Dohoney recommends $75,000 to explore foreclosure initiative

City Manager Milton Dohoney Jr. recommends that Cincinnati spends $75,000 to prepare a study and business plan on the Neighborhood Homes Initiative (NHI).

The NHI has been proposed as one solution for the local foreclosure crisis, allowing foreclosed homes to be purchased and made available to non-profit developers.

Funded by $1,245,000 from the City's foreclosure fund, the Greater Cincinnati Redevelopment Partnership, Inc. (GCRPI) would administer the NHI, acting as a wholesaler and making properties available to community development corporations (CDCs), urban redevelopment corporations, private developers and lenders for demolition, rehabilitation or re-sale.

These properties would be acquired from lending institutions, who find themselves with excess inventory and a depressed housing market.

Demand for foreclosed properties so far has been low, and CDCs have been quite selective due to the high costs required to rehabilitate them.

Under one program, the U.S. Department of Housing and Urban Development's Dollar Homes initiative, CDCs receive no subsidies for rehabilitation outside of the building acquisition costs.

As a result, the City has acquired only 12 properties under this program, involving only four CDCs.

Earlier this month, staff from the Department of Community Development met with the incorporators of the GCRPI to further explore the initiative.

Questions needing further clarification included:

* Are lenders willing to donate or discount properties?
* Are there enough properties to make a significant community impact?
* What organizations and CDCs are willing to participate in the NHI?
* What methodology will be used to select properties?
* How will funds be used, and how can they be leveraged?
* What will be the process for CDC participation?

Some concerns were raised about problems that the NHI might present.

It was pointed out that many lender-owned properties are the worst the neighborhood has to offer, requiring the most money to fix.

Still others felt that the program would somehow "bail out" the banks, who shared the responsibility for creating the problem in the first place.

Funding for the study would come from the Neighborhood Property Redevelopment Program.

If approved, the study would take no more than six months.

Previous reading on BC:
Cincinnati council wants Neighborhood Homes Initiative (2/22/08)