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Rebuilding neighborhoods one foreclosed home at a time

This article first appeared in the St. Louis Beacon, Sept. 17, 2010 - From the curb, the three-bedroom home for sale at 9424 Chester Ave. in Woodson Terrace appears to be a beautifully maintained residence, priced reasonably at $81,900.

"Impeccable,'' says the MLS listing. "And a kitchen that is every cook's dream!"

The roof is brand new, and so is the buff-tone maintenance-free siding. The concrete porch and driveway are freshly poured; the rose bushes out front are freshly planted.

There is a new construction feel -- and smell -- throughout this 82-year-old two-story. All walls and ceilings have been repaired and painted, wiring has been updated and light fixtures replaced. As promised, the kitchen features new appliances, spacious dark cherry cabinets and gleaming countertops. The home is energy efficient -- from the just-installed windows to the heating and cooling system and water heater.

A former foreclosure, this little gem at 9424 has been gutted, rehabbed and may now be the finest home on Chester Avenue, according to its current owner: St. Louis County.

This turned-around property is one of 130 foreclosed homes in north St. Louis County and Lemay in south county that have been purchased and rehabbed -- or demolished -- by the county in the last 18 months using about $18.5 million in federal funds from HUD's Neighborhood Stabilization Program. The program is intended to help communities stabilize neighborhoods by purchasing vacant properties that can not only deteriorate and endanger the value of nearby properties but also attract vandalism and crime.

The county has been working with local developers to remodel existing homes or to build new homes on the sites. Eighty-five NSP homes are available for sale to low- or moderate-income families, a requirement of the federal program. The remaining properties will be land-banked for later use.

So far, about 20 homes have been sold or are under contract, according to Jim Holtzman, the county's director of community development, who wants to get the word out that this could be one of the best real estate deals around.

The houses range in price from $56,000 for a 62-year-old two-bedroom ranch in Ferguson to $135,000 for a three-bedroom ranch in Florissant. Some of the properties are listed on the county's website. The NSP's targeted area includes: Overland, Woodson Terrace, St. Johns, Breckenridge Hills and Lemay.

"We early on made the decision to renovate these homes to where our buyers wouldn't need to do any major maintenance for at least 15 years,'' Holtzman said. "All of our homes are virtually completely gutted properties. New furnaces. New windows. New roofs. Kitchens, baths. And if they needed it, electrical and plumbing.''

The NSP program is income-restricted to families who are at or below 120 percent of HUD's Area Median Income limit. The income ceiling ranges from $53,750 for a single-person household to $101,650 for a family of seven.

Buyers must have steady income, good credit ratings and be able to secure a traditional fixed-rate mortgage. They must also complete housing education through an approved agency.

To make the deal sweeter, the county is offering loans ranging from $5,000 to $34,500, based on family income, to assist with down payments and closing costs.

From foreclosure to 'The best house on the street'

The home on Chester Avenue is a Realtor's dream, both pricewise and because of the available financing assistance, said Hayley Tomazic of J.F. Meyer Realty. She listed the property and has sold six other NSP homes in the county.

The home on Chester was one of the more expensive rehab projects, costing $132,000 in addition to the $55,000 purchase price, Tomazic said. The current selling price isn't based on the cost of the project but on the fair market value of similar-sized homes in the neighborhood that have been updated.

"It's a great value for the buyers,'' she said. "But it's neat to see the effect on the neighborhood, as well. You've got a house that could sit vacant, and there's the broken window theory -- that it could cause crime. But when this sells for fair-market value, it's going to help other homeowners with the values of their properties.''

Holtzman said the county works with the developers on a budget for each home.

"The acquisition is the cheapest part. It's the total renovation that is the most expensive aspect of the whole deal,'' he said.

In essence, families are going to be moving into a brand new home when they purchase a county NSP rehab, he said.

"And that's what we wanted to do for two reasons: One, to make sure the people we're selling to can maintain it and stay in the house for as long as they want. And two, to make it the best house on the street,'' Holtzman said. "We want to encourage others who are living near and around it to invest in their own property, too. We figure if we invest money we can help others to determine, yes, maybe this is a good place to invest.''

The program contributes to neighborhood stability because the homes must be sold to families, not investors, Tomazic said. And the county's financing loans are forgiven if a buyer lives in the home for five years.

Tom Seibel, project manager for Rubicon, the company that rehabbed the Chester property, said that it is rewarding to transform vacant foreclosures into homes for families again -- and that neighbors usually appreciate the effort.

"Every time we start a house, neighbors come over and ask, 'What are you doing?'' he said. "Some people would look at this and say it is a waste of government money. 'All the money you put into this house, and you're selling it for less than what you put into it?' That's not why the program exists. To me it's a good use of government money.''

Getting the word out

Tomazic said she is trying to spread information about the county's NSP homes to both prospective homebuyers and to other Realtors.

"It's a great deal; it's a great program. Sometimes people almost think it's too good to be true,'' she said.

Robin Campbell, 32, who is buying a newly constructed three-bedroom NSP home in Lemay, said she came across the listing while searching the internet.

"I read it so many times. I called my agent and said, 'I'm not reading this right. This is impossible,' '' she said. "I could never imagine this home in all my prayers and dreams."

Campell, who lives in Lemay and works at a discount retail store, said she wanted to stay in the community because it is a peaceful and safe place for her two children, ages 10 and 14. And she didn't want them to have to switch schools. The family currently rents a two-bedroom home, and she is looking forward to everyone having their own bedroom.

The home is priced at $119,000, and she is taking advantage of the county's loan financing program. But even after that loan is forgiven in five years, Campbell said she plans to stay put.

"I'm not going anywhere,'' she said. "I plan for my great-grandkids to have a place to stay if that's what they need.''

Mary Delach Leonard is a veteran journalist who joined the St. Louis Beacon staff in April 2008 after a 17-year career at the St. Louis Post-Dispatch, where she was a reporter and an editor in the features section. Her work has been cited for awards by the Missouri Associated Press Managing Editors, the Missouri Press Association and the Illinois Press Association. In 2010, the Bar Association of Metropolitan St. Louis honored her with a Spirit of Justice Award in recognition of her work on the housing crisis. Leonard began her newspaper career at the Belleville News-Democrat after earning a degree in mass communications from Southern Illinois University-Edwardsville, where she now serves as an adjunct faculty member. She is partial to pomeranians and Cardinals.