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Housing stimulus lacks traction in Tampa and Hillsborough

This house in Town ’N Country sold for $250,000 in 2007 and is now in foreclosure. The county tried to buy it under the federal Neighborhood Stabilization Program. But in an example too common for government, a private investor got there first. 

MARLENE SOKOL | Times

This house in Town ’N Country sold for $250,000 in 2007 and is now in foreclosure. The county tried to buy it under the federal Neighborhood Stabilization Program. But in an example too common for government, a private investor got there first. 

Hillsborough County wanted to buy a foreclosed home on Cadillac Circle in Clair Mel. The seller refused to sign one of the documents.

The county made an offer for a home on E Cayuga Street near Orient Road. The seller wouldn't use the county's title company.

On Brettonwood Drive in Town 'N Country, a two-story house sold before the county could put in its bid.

Again and again, officials have come up empty in their quest to turn foreclosed property into shelter for deserving families. At stake are tens of millions of federal dollars, offered as a way to stimulate the economy while reversing the effects of the housing collapse.

Officials in both the city and county are continuing to pursue the Neighborhood Stabilization Program. They are finding that, just as in the private sector, a simple home purchase is anything but. And they're not alone: Around the nation, recipients of these stabilization funds are struggling to put them to work.

"We're government, and we can't move as quickly," Hillsborough affordable housing director Valmarie Turner told the County Commission last week.

The program, with origins in the Bush administration, was unveiled with great fanfare last fall.

The county elected to focus first on Clair Mel, Palm River and Progress Village and the University area, then branch out into Town 'N County, Gibsonton and Plant City. The city targeted Sulphur Springs, then North Tampa and Old West Tampa.

No one expected it to be easy, as the banking and mortgage industries were a shambles.

But statistics reported by the county program last week alarmed some commissioners.

The county, which has $19.1 million to commit by late 2010, has pursued 174 properties since May. Of those, officials say there have been eight acquisitions and four under contract. Three of the four were set to close this week. Turner told the board that offers were out for 12 properties, and 16 were under negotiation.

In some cases, repairs cost far more than the real estate. While money spent on new drywall and plumbing has a positive effect on the economy, department officials are spending a lot of time spinning their wheels.

Consider this breakdown of eight July purchase offers described in a county report:

Three were rejected for issues that included disagreements over prices. A fourth was not accepted quickly enough, and the county walked away. Two more ran aground because of problems with titles and signatures. A seventh closed last week. The eighth was accepted in August. County officials say they are trying again with two of those that didn't work.

The results did not get much better after the program expanded to Town 'N Country in the summer. Many homes proved unsuitable because they are in a flood plain. The program has such a low profile in the community that Bill Browne, chairman of the civic organization Town 'N Country Alliance, said he had never heard of it. Nor is he sure it is needed. "I don't see a lot of houses that are potential crack houses," he said. "But one problem we are trying to alleviate is the pools that are unattended. If we could get relief with that, we would be happy."

Hearing some of the statistics at an Oct. 14 workshop, County Commissioner Kevin White wondered if the county is in danger of losing the unspent money. He suggested Turner's staff be more aggressive.

"A lot of investors are in it for the quick turn of the dollar," he said, asking if the county can make deals with the flippers.

That's not possible, Turner said, as program regulations require the county to buy directly from the foreclosing lenders.

City of Tampa officials have not closed on many properties either. But growth management and development director Cynthia Miller predicted that before it is over, the city will surpass its goal of buying 80 foreclosed homes.

Both in the city and county, officials say it took the better part of a year to get their proposals to the federal government, gain local approval, then line up local businesses such as contractors and appraisers. And both are moving ahead with a component that provides rental housing for low-income families.

Unlike the county program, which seeks to shore up neighborhoods of single-family homes, the city program aims to take foreclosed rental homes and duplexes and make them available to homeowners to improve neighborhood stability.

Often the properties need to be demolished, which creates an opportunity to start fresh. "I'm really looking at buying houses on the same street," Miller said.

But, as in the county, private investors often beat Miller to the closing. Government must order an appraisal and an inspection; a private investor with cash in hand can skip those steps. While Miller would not label these buyers as flippers, she said she doubts their motives are the same as the city's.

"Those are a lot of high-rental areas, and our focus is on homeownership," she said.

A familiar story

Local officials say their situation is not unique.

In Brevard County, Florida Today reports that four local governments entered the program.

Three of them have spent no money, while the city of Titusville closed on two apartment complexes in September.

U.S. Rep. Corrine Brown, a strong proponent of the program, has expressed frustration about its slow start in her hometown of Jacksonville. There, about 25 percent of the money had been committed or spent as of September.

Troubles extend to California, another foreclosure hot spot, where some housing officials have blamed banks for holding onto an estimated half of their inventory as they wait for prices to rebound. Bankers argue that it is their fiduciary responsibility to sell the homes at a fair price.

One local government that has had success with the program is Pasco County, which has acquired or signed contracts on 141 properties. Community development manager George Romagnoli said his agency uses nonprofit organizations that have teamed up with "able and aggressive realtors" who help them move quickly on properties.

"Government wants to be fair, but the real estate market is not fair," he said.

"It's a business of relationships."

A need for partners

For help, some governments are turning to the National Community Stabilization Trust, an organization funded by several major nonprofits. The trust has a direct pipeline to the banks that own the properties, and can simplify the negotiation process.

Turner said her department is close to formalizing an agreement with the trust, and is working with the Greater Tampa Association of Realtors. The goal behind both partnerships is to learn about properties and move on them before private investors know they are available.

No one doubts that properties exist in abundance, Turner said. Last year there were 20,000 recorded foreclosures in Hillsborough County. So far this year, there have been 15,000, she said.

Browne, in Town 'N Country, said he is starting to see the problem correct itself as first-time homeowners take advantage of the low prices. "I'm seeing families who are young, with young children, working like crazy and making these nice-looking homes," he said.

The new $8,000 federal tax credit for first-time home buyers has made such purchases even more attractive.

Still, city and county officials insist they can play a valuable role in making sure the renovations are genuine and not cosmetic, and that the homes are used for shelter and not a quick business deal.

"Some of these places are eyesores," Turner said. "Some need substantial rehab."

If it succeeds, the program can correct the eyesores, provide work for local contractors and give shelter to families who have been made homeless in the recession, Turner said.

"We're not looking to make a profit."

Information from McClatchy-Tribune Business News and Florida Today was used in this report. Marlene Sokol can be reached at (813) 909-4602 or [email protected]

Housing stimulus lacks traction in Tampa and Hillsborough 10/22/09 [Last modified: Thursday, October 22, 2009 4:30am]
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