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Posted: January 8, 2009 7:38 p.m.

Newton applies for federal funds to aid with foreclosed homes

After much debate, the Newton County Board of Commissioners finally approved an application for federal funds to redevelop foreclosed homes with a unanimous vote Tuesday night.

Newton County has been allocated $2.2 million in federal funds through the Neighborhood Stabilization Program which is being administered statewide by the Department of Community Affairs. The $2.2 million figure includes the $428,070 the city of Covington has been allocated through the program.

In previous discussions over whether to apply for the program, debate on the issue fell largely along party lines with Republican commissioners questioning the propriety of local government becoming involved in the buying and selling of residential properties.

If the county is awarded the allocated funding, it may be spent on the purchase and rehabilitation of abandoned or foreclosed homes, on the demolition of blighted structures or in redeveloping vacant properties.

Newton County Senior Planner Scott Sirotkin told the BOC the county had an estimated 823 foreclosures in 2008, with 117 properties still to be auctioned. The county also has 5,000 vacant lots.

The NSP requires homebuyers of redeveloped NSP homes to meet certain financial thresholds. All program monies must be used to benefit those whose incomes do not exceed 120 percent of the area median income and 25 percent of all program funds must be used to redevelop homes for families whose incomes do not exceed 50 percent of the area median income.

The median family income in the county is $69,200.

District 1 Commissioner Mort Ewing again expressed some hesitation with applying for the funds saying, "I’m not opposed to the concept of helping people in need. My concern …is the potential exposure to the county budget and the taxpayer."

Newton County Chairman Kathy Morgan said if the county partnered with a nonprofit in the redevelopment of foreclosed homes, the nonprofit would pay for the operating expenses of the program and incur any financial risk if homeowners defaulted on their mortgage payments. Operating expenses, which could include utility bills and the cost of appraisals, may not be paid for with NSP funds.

"I think there will be [county taxpayer] exposure in administrative costs," Morgan said.

The NSP requires that all purchased properties be bought at least 5 percent below the market value.

All redeveloped homes must be sold at or below the cost to acquire and improve the house. This means there can be no profit. The county may use the funds received from the sale of homes to purchase more homes for redevelopment or for improvements to blighted areas such as a public park.

The BOC went into executive session, which is not open to the public, to receive information on specific targeted properties in the county for redevelopment.

The board has yet to select a partner to work with on the NSP. A partner is needed as the county has no previous experience redeveloping and selling foreclosed and abandoned homes.

On Monday, the city of Covington selected North Carolina nonprofit Builders of Hope as their partner. The county could partner with Builders of Hope. Other potential nonprofit partners include the Independent Educational Community Development Group and Habitat for Humanity.

The NSP application is due Jan. 15. Prior to that a public meeting will be held at 6 p.m. Jan. 13 at Turner Lake to hear comments and receive input from area residents on participation in NSP.

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