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Utah will receive $5 million in additional federal money for neighborhood stabilization, but little of the first-round funding, nearly $20 million, went toward the hundreds of single-family homes now in foreclosure across the state.
Only 15 homes were purchased for rehabilitation.
This is the second round of federal dollars coming to Utah intended to fight the impact of foreclosure and the mortgage crisis. Based on a formula involving foreclosure rates and subprime mortgage activity, Utah is receiving the minimum amount possible, as it did during the prior round. State officials say no decisions have been made as to how the new money will be spent.
"We'll be able to buy up some foreclosed properties, take them off the market, help stabilize neighborhoods," said Gordon Walker, director of the Utah Division of Housing and Community Development. "And we hope that, eventually, these funds will help families that are in need of affordable housing."
Most of the first-round money was spent on land, which will be developed and targeted toward lower-income families. Some funding went toward rehabilitating apartments.
The Utah Center for Affordable Housing, a new nonprofit founded by a developer and two former Zions Bank executives, was at the helm of those millions after winning a bid process last year. Whether the organization would be involved with this new funding is yet to be determined. Zions Bank will continue to pay the executive director's salary until August 2011.
The Center for Affordable Housing doesn't do the actual rehabilitation but acts as an intermediary, working with other nonprofits that purchase and remodel vacant homes.
"I was hoping we could do more, particularly single-family dwellings," said Dan Peterson, the UCAH executive director, noting some investors quickly lost interest in the program after realizing homes needing substantial renovations were not being sold at low enough prices to make the investment worthwhile.
According to the U.S. Department of Housing and Urban Development website about the neighborhood stabilization money, "Generally, the money must be used to buy, fix up and resell foreclosed and abandoned homes." Land banking is also allowed.
Participating nonprofits have lost money on rehabilitation costs. Unlike some other states, Utah does not allow the neighborhood stabilization money to be used as grants for renovation. "It's our intent to make sure the home is livable and safe, and that often requires a lot of work," said Darin Brush, executive director of the Community Development Corporation of Utah. "My hope would be, with the $5 million that's been allocated to Utah, is that we'd use that with the original intent of [Neighborhood Stabilization Program] to purchase single-family homes."