A new plan to assemble taxpayer, private and philanthropic dollars to purchase foreclosed houses took another step yesterday. The regional committee tasked with encouraging housing and economic improvement in low- and moderate-income neighborhoods unanimously approved a business plan that offered some of the first specific details about the concept, called a land bank.
The predominance of foreclosed properties has government officials concerned some neighborhoods will slip into blight, left to become vacant magnets for vandalism and fall into disrepair before they can be repurchased by homeowners from the banks.
Under the plan, the land bank would acquire bank-owned properties from banks in bulk at a discounted price. Priorities include parts of San Diego, Chula Vista, Oceanside, Escondido, El Cajon and some unincorporated areas.
Barry Schultz presented the plan for the land bank to yesterday’s meeting of the City-County Reinvestment Task Force. Schultz said the task force prefers single-family detached homes or two-to-four unit complexes in neighborhoods hardest hit by foreclosure. The land bank would seek to purchase those properties in bulk, directly from the bank, paying 50 percent of the ultimate resale price.
So the land bank would try to purchase a house for $100,000 to $150,000 from the bank, rehab it, and sell it for $200,000 to $300,000.
Here’s the plan for selling those preferred properties:
Rehabilitate property, according to established standards.
Coordinate with community-based agencies to develop pipeline of qualified buyers.
Price at market, at price affordable to 80 percent to 120 percent AMI buyers ($210,000 to $290,000). Create package of potential seller concessions to include down-payment assistance and/or seller-paid closing costs.
Use selected/qualified “area leaders” as listing agents/transaction coordinators. Area leaders act as independent agents, but coordinate closely with Land Bank to prepare and market properties.
Link to homebuyer support programs. Encourage buyers to promote ownership opportunities to others.
Schultz presented a matrix to show the acquisition of other types of properties. That matrix is here.
Members of the task force asked a bunch of questions about the financial elements of the plan before deciding unanimously to forward the plan to the City Council for discussion. Schultz, CEO of the San Diego Capital Collaborative, said he will have additional information soon about the financial feasibility of the plan. That will help potential investors understand the returns they can expect if they participate in the plan. We’ll keep you posted.