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Schenectady profiting as landlord, investing little

Schenectady profiting as landlord, investing little

The city has collected a small windfall from the houses it seized through foreclosures last year.

The city has collected a small windfall from the houses it seized through foreclosures last year.

By offering month-to-month leases to tenants living in those houses, the city has now earned $45,719 in the first year of its venture into property ownership.

But city officials have not invested much to maintain those houses, which they intend to own for only a short period of time. All of the houses are for sale. Early on, city officials decided they could only afford to spend $2,500 per house on maintenance, Building Inspector Eric Shilling said.

If a more expensive problem cropped up, he said city officials advised the tenants to move out.

Last winter, tenant Rose West was told to leave when she reported a gas leak she believed was related to the furnace. City officials told her they couldn’t justify the expense of a new furnace.

In the end, the leak turned out to be in a gas line to her dryer and she did not have to move, but she had to call National Grid and others to evaluate the situation. City officials never came, she said.

Shilling said that moving out was the only option he could offer.

“I’m not quite sure what assistance we could do,” he said. “Obviously, we have limited resources. We didn’t choose, like a private investor. … We simply don’t have the resources to make all the repairs in all these houses.”

When the city foreclosed, code inspectors looked at each occupied building. If they found unsafe conditions then, the tenants had to move out.

The rest were offered a month-to-month lease, but they were told that the city would be selling their buildings and that they should start looking for a new place to live.

“The city wanted to give people time to move on and find another place,” said Deputy Finance Commissioner Anthony Ferrari. “We’re not fixing properties. The idea is not to fix them so they can stay there; it’s to give them time to move on or buy the place themselves.”

Not many tenants took the city’s offer. At its peak, 20 units were rented by the city; now that number is down to seven, Ferrari said.

City officials offered to rent apartments when they discovered, somewhat to their surprise, landlords had been collecting monthly rent while not paying their taxes. That left the tenants holding the bag when the city foreclosed for back taxes.

“We didn’t want to throw people on the street,” Ferrari said. “They were paid up on their rent, their landlord just didn’t pay their taxes.”

But those who started paying the city found they didn’t really have a landlord. When they called to report problems, the Codes Department decided whether the problem was worth solving.

Many problems were too expensive to resolve — such as leaking roofs and broken furnaces — while others were considered too minor — like peeling paint.

Only a few repairs have been made. In one case, city officials ended up spending $5,000 — twice the self-imposed limit — repairing a sewage pipe that turned out to be far more damaged than inspectors believed. Shilling authorized the complete replacement of the sewer lateral.

“You can’t sell a house that doesn’t have a working toilet,” he said.

Every house is for sale, and that also complicates matters, Mayor Gary McCarthy said.

“It’s a house that owes us $30,000, and somebody complains, ‘We need a new roof.’ I’m not going to spend $11,000 on a new roof,” McCarthy said.

And he also didn’t want city officials to patch up old equipment, like furnaces, that a new owner will replace.

“I don’t want to put a lot of money in these properties in an unplanned endeavor,” he said. “But at the same time, people are not going to be put in a hazardous or life-threatening situation.”

If a house becomes that dangerous, Shilling said, he has no choice but to advise tenants to move out.

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