Foreclosures Part 2:

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Lizbeth Bond
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1 April 22, 2009 Sensible Land Use Foreclosures Part 2: Brooklyn Park Foreclosure Initiatives Robert Schreier Director of Community Development City of Brooklyn Park (763)

2 Overview 1. Foreclosures in Brooklyn Park 2. City foreclosure response

Brooklyn Park Foreclosures Hwy 610 2008: 983 2007: 593 2006:

3 Brooklyn Park Foreclosures Hwy : : : : 157 Hwy 81 I th Ave Hwy 252 Known Vacant Homes: 850

4 Foreclosure Impacts

5 Foreclosure Impacts Neighborhood blight Disinvestment Decreased property values

6 Foreclosure Impacts Vandalism, graffiti, theft of copper, fires Homes become unfit for habitation (lack of utilities, unsanitary conditions) Lack of winterization leads to broken water pipes Mold, electrical hazards, structural damage Takes longer to repair and longer to re-occupy General property hazards

8 Graffiti

9 Copper Theft

10 Junk & Debris

11 Fire Houses Houses in foreclosure that suffer a fire can be difficult to resolve in a quick manner. Insurance issues Multiple parties

12 Broken Water Pipes

13 Mold

14 Brooklyn Park Foreclosure Response

15 Brooklyn Park Response 1. Prevent foreclosures 2. Stabilize and preserve the city s housing stock 3. Foreclosure recovery Acquisition and rehabilitation of foreclosed homes

16 Foreclosure Prevention Increased Foreclosure prevention counseling through CAPSH (Community Action Partnership for Suburban Hennepin) Renter counseling referrals to HOME Line, Legal Aid, Centro Legal Credit counseling through Lutheran Social Services 1 st time homebuyer classes through CAPSH

17 Foreclosure Prevention (cont.) Typical outreach City newsletter Utility bill inserts City website Brooklyn Park NOW cable show City Hall displays Special events Enhanced outreach Home Ownership Center Citywide mailing News papers Ethnic media Multicultural outreach: Leadership in diverse communities City events & festivals Faith communities

18 Stabilization and Preservation New code enforcement case started for each property after sheriff's sale Constant monitoring Streamlined internal processes and management Greater cross department communication Everyone knows the status of properties Better able to preserve properties (e.g. water shut-offs, nuisance abatement, etc.)

19 Stabilization and Preservation City Staff communicates with occupants, banks, realtors, neighbors, restoration companies, potential owners, and other city departments regarding issues unique to each property Point of Sale program est. in Fall 2007 Ensures residential property is maintained in a safe, clean, and healthy condition The Seller must complete repairs on all hazardous conditions prior to sale and non-hazardous repairs may be completed by the buyer, but must be completed within 180 days of ownership transfer

20 Before After

21 Foreclosure Recovery

22 Foreclosure Recovery $3.7 m Neighborhood Stabilization Program $600,000 Mn Housing Pilot Program Proposed Uses Acquisition and Rehab Demolition and redevelopment Homebuyer assistance Flexible plan -- fund most successful programs

23 Neighborhood Stabilization Program To use NSP money, recipients must: Target areas of greatest need Affect vacant, foreclosed, or blighted Document how meeting national objectives Document how serving at or below 50% and 120% of AMI Income verification Purchase at a discount (15% average) URA appraisal Document purchase discount Require HUD approved homebuyer counseling Document homebuyer financing used Create and enforce affordability period Meet rehabilitation standards (including lead-based paint)

24 Neighborhood Stabilization Program (cont.) Complete environmental review (includes historic preservation) Follow relocation and acquisition processes (notices, etc.) Meet labor standards i.e. Davis Bacon for more than 8 units Adhere to fair housing & equal opportunity laws i.e. accessibility, Section 504 Track administration costs Follow procurement (competitive bidding) Complete audit report Manage program income Manage contracts with partners Complete regular reporting and compliance monitoring

25 Foreclosure Recovery (cont.) Foreclosure Recovery Partners Robert Engstrom Companies Interim loans (30% of costs) Gap funding (approx. $30,000) PRG Interim loans (100% of costs) Gap funding (approx. $30,000) Rains Properties Gap funding (approx. $30,000) Other TBD??

26 7701 Noble Ave

27 Brooklyn Park Foreclosure Recovery Plan (2009) Funds required for Facilitated Recovery = $4.3 million *1,576 Foreclosed Properties Homes Near Foreclosure Foreclosure Prevention Who? What? EDA Facilitated Recovery 78 Market Recovery 1,498 EDA Staff 10 Developers Homebuyers How? Tear Downs Acquisition, Rehab and Re-sale Home Improvement Loans Land Bank and Redevelop * Number of foreclosed properties in Brooklyn Park 2007 and 2008 Down Payment Assistance

Neighborhood Stabilization Program

Neighborhood Stabilization Program Neighborhood Stabilization Program What is the Neighborhood Stabilization Program? NSP was funded in 3 rounds to provide assistance to state and local governments to