Local agency hurt by housing crunch

January 30, 2009|By DAN DEARTH

HAGERSTOWN -- The Hagerstown Community Development Department will revise its budget to compensate for an estimated $1.05 million shortfall in program income.

Community Development Director Larry Bayer said the original budget for fiscal year 2008-09 was expected to be about $2.98 million, but will be closer to $1.93 million.

He said the shortfall primarily was caused by a drop in sales of city-owned homes that were part of the Single Family Homeownership program, an initiative in which the city buys homes, renovates them and sells them for a profit to help fund the Community Development Department.

The department has a variety of functions, including housing rehabilitation and securing public funding to build homes for families with low to moderate incomes.


Bayer said the Community Development Department suffered with the rest of the housing market because the homes didn't sell.

In calendar year 2008, Bayer said the city sold only one of its nine homes.

"Up until two years ago, we were selling them," Bayer said. "We usually had them sold six months before they were finished (being renovated)."

To help raise money to combat the shortfall, the city will try to revamp its sales strategy by reducing the price of the eight homes that haven't been sold, Bayer said. One of the homes, at 226 N. Locust St., was selling for $185,000 a year ago, he said. It is selling for $120,000 today.

He said the city still plans to make a profit on some of the houses, but on "other ones, we might have to take a loss."

Postponing projects, such as ones to improve storm drains and the South Locust Street streetscape, should free up about $200,000 to bridge the gap, Bayer said. The Community Development Department will save further by sharing a secretary with the Utilities Department.

Bayer said the department also will cut a $25,000 contribution from the city to the Hagerstown Neighborhood Development Partnership, a private organization created in 2003 to partner with the city to increase residential and commercial development in and around downtown Hagerstown.

Richard Phoebus, president of the Hagerstown Neighborhood Development Partnership, could not be reached Friday for comment.

Bayer said the cost-saving measures will not affect the Community Development Department's support of Holly Place, Children in Need, Community Free Clinic, Girls Inc., Easter Seals Day Care, Fair Housing Services and Food & Friends.

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