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Wayne County Foreclosed Property Auction: Jerry Paffendorf And Alex Alsup Talk No Property Left Behind

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WAYNE COUNTY LAND AUCTION
Jerry Paffendorf and Alex Alsup of Loveland Technologies explain the Wayne County Foreclosed Property Auction and Detroit's vacancy problem. Photo via Alamy. | Alamy
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If Detroit's vacant land was gathered together, it would span an area that's larger than the entire city of Paris. Every year, the Wayne County Foreclosed Property Auction offers up thousands of properties up to the highest bidder. That is, if there's even a buyer. In the 2012 auction, which just ended, 8,000 of those foreclosed properties ended back up on the property rolls.

When prices of $500 for a plot of land can't tempt a buyer, what will? That's the kind of mind game that keeps digital wizards like Jerry Paffendorf busy. He's the founder of Loveland Technologies and Why Don't We Own This?, which has been working to digitize land maps, streamline the land auction process and think up new ways to make Detroit's neighborhoods vibrant again.

Paffendorf will host a presentation and discussion with UIX and HuffPost Detroit called "No Property Left Behind," kicking off Nov. 28 at the Cafe Con Leche De Este pop-up coffeeshop in Lafayette Park.

Click here for more information about the "No Property Left Behind" event and the Urban Innovation Exchange.

We asked Jerry Paffendorf and Loveland Technologies' Alex Alsup to help decode Detroit's blighted land use puzzle for us -- read on!

HuffPost Detroit: Just about 20,000 properties (roughly 5% of the city) were auctioned for $500 and around 8,000 properties did not sell. Overall it seems there was nearly a $250,000,000 (quarter billion dollar) property tax revenue gap.

In your opinion, how much of a priority should it be for the City of Detroit to activate or sell off as many of these properties as possible?

Jerry Paffendorf: Cleaning, managing, investing in and reactivating vacant and blighted land should be among Detroit's highest priorities in general, and the leftover auction properties are among the most interesting to work with. Foremost, they're in a fluid state when so many other government- and privately-owned vacant properties are effectively frozen and inaccessible.

I mean, just a month ago anyone in the world could have purchased them for $500 a pop, no questions asked, and people are still reaching out trying to purchase them, so how can we say, "This cost $500 yesterday but now it's too valuable to sell or do anything with"?

Building on that, why not clearly show people where they are, what they are, let them talk about them, apply for them, consider best options, offer contracts to clean, build or deconstruct them? Then migrate the successes of that to dealing with the city's other 120,000 or whatever number of vacant lots and buildings. That's part of our focus with Why Don't We Own This? and we're ready to work with any level of government that can make it happen at scale.

What does this statement from your website, Why Don't We Own This?, mean to you? We will promote active investment over the buying and holding that slowly erodes properties and neighborhoods or halts the renewal this site is dedicated to.

Jerry Paffendorf: Detroit needs investment, but we've all seen the effects of people buying things and sitting on them. We have an open platform that doesn't try to tell people how to think other than encouragements to follow the golden rule and treat other people how you'd like to be treated.

We have this somehow radical idea that public information should be better shared with the public, but to the extent that we take a position we are not sympathetic to nor do we encourage idle speculation. Sometimes people are afraid that showing more information about the city might lead to speculators jumping on things, but the good news is that transparency is a two-way street. Yes, you can see what's for sale, but neighbors can also see you.

Previously when people bought up lots of properties at the auction, there was no way to know who they were and follow up with what's happening. Now you can search for your neighborhood or have a look at all the buyers right here (click a buyers name to see a map of what they bought). Hopefully what it all adds up to is greater awareness of who's buying what, and therefore, a greater awareness that you can't just sit on things that someone else cares about.

What are a few examples of renewal that or reinvestment that could come from Detroiters purchasing properties -- more than simply purchasing a home and working on it?

Jerry Paffendorf: I think it's possible (inevitable?) to crowdfund blight removal and create more user-friendly land banks or land trusts that neighbors can invest in and have both greater financial and decision-making interest in the places where they live. Those are things we're looking at closely and that we've experimented with on small scales.

Before the auction I was gauging interest in crowdfunding the purchase of leftover auction properties. I estimated it was likely that around 10,000 properties would not sell, and if a group wanted to purchase them at $500 a piece it would "only" cost $5 million. After that, the properties could be clearly advertised and matched with good owners and uses or cleanup efforts. There was a lot of interest in the idea, but also a lot of concern over liability that still needs sorting out. In the end we became part of a group that purchased 10 $500 houses expressly to deconstruct them so we can help streamline that process and make it repeatably crowdfundable. More on that as it develops.

Your website is as much a social forum as it is a property database. How did the process of creating that conversation develop, along with the mapping service?

Alex Alsup: That was interesting to watch develop this year. I don’t think we had very much to do with creating the conversation, we just provided space where it could go on. There was a moment where someone commented on a property and said, Hey, this is a property I’m interested in and please don’t bid on it, because I think I have the best idea for it. I thought that was a good thing, and many more people started having those kinds of conversations. It’s much better that people talk openly about their plans, than move around in the dark bumping into each other and finding out they were trying to accomplish the same thing.

You say that as many as 43,000 properties are currently moving into 2013 tax foreclosure and bound for auction in Wayne County alone. Those numbers seem so high that you wonder whether the demand to own something can ever catch up to this kind of supply.

Jerry Paffendorf: See this graph of Detroit's population boom and bust over the last 200 years. In terms of population, we're back to where we were 100 years ago when the city was much, much smaller, even spatially as you can see in this animation I made of Detroit's annexed land over time. One of the things we're left with is a residential parcel grid that doesn't make sense anymore. There are basically too many properties and we're trying to squeeze life as it is onto an ownership playing field built for 3 times as many people. You look out at a big empty field, and it might actually be 20 residential house-sized properties when it should really be 1 or 3 or 5 properties today.

One of my favorite auction stories this year is someone who got in touch wanting to buy 2 connected lots simply so he could legally turn them back into one property. That's a long way of saying maybe the way to create demand and make sense of this dilemma is to reduce the overall number of properties. It's interesting to consider putting that power directly into people's hands so that neighborhoods can "shrink" the number of properties on their own terms.

Do you think everybody that can afford to buy a property in the auction should? Why or why not?

Alex Alsup: I’m not sure that it does anyone very much good if someone who can afford to buy a house for $500 does so, and then can’t pay their property taxes, and winds up foreclosed on in three years. But it’s a difficult question and there’s probably not a single answer that’s applicable to all situations.

What good comes from the discussion that you're leading on Nov. 28? Is it just theoretical -- more talk? Or do you see some kind of action arising from the event?

Alex Alsup: When it comes to Detroit’s land issues and the auction, I don’t think talk has exhausted its utility. The number of people who understand the scope and implications of the auction is still startlingly small. When you go into the neighborhoods most affected by the auction, many of the people we speak to have no idea the auction exists -- have no idea the houses they live next door to, or even live in, are now owned by the county, and for sale. We hear endless commentary over the potential leasing of Belle Isle to the state, yet no one talks about the 8,000 properties left over from this year’s auction that are going to the Michigan Land Bank.

It’s a good fate for those properties, but it’s striking to see so much consternation over one instance of state control of Detroit property, and none at all over another, equally large, instance. If action comes out of the event on the 28th then great, but I would be more than happy if the result was that we all left a little better informed about Detroit’s foreclosure crisis and the Wayne County auction.

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