Federal Foundation Assistance Monitor

(HOUSING) Metro DC Consortium Seeks $34M in NSP-2 Funds

Six large suburbs of the nation's capitol--led by the Metropolitan Washington Council of Governments (COG)--form a consortium seeking $33.9 million in the second round of Neighborhood Stabilization Program (NSP-2) funding from the Housing & Urban Development Dept. (HUD) in an attempt to return more than 400 homes to the property tax rolls.

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Much of the money--about $21.35 million--would be used to provide homebuyer assistance and counseling as those with incomes at 90% of the area median try to move into homes. Also, money will be used to provide developers with subsidies.

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The COG, the region's planning council, is applying for the money on behalf of the City of Alexandria, VA, the City of Bowie, MD, Fairfax County, VA, the City of Gaithersburg, MD, Prince Georges County, MD and Prince William County, VA. These areas have the majority of the DC area's foreclosures, with Prince Georges and Prince William leading. 

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The consortium is focusing on plans that increase demand for homes in the neighborhoods targeted for improvement. The DC job market is relatively healthy--it is the nation's fourth-best economic area--but tighter underwriting standards and affordability have made it difficult to buy homes there in the current market. In response, the consortium looks to create a leveraged regional acquisition fund that creates economies of scale in purchasing homes for eventual green rehabilitation and resale or rental. Also, it hoes to provide a continuum of homebuyer aid to provide money for down payments and closing costs on homes, as well as to reduce the total cost of homes to cut closing costs. This consortium will provide awards to households earning no more than half of the area median income to get those persons into rental units and condominiums. 

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Enterprise Community Loan Fund (ECLF) has been selected to design and operate a regional fund that would buy and rehabilitate bank-owned properties for housing in all income groups. The consortium seeks $2 million from HUD to allow ECLF to do its job, money that would be in addition to $11.3 million collected by ECLF from other public and private sources. The combined amount of money would be lent to qualified developers. 

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About 22% of the NSP-2 funding sought by the consortium will be used to purchase and redevelop living spaces that would be used for affordable rental at a cost of about $230,000 per unit. The consortium estimates eight months will be needed to buy, rehabilitate and sell a given housing unit. 

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Of the 125 units scheduled for rehabilitation and resale, 75 of those are scheduled for Prince Georges County, MD, which will need $5.8 million to do the job. About 46 units all told are scheduled for purchase and rehabilitation for rental use with Fairfax County needing $2 million to do 22 of those units. 

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The consortium is expecting to work with developers and its membership to designate which properties can be used to rent. "Part of the decision will be based on the local dynamics in the individual neighborhoods," the application says. "If, for example, the neighborhood cannot easily support new homeownership, we are more likely to focus on creating good rental opportunities there. At the same time, we'll be careful not to concentrate large numbers of deeply subsidized units in individual communities."

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Suitland, MD, is being targeted as an example of the communities the consortium is targeting--those near major rail and transit commuter lines and near job centers. Suitland has 4% of mortgages in foreclosure and another 9.4% at-risk. But it also has $35 million for a new redevelopment initiative that will create housing of all types, commercial sites and green space near the Metro rail station. The consortium request says the project will attract an additional $50 million in financing to finish the job. The NSP-2 money could provide subsidies for low- and middle-income people to live in the redeveloped area.

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No money is going toward foreclosure prevention, according to the consortium request.

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According to the application, The DC city government opted not to participate, because it disliked HUD's initial risk scoring requirements that only allowed applicants to use either a foreclosure index or a vacancy risk index.

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Info: Penelope Gross, DC COG, 202/962-3200

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