Denver delays HUD grants
From Sunshine Review
October 5, 2009 A year ago, Denver, Colorado gained access to $6 million in federal recovery money from the Housing and Urban Development Department's Neighborhood Stabilization Program (NSP) (alloted under the American Recovery and Reinvestment Act) to take over and flip foreclosed homes, yet the city has not spent any of it.[1]
[edit] HUD grants
Since the award, an additional 4,000 Denver homes have been foreclosed. The city says it is working on contracts with nonprofit groups for the program's execution and hopes to start spending money on homes in October or in November. Notice of the grants first hit the Federal Register on October 6, 2008, but officials say Denver did not get a formal contract from the Housing and Urban Development department (HUD) until March 2008.
Aurora won $4.5 million from the first round of the same program and so far has spent $2.6 million buying and repairing 21 homes.
The $6 billion NSP was intended for the American communities hit hardest by the recession. Experts say there are similar problems in other cities are caused by a dense bureaucracy.
[edit] Delay
"The fact there's been substantial delays in actual spending seems to be pretty standard across the board," said professor Joseph Schilling of Virginia Tech. Schilling has made recommendations and critiques of housing programs awarded the NSP's funds.
"It's a complicated program. . . . The folks at Housing and Urban Development are doing an amazing job given the complexity of the legislation itself," Schilling said. "We could not have designed a more complex housing program than NSP."
Neighborhood Stabilization manager for the Mayor's Office of Economic Development, Beth Truby, said Denver could not begin buying and repairing homes until it received those federal government contracts in March.
Since March, she said, the city has been writing contracts with groups like Habitat for Humanity so they would purchase and fix up the properties.
"We can't just go out and hire somebody and (say) 'Let's go buy some houses,' " Truby said. "I personally don't think it's taken a long time, having dealt with federal programs for many years; I think things are actually moving along pretty well."
[edit] Aurora
Joseph Garcia, manager of community development, said Aurora could quickly execute the program because city government already had foreclosure-rehabilitation programs in place.
"We bought three homes in a pilot program before NSP even started," Garcia said.
The first four or five Aurora homes the city repaired are expected to be ready for sale in three or four weeks. After selling the homes, the revenue generated can be circulated into more purchases and fix-ups for four years.
Aurora has access to an additional $2.5 million in federal funds given to the state Division of Housing. Denver has $3.6 million from the same second pool, added to its original $6 million.
Colorado Springs has also made progress with its federal money in spending $2.6 million on multifamily units. The city will fix up and market those units, said state Division of Housing Director Pat Coyle.
Schilling said the rules and bureaucracy set out by the 2008 House of Representatives and Senate that were worried about housing agencies wasting money or selling to the wrong buyers is one of the reasons cities are moving so slowly.
Buyers of these homes are likely limited to incomes 120 percent or less of the median income of the area. Cities like Denver must spend at least 25 percent of the funds on properties for home buyers with 50 percent of the median income or less.
HUD wants the agencies to stretch the funds by bidding on homes at a specific percentage below appraised value. In some cases, this puts the agencies in closer competition with private buyers looking for bargains to flip.
[edit] Flawed program
Schilling said the low-income housing program was "rusty" because Congress hadn't given a large new pool of money in decades.
"A number of cities who used to have these programs got out of the business, not because there wasn't a need but because there wasn't the funding to support them," he said.
If cities combine the NSP funds with other grant money for energy efficiency or other government goals, the program can still make a difference in blighted neighborhoods.
Denver is looking to buy some houses on blocks designated for "transportation-oriented development" such as light-rail stations, potentially eligible for extra grants.
Truby said the funds should stretch to purchase 160 to 170 units in 11 targeted neighborhoods. With the revenue generated, dozens more units can be fixed up.
[edit] External links
- Denver government website
- U.S. Department of Housing and Urban Development website
- Neighborhood Stabilization Program website
- Aurora government website
- Habitat for Humanity, metro Denver
- Colorado Springs government website
- HUD information related to the American Recovery and Reinvestment Act
- Neighborhood Stabilization Stimulus Program (Competitive)
- Neighborhood Stabilization Program (NSP) plan
[edit] References
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