Feds: Atlanta needs to pick up pace on foreclosure program

Facing a September deadline to spend or commit the money, city officials have asked for more time.

Meanwhile, they learned Atlanta's bid for $58 million more in a second round of such grants has been turned down.

The U.S. Department of Housing and Urban Development's office of inspector general completed an audit last month that found just $141,480 had been spent on activities, excluding expenses, to run the program.

James Shelby, the city's commissioner of planning and community development, told The Atlanta Journal-Constitution in an interview Monday that in the time since auditors completed their report, the city has approved slightly more than $2 million to acquire 39 homes that will likely be rented or sold.

Shelby said it's possible the city could lose any unspent money if it's not committed by a September deadline. The city has asked HUD for an extension. The department plans to give its quarterly update Tuesday to the City Council's Community Development/Human Resources committee.

Shelby said staff has been bogged down by efforts to meet the deadline, getting information for the audit and applying for nearly $58 million in the second round of NSP funds. They city learned earlier this month it would not get the additional funding. No local government in the state received funds, city officials said. Shelby said the city is waiting for an official notice explaining why it didn't get a second round of funds. HUD officials weren't available for comment Monday.

Several Atlanta neighborhoods south of I-20 have seen a significant rise in foreclosures since 2006, which city officials and community leaders say leads to more crime.

City officials wrote in their first NSP application that "nearly/over half" of Atlanta's census tracts are at a high risk of foreclosure or abandonment. Foreclosure filings rose in the city from 9,334 in 2006 to 10,564 in 2007. More recent numbers weren't available, but the filings were on pace in 2008 to rise to 13,385.

Dozier Smith, a former city councilman, said thieves have robbed a home he owns in the Sylvan Hills neighborhood five times since he bought it in October 2008. Many homes in the area are in foreclosure, as was the one he bought and has been working to fix up. He estimated the cost from the thefts at more than $10,000.

"I am very frustrated," he said. "I'm ready to get out of Dodge."

The federal Neighborhood Stabilization Program was passed in 2008 in response to the nation's foreclosure crisis. Metro Atlanta communities were awarded $68.2 million. Atlanta is the only local government that federal officials have audited.

The city has contracts with more than a dozen agencies, such as the Atlanta Neighborhood Development Partnership, to buy, fix up and rent or sell foreclosed and abandoned homes.

City officials say developers and investors frequently beat them to buying properties. One reason, noted ANDP president John O'Callaghan, is that HUD requires them to check the property for lead paint and other potential environmental hazards. Another challenge for the city is HUD prohibits it from buying properties above fair market value. Investors don't have such restrictions.

Some community leaders and even a few council members have had low expectations for the NSP, noting past federal efforts aimed at revitalizing low-income neighborhoods, such as the $250 million invested in an empowerment zone in parts of south Atlanta 15 years ago, had mixed success.

Shelby believes the NSP is valuable. "Any time you can put someone in a home, the person who lives next door will tell you it's a success," the commissioner said.

Councilwoman Joyce Sheperd is worried that the federal guidelines and other obstacles makes it difficult for the city to spend the money and make a difference in neighborhoods hit hard by foreclosures. Some investors are doing little with their property, she and others complain. Sheperd plans to ask city officials several questions at Tuesday's committee meeting. She also planned a community meeting in the area Monday evening to discuss crime concerns.

In a telephone interview, Sheperd -- who is the committee chair -- wondered, "Do we have the capacity to do this? Is it realistic to do what (HUD) is asking us to do?"

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