Published Wednesday, September 23, 2009

City eyes $2 million housing grant

By Winston Skinner

The Newnan Times-Herald

Newnan city officials are taking a second look at a state program that would provide more than $2 million to help families purchase foreclosed homes.

The city is eligible for a Neighborhood Stabilization Program grant because of the high level of foreclosures in the Newnan area. Newnan-Coweta Habitat for Humanity and the Newnan Housing Authority would use most of the $2.1 million to purchase foreclosed homes and then help families purchase those homes.

The grant includes $700,000 for the Newnan Housing Authority. That money will help NHA clients in the Self-Sufficiency Program move toward home ownership. NHA would rehabilitate houses and lease them to clients who could eventually purchase them.

There also is $127,000 in the grant for the city to administer the program. "Instead of the city acting as the banker, Habitat's acting as the banker," City Attorney Brad Sears told the council at its Monday night meeting at city hall.

Bob Peebles and Leslie Merriman of Newnan-Coweta Habitat and Sandra Strozier, NHA executive director, attended the meeting. Merriman made an impassioned request for the city to move forward with the program for at least the initial four-year grant period.

She spoke of "this tremendous opportunity" and said, "I plead with the council to embrace it." Merriman urged the council not to let the opportunity to help families purchase homes of their own disappear because of issues related to administering the grant.

"We have worked too hard and too long to make this happen," she said.

Habitat is prepared to get busy -- buying, repairing and refurbishing houses. The group has 17 families who have already been through the organization's application process and who are ready to buy a home.

Habitat does not charge interest and would not make money on the program.

Private companies can participate in the NSP program and can get paid 10 percent of the purchase price when a house closes. Habitat is its own banker and will not get the 10 percent fee.

Merriman said the local Habitat affiliate is looking at foreclosed homes that are 10 years old or newer. The NSP program is causing Habitat affiliates to shift their thinking. The ministry has been building houses and selling them -- at market value but without interest -- since 1976.

In the current economy, Habitat can buy and rehab a home cheaper -- and faster -- than one can be built.

The NSP funds provide a huge opportunity "to show a tangible benefit," Merriman said, potentially moving 15-20 families into a home within a year.

Questions were raised about how Habitat deals with people who get behind on payment. Peebles, who works as a lender, oversees the payment process for the local affiliate. He personally visits homeowners who are behind on their payments.

Sometimes the owner can pay an extra $100 to get the loan current. In other cases, the payment schedule may be reworked. Peebles said the local affiliate has a very low rate of problem loans.

Sears outlined long-term issues related to the NSP program -- particularly that the city could incur expenses related to a "20-, 25-, 30-year period of administering the grant."

Sears said in some ways it is "a misnomer to call it a grant." Generally, grant funds are expended and an accounting is made. Then the grantee's responsibility ends.

Because NSP creates a revolving fund, which would be used to buy more homes, several years could pass before the grant funds -- and funds coming in from that grant -- are fully expended.

Sears said 14 homes could generate $7,800 per month in house payments. That money would be reinvested in more homes as long as it lasts. "You've got to keep recirculating that money and stay in that business," Sears said.

One option for the city would be to let Habitat handle the program for the initial four years and then to turn the program -- payments as well as administration -- back to the Georgia Department of Community Affairs. DCA administers the federal NSP program in Georgia.

Mayor Keith Brady noted that as long as the city -- or Habitat in a contract with the city -- operates the program, money generated from monthly payments "remains wholly in our community." If the program is turned back to DCA, the money will go into state coffers.

While turning the program back to the state after four years "is not our preference," Merriman said, that option is one that is "highly acceptable" to Habitat.

Merriman said if the program is returned to DCA, future earnings would go to the state. The city and Habitat could seek grant funds from DCA for similar projects, but "we're competing with everyone in the state," she said.

Councilman Clayton Hicks expressed concerns about making "a 20-year commitment" to the program. "I don't know that that's fair to a future council," he said.

Some facets of NSP have changed while the city and Habitat have been working with state officials with regard to the program. Initially, banks had to be willing to sell homes for at least 15 percent less than their value, but that figure has now changed to 1 percent.

Councilman Rhodes Shell said he was reluctant to look at more than a four-year commitment "until we know how it works."

Councilwoman Cynthia Jenkins suggested the city look at its redevelopment authority as an option for handling the program. Brady recommended the council discuss NSP again at the next council meeting -- with an eye toward the need "to move forward as quickly as possible."

"I would like to see where this conversation goes," Jenkins said.

"We all understand the importance of moving forward as quickly as possible, but we also need to make the right decision," Brady said.