Urban Prospect: Giuliani Confronts In Rem Dilemma

Reviewing the city’s community development plan in 1979, the City Planning Commission, then chaired by Robert F. Wagner, Jr., concluded with the following warning:

“The Commission fervently hopes the city will bring the in rem program under control. Otherwise, the housing rehabilitation, economic development, and neighborhood projects that could and should be the city’s Community Development Program will be supplanted by a quarter-of-a-billion-dollar in rem property management program.”

Fifteen years later, the Giuliani Administration became the city’s third to grapple with the in rem housing dilemma – which has in deed become the drain that the Wagner planning commission feared. In Fiscal Year 1995, the Department of Housing Preservation and Development will spend about $255 million on property management functions against rent collections of some $80 million. Another $95 million in capital budget funds is allocated for the repair and rehabilitation of in rem buildings. As operating and capital budgets are cut in response to the city’s fiscal emergency, its in rem obligations are squeezing other housing and community development efforts out of the budget picture.

Already straining to maintain services to its existing inventory, HPD is faced with the possibility of a huge intake of additional tax-foreclosed properties that it cannot possibly afford. The city has responded with an unofficial moratorium on new property vesting but has thus far not articulated a new approach to financially troubled housing.