Community Revitalization - An endless source of city money

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An endless source of city money

Printed From: MiddletownUSA.com
Category: Middletown City Government
Forum Name: Community Revitalization
Forum Description: Middletown Community Revitalization News
URL: http://www.middletownusa.com/forum/forum_posts.asp?TID=3391
Printed Date: Nov 22 2024 at 10:15pm

Topic: An endless source of city money

Posted By: Nelson...Himself
Subject: An endless source of city money
Date Posted: Oct 19 2010 at 2:32pm

QUESTION:  At what City Council meeting were these NSP Guidelines/Procedures approved:

A) Individual NSP-financed residential Purchase/Rehabilitation/Resale projects subsides --

   1) Maximum $75,000 subsidy when total development cost exceeds purchaser sales price;

   2) Maximum $50,000 subsidy when purchasers have affordability gap in buying a home.

Source:  Middletown Community Revitalization Department.

Replies:

Posted By: wasteful
Date Posted: Oct 19 2010 at 7:29pm

Can someone translate this into laymen speak for us individuals who haven't worked for HUD for any length of time?

Posted By: Nelson...Himself
Date Posted: Oct 19 2010 at 10:26pm

Wasteful,

Here's an easy-to-understand response to your question/critique about my NSP-1 post.

NSP-1 stands for HUD's first round of the fairly new Neighborhood Stabilization Program.

A) The City is using NSP funds to purchase/rehab/resell vacant, foreclosed homes.

Ten properties have been bought and are undergoing rehab via this $2,144,00 HUD grant.

Upon completion of rehab the homes will be sold to qualified income-eligible buyers.

1) Maximum $75,000 subsidy when total development cost exceeds purchaser sales price:

For example, City purchases home on Gage for $150,000;

City then incurs $67,000 more in rehab and property mainenance costs;

After rehab appraisal of rehabilitated Gage property is $142,000;

Home buyer is qualified for mortgage financing with sale by City finalized; and,

RESULT: $217,000 total development costs less $142,000 sales price = $75,000 subsidy.

;

2) Maximum $50,000 subsidy when purchasers have affordability gap in buying a home.

       For example, City purchases home on Red Bud for $105,000;
       City then incurs $35,000 more in rehab and property mainenance costs;

       After rehab appraisal of rehabilitated Red Bud property is $140,000;

       Income-eligible prospective buyers express interest in this home;

City seeks $140,000 for purchase of this former vacant, foreclosed home;

Purchasers only qualify for $90,000 residential mortgage from bank ($50,000 shortfall);

City offers buyers principal reduction grant, mortgage interest subsidy, etc; and,

RESULT: $140,000 purchase price less $50,000 in NSP subsidies = $90,000 net price.

Surely most taxpayers disagree with this wasteful spending of HUD funds by the City?

Posted By: Nelson...Himself
Date Posted: Oct 20 2010 at 4:42am

The following 8/1/2010 post by Miss Vivian speaks volumes about NSP waste:

This little house also caught my eye.
It has 2 bedrooms and 1 bath.
Other houses around it are selling for no more than $65,000
What are they rehabbing in these homes?

Location: 3523 Jewell

Total Project Budget: $139,955

Program Funds Drawndown: $36,289.15

Project Status: Rehab Underway

Posted By: VietVet
Date Posted: Oct 20 2010 at 6:30am

Nelson- thank you for explaining this in terms that even I can understand. I notice that your explanation assumes that after the city uses the HUD funds and purchases the property, rehabs it and tries to sell it, there will still be an automatic monetary loss from the original money invested. Who dreamed up this illogical guaranteed money loser of a program? AND- this program assumes that all of the houses bought, rehabbed and placed on the market will be sold. What happens to the house if it sits and there are no takers?

The home mentioned on Jewell for $139 thou is double the price for the neighborhood. Who in their right mind would pay double the amount of any home in the neighborhood and call it a wise investment? They will never recoup the amount of money poured into this home on resale, even if it becomes totally paid for.

The intention of this program is not a bad idea. ie, to reclaim, re-occupy and rebuild neglected areas, however, the method of execution of this program with the obvious money waste overshadowes any good that was intended. JMO

Posted By: Nelson...Himself
Date Posted: Oct 20 2010 at 8:52am

Thanks..Viet..Vet

Posted By: Dooraghero
Date Posted: Oct 24 2010 at 2:05pm

Some minutes from a City Council meeting were forwarded to me several months ago wherein HUD specified that if you are not losing money, you are not doing your job. I couldn't believe they would state something like that, much less print it in the minutes. What kind of convoluted logic is that? The money ultimately comes from the pockets of working people all across the nation. To lose money is the goal? But I suppose in big government logic, there is some reason for this.

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Would you be willing to trade all the days from this day to that for one chance,just one chance to come back here and tell our enemies that they may take our lives but they'll never take our FREEDOM

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