While the 2012 budget and term lengths got most of the attention at Tuesday’s Davidson Town Board meeting, the board also took action on another item that is stirring questions from some residents. Commissioners voted 5-0 to transfer money from the town fund balance – savings account – to buy two designated “affordable” houses in the Bradford neighborhood, off Davidson-Concord Road, that reportedly are in foreclosure.
The vote followed a closed session after the public portion of Tuesday’s monthly board meeting. The board briefly came back into open session and approved the expenditure – after citizens and reporters had left the meeting.
Town officials said the move is an effort to preserve two homes that were at risk of falling out of Davidson’s affordable housing program after the foreclosures. The town ordinance requires that 12.5 percent of the homes in all new multi-unit developments be built and sold or rented at rates deemed affordable according to federal standards.
The town did not announce the board action, but provided information to DavidsonNews.net after rumors began circulating about the vote on Thursday.
Bradford was developed over the past decade by local developer Frank Jacobus, who also developed other projects in town that are troubled or in foreclosure, including Davidson East, off NC 73, and Abersham, off Grey and Shearer roads.
The two unfinished homes are at 19818 and 19822 Davidson-Concord Road. Davidson Commissioner Margo Williams and other town officials said they are owned by a bank – though nobody could say Thursday night which one. Mecklenburg County property records show that Fifth Third Bank owns one of the buildings, while the other is owned by Neighborhood at Bradford LLC, Mr. Jacobus’s company.
After negotiations with the owners, the town agreed to pay $120,000 each for the two houses. Since the homes are unfinished, the town will have to complete construction, which is estimated to cost another $15,800 per house. So the town’s total cost would be $271,600.
However, it wasn’t clear Thursday how much money the town is appropriating for the deal. Ms. Williams said the town does not expect to spend the full amount on the homes, but will obtain financing. And she said the town expects to sell the homes soon – to buyers on the town’s affordable housing waiting list, who must meet federal income limits to qualify.
Megan Davis, Davidson’s town spokeswoman, agreed. “We expect to sell them each for more than the purchase price,” she said Thursday.
Commissioner Laurie Venzon said even if the houses don’t sell for a year, the town is likely to spend only a few thousand dollars on the purchase, plus the construction costs – not the whole $271,600.
And the town should get its money back with a sale. She said the price the town would pay ($120,000 per unit) is below market rate, which she said is somewhere around $145,000 to $155,000.
Ms. Williams said the purchase was an opportunity to save two homes that were at risk of being taken out of the affordable housing program. Under the program, restrictions on the deeds of certain homes require that the homes be first offered to qualified lower-income buyers.
“These houses were designed and built in the town’s affordable housing program,” Ms. Williams said Thursday. “When the houses went into receivership unfinished, the deed restrictions went away. What we looked at was the fact that we had two very fine houses that were well-designed, well built.”
One of the homes is 3 bedrooms, the other 4 bedrooms, according to property records.
“We decided it would be good to explore the very best deal we could get from the bank and to see what we could do to finish them and them into the hands of those who need them,” Ms. Williams said.
Asked why the bank couldn’t have just sold the homes on the open market, Ms. Williams said that the homes’ unfinished state was a barrier. She said the bank wanted to sell, but it’s very difficult for an affordable buyer to deal with a house that’s unfinished. She said Davidson will acquire the homes at “splendid prices.”
DavidsonNews.net has received several inquiries and comments from readers questioning the town board’s action on the Bradford homes.
Vince Winegardner, a River Run resident and Davidson Planning Board member, wrote a letter to the Town Board Thursday saying: “This is NOT a ‘no brainer,’ this is an example of the type of thinking that got us into the MI Connection situation. I expect the town will buy these properties at the ‘appraised’ value or whatever the bank has into them. The town will then attempt to sell them in this weak market. I expect the town will end up selling them at a loss. Who pays for this ‘no brainer’ social experiment? The taxpayers.”
In addition to preserving affordable housing, the board’s action addresses concerns among neighbors in Bradford about poor infrastructure, including roads and streetlights. In March, Mr. Jacobus agreed to pay a total of $25,000 from the sale of lots into an escrow account that would be used for street repairs.
Commissioner Laurie Venzon said Thursday the affordable housing purchase is part of an effort to help out a neighborhood that has been hit hard by the economy, the decline in home values, and the developer’s troubles.
“The thing’s in bankruptcy, houses are sitting there on the front row of Bradford Park, the neighborhood is up in arms about the roads not being finished,” she said. The town has the ability to step in and help, she said.
Ms. Venzon said the town has six or seven people in its affordable housing “queue,” but they can’t buy the houses unless construction is complete.