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Chicago’s $1 Lot Plan—And Why It Is Different From Those That Have Come Before

As Chicago looks to offload its vacant lots, we examine the success rate of other cities’ lot and home giveaway plans.

By Jeff Vasishta December 16, 2016

No one wants to live in a war zone. But making money in real estate, as brownstone owners in Brooklyn and Harlem can testify, often boils down to moving in to blighted areas—that others are afraid to—for little money. Then you batten down the hatches and hope the neighborhood turns around.

As Chicago spirals out of control in gang- and drug-related violence, the city is attempting to rebuild itself and offering residents vacant lots for $1. The program has expanded—with over 4,000 lots available to residents who already own homes on the same street. Instant equity, though, isn’t on the cards—as the city currently has 20,000 lots in total.

In other cities similar vacant lots programs have stumbled because those—cities stipulated that land owners had to build new properties which they could ill afford. Chicago, on the other hand, allows the lots to be repurposed as gardens, as well as for residential use. Over 550 lots have been sold since the program’s inception in 2014. Most are adjacent to existing occupied properties and have been landscaped or used as parking spaces. The program has insulated itself against flippers by mandating homeowners own the land for at least five years before selling it.

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“The Large Lots Program turns vacant lots into neighborhood assets that benefit neighbors and communities,” Mayor Rahm Emanuel said in a news release. “This program’s success is driven by people who are committed to strengthening their communities block by block, and this expansion will create opportunities to strengthen neighborhoods throughout the entire city of Chicago.”

Last year Newark offered 100 vacant lots for $1,000 to couples (any combination – husband and wife, siblings, etc.)—with the stipulation that the purchaser builds a new property on the lot. While many rushed forward to buy the lots, they were shocked with the cost reality of constructing a new home. It made little sense to spend $350,000 in building costs when an older house nearby could be purchased for less that a third of the price.

Brooklyn transplants to Detroit, Toby Barlow and Sarah Cox came up with a novel solution for dealing with an abandoned house epidemic—and we do mean novel. They started a project called Write A House in 2013.

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The program gave free renovated houses to writers. A panel of writers and poets reviewed applications and the winners received free houses, which were renovated by construction trainees from the nonprofit Young Detroit Builders and supervised by a professional contractor. Each renovation cost between $35,000 to $70,000, and the money was raised via the crowdfunding site Indiegogo, which matching grants kicked in to bolster. Artists are the first pioneers that kick start a city’s turnaround and it’s proven to be the case in Detroit, with many creatives leaving Brooklyn to relocate to Motor city.

It’s almost become an urban legend that you could once buy a Harlem brownstone for a dollar. It’s true that during the crack ravaged years of the Koch administration in the early ’80’s a lottery existed where non-profits could buy dilapidated Brownstones for virtually nothing—as long as they fixed them up, and members of the public could get them for as little as $5,000. At the time, even though people borrowed and saved to afford the houses, the overwhelming cost of renovation proved prohibitive for many, with some properties falling back into into abandonment. One of the pioneers who made good on his brownstone was architect Bill Ryan. He snagged a beat-up brownstone in a lottery for $42,000 and put $300,000 into it.

“Ten out of 150 got renovated,” he told Dwell of the others properties sold in the lottery. “And almost all the locals who purchased homes (a cornerstone of the plan – Ed.) ended up defaulting. They spent their life savings buying the houses, then didn’t have the ability to borrow money to fix them up.” Ryan blamed the city for misrepresenting renovation costs. “They’d show a picture and say, ‘This house will need electrical and plumbing, you’ll spend $30,000’—well, multiply that by ten! These people lost their savings and their houses.”

As the saying goes, there’s no such thing as a free home.

 

Jeff Vasishta

ABOUT THE AUTHOR Jeff Vasishta

ABOUT THE AUTHOR Jeff Vasishta

Jeff is a writer, husband and father but not necessarily in that order. As a music journalist he counts Prince, Beyonce and Quincy Jones amongst those he’s interviewed. He's also owned and flipped homes in Brooklyn, NJ, CT and PA.

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