With that as preamble, Mayor John Dickert today announced the granting of 165 contracts for the rehabilitation of 18 homes, and the construction of 5 new ones, using $1.25 million from the federal Neighborhood Stabilization Program.
The plan is to rehab the homes, sell them, and then "recycle the money" by doing it all again with a new set of homes.
Mayor Dickert with, from left, Jim Spangenberg, Greg Helding,
Jean Wolfgang, Joe Heck, Ray DeHahn and Morris Reece
Dickert said 82% of the qualifying contractors had Racine addresses, and 10-12% are minority owned. It's impossible to say exactly how many jobs will be created, but Dickert said approximately 10 contracts were awarded per house (plumbing, electrical, siding, roof, etc.) and each would require two to three workers. That could total as many as 30 jobs per house, and about 750 in all -- although some contractors were the successful low-bidders on more than one project. Still, at an average rehab cost of $60,000 per house, that works out to just $2,000 per job.
Dickert said the program meets multiple needs, since Racine suffered from 441 foreclosures last year (compared to about 30 a few years ago), so the program will not only put people to work, it will put people back into homes. He was joined at the announcement by Aldermen Greg Helding, Jim Spangenberg and Ray DeHahn, each of whom echoed Dickert's excitement. "It's a thrill to put people from Racine back to work," said Spangenberg. Other city officials who took part in the news conference were Joe Heck, assistant director of development, Jean Wolfgang, associate planner, and Morris Reece, affirmative action director.
The homes to be rehabbed -- and those demolished to make way for new ones -- were bought in foreclosure for about $650,000 - $700,000 -- $10,000 to $65,000 per home, from an initial grant of $1.9 million. Coupled with the approximately $60,000 per home in rehabilitation funds from the second, $1.2 million grant, that means the city will have to sell them for an average of $90,000 or so to break even. The mayor's recently released 10-year-plan said that was the median price of a home in the city.
Dickert said the two real estate firms granted the listings -- First Weber and Shorewest -- have agreed to intensive marketing, as well as to a higher commission for the selling agent (2.4% compared to the usual 2.1% of the standard 6% commission; the rest is divided between the listing and selling agencies). The city hopes this added incentive will reduce the time the houses are on the market.
But, of course, there are lots of houses on the market selling for less than their owners have in them. Asked about that, Dickert, a former Realtor, said, "The market is not that bad... but, candidly, we'll find out."
The city has until February 2013 to continue turning over and recycling the NSP money. At that point, the program ends and -- theoretically -- any remaining money will have to be returned to the federal government.
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