The recently-passed Housing and Economic Recovery Act of 2008 allots $4 billion of federal money to assist communities with buying and rehabbing foreclosed properties, yet some communities have already stepped in to fight the blight in their neighborhoods.
Cleveland Heights is one of them. Known for its forward-thinking strategy towards such issues as integration, historic preservation and promoting independent businesses over past several decades, the city recently turned its attention to troubled duplexes on East Derbyshire Road. Using Community Development Block Grant funds from the federal government, the city purchased and renovated several distressed properties, transforming them into side-by-side, townhouse-style condominiums. The units range from 1,700 to 2,900 square feet; 3150 East Derbyshire, one of the first completed units to hit the market, is currently listed at $139,900, and the future homebuyer will benefit from tax abatement.
A recent article in the New York Times ("Communities Become Home Buyers to Fight Decay," 9/25/08) cited several cities across the U.S. using a combination of taxpayer and private money to buy and rehab foreclosed properties. These cities are trying to re-sell the properties to buyers or developers as a means of stimulating the troubled housing market and promoting redevelopment.
Although the housing decline is showing signs of slowing, these cities are stepping in because their leaders fear that the overwhelming volume of foreclosures and homes on the market will foster more blight. They also do not see the problem being solved entirely by the private market, despite the argument by the Bush administration and others that spending federal funds represents an unnecessary market intervention.
Some examples of cities acting as developers include:
* The city of Boston recently purchased four foreclosed homes in a troubled section of Dorchester. A developer then purchased the homes from the city. The developer will renovate the homes and place them back on the market for sale.
* In San Diego, the city is raising private money ($20 million so far) to buy, rehab and sell hundreds of properties. Investors includee the California State Retirement System and Washington Mutual bank.
* In Minneapolis, the Greater Metropolitan Housing Authority has bought 75 homes in a strategic area that has been hard hit by foreclosures. The housing authority plans to complete the rehab to help stimulate the local market.
How the $4 billion allotted by the feds will be allocated and spent - and how much Cleveland communities will receive - has not yet been determined, but officials expect to have more information by the year's end.
Many housing experts also wonder whether the recently passed housing bill is enough to combat the troubled market, and whether the new administration in 2009 will have to consider additional measures to ease the credit crunch and stem the tide of foreclosures.
For more information on the rehabbed condominiums on East Derbyshire Road in Cleveland Heights, visit these websites:
www.heightsobserver.org
www.clevelandheights.com
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