Transforming Foreclosed Homes Into Affordable Housing
Mar 2, 2010
Utah may be a small player in terms of how much housing stimulus funds it received from the federal government, but the state is leading the way with a unique and effective model for using the funds.Standing in front of the first foreclosed home in Utah to be purchased with federal stimulus funds, Utah Gov. Gary Herbert praised a coalition of nonprofit organizations and financial institutions that is quickly putting to work Utah's share of federal housing stimulus funds.Of the more than $3.92 billion designated by Congress for the Neighborhood Stabilization Program, Utah was awarded the minimum allocation of $19.6 million."Because of Utah's enviable economic position among the states, we received the minimum funding available from this grant," Gov. Herbert said. "But the creation of unique partnerships will allow us to maximize every penny and see an amazing return on our investment."Many other states and municipalities have assigned the work of managing stimulus funds to existing government agencies or nonprofits, which are often already busy with existing projects and responsibilities. Utah business leaders, however, created a new nonprofit, the Utah Center for Affordable Housing, with the sole purpose of leveraging Utah's housing stimulus funds.The brainchild of Zions Bank CEO Scott Anderson, UCAH aims to unite affordable housing providers, national service organizations, government and the private sector to extend the impact of federal affordable housing funding over a five-year timeframe.Financial institutions are directly involved on the UCAH board of directors, helping to eliminate barriers between financial institutions and affordable housing providers, and giving them more incentive to provide discounts and donations to benefit affordable housing projects.The state awarded UCAH the contract to manage $3 million of the state's NSP funds in and extended the contract to $13 million. UCAH has already used more than $10.5 million of NSP funds, approximately 80% of what it was allocated.Once the NSP funds have been spent for the first time, the work for UCAH will have just begun. UCAH plans to recycle the stimulus funds several times, creating at least 1,000 new units of affordable housing over the next five years. The center plans to accomplish this goal by purchasing single-family homes and multi-unit complexes, and land banking to provide sites for future projects."In our first 90 days of work, we've been able to acquire 64 housing units, as well as property which will be developed into another 217 units of affordable housing," said UCAH executive director Dan Peterson. "We're just getting started and yet we've already laid the groundwork to provide 281 families with affordable housing."The center has had remarkable participation from its affordable housing provider partners, government entities and the financial institutions, said Mr. Peterson. "We're creating real value for our neighborhoods that will last long after the housing crisis has faded."The first home purchased with NSP funds is an example of the value created by the UCAH partnership. The home was appraised for $113,000. Chase Bank, which owned the foreclosed home, sold the property to UCAH for $81,808, a 27% discount. The home will be renovated by NeighborWorks of Salt Lake City.Once completed, the house will be sold for affordable housing. The proceeds of the sale will be recycled by UCAH to purchase and renovate more affordable housing.Utah's approach to leveraging the housing stimulus funds is garnering national attention. The National Stabilization Trust, created to lead the effort to solve the housing crisis, has singled out Utah as one of the most promising models for efficiency and collaboration."The creation of UCAH is an innovative model among neighborhood stabilization programs," said Danny Gardner, CEO of the National Community Stabilization Trust, the national nonprofit organization working with over 120 local programs in 38 states."Utah has done a remarkable job, in a short time, of demonstrating how joining collaboration, capacity and capital together is a successful prescription for rebuilding neighborhoods."The Utah Center for Affordable Housing works closely with the Stabilization Trust, which has established relationships with all the major national financial institutions, to identify quickly the foreclosed properties with the best potential to become affordable housing."Together, the Utah Center for Affordable Housing and the Stabilization Trust gives us access to capital and homes that we simply wouldn't have otherwise," said Ty Tippets of Color Country Community Housing. "Through this partnership, we've already been given access to homes and land that will create affordable housing for nine families in the St. George area."One foreclosed or blighted property can drag down a neighborhood, decreasing property values and attracting crime, described Gordon Walker, Utah's housing director."With UCAH as the catalyst for all of us to work together, we can strengthen our neighborhoods, get foreclosed properties off the market, and provide quality affordable homes in which families can thrive."