#7 Substantial Plan Amendment NSP _B_
TCJ
HE ITY OF ANESVILLE
NSPSA
UBSTANTIAL MENDMENT
M18,2009D
AY RAFT
Jurisdiction(s): City of Janesville Contact Person: Jennifer Petruzzello,
Neighborhood Services Director
Address: 18 N. Jackson St., PO Box 5005
Jurisdiction Web Address: Janesville, WI 53547-5005
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Telephone: 608-755-3038
www.ci.janesville.wi.us
Fax: 608-755-3207
Email: petruzzelloj@ci.janesville.wi.us
A.B
ACKGROUND
The Housing and Economic Recovery Act (HERA) of 2008 created the Neighborhood
Stabilization Program, under which states, cities and counties will receive a total of
$3.92 billion to acquire, rehabilitate, demolish, and redevelop foreclosed and
abandoned residential properties. NSP funds are considered Community Development
Block Grant (CDBG) funds.
The U.S. Department of Housing and Urban Development (HUD) has made a total of
$38,779,123 available to the State of Wisconsin and $9,187,465 to the City of
Milwaukee. The State of Wisconsin has recently completed a draft amendment to their
Annual Action Plan, which is available at: http://commerce.wi.gov/.
HERA directs the State’s implementation of the NSP Program to give priority emphasis
in targeting funds to areas with the greatest need, including those:
a. With the greatest percentage of home foreclosures;
b. With the highest percentage of homes financed by a subprime Mortgage related
loan; and
c. Identified by the State or unit of general local government as likely to face a
significant rise in the rate of home foreclosures.
The State’s proposal includes: $5,807,600 for Wisconsin Housing and Economic
Development Authority (WHEDA) Foreclosed Home Purchase Program, $9,000,000 for
CDBG Entitlement Communities (not receiving a direct allocation), $18,093,611 in
Statewide Regional Allocations, $2,000,000 in incentive allocations, and $3,877,912 for
administration.
The City of Janesville is anticipating receiving $987,146 in NSP funding through the
State of Wisconsin’s allocation. The City of Janesville has entered into a Mutual
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Cooperative Agreement with the City of Beloit, and the County of Rock for the
administration of the Neighborhood Stabilization Program.
B.S
UMMARY OF PROPOSED ACTIVITIES AND BUDGET
The City of Janesville is proposing to utilize NSP funds for four activities (proposed
budget): Acquisition/Rehab/Resale ($675,276), Land Banking ($200,000), Demolition of
Blighted Structures ($48,000), and Administration ($68,870). Appendix One further
differentiates the proposed budget, identifies the number of households assisted by
income level, estimates program income, and funding leverage.
C.NO
ATIONAL BJECTIVE
The National Objective for activities under the Neighborhood Stabilization Program is
low, moderate and middle income persons benefit as defined in the NSP Notice (less
than or equal to 120% of area median income).
D.NSPAIA
DDITIONAL NFORMATION BY CTIVITY
Below please find additional information for each NSP activity to be undertaken.
Activity Name -
1. Acquisition/Rehab/Resale.
Projected Start Date –
June 2009.
Potential Partnering Organizations –
The City will enter into a formal partnership
withCommunity Action, Inc. for this NSP activity. In addition, the City anticipates
partnering with State of Wisconsin through their Focus on Energy program.
Activity Description –
The City of Janesville is proposing to acquire, rehabilitate
and resell three single family homes and three rental properties.
Of the single family homes, two are anticipated to benefit moderate income
individuals, with the remaining benefiting medium income individuals. The City of
Janesville will be working with Community Action, Inc. to develop a model for a
successful lease to own program. The City anticipates using this program to identify
moderate income homebuyers.
All of the rental units will benefit low income individuals and will be used to meet the
requirement that 30% of funds be allocated for those below 50% of area median
income. One of the rental units will be rehabilitated by Community Action, Inc. and
will be managed by them on an ongoing basis. The remaining units will be sold with
deed restrictions to ensure their long term affordability.
All of the units will be evaluated for energy improvements and will participate in the
State of Wisconsin’s Focus on Energy Affordable Housing Program. The City is
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committed to making energy improvements and increasing the long term affordability
of these projects.
The expected benefit to income qualified persons due to this activity include:
increased opportunities for home ownership, an increase in owner occupied housing
in the area, an increase in the quality of housing (both single family and rental), and
potentially a reduction in density. Increased opportunities for home ownership will
come through the introduction of a lease to own program and greater opportunities
for and promotion of homebuyer education. The City anticipates subsidizing the
purchase price of rehabilitated units, which will increase the opportunity for owner
occupied housing.
The City has experienced a much higher level of rental housing in the activity
location. According to data from the City Assessment office, the home ownership
rate for Janesville as a whole is about 82% and the rate for both Fourth Ward and
Look West neighborhoods is about 60%. A reduction in density is possible, because
the City will be seeking single family homes that have been converted into multi
family properties in our property selection. In Janesville, it is desirable to convert
some of these properties back to their original single family purpose. Efforts will be
made to do so, as long as we can ensure our low income housing requirement for
those below 50% of area median income will continue to be met.
This activity will ensure that these properties are owner occupied, which will add to
the stability of the neighborhoods.
Leverage to complement the activity –
The City anticipates partnering with the
State of Wisconsin through their Focus on Energy Affordable Housing Program. This
program provides grants of up to $3,000 for energy efficiency and renewable energy
projects, provided the beneficiary is a household below 80% of AMI. Funds are
available on a reimbursement basis, and the City anticipates that funds will continue
to be available through the life of this grant.
The City will provide homebuyer counseling utilizing a HUD certified counselor with
CDBG funding and local sponsors. We have included our 2009 program as
leverage, because we plan to promote the 2009 program to potential NSP
homebuyers. We anticipate our homebuyer counseling to be an ongoing program
that will continue beyond 2009.
Community Action, Inc. will be receiving a donation of a REI property from a bank
through a program that allows them to donate foreclosed properties to non-profit
organizations. This donation is anticipated to be complete by May 1, 2009. NSP
funds are needed to rehabilitate the property.
Anticipated receipt and reuse of program income for the activity –
The City
anticipates receiving approximately $591,000 in program income over the life of the
grant. Program income is anticipated to be received upon the resale of the
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homebuyer and rental rehabilitation projects. Program income will occur throughout
the grant period. When properties are complete and listed for sale, the City will enter
into an offer on another property contingent upon the sale of the rehabilitated
property, so we will be in a position to utilize program income in a timely manner
(first – as required by the grant). Program income will be used both for grant
administration (up to 10%) and to undertake additional
acquisition/rehabilitation/resale projects.
Activity Name –
2. Land Banking.
Projected Start Date –
June 2009.
Potential Partnering Organizations –
No Formal Partnering Organizations. The
City’s partnership with Habitat for Humanity on this project is a critical component to
our reuse strategy.
Activity Description –
The City will seek to acquire four properties through land
banking. Vacant land resulting from demolition activities will be utilized to benefit low
income neighborhoods and individuals.
It is anticipated that two of these properties will be donated to Rock County Habitat
for Humanity for redevelopment purposes. Habitat for Humanity will work to find
eligible families who fall within the range of 30-60% of gross median income for
Rock County. Habitat for Humanity homes are sold for no profit on no-interest, 20-
year to 30-year mortgages to partner families who have completed their “sweat
equity hours”. Before they are donated, the lots will be maintained through a
combination of contracted mowing and snow removal service and volunteer efforts
through neighborhood organizations.
It is possible that some sites may not have the potential for redevelopment.
Therefore, the remaining two properties are anticipated to be donated or sold to
adjoining eligible property owners to reduce density in high density areas. The lots
that will be considered for this purpose may be on particularly small lots or irregularly
shaped lots.
The expected benefit to income qualified persons due to this activity include: a
temporary reduction in the housing supply, a reduction in density through the
elimination of two housing structures that will provide additional green space and
increase the value of adjoining properties and the neighborhood, an increase in
owner occupied housing in the area, and an increase in the quality of housing. A
temporary reduction in the housing supply through land banking will benefit income
qualified persons because our land banking activities will be paired with blight
elimination activities. Land banking will gradually re-introduce quality affordable
housing through its partnership with Habitat for Humanity. A reduction in density
through the elimination of two blighted structures on small lots will enhance the
property values of adjoining properties and the neighborhoods. Through participation
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in the NSP program, the ultimate beneficiaries of the housing will be homeowners.
The City has experienced a much higher level of rental housing in the activity
location. According to data from the City Assessment office, the home ownership
rate for Janesville as a whole is about 82% and the rate for both Fourth Ward and
Look West neighborhoods is about 60%. This activity will ensure that these
properties are owner occupied, which will add to the stability of the neighborhoods.
The redeveloped homes that are ultimately constructed through Habitat for Humanity
will be of much higher quality than the blighted properties that currently exist in these
locations.
Because the land will be donated to Habitat for Humanity, funds used for this activity
will not be used to meet the low income housing requirement for those below 50% of
area median income. However, it should be noted that the end result of this activity
is that five families with incomes below 60% of area median income will benefit from
this activity.
Leverage to complement the activity –
I have not listed as leverage on the budget
summary the contribution from Rock County Habitat for Humanity because the grant
is funding the property (land) acquisition and not the new construction costs. Rock
County Habitat for Humanity has estimated the cost of construction on homes they
build at $65-75,000 resulting in home values of: $85-125,000. Thus, with the
donation of five lots, additional construction dollars totaling $325-375,000 will be
leveraged to complement this activity.
Activity Name –
3. Demolition of Blighted Structures.
Projected Start Date –
July 2009.
Activity Description –
This activity will fund the actual demolition of blighted
structures and site restoration of four properties. (Please note that the site
acquisition costs are included under the Land Banking activity).
By definition, the demolition of blighted structures will result in the removal of
structures that have been determined to show signs of deterioration sufficient to
constitute a threat to human health, safety, and public welfare.
Funds used for this activity will not be used to meet the low income housing
requirement for households below 50% of area median income. The benefits for this
activity will be based upon the area benefit.
Please see the land banking description for additional information how this activity
will benefit income-qualified persons as the acquisition needed for this activity to
occur is listed above.
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Activity Name – Administration
4. .
This activity will provide for general management and program oversight.
E.PL
ROJECT OCATION
The project will take place within the City of Janesville, within Census tracts 3, 4, 6 &
.
10 These census tracts include the neighborhoods commonly known as the Historic
Fourth Ward, Look West, the area directly east and south of the General Motors
Plant, and the area to the north of the downtown. In order to stabilize communities
and neighborhoods, NSP applicants must target funds with priority emphasis and
consideration to areas with the greatest need, including those with the greatest
percentage and number of home foreclosures; the highest percentage of homes
financed by a subprime mortgage related loans; and identified as likely to face a
significant rise in the rate of home foreclosures. HUD has developed an estimated
foreclosure and abandonment risk for every Census block group in the State of
Wisconsin. The score is scaled from 0 to 10, with 10 being the highest or greatest
risk. The average HUD risk score for the City of Janesville is 7. To further target the
area of greatest need in the City of Janesville’s application, we have elected to focus
our activities in Census tracts 3, 4, 6, and 10. Census tracts 3 and 4 have HUD risk
scores of 10 and Census tracts 6 and 10 have HUD risk scores of 9.
Further, within these areas priority will be given to: properties located within either of
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two redevelopment sites as identified in the City of Janesville Look West & Old 4
Ward Neighborhood Revitalization Plan (Adopted December 8, 2008); properties
located along collector, major arterial streets, or minor arterial streets; properties
located near schools or parks; properties identified as poor or fair condition on the
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4 Ward and Look West Housing Condition Report (or of similar condition for census
tracts 6 & 10).
F.COP
ONSISTENCY WITH THER LANS
This NSP Demolition of Blighted Structures activity directly complements the City of
Janesville’s Consolidated Plan. The mission of Janesville’s State and Federal
Grants Program is “to promote the revitalization of Janesville’s downtown and
central city neighborhoods, resulting in vibrant and healthy residential areas with
affordable housing.” The Consolidated Plan includes among its goals providing a
suitable living environment in low and moderate income residential areas. It
includes funds for the acquisition /demolition of blighted structures in residential
areas. One of the reasons we have chosen to include blight elimination in our
application is that, while supply of affordable housing in Janesville is good, the
quality of that housing is not. This is one of the needs that was identified in the
City’s Consolidated Plan, and which will have carried through to our NSP Program.
In December of 2008, the Janesville City Council Adopted the City of Janesville
Look West and Old Fourth Ward Neighborhood Revitalization Plan. This Plan was a
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City-supported plan which came out of the City’s Smart Growth planning process,
and was lead by a group of residents who are actively involved in efforts to improve
the central city neighborhoods. Key concerns that were raised by this group and
throughout the community in visioning sessions were home and property
maintenance issues, density, and the low rate of home ownership in their
neighborhoods.
Three of the key recommendations that were recommended in this plan included:
expanding the City’s Buy, Rehab, and Resell Program, increase home buyers
education seminars and implement a lease to own program.
As it relates to blight elimination, the City has seen an influx of out of town property
owners buying properties, not investing in or maintaining those properties. By
identifying blighted properties, the City will be removing those properties that are
having the greatest negative impact on adjoining properties and where it will not
make financial sense to rehabilitate such properties. The majority of properties will
be donated to Habitat for Humanity, who has a proven track record of identifying
families who will be successful home owners, thus increasing home ownership.
Others will result in density reduction.
G.LIT
OW NCOME ARGETING
At least 25% of funds will be used for housing individuals and families whose
incomes do not exceed 50% of area median income.
H.PC
UBLIC OMMENT
To be completed following the public hearing and comment period.
I.C
ERTIFICATIONS
Add certifications here unless HUD has a separate certification form.
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Appendix One
SUMMARY OF PROPOSED ACTIVITIES AND BUDGET
ACTIVITY NSP FUNDS NUMBER OF HOUSEHOLDS NUMBER OF PROGRAM INCOME LEVERAGE
REQUESTED ASSISTED BY INCOME LEVEL UNITS
$ <50% 51-80% 81-120% # $ $
A. Financing Mechanisms
B. Acquisition/Rehab/Resale
SINGLE FAMILY
Acquisition by applicant $390,000 6 $650,000
Direct homeownership assist
Homebuyer counseling $ 5,400 (2009)
Rehabilitation $360,000 3 3 6 $ 9,000
RENTAL:
Acquisition by applicant $304,000 5 $532,000 $ 60,000
Rehabilitation $302,465 5 5 $ 15,000
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C. Land Banking
$420,000
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D. Demolition of Blighted
Structures
$ 84,000
HOUSING $ TOTAL: $1,860,465
$ 139,535
Administration
TOTAL: $2,000,000
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