Tuesday, June 15, 2010

Cole foreclosure proposal deemed a duplication of services

A proposal by then-Cincinnati City Councilmember Laketa Cole to reduce inspection fees for buyers of foreclosed properties would likely duplicate other available programs and take up valuable City employee time, according to Department of City Planning and Buildings Director Charles C. Graves III.

"While the administration supports rehabilitation of foreclosed properties, establishing a program to eliminate fees for permit and inspections would be more costly to implement and administer than the value of the outcomes," Graves said in a recent report to City Council.

That assessment comes following a study by the department and other City agencies, prompted by Cole's May 2009 Council motion.

Graves said that deferred maintenance on foreclosed properties often means that the new owner needs to make cosmetic changes such as the replacement of roofs, siding, windows, and gutters, as well as new flooring carpet and paint.

That work doesn't require a permit, he said. Only the replacement of mechanical systems or work involving the cutting of structural members would require one.

"The permit fee is usually 1 percent to 2 percent of major renovation costs for these systems and would not likely be enough of an incentive to rehabbers to justify establishing and administering the program," Graves said. "Any funds available to assist with underwriting permit fees could be considered for gap financing to repair foreclosed buildings so that the regulatory safety processes for permit issuance and uniformity of fees and enforcement do not take on a perception that some owners receive preferential treatment over others."

Among the existing programs that Graves suggests for buyers of foreclosed properties are:

  • The Neighborhood Stabilization Program (NSP1 and NSP2), administered by the U.S. Department of Housing and Urban Development, funded with over $8 million for each program for the purchase and rehabilitation of foreclosed properties;
  • The Emergency Mortgage Assistance Program, administered by the Legal Aid Society of Greater Cincinnati, funded with $143,000 for 2010 to assist 45 Cincinnati homeowners in financial distress; and
  • The Vacated Building Maintenance License (VBML) program, which refunds VBML fees if a building is redeveloped within one year. Building owners can also apply to have VBML fees suspended for up to two years.
Previous reading on BC:
Cole: Make blight redevelopment easier (6/10/09)