Somebody call the mayor of Frayser. It looks like he'll be getting some new constituents.
Last October, Memphis and Shelby County held an emergency summit to discuss how to spend more than $14 million in federal foreclosure funds. The 2008 Housing and Economic Recovery Act (HERA) allocated $3.92 billion nationwide to redevelop abandoned and foreclosed homes, pending approval of local governments' remediation plans.
In plans submitted to the federal government, the county is planning to spend its entire allocation of Neighborhood Stabilization Program funds — $2.75 million — in Frayser.
Under federal guidelines, the money can only be used in the areas hardest hit by foreclosures, whether by sheer volume, percent, or greatest growth.
"Frayser came out on the very top for all the categories," says Jim Vazquez, administrator for the Shelby County Department of Housing. "We worked with the city to coordinate where we thought we'd have the biggest impact. Instead of spreading our resources around, on the county side, we decided to focus on that number-one area."
The city plans to use its $11.5 million allocation within the 10 local zip codes that have been "most severely impacted" by foreclosures and subprime lending. The administration estimates the funding will buy and rehab 145 homes. Additional foreclosure funding is also coming to the Memphis area from the state.
Within Frayser, the county would like to coordinate its efforts in the heart of Frayser, near Watkins and St. Elmo.
"If each house costs $50,000 to $60,000, the total number of houses we could do would be 40 to 50, even with $2.7 million," Vazquez says. "It doesn't go as far as it sounds like it would. We can get a much bigger impact on one community than trying to do it on a spot basis."
Under Neighborhood Stabilization Program guidelines, the homes have to be vacant and they have to be purchased below market value.
"I do think we'll get a bunch of houses and put them back in service, whether it's for sale, for rent, or for lease," says Steve Lockwood, executive director of the Frayser Community Development Corporation. "I don't think realistically that we'll be able to sell them all."
And there is a question of whether the federal funds will be enough. Recent data showed more than 17,000 foreclosures in Memphis last year.
Tim Bolding is the executive director of United Housing, a group that has redeveloped property throughout the city — including Frayser — over the past 15 years. In that time, they've completed more than 200 foreclosures.
Bolding says people already are talking about another round of federal funding.
"I looked at the city's map [of target areas] and then I looked at our map [of projects], and it's almost identical," Bolding says. "If you think that each house is $50,000, you can do 20 houses with every million dollars ... that's 280 houses out of a pool of 17,000."
In comparison, the recent Uptown redevelopment project built 385 homes, 175 of them market rate.
But all three men say a concentrated effort can make a difference.
"If you stop at a stop sign and there's a foreclosure on each corner, if you go in and do one, and leave the other three, you can't make an impact," Bolding says. "But if you pick up all four, you can do something."
Says Vazquez: "[The funding is] a drop in the bucket and that's not just Frayser; that's everywhere. But can if affect streets at a certain level? Yes, it can."
The federal government is expected to award the funding by the end of this month.