1.         Project 2211

            Policy Innovations Institute (PII) has developed Project 2211 as an inventive public-private model created to rehabilitate vacant properties in blighted areas in and around the City of Pittsburgh and Allegheny County. This project will infuse capital into many areas that have been notoriously neglected.

            The City of Pittsburgh (the “City”), along with Allegheny County (the “County”), is inundated with numerous vacant, dilapidated properties in blighted areas. Many of these properties have been in this condition for years. They are not just an eyesore to the community, but also pose a safety hazard to the community at large. Many become a haven for crime and drugs.  Also, a substantial number of the single-home structure fires, within the City and County, occur in vacant houses. Financially, the City and the County continually lose much needed tax revenues while these properties sit vacant and off their respective tax rolls. The cost to develop many of these blighted properties outweighs the benefit (due to location, condition, back taxes, utilities and other fees).  Consequently, at this time, there are minimal incentives for developers to invest their own capital in these deteriorated areas of the community. If the properties sit vacant long enough, eventually they will become structurally unsound, resulting in the City or County having to raze the structures at an average cost of $12,000 per unit. The ideal situation would be to identify, take control of, and renovate these properties in the earliest stages of vacancy.

            The PII model will research, locate, purchase, and invest in vacant, dilapidated houses in blighted areas.  PII will contract with a for-profit company to assist in this process and oversee the renovation of the house and property. This for-profit company creates a budget and submits it to PII for approval. Once the budget is approved, the for-profit company manages a consortium of qualified, smaller, local contactors, approved and selected by PII to ensure a qualified, diverse pool of workers. All contractors must complete an application, background check, and provide proof of insurance and bonding to be included in PII’s contractor database. This database will allow PII to match local contractors with work in their neighborhood.

            The property is renovated in three stages. When each third of the rehabilitation project is completed in a timely manner and reviewed for quality, PII will release a payment for the cost of the work completed. During this renovation process, PII will adhere to all state and federal Prevailing Wage requirements. This process continues until the project is completed in its entirety. The final payment is not released until PII receives the Occupancy Permit.

            For the majority of the renovated structures, the sales price is capped at or below market value to allow a low-income buyer affordable access to the property.  PII develops a comprehensive plan to pre-qualify perspective low-income buyers. Utilizing a groundbreaking database (which is further discussed infra); PII creates partnerships with organizations that have established reputable assistance programs to aid the low-income buyers with whom they are working. If for any reason the rehabilitated home does not sell within six months, the for-profit entity will manage PII’s new rent-to-own program (which is further discussed infra) for an administrative fee. This will allow PII to assist more low-income individuals in becoming mortgage eligible. All money dispersed and work performed is fully documented and administered under a strict set of controls.

            This project is called “Project 2211” because PII’s research shows that by strictly managing administrative and renovation costs, while using smaller, local contractors selected through a competitive bidding process, PII is able to completely renovate two vacant, blighted properties for every one rehabilitation project of the existing nonprofit models in our area. Program 2211 was inspired by the very successful St. Joseph’s Carpenters Society (“SJCS”) model of Camden, NJ, a fellow 501(c)(3) entity. PII’s goal is more than just remodeling the glut of vacant/condemned homes in the blighted areas of the City and County. PII has in place a solid support mechanism that will allow PII to provide comprehensive assistance to individuals before and well after the sale of the rehabilitated property.

            Project 2211 was not developed as a solution to the current mortgage crisis. This model was initiated well before this current crisis and is focused on the glut of vacant/condemned homes that exist and have existed in the above urban areas. PII’s goal is to locate streets and neighborhoods that have multiple vacant, blighted properties and provide a holistic approach in renovating those houses and rejuvenating the street. This will be accomplished by partnering with neighborhood organizations, local and state politicians, other nonprofit organizations, and private foundations. 

2.         Creation of Rent-to-Own Program

            PII has partnered with an independent legal consultant to design the specifics of the new rent-to-own program.  This program will target low-income individuals who meet certain criteria, and are interested in purchasing a home but are having trouble qualifying for a mortgage. The rent-to-own program is designed to prepare these low-income tenants for homeownership by assisting with their financial counseling and helping them pre-qualify for mortgages. This program will allow tenants to lease a home for up to a 12 to 24 month period, during which time each month’s rent payment will consist of the principal, interest, taxes and insurance (commonly known as PITI) payments of the first mortgage. The tenant - through a contractual arrangement - will be required to work with PII to improve their credit, financial profile and homeowner knowledge. At the end of the completed contractual arrangement, the tenant will have the option to purchase the property at a reduced rate.

3.         Creation of a Housing Database and Marketing Plan

            Students from the Carnegie Mellon University’s Heinz School of Public Policy, The University of Pittsburgh, and Susquehanna University have researched and created an innovative database of existing, qualified programs to assist low-income, first time homeowners. PII will use this database to create individual marketing plans for low-income buyers/homeowners in the areas of mortgage assistance, homeowner training, and homeowner support. This database is unique in that it is the only one of its kind in the Western PA area. This database enables PII to partner with organizations (both public and private) that have existing, qualified, buyer/homeowner assistance programs. PII is in the process of linking this database to its website to allow any individual to search for germane buyer/homeowner assistance in and around the Pittsburgh community.