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City Loses Big Flipping Real Estate

Comments | Posted in News | By MacIverNews | Posted December 10, 2012 8:31 AM

MacIver News Service | December 12, 2012

By Bill Osmulski
MacIver Institute Investigative Reporter

[Janesville, Wisc...] After pouring about $165,000 into a house in Janesville's Fourth Ward, the city is about to sell it for $85,000.

The city council unanimously approved the sale of the house at its Monday night meeting.

The four bedroom, 2,000 square ft. home is part of the Neighborhood Stabilization Program. The Wisconsin Department of Commerce gave Janesville a grant for $1.2 million in 2009. The State of Wisconsin got the money from the US Department of Housing and Urban Development (HUD).

"The goals of the Neighborhood Stabilization Program (NSP) are to reduce blight, provide affordable single family homes, and stabilize and improve the real estate market in those neighborhoods being hit the hardest by the foreclosure crisis," according to the city council's agenda packet for December 10th.

The program was first authorized under the Housing and Economic Recovery Act of 2008. About $3.9 billion was allocated to states for the program at that time. It received another round of funding under the Stimulus Act, and then a third round under Dodd-Frank.

Part of the reason this renovation project in Janesville got so expensive is HUD requires that all contractors and subcontractors be paid Davis Bacon fair wage rates.

The Janesville City Council agenda states all proceeds from these sales return to the NSP program.

So far, the city has sold five homes like this, two are currently for sale, and another three to six will be for sale next year.

The MacIver News Service attempted to reach the Janesville Neighborhood Services Director, but the call was not returned.