City confronts hurdles to get homes built: Reading PA Eagle, 1/24/07

By Don Spatz

Adam Mukerji has a bit of a dilemma.

Reading's economic development manager wants the city to buy and demolish about 95 homes in the so-called Buttonwood Gateway area, to make way for an as-yet unofficial and incomplete plan to build new market-rate homes there.

Working through the county redevelopment authority, the city has been seeking cheap and friendly sales, not expensive eminent-domain takings.

That's Mukerji's dilemma.

On the one hand, he's afraid that if homeowners discover just how interested the city is, some will hold out for more money.

On the other hand, nine owners owe so much to the city because of a program that sounded like a good idea 10 years ago, they wouldn't make a dime on a sale and so have no interest in selling.

And thus Mukerji on Monday asked City Council to consider cutting that debt in half, just to juice up the city's offer.

The row homes are on West Buttonwood and Tulpehocken, Gordon and Miltimore streets, south of the railroad tracks.

The city already has bought and demolished those homes on the west side of Tulpehocken to clear some of the land, but wants the rest.

Nearby, the city had cleared the rusty and vacant American Chain & Cable Co., where Vancouver-based Sun Rich Fresh Foods plans to begin building a 46,000-square-foot fruit-packaging plant in the spring.

County Commissioner Mark C. Scott believes the entire area may be better used as an industrial park, and says that since a county agency is doing the buying, the county ought to rethink the plan.

The city still wants new homes. But first, it's got to get those old homes.

That's another dilemma.

New state laws ban municipalities from using their eminent domain power to take private property that they ultimately plan to turn over to private developers.

Thus, if the city gets most of the properties through friendly sales but has a few holdouts, it will have to think twice about using its eminent domain power to force the sales, lest it lose the ability to bring in a private developer.

However, Mukerji reminded council that the city and the Reading Housing Authority are building 16 condominiums in the 1000 block of Penn Street.

"That's the city's toe in the water of market-rate housing development, and we'd like to do it elsewhere," Mukerji said.

Eminent domain may be expensive and have restrictions, but it's faster than waiting years for holdouts to sell such as the Benner's Court project that's been under way since the 1990s.

Still, Mukerji is trying the friendly approach first, by juicing up the offers.

Back in the late 1990s, the city's so-called PRIDE program offered home-fix-up money a loan of up to $10,000 that would be repaid when the home sold, and another so-called loan of up to $10,000 that would be gradually forgiven over 10 years if the owner stayed there.

Trouble is, many homes that got the money are no longer worth it, as housing prices fall in blighted areas such as the gateway.

Mukerji said across the city as PRIDE homes are sold, the loan repayment often eats up the entire sale price, and the owner leaves the table with no money.

And no home.

"It was a well-intentioned program (but) it turned out to be not so favorable to some people," he said.

Cutting that debt in half might spark some sales, he told council.

Reading PA Eagle: http://www.readingeagle.com