In 2012, city inspectors walked into Michael Gedeon’s home and declared it a health hazard.
Saying the property was littered with old cars, trash and giant fuel tanks, officials asked a judge to appoint a private company, called a receiver, to clean it up and bill Gedeon for the costs.
But Gedeon wasn’t able to pay off the $63,000 in repair costs the receiver incurred and three years later the St. Lucian immigrant lost the home in a foreclosure auction. The receiver became the home’s new owner and sold it a year later for nearly $80,000.
Gedeon, meanwhile, died in January in a rental home a few miles away after arguing for years, unsuccessfully, that the government had stolen his family home.
That’s not the intended consequence of a state process called “receivership” created to combat blight. But Gedeon’s story has prompted growing concern in Springfield that the court-ordered initiative is pushing out low-income homeowners while private companies are cashing in.
“These are people’s homes and their whole lives are being destroyed as a result of this policy,” said Vanessa Rosa, a professor of Latinx studies at Mount Holyoke College who has studied the process. “People should know what’s happening, because it’s not right.”
Courtesy of Springfield No One Leaves
Alerted by concerns from housing advocates, a group of Rosa’s students investigated the process a few years ago. They found more than 51 percent of properties that went into receivership between 2008 and 2017 in Springfield ended up being purchased by the businesses appointed to bring them back to code. And receivers were not shy about how profits were drawing them into the business, research showed.
For instance, the co-owners of a company called YellowBrick Property LLC posted a YouTube video last year titled, “FREE HOUSE,” saying they’ve been involved with more than 50 receiverships and obtained more than 100 rental properties through the court-ordered process. Most of these homes were in Springfield, they say, making them the busiest receiver in the city.
In the video, one of the YellowBrick principals, Matthew Tortoriello, boasted he could help other companies make similar gains through the program. “Receiverships are a fantastic way for you to acquire property for zero acquisition costs, not to mention help your cities and towns clean up blighted properties,” said Tortoriello. “See all the ways to do it so you can do it too.”
Springfield City Councilor Jesse Lederman told GBH News in February that he is going to request an official investigation into how the city uses the process. Lederman said he was motivated to seek more information after hearing from housing activists about concerns of abuse and watching the YellowBrick YouTube video.
“Anytime you have the government involved in seizing property, especially seizing property and moving towards eventual profit for somebody, there has to be extreme oversight,’’ he said. “We have to make sure that it is clear, it is transparent, it is fair.”
The receivership process was created in the 1990s in Massachusetts and used sporadically until 2008 when cities and towns began searching for ways to clean up vacant and abandoned properties — the brick-and-mortar orphans of the country’s foreclosure crisis. At that time, the state Office of the Attorney General created the Abandoned Housing Initiative to hire receivers to fix up properties when homeowners and banks were unable or unwilling to do the work. Versions of receiverships are used in about 20 states across the country.
The Office of the Attorney General says it has worked with more than 150 municipalities through the legal process, helping to repair about 320 properties across the state. Attorney General Maura Healey said in a written statement that “receivership can be a necessary tool to return properties to a safe and habitable status.” But, she said, “it should only be used as a last resort with appropriate checks and balances in place to avoid overuse and gentrification.”
The YellowBrick video has prompted consternation from some government officials and housing activists who say the program shouldn’t be seen as a profit magnet. The sheer number of receiverships undertaken by one company raised eyebrows. A spokesman for the Attorney General’s Office said its office works, “with a multitude of receivers across the state and has never had a receiver appointed to 50 properties (nor would we).”
Springfield officials say they do all they can to work with homeowners before they appoint a receiver. But Lisa deSousa, a deputy city solicitor in the Springfield Law Department, is not surprised a majority of homes end up in the hands of the businesses that fixed them up — and says it might even be an undercount. She says it’s an unintended outcome of the city’s reliance on receivership to clean up blighted homes with limited public money.
“We’ve got to enforce the codes because there’s health and safety issues and the city can’t afford to do that,” she said. “We’re one of the poorest cities in Massachusetts and there’s a finite amount of money and this was a way to get money and properties fixed up.’’
YellowBrick principals Kevin Shippee and Tortoriello say they are doing well by doing good. They told GBH News that most of the homes they’ve worked on were unoccupied. If they did have people in them, they said, they tried to work with residents to help them maintain their homes. Shippee says the process is good for everybody.
“The neighbors and neighborhood get a property back on track, if it’s a rental property, the tenants get a property that’s brought back to code, and the receivers aren’t and should not work for free,’’ he said. “Profit isn’t a dirty word.”
Another YellowBrick principal, Theodore Agranat, told GBH News that the YouTube posting advertising the receivership program was a marketing ploy that went too far. “No one can ever get a ‘free house,'” he wrote in a message from his home in Puerto Rico. “I personally prefer to use a different approach to marketing.”
There’s likely no municipality in Massachusetts that has more aggressively embraced the use of receiverships than Springfield, a gateway city hard-hit by the state’s foreclosure crisis.
It’s one of two large cities, including Boston, to run receiverships independently through their own legal departments — allowing more freedom to use the process to fix up homes with people still living in them. With a population less than a quarter the size of Boston’s, Springfield has completed some 300 receiverships since 2008, more than three times the number of receiverships initiated in Boston since the late 1990s, data and interviews show.
Springfield officials say legal actions have been necessary to help clean up problem properties in a city that has been plagued by boarded-up buildings, arson and vandalism made worse by the great recession. DeSousa, the deputy city solicitor, acknowledges the receivership system had had some problems. There have been occasional “bad” receivers who inflated costs or didn’t do the work, she says. But they are the “exceptions.”
There also were concerns that some receivers — particularly YellowBrick — were getting more properties than others. But she says the city has worked to make the process more equitable. At the same time the need for receivers has gone down as the housing market has improved and more homeowners see the benefits of holding onto their properties. Most importantly, deSousa maintains, most people losing their homes through the process have been given every chance to save them. If occupied, she said, residents were often tenants living in unsafe conditions who needed help.
“Some of the properties we saw just almost defied description,” she said.
Jenifer McKim / GBH News
The city doesn’t have a specific set of criteria that would send a house into receivership. Instead, deSousa describes the program as a last resort after the city runs out of tools to get a property owner to fix code violations. A receiver is appointed following concerns that a property is violating the State Sanitary Code by failing to meet what are described as “minimum standards of Fitness for Human Habitation.”
“We are, by and large, complaint driven,” she said. “Either a tenant has called us, a neighbor has called us, sometimes the police will call us.”
Court records show the city spent about four years trying to get Gedeon to fix up his family home, which officials described as an “illegal junkyard,” strewn with unregistered motor vehicles, scrap metal and trash.
Frustrated by lack of compliance, the city in 2012 entered the property to clean it — and found a half dozen 275-gallon oil tanks they worried were a fire hazard. That’s when the city asked a judge to appoint a receiver.
City officials say in court records that the house was vacant but Gedeon’s family says he was living there, frustrated about how the government could tell him what to do with his own home. He was a construction worker and “master welder” by trade, they said, and liked to tinker with cars.
Gedeon’s niece, Phylis Gedeon, says her uncle felt he was living the American dream and should have the freedom to do what he wanted at his home. He believed, “The government can’t come in and say, ‘Well, this is what you do with your corner of the world,’’’ she said. “He was always a fighter.”
If the home needed work, she said, city officials should have done more to help him. “I think the city needs to look at being supportive of homeowners, especially homeowners of color.”
Rose…
