Where Has the $250M for Foreclosed Homes in South Florida Gone?

Published by nora | Filed under Communities, Market Trends, Miscellaneous, Real Estate

With the deadline for the allocation of money from the Neighborhood Stabilization Program nearing, housing advocates are wondering whether the more than $250 million given to South Florida to mitigate the effects of foreclosed homes has been spent or allocated. According to the Kirwan Institute’s July report, only 53.5 percent of the NSP funds given to Florida had been allocated to projects, with only a few months before the deadline. All NSP funds from the first round of funding must be committed to projects on or before September 30.

According to community development officials, it was not easy to immediately use the money from the first round of the NSP program because of a lot of factors. They said the program was new and banks then were overwhelmed by foreclosed homes. Additionally, local government officials had to first make consultations and make plans on how they can attack the foreclosure problem before they can implement the NSP program.

The general plan was simple — buy foreclosed homes, repair them, and then resell or rent them out to low-income families — but carrying it out was not easy. There were also NSP requirements that need to be followed, such as median incomes and foreclosure rates of neighborhoods to be helped.

Based on records from the U.S. Housing and Urban Development Department, only 25 percent of the $161.5 million given to South Florida in the first NSP funding round has been actually spent for projects. With less than one month before the NSP1 deadline, there’s still more than $22 million not allocated, and likely to be returned to the federal government if unused.

Learning from the experiences of towns, cities and counties during the NSP1, the local nonprofit Neighborhood Housing Services of South Florida and the local unit of Habitat for Humanity are now bent on spending their NSP2 money strategically so entire neighborhoods will benefit from the money, and not just a few families. The NHSSF received $89.4 million from NSP2, the sixth largest grant among all recipients. The South Florida unit of Habitat for Humanity received another $9.3 million.

The first project of the NHSSF will be the conversion of an empty distressed building in Overtown into an apartment complex of 26 affordable rental units. The city of Miami partnered with NHSSF and purchased the building using city money from the first round.

Miami-Dade County was able to save its $62.2 million allocation from forfeiture by changing its strategy on time. As its original plan of helping low-income families buy foreclosed homes did not pick up, it changed course and decided to buy foreclosed apartment and townhouse complexes for conversion into rental housing communities for low-income renters.

The most successful NSP grantee in South Florida is the city of Tamarac, which was able to spend its NSP funds to help 53 families buy foreclosed homes as of July. According to South Florida grant recipients, the widespread impact of NSP grants will be felt in 2011 and 2012 when the multi-family projects are completed.