HUD awards city $47M to help stave foreclosures

Detroit's Planning and Development Department was awarded $47 million from the U.S. Department of Housing and Urban Development to curb the city's foreclosure crisis. First step: the creation of a business plan that will detail, department by department, the approach the city will take.

Regulating the use of the funds are several guidelines, including:

• The funds are to be used to purchase and redevelop abandoned and foreclosed homes and residential properties;
• A minimum of 25% must go towards affordable housing;
• Funds can be used to establish financing mechanisms for the redevelopment of foreclosed homes;
• Properties must be purchased at a discount from their current market appraised value;
• Investments to properties that increase energy efficiency or introduce a renewable energy source are eligible;
  
• Funds can be used to establish land banks and to demolish blighted structures; and
• Funds must be obligated within 18 months after they are received.

The department faces the challenge of making sure that any and all affected residents get help. "We want to help a lot of people, so we want to come up with the plan that is the most comprehensive that falls within the guidelines," says Marja Winters, the department's deputy director.

Because of the domino effect that even one foreclosed house can have on a neighborhood, the department wants to move quickly, as Winters says, "to prevent further deterioration, further blighting influences in our neighborhoods."

The final plan must be approved by City Council and HUD before it is put into practice.

Source: Marja Winters, PDD
Writer: Kelli B. Kavanaugh