Ed Murray, Mayor
SUBJECT: Affordable homeownership opportunities arise out of foreclosed subdivision in Rainier Beach
11/17/2010 12:15:00 PM
Todd Burley (206) 684-5081
Affordable homeownership opportunities arise out of foreclosed subdivision in Rainier Beach
Federal Neighborhood Stabilization Program provides funding to purchase a development of 15 single family homes for community land trust
SEATTLE - A cul-de-sac of new homes tucked behind a new multifamily apartment building at the corner of South Rose Street and Rainier Avenue South was on the verge of becoming another fatality of the foreclosure epidemic sweeping the nation.
When the lender foreclosed upon this unfinished development on Wolcott Avenue South last summer, it could have remained incomplete and vacant for months or years. With five homes finished but unsold, two homes half built, and foundations alone standing on the remaining eight lots, the subdivision likely would have attracted graffiti and other crime.
Instead, with the help of a Seattle Office of Housing loan, Homestead Community Land Trust purchased the development, will finish the homes and sell them to moderate-income first-time homebuyers. As part of a land trust, the homes will remain affordable to future Seattle households.
"We hope this project will be a bright spot in the dismal real estate news we hear almost daily right now," said Sheldon Cooper, Homestead Executive Director. "While foreclosures typically produce only negative results, no one was displaced by this foreclosure and at the same time it gave us an opportunity to have a positive impact in Rainier Beach. And we could not have done it without our partners at the city, state and federal levels."
A key component of the project financing provided by the Office of Housing is $600,000 from the Department of Housing and Urban Development's Neighborhood Stabilization Program, which allocated dollars to areas around the country hardest hit by foreclosures. The Federal Home Loan Bank and the Washington State Housing Trust Fund provided additional funding for the project.
"A foreclosed house, blighted apartment building or weed-strewn, vacant lot in an otherwise vibrant neighborhood can all too quickly change the quality of life for those who call it home," said HUD Regional Administrator Mary McBride. "Our NSP funds are giving our communities the resources to move effectively to halt the downward trend in its tracks and to keep their neighborhoods strong."
The Wolcott homes were on the market over the past year for $299,950 to $359,950, and will now be starting at $190,000 as part of the land trust. These prices are available to households earning up to about $51,000 for a family of two and $64,000 for a family of four.
"The City recognizes the role affordable housing plays in a neighborhood's vitality," said City Councilmember Nick Licata, chair of the Council's Housing, Human Services, Health, & Culture Committee. "We're always looking for ways to increase the city's affordable housing stock so that people of all incomes can live in Seattle. Homestead provides an innovative and successful model that ensures affordability for years to come."
As a community land trust (CLT), Homestead creates affordable housing by taking the cost of land out of the purchase price of a home. It keeps housing affordable for future buyers by controlling the resale price of houses on CLT land through a ground lease and resale formula.
Homeowners leasing CLT land under their home enjoy the security, control, tax advantages and ability to build equity just like any homeowner. If they sell their home, the resale formula insures that the home is kept affordable for the next family. When land values skyrocket, the inflated value of the property remains a community asset in the form of stable, affordable housing.
Southeast Seattle has seen a higher number of foreclosures in the past few years compared to other Seattle neighborhoods. In response, the City will be using existing programs to support homeowners in the area and help them remain in their homes. The City's home repair loan and weatherization programs provide other resources to help owners improve their homes; the foreclosure prevention program can help a household remain in their homes after falling behind on payments because of a one-time crisis like a job loss, a death or illness in the family, or a divorce.
"A single foreclosed home can be detrimental to the surrounding community. The impact of 15 foreclosed homes on one cul-de-sac could have been devastating," said Deputy Mayor Darryl Smith. "Now, the new homeowners on Wolcott will prevent the blight of foreclosure as well as add to the vitality of the neighborhood by living, working, playing and shopping in Rainier Beach and the surrounding neighborhoods."
Five finished Wolcott Homes are on the market now. Homestead anticipates the other homes will be finished and ready for sale during 2011. For more, visit www.HomesonWolcott.com.
About Homestead Community Land Trust
Homestead Community Land Trust is a membership-based nonprofit organization dedicated to expanding opportunity, strengthening community, and investing in the future by providing permanently affordable homes in Seattle and King County. Our members include people from all walks of life - from displaced persons to government employees, community activists, business people, homeowners, and renters - who share a common belief that Homestead offers a smart and low-risk vehicle for achieving homeownership, and an innovative and effective way to address affordable housing needs.
About the Neighborhood Stabilization Program
Congress created the Neighborhood Stabilization Program to help cities, counties and states deal with community problems that are the result of the mortgage foreclosure crisis in the nation. HUD provides money to about 250 local governments (cities and counties) and all 50 states. The funds must be spent to: establish financing mechanisms for purchase and redevelopment of foreclosed homes and residential properties; purchase and rehabilitate homes and residential properties abandoned or foreclosed; establish land banks for foreclosed homes; demolish blighted structures; or redevelop demolished or vacant properties.
The mission of the Seattle Office of Housing is to build strong healthy communities and increase opportunities for people of all income levels to live in our city.