COVINGTON - A majority of county commissioners are hesitant to pursue grant money to purchase foreclosed or abandoned homes, they indicated Tuesday night.
After hearing a report from Senior Planner Scott Sirotkin on the Neighborhood Stabilization Program resulting from the economic bailout plan passed by Congress, three commissioners indicated the program might not be ideal for Newton County and said they weren't sure it was local government's place to get into the housing business.
The Neighborhood Stabilization Program is administered by the U.S. Department of Housing and Urban Development and, on the state level, by the Georgia Department of Community Affairs.
About half of the $155 million available to Georgia has already been allocated by HUD to specific jurisdictions, leaving $77 million for local governments to compete over.
The grant money can be used "to purchase foreclosed or abandoned homes and to rehabilitate, resell or redevelop these homes in order to stabilize neighborhoods and stem the decline of house values of neighboring homes," according to HUD.
In Georgia, DCA will determine eligibility for funding based on demonstration of need and capability to implement the program.
Areas with the highest percentage of foreclosures and subprime loans and areas identified by DCA as likely to have a significant rise in the rate of foreclosures will get priority.
From 2001 to 2005, the most recent data available, Newton County had a higher percentage of conventional mortgage loans made by subprime lenders as compared with the state as a whole, according to Sirotkin.
However, the county may fall short on the implementation component of the criteria, he said.
DCA has emphasized that "This is not a program for beginners," Sirotkin said.
"Honestly, when it comes to these types of activities, Newton County and the city are somewhat beginners," he said.
The program will focus on Real Estate Owned properties, or those that have been through the foreclosure process but were not purchased during the courthouse sale and have been taken back by banks or other lenders.
Blighted properties next to REO properties may also be eligible for funding.
Properties must be purchased at a 15 percent discount, meaning the sale price must be 15 percent less than the appraised value.
The money cannot be used for property maintenance, but it can go toward rehabilitation prior to the sale or a down payment to assist buyers.
Potential purchasers must be low-moderate-medium income families earning less than 120 percent of the area median income, which in Newton County was $69,200 for 2008, Sirotkin said.
At least 25 percent of funds must assist very low income families earning less than 50 percent of the area median income.
For 2008, low-moderate-medium families earning under $83,040 and very low income families earning $55,360 or less would be eligible.
Based on a formula used by DCA to calculate allocations, Newton County could be awarded $2.1 million.
According to Sirotkin, that would be enough to purchase about 15 properties.
District 3 Commissioner Ester Fleming said he would support the program if it meant redeveloping a large blighted area, but its impact is too limited.
"I can't see government getting into the housing business and this is simply what we are doing if we buy up houses due to hardships of individuals that own the houses," he said. "Let the market and free enterprise take care of that."
District 1 Commissioner Mort Ewing agreed.
"At this point, I fail to see where county government can do a better job than free enterprise," he said.
District 5 Commissioner Monty Laster agreed that the program's scope would be too small locally, but said he is open to continuing the discussion.
District 4 Commissioner J.C. Henderson, however, said he fully supports the county's involvement and suggested county funds be used to buy up as many as 30 more properties.
"I believe if we could help some people who really need help ... I think it would be appreciated, and it would help some of these foreclosed homes that are really just eyesores," he said.
The city of Covington and the county have already agreed to file a joint application for the grant. But commissioners noted they were acting due to a looming deadline, and said they would base future participation on Sirotkin's report.
Commissioners took no formal action Tuesday night, but agreed to confer with city officials and take the matter up again at their Dec. 2 meeting.
Crystal Tatum can be reached at firstname.lastname@example.org.