Fred Sheil fights crime.
But instead of guns and handcuffs to put the bad guys in jail he uses hammers and sheetrock to put first-time buyers into homes.
He oversees Stocktonians Taking Action to Neutralize Drugs (STAND). Since 2008, they have purchased 243 foreclosed or distressed properties — including 18 in Manteca — with the primary goal focused on reducing crime.
It has worked effectively by taking former drug houses in working class neighborhoods and rehabbing them before selling them to families. The result has consistently been an immediate reduction in crime and stopping the flight of law-abiding working class families. The bulk of their focus has been South Stockton in areas just off Airport Way that were once notorious for high crime tied to drug sales.
“People used to run red lights at the neighborhood’s intersection with Airport due to the activity and the people hanging out at the corner,” Sheil told the Manteca Rotarians Thursday at Mt. Mike’s Pizza.
Thanks to STAND the crime rate in the neighborhood has dropped 80 percent.
Sheil said there is still crime but it hasn’t increased. He noted it is now no worse than crime rates elsewhere in the city including newer neighborhoods.
STAND did it by beating slumlords to the punch.
They’re the folks that buy a property, do the minimum they can get away with and often not even bring them up to code, and then “mine” the property for every cent they can. They don’t make ongoing repairs. They don’t require tenants to keep the property clean. All they care is about money.
Typically a modest working class home in the neighborhood with 1,000 square feet with three bedrooms and two baths will rent for $800 a month if you can pass a background check. Those that mine properties don’t do background checks. They will rent to people who pay cash at $1,500 or $1,600 a month for six months in advance.
“They don’t expect to get the seventh month,” Sheil noted. “They end up evicting them.”
The tenants that pay their rent in such a manner aren’t exactly what you’d think they’d be --- folks who deal in drugs and other criminal activity.
The new tenants are almost always more of the same. That is what forces law-abiding families out and sends neighborhoods into a death spiral.
Instead of aiming for $20,000 to $30,000 above expenses when they flip as most scrupulous investors do, STAND settles for a $10,000 “profit” to cover staff expenses and to squirrel away money for future projects. That has allowed them to buy property that decent investors would shy away from and it also allows them to discourage property miners as they also aren’t squeezing sellers who have property in rough condition.
Sheil and others with STAND discovered that much of the drug activities in Stockton wasn’t being conducted by people from their community. They were taking advantage of South Stockton as being a cheaper place to do business than the Bay Area.
Sheil warns that the Northern San Joaquin Valley is under pressure from robust Bay Area housing prices.
Not only is it driving prices up here in terms of those buying and even renting as people head east over the Altamont Pass seeking affordable housing, but it is also bringing slumlord investors.
The reason is simple. If someone sells a rundown property in Oakland for $1.5 million they have to reinvest the money or pay big capital gain taxes. Places like Stockton that are on the edge of the Bay Area market offer them a chance to re-invest and take keep some money at the same time without paying it to Uncle Sam.
Once a slumlord, the odds are great you will always be a slumlord. They aren’t going to change their style of doing business. They simply will find a place on this side of the Altamont Pass where they can again “mine” property.
Sheil also pointed out the high cost of housing in San Francisco is prompting agencies that deal with mentally ill to shop for alternative housing choices with a many zeroing in on Stockton.
In short, the valley isn’t only affordable for working class families but also for those who contribute to crime problems.