The Covington Redevelopment Authority purchased 38 properties in Walker’s Bend in December as it continues its goal of revitalizing neighborhoods and promoting new affordable housing.
The eventual goal is to purchase more properties there and then partner with a private development firm to renovate current housing and build new affordable housing.
Much of Walker’s Bend subdivision was in foreclosure, both houses and vacant properties. The city and authority saw this neighborhood as being on the verge of becoming a slum and hoped to turn it around through concentrated investment, City Planning Director Randy Vinson said.
The authority received a loan of around $200,000 from the city of Covington to purchase the properties, most of which were foreclosed properties owned by the Bank of North Georgia and the Peoples Bank of Covington. These lots were purchased for about $5,500 a piece in combined sales.
Besides the 38 properties already owned, the authority is in the process of trying to negotiate with Rialto Capital Management, a private development firm that also purchased a significant amount of foreclosed lots, 31, in Walker’s Bend.
Vinson said he has contacted the company to discuss a possible purchase of their properties. Rialto purchased their properties in Walker’s Bend for less than $4,000 per property. In addition, Vinson said the city may offer to swap their properties for Rialto’s properties. This would give the authority a more concentrated group of properties to develop.
Although the authority had originally planned to sell the properties to the private firm Affordable Equity Partners to build the affordable housing, Vinson said the city could also explore a partnership with Rialto. However, Rialto focuses on selling homes they build, while AEP does a lot of rental work. The city is trying to revive the neighborhood, so rental properties may be a better fit, at least at first.
AEP has a program where they build single-family homes and rent them for 15 years and then sell them at that point. Vinson said this agreement assures the properties are kept up, because AEP would be selling them 15 years later. AEP also has an established Atlanta presence and relationship with Covington.
However, Rialto may not be interested in a sale or swap. Their parent corporation, The Lennar Corporation, which still has affiliations with Rialto, recently purchased thousands of properties around Atlanta. Lennar saw the rash of foreclosed properties as an opportunity to become a player in Atlanta, a new market for them.
Lennar paid about $243 million for two large portfolios of defaulted loans, held by the FDIC, which were valued at more than $3 billion, according to Lennar’s Web site. The portfolios include 5,500 residential and commercial real estate properties from 22 failed banks. Most of the Covington properties used to belong to The Community Bank of Covington, which was shut down in late 2008.
Vinson said Walker’s Bend was initially supposed to be a mixed-use residential-commercial development. The authority wanted to maintain that vision.
At an Oct. 28 FDIC auction in Atlanta, Vinson purchased one of the mixed-use lots, 6144 Avery St., at the entrance of Walker’s Bend with his own money. In an interview earlier this month, Vinson said he purchased the lot because the redevelopment authority had not yet formed its own bank account, and the property was seen as vital to future plans.
On Dec. 9 Vinson sold the property to the authority for $6,913.54, a dime less than he originally paid for it, according to the sale documents.
At Monday’s council meeting Forrest Sawyer Jr. questioned the ethics of the city buying property from its planning director. Mayor Kim Carter responded that city officials were aware that Vinson had purchased the property and had no problem with it. Sawyer said the situation looked "cloudy" to those looking at it from outside the city.
As far as the actual development project in Walker’s Bend, the authority was keeping its purchases under wraps, because it did not want investors to come in and purchase even more properties in the subdivision than they already have. Vinson said the city is hoping to turn that neighborhood into a quality area that will benefit current and future residents.
The subdivision, which is located off of Ga. Highway 81, currently has a mixture of renters and homeowners. The city recently purchased eight townhomes through its Neighborhood Stabilization Program. Families have recently purchased the homes through Habitat for Humanity, Covington’s NSP partner, and are now living in them.
Vinson said the city hopes to meet with Lennar and Rialto soon to discuss any options.