Plan for foreclosed sites struggles

On an forlorn patch of land off Nebraska Avenue, across from a community church, bail bond business and small auto repair shop, a long-abandoned office building is about to be reborn as affordable housing for female veterans and their families.

Along the Hillsborough River, a rundown apartment complex that fell into foreclosure at the height of the housing crisis will be renovated and rented to low-income families.

Those and other projects are being paid for with $13.6 million the city received from the U.S. Department of Housing and Urban Development's $3.94 billion Neighborhood Stabilization Program. The program provides local governments with grants to buy foreclosed and abandoned properties in neighborhoods hit hard by the housing crisis.

In theory, it seemed like an easy task, given Tampa's record number of foreclosures.

But when the city and its nonprofit partners went to the marketplace, they found themselves competing against deep-pocketed investors who were snatching up foreclosed properties and dealing with banks that shrugged off their offers to buy.

The result: More than year after the program started, city officials are racing against the clock to spend the federal dollars with a use-it-or-lose it deadline three months away.

"You would think that if you show up with a handful of cash to buy a piece of property that someone would be interested," said Sara Romeo, whose nonprofit group, Tampa Crossroads, has partnered with the city to renovate the Nebraska Avenue property. "Not only did the banks not want to negotiate with me, they wouldn't even call me back."

More than a year ago, Mayor Pam Iorio stood on a street corner in Sulphur Springs and unveiled an ambitious plan to buy foreclosed and abandoned properties in the city.

"We have entire blocks in Sulphur Springs that are one foreclosed home after another," Iorio said at a news conference. "This stabilization fund will go a long way to help."

Iorio's initial plan called for buying about 80 foreclosed homes to be fixed up and sold or torn down. An additional 30 would be bought and renovated as rental properties.

Sulfur Springs, North Tampa and Old West Tampa were identified as target areas, based on high rates of subprime mortgages, defaults and delinquencies.

The city forged partnerships with several nonprofit groups and charitable organizations to find and purchase the properties, renovate them and find eligible buyers.

But city officials and nonprofit groups found banks and lending firms were unwilling to give them preference to buy, which city officials argue created an uneven playing field.

"Investors were buying up everything at courthouse auctions," said Cynthia Miller, director of the city's Department of Growth Management and Development Services. "We just couldn't compete with them."

Likewise, the federal program requires the sales price to be at least 1 percent less than the appraised value of a foreclosed property. As a result, the city and its partners lost out on deals to private investors who could offer banks a lot more for the properties.

Complicating matters, much of the housing stock in the target neighborhoods was old, and some properties were worth less than the projected cost of rehabilitating them.

So the city expanded the target areas to include Woodland Terrace, Northeast Community, Lowry Park Central and several other neighborhoods.

Officials also expanded the scope of the program to include multi-unit properties, such as apartment complexes, that could be renovated and rented to qualifying families.

In April, HUD officials loosened the definitions of "abandoned" and "foreclosed" so that more properties were eligible for purchase under the program, which also helped.

To date, the city has committed roughly $8 million of the $13.6 million federal grant.

But the city must have formal contracts in place by Sept. 30 to buy and renovate properties or it loses the funds.

Miller said she is confident that all of the money will be put to use before then.

Properties acquired by the city and its partners under the stabilization program run the gamut, from single-family homes and duplexes to multi-unit apartment complexes.

The city has spent $234,135 to buy 17 single-family homes and duplexes, mostly in the Sulphur Springs area. Most have already been demolished and will be land-banked until the market improves enough to get a good price for the properties.

More than 20 other foreclosed single-family homes in neighborhoods throughout Tampa have been bought by nonprofit groups for about $1million under contracts with the city for renovation.

Prospective homebuyers must qualify for a mortgage and cannot earn more than 120 percent of the area median income. Renters must meet similar income requirements.

Under the program, the nonprofit groups will hold the mortgages to the properties and be responsible for maintaining them, but the city will keep a lien on them for 15 years.