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Council to consider $73,000 bid for $158,000 rehabiliated home

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June 23, 2012
— The Janesville City Council will be asked Monday night to accept a $73,000 bid on a home that the city spent $158,000 in federal money to buy and rehabilitate.

Although the city would be selling the home at 212 Madison St. for less than half the amount invested, city staff said the project fulfills federal and local neighborhood stabilization goals.


The city used federal grant money to pay $38,000 for the house and land. It paid $120,000 for remodeling.


Someone else could have bought the house, thrown some paint on it and turned it into a rental property, said Kelly Lee, neighborhood development specialist for the city.


The city’s goal was to bring the home up to code and do major repairs so a low- or moderate-income family could buy it and move in without making costly improvements, Lee said.


The city made energy improvements, repaired the roof, added a bathroom, installed all new flooring and brought the plumbing, electrical and heating systems up to code. It also removed lead paint.


The city got about $1.2 million from Rock County’s share of stimulus money as part of the Neighborhood Stabilization Program. Janesville also got a portion of Beloit’s money when Beloit was unable to allocate it by the deadline.


The program allows cities and nonprofit organizations to buy foreclosed properties to rehabilitate or raze. The goals are to reduce blight, provide affordable homes for low- to moderate-income families and stabilize and improve the real estate market in neighborhoods hit hardest by foreclosures.


The stone home on Madison Street is in the historic Look West Neighborhood. The potential buyer had the home appraised at $75,000.


Most of the houses the city buys through the foreclosure program either are demolished because of structural problems or must be gutted, Lee said. The mechanicals usually need to be replaced, and that’s not cheap.


“We’ve done some really beautiful homes,” Lee said. “I would move into any of them.”


A private investor never would be able to spend the money and make a profit by doing the same work, she said.


Most homes are owner occupied in the block where the Madison Street house is located, Lee said. The couple who want to buy the home are expecting their first child.


“What feels good for us, we know that child will be going into a house that’s completely lead-free,” Lee said.


She also noted that the money is stimulus money, and the city employed a general contractor and 14 subcontractors.


“We keep people working,” Lee said.


The Neighborhood Stabilization Program must comply with the Davis-Bacon and Related Acts, federal labor laws that require all workers on the project be paid as much as similar workers in the area.


That requirement can inflate the cost of construction projects, Kelly said.


The city cannot add a deed restriction to the seller’s agreement to require that the property remain owner occupied. Instead, the city typically gives a buyer $2,500 in down payment and closing cost money that is forgiven over five years if the owner continues to live in the home as a primary residence.


“The longer they stay in the property, the less they pay back,” Lee said. “It gives them an incentive to stay.”


The money from the sale goes back into the neighborhood program for future projects.


On the agenda

The Janesville City Council will meet at 7 p.m. Monday in City Hall, 18 N. Jackson St.


The council will:


-- Be asked again to approve a partnership with the state Department of Natural Resources to become a Green Tier Legacy Community. The city would work with the state and other legacy communities to become more sustainable.


The item was on a previous agenda, but several residents told the council they feared the community could never get out of such an agreement. One resident, Paul Lembrich, said he believed such an agreement is unconstitutional, as well. The city attorney’s office has since studied the contract and concluded the city can easily opt out the program.


City Manager Eric Levitt recommends the council authorize the partnership if it is interested in being a leading city in ecology. The advantage is the possibility of receiving increased resources and access to the DNR. The city also could decide to move toward sustainability without he state’s help, or it could put sustainability on hold, Levitt said.


-- Discuss taking in more garbage at the landfill from one hauler to make up for projected revenue losses.


-- Discuss the management structure for the Janesville Innovation Center.



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