Neighborhood stabilization: New lease in more ways than one
Barbara Bailey, an ordained elder in the United Methodist Church, was used to living in parsonages, an arrangement in which the congregation owns a home occupied by a succession of pastors.
While the resident of the parsonage makes no mortgage payments, neither does he or she, when moving, have equity a homeowner potentially gains when selling a property.
Bailey went from parish ministry in Charleston, W.Va., to lecturing in New Testament and psychology at Waynesburg University, so her ideal home would be between the Greene County institution of higher learning and the Bethel Park neighborhood of her son, Christopher. She didn’t have much in the way of a down payment, but neither was she seeking a McMansion.
Bailey contacted Realtor Eric Perrell, the agent who helped Christopher find his home several years ago, and she recalled Perrell telling her, “‘I have a program that is ideal for you.’ I couldn’t pass it up. It was monetary, the location was convenient, and in my line of work, this is what I’ll say: It seemed that God was opening doors. After you’ve lived in parsonages for several decades, you don’t have a big down payment and some of your furniture is a little iffy as well,” Bailey said.
But she did have one advantage.
“As a United Methodist minister, my conference provided me with a loan,” she said. “I didn’t have to go through a bank or anything.”
The home she purchased last year was on the market through the federal Neighborhood Stabilization Program, administered by the Washington County Redevelopment Authority.
New life for foreclosed homes
Mortgage foreclosure devastates both homeowners and communities, and although nothing may ease the pain for those losing a home, a program to find new owners for the properties has been so successful in Washington County that the commissioners recently extended it because it has proved to be self-sustaining.
The Neighborhood Stabilization Program provided federal taxpayer dollars to purchase for rehabiltation 21 foreclosed properties from banks buying them at sheriff’s sales. There was enough profit from that group of homes that four more houses could be purchased and rehabilitated.
William McGowen, executive director of Washington County Redevelopment Authority, discussed the background of the Neighborhood Stabilization Program.
As the housing bubble was bursting, then-President George W. Bush signed into law a stimulus package known as the Housing and Economic Recovery Act of 2008 providing grants to all states and selected local governments according to a formula.
Lest anyone regard Neighborhood Stabilization as a government-sponsored house-flipping program, he or she should keep in mind the uncertain economic climate in what was to become known as the Great Recession. Lending basically dried up.
“You had to have cash in hand to do this,” said Rob Phillips, assistant community development director for Washington County Redevelopment Authority.
“You would have been unable to do this without the bankroll.”
What this meant to Washington County was that the Department of Housing and Urban Development identified areas in both the City of Washington and Charleroi Borough as communities that could be included in the Neighborhood Stabilization Program, which was designed to address vacant, foreclosed and abandoned housing in neighborhoods impacted by the subprime mortgage crisis.
Pennsylvania was allotted nearly $60 million in federal Neighborhood Stabilization funds. Although HUD deemed Pittsburgh and Beaver, Fayette and Westmoreland counties eligible, no communities in Greene County were designated as potential recipients.
Washington County, however, was eligible for neighborhood stabilization funds so the redevelopment authority submitted an application to the state Department of Community and Economic Development in February 2009. Six months later, $1.5 million was awarded to Washington County for eligible projects and activities in targeted areas of Washington and Charleroi.
The redevelopment authority partnered with Threshold Housing Development Inc. of Uniontown to purchase homes that were foreclosed in Washington and with Mon Valley Initiative Inc. of Homestead for a similar program of rehabilitating foreclosed homes to resell to eligible buyers in Charleroi. These two nonprofit organizations have been in the business of rehabilitating homes for a number of years.
To purchase a property rehabbed through the Neighborhood Stabilization Program, eligible home buyers may have incomes up to 120 percent of median income in an area determined by U.S. Census tracts to participate. The current maximum income for a family of four, at 120 percent of median income, for example, is $78,720. The redevelopment authority also has details on down payment assistance for qualified buyers.
‘A good program’
All this transpired long before Bailey was in the market for a home. A check of property records showed Wells Fargo Bank purchased the house on McKinley Avenue at a sheriff’s sale Nov. 14, 2012, for $1,130. The bank sold it to Threshold Development Inc. for $41,000.
When Threshold bought the home, built in about 1960, it was in fairly good shape, Re/Max’s Perrell recalled. Pipes hadn’t burst and plaster wasn’t peeling from the walls, but the home’s steel casement windows needed to be replaced. The home also received a new roof because of its age. Both the kitchen and bath were gutted, taking the walls down to the studs, and renovated.
“It’s a good program that they have,” said Perrell, who has been working with Threshold Development for about a dozen years.
Threshold was allotted $25,000 through the Bush stimulus package to rehab each home it purchased through the program.
“I’m involved with the rehab,” said Bruce Hotchkiss, president of Threshold Housing Development Inc. of Uniontown. “There’s a lot of different pieces to the puzzle, but not as many as you might think. Each home is different. Sometimes it takes as little as two months. We have one that’s taken 10 months. The program only allows so many dollars to be spent to do rehab. As a contractor, I evaluate, ‘Can it be done for that amount of money?’”
The redevelopment authority handles the finances, and Threshold deals with the construction, Hotchkiss said.
Bailey closed on her home in May, paying $92,459 to Threshold Development, and moved in over the summer.
“To date, we have $1.2 million in sales proceeds,” Phillips said. “We’ve been spending that, and we have enough left to do four more, which will also create sales proceeds. We have to reinvest those proceeds. It could be more than four, but we were comfortable in putting that number out there.”
Those handling the rehab take many factors into account before purchasing a home for resale.
“We don’t accept everything across the board here,” said Rick Dunn, senior construction manager for Mon Valley Initiative, a 25-year-old nonprofit development corporation based in Homestead, Allegheny County.
“It has to have good bones. This is taxpayer money. We’ve got to get the biggest bang for the buck. We can only work in Mon Valley Initiative member communities, and its sole member in Washington County is Charleroi.”
In Charleroi, homes rehabbed were generally built in the 1930s and 1940s.
Depending on time of year and particular type of structure, rehab can take from four to six months. “The first five houses were full-gut rehabs. They were down to the skeleton,” Dunn said.
Bailey loves teaching, but she’s also open to an assignment in a Methodist parish ministry in this area.
She said her objective was “finding a good, solid home in a family neighborhood, a neighborhood that I would’ve moved into anyway. I moved here from Charleston, W.Va., so I had no clue about a stimulus package. I thought I would have to take a lesser property.
“I would imagine, until this article comes out, that people would never have guessed.”