Struggle To Eliminate Blight In Kansas City Raises Questions About Investors, Investments | KCUR

Struggle To Eliminate Blight In Kansas City Raises Questions About Investors, Investments

Apr 6, 2016

We've been hearing a lot about Kansas City's program to demolish or sell off dilapidated homes. Around 800 properties are on the "dangerous buildings" list and thousands more are vacant or abandoned.

The large amount of blighted homes in Kansas City has a lot to do with the housing crisis, and a lingering question is whether outside investors have been part of the problem or part of the solution.

A local contractor seeking local buyer

Tom Ribera gutted and renovated this home in the Northeast and hopes it will be occupied by a new owner.
Credit Laura Ziegler / KCUR 89.3

Tom Ribera, a contractor who's worked in Kansas City's Northeast neighborhood for 13 years, is trying to take his community back one house at a time.

As he turns several locks on one of his current projects just off Independence Avenue, he boasts that it's move-in ready.

"You see here — all new tile. We've created this open floor plan - all new cabinets," he says as we tour the pristine new kitchen.  It smells of fresh paint and plaster. Ribera says he's ready to install new appliances.

"We don't put heating or appliances in while it's vacant," he says. "They get stolen."

Ribera considers himself a neighborhood activist. He and a handful of other small local contractors have a mission — to rehab vacant homes and sell them to people who want to live in the neighborhood.

With the wave of foreclosures over the last decade, hundreds of outside investors have bought up properties in the inner city.

Ribera says often they either don’t know or don’t care that these places need careful oversight. Renters come and go. Homes get vandalized and robbed.

"(Investors) will go belly up. They can’t afford to take care of the property, " he says. "The owner stops giving money for repairs and that’s how lot of these homes become vacant. People just abandon them and crime, drugs, prostitution comes in."

Is any investment good  investment?

City records show more than 900 vacant properties. I did a search of those located in five ZIP codes along a stretch of Independence Avenue west of Van Brunt. Roughly a quarter of them have a contact number outside the city – everywhere from Lees Summit, Missouri, to Johnson County, Kansas, and Louisiana to California.

Community advocates say outside investment is welcome, as long as landlords are responsible.

But what is responsible?

To find an answer I met with John Murphy at the McDonald's restaurant in Kansas City's Waldo neighborhood. He owns about 70 properties, mostly on the east side of town.

"You know when the bubble burst, foreclosures were abundant, I started buying — got some really good properties. They're rented and making money."

I’d been told by some neighborhood leaders that Murphy wasn’t the greatest landlord. So I talked to some of his renters.

Dana Ross says her landlord responds quickly when she calls.
Credit Laura Ziegler / 89.3

Knocking on more than a half-dozen doors, most said he was a pretty good landlord.

Dana Ross says he comes when she needs something fixed. "Yeah, he's been good to us,"she says.

Another renter had a different point of view. She didn't want to give her name, but said heat didn't work well and Murphy had promised to come put some doors on her washer. 

"He never came and did that," she says.

Some of Murphy's homes need work, by his own admission.
Credit Laura Ziegler KCUR 89-3

Advocates say renters sometimes don’t want to complain about landlords, they worry they might not get their deposit back, or get a bad referral if they rent from someone else.

Back at McDonald's, I showed Murphy some photos we’d taken of a handful of his houses.

Some of them were nice, at least on the outside. 

Others, not so much.

I showed him a picture of one house where a lot of paint was peeling off the side of the house. 

"Yeah, sure," Murphy said, "that one could use some paint."

Another had a front door sealed with what looked like a strip of insulation. I told him it looked like the door might not close all the way. 

"Shouldn't that door be fixed?," I asked him.

"OK," he replied, as he added that this particular tenant had made numerous complaints. "She doesn't seem happy."

Murphy said I happened to select the few of his rentals that needed work. 

"I think I’m a good landlord. Of course there are a few, for whatever reason, personality conflicts or whatever, where we don’t see eye to eye."

He says landlords get vilified when problems are not always their fault.

But city records indicate Murphy has had a number of code violations.

And the name of his company seems to say something.

It's Slum King of Kansas Shitty.

I asked Murphy about the name. He says he was just being "stupid," that he chose the name out of frustration with the city. He says fines he's gotten for code violations are really just a tax. He believes he's doing something good for these communities.

"I'm taking these homes that were vacant and investing in them," he says. " I put tenants in them which is not necessarily a bad thing for the neighborhood."

Some investors in these urban properties are even less connected to their holdings than John Murphy.

Homes worth less than the debt on them

Kansas City was hit hard by the housing crisis of the late 2000s. Wall Street and fly-by-night mortgage companies created, bought and sold loans to people they knew couldn't repay them. Loans were renewed over and over. Ultimately, thousands were forced into foreclosure. Their homes worthless in the face of their mounting debt.

Some of these are the homes Kansas City is looking to tear down or sell off today.

But there's a problem for prospective buyers.

Many carry old mortgages, state or federal tax liens, or credit card debt. Of the hundreds of vacant and abandoned properties the city has, experts estimate over half could retain unpaid debt on the title.

Claude Harris says he could rehab this house for $25,000 but there is $200,000 of old debt on the title.
Credit Laura Ziegler KCUR 89-3

This brings us back to the streets of Kansas City where another local contractor named Claude Harris is standing in front of a home he bought from the city’s Land Bank.

He was encouraged to check for unpaid liens or mortgages before closing the deal. He's glad he did. Pulling the property’s title up on his phone, Claude Harris shows me that the decrepit home is laden with debt.

"Here’s one, it’s a mortgage, $42,500. And here’s another, a federal tax lien in the amount of $69, 248."

The list goes on.

If he buys the home, Harris will pay the city $2,200 for it. He estimates he’ll put $20,000 or so into renovations and can sell it for something like $35,000.

Not such a good investment.

"It’s like, whoa," chuckles Harris. "I had a lawyer look over the paperwork. Their first response was, 'Don’t do it.'"

Even though it could cost Harris several thousand dollars to wipe the debt clean, he says he’s going to try and find a way to do it.

He grew up not far from here, and he'd love to see another family live in this community and call it home.

Laura Ziegler is a community engagement reporter at KCUR 89.3. You can reach her on Twitter @laurazig or by email at lauraz@kcur.org.