Polk Neighborhood Stabilization Program Nuts and Bolts

Some news is best delivered in bits and pieces…like our series of articles on red light cameras. Each commission meeting, each interview with the players, added a new view of the cameras and how they’d make a difference in our community. Sometimes, it’s best to start with the framework and add the details later. The red light camera series was a collection of traditional news articles, analysis, and commentary.

That will also be true of our coverage of the Polk Neighborhood Stabilization Program (Polk NSP). Congress passed the Housing and Economic Recovery Act of 2008 to give $4.92 billion dollars to local communities to acquire and redevelop foreclosed properties. Approximately $14.5 million was given to Polk County to purchase and rehab at least 61 homes in the county. That program became Polk NSP. This week the organization announced they were open for business. Familiar with the process to this point, we met with the two principles to discuss the project.

The Goal

The goal of Polk NSP is to remove foreclosed, empty, or blighted homes from the market and place these homes in the hands of homebuyers who can afford to live in them. No one can purchase the inexpensive homes and flip them. The homebuyers must agree to live in the homes for a set number of years. Polk NSP will target 10 areas of the county that are in greatest need of help. These are low to moderate income communities hit hardest be the recent recession.

The Companies

The county commissioners chose not to implement Polk NSP on their own, but instead brought in development experts to manage and implement the program. They allowed various organizations to apply to manage the funds. In the end, they chose the process offered by a team of two Polk County organizations.

Swan Development Advisors will manage the program. The company, headed by Bruce Lyon, will undertake all of the paperwork needed to satisfy U.S. Department of Housing and Urban Development (HUD). The company managing home rehabilitation, and handling training prospective home owners will be the Keystone Challenge Fund. Since 1991, Jeff Bagwell, President and Executive Director of the Fund, has worked in Polk County to provide education and affordable financing to low and moderate income homeowners.

To insure proper management of the funds, the two organizations proposed a unique method. HUD sets strict limits on how much of the money is used for administration and how much for home purchase and rehabilitation. Rather than mix the two amounts, Swan will simply get the administration funds, and Keystone the rest. The company will use a third-party, Baylis & Company CPA, to manage fund distribution.

The Homes

Polk NSP has already started the home buying process. They are bidding on the purchase of homes in 10 targeted areas in Polk County. Those areas were chosen as they exhibit a greater than average number of foreclosures, financed through a higher numbers of subprime loans, and are likely to face further foreclosures through loan defaults.

Homes can be purchased only if they meet certain criteria of location, condition, and price. Polk NSP hopes to demolish only a few “blighted” homes. The rest will be rehabbed to specific standards. Lyon mentioned they will replace roofing and appliances if the items have only a few years of life left. He and Bagwell emphasized they want to make sure new homeowners aren’t faced with such large replacement expenses in their new homes.

In addition to selling homes, Polk NSP will purchase and rehab a certain number of dwellings to be offered as rentals. The cost of the rentals will be based on the Fair Market Rents (FMR) index. Currently, Polk County FMR for a two-bedroom dwelling is $720.

The Polk NSP goals for the dwellings are:

Acquisition/Rehabilitation/Financing/Resale for Homeowners (Activity 1):
20 units for moderate-income households (≤ 80% Area Median Income — AMI)
41 units for middle-income households (≤ 120% AMI)
Timeline is January 2009 through July 2013.

Acquisition/Rehabilitation/Financing/Resale for Single- or Multi-family Housing (Rentals) (Activity 2):
50 units for low-income households (≤ to 50% AMI)
Timeline is January 2009 through July 2013

Demolition of Acquired Foreclosed Upon Homes and Redevelopment (Activity 3) (Includes demolition and redevelopment strategies)
22 units for low-, moderate-, and middle-income households (≤ to 120% AMI)
Timeline is January 2009 through July 2013

When a home is sold, the purchase price is returned to the Polk NSP coffer and used to purchase and rehab another home for sale. Lyons said that the lower-than-expected prices of the homes will enable Polk NSP to purchase, rehab, and sell more than the expected 61 homes.

The Targeted Areas

The following 10 communities are the target areas for Polk NSP. The links lead to PDF maps of the areas.

Auburndale, Combee / Eaton Park, Inwood / Jan Phyl Village, Kathleen, South Lake Wales, Poinciana, Wabash, Wahneta

The Financing

Homebuyers who meet income eligibility requirements are given considerable help by the program. First, the homes are sold at the lower of the appraised value or amount Polk NSP has put into the home (purchase price plus rehabilitation costs). Lyon mentioned they are bidding for homes that are far below the normal costs. This enables Polk NSP to sell the houses are a greatly reduced price.

Bagwell also mentioned that the program allows Polk NSP to help homeowners with funds for principle reduction. This gets the lower income buyers in with little personal up-front funds. This doesn’t mean the program is placing people in homes they can’t afford. Polk NSP will target low (<%50 of AMI) to moderate (<%80 of AMI) income households, but will use standards to place people with home payments that are affordable for their inclome level. It also doesn't mean anyone can buy a home and flip it for more than they paid. According to Lyons, the County will maintain a second mortgage on each home to forestall that option. In addition, Bagwell said the prospective homeowners must attend education classes that cover every aspect of home purchase and loan repayment.

The Sellers and the Vendors

In addition to helping the low-to-moderate income families, Polk NSP is geared to help area banks and contractors. Banks are able to move forclosed homes off their books, and area contractors will be given the opportunity to bid on rehabbing the Polk NSP homes.

Conclusion

Polk NSP is just beginning. Their proposal looks strong, and the goals are lofty, but achievable. Over the next few weeks, we will continue to follow Lyon, Bagwell, and the Polk NSP staff to report on the progress of the project. Longer articles on the details of the home purchase and rehab process will follow. Expect a detailed article on the numbers of Polk NSP. What income levels are needed for approval. We’ll sit in on the education program for home buyers. Like the red light camera story, we’ll see Polk NSP evolve over the next few months.

We’re starting coverage at both Lakeland Local and Metro I4 News, but expect the majority of the articles to publish at Mi4.

8 thoughts on “Polk Neighborhood Stabilization Program Nuts and Bolts

  1. Thank you for the update! This sounds like a terrific program! I’m looking forward to hearing more about it. Anything that I can do to help? Realtor/Polk County Resident!

  2. Thank you for the update! This sounds like a terrific program! I’m looking forward to hearing more about it. Anything that I can do to help? Realtor/Polk County Resident!

  3. Such a program can be achievable and prosperous in the future as long as there is an oversight on all aspects of the transaction, purchasing of bank-owned(REO) properties, which I see from my experience has challenges for my clients. Overseeing the rehab to allow quality, good craftsmanship and products lasting for many years. In the end it is the buyer who is paying for it.

  4. Such a program can be achievable and prosperous in the future as long as there is an oversight on all aspects of the transaction, purchasing of bank-owned(REO) properties, which I see from my experience has challenges for my clients. Overseeing the rehab to allow quality, good craftsmanship and products lasting for many years. In the end it is the buyer who is paying for it.

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