Ashtabula County’s Department of Community Services is embarking upon a new approach to address the blight of vacant, foreclosed homes in target neighborhoods.
Janice Switzer, program manager, has presented to the board of commissioners a developers agreement that will allow a private developer, CE. R.E. Investment Corp. of Jefferson, to purchase and rehabilitate a home with Neighborhood Stabilization Program grant money. Commissioners unanimously approved the resolution Tuesday.
The Ohio Department of Development allows grantees to use experienced, qualified private real estate developers to acquire and sell abandoned, vacant or foreclosed homes. However, Switzer said Ashtabula County has never used this process, and looked to Lake County’s program for guidance.
While the county could conceivably buy the property and contract to have it renovated, Switzer said that process is “cumbersome, so the state has encouraged us to use private developers.”
The first property to be given this treatment is the residential area near Ashtabula Towne Square, one of three target areas so selected because of its high density of foreclosed properties. The house has been foreclosed upon, is bank owned and vacant.
The developer will handle purchase negotiations with the bank and advance the money to acquire the property. The Department of Community Services will use the grant money to reimburse the developer. An appraisal must prove that the property was purchased below market value.
Switzer said a staff member has already inspected the house and the department will write up a plan for rehabilitation, along with estimates. The developer has the option of doing the work himself or contracting for it. He will submit monthly bills for reimbursement from the grant funds. When the work is done and approved, the house goes to market.
“It’s his responsibility to market it and find a buyer who meets our guidelines,” she said.
The developer receives a $7,500 fee for his work, but does not share in any profits. Switzer says the program will allow the house to be sold below its market value, making for a very good deal for a qualified buyer. As to what happens to any profit from the sale, Switzer says that’s an unsettled issue.
The department approached CE R.E. Investment based upon work the developer performed for the county on other projects.
Switzer said she has shared information about the program with the City of Geneva, which has a target area under the NSP grant. The third area is the west side of Conneaut.
The county received $810,000 for housing re-development, which includes money for home buyers to use as a down payment to purchase or rehabilitate homes in a target area. Switzer said the department was unsuccessful in finding potential home buyers for that aspect of the grant, so she turned to private developers.
The board of commissioners approved a total of $120,000 for the acquisition, rehabilitation and resale of the property, but Switzer said the actually amount will probably be closer to $100,000. She estimates that there should be enough money to do at least seven properties this way.
The projects are entirely outside the general fund.
Switzer said the county will seek other qualified developers to work with the department on similar projects in the target areas.
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