Furman Center/Ford Foundations Roundtable May 2, 2008

Furman Center/Ford Foundations Roundtable May 2, 2008 Existing and Emerging Models for Reusing Distressed Properties Columbus Housing Partnership (CHP) is a private, nonprofit organization founded 20 years ago in the belief that a decent and affordable home is the cornerstone of family life and a healthy community. CHP provides quality, affordable housing and related services to low to moderate income working households in Columbus and the surrounding area. Through its activities, CHP is a partner in building communities and enhancing the lives of its residents. In 2006 and 2007, there were 19,000 foreclosures in Franklin County, Ohio. Over 9,000 more are expected in 2008. According to the City of Columbus, there are 5,100 vacant buildings. Some experts believe it is significantly higher. In an effort to respond to the increasing number of foreclosed properties in the central Ohio market, CHP, Enterprise, and the City of Columbus applied to the Department of Housing and Urban Development for developing an Asset Control Area (ACA) in Columbus, Ohio. The goal of the project, finalized in 2007, was to acquire foreclosed properties in specified areas for renovation and sale to first-time home buyers in our community. The City committed to provide $20,000 per unit for subsidizing the difference between acquisition/renovation costs and the sale price of the homes due to weak local market conditions. To further its ability to finance the acquisition of vacant property and foreclosed homes, build or renovate the property, and sell to low and moderate-income home buyers, CHP also closed on a $9.5 million New Markets Tax Credit (NMTC) transaction with credits provided by Enterprise in 2007. The $6.5 million debt was provided by a number of local sources at interest rates below market. The $3 million of credits were purchased by two local institutions who were motivated by the ability to receive CRA credits who also obtained a below market return. Today, three projects are utilizing the funds. The first involves a revitalization program in the King Lincoln neighborhood of Columbus. This project, called North of Broad (NoBo), involves building new homes on vacant lots, renovation of foreclosed property, working with existing home owners in renovating their homes, and working with community organizations to enhance services available to the community. This project will ultimately involve over 100 housing units. A second neighborhood revitalization project involves the rebuilding of a historically African- American community known as American Addition, a community that currently includes 260 platted lots with only 60 existing homes, a third of which are in good condition. CHP s strategy for this project includes purchasing 30 homes and 150 vacant lots to rebuild this neighborhood located within two miles of a large employment center in Columbus. Infrastructure, utilizing NMTC funding with reimbursement from the City, will start later this year. A third project was the original ACA program, which HUD and CHP terminated in December 2007, as the costs greatly exceeded potential sale value, due to the poor condition of the homes and the low market value in the markets where houses were being designated by HUD. In response to the need for a strategy around foreclosed homes, CHP is currently working with 562 East Main Street Columbus, Ohio 43215 614.221.8889 FAX 614.221.8904

lenders to purchase foreclosed properties and the City to obtain HUD $1 homes (before HUD put this important program on hold). CHP purchases properties in market areas which we are revitalizing and in areas where we can save neighborhoods. We look for foreclosed homes that are in neighborhoods where there are only one or two foreclosures on the block. The goal is to renovate these homes, get them back on the market and sold to home buyers so that the neighborhood does not deteriorate and the houses are not purchased by investors to turn into rental properties. In addition to these projects, CHP is currently working with other stakeholders in Columbus to determine other neighborhoods that should be focused upon for a foreclosure prevention/revitalization program. These programs work with CHP s Homebuyer Education program which has graduated 700-800 people per year for the past few years. Approximately 20% of these people traditionally go on to buy homes. All purchasers of CHP homes participate in the homebuyer education program (although many homebuyer education graduates buy other homes as well). CHP provides down payment assistance through government funds and from NeighborWorks capital funds. These tools are important to ensure that people become and remain successful home owners. The Main Obstacles We Face The main obstacle CHP faces is acquiring control of enough foreclosed property in a neighborhood to make an impact. It is not helpful to obtain one foreclosed house on a block with numerous other boarded up buildings. Dealing with numerous lenders and competing with the private sector on the price is time consuming and assumes significant staff resources. Many houses in central city neighborhoods are both obsolete and in a deteriorated condition while others have been vandalized and, consequently, renovation costs are high. The typical gap between market value and acquisition/renovation costs is $50,000 - $60,000 as we abate lead and ensure that homes are rehabbed to a level that would not require major capital reinvestment for seven years. Often times, houses should be demolished but they aren t due to the high costs of acquisition and/or community opposition to demolition. These issues are important to address in older neighborhoods. Another obstacle in Ohio is that it has been deemed a declining market making it much harder for buyers to obtain financing. This issue must be addressed with both lenders and insurers. Requiring all borrowers to have a minimum 620 credit score and 3%-5% down are strong deterrents to enabling people to become first time home buyers. 562 East Main Street Columbus, Ohio 43215 614.221.8889 FAX 614.221.8904

4/30/2008 2:17 PM ACA SUMMARY SPREADSHEET 1 2 3 4 5 6 7 8 9 10 11 12 13 Designation Period New or from existing HUD inventory? Address Zip Block Group (39.049.xxxx.x) Square Footage Final Appraisal Amount Final Purchase Price from HUD Estimated Repair Cost (including contingency) Total Development Cost (TDC) City Subsidy to be Utilized Net Development Cost (NDC) after City Subsidy Average Comparable Sales Price as of 10/31/07 Ave. Comparable Sales Price per Sq. Ft. Average Comparable Sales: Average Days on Market JUNE 1 new 330 S Weyant Ave 43213 2750.1 720 $29,000 $4,000 $60,480 $84,653 $20,000 $64,653 $37,211 $43.27 71 $27,442 2 existing 195 N Oakley Ave 43204 4500.1 1,412 $48,000 $23,000 $93,209 $152,043 $20,000 $132,043 $73,900 Gap between NDC (minus Subsidy) & Comps 4 existing 364 S Hampton Rd 43213 2750.1 768 $29,500 $4,500 $58,170 $82,304 $20,000 $62,304 $37,211 $43.27 71 $25,093 11/8/07 5 existing 459 S Warren Ave 43204 4700.5 704 $33,000 $8,000 $59,304 $88,354 $20,000 $68,354 $37,333 $39.38 132 $31,021 JULY 1 new 484 Catherine St 43223 4900.1 1,050 $26,000 $1,000 $80,200 $99,024 $20,000 $79,024 $68,380 $52.52 126 $10,644 11/8/07 2 new 2626 Eakin Road 43204 4820.3 1,300 $40,000 $15,000 $60,780 $99,425 $20,000 $79,425 $57,085 $47.02 113 $22,340 11/8/07 3 existing 181 S Weyant Ave 43213 2750.1 720 $27,000 $2,000 $104,736 $139,570 $20,000 $119,570 $37,211 $43.27 71 $82,359 11/30/07 5 existing 565 S Eureka Ave 43204 4820.1 1,344 $39,000 $14,000 $74,510 $115,967 $20,000 $95,967 $57,085 $47.02 113 $38,882 11/30/07 7 existing 3252 E Fulton St 43227 2770.2 864 $39,000 $14,000 $80,220 $123,390 $20,000 $103,390 $58,450 $65.23 114 $44,940 11/30/07 Deadline to Close on Acquisition 11/8/07 $58,143 11/8/07 3 existing 213 N Oakley Ave 43204 4500.1 1,168 $23,000 $1 $77,053 $100,969 $20,000 $80,969 $71,000 $9,969 11/8/07 4 existing 698 S Wheatland Ave 43204 4820.2 732 $29,000 $4,000 $47,188 $67,373 $20,000 $47,373 $52,750 $55.12 190 -$5,377 11/30/07 6 existing 419 Townsend Ave 43223 4900.1 1,422 $49,000 $24,000 $65,886 $117,831 $20,000 $97,831 $68,380 $52.52 126 $29,451 11/30/07 AUGUST 1 new 759 S Richardson Ave 43204 4820.3 1,173 $25,000 $1 $113,040 $147,752 $20,000 $127,752 $57,085 $47.02 113 $70,667 11/30/07 11/8/07 Comments to be removed from Program (4500.1) to be removed from Program (4500.1) addit'l $25K (approx.) for 2nd floor 3 BR work 14 2 new 1952 Oakwood Ave 43207 8720.2 1,025 $32,000 $7,000 $60,794 $88,983 $20,000 $68,983 $83,395 $85.80 52 -$14,412 11/30/07 15 16 17 18 19 20 21 22 3 new 934 Lawrence Drive 43207 8720.2 984 $22,000 4 existing 2390 Parkwood Ave 43211 920.1 1,234 $40,000 $15,000 $151,080 $215,717 $0 $215,717 $44,000 $40.78 99 $171,717 TBD 5 existing 2704 N Beulah Rd 43211 710.4 $29,000 $4,000 TOTAL: $187,504 $1,463,972 $2,628,176 $420,000 $2,208,176 $866,663 Average: $8,523 $83,341 $119,463 $19,091 $100,372 $39,394 22 Total properties actively designated recommending that these properties be removed from the ACA Program 45 % from new inventory block groups requested 55 % from old inventory for removal on 8/14/07 letter 27 % under 800 square feet to be removed from program (in block group 4500.1) $1 $109,574 $143,246 $20,000 $90,282 $123,395 $123,246 $83,395 $20,000 $103,395 $85,234 $39,851 TBD 6 new 244 N Terrace Ave 43204 4500.1 1,422 $36,000 $11,000 $70,380 $98,377 $20,000 $78,377 $96,000 -$17,623 TBD SEPTEMBER 1 new 450 Larcomb Ave 43223 4900.2 1,454 $38,000 $13,000 $102,420 $150,942 $20,000 $130,942 $68,380 $52.52 126 2 new 269 N Wheatland Ave 43204 4500.1 1,560 $39,000 $14,000 $59,980 $96,778 $20,000 $76,778 $52,750 $55.12 190 $24,028 TBD 3 new 294 N Ogden Ave 43204 1,044 4500.4 1,352 $35,000 $10,000 $105,203 $150,637 $20,000 $130,637 $62,528 $49.74 237 4 existing 627 S Highland Ave 43223 4820.1 648 $23,000 $1 $109,020 $141,446 $20,000 $121,446 $52,750 $55.12 190 $68,696 TBD $85.80 $75.83 52 86 $18,161 $62,562 $68,109 TBD TBD TBD not located in City of Columbus, City Subsidy not available to be removed from Program (4500.1) to be removed from Program (4500.1)

Columbus Housing Partnership 562 East Main Street, Columbus, OH 43215 Columbus Housing Partnership is a private, nonprofit organization founded in the belief that a decent and affordable home is the cornerstone of family life and a healthy community. Columbus Housing Partnership provides quality, affordable housing and related services to low to moderate income households in Columbus and the surrounding area. Through its activities, Columbus Housing Partnership is a partner in building communities and enhancing the lives of its residents. Program Overview Program active for 5 months Assumption: 7 new properties per month (35 new properties by end of October) 25 properties designated to CHP in 5 months 3 properties rejected due to appraised value being under $20,000 Only 22 properties currently designated to CHP (18 after 4 properties in block group 4500.1 are removed) 55% from existing (old) HUD inventory Only 45% from new incoming properties 19 of 22 properties have a gap between comps* and Net Development Costs that exceeds available City subsidy *Comparable sales information provided by Columbus Board of Realtors, September-October 2007 with the assistance of Realty Executives Decision

759 South Richardson Avenue Rehab Costs greatly exceed available subsidy 1,173 Square Feet $25,000 HUD Appraised Value $1- Purchase Price $113,040 - Estimated Repair Cost $147,752 - Total Development Cost -$20,000 - City Subsidy utilized $127,752 Net Development Cost $57,085 Comparable Sales $70,667 - Gap between Comps and Net Development Cost 759 South Richardson Avenue Interior pictures

759 South Richardson Avenue Summary of Major Repair Items Repair existing roof Repair existing garage Replace concrete sidewalks Replace all windows Replace all exterior doors Replace existing furnace Replace existing air conditioning system Replace existing electric panel and electrical rough-in New rough plumbing New kitchen & bathroom New interior walls throughout New trim & interior doors throughout New flooring throughout New paint throughout New insulation Repair/replace floor joists between kitchen and bathroom 2704 North Beulah Road Rehab Costs greatly exceed available subsidy 1,044 Square Feet $29,000 HUD Appraised Value $4,000 - Purchase Price $90,282 - Estimated Repair Cost $123,395 - Total Development Cost -$20,000 - City Subsidy utilized $103,395 Net Development Cost $85,234 Comparable Sales $18,161 - Gap between Comps and Net Development Cost

2704 North Beulah Road Neighboring properties 627 South Highland Avenue Property functionally obsolete for modern housing needs 648 Square Feet 2 bedrooms $23,000 HUD Appraised Value $1 - Purchase Price from HUD $109,020 - Estimated Repair Cost $141,446 Total Development Cost -$20,000 - City Subsidy utilized $121,446 - Net Development Cost $52,750 Comparable Sales $68,696 - Gap between Comps and Net Development Cost

181 South Weyant Avenue Property functionally obsolete for modern housing needs 720 Square Feet 2 bedrooms $27,000 HUD Appraised Value $2,000 - Purchase Price $104,736 - Estimated Repair Cost $139,570 - Total Development Cost -$20,000 - City Subsidy utilized $119,570 Net Development Cost $37,211 Comparable Sales $82,359 - Gap between Comps and Net Development Cost 2390 Parkwood Avenue Rehab Costs greatly exceed available subsidy 1,234 Square Feet $40,000 HUD Appraised Value $15,000 - Purchase Price $151,080 - Estimated Repair Cost* (not factoring in historic requirements, which are yet to be determined) $215,717 - Total Development Cost -$0 - City Subsidy not available* $215,717 Net Development Cost $44,000 Comparable Sales $171,717 - Gap between Comps and Net Development Cost *Unique Factors: Not located in City of Columbus, therefore not eligible for City Subsidy or buyer down payment assistance Eligible to be on Historic Register, resulting in increased rehab costs (amount yet to be determined)

2390 Parkwood Avenue Subject Property 2390 Parkwood Avenue Neighboring Properties Adjacent to Subject Property

CHP s Recommendations Properties highlighted in pink on ACA Summary Spreadsheet should be removed from the ACA Program Future properties with Net Development Costs more than $5,000 in excess of available subsidies to either be excluded from the ACA Program or reduced to a $1 purchase price, to be determined on a house-by-house basis Future properties that are functionally obsolete to be excluded from the ACA Program (i.e. 1 bedroom units, low square footage, etc.) Approval of Request from August 14, 2007 to delete specified block groups from the Program