An efficient system at work: The Berlin Housing Initiative
October 20, 2010
BERLIN—The City of Berlin is in the next phase of the $4.2 million it received from the Neighborhood Stabilization Program (NSP). The funding, in addition to the annual City budget allocation, is used efficiently to address 24 properties.
"We're doing three years of work in 14 months," said Andre Caron, Housing Coordinator for the city. The final round of demolition bids, budgeted at $714,180, combined with $1 million in redevelopment by partner New England Family Housing, will cover 11 properties. The work, started in May 2010, will close in June 2011.
The NSP funds allowed Mr. Caron and the city to make significant strides in de-densification and rehabilitation of particulars areas such as the East Side of Berlin. Each property was evaluated in a big picture: buildings close to downtown were good for renovation to encourage a walking community, while others were slated for removal to thin out crowded housing streets of unnecessary housing. An example of a renovated home is on the corner of Rockingham and East Mason Street, where the view and location made it ripe for "something other than demolition," said Mr. Caron.
In addition to the NSP funds, the City budgets $200,000 annually for Mr. Caron to carry out demolitions of tax-deeded properties. In Fiscal Year 2011, that budget topped out at $300,000 because of a carryover of $100,000 unspent from 2010. Reserving $34,000 for emergencies, the $266,000 will fund the demolition of 13 properties.
The efficiency of the Housing Coordinator's budget is due to the system that Mr. Caron developed when he started the position 5 years ago. At the time, the demolition bids covered the entire process, from white goods to tonnage to asbestos to the final demolition of the building. As a result, the amount of buildings that could be removed in a single year was insignificant.
Today, the demolition bid process has been streamlined in a manner that not only allows for the city to tackle more properties, but also provides revenue. The streamlined process that Mr. Caron developed operates as such: the city covers asbestos abatements, tonnage, and other risky and expensive aspects of demolition; when a contractor bids on a job, they are bidding only on the literal demolition and disassembly of the building.
Reducing the contractor bid responsibility led to reducing the risk, and therefore the price of the bid. With a demolition that the city estimates at $38,000, such as 761 Second Avenue (which was tax-deeded to the city), a contractor would add 20-25 percent to the bid to cover potential risk or unknown costs. In other words, a project that would have brought a bid close to $50,000 now costs the City in the range of $12,000 to $15,000. Even with the City bearing the cost of the abatement and tonnage, the cost is less than if put out to bid by a private contractor, said Mr. Caron.
"There's no mark-up," he said.
Local contractors, even if not professional demolition contractors, are also able to meet these low-risk bids, said Mr. Caron. In many of the demolition bids, local contractors outbid professional demolition contractors from Massachusetts, whose bids tend to be twice as much as local bids due to the cost of transporting heavy equipment. The economic boost to the regional economy is another benefit of this streamlined system, said Mr. Caron. "Any contractor with an excavator can bid," he said, "and the smaller contractors can do it."
As the first handful of bids come in, Mr. Caron is looking at a modest profit off the bids. This money goes directly back into funding future demolitions: 818 Fourth Avenue, 508 Champlain Street, 653 Western Avenue, among others.
The NSP program aided in addressing homes that were costly to demolish due to asbestos and other hazards; properties addressed by the NSP funds cost as much as $169,000, while the cost of City budget properties were in the range of $30,000 to $40,000.