Genesee County is getting a $7.5-million infusion from the U.S. Department of Housing and Urban Development to stabilize home values in neighborhoods outside of Flint, but officials in Swartz Creek are concerned about what the program will actually bring to their city.
Assistant City Manager Adam Zettel said he doesn't think the program will help as much as people hope, and said he believes government should not be involved in the real estate business. He also is concerned about the Genesee County Land Bank's involvement in the program.
"I think it's going to be a failed enterprise," he said.
The Neighborhood Stabilization Program is part of the Housing and Economic Recovery Act that was passed in July. The Community Development Block Grant program will get the funds, which must go toward the purchase and rehabilitation or demolition of foreclosed properties in neighborhoods where values could be stabilized. The properties will eventually be sold, rented or developed into parks or community centers.
Christine Durgan, principal planner with Genesee County Metropolitan Planning Commission, said the Planning Commission will work with the Genesee County Land Bank to acquire properties identified by local units of government around the county. Some of the guidelines related to the program could change before the county gets its contract with HUD next month.
"The goal of the program is to deal with vacant, foreclosed properties," Durgan said.
Homes would be purchased at 90 percent of the appraised value and then sold for only the amount spent on the home, including costs for rehabilitation.
Durgan said the commission will meet with municipalities to find homes and neighborhoods to target.
"We just felt it was important to work closely with many of the local units of government because they know their local communities better than we do," she said.
The funds are not for rehabilitating neighborhoods but for stabilizing neighborhoods, she said. The Planning Commission will put dollars where they will have the most impact, she said.
She said 25 percent of the funds must go to low-income housing, so some of the properties could be rented out.
The county has only 18 months from when it gets its contract with HUD to obligate the funds, so municipalities must submit applications for the funds by Feb. 13.
Julie Hinterman, director of the Genesee County Metropolitan Planning Commission, said the plan also was intended to be part of the bailout for U.S. banks.
Zettel said $7.5 million won't be enough to solve the county's housing problems. If it costs $50,000 to acquire and rehabilitate each home, only 150 will be part of the program, he said.
He said about 10 percent of the homes in the city are vacant or on their way to foreclosure, and there are 2,200 housing units in the city, including apartments. In a healthy economy, about 5 percent of homes are vacant at any time.
Hinterman agreed that it isn't enough money and said the county could probably spend the whole amount in one municipality.
"It's more money than what we're gotten in some time, and we're grateful for the opportunity to put the $7.5 million to work in Genesee County," she said.
Zettel said he also was concerned whether the funds would be enough to help the Land Bank effectively manage the properties.
No level of government is equipped to maintain rental properties, and the Lank Bank struggles to maintain its properties, he said.
Hinterman said the Planning Commission isn't equipped to hold titles to properties, which is why the Land Bank is involved.
There is one property in Swartz Creek owned by the Land Bank, and Zettel said it's the only house in the city that doesn't get its lawn mowed.
When homeowners neglect their property, the city can come in and mow the lawn or secure a hazard and bill the owner with a special assessment, he said. The Land Bank does not have to pay property taxes or special assessments, so there's no way to bill for work done.
"It puts governments in a bad place," he said.
Durgan said she doesn't think that will be a problem, and that the county doesn't want to be holding land for long periods.
"The goal is to get them back on the tax roll," she said.
Zettel said tearing down those homes will be good for the city because it's one less hazard and one less surplus house on the market. Homes in a state of disrepair also bring down the values of neighboring properties.
"It's going to be a long time before anyone wants to buy a leaning house with mold inside," he said.
Zettel also expressed concern because 10 percent of the $7.5 million is going to administrative costs.
"We can run a whole police department on $750,000," he said.
In a perfect world, the program will lose money, but it'll be for the public good, Zettel said. It remains to be seen what the funds can accomplish, he said.
"If it's done right ... it definitely could help," he said.
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