SPRINGFIELD - The city of Springfield hopes to boost development of vacant lots and blighted properties by giving builders a new financing option.
The city has created a $1.8 million fund that will provide loans to developers who need help cobbling together funding to revitalize problem properties, especially those in low-income areas.
Blighted and vacant properties are an eyesore that drag down property values and erode neighborhood housing markets. They can also pose safety and public health hazards and attract crime, Mayor Domenic J. Sarno said in announcing the program.
"The significant economic, social, environmental and safety effects of blight make it a crucial issue for neighborhood recovery," Sarno said. "Neighborhood blight is a challenging problem."
Sarno said the program is meant to be one tool the city's Development Services Division can use to help neighborhoods "combat this important issue."
Vacant and blighted properties also cost the city millions due to lost tax revenue, because the owner is often in arrears, or the land is undervalued because of its condition.
In addition, the property can cost money if inspectors, police, health officials and the public works department have to monitor or clean up the site so it is not a hazard, Sarno said.
When a property sits vacant, there are lost opportunities for economic development, job creation or efforts to lessen the housing crisis, he said.
The fund is designed mainly to help developers who have some financing lined up, but are having a difficult time securing all the money they need to get started, said Timothy Sheehan, the city's chief development officer.
"It cannot be more than 30% of the project cost," he said. The loan will be available to private, nonprofit and public builders.
The city will work with developers to find the best way for them to set up loans, determine interest rates charged and arrange repayment plans, he said.
Right now there is enough money to support an estimated half-dozen projects depending on the size of the loans needed.
"The hope is it will be a revolving fund," Sheehan said. "I would like to grow the fund as it continues."
The city is focusing on four areas -- the North End, the South End, Mason Square and Metro, which are considered "tipping point" neighborhoods, he said.
Those neighborhoods are areas threatened by blight, but home as well to many maintained lots. By revitalizing blighted properties, the city and developers can "tip the balance" with a limited number of improvements to restore the heath of a neighborhood, Sarno said.