Faced with 100 vacant, dilapidated houses that threaten property values, Round Lake Beach is getting into the housing business.
In the 100 block of Woodland Drive, the first of five homes the village hopes to buy, repair and sell to help revitalize neighborhoods is an unsightly ruin of code violations complete with boarded-up windows, peeling paint and a yard that needs mowing.
“All it takes is one [vacant and neglected] house on a block” to harm property values, Mayor Rich Hill said.
In its new venture, Round Lake Beach joins municipalities from Chicago to Country Club Hills to Joliet that have waded into the tricky waters of buying and selling homes.
Nearly 100 Illinois municipalities, many in the southern part of the state, have tried similar ventures, with varying degrees of success.
Nationally, it’s much the same story, with more than 1,000 communities taking advantage of $4.4 billion in federal grants earmarked for housing and economic development, said Brian Sullivan of the U.S. Department of Housing and Urban Development.
“Rehabbing old or vacant homes is just one way to accomplish community revitalization and provide affordable housing,” he said.
In Round Lake Beach, the sale of the $73,000, three-bedroom house on Woodland Drive is expected to be completed next month, with construction starting soon afterward, officials said.
In addition to the price tag–paid for through credit from a local bank–is the cost of renovation, which could be as much as $25,000 per house, Hill said.
The home is expected to have a sale price of $100,000. Last year, the median home value in Round Lake Beach was $130,500, compared with $123,500 in 2000, said Brian Holmsten of the Multiple Listing Service of Northern Illinois.
The village has applied for a $75,000 grant from the Lake County Affordable Housing Commission, Hill said.
It also has contracted with the Illinois Housing Development Authority in Chicago to provide low-interest mortgage loans to first-time homeowners of modest means, said Roger Morsch, director of single-family programs for the agency.
“The economic impact on a neighborhood of every first-time homeowner who moves into one of these homes is dramatic,” Morsch said. “A first-time homeowner supports the local economy through home improvement projects and encourages other residents to improve their properties.”
The village hopes to break even on the project, Hill said.
A similar effort is under way in Country Club Hills, a south suburban community of 16,000 where city officials have bought six houses in the last six years.
The city spent $25,000 to $30,000 to renovate each house and sold them below market value to spur sales and encourage first-time homeowners, said Henrietta Turner, director of community development.
The city recently established a separate account with about $100,000 from the sale of those homes, an unexpected profit, Turner said.
“We hoped to break even at best,” she said, adding that the program’s success has prompted city officials to budget $150,000 for additional home purchases this year.
In northwest suburban Carpentersville, village officials bought three homes from HUD that had been vacant for about a year, and they plan to renovate and sell them.
Last year, the village decided to sell the houses for $50,000 to $60,000 to Creative Assistance Development Inc., a non-profit organization started by the Elgin Housing Authority to offer affordable housing in western Cook and Kane Counties, Executive Director Perry Ecton said.
Difficulties in obtaining financing and community support are often big hurdles in these undertakings, Ecton said.
“The difficulty is in getting communities and counties to back home ownership,” he said, because of the misconception that having affordable housing in a neighborhood hurts property values.
Officials said other limitations are imposed by HUD, which won’t allow a house the agency has foreclosed on to be torn down, no matter how dilapidated.
“It’s a tricky proposition to renovate a house that needs a new roof, a new water heater and a new heating-cooling system, for example, and keep costs down,” Turner said. “Yet these repairs must be done and done right, or you set up a first-time homeowner for failure.”
Round Lake Beach officials followed the program in Kenosha, which used federal block grants to help build or remodel more than two dozen homes in the last eight years.
Maxine Amedio, who lives across the street from the boarded-up house in Round Lake Beach, said she supports the village’s efforts.
“I’m tired of seeing it that way,” she said. “It makes the whole neighborhood look bad.”
