HUD funds to help cities clean up foreclosures
With a limited amount of money, officials across the U.S. are zeroing in on the neediest areas. Los Angeles is expected to get nearly $33 million.
Reporting from Los Angeles and Denver — Terry Ware, head of Denver's housing and neighborhood development office, is a man under siege. The city is due to receive $6 million under an unusual federal program to help cities and counties deal with abandoned properties. Not surprisingly, there are many people in town who want help.
Representatives of several neighborhoods have pleaded for the funds to go toward cleaning up blighted houses that are dragging down property values. Homeowners struggling to keep their properties ask why they too can't have some of the money. But with 2,000 Denver homes in foreclosure and thousands more expected to fall into that category, the money can only go so far. "It's a drop in the ocean," said Abdul Sesay, the analyst whom Ware has tapped to distribute the funds. "But it's better than nothing."
Across the country, cities and counties are performing housing triage as they prepare to spend the $4 billion Congress has allocated under the Neighborhood Stabilization Program.
Pushed by Rep. Maxine Waters (D-Los Angeles), the program is intended to help local governments buy, rehab and resell foreclosed homes -- or demolish them if that is the logical alternative.
"These homes that we're talking about, the grass grows long, the pools grow fetid, they become magnets for crime," said Brian Sullivan, a spokesman for the U.S. Department of Housing and Urban Development. "It's almost a viral effect."
Sullivan acknowledged that the money available was nowhere near enough to solve the foreclosure problem in communities across the country. "This gives them an opportunity to at least stanch the bleeding," he said.
The funds come with a few strings attached: The money must be spent in low- to middle-income neighborhoods, and buildings can be resold only to buyers who earn 120% or less of an area's median income. Governments, which had to submit plans to HUD by Dec. 1 to be considered for the program, have 18 months to spend the money.
"It's like no other government program I've seen," said Tom Palamar, city administrator in Pottsville, Pa., which is buying and demolishing a dozen homes on one notoriously blighted street. "They want to get the money on the streets, fast."
Economists have questioned whether it makes sense to have the government flood the market with cheap homes, given that housing prices already are in a tailspin. They also note that many of the agencies have been unable to draw up detailed spending plans in the short time frame allowed, opening the door to possible abuse of the program.
