Continued...

Careful Collaborations

Patrick Morrissy, HANDS’ executive director, as well as National Housing Institute board member, credited existing CDC work, renovating, rehabbing, or developing housing with a particular purview, but pointed to the more regional scope of ONR. “The subprime mortgage crisis and subsequent economic fallout has caused the greatest downward pressure on urban neighborhoods that we have ever seen,” he said at a news conference unveiling the project, adding “three decades of important neighborhood stabilization work is threatened and could be undone in a very short period of time.”

But Morrissy pointed to 16 collaborators involved in ONR that were pivotal in securing the bulk portfolio. Among the projects redevelopment partners include Brand New Day in Elizabeth, NJ, Unified Vailsburg Services Organization in Newark, Episcopal Community Development in Newark, HOMECorp in Montclair, NJ, the Greater Newark Housing Partnership, and La Casa de Don Pedro in Newark.

“Never in all this time have we come together with a single resolve that if we don’t work together, our individual efforts aren’t going to add up to enough to meet this crisis,” Morrissy said.

HANDS first made contact with then Washington Mutual in 2007 looking to deal with the particular properties, but had limited success in making sustained contact with the bank, Meyer said. “But what we did was go to an auction that they were having and we bought a property.” That purchase gave HANDS a good idea of what it cost for WaMu to go through the foreclosure process. Meyer noted that after that single property transaction, HANDS was ready to pursue the whole portfolio of 47 mortgages.

Once the negotiation process became serious, WaMu gave HANDS a 45-day due diligence period for HANDS to go into each property and do a floor-by-floor, room-by-room, and systems renovation analysis. Then they made the purchase offer.

Meyer said that only a handful of properties would need to be demolished because of their condition, and replaced with new houses. Out of the properties acquired, 14 will be developed as market rate, intended to support the development of the other properties as affordable housing.

Having the financial partners, national community development intermediaries and a financial investment insurance company in NeighborWorks America, LISC, Prudential, and Enterprise, working together in a local context was a major facilitator in achieving the project’s financing, said Robert Zdenek, the former president of New Jersey Community Capital.

Michael Meyer, Newark’s director of housing and real estate, who also sits on the regional Essex-Newark Foreclosure Task Force and is an advisor to the CAPC initiative, suggested the scale of the ONR project, as well as the partnerships involved, could prove to be a model for other localities, as well as presenting future potential when it comes to handling the estimated 900 REO properties that currently exist in Newark. “The scale of community reinvestment that is required to stabilize our neighborhoods is substantial,” he said.

“ONR is one more weapon we have in our arsenal,” said Gerard Haizel, executive director of Episcopal Community Development.

The federal government’s Neighborhood Stabilization Program (NSP) could supply additional funding for future projects, Newark’s Michael Meyer said, pointing to last summer’s $3.9 billion in emergency NSP funding, to be distributed to states and localities. New Jersey is receiving $64 million with some of the money funneled to localities. Another NSP round of $2 billion in funding, will allow states, localities, and nonprofits to collaborate, as is the case with ONR, and apply directly for those resources.