February 11, 2010
Brooklyn Asks: Where Did the Stimulus Funds Go?
Note: This story, which originally appeared in El Diaro/La Prensa, was produced
as part of NAM's
Stimulus Watch coverage and was funded with a grant from the Open Society
Institute. It is part three of a three-part series. You can read part one here. and part two here
Elba Reyes, from Puerto Rico, and her husband thought they had found a home to
raise their five children when they bought their house five years ago in
Bushwick on 59 Harman Street, an area of two-story houses.
However, Reyes, 44, is now having nightmares about intruders breaking into her
home and harming her children.
“Once again you can see drugs being sold on the streets; you often hear gun
shots,” Reyes said. “I am at home with my children and I hear helicopters and
The economic crisis has left an epidemic of foreclosures in Bushwick,
especially in the southern area, where many Hispanic homeowners like Reyes
live. Just on her block, three houses have “for sale” signs; another five are
abandoned, with boarded-up doors and windows, accumulating trash and graffiti.
“When we bought the house five years ago, it was difficult to get a house in
Bushwick that one could afford, but now you walk two blocks and see four, five,
six houses for sale,” Reyes said.
Homeowners in the area like Reyes, who paid $285,000 for her house and is up to
date with her payments, have seen their home prices sink 45 percent in the last
two years, according to data from the Furman Center at New York University. For
many, hopes for the neighborhood’s revitalization rest on President Barack
Obama’s promised intervention.
The federal stimulus plan approved last year included a $2 billion package to
help cities all around the country buy and repair these abandoned houses and
offer incentives to potential buyers.
The program, the Neighborhood Stabilization Program 2 (NSP2), seems tailored
for a neighborhood like Bushwick, but its benefits are uncertain.
One of the problems lies in the fact that last January, New York City got just
$20 million of the $50 million it requested to cushion the impact of more than
59,000 foreclosure processes initiated since 2006 through the city. Of these,
almost 1,600 are in Bushwick alone. The non-profit Habitat for Humanity was
awarded an additional $10.5 million for projects in Bedford-Stuyvesant and
Brownsville-Ocean Hill, in Brooklyn.
“Twenty million in any city wouldn’t scratch the surface, let alone in New York City,” said
Craig Nickerson, president of the National Community Stabilization Trust, an
organization that facilitates the transfer of foreclosed and abandon properties
from banks to local housing organizations.
The cost of buying and restoring a home in New York
is very high compared to other cities in the country, explains Arden Sokolow,
responsible for supervising the NSP2 program in New York City's Department of Housing
Preservation and Development (HPD).
“You read those articles about how houses in Cleveland
are selling for $12,000 or in Detroit
for $8,000, we can’t do that,” says Sokolow. “Foreclosured homes here are
selling for $300,000.”
The foreclosure crisis in the city is not widespread; it is concentrated in
certain neighborhoods like the center of Brooklyn or Southeastern
Queens. This could explain why it has received much fewer funds
from the stimulus plan than other large cities, like Los Angeles, which was awarded $100 million,
according to an HPD spokesperson.
“New York City as a whole hasn’t felt the repercussions of the foreclosure
crisis as deeply and widely as many other states have, although we have many
neighborhoods that are deeply impacted,” said Eric Bederman, HPD spokesperson.
“We’re a city of renters.”
To balance out the lack of funds from the stimulus, HPD will use this money to
attract private funds for the activities, as it did in 2008 with $24 million
from a previous federal program, the Neighborhoods Stabilization Plan 1 (NSP1),
which attracted $32 million from the private sector.
In its NSP2 proposal, HPD called for acquiring and rehabilitating 320
foreclosured homes and redeveloping 320 vacant sites, but it will have to scale
down its activities now. HPD's Sokolow says they are waiting federal guidance
on how to do this.
The city plans to use part of the stimulus funds to help families with low and
moderate incomes to buy abandoned or foreclosed homes. A family of two that
earns less than $73,680, for example, could apply for the aid, which could be
up to $50,000 per building for down payments.
However, residents like Reyes doubt that Bushwick families who earn an average
of $31,000, according to the Census, will be able to afford these houses. As an
example, Reyes mentioned a nearby two-family house, which was recently restored
thanks to a HPD supervised program devised to create affordable housing, which
is selling for $460,000.
“I really don’t think that there are going to be any benefits for low-income
people,” said Reyes, who earns $32,000 as a city parks officer. “For people
like me, who earn less than $40,000 a year, a half million house--it’s not a
house for low-income people.”
The city had also proposed using $10 million from stimulus funds to complement
its existing stalled site redevelopment program, known as Housing Asset Renewal
Program (HARP). It offers incentives to developers to acquire and redevelop
unsold or stalled condominiums converting to affordable rentals and
homeownership units. However, given the reduced grant allocation, the city
won’t be using stimulus funds to complement HARP, explains Sokolow, from HPD.
This is bad news for Bushwick-based organizations that believe the HARP
program, which is already funded with $20 million of city money, offers a great
opportunity to create affordable homes in a rapidly gentrifying community.
“For people in
the community, who earn $20,000, $25,000 or $30,000 per year, the condos are
there, but it’s impossible for these people to afford them,” says José
López, an organizer with Make the Road. This local non-profit
estimates that there are more than a hundred empty or stalled condominiums in
Bushwick that sprung up during the recent housing boom.
Another problem for the beneficiaries could be the slow pace at which the funds
are being invested. So far, the city has only committed about $2 million in
NSP1 funding to purchase and rehabilitate seven houses in the Bronx, Queens and
Staten Island and a six-family property in
Bushwick. According to HPD, this delay is due to the fact that in attracting
private funds, the city has had to create a credit facility to channel these
“Now that the credit facility is up and running, we will begin to buy
foreclosured properties much more quickly,” said HPD's Bederman.
The HPD spokesperson said that the federal program is just one of several tools
they are using to stabilize neighborhoods.
In December 2007, the city helped launched the Center for the NYC Neighborhoods
(CNYCN), a non-profit that supports and coordinates the efforts of more than 20
non-profits in the city that help homeowners free-of-charge.
The CNYCN has a $7.5 million annual budget, a third of which comes from HPD and
the City Council; the rest is composed of private donations. Since its
creation, the CNYCN network has assisted nearly 6,000 homeowners and submitted
more than 1,800 applications to modify mortgages.
“Just a little bit of money to fund counselors goes a long way,” said Mike
Mastman, a foreclosure prevention counselor from Grow Brooklyn, which operates
within the CNYCN network.
Mike Hickey, CNYCN executive director, regrets that the stimulus plan doesn’t
include specific funding for housing counseling.
“The stimulus plan really doesn’t do much to help individual homeowners,” said
Hickey. “It’s frustrating that a lot of efforts have been dedicated to
addressing the impact of the foreclosure and economic crisis, but very little
of it has gone directly to support homeowners.”
For Reyes, the best way to prevent her neighborhood's deterioration is to keep
neighbors in their homes.
“We already know each other,” she said. “I know my neighbor, my neighbor knows
the next neighbor, and so each of us knows what we are up against.”
More on: Improving Housing