Bay area trails in housing program

The federal government gave Florida more than half a billion dollars last March to put new owners into homes left empty by the housing crisis.

But the grant came with a "use it or lose it" clause. Commit the money by September 2010 or send the balance back to Washington.

With just six months until the deadline, few Florida communities have come close to dedicating all their funds.

In the Tampa Bay area, Tampa and Hillsborough County are dead last in putting funds from the Neighborhood Stabilization Program into action.

U.S. Rep. Kathy Castor, D-Tampa, said that's unacceptable.

"Compared to the rest of the communities in Tampa Bay, they have not made the progress they should," Castor said Friday. "What will happen is the money will be taken back and given to communities that are doing better. That would be unfortunate."

Pasco County leads six Tampa Bay area counties in using stabilization funds, accounting for nearly half of the $24 million that the region has committed so far. Pasco has 12 percent of the region's 3.6 million residents.

Pasco has become a model for using stabilization funds effectively, said Clearwater housing official Jim Donnelly.

County officials have taken the stage at federal housing workshops in Jacksonville and Washington, D.C., to tout their success.

Donnelly plans to follow Pasco's example by channeling the next wave of stabilization funding through nonprofit agencies.

"It's key to the success," Donnelly said of using nonprofit groups. "They are the true experts at the ground level. They know what they're doing."

Pasco is getting it done

The federal Department of Housing and Urban Development pumped $94 million in neighborhood stabilization funds into Hillsborough, Pinellas, Pasco, Polk, Manatee and Hernando counties, along with Tampa and St. Petersburg.

As of Feb. 2, Pasco had committed 60 percent of its $19.3 million federal allocation, one of the highest rates in the state, said HUD spokesman Brian Sullivan.

Pinellas and St. Petersburg have yet to commit the bulk of their allotments. Likewise, Manatee, Polk and Hernando counties all have millions in uncommitted funds.

The most recent HUD figures show that Hillsborough has used 8.3 percent of its $19.1 million allocation. Tampa has used just more than 4.2 percent of its $13 million.

Tampa and Hillsborough officials said they will use the rest of their money before the clock runs out - a vow their colleagues across the Bay echo.

"We're going to be there soon," said Joshua Johnson, director of St. Petersburg's Housing and Community Development Department. "There should be no loss of money."

Housing officials agree Pasco has a number of factors in its favor when using National Stabilization Fund money. They are:

•Newer houses. The 1970s-era houses in western Pasco, which have absorbed the bulk of the county's stabilization money, are decades younger than communities targeted for rehab in Tampa and St. Petersburg. That age gap reduces Pasco's need for expensive lead-paint treatments and reviews by historic preservation experts.

•Focus on remodeling. Pasco has used the bulk of its funds to remodel houses and to help first-time homebuyers. In contrast, Tampa and St. Petersburg are tearing down houses and banking vacant land for future development as affordable housing. Castor questions whether land-banking is in keeping with the spirit of the program.

•Nonprofits' expertise. Pasco relies on the Clearwater-based Tampa Bay Community Development Corp. and other nonprofits to find bank-owned houses for rehab and to manage the work. Pasco bankrolls the purchase and can close on a house in a week. Other housing agencies take three to six weeks to close.

A new beginning

Valerie and Jose Canales left a Clearwater apartment last December and moved with their children into the family's first home, a four-bedroom house on Aetna Lane in Port Richey.

The 30-year-old house has a new roof, new flooring, a new kitchen and a fresh coat of paint - all of it paid for with money from the National Stabilization Program. What had been a bank-owned eyesore is now a busy home.

"I'm happy," Valeria Canales said. "There's no banging, no people screaming, no commotion outside. At the beginning, I felt out of place. I never had it so quiet."

The Canales paid $105,000 for the house. Pasco County used stabilization dollars to cover 20 percent of the cost.

The Canales have five years or more to start paying the county. Meanwhile, they're paying the 80 percent of the loan held by Bank of America.

The home sits at the heart of Regency Park, a sprawling community of low-slung, single-family homes. The housing bubble exploded there two years ago. Vacant, deteriorating houses blight the area.

Since last spring, Pasco County has picked 19 houses in Regency Park and another 10 in neighboring Embassy Hills for rehab. Together, they make up about 15 percent of the 220 houses chosen countywide for the program. Just more than 10 percent of those houses have been returned to private hands.

Pasco got the jump on stabilization money last year thanks to its relationship with the Tampa Bay Community Development Corp., a private, nonprofit housing agency.

The agency manages a third of Pasco's stabilization properties. In exchange, it gets $7,500 at each closing.

"We had established a program that had become very efficient," said Greg Schwartz, president of Tampa Bay Community Development.

When the National Stabilization Program came along, "all we had to do was ramp up. The machinery was there. We didn't have to reinvent anything," Schwartz said.

Pasco community development chief George Romagnoli said this approach has cut through the red tape that hobbles older housing programs. Pasco's housing program dates to 1992.

"I hate to speak badly about other communities, but there's too many in government that think like government," Romagnoli said. "There's all these rules, and real estate's a little different."

Competition slows progress

Hillsborough and Tampa housing officials said they're making deals with nonprofit and for-profit companies to handle the lion's share of their rehabs. Much of that work has yet to start.

Tampa has more than $10 million in contracts with outside groups, said Cynthia Miller, development services director.

Some of those groups will buy properties, either homes or apartments, and rehab them and rent them to their clients. Other groups will put houses on the market for a fee - 12 percent of the rehab costs.

"They are starting to come to us with properties," Miller said. "We're telling them to bring any valid project."

Housing officials said their progress was slow early on because of competition from investors.

Hillsborough County, for example, has looked at nearly 500 houses but closed on just 28, partly because of investor competition, said Valmarie Turner of the county's affordable housing department.

Last spring, HUD banned governments from paying more than 85 percent of a home's appraised value. That meant governments got trumped by investors willing to pay the full appraisal, often in cash, said Bruce Bussey, urban development manager for Pinellas County's community development department.

"There were people in the market that were looking for bargains," Bussey said. "We thought the banks would be more open to giving out homes."

A change to the rules of the National Stabilization Program last fall lets governments pay up to 99 percent of the appraised value. That has leveled the ground with investors, housing officials said.

"The first of the year started bringing more activity than we had seen before," Miller said.

With the September deadline looming, it's unclear if Tampa Bay communities will use all their stabilization funds.

"I'm quite sure as September nears, some of the communities may be prevailing on Congress to rethink this," HUD spokesman Sullivan said.

Castor said that she has already heard those rumblings. She said that she may support an extension if the local communities prove they are serious about spending the money.

"It will be difficult to justify granting an extension of time unless they're showing progress," she said.