- The Washington Times - Friday, January 3, 2003

People who have experienced good fortune as a result of hard work and perseverance are sometimes frustrated when others tell them they are "lucky." For participants in the Homestead Housing Preservation Program, however, luck is one of several factors that have enabled them to own homes in the District.

Besides having the luck of winning a lottery, these low-income and moderate-income homeowners needed to prove their financial stability and their commitment to a plan for improving the city house by house and neighborhood by neighborhood.

For Joanne Pascale, participation in the Homestead program started with a bit of serendipity. Three years ago, she was beginning to look for a home to buy in the District when a fire drill took place at her office.

Among the crowd awaiting re-entry to her office was a colleague who had read an article about the program and the availability of abandoned properties in the Columbia Heights neighborhood.

"I went in that day to get an application for the Homestead program, completed it and, amazingly, I won," Miss Pascale says. "The chances of winning the opportunity to buy a home were about one in 40 overall. Thousands of people applied, but only about one in 10 could actually qualify for the program. You have to have a job and be credit-worthy so you can afford the mortgage payments."

Applicants to the program review the list of available properties, which also describes the condition of the homes. Then they choose three homes they would like to buy.

A lottery picks a winner and three runners-up for each property and allows the winner 10 days to decide whether to purchase the property.

Benito Lopez found the program through a newspaper ad he noticed three years ago, when he was looking for a home to buy.

"My wife and I are first-time buyers, and we grew up here and wanted to stay in D.C.," Mr. Lopez says. "We selected three homes in the same neighborhood in Columbia Heights and then waited for the drawing. We were the first runner-up for one of the homes, and luckily the winner waived his right to the house. We looked at the house, and it needed a lot of work, but we decided to buy it anyway. Some of the homes require just a new roof or some small project to bring it up to code, but others need a complete overhaul with new plumbing, new electrical systems, a new roof and everything."

Besides participating in the 12 classes required by the Homestead program, the Lopez family found a loan and an architect. The Homestead program has a relationship with the Architecture Research Institute of America to provide an architect to those who need one. The Lopezes expect to be able to move into their home soon, after three years of hard work and anticipation.

When the program was established in 1986, its goals were twofold: to provide opportunities for homeownership to low-income and moderate-income families and to reduce the number of blighted properties in some D.C. neighborhoods.

Stanley Jackson, director of the District's Department of Housing and Community Development, says, "The Homestead program was established by legislation because of the tremendous need to strengthen neighborhoods and families. The concept was first to expand homeownership for those who are economically challenged, and by expanding homeownership to strengthen families. At the same time, the program helped solve the problem of reducing the number of blighted properties that are further hurting communities.

"In addition, the Homestead program functions to turn nonproductive assets into properties that are generating assets for the city in terms of tax revenue."

Carlynn Fuller, acting Homestead administrator, and Barbara Cannady-Masimini, Homestead property analyst, work closely with the District's Office of Tax and Revenue to identify delinquent properties.

"When the period of redemption has expired on a property, we'll add it to our portfolio. We use the tax records as a source to identify properties," Ms.Fuller says. "When we make the decision as to whether to add a residence to the Homestead list, we do site visits and a detailed search of the ownership. Usually the homes are unoccupied, but if there are tenants, we always offer them the first right of refusal to buy the home and the opportunity to participate in the program."

Mr. Jackson says the homes that are brought into the program are a blight on the city because they are neglected and the city is losing the revenue from unpaid property taxes on them.

"For the most part, all the homes need rehabilitation. Some need a substantial amount of work, and some do not. It really depends on how long the property has been neglected or abandoned, or whether the building has been damaged by vandals. Since the Homestead program began, approximately 233 single-family homes have been sold, with 202 completely rehabilitated and owner-occupied," Mr. Jackson says.

"Around 40 to 46 condominium buildings were also renovated, which has generated over 420 housing units," he says.

The program does not have any properties in existing inventory, but the staff is working on acquiring 12 to 15 properties by the spring.

"We kicked off the Home Again project by turning our houses over to that program recently," Mr. Jackson says. "That program allows developers to rehabilitate homes in bundles of five to 10 or 15 to 20 buildings, which they will bring up to code and then sell. Thirty percent of those homes have to go to low- and middle-income buyers."

Anyone interested in participating in the project should watch local newspapers for ads in the early spring and check the Department of Housing and Community Development's Web site (www.dhcd.dcgov.org), which has a menu option to go to Homestead information.

"Interested individuals can respond to the ad, which will have a deadline for the application process," Ms. Fuller says. "All the processing is done in-house, and we run a credit check on each applicant. They must be first-time home buyers, and they must be able to qualify for a loan which can support the rehabilitation process for each home. The goal is to target opportunities to people who might not be able to afford a home, so each applicant who purchases a home through the program can receive a $10,000 deferred loan, which doesn't have to be repaid until the house is sold."

Participants must agree to make repairs on the property to bring it within the city's housing and building code requirements, complete the Homestead program's Home Ownership Training Course, pay all future taxes and assessments on the property and live in the property for at least five years.

"We provide technical training so our participants can learn how to monitor their contractors and how to maintain their homes once they are rehabilitated," Ms. Fuller says. "We also offer free architectural services to help people with the design changes they might want to make. It's an overwhelming opportunity for people, but of course, they have to make the decisions on how much they can customize their home based on what they can afford to pay. There's an element of practicality, too."

According to Ms. Cannady-Masimini, "We work with the people who buy these homes from start to finish, helping them secure a contractor, providing them with housing counseling services and monitoring the whole construction process to make sure the work is completely satisfactory."

The program has been designed to discourage speculative acquisition of properties.

"We want the people in this program to be a part of their neighborhood," Mr. Jackson says.

"If for some reason the participants want to sell the property prior to their five years of residence, they must pay a penalty that is pro-rated based on how long they have lived in the home. For example, if someone sells their house within one to 15 months after moving in, the penalty would be 80 percent of the assessed value at the time of sale," Ms. Cannady-Masimini says.

After the five-year period ends, the owners are free to sell their homes if they wish. In some cases, their initial investment of as little as $250 for the property plus the rehabilitation loan will have grown into a home worth more than $300,000.

For Miss Pascale, "My house cost $250, plus I've put in about $200,000 on the rehabilitation process, and I'll need to put in another $50,000 to fix it up a little more. But I've already made money because the house was recently appraised at $375,000."

Miss Pascale's home had been lived in the year before she bought it and was not in terrible condition.

"It's a typical row house, and so I wanted to open it up a little," she says. "I opened up the kitchen, added a second bath upstairs and put in skylights and French doors to make it brighter. I also put in new plumbing, new appliances and a new roof and replaced the windows."

"I did everything as high-end as I could afford because I wanted to be able to enjoy it," Miss Pascale says, "but also because it's nice for the neighborhood. I think Columbia Heights, especially my block, is a really nice area."

Miss Pascale says she believes the Homestead program has done much to help stabilize her neighborhood.

"A lot of investors are coming and renovating places in Columbia Heights right now because it's considered a hot market, but they are often doing a poor job on the renovations and then selling them or renting them quickly for a high price," she says.

"These investors don't do as much to stabilize the neighborhood as the people who live in the homes and have put their own money and work into them. Going through the process of fixing up this house for the past couple of years has made me feel much more vested in the neighborhood."

Mr. Lopez's street includes several homes being renovated through the Homestead program, and he thinks they are a big boost to the community.

"These houses had been boarded up, and now they are being fixed up for families to live in. This changes the whole street, and the neighbors are all really happy," he says.

The Lopezes needed to replace the roof on their home, so they chose to raise the roof and add a master bedroom suite on the upper level. They also enlarged the kitchen while rehabilitating the house.

"Besides the initial $250 investment and the $10,000 loan, which we'll repay when we sell the place, we took out a $125,000 loan for the renovations," Mr. Lopez says. "Our house was recently appraised at between $180,000 and $200,000. So even though it has been a long three years while all the work was done, we are eager to move in and happy to get into such a good house."


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