By Dawn Rhodes
May 24, 2009
 
A wave of economic stimulus funds may flow into Latino neighborhoods
most devastated by the housing crisis, yet Chicago housing agencies say
the money won’t fix all their problems. Chicago’s Neighborhood
Stabilization Program will devote $55.2 million to create affordable
housing options from foreclosed homes and to demolish decaying
structures.

Yet, Latino housing agencies say this money is no magic potion to cure the community’s ailments.

“It is the Band-Aid being provided by the Fed to deal with this
problem,” said Hipólito Roldán, president of the Hispanic Housing
Development Corporation. “But we’re going to have to bleed.”

Here’s where the city is now:

• The Housing and Economic Recovery Act of 2008 funneled $3.92
billion of stimulus money to the Neighborhood Stabilization Program
(NSP), run by the U.S. Department of Housing and Urban Development
(HUD).

• HUD solicited proposals from local, city and state governments
nationwide for a chunk of the federal money. HUD approved the City of
Chicago’s application for $55.2 million in January 2009.

• The Chicago Department of Community Development selected 25
communities to receive funding as the “areas of greatest need,” based
upon foreclosure rates, activity of sub-prime lending, unemployment and
risk of rising foreclosure rates. According to HUD regulations, NSP
money can only go to those “areas of greatest need.” The majority of
Chicago’s NSP funding, therefore, will finance efforts on the West,
Southwest and South Sides of the city. (See maps 1-5)

• The city selected Mercy Portfolio Services, a division of the
national agency Mercy Housing, to appraise units and negotiate with the
banks to purchase them for development.

• The city and Mercy began accepting applications for qualified developers on March 31.

What happens next:

• The city and Mercy must identify specific areas within the 25
communities to revitalize. Repairing homes in concentrated spaces more
positively impacts a community than simply cherry-picking structures in
a large space, according to Katie Ludwig, Community Development finance
manager.

• Once Mercy reviews and buys these units, approved developers must
secure construction loans from community development finance
institutions, such as ShoreBank. Chicago’s NSP budget sets aside more
than $5.5 million for construction and homebuyer loans. (Figure 6)

• The developer rehabilitates the property, following strict federal guidelines for wage levels and hiring patterns.

• Roll out the “For Sale” sign. The city cannot sell the house for
more than the purchase price plus the redevelopment costs, so that it
is reasonably affordable for low-income families.

“It’s a good program if they can do this quickly, get the
properties up to speed as far as meeting all the codes, and then making
them available for a population that is increasingly losing income,”
said Hector Gamboa, Spanish Coalition for Housing program coordinator.

Easier said than done, because time is money.

HUD requires its grantees to spend its entire allocation within 18
months. The city must commit its $55.2 million by September 2010,
according to Ludwig. After that, the city has another 2 1/2 years to
spend any income generated by rehabilitating and selling homes.

Preparing Latinos to buy and keep homes

Even if developers successfully repair properties, their efforts
fail if there are not enough qualified buyers at the end of the
process.

“Then we’re no better off than when we started,” Ludwig said. “So
we’re trying to get a centralized marketing campaign going to create a
pipeline of qualified buyers now.”

As part of that process, Ludwig said prospective buyers must
complete an 8-hour session with a HUD-certified counselor on home buyer
education and financing. The city collaborates with community
organizations to spread the word. (See Google Map)

Spanish Coalition for Housing in West Humboldt Park has already begun its outreach efforts.

“In this crisis, we lost a lot of the gains that we had been
building up over the years,” Gamboa said. “We lost a lot of wealth, and
we need to rebuild now.”

Reconstruction starts with financial literacy, he added.
HUD-certified counseling sessions typically begin with credit, income
and budget assessments to determine how prepared someone is to support
a mortgage. After the first meeting, counselors map out what goals a
client must achieve before buying a home, such as repairing credit or
saving more income.

Ludwig says NSP intends not simply to create homes for people to buy, but also opportunities for them to maintain their homes.

To that end, the Resurrection Project in Pilsen is similarly
stepping up efforts to educate prospective homebuyers. Preparations to
buy a home can take weeks, months, or even years, said financial
services director Kristen Komara.

“I think that’s the biggest learning moment for a lot of our
homebuyers, this idea that this isn’t something that’s going to happen
next month or next week,” she said. “It is a process.”

Community development by its own residents

While Gamboa and Komara are busy preparing residents to buy, Angela
Hurlock, executive director of Claretian Associates, rallies South
Chicago to develop.

“You really can’t sell homes in areas where the schools are bad,
and the crime is an issue, and you have foreclosed homes,” Hurlock
says.

Even though South Chicago is one of the 25 focus communities,
Hurlock said she’s not seen much interest from large developers to do
work in the neighborhood. So, residents have taken matters into their
own hands.

“We have a lot of mom-and-pops who own the building they’re in and they buy the building next door,” she said.

Claretian Associates ran with that idea and started educating
community members how to become qualified developers who can apply for
NSP funding for their own neighborhood projects.

This way, says Hurlock, those who know the neighborhood best and
have the greatest interest in seeing it thrive are the same people who
revitalize it.

“We know that a lot of time developers come into neighborhoods, and
they just develop and they leave,” she said. “They’re not really
concerned what happens to those families, they’re not really concerned
about how those families integrate into the larger structure of the
neighborhood.

“We’re not looking at someone else to come in and fix our woes.
We’re looking at how we can use our resources we have here and better
our own community.”

Chipping away at a brick wall with a nail file

Chicago’s Neighborhood Stabilization Program aspires to
rehabilitate 2,400 units, according to finance manager Ludwig. Yet, in
the first quarter of 2009 there were more than 5,700 foreclosure
filings, according to the Woodstock Institute, a 38.6 percent increase
from a year prior.

In 2008, there were more than 20,000 filings in the city.

Community leaders say that while the program is well-intentioned, these figures demonstrate its inevitable limitations.

Which is precisely why Southwest Organizing Project in Chicago Lawn said thanks, but no thanks.

“This is a drop in the bucket, so we don’t really want to be a part
of it,” said senior organizer David McDowell. “It isn’t going to have
any significant impact.”

According to McDowell, two development partners won’t apply for NSP
funding because the neighborhood’s properties are so dilapidated that
they require large investments to return them to code.

“Non-profits aren’t doing this for a profit, they’re doing this to
move the houses back into the community,” McDowell said. “But they have
to pay their costs. So, when they’re talking about the rehab work,
they’re not just talking about how much does it cost to put in a
kitchen counter.”

As a result, he says, the financial burden falls upon the
developers until the properties sell for reasonable prices, which isn’t
likely.

“Houses sell for what people will pay for them. People aren’t paying a lot of money for houses here.”

When he says, “here” he gestures to the 6300 block of South
Rockwell Street, where four homes and two multi-unit buildings have
been boarded up and one home abandoned with its windows shattered. (See
“Ruins of Foreclosure”)

In the meantime, the Southwest organization focuses its efforts on
compelling banks to take responsibility for their role in the crisis by
renegotiating loans and changing loan policies. (See video)

While the organization passed up the opportunity for city funds, The Resurrection Project had to create their own prospect.

The Pilsen-based affordable-housing developers also work frequently
in Back of the Yards and Little Village. While Back of the Yards was
singled out as an in-need community, Pilsen and Little Village were
not. Financial services director Kristen Komara explained they had to
change tactics.

“If the funding wasn’t going to be available in our communities, we
felt we had a better chance of getting the award if we went after the
state funds,” she said.

The Resurrection Project applied to the $53.1 million state grant
program on May 4. Each state government is guaranteed almost $20
million of the federal grant.

But even if the state approves that application, the arm of influence will not stretch very far.

“I don’t think we’re even coming to the surface of the problem,”
Komara said. “In Pilsen, we applied to do between 20 and 30 units. Even
in our neighborhood, there’s so much more out there.”

In for the long haul

What’s out there, however, is both unfinished business and
unprecedented opportunity, according to Hispanic Housing president
Hipólito Roldán.

“All the work that all of us have done to try to develop affordable
housing is this,” he said, creating a small space between his thumb and
forefinger, “compared to the opportunity that has now represented
itself by the values dropping so precipitously and affordability being
made available to families who were out in the cold.”

While some Latino organizations choose not to participate at all,
others plan to use the Neighborhood Stabilization Program to boost
their existing, long-term efforts to rebuild and recover, not to
replace them. It won’t solve every problem in one fell swoop. But it’s
a start.

 
 
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