Stabilization funds dry up

SUMMERVILLE -- When Whitney Edwards shook hands Friday with Jeff Stahl outside her new apartment on Travelers Way, they both had good reason to thank Uncle Sam.

Stahl, a developer with Jessco Homes of Charleston, was able to acquire four brand new townhomes here, worth about $370,000, including the one he was renting to Edwards.

Jessco essentially received these properties for free in exchange for its commitment to spruce them up and rent them out at affordable prices for at least five years.

Edwards, who moved into her new two- bedroom unit on Dec. 1, was grateful that her new rent -- about $500 a month -- was less than half of what she had been paying at a North Charleston apartment complex.

Together, their stories show the federal Neighborhood Stabilization Program at work.

But, unfortunately for South Carolina housing advocates, these sorts of stories won't be as numerous in the future as they once had hoped.

Well is running dry

The Neighborhood Stabilization Program was born two years ago as former President George W. Bush and Congress grappled with how to soothe the effects of the nation's burst housing bubble and the resulting tsunami of foreclosed homes.

The program has funneled about $44 million into South Carolina in the past year to help the state tackle its foreclosed and blighted properties.

The idea is to use federal dollars so developers, nonprofits and local governments can buy the properties, rehab them and get them back into use either as subsidized or market rate housing.

For state and local housing officials, this is a bittersweet time. As they watch the emerging successes of the program's first round, they learned this month that South Carolina won't get a dime more, at least for now.

The American Recovery and Reinvestment Act, better known as last year's stimulus bill, had $2 billion to continue the program for a second year, but the state's application -- which focused on Beaufort, Charleston, Greenville, Horry and Richland counties -- came up dry.

Clayton Ingram, director of marketing and communications with the State Housing Authority, said state officials won't know why they were cut out until they are briefed by U.S. Department of Housing and Urban Development officials.

"The first round has been going great. We've obligated 62 percent of funds so far," Ingram said. "We're far ahead of benchmarks as far as obligations of funds expended. ... Our program has been seen as a model of efficiency as far as how it's been run."

The Lowcountry picture

The tri-county area has received about $7.4 million from the program, and local partners already have bought 40 homes, said Tammie Hoy, executive director of the Lowcountry Housing Trust. There's still about $3.2 million unspent.

Eventually, the trust's partners expect to buy and rehabilitate about 70 homes and get them back on the market for sale or for rent, she said.

Unlike some other affordable housing programs, there have been few, if any, complaints from nearby homeowners concerned that this subsidized housing might drag down their property's value.

"Maybe that's because people are thankful these places are being lived in," Hoy said.

The program doesn't deal solely with foreclosed properties.

The city of Charleston plans to use $670,000 in Neighborhood Stabilization Program money to kick-start the redevelopment of four abandoned homes and other vacant property at Fishburne and St. Philip streets.

Those houses never were foreclosed upon, though the state did buy them and give them to the city as part of the Arthur Ravenel Jr. Bridge work.

The city could sign a deal soon with a developer who will rehab the homes, a few of which have suffered from fire, and build other new units.

The project would be a mix of rental and owner-occupied properties at both market rate and subsidized rates, said Geona Shaw Johnson, director of the city's Department of Housing and Community Development.

"We felt that blend would be very nice in that community and would help the developer achieve economies of scale there," she said.

Hoy said the bulk of the Lowcountry's projects include homes in Summerville, Mount Pleasant and James Island -- areas where developers built just as the housing bubble burst -- but it also includes areas with less foreclosure but more vacant, blighted homes, such as southern North Charleston neighborhoods and Charleston's East Side.

"What we're seeing is that this program has been needed for a long time," Hoy said.

Back at Travelers Way

Stahl said the program has done more than helping financial institutions dispose of their foreclosed homes and helping people find high-quality housing at a lower price.

"Truthfully, this program has helped us stay in business in this downturn," he said. Jessco once had 45 employees when the housing boom was going strong. It's down to nine today.

Stahl said he has been interested in affordable housing for a while, and his company has a close relationship with the nonprofit Helping Hands Outreach Ministry, which helps people with renovations they otherwise couldn't afford.

Stahl said he mentioned the Travelers Way townhomes to Helping Hands, and both groups bought four townhomes each, the maximum allowed under the program.

When new, the townhomes were selling for about $120,000, but once they went into foreclosure, the federal government bought them for about $92,000 each. Stahl said the program then reimbursed him about $3,000 per unit to deodorize them, upgrade some appliances and add other finishing touches.

Once they were rented out, Jessco then received a fee of about $15,000 per unit from the program. And after five years, Jessco can sell them or rent them at higher rates. Even though it's a nonprofit, Helping Hands got the same deal on its four units.

Stahl said his hope is that the tenants will buy their units in five years.

That sounds good to Edwards, a single mother raising a son while working on her master's degree and working in the ministry. "This is definitely a blessing for me to be able to live here while I'm going through a transition," she said. "I love it. It's really nice."

Meanwhile, only two of the 18 townhomes here are currently on the market.

"Before, it was kind of empty and vacant looking," Stahl said of Travelers Way, "but it's filling up quickly."

Reach Robert Behre at rbehre@postandcourier.com or 937-5771.