The city’s plan to use $14.85 million of its $18.5 million Neighborhood Stabilization Program 2 (NSP2) federal grant for the rehabilitation of distressed residential properties is well underway. According to City NSP2 Coordinator Jolene Saul, 28 properties (which will amount to 44 ‘units’ since many are multi-renter properties) have been acquired to date, representing nearly 50% of total 100 units that will be acquired and rehabbed with the funds.
Five properties were acquired this fall as a part of NSP2’s “Bid Package #1,” which will be the first set of properties to undergo construction work or ‘rehabilitation.’ Out of the five properties in package #1, four are located in West Evanston and one in South Evanston at 131 Custer. All had fully undergone foreclosure and had reverted to bank ownership by the time Brinshore’s subsidiary, BrinNSP, acquired them as part of the NSP2 program. Three of the properties will be rehabbed to be rental units, and two (1704 Grey and 2020 Brown) will be put back on the market as single-family homes.
Inflation, Foreclosure, and Intervention
It may come as no surprise that each of the distressed properties in package #1 saw a drastic fluctuation in price over the last decade before it eventually foreclosed. Four of the Five properties decreased an average 62.7% in value in the time between their most recent previous market sale and their eventual acquisition via NSP2 funding. In what was perhaps the most extreme case of the group, multi-family property 131 Custer sold for $160,000 in '98. The property then saw a tripling in value by the time it was sold for $445,000 in March '07, flipped, and then sold for $510,000 four months later in July '07. The property officially foreclosed in 2010 and was acquired by Brinshore for $174,900.
A breakdown detailing a similar history for each property follows. Dates, numbers and all other data were taken from the City of Evanston Clerk's office and from the Cook County Recorder of Deeds online database.
|
Sold |
Foreclosed |
Acquired (NSP2) |
| 1704 Grey |
For $350,000 on 11/3/05 |
Deed went to Chase Bank on 9/14/09 |
For $98,325 (Brinshore from Chase) |
| 1836 Brown |
For $170,000 on 4/26/02
|
Deed went to Fannie Mae on 1/26/10 |
For $78,302 (Brinshore from Fannie Mae) |
| 131 Custer |
For $510,000 on 7/30/07 |
Deed went to Fannie Mae on 6/21/10 |
For $174,900 (Brinshore from Fannie Mae) |
| 1915-1919 Grey |
For $450,000 on 12/14/05
|
Deed went to Deutsche Bank on 12/29/09 |
For $183,150 (Brinshore from Deutsche) |
| 2020 Brown |
(Recent sale pre-dates county's online records) |
Deed went to Deutsche Bank on 5/28/08 |
For $57,000 (Brinshore from Deutsche) |
As the City and Brinshore intervene and acquire distressed properties, the hope is that further neighborhood deterioration is avoided, and that surrounding properties benefit from the investment. According to Saul, this intervention prevents two unwanted outcomes:
“They could sit there and then become deteriorated, used for illegal activities; you may have squatters in there,” said Saul. “The other option is that they are bought by investors who just hold them and who are waiting for the market to turn or who will rent it. They just want income coming in if they do rent it to someone; they’re not really concerned about the neighborhood.”
Some in the community are more skeptical of the manner in which the grant money is being used in the program, particularly of the fact that Brinshore, a for-profit organization located outside of Evanston, is playing such a large role in the process.
“It gives them a lot of leverage at banks, financial institutions, and the political system,” said Bennett Johnson, Evanston resident and member of the Minority Business Consortium, of the fact that Brinshore ultimately manages the purchasing from the banks, general contracting for rehabilitation and eventual sale for each property.
“Their goal is to help stabilize the neighborhood by seeking distressed properties, rehabilitating them and putting them back on the tax-role, hiring local people and developing local companies,” said Johnson. “It makes an imminent amount of sense, but if you involve an outside party that takes the funds outside the city, what good does that do?”
