Friday, October 14, 2011

Rehab A Dump With Tax Payer Money And Flip It

Looking for a way to flip properties and use Federal money to do it? Here's how it's done. First you start a non profit. We all know that non profits are not really that. All businesses are essentially non profit as we all spend our money at the end of the year so we don't get nailed hard on taxes. The way non profits do it is by acquiring property or paying large salaries to their top people. The last head honcho of Carillion non profit hospital for example got paid 2.2 million dollars a year. Non profits are the new scam. That's why I'm not involved in them because it breaks my morals and values but this is what you do.

Set up your non profit and apply for the Neighborhood Stabilization Program Grants available through Hud. Click Here.

HUD will give money to States, Local governments, and non profits on a competitive basis. You can compete directly with the local and state governments for this money. However you don't necessarily have to as they give money that they get to non profits to do these kinds of rehab projects in blighted areas. 

But it's looking like Neighborhood Stabilization Program grants and the very large Community Development Block Grant is on the chopping block right now and may not last that much longer.

Programs target empty houses

PETERSBURG - One house on Varina Avenue in Walnut Hill has come out of foreclosure, thanks to the efforts of a local nonprofit agency working through a three-year-old federal program.

Michelle Christian, a Lawrenceville native who needed to move to Petersburg to be closer to her job at Kraft Foods in Richmond, is the new owner, and she couldn't be happier.

"I love this house," she said late last month at an open house held by the organization that made it all possible, Pathways-Va. Inc.

The nonprofit economic development group, headquartered on West Washington Street, bought the house out of foreclosure and rehabilitated it with part of a grant it received under the federal Neighborhood Stabilization Program.

Administered in Virginia by the state Department of Housing and Community Development, the NSP program was created in 2008 to help alleviate the effects of a surge in foreclosures that came in the wake of a national banking crisis and economic recession. That wave of foreclosures threatened to swamp cities like Petersburg that were already up to their necks in vacant and abandoned housing.

Michael Watts, Pathways' director of real estate, said his organization has four more houses it's working on rehabilitating for resale under the NSP. Tri-Cities Habitat for Humanity is working on another 12, he said.

It can be an expensive process - the homes must be fully weatherized, in some cases the heating and air conditioning must be replaced, and they must be equipped with EnergyStar-compliant appliances.

The program also stipulates that the homes must be sold as affordable housing, and buyers must meet specific income and creditworthiness standards.

Christian learned about NSP through a first-time homebuyer class she attended, given by Virginia Affordable Housing. Among the program's attractions for her, she said, is the fact that it paid her down payment and closing costs.

Getting one house sold and owner-occupied is a small enough victory in a city like Petersburg, where more than 16 percent of all residential housing units were vacant last year, according to U.S. Census Bureau figures.

But it's something residents should celebrate, considering the problems that vacant and abandoned homes can create for their neighbors and for a city as a whole.

For example, a study in Austin, Texas, found that blocks with vacant buildings had more than three times as many drug-related calls to police as blocks without vacant buildings, and twice as many violent-crime-related calls.

In addition, abandoned properties lower the value of adjoining homes and keep a lid on the money a city can collect in real estate taxes. That pressure on revenue, in turn, makes it harder for the locality to pay for vital services such as police, fire, street maintenance and schools, and can lead to a self-reinforcing downward spiral.

Enforcing housing codes is one way of trying to prevent vacant homes from deteriorating into eyesores that hurt the whole neighborhood. Petersburg has been aggressive on this front, inspecting nearly 6,400 buildings last year and issuing more than 5,400 notices of violation; 4,100 of the violations were corrected and 45 cases were taken to court.

Finding buyers who are able and willing to make an abandoned property livable again, and who want to move in and keep it that way, is an ideal way to deal with the problem. But it's also a limited strategy, because in many cases the potential value of a blighted house is just not enough to justify the cost of rehabilitating it.

As many cities across the country are finding, sometimes the best way of lowering a high vacancy rate is just to knock down a lot of the empty houses.

Some states have passed laws enabling localities or groups of communities to set up "land banks," which can pool resources to acquire vacant homes and then rehab them for resale or demolish them and package the land for new development.

Virginia doesn't have a land bank law, but Petersburg has taken a similar approach on its own for several years, buying up vacant houses when it could and acquiring others through tax foreclosures - though the latter method can be complicated if the home is owned by an out-of-state landlord or tied up in litigation.

City spokeswoman Joanne Williams noted that City Council is preparing to hold a public hearing on a plan to sell a package of real estate comprising about 30 parcels - mainly on Gressett, Mistletoe and Porterville streets. The package includes some empty lots and some vacant houses. Williams said the properties will be sold with conditions imposed to prevent them from falling back into neglect.

However, every way of trying to reduce the number of vacant homes in a city eventually comes down to one thing: money. With local tax revenue pressured by low and declining home values, help from the state and federal governments is increasingly vital - and also, because of budgetary pressures, increasingly at risk.

For example, under the NSP that helped Christian buy her home, Pathways has been awarded nearly $800,000 in grants. Statewide, about $46 million has been allocated, and nationally about $3.9 billion.
But a bill passed by the U.S. House of Representatives in March and awaiting action in the Senate, the NSP Termination Act, would do exactly what its name says: terminate the program and put any unallocated funds back into the government's general fund. At the time the House of Representatives passed the bill in March, the unspent funds amounted to about $1 billion, including about $6.3 million targeted for Virginia.

Seventh District U.S. Rep. Eric I. Cantor, R-Richmond, and Fourth District U.S. Rep. J. Randy Forbes, R-Chesapeake, both voted with the Republican majority in favor of the bill, which passed on a party line vote of 242-182. It was then sent to the Senate, where it's still sitting in a committee.

To put it in some kind of perspective, the $1 billion that would be regained by killing the whole program would be enough to fund the wars in Iraq and Afghanistan for a little more than three days, based on Department of Defense budget figures.

Another federal program, the longstanding and widely used Community Development Block Grant program, has provided local governments and nonprofits with funding that can be used, among other things, to tackle blighted housing. That program, too, has been targeted for elimination by deficit hawks.

Pathways' Watts said the NSP "is a great incentive to get some foreclosed houses off the market and get some renters into homeownership."

Doing that, he said, creates "tax enhancement benefits, neighborhood benefits, family benefits."
Elimination of the NSP, Watts said, would set back efforts to reduce the city's housing problem.

"Without it, I'm not sure what it is going to take to reenergize the home market in Petersburg," he said.

- Michael Buettner may be reached at 722-5155 or


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