A CUSO created to help a credit union manage foreclosed property has begun to play a role in a city’s economic redevelopment.
The $26.7 billion State Employees’ Credit Union, headquartered in Raleigh, N.C., launched its real estate CUSO in February 2013 to help it handle roughly $49 million in foreclosed real estate. The for-profit SECU*RE remodels, restores and revitalizes property for sale on the open market, and does the same for property the credit union owns and rents, said Mark Twisdale, SECU’s senior vice president of human resources and executive director of the SECU Foundation.
Twisdale reported that the effort has been bearing fruit. In the roughly six months since it began, SECU*RE has helped remove approximately 200 units from the credit union’s books, reducing the number of foreclosed properties from about 500 to 200.
The CUSO’s work so far has been primarily with contractors and real estate professionals, but the firm entered a new phase last week when it signed a formal agreement with the city of Durham, N.C. to renovate and restore some property the credit union owns along Hibiscus Drive, an underdeveloped street on the city’s northeast side.
“The purpose of this agreement was really to put what we are doing on the public record in a way that we hope might encourage others to do the same thing,” Twisdale said. “We want to start a trend.”
He pointed to research which indicated property owners in marginal or economically depressed parts of an urban area will be more likely to maintain their property—or at least not abandon it—if other property in the area is being well maintained or restored. SECU*RE hopes its work along Hibiscus Drive will provide a spark to other property owners or potential property owners to do the same.
SECU Director David King echoed that sentiment in a release announcing the deal when he said, “There is a critical need to reinvest in our neighborhoods and be part of the solution for North Carolina communities. With the support of the City of Durham and other community groups, we will make a difference for the citizens of this area and use this partnership model to positively impact other neighborhoods across the state.”
Durham hopes that will be the case as well, Twisdale said.
Much of the work on the property needed to be done in any case, he said, to meet health and safety codes, But, he added that SECU*RE goes beyond those standard when it makes property improvements, not only bringing them up to code but also improving their energy efficiency to lower costs for future owners or renters.
SECU*RE also offers to help with public property in the area, Twisdale said.
For example, not far from the Hibiscus Drive propertiey is an open lot that a local public utility owns but does not maintain well. The lot is overgrown, trash-strewn and looks abandoned, he said. In the wake of the deal, SECU*RE approached Durham to propose that if the public utility could be encouraged to donate the property to the city, the firm would keep it up and even make a small park out of it. Like the improvement of foreclosed properties, the goal is to spur development in the area.
“The idea is to make it clear to people that we are committed to this area,” Twisdale said. “Once an area starts to see a down turn, it can be really difficult to turn it around, and there are a lot of people who might promise things but then never deliver. We want to make it clear that we are here to deliver.”
There are signs the strategy appears to be working. An investor has purchased some of the properties in the same area as SECU*RE, Twisdale said, and appears to be fixing them up.
“Of course we can’t know if they will meet our standard,” Twisdale said, “but we are hopeful and pleased to see the activity.”
Twisdale added that SECU*RE hoped the agreement sent a message to other North Carolina communities about possibly working with the firm to do similar things in their communities. He declined to give details, but said the firm had already heard from other North Carolina cities about situations they face that might interest the CUSO.
He also acknowledged that the step means that SECU*RE, and by extension SECU, expect to be in the property management business in North Carolina for some time.
“It seems likely we are going to be at this for a while,” he said.