Monday, May 15, 2017

Telling the Whole Story

I noticed a piece written off some conservative news site....hyping up confiscation of private property in Germany.

They wrote the piece in a particular way that would draw you to a certain conclusion.  Oddly, you need stand back and look at the entire landscape of this story, before you reach the final conclusion.

So this story centers on of the more urbanized cities of Germany (2nd in terms of population after Berlin).

One of the chief characteristics of these major urbanized cities that you come to notice if you walk that there are low-income districts.  Some you'd classify as ghetto-like and some nearing the ghetto-stage.

The story goes onto talking about city management folks using a 1982 law which allows for confiscation if a unit (meaning an apartment building) is in poor condition and empty....for four months....then the city can start legal proceedings to take the property from the owner.

The use of the property?'s for immigrants or migrants who've arrived in the urbanized area and find zero housing (at least zero affordable housing).

This district talked about in the story?  The Hamm area....southeast of the city, an area of about 200 meters by one kilometer.  Thirty years was a middle-class income district, with some business sections and warehouses mixed in with apartment houses.

North of Hamburg-Hamm is Hamburg-Hamm North and to the south, along the canal Hamburg-Hamm South.  The north and south sections might still retain part of their working-class character and be somewhat middle-class or progressing toward the lower-class.  This center section of Hamm?  It's in the process of what I'd call ghetto-ization. It's an area that doesn't draw people much, and is not an area where working-class people feel thrilled to live.

The owners of these apartment buildings?  They end up in two categories.  One type of owner will push twenty-percent of his profit into a maintenance fund, and occasionally upgrade parts of the building (new doors, new toilets, new windows, etc).  The second guy will do absolutely nothing after buying the buying the structure and enjoy the profits for thirty-odd years, and then sell it off to the next guy.

If you look across metro Hamburg, you will find literally dozens of apartment buildings or houses in the same condition.  They were profit-makers only.....they are drawing zero interest for renters....they simply continue a trend toward ghetto-ization.

In this case of Hamm....the city filed papers to confiscate six apartment buildings.  All are proven to have been vacant for at least three years.  The city will appoint a guy and make him the manager of the facilities, and give him access to city funding to renovate.  No one says how much will flow into the project but you can figure a minimum of quarter-million Euro for a 12-apartment building being normal.  With updated heating, new windows, paint-job, landscaping, bathroom's a hefty amount of money.

At the end of the renovation period (figure at least one whole year of work), it'll be turned into an affordable housing project.

Why didn't the previous owner take this responsibility?  In most cases, if you stand and admire the structure, the developing ghetto, and the term 'affordable' got a problem.  No one wants to pour half-a-million Euro into a structure and be limited on the amount of rent that you can charge (figure 700 Euro will be the typical amount for affordable two-or-three bedroom residences).  What idiot would toss that large of sum into a project and be limited to the rental income?  The rest of this story is that you are stuck with a building that can't really be sold now (being in a low-income or ghetto-development is a major problem). So the idiot is standing there and paying taxes each year, for a building which is worthless on rent but worth probably half-a-million to one-million in value.

An unfair practice of the city?  If there were just a hundred apartments in the city affected by this non-rental one would say much.  Local chiefs in Hamburg suggest that somewhere between 1,000 and 5,000 residences are in a non-rental situation within the metropolitan area.

Part of this problem is that since the 1980s....a lot of the middle-class folks in metropolitan areas (not just Hamburg)....have moved out of the city, to nearby smaller towns.  You see this in Frankfurt, Berlin, and Koln.

This story, as it's told by some folks....ends up being a fake news story because it's told in a biased way and doesn't reflect the reality of the situation.  People think it's rampant socialism and very unfair to the property owner.  It's urban decay in the early stages.  Think of Detroit and how it was in the 1980s and where there was a brief moment where you could have stepped in and prevented the city from becoming some major urban failure.  This is what the management folks in Hamburg have done.  The previous owners?  They enjoyed the investment income for years and decades.  They should have invested some of that back into the structures.

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