Joe Doakes writes from Como  Park:

The folks opposing the Stillwater bridge have taken a new tack: we don’t need the bridge because the economy is so bad nobody can afford to move out of the city to commute. In the New Ecomony, we’ll all ride light rail to the soup kitchen.

“Everything we needed to know, we learned during the FDR administration”.

Joe has a larger point:

I may not agree with their conclusion but they’ve got a point: old solutions may not work in the new Obama-ized economy, with double-digit unemployment, double-digit inflation, poorer immigrants replacing Baby Boomers and trillions of dollars lost from the middle class to foreign banks. Time to look at new solutions in light of the new economic reality.

I spend a lot of time looking at real estate records especially foreclosures. I frequently find properties with two, three, sometimes four loans from do-gooder groups and government agencies, often forgivable if the borrower lives there long enough.

The problem with those loans is they are made only to low income people for small improvements to crappy houses in crappy neighborhoods. Putting a new furnace and water heater into a crappy house doesn’t buy you a house worth more or a nicer neighborhood to live in; you just get a warmer crappy house.

Low income borrowers tend to have less cash in reserve so when they have trouble making payments, that crappy house goes into foreclosure and sits vacant until inspected by the city as a Vacant Building at which time it needs a total upgrade to wiring, plumbing, insulation and energy efficiency. No foreclosing bank-owner or new buyer would sink that kind of money into a crappy house in a crappy neighborhood so the house is abandoned until torn down by the city.

Thereby wasting the new furnace and water heater, if they haven’t already been stolen by vandals along with the copper pipes.

New Economic Reality Solution? Stop giving money to poor people to make trivial improvements to crappy houses in crappy neighborhoods. De-fund the Minnesota Housing Finance Agency and the St. Paul Housing and Redevelopment Authority. Stop giving taxpayer money to feel-good do-gooder groups such as Greater Frogtown Community Development Corporation or Neighborhood Energy Connection.

If society must help homeowners improve their homes, the funds ought to be prudently invested in loans to middle income folks with decent homes in decent neighborhoods who actually have a chance of keeping them up and repaying the loans. Otherwise, the money is simply wasted. We all work too hard for our money to simply waste it.

As for the crappy neighborhoods, urban renewal Chicago-style: start a fire at Lexington and let it burn to the freeway. We’ll worry about the East Side next year.

Joe Doakes

Como Park

This blog does not endorse pyromania – but Joe knows real estate.

But it is a fact that Saint Paul is trying to do exactly what New York City did, following every single step of the process that has led every part of Manhattan that isn’t a squalid slum to be completely unaffordable to anyone who’s not a network anchor or a hedge fund manager; harassing small landlords out of business (in the time I’ve lived in the city, the number of small, independent, non-governmental-or-non-profit landlords running less than ten units of housing has dropped from the thousands into the hundreds), destroying the stock of inexpensive housing (as Joe described above), and enforcing absurd requirements on the landlords and other property owners that are left.

Of course, there are no networks or hedge funds based in Saint Paul.  There are fewer and fewer businesses of any kind, beyond government.  Downtown vacancy rates are catastrophic (and masked by government renting more and more space); University Avenue is in the process of being turned into a desert.  The North End, Frogtown and East Side are being gutted, just as Joe describes, by government intervention, coming and going.

Maybe they’ll start a new non-profit to fix it all.

This entry was posted by by Mitch Berg on Tuesday, May 17th, 2011 at 5:57 am and is filed under St. Paul. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.