return calls seeking comment.

Inland Empire economist John Husing, who has long blamed abandoned and rundown houses for harming San Bernardino’s economy, praised the city for taking an aggressive approach to solving a serious problem.

“I’ve never heard of it but it sounds like a great idea,” Husing said of RENU. “One of San Bernardino’s problems has been that it has too many home renters and not enough home owners. They should be putting more emphasis on home ownership.”

San Bernardino’s housing market is still recovering from the closing of Norton Air Force Base – now San Bernardino International Airport – in 1995, said Judi Penman, president and chief executive officer of the San Bernardino Chamber of Commerce.

“I don’t mean to sound skeptical, but the city has done this kind of thing before,” Penman said. “I hope it works. Anytime they try to do something about abandoned houses it’s a good thing. But I don’t think our abandoned housing problem is any worse than any other city.”

Abandoned or dilapidated houses don’t keep businesses from locating in a city, Penman said.

“When we’re recruiting someone that subject never comes up,” Penman said. “The main thing they want to talk about is demographics.”