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5870 RESOLUTION NO 5,870 A RESOLUTION APPROVING A PILOT PROJECT TO UTILIZE EXISTING HOUSING STOCK TO PROVIDE HOUSING FOR LOW INCOME CITIZENS; AND FOR OTHER PURPOSES BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE CITY OF LITTLE ROCK, ARKANSAS . SECTION 1. With the objectives of reducing the rate at which existing housing stock is abandoned and demolished and to provide low cost standard housing for low income families and to utilize available land on the East and South sides of the City for residences, the City of Little Rock hereby approves and adopts a pilot project to utilize existing housing stock to provide housing for low income families , all as outlined and set out on Exhibit "A" attached hereto and made a part hereof. SECTION 2 . Demolition permits for residential structures shall not be issued sooner than five (5) days following the date of application for such. SECTION 3 . This Resolution shall be in full force and effect from and after its adoption. ADOPTED: Deceicoer 20, 1977 b ATTEST: 4411j�l' ' APPROVED: City Clerk Mayor J r r— EXHIBIT "A" A PROPOSAL FOR A PILOT PROJECT TO UTILIZE EXISTING HOUSING STOCK TO PROVIDE HOUSING FOR LOW-INCOME CITIZENS DRAFT NEED Under the Little Rock Model Cities program a large number of abandoned houses in the Mode]. Cities area were demolished and their lots cleared. An ongoing project of the Community Development Block Grant (CDBG) program is the demolition of abandoned houses. The CDBG program is citywide, but many of the houses razed have been in the east and south ends of the city. These projects were undertaken in response to complaints of residents that the aban- doned structures were unsightly and often become hangouts for youths or transients . One of the side effects of the demolition program, however, has been a steady reduction in the stock of housing accessible to low-income families and a significant reduction of the number of units available in the Model Cities neighborhoods. A lot of va- cant, unused lots now exist where modest homes once were. In census tract 2 (east end) population diminished from 5 , 283 in 1970 to 4 , 343 in 1974 . R. L. Polk Company reported a further reduction of 240 in population by the end of 1975 . Total house- holds dropped from 1, 420 in 1970 to 1 ,214 in 1975 . Total of hous- ing units of 1 , 548 in 1970 was reduced to 1, 214 by 1975. The ef- fect of the demolition of abandoned houses in census tract 2 is clearly seen in the fact that there were 127 "year-round vacant" units in 1970, but only 57 "two-canvas" vacancies reported in the 1975 Polk data. (Note that "two-canvas" vacancies means only the number of units found vacant at the time of the Polk canvas for two successive years - not necessarily that these units are "va- cant year-round. " ) In census tract 5 ( south end) the total population increased from 5 ,177 to 5 , 837 between 1970 and 1974 . The number of house- holds decreased by 168 between 1970 and 1975, however, and the number of housing units dropped by 142 . There were 104 "year- round vacant" houses in 1970 , and only 69 "two-canvas" vacancies in 1975. / . Page 2 During this time the federal government discontinued the "235" and "236" programs and other subsidies for new low-income housing. With no subsidy programs , the Housing Authority has been unable to attract private developers to use vacant areas to construct low-in- come housing. Regulations prohibit use of CDBG funds for new hous- ing . Thus new construction as a solution to the low-income housing problem is not an option at this time . GOALS The goals to which this proposal is addressed , then, are : (1) to reduce the rate at which existing housing stock is abandoned and demolished; (2 ). to provide low-cost, standard housing for low-income families; and • (3) to utilize available land on the east and south sides of Little Rock for residences. STRATEGY The staff of the inspections division have observed that some of the houses for which demolition permits are sought, under the CDBG demolition program and otherwise, are sound enough to make rehabilitation economically feasible. Sometimes residential struc- tures which are not substandard are demolished to clear land for commercial development . Of 285 residential structures demolished since the start of the CDBG program, the inspections division es- timates that at least 30 had rehabilitation potential . As CDBG monies and funds available under the "Section 312" program may be used for rehabilitation of residential structures , we propose to : (1) inspect all residential structures for which a demolition permit is sought , in order to determine if the structure is suitable for rehabilitation; r 7 Page 3 ( 2 ) bargain with owners of suitable structures, offering to clear and clean their lots in exchange for the structure; (3 ) buy vacant lots in east and south Little Rock; (4 ) move restorable houses to purchased lots and rehabilitate them; ( 5) sell houses and lots at cost to low- or moderate-income purchasers. We believe that there will be a market for residences in east Little Rock, if housing of standard quality is made available. Before the 235 housing program was discontinued, seven single-fa- mily homes were built under the Model Cities program as a pilot project. There were 50 applicants for purchase of them. Applica- tions were processed on a first-come, first-served basis . The seven houses were taken by the first seven families on the list . PROCEDURE No new funding would be needed for this project. CDBG funds already budgetted for housing rehabilitation would be used. The Housing Authority already owns two lots, one on Martel and one on Twenty-ninth, which could be used for a pilot reloca- tion/rehabilitation experiment. The procedure would be supervised by the Housing Authority. Rehabilitation costs would be kept as low as possible . We plan to work out an arrangement with Opportunities Industrialization Center (OIC) to have some foundation, masonry, and concrete work done by training classes . Some of the necessary painting, roofing and simple carpentry also might be done by Comprehensive Employ- ment Training Act (CETA) workers or OIC trainees. The rehabilitated houses would be sold only to low- or moderate- income families , and at cost . As a safeguard against profiteering, each rehabilitated house would be evaluated by a professional ap- praiser, and the mortgage agreement would stipulate that, if the new owner should resell the house during the life of the mortgage, the City would have an option to buy it back at the current appraised de Page 4 k value less the difference between the original purchase price and the appraised value at the time of original purchase . (For ex- ample, if a house and lot cost $12 , 000 and were sold at cost -- although appraised at $15 , 000, and three years later the owner wanted to sell and the property should appraise at $17 , 000, the City could buy it back at $14 , 000 . ) This would give purchasers the benefits and incentives of home ownership , but prevent taking of unearned profit. IMPLEMENTATION In order to implement the program, the Board of Directors needs (1) to authorize the procedure outlined herein and ( 2) to amend the relevant ordinance( s) so as to require a waiting period of five -days between application for a permit to demolish a resi- dential structure and issuance of the permit . This provision would allow time for staff to inspect the house and consider its suitability for the relocation/rehabilitation procedure.