"Baby grant" for foreclosure relief gets council committee nod

"Baby grant" for foreclosure relief gets council committee nod

Consider the language city planners and aldermen are using to describe the latest round of Neighborhood Stabilization Program funding for Chicago.

The federal program, meant to find new uses for vacant, foreclosed homes in hard-hit communities or else demolish them, will send the city about $15.9 million.

That grant is a “limited amount” and a “relatively modest investment,” according to the City of Chicago’s spending plan for the dollars.

Thirty-first Ward Alderman Ray Suarez, whose Committee on Housing and Real Estate approved that plan this morning, called the funds a “baby grant” during today’s hearing and afterward told the Reporterthe city needs more than “small pools” of dollars to tackle neighborhoods left stripped after years of foreclosures.

This funding “is still a lot of money but not a lot of money when it comes to stabilizing housing properties,” he said.

That’s not say the city or Suarez isn’t glad to have the resource at hand. And the latest grant comes after the city won $55 million and $98 million in Neighborhood Stabilization dollars in 2009 and 2010, respectively.

Under Chicago’s program, the city or Mercy Portfolio Services acquire abandoned or foreclosed properties, and then Mercy chooses a qualified developer and uses the Neighborhood Stabilization dollars to subsidize that firm’s work rehabbing the property. Money can also be spent demolishing blighted units. But beating back the pool of vacant foreclosed homes in Chicago is a daunting challenge.

There were 10,569 completed foreclosures in Chicago last year, a nearly 20 percent rise over 2009, according to Woodstock Institute research. Many are sold, but others linger, owned by mortgage lenders.

Some of those homes sit in a dangerous state of limbo. Woodstock calculated at least 1,896 “red flag” properties–“vacant properties where a foreclosure has been filed but has not reached a clear outcome,” according to the group–dot the city, forcing property values lower, decreasing neighborhood safety and deteriorating entire blocks, especially in minority neighborhoods.

Katie Ludwig, a deputy commissioner in the Chicago Department of Housing and Economic Development, said today the city has acquired 137 properties representing 647 units using the first two rounds of Neighborhood Stabilization Program money; purchases of another 20 properties, representing approximately 140 more units, are nearly complete.

In the third round, city says it will acquire and rehab another 70 foreclosed or abandoned housing units; 48 will be reserved for households earning no more than 120 percent of the Chicago-area median income, with the reminder meant for households at or below 50 percent of the area median. Around 100 blighted units will be demolished. This activity is scheduled to be complete by May 2014; the money will be spent in sections of Belmont Cragin, Chatham, East Garfield Park, North Lawndale and West Pullman.

At one point during today’s hearing, Suarez brought up an idea that would seemingly stretch the funding the city has secured.

How much, he asked, was it costing the city to acquire properties with Neighborhood Stabilization dollars?

Ludwig told him in multi-family buildings the average, per-unit cost was running between $10,000 and $20,000. Single-family homes, she said, cost anywhere from $20,000 to $50,000.

And the number of properties the city had acquired for $1?

“I believe we got one property for a dollar,” Ludwig said. “But it was a property that was in a very, very serious state of [disrepair].”

“These properties have already gone through the foreclosure procedure, and banks still want 25, 40, 50,000 dollars for them. They still want big bucks,” he said.

© Community Renewal Society 2011

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