Missouri law meant to combat neighborhood blight is being twisted to profit from cheap homes
Missouri's Abandoned Housing Act has paved the way for neighborhood groups to take control of empty homes and turn them back to productive use. But residents fear nonprofits with no interest in improving Kansas City neighborhoods are using the law to buy up cheap homes.
In the middle of December, the homes lining Belleview Avenue were decked out for the holidays — except for one.
Situated next to a home adorned with holiday lights and twinkling Christmas trees, 2617 Belleview showed little sign of life within its walls. The small attic window was propped open. Off-white paint is chipping around the facade of the two-story home. The only signs of recent activity are green plastic chairs on the porch, empty coffee cups, small scarecrow dolls and a placard that reads “Welcome in for a spell.”
An unfinished wood awning provides shade to the front porch, suggesting the house is undergoing renovation.
Last year, 2617 Belleview fell into the hands of a nonprofit called The New Jersey Area Homesteading Authority, which successfully argued in court that the house was abandoned.
According to court documents, the property owner, David Caudillo, lived in the home for 30 years. He only learned of the lawsuit against his home when a neighbor called to tell Caudillo that someone had tried to break in. Another neighbor called the police. Court documents say the person at the home was changing the locks and showed the officer a copy of the court decision granting temporary possession of 2617 Belleview to The New Jersey Area Homesteading Authority.
A Jackson County judge dismissed the case after Caudillo came forward. Caudillo retained ownership of the home. He declined an interview about the case.
The Abandoned Housing Act intends to address the persistent problem of blight by providing neighborhoods a tool to take over and fix up derelict homes. But in recent years, attorneys and neighborhood associations have noticed what they say is a disconcerting trend: nonprofits are using the Missouri law to quickly acquire abandoned homes and sell them for a profit.
Alicia Johnson, executive director of Legal Aid of Western Missouri — which frequently works with neighborhood associations on Abandoned Housing Act cases — said derelict house claims in the past two years have been unusual and appear to twist the statute.
"Outside actors are trying to use the statute to find ways to own properties that they would not otherwise own, without giving the benefit of the doubt to the existing owner," she said. "It is a much more aggressive litigation approach."
What is the Abandoned Housing Act?
For a case to qualify under the Abandoned Housing Act, a home must be unoccupied for at least six months, the property owner must owe delinquent taxes and the home must have received code violations, making it a nuisance.
Only not-for-profit organizations that have been incorporated for at least six months and “whose purpose includes the provision or enhancement of housing opportunities in its community” can file cases. This opens the door for most neighborhood groups.
Legal Aid attorney Erin Kelly said most abandoned housing cases take place in neighborhoods east of Troost or on the West Side. She said neighborhood groups bring properties to Legal Aid’s attention that could qualify for Abandoned Housing Act cases.
When an abandoned housing act case is filed, the neighborhood nonprofit works with a local rehabber on a plan to fix up the home. If the home satisfies all requirements under the law, the court will allow the rehab to take place. The law allows the property owner to keep the home if they reimburse the cost of the rehab. If that doesn’t happen, the home goes to the nonprofit to give to the rehabber, who can choose to live in it, rent it or sell it.
‘A really profitable business strategy’
Ted Anderson used to lead Kansas City’s Land Bank. He was forced out in 2018, after years selling Land Bank properties in cheap, controversial dealings, according to a 2021 Kansas City Star investigation.
After he left, the real estate lawyer established the New Jersey Area Homesteading Authority as a land bank that would operate in New Jersey.
After not finding any success there, Anderson said he kept the homesteading authority open to work on abandoned housing cases in Kansas City — it’s registered as a nonprofit corporation in Missouri.
Anderson said he and his partners find vacant homes by driving around the city. Since 2021, the organization, which sometimes files under the name KC Housing Initiative, has filed more than 40 Abandoned Housing Act lawsuits.
Most of the homes are in the center city, which encompasses neighborhoods east of Troost.
“I like to see that the properties in the center city are brought back to life for the economic viability of the areas,” Anderson said.
Like the groups Legal Aid works with, the Homesteading Authority partners with a rehabber to renovate the vacant home. The rehabber then sells it on the private market.
Attorneys have noticed that this nonprofit, and others like it, choose homes that may fulfill all the requirements of the statute on paper, but are not so run-down and blighted as to require a hefty rehab.
Plaintiffs also have to notify the homeowner that they’re being taken to court — traditionally done by serving someone in-person or by mail. If the owner can’t be found, they can run a notice in a legal outlet.
For Legal Aid, Kelly said, that can take a while. But in some cases, attorneys have noticed that nonprofits filing abandoned housing cases go straight to service via publication.
"They try as quickly as possible to gain possession of these properties because it's a way for them to make money," Kelly said. "It's a really profitable business strategy because you're paying almost absolutely nothing for a property. And then you can turn around and flip it."
Anderson pushed back on claims that he uses the Abandoned Housing Act just to make money.
"The property we find has to be able to be rehabilitated for less than what it will be worth when it's fixed up," he said. "Otherwise, it just doesn't work. We wouldn't be able to have a partner. No rehabber would work with us if they couldn't make money on the deal."
In some of the New Jersey Area Homesteading Authority’s cases, its speed made it easier to miss property owners — who then showed up to court. Those cases are often dismissed.
“If the guy is living in the house, we don't want to take it anyway,” Anderson said. “That's not what we're about.”
Out of the more than 40 Abandoned Housing Act cases his nonprofit filed, Anderson said they’ve acquired five homes.
Johnson at Legal Aid says homeowners showing up in court to dispute cases brought by the New Jersey Area Homesteading Authority and other nonprofits are a telling sign that the groups may be acting outside the law’s original purpose.
"The whole intention behind the law was really homeowner and neighborhood stability," Johnson said. "It's very important that we are able to be proponents of affordable housing in our communities, and that as a community and as a city, that we discourage those who are doing things to try to move the dial the other direction."
Anderson doesn’t read the law that way. The statute doesn’t specify that a home has to adhere to neighborhood requirements or affordability metrics.
"They wrote the law because they want these properties to be rehabilitated," Anderson said. "We're doing that. I don't know if it's taking advantage. I don't think I'd see it that way. But I think we're using the law. I think it's a good law and I think we're using it in a proper way."
‘It puts everybody on edge’
Abandoned homes are mostly concentrated in poor, predominantly Black and brown neighborhoods east of Troost Ave., like the Marlborough neighborhood in south Kansas City.
Diane Hershberger, executive director of the nonprofit Marlborough Community Coalition, estimates the neighborhood has about 850 abandoned homes.
Hershberger lives near an abandoned home, and said they cause instability and can become magnets for illicit activity. She says she worries most about squatters and gunshots.
"It puts everybody on edge," she said. "It just raises a level of stress in the neighborhood."
Hershberger said one vacant home near the Marlborough Community Coalition’s offices burned down recently, causing damage to the occupied home next door.
“The solutions come a lot slower than the problems pop up,” she said.
The Marlborough Community Coalition has used the Abandoned Housing Act frequently as a tool to get control of vacant homes. But the abundance of vacant homes east of Troost have become attractive to out-of-state investors and groups interested in making a quick profit off cheap housing.
Those practices don’t result in more affordable housing, Kelly at Legal Aid noted.
"They're not affordable for that neighborhood," she said. "We're just seeing bad actors, or sometimes it's people who just aren't educated about how to be a real estate investor, doing something that they think is okay, but is actually hurting a lot of the people in the neighborhood."
Hershberger said an out-of-town buyer won’t have the best interests of the neighborhood in mind.
"When you don't live within a community and understand the connectedness and the impact … you don't have that same appreciation for the balance that it really needs to make a city thrive," Hershberger said.
Hershberger is concerned more nonprofits will use the Abandoned Housing Act to acquire housing for cheap. She said those organizations have more money than a neighborhood group, making it harder for the Marlborough Community Coalition and others to carry out their mission.
"We have to be more creative," she said. "And we have to try to run as fast as they do."