Rural Community Reinvestment: How One Community Is Tackling Blight

A few years ago, a group of concerned residents from the South Side of Hannibal, Mo., approached local leaders regarding a concentration of blighted homes in their neighborhood that were disrupting their community and attracting criminal activity. City Manager Jeff LaGarce and his team studied the issue, seeking to find a practical solution that would make a tangible difference.

The team found that when mapped geographically, the areas with the most criminal activity overlapped almost perfectly with the neighborhoods that had a higher number of rental and vacant properties. This trend is not atypical; research has found a link between higher levels of homeownership and lower levels of crime. Therefore, LaGarce knew that any solution would need to focus on single-family property investment and, ultimately, homeownership. Their research and planning resulted in the creation of Hannibal’s Community P.R.I.D.E. (Planned Renovation, Investment, Development, Endeavor) Project, which takes lessons from major cities like Chicago and Philadelphia and puts them to work in a rural community.

The goal of Hannibal’s program is straightforward: create a system that expedites the preparation and transformation of dilapidated properties and vacant lots into single-family housing investments. P.R.I.D.E. does just that. For one dollar, developers may acquire city-owned properties located within specifically targeted areas if they start construction of a single-family housing unit on the property within six months of the transaction and complete construction within 18 months of the acquisition date. To further motivate developers, the city waives the permit, inspection and utility connection fees for the unit. The same incentive package is available to those who renovate existing, salvageable homes as long as the construction value exceeds $17,500.

P.R.I.D.E. rewards the homebuyer as well. Because the buyer is viewed as providing a community service through their investment in an underserved neighborhood, the city is able to reimburse them for municipal property taxes for three years. Ultimately, communities reap the benefits of this initiative; the new development outpaces the traditional tax forfeiture process, thereby lessening the amount of time that homes sit in a blighted condition.

In its first year, developers built and renovated 14 homes. The goal is to increase that number to 18 to 24 in 2018. LaGarce remains cautiously optimistic. He has yet to receive anything but very positive feedback. This is in part because P.R.I.D.E. benefits so many people. Neighborhood residents are seeing their communities slowly transform as new families move in to homes that replace unappealing dilapidated properties. Real estate agents now have a new market for home sales at prices that are attractive to young adults and first-time homebuyers. And local financial institutions have more demand for housing-related loan products, which spurs new business.

Banks may also find that participating in P.R.I.D.E. could help them accomplish some of their Community Reinvestment Act (CRA) goals, given the fact that the program incorporates both neighborhood stabilization and affordable housing development.

LaGarce credits two things to the program’s success thus far. First, P.R.I.D.E. has always been outcome-driven. Throughout the planning and implementation process, he and his team maintained a laser focus on one goal: creating single-family housing units within neighborhoods in need of investment. That is what the residents wanted and what the city’s research suggested would help alleviate this particular problem.

Secondly and equally as important, the city kept P.R.I.D.E. simple. They did not set out to become landlords, lenders or construction mangers. Instead, they focused on the things they could control, and built relationships with area professionals who could provide the resources and services the city could not. That mentality has led to a great relationship between the 26 investors who participate in P.R.I.D.E. and local banks, realtors and other area stakeholders.

Neighborhood blight is often thought of as an urban issue, plaguing only the largest cities in the United States. As a city of about 17,600 people,¹ Hannibal may be the last place one would expect to find a major community redevelopment initiative. However, the problems facing contemporary urban and rural neighborhoods are not all that different. As Hannibal’s Community P.R.I.D.E. Project moves into its second year, the region may be witnessing the development of a new way for local government leaders and community stakeholders to revitalize rural underserved communities.

Caleb Bobo is an assistant consumer affairs examiner at the Federal Reserve Bank of St. Louis.