Twin Cities Community Development Corporation: Reinvigorating Energy and Investment in Fitchburg

The north central Massachusetts town of Fitchburg perches at the tail end of the commuter rail line into Boston. A small city with a population of about 40,000, Fitchburg offered housing prices that were relatively modest compared to those in the greater Boston area, and a stock of small rental properties (two – three units) attractive to investors. Marc Dohan, executive director of the Twin Cities Community Development Corporation (Twin Cities CDC) says that in the early 2000s investors acquired properties in large numbers, often making only minor improvements before renting them out. When the market crashed in 2007 and 2008 many landlords were so over-leveraged they simply walked away from their properties. These losses were compounded by single-family homeowners who had difficulty paying their mortgages when they were laid off or had a reduction in hours.

The Twin Cities CDC is a NeighborWorks® organization serving Fitchburg and the neighboring town of Leominster. Established in 1979, the Twin Cities CDC has seen the Twin Cities struggle with a number of challenges, including a slow but steady population loss in the 1990s as the former mill towns saw their manufacturing base evaporate and people drifted away.

The 2000s saw a reversal of that trend, however, as Fitchburg became home to a growing Latino population, including Uruguayan, Dominican, and Puerto Rican immigrants. Despite the current economic downturn Dohan sees an opportunity for the Twin Cities to reinvent themselves. “We need to get people to see the resources that are in front of them, to take an entrepreneurial look at the community,” says Dohan. “This area has a rich heritage, with beautiful old mill buildings and a river running through the towns. These are assets we can build on.”

The Twin Cities CDC is taking a multi-pronged approach to revitalizing Fitchburg that combines community organizing with improving the housing stock, starting with the Elm Street Neighborhood. One area of focus is working with the city to make improvements to sidewalks and lighting, and to improve service such as snowplowing in the winter. “Neighbors need to learn to talk to the city, and the city is interested in learning from the residents about their priorities,” says Dohan. The Twin Cities CDC is helping to broker those conversations.

In July 2009 the Twin Cities CDC moved into new office space on Fitchburg’s Main Street, within walking distance of Elm Street and less than a quarter mile from the commuter rail station. The Twin Cities CDC redeveloped a nearly vacant five story building to new, first floor office space for its own use, a new small business center, and the North Central Mass NeighborWorks® HomeOwnership Center. The upper floors have been converted to 31 mixed income rental units. This locates the organization in the heart of the community, both physically and psychologically.

The Twin Cities CDC staff has also been helping residents of the Elm Street tackle problems such as housing abandonment, poorly managed rental properties, and crime.

One such problem is poorly managed rental properties. Investors are snapping up properties at foreclosure and renting them out. They put minimal capital into improving them, and since they do not live in the community do not ensure that tenants behave responsibly. This activity continues to depress property values and the downward cycle continues.

In the Twin Cities, as in many other areas, landlords share information about tenants who are disruptive or who fail to pay rent on time. Tenants that are blacklisted in this way will have difficulty finding a landlord willing to sign a lease with them. The Elm Street residents plan to turn the tables on landlords and create a list of their own. To incent improved property management the newly formed Elm Street Neighborhood Association is creating an interactive website where existing tenants can post comments about their landlords, rating their performance on issues such as the condition of the units, attention to routine property maintenance, response to complaints, and so on. Prospective tenants will be able to read about landlords and try to rent from those that receive higher ratings. The hope is that landlords with good track records will experience lower vacancy rates, and other investors will be forced to improve in order to compete.

With the help of two NeighborWorks® America VISTA volunteers the Twin Cities CDC and residents have created a database of all of the rental properties in the Elm Street Neighborhood. The next step is to identify the buildings that are the most run down, as well as those with tenants who are selling drugs or are otherwise disruptive to the community. These buildings will be referred to the City Building and Health Department, which will put pressure on landlords to fix the code violations and to monitor their tenants. Properties where criminal activity is suspected will be referred to the police department for further investigation and follow up.

The last step, details of which are still being worked out, is to create a mechanism for tenants to post comments on their experience renting from particular landlords. To prevent abusive postings the Neighborhood Association will likely have a screening mechanism to ensure that any criticism leveled is constructive and factual. Tenants may also need to be able to post anonymously in order to avoid retaliation.

“The idea is to give landlords a reason to hang in there during hard times, and to make sure they aren’t unintentionally contributing to the problem by being busy elsewhere,” says Dohan. “We want to make it easier for landlords with good reputations to attract and keep good tenants.” Recognizing that proper education can help improve the behavior of both tenants and investors, the Twin Cities CDC and the Neighborhood Association will offer landlord training and workshops on tenants’ rights and responsibilities. Collectively, these strategies will halt the cycle of decline and improve the quality of life in the Elm Street Neighborhood.

The Twin Cities CDC is partnering with the City of Fitchburg to address the problem of foreclosed and abandoned property. The City received a subgrant of roughly $700,000 under the state of Massachusetts’ Neighborhood Stabilization Program (NSP1) which will be available for use in another month. The Twin Cities CDC will use the funds to acquire, renovate, and resell units to owner occupants. The Twin Cities CDC is finding that it has to be nimble and well-prepared to compete with speculators who are looking to snap up deals in the current market. Dohan cites a group of 20 units in the Elm Street Neighborhood which came on the market on a Monday. The properties were very deteriorated; some would simply have to be demolished, and some of them had illegal units that would have to be removed. Dohan and his staff knew that they would need substantial renovation to turn them into neighborhood assets, and were leaning towards a bid of $10,000/unit when word came (before the week was out) that an investor had purchased them: for $20,000/unit. That was frustrating, Dohan says, as the investor will likely make only minor repairs before renting them out, contributing to future problems. Dohan and his staff are trying to acquire a test property to move through the NSP-1 process so that when they have an opportunity to work with a larger group of units, such as in the above example, they will be able to move more quickly.

The Twin Cities CDC has also been experimenting with serving as a receiver for properties where the city is mandating improvements and the owner is unresponsive. Dohan views receivership as a useful tool for taking care of problem properties in the absence of other alternatives, but doubts this will be a primary activity for the Twin Cities CDC. Receivership comes with a host of challenges, including having to manage non-paying or difficult tenants, greater scrutiny from the court, and the complexity of improving larger, multi-unit properties.

A key strategy has been to promote positive activities, such as creating a new community garden on a vacant lot, to build neighborhood pride and develop a new vision for the community. This gives residents greater energy and resolve to take on more difficult problems.

Cities like Fitchburg which are struggling with longer term deterioration on top of foreclosure and abandonment require a range of strategies to rebuild the social fabric as well as the physical infrastructure of their neighborhoods. The Twin Cities CDC is using a variety of tools to do just that, and is poised to make great progress in the months to come.