July 30, 2013 · Exit133

City of Tacoma Considers Getting Into Flipping

Potential properties for the program would have code violations, and would have the potential to improve their neighborhood. — *Potential properties for the program would have code violations,*

The City of Tacoma is looking at the idea of getting into the house flipping business.

A proposal being shopped around at the Council committee level would have the City buy, rehabilitate, and resell derelict properties.

The proposed single family residential blight abatement program to address the problem of derelict and blighted single-family residences was presented at the July 15 City Council Neighborhoods and Housing Committee meeting.

Tacoma’s Code Compliance and Housing Division would partner on the project, with the Tacoma Community Redevelopment Authority purchasing select homes identified by Code Compliance as problem properties with the potential for rehabilitation. Once rehabilitated, the homes would be sold to income qualified buyers.

The proposal is for the initial $800,000 in funding for the pilot project to come from existing federal CDBG and HOME funds. Depending on initial program success, profits from the sale of rehabilitated properties could be rolled back into the program, and into supporting other affordable housing programs in Tacoma.

Council members on the Neighborhoods and Housing Committee understandably had a lot of questions about the program, so the issue will be back before the committee with further details.

Staff also raised the problem of sustainable funding for City affordable housing programs. With HUD and other funding sources shrinking, if Tacoma is to maintain housing programs, the division will need to begin to look at ways to recycle the funding it has, rather than acting as a pass-through to other agencies as it has in the past. This is an attempt to be entrepreneurial, staff said, to recapture value and address blight in Tacoma’s neighborhoods at the same time.

There’s got to be a reality show in this somewhere… maybe “Real Flippers of Pierce County” ... maybe not.

Filed under: City Projects, City Government, City Services

10 comments

Jesse July 30, 2013

Government is slow by design. To flip houses, and make money, you have to do it quick unless the houses are free. Are the fixer houses free?
Xeno July 30, 2013

Actually, flip houses seem to only take place if there is a certain profit margin in a certain neighborhood. Otherwise every single derelect house would have been fixed already if it was worth it. The City would argueably be capturing all the houses that would not be entirely all that profitable but profitable none-the-less. If implemented correctly I could see the City moving into a market that none touch, so it could perspectively be a good program and benefit less worthwhile neighborhoods.
Christine July 30, 2013

Perhaps they wouldn't make the usual profit, but in the long run it would be a financial benefit to the city if otherwise abandoned and derelict houses were rehabilitated and occupied. This would improve the neighborhood, increase the amount of people who are invested in the neighborhood and just look a heck of a lot better. I wonder if there is any possibility of combining these remodeling jobs with job training programs? That would be greater financial outlay by the city at first, but think of the rewards down the road. We need to invest in our city's properties and people. Am I being a dreamer/Pollyana again? I don't care, I really hope for the best for this city and its people.
fred davie July 30, 2013

Lowering property tax rates would make fixer upper houses more affordable, and therefore more attractive, to both investors and would be first-time home buyers. Even a modest saving of say $30 to $50 would make a big difference to many marginal residents. I doubt if the city (which already has a big problem with deteriorating infrastructure) could manage a hugely problematic house flipping operation. I could see these places being stripped of all their new furnishings before they were even sold.
NSHDscott July 30, 2013

I have a couple houses in my neighborhood that were derelict and condemned with junk-littered yards eight years ago, and haven't changed a bit for the better since, through both the highs and lows of the housing market over that span. The City of Tacoma named one of these houses to its Dirty Dozen list years ago to try to shame the slumlord owner — ha, like he cares. I'm not particularly comfortable with the idea of the City flipping houses, but I'm also sick of seeing no improvement to existing problem houses. Hard to imagine the City making much money on it, or else capitalism would have stepped in already, but making money isn't the goal. As long as the City comes close to breaking even, I say let's give this pilot program a shot! Now, how do we submit nominations ...
Steve July 30, 2013

Could be a good program, but it would be critical to have the right people and the right organization involved. There are non-profits around who have the people and the track record. A good idea could be a lousy program if you don't pay attention to the market, to the condition of each property, costs, financing and clientele. And I think use of the term Flipping is a bad sign.
Published Author RR Anderson July 30, 2013

please start with the meth houses in my neighborhood
Kevin July 31, 2013

No! It's too much of a liability for the city to take on these homes not to mention the resources that would be needed to implement such a program. The city would be better off partnering with a non-profit, as Steve suggested, that have the capacity and track record to accomplish this.
Kevin July 31, 2013

What if the City of Tacoma finds itself in the scenario when this program runs out of funding and leaves them with unfinished properties? While one might argue that it is possible to allocate costs in such a way to prevent this from happening, cost overruns do happen and all too often, public entities find themselves ill-prepared to deal with these.
Renee June 1, 2014

Okay, so why have I been noticing more and more houses boarded up by "the city of tacoma"? I am serious. I live in the north end and there are so many homes that have been boarded up by "the city" AFTER they pondered "buying derelict homes". Coincidence? Let's break this scenario down. Let's say YOU have someone elses funds (let's call him Bill) with which you can buy crap homes. It's not YOUR money, you didn't work for it, but you have access and power over Bill's money, so you spend whatever it is that the buyer is asking for their crap house. Okay, so you've got your crap house...now you can take more of Bill's money and start hiring friend's to fix up the place (you give contractor friend $200,000, even though he's only going to put in $100,000 into the house, he gives you $100,000 for getting him the gig. You are now $100,000 richer from this ONE house....You then turn around and try to sell it, but oh well, it sits on the market for a year at $350,000 and no one buys. Looks like Bill is out a whole lot of money. But who cares. You are not BILL...You are the city worker in charge of the derelict homes and BILL is the taxpayer, who now has to give the city MORE money on their own house because the city stole and squandered what Bill already gave them. Dumb idea. How about if the city wants to REALLY help the city, they step back and cut the amount of TAXES on these properties so they are more afforadable? Maybe then Bill and his friends might have more money to go out and buy these derelict homes for what they are REALLY worth, fix them up and sell them to families who can afford them. CUT THE TAXES!!!!! STAY OUT OF THE BLOWING OUR TAX DOLLARS SO YOUR OWN POCKETS ARE FATTENED!