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Headed to rehab

Part of $4B federal plan, St. Petersburg to buy, rehab, resell foreclosures

ST. PETERSBURG — On this street of working men, blooming flower beds and modest, candy-colored homes, the growing row of abandoned houses and feral lawns has stirred fears of crime and mischief.

"It's bad," said Jackie Wilson, 46, who has lived on 17th Avenue S in Childs Park since 2005. "People are just breaking in and living there. You know they are up to no good."

City officials have an ambitious plan to help.

Armed with a $9.4 million federal grant, St. Petersburg is scouting foreclosed homes in the neediest neighborhoods. The city plans to buy the rotting houses, rehabilitate or rebuild them, and then resell them to area families.

The proceeds will be used to buy more houses, creating a cycle of rejuvenation that city officials hope will wipe out blight and encourage neighbors to improve their homes.

"We want to make sure these are the nicest houses on the block," Tom Deyampert, the city's housing manager, said of the restored homes.

The City Council recently approved the first four home purchases using money from the federal Neighborhood Stabilization Program, a $4 billion foreclosure assistance effort Congress created last July.

Florida, reeling from the real estate downturn and foreclosure crisis, received $541 million of that, more than any other state. Tampa Bay area governments received $70 million.

Governments have 18 months to spend the grants. The clock began ticking in March.

While most area governments are still struggling to organize a team of workers able to meet the program's strict guidelines, St. Petersburg has charged forward, approving a list of contractors and reaching out to area lenders to inquire about more than 114 derelict properties.

In addition to the four home purchases approved this month, the city is negotiating to buy 17 other homes.

St. Petersburg seems to be taking a much more hands-on approach than other governments, purchasing and designing many of the new homes itself.

Tampa and Pasco County plan to contract out most of their work.

The purchased homes can be resold only for the same sum that the governments spend to purchase and rehab the properties or less. Any unused cash must be returned to the federal government.

With a $19.5 million grant, Pasco County leaders have purchased two homes and have collaborated with area nonprofit organizations to redo 20 more foreclosed properties.

Pinellas County and Tampa have only recently started to build teams to handle the massive purchasing program.

For many local governments, the slow start can be attributed to an overwhelming number of lenders unwilling to work within federal guidelines, which require housing officials to purchase discounted properties.

Although many local lenders now own hundreds of foreclosed properties, "the banks are trying to get as much as they can," said George Romagnoli, Pasco's community development manager. "They don't necessarily want to sell a house for 15 percent less than the appraised value."

In St. Petersburg, city officials also are preparing to apply for at least $5 million more in foreclosure assistance money through a second round of federal housing grants.

The goal is to eventually purchase 60 single-family homes, mostly in Midtown and Childs Park. Homes with city code violations are a priority.

For example, the home neighboring Wilson's Childs Park house has illegal additions and an overgrown lawn. City officials expect to purchase the two-bedroom, one-bathroom house for $34,000. Demolishing and rebuilding the house could cost another $100,000.

Wilson couldn't be happier.

"If someone moves in, then you have more neighbors watching for crime," he said. "There are more people looking out for the street."

Reach Cristina Silva at (727) 893-8846 or [email protected]