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Target-property Acquisition & Rehabilitation funds
The current economic climate has produced many challenges as well as many opportunities. Besides locally developed programs, several federal programs have been developed to help local governments take advantage of these circumstances. The Housing and Economic Recovery Act (HERA) of 2008 established a $4 billion Neighborhood Stabilization Program to help local governments purchase foreclosed properties. The American Reinvestment and Recovery Act (ARRA) of 2009 supplemented the program with $2 billion more in funding. With these programs, local governments can finance the purchase and rehabilitation of foreclosed and abandoned housing. The housing can then be sold or rented to income-eligible applicants at affordable rates for as long as is feasible. It is possible that these programs can make properties permanently affordable.
The City of Los Angeles is using its $33-million share of Neighborhood Stabilization Program money to refurbish homes as affordable rentals or for sale homes. Homes will be sold to low- and moderate-income families. The program is considered to be a two-pronged approach as it addresses blighted communities in L.A. and provides new affordable housing opportunities.
Other communities have developed similar programs at a grassroots level (see case study below).In either case, these programs can be promoted in station areas to reduce blight and increase affordable housing.
Los Angeles, California
The real estate crisis which began in 2008 left parts of LA, particularly Central, East and South LA, and North and South San Fernando Valley, with particularly high rates of property foreclosure and abandonment. In order to help stabilize these communities, the Los Angeles Housing Department (LAHD) and Enterprise Community Partners worked together to establish Restore Neighborhoods LA, Inc. (RNLA), a non-profit, community-based holding and development corporation in January 2009. Utilizing funds allocated by LAHD through HUD's Neighborhood Stabilization Program, RNLA purchases foreclosed or abandoned properties at a discount from lenders and loan servicers for resale to qualified owners after rehabilitation. Eligible homebuyers of single-family properties through RNLA have incomes less than 120% AMI. RNLA will also purchase foreclosed and abandoned small multi-unit rental properties and offer them, through a competitive process, for ownership and rehabilitation by organizations with demonstrated capacity and experience with affordable housing development and management. Those organizations will own and operate the properties as affordable rentals serving families that earn at or below 50% of the area median income. They must also fully comply with the City of Los Angeles Rent Stabilization Ordinance which protects tenants from eviction as a result of a foreclosure.