GRAND RAPIDS — The federal government is getting set to release $3.9 billion to help communities buy and fix up foreclosed properties. The Center for American Progress reported that Michigan is one of a dozen states likely to get more than $100 million of those funds, and the city is looking forward to receiving its share, whatever that amount may be.
CAP also projected that the state’s Third Congressional District, which includes Grand Rapids, will get $8.7 million in direct grants from the emergency housing bill that Congress approved this summer and President Bush signed into law July 30.
CAP cited a distribution formula from the U.S. Senate as the source for its projections. The center also reported the district had nearly 2,800 properties in foreclosure at the end of March. According to the Kent County Register of Deeds office, though, there were 3,344 foreclosures in the county alone last year, with half in Grand Rapids.
But City Community Development Director Connie Bohatch said the number of federal dollars the state and Grand Rapids will get hasn’t been decided yet, and may not be for a few more weeks. Bohatch said the funding formula hasn’t been created yet and doesn’t have to be in place until Sept. 30, 60 days after the president signed the bill and 24 hours before the new federal fiscal year begins.
“Then they are supposed to be dispersing those funds within 30 days of that formula. What we think we do know, however, is that the entitlement communities and the states who typically receive Community Development Block Grant funds will be receiving funds. But in terms of the method that it will be distributed, we don’t know that, and even officials at HUD don’t know that yet,” said Bohatch.
Grand Rapids is an entitlement community that receives Community Development Block Grant funds, and Bohatch said the city would get its dollars directly from the federal government. Then the city will likely enter into some sort of agreement with nonprofit developers to make repairs to foreclosed homes. Non-entitlement communities, such as Jenison, will get funds that initially go to the state and then are redistributed to them by Lansing.
“We will get our funds directly,” she said. “Until we find out what kind of resources we are really going to receive from the emergency bill, I’m not sure exactly how we’re going to distribute those at this time. But we do have a model in place that we are actively working on in terms of purchasing homes from HUD.”
Bohatch is also part of a larger effort to convince the government to cut the “red tape” that normally accompanies federal dollars.
“What they’ve said is, once we receive the allocation, we will only have up to 18 months to use it. If we had to follow all the rules that are there to release the funds, to have public comment on the funds, and all the red tape that goes along with it, that eats up quite a bit of time to start spending it. So we’re on those kinds of issues right now,” she said.
While the city is waiting to hear how many dollars it will get, it isn’t waiting to improve the housing stock in the city. City commissioners recently ratified revisions to its housing and rental rehabilitation programs. Both offer financial assistance to property owners and are directed by the Community Development office.
Commissioners made two revisions to the housing rehab program. One created a zero percent loan for households within certain adjusted area median income levels and dropped the interest rate of a loan from 3 percent to 2 percent for other income levels. The policy, though, still offers matching funds of 50 percent and 70 percent to other households.
The second revision made energy efficiency a top priority for the program, a move the city feels will help homeowners lower their utility bills. The program had previously focused on safety and health issues, like bringing homes up to city code. But Bohatch said the new emphasis on energy efficiency and water conservation should make it more affordable for owners to live in their homes longer.
“I think that’s critical. When someone is low-income, they already have a high housing cost burden. As we see utility costs increasing, that’s getting to be a larger gap for them,” she said, while adding that 75 percent of the city’s homes were built before 1970 when energy costs weren’t such a concern.
Mayor George Heartwell said the revisions came at a good time to provide some relief to moderate- and low-income homeowners. In the past, the housing program has provided enough funding to do about 15 rehab projects a year.
The biggest change to the rental rehabilitation program is that it is up and running for the first time in at least four years, as funding wasn’t available for it. Energy efficiency is also a focus of this program. Other changes let a tenant have lower income than in past years for a landlord to qualify, and a landlord now has to make a bigger investment to participate.
A landlord has to invest at least $10,000 in a unit and the city will pick up half. The city’s subsidy can go as high as $14,999 for each unit, meaning a landlord would have to invest $30,000 into a unit to collect the maximum amount. The revised subsidy also now applies to nonprofit rental property owners. The program’s funding comes from HUD money.
“But it’s a match. They pay for it up front and it’s basically a rebate, if you want to call it that. But those are going to be requirements. The reason that we do the rental program is we have, in many cases, substandard rental properties out there that we want to make sure are safe and inhabitable,” said Bohatch.
“Because of the program that we’re using and the resources that we use, it’s required that the rents met the federal affordability guidelines for a certain period of time. It’s another way for us to again address that long-term affordability piece.”
Bohatch said property owners who want more information on the programs should call her office at 456-3677. The department has posted qualifications on the city’s Web site at www.grcity.us
“We’re trying to make sure that people can use the programs and that these will be an incentive for people to fix up their properties, help us keep the neighborhoods looking good and houses safe — and now energy efficient,” she said. “What we ask is that nobody self-screens and they just call us.”