The new face of foreclosure
Using federal grant, governments buy the homes, rehab, resell them
Using federal grant, governments buy the homes, rehab, resell them
Post-Tribune (IN)
September 20, 2010
September 20, 2010
Taking "the foreclosure" on the block and renovating it to sell is the formula Lake County expects to use in its newest federal housing grant.
The U.S. Department of Housing and Urban Development announced this month that Lake County will see an additional $1.6 million in neighborhood stabilization funds. While official guidelines outlining how the county can use the grant have yet to be released, Lake County Economic Development Director Milan Grozdanich expects to spend the money along similar lines of a stabilization grant Lake County received last year as part of Congress' landmark housing bill. In that grant, Lake County received $5.7 million.
Those funds allowed Lake County to purchase 23 bank-owned houses and three multifamily units across the county in Crown Point, Highland, Hobart and Merrillville to revamp.
The county concentrated its efforts in the cities and towns where there were high volumes of foreclosed properties. Gary, Hammond and East Chicago weren't included because those cities can apply for their own HUD grants, Grozdanich said. Along with Lake County, Hammond received $1.2 million in this round and Gary received $2.7 million.
"The houses we bought are somewhat clustered near each other," Grozdanich said. "We looked at hundreds of houses. We turned down about half of them because of their conditions. We have to have the ability to rehab and resell them, so you got to be practical here."
The houses cost in the range of $49,000 to $140,000, but one in Merrillville was bought for as low as a $1.
How much it costs to rehab a home depends on the work done. Most of the properties will have new roofs, appliances and energy-efficient windows, Grozdanich said. Repairs on six of the houses are on hold until the county either sells a few of the rehabbed homes or discovers it can use the new grant money to facilitate repairs.
"Since we haven't seen the definitions and the rules, we don't know where to exactly target the next round," Grozdanich said. "If new money allows it, we'll push money right into rehabs that we're short on."
He does know for sure that the county must sell at least a quarter of the homes to people who make at least 50 percent under their area's median income. Grozdanich also expects HUD to tighten the areas where the county can spend the money, such as zeroing in on census tracts most affected by foreclosure and blight.
"The houses in the end will be so renovated that they're almost as good as new," Grozdanich said. "Whoever gets it will have a house that you put the key in the door and it's ready."
Gary stocking factory to go
In Gary, the neighborhood stabilization funds will allow the city to demolish the abandoned stocking factory at 21st and Massachusetts. Some 158 properties will come down as well but the city also bought 17 houses to rehabilitate. As with Lake County, Gary received more in the first round of funding, $3.8 million, but doesn't yet know how the city can use the new funding.
Lake County also demolished 11 homes at about $7,000 to $8,000 apiece with the first grant. The demolitions were mainly in Lake Station, with 10 of the 11 houses. The other was in Merrillville.
"The ones we're tearing down are the ones that the town or city themselves pick off their demolition lists," Grozdanich said. "We don't buy them. They take the owner through the court system and get a demolition order and at that point they come to us."
Gary Community Development Director Jacquelyn Drago - Hunter said crews have already torn down 25 of the properties and the stocking factory will be demolished once the city gains environmental approval.
"The larger amount went into demolition," Drago - Hunter said. "You have to have a community where people feel safe, where people want to live in. Those lots, of course, can be utilized for green spaces ... We are very, very excited because it will allow properties to go back into the tax roll. It will begin to develop the community."
Hammond houses see rebirth
The house on Magnolia Avenue had weeds 20 to 30 feet tall. Vines had grown over some trees. Hammond used its first round of funds to clean up the house and is working to rehab 32 in total.With the grant, Hammond will test the houses for mold and asbestos. They're also replacing furnaces, water heaters and rewiring electricity, if needed.
"Some of these homes, if you were to go to them, a typical person looking for a house would probably buy it as is," Hammond's grant director Dennis Radowski said. "We've looked at without exaggeration 500 properties in the last 18 months. We ask ourselves if this property qualifies. Is this a very nice block with one raggedy old house in foreclosure? We're also looking for vacant, foreclosed properties that are near schools. What we don't want is an incident with a child to take place in a vacant, foreclosed property. That's the worst thing that can happen."
The abandoned stocking factory at 21st Avenue and Pennsylvania Street in Gary will be demolished through use of neighborhood stabilization funds. -- Leslie Adkins/Post-Tribune
Vester Nall fences off a second filled trash container in the driveway of the HUD home at 7505 Magnolia Ave. in Hammond. -- Michael McArdle/Post-Tribune
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