Phoenix residents see benefits of housing program

Three years after the federal government began pumping millions of dollars into Phoenix neighborhoods, some residents are beginning to see the benefit of the U.S. Department of Housing and Urban Development's Neighborhood Stabilization Program.

In late 2008, Congress approved the program to help reduce the number of foreclosure and abandoned properties throughout the country. Money must be spent on bank-owned properties, in low-income areas and help buyers or renters that meet income requirements.

Because of the sheer volume of its troubled real estate, Phoenix received more funding than some states. Of the $6.9 billion awarded over three years, Phoenix received $115.5 million.

The local program offers incentives to homebuyers in the form of down-payment and closing-cost assistance. It also allows the city to buy and rehabilitate foreclosure homes and multifamily apartment complexes and buy foreclosure properties to demolish and redevelop at a later date.
 
Flexibility and partnerships are key, said Kate Krietor, deputy director of the city's Neighborhood Services Department. The city knew it didn't have the resources or expertise to buy, rehab and sell dozens of single-family homes, so it found partners that could.

Margie O'Campo de Castillo, a Phoenix real-estate agent, said the biggest challenge now is raising awareness about the availability of homes.

Using stabilization funds, the Cesar E. Chavez Foundation bought 48 homes to rehab and is in the process of buying 30 more, O'Campo de Castillo said. Most of the homes are located in a target area, bounded by Camelback Road, Southern Avenue and 19th to 107th avenues. The foundation has sold 10 homes to qualifying buyers.

"This is a way for someone to purchase a home," O'Campo de Castillo said. "It's a different process, as mandated by HUD, but we're committed to helping people be successful in the buying process."

Gary LeBlanc, a resident active in the Pasadena and Grandview neighborhoods near 15th Avenue and Camelback Road, said he applauds the city for buying the blighted Park Lee Apartments, a 32-acre community of more than 500 apartments, for $5.2 million. The city plans to spend another $5 million on electrical-system upgrades, new parking and sidewalk surfaces, carpet, paint, appliances and other amenities metropolitan apartment dwellers clamor for.

"I think the program is doing a fabulous job," LeBlanc said. "All the neighbors are talking about it."

It's difficult to measure the success, because each qualifying state or municipality faces different challenges, said Sheila Harris, an affordable-housing expert and former director of the Arizona Department of Housing. In Maricopa County, more than 28,000 homes are in foreclosure.

Experts said buyers are looking at price and location. Unfortunately, Harris said, homes in desirable, higher-income neighborhoods such as Ahwatukee Foothills, Arcadia, historic districts and those in north-central Phoenix aren't eligible for the neighborhood-stabilization incentives. Changes to the program would take an act of Congress. 

HUD is pleased that Phoenix has met the spending requirements, Harris said. Some cities have returned money from the program because they couldn't find enough properties that qualified. Harris said Phoenix's Neighborhood Services and Housing Departments' three-prong approach followed HUD's criteria, allowed flexibility and appeased elected leaders.

"Everyone on the City Council had a foreclosure problem in their district," Harris said. "Everyone wanted some of the funds. Phoenix had to spread their efforts out instead of concentrating in one area."

Congress approved funding three times for the program. Each time, criteria changed slightly, but overall, activities funded by the program must benefit low- to moderate-income residents whose incomes do not exceed 120 percent of the area's median income. In Phoenix, a household of four can earn $78,600 or less and qualify.

Phoenix delivered what it promised, said Rebecca Flanagan, field-office director for HUD's Phoenix and Tucson offices. Government programs sometimes have a hard time being responsive to the local environment, Flanagan said.