Town of Hempstead Officials Propose New 'Zombie Business' Law

Town of Hempstead Supervisor Anthony J. Santino recently announced his proposed law that would require banks and other lenders that business properties to pay the town “security funding” for the upkeep of vacant commercial properties

“Banks that foreclose on ‘zombie businesses’ need to step-up and maintain their vacant commercial properties,” Santino said at a recent town hall press conference.

Joining Santino at the conference were Councilman Edward Ambrosino, Councilman Anthony D’Esposito, Receiver of Taxes Don Clavin and Town Clerk Nasrin Ahmad.

The proposal law would create a new section of the town code to deal with “zombie businesses” that are going through a foreclosure. The law would require banks and other lenders that start to foreclosure on commercial and other non-residential properties to pay a “security funding” of $35,000 (cash, cash bond, letter of credit) in order to maintain the property and keep it up to the Hempstead Town Code.

The plan would also require lenders to replenish the “security fund” to maintain foreclosed, vacant properties. The penalties for lenders who fail to provide the money for the fund would be up to $1,500 per day under the proposed law.

“A blighted business can drive customers away from a local downtown, encourage vandalism and adversely impact local home values,” Santino said. “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.”

The town officials claim that it would be in the financial interest of banks and lenders to maintain foreclosed properties as opposed to leaving the town to upkeep the property.

“Hempstead Town will make it financially painful for banks to ignore their responsibility to maintain their foreclosed business properties,” Ambrosino said. “We’re taking meaningful steps to reclaim our downtowns from blight and neglect at the hands of bad lenders.”

According to Santino, the law would enhance the quality of life for shoppers and surrounding business owners by using the “security funding” to fix problems such as graffiti and overgrown grass.

In addition, the plan would help avoid significant outlays of public funds while still accommodating the upkeep of “zombie businesses.”

A hearing on the plan to curb “zombie businesses” is scheduled during the Hempstead Town Board meeting on Tuesday, June 21 on 1 Washington Street in Hempstead.

“Being a bad business neighbor is going to hit banks and other lenders in the wallet,” D’Esposito said. “We are determined to cleanup local downtowns with or without the cooperation of banks.”