Chicago wins $98 million in second round of NSP funding to acquire foreclosed properties
Chicago will receive a $98 million federal grant to recycle foreclosed homes. The amount, second only to Los Angeles among U.S. cities, reflects and validates the efforts the city and its partners have made in addressing the foreclosure crisis.
Only 60 of 482 applicants won grants in the $2 billion second round of the Neighborhood Stabilization Program (NSP2) announced January 14, 2010 by U.S. Housing Secretary Shaun Donovan. Chicago’s proposal was cited as “responsive to specific neighborhood needs” while “maximizing the impact on local markets.”
Chicago has received an additional $98 million to fix up vacant, foreclosed houses and apartments.
The grant comes on the heels of NSP1, in which the city received $55.2 million in federal stimulus money to acquire and rehabilitate vacant, foreclosed properties in 25 Chicago neighborhoods. The new grant will be directed to acquisitions in Albany Park, Logan Square/Hermosa, Humboldt Park, South Lawndale, Chicago Lawn, Grand Boulevard, Washington Park, Woodlawn, Greater Grand Crossing, South Chicago and Englewood.
So far the program, managed by Mercy Portfolio Services (MPS), has purchased a variety of single-family houses and apartment buildings comprising 95 units. Another 107 are under contract. Rehab work is progressing by NSP-qualified developers – both private and non-profit – participating in the program. Another 200 first-round units are being identified, and many more could be produced as sales proceeds and other funds are brought to bear.
Under NSP2, the city and MPS say they’ll buy and oversee rehab of 1,331 housing units … and demolish another 182 hulks that are beyond salvation. Some 27 of the latter will be replaced with new houses and apartment buildings. Others will become community gardens, playgrounds or other public amenities. Roughly two-thirds of the new and rehabbed units will be resold to moderate-income families (incomes at or below 120 percent of area median) with the rest rented to those of even more limited means.
Another selling point of Chicago’s proposal was its pledge to crank energy efficiency into the rehabs. All
Counseling is a crucial tool with which to address foreclosures.
will be within walking distance of public transit and all will have “the highest feasible standards for energy efficiency and
HUD also emphasized partnerships. So the Chicago Housing Authority (CHA) is expected to provide $16 million in project-based rental vouchers to finance 200 of the units as part of its Plan for Transformation. Other non-profits committing resources to NSP2 include Community Investment Corp., Chicago Community Loan Fund, Chicago Community Land Trust, the National Stabilization Trust, Self-Help Ventures, and Neighborhood Housing Services of Chicago.
“This is great news,” said LISC/Chicago Executive Director Andrew Mooney of Chicago’s big win. “It means a great deal of work ahead, but comes at an important time, as foreclosures continue to rise exponentially throughout the region.” Mooney serves on the Chicago NSP board of advisors.
Other Illinois NSP2 winners include the City of Evanston ($18 million), Rock Island-Moline ($18.5 million), Chicanos Por La Casa, Inc. ($13.5 million), The Community Builders ($8.6 million), and the Center for Community Self-Help ($3.2 million), bringing the state's share to more than $160 million.
Foreclosure-plagued Florida got the most among states at $348 million, followed by California at $348 million, including $100 million earmarked for Los Angeles.
Crisis still overwhelms
As ample as NSP2 grants may seem, they are a drop in the proverbial bucket that is the overall foreclosure problem, which reached new heights in 2009 and threatens to continue unabated into 2010. Some 76,000 properties in Cook County are in some stage of the foreclosure process – in delinquency, in foreclosure, at auction, etc. – according to RealtyTrac, an online property data service. In Chicago the trend held steady through 2008 and 2009 with more than 20,000 new foreclosures recorded in both years. This year threatens more of same, what with job losses and falling home values spreading delinquencies even among those holding so-called “prime” fixed-rate mortgages.
Thanks in large part to grants from the MacArthur Foundation, seven of the city’s hardest hit neighborhoods have set up foreclosure awareness and referral programs and hundreds of at-risk owners and renters have received professional counseling from partners such as NHS and Lawyers’ Committee for Better Housing.
The hard reality, however, is that most delinquent homeowners never seek help, and among those who do, only a small minority are able to modify mortgage terms and hang on. As home after home become bank-owned board-ups, with all the health and safety implications that entails, neighborhood stabilization becomes the tactic of last resort.
Ellen Sahli, of the city's Department of Community Development
“Our primary strategy is to help owners stay in their homes,” explained Ellen Sahli, the city’s 1st deputy commissioner of community development. “But it’s important, on the back end, to get vacant properties back into productive use.”
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