“Banks that foreclose on ‘zombie businesses’ need to step-up and maintain their vacant commercial properties,” announced Hempstead Town Supervisor Anthony J. Santino at a town hall press conference. On the heels of the Supervisor’s recent “declaration of war” on “zombie homes,” Santino announced a companion plan that would force banks and other lenders that foreclose on business properties to provide the town with “security funding” to pay for the upkeep of vacant commercial properties. Joining Santino at a town hall press briefing replete with pictures of “zombie businesses” were Councilman Edward Ambrosino, Councilman Anthony D’Esposito, Receiver of Taxes Don Clavin and Town Clerk Nasrin Ahmad.
“A blighted business can drive customers away from a local downtown, encourage vandalism and adversely impact local home values,” stated Santino. “We’re taking steps to hold lenders accountable. I won’t stand for banks that reap profits on business loans and then walk away from their responsibility to maintain commercial properties once they start a foreclosure proceeding. It’s time to make banks pay, and it’s time to make sure they are better neighbors.”
A hearing on the Supervisor’s plan to curb “zombie businesses” is scheduled for the June 21stmeeting of the Hempstead Town Board. The proposal would create a new section of the town code to deal with “zombie businesses” that are the subject of foreclosures. Specifically, the law would require banks and other lenders that commence foreclosure proceedings on commercial and other non-residential properties to provide Hempstead Town with “security funding” in the amount of $35,000 (cash, cash bond, letter of credit). These monies would secure the continued maintenance of the property in conformity with the Hempstead Town Code.
“Hempstead Town will make it financially painful for banks to ignore their responsibility to maintain their foreclosed business properties,” stated Ambrosino. “We’re taking meaningful steps to reclaim our downtowns from blight and neglect at the hands of bad lenders.”
The town officials observed that it would be in the financial interest of banks and lenders to maintain foreclosed properties as opposed to leaving the task of property upkeep to the township. Santino noted that the cost of town crews and contractors maintaining foreclosed properties and administering the “security funds” would certainly be more costly than if lenders were to directly contract for property maintenance.
“Being a bad business neighbor is going to hit banks and other lenders in the wallet,” said D’Esposito. “We are determined to cleanup local downtowns with or without the cooperation of banks.”
Enhancing the quality of life for shoppers and surrounding business owners was a key motivating factor behind Santino’s decision to pursue the “zombie business” law. In support of that goal, the Supervisor observed that the “security funding” would help expedite remediation of violations such as graffiti and overgrown grass. What’s more, town officials stated that the plan would help avoid significant outlays of public funds while still accommodating the upkeep of “zombie businesses.”
“This law is all about maintaining local quality of life and keeping our downtowns vibrant,” said Santino.
The Santino “zombie business” plan also has provisions that require lenders to replenish the “security fund” as monies are depleted to maintain foreclosed, vacant properties. Additionally, the plan provides for penalties of up to $1,500 per day for lenders who fail to provide the $35,000 “security fund” stipulated under the proposed law.
“We’re taking back our downtowns, and we are forcing banks that foreclose on businesses to be better neighbors,” concluded Santino. “My ‘zombie business’ legislation will provide for better, more vibrant and attractive business districts.”