Foreclosure renovation funding plan facing cuts

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In 2009, Greccio Housing converted the Bentley Commons into affordable housing.

In 2009, Greccio Housing converted the Bentley Commons into affordable housing.

As deficit hawks circle Washington, D.C., expenditures are up against the knife.

Even popular programs aimed at preventing urban decay and providing affordable housing could be on the chopping block.

The U.S. House will vote on a bill next week that would kill the Neighborhood Stabilization Program, which provides funding to cities for purchases of foreclosed and abandoned properties for the purpose of rehabilitating them into affordable housing.

Colorado Springs has already invested the $3.9 million it received from the first round of funding, and the city is slated to receive another $1.4 million from the program’s final round of funding later this year. The Colorado Springs Housing Development Division is working with local nonprofits on how to best utilize that money, assuming the legislature doesn’t rescind the grant first.

“We’re looking at tying these funds into some initiatives that are already in the works,” said Housing Development Division Manager Valorie Jordan. “We’re looking at areas of the city with a high number of foreclosures where the impact will be more readily seen. It’s absolutely vital for us to get these dollars.”

In the wake of the housing market collapse, a substantial number of single and multi-family dwellings were abandoned by developers. This left the city with vacant and decaying housing structures, a problem that has been magnified as the construction of new apartments has dried up, resulting in a scarcity of affordable housing.

“There were about five complexes in the South Academy corridor that were basically abandoned by the developer and the city was left holding the bag,” said Greccio Housing Executive Director Lee Patke. “As a nonprofit, we can leverage the NSP funds to rehab those buildings into livable conditions, and then we rent them and maintain them. It not only helps someone out with affordable housing, but crime goes down as the condition of the neighborhood goes up.”

The city’s housing division might work with the Pikes Peak United Way to rehabilitate residential areas.

“We did a tour and took down the addresses of abandoned houses and short sales to see if we can do anything to improve those houses,” said Pikes Peak United Way Manager Amber Cote. “We’re also looking at planting trees and other neighborhood beautification programs, and we’d like to get interns canvassing the area to see what improvements the people who live there would like to see.”

Greccio Housing is also in the process of analyzing abandoned apartment buildings it could potentially acquire with the help of additional NSP funds. Greccio was the beneficiary of the first round of funding and is a good model for the effective use of NSP funding.

In 2009, through a partnership with Partners in Housing and Rocky Mountain Community Land Trust, the firm purchased the Bentley Commons condominiums. The Bentley Commons were built in 2005 as a high-end condominium complex but were never occupied.

Greccio has since turned it into an affordable housing complex that has been 100-percent occupied since it opened to low income tenants in late 2009.

“Back in 2007 people were throwing money into condos everywhere,” Patke said. “But when the market busted these developers just picked up and left. For us, the NSP funding came through at just the right time. The Bentley Commons is probably one of the nicest affordable housing complexes imaginable.”

In addition to providing an opportunity for struggling families, the benefits of the Neighborhood Stabilization Program flow through the city’s ledger.

“Providing an opportunity to a struggling family is the crux of the program, but the city also benefits,” Jordan said. “It brings income in by putting the house back on the (property) tax roll, and it can even boost sales taxes as people buy higher ticket items to furnish the place.”

Proponents of the NSP say it should be seen as an investment that builds on itself, not a one-time handout. After the expenses and management fees on a project are paid, the revenue isn’t pocketed by the landlord. Instead, the net proceeds go into a state-managed reserve fund for further rehabilitation projects.

“We’re not waiting on additional funds from the federal government following these investments,” Patke said. “The projects generate second- and third-generations of money off of the original amount to further develop housing for the working poor. If you cut that funding it’s not a one-time cut, it affects all future potential projects that could have been developed through that mechanism.”

With the unemployment rate in El Paso County passing 10 percent last month and the rising cost of rentals, Patke expects the need for affordable housing will continue to grow.

“Of the 351 units we own or manage, all of them have been filled at a 98 percent or greater rate for the last two years,” he said. “I’m all for scrutinizing the budget, but let’s not just hack away at things. The money that goes to NSP generates long-term financial and social returns.”