While Modesto has had its recent struggles with outsourcing their Neighborhood Stabilization Program, the City of Turlock has implemented their program in-house with great success. In June 2009, the City of Turlock applied for Neighborhood Stabilization Program (NSP) grant funds through the State of California Housing & Community Development and received $1.4 million.
This is a different funding source from Modesto’s NSP funds which came directly from the Federal Housing & Urban Development. One of the main differences between the sources is the reporting procedures required under the grant. The City of Turlock has much more stringent requirements that include a detailed report of purchases made, rehabilitation in process, properties sold, and buyer eligibility every two weeks.
The NSP program was established for the purpose of stabilizing communities that have suffered from foreclosures and abandonment. Through the purchase and rehabilitation of these homes which are often the worst house on the block helps maintain the values of the surrounding properties. It’s a far cry from the Palos Verdes Estates homes listings that realtors like Maureen Megowan specialize in, but with that being said, this program has the ability to accomodate people who are in need of housing, something that doesn’t happen in other places across the country. All NSP program houses must be sold to low or moderate income qualified families through an established loan process that protects the home buyer from predatory loans and makes the City of Turlock a second on the deed so that homes that may fall behind are returned to the city to maintain the low income housing stock.
The NSP program is not designed to compete with local property investors and in fact are meant to function where private investment will not work. Often these are homes that have been on the market for a long period of time, have been stripped of all appliances, have extensive damage, or structural issues such as dry rot. The money invested in these properties not only improves the neighborhood but are dollars that stay local. Local contractors are used which hire local employees and are spending at local home improvement stores and other suppliers.
Once a property is purchased a work write up is done outlining the rehabilitation that needs to be done. This includes mandatory items, potential hazard items, neighborhood improvement items, general property improvements and energy saving items. The energy saving items are a required element in the State of California program which include installation of energy efficient appliances, energy efficient windows, and on occasion replacement of outdated air conditioning units for more efficient units.
The NSP program houses must be sold at post rehab appraised value or the amount invested in the property, whichever is less. Considering the amount of rehabilitation each property is in need of the appraised value is often less. Turlock’s NSP program leaves an average of $35,000 in each house which is reflective of the average across California. Once sold, the money is returned to the City of Turlock NSP program fund which can be used to purchase and rehabilitate another home. The program continues as a revolving fund until June 30, 2013 at which time the remaining funds must be returned to the State of California general fund.
The highest rehabilitation done to this point was a house purchased that had been boarded up and had interior fire damage. This particular home had a lower elevation line and made it easy to rehabilitate to be ADA accessible for a family on the first time home buyers list with a disabled parent. Since the home had interior fire damage it needed to be completely gutted, making it easy to widen the doorways and reconfigure the bathroom. Total invested in the property improvements was $100,000.
Based on the average investment and the few properties such as the ADA accessible ones the fund should be able to rehabilitate approximately 30 homes by the end of the grant in 2013. Currently the City of Turlock has purchased 15 homes and sold 9 of those homes. The remaining 6 are currently undergoing rehabilitation and includes another ADA accessible home.
Community Housing Services Manager, Maryn Pitt, said “I’m pleased we were able to secure the $1.4 million to be able to stabilize our neighborhoods. We have been able to put it to good use putting families into homes with secure financing to ensure long term home ownership.” During her presentation at City Council she summed the program up best with “The NSP program is a reinvestment in our community.”