Dealing With Chicago’s Vacant Buildings Is Not an Open-and-Shut Matter

On October 8, the Chicago Tribune published an article titled Dealing with Chicago’s Vacant Buildings Isn’t an Open-and-Shut Matter.

Dealing with Chicago’s vacant buildings isn’t an open-and-shut matter
Problems in West Humboldt Park illustrate how daunting the epidemic has become

Dorothy Leonard has lived for 33 years in the same house on the same block in West Humboldt Park, one of the better blocks in the struggling West Side Chicago neighborhood.

She’s the block’s unofficial ambassador, shooing away young people who gather on the corner, telling neighbors where to go for help and calling the city when she sees a burned-out street lamp or plywood removed from a window at one of the boarded-up homes.

Two years ago, her neighborhood was chosen for renewal and reinvestment by the city and nonprofit community groups. Additionally, Chicago beefed up an ordinance to crack down on the city’s estimated 18,000 abandoned properties and those owners and mortgage servicers who fail to register buildings.

There was a belief that, despite the problems, areas such as West Humboldt Park could be nurtured back to health. The real estate market’s recovery has added to expectations that Chicago might see its vacant building problems alleviated.

Yet vacant, unsecured buildings still litter the neighborhood, providing havens for squatters and illegal activity such as arson, drug dealing and prostitution. Many buildings haven’t been registered, so the city is not collecting the fees and officials don’t know who to notify in case the property isn’t maintained, is broken into or is damaged. On Leonard’s block, only one vacant building has been registered.

Has there been progress?

“It’s really kind of hard to tell,” Leonard said.

The city’s worst problems are in the already battle-scarred West and South sides, but even neighborhoods like Belmont-Cragin, where there are vacancies but not many board-ups, find themselves struggling to see signs of accountability.

Today, only 5,158 vacant buildings are registered in the city, less than one-third of the estimated total that are vacant. And even registered buildings often aren’t in full compliance with requirements.

For example, the one registered board-up on Leonard’s block doesn’t have a sign out front showing who is responsible for it.

With little discernible progress being made, the city wants to hold owners and mortgage servicers of vacant buildings even more accountable for the eyesores that pepper its blocks. But the ordinance won’t apply to buildings in foreclosure with mortgages backed by Fannie Mae or Freddie Mac, after the city lost a federal court challenge to the ordinance.

Meanwhile, crime is festering as more buildings become vacant. Last year, more than 2,600 crimes were reported in Chicago’s abandoned buildings and vacant lots, up 48 percent since 2005, according to a study by Lawyers’ Committee for Better Housing. That equates to an average of seven crimes a day.

The battle to grapple with the issue is evident in West Humboldt Park. Although riddled with foreclosures, the neighborhood was thought to be attractive to first-time homebuyers and residential investors because of its access to parks and public transportation. The median price of a single-family home in August was $66,750, compared with $175,000 for the city as a whole.

One of the original nine areas picked for the city’s “micro-market recovery pilot program,” its 32 blocks are roughly bordered by Central Park Avenue on the west, Franklin Boulevard on the south, Kedzie Avenue on the east and, on the north, Augusta Boulevard from Central Park to Homan Avenue, and Chicago Avenue from Homan to Kedzie.

At the time the program was announced, Neighborhood Housing Services of Chicago Inc., a nonprofit, counted 115 vacant single-family and multifamily homes within those 32 blocks, and traced ownership of 40 percent of them to investors.

Two years later, 38 of those 115 properties are vacant and boarded. Sixteen have been demolished. Sixty-one have been identified as occupied.

Meanwhile, an additional 35 homes are newly vacant.

“It’s two steps forward and one step back, and that would be a good day,” said Ed Jacob, Neighborhood Housing Services’ executive director. “The rougher days would be when it’s two steps forward and two steps back.”

From 2000 to 2010, Humboldt Park’s population fell by 14.4 percent, according to census data. As residents moved out, thieves have moved in, stealing furnaces, copper pipe, even the address numbers. Some buildings have been damaged so severely that they have been marked with a big red “x,” a sign the Chicago Fire Department uses to warn first responders the buildings could be hazardous.

Many of the neighborhood’s vacant graystones and brick two-flats are in various states of disrepair. Plywood covers the front windows of some, but side windows are smashed and wide open. Others aren’t secured at all. Young men routinely congregate on the front steps of empty buildings. On a recent day, two men sat by a card table on a vacant home’s front porch.

The city envisioned West Humboldt Park attracting investors, and that has happened. But not all building purchases are positive.

Some buyers are speculators who apparently plan to hold on to properties until they can flip them at a profit or when the housing market fully recovers. In the Neighborhood Housing Services’ fall 2012 update of its 2011 building survey, 20 investor-owned buildings, most which were bought from 2009 through 2011, remained vacant. Two others had been demolished.

“I’m calling them buy-and-board investors,” said John Groene, neighborhood director of Neighborhood Housing Services’ office in West Humboldt Park.. “They bought it, but it’s been a year and it’s still sitting boarded.”

Trying to locate people responsible for such buildings is difficult, if not impossible. Groene said that even when he combs through public real estate records, it’s not unusual for buildings to be owned by limited liability corporations without individuals listed.

“You never know who it is,” he said.

Buildings that have been abandoned by such owners pose their own problems. The court process by the city to take ownership of abandoned buildings takes at least a year.

Still, here and there are small, but welcome, signs of progress, such as two construction workers carrying drywall and tool buckets into a brick two-flat on a recent morning.

There also are some success stories generated by the work of city and community groups to boost the number of owner-occupants. A case in point is a former renter that Neighborhood Housing Services staffers met while canvassing the area with a camera. The staffers helped negotiate a purchase-rehab loan so she could buy her own home in the neighborhood and move out of her apartment in a foreclosed building.

“Every time we save a building and help someone buy it and rehab it, it’s sending a message to people that already own their home that ‘My home is worth something. I’m staying,'” Groene said. “That helps keep your spirits up.”

Just identifying vacant buildings isn’t easy, which is why the city wants to add even more teeth to its registration law so officials know more quickly which ones have been abandoned.

“It’s a moving target a lot of times,” said Michael Merchant, the city’s building commissioner. “We’re always going to be chasing the vacant buildings.”

The city’s building department has 27 inspectors. So it also relies on police and community residents to help identify problem buildings, Merchant said. “We’re looking for the ones that are dangerous, providing havens for crime,” he said.

“If there was no regulation here, the situation would be worse,” Merchant said. “If you’re a bad actor, we’re going to get to you at some point.”

One of West Humboldt Park’s more troubled stretches is North St. Louis Avenue, blocks rife with vacant and abandoned buildings, some with their front doors ajar. On the 900 block alone, from Aug. 4 to Sept. 16, there were 11 crime reports filed with the city. They included heroin possession, theft, burglary, battery and criminal damage to property, according to city data.

Those homes are only one street from Leonard’s block, considered one of the 15 stronger blocks in the area that is more likely to attract first-time homebuyers. But convincing a homeowner who has purchase options elsewhere can be a challenge.

Take Ceil Sykes. The armed services veteran and mother of a 19-year-old college student has lived her whole life on the West Side.

Now renting half of a two-flat in the Austin neighborhood, Sykes is hoping to take advantage of the financial incentives available, like down payment assistance and subsidized purchase-rehab loans, to consumers like herself who are willing to bear the risks involved in buying and rehabbing a vacant home in a challenged neighborhood.

“There’s just so many vacant buildings, so many,” Sykes said as she rifled through a stack of papers that included the address of various vacant buildings she has looked at, if only from the sidewalk. “I know the people want better. I’m just hoping that the area, in the next eight to 10 years, has stood the test of time.”

She has looked at 30 buildings in West Humboldt Park and East Garfield Park, drawn to the neighborhoods by their proximity to the Garfield Park Conservatory, parks and public transportation options.

But it has not been an easy search. Address numbers are pried off homes, and with no contact information on them, she doesn’t know who to call to inquire about them. She doesn’t bother with houses where locks are broken, because that indicates they’ve been vandalized.

“They’re just devastated,” she said. “The walls are torn out for the copper pipes, so you have water damage. I’ve seen animals. It’s just amazing. There has to be something that tells me this is a house that can be recovered.”

One of her favorites is a brick two-flat with open front porches on North Central Park Avenue. It has been vacant for at least three years and is scheduled to go to foreclosure auction this year. It was registered as vacant in January 2012, more than a year after the city began receiving 311 calls about problems at the building.

The southern “gateway” to the neighborhood is the 500 block of North Central Park, and it exemplifies the uphill battle the neighborhood’s recovery faces. Neighborhood Housing Services has been named the receiver of four abandoned buildings in a row. They are kept secure, minimal repairs have been made to keep the exteriors safe, and the plywood on the windows has been painted a uniform shade of gray.

The receivership process has taken more than a year, and Neighborhood Housing Services knows it will be unlikely to attract a first-time homeowner to the properties, since there are several vacant buildings in a row. A few of the properties are likely to become affordable rental housing for veterans.

Miguel Nogueras grew up in Humboldt Park, lives in West Humboldt Park and works in the area as an agent for Zip Realty Inc. He sees the area slowly improving, but he said he has seen homebuyers beat out by investors’ cash offers, investors who rehab the properties and turn them into rentals, and others who board them up and wait to flip them. Those investors worry him.

“If you’re going to buy something, rehab it, rent it out, but don’t leave it in the condition it’s in,” Nogueras said. “To leave a property abandoned creates disinvestment in a neighborhood. It increases crime, it erodes the tax base.

“It’s a complicated issue. It’s a free society. People have a right to purchase a property and do what they want to do, but we don’t live on an island. We live in a community, and people need to think about that.”
 
To view the online article, please click here.

About Safeguard 
Safeguard Properties is the largest mortgage field services company in the U.S. Founded in 1990 by Robert Klein and based in Valley View, Ohio, the company inspects and maintains defaulted and foreclosed properties for mortgage servicers, lenders,  and other financial institutions. Safeguard employs approximately 1,700 people, in addition to a network of thousands of contractors nationally. Website: www.safeguardproperties.com.

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CHIEF EXECUTIVE OFFICER

Alan Jaffa

Alan Jaffa is the chief executive officer for Safeguard, steering the company as the mortgage field services industry leader. He also serves on the board of advisors for SCG Partners, a middle-market private equity fund focused on diversifying and expanding Safeguard Properties’ business model into complimentary markets.

Alan joined Safeguard in 1995, learning the business from the ground up. He was promoted to chief operating officer in 2002, and was named CEO in May 2010. His hands-on experience has given him unique insights as a leader to innovate, improve and strengthen Safeguard’s processes to assure that the company adheres to the highest standards of quality and customer service.

Under Alan’s leadership, Safeguard has grown significantly with strategies that have included new and expanded services, technology investments that deliver higher quality and greater efficiency to clients, and strategic acquisitions. He takes a team approach to process improvement, involving staff at all levels of the organization to address issues, brainstorm solutions, and identify new and better ways to serve clients.

In 2008, Alan was recognized by Crain’s Cleveland Business in its annual “40-Under-40” profile of young leaders. He also was named a NEO Ernst & Young Entrepreneur of the Year® finalist in 2013.

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Chief Operating Officer

Michael Greenbaum

Michael Greenbaum is the chief operating officer for Safeguard. Mike has been instrumental in aligning operations to become more efficient, effective, and compliant with our ever-changing industry requirements. Mike has a proven track record of excellence, partnership and collaboration at Safeguard. Under Mike’s leadership, all operational departments of Safeguard have reviewed, updated and enhanced their business processes to maximize efficiency and improve quality control.

Mike joined Safeguard in July 2010 as vice president of REO and has continued to take on additional duties and responsibilities within the organization, including the role of vice president of operations in 2013 and then COO in 2015.

Mike built his business career in supply-chain management, operations, finance and marketing. He has held senior management and executive positions with Erico, a manufacturing company in Solon, Ohio; Accel, Inc., a packaging company in Lewis Center, Ohio; and McMaster-Carr, an industrial supply company in Aurora, Ohio.

Before entering the business world, Mike served in the U.S. Army, Ordinance Branch, and specialized in supply chain management. He is a distinguished graduate of West Point (U.S. Military Academy), where he majored in quantitative economics.

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CHEIF INFORMATION OFFICER

George Mehok

George Mehok is the chief information officer for Safeguard. He is responsible for all strategic technology decisions, new systems deployments and data center operations supporting a national network of more than 10,000 mobile workers.

George has more than 20 years of leadership experience dedicated to high-growth companies in the mobile telecommunications and financial services industries, spanning startups to global industry leaders.

George played a senior role in the formation of Verizon Wireless, leading the IT product development and strategic planning team. He led the integration planning for the Verizon merger including: GTE, Vodafone-AirTouch, Bell Atlantic Mobile and PrimeCo.

As chief information officer at Revol Wireless, a VC-backed CDMA wireless communications network operator, George’s team implemented an integrated technology infrastructure and award-winning business intelligence platform.

George holds a bachelor’s degree in political science and economics from Eastern Michigan University and an M.B.A. from The Ohio State University. He is a board member of Akron University’s School of Business Center for Information Technology, in addition to an advisory board member for OHTec.

In 2013, George won the Crain’s Cleveland Business CIO of the Year award for his team’s work in completing a major acquisition and technology transformation at Safeguard. In 2015, George’s team was recognized by InformationWeek’s annual Elite 100 ranking of the most innovative U.S.-based users of business technology. The mobile inspection technology developed at Safeguard was selected as InformationWeek’s “One of the top 20 ideas to steal in 2015”.

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General Counsel and Executive Vice President

Linda Erkkila, Esq.

Linda Erkkila is the general counsel and executive vice president for Safeguard, with oversight responsibilities for the legal, human resources, training, compliance and audit departments. Linda’s broad scope of oversight covers regulatory issues that impact Safeguard’s operations, pro-active risk mitigation, enterprise strategic planning, human capital and training initiatives, compliance and audit services, litigation and claims management, and counsel related to mergers, acquisition and joint ventures.

Linda’s oversight of the legal department along with multiple compliance and human capital focused departments assures that Safeguard’s strategic initiatives align with its resources, leverage opportunities across the company, and contemplate compliance mandates. Her practice spans almost 20 years, and Linda’s experience, both as outside and in-house counsel, covers a wide range of corporate matters, including regulatory disclosure, corporate governance compliance, risk assessment, executive compensation, litigation management, and merger and acquisition activity. Her experience at a former Fortune 500 financial institution during the subprime crisis helped develop Linda’s pro-active approach to change management during periods of heightened regulatory scrutiny.

Linda previously served as vice president and attorney for National City Corporation, as securities and corporate governance counsel for Agilysys Inc., and as an associate at Thompson Hine LLP. She earned her JD at Cleveland-Marshall College of Law. Linda holds a degree in economics from Miami University and an MBA. In 2017, Linda was named as both a “Woman of Influence” by HousingWire and as a “Leading Lady” by MReport.

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Chief Financial Officer

Joe Iafigliola

Joe Iafigliola is the Chief Financial Officer for Safeguard. Joe is responsible for oversight of the Control, Quality Assurance, Accounting and Information Security departments, and is a Managing Director of SCG Partners, a middle-market private equity fund focused on diversifying and expanding Safeguard Properties’ business model into complimentary markets.

Joe has been in a wide variety of roles in finance, supply chain management, information systems development, and sales and marketing. His career includes senior positions with McMaster-Carr Supply Company, Newell/Rubbermaid, and Procter and Gamble.

Joe has an MBA from The Weatherhead School of Management at Case Western Reserve University, is a Certified Management Accountant (CMA), and holds a bachelor’s degree from The Ohio State University’s Honors Accounting program.

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AVP, High Risk and Investor Compliance

Steve Meyer

Steve Meyer is the assistant vice president of high risk and investor compliance for Safeguard. In this role, Steve is responsible for managing our clients’ conveyance processes, Safeguard’s investor compliance team and developing our working relationships with cities and municipalities around the country. He also works directly with our clients in our many outreach efforts and he represents Safeguard at a number of industry conferences each year.

Steve joined Safeguard in 1998 as manager over the hazard claims team. He was instrumental in the development and creation of policies, procedures and operating protocol. Under Steve’s leadership, the department became one of the largest within Safeguard. In 2002, he assumed responsibility for the newly-formed high risk department, once again building its success. Steve was promoted to director over these two areas in 2007, and he was promoted to assistant vice president in 2012.

Prior to joining Safeguard, Steve spent 10 years within the insurance industry, holding a number of positions including multi-line property adjuster, branch claims supervisor, and multi-line and subrogation/litigation supervisor. Steve is a graduate of Grove City College.

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AVP, Operations

Jennifer Jozity

Jennifer Jozity is the assistant vice president of operations, overseeing inspections, REO and property preservation for Safeguard. Jen ensures quality work is performed in the field and internally, to meet and exceed our clients’ expectations. Jen has demonstrated the ability to deliver consistent results in order audit and order management.  She will build upon these strengths in order to deliver this level of excellence in both REO and property preservation operations.

Jen joined Safeguard in 1997 and was promoted to director of inspections operations in 2009 and assistant vice president of inspections operations in 2012.

She graduated from Cleveland State University with a degree in business.

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AVP, Finance

Jennifer Anspach

Jennifer Anspach is the assistant vice president of finance for Safeguard. She is responsible for the company’s national workforce of approximately 1,000 employees. She manages recruitment strategies, employee relations, training, personnel policies, retention, payroll and benefits programs. Additionally, Jennifer has oversight of the accounts receivable and loss functions formerly within the accounting department.

Jennifer joined the company in April 2009 as a manager of accounting and finance and a year later was promoted to director. She was named AVP of human capital in 2014. Prior to joining Safeguard, she held several management positions at OfficeMax and InkStop in both operations and finance.

Jennifer is a graduate of Youngstown State University. She was named a Crain’s Cleveland Business Archer Award finalist for HR Executive of the Year in 2017.

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AVP, Application Architecture

Rick Moran

Rick Moran is the assistant vice president of application architecture for Safeguard. Rick is responsible for evolving the Safeguard IT systems. He leads the design of Safeguard’s enterprise application architecture. This includes Safeguard’s real-time integration with other systems, vendors and clients; the future upgrade roadmap for systems; and standards designed to meet availability, security, performance and goals.

Rick has been with Safeguard since 2011. During that time, he has led the system upgrades necessary to support Safeguard’s growth. In addition, Rick’s team has designed and implemented several innovative systems.

Prior to joining Safeguard, Rick was director of enterprise architecture at Revol Wireless, a privately held CDMA Wireless provider in Ohio and Indiana, and operated his own consulting firm providing services to the manufacturing, telecommunications, and energy sectors.

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AVP, Technology Infrastructure and Cloud Services

Steve Machovina

Steve Machovina is the assistant vice president of technology infrastructure and cloud services for Safeguard. He is responsible for the overall management and design of Safeguard’s hybrid cloud infrastructure. He manages all technology engineering staff who support data centers, telecommunications, network, servers, storage, service monitoring, and disaster recovery.

Steve joined Safeguard in November 2013 as director of information technology operations.

Prior to joining Safeguard, Steve was vice president of information technology at Revol Wireless, a privately held wireless provider in Ohio and Indiana. He also held management positions with Northcoast PCS and Corecomm Communications, and spent nine years as a Coast Guard officer and pilot.

Steve holds a BBA in management information systems from Kent State University in Ohio and an MBA from Wayne State University in Michigan.

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AVP, Mobile and Analytics

Jason Heckman

Jason Heckman is the assistant vice president of mobile and analytics for Safeguard. He is responsible for both Safeguard’s mobile development and strategy as well as the company’s data warehousing and business intelligence. Jason oversees the design, development and release of all Safeguard’s internally developed mobile applications. He also oversees the development and delivery of operational and analytical data technologies throughout the organization.

Jason joined Safeguard as manager of mobile in 2012. During that time he led the development and integration of Safeguard’s mobile applications across the company’s vendor network to provide real-time data from the field. In 2014, he was promoted to director of mobile applications and named assistant vice president in 2017.

Prior to joining Safeguard, Jason was the director of application development and business intelligence for Revol Wireless, a privately held wireless provider in Ohio and Indiana.

Jason holds a bachelor’s degree in business management from Case Western Reserve University in Ohio.

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AVP, Business Development

Tim Rath

Tim Rath is the AVP of business development for Safeguard. He is responsible for developing innovative growth strategies for Safeguard and developing and overseeing potential partnerships, mergers and acquisitions.

Tim joined Safeguard in 2011 as project director and has filled numerous roles within Vendor Management, most recently serving as director of vendor management, a role he assumed in 2011.

Prior to Safeguard, Tim worked as director of supply chain at PartsSource Inc. in Aurora, Ohio, a provider of medical replacement parts, procurement solutions and healthcare supply chain management technology services. He also has held sales positions with Rexel, ComDoc, and Pier Associates, all based in Ohio.

Tim holds a degree in marketing and sales from The University of Akron in Akron, Ohio. He also earned his FAA Certified Commercial UAS (Drone) Pilot license in 2017.