Bank Owned Property Listing and Foreclosures Impact City Budget

by Simon Lindsay on cities

The growing number of foreclosures and properties under bank owned property listing is just one of the factors believed to have contributed to the city budget problem of Newark, New Jersey. As the city faces an over $80 million budget deficit, officials are considering selling some of the pieces of real estate owned by the municipality.

Along with the recession and the high number of unemployed, New Jersey foreclosed homes for sale also made their presence felt in Newark in the form of a considerable budget shortage. One of the proposals presented recently to balance the budget is to sell municipal real estate, including police precincts, office buildings and fire houses.

With bank owned properties listings continuing to grow in the city and unemployment rates reaching record highs, Newark is forced to explore not-so-common ways to generate at least $50 million to keep the budget in balance.

The proposal involves the sale of bonds by the Essex County Improvement Authority to have the money to purchase public buildings and lease them to Newark for several years. Since selling bank foreclosure homes for sale and other types of properties are not as easy as it used to be, the lease-back plan, although considered risky, is one of the few solutions that the city is looking into.

As long as bank owned property listing issues and unemployment remain a problem in the city, some officials believe that most efforts will only provide a temporary solution. Those who are reluctant to support the proposed sale of the properties have also stated that, in the long run, the plan will cost the city more than the amount it can generate should the plan is put into motion.

In addition, there is no sure way that the plan will even be approved as it needs to go through authorities for approval. The Newark City County, the Local Finance Board and the Essex County Freeholders all have a say on whether the program will come to fruition.

City officials who support the proposal have argued that the plan should be approved or the city is facing a tax increase of as much as 30%. They also stated that the city cannot wait for unemployment and the problem of huge numbers of foreclosed homes under bank owned property listing to ease down before they make a move.