Gloversville has been forced to drop its proposed pilot plan to acquire distressed foreclosure properties, after Fulton County told the city it can either take all of them or none at all.
On July 24, the Common Council passed a resolution to acquire 23 Park St., an example of a property that was "underbid" at Fulton County's most recent foreclosure auction. The bid on the property, $7,000 plus 10 percent, did not cover the back taxes owed on it.
The pilot program would have sought to "mothball" the two-story home on the property and make it presentable for sale to an income-qualified home buyer who agrees to enter into a deed covenant requiring the homeowner to reside within the house at the property.
Gloversville had also considered purchasing 126 North St., 121 Sixth Ave., 31 Grand St. and 28 Allen St., all of which were also underbid. Howeve a close inspection of those properties by Mayor DeSantis, Fire Chief Tom Groff and Public Works Director Dale Trumbull revealed the repair work needed for them would be too expensive, according to city officials.
"We determined they were too far gone, and it wouldn't be worth it," said Councilman-at-large Steven Smith.
County Administrative Officer Jon Stead said county Treasurer Terry Blodgett did not feel it would be fair to the other parties who underbid on properties in the foreclosure auction for the county to only reject the underbid for 23 Park St. and sell it to Gloversville instead.
"The original deal was for them to take all of them," Stead said. "They were underbids, but these people had put down deposits and had made an attempt. So, the county treasurer thought it was better to ask the Board of Supervisors to not give any of those five to the city, and work with the city for next year's process, because he thought that was more fair to the underbidders."
"[Blodgett] recommended to the Board of Supervisors to go ahead and re-sell them all as a group to the original underbid offerers," Stead said.
Stead added that he wasn't surprised to learn that Gloversville determined most of the underbid properties were not suitable for rehabilitation.
"I already knew that, frankly," he said. "That's why they are in the condition that they are in. That's why they are underbids. But the city wanted to do this as a pilot project for the first time. So, we're going to work with them in the future to have a little bit of a different approach, so they can do a rehab program on some of these types of properties."
Smith said Gloversville needs to do something to break the cycle of out-of-town investors purchasing properties at Fulton County's foreclosure auctions without ever seeing them and then abandoning them to another three-year cycle of unpaid taxes and eventual foreclosure.
"It's a big problem," Smith said. "I dealt with a woman on Long Island, who bought a house here in Gloversville sight-unseen, and it was so cheap that she couldn't imagine that it wasn't some sort of a bargain, but in fact she was wrong. Then there was a fire in it, the city chased after her to do something about it. She finally just threw up her hands, and walked away from whatever money she paid for it. They are penny stocks. People from far away see these properties on the Internet and they think everything is cheap here, but it's cheap for a reason."
Unlike most cities, Gloversville does not foreclose on its own properties. The city gave that power to Fulton County, which was good for the city's finances because it alleviated the city of the responsibility to pay taxes owed on city properties to the school district and the county. However, it also meant the city lost control over the fate of its distressed properties.
DeSantis has said he would like Gloversville to be given the ability to inspect the foreclosed properties before the tax foreclosure auction. He'd also like Gloversville to help Fulton County's demolition team to demolish more derelict structures to help end the cycle of distressed properties being foreclosed on again and again.
Stead said Fulton County's "Operation Green Scene" already demolishes 8 to 10 properties per year, using a systematic formula. However, he agreed that if Gloversville contributed more resources to the demolition team, it's possible it could take care of more distressed properties.