Local effect expected from foreclosure aid

The deadline is today for local and state officials to apply for federal aid to help restore neighborhoods blighted by foreclosures and abandoned properties.

As the deadline nears, nine local governments are busy finalizing plans outlining how they will spend $77 million in aid from the federal Housing and Urban Development Department.

Georgia has another $76 million from HUD the state plans to grant to local communities. That includes more than $38 million to be pumped into 12 metro Atlanta counties.

A few of the most hard-hit counties —- Fulton, DeKalb and Gwinnett —- will get both direct federal aid and a secondary allotment through the Georgia Department of Community Affairs.

Even so, state and federal officials readily admit the impact of the federal Neighborhood Stabilization Program is likely to be localized at best because the foreclosure problem is so severe in some communities.

“I understand this is not the end-all, be-all,” said Susan Peppler, assistant secretary of community planning and development for HUD. “It won’t completely solve this problem.”

But, she said, the money should help. “What if we did nothing?” she asked. “When you look at it from that respect, I’d rather look at it this way.”

State officials said it will be critical for local governments to work with nonprofits, renovators and others to stretch out the money and broaden its impact. They plan to act as a granting agency, taking in applications from the local governments that will actually oversee the buying, renovating and reselling of homes.

“This program isn’t going to do anything without very robust partnerships,” said Glenn Misner, head of field services for DCA.

State officials have heard plenty of complaints about their plans to give state aid to some of the same counties, including Gwinnett and Fulton, that also directly received HUD money.

“We have 159 counties and 400-plus cities all saying, ‘We have issues too,’ ” said Brian Williamson, assistant commissioner with DCA. “The problem exists statewide. But it is concentrated in metro Atlanta.”

The rest of the state money will fund a $15 million loan pool, pay administrative costs and go to more distant counties, such as Carroll, Bibb, Polk and Catoosa, which are also seeing a surge in foreclosures.

With $77 million in federal aid to award, state officials said it was critical they set up clear guidelines so local governments didn’t think they were playing politics. So, they created a formula based on the number of actual foreclosures in each of Georgia’s 159 counties. State officials found problems concentrated primarily in the metro area, where six counties each had recorded more than 1,000 foreclosures through Sept. 30. The state data also showed 22 other counties had recorded at least 100 foreclosures during the period.

State officials found the largest number of foreclosures in Fulton, with 11,500 notices filed in the first nine months of 2008. Of those, 6,822 were completed. DeKalb County ranked second with 3,721.

Williamson said state officials hope the federal aid will be used by local governments to transform some of the state’s most blighted communities through local government efforts to repair and sell problem properties. Still, they recognize that the program has shortcomings.

Williamson said the state will need to spend a lot of its efforts monitoring how local governments spend their money.

He said federal requirements to buy only bank-owned properties at no more than 85 percent of their list price could actually drive down property values in areas hit by foreclosures.

“The last thing we need to do is be contributing to an already bad situation,” Williamson said. In the end, it will be up to local governments to decide which properties to buy and what sort of work to perform on them. They will also have to monitor contractors and eventually sell the properties.

“I hope in 18 months we will be a good way toward climbing out of this problem,” Peppler said. “Absolutely, the ball is in [local governments’] court.”