L.V. housing program hasn’t led to purchases
November 9, 2009
LAS VEGAS (AP) – An 8-month-old program aimed at stabilizing Las Vegas Valley neighborhoods by allowing local governments to buy, renovate and then sell homes to low-income families hasn’t resulted in any families moving into homes yet.
The U.S. Housing and Urban Development Department gave Las Vegas Valley municipalities $64.3 million this year to buy homes. The Las Vegas Sun reported Sunday that only five homes been purchased by local governments.
Officials say the primary obstacles hampering local governments in launching the program have been ongoing changes in rules and the volatility of local real estate due to investors suddenly taking interest.
“Generally, funds have been spent much slower than expected,” said Melia Schultzman, who has been monitoring the federal funding from the Oakland office of the National Housing Law Project. “What we’ve heard is that investors are snatching up properties with cash much faster.”
Schultzman said experts are projecting that up to one-third of the 306 state and local governments with neighborhood stabilization funds might miss deadlines, resulting in governments returning unspent money.
Local officials had hoped the millions of dollars would buy hundreds of houses by September of next year. The money also goes to nonprofit organizations involved in buying and renovating homes and helping homebuyers.
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Mike Pawlak, who oversees Clark County’s $30 million from the community resources management division, is the local official who has had the most success with the program so far.
The county bought the first five houses and has seven more in the works.
He said the county spent two months reviewing more than 700 properties on Fannie Mae and Wells Fargo Web sites in the 13 ZIP codes the county is targeting. Each municipality chose ZIP codes according to foreclosure rates and other factors. From that initial group, the county determined that 140 houses fit the program’s guidelines. After inspection, the county asked for prices on 38. But most of those were quickly bought by private bidders.
Pawlak said the program requires that properties meet environmental and historical reviews, which can be lengthy. Also, governments must buy the houses at 1 percent below appraised value, and investors have been willing to pay more.
Kenny Young, senior assistant to North Las Vegas’ city manager, said North Las Vegas is close to closing on two houses, although he acknowledges the city is frustrated by how slow things are occurring.
“We’re not as far ahead as we wanted to be,” he said.
Still, Pawlak remains optimistic about the program’s potential to fill empty homes.
He points out that local governments will first renovate houses in the program then counsel homebuyers before they purchase or rent those houses, two steps that should create more stability across the valley.