State funding helps low-income housing compete in a falling market

By Chet Williamson

You can't miss them. Take a ride up Bell Hill to Eastern Avenue or down to Main South in the Kilby-Gardner-Hammond Street neighborhood and you see them. They dot the urban landscape with their Kool-Aid brightness.

They are the look of hope and the promise of homeownership for low-income families in Worcester. They are the newly constructed or recently renovated affordable homes built by local community development corporations with money allocated by the city and state.

Last month Gov. Deval Patrick came to town to announce that the state would be delivering nearly $1 million of additional funding to assist two of these agencies in their efforts to maintain momentum in a down housing market.

Those awarded were the Worcester East Side Community Development Corporation, which received $760,000 for its Bell Hill home ownership project. The Main South Community Development Corporation received the other two grants: One for $115,597 grant for its Kilby Townhomes development; and the other is for $103,788 to convert a condominium into rental units.

Although the two CDCs are working toward the same goal of affordable housing, their grants were designed to deal with contrasting issues. The Eastside CDC needs to build out to accommodate demand. Main South has to sell homes before they can go forward.

The Eastside money is directed toward Phase IV of the Bell Hill Homeowner Initiative.

“This is property that we've owned for a number of years now. It will mean we can actually start doing the work,” says Executive Director Dominick Marcigliano of the grant. “We are hoping that the closing on these funds happens in a timely manner so that we can go to construction this season.”

The Bell Hill Initiative is a scattered-site development with property on Hooper Street, Eastern Avenue and two others on Catherine Street. They are two-family homes with a total development cost $400,000-$450,000. The grant assistance allows the CDC to now sell it for $217,000.

“I think that we have a very desirable product,” Marcigliano says. “People like the two-family model, where they have their owner's unit to live in, yet a smaller rental unit that brings in income and financial stability.”

The Main South CDC's Kilby Townhomes is a 10-unit project that appeared on the market last year.

“The original sale price was projected to be $152,000 for a three-bedroom unit,” says Executive Director Stephen Teasdale. “The revised sale price is going to be $130,000.”

The project is the third phase of the larger Kilby-Gardner-Hammond revitalization effort. The homes sit in the middle of an area that is seeing a great deal of renewal, including the new Boys & Girls Club and Clark's athletic field.

“There is good momentum,” Teasdale says. “We feel that these housing units will sell. We've got enough people right now applying. It's a case of whether they will go through the banks. We do not want to see the momentum and the improvement efforts in Kilby-Gardner-Hammond stall because of the national phenomenon. That's our concern.”

The property on Benefit Street just may be the neighborhood. It is a beautiful four-story brownstone-like structure exposed to Main Street. Teasdale says it was on the market for six months for as low as $90,000 with no offers.

According to Marcigliano, the applications for these grants were originally denied. “The state didn't fund any projects in Worcester — partly because of the number of unsold units that they had previously funded,” he says. “We contacted the state and said that we don't have any unsold units. We've always sold our units and there still is a market for homes.”

Teasdale says that both the city and state were aware something had to be done. He says that the perception was that Main South needed to concentrate on moving its units before funding any new development.

“The state met with the city folks over a long period of time and came to talk to us,” he says. “They were quite anxious to make sure that the additional subsidy would allow us to reduce the sale price to a level that was competitive even in this down market.

“The state became increasingly concerned because if the properties go into a foreclosure situation the state and the city are responsible for repaying the investment of the federal money into those projects. They clearly do not want to do that. Because it's not just the problem here in Worcester, this is a statewide phenomenon,” Teasdale says.

Five days before Gov. Patrick's recent visit to Worcester to announce the CDC grants, he also awarded $2 million in support of 11 regional foreclosure education centers, statewide foreclosure efforts and first-time homebuyer programs.

“The threat of foreclosure is a reality confronting many homeowners in Massachusetts and across our country,” Patrick said. “Families are struggling and entire neighborhoods are being tested. These grants will serve two fundamental purposes: first to ensure assistance reaches the people who need our help now and, second, prevent the number of foreclosures from growing.”

Locally, the Oakhill CDC at 74 Providence St. received three separate awards. The first, $183,750, is for the foreclosure education center. They also received $40,000 for foreclosure prevention and first-time homebuyer and counseling programs. Lastly, there's a $13,000 grant for sub-prime borrower counseling. o