Nonprofit coalition awarded $1 million to improve Lynchburg homes

A coalition of local nonprofits has been awarded $1 million to rehabilitate foreclosed homes in Lynchburg, the governor’s office announced Monday.

The funding will be focused on the Middle Rivermont neighborhood around Early Street and the Diamond Hill neighborhood around Grace Street, two areas deemed to be suffering from a high rate of foreclosed or abandoned properties.

Four nonprofits will share in the work: the Lynchburg Neighborhood Development Foundation, the Lynchburg Community Action Group, the Greater Lynchburg Habitat for Humanity chapter and Rush Homes. Region 2000 will act as grants administrator.

“This is a considerable amount of money that we can invest in a concentrated way in two vulnerable neighborhoods,” said Laura Dupuy, executive director of LNDF, which served as the lead organization on the funding application.

The money has been awarded through the Virginia Neighborhood Stabilization Program, a new initiative focused on combating the state’s rising foreclosure rate.

According to the governor’s office, Virginia has seen an eightfold increase in foreclosures in the past three years. Currently, there are more than 28,000 homes in the foreclosure process and more than 16,000 foreclosed homes sitting empty.

Lynchburg itself has not reported such a sharp rise in foreclosures, but it is dealing with multiple risk factors, according to a report from the state Department of Housing and Community Development.

“Older central cities targeted (in this program), such as Danville and Lynchburg, may not on paper show a large number of foreclosed properties, however, these areas are high-risk communities that have a significant number of sub-prime loans, growing unemployment, and high vacancy rates,” reads the report posted to the department’s Web site.

“Without assistance (from this program), these at-risk communities will likely see an expanding list of affected properties that become a source of blight and drain on the surrounding community.”

It is not immediately clear how many Lynchburg homes will be rehabilitated as part of this program. The community’s original application suggested 15 was feasible, but it also asked for $1.5 million.

Dupuy preliminarily estimated they could take on 11 homes with the reduced award. The partner agencies are working with a real estate agent to identify eligible properties. They also will meet with state officials later this month to get a better sense of the program’s requirements and restrictions.

According to an earlier report made to City Council, nearly 16 percent of all Diamond Hill homes were foreclosed or condemned as of January 2009. In the Middle Rivermont area, the rate was 12.4 percent.

The homes acquired under the stabilization program will be renovated — or in some cases razed and rebuilt — for future sale or rental to low-to-middle income families.

Homebuyers will be aided by the partner agencies through a counseling program and financing assistance made possible through a $180,000 HOME grant handed down by City Council.

HOME grants are federally funded, but distributed locally by council. They are reserved for projects that will improve the city’s housing stock.

Gary Christie, executive director of Region 2000’s local government council, which will administer the stabilization money, said that focusing on two neighborhoods will allow the program to maximize its impact.

“There are some tough houses in these neighborhoods that are in mighty rough shape,” he said. “These groups will be able to fix them up, get them back on their feet and help revitalize these neighborhoods.”

The Virginia Neighborhood Stabilization Program is being funded under a 2008 federal housing recovery act. The state has a total of $38.7 million to spend.